--- page 1 ---
Joint Sponsors, Overall Coordinators,
Joint Global Coordinators,
Joint Bookrunners and Joint Lead Managers
Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers
Overall Coordinator, Joint Global Coordinator, Joint Bookrunner and Joint Lead Manager


--- page 2 ---
IMPORTANT: If you are in any doubt about any of the contents of this prospectus, you should seek independent professional advice.
ё໋इᔼᖹ
HighTide Therapeutics, Inc.
(IncorporatedintheCaymanIslandswithlimitedliability)
GLOBAL OFFERING
Number of Offer Sh ares under
the Glob al Offerin g
: 24,194,000 Sh ares
Number of Hon g Kong Offer Sh ares : 2,419,500 Sh ares (subject to adjustment)
Number of Intern ation al Offer Sh ares : 21,774,500 Sh ares (subject to adjustment)
Offer Price : HK$11.50 per Sh are, plus broker ageo f
1.0%, SFC tr ansaction levy of 0.0027%,
Stock Exch anget r ading fee of 0.00565%
and AFRC tr ansaction levy of 0.00015%
(payable in full on applic ation in Hon g
Kong Doll arsa nds ubject to refun d)
Nomin alV alue : US$0.0001 per Sh are
Stock Co de : 2511
Joint Sponsors, Overall Coordinators, Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers
Overall Coordinator, Joint Global Coordinator, Joint Bookrunner and Joint Lead Manager
Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers
Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsib ility for the
contents of this prospectus, make no representation as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss howsoever arising from or in
reliance upon the whole or any part of the contents of this prospectus.
A copy of this prospectus, having attached thereto the documents specified in “Appendix V—Documents Delivered to the Registrar of Companies and on Di splay” to this
prospectus, has been registered by the Registrar of Companies in Hong Kong as required by Section 342C of the Companies (Winding Up and Miscellaneous P rovisions) Ordinance
(Chapter 32 of the Laws of Hong Kong). The Securities and Futures Commission and the Registrar of Companies in Hong Kong take no responsibility for the c ontents of this
prospectus or any other document referred to above.
Our Company is incorporated in the Cayman Islands and a significant portion of our businesses are located in the PRC. Potential investors should be awa re of the differences in
legal, economic and financial systems between the Cayman Islands, the PRC and Hong Kong and that there are different risk factors relating to the inves tment in our Company.
Potential investors should also be aware that the regulatory frameworks in the Cayman Islands and the PRC are different from the regulatory framework in Hong Kong and should
take into consideration the different market nature of our Shares. Such differences and risk factors are set out in the sections headed “Risk Factors” and “Regulatory Overview”.
The Offer Price will be HK$11.50 per Offer Share.
Applicants for Hong Kong Offer Shares are required to pay, on application, the Offer Price of HK$11.50 for each Hong Kong Offer Share together with brok erage fee of 1%, SFC
transaction levy of 0.0027%, Stock Exchange trading fee of 0.00565% and AFRC transaction levy of 0.00015%.
The Over all Coor dinator s (for them selve sa nd on beh alf of the Un derwriter s), and with our con sent, m ay, where con sidere d app ropriate, re duce the number of Hon g Kong
Offer Sh aresa nd/or the Offer Price below th ati ss tated in thi sp rospectu s (which i s HK$11.50) at any time prior to the mornin g of the l ast da
yf o rl odginga p plic ation s
under the Hon g Kong Public Offerin g.I n such c ase, notice s of the re duction in the number of Hon g Kong Offer Sh aresa nd/or the Offer Price will be publi shed on the
web site of our Com pany at www.hi ghti detx.com and on the web site of the Stock Exch ange at www.hkexnew s.hk as s oon as p ractic able followin g the deci sion to m ake such
reduction, and in any event not l ater th an the mornin g of the day which i s the l ast day for lo dging app lic ation s under the Hon g Kong Public Offerin g. Further details are
set forth in “Structure of the Global Offering” and “How to Apply for Hong Kong Offer Shares” in this prospectus.
The obli gation s of the Hon g Kong Underwriter s under the Hon g Kong Underwritin g Agreement to subscribe for, and to procure applic ants for the subscri ption for, the
Hon g Kong Offer Sh ares, are subject to termin ation by the Over all Coor dinator s (for them selve sa nd on beh alf of the Hon g Kong Underwriter s) if cert ain groun ds a rise
prior to 8:00 a.m. on the dayt h att r adin g in the Sh ares commence s on the Hon g Kon g Stock Exch ange. Such groun ds a re set out in the section he aded
“Un derwritin g—Un derwritin g Arr angement sa nd Expenses—Hon g Kong Public Offerin g—Groun ds for termin ation” in thi sp rospectu s.
The Offer Shares have not been and will not be registered under the Securities Act or any state securities law in the United States and may not be offered, sold, pledged or transferred
within the United States or to, or for the account or benefit of United States persons, except in transactions exempt from, or not subject to, the regist ration requirements of the
Securities Act. The Offer Shares are being offered and sold (i) in the United States solely to QIBs as defined in Rule 144A pursuant to an exemption from r egistration under the
Securities Act and (ii) outside the United States in offshore transactions in reliance on Regulation S under the Securities Act.
ATTENTION
We h ave adopteda fully electronic applic ation proce ss for the Hon g Kong Public Offerin g. We will not provi de printe d copies of thi sp rospectu s to the public in
rel ation to the Hon g Kong Public Offerin g.
Thi sp rospectu s isa vailable at the web site of the Stock Exch ange at htt p://www.hkexnew s.hk and our web site at www.hi ghti detx.com. If you require ap rinte d copy
of thi sp rospectu s,y o um ay downlo ad a ndp rint from the web site addressesa bove.
IMPORTANT
December 14, 2023


--- page 3 ---
IMPORTANT NOTICE TO INVESTORS:
FULLY ELECTRONIC APPLICATION PROCESS
We h ave adopteda fully electronic applic ation proce ss for the Hon g Kong Public
Offerin g. We will not provi de printe d copies of thi sp rospectu s to the public in rel ation to
the Hon g Kong Public Offerin g.
This prospectus is available at the website of the Stock Exchange at
http://www.hkexnews.hk under the “HKEXnews > New Listings > New Listing Information”
section, and our website at www.hightidetx.com. If you require a printed copy of this
prospectus, you may download and print from the website addresses above.
To apply for the Hong Kong Offer Shares, you may:
(a) apply online through the White Form eIPO service through the designated
website at htt p://www.ei po.com.hk ;
(b) apply electronically through the HKSCC EIPO channel and cause HKSCC
Nominees to apply on your behalf by instructing your broker or custodian who
is a HKSCC Participant to give electronic app lic ation in struction s via
HKSCC’s FINI system to apply for the Hong Kong Offer Shares on your behalf.
WewillnotprovideanyphysicalchannelstoacceptanyapplicationfortheHongKong
Offer Shares by the public. The contents of the electronic version of this prospectus are
identicaltotheprintedprospectusasregisteredwiththeRegistrarofCompaniesinHongKong
pursuant to Section 342C of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance(Chapter32ofthelawsofHongKong).
If you are anintermediary , broker or agent, please remind your customers, clients or
principals, as applicable, that this prospectus is available online at the website addresses
above.
Please refer to the section headed “How to Apply for Hong Kong Offer Shares” in this
prospectus for further details of the procedures through which you can apply for the Hong
Kong Offer Shares electronically.
IMPORTANT


--- page 4 ---
Your application through the White Form eIPO service or by giving electronic applic ation
instruction s to HKSCC must be for a minimum of 500 Hong Kong Offer Shares and in one of the
numbers set out in the table. You are required to pay the amount next to the number you select.
If you are applying through the White Form eIPO service, you may refer to the table below
for the amount payable for the number of Shares you have selected. You must pay the respective
amount payable on application in full upon application for Hong Kong Offer Shares.
If you are applying through the HKSCC EIPO channel, you are required to pre-fund your
application based on the amount specified by your broker or custodian, as determined based on
the applicable laws and regulations in Hong Kong.
HighTi de Ther apeutic s, Inc. (Stock Co de: 2511)
(HK$11.50 per Hon g Kong Offer Sh are)
NUMBER OF HONG KONG OFFER SHARES THAT MAY BE APPLIED FOR AND PAYMENTS
No. of Hon g
Kong Offer
Shares
applie d for
Amount
payable on
applic ation
No. of Hon g
Kong Offer
Shares
applie d for
Amount
payable on
applic ation
No. of Hon g
Kong Offer
Shares
applie d for
Amount
payable on
applic ation
No. of Hon g
Kong Offer
Shares
applie d for
Amount
payable on
applic ation
HK$ HK$ HK$ HK$
500 5,807.99 7,000 81,311.84 50,000 580,798.88 400,000 4,646,391.00
1,000 11,615.98 8,000 92,927.82 60,000 696,958.66 450,000 5,227,189.88
1,500 17,423.97 9,000 104,543.80 70,000 813,118.43 500,000 5,807,988.76
2,000 23,231.95 10,000 116,159.78 80,000 929,278.20 600,000 6,969,586.50
2,500 29,039.94 15,000 174,239.67 90,000 1,045,437.98 700,000 8,131,184.26
3,000 34,847.93 20,000 232,319.56 100,000 1,161,597.76 800,000 9,292,782.00
3,500 40,655.92 25,000 290,399.43 150,000 1,742,396.63 900,000 10,454,379.76
4,000 46,463.91 30,000 348,479.33 200,000 2,323,195.50 1,000,000 11,615,977.50
4,500 52,271.90 35,000 406,559.21 250,000 2,903,994.38 1,100,000 12,777,575.26
5,000 58,079.89 40,000 464,639.10 300,000 3,484,793.26 1,209,500
(1) 14,049,524.78
6,000 69,695.86 45,000 522,718.99 350,000 4,065,592.13
(1) Maximum number of Hong Kong Offer Share you may apply for.
No application for any other number of Hong Kong Offer Shares will be considered and any
such application is liable to be rejected.
IMPORTANT


--- page 5 ---
If there is any change in the following expected timetable of the Hong Kong Public
Offering, our Company will issue an announcement to be published on the websites of the
Stock Exchange at www.hkexnews.hk and our Company at www.hightidetx.com .
Date(1)
Hong Kong Public Offering commences ................................ 9:00 a.m. on
Thursday, December 14, 2023
Latest time for completing electronic applications under the
White Form eIPO service through the
designated website www.ei po.com.hk (2) ............................ 11:30 a.m. on
Tuesday, December 19, 2023
Application lists of the Hong Kong Public Offering open (3) ................ 11:45 a.m. on
Tuesday, December 19, 2023
Latest time for (a) completing payment of White Form eIPO
applications by effecting internet banking transfer(s) or
PPS payment transfer(s) and (b) giving
electronic applic ation in struction s to HKSCC
(4) ..................... 12:00 noon on
Tuesday, December 19, 2023
If you are instructing your broker or custodian who is a HKSCC Participant submit an
EIPO application on your behalf through HKSCC’s FINI system in accordance with your
instruction, you are advised to contact your broker or custodian for the latest time for giving such
instructions which may be different from the latest time as stated above.
Application lists of the Hong Kong Public Offering close
(3) ................ 12:00 noon on
Tuesday, December 19, 2023
Announcement of the level of indications of
interest in the International Offering, the level of applications
in the Hong Kong Public Offering and the basis of allocation
of the Hong Kong Offer Shares to be published
on the websites of the Stock Exchange at www.hkexnew s.hk
and our Company at www.hi ghti detx.com
on or before (5) ................................... Thursday, December 21, 2023
EXPECTED TIMETABLE (1)
–i–


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The results of allocations in the Hong Kong Public Offering (with successful applicants’
identification document numbers, where applicable) to be available through a variety of
channels, including:
• in the announcement to be posted on the
websites of the Stock Exchange at
www.hkexnew s.hk and our Company at
www.hi ghti detx.com , respectively ............. Thursday, December 21, 2023
• from the designated results of allocations website
at www.i pore sult s.com.hk
(alternatively: www.ei po.com.hk/eIPOAllotment )
with a “search by ID” function from .............. 2 4 hours, from 11:00 p.m.
on Thursday, December 21,
2023 to 12:00 midnight
on Wednesday, December 27, 2023
• from the allocation results telephone
enquiry line by calling +852 2862 8555
between 9:00 a.m. and 6:00 p.m. on ............. Friday, December 22, 2023,
Wednesday, December 27, 2023,
Thursday, December 28, 2023 and
Friday, December 29, 2023
Share certificates in respect of wholly or partially successful
applications pursuant to the Hong Kong Public Offering
to be deposited into CCASS on or before
(6) ............... Thursday, December 21, 2023
Share certificates in respect of wholly or partially successful
applications pursuant to the Hong Kong Public Offering
to be despatched on or before
(8) ....................... Thursday, December 21, 2023
White Form e-Refund payment instructions/refund
checks in respect of (i) wholly or partially successful applications
(if applicable) and (ii) wholly or partially unsuccessful
applications pursuant to the Hong Kong Public Offering
to be despatched on or before
(7)(8)(9) ...................... Friday, December 22, 2023
Dealings in the Shares on the Stock Exchange
expected to commence ........................................a t 9:00 a.m. on
Friday, December 22, 2023
(1) All times and dates refer to Hong Kong local times and dates, except as otherwise stated.
(2) You will not be permitted to submit your application under the White Form eIPO service through the designated
website at www.ei po.com.hk after 11:30 a.m. on the last day for lodging applications. If you have already
submitted your application and obtained an application reference number from the designated website prior to
11:30 a.m., you will be permitted to continue the application process (by completing payment of application
monies) until 12:00 noon on the last day for lodging applications, when the application lists close.
(3) If there is/are a “black” rainstorm warning signal, a tropical cyclone warning signal number eight or above and/or
Extreme Conditions in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on Tuesday, December
19, 2023, the application lists will not open and will close on that day. See the section headed “How to Apply for
Hong Kong Offer Shares – E. Severe Weather Arrangements” in this prospectus.
EXPECTED TIMETABLE (1)
–i i–


--- page 7 ---
(4) Applicants who apply for the Hong Kong Offer Shares by giving electronic applic ation in struction s to the
HKSCC via CCASS or instructing your broker or cu stodian to apply on your behalf via CCASS should refer to the
section headed “How to Apply for Hong Kong Offer Shares — A. Application for Hong Kong Offer Shares — 2.
Application Channels” in this prospectus.
(5) None of the websites or any of the information contained on the websites forms part of this prospectus.
(6) Share certificates for the Hong Kong Offer Shares are expected to be issued on Thursday, December 21, 2023 but
will only become valid certificate of title provided that (i) the Global Offering has become unconditional in all
respects, and neither of the Underwriting Agreements has been terminated in accordance with its terms, prior to
8:00 a.m. on the Listing Date, which is expected to be on or around Friday, December 22, 2023. Investors who trade
Shares on the basis of publicly available allocation details before the receipt of share certificates or before the share
certificates becoming valid certificates of title do so entirely at their own risk, (ii) the right of termination as
described in the paragraph headed “Grounds for Termination” under the section headed “Underwriting” in this
prospectus has not been exercised and has lapsed.
(7) e-Refund payment instruction or refund checks will be issued in respect of wholly or partially unsuccessful
applications pursuant to the Hong Kong Public Offering. Part of the applicant’s Hong Kong identity card number or
passport number, or, if the application is made by joint applicants, part of the Hong Kong identity card number or
passport number of the first-named applicant, provided by the applicant(s) may be printed on the refund check, if
any. Such data would also be transferred to a third party for refund purpose. Banks may require verification of an
applicant’s Hong Kong identity card number or passport number before cashing the refund check. Inaccurate
completion of an applicant’s Hong Kong identity card number or passport number may lead to delay in encashment
of or may invalidate the refund check. Further information is set out in the section headed “How to Apply for Hong
Kong Offer Shares” in this prospectus.
(8) Applicants who apply via HKSCC EIPO channel should refer to the section headed “How to Apply for Hong Kong
Offer Shares — D. Despatch of Share Certificates and Refund of Application Monies” in this prospectus for details.
Applicants who have applied through the White Form eIPO service by paying the application monies through
single bank accounts may have refund monies (if any) despatched to the bank account in the form of e-Refund
payment instructions. Applicants who apply via the White Form eIPO service by paying the application monies
through multiple bank accounts may have refund monies (if any) despatched to the address as specified in their
application instructions in the form of refund checks by ordinary post and at their own risk.
Share certificates and/or refund checks will be dispatched by ordinary post, at the applicants’ risk, to the addresses
specified in the relevant applications.
Further information is set out in the sections headed “How to Apply for Hong Kong Offer Shares — D. Despatch of
Share Certificates and Refund of Application Monies”.
(9) In case a tropical cyclone warning signal number eight or above, a black rainstorm warning signal and/or Extreme
Conditions is/are in force from Thursday, December 14, 2023 to Friday, December 22, 2023, then the day of (i)
announcement of results of allocations in the Hong Kong Public Offering; (ii) despatch of Share certificates and
refund checks/ White Form e-Refund payment instructions; and (iii) dealings in the Shares on the Stock Exchange
may be postponed and an announcement may be made in such event.
EXPECTED TIMETABLE (1)
– iii –


--- page 8 ---
The above expected timetable is a summary only. You should refer to the sections headed
“Structure of the Global Offering” and “How to Apply for Hong Kong Offer Shares” in this
prospectus for details of the structure of the Global Offering, including the conditions of the
Global Offering, and the procedures for application for the Hong Kong Offer Shares.
If the Global Offering does not become unconditional or is terminated in accordance with its
terms, the Global Offering will not proceed. In such case, the Company will make an
announcement as soon as practicable thereafter.
Youshouldreadcarefully“Underwriting,”“StructureoftheGlobalOffering”and“Howto
Apply for Hong Kong Offer Shares” for details relating to the structure of the Global Offering,
proceduresontheapplicationsforHongKongOfferSharesandtheexpectedtimetable,including
conditions, effect of bad weather and/or Extreme Conditions and the despatch of refund monies
andSharecertificates.
EXPECTED TIMETABLE (1)
–i v–


--- page 9 ---
IMPORTANT NOTICE TO INVESTORS
This prospectus is issued by us solely in connection with the Hong Kong Public
Offering and does not constitute an offer to sell or a solicitation of an offer to buy any
security other than the Hong Kong Offer Shares offered by this prospectus pursuant to the
Hong Kong Public Offering. This prospectus may not be used for the purpose of, and does
not constitute, an offer or a solicitation of an offer to subscribe for or buy, any security in
any other jurisdiction or in any other circumstances. No action has been taken to permit a
public offering of the Offer Shares or the distribution of this prospectus in any jurisdiction
other than Hong Kong. The distribution of this prospectus and the offering and sale of the
Offer Shares in other jurisdictions are subject to restrictions and may not be made except as
permitted under the applicable securities laws of such jurisdictions pursuant to registration
with or authorization by the relevant securities regulatory authorities or an exemption
therefrom.
Y ou should rely only on the information contained in this prospectus and the
Application Forms to make your investment decision. We have not authorized anyone to
provide you with information that is different from what is contained in this prospectus. Any
information or representation not made in this prospectus must not be relied on by you as
having been authorized by us, the Joint Sponsors, the Overall Coordinators, the Joint Global
Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Capital Market
Intermediaries, any of the Underwriters, any of our or their respective directors, officers or
representatives, or any other person or party involved in the Global Offering.
Page
EXPECTED TIMETABLE ............................................. i
CONTENTS ........................................................ v
SUMMARY ......................................................... 1
DEFINITIONS ...................................................... 2 6
GLOSSARY OF TECHNICAL TERMS ................................... 3 8
FORW ARD-LOOKING STATEMENTS ................................... 4 8
RISK FACTORS ..................................................... 5 0
W AIVERS AND EXEMPTIONS ......................................... 1 0 8
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING ... 1 1 3
CONTENTS
–v–


--- page 10 ---
Page
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING ......... 1 1 7
CORPORATE INFORMATION ......................................... 1 2 5
INDUSTRY OVERVIEW .............................................. 1 2 8
REGULATORY OVERVIEW ........................................... 1 6 2
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE ............. 2 0 1
BUSINESS ......................................................... 2 4 0
DIRECTORS AND SENIOR MANAGEMENT .............................. 3 5 8
SHARE CAPITAL ................................................... 3 7 8
SUBSTANTIAL SHAREHOLDERS ...................................... 3 8 1
CONNECTED TRANSACTION ......................................... 3 8 4
FINANCIAL INFORMATION .......................................... 3 9 3
CORNERSTONE INVESTOR ........................................... 4 2 7
FUTURE PLANS AND USE OF PROCEEDS ............................... 4 3 1
UNDERWRITING ................................................... 4 3 5
STRUCTURE OF THE GLOBAL OFFERING .............................. 4 4 5
HOW TO APPLY FOR HONG KONG OFFER SHARES ....................... 4 5 3
APPENDIX I — ACCOUNTANTS’ REPORT ......................... I - 1
APPENDIX II — UNAUDITED PRO FORMA FINANCIAL INFORMATION . II-1
APPENDIX III — SUMMARY OF THE CONSTITUTION OF THE COMPANY
AND CAYMAN ISLANDS COMPANY LA W .......... III-1
APPENDIX IV — STATUTORY AND GENERAL INFORMATION ......... I V - 1
APPENDIX V — DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES AND ON DISPLAY ................... V - 1
CONTENTS
–v i–


--- page 11 ---
This summary aims to give you an overview of the information contained in this
prospectus. As this is a summary, it does not contain all the information that may be
important to you. Y ou should read this prospectus in its entirety before you decided to invest
in the Offer Shares. There are risks associated with any investment. Some of the particular
risks in investing in the Offer Shares are set out in “Risk Factors” of this prospectus. Y ou
should read that section carefully before you decide to invest in the Offer Shares. In
particular, we are a biotechnology company seeking to list on the Main Board of the Stock
Exchange under Chapter 18A of the Listing Rules on the basis that we are unable to meet
the requirements under Rule 8.05(1), (2) or (3) of the Listing Rules. There are unique
challenges, risks and uncertainties associated with investing in companies such as ours.
Y our investment decision should be made in light of these considerations.
OVERVIEW
Established in 2011, we are a biopharmaceutical company specializing in the discovery,
development and commercialization of multifunctional, multi-targeted therapies for the treatment
of metabolic and digestive diseases. We have developed a product pipeline of one Core Product and
other four product candidates in-house. Our Core Product, HTD1801 (berberine
ursodeoxycholate), a new molecular entity, is a gut-liver anti-inflammatory metabolic modulator
which targets multiple pathways pivotal to metabolic regulation, including those associated with
metabolic and digestive diseases.
WE MAY NOT BE ABLE TO SUCCESSFULLY DEVELOP AND/OR MARKET OUR
CORE PRODUCT.
Our Pi peline
As of the Latest Practicable Date, we have researched and developed in-house a pipeline
with five proprietary drug candidates covering nine indications, including five indications that are
at clinical stage. The following chart summarizes the development status of our drug candidates as
of the Latest Practicable Date.
SUMMARY
–1–


--- page 12 ---
Candidate Mechanism/Target Indication Right Designations Pre-Clinical Phase I Phase II Phase III Competent or
regulatory authorities
HTD1801
Berberine
ursodeoxycholate
(BUDC)
MASH
Global(1)
FTD
T2DM
Global
SHTG
Global
PSC
Global(1)
FTD, ODD
PBC
Global
HTD4010 Polypeptide drug AH
Global
HTD1804 Undisclosed Obesity
Global
HTD1805 Undisclosed Metabolic disease
Global
HTD2802 Undisclosed IBD
Global
11
Ph IIa completed in US; Ph IIb initiated in US and Hong Kong
to be initiated in Mexico and Mainland China
Ph II completed in Mainland China, Ph III initiated in Mainland China (2)
Ph II to be initiated in US
(3)
Ph II completed in US and Canada; IND approval obtained in China (4)
Ph II completed in US
Ph I completed in Australia
Core Product
 Metabolic disease Di gestive disease
Upcoming Milestone
FDA, NMPA, The Federal
Commission for Protection
against Sanitary Risks,
Department of Health
Ph IIb Mexico and Mainland
China clinical sites to be
initiated in December 2023
and studies in all clinical
sites expected to be
completed in 2025
NMPA Ph III to be completed
in 2025
FDA Ph II to be initiated
in 1H 2024
FDA, Health Canada, NMPA
FDA
TGA Ph II to be initiated
in late 2024 or beyond
IND-enabling
IND-enabling
IND-enabling
Joint collaboration strategy
Joint collaboration strategy
N/A
N/A
N/A
Abbreviations: MASH: metabolic dysfunction-associated steatohepatitis, formerly known as nonalcoholic steatohepatitis or NASH; T2DM: type 2 di abetes mellitus; SHTG: severe hypertriglyceridemia; PSC:
primarysclerosingcholangitis;PBC:primarybiliarycholangitis;AH:alcoholichepatitis;IBD:inflammatoryboweldisease;FTD:FastTrackDesi gnation;ODD:OrphanDrugDesignation;Ph:
Phase.
Notes:
1. Researched and developed in-house. We have granted Hepalink an exclusive, sublicensable (solely to Hepalink’s designated wholly-owned subsidi aries), non-transferable license for the commercialization
of HTD1801 for MASH and PSC in Europe. The Company reserved the rights to (i) research, develop and manufacturing HTD1801 globally; (ii) commercializ e HTD1801 for any indications outside Europe;
(iii) commercialize HTD1801 in Europe for any indications other than MASH and PSC; and (iv) import and export HTD1801. For details, see “Business — Col laboration Agreement — HTD1801 License-Out
Agreement” and “Connected Transaction”.
2. In November 2023, we initiated the two Phase III clinical trials (i.e. one with HTD1801 as a standalone treatment and one with HTD1801 as an add-on the rapy with metformin) for the T2DM indication of
our self-developed HTD1801 in China. We expect to complete those two Phase III studies in 2025. For details, see “Business — Clinical Stage Candidate — Core Product HTD1801 — Summary of Clinical
Trials of HTD1801”.
3. We have completed a Phase Ib/IIa trial for hypercholesterolemia in Australia and a Phase IIa trial for MASH in the United States. Based on FDA’s writt en responses to the pre-IND meeting, the FDA concluded
that the available preclinical and clinical data of the above trials was adequate to support the initiation of Phase II trial for SHTG.
4. We have obtained the IND approval from the NMPA to conduct the China part in the Phase II MRCT of PSC. However, due to COVID-19 pandemic, we did not initi ate the China part of the Phase II clinical
trial. After the completion of Phase II trials in the United States and Canada, the China part of the Phase II trial is not required because the Phase II tr ials had met the endpoints in the United States and Canada.
5. Competent authority in respective jurisdictions: US — FDA; Mainland China — NMPA; Canada — Health Canada; Australia — TGA; Hong Kong — The Departmen t of Health; Mexico — The Federal
Commission for Protection against Sanitary Risks.
SUMMARY
–2–


--- page 13 ---
Core Product
HTD1801 is a salt with an ionic bond formed between two active moieties (the molecule or
ion responsible for the physiological or pharmacological action of the drug substance), berberine
(“BBR”) and ursodeoxycholic acid (“ UDCA ”). The two active moieties BBR and UDCA have a
long history of medicinal applications as treatments for gut and liver diseases in traditional
Chinese medicine. In HTD1801, BBR and UDCA work in tandem in the salt form with unique
microstructure to produce distinct and improved properties as demonstrated in our studies. The
improved properties are not observed with either of the individual active moieties or their physical
mixture. Our clinical results show that HTD1801 delivers a therapeutic effect for patients
including metabolic improvement, liver protection, anti-inflammation and antioxidative stress.
However, therapeutic effect of the Core Product is based on preliminary clinical data only which is
yet to be validated in later clinical trials, and the Core Product may fail to meet the primary and
secondary endpoints at the late-stage clinical trials due to higher clinical development risks. For
details, see “Risk Factors — Risks relating to development, clinical trials and regulatory approval
of our drug candidates — the Core Product may fail to meet the primary and secondary endpoints
at the late-stage clinical trials due to higher clinical development risks resulted from HTD1801
being a new molecular entity and potential rejection from competent authorities” in this
Prospectus. HTD1801 is currently being developed by us for indications across metabolic
dysfunction-associated steatohepatitis (“ MASH ”, formerly known as nonalcoholic steatohepatitis
or NASH), type 2 diabetes mellitus (“ T2DM ”), severe hypertriglyceridemia (“ SHTG ”), primary
sclerosing cholangitis (“ PSC”) and primary biliary cholangitis (“ PBC”) globally, with a focus on
comorbidities and a potential for indication expansion. However, we may face uncertainties in
clinical trial development which are subject to a variety of factors, including satisfactory safety
and efficacy results from clinical trials, successful enrollment of patients, performance of CROs
and other parties involved in clinical trial development and others. For more details, please see
“Risk Factors — Risks relating to development, clinical trials and regulatory approval of our drug
candidates — Clinical drug development involves a lengthy and expensive process with uncertain
outcomes, and we may be unable to commercialize our drug candidates at all.”
The following diagram illustrates mechanism of action of HTD1801:
HTD1801: A Gut-Liver Anti-infl ammatory Met abolic Mo dulator (“GLAM”)
Inflammation
Steatosis
Fibrosis
Cholestasis
Cholangitis
Atherogenic Lipids
Oxidative Stress
Glucose Clearance
Beneficial Microbiota
Body Weight
Inflammation
Insulin Resistance
Glycemic Control
Harmful MicrobiotaHarmful Microbiota
HTD1801
Berberine Ursodeoxycholate
Source:CompanyData
SUMMARY
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In the United States, we have received fast track designation (“ FTD”) from the Food and
Drug Administration (“ FDA”) for MASH and PSC indications, as well as orphan drug designation
(“ODD”) for the PSC indication. Under the Orphan Drug Act, the FDA granted the ODD to
HTD1801 for PSC on the condition that HTD1801 is intended to treat a rare disease of PSC
affecting fewer than 200,000 individuals in the United States. For more details, please see
“Regulatory Overview — Laws and Regulations in the United States and EU — Orphan Drugs.”
According to CIC, HTD1801 is the first PSC drug candidate to receive FTD from the FDA. The
FTD is based on available preclinical and clinical data that demonstrate the potential to address an
unmet medical need and is intended to facilitate an expedited regulatory review process. In China,
we received government support from “Major National Science and Technology Projects for New
Drug Development” under the “National 13th Five-Year Plan”, which may further accelerate the
domestic market approval for HTD1801. According to the current development progress and
timeline, we expect to submit the first New Drug Application (“ NDA”) for HTD1801 for T2DM in
2025 in China.
As of the Latest Practicable Date, we held 58 patents and patent applications in relation to
our Core Product, representing four types of patents that have been applied in different
jurisdictions, including a new molecular entity (a “composition-of-matter” patent), the process
used to manufacture the drug, the way the drug is used and new formulations of the drug to protect
our assets. The reasons for applying these patents in various jurisdictions are to provide extensive
patent protections and maintain our Core Product’s exclusivity in these jurisdictions. We have
successfully obtained composition of matter patent for HTD1801 in many countries and regions,
including the United States, China, the European Union and Japan, as well as crystalline form
patent in United States and China.
Considering the market size and addressable patient population of MASH and T2DM, we
have and will continue to prioritize our resources for the clinical development of the MASH and
T2DM indications of HTD1801. We are currently conducting the Phase IIb clinical trial for the
MASH indication of our self-developed HTD1801, and may seek joint development opportunities
for its Phase III clinical trials. For T2DM, we completed two Phase I clinical trials, one Phase Ib
clinical trial, and one Phase II clinical trial in China, which are all required by the NMPA. In
November 2023, we initiated the two Phase III clinical trials (i.e. one with HTD1801 as a
standalone treatment and one with HTD1801 as an add-on therapy with metformin) for the T2DM
indication of our self-developed HTD1801 in China. We expect to complete those two Phase III
studies in 2025. In addition, we have no immediate plans to conduct clinical trials for and
commercialise T2DM outside of China. Since the completion of Phase II clinical trials for PSC in
August 2020 and for PBC in May 2022, no clinical development progress has been made for the
PSC and PBC indications of HTD1801. We have no immediate development plans and will not
allocate any net proceeds of the Global Offering to these two indications, and we are seeking
collaboration opportunities with global partners for future clinical development and
commercialisation of HTD1801 for PSC and PBC indications. Despite the rebound in liver
biochemistry during the follow-up period in the Phase II trial for PBC and a long period of clinical
development suspension for the PBC and PSC indications, we have not encountered any
difficulties in identifying collaboration opportunities with global partners for future clinical
development and commercialisation of HTD1801 for PBC and PSC. In addition to Hepalink
obtaining a license to commercialize HTD1801 in Europe for the NASH and PSC indications, we
are in negotiations with global partners for the future development of HTD1801 for such orphan
diseases of cholestasis (the category of diseases which PSC and PBC fall within); however, due to
SUMMARY
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the time required to negotiate the commercial terms, as of the Latest Practicable Date, no
collaboration agreements had been entered into. The follow-up periods in the Phase II clinical trial
for PBC, during which HTD1801 treatment was withdrawn, showed a worsening in liver
biochemistry compared with baseline, also suggesting the efficacy of HTD1801. Therefore, we
believe that it has no impact on our clinical development.
We designed the MRCTs for HTD1801 for MASH and PSC indications. The use of MRCT
for MASH and PSC was determined in 2017. The Phase IIb clinical trial for MASH and Phase II
clinical trial for PSC were conducted in the form of MRCT, and MRCT would also be the approach
for the clinical trials going forward for MASH and PSC. We believe MRCTs can expedite global
clinical development and facilitate registration in multiple regions across the globe. We use the
same study protocol for IND approval of clinical trials and conducting clinical trials in different
phases after obtaining IND approvals in each of MRCT’s jurisdictions. The clinical results of the
MRCT in various jurisdictions can be used to support registration approval by the competent
authorities in those jurisdictions. There are no differences in primary endpoints, extent or type of
clinical trials to be conducted across various jurisdictions but might be slight differences in
materials to be submitted among the different regulatory bodies.
For Phase IIb MRCT of HTD1801 for MASH indication in the United States, Hong Kong,
Mexico and Mainland China, the details of communications with competent authorities have been
set forth in the section “Business — Clinical-Stage Candidates — Core Product HTD1801 —
Material Communications with Competent Authorities”. In April 2023, we submitted the Phase IIb
study protocol to the FDA and we did not receive any comments or rejections from the FDA within
the 30-day clearance period. We also obtained the IND approvals in Hong Kong and Mainland
China in August and September 2023, respectively, and filed an IND application in Mexico in July
2023.
For Phase II MRCT of HTD1801 for PSC in the United States, Mainland China and Canada,
the details of communications with competent authorities have been set forth in the section
“Business — Clinical-Stage Candidates — Core Product HTD1801 — Material Communications
with Competent Authorities”. We obtained IND approvals from the FDA in 2017, and from the
NMPA and the Health Canada in 2019.
Other Product Candidates
Building on our expertise in the development of HTD1801, we have also invested in and
developed our pipeline to cover alcoholic hepatitis (“ AH”), obesity, inflammatory bowel disease
(“IBD”) and other metabolic diseases to address large unmet medical needs. For AH, we are
advancing the early clinical development of HTD4010. AH is one of the manifestations from
alcohol-associated liver disease (“ ALD”) characterized by acute liver inflammation. There are
currently no approved drug treatments specifically targeting AH. The current standard of care,
corticosteroids, often used in patients with severe AH, has not shown a meaningful long-term
survival benefit and usually carries serious side effects. HTD4010 is a Toll-like receptor 4
(“TLR4 ”) inhibitor potentially capable of modulating the innate immune response and the
resulting liver inflammation, a major contributor to AH pathogenesis. In animal studies, HTD4010
demonstrated potent beneficial effects for AH, alleviating signs of severe liver injury and reducing
systemic inflammation. Our completed Phase I clinical trial demonstrated its favorable safety
profile in healthy humans.
SUMMARY
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We are also evaluating HTD1804 for the treatment of obesity, which is a growing global
health risk associated with a wide range of comorbidities, most notably cardiovascular diseases
(“CVD s”) and T2DM. Preclinical studies show that HTD1804 may be an important modulator of
energy metabolism as well as cardiovascular protection. HTD1805, another drug candidate in our
pipeline, is a multifunctional small molecule drug for the treatment of metabolic diseases.
HTD2802 is a preclinical-stage, multifunctional drug for the treatment of IBD. In preclinical
studies, HTD2802 has shown positive effects on stool formation and the occurrence of fecal occult
blood, as well as reducing inflammatory cytokine levels and preventing pathological injury.
Business Model
Self-Development
We adopt a self-development business model. All our product candidates are self-developed.
In addition, we have granted Shenzhen Hepalink Pharmaceutical Group Co., Ltd. ( ଉέ̹ऎ౷๿
ʮ̡ )( “ He pa link ”) an exclusive, sublicensable (solely to Hepalink’s
wholly-owned subsidiaries), non-transferable license of HTD1801 for all aspects of
commercialization for the indications of NASH and PSC in Europe. We retain the rights to (i)
research and develop HTD1801 worldwide; (ii) manufacture HTD1801 worldwide; (iii)
commercialize HTD1801 for any indications outside Europe; (iv) commercialize HTD1801 in any
region in Europe for indications other than for NASH and PSC; and (v) import and export
HTD1801 for the purposes described above. Please see the paragraphs headed “— HTD1801
License-Out Agreement” in this section for more details.
OurCapabilities
Our R&D team has profound expertise, deep understanding, and broad development
experience in metabolic and digestive diseases. Our R&D team pioneered the identification of
compounds designed to modulate multiple pathways underlying chronic diseases, providing a
unique advantage in addressing the unmet clinical needs across complex pathologies. Our CMC
team is specialized in preclinical and clinical support throughout the drug development process.
The CMC function plays a critical role in drug development. It is responsible for developing safe,
robust, and economically sound production processes for our drug substances and drug products,
and ensuring their quality meets regulatory requirements. We have not established our in-house
sales team. We will pursue the commercialization strategy of external cooperation for future assets
to maximize the value of our drug candidates globally.
ADDRESSABLE MARKETS AND COMPETITIVE LANDSCAPE OF CORE PRODUCT
There has been an increasing industry focus on metabolic and digestive diseases in recent
years, which has driven our continued investment in the development of new and more effective
treatments. According to CIC, there are significant commercial opportunities across multiple
metabolic and digestive diseases including MASH, T2DM, SHTG, PSC and PBC, together
representing a large global market size of US$330 billion in 2022.
SUMMARY
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MASH is a growing health issue, particularly in developed countries, due to the rising rates
of obesity and metabolic syndrome. As of the end of 2022, the prevalence of MASH reached 40.4
million, 20.7 million and 35.0 million in China, the United States and Europe, respectively,
according to CIC. There are currently no approved therapies for the treatment of MASH. While
lifestyle modifications and management of underlying conditions can help slow or stop the
progression of MASH, there are currently no approved pharmacologic therapies that
comprehensively improve the full spectrum of MASH, from inflammation and liver cell damage to
fibrosis and cirrhosis. Therefore, there is a significant need for safe and effective pharmacologic
therapies to treat MASH, specifically therapies that comprehensively improve the pathologic
spectrum of MASH. Effects on cardiometabolic parameters such as lipid metabolism, glycemic
control, and body weight are also important considerations given the prevalence of such
comorbidities in patients with MASH. Lastly, given the pathogenetic complexity and
heterogeneity of the disease, there is growing interest in developing therapies that target multiple
pathways involved in the development and progression of MASH.
We may face uncertainties in clinical trial development which are subject to a variety of
factors, including satisfactory safety and efficacy results from clinical trials, successful enrollment
of patients, and performance of CROs and other parties involved in clinical trial development and
others. For example, Intercept’s ocaliva, one of the most advanced MASH drugs in the pipeline,
filed the second application for MASH but it was rejected by the FDA in June 2023. The FDA
reviewers flagged increased risk of diabetes and liver injury from using the oral tablets, called
obeticholic acid (“ OCA”), for the treatment of MASH. The FDA concluded that benefits of ocaliva
did not outweigh the risks in MASH patients with fibrosis based on current data. Intercept
expressed that continuing a long-term outcomes study as requested by the FDA may not be
economically feasible and has decided to discontinue all MASH-related investment, which has a
negative impact on MASH market. Therefore, favorable safety profiles matter in new drug
development for chronic diseases. We believe that such risk is low in our HTD1801 development
given its good preliminary clinical results.
We may fail to develop the HTD1801 MASH indication, which is one of the major
indications of HTD1801, in particular the high probability of failure to achieve the primary and
second efficacy endpoints in late-stage clinical trials because HTD1801 is based on a new
molecular entity, which is yet to be tested in large-scale clinical studies, thus facing higher clinical
risks. Despite that HTD1801 is different from ocaliva in many aspects, such as mechanism of
actions, PK profiles and others as applicable, our development of HTD1801 may still be subject to
development risks, including those faced by ocaliva in their development.
T2DM is one of the most common metabolic disorders worldwide, which is characterized by
chronic hyperglycemia resulting from insulin deficiency due to pancreatic β-cell dysfunction and
insulin resistance. According to CIC, China has the largest number of T2DM patients globally,
with approximately 123.2 million patients in 2022, this number is expected to increase to 141.8
million by 2032. Despite low diagnosis rate at 50% in 2022 and relatively low penetration rate, the
market size in T2DM treatment reached US$7.9 billion in 2022 in China. T2DM and metabolic
dysfunction-associated steatotic liver disease (“ MASLD ”, formerly known as nonalcoholic fatty
liver disease or NAFLD) are closely interrelated metabolic diseases. A key function of the liver is
the storage and management of energy (e.g., sugars and lipids) in the body, as such a dysregulation
in energy management or sensitivity (e.g., insulin resistance in T2DM) may have a substantial
impact in that function. T2DM aggravates MASLD and results in a higher risk of disease
SUMMARY
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progression and outcomes including MASH, cirrhosis and hepatocellular carcinoma. Similarly,
MASLD compounds the severity of T2DM and with an increase in comorbidities such as
cardiovascular disease and liver-related outcomes. The worldwide prevalence of MASLD among
people with T2DM is 55.5%; in China the prevalence of T2DM with MASLD was 64.1 million as
of the end of 2022. According to CIC, there are currently no approved drugs which can provide
sufficient and comprehensive therapeutic benefits for both T2DM and MASLD. And most drugs
under development are designed for targeting a single target. The goal in treating these patients is
to halt or reverse the progression of T2DM and MASLD, thereby reducing the risk of clinical
outcomes associated with advanced disease. Therefore, an ideal therapy for patients with T2DM
and MASLD should provide comprehensive benefits across a wide variety of parameters which
encapsulate the spectrum of these diseases.
SHTG is the presence of high levels of triglycerides. The diagnosis of hypertriglyceridemia
(“HTG”) is defined by the presence of serum triglycerides (“ TGs”) greater than 150 mg/dL with
SHTG being defined by TGs greater than or equal to 500 mg/dL. As of the end of 2022, the
prevalence of SHTG reached 1,586.4 thousand, 339.8 thousand and 813.0 thousand in China, the
United States and Europe, respectively, according to CIC. Dietary modification is one of the
current standard of cares (“ SoC ”) in treating patients with SHTG. In addition to dietary
modification, fibrates, prescription omega-3 fatty acids or statins are also considered as SoC of
SHTG to reduce risk of pancreatitis. Unfortunately, while each of these classes of therapeutics
offer benefit in the treatment of SHTG, each of them still leaves a large fraction of patients with an
incomplete response to treatment or presents additional risks or adverse reactions. Furthermore,
while the existing therapies for SHTG offer a benefit in treating high TGs, they offer limited
benefit in the treatment of the constellation of metabolic issues in orbit around or underlying the
TG levels (e.g., T2DM, MASLD/MASH, obesity).
PSC is a rare, chronic cholestatic liver disease characterized by intrahepatic or extrahepatic
bile duct injury, or both. Inflammation and fibrosis of the bile ducts leads to stricturing, impaired
bile flow (i.e. cholestasis), and progressive liver dysfunction. As of the end of 2022, the prevalence
of PSC reached 171.9 thousand, 48.4 thousand and 60.7 thousand in China, the United States and
Europe, respectively, according to CIC. PSC has a high incidence of liver related morbidity and
mortality, cholangiocarcinoma, and an increased risk for colorectal cancer. There is also a strong
association of PSC and inflammatory bowel disease. Prior to the liver transplant era, death from
liver failure was the leading outcome in PSC; but now, death due to cholangiocarcinoma (“ CCA”)
has been reported to be more common. The exact pathogenesis of PSC is not fully understood, but
it is believed to be a complex interplay of genetic, environmental, and immune factors. Despite the
seriousness of the disease, there is no available therapy for patients with PSC, and standard of care
consists of supportive therapies to manage symptoms and prevent complications. Given the
pathogenesis of PSC is complex and multifactorial, an effective treatment should target multiple
underlying mechanisms that contribute to the development and progression of PSC.
PBC is a chronic, slowly progressive autoimmune, cholestatic liver disease characterized by
female predominance. PBC is characterized by progressive inflammation and destruction of small
bile ducts, resulting in fibrosis, cirrhosis, and eventually leading to complications of end-stage
liver disease and death. As of the end of 2022, the prevalence of PBC reached 789.8 thousand,
135.4 thousand and 175.6 thousand in China, the United States and Europe, respectively, according
to CIC. There are only two approved treatments for PBC to date, each with their own limitations.
While UDCA is prescribed for patients with PBC as the current first-line therapy, up to 40% of
SUMMARY
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PBC patients do not achieve an adequate response to UDCA as a monotherapy. In the United States
and Europe, obeticholic acid (“ OCA”) is approved as second-line therapy for the treatment of
patients with PBC patients who have had an inadequate response to or are intolerant of UDCA.
Approximately 40% of patients with PBC who are incomplete responders to UDCA alone also do
not achieve a complete response with the addition of OCA. Further, OCA is contraindicated for
patients with PBC who have compensated cirrhosis with evidence of portal hypertension or
patients with decompensated cirrhosis. Tolerability concerns related to the use of OCA include an
exacerbation of pruritus, a common symptom of PBC. Hence, there remains a significant unmet
medical need for patients with PBC.
We face fierce competition from approved products and product candidates under clinical
development in the MASH, T2DM, SHTG, PSC and PBC markets. We may also face potential
competition from off-label treatment paradigms for MASH and PSC. The indications of such
approved products may also be expanded and potentially compete with HTD1801. As there are
multiple product candidates currently in Phase III clinical trials for each of the targeted indications
of HTD1801, our development and commercialization of HTD1801 may be adversely affected if
some or all of such product candidates receive NDA approval prior to HTD1801. For example, the
FDA may request head-to-head studies for HTD1801 before granting the approval, which may
impose higher risk of clinical failure and also delay the original development plan. For details, see
“Risk Factors — Risks relating to development, clinical trial and regulatory approvals of our drug
candidates — We may face intense competition and rapid technological change and the possibility
that our competitors may develop therapies that are similar, more advanced, or more effective than
ours, which may adversely affect our financial condition and our ability to successfully
commercialize our drug candidates” in this Prospectus. In addition, our Core Product has been
developed for the indications of MASH, T2DM, SHTG, PSC and PBC. However, given the
presence of various prevention methods, such as lifestyle changes, regular exercise and weight
management, as well as existing and potential alternative treatment options, such as drugs for
obesity including but not limited to wegovy and ozempic, for our targeted indications, the market
potential of the Core Product may be limited, and the market size might be smaller than we
expected. For details, see “Risk Factors — Risks relating to manufacturing and commercialization
of our drug candidates — The market size of our drug candidates might be smaller than we
expected”.
STRENGTHS
We believe the following strengths differentiate us from our competitors:
• Develop novel multifunctional, multi-target therapies for metabolic and digestive
diseases to treat patients as a whole
• HTD1801, a “pipeline-in-a-product” new molecular entity with the potential to
become a therapy for MASH, T2DM, and other metabolic and digestive diseases
• Pipeline of new molecular entities with a therapeutic profile to address unmet needs
in metabolic and digestive diseases
• Commercial opportunity in metabolic and digestive diseases for HTD1801 and our
pipeline of other highly differentiated therapeutic candidates
• R&D capabilities bolstered by visionary management team and world-renowned key
opinion leaders with deep expertise in metabolic and digestive diseases
SUMMARY
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STRATEGIES
We plan to pursue the following opportunities and execute our key strategies accordingly:
• Rapidly advance our current pipeline of drug candidates through clinical
development, and continue to expand indication coverage to maximize the
therapeutic and economic value of our assets
• Leverage our drug discovery capabilities and team expertise to build a pipeline based
on the multi-mechanism approach
• Expand our R&D team and capabilities
• Pursue strategic collaboration in drug development and commercialization in the
global market
• Strategically seek partnerships to drive long-term growth
• Continue to protect our global IP by employing various life-cycle management patent
strategies including a new molecular entity (a “composition-of-matter” patent), the
process used to manufacture the drug, how the drug is used, and new formulations of
the drug to protect our assets and maintain the market exclusivity
RESEARCH AND DEVELOPMENT
As of the Latest Practicable Date, our drug discovery members have average 11 years’
experience. We have worked on our product candidates’ advancement for more than 10 years and
developed product candidates in-house. Our drug discovery team members have expertise in
biology, medicinal chemistry, drug metabolism and pharmacokinetics (“ DMPK ”), chemistry and
early clinical areas, which support our product development, and all of them have obtained
post-graduate degrees.
Our drug discovery comprises (i) identifying unmet medical needs and integrating
real-world data, network pharmacology, known and established molecules with desired therapeutic
benefits to design novel, multifunctional drug candidates; (ii) performing in vitro and in vivo
assays of drug candidates including but not limited to pharmacological activities,
pharmacokinetics and toxicities; and (iii) developing formulations, and analytical assays for
quality control and assurance. During the drug discovery stage, our R&D chemistry team carries
out synthesis and optimization of the target molecules for potential drug candidates. During the
drug evaluation stage, our drug discovery team coordinates and accomplishes preclinical R&D
activities in relation to the product candidates’ pharmacology, pharmacokinetics and toxicology.
SUMMARY
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As of the Latest Practicable Date, the clinical development team consisted of 30 members,
including scientists and physicians with strong drug development experience, who participate in
clinical development strategy development, clinical trial protocol design, clinical trial operation
organization, drug safety monitoring, and clinical trial quality control. Our clinical development
team members have average 11 years’ experience. Among our clinical development team members,
over 60% have obtained post-graduate degrees. Our clinical development staff represent a highly
skilled and experienced team of professionals who work collaboratively to design and execute
complex clinical trials and drug development programs. Our core capabilities in the area of
development include clinical trial design, regulatory and quality compliance, project management,
clinical operations, medical writing, safety monitoring and drug development strategy. Our team
has the expertise to design clinical trials that are rigorous and compliant with regulatory
requirements. This involves collaborating internally, with experts and regulatory authorities to
determine the appropriate patient population, defining endpoints, and selecting appropriate control
groups. Our regulatory team has a thorough understanding of regulatory requirements for clinical
trials in the relevant countries and regions, including knowledge of Good Clinical Practice
(“GCP”) guidelines. The team has proven to be able to manage complex projects, including
clinical trials that involve multiple sites and stakeholders. This involves developing and managing
timelines, budgets, and resources, as well as monitoring and mitigating risks. Lastly, the team has
the strategic vision to guide drug development programs from early-stage research through clinical
development and regulatory approval.
In line with industry practice, we collaborate with contract research organizations
(“CROs”) to conduct and support our preclinical and clinical studies. We select our CROs by
weighing various factors, such as their qualifications, academic and professional experience,
industry reputation and service fees. To the best of our Company’s knowledge, all of our CROs
during the Track Record Period are Independent Third Parties.
In 2021 and 2022 and the six months ended June 30, 2023, we recorded R&D costs of
RMB84.0 million, RMB182.7 million and RMB120.1 million, respectively, representing 62%,
81% and 70% of total operating expenses in 2021, 2022 and the six months ended June 30, 2023,
respectively. In 2021 and 2022 and the six months ended June 30, 2023, we recorded R&D costs of
RMB76.0 million, RMB173.7 million and RMB114.4 million, respectively, for our Core Product
HTD1801, representing 90.5%, 95.1% and 95.2% of total R&D expenses in 2021, 2022 and the six
months ended June 30, 2023, respectively.
SUMMARY
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INTELLECTUAL PROPERTY RIGHTS
As of the Latest Practicable Date, we held 133 patents and patent applications, including 58
patents and patent applications in relation to our Core Product. All of our material patents and
patent applications are self-owned. The following table sets forth an overview of our material
granted patents and filed patent applications in connection with our Core Product as of the Latest
Practicable Date:
Pro duct N ame of P atent (1) Juri sdiction St atus
Patent
Expiration (2)
Market
commerci alr i ghts
of the Com pany
HTD1801 ......... B erberine Salts, Ursodeoxycholic
Salts and Combinations,
Methods of Preparation and
Application Thereof
Australia, Brazil, Mainland China,
EAPO, EPO, Israel, Japan,
Korea, Mexico, Singapore,
United States, South Africa,
Canada, India, New Zealand
Granted 2035 Ownership
Canada, Mainland China, EAPO,
Israel, Japan, Korea, Mexico,
New Zealand, United States
Pending – Ownership
Solid Forms of Berberine
Ursodeoxycholate and
Compositions and Methods
Thereof
Australia, Mainland China,
EAPO, United States
Granted 2038 (2037
in Mainland
China)
Ownership
Australia, Canada, EPO, Hong
Kong, Israel, Japan, Korea,
New Zealand, United States
Pending – Ownership
Compositions of Berberine
Ursodeoxycholate and Methods
Thereof for Treating Fatty
Liver Disease, Diabetes and/or
Hyperlipidemia, and Related
Diseases and Disorders
United States, EPO, Mainland
China
Pending – Ownership
Compositions of Berberine
Ursodeoxycholate and Methods
for Treating Primary
Sclerosing Cholangitis
United States Pending – Ownership
Abbreviations: EPO = European Patent Office; PCT = Patent Cooperation Treaty; EAPO = Eurasian Patent
Organization.
Notes:
(1) Unless otherwise indicated, the patent for applications within the same family is the same and is therefore
disclosed once.
(2) The patent expiration date is estimated based on current filing status, without taking into account any
possible patent term adjustments or extensions and assuming payment of all appropriate maintenance,
renewal, annuity and other government fees.
We conduct our business under the brand name of “HighTide” or “ ё໋इ.” As of the Latest
Practicable Date, we held 34 trademarks and trademark applications in the United States, Mainland
China, Hong Kong, Europe and United Kingdom. We are also the owner of seven domain names.
During the Track Record Period and up to the Latest Practicable Date, we had not been involved in
any proceedings in respect of, and we had not received notice of any claims of infringement of, any
intellectual property rights, in which we may be a claimant or a respondent. To our best knowledge,
we are not aware of any potential or material claims or disputes in relation to the infringement of
intellectual properties of our products during the Track Record Period.
SUMMARY
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LICENSING ARRANGEMENTS AND CONTINUING CONNECTED TRANSACTION
We have entered into and will continue to engage in the below transaction which would
constitute continuing connected transaction for our Company under the Listing Rules following
completion of the Global Offering. We have applied to the Stock Exchange for, and the Stock
Exchange has granted us, waivers from strict compliance with certain requirements set out in
Chapter 14A of the Listing Rules for such continuing connected transactions. For further details of
such potential non-exempt continuing connected transaction and the waivers, please see
“Connected Transaction”.
HTD1801 Licen se-Out A greement
On August 29, 2020, we entered into a license-out agreement (“ HTD1801 A greement ”)
with Shenzhen Hepalink Pharmaceutical Group Co., Ltd. (ʮ̡ )
(“Hepalink ”) to promote the commercialization of innovative drug formulations containing
HTD1801 in Europe. Pursuant to the HTD1801 Agreement, we have granted Hepalink an
exclusive, sublicensable (solely to Hepalink’s wholly-owned subsidiaries), non-transferable
license of HTD1801 for all aspects of commercialization for the indications of NASH and PSC in
Europe, including, but not limited to, distribution, dispensing, promotion, sales, branding, pricing,
import, export and use of the product, use of the product name and packaging. We reserved the
rights to (i) research and develop HTD1801 worldwide; (ii) manufacture HTD1801 worldwide;
(iii) commercialize HTD1801 for any indications outside Europe; (iv) commercialize HTD1801 in
any region in Europe for indications other than for NASH and PSC; and (v) import and export
HTD1801 for the purposes described above. Hepalink is the owner of new intellectual property
rights generated from the commercialization of HTD1801 by Hepalink.
In consideration of the license grant, Hepalink shall pay milestone payments for various
development milestones for NASH and PSC, each ranging from RMB30.0 million to RMB50.0
million. In addition, during the royalty term of HTD1801 in Europe, Hepalink is also obligated to
pay tiered royalty payments calculated as a percentage ranging from 10% to 25% of total annual
net sales of HTD1801 in Europe. After expiration of the royalty term of HTD1801 in Europe, both
parties shall agree in advance on a separate written agreement regarding the sales royalties if
Hepalink plans to continue sales of HTD1801, or continue to accrue sales royalties on the
foregoing rates.
The term of HTD1801 Agreement shall continue in full force until the date of expiration of
the last applicable royalty term (the patent expiration date or the expiration date of regulatory
exclusion for other administrative protections, whichever is later), or the date of earlier
termination, whichever is earlier. For details, please refer to “Business — Collaboration
Agreement — HTD1801 License-Out Agreement.”
SUMMARY
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SUPPLIERS
During the Track Record Period, our major suppliers primarily consisted of CROs, SMOs
and CDMOs and we did not experience any material disputes with our suppliers. In addition, we
believe that adequate alternative sources for such supplies exist, and we have developed alternative
sourcing strategies for these supplies. In 2021 and 2022 and the six months ended June 30, 2023,
our purchases from our five largest R&D suppliers in each year/period in aggregate amounted to
RMB26.9 million, RMB68.7 million and RMB36.4 million, representing 45.5%, 54.4% and 45.7%
of our total corresponding purchases, respectively, and our purchases from the largest R&D
supplier in each year/period accounted for 12.0%, 17.9% and 26.5% of our total corresponding
purchases, respectively.
All of our five largest suppliers during the Track Record Period are Independent Third
Parties. None of our Directors or any Shareholder who, to the knowledge of our Directors, owns
more than 5% of our issued share capital immediately following completion of the Global
Offering, nor any of their respective associates had any interest in any of our five largest suppliers
during the Track Record Period.
MANUFACTURING
As of the Latest Practicable Date, our CMC team consisted of six professionals with
extensive experience in process development, production and quality management from
well-known biopharmaceutical and pharmaceutical companies. Our CMC team members have on
average approximately eight years’ experience. Among our CMC team members, over 50% have
obtained post-graduate degrees.
As of the Latest Practicable Date, we had not established an internal clinical manufacturing
facility. Collaborating with leading CDMOs, we currently outsource the production of product
candidates to support global clinical trials. Given the highly sophisticated nature of the drug
substance and drug product manufacturing process, we support our CDMOs with our extensive
CMC know-hows in production, packaging, transportation, and storage of our products through
technology transfer. We have a stable relationship with our major CDMOs for more than five years,
in particular, the CDMO providing APIs for HTD1801. To the best of our Company’s knowledge,
none of CDMOs, including their shareholders, directors and senior management, have any past or
present relationships with our Group, our Directors, shareholders, senior management or any of
their respective associates. After market launch of our drug candidates, we plan to continue to
outsource our commercial-scale manufacturing to globally recognized CDMOs.
SHAREHOLDING OF AIC GROUP AND HEPALINK ENTITIES
As of the Latest Practicable Date, our single largest group of Shareholders comprised Dr.
Liu, the Founder BVI, Greaty Investment, ZT Global Energy and Orient Champion (collectively,
the “ AIC Grou p”), each of which is a party to the Concert Party Agreement, which provided that
(i) such parties had acted in concert since September 1, 2019 and would continue to act in concert
and collectively for all matters relating to the operation and development of our Group that need to
be approved by the Shareholders pursuant to applicable laws and the constitutional documents of
our Company after the Listing, and (ii) when and if they could not reach unanimous consent, the
decision of Dr. Liu shall prevail. Prior to Listing, the shareholdings of AIC Group and Hepalink
SUMMARY
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entities in our Company are approximately 30.84% and 24.06%, respectively. Upon Listing, the
shareholdings of AIC Group and Hepalink entities in our Company are approximately 20.42% and
23.61%, respectively.
Immediately after the Listing, Dr. Liu will abstain from voting on the 7,099,923 (42,599,538
as adjusted after the Capitalization Issue) unvested Shares held in the 2020 ESOP Platform for the
purpose of compliance with Rule 17.05A of the Listing Rules. As a result, the exercisable voting
rights of the AIC Group and the Hepalink Entities in our Company will not be equal to their
respective shareholding in our Company upon Listing. For details of the exercisable voting rights
of the AIC Group and the Hepalink Entities, please refer to “History, Reorganization and Corporate
Structure — Shareholding and V oting Rights of AIC Group and Hepalink Entities”.
Upon Listing, the day-to-day management and operation of the Group will remain to be
driven by the executive Directors and the senior management under Dr. Liu’s leadership as the
founder, chief executive officer, executive Director and chairwoman of the Board. Therefore, the
AIC Group will continue to have day-to-day control over the management and operation of our
Group upon Listing, while the designated director from Hepalink Entities remains a non-executive
Director of the Company who will not involve in the day-to-day management of our Company. For
further details, see “History, Reorganization and Corporate Structure — Day-to-Day Control over
Management and Operation of the Group before and after the Listing”.
OUR PRE-IPO INVESTORS
We have received seven rounds of Pre-IPO investments with an aggregate amount of
RMB12,000,000 and USD188,316,000 raised since our establishment. Our Pre-IPO Investors
include Hepalink, Qianhai Haichuang, Goldlink, Able Holdings, Yuexiu Jinchan IV , Pingtan
Rongjing and Yuthai Investment, MPCAPITAL, Greaty Investment, ZT Global Energy, Green Pine,
Orient Champion, Blue Ocean and Shenzhen BioResearch, Shenzhen Taixun, Poly Platinum and
Greater Bay Area Fund, HK Tigermed and Hangzhou Tigermed, Pluto and CITIC, Xinyu Cowin,
Shenzhen Winzac, Sichuan Rongxin, Ningbo Borui, Hongtu Capital, BAIYI Capital and
Traditional Chinese Medicine Fund. Our Pre-IPO Investors include two Sophisticated Investors,
namely, Greater Bay Area Fund and Traditional Chinese Medicine Fund, which will hold
approximately 3.71% and 3.48% respectively, of the total issued Shares of the Company upon the
completion of the Global Offering. The Shares held by each of the Sophisticated Investors will be
subject to lock-up for a period of six months commencing from the Listing Date. We utilize the
proceeds from the Pre-IPO Investments to finance our research and development activities and
fund our daily operations. For further details of the identity and background of our Pre-IPO
Investors, and the principal terms of the Pre-IPO Investments, see “History, Reorganization and
Corporate Structure — Pre-IPO Investments”.
SUMMARY
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SUMMARY OF KEY FINANCIAL INFORMATION
Summ ary of Con soli dated Statement s of Profit or Lo ss a nd Other Com prehen sive Income
The following table sets forth a summary of our consolidated statements of profit or loss and
other comprehensive income for the years indicated. Our historical results presented below are not
necessarily indicative of the results that may be expected for any future period. During the Track
Record Period and as of the Latest Practicable Date, we had not generated any revenue.
For the ye are n ded
December 31,
For the six month s ended
June 30,
2021 2022 2022 2023
(unaudited)
(RMBinthousands)
Other income and gains ..................... 13,821 20,581 3,925 22,722
Fair value (losses)/gains on convertible
redeemable preferred shares ............... (93,656) 23,242 31,247 (399,635)
Other expenses ............................. ( 1 ) (7,518) (4,381) (502)
Fair value losses on financial liabilities at
FVTPL .................................. (4,609) – – –
Research and development costs .............. (84,012) (182,651) (76,322) (120,088)
Administrative expenses ..................... (48,064) (43,433) (28,357) (52,014)
Finance costs .............................. (4,528) (426) (217) (201)
Loss before t ax............................. (221,049) (190,205) (74,105) (549,718)
Total com prehen sive lo ss for the ye ar/perio d . (217,410) (223,888) (92,387) (586,343)
We have incurred operating losses during the Track Record Period. Our loss before tax was
RMB221.0 million, RMB190.2 million and RMB549.7 million for 2021, 2022 and the six months
ended June 30, 2023, respectively. Substantially all of our loss resulted from fair value losses on
convertible redeemable preferred shares, research and development costs and administrative
expenses, as a result of the expansion of our business operations.
Our research and development costs increased by 57.3% from RMB76.3 million in the six
months ended June 30, 2022 to RMB120.1 million in the six months ended June 30, 2023. Our
research and development costs increased by 117.4% from RMB84.0 million in 2021 to RMB182.7
million in 2022. The increase was primarily attributable to an increase in expenditures for our
clinical and preclinical development activities, including increase in third-party contracting
expenses, staff costs and ESOP expenses.
SUMMARY
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We recorded fair value gains on convertible redeemable preferred shares of RMB31.2
million in the six months ended June 30, 2022 and fair value losses on convertible redeemable
preferred shares of RMB399.6 million in the six months ended June 30, 2023, mainly due to the
increase in fair value of our convertible redeemable preferred shares as of June 30, 2023. We
recorded fair value losses on convertible redeemable preferred shares of RMB93.7 million in 2021
mainly because of the increase in fair value of Series B+ convertible redeemable preferred shares
as of December 31, 2021 compared with December 31, 2020. We recorded fair value gains on
convertible redeemable preferred shares of RMB23.2 million in 2022 mainly because of the
decrease in fair value of Series B+ and C convertible redeemable preferred shares as of December
31, 2022 compared with December 31, 2021, resulting from the issuance of Series C+ convertible
redeemable preferred shares in 2022, which retained with more preferential rights.
For more details, see “Financial Information — Description of Certain Key Items of the
Consolidated Statements of Profit or Loss and Other Comprehensive Income.”
Summ ary of Con soli dated Statement s of Fin anci alP o sition
The following table sets forth a summary of our consolidated statements of financial
position for the years indicated.
As of December 31, A s of June 30,
2021 2022 2023
(RMBinthousands)
Total non-current assets ........................... 3,450 4,806 5,263
Total current assets ............................... 775,182 851,018 753,319
Total assets ..................................... 778,632 855,824 758,582
Total current liabilities ............................ 28,534 1,319,720 310,888
Total non-current liabilities ........................ 1,022,360 6,632 1,476,120
Totall i abilitie s .................................. 1,050,894 1,326,352 1,787,008
Net li abilitie s ................................... (272,262) (470,528) (1,028,426)
Net current assets/(liabilities) ...................... 746,648 (468,702) 442,431
SUMMARY
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As of June 30, 2023, we maintained a net liabilities position, primarily due to the
recognition of convertible redeemable preferred shares issued to investors as our non-current
liabilities. We had net liabilities of RMB272.3 million, RMB470.5 million and RMB1,028.4
million as of December 31, 2021 and 2022, and June 30, 2023, respectively. The increase in our net
liabilities was primarily due to the increase in total comprehensive loss. Our total comprehensive
loss increased from RMB217.4 million in 2021 to RMB223.9 million in 2022 and our total
comprehensive loss increased from RMB92.4 million for the six months ended June 30, 2022 to
RMB586.3 million for the six months ended June 30, 2023. The increase in total comprehensive
loss was driven by the expanded research and development activities, fair value changes on
convertible redeemable preferred shares issued to investors, as well as administrative expenses.
The majority of our convertible redeemable preferred shares was reclassified from current
liabilities as of December 31, 2022, to non-current liabilities as of June 30, 2023, as we entered
into the supplementary deferred redemption agreement with majority of our investors of series B+,
series C and series C+ convertible redeemable preferred shares. All preferred shares will be
reclassified from financial liabilities to equity as a result of the automatic conversion into our
Shares upon Listing, which will reverse our net liability position to a net asset position. See the
Accountants’ Report set out in Appendix I to this prospectus for a detailed description of our
statements of changes in equity.
We had net current liabilities of RMB468.7 million as of December 31, 2022, as compared
to net current assets of RMB442.4 million as of June 30, 2023. This was mainly attributable to our
convertible redeemable preferred share reclassification from short-term to long-term liabilities as
of June 30, 2023. We had net current assets of RMB746.6 million as of December 31, 2021, as
compared to net current liabilities of RMB468.7 million as of December 31, 2022. This was mainly
attributable to an RMB1,260 million increase in convertible redeemable preferred shares which is
primarily due to reclassification of our convertible redeemable preferred shares from long-term to
short-terms liabilities. The convertible redeemable preferred shares will be re-classified as equity
as the convertible redeemable preferred shares will automatically convert into Shares upon Listing,
after which we do not expect to recognize any further loss or gain on fair value changes from the
convertible redeemable preferred shares. See the Accountants’ Report set out in Appendix I to this
prospectus for a detailed description of our statements of changes equity.
For more details, see “Financial Information — Description of Certain Selected Items from
the Consolidated Statements of Financial Position.”
SUMMARY
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Summ ary of Con soli dated Statement s of C ash Flow s
The following table sets forth the components of our consolidated statements of cash flows
for the years indicated.
For the ye are n ded December 31, For the six month s ended June 30,
2021 2022 2022 2023
(unaudited)
(RMBinthousands)
Net c ash flow s used in
operatin ga ctivitie s ........ (90,546) (172,379) (74,419) (143,908)
Net c ash flow s from/(u sed in)
inve stin ga ctivitie s ......... 1,588 (415,661) 2,749 271,034
Net c ash flow s from fin ancin g
activitie s ................. 493,982 46,034 845 (1,946)
Net incre ase/( decre ase) in
cash and cash equiv alent s .. 405,024 (542,006) (70,825) 125,180
Cash and cash equivalents at
beginning of year .......... 367,252 765,290 765,290 273,047
Effects of foreign exchange rate
changes, net ............... (6,986) 49,763 29,290 19,671
Cash and cash equiv alent sa t
end of ye ar ............... 765,290 273,047 723,755 417,898
In the six months ended June 30, 2023, our net cash used in operating activities was
RMB143.9 million. This net outflow from operating activities primarily reflected loss before tax of
RMB549.7 million, positively adjusted primarily by (i) fair value losses on convertible redeemable
preferred shares of RMB399.6 million, (ii) equity-settled share option arrangements of RMB28.4
million and (iii) an increase in trade payables of RMB8.1 million, partially offset by (i) an increase
in prepayments, other receivable and other assets of RMB8.4 million and (ii) a decrease in other
payables and accruals of RMB6.3 million.
In 2022, our net cash used in operating activities was RMB172.4 million. This net outflow
from operating activities primarily reflected loss before tax of RMB190.2 million, positively
adjusted primarily by (i) equity-settled share option arrangements of RMB25.6 million and (ii)
foreign exchange differences, net of RMB7.5 million. The amount was further adjusted by changes
in working capital, primarily including (i) an increase in trade payables of RMB15.6 million and
(ii) an increase in other payables and accruals of RMB13.5 million, partially offset by a decrease in
deferred income of RMB3.9 million.
SUMMARY
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In 2021, our net cash used in operating activities was RMB90.5 million. This net outflow
from operating activities primarily reflected loss before tax of RMB221.0 million, positively
adjusted primarily by (i) fair value losses on convertible redeemable preferred shares of RMB93.7
million and (ii) transaction costs for preferred shares of RMB16.2 million. This amount was
further adjusted by changes in working capital, primarily including (i) an increase in other
payables and accruals of RMB14.4 million and (ii) an increase in deferred income of RMB3.4
million, partially offset by an increase in prepayments, other receivables and other assets of
RMB3.6 million.
In 2022, our net cash used in investing activities was RMB415.7 million, which was
primarily attributable to purchase of financial assets at FVTPL of RMB717.8 million and purchase
of short-term time deposits of RMB621.4 million, partially offset by proceeds from disposal of
financial assets at FVTPL of RMB717.8 million, proceeds from disposal of short-term time
deposits of RMB197.5 million, receipts of investment income from short-term time deposits of
RMB3.9 million and bank interest received of RMB3.5 million.
Our cash burn rate refers to our average monthly (i) net cash used in operating activities, (ii)
capital expenditures and (iii) lease payments. Assuming an average cash burn rate going forward of
2.1 times the level in 2022, we estimate that our total cash balance as of June 30, 2023, will be able
to maintain our financial viability for approximately 25 months or, if taking into account the
estimated net proceeds from the Global Offering, for at least 31 months. We will continue to
monitor our cash flows from operations closely and expect to raise our next round of financing, if
needed, with a minimum buffer of 12 months.
Key Fin anci alR atio s
As of December 31, A s of six month s ended June 30,
2021 2022 2022 2023
(unaudited)
Gearing Ratio (1) .............. ( 3 % ) ( 2 % ) ( 2 % ) ( 1 % )
Current Ratio (2) .............. 27.2 0.6 0.7 2.4
Notes:
(1) Equals bank loans and other borrowings divided by total equity as of the same date.
(2) Equals current assets divided by current liabilities as of the same date.
SUMMARY
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GLOBAL OFFERING STATISTICS
The Global Offering by us consists of:
• the offer by us of initially 2,419,500 Hong Kong Offer Shares, for subscription by the
public in Hong Kong, referred to in this prospectus as the Hong Kong Public
Offering; and
• the offer by us of initially 21,774,500 International Offer Shares, outside the United
States (including to professional, institutional and other investors within Hong Kong)
in offshore transactions in reliance on Regulation S and in the United States to
qualified institutional buyers in reliance on Rule 144A or another exemption from the
registration requirements under the U.S. Securities Act, referred to in this prospectus
as the International Offering.
Based on the Offer
Price of HK$11.50
Market capitalization of our Shares (1) ............................................. HK$5,920 million
Unaudited pro forma adjusted net tangible assets per Share (2)(3) ....................... HK$1.91
Notes:
(1) The calculation of market capitalization is based on 514,770,668 Shares expected to be in issue
immediately upon completion of the Global Offering.
(2) The unaudited pro forma adjusted net tangible assets per Share is calculated after making the adjustments
(after taking into consideration of Capitalization Issue) referred to in “Financial Information — Unaudited
Pro Forma Statement of Adjusted Consolidated Net Tangible Assets.”
(3) No audited financial statements have been prepared by us, in respect of any period subsequent to June 30,
2023.
DIVIDEND
We have never declared or paid regular cash dividends on our Shares. Any declaration and
payment as well as the amount of dividends will be subject to our Memorandum and Articles and
the Cayman Companies Act. Our Board of Directors has the discretion to pay interim dividends
and to recommend to Shareholders to pay final dividends, and will depend on a number of factors,
including our earnings, capital requirements, overall financial condition and contractual
restrictions. In addition, our Shareholders in a general meeting may approve any declaration of
dividends, which must not exceed the amount recommended by our Board. As advised by our
Cayman counsel, under the Cayman Companies Act, a Cayman Islands company may pay a
dividend out of either profits and/or share premium account, provided that in no circumstances
may a dividend be paid out of share premium if this would result in the company being unable to
pay its debts as they fall due in the ordinary course of business. In light of our accumulated losses
as disclosed in this prospectus, it is unlikely that we will be eligible to pay a dividend out of our
profits in the foreseeable future. We may, however, pay a dividend out of our share premium
account unless the payment of such a dividend would result in our Company being unable to pay
our debts as they fall due in the ordinary course of business. There is no assurance that dividends of
any amount will be declared to be distributed in any year.
SUMMARY
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If we pay dividends in the future, in order for us to distribute dividends to our Shareholders,
we will rely to some extent on any dividends distributed by our PRC subsidiaries. Any dividend
distributions from our PRC subsidiaries to us will be subject to PRC withholding tax. In addition,
regulations in the PRC currently permit payment of dividends of a PRC company only out of
accumulated distributable after-tax profits as determined in accordance with its articles of
association and the accounting standards and regulations in China. See “Risk Factors — Risks
Relating to Doing Business in the PRC” in this prospectus.
USE OF PROCEEDS
We estimate that we will receive net proceeds of approximately HK$194.1 million after
deducting the underwriting fees and expenses payable by us in the Global Offering, assuming an
Offer Price of HK$11.50 per Offer Share. We intend to use the net proceeds from the Global
Offering for the following purposes:
• Approximately HK$155.2 million, representing 80.0% of the net proceeds, will be
used to fund the continuing clinical development activities as well as registration
filings, post-approval studies and costs and expenses of R&D staff and activities of
our Core Product HTD1801;
• Approximately HK$9.7 million, representing 5.0% of the net proceeds, will be used
to fund the ongoing research and development as well as R&D personnel costs, drug
production for the clinical studies and contracting costs with third parties of our
product candidate HTD1804 for obesity. We are currently conducting the preclinical
study of HTD1804 in China;
• Approximately HK$19.5 million, representing 10.0% of the net proceeds, will be
used for the early drug discovery and development of other drug candidates and the
enhancement of FUSIONTX™ development approach;
• Approximately HK$9.7 million, representing 5.0% of the net proceeds, will be used
for working capital and other general corporate purposes.
For further details, see “Future Plans and Use of Proceeds.”
RISK FACTORS
We believe that there are certain risks involved in our operations, many of which are beyond
our control. These risks are set out in the section headed “Risk Factors” in this prospectus. Some of
the major risks we face include:
• The Core Product may fail to meet the primary and secondary endpoints at the
late-stage clinical trials due to higher clinical development risks resulted from
HTD1801 being a new molecular entity and potential rejection from competent
authorities.
SUMMARY
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• Clinical drug development involves a lengthy and expensive process with uncertain
outcomes, and we may be unable to commercialize our drug candidates at all.
• If our drug candidates fail to demonstrate safety and efficacy to the satisfaction of
regulatory authorities or do not otherwise produce positive results, we may incur
additional costs or experience delays in completing, or may ultimately be unable to
complete, the development and commercialization of our drug candidates.
• If we lose the Fast Track Designation or the Orphan Drug Designation by the FDA for
our drug candidates, the time and cost we incur to obtain regulatory approvals may
increase.
• The regulatory approval processes of the NMPA, FDA, EMA and other comparable
regulatory authorities are time-consuming and may evolve over time, and if we are
ultimately unable to obtain regulatory approval for our drug candidates, our business
will be substantially harmed.
• We work with third parties to manufacture a portion of our drug candidates for
clinical development and commercial sales. Our business could be harmed if those
third parties fail to deliver sufficient quantities of products or fail to do so at
acceptable quality levels or prices.
• We have incurred significant net losses since inception and we may continue to incur
net losses and may fail to achieve or maintain profitability in the future. As a result,
you may lose substantially all of your investment in us if our business fails.
• We could be unsuccessful in obtaining or maintaining adequate patent protection for
one or more of our drug candidates through intellectual property rights, or if the scope
of such intellectual property rights obtained is not sufficiently broad, third parties
may compete directly against us.
• The market size of our drug candidates might be smaller than we expected.
LISTING EXPENSES
Our listing expenses represent professional fees, underwriting commissions and other fees
incurred in connection with the Global Offering. Assuming an Offer Price of HK$11.50 per Share,
we estimated that the total listing expenses for the Global Offering are approximately HK$84.1
million, accounting for approximately 30.24% of the gross proceeds from the Global Offering,
including HK$32.5 million that we have incurred for the years ended December 31, 2021 and 2022
and the six months ended June 30, 2023, of which HK$28.7 million was charged to our
consolidated statements of profit or loss, while the remaining amount of HK$3.8 million was
directly attributable to the issue of Shares as of June 30, 2023 and will be subsequently deducted
from equity upon completion of the Global Offering, and HK$51.6 million that we expect to
further incur after June 30, 2023, of which HK$27.4 million will be charged to our consolidated
income statements, and HK$24.2 million is expected to be accounted for as a deduction from
equity upon the completion of Global Offering. The above expenses comprise of (i)
SUMMARY
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underwriting-related expenses, including underwriting commission and other expenses, of
HK$30.9 million; and (ii) non-underwriting-related expenses of HK$53.2 million, including (a)
fee paid and payable to legal advisors and reporting accountants of HK$41.7 million, and (b) other
fees and expenses of HK$11.5 million. The listing expenses above are the latest practicable
estimate for reference only, and the actual amount may differ from this estimate.
RECENT DEVELOPMENTS
Impact of the COVID-19 Outbre ak
The outbreak of the COVID-19 and its recurrence had caused temporary disruption to our
operations to the extent that certain on-site meetings, deployment and technical support had to be
delayed or cancelled. As of the Latest Practicable Date, however, COVID-19 had not had any
material adverse impact on our R&D activities, clinical development, daily operation, supply chain
and regulatory affairs. Given that the PRC government has substantially lifted its COVID-19
prevention and control policies since December 2022, our Directors are of the view that it is
unlikely that the COVID-19 will have a material adverse impact on our business going forward.
Recent Develo pment s in Clinic al Develo pment
For MASH, we initiated our Phase IIb study (HTD1801.PCT014) in the United States in
December 2022 and in Hong Kong in October 2023, and we are actively enrolling patients in this
study in the United States and Hong Kong. We obtained the IND approval from the NMPA in
Mainland China in September 2023. In July 2023, we submitted an IND application to initiate
Phase IIb study (HTD1801.PCT014) for MASH with T2DM or prediabetes in Mexico. We expect
to initiate the same study in Mexico and Mainland China in December 2023.
For T2DM, we initiated Phase II study (HTD1801.PCT103) in China in March 2022 and
completed in January 2023 with 113 patients enrolled. The Phase II clinical trial has demonstrated
a strong therapeutic effect in improving glucose metabolism, including statistically significant
decreases in HbA1c and fasting glucose levels, which may be the result of decreased insulin
resistance. In the clinical trial, improvements in other disease-relevant parameters were also
observed. With HTD1801 treatment, liver biomarkers (ALT, AST, GGT) were reduced. HTD1801
also led to improvement of lipid profiles, such as reduction of low-density lipoprotein cholesterol
(“LDL-c ”) and non-high-density lipoprotein cholesterol (“ non-HDL-c ”) levels. In November
2023, we initiated the two Phase III clinical trials (i.e. one with HTD1801 as a standalone
treatment and one with HTD1801 as an add-on therapy with metformin) for the T2DM indication
of our self-developed HTD1801 in China. We expect to complete those two Phase III studies in
2025.
For SHTG, in April 2023, the FDA concluded that the available clinical results from Phase
Ib/IIa study for hypercholesterolemia (HTD1801.PCT004) in Australia and completed Phase IIa
MASH study in the United States (HTD1801.PCT012) were sufficient to support a Phase II study
in subjects with SHTG. We plan to file IND with the FDA to initiate the Phase II of HTD1801 for
SHTG in the United States in the first half of 2024.
SUMMARY
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Recent Re gulatory Develo pment s
On February 17, 2023, the CSRC promulgated the Trial Administrative Measures of
Overseas Securities Offering and Listing by Domestic Companies ( ྤʫΆุྤ̮೯БᗇՎձɪ
) (the “ Over seas Listin g TrialM e asure s”) and relevant supporting guidelines,
which came into effect on March 31, 2023. The Overseas Listing Trial Measures comprehensively
improve and reform the existing regulatory regime for overseas offering and listing of PRC
domestic companies’ securities and regulate both direct and indirect overseas offering and listing
of PRC domestic companies’ securities.
Pursuant to the Overseas Listing Trial Measures, where a PRC domestic company submits
an application for initial public offering to competent overseas regulators or overseas stock
exchanges, such issuer must file with the CSRC within three business days after such application is
submitted. As advised by our PRC Legal Advisor, we are required to complete the filing with the
CSRC pursuant to the Overseas Listing Trial Measures. We submitted required filing documents to
the CSRC on June 1, 2023. On October 19, 2023, the CSRC issued a notification on our Company’s
completion of the PRC filing procedures for the Global Offering of our Shares on the Stock
Exchange.
Expecte d Incre ase in Net Lo ss
We expect to incur a significant increase in net loss for 2023 due to (i) increase in fair value
losses on convertible redeemable preferred shares, (ii) the anticipated costs associated with
increased research and development activities and (iii) expenses in connection with the Listing
incurred in 2023.
No M ateri alA dver seC h ange
Our Directors confirm that up to the date of this prospectus, save as disclosed above, there
has been no material adverse change in our financial, operational or trading positions or prospects
since June 30, 2023, being the end of the period reported on as set out in the Accountants’ Report
included in Appendix I to this prospectus.
SUMMARY
–2 5–


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In this prospectus, unless the context otherwise requires, the following terms shall
have the meanings set out below. Certain other terms are explained in the section headed
“Glossary of Technical Terms” in this prospectus.
“2020 ESOP Platform” Wisdom Spring Group Limited
“2020 Share Incentive Plan” the employee long term incentive plan originally adopted
by our Company on January 22, 2020, amended and
restated on October 18, 2021 and further amended and
restated in its entirety on March 4, 2022, the principal
terms of which are set out in “Appendix IV — Statutory
and General Information — D. Incentive Plans — 1. 2020
Share Incentive Plan” to this prospectus
“2023 ESOP Platform” Wisdom Summer Group Limited
“2023 Share Incentive Plan” the employee long term incentive plan adopted by our
Company on May 24, 2023, the principal terms of which
are set out in “Appendix IV — Statutory and General
Information — D. Incentive Plans — 2. 2023 Share
Incentive Plan” to this prospectus
“AFRC” the Accounting and Financial Reporting Council
“AIC Group” refers to Dr. Liu, the Founder BVI, Greaty Investment, ZT
Global Energy and Orient Champion
“Articles of Association” or
“Articles”
the amended and restated articles of association of our
Company conditionally adopted on December 11, 2023,
and with effect from the Listing Date, a summary of which
is set out in Appendix III to this prospectus, as amended
from time to time
“associate(s)” has the meaning ascribed to it under the Listing Rules
“Audit Committee” the audit committee of the Board
“Australia HighTide” HIGHTIDE BIOPHARMA PTY . LTD., a proprietary
company limited by shares registered in Australia on July
15, 2015, and a subsidiary of our Company
“Board” or “Board of Directors” the board of directors of our Company
“Business Day” a day on which banks in Hong Kong are generally open for
normal banking business to the public and which is not a
Saturday, Sunday or public holiday in Hong Kong
DEFINITIONS
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“BVI HighTide” HighTide Therapeutics, Ltd., a limited company
incorporated in the BVI on March 26, 2018, a
wholly-owned subsidiary of our Company
“Capitalization Issue” the issue of 408,813,890 Shares to be made upon
capitalization of certain sums standing to the credit of the
share premium account of our Company referred to in the
section headed “Statutory and General Information — A.
Further Information about Our Group — 4. Written
Resolutions Passed by Our Shareholders on December 11,
2023” in Appendix IV to this prospectus
“CCASS” the Central Clearing and Settlement System established
and operated by HKSCC
“CDE” the Center for Drug Evaluation of the NMPA (္
ᄲ൙ʕː ), a division of the NMPA mainly
responsible for the review and approval of IND and NDA
“China”, “Mainland China” or
“PRC”
People’s Republic of China, but for the purpose of this
prospectus and for geographical reference only and except
where the context requires otherwise, references in this
prospectus to “China” and the “PRC” do not apply to Hong
Kong, Macau and Taiwan
“CIC” C hina Insights Industry Consultancy Limited, a global
market research and consulting company, which is an
Independent Third Party
“close associate(s)” has the meaning ascribed thereto under the Listing Rules
“Companies Act” or “Cayman
Companies Act”
the Companies Act, Cap. 22 (As Revised) of the Cayman
Islands
“Companies Ordinance” the Companies Ordinance (Chapter 622 of the Laws of
Hong Kong) as amended, supplemented or otherwise
modified from time to time
“Companies (Winding Up and
Miscellaneous Provisions)
Ordinance”
the Companies (Winding Up and Miscellaneous
Provisions) Ordinance (Chapter 32 of the Laws of Hong
Kong) as amended, supplemented or otherwise modified
from time to time
DEFINITIONS
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--- page 38 ---
“Company” or “our Company” HighTide Therapeutics, Inc., a company incorporated
under the laws of the Cayman Islands with limited liability
on February 28, 2018
“connected person(s)” has the meaning ascribed thereto under the Listing Rules
“connected transaction(s)” has the meaning ascribed thereto under the Listing Rules
“core connected person(s)” has the meaning ascribed thereto under the Listing Rules
“Core Product” has the meaning ascribed to it in Chapter 18A of the Listing
Rules; for the purpose of this prospectus, our Core Product
refers to HTD1801
“COVID-19” disease caused by a new strain of coronavirus where ‘CO’
stands for corona, ‘VI’ for virus, and ‘D’ for disease
“CSRC” China Securities Regulatory Commission ( ʕ਷ᗇՎ္ຖ
ึ )
“Director(s)” or “our Director(s)” the directors of our Company, including all executive,
non-executive and independent non-executive Directors
“Dr. Liu” Dr. LIU Liping ( ᄎл̻), the founder, executive Director
and chief executive officer of our Company
“EIT Law” the PRC Enterprise Income Tax Law ( ʕശɛ͏΍ձ਷Άุ
جas enacted by the NPC on March 16, 2007 and
effective on January 1, 2008, as amended, supplemented or
otherwise modified from time to time
“EMA” the European Medicines Agency
“ESOP Platforms” the 2020 ESOP Platform and the 2023 ESOP Platform
“Extreme Conditions” e xtreme conditions caused by a super typhoon as
announced by the Government of Hong Kong
“Family Trust” an irrevocable discretionary trust settled by Dr. Liu as the
settlor pursuant to a trust deed dated December 31, 2020
under the laws of the State of Delaware for her succession
planning, and pursuant to the aforesaid trust deed, the
beneficiary is any one or more of Dr. Liu’s children and
more remote issue
“FDA” the United States Food and Drug Administration
DEFINITIONS
–2 8–


--- page 39 ---
“FINI” or “Fast Interface for New
Issuance”
an online platform operated by HKSCC that is mandatory
for admission to trading and, where applicable, the
collection and processing of specified information on
subscription in and settlement for all new listings
“Founder BVI” GREAT Mantra Group Limited, a limited company
incorporated in the BVI on November 24, 2017, one of the
members of the AIC Group and wholly-owned by the
Family Trust
“Global Offering” the Hong Kong Public Offering and the International
Offering
“Group” or “our Group” our Company and all of our subsidiaries or, where the
context so requires, in respect of the period before our
Company became the holding company of its present
subsidiaries, the businesses operated by such subsidiaries
or their predecessors (as the case may be)
“Hebei Puhui” Hebei Puhui Pharmaceutical Co., Ltd. (ࠢ
ʮ̡), a limited liability company established in the PRC
on September 27, 2023, a wholly-owned subsidiary of our
Company
“Hepalink” Shenzhen Hepalink Pharmaceutical Group Co., Ltd. ( ଉέ
ʮ̡ ), a joint stock limited
company incorporated under the laws of the PRC, whose A
shares are listed on the Shenzhen Stock Exchange (stock
code: 002399) and H Shares are listed on the Stock
Exchange (stock code: 9989)
“HK$” or “Hong Kong Dollars”
or “HKD”
Hong Kong dollars, the lawful currency of Hong Kong
“HK HighTide” HighTide Therapeutics (Hong Kong) Limited, a limited
company incorporated in Hong Kong on April 9, 2018, a
wholly-owned subsidiary of our Company
“HKSCC” Hong Kong Securities Clearing Company Limited, a
wholly-owned subsidiary of Hong Kong Exchanges and
Clearing Limited
DEFINITIONS
–2 9–


--- page 40 ---
“HKSCC EIPO” the application for the Hong Kong Offer Shares to be
issued in the name of HKSCC Nominees and deposited
directly into CCASS to be credited to your designated
HKSCC Participant’s stock account through causing
HKSCC Nominees to apply on your behalf, including by
instructing your broker or custodian who is a HKSCC
Participant to give electronic application instructions via
HKSCC’s FINI system to apply for the Hong Kong Offer
Shares on your behalf
“HKSCC Participant” a participant admitted to participate in CCASS as a direct
clearing participant, a general clearing participant or a
custodian participant
“HKSCC Nominees” HKSCC Nominees Limited, a wholly-owned subsidiary of
HKSCC
“Hong Kong” the Hong Kong Special Administrative Region of the PRC
“Hong Kong Offer Shares” the 2,419,500 Shares being initially offered by our
Company for subscription at the Offer Price pursuant to the
Hong Kong Public Offering (subject to reallocation as
described in the section headed “Structure of the Global
Offering” in this prospectus)
“Hong Kong Public Offering” the offer for subscription of the Hong Kong Offer Shares to
the public in Hong Kong at the Offer Price, subject to and
in accordance with the terms and conditions set out in this
prospectus
“Hong Kong Share Registrar” Computershare Hong Kong Investor Services Limited
“Hong Kong Stock Exchange” or
“Stock Exchange”
The Stock Exchange of Hong Kong Limited, a
wholly-owned subsidiary of Hong Kong Exchange and
Clearing Limited
“Hong Kong Takeovers Code” or
“Takeover Code”
the Codes on Takeovers and Mergers and Share Buy-backs
issued by the SFC, as amended, supplemented or otherwise
modified from time to time
“Hong Kong Underwriters” the underwriters of the Hong Kong Public Offering whose
names are set out in the section headed “Underwriting —
Hong Kong Underwriters” in this prospectus
DEFINITIONS
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--- page 41 ---
“Hong Kong Underwriting
Agreement”
the underwriting agreement dated December 12, 2023
relating to the Hong Kong Public Offering entered into by
our Company, Dr. Liu, the Joint Sponsors, the Overall
Coordinators and the Hong Kong Underwriters
“Incentive Plans” the 2020 Share Incentive Plan and the 2023 Share Incentive
Plan
“Independent Third Party(ies)” party or pa rties that, to the best of our Directors’
knowledge, information and belief, having made all
reasonable enquiries, is or are not a connected person or
connected persons of the Company within the meaning of
the Listing Rules
“International Offer Shares” the 21,774,500 Shares being offered for subscription under
the International Offering
“International Offering” the offer of the International Offer Shares at the Offer
Price, in the United States to QIBs only in reliance on Rule
144A and outside the United States in offshore transactions
in accordance with Regulation S or any other available
exemption from registration under the United States
Securities Act, as further described in the section headed
“Structure of the Global Offering” in this prospectus
“International Underwriters” the group of international underwriters expected to enter
into the International Underwriting Agreement relating to
the International Offering
“International Underwriting
Agreement”
the international underwriting agreement relating to the
International Offering to be entered into by, among other
parties, our Company, the Joint Sponsors, the Overall
Coordinators, the Joint Global Coordinators and the
International Underwriters on or about Tuesday, December
19, 2023
“Joint Bookrunners” UBS AG Hong Kong Branch, Huatai Financial Holdings
(Hong Kong) Limited, CLSA Limited, CMB International
Capital Limited, BOCOM International Securities Limited,
Yue Xiu Securities Company Limited, CCB International
Capital Limited, Fosun International Securities Limited,
Goldlink Securities Limited, I Win Securities Limited,
Shenwan Hongyuan Securities (H.K.) Limited, uSmart
Securities Limited and Winbull Securities International
(Hong Kong) Limited
DEFINITIONS
–3 1–


--- page 42 ---
“Joint Global Coordinators” UBS AG Hong Kong Branch, Huatai Financial Holdings
(Hong Kong) Limited, CLSA Limited, CMB International
Capital Limited, BOCOM International Securities Limited,
Yue Xiu Securities Company Limited and CCB
International Capital Limited
“Joint Lead Managers” UBS AG Hong Kong Branch, Huatai Financial Holdings
(Hong Kong) Limited, CLSA Limited, CMB International
Capital Limited, BOCOM International Securities Limited,
Yue Xiu Securities Company Limited, CCB International
Capital Limited, Fosun International Securities Limited,
Goldlink Securities Limited, I Win Securities Limited,
Shenwan Hongyuan Securities (H.K.) Limited, uSmart
Securities Limited and Winbull Securities International
(Hong Kong) Limited
“Joint Sponsors” UBS Securities Hong Kong Limited and Huatai Financial
Holdings (Hong Kong) Limited
“JSK Healthcare” JSK Consumer Healthcare, Ltd. (ҦஔϞ
ʮ̡ ), a limited liability company established in the
PRC on July 21, 2015, a wholly-owned subsidiary of our
Company
“Latest Practicable Date” December 4, 2023, being the latest practicable date for the
purpose of ascertaining certain information contained in
this prospectus prior to its publication
“Listing” the listing of our Shares on the Main Board
“Listing Committee” the listing committee of the Hong Kong Stock Exchange
“Listing Date” the date, expected to be on or about Friday, December 22,
2023, on which dealings in our Shares first commence on
the Main Board
“Listing Date Vesting Share(s)” Shares underlying Awards granted under the 2020 Share
Incentive Plan that shall be vested on the date of the Listing
based on the vesting schedule of the Awards, excluding
409,232 (2,455,392 as adjusted after the Capitalization
Issue) underlying Shares that were granted to Dr. Liu under
the 2020 Share Incentive Plan
“Listing Rules” the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited, as amended or
supplemented from time to time
DEFINITIONS
–3 2–


--- page 43 ---
“M&A Rules” Re gulations on Mergers and Acquisitions of Domestic
Companies by Foreign Investors (Իᒅྤ
֛which were jointly promulgated by
MOFCOM, the State Assets Supervision and
Administration Commission, the SAT, the SAIC, the
CSRC, and the SAFE on August 8, 2006, and came into
effect on September 8, 2006 and subsequently amended on
June 22, 2009, as amended, supplemented or otherwise
modified from time to time
“Main Board” the stock exchange (excluding the option market) operated
by the Stock Exchange which is independent from and
operated in parallel with the GEM of the Stock Exchange.
“Memorandum” or “Memorandum
of Association”
the amended and restated memorandum of association of
our Company conditionally adopted on December 11, 2023
with effect from the Listing Date, a summary of which is
set out in Appendix III to this prospectus, as amended from
time to time
“MOFCOM” or “Ministry of
Commerce”
the Ministry of Commerce of the PRC ( ʕശɛ͏΍ձ਷ਠ
ਕ௅)
“Nanchang Fusion” Nanchang Fusion Therapeutics, Ltd. (Ҧஔ
ʮ̡ ), a limited liability company established in the
PRC on November 29, 2021, a wholly-owned subsidiary of
our Company
“National Bureau of Statistics” the National Bureau of Statistics of China ( ʕശɛ͏΍ձ
҅ )
“NDRC” the National Development and Reform Commission of the
PRC (ึ )
“NHFPC” National Health and Family Planning Commission (ሊ
ึ )
“NMPA” National Medical Products Administration (္ຖ
၍ଣ҅ ) and its predecessor, the China Food and Drug
Administration (္ຖ၍ଣᐼ҅ ) from 2013
to 2018 and the State Food and Drug Administration (࢕
္ຖ၍ଣ҅ ) from 2003 to 2013
“Nomination Committee” the nomination committee of the Board
DEFINITIONS
–3 3–


--- page 44 ---
“Non-PRC Resident Enterprise” as def ined under the EIT Law, means companies
established pursuant to a non-PRC law with their de facto
management conducted outside the PRC, but which have
established organizations or premises in the PRC, or which
have generated income within the PRC without having
established organizations or premises in the PRC
“NPC” the National People’s Congress of the PRC ( ʕശɛ͏΍ձ
ɽึ )
“Offer Price” the offer price per Offer Share (exclusive of brokerage fee
of 1.0%, SFC transaction levy of 0.0027%, Stock Exchange
trading fee of 0.00565% and AFRC transaction levy of
0.00015%) of HK$11.50 at which the Offer Shares are to
be subscribed or purchased pursuant to the Global Offering
“Offer Shares” the Hong Kong Offer Shares and the International Offer
Shares
“Overall Coordinators” UBS AG Hong Kong Branch, Huatai Financial Holdings
(Hong Kong) Limited and CLSA Limited
“PBOC” the People’s Bank of China ( ʕ਷ɛ͏ვБ ), the central
bank of the PRC
“PRC Legal Advisor” Han Kun Law Offices
“Preferred Shares” the Series A Preferred Shares, the Series B-1 Preferred
Shares, the Series B-2 Preferred Shares, the Series B+
Preferred Shares, the Series C Preferred Shares and the
Series C+ Preferred Shares
“Pre-IPO Investments” certain rounds of financing carried out by the Group before
the Global Offering, details of which are set out in the
section headed “History, Reorganization and Corporate
Structure — Pre-IPO Investments” in this prospectus
“Pre-IPO Investors” The investors of the Pre-IPO Investments
“Principal Share Registrar” Conyers Trust Company (Cayman) Limited
“QIB” qualified institutional buyer within the meaning of Rule
144A
“Regulation S” Regulation S under the U.S. Securities Act
“Remuneration Committee” the remuneration committee of the Board
DEFINITIONS
–3 4–


--- page 45 ---
“Renminbi” or “RMB” the lawful currency of the PRC
“Reorganization” the reorganization conducted by our Group in preparation for
the Listing as described in the section headed “History,
Reorganization and Corporate Structure — Reorganization”
in this prospectus
“Rule 144A” Rule 144A under the United States Securities Act
“SAFE” the State Administration of Foreign Exchange of the PRC
(̮ි၍ଣ҅ )
“SAIC” the State Administration of Industry and Commerce of the
PRC (၍ଣᐼ҅ )
“SAT” the State Administration of Taxation of the PRC ( ʕശɛ͏
೼ਕᐼ҅ )
“Series A Preferred Shares” the series A preferred shares of our Company with a par
value of US$0.0001 each
“Series B-1 Preferred Shares” the series B-1 preferred shares of our Company with a par
value of US$0.0001 each
“Series B-2 Preferred Shares” the series B-2 preferred shares of our Company with a par
value of US$0.0001 each
“Series B+ Preferred Shares” the series B+ preferred shares of our Company with a par
value of US$0.0001 each
“Series C Preferred Shares” the series C preferred shares of our Company with a par
value of US$0.0001 each
“Series C+ Preferred Shares” the series C+ preferred shares of our Company with a par
value of US$0.0001 each
“SFC” the Securities and Futures Commission of Hong Kong
“SFO” the Securities and Futures Ordinance, Chapter 571 of the
Laws of Hong Kong, as amended, supplemented or
otherwise modified from time to time
“Shanghai Fusion” Shanghai Fusion Therapeutics, Ltd. (ҦஔϞ
ʮ̡ ), a limited liability company established in the
PRC on May 20, 2021, a wholly-owned subsidiary of our
Company
DEFINITIONS
–3 5–


--- page 46 ---
“Shanghai HighTide” Shanghai HighTide Biopharmaceutical Ltd. ( ɪऎё໋इ
ʮ̡ ), a limited liability company
established in the PRC on March 14, 2014, a wholly-owned
subsidiary of our Company
“Share(s)” or “Ordinary Share(s)” ordinary shares in the share capital of our Company with a
par value of US$0.0001 each
“Shareholder(s)” holder(s) of our Share(s)
“Shenzhen HighTide” Shenzhen HighTide Biopharmaceutical Ltd. ( ଉέё໋इ
ʮ̡ ), a limited liability company
established in the PRC on November 15, 2011, a
wholly-owned subsidiary of our Company
“Sophisticated Investor(s)” has the meaning ascribed to it under Guidance Letter
HKEX-GL92-18 issued by the Stock Exchange and for the
purpose of this prospectus refers to Greater Bay Area
Homeland Development Fund LP and Guangdong Chinese
Medicine Comprehensive Health Equity Investment Fund
Partnership (Limited Partnership), both of which have
made meaningful investment in our Company at least six
months before the Listing Date
“State Council” the State Council of the PRC ( ʕശɛ͏΍ձ਷਷ਕ৫ )
“subsidiary(ies)” has the meaning ascribed to it in Section 15 of the
Companies Ordinance
“Substantial Shareholder(s)” has the meaning ascribed to it under the Listing Rules
“Track Record Period” the two years ended December 31, 2021 and 2022 and the
six months ended June 30, 2023
“Underwriters” the Hong Kong Underwriters and the International
Underwriters
“Underwriting Agreements” the Hong Kong Underwriting Agreement and the
International Underwriting Agreement
“U.S.” or “United States” the United States of America, its territories, its possessions
and all areas subject to its jurisdiction
“U.S. dollars” or “US$”
or “USD”
United States dollars, the lawful currency of the United
States
DEFINITIONS
–3 6–


--- page 47 ---
“U.S. HighTide” HighTide Therapeutics USA, LLC (formerly known as
HighTide Biopharma USA, LLC), a stock corporation
incorporated in the State of Maryland, United States on
January 24, 2018, and a wholly-owned subsidiary of our
Company
“U.S. persons” United States persons as defined in Regulation S
“U.S. Securities Act” United States Securities Act of 1933, as amended,
supplemented or otherwise modified from time to time
“V AT” value-added tax; all amounts are exclusive of V AT in this
prospectus except where indicated otherwise
“we”, “us” or “our” the Company or the Group, as the context requires
“White Form eIPO ” the application for Hong Kong Offer Shares to be issued in
the applicant’s own name by submitting applications online
through the designated website of White Form eIPO at
www.ei po.com.hk
“White Form eIPO Service
Provider”
Computershare Hong Kong Investor Services Limited
“WHO” the World Health Organization
Certain amounts and percentage figures included in this prospectus have been subject to
rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an
arithmetic aggregation of the figures preceding them.
Foreaseofreference,thenamesofChineselawsandregulations,governmentalauthorities,
institutions, natural persons or other entities (including certain of our subsidiaries) have been
included in the prospectus in both the Chinese and English languages and in the event of any
inconsistency, the Chinese versions shall prevail. English translations of company names and
othertermsfromtheChineselanguageareprovidedforidentificationpurposesonly.
For the purpose of this prospectus, references to “provinces” of China include provinces,
municipalities under direct administration of the central government and provincial-level
autonomousregions.
DEFINITIONS
–3 7–


--- page 48 ---
Unless the context otherwise requires, explanations and definitions of certain terms
used in this prospectus in connection with our Group and our business shall have the
meanings set out below. The terms and their meanings may not correspond to standard
industry meaning or usage of these terms.
“active moiety” the active component which is responsible for a drug’s
physiological or pharmacological action
“AEs” adverse effects
“AH” alcoholic hepatitis, a type of alcohol-associated liver
disease characterized by acute liver inflammation
“ALD” al cohol-associated liver disease, characterized by liver
damage caused by heavy alcohol intake
“ALP” alkaline phosphatase, an enzyme primarily found in the
liver, bones, intestine, and kidneys, and a key biomarker
indicating the presence of cholestatic liver diseases
including primary sclerosing cholangitis and primary
biliary cholangitis
“ALS” amyotrophic lateral sclerosis, a paralyzing progressive
disease with a short life expectancy typically of only two to
five years from diagnosis
“ALT” alanine transaminase, an enzyme found in the liver that
helps convert proteins into energy for the liver cells; the
level of ALT increases when the liver is damaged, making it
a biomarker commonly associated with injury or apoptosis
of liver cells
“AMPK” AMP-activated protein kinase
“AP” acute pancreatitis, a condition where the pancreas becomes
inflamed over a short period of time
“API” active pharmaceutical ingredients, any substance or
mixture of substances intended to be used in the
manufacture of a drug (medicinal) product in order to
furnish pharmacological activity or other direct effect in
the diagnosis, cure, mitigation, treatment, or prevention of
disease or to affect the structure or function of the body
“apoptosis” a type of programed cell death
GLOSSARY OF TECHNICAL TERMS
–3 8–


--- page 49 ---
“APRI” aspartate aminotransferase to platelet ratio index, a
noninvasive and readily available tool for the assessment of
liver fibrosis
“AST” aspartate aminotransferase, an enzyme found mostly in the
liver, heart, muscles and kidneys; high levels of which in
the blood may indicate hepatitis, cirrhosis, or other liver
diseases
“BBR” berberine, an isoquinoline alkaloid with a long history of
use for its wide-ranging biological effects, particularly
antimicrobial effects, in Chinese, Indian and
Middle-Eastern medicine, and is an approved drug for the
treatment of intestinal infection in mainland China, Japan
and Taiwan
“BID” two times a day
“bioavailability” the fraction of an administered drug that reaches the
systemic circulation
“biomarker” a measurable indicator of a biological state or condition
“BSH” bile salt hydrolase, an enzyme produced in the intestinal
microbiota that catalyzes the hydrolysis of amide bonds in
conjugated bile acids, resulting in the release of free amino
acids
“BUDC” berberine ursodeoxycholate, the molecular entity of our
Core Product HTD1801
“CAGR” compound annual growth rate
“CCA” cholangiocarcinoma, a type of cancer that forms in the bile
ducts
“CD” Crohn’s disease, a type of inflammatory bowel disease
which can affect any part of the gastrointestinal tract
“CDMO” contract development and manufacturing organization, a
company that serves other companies in the pharmaceutical
industry on a contract basis to provide comprehensive
services from drug development through drug
manufacturing
“cholestatic liver disease” a disease characterized by a decrease or blockage in the
flow of bile, including primary sclerosing cholangitis and
primary biliary cholangitis
GLOSSARY OF TECHNICAL TERMS
–3 9–


--- page 50 ---
“cirrhosis” the impaired liver function caused by the formation of scar
tissue due to damage caused by liver disease
“clinical trial/study” a research study for validating or finding the therapeutic
effects and side effects of test drugs in order to determine
the therapeutic value and safety of such drugs
“ClinicalTrials” ClinicalTrials.gov, a registry of clinical trials run by the
United States National Library of Medicine at the National
Institutes of Health
“CMC” chemistry, manufacturing, and controls
“CMO” contract manufacturing organization, a company that
serves other companies in the pharmaceutical industry on a
contract basis to provide comprehensive services for drug
manufacturing
“CNS” central nervous system, the part of the nervous system
consisting primarily of the brain and spinal cord
“cohort” a group of patients as part of a clinical trial who share a
common characteristic or experience within a defined
period and who are monitored over time
“combination therapy” treatment in which a patient is given two or more drugs (or
other therapeutic agents) for a single disease
“comorbidity” the simultaneous presence of two or more diseases or
medical conditions in a patient
“complex disease” also known as multifactorial disease, caused by a
combination of genetic, lifestyle and environmental factors
“CRO” contract research organization, a company that provides
support to the pharmaceutical, biotechnology, and medical
device industries in the form of research services
outsourced on a contract basis
“cT1” corrected T1 value, a novel MRI-based quantitative metric
for assessing a composite of liver inflammation and
fibrosis
“CVDs” cardiovascular diseases, conditions affecting the heart or
blood vessels
GLOSSARY OF TECHNICAL TERMS
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“diabetes” a complex, chronic metabolic disease characterized by
elevated levels of blood glucose, which leads over time to
serious damage to the heart, blood vessels, eyes, kidneys,
nerves and other organs, comprised of two categories
including type 1 diabetes mellitus and type 2 diabetes
mellitus
“digestive diseases” health conditions associated with the digestive system
“DN” diabetic neuropathy, nerve damages caused by diabetes
“DPP-4I” dipeptidyl peptidase 4 inhibitors, a class of oral
hypoglycemics that block the enzyme dipeptidyl
peptidase-4 (DPP-4) for the treatment of T2DM
“EOP meeting” end-of-phase meeting; a meeting held when the clinical
trial has reached the end of a particular phase and is ready
to move to the next
“ESG” envi ronmental, social and governance; a collection of
corporate performance evaluation criteria that assess the
robustness of a company’s governance mechanisms and its
ability to effectively manage its environmental and social
impacts
“FGF21” f ibroblast growth factor 21, a liver-secreted peptide
hormone to regulation of lipid, glucose, and energy
metabolism
“FIB-4” a non-invasive scoring system based on several laboratory
tests that help to estimate the amount of scarring in the
liver
“FTD” fast track designation, a designation granted by the FDA of
a drug for expedited review to facilitate the development of
drugs which treat serious or life-threatening condition or
fill an unmet medical need
“FXR” farnesoid X receptor, a nuclear receptor that is encoded by
the NR1H4 gene in humans
“GCP” good clinical practice, an international ethical and
scientific quality standard for the performance of a clinical
trial on medicinal products involving humans
GLOSSARY OF TECHNICAL TERMS
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“GGT” gamma-glutamyl transferase, an enzyme found primarily in
the liver; the level of GGT increases when the liver is
damaged, making it a biomarker commonly associated with
injury or apoptosis of liver cells
“GLP-1” gluc agon-like peptide-1, a gastrointestinal peptide to
encourage the release of insulin from the pancreas
“GLP-1R” glucagon-like peptide-1 receptor
“GLP-1RA” glucagon-like peptide-1 receptor agonist
“glycemic control” the management of blood sugar levels
“GMP” good manufacturing practice, the practices required in
order to conform to the guidelines recommended by
agencies that control the authorization and licensing of the
manufacture and sale of products
“gut microbiota” the microorganism including bacteria, archaea and fungi
that live in the digestive tracts of humans and other animals
“HbA1c” glycated haemoglobin, formed when haemoglobin joins
with glucose in the blood and becomes glycated
“HCC” hepatocellular carcinoma
“HDL-C” high-density lipoprotein cholesterol, often referred to as
“good” cholesterol as it is known to remove other forms of
cholesterol from the bloodstream
“HSCs” hepatic stellate cells, also known as perisinusoidal cells or
Ito cells, that are pericytes found in the perisinusoidal
space of the liver
“HTG” h ypertriglyceridemia, the presence of high amounts of
triglyceridemia in the blood
“hypercholesterolaemia” elevated amounts of cholesterol in the blood
“hyperlipidemia” abnormally elevated levels of any or all lipids or
lipoproteins in the blood
“IBD” in flammatory bowel disease, a group of inflammatory
conditions of the colon and small intestine, comprised of
two major categories including CD and ulcerative colitis
GLOSSARY OF TECHNICAL TERMS
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“IFN γ” interferon gamma
“in vitro” Latin for “within the glass”, referring to studies that are
performed with microorganisms, cells, or biological
molecules outside their normal biological context
“in vivo” Latin for “within the living”, referring to studies in which
the effects of various biological entities are tested on
whole, living organisms or cells, usually animals,
including humans, and plants, as opposed to a tissue extract
or dead organism
“IND” investigational new drug, an application in the drug review
process required by an regulatory authority to decide
whether a new drug is permitted to initiate clinical trials;
also known as clinical trial application, or CTA, in China
“ITT” intention-to-treat
“ITT population” the set of all randomised subjects in a randomised trial
“KOL” key opinion leader, a trusted, well-respected influencer
with proven experience and expertise in a particular field
“LDL-C” low-density lipoprotein cholesterol, often referred to as
“bad” cholesterol as it may build up in the walls of blood
vessels and cause atherosclerotic diseases
“LFC” liver fat content, fat accumulated in the liver
“LPS” lipopolysaccharides, an agent commonly used to induce
inflammatory responses in animal studies
“MASH” metabolic dysfunction-associated steatohepatitis (formerly
known as nonalcoholic steatohepatitis or NASH), an
advanced form of MASLD
“MASLD” met abolic dysfunction-associated steatotic liver disease
(formerly known as nonalcoholic fatty liver disease or
NAFLD), characterized by the excessive fat accumulation
in the liver. At EASL Congress 2023, the multinational
liver societies leaders from La Asociación
Latinoamericana para el Estudio del Hígado (ALEH),
American Association for the Study of Liver Diseases
(AASLD), and European Association for the Study of the
Liver (EASL) as well as the co-chairs of the MASLD
Nomenclature Initiative announced that steatotic liver
disease (SLD) was chosen as an overarching term to
encompass the various aetiologies of steatosis
GLOSSARY OF TECHNICAL TERMS
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“mechanism of action” the specific biochemical interaction through which a drug
substance produces its pharmacological effect
“MRCT” multi-regional clinical trials
“MRI” m agnetic resonance imaging, a non-invasive imaging
technology that uses strong magnetic fields and radio
waves to produce three dimensional detailed anatomical
images
“MRI-PDFF” magnetic resonance imaging-derived proton density fat
fraction, a noninvasive, quantitative, and accurate measure
of liver fat content
“NAS” NAFLD activity score, a sum of numerical score system
applying to steatosis, hepatocellular ballooning, and
lobular inflammation
“NDA” new drug application, a process required by an regulatory
authority to approve a new drug for sale and marketing
“obesity” abnormal or excessive fat accumulation in the body;
defined as an individual having a body mass index over 30
kg/m
2 or more
“OCA” obeticholic acid, an FDA-approved second line treatment
in combination with ursodeoxycholic acid for primary
biliary cholangitis
“ODD” orphan drug designation, a designation granted by the FDA
to a drug or biological product which prevents, diagnoses
or treats a rare disease or condition, qualifying the
sponsors for certain incentives
“off-label” related to the use of pharmaceutical drugs for an
unapproved indication or in an unapproved age group,
dosage or route of administration
“OTC” over-the-counter, ordinary retail purchase of drugs, with no
need for medical prescription or license
“pan PPAR” pan agonists acting on all three isoforms of PPAR
GLOSSARY OF TECHNICAL TERMS
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“PBC” primary biliary cholangitis, an autoimmune liver disease
resulting from a slow, progressive destruction of the
intra-hepatic small bile ducts
“PCSK9” proprotein convertase subtilisin/kexin type 9, an enzyme
binding to and degrading the receptor for low-density
lipoprotein particles
“PD” pharmacodynamics; the study of how a drug affects an
organism, which, together with pharmacokinetics,
influences dosing, benefit, and adverse effects of the drug
“Phase I clinical trial” a study in which a drug is introduced into healthy human
subjects or patients with the target disease or condition and
tested for safety, dosage tolerance, absorption,
metabolism, distribution, excretion, and if possible, to gain
an early indication of its efficacy
“Phase II clinical trial” a study in which a drug is administered to a limited patient
population to preliminarily evaluate the efficacy of the
product for specific targeted diseases, to identify possible
adverse effects and safety risks, and to determine optimal
dosage
“Phase III clinical trial” a study in which a drug is administered to an expanded
patient population generally at geographically dispersed
clinical trial sites, in well-controlled clinical trials to
generate enough data to statistically evaluate the efficacy
and safety of the product for approval, to provide adequate
information for the labeling of the product
“PK” pharmacokinetics; the study of the bodily absorption,
distribution, metabolism, and excretion of drugs, which,
together with pharmacodynamics, influences dosing,
benefit, and adverse effects of the drug
“placebo” a medical treatment or preparation with no specific
pharmacological activity
“PPAR” peroxisome proliferator-activated receptors with three
main classes, namely α, γ and δ; a family of nuclear
receptors to regulate metabolism, inflammation and
fibrosis
GLOSSARY OF TECHNICAL TERMS
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“preclinical study” a study testing a drug on non-human subjects, to gather
efficacy, toxicity, pharmacokinetic and safety information
and to decide whether the drug is ready for clinical trials
“pre-diabetes” a condition characterized by elevated blood sugar levels
that fall below the threshold to diagnose diabetes
“pre-T2DM” a condition characterized by elevated blood sugar levels
that fall below the threshold to diagnose type 2 diabetes
mellitus
“primary endpoint” the specific key measurement upon which a clinical study
is designed to assess the effect of the drugs being
investigated
“PSC” primary sclerosing cholangitis, a life-threatening,
multifactorial and rare liver disease characterized by
hepatic inflammation, scarring and abnormal liver damage
“Reg3 α” regenerating islet derived protein 3 alpha; a prognostic
biomarker for gastrointestinal chronic graft-versus-host
disease
“registrational clinical trial” a clinical trial or study to demonstrate clinical efficacy and
safety evidence required before submission for drug
marketing approval
“ROS” reactive oxygen species; a type of unstable molecule that
contains oxygen and that easily reacts with other molecules
in a cell
“SAEs” serious adverse events, an event or reaction that, in the
view of either the investigator or sponsor, results in severe
outcomes such as death, life-threatening adverse events,
in-patient hospitalization or prolongation of existing
hospitalization, persistent or significant disability or
incapacity, a congenital anomaly or birth defect
“SGLT-2I” sodium-glucose cotransporter-2 inhibitors, a class of
prescription medicines that are FDA-approved for use with
diet and exercise to lower blood sugar in adults with T2DM
“SHTG” severe hypertriglyceridemia, SHTG is the presence of high
levels of triglycerides, a type of fat, in the blood. SHTG is
well known to be associated with other complex and
serious disorders such as acute pancreatitis and CVDs
GLOSSARY OF TECHNICAL TERMS
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“SMO” site management organization, an organization that has
adequate infrastructure and staff to meet the requirements
of the clinical trial protocol and provides clinical trial
related services to a CRO, a pharmaceutical company, a
biotechnology company, or a clinical site
“SOD” superoxide dismutase; an antioxidant enzyme which
converts reactive oxygen species into less aggressive
forms, and reduce serum malondialdehyde
“T2DM” type 2 diabetes mellitus, a form of diabetes characterized
by high blood sugar, insulin resistance and relative lack of
insulin
“TEAEs” treatment-emergent adverse events, undesirable events not
present prior to medical treatment or already present events
that worsen in either intensity or frequency following the
treatment
“TG” triglycerides, the main constituents of body fat in humans
“TGA” Therapeutic Goods Administration; Australia’s regulatory
authority for therapeutic goods such as medicines, medical
devices, and diagnostic tests
“THR- β” thyroid hormone receptor β, one receptor for thyroid
hormone to mediate the biological activities of thyroid
hormone
“TLR4” Toll-like receptor 4, a transmembrane protein in humans
encoded by the TLR4 gene which plays a pivotal role in the
regulation of immune responses to infection
“TNF- α” tumor necrosis factor alpha
“TZD” thiazolidinediones, a family of drugs used in the treatment
of T2DM
“UC” ulcerative colitis, a type of IBD which primarily affects the
colon
“UDCA” ursodeoxycholic acid, a secondary bile acid approved by
the FDA as first-line treatment for PBC, and widely used
off-label to treat PSC
“ULN” upper limit of normal, the 95th percentile of the target
population
GLOSSARY OF TECHNICAL TERMS
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We have included in this prospectus forward-looking statements. Statements that are
not historical facts, including statements about our intentions, beliefs, expectations or
predictions for the future, are forward-looking statements.
This prospectus contains certain forward-looking statements and information relating to us
and our subsidiaries that are based on the beliefs of our management as well as assumptions made
by and information currently available to our management. When used in this prospectus, the
words “aim”, “anticipate”, “believe”, “could”, “expect”, “going forward”, “intend”, “may”,
“might”, “ought to”, “plan”, “potential”, “predict”, “project”, “seek”, “should”, “will”, “would”
and the negative of these words and other similar expressions, as they relate to us or our
management, are intended to identify forward-looking statements. Such statements reflect the
current views of our management with respect to future events, operations, liquidity and capital
resources, some of which may not materialize or may change. These statements are subject to
certain risks, uncertainties and assumptions, including the other risk factors as described in this
prospectus. You are strongly cautioned that reliance on any forward-looking statements involves
known and unknown risks and uncertainties. The risks and uncertainties facing our company which
could affect the accuracy of forward-looking statements include, but are not limited to, the
following:
• general political and economic conditions, including those related to the PRC;
• our ability to successfully implement our business plans and strategies;
• future developments, trends and conditions in the industry and markets in which we
operate or into which we intend to expand;
• our business operations and prospects;
• our capital expenditure plans;
• the actions and developments of our competitors;
• our financial condition and performance;
• capital market developments;
• our dividend policy;
• any changes in the laws, rules and regulations of the central and local governments in
the PRC and other relevant jurisdictions and the rules, regulations and policies of the
relevant governmental authorities relating to all aspects of our business and our
business plans;
• various business opportunities that we may pursue; and
• changes or volatility in interest rates, foreign exchange rates, equity prices or other
rates or prices, including those pertaining to the mainland China and Hong Kong and
the industry and markets in which we operate.
FORW ARD-LOOKING STATEMENTS
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Subject to the requirements of applicable laws, rules and regulations, we do not have any
and undertake no obligation to update or otherwise revise the forward-looking statements in this
prospectus, whether as a result of new information, future events or otherwise. As a result of these
and other risks, uncertainties and assumptions, the forward-looking events and circumstances
discussed in this prospectus might not occur in the way we expect or at all. Accordingly, you
should not place undue reliance on any forward-looking information. Moreover, the inclusion of
forward-looking statements should not be regarded as representations by us that our plans and
objectives will be achieved or realized. All forward-looking statements in this prospectus are
qualified by reference to the cautionary statements in this section.
In this prospectus, statements of or references to our intentions or those of our Directors are
made as of the date of this prospectus. Any such information may change in light of future
developments.
FORW ARD-LOOKING STATEMENTS
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Investments in our Shares involves significant risks. Y ou should carefully consider all
of the information set out in this prospectus, including the risks and uncertainties described
below, before making an investment in our Shares. In particular, we are a
biopharmaceutical company seeking to list on the Main Board of the Stock Exchange under
Chapter 18A of the Listing Rules. Our operations and the biopharmaceutical industry
involve certain risks and uncertainties, some of which are beyond our control and may cause
you to lose all your investment in our Shares. Our business, financial condition and results
of operations could be materially and adversely affected by any of these risks and
uncertainties. The trading price of our Shares could decline due to any of these risks, and
you may lose all or part of your investment. Additional risks and uncertainties not presently
known to us, or not expressed or implied below, or that we deem immaterial, could also harm
our business, financial condition and results of operations.
These factors are contingencies that may or may not occur, and we are not in a
position to express a view on the likelihood of any such contingency occurring. The
information given is as of the Latest Practicable Date unless otherwise stated, which will not
be updated after the date hereof, and is subject to the cautionary statements in the section
headed “Forward Looking Statements” in this prospectus.
We believe there are certain risks and uncertainties involved in our operations, some of
which are beyond our control. We have categorized these risks and uncertainties into: (i) risks
relating to development, clinical trials and regulatory approval of our drug candidates; (ii) risks
relating to manufacturing and commercialization of our drug candidates; (iii) risks relating to our
financial prospects; (iv) risks relating to our intellectual property rights; (v) risks relating to our
business and industry; (vi) risks relating to doing business in the PRC; and (vii) risks relating to the
Global Offering.
Additional risks and uncertainties that are presently not known to us or not expressed or
implied below or that we currently deem immaterial could also have a material adverse effect on
our business, financial condition and operating results. You should consider our business and
prospects in light of the challenges we face, including the ones discussed in this section.
RISKS RELATING TO DEVELOPMENT, CLINICAL TRIALS AND REGULATORY
APPROV AL OF OUR DRUG CANDIDATES
The Core Pro duct m ayf ail to meet the prim ary ands econ dary en dpoint sa t the l ate- stage
clinic al tri alsd ue to hi gher clinic al develo pment ri sks resulte d from HTD1801 bein ga new
molecul ar entity andp otenti al rejection from com petent authoritie s.
We may fail to develop the HTD1801 for certain indications as they progress to the
late-stage clinical trials. There is a high probability of failure to achieve the primary and second
efficacy endpoints in late-stage clinical trials because HTD1801 is based on a new molecular
entity, which is yet to be tested in large-scale clinical studies, thus facing higher clinical risks.
Taking the MASH indication as an example, despite that HTD1801 is different from ocaliva in
many aspects, such as mechanism of actions, PK profiles and others as applicable, our
development of HTD1801 may still be subject to development risks, including those faced by
ocaliva in their development.
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Clinic al drugd evelo pment involve sa len gthy and expensive proce ss with uncert ain outcome s,
and we m ayb eu n able to commerci alize our drug candidatesa t all.
We face uncertainties in clinical trial development which are subject to a variety of factors,
including satisfactory safety and efficacy results from clinical trials, successful enrollment of
patients, and performance of CROs and other parties involved in clinical trial development and
others. For example, Intercept’s ocaliva, one of the most advanced MASH drugs in the pipeline,
filed the second application for MASH but it was rejected by the FDA in June 2023. The FDA
reviewers flagged increased risk of diabetes and liver injury from using the oral tablets, called
obeticholic acid (“ OCA”), for the treatment of MASH. The FDA concluded that benefits of
Ocaliva did not outweigh the risks in MASH patients with fibrosis based on current data. Intercept
expressed that continuing a long-term outcomes study as requested by the FDA may not be
economically feasible and has decided to discontinue all MASH-related investment, which has a
negative impact on MASH market.
We may experience numerous unexpected events during, or as a result of, clinical trials that
could delay or prevent our ability to receive regulatory approval or commercialize our drug
candidates, including but not limited to:
• regulators may not authorize us or our investigators to commence a clinical trial or
conduct a clinical trial at a prospective trial site;
• clinical trials of our drug candidates may produce negative or inconclusive results,
and we may decide, or regulators may require us, to conduct additional clinical trials
or abandon drug development programs;
• the number of patients required for clinical trials of our drug candidates may be larger
than we anticipate, enrollment may be insufficient or slower than we anticipate or
patients may drop out at a higher rate than we anticipate;
• our CROs may fail to comply with regulatory requirements or meet their contractual
obligations to us in a timely manner, or at all;
• we might have to suspend or terminate clinical trials of our drug candidates for
various reasons, including a finding of a lack of clinical response or a finding that
participants are being exposed to unacceptable health risks;
• regulators may require that we or our investigators suspend or terminate clinical
research for various reasons, including non-compliance with regulatory
requirements;
• the cost of clinical trials of our drug candidates may be greater than we anticipate; or
• the supply or quality of our drug candidates or other materials necessary to conduct
clinical trials of our drug candidates may be insufficient or inadequate.
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If we do not achieve one or more of these factors in a timely manner, we may be unable to
commercialize our drug candidates at all which would materially harm our business, and we may
fail to generate sufficient revenues or cash flows to continue our operations. These factors present
uncertainty and material risks to our commercial success and may cause potential investors to lose
a substantial amount, or substantially all, of their investments in our business.
We mayf ace inten se com petition and rapid technolo gicalc h ange and the possibility th at our
com petitor s may develo p ther apies that are simil ar, more advance d, or more effective th an
our s, which m ay adver sely affect our fin anci al con dition and our ability to succe ssfully
commerci alize our drug
candidates.
We are developing our drug candidates in competition with a number of biopharmaceutical
companies that currently market and sell drugs or are pursuing the development of drugs for the
same indications. Our competitors may develop generic or biosimilar drugs if the patent protection
of our drug candidates were to expire. Many of our competitors have significantly greater
financial, development, manufacturing, marketing, sales and supply resources or experience than
we do. Our commercial opportunity and success will be reduced or eliminated, if any competing
products become available that are more effective or cost-efficient than ours.
We also face fierce competition from existing products and product candidates under
development in the entire MASH, T2DM, SHTG, PSC and PBC market. In addition to approved
therapies, there are a large number of competing drug candidates currently under different clinical
stages. We may also face potential competition from existing products used off-label for MASH
and PSC. Those existing products may also be developed to expand their indications targeted by
the Core Product. As multiple product candidates are currently in Phase III clinical trials for each
of the targeted indications of the Core Product, our development and commercialization of Core
Product may be adversely affected by some or all of such product candidates that receive NDA
approval prior to the Core Product. For example, the FDA may request head-to-head studies for
HTD1801 before the granting of the approval, which may impose higher risk of clinical failure and
also delay the original development plan.
Our clinic al develo pment progress coul d be delayed or otherwi se adver sely affecte dd ue to
our re source sa lloc ation.
We may not be able to initiate or continue clinical trials for our drug candidates if we are
unable to allocate sufficient resources to participate in these trials. We have historical and potential
delay of clinical trials due to prioritisation of resources for the clinical development of the Core
Product and other product candidates. For example, the longtime gap between the completion of
the MASH Phase IIa clinical trial and the initiation of the MASH Phase IIb clinical trial for
HTD1810 and no clinical development for PSC since August 2020 and for PBC since May 2022.
Significant clinical trial delays may increase our development costs and could shorten any periods
during which we have the exclusive right to commercialize our drug candidates or allow our
competitors to bring drugs to market before we do. This could impair our ability to commercialize
our drug candidates and may harm our business and results of operations.
RISK FACTORS
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If our drug candidates fail to demon strate safety and effic acy to the satisfaction of re gulatory
authoritie s or do not otherwi se produce positive re sult s,w em ay incur addition alc o sts or
experience delays in com pletin g,o rm ay ultim ately be un able to com plete, the develo pment
and commerci aliz ation of our drug candidates.
Before obtaining regulatory approvals for the commercialization of our drug candidates, we
must conduct extensive clinical trials to demonstrate the safety and efficacy of our drug candidates
in humans. If the results of the clinical trials of our drug candidates are not positive or only
modestly positive for proposed indications, or if they raise safety concerns, any or some of the
following would occur:
• regulatory approvals for our drug candidates would be delayed or denied;
• we may be required to conduct additional clinical trials or other testing of our drug
candidates beyond our current development plan;
• we may be required to add labeling statements, such as a “boxed” warning or a
contraindication;
• we may be required to create a medication guide outlining the risks of the adverse
effects for distribution to patients;
• we may be required to implement a risk evaluation and mitigation strategy program,
including medication guides, doctor communication plans and other risk management
tools with restricted distribution methods and patient registries;
• we may not be able to obtain regulatory approvals for all the proposed indications as
intended;
• we may be subject to restrictions on how the drug is distributed or used;
• we may be sued or held liable for injury caused to individuals exposed to or taking our
drug candidates;
• we may be unable to obtain reimbursement for use of the drug; or
• conditional regulatory approval of our drug candidates may require us to conduct
confirmatory studies to verify the predicted clinical benefit and additional safety
studies. The results from such studies may not support the clinical benefit, which
would result in the approval being withdrawn.
For example, HTD1801 experienced significant rebound of ALP during the follow-up period
for the PBC Phase II clinical trial. Although it is due to a withdrawal of HTD1801 treatment, if
HTD1801 fails to demonstrate safety and efficacy to the satisfaction of regulatory authorities or do
not otherwise produce positive results in future clinical trials, we would not be able to realize any
revenue on HTD1801. If HTD1801 ultimately fails to receive regulatory approvals due to
unsatisfactory clinical trial results, our business, financial condition, results of operations and
prospects would be materially and adversely affected.
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If we lo se the F astT r ack De signation or the Or phan Dru g Designation by the FDA for our
drug candidates, the time and cost we incur to obt ain re gulatory approvals may incre ase.
HTD1801 is the first primary sclerosing cholangitis (“ PSC”) drug that has obtained Fast
Track Designation from the FDA, followed by an Orphan Drug Designation in the United States,
according to CIC. However, there is no assurance that an Orphan Drug Designation or Fast Track
Designation will not be lost. Any future policies, or changes to current polices might require us to
change our planned clinical study design or otherwise spend additional resources and effort to
obtain approval of our drug candidates. In addition, policy changes may contain significant
limitations related to use restrictions for certain age groups, warnings, precautions or
contraindications, or may be subject to burdensome post-approval study or risk management
requirements. If we are unable to obtain regulatory approval for our drug candidates, or any
approval contains significant limitations, we may not be able to obtain sufficient funding or
generate sufficient revenue to continue the development of our drug candidates or any other drug
candidates that we may in-license, acquire or develop in the future.
Mosto fo u r pipeline product sa re in preclinic al develo pment stage, thu s facin g higher clinic al
risk
s.
We have three product candidates that are in preclinical development stage. We may face
higher clinical risk, for instance, we might have to suspend or terminate preclinical studies of
certain drug candidates for various reasons, including unexpected safety concerns, severe adverse
effects, undesirable side effects or other unexpected characteristics, causing us or investigators to
suspend or terminate the trials. These factors present uncertainty and material clinical risks to our
commercial success and may cause potential investors to lose a substantial amount, or
substantially all, of their investments in our business.
The re gul atory app rov al proce sses of the NMPA, FDA, EMA and other com parable
regulatory authoritie sa re time-con sumin ga nd may evolve over time, and if we are ultim ately
un able to obt ain re gul atory app rov al for our dru g candidate s, our bu sine ss will be
substanti ally h arme d.
The time required to obtain the approval of the NMPA, FDA, EMA, TGA and other
comparable regulatory authorities is uncertain and depends on numerous factors, including the
substantial discretion of the regulatory authorities. Generally, such approvals take years to be
obtained following the commencement of preclinical studies and clinical trials. In addition,
approval policies, regulations or the type and amount of clinical data necessary to gain approval
may change during the course of a drug candidate’s clinical development and may vary among
jurisdictions.
We cannot guarantee that we will be able to obtain regulatory approvals for our other
existing drug candidates or any drug candidates we may discover, in-license or acquire and seek to
develop in the future. Our drug candidates could fail to receive the regulatory approval of the
NMPA, FDA, EMA, TGA or a comparable regulatory authority for many reasons, including but not
limited to:
• disagreement with the design or implementation of our clinical trials;
• failure to demonstrate that a drug candidate is safe and effective and potent for its
proposed indication;
RISK FACTORS
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• failure of our clinical trial results to meet the level of statistical significance required
for approval;
• failure of our clinical trial process to pass relevant GCP inspections;
• disagreement with our interpretation of data from preclinical studies or clinical trials;
• insufficient data collected from the clinical trials of our drug candidates to support
the submission and filing of an NDA or other submissions or to obtain regulatory
approval;
• failure of our drug candidates to pass current GMP, inspections during the regulatory
review process or across the production cycle of our drug candidates;
• failure of our clinical sites to pass audits carried out by the NMPA, FDA, EMA, TGA
or other comparable regulatory authorities, resulting in a potential invalidation of our
research data;
• changes in approval policies or regulations that render our preclinical and clinical
data insufficient for obtaining approvals; or
• failure of our clinical trial process to keep up with any scientific or technological
advancements required by approval policies or regulations.
The NMPA, FDA, EMA, TGA or a comparable regulatory authority may require more
information, including additional preclinical or clinical data, to support approval, which may delay
or prevent approval and our commercialization plans. Even if we were to obtain approval,
regulatory authorities may approve any of our drug candidates for fewer or more limited
indications than we request, grant approval contingent on the performance of costly
post-marketing clinical trials, or approve a drug candidate with an indication that is not desirable
for the successful commercialization of that drug candidate. Legislative and regulatory proposals
may also, from time to time, be made to expand existing requirements. For example, increased
scrutiny by the United States Congress of the FDA’s approval process may significantly delay or
prevent marketing approval, and potentially introduce more stringent product labeling and
post-marketing conditions. Any of the foregoing scenarios could materially harm the commercial
prospects of our drug candidates.
We may not be able to i dentify or discover new drug candidates.
We may fail to identify drug candidates for clinical development for a number of reasons.
For example, our research methodology may be unsuccessful in identifying potential drug
candidates or those we identify may be shown to have harmful adverse effects or other
characteristics that make them unmarketable or unlikely to receive regulatory approval. We have
devoted significant resources to compound discovery efforts through our drug discovery approach,
and we cannot guarantee that we will be successful in identifying potential drug candidates.
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Research programs to pursue the development of our drug candidates for additional
indications and to identify new drug candidates and drug targets require substantial technical,
financial and human resources. Our research programs may initially show promise in identifying
potential indications and/or drug candidates, yet fail to yield results for clinical development for a
number of reasons, including but not limited to:
• the research methodology used may not be successful in identifying potential
indications and/or drug candidates;
• potential drug candidates may, after further study, be shown to have harmful adverse
effects or other characteristics that indicate they are unlikely to be effective drugs; or
• it may take greater human and financial resources to identify additional therapeutic
opportunities for our drug candidates or to develop suitable potential drug candidates
through internal research programs than we will possess, thereby limiting our ability
to diversify and expand our drug portfolio.
Accordingly, there can be no assurance that we will ever be able to identify additional
therapeutic opportunities for our drug candidates or to develop suitable potential drug candidates
through internal research programs, which could materially adversely affect our future growth and
prospects. We may focus our efforts and resources on potential drug candidates or other potential
programs that ultimately prove to be unsuccessful.
If we encounter del ays or difficultie s enrollin gs ubject s in our clinic al tri als, clinic al
develo pment of our drug candidates coul d be delayed or otherwi se adver sely affecte d.
The timely completion of clinical trials in accordance with their protocols depends, among
other things, on our ability to enroll a sufficient number of patients or participants who remain in
the trial until its conclusion. We may not be able to initiate or continue clinical trials for our drug
candidates if we are unable to locate and enroll a sufficient number of eligible patients or
participants to participate in these trials, or if there are delays in the enrollment of eligible patients
or participants as a result of the competitive clinical enrollment environment. We may experience
difficulties in patient enrollment in our clinical trials for a variety of reasons, including but not
limited to:
• design and eligibility criteria for the clinical trial in question;
• perceived risks and benefits of the drug candidate under study;
• our resources to facilitate timely enrollment in clinical trials;
• patient referral practices of physicians;
• availability of competing therapies also undergoing clinical trials;
• our investigators’ or clinical trial sites’ efforts to screen and recruit eligible patients
or participants; or
• proximity and availability of clinical trial sites for prospective patients or
participants.
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In addition, some of our competitors have ongoing clinical trials for drug candidates that
treat the same indications as our drug candidates, and patients or participants who would otherwise
be eligible for our clinical trials may instead enroll in the clinical trials of our competitors’ drug
candidates, which may further delay our clinical trial enrollments.
Even if we are able to enroll a sufficient number of patients or participants in our clinical
trials, delays in patient enrollment may result in increased costs or may affect the timing or
outcome of the planned clinical trials, which could prevent completion of these trials and adversely
affect our ability to advance the development of our drug candidates.
We work with v ariou s thir dp a rtie s to develo p our drug candidates.I ft h ese thir dp a rtie s fail
to duly perform their contr actu al obli gation s or meet ex pecte d timeline s,w em ayb eu n able to
obt ain re gulatory approvals for, or commerci alize, our drug candidates, and our bu sine ss,
financi al con d
ition and result s of o peration s coul d be m ateri ally anda d ver sely affecte d.
We have worked with and may continue to work with third parties on our ongoing preclinical
and clinical programs. For example, we rely on CROs, clinical trial sites, consultants and other
third parties to monitor, support and/or conduct preclinical studies and clinical trials of our drug
candidates. We work with these parties to execute our preclinical studies and clinical trials, and
control only certain aspects of their activities. Nevertheless, we are responsible for ensuring that
each of our studies is conducted in accordance with the applicable protocols, legal and regulatory
requirements and scientific standards, and our collaboration with the CROs does not relieve us of
our regulatory responsibilities. We, our CROs for our clinical programs and our clinical
investigators are required to comply with GCPs, which are regulations and guidelines enforced by
the NMPA, FDA, EMA, TGA and other comparable regulatory authorities for all of our drugs in
clinical development. If we or any of our CROs or clinical investigators fail to comply with the
applicable GCP, the clinical data generated in our clinical trials may be deemed unreliable and the
NMPA, FDA, EMA, TGA or other comparable regulatory authorities may require us to perform
additional clinical trials before approving our marketing applications. In addition, our pivotal
clinical trials must be conducted with products produced under GMP regulations. Any failure to
comply with these regulations may require us to repeat clinical trials, which would delay the
regulatory approval process.
If any of our relationships with these third-party CROs terminates, we may not be able to
enter into arrangements with alternative CROs or to do so on commercially reasonable terms. In
addition, our CROs are not our employees, and except for remedies available to us under our
agreements with such CROs, we cannot control whether or not they devote sufficient time and
resources to our ongoing clinical and nonclinical programs. If CROs fail to duly perform their
contractual obligations or meet expected deadlines, if they need to be replaced or if the quality or
accuracy of the clinical data they or our clinical investigators obtain is compromised due to failure
to adhere to our clinical protocols, regulatory requirements or for other reasons, our clinical trials
may be extended, delayed or terminated and we may not be able to obtain regulatory approvals for,
or successfully commercialize, our drug candidates. Switching or adding additional CROs involves
additional cost and delays, which can materially influence our ability to meet our desired clinical
development timelines. Any of the foregoing events may cause cost increases, restrict our ability to
generate revenue and have a material adverse effect on our business and prospects.
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Our ability to generate future revenue is dependent on our ability to work effectively with
collaborators to develop our drug candidates, including to obtain regulatory approvals. Our
arrangements with collaborators will be critical to the successful commercialization of our drug
candidates and future products. We rely on collaborators in various respects, including to
undertake research and development programs and conduct clinical trials, manage or assist with
the regulatory filings and approval process, and to assist with our commercialization efforts. We do
not control our collaborators, and therefore there can be no assurance that these third parties will
adequately and timely perform all of their obligations under their agreements with us. If they fail to
complete the remaining studies successfully, or at all, it could delay or adversely affect the
obtaining of regulatory approvals. There can be no assurance of the satisfactory performance of
any of our collaborators, and if any of our collaborators breach or terminate their agreements with
us, we may not be able to successfully commercialize the product which could materially and
adversely affect our business, financial condition, cash flows and results of operations. In addition,
we may rely on third parties to perform certain specification tests on our drug candidates prior to
delivery to patients. If these tests are not appropriately carried out and test data are not reliable,
patients could be put at risk of serious harm and regulatory authorities could place significant
restrictions on us until deficiencies are remedied.
If we c annot m aint ain or develo p clinic al coll abor ation sa nd rel ation ships with our princi pal
inve stigator s,k e yo pinion le aders, physici ansa nd expert s, our re sult s of o peration sa nd
prospect s coul d be adver sely affecte d.
Our relationships with principal investigators (“ PIs”), key opinion leaders (“ KOLs”),
physicians and experts play an important role in our research and development and marketing
activities. We have established extensive interaction channels with PIs, KOLs, physicians and
experts to gain first-hand knowledge of unmet clinical needs and clinical practice trends, which is
critical to our ability to develop new market-responsive drugs. However, we cannot assure you that
we will be able to maintain or strengthen our clinical collaborations and relationships with our PIs
and KOLs, physicians and experts, or that our efforts to maintain or strengthen such relationships
will yield the successful development and marketing of new products. These industry participants
may leave their roles, change their business or practice focus, choose to no longer cooperate with
us or cooperate with our competitors instead. Even if they continue to cooperate with us, their
market insights and perceptions, which we take into account in our research and development
process, may be inaccurate and lead us to develop products that do not have significant market
potential. Moreover, we cannot assure you that our academic promotion and marketing strategy
will continue to serve as an effective marketing strategy. Industry participants may no longer want
to collaborate with us or attend our conferences, and our marketing strategy may no longer be able
to yield results that are commensurate to our efforts spent. If we are unable to develop new drugs
or generate returns from our relationships with industry participants as anticipated, or at all, our
business, financial condition and results of operations may be materially and adversely affected.
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Result s of e arlier clinic al tri als may not be predictive of re sult s of l ater- stage clinic al tri als.
The results of preclinical studies and early clinical trials of our drug candidates may not be
predictive of the results of later phase clinical trials. Drug candidates in later stages of clinical
trials may fail to show the desired safety and efficacy traits despite having progressed through
preclinical studies and initial and early phase clinical trials. A number of companies in the
pharmaceutical and biotechnology industries have suffered significant setbacks in advanced
clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding promising results
in earlier trials. Future clinical trial results may not be favorable for these and other reasons.
In some cases, there can be significant variability in safety and/or efficacy results between
different trials of the same drug candidate due to numerous factors, including changes in trial
procedures set forth in protocols, differences in the size and type of the patient populations
including genetic differences, patient adherence to the dosing regimen and other trial protocols and
the rate of dropout among clinical trial participants. As drug candidates are developed through
preclinical to early- to late-stage clinical trials towards approval and commercialization, it is
customary that various aspects of the development program, such as manufacturing and
formulation, are altered along the way in an effort to optimize processes and results. Such changes
carry the risk that they will not achieve these intended objectives. In the case of any trials we
conduct, results may differ from earlier trials due to the larger number of clinical trial sites and
additional countries and languages involved in such trials. Any of these changes could make the
results of planned clinical trials or other future clinical trials we may initiate less predictable and
could cause our drug candidates to perform differently, which could delay completion of clinical
trials, delay approval of our drug candidates and/or jeopardize our ability to commence
commercialization of our drug candidates.
All m ateri al aspect s of the re search, develo pment and commerci aliz ation of pharmaceutic al
product sa re he avily re gulated. Any f ailure to com ply with relev ant l awsa nd regula
tion s may
adver sely affect the bu sine ss a nd result s of o peration s of our Grou p.
All jurisdictions in which we intend to conduct our biopharmaceutical industry activities
regulate these activities in great depth and detail. These jurisdictions strictly regulate the
pharmaceutical industry, and in doing so they employ extensive regulations governing the
development, approval, manufacturing, marketing, sales and distribution of pharmaceutical
products. Differences in regulatory regimes across jurisdictions may lead to a higher compliance
burden.
The process of obtaining regulatory approvals and compliance with appropriate laws and
regulations requires the expenditure of substantial time and financial resources. Failure to comply
with the applicable requirements at any time during the product development process and approval
process, or after approval, may subject an applicant to administrative or judicial sanctions. These
sanctions could include but are not limited to: refusal to approve pending applications; withdrawal
of an approval; license revocation; clinical hold; mandatory product recalls; product seizures; total
or partial suspension of production or distribution; injunctions, refusals of government contracts;
injunctions, fines and other civil or criminal penalties. Failure to comply with these regulations
could therefore have a material adverse effect on our business.
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We may not be able to com ply with on goin g regulatory obli gation sa nd continue d regulatory
review even if we receive re gulatory approval for our drug candidates.
Once our drug candidates are approved, they will be subject to ongoing regulatory
requirements for manufacturing, labeling, packaging, storage, advertising, promotion, sampling,
record-keeping, post-marketing studies, and submission of safety, efficacy, and other post-market
information in different jurisdictions, such as the United States, China and Europe. For example, in
order to produce drugs for sales, we may become subject to extensive laws and regulations
enforced by the NMPA, FDA, EMA, TGA and other applicable regulatory authorities, including
those ensuring that quality control and manufacturing procedures conform to current GMP
regulations. Moreover, any new legislation addressing drug safety issues could result in increased
costs to ensure compliance with ongoing regulatory requirements.
The NMPA, FDA, EMA, TGA or other applicable regulatory authorities may withdraw its
approval if compliance with regulatory requirements and standards is not maintained or if
problems occur after the drugs reach the market. Later discovery of previously unknown problems
with our drug candidates, including but not limited to adverse events of unanticipated severity or
frequency, or with our manufacturing processes, or failure to comply with regulatory requirements,
may result in voluntary or mandatory product recalls; revocation of or refusal to grant permits and
approvals; revisions to the approved labeling to add new safety information; imposition of
post-market studies or clinical studies to assess new safety risks; or imposition of distribution
restrictions or other restrictions under a risk evaluation and mitigation program.
The NMPA, FDA, EMA, TGA and other applicable regulatory authorities also strictly
regulate the marketing, labeling, advertising and promotion of products that are placed on the
market. Drugs may be promoted only for their approved indications and for use in accordance with
the provisions of the approved label. The NMPA, FDA, EMA, TGA and other applicable regulatory
authorities actively enforce the laws and regulations prohibiting the promotion of off-label uses,
and a company that is found to have improperly promoted off-label uses may be subject to
significant liability.
Moreover, the biopharmaceutical market is heavily regulated in China. Changes in
government regulations or in practices relating to the biopharmaceutical industry, such as a
relaxation in regulatory requirements or the introduction of simplified approval procedures which
will lower the entry barrier for potential competitors, or an increase in regulatory requirements
which may cause difficulty for us to satisfy such requirements, may have a material adverse impact
on our business, financial condition, results of operations and prospects.
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RISKS RELATING TO MANUFACTURING AND COMMERCIALIZATION OF OUR
DRUG CANDIDATES
We work with thir dp a rtie s to m anuf acture ap ortion of our drug candidates for clinic al
develo pment. Our bu sine ss coul d be h arme d if tho se thir dp a rtie s fail to deliver sufficient
quantitie s of product s.
We currently do not have in-house manufacturing facilities. Currently and in the long term
future, we plan to work with qualified CDMOs (including CMOs) to manufacture product
candidates for preclinical and clinical supply. We also procure technical services, including CRO
and CDMO services and consulting services that support our clinical trials and preclinical studies.
Reliance on third-party manufacturers would expose us to the following risks:
• we may be unable to identify manufacturers on acceptable terms, or at all, because the
number of potential manufacturers is limited and the NMPA, FDA, EMA, TGA or
other comparable regulatory authorities must evaluate and/or approve any
manufacturers as part of their regulatory oversight of our drug candidates;
• our third-party manufacturers might be unable to timely manufacture our drug
candidates or produce the quantity and quality required to meet our clinical and
commercial needs, if any;
• manufacturers are subject to ongoing periodic unannounced inspection and other
government regulations by the NMPA, FDA, EMA, TGA or other comparable
regulatory authorities to ensure strict compliance with GMP. We do not have control
over third party manufacturers’ compliance with these regulations and requirements;
• we may not own, or may have to share, the intellectual property rights to any
improvements made by our third-party manufacturers in the manufacturing process
for our drug candidates;
• manufacturers may not properly obtain, protect, maintain, defend or enforce our
intellectual property rights or may use our intellectual property or proprietary
information in a way that gives rise to actual or threatened litigation that could
jeopardize or invalidate our intellectual property or proprietary information or expose
us to potential liability;
• manufacturers may infringe, misappropriate, or otherwise violate the patent, trade
secret, or other intellectual property rights of third parties;
• raw materials and components used in the manufacturing process, particularly those
for which we have no other source or supplier, may not be available or may not be
suitable or acceptable for use due to material or component defects; and
• our contract manufacturers and suppliers may be subject to inclement weather, as
well as natural or man-made disasters.
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However, given the complex manufacturing nature of HTD1801, termination or change with
our CDMOs can adversely affect our R&D and commercialization of HTD1801, such as delaying
or preventing the completion of our clinical trials or the approval of HTD1801.
We work with thir dp a rtie s for the clinic al develo pment and commerci aliz ation of our drug
candidates.W em ayf ail to i dentify com petent thir dp a rtie s for such purposes,f ail to achieve
the ex pecte ds yner gies with the clinic al develo pment partner s, and have little or no control
over the m arketin ga nds a les effort s of the commerci aliz ation partner
s.
We may also pursue collaborative arrangements regarding the sales and marketing of our
product candidates. On August 29, 2020, we entered into a license-out agreement with Hepalink to
promote the commercialization of HTD1801 for NASH and PSC in Europe. According to the
agreement, Hepalink may determine at its sole discretion the commercialisation and sales plan of
HTD1801 for NASH and PSC in Europe. Generation of revenue from HTD1801 after it is approved
for marketing will partly depend upon the efforts of Hepalink, which may not be successful. We
may have little or no control over the marketing and sales efforts of Hepalink. Therefore, our
revenue generated from the commercialization collaboration model may be lower than the revenue
that we would have generated if we commercialized the HTD1801 ourselves. We also face
competition in our search for third parties to assist us with the sales and marketing efforts of our
product candidates. We cannot assure you that we will be able to establish or maintain
relationships with third-party collaborators to successfully commercialize our product candidates,
and as a result, we may not be able to generate product revenue.
In addition, we may pursue collaborative arrangements regarding the future clinical
development of our product candidates. For example, we are also seeking partners on the
development of HTD1801 for indications of PSC and PBC. As of the Latest Practicable Date, no
partners had been identified. Despite the rebound in liver biochemistry during the follow-up period
in the Phase II trial for PBC and a long period of clinical development suspension for the PBC and
PSC indications, we have not encountered any difficulties in identifying collaboration
opportunities with global partners for future clinical development and commercialisation of
HTD1801 for PBC and PSC. However, we may not achieve the revenue and cost synergies expected
from the collaboration. These synergies are inherently uncertain, and are subject to significant
business, economic and competitive uncertainties and contingencies, many of which are difficult to
predict and are beyond our control. Even if we achieve the expected benefits, they may not be
achieved within the anticipated timeframe. Also, the synergies from our collaboration with
partners may be offset by other costs incurred in the collaboration, increases in other expenses,
operating losses or problems in the business unrelated to our collaboration. As a result, there can
be no assurance that these synergies will be achieved.
We may fail to identity competent third parties for the future clinical development and
commercialization of our drug candidates, or fail to identify such partners within the anticipated
timeframe, which may result in delay or termination of clinical development and/or
commercialization of our drug candidates. Also, disputes may arise between us and our
collaboration partners. Such disputes may cause delay or termination of the research, development
or commercialization of our drug candidates, or may result in costly litigation or arbitration that
diverts management attention and resources.
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Our drug candidates mayf ail to achieve the degr e eo fm arket acce ptance by physici ans,
patient s, thir d-party payer sa nd other s in the me dical community nece ssary for commerci al
succe ss.
Even if we are able to receive the requisite regulatory approvals of our existing and future
drug candidates, such drug candidates may fail to gain sufficient market acceptance by physicians,
patients, third-party payers and other relevant parties in the medical community. If drug candidates
do not achieve an adequate level of acceptance, we may not generate significant revenue from our
product portfolio and we may not become profitable. The degree of market acceptance of our drug
candidates will depend on a number of factors, including but not limited to:
• the clinical indications for which our drug candidates are approved;
• physicians’ and patients’ perception of our drug candidates as a safe and effective
treatment;
• the potential and perceived advantages of our drug candidates over alternative
treatments;
• the prevalence and severity of any side effects;
• product labeling or product insert requirements of the NMPA, FDA, EMA, TGA or
other applicable regulatory authorities;
• limitations or warnings contained in the labeling approved by the NMPA, FDA, EMA,
TGA or other applicable regulatory authorities;
• the timing of market introduction of our drug candidates as well as competing drugs;
• the cost of treatment in relation to alternative treatments;
• the availability of adequate coverage and reimbursement by government authorities
under the National Reimbursement Drug List (“ NRDL ”) (ͦ፽) and
other government-sponsored medical insurance programs, or by third-party payers;
• the willingness of patients to pay out-of-pocket in the absence of coverage and
reimbursement by third-party payers and government authorities;
•
relative convenience and ease of administration, including as compared to alternative
treatments and competitive therapies; or
• the effectiveness of our sales and marketing efforts.
If our drug candidates are approved but fail to achieve market acceptance among physicians,
patients, hospitals or others in the medical community, we will not be able to generate significant
revenue. Even if our drugs achieve market acceptance, we may not be able to maintain that market
acceptance over time if new products or technologies are introduced that are more favorably
received than our drugs, are more cost effective or render our drugs obsolete.
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Our drugs may not be covere d by reimbur sement programs or m ay become subject to
unf avor able reimbur sement practice s, either of which coul d harm our bu sine ss.
Our ability to commercialize any approved drug candidates successfully also will depend in
part on the extent to which reimbursement for these drugs and related treatments will be available
from government health administration authorities and/or third-party payers, such as private health
insurers and health maintenance organizations. The regulations that govern reimbursement for new
therapeutic drugs vary substantially from country to country.
In China, the NRDL and Provincial Reimbursement Drug Lists (“ PRDL ”) (ۜ
ͦ፽) include drugs under the National Medical Insurance Catalogue, which affect the amounts
reimbursable to program participants for those drugs. There can be no assurance that any of our
drug candidates will be included in the NRDL or the PRDL after initial approval for commercial
sale. Pharmaceutical products included in the NRDL or the PRDL are typically generic and
essential drugs. Innovative drugs similar to our drug candidates have historically been more
limited on their inclusion in the NRDL or the PRDL due to cost constraints. If we were to
successfully launch commercial sales of our products but fail in our efforts to have our products
included in the NRDL or PRDL, our revenue from commercial sales will be highly dependent on
patient self-payment, which can make our products less competitive.
In addition, a key trend in the global healthcare industry is cost containment. Government
authorities and third-party payers have attempted to control costs by limiting coverage and the
amount of reimbursement for particular medications. As a result, even if our drug candidates are
successfully approved by the NRDL or PRDL or any other reimbursement programs sponsored by
government health administration authorities and third-party payers, our potential revenue from
the sales of these products could still decrease as a result of the significantly lowered prices we
may be required to charge for our products to be included in such reimbursement programs due to
price control policies. Increasingly, third-party payers are requiring that companies provide them
with predetermined discounts from list prices and are challenging the prices charged for medical
products.
We cannot assure you that reimbursement will be available for our drug candidates that we
commercialize and, if reimbursement is available, the level of reimbursement. Reimbursement may
impact the demand for, or the price of, any approved drug candidate that we commercialize.
Obtaining or maintaining reimbursement for approved drug candidates may be particularly
difficult because of the higher prices often associated with drugs administered under the
supervision of a physician. If reimbursement is not available or is available only to limited levels,
we may not be able to successfully commercialize any drug candidate that we successfully
develop.
There may also be significant delays in obtaining reimbursement for approved drug
candidates, and reimbursement coverage may be more limited than the approved indications of the
drug candidates by the NMPA, FDA, EMA, TGA or other comparable regulatory authorities.
Moreover, eligibility for reimbursement does not imply that any drug will be paid for in all cases or
at a rate that covers our costs, including research, development, manufacture, sale and distribution.
Payment rates may vary according to the uses of the drugs and the clinical setting in which the
drugs are used, may be based on payments allowed for lower cost drugs that are already
reimbursed, and may be incorporated into existing payments for other services. Net prices for
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drugs may be reduced by mandatory discounts or rebates required by government healthcare
programs or private payers and by any future weakening of laws that presently restrict imports of
drugs from countries where they may be sold at lower prices. Our inability to promptly obtain
reimbursement coverage at intended payment rates from both government funded and private
payers for our drug candidates and any new drug candidates that we develop could have a material
adverse effect on our business, operating results, and overall financial conditions.
The m anuf acture of pharmaceutic al product s isa highly ex actin ga nd com plex proce ss, and if
we encounter problem s in m anuf acturin g our product s, our bu sine ss coul d be m ateri ally and
adver sely affecte d.
The manufacturing of our drug candidates is highly complex and we have limited experience
in commercial manufacturing. Problems may arise during manufacturing for a variety of reasons,
including but not limited to equipment malfunction, failure to follow specific protocols and
procedures, changes in product specification, low quality or insufficient supply of raw materials,
changes in the types of products produced, physical limitations that could inhibit continuous
supply, man-made or natural disasters and other environmental factors. Products with quality
issues may have to be discarded, resulting in product shortages or additional expenses. This could
lead to, among other things, increased costs, lost revenue, damage to customer relationships, time
and expense spent investigating the cause and, depending on the cause, similar losses with respect
to other batches or products. If problems are not discovered before the product is released to the
market, recall and product liability costs may also be incurred.
Manufacturing methods and formulation are sometimes altered through the development of
drug candidates from clinical trials to approval, and further to commercialization, in an effort to
optimize manufacturing processes and results. Such changes carry the risk that they will not
achieve these intended objectives. Any of these changes could cause the drug candidates to
perform differently and affect the results of planned clinical trials or other future clinical trials
conducted with the altered materials. This could delay the commercialization of drug candidates
and require bridging studies or the repetition of one or more clinical trials, which may result in
increases in clinical trial costs, delays in drug approvals and jeopardize our ability to commence
product sales and generate revenue.
The m arket size of our drug candidates mig
ht be smaller th anw ee x pecte d.
Our estimates regarding our eligible patient population, pricing and available coverage and
reimbursement determine our estimated market size, which may differ significantly from the actual
market addressable by our drug candidates. Our estimates of both the number of people who have
these diseases, as well as the subset of people with these diseases who have the potential to benefit
from treatment with our drug candidates, are based on our beliefs and analysis. These estimates
have been derived from a variety of sources, including patient foundations or market research, and
may prove to be incorrect. Further, new studies may change the estimated incidence or prevalence
of the diseases we are targeting. The number of our target patients may turn out to be lower than
expected. For example, the Phase IIa and Phase IIb trial (HTD1801.PCT012/014) IND approval of
our Core Product as well as its FTD approval were granted for the treatment of MASH in general.
Although we conducted Phase IIa and Phase IIb trials for the treatment of MASH with T2DM and
MASH with T2DM or prediabetes, respectively, our planned pivotal Phase III clinical trial for our
Core Product and its planned NDA are intended to enroll MASH patients with or without
diabetes. Unless in the case that, based on our Phase IIa and Phase IIb clinical results, we decide to
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specifically conduct our planned Phase III clinical trial for the treatment of MASH with T2DM
instead of MASH in general, then our market potential may be more limited than we expected.
Likewise, the potentially addressable patient population for each of our drug candidates may be
limited or may not be receptive to treatment with our drug candidates, and new patients may
become increasingly difficult to identify or access. If the market opportunities for our drug
candidates are smaller than we estimate, it could have an adverse effect on our business, financial
condition, results of operations and prospects.
Our Core Product has been developed for the indications of MASH, T2DM, SHTG, PSC and
PBC. However, given the presence of various prevention methods, such as lifestyle changes,
regular exercise and weight management, as well as existing and potential alternative treatment
options, such as drugs for obesity including but not limited to wegovy and ozempic, for our
targeted indications, the market potential of the Core Product may be limited. As a result, even
though the number of patients of our targeted indications may be large, the actual addressable
patients of our drug candidates may be limited and smaller than we expected.
Gui deline s, recommen dation s, ands tudiesp ubli shed by v ariou s organiz ation s coul dd isfavor
our drug candidates.
Government agencies, professional societies, practice management groups, private health
and science foundations and organizations focused on various diseases may publish guidelines,
recommendations or studies that affect our or our competitors’ drugs and drug candidates.
Currently, there are not any unfavorable guidelines, recommendations and studies published by
various organizations in relation to our product candidates. However, any such guidelines,
recommendations or studies that reflect negatively on our drug candidates, either directly or
relative to our competitive drug candidates, could result in current or potential decreased use
and/or sales of, and revenue from one or more of our drug candidates. Furthermore, our success
depends in part on our ability to educate healthcare providers and patients about our drug
candidates, and these education efforts could be rendered ineffective by, among other things, third
parties’ guidelines, recommendations or studies.
RISKS RELATING TO OUR FINANCIAL PROSPECTS
We h ave incurre ds ignific ant net lo ssess ince ince ption and we m ay continue to incur net
lossesa nd mayf ail to achieve or m aint ain profit ability in the future. A sa re
sult, you m ayl o se
substanti ally all of your inve stment in u s if our bu sine ss fails.
Investment in pharmaceutical or biotechnology companies is highly speculative. It entails
substantial upfront capital expenditures and significant risk that a drug candidate will fail to gain
regulatory approval or become commercially viable. We have incurred significant expenses related
to the research and development of our drug candidates. For the years ended December 31, 2021
and 2022 and the six months ended June 30, 2023, our research and development costs amounted to
RMB84.0 million, RMB182.7 million and RMB120.1 million, respectively. In addition, we also
incurred other expenses related to our operations including administrative expenses. As a result,
we recorded net losses of RMB221.1 million, RMB190.2 million and RMB549.7 million for the
years ended December 31, 2021 and 2022 and the six months ended June 30, 2023, respectively.
RISK FACTORS
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We expect to continue to incur significant expenses and operating losses for the foreseeable
future as we carry out certain activities relating to our development, including, but not limited to,
the following:
• continue to advance the clinical trials and preclinical studies of our drug candidates;
• seek regulatory approvals for our drug candidates to complete clinical development
and commence commercialization;
• commercialize any of our drug candidates for which we may obtain marketing
approval;
• seek to identify additional drug candidates;
• address any competing technological and marketing developments, including new
drugs developed by competitors;
• maintain, protect and expand our intellectual property portfolio; and
• create additional infrastructure to support our operations as a public company and our
drug development and future commercialization efforts.
We cannot guarantee that we will be able to obtain regulatory approvals for any of our drug
candidates in a timely manner, or at all. In addition, none of our drug candidates has been approved
for marketing in China or any other jurisdictions yet. Substantial investments may be incurred
before we generate any revenue from product sales. Considering the numerous risks and
uncertainties associated with regulatory approval, we are unable to accurately predict the timing or
amount of additional expenses, or when, or if, we will be able to achieve or maintain profitability.
Our expenses could increase beyond expectations if we are required by the NMPA, FDA, EMA,
TGA or other applicable authorities to perform studies in addition to those that we currently
anticipate. Even if our drug candidates are approved for commercial sale, we expect to continue
incurring significant costs associated with the manufacturing and the commercial launch of the
drug candidates.
We had net o peratin g cash outflow s, net li abilitie sa nd net current li abilitie sd urin g the Track
Recor d Perio d.
Since our inception, our operations have consumed substantial amounts of cash. We had
operating cash outflows of RMB90.5 million, RMB172.4 million and RMB143.9 million in 2021
and 2022 and the six months ended June 30, 2023, respectively. We had net liabilities of RMB272.3
million, RMB470.5 million and RMB1,028.4 million as of December 31, 2021 and 2022 and June
30, 2023, respectively. We had net current assets of RMB746.6 million, net current liabilities of
RMB468.7 million and net current assets of RMB442.4 million as of December 31, 2021,
December 31, 2022 and June 30, 2023, respectively.
We expect our expenses to increase significantly in connection with our ongoing activities,
particularly as we advance the clinical development of our clinical-stage drug candidates, continue
the research and development of our preclinical stage drug candidates, initiate additional clinical
trials of, and seek regulatory approval for, these and other future drug candidates.
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Additionally, we are exposed to credit risk on the cash and cash equivalents deposited in
financial institutions. In the event that any of them becomes insolvent and is taken into
receivership by the relevant government agencies, there will be uncertainty as to the timing and
extent to which we will be able to recover our cash on deposit at such financial institution.
While we believe we have sufficient working capital to fund our current operations for the
next 12 months, we expect that we may experience net cash outflows from our operating activities
for the foreseeable future. We may need to obtain substantial additional funding in connection with
our continuing operations through public or private equity offerings, debt financing, collaborations
or other sources. Adequate additional funding may not be available to us on acceptable terms, or at
all. If we are unable to raise capital when needed or on reasonable terms, we could have to delay,
limit, reduce or terminate our research and development programs or any future commercialization
efforts. Our inability to obtain additional funding when we need it could seriously harm our
business.
Uncert ainty over the f air v alue ch anges in our Preferre d Sharesa nd rel ated valuation m ay
materi ally affect our fin anci al con dition and result s of o peration s.
Our convertible redeemable preferred shares in relation to our Preferred Shares are
classified as financial liabilities measured at FVTPL. The estimated changes in fair value involve
the exercise of professional judgment and the use of certain bases, assumptions and unobservable
inputs, which, by their nature, are subjective and uncertain. As such, the financial liabilities
valuation has been, and will continue to be, subject to uncertainties in accounting estimation,
which may not reflect the actual fair value of these derivative financial liabilities and result in
significant fluctuations in profit or loss from year to year. Our Preferred Shares will be converted
into Shares upon the Listing, but we may still retain accumulated losses due to the loss on the fair
value change of our Preferred Shares after the Listing.
We may incur im pairment lo sses for prepayment s, other receiv able and other assets.
Our prepayments, other receivables and other assets primarily consist of short-term time
deposits, prepayments to suppliers, input value-added tax and other receivables and other current
assets. During the Track Record Period, we did not record impairment loss for prepayments, other
receivables and other assets. However, we may incur such impairment losses in the future. The
assessment of impairment losses involves a significant degree of management judgments as well as
estimates in determining the key assumptions, and unpredictable adverse changes in the future may
also result in decreases in the value of our prepayments, other receivables and other assets.
Therefore, we cannot assure you that these assumptions and estimates would not result in outcomes
that require a material adjustment to the carrying amounts of our prepayments, other receivables
and other assets in the future, which may in turn result in impairment losses. Any significant
impairment losses of prepayments, other receivables and other assets in the future could have an
adverse effect on our business, financial condition and results of operations.
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We have never gener ateda ny revenue from sales of drugp roduct s, and our ability to gener ate
revenue from sales of drugp roduct sa nd become profit able depends s ignific antly on our
succe ss in a number of f actor s.
We have no drug products approved for commercial sale, have not generated any revenue
from drug product sales, and do not anticipate generating any revenue from drug product sales until
sometime after we have received regulatory approval for the commercial sale of our drug
candidates. Our ability to generate revenue and achieve profitability depends significantly on our
success in many factors, including but not limited to:
• completing research regarding, and nonclinical and clinical development of, our
product candidates;
• obtaining regulatory approvals and marketing authorizations for product candidates
for which we complete clinical studies;
• developing a sustainable and scalable manufacturing process for our product
candidates, including establishing and maintaining commercially viable supply
relationships with third parties and establishing our own manufacturing capabilities
and infrastructure;
• launching and commercializing product candidates for which we obtain regulatory
approvals and marketing authorizations;
• addressing any competing technological and market developments;
• identifying, assessing, acquiring and/or developing new product candidates,
intellectual property and technologies;
• negotiating favorable terms in any collaboration, licensing, or other arrangements
into which we may enter;
• maintaining, protecting, expanding and enforcing our portfolio of intellectual
property rights, including patents, trademarks, trade secrets, and know-how; or
• attracting, hiring, and retaining qualified personnel.
Even if one or more of the product candidates that we develop is approved for commercial
sale, we anticipate incurring significant costs associated with commercializing any approved
product candidate. Our expenses could increase beyond expectations if we are required by the
NMPA, FDA, EMA, TGA or other regulatory authorities to change our manufacturing processes or
assays, or to perform clinical, nonclinical, or other types of studies in addition to those we
currently anticipate. If we are successful in obtaining regulatory approvals to market one or more
of our product candidates, our revenue will be dependent, in part, upon the size of the market for
the relevant product in China or the relevant jurisdictions, the accepted price for the product to be
paid with out-of-pocket expenses and the ability to get reimbursement for any amount. If the
number of patients with our addressable disease is not as significant as we estimate, the indication
approved by regulatory authorities is narrower than we expect, or the reasonably accepted
RISK FACTORS
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population for treatment is narrowed by competition, physician choice or treatment guidelines, we
may not generate significant revenue from sales of such products, even if approved. If we are not
able to generate revenue from the sale of any approved products, we may never become profitable.
We benefit from cert ain preferenti alt axt r eatment sa ndg overnment grants, the ex piration of
or ch anges to which coul da d ver sely affect our profit ability.
We currently benefit from certain preferential tax treatments. Shenzhen HighTide has been
approved as a high technology enterprise under the relevant tax rules and regulations, and
accordingly, is entitled to a preferential corporate income tax rate of 15% from 2022 to 2024. We
cannot assure you that these preferential tax treatments will continue to be available to us in the
future or that these preferential tax treatments will not be changed as a result of changes in
government policy, administrative decisions or otherwise, in which case our financial condition
and results of operations may be adversely affected.
During the Track Record Period, we recognized RMB9.8 million, RMB8.0 million and
RMB8.9 million of government grants in other income and gains for the years ended December 31,
2021 and 2022 and the six months ended June 30, 2023, respectively. The timing, amount and
criteria of government financial incentives are determined at the sole discretion of the local
government authorities and cannot be predicted with certainty before we actually receive any
financial incentive. We do not have the ability to influence local governments in making these
decisions. Local governments may decide to reduce or eliminate incentives at any time. In
addition, some of the government financial incentives are granted on a project by project basis and
subject to the satisfaction of certain conditions, including compliance with the applicable financial
incentive agreements and completion of the specific projects therein. We cannot guarantee that we
will satisfy all relevant conditions. If we fail to satisfy any such condition, we may be deprived of
the relevant incentives. We cannot assure you of the continued availability of the government
incentives currently enjoyed by us. Any reduction or elimination of incentives may have an adverse
effect on our results of operations. In addition, we may not be able to receive government grants in
the future, which may have an adverse effect on our financial condition and results of operations.
RISKS RELATING TO OUR INTELLECTUAL PROPERTY RIGHTS
We coul d be un succe ssful in obt ainin g or m aint ainin ga d equ ate patent protection for one or
more of our drug candidates throu gh intellectu al property ri ghts,o ri ft h e scopeo f s
uch
intellectu al property ri ghts obt aine d is not sufficiently bro ad, thir dp a rtie s may com pete
directly againstu s.
Our commercial success will depend, in large part, on our ability to obtain and maintain
patent and other intellectual property protection with respect to our drugs and drug candidates. We
cannot be certain that patents will be issued or granted with respect to our patent applications that
are currently pending, or that issued or granted patents will not later be found to be invalid and/or
unenforceable, be interpreted in a manner that does not adequately protect our drug candidates, or
otherwise provide us with any competitive advantage. The patent position of biotechnology and
pharmaceutical companies is generally uncertain because it involves complex legal and factual
considerations. Patent applications we had applied may not be granted in the end. As such, we do
not know the degree of future protection that we will have on our drugs and technology, if any, and
a failure to obtain adequate intellectual property protection with respect to our drug candidates
could have a material adverse impact on our business.
RISK FACTORS
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The scope of patent protection in various jurisdictions is uncertain. Changes in either the
patent laws or their interpretation in the United States, the PRC, or other countries or regions may
diminish our ability to protect our inventions, obtain, maintain, defend, and enforce our
intellectual property rights and, more generally, could affect the value of our intellectual property
or narrow the scope of our patent rights. We cannot predict whether the patent applications we are
currently pursuing and may pursue in the future will issue as patents in any particular jurisdiction
or whether the claims of any future granted patents will provide sufficient protection from
competitors.
The coverage claimed in a patent application can be significantly reduced before the patent
is issued, and its scope can be reinterpreted after issuance. Even if patent applications we own
currently or in the future issue as patents, they may not issue in a form that will provide us with any
meaningful protection, prevent competitors or other third parties from competing with us, or
otherwise provide us with any competitive advantage. In addition, the patent position of
biopharmaceutical companies generally is highly uncertain, involves complex legal and factual
questions, and has been a common subject of litigation in recent years. As a result, the issuance,
scope, validity, enforceability and commercial value of our patent rights are highly uncertain.
Obt ainin ga nd maint ainin g our patent protection depends on com pliance with v ariou s
proce dur al, document submi ssion, fee payment, and other requirement s im posed by
government al patent agencie s, and our patent protection coul d be re duce d or elimin ated for
non-com pliance with the se requirement s.
Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees
on patents and patent applications are due to be paid to the China National Intellectual Property
Administration (“ CNIPA ”), the United States Patent and Trademark Office (“
USPTO ”) and other
patent agencies in other jurisdictions in several stages over the lifetime of a patent. The CNIPA, the
USPTO and other governmental patent agencies also require compliance with a number of
procedural, documentary, and other similar provisions during the patent application process. We
work with our counsel and professionals to help us comply with these requirements with respect to
our intellectual property. Although an inadvertent lapse can in many cases be cured by payment of
a late fee or by other means in accordance with the applicable rules, there are situations in which
non-compliance can result in abandonment, loss of priority or lapse of the patent or patent
application, resulting in partial or complete loss of patent rights in the relevant jurisdiction.
Non-compliance events that could result in abandonment or lapse of a patent or patent application
include the failure to respond to official actions within prescribed time limits, nonpayment of fees,
and failure to properly legalize and submit formal documents. In any such event, our competitors
or other third parties might be able to enter the market, which would have a material adverse effect
on our competitive position, business, financial condition, results of operations and prospects.
We m ay not be able to protect our intellectu al property ri ghts throu ghout the worl d or
prevent unf air com petition by thir dp a rtie s.
We focus on protecting our intellectual property rights in our target markets, primarily the
United States, China and Europe. Filing, prosecuting, maintaining and defending patents on drug
candidates in all other countries throughout the world could be prohibitively expensive for us. Our
intellectual property rights in other jurisdictions, if obtained, can have a different scope and
strength compared to those in our target markets. In addition, the laws of certain jurisdictions do
RISK FACTORS
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not protect intellectual property rights to the same extent as the laws of our target markets.
Competitors may use our technologies in jurisdictions where we have not obtained patent
protection to develop their own drugs and further, may export otherwise infringing drugs to
jurisdictions where we have patent protection, but where enforcement rights are not as strong as
those in markets such as the United States. Consequently, we may not be able to prevent third
parties from using our inventions in all jurisdictions outside our target markets, or from selling or
importing drugs made using our inventions into our target markets or other jurisdictions. These
drugs may compete with our drug candidates and our patent rights or other intellectual property
rights may not be effective or adequate to prevent them from competing.
We may from time to time be involve d in l awsuit s to protect or enforce our patent sa nd other
intellectu al property, which coul d be ex pensive, time-con sumin ga nd unsucce ssful and may
delayu s from develo ping or commerci alizin g our drug candidates. Our patent ri ghts rel atin g
to our drug candidates coul d
be foun d invalid or unenforce able if bein g challen ged.
Litigation relating to patents and other intellectual property rights is common in the
pharmaceutical industries, and is inherently uncertain. Even if successful, litigation may result in
substantial costs and reputational harm, and distraction of our management and other employees.
Furthermore, because of the substantial amount of discovery required in connection with
intellectual property litigation, there is a risk that some of our confidential information could be
inevitably compromised by disclosure during discovery.
Competitors may infringe our patents. To counter infringement or unauthorized use, we may
be required to file infringement claims, which can be expensive and time consuming. In any
infringement proceeding, the defendant may be able to counterclaim that our patent is invalid
and/or unenforceable, and a court may uphold such claims, or otherwise refuse to stop the
opposing party from using the technology at issue, on the potential grounds that our patents do not
cover the technology in question. An adverse result in any litigation or defense proceedings could
put one or more of our patents at risk of being invalidated or interpreted narrowly and could put our
patent application at risk of not being issued.
On the other hand, if a third party were to assert claims of patent infringement,
misappropriation of trade secrets, or violation of other intellectual property rights against us, even
if we believe such claims are without merit, a court of competent jurisdiction could hold that these
third-party patents and rights are valid, enforceable and infringed, and the holders of any such
patents and rights may be able to block our ability to commercialize the applicable product unless
we obtained a license from them, or until such patents or rights expire or are finally determined to
be invalid or unenforceable. Defending against claims of patent infringement, misappropriation of
trade secrets or other violations of intellectual property rights could also be costly and
time-consuming, regardless of the outcome. Thus, even if we were to ultimately prevail, or to settle
at an early stage, such litigation could burden us with substantial unanticipated costs.
During the course of any intellectual property litigation, there could be public
announcements of the results of hearings, rulings on motions, and other interim proceedings in the
litigation. If securities analysts or investors perceive these announcements as negative, the
perceived value of our drug candidates, future drugs, programs or intellectual property could be
diminished. Accordingly, the market price of our Shares may decline. Such announcements could
also harm our reputation or the commercialization of our drug candidates, which could have a
RISK FACTORS
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material adverse effect on our business. In addition, the uncertainties associated with litigation
could have a material adverse effect on our ability to raise the funds necessary to conduct our
clinical trials and continue our in-house research programs.
Unf avor able outcome s in intellectu al property liti gation coul d limit our re search and
develo pment activitie sa nd/or our ability to commerci alize our drug candidates.
If third parties successfully assert their intellectual property rights against us, we might be
barred from using certain aspects of our technology, or barred from developing and
commercializing our drug candidates. Prohibitions against using certain technologies, or
prohibitions against commercializing our drug candidates, could be imposed by a court or by a
settlement agreement between us and a plaintiff. In addition, if we are unsuccessful in defending
against allegations that we have infringed, misappropriated or otherwise violated patent or other
intellectual property rights of others, we may be forced to pay substantial damage awards to the
plaintiff. There is inevitable uncertainty in any litigation, including intellectual property litigation.
There can be no assurance that we would prevail in any intellectual property litigation, even if the
case against us is weak or flawed.
We mayf ace intellectu al property dispute s with our bu sine ss pa rtner s.
We may be subject to claims that former employees, collaborators, contractors or other third
parties have an interest in our patents or other intellectual property, for example as an inventor or
co-inventor. When enforcing our rights in our patents or other intellectual property, we may be
subject to counterclaims that we do not own or possess clean title to one or more patents or patent
applications that cover development, manufacture, and commercialization of one or more of our
drug candidates. If we are unsuccessful in any interference proceedings or other priority or validity
disputes (including any patent oppositions) to which we or they are subject, we may lose valuable
intellectual property rights through the loss of one or more patents, or our patent claims may be
narrowed, invalidated, or held unenforceable. In addition, if we are unsuccessful in any
inventorship or ownership disputes to which we or they are subject, we may lose valuable
intellectual property rights, such as exclusive ownership of, or the exclusive right to use, our
patents.
If our tr ademarksa nd traden amesa re not adequ ately protecte d
,w em ay not be able to buil d
brand reco gnition in our m arket s of intere st and our bu sine ss mayb e adver sely affecte d.
We own registered trademarks. We may not always be able to obtain and ensure trademark
protection in territories that we consider of significant importance to us. In addition, any of our
trademarks or trade names, whether registered or unregistered, may be challenged, opposed,
infringed, cancelled, circumvented or declared generic, or determined to be infringing on other
marks, as applicable. We may not be able to protect our rights to these trademarks and trade names,
which we will need in order to build name recognition by potential collaborators or customers in
our markets of interest. Over the long term, if we are unable to establish name recognition based on
our trademarks and trade names, we may not be able to compete effectively and our business may
be adversely affected.
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Intellectu al property ri ghtsd o not nece ssarily protect u s from all potenti al thre ats to our
com petitive advantage.
As it is the case with other pharmaceutical companies, our success is heavily dependent on
intellectual property, particularly patents and trademarks of our trade names. The degree of future
protection afforded by our intellectual property rights is uncertain because intellectual property
rights have limitations, and may not adequately protect our business, or permit us to maintain our
competitive advantage. The illustrative examples include but are not limited to:
• others may be able to make products that are similar to our drug candidates but that
are not covered by the claims of the patents that we own;
• we might not have been the first to make the inventions covered by the issued patents
or pending patent applications that we own or may in the future exclusively license,
which could result in the patent applications not issuing or being invalidated after
issuing;
• we might not have been the first to file patent applications covering certain of our
inventions, which could result in the patent applications not issuing or being
invalidated after issuing;
• others may independently develop similar or alternative technologies or duplicate any
of our technologies without infringing our intellectual property rights;
• it is possible that our pending patent applications will not lead to issued patents;
• issued patents that we own may not provide us with any competitive advantages, or
may be held invalid or unenforceable, as a result of legal challenges by our
competitors;
• we may obtain patents for certain compounds many years before we receive NDA
approval for drugs containing such compounds, and because patents have a limited
life, which may begin to run prior to the commercial sale of the related drugs, the
commercial value of our patents may be limited;
• our competitors might conduct research and development activities in countries
where we do not have patent rights and then use the information learned from such
activities to develop competitive drugs for commercialization in our major markets;
• we may fail to develop additional proprietary technologies that are patentable;
• we may fail to apply for or obtain adequate intellectual property protection in all the
jurisdictions in which we operate;
• the patents of others may have an adverse effect on our business, for example by
preventing us from commercializing one or more of our drug candidates for one or
more indications; or
• our competitors might develop biosimilar drugs if the patent protection of our drug
candidates will be expired.
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Any of the aforementioned threats to our competitive advantage could have a material
adverse effect on our business.
The life of patent protection i s limite d, and thir dp a rtie s coul d be able to circumvent our
patent s by develo pings imil aro r altern ative product sa nd technolo gies in a non-infrin ging
manner, or develo pa nd commerci alize product sa nd technolo giess imil aro ri dentic alt oo u rs
and com pete directly againstu sa fter the ex piration of our patent ri ghts,i f any, and our
ability to succe ssfully commerci alize any product or technolo gy woul d be m ateri ally
adver sely affecte d.
The life of a patent and the protection it affords is limited. For example, in China, if all
maintenance fees are timely paid, the invention patents, design patents and utility model patents
are valid for 20 years, 15 years and 10 years from its filing date, respectively, with potential patent
term extension or adjustment for invention patents under the current Patent Law of the PRC. Even
if we successfully obtain patent protection for an approved product candidate, it may face
competition from generic or biosimilar medications. Manufacturers of generic or biosimilar drugs
may challenge the scope, validity or enforceability of our patents in court or before a patent office,
and we may not be successful in enforcing or defending those intellectual property rights and, as a
result, may not be able to develop or market the relevant product exclusively, which would
materially adversely affect any potential sales of that product.
Patent terms may not be adequate to protect our competitive position on our product
candidates in the absence of patent linkage, patent term extensions and other exclusivities. Given
the amount of time required for the development, testing and regulatory review of new product
candidates, patents protecting such product candidates might expire before or shortly after such
product candidates are commercialized. As a result, our patents and patent applications may not
provide us with sufficient rights to exclude others from commercializing products similar or
identical to ours. Even if we believe that we are eligible for certain patent term extensions, there
can be no assurance that the applicable authorities will agree with our assessment of whether such
extensions are available, and such authorities may refuse to grant extensions to our patents, or may
grant more limited extensions than we request. The pending patent applications, if issued, for our
product candidates are expected to expire on various dates as described in “Business —
Intellectual Property”. Upon the expiration of our patents that may issue from our pending patent
applications, we will not be able to assert such patent rights against potential competitors, which
would materially adversely affect our business, financial condition, results of operations and
prospects.
According to Article 42 of the Patent Law of the PRC issued on October 17, 2020 and
implemented on June 1, 2021, for the purpose of compensating for the time taken to evaluate and
approve a new drug to be put on market, CNIPA shall grant compensation for duration of patent
right for invention of a new drug approved to be put on market in China upon request of the
patentee. The compensation period shall not exceed five years, and the total validity period of
patent right for a new drug approved to be put on market shall not exceed 14 years.
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If we are un able to protect the confi denti ality of our tr ade secret s, our bu sine ss a nd
com petitive position woul d be h arme d.
In addition to our patents, we rely on trade secrets and confidential information, including
but not limited to unpatented know-how, technology and other proprietary information to maintain
our competitive position and to protect our drug candidates. We seek to protect these trade secrets
and confidential information, in part, by entering into confidentiality agreements with parties that
have access to them, such as our employees, outside collaborators, CROs, consultants and other
third parties. However, any of these parties may breach such agreements and disclose our
proprietary information, and we may not be able to obtain adequate remedies for such breaches.
Substantiating and winning a claim that a party illegally disclosed or misappropriated a trade
secret can be difficult, expensive and time-consuming, and the outcome is unpredictable. If any of
our trade secrets were to be lawfully obtained or independently developed by a competitor or other
third party, we may have no means to prevent them from using that technology or information to
compete with us, and our competitive position would be harmed.
Furthermore, many of our employees including our senior management, were previously
employed at other pharmaceutical or biotechnology companies, which may include our
competitors or potential competitors. Although we try to ensure that our employees do not use the
proprietary information or know-how of others in their work for us, we may be subject to claims
that we or our employees, consultants and advisors have used or disclosed intellectual property,
including trade secrets or other proprietary information, of any of the former employers of such
employees, consultants and advisors. We are not aware of any such claims threatened or pending as
of the Latest Practicable Date, but there is no assurance that we will not be subject to such claims
or involved in litigations to defend against such claims in the future. If we fail in defending any
such claims, in addition to paying monetary damages, we may lose valuable intellectual property
rights or personnel. Even if we are successful in defending against such claims, litigation could
result in substantial costs and reputational harm, and be a distraction to our management.
In addition, while we typically require our employees, consultants and contractors who may
be involved in the development of intellectual property to execute agreements assigning such
intellectual property to us, we may be unsuccessful in executing such an agreement with every
party who is actually involved in developing intellectual property that we regard as our own.
Further, the assignment of intellectual property rights may not be self-executing, or the assignment
agreements may be breached, each of which may result in claims by or against us related to the
ownership of such intellectual property. If we fail in prosecuting or defending any such claims, in
addition to paying monetary damages, we may lose valuable intellectual property rights. Even if
we are successful in prosecuting or defending against such claims, litigation could result in
substantial costs and be a distraction to our management and scientific personnel and could have a
material adverse effect on our business, financial condition, results of operations and prospects.
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Changes in patent l aw coul dd imini sh the v alue of patent s in gener al, thereby im pairin g our
ability to protect our drug candidates.
Depending on decisions by the National People’s Congress and the CNIPA, the laws and
regulations governing patents could be revised from time to time that would affect our ability to
obtain new patents or to enforce our existing patents and patents that we might obtain in the future.
Our existing patent rights and future patent applications may face certain potential influence.
There could be similar changes in the laws of other jurisdictions that may impact the value of our
patent rights or our other intellectual property rights. The United States has enacted and is
currently implementing wide-ranging patent reform legislation. The United States Supreme Court
rulings have narrowed the scope of patent protection available in certain circumstances and
weakened the rights of patent owners in certain situations recently. In addition to increasing
uncertainty with regard to our ability to obtain patents in the future, this combination of events has
created uncertainty with respect to the value of patents once obtained, if any.
RISKS RELATING TO OUR BUSINESS AND INDUSTRY
We m ay encounter difficultie s in m anaging our growth and expanding our o peration s
succe ssfully.
As we seek to advance our drug candidates through clinical trials, we will need to expand
our development, regulatory, manufacturing, sales and marketing capabilities or contract with
third parties to provide these capabilities for us. In addition, we may need to manage additional
relationships with various strategic partners, suppliers and other third parties. Future growth will
impose significant additional responsibilities on our management. Our future financial
performance and our ability to commercialize our drug candidates and to compete effectively will
depend, in part, on our ability to manage any future growth effectively. We cannot assure you that
we will be able to successfully develop and commercialize our drug candidates and build suitable
manufacturing, sales, marketing and managerial teams to meet our growth targets. Our failure to
accomplish any of these tasks could prevent us from successfully growing our company.
We m ayb e subject to product li ability l awsuit s th
at coul d causeu s to incur substanti al
liabilitie s.
We face an inherent risk of product liability as a result of the clinical testing and any future
commercialization of our drug candidates, subject to limited immunity that we may seek in
connection with some of our product candidates. For example, we may be sued if our drug
candidates cause or are perceived to cause injury or are found to be otherwise unsuitable during
clinical testing, manufacturing, marketing or sale. Any such product liability claims may include
allegations of defects in manufacturing, defects in design, improper, insufficient or improper
labelling of products, insufficient or misleading disclosures of side effects or dangers inherent in
the product, negligence, strict liability and a breach of warranties. If we cannot successfully
defend ourselves against product liability claims, we may incur substantial liabilities or be
required to limit commercialization of our drug candidates. Even successful defense would require
significant financial and management resources. There is also risk that third parties we have agreed
to indemnify could incur liability. Regardless of the merits or eventual outcome, liability claims
may result in:
• decreased demand for our drug candidates or any resulting products;
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• injury to our reputation;
• withdrawal of clinical trial participants;
• costs to defend the related litigation;
• a diversion of management’s time and our resources;
• substantial monetary awards to trial participants or patients;
• product recalls, withdrawals or labeling, marketing or promotional restrictions;
• loss of revenue;
• the inability to commercialize our drug candidates; and
• a decline in our Share price.
If we are unable to defend ourselves against such claims, among other things, we may be
subject to civil liability for physical injury, death or other losses caused by our products and to
criminal liability and the revocation of our business licenses if our products are found to be
defective. In addition, we may be required to recall the relevant products, suspend sales or cease
sales. Even if we are able to successfully defend ourselves against any such product liability
claims, doing so may require significant financial resources and the time and attention of our
management.
We m ayb ei n v o l v ed in cl aims, dispute s, liti gation, arbitr ation or other le gal procee dings in
the or dinary cour seo fb u sine ss.
From time to time, we may be involved in claims, disputes and legal proceedings in our
ordinary course of business. These may concern issues relating to, among others, product liability,
environmental matters, breach of contract, employment or labor disputes and infringement of
intellectual property rights. Any claims, disputes or legal proceedings initiated by us or brought
against us, with or without merit, may result in substantial costs and diversion of resources, and if
we are unsuccessful, could materially harm our reputation. Furthermore, claims, disputes or legal
proceedings against us may be due to our counterparties, such as our suppliers, CROs and other
service providers. Even if we are able to seek indemnity from them, they may not be able to
indemnify us in a timely manner, or at all, for any costs that we incur as a result of such claims,
disputes and legal proceedings.
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We are subject to the ri sks of doin g busine ss in multi ple juri sdiction s.
As we operate in multiple jurisdictions, our business is subject to risks associated with
doing business in multiple jurisdictions. Our business and financial results in the future could be
adversely affected due to a variety of factors, including but not limited:
• changes in a specific country’s or region’s political and cultural climate or economic
condition;
• geopolitical tensions;
• changes in laws and regulatory requirements in local jurisdictions;
• efforts to develop an international sales, marketing and distribution organization may
increase our expenses, divert our management’s attention from the development of
our drug candidates or cause us to forgo profitable licensing opportunities in these
geographies;
• the occurrence of economic stagnation or downturn in certain jurisdictions, including
those caused by inflation or policy changes;
• the burden of complying with a variety of foreign laws;
• inadequate intellectual property protection in certain jurisdictions;
• enforcement of anti-corruption and anti-bribery laws;
• trade-protection measures, import or export licensing requirements and fines,
penalties or suspension or revocation of export privileges;
• delays resulting from difficulty in obtaining export licenses, tariffs and other barriers
and restrictions, potentially longer payment cycles, greater difficulty in accounts
receivable collection and potentially adverse tax treatment;
• the effects of applicable local tax regimes and potentially adverse tax consequences;
or
• significant adverse changes in local currency exchange rates.
For example, in the event that the countries from which we import raw materials impose
import tariffs, trade restrictions or other trade barriers affecting the importation of such
components or raw materials, we may not be able to obtain a stable supply of necessary
components or raw materials at competitive prices, and our business and operations may be
materially and adversely affected. We may also sell our products to certain foreign countries in the
future. Our business is therefore subject to constantly changing international economic, regulatory,
social and political conditions, and local conditions in foreign countries and regions. It is notable
that the United States government has made significant changes in its trade policy and has taken
certain actions that may materially impact international trade, such as announcing import tariffs,
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which have led to other countries, including the PRC and members of the EU, imposing tariffs
against the United States in response. These trade disputes may further escalate and may result in
certain types of goods, such as advanced research and development equipment and materials,
becoming significantly more expensive to procure from overseas suppliers or even illegal to
export. Furthermore, there can be no assurance that our existing or potential service providers or
collaboration partners will not alter their perception of us or their preferences as a result of adverse
changes to the political relationships. International or regional tensions and political concerns may
therefore adversely affect our business, financial condition, results of operations and prospects.
In addition, we are subject to general geopolitical risks in foreign countries where we
operate, such as political and economic instability and changes in diplomatic and trade
relationships. The occurrence of any one or more of these risks of doing business internationally,
individually or in the aggregate, could materially and adversely affect our business and results of
operations.
The AIC Grou p has s ubstanti al influence over our Com pany and its intere sts may not be
aligned with the intere sts of our other Sh arehol ders.
Immediately after completion of the Global Offering, the AIC Group will collectively
control approximately 24.40% voting power at general meetings of our Company. The AIC Group
will have significant influence over our business, including matters relating to our management,
policies and decisions regarding acquisitions, mergers, expansion plans, consolidations and sales
of all or substantially all of our assets, election of Directors and other significant corporate actions.
This concentration of voting power may discourage, delay or prevent a change in control of our
Company, which could deprive other Shareholders of an opportunity to receive a premium for their
Shares as part of a sale of our Company and might reduce the price of our Shares. These events may
occur even if they are opposed by our other Shareholders. In addition, the interests of the AIC
Group may differ from the interests of our other Shareholders. We cannot assure you that the AIC
Group will not exercise their substantial influence over us and cause us to enter into transactions or
take, or fail to take, actions or make decisions that conflict with the best interests of our other
Shareholders.
Our future succe ss d epends on our ability to ret ain key executive sa nd to attr act, hire, ret ain
and motiv ate other qu alifie da nd highly skille dp ersonnel.
Our success depends in part on our continued ability to attract, retain and motivate highly
qualified management, clinical and scientific personnel. We are highly dependent upon our senior
management, as well as other key clinical and scientific personnel, and other key employees.
Competition for qualified employees in the biopharmaceutical industry is intense and the
pool of qualified candidates is limited. In recent years, the average labor cost in the global
biopharmaceutical market, particularly for highly skilled and experienced personnel, has been
rising steadily. We cannot assure you that there will be no significant increase in our labor cost,
especially as we continue to expand our business and operations. Despite an increase in labor cost,
we may still not be able to retain the services of experienced senior management or key clinical and
scientific personnel in the future. The departure of one or more of our senior management or key
clinical and scientific personnel, whether or not they join a competitor or form a competing
company, may subject us to risks relating to finding replacements in a timely manner or at all,
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which may disrupt our drug development progress and have a material and adverse effect on our
business and results of operations. We will also need to hire additional employees as we expand our
commercialization and manufacturing teams.
We mayb e subject to disaster s,h e alth e pidemic s, acts of w ar, terrori sm, bu sine ss d isruption s
and other force m ajeure event s, which m ayh ave a materi al adver se effect on our bu sine ss,
financi al con dition and result s of o peration s.
Natural disasters, acts of war, terrorism or other force majeure events beyond our control
may adversely affect the economy, infrastructure and livelihood of the people in the regions where
we conduct our business. Our operations, and those of our third-party research institution
collaborators, suppliers and other contractors and consultants, may be under the threat of natural
disasters such as floods, earthquakes, sandstorms, snowstorms, fire or drought, the outbreak of a
widespread health epidemic, such as swine flu, avian influenza, severe acute respiratory syndrome,
or SARS, Ebola, Zika, COVID-19, force majeure events such as power, water or fuel shortages,
failures, malfunction and breakdown of information management systems, unexpected
maintenance or technical problems, or potential wars or terrorist attacks.
The occurrence of a disaster or a prolonged outbreak of an epidemic illness or other adverse
public health developments could materially disrupt our business and operations. For example,
since the end of December 2019, the outbreaks of a novel strain of coronavirus COVID-19 have
materially and adversely affected the global economy. Many countries and regions had been
affected by the COVID-19 outbreaks. There is no assurance that such kind of health epidemic or
even a more severe pandemic will not occur again in the future.
There also could occur serious natural disasters, which may result in loss of lives, injury,
destruction of assets and disruption of our business and operations. Damage or extended periods of
interruption to our corporate, development, research or manufacturing facilities due to fire,
disaster, epidemics, power loss, communications failure, unauthorized entry or other events could
cause us to cease or delay development or commercialization of some or all of our drug candidates.
As we rely on third parties on various services and supplies, the occurrence of any of the foregoing
events could seriously harm ability to obtain services or supplies if such third parties are affected
by disasters, epidemics, business interruptions and other force majeure events. In addition, our
insurance might not cover all losses under such circumstances and our business may be seriously
harmed by such delays and interruption. Acts of war or terrorism may also injure our employees,
disrupt our business network and destroy our markets. Any of the foregoing events and other events
beyond our control could have an adverse effect on the overall business sentiment and
environment, cause uncertainties in the regions where we conduct business, cause our business to
suffer in ways that we cannot predict and materially and adversely impact our business, financial
condition and results of operations.
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If we or our bu sine ss pa rtner s fail to protect dataa ndp riv acy of subject s in our clinic al tri als,
or the me dicali n stitution s thatw ec o n duct clinic al tri alsa to r provi de service s to, our
reputation will be damageda nd we mi ght be subject to fine s or other re gulatory puni shment s.
We need to collect and store subjects’ personal data and information in clinical trials, which
require us and our business partners such as clinical trial institutions and medical institutions to
maintain an effective control system to protect such personal data and information. The regulatory
framework for the collection, use, safeguarding, sharing, transfer and other processing of personal
information worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable
future. Regulatory authorities in virtually every major target market in which we operate or intend
to operate have implemented and are considering a number of legislative and regulatory proposals
concerning personal data protection.
Whilst we have adopted security policies and measures to protect our proprietary data and
subjects’ privacy, misappropriation, misuse, leakage, falsification or intentional or accidental
release or loss of personal data might not be avoided due to human error, employee misconduct or
system breakdown. We also cooperate with third parties including principal investigators,
hospitals and other third parties for our clinical trials. Any leakage or abuse of patient data by our
third-party partners may be perceived by the patients as a result of our failure. Any failure or
perceived failure by us to prevent information security breaches or to comply with privacy policies
or privacy-related legal obligations, or any compromise of information security that results in the
unauthorized release or transfer of personally identifiable information or other patient data, could
cause our customers to lose trust in us and could expose us to legal claims. Although we have made
efforts to ensure our compliance with the applicable privacy regulations in the relevant
jurisdictions, we may not be capable of adjusting our internal policies in a timely manner and any
failure to comply with applicable regulations could also result in regulatory enforcement actions
against us.
Complying with all applicable laws, regulations, standards and obligations relating to
privacy and data security may cause us to incur substantial operational costs or require us to
modify our data processing practices and processes. Non-compliance could result in proceedings
against us by data protection authorities, governmental entities or others, including class action
privacy litigation in certain jurisdictions, which would subject us to significant fines, penalties,
judgments and negative publicity. In addition, if our practices are not consistent or viewed as not
consistent with legal and regulatory requirements, including changes in laws, regulations and
standards or new interpretations or applications of existing laws, regulations and standards, we
may become subject to audits, inquiries, whistleblower complaints, adverse media coverage,
investigations, severe criminal or civil sanctions and reputational damage. Any of the foregoing
could have a material adverse effect on our competitive position, business, financial condition,
results of operations and prospects.
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Our li stin g mayb ei m pededa nd our bu sine ss operation s mayb e adver sely affecte d by the
Measure s for Cyber security Review or the Re gulation on the A dmini stration of Cyber D ata
Security (Dr aft for Comment s).
On December 28, 2021, the Cyberspace Administration of China (“ CAC”), jointly with the
other 12 governmental authorities, promulgated the Measures for Cybersecurity Review ( ၣഖτ
) (the “ MCR”), which became effective from February 15, 2022. Pursuant to Article
2 of the MCR, besides the procurement of network products and services by critical information
infrastructure operators, any data processing activity by network platform operators that affects or
may affect national security shall be subject to the cybersecurity review. In accordance with Article
7 of the MCR, network platform operators mastering personal information of more than one
million users must apply to the Cybersecurity Review Office for cybersecurity review when listing
abroad ( ਷̮ɪ̹ ).
On November 14, 2021, CAC promulgated the Regulation on the Administration of Cyber
Data Security (Draft for Comments) ( ၣഖᅰኽτΌ၍ଣૢԷ ᅄӋจԈᇃ) (the “ Dr aft
Cyber D ata Security Re gulation ”). Given that the Draft Cyber Data Security Regulation had not
come into force as of the Latest Practicable Date, the applicability of various requirements under
the Draft Cyber Data Security Regulation is still subject to further official guidance and applicable
implementation rules.
On May 6, 2023, our PRC Legal Advisor conducted a telephonic consultation with the China
Cybersecurity Review Technology and Certification Center (the “ Center ”). The Center is
authorized by the Cybersecurity Review Office of the CAC to accept public consultation and
cybersecurity review submissions and is the competent authority to provide views and
interpretation relating to the MCR. Our PRC Legal Advisor is of the view that the staff who
responded our inquires during such consultation is the duly designated person in the Center to
respond to public inquiries. According to the Center, (i) the listing in Hong Kong does not fall
within the scope of “listing abroad”; (ii) critical information infrastructure operators are identified
by the governmental authorities of corresponding industry; (iii) Draft Cyber Data Security
Regulation had not come into force as of the Latest Practicable Date, the applicability of various
requirements under the Draft Cyber Data Security Regulation is still subject to applicable
implementation rules.
As of the Latest Practicable Date, (i) we have not been notified of the results of any
determination that we have been identified as a critical information infrastructure operator or that
any of our systems have been identified as critical information infrastructure by the relevant
governmental authorities; (ii) the MCR provides no further explanation or interpretation for
“online platform operator” and “list abroad”, and does not stipulate that an online platform
operator which intends to list in Hong Kong will be subject to cybersecurity review; (iii) Hong
Kong is not a foreign country or region and does not fall within the scope of “abroad” under the
MCR, and there is no specific guidance or implementation rules to indicate otherwise; (iv) the
MCR provides no further explanation or interpretation for “affect or may affect national security”,
which remains to be clarified and elaborated by the CAC, and we have not received any notification
of cybersecurity review from relevant governmental authorities due to our impact or potential
impact on national security; (v) the volume of personal information we process is far less than one
million people; and (vi) we believe that our collection and handling of the personal information do
not constitute any data processing activities that may affect national security under the Draft Cyber
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Data Security Regulation. Therefore, as advised by our PRC Legal Advisor, our Directors believe
that as long as there is no material change to our current business and if no further rules are
introduced and no significant changes to the enforcement of the MCR by governmental authorities,
cybersecurity review under the article 2 and article 7 of the MCR shall not be applicable to us.
Furthermore, based on the fact that (i) the MCR came into effect recently and the Draft
Cyber Data Security Regulation has not been formally adopted, and their implementation and
interpretation are subject to uncertainties and (ii) we have not been involved in any investigations
on cybersecurity review initiated by the CAC on such basis and nor have we received any inquiry,
notice, warning, or sanctions in such respect, with the support of our PRC Legal Advisor, we are of
the view that we comply with such regulations in all material aspects and we believe such
regulations would not have a material adverse impact on our business operations or our Global
Offering. Considering that (a) we have not been involved in any cybersecurity review or
investigation by the CAC or other authorities with respect to the MCR; (b) we have not been
informed that we are recognized as a crucial information infrastructure operator by any relevant
authority; (c) the data processed by us has not been included in the effective core data and
important data catalogs by any authority; and (d) we have taken reasonable and adequate technical
and management measures to ensure data security, we are of the view that the likelihood that our
business operation or the Global Offering might give rise to national security risks is remote.
However, the MCR and the Draft Cyber Data Security Regulation were both released
recently, certain provisions of which are still unclear and are subject to the finalization or
clarifications by relevant authorities. As such, the PRC regulatory authorities may have broad
discretion in the interpretation of “affect or may affect national security”. Moreover, given that the
Draft Cyber Data Security Regulation was still in the draft form for comments and had not come
into force as of the Latest Practicable Date, the applicability of various requirements thereunder is
still subject to further official guidance and applicable implementation rules. If we were deemed as
a data processor that “affects or may affect national security” by the PRC regulatory authorities
under their broad discretion, we may be subject to cybersecurity review. If we fail to pass such
cybersecurity review, our Listing may be impeded, our business operations may be adversely
affected, and/or we may be subject to other severe penalties and/or action by the competent
government authorities.
On July 7, 2022, the CAC promulgated the Measures for the Security Assessment of Data
Cross-border Transfer (), which took effect on September 1, 2022. The
Measures for the Security Assessment of Data Cross-border Transfer requires the data processor
providing data overseas and falling under any of the following circumstances apply for the security
assessment of cross-border data transfer by the national cybersecurity authority through its local
counterpart: (i) where the data processor intends to provide important data overseas; (ii) where the
critical information infrastructure operator and any data processor who has processed personal
information of more than 1,000,000 people intend to provide personal information overseas; (iii)
where any data processor who has provided personal information of 100,000 people or sensitive
personal information of 10,000 people to overseas recipients accumulatively since January 1 of the
last year intends to provide personal information overseas; and (iv) other circumstances where the
security assessment of data cross-border transfer is required as prescribed by the CAC. As advised
by our PRC Legal Advisor, the volume of personal information we process does not meet the
aforesaid trigger thresholds, and our business does not involve the aforesaid cross-border transfer
of important data, the Measures for the Security Assessment of Data Cross-border Transfer is not
applicable to us currently.
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On February 22, 2023, the CAC issued the Measures for the Standard Contract for
Cross-Border Transfer of Personal Information (), (the “ Standard
Contr act Me asure s”), along with the formal version of the standard contractual clauses for
cross-border transfer of personal information stipulated under the Personal Information Protection
Law. The Standard Contract Measures will come into effect on June 1, 2023, and provide a
six-month grace period. Any violation of the Standard Contract Measures shall be punished in
accordance with the Personal Information Protection Law and other laws and regulations. We
intend to comply with such measures within the six-month grace period in 2023. However, if we
fail to comply with such measures by November 30, 2023, we may face legal liability under the
Personal Information Protection Law, including being ordered to make corrections, given a
warning, confiscation of illegally obtained gains, etc.
We mayb er e stricte d from tr ansferrin g our scientific dataa bro ad.
On March 17, 2018, the General Office of the State Council promulgated the Measures for
the Management of Scientific Data () (the “ Scientific D ata Measure s”),
which provides a broad definition of scientific data and relevant rules for the management of
scientific data. According to the Scientific Data Measures, enterprises in China must seek
governmental approval before any scientific data involving a state secret may be transferred abroad
or to foreign parties. Further, any researcher conducting research funded at least in part by the
Chinese government is required to submit relevant scientific data for management by the entity to
which such researcher is affiliated before such data may be published in any foreign academic
journal. Given the term state secret is not clearly defined, if and to the extent our research and
development of drug candidates will be subject to the Scientific Data Measures and any subsequent
laws as required by the relevant government authorities, we cannot assure you that we can always
obtain relevant approvals for sending scientific data (such as the results of our preclinical studies
or clinical trials conducted within China) abroad or to our foreign partners in China. If we are
unable to obtain necessary approvals in a timely manner, or at all, our research and development of
drug candidates may be hindered, which may materially and adversely affect our business, results
of operations, financial condition and prospects. If the relevant government authorities consider
the transmission of our scientific data to be in violation of the requirements under the Scientific
Data Measures, we may be subject to fines and other administrative penalties imposed by those
government authorities. In addition, according to the Administration of Human Genetic Resources
(ɛᗳ፲ෂ༟๕၍ଣૢԷ) promulgated in May 2019 and the PRC Biosecurity Law (τΌ
) promulgated in October 2020, if any scientific data falls within the scope of Chinese human
genetic resources, any transfer of such data outside of China will be subject to the prior approval of
the PRC Ministry of Science and Technology. There can be no assurance that we will be able to
obtain such approval in a timely manner, or at all.
Our inve stment s or acqui sition s mayh ave a materi al adver se effect on our bu sine ss,
reputation, fin anci al con dition an
d result s of o peration s.
We may in the future evaluate and consider a wide array of investments and acquisitions that
we believe can augment our overall business strategy. We may be engaged in discussions or
negotiations with respect to one or more of these types of transactions. These transactions involve
significant challenges and risks, including but not limited to:
• difficulties integrating into our operations the personnel, operations, products and
services;
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• technology, internal controls and financial reporting of companies we acquire;
• disrupting our ongoing business, distracting our management and employees and
increasing our expenses;
• losing skilled professionals as well as established client relationships of the
businesses we invest in or acquire;
• for investments over which we do not obtain management and operational control, we
may lack influence over the controlling partner or shareholder, which may prevent us
from achieving our strategic goals in such investment;
• new regulatory requirements and compliance risks that we become subject to as a
result of acquisitions in new industries or otherwise;
• actual or alleged misconduct or non-compliance by any company we acquire or invest
in (or by its affiliates) that occurred prior to our acquisition or investment, which may
lead to negative publicity, government inquiry or investigations against such company
or against us;
• unforeseen or hidden liabilities or costs that may adversely affect us following our
acquisition of such targets;
• regulatory hurdles including the anti-monopoly and competition laws, rules and
regulations in connection with any proposed investments and acquisitions;
• the risk that any of our pending or other future proposed acquisitions does not close;
• the costs of identifying and consummating investments and acquisitions;
• the use of substantial amounts of cash and potentially dilutive issuances of equity
securities;
• the occurrence of significant goodwill impairment charges and amortization expenses
for other intangible assets; or
• challenges in achieving the expected benefits of synergies and growth opportunities
in connection with these acquisitions and investments.
Any such negative developments described above could disrupt our existing business and
have a material adverse effect on our business, reputation, financial condition and results of
operations.
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If we en gag ei n acqui sition s or str ate gic partner shi ps, thi s may incre ase our c apit al
requirement s,c auseu s to incur debt or assume contin gent li abilitie s, ands ubject u s to other
risks.
From time to time, we may evaluate various acquisitions and strategic partnerships,
including licensing or acquiring complementary products, intellectual property rights,
technologies or businesses. Any completed, in-process or potential acquisition or strategic
partnership may entail numerous risks, including but not limited to:
• increased operating expenses and cash requirements;
• the assumption of additional indebtedness or contingent or unforeseen liabilities;
• assimilation of operations, intellectual property and products of an acquired
company, including difficulties associated with integrating new personnel;
• the diversion of our management’s attention from our existing product programs and
initiatives in pursuing such a strategic merger or acquisition;
• retention of key employees, the loss of key personnel, and uncertainties in our ability
to maintain key business relationships;
• risks and uncertainties associated with the other party to such a transaction, including
the prospects of that party and their existing products and pipeline products and
regulatory approvals; and/or
• our inability to generate revenue from acquired technology and/or products sufficient
to meet our objectives in undertaking the acquisition or even to offset the associated
acquisition and maintenance costs.
As a result, we may not be able to realize the benefit of or choose to exercise any options
under current or future collaborations, strategic partnerships or the license of our third-party drugs
if we are unable to successfully integrate such products with our existing operations and company
culture, which could delay our timelines or otherwise adversely affect our business. We also cannot
be certain that, following a strategic transaction or license, we will achieve the revenue or specific
net income that justifies such transaction. If we are unable to reach agreements with suitable
collaborators on a timely basis, on acceptable terms, or at all, we may have to curtail the
development of a drug candidate, reduce or delay our research and development program or one or
more of our other research and development programs, delay its potential commercialization or
reduce the scope of any sales or marketing activities, or increase our expenditures and undertake
development or commercialization activities at our own expense. If we elect to fund and undertake
development or commercialization activities on our own, we may need to obtain additional
expertise and additional capital, which may not be available to us on acceptable terms or at all. If
we fail to enter into collaborations and do not have sufficient funds or expertise to undertake the
necessary development and commercialization activities, we may not be able to further develop
our drug candidates or bring them to market and generate product sales revenue, which would harm
our business prospects, financial condition and results of operations.
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In addition, if we undertake acquisitions, we may assume or incur debt obligations, incur
large one-time expenses and acquire intangible assets that could result in significant future
amortization expense.
If we, or our CRO s, CDMO s or other contr actor sa nd busine ss pa rtner s fail to com ply with
environment al, he alth ands a fety l awsa nd regulation s, we coul d become subject to fine s or
penaltie s or incur co sts that coul d have a materi al adver se effect on the succe ss of our
busine ss.
We are subject to numerous environmental, health and safety laws and regulations,
including those governing laboratory procedures and the handling, use, storage, treatment and
disposal of hazardous materials and wastes. Our operations may involve the use of hazardous and
flammable materials, including chemicals materials, and may produce hazardous wastes. We may
contract with third parties for the disposal of these materials and wastes. We cannot eliminate the
risk of contamination or injury from these materials and wastes, whether arising from our own
operations or those of our CROs, CDMOs or other contractors and business partners, now or in the
future. In the event of such contamination or injury, we could be held liable for any resulting
damages, and such liabilities could exceed our resources. We could also incur significant costs
associated with civil or criminal fines and penalties.
In addition, we may incur substantial costs to ensure compliance with current or future
environmental, health and safety laws and regulations. These current or future laws and regulations
may impair our research, development or production efforts. Failure to comply with these laws and
regulations also may result in substantial fines, penalties or other sanctions.
We m ayb e subject, directly or in directly, to applic a
ble anti-kickb ack, f alsec l aims laws,
physici an payment tr anspa rency l aws,f r auda nda busel aws or simil arh e althc are and
security l awsa nd regulation s in Chin aa nd other juri sdiction s, which coul d exposeu s to
crimin al sanction s, civil penaltie s, contr actu al damages,r e putation alh arm andd imini shed
profit sa nd future e arnin gs.
Healthcare providers, including physicians and others, play a primary role in the
recommendation and prescription of products for which we may seek regulatory approval. If we
obtain approval from the NMPA, FDA, EMA, TGA or other regulatory authorities for any of our
drug candidates and if we then begin to market those drugs in the United States or in the PRC, our
operations may be subject to federal and state fraud and abuse laws in the United States, PRC and
other countries, including the federal Anti-Kickback Statute and the False Claims Act, as well as
physician payment transparency laws and regulations, including the Federal Physician Payment
Act. Our current and future operations also may be subject to regulation by U.S. federal, state and
local authorities including, among others, the Centers for Medicare and Medicaid Services and
other divisions within the U.S. Department of Health and Human Services such as the Office of the
Inspector General and the Office for Civil Rights. We may also be subject to state laws that require
pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance
guidelines and the relevant compliance guidance promulgated by the federal government. There
are ambiguities as to what is required to comply with any of these requirements, and if we fail to
comply with any such requirements, we could be subject to applicable penalties.
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Efforts to ensure that our business arrangements with third parties are in compliance with
applicable healthcare laws and regulations will involve substantial costs. Regulatory authorities
could conclude that our business practices may not comply with current or future fraud, abuse or
other healthcare laws or regulations. If any such actions are instituted against us, and if we are not
successful in defending ourselves or asserting our rights, those actions could result in the
imposition of civil, criminal and administrative penalties, damages, disgorgement, monetary fines,
possible exclusion from participation in governmental healthcare programs, contractual damages,
reputational damage, diminished profits and future earnings, and curtailment of our operations,
any of which could adversely affect our ability to operate our business and have a material adverse
effect on our business and results of operations.
If any of the physicians or other providers or entities with whom we expect to do business is
found to be not in compliance with applicable laws, they may be subject to criminal, civil or
administrative sanctions, including exclusions from government-funded healthcare programs,
which may also adversely affect our business.
If we f ail to com ply with applic able anti-bribery l aws, our re putation m ayb eh arme da nd we
coul d be subject to penaltie sa nds ignific ant ex penses thath ave a materi al adver se effect on
our bu sine ss,f i nanci al con dition and result s of o peration s.W em ayb eu n able to detect, deter
andp revent all in stance s of fr aud or other mi scon duct committe d by our em ployee s or other
thir dp a rtie s.
We are subject to anti-bribery laws in China that generally prohibit companies and their
intermediaries from making payments to government officials for the purpose of obtaining or
retaining business or securing other improper advantages. In addition, although currently our
primary business operations are in China, we are subject to the Foreign Corrupt Practices Act of
the United States, which generally prohibits us from making improper payments to non-U.S.
officials for the purpose of obtaining or retaining business. Although we have policies and
procedures designed to ensure that we, our employees, agents and intermediaries comply with
anti-bribery laws, there is no assurance that such policies or procedures will always effectively
prevent our employees, agents and intermediaries from engaging in bribery activities. Failure to
comply with anti-bribery laws could disrupt our business and lead to severe criminal and civil
penalties, including imprisonment, criminal and civil fines, loss of our export licenses, suspension
of our ability to do business with the government, denial of government reimbursement for our
products and/or exclusion from participation in government healthcare programs. Other remedial
measures could include further changes or enhancements to our procedures, policies, and controls
and potential personnel changes and/or disciplinary actions, any of which could significantly
affect our business, financial condition, and results of operations. We could also be adversely
affected by any allegation that we violated such laws.
Any f ailure to com ply with applic able l awsa nd regulation sa nd industry standards or obt ain
variou s licen sesa ndp ermit s or any ch anget ot h e applic able l awsa nd reg
ulation s coul d harm
our re putation and busine ss,r e sult s of o peration sa ndp rospect s.
A number of governmental agencies or industry regulatory bodies in the PRC and other
applicable jurisdictions impose strict rules, regulations and industry standards governing
biopharmaceutical research and development activities, which apply to us. Our or our business
partners’ failure to comply with such regulations could result in the termination of ongoing
RISK FACTORS
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research, administrative penalties imposed by regulatory bodies or the disqualification of data for
submission to regulatory authorities. This could harm our business, reputation, prospects and
results of operations.
Pursuant to relevant laws and regulations, we are required to obtain, maintain and renew
various approvals, licenses, permits and certificates from relevant authorities to operate our
business. Any failure to obtain or renew any approvals, licenses, permits and certificates necessary
for our operations may result in enforcement actions including orders issued by the relevant
regulatory authorities to take remedial actions, suspend our operations or impose fines and
penalties which could materially and adversely affect our business, financial condition and results
of operations. Moreover, the criteria used in reviewing applications for, or renewals of permits,
licenses and certificates may change from time to time, and there can be no assurance that we will
be able to meet new criteria that may be imposed. If the interpretation or implementation of
existing laws and regulations changes or new regulations come into effect, we may be required to
obtain any additional approvals, permits, licenses or certificates and we cannot assure you that we
will be able to do so. Our failure to obtain the additional approvals, permits, licenses or certificates
may restrict the conduct of our business, increase our costs, and in turn, adversely affect results of
operations and prospects.
Any government investigation of alleged violations of laws could require us to expend
significant time and resources in response and generate negative publicity. Any failure to comply
with ongoing regulatory requirements may significantly and adversely affect our ability to
commercialize and generate revenue from our products. If regulatory sanctions are applied or if
regulatory approval is withdrawn, the value of our Company and our results of operations will be
adversely affected.
If we become ap a rty or are subject to liti gation, le gal or contr actu al dispute s, government al
inve stigation s or admini strative procee dings, our m anagement’ sa ttention m ayb e diverte d
and we m ay incur substanti alc o stsa nd liabilitie s.
We may also from time to time become a party to various litigation, legal disputes, claims,
administrative proceedings or other administrative measures arising in the ordinary course of our
business. On-going litigation, legal disputes, claims, administrative proceedings or other
administrative measures may divert our management’s attention and consume their time and our
other resources. Furthermore, any litigation, legal disputes, claims, administrative proceedings or
other administrative measures which are initially not of material importance may escalate and
become important to us, due to a variety of factors, such as the facts and circumstances of the
cases, the likelihood of loss, the monetary amount at stake and the parties involved. Negative
publicity arising from litigation, legal disputes, claims, administrative proceedings or other
administrative measures may damage our reputation and adversely affect the image of our brands
and products. In addition, if any verdict or award is rendered against us or we are imposed any fines
or penalties, we could be required to pay significant monetary damages, assume other liabilities
and even to suspend or terminate the related business ventures or projects. Consequently, our
business, financial condition and results of operations may be materially and adversely affected.
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Failure to m ake soci ali n surance and hou singp rovi dent fun d contribution s for some of our
employee s timely as require d by PRC l awsa nd regulation s may subject u s to l ate payment s
and fine s imposed by relev ant government al authoritie s.
During the Track Record Period, we had not made full contributions to the social insurance
premium and housing provident fund based on the actual salary level of some of our employees as
prescribed by relevant laws and regulations.As of the Latest Practicable Date, we had not received
any notice from the local authorities or any claim or request from the relevant employees that
require us to make payments or impose upon us administrative penalties for insufficient
contributions. Pursuant to relevant PRC laws and regulations, the under-contribution of social
insurance within a prescribed period may subject us to a daily overdue charge of 0.05% of the
delayed payment amount. Although we had made timely payments for the full amount of social
insurance and housing provident fund contribution since May 2022, we cannot assure you that the
relevant government authorities will not require us to pay the outstanding amount within a
prescribed time and impose late charges or fines on us, which may affect our business, financial
condition and results of operations.
During the Track Record Period, Shenzhen HighTide engaged a third-party human resource
agency to pay social insurance premium and housing provident funds for three of our employees.
These three employees have accepted this arrangement and will not pursue any claims against us
with the competent authorities. However, if the local governments determine the use of
third-parties to pay social insurance and housing provident funds to be non-compliant in the future
or such human resource agency fail to pay the social insurance premium or housing provident
funds for and on behalf of our employees as required by applicable PRC laws and regulations, we
may be subject to additional contribution, late payment fee or penalties imposed by the relevant
PRC authorities for failing to discharge our obligations in relation to payment of social insurance
and housing provident funds as an employer or be ordered to rectify. This in turn may affect our
financial condition and results of operations.
Our bu sine ss s ignific antly depen
ds on our re putation, anda ny ne gative publicity on u s or
failure to m aint ain and enh ance our reco gnition and reputation m aym ateri ally anda d ver sely
affect our bu sine ss,f i nanci al con dition and result s of o peration s.
We believe that market awareness and recognition of our brand image, and the maintenance
of a positive brand image, is crucial to the success of our business. While we will continue to
promote our brands to remain competitive, we may not be successful in doing so. In addition, we
may engage various third parties, such as contract sales organizations, to expand our
commercialization network and increase market access for our drugs, which can make it
increasingly difficult to effectively manage our brand reputation, as we have relatively limited
control over these third parties.
Any negative publicity, including disputes concerning us, our business partners or our
affiliates, even if untrue, could adversely affect our reputation and prospects. Moreover, if we are
unable to maintain a good reputation, our ability to attract and retain key employees and business
partners could be harmed which, in turn, may materially and adversely affect our business, results
of operations and prospects.
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Our reputation is vulnerable to potential threats that can be difficult or impossible to
control, and costly or impossible to remediate. Negative publicity about us, such as alleged
misconduct or improper activities, or negative rumors relating to us, our management, employees,
business partners or affiliates, can harm our business and results of operations, even if they are
unsubstantiated or are later satisfactorily addressed. Any regulatory inquiries or investigations or
other actions against our management, any perceived unethical, fraudulent, or inappropriate
business conduct by us or perceived wrong doing by any key member of our management team or
other employees, our business partners or our affiliates, could harm our reputation and materially
and adversely affect our business. Regardless of the merits or final outcome of such regulatory
inquiries, investigations or actions, our reputation may be substantially damaged, which may
impede our ability to attract and retain talent and business partners and grow our business.
Moreover, any negative media publicity about the pharmaceutical industry in general,
including issues and allegations solely involving other companies in the industry, may also
negatively impact our reputation.
In the event that such negative publicity relates to our own products and business, the
adverse impact on our financial condition or results of operations might be more significant. Any
such negative publicity may undermine the public confidence in our products, reputation, brand
image, business prospects, and impair the development and commercialization of our drug
candidates, all of which may adversely affect our business operations and financial performance.
Investigations and increasingly stringent regulations arising from such negative publicity, if any,
may draw time and attention from our management team, which would have otherwise been
devoted into our business operations, or may incur additional compliance expenses.
Our inform ation technolo gy system s,o rt h ose of our CRO s, CDMO s or other contr actor sa nd
busine ss pa rtner s,m ayf ail or suffer security bre ache s.
Despite the implementation of security measures, our information technology systems and
those of our CROs, CDMOs, consultants and other service providers are vulnerable to damage
from computer viruses, unauthorized access, cyberattacks, natural disasters, terrorism, war and
telecommunication and electrical failures. If such an event were to occur and cause interruptions in
our operations, it could result in a material disruption of our research and development programs.
For example, our data may not be backed up in a timely manner and the loss of clinical trial data
from ongoing or future clinical trials for any of our drug candidates could result in delays in
regulatory approval efforts and significantly increase costs to recover or reproduce the data. To the
extent that any disruption or security breach were to result in a loss of or damage to data or
applications, or inappropriate disclosure of confidential or proprietary information, we could incur
liability and the further development of our drug candidates could be delayed.
If we f ail to m aint ain effective intern al control s,w em ay not be able to accur ately re port our
financi alr esult s or prevent fr aud, and our bu sine ss,f i nanci al con dition, re s
ult s of o peration s
and reputation coul d be m ateri ally anda d ver sely affecte d.
We will become a public company upon completion of the Global Offering, and our internal
controls will be essential to the integrity of our business and financial results. Our public reporting
obligations are expected to place a strain on our management, operational and financial resources
and systems in the foreseeable future. In order to address our internal controls issues and to
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generally enhance our internal controls and compliance environment, we have taken various
measures to improve our internal controls and procedures including establishing a compliance
program for data storage and transmission, adopting new policies, and providing training on our
controls, procedures and policies to our employees. In addition, in preparation for the Global
Offering, we have implemented other measures to further enhance our internal controls, and plan
to take steps to further improve our internal controls. If we encounter difficulties in improving our
internal controls and management information systems, we may incur additional costs and
management time in meeting our improvement goals. We cannot assure you that the measures
taken to improve our internal controls will be effective. If we fail to maintain effective internal
controls in the future, our business, financial condition, results of operation and reputation may be
materially and adversely affected.
We h ave limite d insurance cover age, anda ny cl aims beyon d our in surance cover agem ay
result in our incurrin gs ubstanti alc o stsa ndad iver sion of re source s.
We maintain insurance policies that are required under the PRC laws and regulations as well
as based on our assessment of our operational needs and industry practice. Our principal insurance
policies cover employee benefits liability and adverse events in clinical trials. We currently do not
maintain insurance for environmental liability or property loss. According to CIC, our insurance
policy is in line with the industry practice. Our insurance coverage may be insufficient to cover any
claims that we may have. Any liability or damage to, or caused by, our facilities or our personnel
beyond our insurance coverage may result in our incurring substantial costs and a diversion of
resources and may negatively impact our product development and overall operations.
We are subject to ri sks rel atin g to le asedp ropertie s.
As of the Latest Practicable Date, the actual usage of one leased property was inconsistent
with the usage set out in its title certificate. Our PRC Legal Advisor believes that there is a
likelihood that we will be asked to vacate the non-compliant leased property. In the event that we
are required to relocate, there is no assurance that we will be able to identify comparable locations
in a timely manner or at all, and that we will secure a lease in the vicinity on comparable terms.
Moreover, ten of our lease agreements for properties in China have not been registered with
relevant authorities in China. As advised by our PRC Legal Advisor, according to the PRC Civil
Code, failure to complete the registration and filing of lease agreements will not affect the validity
of the lease agreements. However, the relevant PRC authorities may impose a fine on us ranging
from RMB1,000 to RMB10,000 for each unregistered lease. We have used our commercially
reasonable efforts to register the relevant leases. However, the registration of these relevant lease
agreements requires additional steps to be taken by the lessors which are beyond our control. We
cannot assure you that the lessors will be cooperative and that we can complete the registration of
these lease agreements.
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Difficult con dition sa nd turbulence in the glob al economic, politic al and fin anci al
environment m ay adver sely affect our bu sine ss.
Geopolitical, economic and market conditions, including factors such as the liquidity of the
global financial markets, the level and volatility of debt and equity prices, interest rates, currency
and commodities prices, investor sentiment, inflation and the availability and cost of capital and
credit have been and will continue to affect the countries where we operate. The stress experienced
by the global financial markets in 2020 due to the COVID-19 pandemic, the series of measures
taken by major economies in response and the consequences of such measures continue to impact
the global economy in varying degrees in different regions over the years. The financial markets
continue to be impacted by general uncertainty, and growth rates have declined recently. In
addition, tighter monetary policy in the United States could further undermine financial stability in
emerging market economies. Central banks around the world, including in the United States and
several large emerging markets, have tightened monetary policy and have indicated that they would
continue to do so in the near future. The financial conditions of banking institutions have come
under severe pressure and deterioration, as exemplified by the proposed restructuring of Credit
Suisse Group AG and the failures of Silicon Valley Bank and Signature Bank in the first quarter of
2023, driven by bank runs or simultaneous withdrawals by depositors due to various reasons,
including lack of confidence in the banking system. The slow economic recoveries around the
world and the high inflation, high interest environment have contributed to higher global volatility.
These developments may adversely impact global liquidity, heighten market volatility and increase
U.S. dollar funding costs resulting in tightened global financial conditions and fears of a recession.
A prolonged period of extremely volatile and unstable market conditions would likely increase our
funding costs and could also adversely affect the countries where we operate, which could in turn
affect our business.
RISKS RELATING TO DOING BUSINESS IN THE PRC
Changes in economic, soci al con dition s, policie sa ndg eopolitic alr e lation ships mayi m pact
our bu sine ss,f i nanci al con dition, re sult s of o peration sa ndp rospect s.
Substantially all of our assets and operations are located in the PRC. Accordingly, our
business, financial condition, results of operations and prospects may be influenced to a significant
degree by economic, political and social conditions in the PRC generally. The PRC government
conducts management on the resource allocation, foreign exchange supervision and management,
industry support and other aspects through relevant laws and regulations as well as the functions
and powers of the government, playing an important role in China’s economic growth. In addition,
the PRC government plays a significant role in regulating industry development by imposing
relevant industrial policies.
While the PRC economy has experienced significant growth over the past decades, growth
varies, both geographically and among various sectors of the economy. COVID-19 adversely
affected the Chinese and global economies in recent years. If material changes occur in the policies
of the PRC government or in the PRC laws and regulations, the overall economic growth of China
may be affected significantly. Such developments could adversely affect our business and
operating results, lead to reduction in demand for our solutions and services and adversely affect
our competitive position. The PRC government has implemented various measures to encourage
economic growth and guide the allocation of resources. Some of these measures may benefit the
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overall PRC economy, but may have a negative effect on us. For example, our financial condition
and results of operations may be adversely affected by government control over capital
investments or changes in tax regulations. In addition, certain measures implemented by the PRC
government based on the overall economic situation, including interest rate adjustment, will affect
the pace of economic growth. These measures may cause decreased economic activity in China,
which may adversely affect our business and results of operations.
Furthermore, there is no assurance that the substantial growth in the PRC economy in the
previous decades will continue or continue at the same pace. In recent years, the United
States-China relations also give rise to uncertainties on the PRC economy as well as the global
economy. Since 2018, the United States government increased tariffs on Chinese products. In
retaliation, the PRC government responded with tariffs on United States products. The trade
tensions were accompanied with escalating economic restrictions and sanctions, which created
further uncertainties and volatilities to the PRC economy and global markets. Since 2019, the
United States government has imposed increasing restrictions on exporting sensitive United States
goods to Chinese technology companies. In 2021, the United States government blacklisted over
40 Chinese technology companies, citing activities contrary to the national security or foreign
policy interests of the United States. The future development and lasting impact of the United
States-China relations on China’s economy and the online chronic disease management industry
remain uncertain. Should the United States-China relations materially impact the PRC economy,
the purchasing power of our customers may decrease and procurement costs of the imported drugs
sold on our platforms may increase, which will have an adverse effect on our business operation
and financial performance. Our compliance costs may increase and our results of operations will
be adversely affected.
It m ayb e difficult to effect service of le gal proce ss a nd enforce ju dgment s aga instu sa nd our
management due to the l ack of relev ant intern ation alt r eatie s regarding judici al service and
judici al enforcement.
A significant portion of our assets and the majority of our Directors and senior management
are located in the PRC. As a result, it may not be possible to effect service of process within certain
jurisdictions outside the PRC upon us or most of our Directors and senior management.
Furthermore, the PRC does not have treaties providing for the reciprocal enforcement of
judgments of courts with the United States, the United Kingdom, Japan or many other countries. In
addition, Hong Kong has no arrangement for the reciprocal enforcement of judgments with the
United States. As a result, recognition and enforcement in Mainland China or Hong Kong of
judgments of a court obtained in the United States or any of the other jurisdictions mentioned
above may not be consistent with expectations. On July 3, 2008, the Supreme People’s Court of the
PRC and the government of the Hong Kong Special Administrative Region entered into the
Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial
Matters by Courts of the Mainland and the Hong Kong Special Administration Region Pursuant to
Choice of Court Agreements between Parties Concerned (ʝ
τર ) (the “ Arr angement ”). Under the
Arrangement, where any designated PRC court or any designated Hong Kong court has made an
enforceable final judgment requiring payment of money in a civil or commercial case pursuant to
a choice of court agreement in writing, any party concerned may apply to the relevant PRC court or
Hong Kong court for recognition and enforcement of the judgment. A judgment rendered by a
Hong Kong court may not be enforced as expected in Mainland China if the parties in dispute have
RISK FACTORS
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not agreed to enter into a choice of court agreement in writing. In addition, the Arrangement has
expressly provided for “enforceable final judgment”, “specific legal relationship” and “written
form.” On January 18, 2019, the Supreme People’s Court and the government of the Hong Kong
Special Administrative Region entered into the Arrangement on Reciprocal Recognition and
Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and of
the Hong Kong Special Administrative Region (ʝႩ̙ձੂ
τર) (the “ New Arr angement ”), which seeks to establish a mechanism
with further clarification on and certainty for reciprocal recognition and enforcement of judgments
in a wider range of civil and commercial matters between Mainland China and Hong Kong. The
New Arrangement discontinued the requirements for a choice of court agreement for bilateral
recognition and enforcement. The New Arrangement will only take effect after the promulgation of
a judicial interpretation by the Supreme People’s Court and the completion of the relevant
legislative procedures in Hong Kong. The New Arrangement will, upon its effectiveness, supersede
the Arrangement. Therefore, before the New Arrangement becomes effective, a judgment rendered
by a Hong Kong court may not be enforced as expected in Mainland China if the parties in the
dispute do not agree to enter into a choice of court agreement in writing.
Under the New Arrangement, any party concerned may apply to the relevant PRC court or
Hong Kong court for recognition and enforcement of the effective judgments in civil and
commercial cases subject to the conditions set forth in the New Arrangement. Although the New
Arrangement has been signed, the outcome and effectiveness of any action brought under the New
Arrangement may still be uncertain. We cannot assure you that an effective judgment that complies
with the New Arrangement can be recognized and enforced in a PRC court.
The inter pret ation and enforcement of some PRC l aws, rule sa nd regulation s recently and
newly i ssueda re subject to further inter pret ation by the re gulatory authoritie s.
A majority of our operations are conducted in China, and are hence governed by PRC laws,
rules and regulations. The PRC legal system is a civil law system based on written statutes. Unlike
the common law system, prior court decisions may be cited for reference but have limited
precedential value.
In the late 1970s, the PRC government began to promulgate a comprehensive system of
laws, rules and regulations governing economic matters in general. The overall effect of legislation
over the past four decades has significantly enhanced the protections afforded to various forms of
economic activities in China. However, due to the rapid development and iteration of economic
activities, recently enacted laws, rules and regulations may not sufficiently cover all aspects of
economic activities in China or may be subject to the significant interpretation discretion by PRC
regulatory agencies. It requires us to understand and be familiar with the actual implementation
methods of relevant laws and regulations in a timely manner, or otherwise we may violate relevant
laws and regulations.
Additionally, the NMPA’s recent reform of the drug approval system may face
implementation challenges. The timing and full impact of such reforms is uncertain and could
prevent us from commercializing our drug candidates in a timely manner. Since PRC
administrative and court authorities have discretion in interpreting and implementing statutory and
contractual terms according to the authorisation of laws and regulations, it may be difficult to
evaluate the outcome of administrative and court proceedings for laws and regulations and
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contractual treaties without specific interpretation. These uncertainties may impede our ability to
enforce the contracts we have entered into and could materially and adversely affect our business,
financial condition and results of operations.
Future adjustment s in l aws,r e gulation s or enforcement policie s in the PRC coul da d ver sely
affect our bu sine ss.
Laws, regulations or enforcement policies in China, including those regulating the
healthcare and pharmaceutical industry, are evolving and subject to possible changes. The PRC
pharmaceutical industry is heavily regulated and many aspects of our business depend on the
receipt of the relevant government authorities’ approvals and permits. Further, regulatory agencies
in China may change their enforcement practices based on economic conditions and needs.
Therefore, prior enforcement activities, or lack of enforcement activities, may not be a complete
indication of future actions. Any enforcement actions against us could have an adverse effect on us.
Any litigation or governmental investigation or enforcement proceedings in China or any
other regions in the world may be protracted and may result in substantial costs and diversion of
resources and management attention, negative publicity, and damage to reputation.
Fluctu ation s in exch anger ates of the Renminbi coul d result in forei gn currency exch ange
losses.
Certain of our cash and cash equivalents, with original maturity less than one year, trade
payables and convertible redeemable preferred shares are denominated in foreign currencies, and
are exposed to foreign currency risk. We recognized net foreign exchange gains of RMB0.6 million
and net exchange loss of RMB7.5 million and RMB0.5 million for the year ended December 31,
2021 and 2022 and the six months ended June 30, 2023, respectively. The fair value change of
convertible redeemable preferred shares take into account exchange gains or losses. As of
December 31, 2021 and 2022 and June 30, 2023, RMB692.0 million, RMB328.2 million and
RMB573.8 million of our cash and bank balances were denominated in U.S. dollars, respectively,
primarily representing proceeds from our Pre-IPO Financing. The exchange rate of the Renminbi
against the U.S. dollar and other foreign currencies fluctuates and is affected by a series of factors.
It is difficult to predict how market forces or government policies may impact the exchange rate
between the Renminbi and the Hong Kong dollar, the U.S. dollar or other currencies in the future.
The proceeds from the Global Offering will be received in Hong Kong dollars. As a result,
any appreciation of the Renminbi against the U.S. dollar, the Hong Kong dollar or any other
foreign currencies may result in the decrease in the value of our proceeds from the Global Offering.
Conversely, any depreciation of the Renminbi may adversely affect the value of, and any dividends
payable on, our Shares in foreign currency. In addition, there are limited instruments available for
us to reduce our foreign currency risk exposure at reasonable costs. Any of these factors could
materially and adversely affect our business, financial condition, results of operations and
prospects, and could reduce the value of, and dividends payable on, our Shares in foreign currency
terms.
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Require dp roce dure s on the remitt ance of Renminbi into and out of the PRC un der the
relev ant PRC l awsa nd regul ation s may limit our ability to pay divi den ds a nd other
obli gation s, anda ffect the v alue of your inve stment.
Required procedures on the remittance of Renminbi into and out of the PRC are required
under the relevant PRC laws and regulations. A substantial majority of our future revenue is
expected to be denominated in Renminbi and we will need to convert Renminbi into foreign
currencies for the payment of dividends, if any, to holders of our Shares. Shortages in the
availability of foreign currency may restrict our ability to remit sufficient foreign currency to pay
dividends or other payments, or otherwise satisfy our foreign currency denominated obligations.
Under China’s current foreign exchange control system, foreign exchange transactions
under the current account conducted by us, including the payment of dividends, do not require
advance approval from China’s State Administration of Foreign Exchange (“ SAFE ”), but we are
required to present relevant documentary evidence of such transactions and conduct such
transactions at designated foreign exchange banks within China that have the licenses to carry out
foreign exchange business. Approval from appropriate government authorities is required where
Renminbi is to be converted into foreign currency and remitted out of China to pay capital
expenses such as the repayment of loans denominated in foreign currencies.
We m ayb e deeme d to be a PRC re sident enter priseu n der the PRC Enter prise Income T ax
Law and our glob al income m a
yb e subject to PRC cor porate t axu n der the PRC Enter prise
Income T axL aw.
The PRC Enterprise Income Tax (“ EIT”) Law provides that enterprises established outside
of China whose “ de facto management bodies” are located in the PRC are considered “resident
enterprises” and are generally subject to the uniform 25% enterprise income tax rate on their global
income. “ De facto management body” is defined as the body that has the significant and overall
management and control over the business, personnel, accounts and properties of an enterprise. In
April 2009 and July 2011, the SAT issued several circulars to clarify certain criteria for
determining location of the “ de facto management bodies” of foreign enterprises controlled by
PRC enterprises; however, no official implementation rules have been issued for determining the
location of the “ defacto management bodies” of foreign enterprises that are not controlled by PRC
enterprises. Being regarded as a PRC resident enterprise may materially and adversely affect our
profit and hence our retained profit available for distribution to our Shareholders.
Divi dends pa id by u s to our forei gni n v estor sa ndg a ins on the sale of our Sh ares mayb e
subject to withhol ding taxes under PRC t axl aws.
Under the EIT law, PRC withholding tax at a rate of 10% is normally applicable to dividends
from a PRC source paid to investors that are “non-resident enterprises”, which do not have an
establishment or place of business in China, or which have an establishment or place of business in
China but whose relevant income is not effectively connected with the establishment or place of
business in China. Any gain realized by non-resident enterprise investors on the transfer of shares
is generally subject to a 10% PRC income tax if such gain is regarded as income derived from
sources within China.
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Under the PRC Individual Income Tax Law and its implementation rules, dividends from
sources within China paid to foreign individual investors who are not PRC residents are generally
subject to a PRC withholding tax at a rate of 20% and gains from PRC sources realized by such
investors on the transfer of shares are generally subject to PRC income tax at a rate of 20% for
individuals. Any PRC tax may be reduced or exempted under applicable tax treaties or similar
arrangements.
If we are treated as a PRC resident enterprise as described under the risk factor headed “—
We may be deemed to be a PRC resident enterprise under the PRC Enterprise Income Tax Law and
our global income may be subject to PRC corporate tax under the PRC Enterprise Income Tax
Law”, dividends we pay with respect to our Shares, or the gain realized from the transfer of our
Shares, may be treated as income derived from sources within China and as a result be subject to
the PRC income taxes described above. However, owners of our Shares who are not PRC tax
residents and seek to enjoy preferential tax rates under relevant tax treaties may apply to the PRC
tax authorities to be recognized as eligible for treaty benefits in accordance with the
Announcement of the State Taxation Administration on Promulgating the Administrative Measures
for Tax Convention Treatment for Non-resident Taxpayers (͏ॶ೼
ʮѓ ) (the “ Circul ar6 0 ”). If any PRC tax is imposed on
distributions on, or dispositions of, our Shares, the value of your investment in our Shares may be
materially and adversely affected.
We h ave grante d, and may continue to grant, o ption sa nd other ty pes of awards under our
share incentive plan, which m ayr e sult in incre aseds hare-b asedp a yment sa ndp otenti al
dilution in sharehol ding.
We have adopted the Incentive Plans to, among others, attract and retain outstanding
individuals to serve as directors, officers, employees, consultants, and advisors to the Company.
We believe the granting of share-based payment is of significant importance to our ability to attract
and retain key personnel and employees, and we may continue to grant share-based payment to
employees in the future. Our share-based payments were RMB7.3 million, RMB25.6 million and
RMB28.4 million in 2021 and 2022 and the six months ended June 30, 2023, respectively. See Note
28 of the Accountants’ Report set out in Appendix I to this prospectus. As a result, our expenses
associated with share-based payment may increase, which may have an adverse effect on our
results of operations and would also potentially dilute the shareholding. We may re-evaluate the
vesting schedules, lock-up period, exercise price or other key terms applicable to the grants under
our currently effective share incentive plans and any subsequently adopted share incentive plans
from time to time. If we choose to do so, we may experience substantial change in our share-based
payment charges in the reporting periods following the Global Offering.
Any f ailure to com ply with PRC re gulation s re
garding our em ployee equity incentive plans
may subject the PRC plan partici pants or u s to fine sa nd other le galo r admini strative
sanction s.
In February 2012, SAFE promulgated the Notices on Issues Concerning the Foreign
Exchange Administration for Domestic Individuals Participating in Stock Incentive Plans of
Overseas Publicly Listed Companies (ᛆዧ
 )( “ SAFE Circul ar7 ”), repealing the previous rules issued by
SAFE in March 2007. Under SAFE Circular 7 and other relevant rules and regulations, PRC
RISK FACTORS
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residents who participate in a stock incentive plan in an overseas publicly listed company are
required to register with SAFE or its local branches and complete certain other procedures.
Participants in a stock incentive plan who are PRC residents must retain a qualified PRC agent,
which could be a PRC subsidiary of the overseas publicly listed company or another qualified
institution selected by the PRC subsidiary, to conduct the SAFE registration and other procedures
with respect to the stock incentive plan on behalf of its participants. The participants must also
retain an overseas entrusted institution to handle matters in connection with their exercise of stock
options, the purchase and sale of corresponding stocks or interests and fund transfers. In addition,
the PRC agent is required to amend the SAFE registration with respect to the stock incentive plan
if there is any material change to the stock incentive plan, the PRC agent or the overseas entrusted
institution or other material changes. We and our PRC employees who have been granted share
options will be subject to these regulations upon the completion of this Global Offering. Failure of
our PRC share option holders to complete their SAFE registrations may subject these PRC
residents to fines of up to RMB300,000 for entities and up to RMB50,000 for individuals, and legal
sanctions and may also limit our ability to contribute additional capital into our PRC subsidiaries,
limit our PRC subsidiaries’ ability to distribute dividends to us, or otherwise materially and
adversely affect our business.
The STA has also issued relevant rules and regulations concerning employee share
incentives. Under these rules and regulations, our employees working in the PRC will be subject to
PRC individual income tax upon exercise of the share options. Our PRC subsidiaries have
obligations to file documents with respect to the granted share options or restricted shares with
relevant tax authorities and to withhold individual income taxes for their employees upon exercise
of the share options or grant of the restricted shares. If our employees fail to pay or we fail to
withhold their individual income taxes according to relevant rules and regulations, we may face
sanctions imposed by the competent governmental authorities.
We may rely on divi dends a nd other distribution s on equity paid by our PRC subsidiarie s to
fun da ny c ash and financin g requirement s we m ayh ave, anda ny limit ation on the ability of
our PRC subsidiarie s to m ake payment s to u s coul d have a materi al anda d ver se effect on our
ability to con duct our bu
sine ss.
We are a holding company incorporated in the Cayman Islands, and we may rely on
dividends and other distributions on equity paid by our PRC subsidiaries for our cash and financing
requirements, including the funds necessary to pay dividends and other cash distributions to our
shareholders or to service any debt we may incur. If any of our PRC subsidiaries incurs debt on its
own behalf in the future, the instruments governing the debt may restrict its ability to pay
dividends or make other distributions to us. Under PRC laws and regulations, our PRC subsidiaries
may pay dividends only out of their respective accumulated profits as determined in accordance
with PRC accounting standards and regulations. In addition, our PRC subsidiaries are required to
set aside at least 10% of its accumulated after-tax profits each year, if any, to fund a certain
statutory reserve fund, until the aggregate amount of such fund reaches 50% of its registered
capital. Such reserve funds cannot be distributed to us as dividends.
RISK FACTORS
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The PRC government will make adjustments to the enforcement measures on foreign
exchange control in accordance with laws and regulations based on capital inflow and outflow as
well as the status of economic activities. Any limitation on the ability of our PRC subsidiaries to
pay dividends or make other kinds of payments to us could materially and adversely limit our
ability to grow, make investments or acquisitions that could be beneficial to our business, pay
dividends to our investors or other obligations to our suppliers, or otherwise fund and conduct our
business.
Our divi dend income from our forei gn-inve sted PRC subsidiarie s mayb e subject to a higher
rate of withhol ding taxt h ant h at which we currently antici pate.
Under the EIT Law, if a foreign entity is deemed to be a “non-resident enterprise”, a PRC
withholding tax at the rate of 10% will be applicable to any dividends for earnings accumulated
since January 1, 2008 payable to the foreign entity, unless the foreign entity is entitled to reduction
or elimination of such tax, including by tax treaties or agreements. According to the Arrangement
between the Mainland of China and Hong Kong Special Administrative Region for the Avoidance
of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Incomes ( ʫή
τર ), dividends paid by a PRC
foreign-invested enterprise to its shareholder(s) incorporated in Hong Kong will be subject to
withholding tax at a rate of 5% if the Hong Kong company directly holds a 25% or more interest in
the PRC foreign-invested enterprise. The STA promulgated the Circular of the State Taxation
Administration on Relevant Issues relating to Beneficial Owner under Tax Treaties (೼ਕᐼ
ʕ “Ϟɛ ”ʮѓ) (the “ Circul ar9 ”) on February 3, 2018,
which addresses the methods for determining the “beneficial owners” under tax treaties’ articles
on dividends, interest and royalties. According to Circular 9, the PRC tax authorities must evaluate
whether an applicant qualifies as a “beneficial owner” on a case-by-case basis, and a beneficial
owner generally must be engaged in substantive business activities and an agent will not be
regarded as a beneficial owner.
If our Hong Kong subsidiary is not considered as a “beneficial owner” under PRC tax law,
dividends from our PRC subsidiaries to our Hong Kong subsidiary will be subject to PRC
withholding tax at a 10% rate instead of a 5% rate. This would negatively impact us and our ability
to pay dividends in the future.
The hei ghtene ds crutiny over acqui sition s from the PRC t ax authoritie s mayh as a n adver se
impact on our bu sine ss
, acqui sition s or re structurin gs trategies.
On February 3, 2015, the STA promulgated the Announcement on Several Issues
Concerning Enterprise Income Tax for Indirect Transfer of Assets by Non-Resident Enterprises
(ʮѓ ) (the “ Circul ar7 ”), which
provides comprehensive guidelines relating to, and heightened the PRC tax authorities’ scrutiny on
indirect transfers, by a non-resident enterprise, of assets (including equity interests) of a PRC
resident enterprise.
RISK FACTORS
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The application of the Circular 7 is uncertain. Tax authorities may determine that Circular 7
applies to our offshore restructuring transactions or sale of the shares of our offshore subsidiaries,
where non-resident enterprises are transferors. Furthermore, we, our non-resident enterprises and
PRC subsidiaries may be required to spend valuable resources to comply with the Circular 7 or to
establish that we and our non-resident enterprises should not be taxed under the Circular 7 for our
previous and future restructuring or disposal of shares of our offshore subsidiaries, which may
have a material adverse effect on our financial conditions and results of operations.
If any of our sharehol ders or benefici arie s who i sa PRC re sident f ails to re gister forei gn
exch ange pursuant to Circul ar 37, it m ay adver sely affect our PRC subsidiarie s’ ability to
distribute profit s to u s, or otherwi se adver sely affect our fin anci al position.
The SAFE promulgated the Circular of the State Administration of Foreign Exchange on the
Administration of Foreign Exchange Involved in Overseas Investment, Financing and Roundtrip
Investment through Special Purpose Vehicles Conducted by Domestic Residents in China via
Special-Purpose Companies (೻ҳ༟̮ි၍ଣ
) (the “ Circul ar3 7 ”) on July 4, 2014. According to Circular 37, PRC residents
(including PRC citizens and PRC enterprises) shall apply to the SAFE or its local bureau to register
foreign exchange for overseas investments before contributing to special purpose vehicles (the
“SPV s”) with legitimate domestic and overseas assets or rights and interests. In the event of any
alteration in the basic information of the registered SPVs, such as the change of a PRC citizen
shareholder, name and operating duration; or in the event of any alternation in key information,
such as increases or decreases in the share capital held by PRC citizens, or equity transfers, swaps,
consolidations, or splits, the registered PRC residents shall timely submit a change in the
registration of the foreign exchange for overseas investments with the foreign exchange bureaus.
SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the
Foreign Exchange Concerning Direct Investment (݁
) (the “ Sim plifyin ga nd Improvin g Notice ”) in February 2015, which took effect on
June 1, 2015. The Simplifying and Improving Notice amended Circular 37 requiring PRC residents
or entities to register with qualified banks rather than SAFE or its local branch in connection with
the establishment or control of an offshore entity established for the purpose of overseas
investment.
We may not at all times be fully aware or informed of the identities of our beneficiaries who
are PRC nationals, and may not be able to compel our beneficiaries to comply with the
requirements of the Circular 37. As a result, we cannot assure you that all of our Shareholders or
beneficiaries who are PRC nationals will at all times comply with, or in the future make or obtain
any applicable registrations or approvals required by the Circular 37 or other related regulations.
Under the relevant rules, failure to comply with the registration procedures set forth in the Circular
37 may result in restrictions on the foreign exchange activities of the relevant PRC enterprise and
may also subject the relevant PRC resident to penalties under the PRC foreign exchange
administration regulations.
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PRC re gulation s of lo ansa ndd irect inve stment by off shore hol ding com panie s to PRC
entitie s may delayo r prevent u s from u sing the procee ds of the Glob al Offerin g to m ake lo ans
or addition alc apital contribution s to our PRC subsidiarie s.
Any loans provided by our offshore holding companies to our PRC subsidiaries are subject
to PRC regulations and such loans must be registered with the local branch of SAFE. Additionally,
our capital contributions must be filed with or approved by the MOFCOM or its local counterpart
and registered with the SAIC or its local branch. We cannot assure you that we will be able to
obtain these government registrations or approvals or to complete filing and registration
procedures on a timely basis, if at all, with respect to future loans or capital contributions by us to
our subsidiaries or any of their respective subsidiaries. If we fail to obtain such approvals or
registrations, our ability to make equity contributions or provide loans to our PRC subsidiaries or
to fund their operations may be materially and adversely affected. This may materially and
adversely affect our PRC subsidiaries’ liquidity, their ability to fund their working capital and
expansion projects, and their ability to meet their obligations and commitments. As a result, this
may have a material adverse effect on our business, financial conditions and results of operations.
RISKS RELATING TO THE GLOBAL OFFERING
No public m arket currently exi sts for our Sh ares, anda n active tr ading m
arket for our Sh ares
may not develo pa nd the m arket price for our Sh ares may decline or bec ame vol atile.
No public market currently exists for our Shares. The initial Offer Price for our Shares to the
public will be the result of negotiations between our Company and the Overall Coordinators, and
the Offer Price may differ significantly from the market price of the Shares following the Global
Offering. As a result, a listing on the Hong Kong Stock Exchange does not guarantee that an active
and liquid trading market for our Shares will develop, especially during the period when a
significant portion of our Shares are subject to lock-up undertakings, or if it does develop, that it
will be sustained following the Global Offering, or that the market price of the Shares will rise
following the Global Offering.
The price and trading volume of our Sh ares mayb ev o latile, which coul d lead to substanti al
losses to inve stor s.
The price and trading volume of our Shares may be subject to significant volatility in
response to various factors beyond our control, including the general market conditions of the
securities in Hong Kong and elsewhere in the world. In particular, the business and performance
and the market price of the shares of other companies engaging in similar business may affect the
price and trading volume of our Shares. In addition to market and industry factors, the price and
trading volume of our Shares may be highly volatile for specific business reasons, such as the
results of clinical trials of our product candidates, the results of our applications for approval of
our product candidates, regulatory developments affecting the biopharmaceutical industry,
healthcare, health insurance and other related matters, fluctuations in our revenue, earnings, cash
flows, investments and expenditures, relationships with our suppliers, movements or activities of
key personnel, or actions taken by competitors. Moreover, shares of other companies listed on the
Stock Exchange with significant operations and assets in China have experienced price volatility in
the past, and it is possible that our Shares may be subject to changes in price not directly related to
our performance.
RISK FACTORS
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The price of our Sh ares when tr ading begins coul d be lower th an the Offer Price.
The Shares will not commence trading on the Stock Exchange until they are delivered.
Accordingly, holders of our Shares are subject to the risk that the price of the Shares when trading
begins could be lower than the Offer Price as a result of adverse market conditions or other adverse
developments that may occur between the time of sale and the time trading begins.
Future sales or perceive ds a les of as ubstanti al number of our Sh ares in the public m arket
followin g the Glob al Offerin g coul d materi ally anda d ver sely affect the price of our Sh ares.
Prior to the Global Offering, there has not been a public market for our Shares. Future sales
or perceived sales by our existing Shareholders of our Shares after the Global Offering could result
in a significant decrease in the prevailing market price of our Shares. Only a limited number of the
Shares currently outstanding will be available for sale or issuance immediately after the Global
Offering due to contractual and regulatory restrictions on disposal and new issuance. Nevertheless,
after these restrictions lapse or if they are waived, future sales of significant amounts of our Shares
in the public market or the perception that these sales may occur could significantly decrease the
prevailing market price of our Shares and our ability to raise equity capital in the future.
In addition, our Shareholders would experience dilution in their shareholdings upon offer or
sale of additional share capital or share capital-linked securities by our Company in future
offerings. If additional funds are raised through our issuance of new share capital or share
capital-linked securities other than on a pro rata basis to existing Shareholders, the shareholdings
of such Shareholders may be reduced and such new securities may confer rights and privileges that
take priority over those conferred by the Offer Shares.
Sales of substantial amounts of Shares in the public market after the completion of the
Global Offering, or the perception that these sales could occur, could adversely affect the market
price of our Shares. Although the AIC Group is subject to restrictions on its sales of Shares within
6 months from the Listing Date as described in “Underwriting” in this prospectus, future sales of a
significant number of our Shares by the AIC Group in the public market after the Global Offering,
or the perception that these sales could occur, could cause the market price of our Shares to decline
and could materially impair our future ability to raise capital through offerings of our Shares. We
cannot assure you that the AIC Group will not dispose of Shares held by it or that we will not issue
Shares pursuant to the general mandate to issue shares granted to our Directors, upon the
expiration of restrictions set out above. We cannot predict the effect, if any, that any future sales of
Shares by the AIC Group, or the availability of Shares for sale by the AIC Group, or the issuance of
Shares by the Company may have on the market price of the Shares. Sale or issuance of a
substantial amount of Shares by the AIC Group or us, or the market perception that such sale or
issuance may occur, could materially and adversely affect the prevailing market price of the
Shares.
RISK FACTORS
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--- page 115 ---
There m ayb e difficultie s in protectin g your intere sts under the l aws of the C aymanI slands.
Our corporate affairs are governed by, among other things, our Memorandum of Association
and Articles of Association, the Companies Act and common law of the Cayman Islands. The rights
of Shareholders to take action against our Directors, actions by minority shareholders and the
fiduciary responsibilities of our Directors to us under Cayman Islands law are to a large extent
governed by the common law of the Cayman Islands. The common law of the Cayman Islands is
derived in part from comparatively limited judicial precedent in the Cayman Islands as well as
from English common law, which has persuasive, but not binding, authority on a court in the
Cayman Islands. The laws of the Cayman Islands relating to the protection of the interests of
minority shareholders differ in some respects from those established under statutes and judicial
precedent in existence in the jurisdictions where minority Shareholders may be located. See
“Appendix III — Summary of the Constitution of the Company and Cayman Islands Company
Law” in this prospectus. As a result of all of the above, minority Shareholders may have difficulties
in protecting their interests under the laws of the Cayman Islands through actions against our
management, Directors or Substantial Shareholders, which may provide different remedies to
minority Shareholders when compared to the laws of the jurisdiction in which such shareholders
are located.
There m ayb e dilution bec auseo fi ssuance of new Sh ares or equity securitie s.
In spite of our current cash and cash equivalents and the net proceeds from the Global
Offering, we may require additional funds due to changes in business conditions or other future
developments relating to, inter alia, our existing operations or any future expansions. The amount
and timing of such additional financing needs will vary depending on the timing investments in
and/or acquisitions of new businesses from third-parties, and the amount of cash flow from our
operations. If our resources are insufficient to satisfy our cash requirements, we may seek
additional financing through selling additional equity or debt securities or obtaining a credit
facility.
The sale of additional equity securities could result in additional dilution to our
Shareholders. If additional funds are raised by way of issuance of new Shares or equity linked
securities other than on a pro rata basis to existing Shareholders, the percentage of ownership of
our existing Shareholders in our Company, the earnings per Share and the net asset value per Share
may be reduced.
Bec ause the initi al public Offer Price per Sh are is higher th an the net t angible book v alue per
Share, purch asers of our Sh ares in the Glob al Offerin g
will ex perience imme diate dilution.
The Offer Price of the Offer Shares is higher than the net tangible asset value per Share
immediately prior to the Global Offering. Therefore, purchasers of the Offer Shares in the Global
Offering will experience an immediate dilution, and our existing Shareholders will receive an
increase in the net tangible assets per Share of their Shares. In order to expand our business, we
may consider offering and issuing additional Shares in the future. Purchasers of the Offer Shares
may experience dilution in the net tangible asset value per share of their Shares if we issue
additional Shares in the future at a price that is lower than the net tangible asset value per Share at
that time.
RISK FACTORS
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We c annot assure you th at we will decl are andd istribute any amount of divi dends in the
future.
Our ability to declare future dividends will depend on the availability of dividends, if any,
received from our operating subsidiaries. Under applicable laws and the constitutional documents
of our operating subsidiaries, the payment of dividends may be subject to certain limitations. The
calculation of certain of our operating subsidiaries’ profit under applicable accounting standards
differs in certain respects from the calculation under HKFRSs. As a result, our operating
subsidiaries may not be able to pay a dividend in a given year even if they have profit as determined
under HKFRSs. Accordingly, since we derive all of our earnings and cash flows from dividends
paid by our operating subsidiaries, we may not have sufficient distributable profit to pay dividends
to our Shareholders.
In addition, any future dividend declaration and distribution will be at the discretion of our
Directors and will depend on our future operations and earnings, capital requirements and surplus,
general financial condition, contractual restrictions and other factors that our Directors deem
relevant. Any declaration and payment as well as the amount of dividends will also be subject to
our Articles of Association and PRC laws, including (where required) the approvals from our
Shareholders and our Directors. Our Shareholders at a general meeting must approve any
declaration of dividends, which must not exceed the amount recommended by our Board.
Moreover, our Directors may from time to time pay such interim dividends as our Board considers
to be justified by our profits and overall financial requirements, or special dividends of such
amounts and on such dates as they think appropriate. As a result, we cannot assure you that we will
make any dividend payments on our Shares in the future.
We c annot m ake fun dament alc h anges to our bu sine ss without the con sent of the Stock
Exch ange.
Under Rule 18A.10 of the Listing Rules, without the prior consent of the Stock Exchange,
we will not be able to effect any acquisition, disposal or other transaction or arrangement or any
series of acquisitions, disposals or other transactions or arrangements, which would result in a
fundamental change in our principal business activities as set forth in this prospectus. As a result,
we may be unable to take advantage of certain strategic transactions that we might otherwise
choose to pursue in the absence of Rule 18A.10. Were any of our competitors that are not listed on
the Stock Exchange to take advantage of such opportunities in our place, we may be placed at a
competitive disadvantage, which could have a material adverse effect on our business, financial
condition and results of operations.
Cert ain statistic s cont aine d in thi sp rospectu sa re derive d from a thir d-party re port and
publicly ava
ilable offici al source sa nd they m ay not be reli able.
Facts, forecasts and statistics in this prospectus relating to the pharmaceutical industry are
obtained from various sources that we believe are reliable, including official government
publications as well as a report prepared by CIC that we commissioned. We have no reason to
believe that such information is false or misleading or that any fact has been omitted that would
render such information false or misleading. The Directors and the Joint Sponsors have exercised
reasonable care in selecting and identifying the named information sources, in compiling,
extracting, and reproducing the information, and in ensuring that there is no material omission of
the information.
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You shoul d read the entire document c arefully, and we stron gly c aution you not to place any
reli ance on any inform ation cont aine d in press a rticle s or other me dia regarding us or the
Glob al Offerin g.
Subsequent to the date of this prospectus but prior to the completion of the Global Offering,
there may be press and media coverage regarding us and the Global Offering, which may contain,
among other things, certain financial information, projections, valuations and other forward-
looking information about us and the Global Offering. We have not authorized the disclosure of
any such information in the press or media and do not accept responsibility for the accuracy or
completeness of such press articles or other media coverage. We make no representation as to the
appropriateness, accuracy, completeness or reliability of any of the projections, valuations or other
forward-looking information about us. To the extent such statements are inconsistent with, or
conflict with, the information contained in this prospectus, we disclaim responsibility for them.
Accordingly, prospective investors are cautioned to make their investment decisions on the basis of
the information contained in this prospectus only and should not rely on any other information.
You should rely solely upon the information contained in this prospectus, the Global
Offering and any formal announcements made by us in Hong Kong in making your investment
decision regarding our Shares. We do not accept any responsibility for the accuracy or
completeness of any information reported by the press or other media, nor the fairness or
appropriateness of any forecasts, views or opinions expressed by the press or other media
regarding our Shares, the Global Offering or us. We make no representation as to the
appropriateness, accuracy, completeness or reliability of any such data or publication.
Accordingly, prospective investors should not rely on any such information, reports or publications
in making their decisions as to whether to invest in our Global Offering. By applying to purchase
our Shares in the Global Offering, you will be deemed to have agreed that you will not rely on any
information other than that contained in this prospectus and the Global Offering.
RISK FACTORS
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In preparation for the Global Offering, we have sought the following waivers from strict
compliance with the relevant provisions of the Listing Rules and certificates of exemption from
strict compliance with the relevant provisions of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance:
MANAGEMENT PRESENCE IN HONG KONG
Pursuant to Rule 8.12 of the Listing Rules, an issuer must have sufficient management
presence in Hong Kong. This normally means that at least two of its executive directors must be
ordinarily resident in Hong Kong.
We do not have sufficient management presence in Hong Kong for the purposes of satisfying
the requirements under Rule 8.12 of the Listing Rules. Our Group’s management, business
operations and assets are primarily based outside Hong Kong. The principal management
headquarters and senior management of our Group are primarily based in China. Our Directors
consider that the appointment of executive Directors who will be ordinarily resident in Hong Kong
would not be beneficial to, or appropriate for, our Group and therefore would not be in the best
interests of our Company and our Shareholders as a whole. Accordingly, we have applied to the
Stock Exchange for, and the Stock Exchange has granted, a waiver from strict compliance with the
requirements under Rule 8.12 of the Listing Rules. We will ensure that there is a regular and
effective communication between us and the Stock Exchange by way of the following
arrangements:
(a) pursuant to Rule 3.05 of the Listing Rules, we have appointed and will continue to
maintain two authorised representatives, who will act as our principal channel of
communication with the Stock Exchange and ensure that our Company complies with
the Listing Rules at all times. The two authorised representatives are Dr. Liu, our
executive Director, and Ms. CHU Pik Man ( ϡᓴઽ)( “ Ms. Chu ”), a joint company
secretary of our Company. Each of our authorised representatives will be available to
meet with the Stock Exchange within a reasonable time frame upon the request of the
Stock Exchange and will be readily contactable by phone and email. Each of the
authorised representatives is authorised to communicate on our behalf with the Stock
Exchange;
(b) both authorised representatives have means to contact all of our Directors (including
our independent non-executive Directors) promptly at all times as and when the Stock
Exchange wishes to contact our Directors for any matters. Our Directors who are not
ordinarily resident in Hong Kong possess or can apply for valid travel documents to
visit Hong Kong and will be able to meet with the Stock Exchange within a
reasonable period of time when required. To enhance communication between the
Stock Exchange, our authorised representatives and our Directors, we have
implemented a policy that (i) each Director has provided their respective contact
details (including phone number and e-mail address) to the authorised
representatives; (ii) in the event that a Director expects to travel or is otherwise out of
office, he/she will endeavour to provide his/her phone number of the place of his/her
accommodation to the authorised representatives or maintain an open line of
communication via his/her mobile phone; and (iii) each of our Directors will provide
their respective mobile phone numbers, office phone numbers and fax numbers (if
applicable) to the Stock Exchange pursuant to the Guidance Letter HKEX-GL9-09;
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(c) in compliance with Rule 3A.19 of the Listing Rules, we have appointed Fosun
International Capital Limited as our compliance advisor (the “ Com pli ance
Advisor”) which has access at all times to our authorised representatives, Directors,
senior management and other officers of our Company, and will act as an additional
channel of communication with the Stock Exchange. We will keep the Stock
Exchange up to date in respect of any change to such details. Our authorised
representatives, Directors and other officers of our Company will provide promptly
such information and assistance as the Compliance Advisor may reasonably require
in connection with the performance of the Compliance Advisor’s duties as set forth in
Chapter 3A of the Listing Rules. There will be adequate and efficient means of
communication between our Company, authorised representatives, Directors and
other officers of our Company and the Compliance Advisor, and to the extent
reasonably practicable and legally permissible, we will keep the Compliance Advisor
informed of all communications and dealings between the Stock Exchange and us;
(d) we will appoint other professional advisors (including legal advisors in Hong Kong)
after the Listing to assist us in dealing with any questions which may be raised by the
Stock Exchange and to ensure that there will be prompt and effective communication
with the Stock Exchange;
(e) our Company has designated one of our staff members as the communication officer
at our headquarters after the Listing who will be responsible for maintaining
day-to-day communication with Ms. Chu and our Company’s professional advisors in
Hong Kong, including our legal advisors in Hong Kong and the Compliance Advisor,
to keep abreast of any correspondences and/or enquiries from the Stock Exchange and
report to our executive Directors to further facilitate communication between the
Stock Exchange and our Company; and
(f) meetings between the Stock Exchange and our Directors could be arranged through
our authorised representatives or the Compliance Advisor, or directly with our
Directors within a reasonable time frame. We will inform the Stock Exchange as soon
as practicable in respect of any change of authorised representatives and/or the
Compliance Advisor.
JOINT COMPANY SECRETARIES
Pursuant to Rules 3.28 and 8.17 of the Listing Rules, the company secretary must be an
individual who, by virtue of his academic or professional qualifications or relevant experience, is,
in the opinion of the Stock Exchange, capable of discharging the functions of the company
secretary. The Stock Exchange considers the following academic or professional qualifications to
be acceptable: (i) a member of The Hong Kong Chartered Governance Institute (formerly known as
The Hong Kong Institute of Chartered Secretaries); (ii) a solicitor or barrister (as defined in the
Legal Practitioners Ordinance); and (iii) a certified public accountant (as defined in the
Professional Accountants Ordinance).
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In assessing “relevant experience”, the Stock Exchange will consider the individual’s: (i)
length of employment with the issuer and other listed companies and the roles he/she played, (ii)
familiarity with the Listing Rules and other relevant law and regulations including the Securities
and Futures Ordinance, Companies Ordinance, Companies (Winding Up and Miscellaneous
Provisions) Ordinance and the Takeovers Code, (iii) relevant training taken and/or to be taken in
addition to the minimum requirement of taking not less than fifteen hours of relevant professional
training in each financial year under Rule 3.29 of the Listing Rules, and (iv) professional
qualifications in other jurisdictions.
We have appointed Ms. Yu Li ( ɲ஁)( “ Ms.Y u ”) and Ms. Chu as our joint company
secretaries. Ms. Yu is our vice president and her primary responsibility is the management of
administration of our Group. Ms. Yu’s biographical information is set out in the section headed
“Directors and Senior Management” in this prospectus. Since Ms. Yu does not possess a
qualification stipulated in Rule 3.28 of the Listing Rules, she is not able to solely fulfill the
requirements as a company secretary of a listed issuer stipulated under Rules 3.28 and 8.17 of the
Listing Rules.
Accordingly, we have applied to the Stock Exchange for, and the Stock Exchange has
granted, a waiver from strict compliance with the requirements under Rules 3.28 and 8.17 of the
Listing Rules in relation to the appointment of Ms. Yu as our joint company secretary. In order to
provide support to Ms. Yu, we have appointed Ms. Chu, an associate member of both The Hong
Kong Chartered Governance Institute and The Chartered Governance Institute in the United
Kingdom, who meets the requirements under Rule 3.28 and 8.17, as a joint company secretary to
provide assistance to Ms. Yu, for a three-year period from the Listing Date so as to enable her to
acquire the relevant experience (as required under Rule 3.28(2) of the Listing Rules) to duly
discharge her duties. In order to enable Ms. Yu to have good understanding of the Listing Rules and
other applicable Hong Kong laws, Ms. Yu has also attended the training given by our Hong Kong
legal counsel, Davis Polk & Wardwell. Ms. Chu will also work closely with Ms. Yu to jointly
discharge the duties and responsibilities as a company secretary and assist Ms. Yu in acquiring the
relevant experience as required under Rules 3.28 and 8.17 of the Listing Rules. Ms. Chu will assist
Ms. Yu in organizing Board meetings and Shareholders’ meetings of our Company as well as other
matters of our Company which are incidental to the duties of a company secretary. Ms. Chu will
maintain regular contact with Ms. Yu, the Directors and the senior management of our Company.
The waiver will be revoked immediately if Ms. Chu ceases to provide assistance to Ms. Yu as a
joint company secretary for the three-year period after the Listing or where there are material
breaches of the Listing Rules by our Company. Ms. Yu will comply with the annual professional
training requirement under Rule 3.29 of the Listing Rules and will enhance her knowledge of the
Listing Rules during the three-year period from the Listing. She will also be assisted by the Hong
Kong legal advisors of our Company, on matters concerning our Company’s ongoing compliance
with the Listing Rules and the applicable laws and regulations.
Pursuant to the Guidance Letter HKEx-GL108-20, such waiver will be subject to the
following conditions: (i) Ms. Yu must be assisted by a person, namely Ms. Chu, who possesses the
qualifications or experience as required under Rule 3.28 of the Listing Rules and is appointed as a
joint company secretary of our Company throughout the three-year waiver period; and (ii) the
waiver can be revoked if there are material breaches of the Listing Rules by us. We will liaise with
the Stock Exchange before the end of the three-year period to enable it to assess whether Ms. Yu,
having had the benefit of Ms. Chu’s assistance for three years and will have acquired relevant
experience within the meaning of Rule 3.28 of the Listing Rules so that a further waiver will not be
necessary.
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See the section headed “Directors and Senior Management” in this prospectus for further
information regarding the qualifications of Ms. Yu and Ms. Chu.
EXEMPTION FROM COMPLIANCE WITH SECTION 342(1)(b) OF THE COMPANIES
(WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE AND PARAGRAPH
27 OF PART I OF THE THIRD SCHEDULE TO THE COMPANIES (WINDING UP AND
MISCELLANEOUS PROVISIONS) ORDINANCE
According to Section 342(1)(b) of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance, this prospectus shall include an accountants’ report which contains the
matters specified in the Third Schedule to the Companies (Winding Up and Miscellaneous
Provisions) Ordinance.
According to paragraph 27 of Part I of the Third Schedule to the Companies (Winding Up
and Miscellaneous Provisions) Ordinance, our Company is required to include in this prospectus a
statement as to the gross trading income or sales turnover (as the case may be) of our Company
during each of the three financial years immediately preceding the issue of this prospectus as well
as an explanation of the method used for the computation of such income or turnover and a
reasonable breakdown of the more important trading activities.
According to paragraph 31 of Part II of the Third Schedule to the Companies (Winding Up
and Miscellaneous Provisions) Ordinance, our Company is required to include in this prospectus a
report prepared by our Company’s auditor with respect to profits and losses of our Company in
respect of each of the three financial years immediately preceding the issue of the prospectus and
the assets and liabilities of our Company at the last date to which the financial statements were
prepared.
According to Section 342A(1) of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance, the SFC may issue, subject to such conditions (if any) as the SFC thinks fit,
a certificate of exemption from compliance with the relevant requirements under the Companies
(Winding Up and Miscellaneous Provisions) Ordinance if, having regard to the circumstances, the
SFC considers that the exemption will not prejudice the interests of the investing public and
compliance with any or all of such requirements would be irrelevant or unduly burdensome, or is
otherwise unnecessary or inappropriate.
According to Rule 4.04(1) of the Listing Rules, the Accountants’ Report contained in this
prospectus must include, inter alia, the results of our Company in respect of each of the three
financial years immediately preceding the issue of this prospectus or such shorter period as may be
acceptable to the Stock Exchange.
Our Company is a biotech company as defined under Chapter 18A of the Listing Rules and
is seeking a listing under Chapter 18A of the Listing Rules. According to Rule 18A.03(3) of the
Listing Rules, a biotech company must have been in operation in its current line of business for at
least two financial years prior to listing under substantially the same management. And according
to Rule 18A.06 of the Listing Rules, an eligible biotech company shall comply with Rule 4.04
modified so that references to “three financial years” or “three years” in that rule shall instead
reference to “two financial years” or “two years”, as the case may be.
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Accordingly, we have applied to the SFC for a certificate of exemption from strict
compliance with the requirements under Section 342(1)(b) of the Companies (Winding Up and
Miscellaneous Provisions) Ordinance and paragraph 27 of Part I and paragraph 31 of Part II of the
Third Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance on the
following grounds.
(a) our Company is primarily engaged in R&D, application and commercialization of
biotech products, and falls within the scope of biotech company as defined under
Chapter 18A of the Listing Rules;
(b) the Accountants’ Report for each of the two financial years ended December 31, 2021
and 2022 and the six months ended June 30, 2023 has been prepared and is set out in
Appendix I to this prospectus in accordance with Rule 18A.06 of the Listing Rules;
(c) notwithstanding that the financial results set out in this prospectus are only for the
two years ended December 31, 2021 and 2022 and the six months ended June 30, 2023
in accordance with Chapter 18A of the Listing Rules, other information required to be
disclosed under the Listing Rules and requirements under the Companies (Winding
up and Miscellaneous Provisions) Ordinance has been adequately disclosed in this
prospectus pursuant to the relevant requirements;
(d) furthermore, as Chapter 18A of the Listing Rules provides track record period for
biotech companies in terms of financial disclosure is two years, strict compliance
with the requirements of Section 342(1)(b) of the Companies (Winding Up and
Miscellaneous Provisions) Ordinance and paragraph 27 of Part I and paragraph 31 of
Part II of the Third Schedule to the Companies (Winding Up and Miscellaneous
Provisions) Ordinance would be unduly burdensome for our Company; and
(e) the Accountants’ Report covering the two years ended December 31, 2021 and 2022
and the six months ended June 30, 2023 (as set out in Appendix I), together with other
disclosures in this prospectus, have already provided adequate and reasonable
up-to-date information in the circumstances for the potential investors to make an
informed assessment of the business, assets and liabilities, financial position,
management and prospects and to form a view on the track record of our Company.
Therefore, the exemption would not prejudice the interest of the investing public.
The SFC has granted us a certificate of exemption under section 342A of the Companies
(Winding Up and Miscellaneous Provisions) Ordinance exempting our Company from strict
compliance with section 342(1)(b) in relation to paragraph 27 of Part I and paragraph 31 of Part II
of the Third Schedule on the condition that particulars of the exemption are set out in this
prospectus and that this prospectus will be issued on or before December 14, 2023.
CONTINUING CONNECTED TRANSACTION
We have entered into and will continue to engage in certain transaction which would
constitute continuing connected transaction for our Company under the Listing Rules following
completion of the Global Offering. We have applied to the Stock Exchange for, and the Stock
Exchange has granted us, waivers from strict compliance with certain requirements set out in
Chapter 14A of the Listing Rules for certain continuing connected transactions. For further details
of such potential non-exempt continuing connected transaction and the waivers, please see
“Connected Transaction”.
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DIRECTORS’ RESPONSIBILITY FOR THE CONTENTS OF THIS PROSPECTUS
This prospectus, for which our Directors (including any proposed director who is named as
such in this prospectus) collectively and individually accept full responsibility, includes
particulars given in compliance with the Companies (Winding Up and Miscellaneous Provisions)
Ordinance, the Securities and Futures (Stock Market Listing) Rules (Chapter 571V of the Laws of
Hong Kong) and the Listing Rules for the purpose of giving information to the public with regard
to our Group. Our Directors, having made all reasonable enquiries, confirm that to the best of their
knowledge and belief the information contained in this prospectus is accurate and complete in all
material respects and not misleading or deceptive, and there are no other matters the omission of
which would make any statement in this prospectus misleading.
GLOBAL OFFERING
This prospectus is published solely in connection with the Hong Kong Public Offering,
which forms part of the Global Offering. For applicants under the Hong Kong Public Offering, this
prospectus contains the terms and conditions of the Hong Kong Public Offering.
The Hong Kong Offer Shares are offered solely on the basis of the information contained
and representations made in this prospectus and on the terms and subject to the conditions set out
herein. No person is authorized to give any information in connection with the Global Offering or
to make any representation not contained in this prospectus, and any information or representation
not contained herein must not be relied upon as having been authorized by our Company, the Joint
Sponsors, the Overall Coordinators, the Joint Global Coordinators, the Joint Bookrunners, the
Joint Lead Managers and any of the Underwriters, any of their respective directors, agents,
employees or advisors or any other party involved in the Global Offering.
The Listing is sponsored by the Joint Sponsors and the Global Offering is managed by the
Overall Coordinators. Pursuant to the Hong Kong Underwriting Agreement, the Hong Kong Public
Offering is fully underwritten by the Hong Kong Underwriters under the terms of the Hong Kong
Underwriting Agreement. The International Offering is expected to be fully underwritten by the
International Underwriters subject to the terms and conditions of the International Underwriting
Agreement.
See the section headed “Underwriting” in this prospectus for further information about the
Underwriters and the underwriting arrangements.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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PROCEDURES FOR APPLICATION FOR HONG KONG OFFER SHARES
The application procedures for the Hong Kong Offer Shares are set forth in “How to Apply
for Hong Kong Offer Shares” in this prospectus.
STRUCTURE AND CONDITIONS OF THE GLOBAL OFFERING
Details of the structure of the Global Offering, including its conditions, are set forth in the
section headed “Structure of the Global Offering” in this prospectus.
RESTRICTIONS ON OFFER AND SALE OF THE OFFER SHARES
Each person acquiring the Hong Kong Offer Shares under the Hong Kong Public Offering
will be required to, or be deemed by his/her acquisition of Offer Shares to, confirm that he/she is
aware of the restrictions on offers for the Offer Shares described in this prospectus.
No action has been taken to permit a public offering of the Offer Shares in any jurisdiction
other than in Hong Kong, or the distribution of this prospectus in any jurisdiction other than Hong
Kong. Accordingly, this prospectus may not be used for the purpose of, and does not constitute an
offer or invitation in any jurisdiction or in any circumstances in which such an offer or invitation is
not authorized or to any person to whom it is unlawful to make such an offer or invitation. The
distribution of this prospectus and the offering and sale of the Offer Shares in other jurisdictions
are subject to restrictions and may not be made except as permitted under the applicable securities
laws of such jurisdictions pursuant to registration with or authorization by the relevant securities
regulatory authorities or an exemption therefrom.
APPLICATION FOR LISTING ON THE STOCK EXCHANGE
We have applied to the Listing Committee for the listing of, and permission to deal in, the
Shares in issue and to be issued pursuant to the Global Offering.
Dealings in the Shares on the Stock Exchange are expected to commence on Friday,
December 22, 2023. No part of our Shares or loan capital is listed on or dealt in on any other stock
exchange and no such listing or permission to list is being or proposed to be sought. All Offer
Shares will be registered on the Hong Kong Share Registrar of our Company in order to enable
them to be traded on the Stock Exchange.
Under Section 44B(1) of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance, any allotment made in respect of any application will be invalid if the listing of, and
permission to deal in, the Shares on the Stock Exchange is refused before the expiration of three
weeks from the date of the closing of the application lists, or such longer period (not exceeding six
weeks) as may, within the said three weeks, be notified to our Company by the Stock Exchange.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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SHARES WILL BE ELIGIBLE FOR ADMISSION TO CCASS
Subject to the granting of the listing of, and permission to deal in, the Shares on the Stock
Exchange and compliance with the stock admission requirements of HKSCC, the Shares will be
accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with
effect from the Listing Date or any other date as determined by HKSCC. Settlement of transactions
between participants of the Stock Exchange is required to take place in CCASS on the second
settlement day after any trading day. All activities under CCASS are subject to the General Rules
of HKSCC and HKSCC Operational Procedures in effect from time to time.
All necessary arrangements have been made for the Shares to be admitted into CCASS.
Investors should seek the advice of their stockbroker or other professional advisor for details of
those settlement arrangements and how such arrangements will affect their rights and interests.
REGISTER OF SHAREHOLDERS AND STAMP DUTY
Our principal register of members will be maintained in the Cayman Islands by our principal
registrar, Conyers Trust Company (Cayman) Limited, in the Cayman Islands, and our Hong Kong
register will be maintained by the Hong Kong Share Registrar, Computershare Hong Kong Investor
Services Limited in Hong Kong.
All Offer Shares issued pursuant to applications made in the Hong Kong Public Offering and
the International Offering will be registered on the Hong Kong register of members of our
Company in Hong Kong. Dealings in the Shares registered in our Hong Kong register of members
will be subject to Hong Kong stamp duty. For further details of Hong Kong stamp duty, please seek
professional tax advice.
PROFESSIONAL TAX ADVICE RECOMMENDED
Potential investors in the Global Offering are recommended to consult their professional
advisors if they are in any doubt as to the taxation implications of subscribing for, holding and
dealing in the Shares or exercising any rights attached to them. It is emphasized that none of the
Company, the Joint Sponsors, the Overall Coordinators, the Joint Global Coordinators, the Joint
Bookrunners, the Joint Lead Managers, the Underwriters, any of their respective affiliates,
directors, supervisors, employees, agents or advisors or any other party involved in the Global
Offering accepts responsibility for any tax effects on, or liabilities of holders of the Shares
resulting from the subscription, purchase, holding or disposal of the Shares or exercising any rights
attached to them.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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EXCHANGE RATE CONVERSION
Solely for your convenience, this prospectus contains translations of certain Renminbi
amounts into Hong Kong dollars, of Renminbi amounts into U.S. dollars and of Hong Kong dollars
into U.S. dollars at specified rates.
No representation is made that the amounts denominated in one currency could actually be
converted into the amounts denominated in another currency at the rates indicated or at all. Unless
indicated otherwise, (i) the translations between Renminbi and U.S. dollars were made at the rate
of RMB7.1011 to US$1.00, (ii) the translations between Hong Kong dollars and Renminbi were
made at the rate of RMB0.9088 to HK$1.00; and (iii) the translations between U.S. dollars and
Hong Kong dollars were made at the rate of HK$7.8137 to US$1.00. The RMB to HK$ and US$ to
RMB exchange rates are quoted by the PBOC for foreign exchange transactions prevailing on
December 4, 2023. Any discrepancies in any table between totals and sums of amounts listed
therein are due to rounding.
LANGUAGE
If there is any inconsistency between the English version of this prospectus and the Chinese
translation of this prospectus, the English version of this prospectus shall prevail unless otherwise
stated. However, if there is any inconsistency between the names of any of the entities mentioned
in this English prospectus which are not in the English language and their English translations, the
names in their respective original languages shall prevail.
ROUNDING
Certain amounts and percentage figures included in this prospectus have been subject to
rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an
arithmetic aggregation of the figures preceding them. Any discrepancies in any table or chart
between the total shown and the sum of the amounts listed are due to rounding.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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DIRECTORS
Name A ddress Nation ality
Executive Director s
Dr. LIU Liping ( ᄎл̻) 703, Building 4
Jiaxin Garden
Longcheng Street
Longgang District
Shenzhen, Guangdong
PRC
United States
Ms. YU Meng ( ɲ഼) 6-2-506 Wendelford Garden
Houhai Avenue
Nanshan District
Shenzhen, Guangdong
PRC
Chinese
Non-executive Director s
M r .L IL i( ҽ቞) 9C, Building A
Huifang Garden
Nanguang Road
Nanshan District
Shenzhen, Guangdong
PRC
Chinese
Dr. ZHU Xun ( ϡԘ) Room 402, Building 33
Yumingbieyuan
Guangsheng Road
Jiangang Hill
Bao’an District
Shenzhen, Guangdong
PRC
Chinese
Mr. MA Lixiong ( ৵ͭඪ) Room 1608
International Chamber of Commerce Center
No. 168 Fuhua 3rd Road
Futian District
Shenzhen, Guangdong
PRC
Chinese
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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Name A ddress Nation ality
Mr. JIANG Feng (ࢤRoom 701, Block C
Poly Central North District
No. 2 Jianshe Zhongma Road
Yuexiu District
Guangzhou, Guangdong
PRC
Chinese
Independent non-executive Director s
Mr. TAN Bo ( ᗈᏙ) Flat 32C, Block 6B
Imperial Cullinan
No. 10 Hoi Fai Road
Kowloon
Hong Kong
Canadian
Dr. Jin LI ( ҽཨ) Room 701, Unit 7, Building 41
No. 2, Xierqi West Road
Haidian District
Beijing
PRC
United States
Mr. HUNG Tak Wai
(ˆᅃਃ)
Apt. 10B, Tower 4
Hillsborough Court
18 Old Peak Road
Hong Kong
Chinese
Please see the section headed “Directors and Senior Management” in this prospectus for
further details of our Directors.
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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PARTIES INVOLVED IN THE GLOBAL OFFERING
Joint S ponsors UBS Securitie s Hon g Kong Limite d
52/F, Two International Finance Centre
8 Finance Street, Central
Hong Kong
Huatai Fin anci al Hol dings (Hon g Kong) Limite d
62/F, The Center
99 Queen’s Road Central
Hong Kong
Over all Coor dinator s UBS AG Hon g Kong Branch
52/F, Two International Finance Centre
8 Finance Street, Central
Hong Kong
Huatai Fin anci al Hol dings (Hon g Kong) Limite d
62/F, The Center
99 Queen’s Road Central
Hong Kong
CLSA Limite d
18/F, One Pacific Place
88 Queensway
Hong Kong
Joint Glob al Coor dinator s UBS AG Hon g Kong Branch
52/F, Two International Finance Centre
8 Finance Street, Central
Hong Kong
Huatai Fin anci al Hol dings
(Hon g Kong) Limite d
62/F, The Center
99 Queen’s Road Central
Hong Kong
CLSA Limite d
18/F, One Pacific Place
88 Queensway
Hong Kong
CMB Intern ation alC apital Limite d
45/F, Champion Tower
3 Garden Road, Central
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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BOCOM Intern ation al Securitie s Limite d
9/F, Man Yee Building
68 Des V oeux Road Central, Hong Kong
Yue Xiu Securitie s Com pany Limite d
Rooms Nos. 4917-4937, 49/F
Sun Hung Kai Centre
No.30 Harbour Road
Wanchai, Hong Kong
CCB Intern ation alC apital Limite d
12/F, CCB Tower
3 Connaught Road Central
Central Hong Kong
Joint Bookrunner sa nd Joint
Lead Managers
UBS AG Hon g Kong Branch
52/F, Two International Finance Centre
8 Finance Street, Central
Hong Kong
Huatai Fin anci al Hol dings (Hon g Kong) Limite d
62/F, The Center
99 Queen’s Road Central
Hong Kong
CLSA Limite d
18/F, One Pacific Place
88 Queensway
Hong Kong
CMB Intern ation alC apital Limite d
45/F, Champion Tower
3 Garden Road, Central
Hong Kong
BOCOM Intern ation al Securitie s Limite d
9/F, Man Yee Building
68 Des V oeux Road Central, Hong Kong
Yue Xiu Securitie s Com pany Limite d
Rooms Nos. 4917-4937, 49/F
Sun Hung Kai Centre
No.30 Harbour Road
Wanchai, Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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CCB Intern ation alC apital Limite d
12/F, CCB Tower
3 Connaught Road Central
Central
Hong Kong
Fosun Intern ation al Securitie s Limite d
Suite 2101-2105, 21/F Champion Tower
3 Garden Road, Central, Hong Kong
Gol dlink Securitie s Limite d
28/F, Bank of East Asia Harbour View Centre
56 Gloucester Road, Wanchai
Hong Kong
I Win Securitie s Limite d
Room 201, 2/F, China Insurance Group Building
141 Des V oeux Rd Central Central, Hong Kong
Shenw an Hon gyuan Securitie s (H.K.) Limite d
Level 6, Three Pacific Place
1 Queen’s Road East
Hong Kong
uSm art Securitie s Limite d
Unit 2606, 26/F, FWD Financial Centre
308 Des V oeux Road Central
Hong Kong
Winbull Securitie s Intern ation al (Hon g Kong) Limite d
Unit A, 26/F, United Centre
95 Queensway, Admiralty
Hong Kong
CapitalM arket Interme diarie s UBS AG Hon g Kong Branch
52/F, Two International Finance Centre
8 Finance Street, Central
Hong Kong
Huatai Fin anci al Hol dings (Hon g Kong
) Limite d
62/F, The Center
99 Queen’s Road Central
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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CLSA Limite d
18/F, One Pacific Place
88 Queensway
Hong Kong
CMB Intern ation alC apital Limite d
45/F, Champion Tower
3 Garden Road, Central
Hong Kong
BOCOM Intern ation al Securitie s Limite d
9/F, Man Yee Building
68 Des V oeux Road Central, Hong Kong
Yue Xiu Securitie s Com pany Limite d
Rooms Nos. 4917-4937, 49/F
Sun Hung Kai Centre
No.30 Harbour Road
Wanchai, Hong Kong
CCB Intern ation alC apital Limite d
12/F, CCB Tower
3 Connaught Road Central
Central
Hong Kong
Fosun Intern ation al Securitie s Limite d
Suite 2101-2105, 21/F Champion Tower
3 Garden Road, Central, Hong Kong
Gol dlink Securitie s Limite d
28/F, Bank of East Asia Harbour View Centre
56 Gloucester Road, Wanchai
Hong Kong
I Win Securitie s Limite d
Room 201, 2/F, China Insurance Group Building
141 Des V oeux Rd Central Central, Hong Kong
Shenw an Hon gyuan Securitie s (H.K.) Limite d
Level 6, Three Pacific Place
1 Queen’s Road East
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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uSm art Securitie s Limite d
Unit 2606, 26/F, FWD Financial Centre
308 Des V oeux Road Central
Hong Kong
Winbull Securitie s Intern ation al (Hon g Kong) Limite d
Unit A, 26/F, United Centre
95 Queensway, Admiralty
Hong Kong
Legal advisors to our Com pany AstoHongKongandUnitedStateslaws:
Davis Polk & W ardwell
10/F, The Hong Kong Club Building
3A Chater Road
Hong Kong
AstoPRClaws:
HanK u nL aw Office s
20/F, Kerry Plaza Tower 3
1-1 Zhongxinsi Road
Futian District
Shenzhen, Guangdong
PRC
AstoCaymanIslandslaws:
Conyer s Dill & Pe arman
29/F, One Exchange Square
8 Connaught Place
Central
Hong Kong
Legal advisors to the Joint
Sponsorsa nd the Un derwriter s
AstoHongKongandUnitedStateslaws:
She arman & Sterlin g
21/F, Gloucester Tower
The Landmark
15 Queen’s Road Central
Hong Kong
AstoPRClaws:
Commerce & Fin ance L aw Office s
12-14/F, China World Office 2
No.1 Jianguomenwai Avenue
Chaoyang District
Beijing
PRC
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
– 123 –


--- page 134 ---
Auditor and Reportin g
Account ants
Ern st & Youn g
CertifiedPublicAccountants
27/F, One Taikoo Place
979 King’s Road
Quarry Bay
Hong Kong
Industry Con sult ant Chin a Insights Industry Con sult ancy Limite d
10/F, Block B
Jing’an International Center
88 Puji Road
Jing’an District
Shanghai
PRC
Receivin g Bank CMB Win g Lun g Bank Limite d
45 Des V oeux Road
Central
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
– 124 –


--- page 135 ---
Registere d Office Cricket Square
Hutchins Drive
P.O. Box 2681
Grand Cayman KY1-1111
Cayman Islands
Head Office and Princi palP l ace
of Bu sine ss in the PRC
18B-102, Zhonghaixin Innovation Industry City
Ganli Second Road
Jihua Neighborhood
Longgang District
Shenzhen, Guangdong
PRC
Princi palP l ace of Bu sine ss in
Hon g Kong
40/F, Dah Sing Financial Centre
No. 248 Queen’s Road East
Wanchai
Hong Kong
Com pany’s Website www.hi ghti detx.com
(informationonthiswebsitedoesnotformpartofthis
prospectus)
Joint Com pany Secret arie s Ms.Y UL i( ɲ஁)
Room 1618, Building 16
Zhonghaixin Innovation Industry City
Ganli Second Road
Jihua Neighborhood
Longgang District
Shenzhen, Guangdong
PRC
Ms. CHU Pik M an( ϡᓴઽ)
AssociatememberofbothTheHongKong
CharteredGovernanceInstituteand
TheCharteredGovernanceInstituteinthe
UnitedKingdom
40/F, Dah Sing Financial Centre
No. 248 Queen’s Road East
Wanchai
Hong Kong
CORPORATE INFORMATION
– 125 –


--- page 136 ---
Authorize d Represent ative s Dr. LIU Li ping (ᄎл̻)
703, Building 4
Jiaxin Garden
Longcheng Street
Longgang District
Shenzhen, Guangdong
PRC
Ms. CHU Pik M an( ϡᓴઽ)
40/F, Dah Sing Financial Centre
No. 248 Queen’s Road East
Wanchai
Hong Kong
Audit Committee Mr. TAN Bo ( ᗈᏙ)( Chairman )
Dr. Jin LI ( ҽཨ)
Mr. HUNG Tak Wai ( ˆᅃਃ)
Remuner ation Committee Dr. Jin LI ( ҽཨ)( Chairman )
Dr. LIU Liping ( ᄎл̻)
Mr. TAN Bo ( ᗈᏙ)
Nomin ation Committee Dr. LIU Liping ( ᄎл̻)( Chairwoman )*
Dr. Jin LI ( ҽཨ)
Mr. HUNG Tak Wai ( ˆᅃਃ)
Com pliance A dvisor Fo sun Intern ation alC apital Limite d
Suite 2101-2105, 21/F, Champion Tower
3 Garden Road
Central
Hong Kong
Princi palS h are Re gistrar a
nd
Transfer Office
Conyer s Trust Com pany (C ayman) Limite d
P.O. Box 2681
Grand Cayman KY1-1111
Cayman Islands
Hon g Kong Share Re gistrar Com puter share Hon g Kong Inve stor Service s Limite d
Shops 1712-1716, 17th Floor
Hopewell Centre
183 Queen’s Road East
Wan Chai
Hong Kong
* effectiveuponListing
CORPORATE INFORMATION
– 126 –


--- page 137 ---
Princi palB anks Citib ank N.A. Hon g Kong Branch
21/F, Citi Tower
One Bay East, 83 Hoi Bun Road
Kwun Tong, Kowloon
Hong Kong
Bank of Chin a Shenzhen Br anch
2nd Floor, International Finance Building
No. 2022 Jianshe Road
Shenzhen
PRC
Chin a Merch ants Bank Shenzhen Br anch
14th Floor
China Merchants Bank Shenzhen Branch Building
No. 2016 Shennan Avenue
Futian District
Shenzhen
PRC
CORPORATE INFORMATION
– 127 –


--- page 138 ---
The information and statistics set out in this section and other sections of this
prospectus were extracted from the report prepared by China Insights Consultancy, which
was commissioned by us, and from various official government publications and other
publicly available publications. We engaged China Insights Consultancy to prepare the CIC
Report, an independent industry report, in connection with the Global Offering. The
information from official government sources has not been independently verified by us, the
Joint Sponsors, the Overall Coordinators, the Joint Global Coordinators, the Joint
Bookrunners, the Joint Lead Managers, the Underwriters, any of their respective directors
and advisers, or any other persons or parties involved in the Global Offering, and no
representation is given as to its accuracy, fairness and completeness.
OVERVIEW OF METABOLIC AND DIGESTIVE DISEASES
Intro duction to Met abolic and Digestive Di seases
Metabolic and digestive diseases occur when a number of organs fail to function normally
due to a lack of hormones or enzymes. These two types of diseases involve multiple organs and
factors and the synergistic effect between them can worsen the condition. In addition, these
diseases can lead to a number of complications and in some cases, the primary goal of treatment is
to manage these complications.
There is a high prevalence of metabolic disorders and digestive diseases globally, primarily
including MASH, T2DM, and obesity, which are usually caused by a complex interplay of genetic,
environmental, and lifestyle factors, and are thus characterized by outstanding heterogeneity. It is
clear that the treatment pathway of these diseases lies in polypharmacology, which can be a
combination of multiple drugs to different targets or a drug with multitarget, to provide holistic
care for a diverse group of patients. In addition, because patients’ experiences and responses to
treatment can vary widely, diversifying treatment options not only increases the chances of
effectively managing the disease, but also allows patients to make choices based on their
considerations. Thus, the industry is searching for multiple therapeutic procedures simultaneously
to provide cares for a greater number of patients suffering from heterogeneous disorders and to
address the intricate networks of disease mechanisms.
There are no current and anticipated changes in the field of targeted metabolic therapeutic
areas, such as clinical guidelines, treatment paradigm, and diagnosis techniques.
INDUSTRY OVERVIEW
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The following diagram illustrates the details of metabolic and digestive diseases.
Metabolic diseases
• Metabolic disorders is a complex, pathoph ysiological state
composed of a cluster of clinically measured and typically
unmeasured risk factor, is progressive in its course, and is
associated with serious and extensive comorbidity, but tends to
be clinically under-recognized.
Metabolic
diseases
Adiposity Dominant
• Fatt y liver disease such
as MASH
• Sleep disordered
breathing
Vascular Dominant
• ASC VD
• Prothrombotic and
proinflammatory states
•H ypertension
Other Risk Factors
• Hormonal d ysfunction
• Chronic kidne y disease
•H yperuricemia
Insulin Resistance
Dominant
• T2DM
• Gestational diabetes
• Polycystic ovary
disorders
Lipid Dominant
• Athero genic
dyslipidemia
Liver disease
There are many kinds of
liver diseases, including
Liver cirrhosis
Viral hepatitis
Caused by virus, major
type Hepatitis B and
Hepatitis C
Gastrointestinal
infection
Viral, bacterial or parasitic
infections
Peptic ulcer
A sore on the lining of
your stomach or
duodenum
Pancreatitis
Inflammation of the
pancreas: including acute
and chronic
Inflammatory Bowel
Disease
Including Crohn’s Disease
and Ulcerative Colitis
Gallstones
Hard, pebble-like pieces of
material that develop in
gallbladder
Gastroesophageal
Reflux Disease
Stomach contents come
back up into esophagus
Digestive
diseases
Digestive diseases
• The di gestive system made up of gastrointestinal tract (GI), liver,
pancreas, and gallbladder helps the body digest food.
•D i gestive diseases have become prevalent in a large part of the
world population. Some digestive diseases and conditions are
acute, lasting a short time, while others are chronic, or long-lasting.
Source: National Institute of Diabetes and Digestive and Kidney Diseases; The CardioMetabolic Health Alliance:
WorkingTowardaNewCareModelfortheMetabolicDisorders;CIC
Glob alM arket Size of M ajor Met abolic and Digestive Di seases
The following chart illustrates the historical and projected expansion of global market of
major metabolic and digestive diseases.
Glob alM arket Size of M ajor Met abolic and Digestive Di seases, 2018-2032E
259
105
2018 2019 2020 2021 2022 2023E 2024E 2025E 2027E 2026E 2028E 2029E 2032E 2030E 2031E
CAGR 2018-22 2022-32E
10.9% 11.1%
2.6% 3.0%
6.2% 7.6%Total
Billion USD
Metabolic diseases
Digestive diseases
153
268
113
155
282
122
160
305
140
165
330
160
170
356
181
175
385
204
180
415
229
186
447
255
192
481
284
198
518
314
204
556
347
210
597
381
216
641
418
223
687
458
229
Notes:
(1) Major metabolic diseases include diabetes, MASLD, hypertriglyceridemia, obesity, diabetic neuropathy,
etc.
(2) Major digestive diseases include liver cirrhosis, gallbladder and biliary diseases, inflammatory bowel
disease,pancreatitis,upperdigestivesystemdiseases,etc.
Source: Annualreportspublishedbymarketplayers,Expertinterview,Literatureresearch,CIC
INDUSTRY OVERVIEW
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The following chart sets forth the top 10 metabolic disorders and digestive diseases drugs in
terms of annual sales in 2022, approved by the FDA in recent years.
Top 10 Met abolic and Digestive Di seases Dru gs in Term s of S ales in 2022
Rank Drug name Manufacturer In dication MoA /target Annual sales, 2022
(USD Billions)
1O Z E M PIC No vo Nordisk Diabetes GL P-1R 8.6
2 TRULICITY Eli Lill y Diabetes GL P-1R 7.4
3 JARDIANCE Eli Lill y Diabetes SGLT2i 6.1
4J A N U VIA Merck Diabetes 5.7
5E N T Y VIO Takeda Ulcerati ve colitis and Crohn’s disease Α4β7 5.2
6 FARXIGA AstraZeneca Diabetes SGLT2i 4.4
7 LANTUS SOLOSTAR Sanofi Diabetes Ins ulin 2.4
8 HUMALOG Eli Lill y Diabetes Ins ulin 2.1
9 RYBELSUS No vo Nordisk Diabetes GL P-1R 1.7
10 No vorapid No vo Nordisk Diabetes GL P-1R 1.4
DPP-4i
Source: Annualreportspublishedbymarketplayers,Expertinterview,Literatureresearch,CIC
Future Tren ds of the Met abolic and Digestive Di seases Treatment M arket
According to CIC, the global metabolic and digestive disease treatment market has
demonstrated the following trends:
• Targeting multiple targets simultaneously to address complex diseases. As complex
diseases continue to challenge the healthcare industry, the innovation therapies have
been developed from single-target drugs to drug combination, then to single drug
with multiple targets, finally developing a multifunctional drugs approach. The
following chart compares treatment options among single-target drugs, drug
combination, fixed dose combination, and multifunctional drugs.
Treatment Options Comparison
Single-target
drugs
Drug
combination
Fixed Dose
Combination
(FDCs)
Multi-
functional
drugs
Efficacy
• Traditional treatments are symptom-by-symptom, organ-by-
organ basis, which did not consider the multi-organ
physiological effects of this complex disease, while
multi-functional drug tackles through multiple pathways,
which would have much improved potency.
Synergistic
effect
• Though drug combination therapies tend to have better
efficacy comparing to single-target drugs, its synergistic
effect is limited. Multi-functional drugs could work
synergistically in distinct disease pathways.
Safety
• Single-target drug usually have multiple side effects such
as increased blood sugar, kidneys affection. Drug
combination and FDCs on the other hand have a higher
risk of drug-drug interactions. Yet great synergistic effect
of multi-functional drugs results in a lower side effect and
lower toxicity.
Patient
compliance
• With multi-functional drugs, patients trade a handful of
pills for a single pill, which improve patients’ compliance.
Source: MultitargetDrugs:StrategiesandChallengesforMedicinalChemists;CIC
INDUSTRY OVERVIEW
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--- page 141 ---
• Benefit of multiple pathways. Diseases are often the result of a breakdown of a
powerful physiological system due to multiple genetic and/or environmental factors.
Complex diseases are therefore more likely to be cured or alleviated by the
simultaneous modulation of multiple targets or pathways. Multifunctional agents that
can simultaneously target multiple pathways and modulate multiple biological targets
show significant advantages in terms of higher efficacy, better safety and simpler
administration compared to single target agents.
• Chinese medicine internationalization and globalization. The combination of
Chinese medicine with modern scientific system has contributed to its
internationalization and globalization. Along the continuous development and
progress of modern science and technology, the quality identification, extraction and
separation, analysis and detection of Chinese medicine become more mature and
developed, which would contribute to Chinese medicine internationalization. In
addition, favorable policies have been introduced to promote the globalization of
Chinese medicine in China. In the “National 14th Five-Year Plan” period
(2021-2025), Chinese medicine is given priority in reform and development of the
industry. One of the ten critical tasks outlined in the “National 14th Five-Year Plan”
for Chinese medicine is the expansion of its international trade. In addition, the
“National 14th Five-Year Plan” for Chinese medicine announced that the
internationalization of Chinese medicine should be achieved through integration of
high-quality development of both Chinese medicine and the “Belt and Road
Initiative”. For example, during the 2021 China International Fair for Trade in
Services, the government pledged to build a global platform and push forward
constructing a series of Chinese medicine globalization projects to improve the level
of Chinese medicine service and trade. As of May 29, 2023, there are two
FDA-approved innovative Chinese drugs and over 200 ongoing clinical trials
globally, suggesting good trends of Chinese medicines.
OVERVIEW OF METABOLIC SYNDROME DRUG MARKET
Overview of MASH Dru g Market
Introduction to MASH
MASH is liver inflammation and damage caused by a buildup of fat in the liver. It is the
more severe form of metabolic dysfunction-associated steatotic liver disease (“ MASLD ”), an
umbrella term for a range of liver conditions affecting people who drink little to no alcohol. If left
untreated, MASH can cause scarring of the liver, which leads to permanent scarring (cirrhosis) and
liver cancer. MASLD is characterized by steatosis of the liver, and MASH is a necro-inflammatory
process whereby the liver cells become injured under steatosis. At EASL Congress 2023, the
multinational liver societies leaders from La Asociación Latinoamericana para el Estudio del
Hígado, American Association for the Study of Liver Diseases, and European Association for the
Study of the Liver as well as the co-chairs of the MASLD Nomenclature Initiative announced that
steatotic liver disease was chosen as an overarching term to encompass the various aetiologies of
steatosis. MASLD will now be metabolic dysfunction-associated steatotic liver disease. Metabolic
dysfunction-associated steatohepatitis is the replacement term for MASH.
INDUSTRY OVERVIEW
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--- page 142 ---
The complications of MASH include:
• Fibrosis and cirrhosis: The inflammation and liver cell damage will lead to fibrosis. If
the patient is left untreated, scar tissue will continue to replace healthy liver tissue,
thus leading to cirrhosis, which is an advanced, late stage of scarring. About 20% of
people with MASH will progress to cirrhosis over several years.
• Liver failure: If cirrhosis is not treated, the liver will not be able to work well or
cannot work at all. A liver transplant may be needed at this stage.
• Liver cancer: One complication of cirrhosis is liver cancer. MASH patients have
increased risk of hepatocellular carcinoma.
• Cardiovascular disease/type 2 diabetes mellitus (“ T2DM ”): MASLD and
cardiovascular disease (“ CVD”) exhibit an intricate bidirectional relationship, with
shared risk factors, notably T2DM, dyslipidemia, and obesity, suggesting a common
etiology for both MASLD/MASH and CVD. MASLD/MASH may further cause
CVD/T2DM, and CVD is the most common cause of death in MASLD/MASH
patients. Many patients with MASLD/MASH have a high prevalence of cardiac risk
factors, which further contributes to both MASLD/MASH and CVD. Among patients
with MASLD, clinical CVD, notably ischemic heart disease, stands as the primary
cause of mortality. MASLD patients appear to face an elevated risk of developing
ischemic heart disease, with the severity of MASLD directly correlating with an
increased risk of CVD. On the other hand, the presence of CVD contributes to risk
factors such as congestive hepatopathy that may elevate the severity of MASLD. The
mortality rate of these interrelated diseases, including cardiovascular disease, may
potentially limit the market potential of the Core Product. The following chart
demonstrates the pathophysiologic mechanisms linking hepatic steatosis to
cardiovascular disease.
Diet
Genetics
Obesity Adipose tissue
expansion
Serum FFA
availability
Hepatic
lipogenesis
Hepatic TG burden
Hepatic lipo-toxicity
Prothrombotic state
Endothelial
dysfunction
Cardiac structural
changes
MASLD/MASH C VD
Insulin resistance
Congestive
hepatopathy
Ischemic hepatitis
Abbreviations: FFA:freefattyacid;TG:triglyceride;CVD:cardiovasculardisease.
Source: HHSPublicAccess;JournalofClinicalMedicine;CIC
INDUSTRY OVERVIEW
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--- page 143 ---
Prevalence of MASH in China, the United States and Europe
The following charts set forth the prevalence of MASH in China, the United States and
Europe from 2018 to 2032.
Prev alence of MASH in Chin a, the Unite d Statesa nd Euro pe (2018-2032E)
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E
CAGR 2018-22 2022-32E
2.9% 2.3%
3.2% 2.8%
2.6% 2.1%
2.9% 2.4%Total
Million patients
China
United States
Europe
121.4
43.3
27.4
50.8
120.2
42.9
27.0
50.3
118.9
42.6
26.6
49.8
115.9
41.5
25.8
48.5
112.9
40.6
25.0
47.3
109.9
39.6
24.2
46.1
107.0
38.6
23.5
44.9
104.2101.498.796.193.590.988.385.8
37.7
22.7
43.8
36.8
22.0
42.6
35.9
21.4
41.5
35.0
20.7
40.4
34.1
20.1
39.3
33.3
19.4
38.2
32.4
18.8
37.1
31.6
18.3
36.0
Source: Expertinterview,Literatureresearch,CIC
Current Treatment Regimen
The global and China markets follow the same treatment regimen. The international and
national guidelines recommend that management for MASLD and MASH patients varies
depending on their risk of clinical liver fibrosis. Due to its complex pathogenesis, medication for
MASH is still currently underdeveloped. In both the United States and China, no evidence-based
pharmacological therapy is approved, and treatment of MASH and MASLD, which is also the
prevention method, is currently limited to managing health conditions and making lifestyle
changes, such as losing weight, controlling diabetes, avoiding alcohol, exercising regularly,
reducing the total cholesterol level, and taking supplement with vitamin E. In addition, while there
is no specific medication that directly treats MASH, taking metformin and statins treats the related
metabolic disorders such as insulin resistance and high cholesterol, further facilitating the
treatment of MASH. In addition, the American Association for the Study of Liver Diseases
confirms that vitamin E and pioglitazone (a drug used to treat diabetes) are the two best drug
choices for biopsy-confirmed MASH, but questions remain about safety, efficacy, and side effects.
INDUSTRY OVERVIEW
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--- page 144 ---
The Core Product is intended to be first-line treatment of MASH. The following table sets
forth the recommendation for MASLD and MASH patient management according to international
guidelines.
MASLD/MASH Clinical Care Pathway multidisciplinary task force — Recommended management of patients with MASLD/MASH
Risk level Low risk Intermediate risk High risk
Patient stratification FIB-4 < 1.3 or LSM < 8 kPa or liver
biopsy F0-F1
FIB-4 1.3–2.67 and /or LSM 8–12 kPa
and liver biopsy not available
FIB-4 > 2.67 or LSM >12 kPa or
liver biopsy F2-F4
Lifestyle
intervention All patients require regular physical activities, healthy diet, and avoid excess alcohol intake
Weight loss
recommended if
overweight or obese
May benefit Greater need Strong need
• Structured weight loss programs
• Anti-obesity medications
• Bariatric surgery
Pharmacotherapy
for MASH Not recommended
No pharmacological agent is FDA-approved so far for MASH treatment;
Patients with T2DM may benefit from some diabetes medications such as
pioglitazone and some GLP-1 RAs;
Vitamin E improves steatohepatitis in patients with MASH without
diabetes, with less evidence in patients with T2DM
Not applicable
Pharmacotherapy for MASH
cirrhosis is very limited and should
be avoided
CVD risk reduction Statins can be used safely in patients with steatohepatitis and liver fibrosis, but is to be avoided in
decompensated cirrhosis
Diabetes care Standard of Care of diabetes Medications with effic acy in MASH (pioglitazone, GLP-1 RA) preferred
Abbreviations: FIB-4: fibrosis-4; LSM: liver stiffness measurement; CVD: cardiovascular disease; GLP-1 RA:
glucagon-likepeptide1receptoragonist
Note: F0-F4arestagesofliverfibrosisthatmeasuretheamountoffibrosis.F0isnoscarring(nofibrosis);F1is
minimalscarring;F2isscarringthathasoccurredandextendsoutsidetheliverarea(significantfibrosis);
F3 is fibrosis spreading and forming bridges with other fibrotic liver areas (severe fibrosis); and F4 is
cirrhosisoradvancedscarring.
Source: Gastroenterology,CIC
MASH Drug Market Size
The following chart sets forth the market size of MASH drug in China, the United States and
Europe from 2018 to 2032.
MASH Dru g Market Size in Chin a, the Unite d Statesa nd Euro pe, 2018-2032E
2018 2022 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E
Billion USD
37.8
18.5
16.2
3.135.9
17.5
15.4
3.032.1
15.3
13.9
2.927.4
12.8
11.9
2.622.4
10.3
9.9
2.2
17.0
7.8
7.7
11.4
5.2
5.4
5.6
2.7
2.8
0.2
0.1
0.04
CAGRPeriodCAGR
79.6%
87.6%
86.2%
84.8%
China
United States
Europe
Total 2024E-2032E
2025E-2032E
2024E-2032E
2024E-2032E
0.1
0.8
1.5
INDUSTRY OVERVIEW
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Note: The size and significant growth of MASH drug market in China, the United States and Europe is
estimated with the following assumptions: (i) market is estimated as the average MASH drug price
multipliedbythenumberoftreatedpatients.In2024,thenumberofMASHpatientsgloballyisexpected
to be 101.4 million and in 2032, this number is expected to reach 121.4 million. For details, see
“— Prevalence of MASH in China, the United States and Europe” in this section above; (ii) the price
assumptionisbasedonthepricesofotherfirst-in-classdrugsforchronicdiseases;(iii)theMASHdrugs
expected to be approved in forecast period would not be covered in national or regional volume-based
procurementprograminChina;(iv)therangeofdiagnosisratesofadvancedstage(F3~F4)offibrosis
among MASH patients is expected to be within 14%~15%, 25%~30% and 25%~30% in China, the U.S.
and Europe, respectively; the initial MASH-indicated drug adoption rates in total MASH patients are
expected to be 0.3%, 0.3%, and 0.3% in 2028 in China, the U.S. and Europe, respectively, and the
expected range of annual treatment cost of MASH indicated drug is expected to be within
USD1,000~3,000,USD9,000~10,000andUSD5,000~6,000inChina,theU.S.andEurope,respectively;
thepricechangeinChina,theUnitedStatesandEuropeisinlinewiththeindustrytrend;(v)basedon
the current pipeline under development, in the United States and Europe, the first MASH drugs
(resmetiromanddapagliflozin)areexpectedtobeapprovedin2024,andinChina,thefirstMASHdrug
(dapagliflozin)isexpectedtobeapprovedin2025.Theapprovaltimelineisestimatedonthetrialstatus,
duration of a Phase III trial and public announcements by the trial sponsors; (vi) a number of MASH
drugs, including but not limited to cotadutide and IVA337 which are currently in the Phase III clinical
stage, are expected to be approved and commercialized from 2025 onwards. For details. see “—
competitivelandscapeofMASHdrugmarket”inthissectionbelow;(vii)increasedacademicpromotion
andphysicianeducationbymarketplayers;(viii)thepatientpopulationthatcanbegivenMASHdrugs
continuetogrow;(ix)becausenomedicationsspecificallyindicatedforMASHhavebeenapproved,the
treatmentrateofdrugsthatareindicatedforMASHiscurrently0%.Astheexpectedapprovalofdrugs
specifically indicated for MASH address the unmet clinical needs, MASH patients will quickly adopt
these MASH-indicated drugs and the number of treated patients will then grow rapidly, leading to
significantgrowthinmarketsizeafterMASH-indicateddrugsareapproved.
In2024,MASHdrugmarketisexpectedtobenull,US$127.8millionandUS$118.6millioninChina,the
UnitedStatesandEurope,respectively.
Source: Expertinterview,Literatureresearch,CIC
Competitive Landscape of MASH Drug Market
According to CIC, there is no medication currently approved for the treatment of MASH in
the United States, the Europe and Mainland China. To date, only resmetirom from Madrigal
Pharmaceutical has been filed with NDA seeking for accelerated approval from FDA. As of the
Latest Practicable Date, there were more than 100 active clinical trials in the field of MASH
treatment registered under ClinicalTrials and regulated by the FDA, including one drug candidate
under NDA stage, seven drug candidates in Phase III clinical stage and more than 60 drugs in Phase
II clinical stage regulated by the FDA. Intercept’s ocaliva, one of the most advanced MASH drugs
in the clinical stage, filed the second application for MASH but it was rejected by the FDA in June
2023. The FDA concluded that benefits of ocaliva did not outweigh the risks in MASH patients
with fibrosis based on current data. In addition, the FDA reviewers flagged increased risk of
diabetes and liver injury from using the oral tablets, called obeticholic acid (“ OCA”), for the
treatment of MASH. Thus, Intercept announced in June 2023 that it discontinued the MASH
clinical trial for ocaliva. The following chart sets forth the details of MASH drug candidates under
NDA and Phase III clinical stage regulated by the FDA.
INDUSTRY OVERVIEW
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--- page 146 ---
Pipeline of MASH Dru gs under NDA and Phase III Clinic alS t ageR e gulated by the FDA
Lanifibranor (IVA337)
Fatty Liver (Nonalcoholic), MASLD, NFLD,
MASH, T2DM, Digestive System Disease
T2DM, MASH, MASLD
Non-cirrhotic Non-alcoholic
Steatohepatitis with Fibrosis
Inventiva Pharma
Cirius Therapeutics
HighTide Biopharma
SGLT-2
Galectin-3
GLP-1
Dual GLP-1/GCCR
Resmetirom
MSDC-0602K
Drug Name Target Company Indications Administration Phase First Posted Date Trial Number Competent
Authority
THR β Madrigal MASH with Liver Fibrosis Oral NDA 2022/08/15 NCT05500222 FDA
Cotadutide AstraZeneca Injection III 2022/05/06 NCT05364931 FDA
PPAR MASH Oral III 2021/04/19 NCT04849728 FDA
Semaglutide Novo Nordisk A/S MASH Injection III 2021/03/30 NCT04822181 FDA
B elapectin Galectin MASH Injection III 2020/04/28 NCT04365868 FDA
A ramchol1 SCD Galmed MASH Oral III 2019/09/26 NCT04104321 FDA
MPC Oral III 2019/05/31 NCT04618744 FDA
Dapagliflozin AZ/BMS MASH Oral III 2018/10/29 NCT03723252 FDA
HTD1801 Multiple pathways Oral II 2018/09/04 NCT03656744 FDA
Note: 1. The recruitment of this clinical trial is suspended, and the interim analysis of data from open-label
partshowedthispartofthestudymetitsobjectives.Theinitiationofthedouble-blindpartofthestudy
hasbeendelayedbecausearamcholmeglumineneedstobeformulated.
Source: ClinicalTrials;CIC
As of the Latest Practicable Date, there were more than 20 active clinical trials for MASH
treatment regulated by the NMPA, including one drug candidate in Phase III clinical stage. The
following chart sets forth the details of MASH drug candidates under Phase II and Phase III
clinical stage regulated by the NMPA.
Pipeline of MASH Dru gs in Ph ase II to III Clinic alS t ages Regulated by the NMPA
OralCoptis glycosides
capsules
Chiglitazar Sodium
CZ130 Capsule
MK-3655
Ascletis Pharma
MASH
GLP-1
PPAR
GLP-1
ZSP1601 Capsule
AZD2693
ASC41 Capsule
PF-06865571
Drug Name Target Company Indications Administration Phase First Posted Date Trial Number Competent
Authority
Semaglutide Novo Nordisk A/S MASH Injection III 2021/07/27 CTR20211818 NMPA
Lanifibranor (IVA337) Inventiva Pharma Oral III 2023/09/11 CTR20232876 NMPA
MASH, T2DM, ObesityDual GLP-
1/FGF21HEC88473 Guangdong HEC
Technology Injection II 2023/08/17 CTR20232481 NMPA
N/A Tipr Pharmaceutical MASH II 2023/08/12 CTR20222042 NMPA
Recombinant human
FGF21-Fc
Fusion protein (AP025)
FGF21 AMPSOURCE
BIOPHARMA MASH Injection II 2023/08/11 CTR20232280 NMPA
N/A AstraZeneca MASH Injection II 2023/07/11 CTR20232127 NMPA
PDE
Guangdong
Zhongsheng
Pharmaceutical
MASH Oral II 2022/12/30 CTR20223378 NMPA
N/A MASH Oral II 2022/06/21 CTR20221529 NMPA
PPAR Chipscreen MASH Oral II 2021/12/07 CTR20213202 NMPA
BI 456906 Boehringer Ingelheim MASH Injection II 2021/09/01 CTR20212081 NMPA
HEC96719 FXR HEC pharmaceutical MASH
MASH
Oral
Oral
II 2021/07/27 CTR20211428 NMPA
N/A Hongjing II 2021/05/13 CTR20210871 NMPA
ACC, DGAT2 Pfizer MASH Oral II 2021/03/15 CTR20210412 NMPA
KLB, FGFR1 Merck & Co. MASH Injection II 2021/01/21 CTR20210074 NMPA
HSK-31679 THRB Haisco MASH Oral II 2023/11/09 CTR20233629 NMPA
Efinopegdutide (MK-6024) GLP1R; GCGR Merck & Co. MASH Injection II 2023/10/19 CTR20233311 NMPA
Source: ClinicalTrials;CDE;CIC
We have completed the HTD1801 Phase IIa clinical trial for MASH indication. The
following chart shows the comparison of clinical results of HTD1801 Phase IIa clinical trial and
selected clinical trials that entered Phase III stages with posted Phase II results. There is no
head-to-head comparison of clinical studies between the drugs in the following chart. Clinical
trials of a drug cannot be directly compared to the clinical trials of another drug. Thus, the non
head-to-head comparison may not be representative of the overall data.
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Com parin g the HTD1801 Ph aseI I a Result s for
MASH In dication with Selecte d Trials Registere da t Clinic alTrials
Lanifibranor
Resmetirom
-46%
Drug name Target Company Intent-to-
treat Administration Endpoints in Phase II clinical trails Results by study groups
HTD1801 BUDC HighTide MASH and
T2DM Oral
Groups • Time frame: 18 week 500mg 1,000mg Placebo
Primary
endpoint
•
•
•
Absolute change in LFC as measured by MRI-PDFF from
Baseline to Week 18 (Absolute Change from Baseline to
Week 18/Early Termination, LS mean)
-3.198 -4.681 -1.824
Additional
LFC secondary
endpoints
• Relative change in LFC as measured by MRD-PDFF from
Baseline to Week 18 -15.942% -23.308% -8.231%
Secondary
endpoints
-4.4% -7.4% 1.3%
-6% -21% -6%
3% -14% -5%
-23% -29% 5%
1 (5%) 1 (4%) 1 (5%)
PPAR Inventiva MASLD and
T2DM Oral
Groups • Time frame: 24 week 800mg Placebo
Primary
endpoint
Change in intrahepatic triglycerides (IHTG) quantified by
proton magnetic resonance and spectroscopy (
1H-MRS)
(LS Means Relative Percent change from Baseline in Liver Fat
at Week 24), FAS
(1)(3)
-12%
Secondary
endpoints
65% 22%
25% 0%
-0.9 -0.2
2.2 -0.2
1 (5%)(2) 0 (0%)(2)
• Changes in HbA1c from Baseline to Week 18
(Percent Change from Baseline to Week 18, mean)
• Changes in ALT from Baseline to Week 18
(Percent Change from Baseline to Week 18, mean)
• Changes in AST from Baseline to Week 18
(Percent Change from Baseline to Week 18, mean)
• Changes in GGT from Baseline to Week 18
(Percent Change from Baseline to Week 18, mean)
• Number (%) of Serious TEAE (Treatment-Emergent
Adverse Events) in TEAE
• Proportion of patients with a decrease from baseline in IHTG
(quantified by 1H-MRS) to week 24 of ≥ 30% (Percentage of
patients achieving liver fat reduction ≥30% at week 24), FAS(1)
• Proportion of patients with MASLD resolution, defined as having
≤ 5.5% IHTG (quantified by 1H-MRS) (Percentage of patients
achieving MASLD resolution at week 24), FAS
• Change in glycemic control (HbA1c) (LS Mean absolute Change from
Baseline to week 24), Completers
• Improvement in muscle insulin sensitivity (Rd) (LS Mean absolute
change from Baseline to week 24), Completers
• Number (%) of SAE in TEAE
-28.4%
THR ß Madrigal
Biopsyproven
MASH (stage 1-3)
with ≥ 10%
liver fat content
on PDFF-MRI
Oral
Groups • Time frame: 12 and 36 week 80mg Week 36 Placebo Week 36
Primary
endpoint
Relative change from baseline in hepatic fat fraction
assessed by MRI-PDFF (LS mean)(3) -8.9%-22.5%
80mg Week 12 Placebo Week 12
-10.4%
67.6% 29.4%60.3% 18.4%
-26.4 n/a-3.0 n/a
2 (5%)(2) 6 (7%)(2)
-11.1 n/a-4.8 n/a
Secondary
endpoints
• Proportions of patients with 30% or more relative hepatic fat
reduction assessed by MRI-PDFF
• Alanine Aminotransferase (ALT), (IU/L) (LS mean differences
of change from baseline compared to placebo)
• Aspartate Aminotransferase (AST), (IU/L) (LS mean differences
of change from baseline compared to placebo)
• Number (%) of SAE in TEAE
Notes:
1. FAS: Full analysis set. The FAS population consists of all subjects randomly assigned to treatment who
receivedatleastonedoseoftrialmedication.
2. Thenumbersshownrepresenttotalnumberofsevereadverseeventsintreatment-emergentadverseevents
duringtreatmentperiod.
3. BothMRIandMRSleveragethesameMRphysicsconceptstoquantitativelyassessliverfataccumulation
by measuring signal fat-fraction and/or proton density fat-fraction. These techniques are employed for
detectingliverfat(hepaticfat),includingquantitativemeasurementofintrahepatictriglyceridesandother
lipidmetabolites.
Source: ClinicalTrials;CorporatepresentationofInventiva(June2023);CIC
Market Drivers and Entry Barriers of MASH Drug Market
The MASH drug market growth has primarily been driven by the following key factors:
• Strengthened public awareness : A growing number of people of different ages,
genders, races and occupations in the world have been suffering from metabolic and
digestive diseases, including MASH. Accordingly, the public, governments, medical
institutions and social media pay more attention to metabolic and digestive diseases,
which in turn strengthens public awareness for MASH disease. More diversified
marketing channels can be used to educate doctors and MASH patients on disease
diagnosis and pharmaceutical interventions. For example, the National Health
Commission of China has initiated a specific training program for metabolism
physicians from regional medical and health services since 2022, in order to ensure
the correct diagnosis for metabolic diseases, including MASH. More MASH care
clinics are also opened in China, allowing doctors to provide patients with more
comprehensive treatment on rational medication use and lifestyle intervention. In
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addition, improvement of diagnostic techniques further drives the market forward of
MASH disease. For example, more diagnostic techniques have become available to
diagnose MASH, such as physical examination, imaging test and liver biopsy. During
the physical examination, doctors usually examine body weight and height of subjects
to calculate body mass index, and also examine liver and/or signs of insulin resistance
or cirrhosis. If the subject has the body mass index over 30 kg/m
2 or has the enlarged
liver or insulin resistance or cirrhosis, the subject is unhealthy and more likely to
develop MASH. Furthermore, liver biopsy can prove a diagnosis of MASH and show
clearly how severe the disease is. Doctors usually do not recommend liver biopsy
method for suspected MASH patients, but if the subject is more likely to have MASH
with advanced fibrosis or if other tests show signs of advanced liver disease or
cirrhosis, doctors may recommend a liver biopsy to rule out other liver diseases and
diagnose MASH. Thus, more subjects use physical examination, imaging test and
liver biopsy to diagnose MASH, further increasing the demand for pharmaceutical
interventions.
• Expansion of vulnerable population : As a metabolic disease, MASH is associated
with risk factors including, among others, obesity, T2DM, age, obstructive sleep
apnea, and abnormal fat levels in the blood. As the world’s obesity and T2DM
population grows, the MASH population will accordingly grow.
• Novel treatments to fulfil unmet needs: As of May 2023, in China, the United States
and Europe, no medications indicated for MASH have been approved. As the public
gains a better understanding of MASH disease and novel treatments indicated for
MASH are expected to be approved, the MASH patients will quickly adopt these
newly-approved drugs, thus driving significant growth of MASH drug markets.
• Growingspendingpower : Increased per capita disposable income in China has made
it easier for patients to afford more expensive medical fees. With growing spending
power, more and more patients will be able to afford novel medications, further
driving the growth of MASH drug markets.
Despite the drivers discussed above, significant entry barriers remain in the MASH market:
• Technological barrier : The development of novel treatment for MASH requires
advanced disease understanding and technological capabilities, especially when the
pathogenesis of MASH still needs further research. Companies and manufacturers
that are equipped with advanced technologies and know-how would have
technological advantages in this market.
• Regulatory barrier : The development of drugs and medications is strictly regulated.
Companies and manufacturers that have little experience in drug development or are
unfamiliar with relevant regulations and compliance knowledge would be difficult to
compete in this market.
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• Capitalbarrier : Drug development process is a lengthy and capital-intensive activity,
which requires enormous amount of capital investment and other kinds of resources
to be consistently invested. New entrants of the market usually have limited financial
capabilities and liquidity.
• Talent barrier : The innovative drug industry is a technology-intensive and
multi-disciplinary industry, involving biology, pharmacology, and clinical research
etc. Talents are highly sought-after in product development, registrational clinical
research and market research. Therefore, it is difficult for newly-entered companies
to hire more top talents with multi-domain knowledge in the short term, which
directly leads to the slow development and low efficiency of newly-entered
companies.
• Sales and marketing barrier : Sales and marketing activities are critical in the
pharmaceutical industry, especially for innovative treatments. Newly-entered
companies usually have difficulty to construct a sales and marketing team with rich
experiences.
Overview of T2DM Dru g Market
Introduction to T2DM
Diabetes is a disease in which blood glucose, or blood sugar, levels are too high. Glucose
comes from the food, and insulin is a hormone produced by pancreas that helps the glucose get into
cells to give them energy to maintain normal physiological function. With type 1 diabetes, body
does not make insulin. With type 2 diabetes, body does not make or use insulin well. T2DM is an
impairment in the way the body regulates and uses glucose as a fuel. It is a chronic condition
resulting in too much sugar circulating in the bloodstream. The following chart illustrates the
details of diabetes mellitus and T2DM.
Introduction to Diabetes Mellitus
Symptoms of T2DM
• Frequent urination, excessive thirst
and fluid intake
• Fatigue, blurred vision, abnormal
weight loss and increased hunger
• Sores that do not heal
A1C Test
(%)
FPG Test
(mg/dL)
OGTT Test
(mg/dL)
Diabetes ≥6 . 5 ≥1 2 6 ≥2 0 0
Prediabetes 5.7 – 6.4 100 – 125 140 – 199
Normal ≈ 5 ≤ 99 ≤ 139
There are several ways to diagnose diabetes. Each
way usually need to be repeated on a second day;
• Hemoglobin A1C (“A1C”) Test measures average
blood sugar for the past two to three months;
• Fasting Plasma Glucose (“FPG”) Test checks
fasting blood sugar levels. 8-hours fasting before
the test is required;
• Oral Glucose Tolerance Test (“OGTT”)is a two-
hour test that checks blood sugar levels before
and two hours after drinking a special sweet drink;
• Random Plasma Glucose Test is a blood check
at any time of the day when patients have severe
diabetes symptoms.
Diagnosis of Diabetes and Prediabetes
Causes of Diabetes
T1DM and T2DM
Comorbidities of T2DM
Comorbidities of T2DM: from top to
bottom: Hypertension,
overweight/obesity, hyperlipidemia,
chronic kidney disease and
cardiovascular disease.
77.2%
78.2 %
82.1%
24.1%
21.6%
Increased
Hepatic Glucose
Production
Increased
Carbohydrate
Intake
Decreased
Insulin Secretion
Decreased
Peripheral
Glucose Uptake
Blood
Glucose
Nearly 97.5% of American adults
with T2DM have at least one
comorbid condition and nearly 88.5%
have two comorbidities.
T1DM is characterized by the autoimmune
destruction of pancreatic beta cells in the
majority. After these beta cells are
destroyed, the body is unable to produce
insulin. T2DM is caused by duel defects in
insulin resistance and insulin secretion.
The body still produces insulin, but is
unable to use it effectively.
Source: Medscape,AmericanDiabetesAssociation,CIC
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In particular, worldwide prevalence of MASLD among people with T2DM is 55.5% in 2022.
MASLD, also known as metabolic (dysfunction) associated steatotic liver disease, is excessive fat
build up in the liver without another clear cause such as alcohol use. Most MASLD patients are
asymptomatic, with fatigue or pain or discomfort in the upper right abdomen. A broad range of risk
factors of MASLD include T2DM, high cholesterol, high triglycerides level, metabolic syndrome,
polycystic ovary syndrome, hypothyroidism, hypopituitarism, obesity, and obesity particularly
when fat is concentrated in the abdomen. The following diagram illustrates the details of two-way
pathophysiologic relationship between T2DM and MASLD or MASH. The relationship between
MASLD/MASH and T2DM is not simply a one-to-one complement to each other. While the
definitive mechanisms involved are still being investigated, the bidirectional pathophysiological
relationship suggests that there are multiple pathways involved in this relationship.
The Two-way Pathophysiologic Relationship between T2DM and MASLD/MASH
T2DM
Adipose tissue lipolysis
Insulin
Resistance
Relative Insulin
Resistance
Persistent
Systemic IR
Insulin Resistance
↑ FFAs
↑ CRP, TNF-α, IL-6
↑ ROS
↑ Inflammation
↑ Oxidative Stress
B-cell dysfunction
 Hepatic IR
Hyperinsulinemia
 De novo lipogenesis
↑ Glucose Uptake
↓ Gluconeogenesis
↑ De novo lipogenesis
↓ FFAs B-oxidation
MASLD
↓ Adiponectin
↑ Leptin, ↑ FFAs
↑ Inflammation
Obesity
(Metabolic Syndrome)
Intestinal Dysbiosis
↑ Circulating LPS
 ↑ TLR-α, IL-6
Prevalence about MASLD/MASH
&T 2 D M
Multiple Pathways Involved in MASLD/MASH and T2DM
T2DM in
General
Population
T2DM in
MASLD
Population
T2DM in
MASH
Population
10%
 23%
 44%
General Population People with T2DM
Unaffected MASLD
MASH or Fibrosis
Source: OpenExploration,CIC
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Prevalence of T2DM in China, the United States and Europe
The following charts set forth the prevalence of T2DM in China, the United States and
Europe from 2018 to 2032.
Prev alence of T2DM in Chin a, Unite d Statesa nd Euro pe, 2018-2032E
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E
136.3
225.3 228.9 229.7219.8
134.1
222.6
138.4 141.2 141.8
51.7
217.0
132.0
33.3 33.6
52.1
115.1
194.3
30.5
48.7
116.6
196.7
118.9
49.0
31.1
121.0
202.6199.7
49.4
31.5
49.7
31.8
123.2
205.5
50.1
32.1
125.4
208.4
50.5
32.4
127.6
211.3
50.9
32.7
129.8
214.3
51.4
33.1
52.4
33.9
52.8
34.1
228.1
140.5
53.2
34.4
53.2
34.5
53.3
34.7
million patients2022-32E2018-22CAGR
1.7%
1.4%
1.3%
0.7%
1.4%
1.1%
0.8%
0.6%
China
United States
Europe
Total
Source: Literatureresearch,CIC
Current Treatment Regimen
The treatment regimen of T2DM, which is also the prevention method, includes healthy
eating, regular exercise, weight loss and blood sugar monitoring. Other treatments include diabetes
medication and insulin therapy, such as the use of insulin pump devices. If adequate glycemia
cannot be achieved, metformin is the first-line therapy. Following metformin, many other therapies
such as oral sulfonylureas, dipeptidyl peptidase-4 (“ DPP-4 ”) inhibitors, glucagon-like peptide-1
(“ GLP-I ”) receptor agonists, sodium-glucose co-transporter-2 (“ SGLT2 ”) inhibitors,
pioglitazone, as well as alpha-glucosidase inhibitors and insulin especially for patients that have
fatty liver disease, are available. In addition, insulin therapy can be prescribed if blood sugar
targets are not met with lifestyle changes and other medicines. The weight-loss surgery changes
the shape and function of the digestive system.
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The international guideline and national guideline follow the same treatment regimen. The
Core Product is intended to be indicated as second or later-line treatment of T2DM. The following
chart sets forth the treatment regimen according to American Diabetes Association (“ ADA”):
Gluco se-lowerin g Ther apy in T2DM: Gener al Recommen dation from ADA
Combination Injectable Therapy
Insulin (basal)
Insulin (basal)+
TZD SU SU SU SU TZD
or DPP-4i or TZD or TZD or TZD or DPP-4i
or SGLT2i or SGLT2i or SGLT2i
or GLP-1 RA or Insulin or GLP-1 RA
or Insulin or Insulin
If HbA1c target not achieved after approximately three months of monotherapy, proceed to two-drug combination.
If HbA1c target not achieved after approximately 3 months of dual therapy, proceed to 3-drug combination.
Start with Monotherapy unless
Monotherapy Lifestyle ManagementMetformin
Dual Therapy Lifestyle ManagementMetformin +
Triple Therapy Lifestyle ManagementMetformin +
HbA1c ≥9%, consider dual therapy.
HbA1c ≥10%, blood glucose ≥300 mg/dL, or patients is markedly symptomatic, consider Combination Injectable Therapy.
Sulfonylurea Thiazolidinedione DPP-4 Inhibitor SGLT2 Inhibitor GLP-1 Receptor Agonist
Sulfonylurea+ Thiazolidinedione+ DPP-4 Inhibitor+ SGLT2 Inhibitor+ GLP-1 Receptor Agonist+
or DPP-4i
or DPP-4ior SGLT2ior SGLT2i
or GLP-1 RAor Insulinor GLP-1 RA
or Insulin
If HbA1c target not achieved after approximately 3 months of triple therapy and patients: (1) on oral combination, move to basal insulin or GLP-1 RA,
(2) on GLP-1 RA, add basal insulin, or (3) on optimally titrated basal insulin, add GLP-1 RA or mealtime insulin to avoid unnecessarily complex or costly regimens.
Source: ADA,CIC
T2DM Drug Market Size
The following charts set forth the market size of T2DM drugs in China, the United States
and Europe from 2018 to 2032.
T2DM Dru g Market Size in Chin a, the Unite d Statesa nd Euro pe, 2018-2032E
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E
16.5
7.9 8.8 8.6 8.7 7.9 9.8 10.5 11.2 12.0 12.7 13.5 14.3 15.1 15.6 16.1
28.8
53.2 54.9 55.1 56.5 56.9 59.9 61.6 63.1 64.5 65.9 67.1 68.3 69.5 70.0 70.4
29.7 30.2 31.0 31.6 32.2 32.8 33.2 33.6 33.9 34.2 34.4 34.6 34.6 34.5
16.4 16.3 16.9 17.4 17.9 18.3 18.7 19.0 19.2 19.5 19.6 19.8 19.8 19.7
Billion USD2022-32E2018-22CAGR
-0.2%*
1.7%
2.3%
1.4%
7.5%
2.2%
0.9%
1.3%
China
United States
Europe
Total
Note: Under the influence of COVID-19 pandemic, the China market size decreased from 2018 to 2022, with
CAGR of -0.2%.
Source: CIC
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Competitive Landscape of T2DM Drug Market
According to ADA guidelines, T2DM glucose-lowering agents include metformin,
alpha-glucosidase inhibitors (“ AGIs”), DPP-4 inhibitors, SGLT2 inhibitors, glitazones, GLP-1R
agonists, insulinotropic agents, insulin and others. Among the FDA-approved T2DM drugs, as of
the Latest Practicable Date, a total of 302 drugs of metformin and 57 drugs of insulin had been
approved. GLP-1R agonists primarily include dulaglutide, exenatide, and liraglutide, with two,
five, and three cases approved, respectively.
The following table sets forth the details of top 10 T2DM drugs in terms of annual sales in
2022 approved by the FDA in recent years.
Top 10 T2DM Dru gs in Term s of S ales in the Unite d State in 2022
Rank Drug name Manufacturer Th erapeutic areas MoA /target Annual sales, 2022
(USD Billions)
1 OZEMPIC Novo Nordisk Diabetes GLP-1R 8.6
2 TRULICITY Eli Lilly Diabetes GLP-1R 7.4
3 JARDIANCE Eli Lilly Diabetes SGLT2i 6.1
4 JANUVIA Merck Diabetes DPP -4i 5.7
5 FARXIGA AstraZeneca Diabetes SGLT2i 4.4
6 LANTUS SOLOSTAR Sanofi Diabetes Insulin 2.4
7 HUMALOG Eli Lilly Diabetes Insulin 2.1
8 RYBELSUS Novo Nordisk Diabetes GLP-1R 1.7
9 Novorapid Novo Nordisk Diabetes GLP-1R 1.4
10 Novomix Novo Nordisk Diabetes Insulin 1.0
Source: Annualreportspublishedbymarketplayers,Expertinterview,Literatureresearch,CIC
In total, more than 1,000 T2DM drugs have been approved by the NMPA. The following
table sets forth the details of top 10 T2DM drugs in terms of annual sales in 2022 approved by the
NMPA in recent years.
Top 10 T2DM Dru gs in Term s of S ales in Chin a in 2022
Rank Generic name Manufacturer Annual sales, 2022
(RMB Billions)
1 Insulin Aspart 30 Injection Diabetes Insulin 4.5
2 Dapagliflozin Astra Zeneca Diabetes SGLT2i 3.7
3 Insulin Glargine Injection Sanofi Diabetes Insulin 3.3
4 Metformin Hydrochloride Tablets MSD Diabetes Metformin 2.7
5 Semaglutide Injection Novo Nordisk Diabetes GLP-1R 2.4
6 Isophane Protamine Human Insulin
Injection (30R) Novo Nordisk Diabetes Insulin 2.3
7 Sitagliptin Phosphate Tablets Merck Diabetes DPP-4i 2.3
8 Insulin Aspart Injection Novo Nordisk Diabetes Insulin 2.1
9 Acarbose Tablets Byer Diabetes α-glucosidase
inhibitor 1.7
10 Liraglutide Novo Nordisk Diabetes GLP-1R 1.7
Indication MoA/target
Novo Nordisk
Source: Annualreportspublishedbymarketplayers,Expertinterview,Literatureresearch,CIC
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There are more than 70 and 60 Phase III clinical trials in the field of T2DM treatment
regulated by the FDA and NMPA, respectively. The following table sets forth the T2DM drugs
under Phase II clinical trials regulated by the FDA.
Pipeline of Ph ase II T2DM Dru gs Registere da tF D A
CKD, T2DM
DualGIPR/GLP-1R
Triple GLP-
MN-001
GLP-1R
Obesity, MASLD, MASH, T2DM
Hypertriglyceridemia, MASLD,
T2DM
Obesity, Overweight, T2DM
Obesity, T2DM
T2DM, DCM, HFpE
Obesity, Overweight, T2DM
Rivus Pharmaceuticals
Innovent Biologics (Suzhou)
Fujian Shengdi Pharmaceutical
CSPC Baike
(Shandong)
Biopharmaceutical
ketohexokinase, KHK
GLP-1R
SGLT-2
SGLT-1
GLP-1R
GLP-1R
GLP-1R
GLP-1R
GLP-1R
DualGIPR/GLP-1R
GLP-1R/Insulin
Dual GIPR/GLP-1R
Dual GIPR/GLP-1R
Dual GCGR/GLP-1R
GLP-1R
Finerenone
(Kerendia,
BAY94-8862 )
CT-868
HRS-7535
HD-6277
NPM-119
IMB-1018972
RGT001-075
SY-009
PF-07081532
BMF-219
GSBR-1290
ALN-KHK
Tirzepatide
(LY3298176) Eli Lilly and Company Obesity, Overweight, CKD,
T2DM Injection II 2022/09/13 NCT05536804 FDA
LY3437943 1R/GIPR/GCGR Eli Lilly and Company Obesity, Overweight, CKD,
T2DM Injection II 2023/07/07 NCT05936151 FDA
CPL207280 GPR40 Celon Pharma SA T2DM Oral II 2022/02/21 NCT05248776 FDA
aflibercept Multiple pathways Regeneron Pharmaceuticals DME, T1DM, T2DM Injection II 2020/06/12 NCT04429503 FDA
N/A Bayer Oral II 2020/02/24 NCT05254002 FDA
Multiple pathways MediciNova Oral II 2022/07/19 NCT05464784 FDA
HU6 N/A Oral II 2023/08/07 NCT05979779 FDA
Vivani Medical, Medpace T2DM Injection II 2023/01/04 NCT05670379 FDA
GPR40 Hyundai Pharm T2DM Oral II 2022/12/27 NCT05666128 FDA
TG103 T2DM Injection II 2021/10/01 NCT05063253 FDA
Shandong
Suncadia
Medicine
T2DM Oral II 2023/03/08 NCT05759897 FDA
Carmot
Therapeutics Injection II 2021/11/08 NCT05110846 FDA
HR17031
Jiangsu
HengRui
Medicine
T2DM Injection II 2022/04/19 NCT05333835 FDA
AMG133 Amgen Injection II 2023/01/03 NCT05669599 FDA
HRS9531 T2DM Injection II 2023/07/28 NCT05966272 FDA
IBI362 T2DM Injection II 2021/07/16 NCT04965506 FDA
Semaglutide Novo Nordisk A/S T2DM Injection II 2022/08/03 NCT05486065 FDA
Target Company Indications Admin. Phase Trial Number
Alnylam
Pharmaceuticals T2DM Injection II 2023/03/09 NCT05761301 FDA
Gasherbrum Bio Oral II 2023/03/09 NCT05762471 FDA
Menin Biomea Fusion T2DM Oral II 2023/02/16 NCT05731544 FDA
Pfizer T2DM Oral II 2022/10/14 NCT05579977 FDA
Tofogliflozin Kowa Company T2DM Oral II 2022/06/22 NCT05469659 FDA
Suzhou Yabao T2DM Oral II 2022/06/21 NCT05426018 FDA
IVA337 PPAR Inventiva
Pharma
T2DM
(Combined with Empagliflozin) Oral II 2022/02/09 NCT05232071 FDA
Regor
Pharmaceuticals T2DM Oral II 2022/03/25 NCT05297045 FDA
Liraglutide BioLingus T2DM Oral II 2022/03/07 NCT05268237 FDA
N/A Imbria
Pharmaceuticals Oral II 2021/04/01 NCT04826159 FDA
Hepalatide NTCP Shanghai HEP
Pharmaceutical T2DM Injection II 2020/12/10 NCT04662164 FDA
Lanifibranor PPAR Inventiva
Pharma T2DM, MASLD Oral II 2018/03/08 NCT03459079 FDA
Drug Name First Posted
Date
Competent
Authority
Source: ClinicalTrials;CIC
INDUSTRY OVERVIEW
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The following table sets forth the T2DM drugs under Phase II clinical trials regulated by the
NMPA.
Pipeline of Ph ase II T2DM Dru gs Registere da t CDE
Dual GIP/GLP-
T2DM patients, withoral
non-insulin antidiabetic
drugs are ineffective or
the effect is unsatisfactory
Tianjin Institude of
Pharmaceutical
Research
I-MAB Pharma
HighTide Biopharma
I-MAB Pharma
Hengrui/Suncadia
Hengrui/Suncadia
GLP-1R
GLP-1R
Dual
GCGR/GLP-1R
GLP-1R
SGLT-1
GLP-1R
GLP-1R and
Insulin
GLP-1R
GLP-1R
PB-119
SY-009
HRS-7535
HS-20094
# Target Company Indications Administration Phase
First
Posted
Date
Trial Number Competent
Authority
1 HRS9531 N/A T2DM Injection II 2023/08/02 CTR20232258 NMPA
2G Z R 1 8 Ganlee T2DM Injection II 2023/07/10 CTR20232069 NMPA
3 1R Hansoh T2DM Injection II 2023/05/06 CTR20231357 NMPA
4 T2DM Oral II 2023/02/20 CTR20230393 NMPA
5 HR17301 Hengrui Injection II 2022/04/14 CTR20220857 NMPA
6 TG103 T2DM Injection II 2022/04/01 CTR20220751 NMPA
7 HTD1801 BUDC T2DM Oral II 2022/02/23 CTR20220346 NMPA
8 Yabao T2DM Oral II 2022/01/25 CTR20220144 NMPA
9 TG103 Patients with T2DM and
Overweight/Obesity Injection II 2021/09/24 CTR20212332 NMPA
10 IBI362 Innovent T2DM Injection II 2021/07/28 CTR20211733 NMPA
11 Tianagliflozin SGLT2 T2DM Oral II 2020/08/10 CTR20201558 NMPA
12 JY09 Eastern Biotech T2DM Injection II 2019/10/31 CTR20192166 NMPA
13 LianmeiGranules N/A Artepharm T2DM Oral II 2020/07/31 CTR20191646 NMPA
14 Pegbio T2DM Injection II 2018/08/20 CTR20180460 NMPA
Drug Name
Source:ClinicalTrials,CDE,CIC
Market Drivers and Entry Barriers of T2DM Drug Market
The T2DM drug market growth has primarily been driven by the following key factors:
• Strengthened public awareness : A major concern in public health, governments,
medical institutions and associations around the world increases public awareness of
the T2DM disease. A growing number of people of different ages, genders and
occupations have been suffering from metabolic and digestive diseases. As the market
expands, there are diversified marketing channels to educate doctors and T2DM
patients on pharmaceutical interventions. For example, the National Health
Commission of China has initiated a specific training program for metabolism
physicians from regional medical and health services since 2022, in order to ensure
the correct diagnosis for metabolic diseases, including T2DM. Training books such as
“Guidelines for the Diagnosis and Treatment of Diabetes” and “Wise Eyes on Sugar”
were published in 2022 and 2023, respectively, and metabolic disease education for
physicians and nurses were arranged accordingly. More T2DM care clinics are also
opened in China, allowing doctors to provide patients with more comprehensive
guidance on rational medication use and lifestyle intervention. As a result, patients
will gain more access to medication knowledge and are more likely to accept the
medication treatments. In addition, improvement of diagnostic techniques further
drives the market forward. For example, more diagnostic techniques have become
available for use to determine the concentration of glucose in the blood with a more
user-friendly approach, such as the glucometer. The glucometer is a portable device
to test the blood through a finger stick sample in a rapid and accurate manner. More
and more patients use such device to monitor the glucose level during treatment or in
their daily life, further increasing the demand for pharmaceutical interventions.
INDUSTRY OVERVIEW
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--- page 156 ---
• Increaseofdiagnosisrate : The increasing diagnosis rate of T2DM drives the growth
of T2DM drug market, leading to a growing number of diagnosed patients.
Accordingly, more patients would become aware of their T2DM status, promoting the
sales of T2DM drugs.
• Novel treatment : Aside from metformin, more and more novel treatment and
innovative drugs have entered the market, fulfilling unmet needs in the T2DM
population. As innovative treatments targeting GLP-1, DPP-4 and SGLT-2 as well as
other novel medications enter the T2DM drug market, the T2DM drug market will
grow steadily.
Despite the drivers discussed above, significant entry barriers remain in the T2DM market:
• Technological barrier : The development of novel treatment for T2DM requires
advanced disease understanding and technological capabilities. It requires companies
and manufacturers to look for novel treatment targets for T2DM treatment. The
overall level of technology in R&D of new entrants will not be sufficient to drive drug
discovery and subsequent development.
• Regulatory barrier : The development of drugs and medications is strictly regulated.
Companies and manufacturers that have little experience in drug development or are
unfamiliar with relevant regulations and compliance knowledge would not be able to
compete in this market.
• Capitalbarrier : Drug development process is a lengthy and capital-intensive activity,
which requires enormous amount of capital investment and other kinds of resources.
In the T2DM market, incumbents and large companies have been constantly investing
in drug discovery and development. New entrants are expected to have limited
financial capabilities and liquidity.
• Talent barrier : The innovative drug industry is a technology-intensive and
multi-disciplinary industry, involving many disciplines such as biology, medicine,
pharmacology, and clinical research etc. The research and development, and
production of innovative treatments are in high demand for candidates with great
talents, and thus many medical technicians, biological technicians and other
professional staff are needed in product development, registrational clinical research
and market research. Therefore, it is difficult for newly-entered companies to hire
more top talents with multi-domain knowledge in the short term, directly leading to
the slow business development and low efficiency of newly-entered companies.
• Sales and marketing barrier : Sales and marketing activities are critical in the
pharmaceutical industry, especially for innovative treatments. Newly-entered
companies will have difficulty to construct a sales and marketing team with rich
experiences from scratch.
INDUSTRY OVERVIEW
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Overview of Severe Hy pertri glyceri demi a (“SHTG”) Dru g Market
Introduction to SHTG
Hypertriglyceridemia (“ HTG”) is the presence of high amounts of triglycerides (“ TGs”) in
the blood. More specifically, it is defined as fasting serum TG levels of 150 mg/dL or higher, and
is associated with increased risk of cardiovascular disease. SHTG is the presence of high levels of
triglycerides, a type of fat, in the blood. SHTG is well known to be associated with other complex
and serious disorders such as acute pancreatitis and CVDs. Dietary modifications is the current
standard treatment for patients with SHTG. Existing pharmacological interventions primarily
include the use of fibrates, omega-3 fatty acids, statins and niacin, but these treatment options
either have limited efficacy or are associated with significant safety concerns. Furthermore, while
the existing therapies for SHTG offer a benefit in treating high triglycerides, they offer limited
benefit in the treatment of the constellation of metabolic issues in orbit around or underlying the
triglycerides levels. It is clear that there remains a medical need for safe and effective therapies for
the treatment of adult patients with SHTG, therapies that address not only triglycerides levels but
also comorbid conditions.
The following chart illustrates the details of HTG, including SHTG.
Severity
Serum TG 150–199mg/dL
Moderate
Severe
Causes of Hypertriglyceridemia (HTG)
familial chylomicronemia
familial hypertriglyceridemia primary mixed hyperlipidemia
Obesity, metabolic syndrome, alcohol, unhealthy diet
Classification of HTG
Complications of HTG
Cardiovascular disease
HTG increased risk of cardiovascular disease (CVD);
Pancreatitis
Extreme elevations of triglycerides may cause acute pancreatitis;
Chylomicronemia Syndrome
An often unrecognized and less severe condition, usually caused by triglyceride levels greater
than 500 mg/dL.
Miscellaneous
Pregnancy, paraproteinemia
Autoimmune Disorders
Hypothyroidism, systemic lupus
erythematosus
Medication
Estrogen, Isotretinoin
Renal Disease
Uremia, Glomerulonephritis
familial combined
hyperlipoproteinemiaPrimary
causes
Secondary
causes
Classification
Normal Serum TG ͻ150mg/dL
Mild
Serum TG 200–499mg/dL
Serum TG > 500mg/dL
• According to the 2018 AHA/ACC
Guideline, SHTG is defined as serum
TG>500 mg/dL
• SHTG is usually caused by a combination
of genetic and secondary factors. A detailed
history that includes family history,
medications, and alcohol consumption can
often lead to the cause. Physical
examination findings may stretch across
multiple organ systems. Patients with
SHTG should be admitted to the hospital
for aggressive medical therapy if they
develop symptoms such as abdominal pain
or pancreatitis.
Introduction of Hypertriglyceridemia
Abbreviation:AHA/ACC:AmericanHeartAssociation/AmericanCollegeofCardiology
Source: frontiers,CIC
INDUSTRY OVERVIEW
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Prevalence of SHTG in China, the United States and Europe
The following charts set forth the prevalence of HTG in China, the United States and Europe
from 2018 to 2032.
Prev alence of SHTG in Chin a, Unite d Statesa nd Euro pe 2018-2032E
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E
2,984.0 3,053.5 3,087.72,913.7 2,948.82,878.8
2,593.4 2,631.1 2,704.02,668.1 2,739.2 2,774.0 2,808.8 2,844.0
3,019.4
thousand patients2022-32E2018-22CAGR
1.9%
1.4%
1.3%
0.5%
1.6%
1.2%
1.2%
0.5%
China
United States
Europe
Total
1,473.4
322.7
797.3
1,502.4
801.6
327.1
1,748.51,721.8 1,775.4 1,828.6 1,855.0
827.4
1,695.0
356.4 360.5
831.4
1,558.9
809.5
335.6
1,586.4
813.0
339.8
1,613.7
816.4
343.9
1,640.8
819.9
348.1
1,667.9
823.7
352.4
835.5
364.7
839.7
369.0
1,802.4
843.9
373.1
847.9
377.0 380.9
851.8
1,530.9
805.6
331.6
Source: Expertinterview,Literatureresearch,CIC
Current Treatment Regimen
The general treatment regimen for SHTG includes dietary restrictions and lipid-lowering
drug treatment such as the use of medium-chain triglycerides (“ MCT”), fibrates, omega-3-fatty
acids (“ ome ga-3-FA”), and nicotinic acid. Diet restrictions are also a prevention method, and
remain the mainstay of treatment of SHTG, and the drug treatment may offer extra percentages of
TG-lowering. Yet, drugs of first choice, such as fibrates, do not offer fast onset of action, while
immediately acting drugs like omega-3-FA and MCT may not be powerful enough to lower
excessively elevated TG levels rapidly. Since patients with excessively elevated TG levels are in
urgent need of a fast and effective lowering of their TG levels in order to prevent a severe
pancreatitis episode, further measures must be taken. Immediate apheretic treatment might thus be
a potential option in order to rapidly lower excessively elevated TG levels and prevent acute
pancreatitis in these patients. Recently, the successful use of plasmapheresis for treating patients
with SHTG has not only been confirmed in a number of studies, but also been suggested by the
American Society for Apheresis (“ ASFA”) Committee on Clinical Applications.
The Core Product is intended to be second or later-line treatment of SHTG.
INDUSTRY OVERVIEW
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--- page 159 ---
SHTG Drug Market Size
The following chart sets forth the SHTG drug market size in China, the United States and
Europe from 2018 to 2032.
Market Size of SHTG Dru g Market, 2018-2032E
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E
4,040.5
4,551.1
4,802.4
3,526.4
3,783.1
3,271.8
1,647.3 1,742.3
2,063.3
1,842.4
2,292.5
2,529.1
2,772.1
3,020.6
4,297.5
Million USD2022-32E2018-22CAGR
10.5%
8.6%
8.8%
8.0%
9.3%
7.6%
7.8%
7.1%
China
the U.S.
Europe
Total
189.8
661.2
796.3
204.4
837.1
700.7
514.2
472.2
557.4
646.5
692.2
1,508.0
431.5
1,332.4
1,437.8
1,616.3
250.7
979.5
833.1
283.3
1,081.8
927.3
317.9
1,186.2
1,025.0
354.1
1,292.4
1,125.6
392.0
1,399.9
1,228.7
1,724.5
1,544.3
1,831.9
1,651.2
601.6
1,938.1
1,757.8
2,041.9
1,862.7 1,966.4
2,413.8
220.0
879.9
742.7
Source: Annualreportspublishedbymarketplayers,Expertinterview,Literatureresearch,CIC
Competitive Landscape of SHTG Drug Market
According to the SHTG/HTG treatment guidelines, SHTG/HTG drugs primarily include
three categories of drugs: fenofibrate, nicotine acid and ethyl eicosapentaenoate acid. As of Latest
Practicable Date, there were more than 100 SHTG/HTG drugs approved by each of FDA and
NMPA.
INDUSTRY OVERVIEW
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There are 15 SHTG drugs under clinical development regulated by the FDA, including 13
SHTG drugs in Phase II and Phase III clinical trials, and there is one SHTG drug under clinical
development regulated by the NMPA. The following table sets forth the pipeline of SHTG drugs in
clinical trials regulated by the FDA and the NMPA.
Pipeline of SHTG Dru gs in Clinic alT r ials Registere da t Clinic alTrialsa nd CDE
Drug Name
Patients with Hypertriglyceridemia, T2DM and
MASLD
Dyslipidemias, Familial Hypercholesterolemia,
Hypertriglyceridemia
Visirna Therapeutics
HK Limited
Akcea Therapeutics
Marea Therapeutics
89Bio
PPARα
ApoC-III
FGFR1/β-
Klotho
ARO-APOC3
NST-1024
K-877
# Target Company Indications Administration Phase First Posted Date Trial Number Competent
Authority
1 FGF21 Severe Hypertriglyceridemia Injection III 2023/05/10 NCT05852431 FDA
2O l e z a r s e n
Pegozafermin
APOC3 mRNA Ionis Pharmaceuticals Sev ere Hypertriglyceridemia Injection III 2023/01/12 NCT05681351 FDA
3O l e z a r s e n APOC3 mRNA Ionis Pharmaceuticals
Patients with Hypertriglyceridemia and
Atherosclerotic Cardiovascular Disease, or with
Severe Hypertriglyceridemia
Injection III 2022/11/09 NCT05610280 FDA
4O l e z a r s e n APOC3 mRNA Ionis Pharmaceuticals Sev ere Hypertriglyceridemia Injection III 2022/09/23 NCT05552326 FDA
5O l e z a r s e n APOC3 mRNA Ionis Pharmaceuticals Severe Hypertriglyceridemia Injection III 2021/10/15 NCT05079919 FDA
6 Ethyl Icosapentate N/A Mochida Severe Hypertriglyceridemia Oral III 2020/01/27 NCT04239950 FDA
7 Kowa Company Severe Hypertriglyceridemia Oral III 2017/01/05 NCT03011450 FDA
8M A R 0 0 1 N/A Patients With Metabolic Dysfunction
(triglyceride levels > 2.8 mmol/L) Injection Ib/IIa 2023/07/22 NCT05896254 FDA
9 N/A NorthSea
Therapeutics B.V. High Triglycerides Oral II 2023/06/05 NCT05889156 FDA
10 Olezarsen APOC3 mRNA Ionis Pharmaceuticals
Hypertriglyceridemia, Atherosclerotic
Cardiovascular Disease, Severe
Hypertriglyceridemia
Injection II 2021/10/15 NCT05355402 FDA
11 Arrowhead Severe Hypertriglyceridemia Injection II 2021/01/22 NCT04720534 FDA
12 Pegozafermin 89Bio Severe Hypertriglyceridemia Injection II 2020/09/09 NCT04541186 FDA
13 ISIS 703802 ANGPTL3
mRNA Injection II 2017/12/03 NCT03371355 FDA
14 VSA003 N/A Injection I 2023/05/09 NCT05851066 FDA
15 LY3875383 N/A Eli Lily Hypertriglyceridemia Injection I 2022/11/08 NCT05609825 FDA
16 Ethyl Icosapentate N/A Mochida Severe Hypertriglyceridemia Oral III 2019/10/15 CTR20191474 NMPA
Note: TheabovetableonlyincludespipelineofSHTGdrugsinclinicaltrialsregulatedbytheFDAandNMPAin
whichtheinclusioncriteriaspecifypatientswithtriglyceridelevel≥500mg/dLortriglyceridelevels>2.8
mmol/L
Source: ClinicalTrials.gov;CIC
Market Drivers and Entry Barriers of SHTG Drug Market
The SHTG drug market growth has primarily been driven by the following key factors:
• Expansion of vulnerable population : Hypertriglyceridemia results from the
combination of genetic factors and lifestyle causes such as excessive alcohol intake
and foods rich in saturated fat. Hypertriglyceridemia also associates with other
metabolic diseases, such as obesity, metabolic syndrome, and T2DM. These risk
factors and comorbidities together contribute to the expansion of vulnerable
population of SHTG.
• Noveltreatmentstofulfilunmetneeds : The current treatment options for SHTG have
their respective limitations. Significant unmet clinical needs prevail in SHTG
treatment, especially the need to simultaneously reduce triglycerides and further
improve lipid metabolism and weight management. After novel treatment choices are
introduced to the market, the SHTG drug market is expected to grow steadily.
INDUSTRY OVERVIEW
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--- page 161 ---
Despite the drivers discussed above, significant entry barriers remain in the SHTG market:
• Technological and talent barrier : SHTG with complex pathogenesis and etiology is
still under scientific research and needs further understanding. Drug development in
this field requires multi-faceted talents who are familiar with regulations, clinical
trials, the field of metabolic diseases and other areas that are key to the development
and commercialization of innovative therapies in SHTG treatment. This presents a
critical technological and talent barrier that prevents new entrants from entering the
market and conducting clinical research and other business operations.
• Capital investment barrier : Drug development process is a lengthy and
capital-intensive activity, which requires enormous amount of capital investment and
other kinds of resources. New entrants are expected to have limited financial
capabilities and liquidity to sustain business operation and product development.
OVERVIEW OF CHRONIC CHOLESTATIC LIVER DISEASE DRUG MARKET
Cholestasis describes impairment in bile formation or flow that can manifest clinically with
fatigue, pruritus, and jaundice. Although the clinical manifestations of cholestatic liver disease
vary, early biochemical evidence of cholestasis includes increases in serum alkaline phosphatase
and gamma glutamyltranspeptidase, followed by onset of conjugated hyperbilirubinemia.
Incidence rate of cholestasis in first-hospitalized patients with chronic liver disease is 10.26%.
If cholestasis lasts longer than six months, it is considered as chronic cholestatic liver
disease, with two major types of primary sclerosing cholangitis (“ PSC”) and primary biliary
cholangitis (“ PBC”). The following diagram sets forth the introduction to chronic cholestatic liver
disease.
Introduction to Chronic Cholestatic Liver Disease
Definition Classification
75
43
36
31
28
16
Hepatic tumor
PSC
Autoimmune hepatitis
PBC
Drug-induced liver diseases
Alcoholic hepatitis
Feature PSC PBC
Gender > >
30-40 years 52 years
Mode of diagnosis
Co-existing IBD4 ~70% ~1%
Treatment UDCA, Obeticholic acid
Incidence of cholestasis of main chronic liver diseases (%)
Causes of Cholestasis
Cholestasis describes impairment in bile formation or flow that can
manifest clinically with fatigue, pruritus, and jaundice. Although the
clinical manifestations of cholestatic liver disease vary, early
biochemical evidence of cholestasis includes increases in serum alkaline
phosphatase (ALP) and gamma-glutamyltranspeptidase (GGT), followed
by onset of conjugated hyperbilirubinemia. By convention, cholestasis
is considered chronic if it lasts >6 months.
Cholestatic disorders are broadly defined as intra- or extrahepatic.
Intrahepatic cholestasis: caused by defects in bile canaliculi,
hepatocellular function, or intrahepatic bile ducts;
Extrahepatic cholestasis: causes affect the extrahepatic ducts, common
hepatic duct, or common bile duct.
/g190/g3Some etiologies of cholestasis, such as primary sclerosing cholangitis,
can affect both the intrahepatic and extrahepatic bile ducts.
Incidence rate of cholestasis in first-hospitalized patients with chronic
liver disease is 10.26%, the distribution of the cholestasis incidence
according to the type of chronic liver disease is:
Itching, fatigue,
abdominal pain,
dry eyes and mouth
Itching, fatigue,
abdominal pain,
cholan
gitis flares
Common
symptoms in early
stages
No effective medical
therapy
Raised ALP, AMA3,
diagnostic liver biopsy
MRI1 of bile ducts, liver
biopsy, ERCP2
Small bile ducts inside
the liver only
Bile ducts inside and
outside the liver
Site of disease
involvement
Median age at
diagnosis
Note: 1 Magnetic Resonance Imaging; 2 Endoscopic retrograde cholangiopancreatography; 3 positive disease
specificantibodies;4inflammatoryboweldisease.
Source: “Consensus on the Diagnosis and Treatment of Cholestasis Liver Diseases (ᐕ
΍ᗆ)(2015)”;CIC
INDUSTRY OVERVIEW
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Overview of PSC Dru g Market
PSC is a long term progressive disease and is characterized by inflammation and scarring of
the bile ducts which normally allow bile to drain from the gallbladder. Though PSC advances very
slowly, it eventually leads to liver failure, repeated infections, and tumors of the bile duct or liver.
PSC affects all age groups, with the median age at onset of 30-40 years. Furthermore, PSC is more
common in men, more than 60% of patients are men.
Prevalence of PSC in China, the United States and Europe
The following charts set forth the prevalence of PSC in China, the United States and Europe
from 2018 to 2032.
Prev alence of PSC in Chin a, the Unite d Statesa nd Euro pe 2018-2032E
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E
CAGR 2018-22 2022-32E
1.4% 1.1%
1.6% 1.4%
1.1% 0.8%
1.3% 1.0%Total
Thousand patients
China
United States
Europe
311.1
65.6
55.8
189.7
308.3
65.1
55.0
188.2
305.5
64.7
54.3
186.6
302.7
64.2
53.5
184.9
299.8
63.7
52.8
183.2
296.8
63.3
52.0
181.5
293.8
62.8
51.3
179.7
290.7287.5284.3281.1277.7274.3270.8267.1
62.3
50.6
177.8
61.8
49.9
175.9
61.3
49.1
173.9
60.7
48.4
171.9
60.2
47.7
169.8
59.6
47.0
167.7
59.0
46.3
165.4
58.4
45.6
163.2
Source: Expertinterview,Literatureresearch,CIC
INDUSTRY OVERVIEW
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--- page 163 ---
Current Treatment Regimen
The treatment options for PSC include medication, endoscopic therapy, percutaneous
therapy and surgery, such as liver transplant. In the global and China market, there are no effective
medical treatment options for PSC. Ursodeoxycholic acid (“ UDCA ”) is used off-label to treat PSC
as the current mainstay of medical treatment. In addition, prevention methods are also critical,
which include alcohol consumption control, hepatitis A and B viruses vaccinations and low-fat
diet. The Core Product is intended to be second or later-line treatment of PSC. The following table
sets forth the treatment pathway for PSC according to international and national guidelines:
At present there are no effective medical treatment options
for PSC. Hence, there are no approved drugs.
Current mainstay of medical treatment:
Ursodeoxycholic acid (UDCA) (off label), although there
is no evidence that alters long-term outcomes, it has
efficacy in the treatment of other cholestatic
diseases such as PSC
Care for primary sclerosing cholangitis focuses on
monitoring liver function, managing symptoms and, when
possible, doing procedures that temporarily open blocked
bile ducts, such as: endoscopic retrograde
cholangiopancreatography, percutaneous transhepatic
cholangiography
The only known cure for advanced PSC:
Liver transplant, but the disease may recur in the
transplanted liver in a small number of patients.
Over the past two decades many clinical trials of medical
therapies for PSC have been conducted; however, none
have demonstrated real improvements in hard clinical
endpoints.
Key focus on future treatment of PSC:
Efforts for new diagnostic tests aiming at earlier PSC
detection should be emphasized, since magnetic
resonance imaging/magnetic resonance
cholangiopancreatography and endoscopic retrograde
cholangiopancreatography still do only detect the
footprints of the disease and are therefore an imperfect
gold standard.
Combination therapy may reach a breakthrough due to
the still unknown cause of PSC. Theoretically, a potential
treatment regimen in PSC may include synergistically
acting anticholestatic nor UDCA (Nor-ursodeoxycholic
acid) and fibrates. Targeting at an inflammatory gut-liver
axis in PSC may contain novel therapeutic antibodies,
antibiotics, sulfasalazine, and fecal microbiota
transplantation.
Now Future
Unmet need
1
2
f
o
f
f
 r
 PS
C
.
 H
en
c
e
,
 t
he
r
e
 a
r
e
 n
o
 a
pp
r
o
v
e
d
 d
r
u
gs
.
,
 pppp
 gg
“PSC is one of the biggest unmet needs in hepatology.”
--European Association for the Study of the Liver annual
meeting, 2011, Berlin
Treatment pathway for PSC
Source: Literaturesearch,CIC
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--- page 164 ---
PSC Drug Market Size
The following chart sets forth the PSC drug market size in China, the United States and
Europe from 2018 to 2032.
Market Size of PSC Dru g in Chin a, the Unite d Statesa nd Euro pe, 2018-2032E
2018 2022 2026E 2027E 2028E 2029E 2030E 2031E 2032E
Million USD
147.418.6
108.4
202.6
310.5
452.5
66.235.2
54.2
100.9
0.00.00.00.0 101.5
154.7
225.5
2028E-32ECAGR
126.6%
121.2%
117.3%
127.6%
China
United States
Europe
Total
79.6
54.3
35.5
19.1
3.010.1
5.5
Note: The size and the significant growth of PSC drug market is estimated with the following assumptions: (i)
market is estimated as the average PSC drug price multiplied by the number of patients treated; (ii) the
price assumption is based on the prices of other first-in-class drugs for chronic diseases; (iii) the PSC
drugs expected to be approved in forecast period would not be covered in national or regional
volume-based procurement program in China patients. In 2028, the number of PSC patients globally is
expectedtobe299.8thousandandin2032,thisnumberisexpectedtoreach311.1thousand.Fordetails,
see“—PrevalenceofPSCinChina,theUnitedStatesandEurope”inthissectionabove;(iv)From2028
to2032,therangeofdiagnosisratesamongPSCpatientsisexpectedtobewithin40%-50%,50%-60%and
50%-60% in China, the U.S. and Europe, respectively. The initial PSC-indicated drug adoption rates in
total PSC patients are expected to be 2.1%, 1.2%, and 0.8% in 2028 in China, the U.S. and Europe,
respectively.The expected range of annual treatment cost of PSC-indicated drug is expected to be within
USD600-1,300, USD16,000-17,000 and USD11,000-12,000 in China, the U.S. and Europe, respectively.
ThepricechangeinChina,theUnitedStatesandEuropeisinlinewiththeindustrytrend;(v)thefirstdrug
(HTD1801) for the treatment of PSC is expected to be approved in the second quarter 2028 in China, the
United States and Europe on the basis that (a) HTD1801 is the first drug candidate to complete Phase II
clinical trial in China and (b) in September 2018, HTD1801 was granted the first fast track designation
statusbyFDAinthefieldofPSCtreatment;(vi)anumberofPSCdrugsareexpectedtobeapprovedand
commercialized from 2029 onwards, including but not limited to GS-9674 and norUDCA, which are in
Phase III clinical stages. For details. see “– competitive landscape of PSC drug market” in this section
below.The expected approval timeline was estimated based on the duration of Phase III trials and public
announcements by the trial sponsors; (vii) increased academic promotion and physician education by
marketplayers;(viii)thepatientpopulationthatcanbegivenPSCdrugscontinuetogrow;(ix)becauseno
medications specifically indicated for PSC have been approved, the treatment rate of drugs that are
indicated for PSC is currently 0%. As the expected approval of drugs specifically indicated for PSC
address the unmet clinical needs, PSC patients will quickly adopt these PSC-indicated drugs and the
treatmentratewillthengrowsignificantly.
Source: Expertinterview,Literatureresearch,CIC
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--- page 165 ---
Competitive Landscape of PSC Drug Market
According to CIC, there is no medication currently approved for the treatment of PSC
globally. There are 13 PSC drugs under clinical development regulated by the FDA and the NMPA,
all of which are in Phase II and Phase III clinical stages. The following table sets forth the pipeline
of PSC drugs under clinical trials regulated by the FDA and the NMPA.
Pipeline of PSC Dru gs in Clinic alT r ials Registere da t Clinic alTrialsa nd CDE
# Drug Name Target Company Indications Phase Administration Trial Number
1 FXR Gilead Sciences PSC III Oral Orphan drug 2019/03/26 NCT03890120 FDA
2 norUDCA Dr. Falk Pharma GmbH PSC III Oral / 2019/03/13 NCT03872921 FDA
3 CS0159 FXR Cascade PSC II Oral / 2023/06/09 NCT05896124 FDA
4 A3907 ASBT Albireo PSC II Oral / 2022/12/08 NCT05642468 FDA
5 Elafibranor Ipsen PSC II Oral / 2022/12/25 NCT05627362 FDA
6 EP547 MRGPRX4 PSC II Oral Orphan drug 2022/09/01 NCT05525520 FDA
7 IBAT Mirum Pharmaceuticals PSC II Oral / 2020/12/11 NCT04663308 FDA
8 Unidentified PSC II Orphan drug 2020/10/22 NCT04595825 FDA
9 Pliant Therapeutics, PSC II Oral 2020/07/21 NCT04480840 FDA
10 PSC II Oral / 2019/07/18 NCT04024813 FDA
11 HTD1801 HighTide PSC II Oral 2017/11/07 NCT03333928 FDA
12 CS0159 FXR Cascade PSC II Oral / 2023/05/22 CTR20231403 NMPA
13 HTD1801 BUDC Hi ghTide PSC II Oral / 2020/02/05 CTR20200049 NMPA
Fast track/
orphan drug
First Posted
Date
Competent
Authority
BUDC
MBX-8025
(Seladelpar) PPAR-δ
αvβ6/αvβ1PLN-74809
CM-101
Fast track,
Orphan drug
Fast track,
orphan drug
Intravenous
and
subcutaneous
ChemomAb Ltd.
SHP626
(Volixibat)
Escient pharmaceuticals
PPAR-α/δ
α1ATZ
GS-9674
(Cilofexor)
CymaBay Therapeutics
Source: Clinicaltrials;CDE;CIC
Market Drivers and Entry Barriers of PSC Drug Market
The PSC drug market growth has primarily been driven by the following key factors:
• Strengthened public awareness : As more and more PSC patients emerge,
governments, medical institutions and the public pay more attention to PSC disease,
which lead to increased public awareness for PSC disease. In addition, a variety of
media and channels can be used to educate doctors and PSC patients on disease
diagnosis and pharmaceutical interventions. For example, the National Health
Commission of China has initiated a specific training program for metabolism
physicians from regional medical and health services since 2022, in order to ensure
the correct diagnosis for metabolic diseases, including PSC. More PSC care clinics
are also opened in China, allowing doctors to provide patients with more
comprehensive treatment on rational medication use and lifestyle intervention. In
addition, improvement of diagnostic techniques further drives the market forward of
PSC disease. For example, more diagnostic techniques have become available to
diagnose PSC, such as liver function blood test, magnetic resonance imaging of bile
ducts and liver biopsy. The magnetic resonance imaging, the best choice to diagnose
PSC with a user-friendly approach, makes images of liver and bile ducts directly. A
INDUSTRY OVERVIEW
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--- page 166 ---
liver biopsy is a procedure to remove a piece of liver tissue for laboratory testing, in
order to determine the extent of damage to liver. Doctors usually use liver biopsy only
when the diagnosis of PSC is still uncertain after using other less-invasive
approaches. Thus, more subjects use magnetic resonance imaging and liver biopsy to
diagnose PSC, further increasing the demand for pharmaceutical interventions.
• Increase of diagnosis rate : The pathogenesis of PSC has not yet been clearly
identified. Multiple risk factors such as genetics, environment, autoimmune
conditions and metabolism of bile acids could lead to PSC. The major population
group susceptible to PSC is males aged between 20 and 57 years old. With more
extensive understanding of PSC disease and its standard of diagnosis, the diagnosis
rate will increase, further driving the growth of PSC market.
• Novel treatments to fulfil unmet needs: As of May 2023, no drugs indicated for PSC
have been approved. This presents significant unmet needs to address for the PSC
patients and improve their prognosis. After novel treatments that fulfill these unmet
needs are approved, PSC patients are expected to adopt these innovative drugs, thus
driving the growth of PSC market.
Despite the drivers discussed above, significant entry barriers remain in the PSC market:
• Technologicalandtalentbarrier : Scientific researches and clinical developments are
constantly dedicated to the treatment of PSC, looking for pathways or targets to treat
PSC. These activities typically demand high-level insights and technologies in areas
of PSC, metabolism or autoimmunology, and require a team of talents with research
focus on the underlying topics. This presents the technological and talent barrier for
the PSC drug market.
• Regulatory barrier : The development of drugs and medications is strictly regulated.
Companies and manufacturers that have little experience in drug development or are
unfamiliar with relevant regulations and compliance knowledge would not be able to
compete in this market.
• Capital investment barrier : Drug development process is a lengthy and
capital-intensive activity, which requires enormous amount of capital investment and
other kinds of resources. For example, with a relatively small PSC patient population,
patient recruitment requires significant investment and resources. New entrants are
expected to have limited financial capabilities and liquidity to sustain business
operation and product development.
INDUSTRY OVERVIEW
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--- page 167 ---
Overview of PBC Dru g Market
PBC, formerly known as primary biliary cirrhosis, is a rare chronic liver disease that is
triggered by autoimmune reactions with unspecified causes, such as a combination of genetic risk
factors and environmental factors. It affects small bile ducts inside the liver only, and may be
progressive. Starting with inflammation, the damage can cause fibrosis, then cirrhosis, and
eventually lead to liver failure in some cases. PBC disproportionately affects women, with the ratio
of 10 women for one man. The following diagram sets forth the details of definition and
classification of PBC:
Definition and Classification of PBC
PBC is classified into two groups depending on the absence or
presence of symptoms caused by liver damage: aPBC and sPBC.
Overview of PBC
 Subgroups of PBC
Primary Biliary Cholangitis (PBC)
• Primary biliary cholangitis, formerly known as primary
biliary cirrhosis, is a rare chronic liver disease that is
caused by an autoimmune reaction and affect small bile
ducts inside the liver only.
• Disproportionately affect women, with 10 women for
every men.
• The cause(s) of PBC remains unknown, caused due to a
combination of genetic risk factors and environmental
triggers.
• PBC is progressive, which means that the damage gets
worse over time. Starting with inflammation, the damage
can cause fibrosis, and then cirrhosis. In some cases,
cirrhosis can lead to liver failure.
Asymptomatic PBC (aPBC): Condition absent from
symptoms caused by liver damage
• Median survival of asymptomatic patients is 16 years
• Account for more than half of patients
Symptomatic PBC (sPBC): Condition with symptoms caused
by liver damage
/g190s1PBC: serum bilirubin level below 2.0 mg/dL
/g190s2PBC: serum bilirubin level equal or over 2.0 mg/dL
• Median survival of symptomatic patients is 7.5 years
•
1
2
Immune
response
Chronic
cholestasis/
inflammation
Fibrosis
Cirrhosis and
end-stage
liver disease
Classical symptoms Other symptoms
• Pruritus
• Fatigue
• Jaundice
• Dry eyes and mouth
• Bone pain
• Joint pain
• Abdominal pain
• Restless legs
/g190Fatigue or pruritus affects over 50% of patients with PBC
Account for 36%-89% of patients
Source: 2018 practice guidance from American Association for the Study of Liver Disease (“ AASLD”); EASL
clinicalpracticeguidelines;CIC
Prevalence of PBC in China, the United States and Europe
The following charts set forth the prevalence of PBC in China, the United States and Europe
from 2018 to 2032.
Prev alence of PBC in Chin a, Unite d Statesa nd Euro pe 2018-2032E
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E
CAGR 2018-22 2022-32E
1.7% 1.6%
1.9% 1.8%
2.7% 2.2%
1.9% 1.7%Total
Thousand patients
China
United States
Europe
1,306.7
218.6
161.5
926.5
1,292.6
214.4
158.8
919.4
1,275.9
210.2
156.2
909.5
1,255.5
205.9
153.5
896.1
1,232.5
201.6
150.9
880.0
1.208.0
197.3
148.2
862.4
1.183.8
193.0
145.6
845.2
1,161.31,139.71,119.71,100.81,082.01,062.61,042.21,021.6
188.6
143.1
829.6
184.3
140.5
814.9
180.0
137.9
801.8
175.6
135.4
789.8
171.2
132.9
777.9
166.7
130.4
765.4
162.2
128.0
752.1
157.7
125.5
738.5
Source: CIC
INDUSTRY OVERVIEW
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--- page 168 ---
Current Treatment Regimen
PBC treatment’s primary goals are to slow down disease progression, manage symptoms,
and prevent complications. The immediate treatment for PBC is using ursodeoxycholic acid
(UDCA). UDCA helps improve liver function and bile flow, slowing down the progression of the
disease. It is the standard treatment for PBC and has been shown to increase survival rates and
delay the need for a liver transplant. In cases where UDCA alone is not effective or well-tolerated,
obeticholic acid (“ OCA ”) may be prescribed. OCA is a medication that regulates bile acid
synthesis and improves liver function. It is approved for use with UDCA for certain individuals
with PBC. Medications such as antihistamines or bile acid binders may be prescribed to help
alleviate symptoms such as itching (pruritus). These medications work by reducing bile acid levels
in the blood, which can help relieve itching. A liver transplant may be considered in advanced
cases of PBC where the liver function significantly deteriorates or complications such as cirrhosis
develop. A liver transplant replaces the diseased liver with a healthy liver from a donor. In addition,
prevention methods are also critical, which include alcohol consumption control, hepatitis A and B
viruses vaccinations and low-fat diet.
UDCA is the first-line agent for the treatment of PBC, and OCA is recommended as the
second-line agent used in combination with UDCA. None of the other drugs has been tested
beneficial as single agent. The following table sets forth the treatment pathway for PBC according
to international and national guidelines:
Approved drugs Other therapies
Treatment pathway for PBC
Fibric acid derivatives
• Fibrates can be considered as off-label
alternatives for patients with PBC and
inadequate response to UDCA.
• Use of OCA and fibrates is discouraged in
patients with decompensated liver disease
(Child-Pugh-Turcotte B or C).
Other drugs
• Newer agents under consideration include
the selective PPAR-agonist seladelpar and
other FXR agonists.
Unmet need
OCA is the only approved drug during
the past 20 years since the approval of
UDCA. Other drugs are tested, while
none of them found as single agent to be
benefit.
Liver transplantation
• Patients with manifestations of end-
stage PBC should be referred for liver
transplantation when they present with
complications of cirrhosis, or their
Model for End-Stage Liver Disease
score exceeds 14.
First-line Second-line
Ursodeoxycholic acid (UDCA) Obeticholic acid (OCA)
Representative
drugs*
Approval FDA: 1987/12 FDA: 2016/5
Dosage 13 to 15 mg/kg/day orally Starting at 5 mg/day for inadequate
responders to UDCA
Manufacturer
Annual cost $5,000~$7,000 $150,000~$170,000
Annual Sales
(million dollars) No public information disclosure
Limitations
• Up to 40% of PBC patients
do not achieve a complete
response to UDCA
• Black Box Warning
• Dosing higher than recommended
in the drug label can increase the
risk for liver decompensation, liver
failure, and sometimes death
US sales ex-US sales
79116 141 188 234
2020
313
20192017 2018
178129
250
6213 37
Source: Literaturesearch,CIC
INDUSTRY OVERVIEW
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--- page 169 ---
PBC Drug Market Size
The following chart sets forth the market size of PBC drug in China, the United States and
Europe from 2018 to 2032.
Market Size of PBC Dru g Market, 2018-2032E
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E
1,756.4
2,197.4
2,376.3
1,119.2
1,473.0
1,015.8
543.6 581.1
682.9621.0
746.3 811.3 878.0 946.2
1,993.6
Million USD2022-32E2018-22CAGR
5.8%
8.2%
9.0%
9.8%
10.7%
12.3%
12.7%
13.2%
China
the U.S.
Europe
Total
171.5
219.4
152.7
179.0
165.9
236.3
377.5
297.6
448.8
554.6
591.7
315.6
270.2
430.0 473.0
348.7
200.8
200.7
281.3
214.8
222.2
309.4
228.5
244.5
338.3
242.3
267.5
368.1
256.3
291.2
398.7
469.7
625.8
557.4
750.2
507.5
632.2
853.8
700.4
942.4
1,020.0
764.6
186.6
180.1
254.3
Source: Annualreportspublishedbymarketplayers,Expertinterview,Literatureresearch,CIC
Competitive Landscape of PBC Drug Market
As of the Latest Practicable Date, only two drugs had been approved for PBC by the FDA.
UDCA is the first-line agent for the treatment of PBC, and OCA is recommended as the
second-line agent used in combination with UDCA. In China, only UDCA has been approved by
the NMPA.
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--- page 170 ---
Approve d PBC Dru gs by the FDA
Drug Name Target Manufacturer Approval I ndications Dosage Annual cost Limitations
/ Allergan 1987/12 Primary Biliary  Cholangitis 5,000~7,000 USD
FXR Intercept 2016/5
Ursodeoxycholic
acid (UDCA)
Obeticholic acid
(OCA)
Treatment of primary biliary
cholangitis, previously known
as primary biliary cirrhosis
(PBC), in combination with
ursodeoxycholic acid (UDCA) in
adults with an inadequate
response to UDCA or as
monotherapy in adults unable to
tolerate UDCA
Starting at 5
mg/day for
inadequate
responders to
UDCA
150,000~170,000
USD
• Black Box Warning
• Dosing higher than
recommended in
the drug label can increase the
risk for liver decompensation, liver
failure, and sometimes death
Up to 40% of PBC patients
do not achieve a complete
response to UDCA
13 to
15mg/kg/day
orally
Note:
1. Annual cost calculated based on assumptions that i) medications are used in adults according to indications and
usageindruglabelsandii)individualtreatmentmaintainsforayearof52weeks.
Source:ClinicalTrials;NMPA;CIC
There are 18 PBC drugs under clinical development regulated by the FDA and the NMPA,
including 16 PBC drugs in Phase II and Phase III clinical stages. The following table sets forth the
PBC drugs under clinical trials regulated by the FDA and the NMPA.
Pipeline of PBC Dru gs in Clinic alT r ials Registere da t Clinic alTrialsa nd CDE
# Trial Number Competent
AuthorityFirst Posted DatePhaseAdministrationIndicationsCompanyTargetDrug Name
1 TQA3526 FXR/Bile Acid Chia Tai Tianqing PBC Oral III 2022/07/11 NCT05450887 FDA
2 MBX-8025
(Seladelpar) PPAR-δ CymaBay
Therapeutics PBC Oral III 2020/11/09 NCT04620733 FDA
3 MBX-8025
(Seladelpar) PPAR-δ CymaBay
Therapeutics PBC Oral III 2020/11/09 NCT03602560 FDA
4 GFT505
(Elafibranor)
dual PPAR-
α/PPAR-δ Genfit PBC Oral III 2020/08/26 NCT04526665 FDA
5O b e t i c h o l i c  A c i d F X R Fudan-Zhangjiang
Bio-Pharmaceutical PBC Oral III 2021/08/16 CTR20211958 NMPA
6 TQA3526 FXR/Bile Acid Chia Tai Tianqing PBC Oral III 2021/08/16 CTR20211444 NMPA
7 TQA3526 FXR/Bile Acid Chia Tai Tianqing PBC Oral III 2021/06/17 CTR20211354 NMPA
8 Saroglitazar PPAR α/γ Zydus
Therapeutics PBC Oral IIb/III 2021/11/24 NCT05133336 FDA
9 ASC42 FXR Ascletis
Pharmaceuticals PBC Oral II 2022/01/13 NCT05190523 FDA
10 HTD1801 Multiple pathways
HighTide
Biopharma
Enanta
PBC Oral II 2020/10/27 NCT04604652 FDA
11 EDP-305 FXR Pharmaceuticals PBC Oral II 2018/01/09 NCT03394924 FDA
12 GKT137831 Nox4 PBC Oral II 2017/07/21 NCT03226067 FDA
13 Saroglitazar PPAR α/γ
Cascade Ascletis
PBC Oral II 2017/04/13 NCT03112681 FDA
14 CS0159 FXR PBC Oral II 2023/05/12 CTR20231402 NMPA
15 ASC42 FXR Pharmaceuticals/
Gannex PBC Oral II 2021/12/10 CTR20213229 NMPA
16 TQA3526 FXR/Bile Acid Chia Tai Tianqing
COUR PBC Oral IIa 2020/01/10 CTR20200055 NMPA
17 CNP-104 N/A
Pharmaceutical
Development
Company
PBC Injection I/IIa 2021/11/03 NCT05104853 FDA
18 MBX-8025
(Seladelpar) PPAR-δ CymaBay
Therapeutics PBC Oral I 2021/09/17 NCT04950764 FDA
Genkyotex SA
Zydus
Therapeutics
Source: ClinicalTrials;CDE;CIC
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--- page 171 ---
Market Drivers and Entry Barriers of PBC Drug Market
The PBC drug market growth has primarily been driven by the following key factors:
• Expansion of vulnerable population: The pathogenesis of PBC has not been fully
understood, and the major population group susceptible to PBC is older women. As
the awareness and level of clinical diagnosis increase, with the growing aging
population, PBC is expected to have a growing prevalence.
• Noveltreatmentstofulfilunmetneeds: As of May 2023, UDCA and FXR antagonists
are the only drugs approved for treatment of PBC. However, they have respective
limitations that only 60% of the PBC patients respond well to UDCA, and FXR
antagonists have black box warnings regarding their safety profile. The limitations in
currently available treatments present significant unmet needs in PBC treatment, and
novel treatments that fulfill unmet needs are expected to drive the growth of PBC drug
market.
Despite the drivers discussed above, significant entry barriers remain in the PBC market:
• Technological and talent barrier: The pathogenesis of PBC is still under further
research. In addition, due to the slow progression of PBC, sometimes surrogate
endpoints are needed in clinical assessment. The complex activities involved in
developing new drugs to treat PBC require high-level technological know-how and
clinical development professionals. It is difficult for newly-entered enterprises to
recruit talents with specific knowledge in such a short term, which directly leads to
the slow product development of newly-entered enterprises.
• Regulatory barrier: The development of drugs and medications is strictly regulated.
Companies and manufacturers that have little experience in drug development or are
unfamiliar with relevant regulations and compliance knowledge would not be able to
compete in this market.
• Capital investment barrier: Drug development process is a lengthy and
capital-intensive activity, which requires enormous amount of capital investment and
other kinds of resources. Similar to PSC, PBS population is also small, and patient
recruitment requires significant investment and resources. New entrants are expected
to have limited financial capabilities and liquidity to sustain business operation and
product development.
REPORT COMMISSIONED BY CHINA INSIGHTS CONSULTANCY
In connection with the Global Offering, we commissioned CIC, an Independent Third Party,
to prepare a report on global and China’s markets regarding metabolic and digestive diseases.
Except as otherwise noted, all data and forecasts in this section come from the CIC Report. We
have agreed to pay a total of RMB954,000 in fees for the preparation of the CIC Report. CIC is a
market research and consulting company that provides market research on a variety of industries
including healthcare. In preparing the report, CIC collected and reviewed publicly available data
such as government-derived information, annual reports and industry association statistics, as well
as market data collected by conducting interviews with key industry experts and leading industry
participants. CIC has exercised due care in collecting and reviewing the information so collected.
INDUSTRY OVERVIEW
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--- page 172 ---
PRC LA WS AND REGULATIONS
Our business operations are subject to extensive supervision and regulation by the
government of the People’s Republic of China (the “ PRC”o r“ Chin a”). This section summarizes
the principal laws and regulations in the PRC that may have a significant impact on our business.
Lawsa nd regulation s in rel ation to Dru gs
Major Regulatory Authorities
The drug industry in the PRC is mainly administered by three governmental agencies: the
National Medical Products Administration (္ຖ၍ଣ҅ ) (the “ NMPA”), a department
under the State Administration for Market Regulation (̹ఙ္ຖ၍ଣᐼ҅ ) (the “ SAMR ”),
the National Health Commission (ึ ) (the “ NHC”) and the National Healthcare
Security Administration (ღ҅ ) (the “ NHSA ”).
The NMPA, which inherits the drug supervision function from its predecessor the China
Food and Drug Administration, or the CFDA (before March 2018), is the primary drug regulator
responsible for almost all of the key stages of the life-cycle of pharmaceutical products, including
non-clinical researches, clinical trials, marketing approvals, manufacturing, advertising and
promotion, distribution and pharmacovigilance.
The NHC, formerly known as the National Health and Family Planning Commission, is
China’s chief healthcare regulator. It is primarily responsible for drafting national healthcare
policy and regulating public health, medical services, and health contingency system, coordinating
the healthcare reform, and overseeing the operation of medical institutions and practicing of
medical personnel.
The NHSA, a new authority established in May 2018, is responsible for drafting and
implementing policies, plans and standards on medical insurance, maternity insurance and medical
assistance; administering healthcare fund; formulating a uniform medical insurance catalogue and
payment standards on drugs, medical disposables and healthcare services; formulating and
administering the bidding and tendering policies for drugs and medical disposables.
Reform of the Drug Approval System
On August 9, 2015, the State Council promulgated the Opinions on the Reform of
Evaluation and Approval System for Drugs and Medical Devices (ᔼᐕኜ૛ᄲ൙ᄲ
จԈ) (the “ Reform O pinion s”), which established a framework for reforming the
evaluation and approval system for drugs and medical devices. The Reform Opinions indicated
enhancing the standard of approval for drug registration and accelerating the evaluation and
approval process for innovative drugs.
On March 4, 2016, the General Office of the State Council promulgated the Guiding
Opinions on Promoting the Sound Development of the Medical Industry (ආᔼᖹପุ਄ੰ
ኬจԈ), which aims to accelerate the development of innovative drugs and biological
products with major clinical needs, to speed up the promotion of green and intelligent
pharmaceutical production technologies, to strengthen scientific and efficient supervision, and to
promote the development of industrial internationalization.
REGULATORY OVERVIEW
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--- page 173 ---
On October 8, 2017, the General Office of Chinese Communist Party’s Central Committee
and the General Office of the State Council jointly issued the Opinions on Strengthening the
Reform of the Drug and Medical Device Review and Approval Process to Encourage Drug and
Medical Device Innovation (จԈ ) (the
“Innov ation O pinion s”), which seek to streamline the clinical trial process and shorten the time
line. The Innovation Opinions provided for special fast-track approval for new drugs and devices in
urgent clinical need, and drugs and devices for rare diseases.
On December 21, 2017, the CFDA promulgated the Opinions on Implementing Priority
Review and Approval to Encourage Drug Innovation (จ
Ԉ), which further clarified that a fast track clinical trial approval or drug registration pathway
will be available to innovative drugs. The Opinions on Implementing Priority Review and Approval
to Encourage Drug Innovation was replaced by the Announcement of NMPA on Promulgating
Three Documents including the Working Procedures for Evaluation of Breakthrough Therapy
Designation Drugs (Trial) (ᄲ൙ʈЪ೻ҏ ༊Бഃɧ
ʮѓ), which was issued and implemented on July 7, 2020, refined the requirements and
scope of the fast track, and the Opinions on Implementing Priority Review and Approval to
Encourage Drug Innovation was repealed simultaneously.
On May 17, 2018, the NMPA and NHC jointly promulgated the Circular on Issues
Concerning Optimizing Drug Registration Review and Approval (ൗ̅ᄲ൙ᄲҭϞ
ʮѓ), which further simplified and accelerated the clinical trial approval process.
On July 24, 2018, the NMPA promulgated the Circular on Adjusting Evaluation and
Approval Procedures for Clinical Trials for Drugs (ʮ
ѓ), which provides that if a clinical trial applicant does not receive any negative or questioned
opinions from the CDE within 60 days after the date when the trial application is accepted and the
fees are paid, the applicant can proceed with the clinical trial in accordance with the trial protocol
submitted to the Center for Drug Evaluation under the NMPA (the “ CDE”).
Regulation s in rel ation to the Re gistration of New Dru gs
Non-Clinical Research and Animal Testing
The non-clinical safety evaluation study for drugs for the purpose of applying for marketing
approval shall be conducted in accordance with the Administrative Measures for Good
Laboratories Practice for Non-Clinical Laboratory (Ӻሯඎ၍ଣ஝ᇍ ), which was
promulgated on August 6, 2003 and revised on July 27, 2017 by the CFDA. On April 16, 2007, the
State Food and Drug Administration, the predecessor of the CFDA, or the “SFDA” (before March
2013) issued the Circular on Measures for Certification of Good Laboratory Practice for
Non-Clinical Laboratory ( ), last amended on
January 19, 2023 and will come into effect on July 1, 2023, which sets forth the requirements for an
institution to apply for a Certification of Good Laboratory Practice to undertake drug non-clinical
research.
The State Science and Technology Commission, now known as the Ministry of Science and
Technology, promulgated the Regulations for the Administration of Affairs Concerning
Experimental Animals (၍ଣૢԷ) on November 14, 1988, which were most recently
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amended by the State Council on March 1, 2017. The State Science and Technology Commission
and the State Bureau of Quality and Technical Supervision jointly promulgated the Administration
Measures on Good Practice of Experimental Animals () on December
11, 1997. The Ministry of Science and Technology and other regulatory authorities promulgated
the Administrative Measures on the Certificate for Experimental Animals (Trial)
(༊Б) on December 5, 2001. All of these laws and regulations
require a Certificate for Use of Laboratory Animals for performing experimentation on animals.
Clinical Trial Application
According to the Administrative Measures for Drug Registration ()
(the “ Registration Me asure s”), which was promulgated on February 28, 2005 and last amended
on January 22, 2020 and took effect on July 1, 2020, the CDE is responsible for the application of
conducting new drug clinical trials. According to Registration Measures, drug clinical trials shall
be divided into Phase 1 clinical trial, Phase 2 clinical trial, Phase 3 clinical trial, Phase 4 clinical
trial, and bioequivalence trial.
After obtaining the clinical trial authorization from the NMPA, the applicant must register
the clinical trial at the Drug Clinical Trial Information Platform for public disclosure in
accordance with the Announcement on Drug Clinical Trial Information Platform (ᑗґ
ʮѓ), which came into effect on September 6, 2013. The applicant shall
complete the pre-registration within one month after obtaining the clinical trial authorization and
complete follow-up registrations before the first subject’s enrollment in the trial.
Conduction of Clinical Trial and the Communication with CDE
Clinical trials must be conducted in accordance with the Announcement on Good Clinical
Practice for Drug Trials (ᑗґ༊᜕ሯඎ၍ଣ஝ᇍ), which was promulgated by the NMPA
and NHC on April 23, 2020 and took effect on July 1, 2020, which also sets forth the requirements
for conducting the clinical trial, including preparation of clinical trials, clinical trial protocol,
duties of the sponsor and investigators and protection of the trial subjects.
The drug clinical trial institution refers to institutions that have the conditions to conduct
clinical trials in accordance with the requirements of the Good Clinical Practice for Drug Trials
(the “ GCP”) and relevant technical guidelines for clinical trials according to the Regulations for
the Administration of Drug Clinical Trial Institutions (), which was
promulgated by the NMPA and NHC on November 29, 2019 and came into effect on December 1,
2019.
According to the Registration Measures, applicants could communicate with the CDE the
key issues before applying for drug clinical trials, through the clinical trials, before applying for
marketing authorization, or during other key stages. According to the Administrative Measures for
Communication on the Research, Development and Technical Evaluation of Drugs (೯ၾ
), promulgated by the CDE on December 10, 2020, during the
research and development periods and in the registration applications of drugs, the applicants may
propose to conduct the communication session with the CDE. The communication session can be
classified into three types. Type 1 meetings are convened to address key safety issues in clinical
trials of drugs and key technical issues in the research and development of breakthrough
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therapeutic drugs. Type 2 meetings are held during the key research and development periods of
drugs, mainly including meetings before the Investigational New Drug application (the “ IND”),
meetings upon the completion of Phase 2 trials and before the commencement of Phase 3 trials,
meetings before submitting a marketing application for a new drug, and meetings for risk
evaluation and control. Type 3 meetings refer to meetings not classified as Type 1 or Type 2.
Regulations relating to Multi-Regional Clinical Trials and Acceptance of Overseas Clinical
Trial Data
The International Multi-Center Clinical Trial Guidelines (Trial), or the Multi-Center
Clinical Trial Guidelines, which was promulgated by the CFDA in January 2015 and came into
effect in March 2015, provided guidance on the implementation of Multi- Regional Clinical Trials,
or the MRCT, in China. According to the Multi-Center Clinical Trial Guidelines, international
multi-center clinical trial applicants may simultaneously perform clinical trials in different centers
using the same clinical trial protocol. Where the applicants plan to implement the international
multi-center clinical trials in the PRC, the applicants shall comply with relevant laws and
regulations, such as the Drug Administration Law, the Implementing Regulations of the Drug
Administration Law and the Registration Measures, execute the GCP Rules, make reference to
universal international principles such as the ICH-GCP and comply with the laws and regulations
of the countries involved in the international multi-center clinical trials. Where the applicants plan
to use the data derived from the international multi-center clinical trials for approval of a drug
registration in the PRC, it shall involve at least two countries, including China, and shall satisfy the
requirements for clinical trials set forth in the Multi-Center Clinical Trial Guidelines, Registration
Measures and other related laws and regulations.
In April 2020, the NMPA and the NHC promulgated the Revised GCP Rules, which came
into effect in July 2020. The Revised GCP Rules summarize the requirements for initiating an
MRCT, that is, before initiating an MRCT: (i) the applicant shall ensure that all the centers
participating in the clinical trial comply with the trial protocol; (ii) the applicant shall provide each
center with the same trial protocol, and each center shall comply with the same unified evaluation
criterion for clinical trial and laboratory data and the same guidance for case report form; (iii) each
center shall use the same case report form to record the data of each human subject obtained during
the trial; (iv) before initiating a clinical trial, a written document is required to specify the
responsibilities of the investigators of each center; and (v) the applicant shall ensure the
communication among the investigators of each center.
Data derived from international multi-center clinical trials can be used for the new drug
applications with the NMPA. When using international multi-center clinical trial data to support
new drug applications in China, applicants shall submit the completed global clinical trial report,
statistical analysis report and database, along with relevant supporting data in accordance with the
content and format requirements under the International Conference on Harmonization-Common
Technical Document. Subgroup research results summary and comparative analysis shall also be
conducted concurrently. Leveraging the clinical trial data derived from international multi-center
clinical trials conducted by our partners, we may avoid unnecessarily repetitive clinical trials and
thus further accelerate the NDA process in China.
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The CFDA released the Decision on Adjusting Items concerning the Administration of
Imported Drug Registration in October 2017, which includes the following key points:
• If the International Multicenter Clinical Trial, or the IMCCT, of a drug is conducted
in China, Phase I clinical trial of the drug is allowed simultaneously. The IMCCT
drug does not need to be approved or to enter into either a Phase II or III clinical trial
in a foreign country, except for preventive biological products;
• If the IMCCT is conducted in China, the application for drug marketing authorization
can be submitted directly after the completion of the IMCCT. The Registration
Measures and relevant laws and regulations shall be complied with for registration
application;
• With respect to applications for the clinical trial and marketing of the imported
innovative chemical drugs and therapeutic biological products, the marketing
authorization in the country or region where the foreign drug manufacturer is located
will not be required; and
• With respect to drug applications that have been accepted before the release of this
Decision, if relevant requirements are met, importation permission can be granted if
such applications request exemption of clinical trials for the imported drugs based on
the data generated from the IMCCT.
New Drug Application
Pursuant to Registration Measures, upon completion of clinical trials, determination of
quality standards, completion of validation of commercial-scale production processes, and
preparation for acceptance of verification and inspection for drug registration, the applicant may
apply to the NMPA for approval of NDA. The NMPA then determines whether to approve the
application according to applicable laws and regulations. The applicant must obtain approval of
NDA before the drugs can be manufactured and sold in the China market. According to
Registration Measures, for (1) drugs which are used for the treatment of severe life-threatening
diseases currently lacking effective treatment and the data of clinical trials can confirm the
efficacy and forecast the clinical value of the drugs; (2) drugs which are urgently needed for public
health and data of clinical trials can reveal the efficacy and forecast the clinical value of the drugs;
(3) vaccines which are urgently needed to deal with major public health emergencies or other
vaccines which the NHC deems to be urgently needed, and the benefit is assessed outweigh the
risk, such drugs can apply for conditional approval.
Reclassification of Drugs
According to the Registration Measures, drug marketing registration applications shall be
subject to three categories, namely traditional Chinese drugs, chemical drugs and biological
products. Among them, the registration applications of chemical drugs shall be categorized by
innovative chemical drugs, improved new chemical drugs, generic chemical drugs, etc.
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On March 4, 2016, the CFDA issued the Reform Plan for Registration Category of Chemical
Drugs ( ) (the “ Dru g Recl assific ation Pl an”), which outlined
the reclassifications of drug applications. Under the Drug Reclassification Plan, Category 1 refers
to new drugs that have not been marketed anywhere in the world containing a new compound with
a specific structure, pharmacological effects and clinical value. Improved new drugs that are not
marketed anywhere in the world fall into Category 2, which refers to drugs with obvious clinical
advantages that is optimized on the basis of known active ingredients in terms of structure, dosage
form, prescription technology, route of drug administration and indications, etc.. Generic drugs,
that have equivalent quality and efficacy to the originator’s drugs have been marketed abroad but
not yet in China, fall into Category 3. Generic drugs, that have equivalent quality and efficacy to
the originator’s drugs and have been marketed in China, fall into Category 4. Category 5 drugs are
drugs which have already been marketed abroad but are not yet approved in China. The Chemical
Drug Registration Classification and Application Data Requirements (ൗ̅ʱᗳʿ͡జ
Ӌ) which was promulgated by NMPA on June 29, 2020, and took effect on July 1, 2020,
reaffirmed the principles of the classification of chemical drugs set forth by the Reform Plan for
Registration Category of Chemical Drugs, and made minor adjustments to the subclassifications of
Category 5. According to such rule, Category 5.1 are innovative chemical drugs and improved new
chemical drugs while Category 5.2 are generic chemical drugs, all of which shall have been already
marketed abroad but not yet approved in China.
On June 29, 2020, the NMPA issued the Registration Category of Biological Products and
the Data Requirements for Declaration (Ӌ ), which took effect
on July 1 2020 stipulated that the therapeutic biological products should be classified into 3
categories, in which Category 1 refers to therapeutic biological products that have not been
marketed anywhere in the world; Category 2 refers to improved new therapeutic biological
products; and, Category 3 refers to therapeutic biological products that have been marketed in
China or abroad.
Prioritized Examination and Approval for Registration of Certain Drugs
On November 11, 2015, the CFDA promulgated the Circular Concerning Several Policies on
Drug Registration Review and Approval (ʮѓ ), which
provides that a fast track clinical trial approval or drug registration pathway can be available for
the applications for certain drugs, including the registration of innovative new drugs treating HIV ,
cancer, serious infectious diseases and orphan diseases; and registration of pediatric drugs, etc.
On July 7, 2020, the NMPA promulgated the Announcement on Promulgating Three
Documents Including the Working Procedures for the Evaluation of Breakthrough Therapy
Designation Drugs (Trial), which stipulates that during clinical trial period, innovative drugs or
modified new drugs that are used to prevent and treat the disease that is serious life-threatening or
severely affecting the quality of life and there is no effective prevention and treatment method, or
compared with existing treatment methods that have sufficient evidence to show that they have
obvious clinical advantages, then any applicant can apply for breakthrough therapeutic drug
programs during Phase 1 and 2 clinical trials, but usually no later than the commencement of Phase
3 clinical trials.
On 23 October 2018, the NMPA and NHC jointly issued the Notice regarding Relevant
Matters on the Review and Approval of Overseas New Drugs with Urgent Clinical Needs (ᑗ
ʮѓ ), which provided a special approval system for the
following new drugs with urgent clinical needs that have been marketed in the United States,
Europe or Japan within the last decade: (1) drugs for rare diseases; (2) drugs for serious or
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life-threatening diseases that lack effective treatment or prevention methods; (3) drugs for serious
or life-threatening diseases with distinctive treatment advantages.
Special Examination and Approval Procedures
On November 18, 2005, the SFDA promulgated the Procedures of the SFDA for the Special
Examination and Approval of Drugs (तйᄲҭ೻ҏ ), which
stipulates that in the case of any threatening or actual public health emergency, the SFDA shall take
a series of measures to facilitate the approval procedures so that the drugs needed in responding to
the public health emergency can be approved as soon as possible.
Marketing Authorization Holder System
Pursuant to the PRC Drug Administration Law, which was promulgated on September 20,
1984 by the Standing Committee of the National People’s Congress and recently revised on August
26, 2019, and came into effect on December 1, 2019, the Drug Marketing Authorization Holder
Mechanism (the “ MAH Sy stem”) is applicable throughout the country. Under the MAH System,
domestic drug research and development institutions and enterprises are eligible to be holders of
drug registrations. The legal representative and the key person-in-charge of a drug marketing
authorization holder shall be fully responsible for the quality of drugs. And holders of drug
registrations shall establish a pharmaceutical quality assurance system, equipped with specialized
staff solely responsible for the quality of medicines management.
Sampling and Collecting Human Genetic Resources Filing
On June 10, 1998, the Ministry of Science and Technology and the Ministry of Health
promulgated the Interim Administrative Measures on Human Genetic Resources ( ɛᗳ፲ෂ༟๕
), which established the rules for protecting and utilizing human genetic resources
in the PRC. According to the Service Guide for Administrative Licensing Items concerning
Examination and Approval of Sampling, Collecting, Trading or Exporting Human Genetic
Resources, or Taking Such Resources out of the PRC ( ɛᗳ፲ෂ༟๕મණeϗණe൯ርëɹe
 ) issued by the Ministry of Science and Technology on July 2,
2015 and the Circular on Implementing the Approval of Sampling, Collecting, Trading or
Exporting Human Genetic Resources (ɛᗳ፲ෂ༟๕મණeϗණe൯ርëɹëྤ
) issued by the Ministry of Science and Technology on August 24, 2015, the
sampling and collection of human genetic resources through clinical trials by a foreign-invested
sponsor shall be required to be filed with the China Human Genetic Resources Management Office
through the online system. On October 26, 2017, the Ministry of Science and Technology
promulgated the Circular on Optimizing the Administrative Examination and Approval of Human
Genetic Resources ( ), which simplifies the
approval of sampling and collecting human genetic resources for the purpose of marketing a drug
in the PRC.
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The Regulations of the PRC on the Administration of Human Genetic Resources ( ʕശɛ͏΍
ձ਷ɛᗳ፲ෂ༟๕၍ଣૢԷ) promulgated by the State Council on May 28, 2019 and implemented
on July 1, 2019, stipulates that in order to obtain marketing authorization for relevant drugs and
medical devices in China, no approval is required in international clinical trial cooperation using
China’s human genetic resources at clinical institutions without exporting of human genetic resource
materials. However, the two parties shall file the type, quantity and usage of the human genetic
resource to be used with the administrative department of science and technology under the State
Council before clinical trials. On March 21, 2022, the Ministry of Science and Technology issued the
Implementing Rules of the Administrative Regulations on Human Genetic Resources (for Public
Comments) (ᅄӋจԈᇃ) (the “ Hum an Genetic Re source s
Implementin g Rule s”) for public comments, which provided specific provisions on the collection,
preservation, utilization and external provision of human genetic resources of the PRC. As of the
Latest Practicable Date, the Human Genetic Resources Implementing Rules has not been officially
issued and implemented.
The Bio-security Law of the PRC () promulgated by the
Standing Committee of the National People’s Congress on October 17, 2020, and implemented on
April 15, 2021, provides that the State shall have sovereignty over the human genetic resources and
biological resources of China. The Bio-security Law of the PRC further stipulates that the
department of science and technology under the State Council shall be the competent authority for
the approval or filing of using China’s human genetic resources.
Administrative Protection and Monitoring Periods for New Drugs
According to the Implementing Rules for PRC Drug Administration Law ( ʕശɛ͏΍ձ਷
ૢԷ) issued on March 2, 2019 and the Drug Reclassification Plan, the NMPA
may, for the purpose of protecting public health, provide for an administrative monitoring period
of five years for new Category 1 drugs approved to be manufactured, commencing from the date of
approval, to continually monitor the safety of those new drugs. During the monitoring period of a
new drug, the NMPA will not approve any other enterprises’ applications to manufacture or import
the said drug.
Regulation s in rel ation to the M anuf acturin ga nd Supply of Dru gs
Drug Manufacturing Permit
Pursuant to the PRC Drug Administration Law, a drug manufacturer must obtain a Drug
Manufacturing Permit from the NMPA before it starts to manufacture drug products. Prior to
granting such permit, the relevant government authority will inspect the applicant’s production
facilities, and decide whether the sanitary conditions, quality assurance system, management
structure and equipment within the facilities have met the required standards. And according to the
Implementing Rules for PRC Drug Administration Law and the Measures on the Supervision and
Administration of the Manufacture of Drugs () last amended in January
2020 and came into effect in July 2020, each Drug Manufacturing Permit is valid for a period of
five years and the manufacturer is required to apply for renewal of the permit within six months
prior to its expiration date and will be subject to reassessment by the authority in accordance with
then prevailing legal and regulatory requirements for the purposes of such renewal.
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Good Manufacturing Practice
The drug manufacturer must conduct the manufacturing process according to the Good
Manufacturing Practice for Drugs (͛ପሯඎ၍ଣ஝ᇍ) (2010 version) issued by the
Ministry of Health on January 17, 2011, which sets forth the requirements on the manufacturer’s
organization and staff qualifications, manufacture premises and facilities, equipment, hygiene
conditions, manufacture management, product management, maintenance of sales records and the
procedure of handling customer complaints and adverse reaction reports.
On August 2, 2011, the SFDA issued the Circular on Printing and Distributing the
Administrative Measures for the Certification of Good Manufacturing Practice (͛
 ), which provided that newly established drug
manufacturers, or existing drug manufacturers that wish to expand manufacturing scope or build
new workshops shall apply for the Good Manufacturing Practice certification (the “ GMP
certific ation ”) in accordance with the Drug Administration Law Implementing Regulations
(ૢԷ ). Those drug manufacturers that have already obtained the GMP
certificates shall re-apply for the GMP certification within six months prior to the expiration date
of the GMP certificates. On December 30, 2015, the CFDA issued the Notice on Effectively
Implementing the Good Manufacturing Practice (͛ପሯඎ၍ଣ஝ᇍϞ
), which provided that those drug manufacturers that failed to obtain the GMP
certificates shall not be granted the drug manufacturing license.
On November 29, 2019, the NMPA issued the Announcement on Matters relating to the
Implementation of the Drug Administration Law of the PRC (ʕശɛ͏΍ձ਷ᖹ
ʮѓ), which confirmed that the GMP certification would be cancelled
from December 1, 2019, and no application for GMP certification would be accepted and no GMP
certificate would be granted. However, according to the Drug Administrative Law, drug
manufacturers shall still comply with the GMP, establish and improve the GMP system, and ensure
the whole drug production process consistently in compliance with statutory requirements.
On May 24, 2021, the NMPA issued the Administrative Measures for Drug Inspection
(Trial) (༊Б) which became effective on the same day, and the
Administrative Measures for the Certification of Good Manufacturing Practice (͛ପሯඎ၍
) was repealed. The Administrative Measures for Drug Inspection (Trial)
provided that onsite inspections shall be conducted pursuant to the GMP on a drug manufacturer
applying for the drug manufacturing license for the first time, while for the drug manufacturers
applying for the renewal of drug manufacturing licenses, the review shall be conducted based on
the risk management principles, in combination with the drug manufacturers’ compliance with the
laws and regulations of drug administration, and the operation of the GMP and quality
management system, and inspections on the drug manufacturers’ conformity to the GMP may be
conducted where necessary.
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Contract Manufacturing of Drugs
Pursuant to the Administrative Regulations for the Contract Manufacturing of Drugs (ۜ
 ) issued by the CFDA on August 14, 2014 (the “ Contr act
Manuf acturin g Regulation s”), in the event a drug manufacturer in China that has obtained a drug
marketing authorization temporarily lacks manufacturing conditions as a result of technology
upgrade or is unable to ensure market supply due to insufficient manufacturing capabilities, it can
entrust the manufacturing of that drug to another domestic drug manufacturer. Such contract
manufacturing arrangements needs to be approved by the provincial branch of the CFDA. The
Contract Manufacturing Regulations prohibit the contract manufacturing arrangement of certain
special drugs, including narcotic drugs, psychoactive drugs, biochemical drugs and active
pharmaceutical ingredients.
The PRC Drug Administration Law specifies that drug marketing authorization holders may
produce drugs by themselves or entrust drug manufacturers with the production of such drugs. A
drug marketing authorization holder that intends to manufacture drugs on its own shall obtain a
drug manufacturing permit; if it intends to manufacture drugs on a commissioned basis, it shall
entrust a qualified drug manufacturer. Drug marketing authorization holders and the commissioned
manufacturers shall enter into an entrustment agreement and a quality agreement, and strictly
perform the obligations under such agreements. Blood products, anesthetics, psychotropic
pharmaceuticals, toxic pharmaceuticals for medical treatment, and pharmaceutical precursor
chemicals may not be produced through entrustment, except as otherwise prescribed by the
department of drug supervision and administration of the State Council.
Drug Operation Permit
According to the Drug Administration Law, the Provisions for Supervision and
Administration of Drug Distribution (), which was issued by the SFDA
on January 31, 2007 and came into effect on May 1, 2007, detailed provisions are imposed on
aspects such as the purchase, sale, transportation and storage of medicines. The engagement of a
wholesale pharmaceutical distribution of a company requires the approval of the provincial
medicine administrative authorities. Upon approval, the authority will grant a Drug Operation
Permit in respect of the wholesale drugs distribution company. The grant of such permit is subject
to an inspection of the operator’s facilities, warehouse, hygiene environment, quality control
systems, personnel (including of whether pharmacists and other professionals have the relevant
qualifications) and equipment. Under the Measures on the Administration of Drug Operation
Permit () promulgated on February 4, 2004 and became effective
from April 1, 2004 and amended on November 17, 2017 by the NMPA, a Drug Operation Permit is
valid for five years. Each holder of the Drug Operation Permit must apply for an extension of its
permit six months prior to expiration, and extensions are granted only after a reexamination of the
permit holder by the authority which issued the permit.
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Good Supply Practices
According to the Good Supply Practice for Drugs (຾ᐄሯඎ၍ଣ஝ᇍ) (the “ Goo d
Supply Pr actice ”) newly amended by the CFDA on July 13, 2016, drug distributors shall strictly
implement the Good Supply Practice. Enterprises shall take effective measures for quality control
at such stages as procurement, storage, sales and transportation of drugs to ensure the quality of
drugs and shall develop a drug traceability system as per relevant requirements of the state to
realize the traceability of drugs. In addition, the CFDA revised the Guidelines for On-site
Inspection of Drug Operation and Quality Management Specifications (຾ᐄሯඎ၍ଣ஝ᇍ
) in 2016, in order to further regulate the organization of the supervision and
inspection of drug distributors.
Regulation s in rel ation to the Me dicalI n surance Pro gram
Coverage of the national medical insurance program
The national medical insurance program was first adopted according to the Decision of the
State Council on the Establishment of the Urban Employee Basic Medical Insurance Program
( ) issued by the State Council on
December 14, 1998, under which all employers in urban cities are required to enroll their
employees in the basic medical insurance program and the insurance premium is jointly
contributed by the employers and employees. On July 10, 2007, the State Council issued the
Guiding Opinions of the State Council about the Pilot Urban Resident Basic Medical Insurance
(ኬจԈ ), further enlarged the coverage of
the basic medical insurance program, under which urban residents of the pilot district, rather than
urban employees, may voluntarily join Urban Resident Basic Medical Insurance. In addition, on
January 3, 2016, the Opinions of the State Council on Integrating the Basic Medical Insurance
Systems for Urban and Rural Residents (จԈ )
issued by the State Council required the integration of the urban resident basic medical insurance
and the new rural cooperative medical care system and the establishment of a unified basic medical
insurance system, which will cover all urban and rural residents other than rural migrant workers
and persons in flexible employment arrangements who participate in the basic medical insurance
for urban employees.
Medical Insurance Catalogue
According to the Interim Measures for the Administration of Use of Drugs Covered by the
Basic Medical Insurance ( ), which promulgated by the NHSA,
on July 30, 2020 and took effect on September 1, 2020, the scope of drugs covered by the basic
medical insurance shall be administered through a reimbursement drug list.
The National Drug Catalog for Basic Medical Insurance, Work-related Injury Insurance and
Maternity Insurance (ͦ፽ ), or the National
Reimbursement Drug List, or the NRDL, which promulgated by the NHSA and the Ministry of
Human Resources and Social Security (the “ MOHRSS ”), on January 13, 2023 and took effect on
March 1, 2023, sets forth the payment standard for pharmaceutical products under the basic
medical insurance, work-related injury insurance and maternity insurance funds. The local
government shall strictly implement the National Drug Catalog, and shall not adjust the contents
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contained in the Catalogue at their own discretion. Medicines listed in the NRDL are divided into
two parts, List A and List B. List A drugs are widely used clinical treatments with good efficacy
and lower prices compared to similar drugs, while List B drugs are clinical treatments with good
efficacy and slightly higher prices compared to List A drugs.
According to the Interim Measures for the Administration of Use of Drugs Covered by the
Basic Medical Insurance, a Provincial Reimbursement Drug List (“ PRDL ”) must be made by the
provincial healthcare security authorities. The provincial healthcare security authorities have the
right to add ethnic drugs and preparations of medical institutions as List B drugs in the PRDL in
accordance with relevant rules.
According to the Interim Measures for the Administration of Use of Drugs Covered by the
Basic Medical Insurance, patients purchasing List A drugs can directly obtain reimbursement
under the basic medical insurance program. Patients purchasing List B drugs shall pay a certain
percentage of the purchase price first and then obtain reimbursement under the basic medical
insurance program.
National Essential Drug List
On August 18, 2009, the Ministry of Health (the “ MOH”) and eight other ministries and
commissions in the PRC issued the Provisional Measures on the Administration of the National
Essential Drug List (ᅲБ), which was revised by NHFPC on
February 13, 2015, and the Guidelines on the Implementation of the National Essential Drug List
System (จԈ ), which aims to promote essential medicines
sold to consumers at fair prices in the PRC and ensure that the general public in the PRC has equal
access to the drugs contained in the National Essential Drug List. NHC promulgated the National
Essential Drug List (2018) (ͦ፽2018), the “ Nation alE ssenti al Dru g
List”) on September 30, 2018, replacing the National Essential Drug List (2012) (ي
ͦ፽2012) which was promulgated on March 13, 2013. According to these regulations,
basic healthcare institutions funded by government, which primarily include county-level
hospitals, county-level Chinese medicine hospitals, rural clinics and community clinics, shall store
up and use drugs listed in National Essential Drug List. The drugs listed in National Essential Drug
List shall be purchased by centralised tender process and shall be subject to the price control by the
National Development and Reform Commission of the PRC (։
ึ). Remedial drugs in the National Essential Drug List are all listed in the Medical Insurance
Catalogue and the entire amount of the purchase price of such drugs is entitled to reimbursement.
Regulation s in rel ation to the Price Control and Two-invoice Sy stem
Instead of direct price controls which were historically used in China, the government
regulates prices mainly by establishing a consolidated procurement mechanism, revising medical
insurance reimbursement standards, and strengthening regulation of medical and pricing practices.
According to the Notice on Issuing Certain Regulations on the Trial Implementation of
Centralized Tender Procurement of Drugs by Medical Institutions (ᅺમᒅ
) promulgated on July 7, 2000 and the Notice on Further Improvement on the
Implementation of Centralized Tender Procurement of Drugs by Medical Institutions (ආɓ
 ) promulgated on July 23, 2001, not-for-profit
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medical institutions established by county or higher level government are required to implement
centralized tender procurement of drugs.
The Ministry of Health promulgated the Working Regulations of Medical Institutions for
Procurement of Drugs by Centralized Tender and Price Negotiations (Trial) (ණʕ
ᅺમᒅձණʕᙄᄆમᒅʈЪ஝ᇍ ༊Б) on March 13, 2002, which provides rules for the
tender process and negotiations of the prices of drugs, operational procedures, a code of conduct
and standards or measures of evaluating bids and negotiating prices. According to the Notice on the
Issue of Opinions on Further Regulating Centralized Procurement of Drugs by Medical Institutions
() promulgated by the MOH
and five other ministries and commissions on January 17, 2009, not-for-profit medical institutions
owned by the government at the county level or higher or owned by state-owned enterprises
(including state-controlled enterprises) shall purchase pharmaceutical products by online
centralized procurement. Each provincial government shall formulate its catalogue of drugs
subject to centralized procurement. Except for drugs in the National List of Essential Drugs (the
procurement of which shall comply with the relevant rules on National List of Essential Drugs),
certain pharmaceutical products which are under the national government’s special control, such as
toxic, radioactive and narcotic drugs and traditional Chinese medicines, in principle, all drugs used
by not-for-profit medical institutions shall be covered by the catalogue of drugs subject to
centralized procurement. The Opinions of the General Office of the State Council on Improvement
of the Policy of Production, Circulation and Use of Drugs (ҁഛᖹ
ʍจԈ ) promulgated on January 24, 2017 by the General Office of the
State Council aims to deepen the reform of medicine health system, improve the quality of the drug
and regulate the distribution and use of the drug. The Notice of the General Office of the State
Council on Issuing Pilot Plan of Centralized Procurement and Use of the Drug Organized by the
State ( ) promulgated on
January 1, 2019 aims to improve the pricing mechanism of the drug, which also further regulates
the scope and mode of centralized procurement.
The centralized tender process takes the form of public tender operated and organized by
provincial or municipal government agencies. The centralized tender process is in principle
conducted once every year in the relevant province or city in China. The bids are assessed by a
committee composed of pharmaceutical and medical experts who will be randomly selected from a
database of experts approved by the relevant government authorities. The committee members
assess the bids based on a number of factors, including but not limited to, bid price, product
quality, clinical effectiveness, product safety, qualifications and reputation of the manufacturer,
after-sale services and innovation. Only pharmaceuticals that have won in the centralized tender
process may be purchased by public medical institutions funded by the governmental or
state-owned enterprise (including state-controlled enterprises) in the relevant region.
In order to further optimize the order of purchasing and selling pharmaceutical products and
reduce circulation steps, under the 2016 List of Major Tasks in Furtherance of the Healthcare and
Pharmaceutical System Reforms (ࠧ2016ᓃʈЪ΂ਕ) issued by the
General Office of the State Council on April 21, 2016, the “Two-invoice System” ( ՇୃՓ) is fully
implemented in the PRC. According to the Circular on Issuing the Implementing Opinions on
Carrying out the Two-invoice System for Drug Procurement among Public Medical Institutions
(for Trial Implementation) (จԈ
), which came into effect on December 26, 2016, the two-invoice system means one
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invoice between the pharmaceutical manufacturer and the pharmaceutical distributor, and one
invoice between the pharmaceutical distributor and the hospital, and thereby only allows a single
level of distributor for the sale of pharmaceutical products from the pharmaceutical manufacturer
to the hospital.
Regulation s in rel ation to Com pany E stabli shment and Forei gnI n v estment
Company Establishment
The establishment, operation and management of corporate entities in China are governed
by the Company Law of the PRC () (the “ Com pany L aw”), which was
promulgated by NPCSC on December 29, 1993 and became effective on July 1, 1994. It was
subsequently amended on December 25, 1999, August 28, 2004, October 27, 2005, December 28,
2013 and October 26, 2018. Pursuant to the Company Law, companies are classified into
categories, namely limited liability companies and limited companies by shares. The Company
Law shall also apply to foreign-invested limited liability companies and companies limited by
shares. According to the Company Law, the provisions otherwise prescribed by the laws on foreign
investment shall prevail.
The Company Law is the principal law governing dividend distributions of PRC companies.
PRC companies may pay dividends only out of their accumulated profits, if any, determined in
accordance with PRC accounting principles. In addition, PRC companies are required to set aside
each year at least 10% of their after-tax profit based on PRC accounting principles to their
statutory general reserves funds until the cumulative amount of such reserve fund reaches 50% of
their registered capital. These reserves or funds are not distributable as dividends. A PRC company
is not permitted to distribute any profits until any losses from prior fiscal years have been offset.
Profits retained from prior fiscal years may be distributed together with distributable profits from
the current fiscal year. Upon approval of the competent governmental authorities, foreign investors
may utilize RMB dividends to invest or re-invest in enterprises established in China.
Foreign Investment
The Foreign Investment Law of the People’s Republic of China ( ʕശɛ͏΍ձ਷̮ਠҳ༟
) (the “ FIL”), which was promulgated by the National People’s Congress on March 15, 2019
and came into effect on January 1, 2020, provides that the foreign investment refers to the
investment activities in China carried out directly or indirectly by foreign natural persons,
enterprises or other organizations, including the following: (1) Foreign Investors establishing
foreign-invested enterprises in China alone or collectively with other investors; (2) Foreign
Investors acquiring shares, equities, properties or other similar rights of Chinese domestic
enterprises; (3) Foreign Investors investing in new projects in China alone or collectively with
other investors; and (4) Foreign Investors investing through other ways prescribed by laws and
regulations or the State Council. The State adopts the management system of pre-establishment
national treatment and negative list for foreign investment. The pre-establishment national
treatment refers to granting to Foreign Investors and their investments, in the stage of investment
access, the treatment no less favorable than that granted to domestic investors and their
investments; the negative list refers to special administrative measures for access of foreign
investment in specific fields as stipulated by the State. The State will grant national treatment to
foreign investments outside the negative list. The negative list will be released by or upon approval
of the State Council.
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Foreign investment in China is subject to the Catalogue for the Encouraged Investment
Industries (2022 Edition) ( ོᎸ̮ਠҳ༟ପุͦ፽2022) issued on October 26, 2022 and
took effect on January 1, 2023, and the Special Administrative Measures for the Access of Foreign
Investment (Negative List) (2021 Edition) (૶ఊ2021)
issued on December 27, 2021 and took effect on January 1, 2022, which together comprise the
encouraged foreign-invested industries catalogue and the special administrative measures for the
access of foreign investments to the restricted or the prohibited foreign-invested industries. The
latter sets out restrictions such as percentage of shareholding and qualifications of senior
management. According to the Measures for the Reporting of Foreign Investment Information
() which took effective on January 1, 2020, foreign investments that are
not subject to special access administrative measures and are only required to complete an online
filing to the commerce departments.
Regulation s in rel ation to Intellectu alP r opertie s
Patents
According to the Patent Law of the PRC () promulgated by the
NPCSC on March 12, 1984, as amended on September 4, 1992, August 25, 2000, December 27,
2008 and October 17, 2020, and effective from June 1, 2021 and the Implementation Rules of the
Patent Law of the PRC ( ), promulgated by the State Council
on June 15, 2001 and as amended on December 28, 2002 and January 9, 2010, there are three types
of patents in the PRC: invention patents, utility model patents and design patents. The protection
period is 20 years for an invention patent, 10 years for a utility model patent and 15 years for a
design patent, commencing from their respective application dates. Any individual or entity that
utilizes a patent or conducts any other activity in infringement of a patent without prior
authorization of the patent holder shall pay compensation to the patent holder and is subject to a
fine imposed by relevant administrative authorities and, if constituting a crime, shall be held
criminally liable in accordance with the law.
According to the Amendments to the Patent Law of the PRC which became effective from
June 1, 2021, for the purpose of compensating for the time taken to evaluate and approve a new
drug to be put on market, the patent administrative department under the State Council shall grant
compensation for duration of patent rights for invention of a new drug approved to be put on
market in China upon request of the patentee. The compensation period shall not exceed five years,
and the total validity period of patent rights for a new drug approved to be put on market shall not
exceed 14 years.
Trade Secrets
According to the PRC Anti-Unfair Competition Law (),
promulgated by the NPCSC in September 1993, as amended in November 4, 2017 and April 23,
2019 respectively, the term “trade secrets” refers to technical, operational or other business
information that is unknown to the public, has utility, may create business interests or profits for its
legal owners or holders, and is maintained as a secret by its legal owners or holders. Under the PRC
Anti-Unfair Competition Law, business persons are prohibited from infringing others’ trade
secrets by: (1) obtaining the trade secrets from the legal owners or holders by any unfair methods
such as theft, bribery, fraud, coercion, electronic intrusion, or any other illicit means; (2)
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disclosing, using or permitting others to use the trade secrets obtained illegally under item (1)
above; (3) disclosing, using or permitting others to use the trade secrets, in violation of any
confidentiality obligations or any requirements of the legal owners or holders to keep such trade
secrets in confidence; or (4) instigate, entice or help others to obtain, disclose, use or permit others
to use the trade secrets in violation of any confidentiality obligations or any requirements of the
legal owners or holders to keep such trade secrets in confidence. If a third party knows or should
have known of the above-mentioned illegal conduct but nevertheless obtains, uses or discloses
trade secrets of others, the third party may be deemed to have committed an infringement of the
others’ trade secrets. The parties whose trade secrets are being infringed may petition for
administrative corrections, and regulatory authorities may stop any illegal activities and fine
infringing parties.
Trademarks
According to the Trademark Law of the PRC (), promulgated by
the NPCSC on August 23, 1982, amended on February 22, 1993, October 27, 2001, August 30,
2013 and April 23, 2019 and effective from November 1, 2019, the period of validity for a
registered trademark is 10 years, commencing from the date of registration. Upon expiry of the
period of validity, the registrant shall go through the formalities for renewal within twelve months
prior to the date of expiry, if intending to continue to use the trademark. Where the registrant fails
to do so, a grace period of six months may be granted. The period of validity for each renewal of
registration is 10 years, commencing from the day immediately after the expiry of the preceding
period of validity for the trademark. In the absence of renewal upon expiry, the registered
trademark shall be canceled. Industrial and commercial administrative authorities have the
authority to investigate any behavior in infringement of the exclusive right under a registered
trademark in accordance with the law. In case of a suspected criminal offense, the case shall be
timely referred to a judicial authority and decided according to law.
Copyright
Copyright in the PRC is primarily protected by the Copyright Law of the PRC ( ʕശɛ͏΍
), which was promulgated by the SCNPC on September 7, 1990, last amended on
November 11, 2020 and became effective on June 1, 2021, and Implementation Regulations of the
Copyright Law of PRC (ૢԷ ), which was promulgated by the
State Council on August 2, 2002 and last amended on January 30, 2013. These law and regulation
provide provisions on the classification of works and the obtaining and protection of copyright.
Domain Names
Domain names are protected under the Administrative Measures on the Internet Domain
Names () issued by the Ministry of Industry and Information Technology
(the “ MIIT ”), on August 24, 2017 and took effect from November 1, 2017, and the Implementing
Rules on Registration of National Top-level Domain Names ()
issued by China Internet Network Information Center and came into effective on June 18, 2019.
The MIIT is the main regulatory body responsible for the administration of PRC internet domain
names. Domain name registrations are handled through domain name service agencies established
under the relevant regulations, and the applicants become domain name holders upon successful
registration.
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Other Re gulation s in rel ation to Our Bu sine ss
Enterprise Income Tax and V alue Added Tax
According to the Enterprise Income Tax Law ( )
promulgated by the National People’s Congress on March 16, 2007, which became effective on
January 1, 2008 and was amended on February 24, 2017 and December 29, 2018, and the
Implementation Rules of the Enterprise Income Tax Law of the PRC (੻
ૢԷ) promulgated by the State Council on December 6, 2007, which became effective
on January 1, 2008, and amended on April 23, 2019, other than a few exceptions, the income tax
rate for both domestic enterprises and foreign-invested enterprises is 25%. Enterprises are
classified as either “resident enterprises” or “non-resident enterprises”. Besides enterprises
established within the PRC, enterprises established outside China whose “de facto management
bodies” are located in China are considered “resident enterprises” and subject to the uniform 25%
enterprise income tax rate for their global income. A non-resident enterprise refers to an entity
established under foreign law whose “de facto management bodies” are not within the PRC but
which have an establishment or place of business in the PRC, or which do not have an
establishment or place of business in the PRC but have income sourced within the PRC. An income
tax rate of 10% will normally be applicable to dividends declared to non-PRC resident enterprise
investors that do not have an establishment or place of business in the PRC, or that have such
establishment or place of business but the relevant income is not effectively connected with the
establishment or place of business, to the extent such dividends are derived from sources within the
PRC.
According to the Temporary Regulations on Value Added Tax of the PRC ( ʕശɛ͏΍ձ਷
೼ᅲБૢԷ) (the “ VAT R egulation s”), which was promulgated by the State Council on
December 13, 1993, came into effect on January 1, 1994, and was amended on November 10, 2008,
on February 6, 2016 and November 19, 2017 respectively, and the Detailed Rules for the
Implementation of the V AT Regulations ( ), which
was promulgated by the Ministry of Finance and came into effect on December 25, 1993 and was
amended on December 15, 2008 and October 28, 2011, all taxpayers selling goods, providing
processing, repairing or replacement services or importing goods within the PRC shall pay value
added tax. Other than those as specified in the V AT Regulations, the tax rate of 17% shall be levied
on general taxpayers selling or importing various goods; the tax rate of 17% shall be levied on the
taxpayers providing processing, repairing or replacement service; the applicable rate for the export
of goods by taxpayers shall be nil, unless otherwise stipulated. According to the Notice of the
Ministry of Finance and the State Administration of Taxation on Adjusting Value added Tax Rates
( ) issued on April 4, 2018 and became
effective on May 1, 2018, the deduction rates of 17% and 11% applicable to the taxpayers who
have V AT taxable sales activities or imported goods are adjusted to 16% and 10%, respectively.
According to the Notice of the Ministry of Finance, the State Administration of Taxation and the
General Administration of Customs on Relevant Policies for Deepening Value Added Tax Reform
(ʮѓ ) issued on March 20, 2019 and became effective on
April 1, 2019, the value added tax rate was reduced to 13% and 9%, respectively.
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According to an Arrangement Between the Mainland of China and the Hong Kong Special
Administrative Region for the Avoidance of Double Taxation and Prevention of Fiscal Evasion
with Respect to Taxes on Income (ᅄ೼ձԣ˟ਊဍ
τર) (the “ Double T axA v o idance Arr angement ”) issued on August 21, 2006, and other
applicable PRC laws, if a Hong Kong resident enterprise is determined by the competent PRC tax
authority to have satisfied the relevant conditions and requirements under such Double Tax
Avoidance Arrangement and other applicable laws, the 10% withholding tax on the dividends the
Hong Kong resident enterprise receives from a PRC resident enterprise may be reduced to 5%.
However, based on the Circular on Certain Issues with Respect to the Enforcement of Dividend
Provisions in Tax Treaties ( ) issued on February
20, 2009 by the SAT, if the relevant PRC tax authorities determine, in their discretion, that a
company benefits from such reduced income tax rate due to a structure or arrangement that is
primarily tax-driven, such PRC tax authorities may adjust the preferential tax treatment; and based
on the Announcement on Certain Issues with Respect to the “Beneficial Owner” in Tax Treaties
(ʮѓ ) issued by the SAT on
February 3, 2018 and effective from April 1, 2018, if an applicant’s business activities do not
constitute substantive business activities, it could result in the negative determination of the
applicant’s status as a “beneficial owner”, and consequently, the applicant could be precluded from
enjoying the above-mentioned reduced income tax rate of 5% under the Double Tax Avoidance
Arrangement.
Product Liability
The Product Quality Law of the PRC () promulgated by the
NPCSC on February 22, 1993 and amended on July 8, 2000, August 27, 2009 and December 29,
2018, is the principal governing law relating to the supervision and administration of product
quality, which clarified liabilities of the manufactures and sellers. Manufactures shall not be liable
when they are able to prove that: (1) the product has never been circulated; (2) the defects causing
injuries or damage did not exist at the time when the product was circulated; or (3) the science and
technology at the time when the product was circulated were at a level incapable of detecting the
defects. A seller shall pay compensation if it can neither indicate the manufacturer nor the supplier
of the defective product. A person who is injured or whose property is damaged by the defects in
the product may claim compensation from the manufacturer or the seller.
According to the Civil Code of PRC (Պ), promulgated by the NPC
on May 28, 2020 and effective on January 1, 2021, manufacturers shall assume tort liability where
the defects in relevant products cause damage to others. The aggrieved party may claim
compensation from the manufacturer or the seller of the relevant product in which the defects have
caused damage.
Safety Management Supervision
Pursuant to the Law on Work Safety of the PRC () (Order
No. 70 of the PRC President, effective on November 1, 2002 and amended on August 27, 2009,
August 31, 2014 and June 10, 2021 respectively), enterprises engaged in production activities must
strengthen safety production management, establish and improve the responsibility system for safe
production and ensure a safe production environment. The state establishes and implements a
system for the accountability of production safety accidents. If the company fails to comply with
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the provisions of the Law on Work Safety, the supervisory authority on production safety may issue
a rectification order, impose a fine, order the company to cease production and operation, or revoke
the relevant permit.
Some chemical materials needed for new drug research and development, such as toluene
and hydrochloric acid, are hazardous chemicals. Pursuant to the Regulations on Safety
Management of Hazardous Chemicals (τΌ၍ଣૢԷ) (Order No. 344 of the State
Council, effective on March 15, 2002 and amended on March 2, 2011 and December 7, 2013,
respectively), the production, storage, use, operation, and transportation of hazardous chemicals
must be in accordance with the safety management regulations. The hazardous chemical units shall
oblige to the safety conditions required by laws and administrative regulations and state and
industry standards, establish and improve safety management rules and post safety responsibility
systems, and provide safety education and legal education and occupation technical training for
employees. Employees should accept such education and training, and may begin working only
after qualifying the relevant assessment. Where it requires employees to have certain qualification
to assume a post, an enterprise shall only designated employees having such qualification to
assume the post.
Environmental Protection
According to the Environmental Protection Law of the PRC (ᚐ
), promulgated by the NPCSC on December 26, 1989 and amended on April 24, 2014, all
enterprises and institutions which discharge pollutants shall adopt measures to prevent and control
pollution and damage to the environment from waste gas, waste water, waste residues, medical
waste, dust, malodorous gases, radioactive substances, noise, vibration, ray radiation and
electromagnetic radiation generated in the course of production, construction or other activities.
The relevant authorities are authorized to impose various types of penalties on the persons or
entities in violation of the environmental regulations, including fines, restriction or suspension of
operation, shut-down, detention of office-in-charge, etc.
According to the Environmental Protection Law of the PRC, the Environmental Impact
Assessment Law of the PRC ( ), promulgated by the NPCSC on
October 28, 2002 and amended on July 2, 2016 and December 29, 2018 respectively, the
Administrative Regulations on the Environmental Protection of Construction Project (ணධͦ
ᚐ၍ଣૢԷ), promulgated by the State Council on November 29, 1998 and amended on
July 16, 2017, and other relevant environmental laws and regulations, enterprises which plan to
construct projects shall provide the environmental assessment reports, assessment form, or
registration form on the environmental impact of such projects with relevant environmental
protection administrative authority for approval or filing. Enterprises planning to construct
projects may entrust a technical entity to conduct environmental impact assessment and compose
assessment reports and assessment forms of the construction project. If the enterprise has the
technical capability of environmental impact assessment, it may conduct environmental impact
assessment of its construction project and prepare assessment reports and assessment form by
itself. Enterprises shall, after the completion of the construction project for which the
environmental assessment reports, assessment form is prepared, according to standards and
procedures prescribed by the environmental protection administrative department of the State
Council, conduct acceptance check of the constructed supporting environmental protection
facilities and prepare the acceptance check report.
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Pursuant to the Measures for Pollutant Discharge Permitting Administration (for Trial
Implementation) (༊Б) (Order No. 48 of the Ministry of Environmental
Protection, effective on January 10, 2018 and amended on August 22, 2019), enterprises,
institutions and other producers and operators (the “ pollut ant discharge enter prises”) that have
been included in the Classification Administration List of Pollutant Discharge Permitting for Fixed
Pollution Sources (๕રϮ஢̙ʱᗳ၍ଣΤ፽ ) shall apply for and obtain a discharge
permit in accordance with the prescribed time limit. The pollutant discharge enterprises that are
not included in the Classification Management List do not need to apply for a pollutant discharge
permit. The pollutant discharge enterprise shall hold a pollutant discharge permit in accordance
with the law and discharge pollutants in accordance with the discharge permit. Pursuant to the
Notice of the General Office of the State Council on Issuing the Implementation Plan for the
Permit System Controlling Pollutant Emission (஢̙Փ
) (No. 81 [2016] of the General Office of State Council, effective on November
10, 2016) and the Classification Administration List of Pollutant Discharge Permitting for Fixed
Pollution Sources (2019 Version) (๕રϮ஢̙ʱᗳ၍ଣΤ፽ 2019) (Order No.
11 of the Ministry of Ecology and Environment, the State implements focused, simplified and
registered management of emission permits based on factors such as the amount of pollutants
produced by enterprises and other production operators discharging pollutants, the amount of their
emissions and the impact on the environment.
Labor and Social Insurance
According to the PRC Labor Law (), which was promulgated by
the NPCSC on July 5, 1994 and effective from January 1, 1995, and amended on August 27, 2009
and December 29, 2018 respectively, the PRC Labor Contract Law ( ʕശɛ͏΍ձ਷௶ਗΥΝ
), which was promulgated by the NPCSC on June 29, 2007 and effective from January 1, 2008,
and amended on December 28, 2012 and effective from July 1, 2013, and the Implementing
Regulations of the Employment Contracts Law of the PRC (ૢ
Է), which was promulgated by the State Council on September 18, 2008, labor contracts in
written form shall be executed to establish labor relationships between employers and employees.
In addition, wages cannot be lower than local minimum wage. The employers must establish a
system for labor safety and sanitation, strictly abide by State rules and standards, provide
education regarding labor safety and sanitation to its employees, provide employees with labor
safety and sanitation conditions and necessary protection materials in compliance with State rules,
and carry out regular health examinations for employees engaged in work involving occupational
hazards.
According to the Social Insurance Law of PRC (), which was
promulgated by the NPCSC on October 28, 2010 and effective from July 1, 2011, and amended on
December 29, 2018, the Interim Regulations on the Collection and Payment of Social Security
Funds (ᎈ൬ᅄᖮᅲБૢԷ), which was promulgated by the State Council on January 22,
1999 and amended on March 24, 2019, and the Regulations on the Administration of Housing
Provident Funds (၍ଣૢԷ), which was promulgated by the State Council on April
3, 1999 and amended on March 24, 2002 and March 24, 2019, employers are required to contribute,
on behalf of their employees, to a number of social security funds, including funds for basic
pension insurance, unemployment insurance, basic medical insurance, occupational injury
insurance, maternity insurance and to housing provident funds. Any employer who fails to
contribute may be fined and ordered to make good the deficit within a stipulated time limit.
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Foreign Exchange Control
The principal regulations governing foreign currency exchange in China are the Foreign
Exchange Administration Regulations of the PRC ( ʕശɛ͏΍ձ਷̮ි၍ଣૢԷ ) which was
promulgated by the State Council on January 29, 1996, became effective on April 1, 1996 and was
subsequently amended on January 14, 1997 and August 5, 2008 and the Regulations on the
Administration of Foreign Exchange Settlement, Sale and Payment ( ഐිeਯිʿ˹ි၍ଣ஝
) which was promulgated by PBOC on June 20, 1996 and became effective on July 1, 1996.
Pursuant to these regulations and other PRC rules and regulations on currency conversion,
Renminbi is freely convertible for payments of current account items, such as trade and
service-related foreign exchange transactions and dividend payments, but not freely convertible
for capital account items, such as direct investment, loan or investment in securities outside China
unless prior approval of the SAFE or its local counterpart is obtained.
Foreign-invested enterprises are permitted to convert their after-tax dividends into foreign
exchange and to remit such foreign exchange out of their foreign exchange bank accounts in the
PRC. However, foreign exchange transactions involving overseas direct investment or investment
and exchange in securities, derivative products abroad are subject to registration with SAFE and
approval from or filing with the relevant PRC government authorities (if necessary).
SAFE promulgated the Notice on Reforming the Administration of Foreign Exchange
Settlement of Capital of Foreign-invested Enterprises (ഐි
)( “ SAFE Circul ar1 9 ”) on March 30, 2015, further expanding the extent of
convertibility under direct investment. SAFE Circular 19 stipulates that the use of capital funds
and exchange settlement funds by foreign-invested enterprises shall be subject to foreign exchange
management regulations, and implement negative list management.
On June 9, 2016, the SAFE promulgated the Circular on Reforming and Regulating Policies
on the Management of the Settlement of Foreign Exchange of Capital Accounts (̮ි၍ଣ҅
 ) (the “ SAFE Circul ar1 6 ”). The SAFE Circular
16 unifies the policies of Discretional Foreign Exchange Settlement for all the domestic
institutions. The Discretional Foreign Exchange Settlement means that the foreign exchange
capital in the capital account which has been confirmed by the relevant policies subject to the
Discretional Foreign Exchange Settlement (including foreign exchange capital, foreign loans and
funds remitted from the proceeds from the overseas listing) can be settled at the banks based on the
actual operational needs of the domestic institutions. The proportion of Discretional Foreign
Exchange Settlement of the foreign exchange capital is temporarily determined as 100%.
Violations of SAFE Circular 19 or SAFE Circular 16 could result in administrative penalties in
accordance with the Regulations of the People’s Republic of China on Foreign Exchange Control
and relevant provisions.
Furthermore, SAFE Circular 16 stipulates that the use of foreign exchange incomes of
capital accounts by foreign-invested enterprises shall follow the principles of authenticity and
self-use within the business scope of enterprises. The foreign exchange incomes of capital
accounts and capital in Renminbi obtained by the FIE from foreign exchange settlement shall not
be used for the following purposes: (i) directly or indirectly used for the payment beyond the
business scope of the enterprises or the payment prohibited by relevant laws and regulations; (ii)
directly or indirectly used for investment in securities or financial schemes other than bank’s
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principal guaranteed products unless otherwise provided by relevant laws and regulations; (iii)
used for granting loans to non-connected enterprises, unless otherwise permitted by its business
scope; and (iv) used for the construction or purchase of real estate that is not for self-use (except
for the real estate enterprises).
In October 2019, SAFE issued the Notice of the State Administration of Foreign Exchange
on Further Promoting the Facilitation of Cross-border Trade and Investment (ආ༨
), or SAFE Circular 28, pursuant to which foreign-invested enterprises
whose approved business scope does not include equity investments are allowed to use their capital
funds obtained from foreign exchange settlement to make domestic equity investments in China,
provided that such investments do not violate the Negative List and the target investment projects
are genuine and in compliance with laws.
According to the Circular of SAFE on Optimizing Foreign Exchange Administration to
Support the Development of Foreign-related Business (ܵ
) promulgated and effective on April 10, 2020 by the SAFE, the reform of
facilitating the payments of incomes under the capital accounts shall be promoted nationwide.
Under the prerequisite that the use of funds is genuine and in compliance with laws are and
complying with the prevailing administrative provisions on use of income from capital accounts,
enterprises which satisfy the criteria are allowed to use income under the capital account, such as
capital funds, foreign debt and overseas listing, etc., for domestic payment, without the need to
provide proof materials for veracity to the bank beforehand for each transaction.
Dividend Distribution
According to the PRC Company Law, Foreign Investment Law and Regulation for
Implementing the Foreign Investment Law, foreign-invested enterprises in the PRC may pay
dividends only out of their accumulated profits as determined in accordance with PRC accounting
standards and regulations. An enterprise is required to set aside at least 10% of its respective
accumulated profits to its statutory common reserve where it distributes its after-tax profits of the
current year, until the accumulative amount of such reserve reaches 50% of its registered capital. If
the aggregate balance of the enterprise’s statutory common reserve is not enough to make up for
the losses of the enterprise of the previous year, the current year’s profits shall first be used for
making up the losses before the statutory common reserve is drawn. After the enterprise has drawn
statutory common reserve from the after-tax profits, it may, upon a resolution made by the
shareholders’ meeting, draw a discretionary common reserve from the after-tax profits. After the
losses have been made up and common reserves have been drawn, the remaining profits shall be
distributed to shareholders.
According to the Notice on Improving the Check of Authenticity and Compliance to Further
Promote Foreign Exchange Control (ҁഛॆྼΥ
) promulgated by the SAFE on January 26, 2017, (1) under the principle of
genuine transaction, banks shall check board resolutions regarding profit distribution, the original
version of tax filing records and audited financial statements; and (2) domestic entities shall hold
income to account for previous years’ losses before remitting the profits. Moreover, domestic
entities shall make detailed explanations of sources of capital and utilization arrangements, and
provide board resolutions, contracts and other proof when proceeding with the registration
procedures in connection with an outbound investment.
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SAFE Circular 37
In July 2014, SAFE promulgated the Notice of the State Administration of Foreign
Exchange on Issues concerning Foreign Exchange Administration of the Overseas Investment and
Financing and the Round-tripping Investment Made by Domestic Residents through
Special-Purpose Companies (೻ҳ༟̮ි၍ଣ
 ), or the SAFE Circular 37, which replaces the Notice of the State
Administration of Foreign Exchange on Relevant Issues concerning Foreign Exchange
Administration for Domestic Residents to Engage in Financing and in Return Investment via
Overseas Special Purpose Companies (೻ҳ༟̮
), or the SAFE Circular 75. SAFE Circular 37 requires PRC residents,
including PRC individuals and PRC corporate entities, to register with SAFE or its local branches
in connection with their direct or indirect offshore investment activities.
According to the Circular on Further Simplifying and Improving the Direct Investment
related Foreign Exchange Administration Policies (݁
), which was promulgated by the SAFE on February 13, 2015 and came into effect on
June 1, 2015, registrations under Circular 37 will be handled directly by the bank that has obtained
the financial institution identification codes issued by the foreign exchange regulatory authorities
and that has opened the capital account information system at the local foreign exchange
regulatory authority. Foreign exchange regulatory authorities will perform indirect regulation over
the direct investment-related foreign exchange registration via the banks.
Employee Stock Incentive Plan
On February 15, 2012, the SAFE promulgated the Notices on Issues Concerning the Foreign
Exchange Administration for Domestic Individuals Participating in Stock Incentive Plans of
Overseas Publicly Listed Companies (ᛆዧ
 ), which prescribed that PRC citizens or non-PRC citizens
residing in China for a continuous period of no less than one year (except for foreign diplomatic
personnel in China and representatives of international organizations in China) who participate in
any stock incentive plan of an overseas publicly listed company shall, through the domestic
company to which the said company is affiliated, collectively entrust a domestic agency (may be
the Chinese affiliate of the overseas publicly listed company which participates in stock incentive
plan, or other domestic institutions qualified for asset trust business lawfully designated by such
company) to handle foreign exchange registration, and entrust an overseas institution to handle
issues like exercise of options, purchase and sale of corresponding stocks or equity, and transfer of
corresponding funds. In addition, the domestic agency is required to amend the SAFE registration
with respect to the stock incentive plan if there is any material change to the stock incentive plan.
M&A Rules
On August 8, 2006, MOFCOM, the State-owned Assets Supervision and Administration
Commission of the State Council, the SAT, the State Administration of Industry and Commerce,
the China Securities Regulatory Commission and SAFE jointly issued the Rules on the Acquisition
of Domestic Enterprises by Foreign Investors (as amended, re-promulgated and effective on June
22, 2009) ( ) (the “ M&A Rule s”). According to the M&A
Rules, the merger and acquisition of the domestic companies by foreign investors means that the
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foreign investors purchase or subscribe for the equity or shares of a non-foreign invested PRC
company or that the foreign investors establish a foreign-invested PRC company to acquire or
operate the assets of a non-foreign-invested PRC company by agreement. The M&A Rules require
that an application be made to MOFCOM for examination and approval in relation to the
acquisition of any company inside China affiliated with a domestic company, enterprise or natural
person, which is made in the name of an overseas company lawfully established or controlled by
such domestic company, enterprise or natural person. The M&A Rules also provide that the
overseas listing of a special purpose company controlled directly or indirectly by PRC companies
or individuals on an overseas stock market must be approved by the China Securities Regulatory
Committee.
The M&A Rules, and other recently adopted regulations and rules concerning mergers and
acquisitions established additional procedures and requirements that could make merger and
acquisition activities by foreign investors more time-consuming and complex. For example, the
M&A Rules require that MOFCOM be notified in advance of any change-of-control transaction in
which a foreign investor takes control of a PRC domestic enterprise, if (i) any important industry is
concerned, (ii) such transaction involves factors that impact or may impact national economic
security, or (iii) such transaction will lead to a change in control of a domestic enterprise which
holds a famous trademark or PRC time-honored brand.
Outbound Investment
Pursuant to the Administrative Measures on Outbound Investments ()
issued by the MOFCOM on March 16, 2009, and amended on September 6, 2014, and the
Administrative Measures for the Outbound Investments of Enterprises ()
issued by the National Development and Reform Commission (the “ NDRC ”) on December 26,
2017, and effective from March 1, 2018, if an enterprise in the territory of the PRC (the
“Inve stor”) intends to make outbound investments (the “ Project ”), it shall be subject to approval
or filing for the Project, report relevant information, and cooperate in the supervisory inspections.
The sensitive Projects invested directly by the Investor or through the foreign enterprises
controlled by the Investor shall be subject to approval. The non-sensitive Projects invested directly
by the Investor, which involve the direct contribution of assets, rights and interests, or provision of
financing or guarantee by the Investor, shall be subject to filing.
Information Security and Data Privacy
On June 10, 2021, the SCNPC promulgated the Data Security Law of the PRC ( ʕശɛ͏΍
) (the “ Data Security L aw”), which became effective from September 1, 2021.
According to the Data Security Law, a data classification protection system shall be established to
protect data by classification. Entities engaged in data processing activities shall, in accordance
with the laws and regulations, establish a sound whole-process data security management system,
organize data security education and training, and take corresponding technical measures and other
necessary measures to ensure data security.
According to the Civil Code, personal information of natural persons is protected by law.
Any organization or individual that needs to obtain personal information of others shall obtain
legally and ensure the information security, and shall not illegally collect, use, process, transmit,
trade, provide or disclose personal information of others. The Personal Information Protection
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Law of the PRC ( ) promulgated by the SCNPC on August 20,
2021 and effective from November 1, 2021 further emphasized the duties and responsibilities of
the processing personnel for the protection of personal information, and provided stricter
protection measures for processing sensitive personal information.
On November 7, 2016, the SCNPC promulgated the Cybersecurity Law of the PRC ( ʕശ
) (the “ Cyber security L aw”), which became effective from June 1, 2017.
According to the Cybersecurity Law, network operators shall abide by the principles of legality,
legitimacy and necessity when collecting and using personal information. Network operators shall
disclose the rules for collection and use, specify the purpose, methods and scope of collection and
use of information, and obtain consent from the persons whose personal information is collected,
when collecting and using personal information. Network operators shall not collect the personal
information irrelevant to the services they provide, nor disclose, tamper with or damage the
personal information they collect, and shall not provide relevant personal information to others
without the prior consent of the persons whose personal information is collected, except for the
personal information that cannot be identified and restored after processing.
On July 7, 2022, the CAC issued the Measures on Security Assessment of Cross-border Data
Transfer ( ) (the “ Cro ss-bor der D ata Transfer Me asure s”) which
became effective on September 1, 2022. Pursuant to the Cross-border Data Transfer Measures, the
security assessment of outbound data transfer shall adhere to the integration of prior assessment
and continuous supervision and the integration of risk self-assessment and security assessment, so
as to prevent security risks arising from outbound data transfer and ensure the orderly and free flow
of data in accordance with the law. A data processor shall expressly agree on the data security
protection responsibilities and obligations in the legal documents concluded with the overseas
recipient.
On July 12, 2018, the NHC issued the Administrative Measures on National Health and
Medical Care Big Data Standards, Security and Services (Trial) (਄ੰᔼᐕɽᅰኽᅺ๟eτ
༊Б) (the “ Measure s on He alth and MedicalC are Bi g Data”), which
became effective on the same day. The Measures on Health and Medical Care Big Data provided
the guidelines and principles of health and medical big data standard management, security
management and service management. According to the Measures on Health and Medical Care Big
Data, the NHC, together with other relevant departments, is responsible for the management of
national health and medical care big data, while the authorities of health above the county level,
together with other relevant departments, are responsible for the management of health and
medical care big data within their respective administrative regions. Medical institutions and
relevant enterprises, including those engaged by medical institutions to store or operate health and
medical care big data, shall take measures, such as data classification, important data backup and
encryption, to ensure the security of health and medical care big data, and provide secured
channels for the query and replication of information. The responsible parties shall, pursuant to the
Cybersecurity Law, strictly control the authorization to users at different levels to access and use
data, and ensure the use of data within the scope of authorization. Without authorization, no unit or
individual shall use or disseminate any health and medical care big data or data beyond the scope
of authorization, nor obtain any data in illegal ways. The responsible parties shall abide by the
relevant regulations when disclosing health and medical care big data, shall not divulge state
secrets, trade secrets or personal privacy, shall not infringe upon the interests of the state or the
public, and shall not infringe upon the legitimate rights and interests of citizens, enterprise entities
or other organizations.
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Overseas Listing
On February 17, 2023, the CSRC promulgated the Trial Administrative Measures of the
Overseas Securities Offering and Listing by Domestic Companies ( ྤʫΆุྤ̮೯БᗇՎձɪ
) (the “ Over seas Listin g TrialM e asure s”) and relevant five guidelines, which
became effective on March 31, 2023. The Overseas Listing Trial Measures will comprehensively
improve and reform the existing regulatory regime for overseas offering and listing of PRC
domestic companies’ securities and regulate both direct and indirect overseas offering and listing
of PRC domestic companies’ securities by adopting a filing-based regulatory regime.
According to the Overseas Listing Trial Measures, a domestic company seeking direct
overseas offering and listing shall file with the CSRC, submit the filing report, legal opinions and
other relevant materials as required under the Overseas Listing Trial Measures, and state the
shareholders’ information and other matters in a truthful, accurate and complete manner. Where a
domestic company submits an application for initial public offering to the competent overseas
regulators, such domestic company shall file with the CSRC within three business days after such
application is submitted. The Overseas Listing Trial Measures also require subsequent reports to
be filed with the CSRC on material events, such as a change-of-control event, or voluntary or
forced delisting of the issuer who has completed the overseas offering and listing. If the issuer fails
to complete the filing procedure or conceals any material fact or falsifies any major content in its
filing documents, it may be subject to administrative penalties, such as order to rectify, warnings,
fines, and its controlling shareholders, actual controllers, the person directly in charge and other
directly liable persons may also be subject to administrative penalties, such as warnings and fines.
On the same day, the CSRC also held a press conference for the release of the Overseas
Listing Trial Measures and issued the Notice on Administration for the Filing of Overseas Offering
and Listing by Domestic Companies ( ),
which, among others, clarified that, a domestic company that has already obtained the approval
document from the CSRC for overseas public offering and listing may proceed with the overseas
listing within the validity period of the approval document. Where the overseas listing has not been
completed upon the expiration of the approval document, filing procedures specified in the
Overseas Listing Trial Measures shall be made as required.
LA WS AND REGULATIONS IN THE UNITED STATES AND EU
This section summarizes the principal laws and regulations in the United States that are
relevant to our business.
U.S. Government Re gulation of Dru ga nd Biolo gicalP r oduct s
In the United States, the Food and Drug Administration (“ FDA”) regulates drugs under the
Food, Drug, and Cosmetic Act (“ FDCA ”) and its implementing regulations, and the FDA regulates
biologics under the FDCA and the Public Health Service Act (the “ PHSA ”) and their respective
implementing regulations. Both drugs and biologics also are subject to other federal, state, and
local statutes and regulations, such as those related to competition. The process of obtaining
regulatory approvals to manufacture or market drugs and biologics in the United States and the
subsequent compliance with appropriate federal, state, local, and non-U.S. applicable statutes and
regulations requires the expenditure of substantial time and financial resources. Failure to comply
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with the applicable U.S. requirements at any time during the product development process,
approval process or following approval may subject an applicant to administrative proceedings
administrative actions, government prosecution, judicial sanctions or any combination of them in
the United States. These actions and sanctions could include, among other actions, the FDA’s
refusal to approve pending applications, withdrawal of an approval, license revocation, a clinical
hold, untitled or warning letters, voluntary or mandatory product recalls or market withdrawals,
product seizures, total or partial suspension of production or distribution, injunctions, fines,
refusals of government contracts, restitution, disgorgement and civil or criminal fines or penalties.
Any administrative proceeding on action or any judicial enforcement action could have a material
adverse effect on our business, financial condition and results of operations as well as the market’s
acceptance of our products and our reputation. Outside the United States, drugs and biologics are
regulated under other statutory and regulatory systems with which we would need to comply if we
were to manufacture or market drugs or biologics outside the United States, and failure to comply
there could also subject us to administrative actions, government prosecution or judicial sanctions
(or any combination of them).
Once a product candidate is identified for development, it enters preclinical testing, which
includes laboratory evaluations of product chemistry, toxicity, formulation and stability, as well as
animal studies. Preclinical testing is conducted in accordance with FDA’s Good Laboratory
Practice regulations. A sponsor of an Investigational New Drug application (“ IND”) must submit
the results of the preclinical tests (such as animal tests), manufacturing information, analytical
data, the clinical trial protocol, and any available clinical data or literature to the FDA. The IND
automatically becomes effective 30 days after receipt by the FDA, unless the FDA raises concerns
or questions and places the trial on a clinical hold within that 30-day period. FDA may also impose
clinical holds or partial clinical holds at any time during clinical trials due to safety concerns or
non-compliance. Although information a sponsor submits in an IND is confidential information,
general clinical trial information such as the number of patients involved and the type of adverse
events studied can be made public information and can be available for public review through
publication on government websites such as www.clinicaltrials.gov .
All clinical trials, which involve the administration of the investigational product to
humans, must be conducted under the supervision of one or more qualified investigators in
accordance with Good Clinical Practice (“ GCP s”) and human subject protection regulations,
including the requirement that all research subjects provide informed consent in writing before
their participation in any clinical trial. Further, an Institutional Review Board (“ IRB”), often under
the auspices of a university and sometimes a private, independent organization, must review and
approve the plan for any clinical trial before it commences at any institution, and the IRB must
conduct continuing review and reapprove the study at least annually. Each new clinical protocol
and any amendments to the protocol must be submitted for FDA review, and to the IRBs for
approval. An IRB can suspend or terminate approval of a clinical trial at its institution if the trial is
not being conducted in accordance with the IRB’s requirements or human subject research
regulations or if the product has been associated with unexpected serious harm to subjects and the
IRB believes patients are at risk.
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Clinical trials generally are conducted in three sequential phases, known as Phase I, Phase II
and Phase III, and may overlap.
• Phase I clinical trials generally involve a small number of healthy volunteers or
disease-affected patients who are initially exposed to a single dose and then multiple
doses of the product candidate. The primary purpose of these clinical trials is to
assess the metabolism, pharmacologic action, side effect tolerability and safety of the
product candidate.
• Phase II clinical trials involve studies in disease-affected patients to evaluate proof of
concept and/or determine the dose required to produce the desired benefits. At the
same time, safety and further pharmacokinetics and pharmacodynamics information
is collected, possible adverse effects and safety risks are identified and a preliminary
evaluation of efficacy is conducted.
• Phase III clinical trials generally involve a large number of patients at multiple sites
and are designed to provide the data necessary to demonstrate the effectiveness of the
product for its intended use, its safety in use and to establish the overall benefit/risk
relationship of the product and provide an adequate basis for product labeling.
Progress reports detailing the results of the clinical trials must be submitted at least annually
to the FDA before marketing approval is received. Safety reports must be submitted to the FDA and
the investigators 15 calendar days after the trial sponsor determines that the information qualifies
for reporting. The sponsor also must notify FDA of any unexpected fatal or life-threatening
suspected adverse reaction as soon as possible but in no case later than 7 calendar days after the
sponsor’s initial receipt of the information. Sponsors of clinical trials of FDA-regulated products,
including drugs, are required to register and disclose certain clinical trial information, which is
publicly available at www.clinicaltrials.gov .
Concurrent with clinical trials, companies usually complete additional animal studies and
must also finalize a process for manufacturing the product in commercial quantities in accordance
with FDA’s current Good Manufacturing Practices (“ cGMP ”).
U.S. Review and Approval Proce sses
The results of product development, preclinical studies and clinical trials, along with
descriptions of the manufacturing process, analytical tests conducted on the product, proposed
labeling and other relevant information, are submitted to the FDA as part of a New Drug
Application (“ NDA”). Unless deferred or waived, NDAs, or supplements, must contain data
adequate to assess the safety and efficacy of the product at the proposed commercial dosing
regimen and administration for the claimed indications in all relevant populations, including any
pediatric subpopulations. The submission of an NDA is subject to the payment of a user fee and an
annual prescription drug product program fee to the FDA although in certain circumstances the
FDA may waive the annual prescription drug product program fee if the drug qualifies for orphan
drug designation.
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Within 60 days of its receipt, the FDA reviews the NDA to ensure that it is sufficiently
complete for substantive review before it accepts the NDA for filing. After accepting the NDA
filing, the FDA begins an in-depth substantive review to determine, among other things, whether a
product is safe and effective for its intended use. The FDA also evaluates whether the product’s
manufacturing is cGMP-compliant to assure the product’s identity, strength, quality and purity.
Before approving the NDA, the FDA typically will inspect whether the manufacturing processes
and facilities are in compliance with cGMP requirements and adequate to assure consistent
production of the product within required specifications. The FDA may refer the NDA to an
advisory committee, generally consisting of a panel of experts, to review whether the application
should be approved and under what conditions, and the FDA typically considers such
recommendations when making decisions.
The FDA may refuse to approve the NDA if the applicable regulatory criteria are not
satisfied or may require additional clinical data or other data and information. The FDA will issue
a complete response letter describing all of the specific deficiencies that the FDA identified in the
NDA that must be satisfactorily addressed before it can be approved. The deficiencies identified
may be minor, for example, requiring labeling changes, or major, for example, requiring additional
clinical trials. Additionally, the complete response letter may include recommended actions that
the applicant might take to place the application in a condition for approval. The applicant may
withdraw the application and resubmit the NDA when all the data addressing all of the deficiencies
identified in the letter is available, or the applicant may request an opportunity for a hearing.
The regulatory approval may be limited to specific diseases and dosages or the indications
for use may otherwise be limited, which could restrict the commercial value of the product.
Further, the FDA may require that certain contraindications, warnings or precautions be included
in the product labeling. In addition, the FDA may require post-approval studies, including phase
IV clinical trials, to further assess a product’s safety and effectiveness after NDA/BLA approval
and may require testing and surveillance programs to monitor the safety of approved products that
have been commercialized.
MRCT s
FDA has acknowledged the increasing globalization of drug development and the
importance that data from multiregional clinical trials (MRCTs) can be accepted by regulatory
authorities across regions and countries as the primary source of evidence to support marketing
approval of drugs. MRCTs conducted according to FDA Guidance “E17 General Principles for
Planning and Design of Multiregional Clinical Trials Guidance for Industry” dated July 2018
allows for the investigation of treatment effects, including safety evaluations in the overall
population, and investigation of the potential impact of intrinsic and extrinsic factors on the
treatment effect. MRCTs, which are properly designed and executed according to FDA Guidance
“E17 General Principles for Planning and Design of Multiregional Clinical Trials” dated July
2018, may facilitate more efficient drug development and increase the possibility of submitting
marketing authorization applications to multiple regulatory authorities in different regions
simultaneously, thus providing earlier access to new drugs worldwide. In addition, MRCTs
conducted according to FDA Guidance “E17 General Principles for Planning and Design of
Multiregional Clinical Trials” dated July 2018 may enhance scientific knowledge about how
treatment effects vary across regions and populations under the umbrella of a single-study protocol
and how this variation may be explained by intrinsic and extrinsic factors.
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The following basic principles for designing MRCTs are included in the FDA’s July 2018
MRCT guidance:
• Strategic use of MRCTs in drug development programs, properly designed and
executed according to this guidance, can increase efficiency of drug development.
MRCTs may enable simultaneous submission of marketing authorization applications
and support regulatory decision-making in multiple regions, allowing earlier access
to new drugs worldwide. Although MRCTs may generally become the preferred
option for investigating a new drug for which regulatory submission is planned in
multiple regions, the potential for regional differences to have an impact on the
interpretability of study results should be carefully considered.
• The intrinsic and extrinsic factors important to the drug development program should
be identified early. The potential impact of these factors could be examined in the
exploratory phases before the design of confirmatory MRCTs. Information about
them should also be collected during the confirmatory trial for evaluation of their
impact on treatment effects.
• MRCTs are planned under the assumption that the treatment effect applies to the
entire target population, particularly to the regions included in the trial. Strategic
allocation of the sample size to regions allows an evaluation of the extent to which
this assumption holds.
• Prespecified pooling of regions or subpopulations, based on established knowledge
about similarities, may help provide flexibility in sample-size allocation to regions,
facilitate the assessment of consistency in treatment effects across regions, and
support regulatory decision-making.
• A single primary analysis approach for hypothesis testing and estimation of the
overall treatment effect should be planned so that it will be acceptable to all
concerned regulatory authorities. A structured exploration to examine the consistency
of treatment effects across regions and subpopulations should be planned.
• In light of diverse regional practices, ensuring high quality of study design and
conduct in accordance with ICH E6 in all regions is of paramount importance to
ensure the study results are interpretable. Careful attention to quality during trial
planning, investigator training, and trial monitoring will help achieve consistently
high trial quality required for a successful MRCT.
• Efficient communication among sponsors and regulatory authorities is encouraged at
the planning stage of MRCTs, with the goal of obtaining acceptance of a global
approach to study design across the different regulatory regions.
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All sites participating in MRCTs should meet applicable quality, ethical, and regulatory
standards. Specifically, MRCTs should be conducted in compliance with ICH E6 good clinical
practice (“ GCP”) standards in all regions and sites, including making sites available for GCP
inspections by regulatory authorities. Monitoring plans and other quality checks should be
prespecified and implemented to address potential risks to subject rights, safety and well-being,
and the reliability of study results. The primary endpoint should be relevant to the target
population. In MRCTs, this relevance should be considered for all regions in the trial and with
respect to the various drug, disease, and population characteristics represented in those regions.
For MRCTs, the primary endpoint, whether efficacy or safety, should satisfy these criteria,
as well as being acceptable to all concerned regulatory authorities, to ensure that interpretation of
the success or failure of the MRCT is consistent across regions and among regulatory authorities.
Agreement on the primary endpoint ensures that the overall sample size and power can be
determined for a single (primary) endpoint based on the overall population and also agreed upon
by the regulatory authorities. If agreement cannot be reached because of well-justified scientific or
regulatory reasons, a single protocol should be developed with endpoint-related subsections
tailored to meet the respective requirements of the regulatory authorities.
Expedite d Develo pment and Review Pro grams
Fast Track Designation
Fast Track is a process designed to facilitate the development, and expedite the review of,
drugs to treat serious conditions and fill an unmet medical need. Fast Track designation must be
requested by the drug company. The request can be initiated at any time during the drug
development process. FDA will review the request and make a decision within sixty days based on
whether the drug fills an unmet medical need in a serious condition. Determining whether a disease
is serious is a matter of judgment, but generally the FDA considers whether the proposed drug will
affect factors such as survival, day-to-day functioning, and the likelihood that the disease, if left
untreated, will progress from a less severe condition to a more serious one. To address an unmet
medical need, the proposed drug may be developed as a treatment or preventative measure for a
disease that does not have a current therapy. The type of information necessary to demonstrate
unmet medical need varies with the stage of drug development: early in development, nonclinical
data, mechanistic rationale, or pharmacologic data will suffice; later in development, clinical data
should be utilized. If there are existing therapies, a fast track eligible drug must show some
advantages over available treatments, such as:
• Showing superior effectiveness, effect on serious outcomes or improved effect on
serious outcomes
• Avoiding serious side effects of an available therapy
• Improving the diagnosis of a serious condition where early diagnosis results in an
improved outcome
• Decreasing a clinical significant toxicity of an available therapy that is common and
causes discontinuation of treatment
• Ability to address emerging or anticipated public health need
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The impacts on the clinical development and registration of a drug that receives a Fast Track
designation, include, among others:
• More frequent meetings with FDA to discuss the drug’s development plan and ensure
collection of appropriate data needed to support drug approval
• More frequent written correspondence from FDA about such things as the design of
the proposed clinical trials
• Eligibility for accelerated approval or priority review if the requisite criteria are met.
Accelerated approval is meant for drugs that demonstrate an effect on a surrogate, or
intermediate endpoint reasonably likely to predict clinical benefit. Priority review
shortens the FDA review process for a new drug from ten months to six months, and is
appropriate for drugs that demonstrate significant improvements in both safety and
effectiveness of an existing therapy. A fast track application is automatically
considered for both of these designations
• Rolling review, which means that a drug company can submit completed sections of
its NDA for review by FDA, rather than waiting until every section of the application
is completed before the entire application can be reviewed. NDA review usually does
not begin until the drug company has submitted the entire application to the FDA
A sponsor may request Fast Track designation when the sponsor files an IND application or
any time thereafter prior to the receipt of marketing approval. If a new drug product meets the
requisite criteria for Fast Track designation, the FDA should grant the application. However, the
FDA may rescind fast track designation, if the FDA determines the criteria for fast track
designation are no longer met. The FDA will notify the sponsor in writing of its intent to rescind
the designation through a “Intent to Rescind Fast Track Designation” letter, which will include the
criteria for making the determination and provide the sponsor with an opportunity to submit
additional data and justification to support the continuing designation and request a meeting to
discuss the designation for the product. The rescinding of a fast track designation does not
necessarily mean the product is not promising or that the product may not receive marketing
approval. It means that the criteria for fast track designation are no longer met. The sponsor may
request the designation to be rescinded/withdrawn. The impact of revocation is that the sponsor
will lose all of the benefits of Fast Track designation, which include more frequent meetings and
written communication with FDA, rolling review, and eligibility for Accelerated Approval and
priority review.
Based on our favorable clinical results of HTD1801 for MASH and PSC, and our frequent
communications with the FDA, we believe that the likelihood of revocation of Fast Track
designation for MASH and PSC is low.
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Accelerated Approval
Under the FDA’s accelerated approval regulations, the FDA may approve a drug or biologic
candidate for a serious or life-threatening illness that provides meaningful therapeutic benefit to
patients over existing treatments and demonstrates an effect on either a surrogate endpoint that is
reasonably likely to predict clinical benefit or on a clinical endpoint that can be measured earlier
than irreversible morbidity or mortality (“ IMM”) that is reasonably likely to predict an effect on
IMM or other clinical benefit, taking into account the severity, rarity, or prevalence of the disease
or condition and the availability or lack of alternative treatments. A product candidate approved on
this basis is subject to rigorous post-marketing compliance requirements, including the completion
of post-approval clinical trials to confirm the effect on the clinical endpoint. Failure to conduct
required post-approval studies, or to confirm a clinical benefit during post-marketing studies, will
allow the FDA to withdraw the product from the market on an expedited basis. All promotional
materials for product candidates approved under accelerated regulations are subject to prior review
by the FDA.
Breakthrough Designation
Another program potentially available for sponsors is the breakthrough therapy designation.
A drug or biologic may be eligible for designation as a breakthrough therapy if the product is
intended, alone or in combination with one or more other drugs or biologics, to treat a serious or
life-threatening condition and preliminary clinical evidence indicates that the product may
demonstrate substantial improvement over currently approved therapies on one or more clinically
significant endpoints, such as substantial treatment effects observed early in clinical development.
A sponsor may request that a product be designated as a breakthrough therapy concurrently with,
or at any time after, the submission of an IND, and according to FAQs published by the FDA
(current as of February 3, 2022), the FDA must determine if the candidate qualifies for such
designation within 60 days of receipt of the request. If so designated, the FDA shall act to expedite
the development and review of the product’s marketing application, including by meeting with the
sponsor throughout the product’s development, providing timely advice to the sponsor to ensure
that the development program to gather preclinical and clinical data is as efficient as practicable.
Orphan Dru gs
Under the Orphan Drug Act, the FDA may grant orphan drug designation to drugs or
biologic candidates intended to treat a rare disease or condition generally affecting fewer than
200,000 individuals in the United States. The first applicant to receive FDA approval for the
disease or indication for which it has orphan drug designation is entitled to a seven-year exclusive
marketing period. During the exclusivity period, the FDA may not approve any other applications
to market the same product for the same disease or condition except in limited circumstances. The
impacts on the clinical development and registration of drugs receiving Orphan Drug designation
are: the sponsors may be provided with (1) a tax credit of 50 percent of the cost of conducting
human clinical trials, and (2) federal research grants for clinical testing of new therapies to treat
and/or diagnose rare diseases; (3) eligibility for seven-year marketing exclusivity and (4) a waiver
of NDA PDUFA fees. The approval of an orphan drug designation request does not alter the
standard regulatory requirements and processes for obtaining marketing approval. Sponsors must
establish safety and efficacy of a compound to treat a rare disease through adequate and
well-controlled studies.
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FDA may revoke orphan-drug designation for any drug if the agency finds that:
• The request for designation contained an untrue statement of material fact; or
• The request for designation omitted required or material information; or
• FDA subsequently finds that the drug in fact had not been eligible for orphan-drug
designation at the time of submission of the request.
For an approved drug, revocation of orphan-drug designation also suspends or withdraws the
sponsor’s exclusive marketing rights for the drug but not the approval of the drug’s marketing
application.
Where a drug has been designated as an orphan drug because the prevalence of a disease or
condition (or, in the case of vaccines, diagnostic drugs, or preventive drugs, the target population)
is under 200,000 in the United States at the time of designation, its designation will not be revoked
on the ground that the prevalence of the disease or condition (or the target population) becomes
more than 200,000 persons.
If FDA revokes an orphan-drug designation, FDA will publicize that the drug is no longer
designated in accordance with 21 CFR 316.28. The sponsor may request the designation to be
rescinded/withdrawn. The impact of revocation is that the sponsor will lose all the benefits of
Orphan Drug designation. Based on our favorable clinical results of HTD1801 for PSC, and the
prevalence of PSC in the United States, we believe that the likelihood of revocation of Orphan
Drug designation for HTD1801 for PSC is low.
In Europe, the EMA is responsible for reviewing applications from sponsors for orphan
designation. To qualify for orphan designation, a medicine must meet a number of criteria:
• it must be intended for the treatment, prevention or diagnosis of a disease that is
life-threatening or chronically debilitating;
• the prevalence of the condition in the EU must not be more than 5 in 10,000 or it must
be unlikely that marketing of the medicine would generate sufficient returns to justify
the investment needed for its development;
• no satisfactory method of diagnosis, prevention or treatment of the condition
concerned can be authorised, or, if such a method exists, the medicine must be of
significant benefit to those affected by the condition.
Orphan medicines benefit from ten years of market exclusivity once they receive a
marketing authorisation in the EU. This measure is intended to encourage the development of
medicines for rare diseases, by protecting them from competition from similar medicines with
similar indications, which cannot be marketed during the exclusivity period.
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Post-M arketin g Requirement s
Following approval of a new product, the manufacturer of the approved product is subject to
continuing regulation by the FDA, including, among other things, monitoring and record-keeping
activities, reporting of adverse events (“ AEs”) experiences, complying with promotion and
advertising requirements, which include restrictions on promoting products for unapproved uses or
patient populations (known as “ off-l abel u se”) and limitations on industry-sponsored scientific
and educational activities. Although physicians may prescribe legally available products for
off-label uses, manufacturers may not market or promote such uses. The FDA and other agencies
such as the Department of Justice actively enforce the laws and regulations prohibiting the
promotion of off-label uses, and a company that is found to have improperly promoted off-label
uses may be subject to significant liability, including investigation by federal and state authorities
as well as potential tort liability. Prescription drug promotional materials must be submitted to the
FDA in conjunction with their first use or first publication. Further, if there are any modifications
to the drug or biologic, including changes in indications, labeling or manufacturing processes or
facilities, the applicant may be required to submit and obtain FDA approval of a new NDA/BLA or
NDA/BLA supplement, which may require the development of additional data or preclinical
studies and clinical trials. The FDA may also place other conditions on approvals including the
requirement for a risk evaluation and mitigation strategy (“ REMS ”), to assure the safe use of the
product. If the FDA concludes a REMS is needed, the sponsor of the NDA/BLA must submit a
proposed REMS. The FDA will not approve the NDA/BLA without an approved REMS, if
required. A REMS could include medication guides, physician communication plans or elements
to assure safe use, such as restricted distribution methods, patient registries and other risk
minimization tools. Any of these limitations on approval or marketing could restrict the
commercial promotion, distribution, prescription or dispensing of products. Product approvals
may be withdrawn for non-compliance with regulatory standards or if problems occur following
initial marketing.
FDA regulations require that products be manufactured in specific approved facilities
according to approved manufacturing processes and in accordance with cGMP regulations. We
rely, and expect to continue to rely, on third parties for the production of clinical and commercial
quantities of our products in accordance with cGMP regulations. These manufacturers must
comply with cGMP regulations that require, among other things, quality control and quality
assurance, the maintenance of records and documentation and the obligation to investigate and
correct any deviations from cGMP. The manufacturer is ultimately responsible for its products and
the manufacturing practices of its contract manufacturers, therefore the manufacturer must take
responsibility for the failure for the contract manufacturers to manufacture according to cGMPs.
Manufacturers and other entities involved in the manufacture and distribution of approved
drugs or biologics are required to register their establishments with the FDA and certain state
agencies, and are subject to periodic unannounced inspections by the FDA and certain state
agencies for compliance with cGMP requirements and other laws. Accordingly, manufacturers
must continue to expend time, money and effort in the area of production and quality control to
maintain cGMP compliance. The discovery of violative conditions, including failure to conform to
cGMP regulations, could result in enforcement actions, and the discovery of problems with a
product after approval may result in restrictions on a product, manufacturer or holder of an
approved NDA/BLA, including recall, any of which could have a material adverse effect on our
business, financial condition and results of operations.
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Once an approval is granted, if compliance with regulatory requirements and standards is
not maintained or if problems occur after the drug reaches the market, the FDA may take
enforcement actions such as issuing Warning Letters or Untitled Letters, ordering removal of the
product from the market until deficiencies are remedied, withdrawing the approval of the product,
or imposing civil and criminal penalties. Corrective action in response to these enforcement
activities could delay drug distribution and require significant time and financial expenditures.
Later discovery of previously unknown problems with a drug, including AEs of unanticipated
severity or frequency, or with manufacturing processes, or failure to comply with regulatory
requirements, may result in revisions to the approved labeling to add new safety information;
imposition of post-market studies or clinical trials to assess new safety risks; or imposition of
distribution or other restrictions under a REMS program. Other potential consequences which
could arise from such regulatory violations include, among other things:
• restrictions on the marketing or manufacturing of the drug, suspension of the
approval, complete withdrawal of the drug from the market or product recalls;
• fines, warning letters or holds on post-approval clinical trials;
• refusal of the FDA to approve applications or supplements to approved applications,
or suspension or revocation of drug approvals; drug seizure or detention, or refusal to
permit the import or export of drugs; and
• injunctions or the imposition of civil or criminal penalties.
Patient Protection and Affor dable He alth C are Act
The Patient Protection and Affordable Care Act, as amended by the Health Care and
Education Affordability Reconciliation Act (collectively the “ ACA”) became law in the United
States in March 2010, and have driven healthcare reform in the United States by extending health
insurance coverage and substantially changing the way healthcare is financed by both
governmental and private insurers in the United States. With regard to pharmaceutical products
specifically, the ACA, among other things, expanded and increased industry rebates for drugs
covered under Medicaid programs and made changes to the coverage requirements under the
Medicare prescription drug benefit. Among other things, the ACA contains provisions that may
reduce the profitability of drug products through expansion of the Medicaid program and
mandatory increased rebates for both generic and brand drugs reimbursed by Medicaid programs,
the exclusion of certain manufacturer discounts from the average manufacturer price (AMP),
extended eligibility for Medicaid rebates provided through Medicaid managed care plans
mandatory discounts for certain Medicare Part D beneficiaries and accessed new federal taxes in
the form of an annual fee based on pharmaceutical companies’ share of sales to federal health care
programs.
Since its enactment, there have been judicial and Congressional challenges to certain
aspects of the ACA, and there may be additional challenges and amendments to the ACA in the
future. Starting in January 2017, President Trump signed Executive Orders and other directives
designed to delay the implementation of certain provisions of the ACA or otherwise circumvent
some of the requirements for health insurance mandated by the ACA. Concurrently, Congress has
considered legislation that would repeal, or repeal and replace, all or part of the ACA. While
Congress has not passed comprehensive repeal legislation, several bills affecting the
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implementation of certain taxes under the ACA have passed including, for example, the Tax Cuts
and Jobs Act (TCJA) enacted by the Congress in 2017, which eliminated the tax-based shared
responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying
health coverage for all or part of a year that is commonly referred to as the “individual mandate.”
In addition, the 2020 federal spending package permanently repealed, effective January 1, 2020,
the ACA- mandated “Cadillac” tax on high-cost employer-sponsored health coverage and the
medical device tax. There may be other efforts to challenge, repeal or replace the ACA. Most
recently, the United States Supreme Court, on June 17, 2021, ruled 7-2 that Republican states, led
by Texas, lack standing to challenge the individual mandate. The decision represents the third time
that the Supreme Court has upheld the ACA. The most recent Supreme Court opinion did not
address issues of constitutionality or severability, which may create the basis for future legal
challenge.
On March 11, 2021, President Biden signed into law the American Rescue Plan (ARP) Act
of 2021. This ARP Act increases and expands eligibility for ACA premium subsidies for certain
people enrolled in marketplace health plans. The Act helps progress toward improving prescription
access and cost through expanded coverage. President Biden also signed into law the Inflation
Reduction Act (IRA) on August 16, 2022. The IRA affects the most significant reform for the
payment of pharmaceuticals and biologicals since the creation of the Medicare Part D program as
part of the Medicare Modernization Act of 2003 (MMA). The drug pricing provisions in Subtitle B
of Title I of the IRA, entitled “Prescription Drug Pricing Reform,” are the culmination of a
multi-year effort by the Biden Administration and the United States Congress to enact government
price negotiation authority over pharmaceuticals and biologicals for the Medicare program.
Although the legislation is now enacted, questions remain regarding its implementation. The
market expects implementation of the IRA will take place through a combination of guidance,
program instruction, agreements with manufacturers, and notice-and-comment rulemaking.
Throughout 2023, the Centers for Medicare & Medicaid Services (“ CMS”) has adopted changes to
IRA requirements and has been preparing to implement key features of the law that will become
effective in the next few years. CMS published numerous guidance documents and created the
Medicare Drug Rebate and Negotiations Group, which is responsible for administering the
Medicare Prescription Drug Inflation Rebate Program and the Medicare Drug Price Negotiation
Program. CMS also published a list of 10 Part D selected drugs for negotiation for 2026 on
September 1, 2023. Under the IRA, the deadline for sponsors of drugs selected for the Medicare
Drug Negotiation Program to sign a required and proscribed template contract in order to
participate in the negotiation process for 2026 is October 1, 2023.
Patent Term Re stor ation and Marketin g Exclu sivity
After approval, owners of relevant drug or biological product patents may apply for up to a
five-year patent extension to restore a portion of patent term lost during product development and
FDA review of NDA/BLA if approval of the application is the first permitted commercial
marketing or use of a biologic containing the active ingredient under the Drug Price Competition
and Patent Term Restoration Act of 1984, referred to as the Hatch-Waxman Act. The allowable
patent term extension is calculated as one-half of the product’s testing phase, which is the time
between IND and BLA submission, and all of the review phase, which is the time between
NDA/BLA submission and approval, up to a maximum of five years. The time can be shortened if
the FDA determines that the applicant did not pursue approval with due diligence. The total patent
term after the extension may not exceed more than 14 years from the date of FDA approval of the
product. Only one patent claiming each approved product is eligible for restoration, only those
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claims covering the approved product, a method for using it, or a method for manufacturing it may
be extended, and the patent holder must apply for restoration within 60 days of approval. The
USPTO, in consultation with the FDA, reviews and approves the application for patent term
restoration. For patents that might expire during the application phase, the patent owner may
request an interim patent extension. An interim patent extension increases the patent term by one
year and may be renewed up to four times. For each interim patent extension granted, the
post-approval patent extension is reduced by one year. The director of the USPTO must determine
that approval of the drug candidate covered by the patent for which a patent extension is being
sought is likely. Interim patent extensions are not available for a drug candidate for which a BLA
has not been submitted.
LA WS AND REGULATIONS OF AUSTRALIA
Lawsa nd Regulation s of Clinic al Develo pment
Clinical trials conducted in Australia are regulated by the Therapeutic Goods
Administration (“ TGA”). Clinical trials must comply with a number of laws and regulations in
Australia at the Commonwealth and State/Territory levels, including the Therapeutic Goods Act
1989 (Cth) and the Therapeutic Goods Regulations 1990 (Cth). Clinical trials must also comply
with: the International Council for Harmonisation of Technical Requirements for Pharmaceuticals
for Human Use (ICH) Guidelines for Good Clinical Practice, as adopted and annotated by the TGA
(the “ ICH GCP Gui deline s”); and the National Statement on Ethical Conduct in Human Research
(the “ Nation alS t atement ”).
There are two schemes for the approval of clinical trials in Australia: the Clinical Trial
Notification (“ CTN”) scheme; and the Clinical Trial Approval (“ CTA”) scheme. The CTN scheme
involves the TGA being notified of the clinical trial, but not undertaking any evaluation of the
clinical trial. The CTA scheme involves the TGA not only being notified of the clinical trial, but
also conducting an evaluation and assessment of the clinical trial prior to its commencement. The
CTN scheme is generally used for earlier phase studies when there is adequate preclinical
information about the product, particularly in relation to safety. The CTA scheme is generally used
for high-risk or novel treatments, where there is little known or no knowledge about the safety of
the goods. The decision regarding which scheme to follow is generally up to the sponsor of the trial
and the applicable Human Research Ethics Committee (“ HREC ”), although the CTA scheme is
mandatory for certain types of biological medicines. Clinical trials in Australia require the
approval of the research institute that is conducting the trial, following a review by its HREC
before the trial commences. HRECs are also responsible for overseeing clinical trials.
Clinical trials conducted in Australia must have a trial sponsor that is an Australian
company. It is permissible for a foreign corporation to engage an Australian company to act as the
sponsor of a clinical trial in Australia, often referred to as the Local Sponsor. In this situation, the
foreign corporation does not, itself, need to obtain any licenses or authorizations in respect of the
clinical trial. The Australian trial sponsor is responsible for the initiation, management and
financing (or arranging the financing) for the clinical trial and is legally responsible for the
conduct of the clinical trial, including obtaining the requisite licenses or authorizations. The trial
sponsor does not need to be the manufacturer of the product being trialed. The product
manufacturer may rely on the results the trial when seeking to have the product registered on the
Australian Register of Therapeutic Goods.
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Clinical trials in Australia must follow the ICH GCP Guidelines as annotated by the TGA.
The TGA’s annotations provide additional guidance regarding compliance with the National
Statement, obtaining informed consent in special cases, responsibility for the conduct of the trial
(including management, data handling and record keeping), the manufacturing, packaging,
labelling and coding of investigational products, and reporting for adverse drug reactions. The
approval of a clinical trial in Australia is conditional upon compliance with the ICH GCP
Guidelines as annotated by the TGA.
Clinical trials in Australia must also comply with the National Statement. The National
Statement sets out the Australian ethical standards against which all research involving humans,
including clinical trials, are reviewed. The approval of a clinical trial in Australia is conditional
upon compliance with the National Statement.
In relation to safety reporting requirements, clinical trials conducted in Australia must
follow: the Note for Guidance on Clinical Safety Data Management: Definitions and Standards for
Expedited Reporting (CPMP/ICH/377/95), as annotated by the TGA; and the National Health and
Medical Research Council (“ NHMRC ”) Guidance: Safety Monitoring and Reporting in Clinical
Trials Involving Therapeutic Goods.
Additionally, per the ICH GCP Guidelines as annotated by the TGA, products used in
clinical trial must comply with the applicable good manufacturing practices (“ GMP ”). For
investigational products manufactured in Australia, the relevant manufacturing standards are set
out in the Therapeutic Goods (Manufacturing Principles) Determination 2020 (Cth) . Generally,
therapeutic goods (other than blood, blood components, haematopoietic progenitor cells and
biologicals that do not comprise or contain live animal cells, tissues or organs) must be
manufactured in accordance with the Guide to Good Manufacturing Practice of Medicinal Products
(PE 009-15, 1 May 2021) published by PIC/S.
Under both the CTN and CTA schemes, the clinical trial sponsor for a trial involving
medicines or biological products must provide to the TGA information about the proposed dosage
form, route of administration, formulation, dosage, and frequency of administration of the product
(amongst other information), prior to the commencement of the clinical trial. If a change to the
dosage is proposed to be made following the completion of a phase I clinical trial, then that change
must be either notified to the TGA (if the clinical trial falls under the CTN scheme), or approved by
the TGA (if the clinical trial falls under the CTA scheme). The change would also require review
and approval by the HREC overseeing the trial.
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OVERVIEW
We are a biopharmaceutical company specializing in the discovery, development and
commercialization of multifunctional, multi-targeted therapies for the treatment of metabolic and
digestive diseases. The history of our Group can be traced back to November 15, 2011, when Dr.
Liu, our founder, executive Director and chief executive officer, established Shenzhen HighTide
together with our Angel Investor, Hepalink. For more information on the background of Dr. Liu,
please refer to the section headed “Directors and Senior Management” in this prospectus.
Our Company was incorporated in the Cayman Islands as an exempted company with
limited liability on February 28, 2018 and has been an investment holding company since
incorporation. As a part of the Reorganization, our Company became the holding company and the
listing vehicle of our Group.
MILESTONES OF DEVELOPMENT
The following is a summary of our major business development milestones:
Year Event
November 2011 .............. S henzhen HighTide was established by Dr. Liu and we
completed the Angel Round Investment (as defined below).
March 2013 .................... We f iled the first PCT patent application covering the
compound of HTD4010.
April 2014 ..................... We initiated the discovery study of our Core Product,
HTD1801.
March 2015 .................... We initiated the pre-clinical study of our Core Product,
HTD1801.
July 2015 ....................... We f iled the first PCT patent application covering the
compound of our Core Product, HTD1801.
October 2015 ................. We initiated Phase I clinical trial of HTD4010 in Australia.
March 2016 .................... We completed Phase I clinical trial of HTD4010 in Australia.
August 2016 ................... HTD1801 was granted Orphan Drug Designation for PSC
indication by FDA.
December 2016
(1) .......... We completed the Series A Investment (as defined below).
February 2018 ................ We initiated Phase II clinical trial of HTD1801 for PSC in the
United States and Canada.
April 2018 ..................... We initiated Phase Ib/IIa trial of HTD1801 for
hypercholesterolemia in Australia.
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Year Event
September 2018 ............. Fast Track Designation was granted by FDA for HTD1801
PSC indication.
November 2018 .............. Fast Track Designation was granted by FDA for HTD1801
MASH indication.
November 2018 .............. We initiated Phase II clinical trial of HTD1801 in adult MASH
and T2DM patients in the United States.
December 2018 .............. We completed Phase Ib/IIa trial of HTD1801 for
hypercholesterolemia in Australia.
December 2018 (1) ........... We completed the Series B-1 Investment (as defined below).
April 2019 (1) ................. We completed the Series B-2 Investment (as defined below).
March 2020 .................... We completed Phase IIa clinical trial of HTD1801 in adult
MASH and T2DM patients in the United States.
August 2020 ................... We completed Phase II clinical trial of HTD1801 in adult PSC
patients in the United States and Canada.
May 2021 ....................... We initiated Phase II clinical trial of HTD1801 in adult PBC
patients in the United States.
May 2021 (1) ................... We completed the Series B+ Investment (as defined below).
September 2021 ............. We initiated Phase I clinical trial in healthy volunteers for
HTD1801 T2DM indication in the PRC.
November 2021 (1) .......... We completed Series C Investment (as defined below).
March 2022 .................... We initiated Phase II clinical trial of HTD1801 in adult T2DM
patients in China.
May 2022 ....................... We completed Phase II clinical trial of HTD1801 in adult PBC
patients in the United States.
December 2022 (1) ........... We completed Series C+ Investment (as defined below).
December 2022 .............. We initiated Phase IIb clinical trial of HTD1801 in adult with
MASH and liver fibrosis who have T2DM or pre-diabetes in
the United States.
Note:
(1) The time refers to the time when the last installment of the investments comprising the relevant series of
investments has been irrevocably settled.
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OUR GROUP
Our Com pany
Our Company was incorporated as an exempted company with limited liability in the
Cayman Islands on February 28, 2018. Please refer to the paragraph headed “Shenzhen HighTide
— Establishment and Angel Round Investment” in this section for further details. Immediately
after its incorporation, one Share was issued and transferred to the Founder BVI, which was then
wholly-owned by Dr. Liu.
For information and further shareholding change of our Company, please refer to the
paragraph headed “— Reorganization.”
Our Princi palO peratin g Entitie s
As at the Latest Practicable Date, the Group consisted of ten subsidiaries, among which we
had four principal operating entities, namely Shenzhen HighTide, Australia HighTide, U.S.
HighTide and Shanghai Fusion, which made material contribution to our results of operation
during the Track Record Period. The details of our principal operating entities are set forth below:
Name of Entity Princi palB u sine ss Activitie s
Date of
Establi shment/
Incor poration
Place of
Establi shment
Shenzhen HighTide . . . Pharmaceutical research, preclinical study and
clinical study of drug candidates in our pipeline
November 15, 2011 Shenzhen, PRC
Australia HighTide .... Early stage clinical trials conducted in Australia July 15, 2015 Sydney, Australia
U.S. HighTide ........ Assisting the management of overseas clinical trial
operations for our Group
January 24, 2018 Maryland, United
States
Shanghai Fusion ....... Assisting the management of preclinical study for
our Group
May 20, 2021 Shanghai, PRC
Shenzhen Hi ghTi de
Establishment and Angel Round Investment
In 2011, Dr. Liu was introduced to Hepalink, our Angel Investor, through an acquaintance of
Mr. Shan Yu, the executive director of Hepalink. Hepalink is a leading China-based pharmaceutical
company with global pharmaceutical, innovative biotech and CDMO businesses. Dr. Liu has
approximately 20 years of drug research and development experience. Both Hepalink and Dr. Liu
considered it to be in line with their respective business objectives and a mutual beneficial and
complementary commercial decision to establish Shenzhen HighTide together. On November 15,
2011, Shenzhen HighTide was established by Dr. Liu and Hepalink with an initial registered
capital of RMB35 million, among which Dr. Liu agreed to subscribe for RMB15 million and
Hepalink agreed to subscribe for RMB20 million (the “ Angel Roun d Inve stment ”). As at
November 30, 2011, the registered capital of Shenzhen HighTide had been fully paid by Dr. Liu
with intangible assets appraised by an independent valuation expert at RMB15 million and by
Hepalink with RMB20 million in cash. As part of the Reorganization, our Company was
incorporated on February 28, 2018 and became the ultimate holding company of Shenzhen
HighTide in September 2018.
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The shareholding structure of Shenzhen HighTide upon establishment and completion of the
Angel Round Investment is set forth below:
Name of Sh arehol der
Amount of
Registere d Capital
Sharehol ding
Percent age
(RMB)
D r .L i u .................................................. 1 5 million 42.86%
Hepalink ................................................ 2 0 million 57.14%
Series A Investment
On June 17 and December 19, 2016, Shenzhen HighTide entered into two investment
agreements with (i) Xinjiang Taitong Equity Investment Partnership (ᛆҳ༟ΥྫΆุ
Υྫ)( “ Xinji ang Taiton g”) and Shenzhen Qianhai Haichuang Fund Partnership (Limited
Partnership) (Υྫ)( “ Qi anh aiH aichu ang”); and (ii)
Hepalink and Tibet Ningfeng Equity Investment Partnership (ࠢ
Υྫ)( “ Tibet Nin gfen g”), respectively, pursuant which Hepalink, Qianhai Haichuang, Tibet
Ningfeng and Xinjiang Taitong agreed to subscribe for RMB4.13 million, RMB1.4 million,
RMB1.05 million and RMB420,000 of the registered capital of Shenzhen HighTide at subscription
price of RMB59 million, RMB20 million, RMB15 million and RMB6 million, respectively (the
“Serie s AI n v estment ”). The subscription price was determined after arm’s length negotiation
taking into account that (i) HTD4010 had entered into clinical stage in October 2015 and (ii)
HTD1801 was granted Orphan Drug Designation for PSC indication by the FDA in August 2016.
The last installment of the Series A Investment was fully settled in cash on December 26, 2016.
The shareholding structure of Shenzhen HighTide following the completion of the Series A
Investment is set forth below:
Name of Sh arehol der
Amount of
Registere d Capital
Sharehol ding
Percent age
(RMB)
Hepalink ................................................ 24,130,000 57.45%
D r .L i u .................................................. 15,000,000 35.71%
Qianhai Haichuang ....................................... 1,400,000 3.33%
Tibet Ningfeng ........................................... 1,050,000 2.50%
Xinjiang Taitong ......................................... 420,000 1.00%
Total ................................................... 42,000,000 100%
For information and further shareholding changes of Shenzhen HighTide during the
Reorganization, please refer to the paragraph headed “— Reorganization”.
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Australia HighTide
Australia HighTide was incorporated as a proprietary company limited by shares in
Australia on July 15, 2015. Since August 11, 2015, it has been wholly-owned by Shenzhen
HighTide. Australia HighTide has been principally engaged in early stage clinical trials conducted
in Australia.
Shanghai Fusion
Shanghai Fusion was established in the PRC as a limited liability company on May 20, 2021.
The initial registered capital of Shanghai Fusion was RMB1 million and had been paid up as at the
Latest Practicable Date. Since its establishment, it has been wholly-owned by Shenzhen HighTide.
Shanghai Fusion has been principally engaged in assisting the management of preclinical study for
our Group.
U.S. Hi ghTi de
U.S. HighTide was incorporated in the United States as a limited liability company on
January 24, 2018. Since its incorporation, U.S. HighTide has been principally engaged in assisting
the management of overseas clinical trial operations for our Group. U.S. HighTide was
wholly-owned by Dr. Steven LINBERG at the time of its incorporation. Dr. Steven LINBERG has
more than 20 years of experience in clinical operation and biologics development. From 2017 to
2019, Dr. Steven LINBERG provided U.S. registration regulations and clinical development
consulting services in relation to HTD1801 to our Company. On January 1, 2019, our Company and
Dr. Steven LINBERG entered into a membership interest purchase agreement, pursuant to which
Dr. Steven LINBERG transferred all of his right, title and interest in and to U.S. HighTide to our
Company at the consideration of US$2. The consideration was determined after arm’s length
negotiation taking into account the total assets of U.S. HighTide as of the time of the purchase.
PRE-IPO INVESTMENTS
We have received the seven rounds of Pre-IPO investments since our establishment.
Angel Round Investment and Series A Investment
For the information of the Angel Round Investment and Series A Investment, please refer to
the paragraphs headed “— Establishment and Angel Round Investment” and “— Series A
Investment”.
Transfer of Interest in Our Group by Xinjiang Taitong to Able Holdings
On March 14, 2019, Xinjiang Taitong entered into an equity transfer agreement with HK
HighTide, and Able Holdings International Limited (“ Able Hol dings”) entered into a share
purchase agreement with, among others, our Company, pursuant to which (i) Xinjiang Taitong
agreed to transfer its equity interests in Shenzhen HighTide to HK HighTide at a consideration of
RMB6 million; and (ii) Able Holdings agreed to subscribe for a number of Series A Preferred
Shares on a pro-rata basis with reference to Xinjiang Taitong’s equity interests in Shenzhen
HighTide, which is 378,000 Series A Preferred Shares, at the same consideration. The
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consideration of the transfer was determined with reference to investment amount of Xinjiang
Taitong in the Series A Investment and was fully paid by Able Holdings on December 2, 2019 and
by HK HighTide (in an equivalent amount in United States dollars) on November 27, 2019. On
March 25, 2019, our Company issued and allotted 378,000 Series A Preferred Shares to Able
Holdings.
Series B-1 Investment
Our Company entered into a share purchase agreement (the “ Serie s B-1 Inve stment
Agreement ”) with Green Pine Growth Fund I LP (“ Green Pine ”), Greaty Investment Limited ( ᄿ
ʮ̡ )( “ Gre aty Inve stment ”) and ZT Global Energy Investment Fund I LLP
(“ZT Glob al Ener gy”) on September 25, 2018, pursuant to which Green Pine, Greaty Investment
and ZT Global Energy agreed to subscribe for 700,000, 1,166,667 and 1,166,667 Series B-1
Preferred Shares at an aggregate subscription price of US$3 million, US$5 million and US$5
million, respectively (the “ Serie s B-1 Inve stment ”). The last installment of the Series B-1
Investment was fully settled in cash on December 6, 2018.
Series B-2 Investment
Our Company entered into a share purchase agreement (the “ Serie s B-2 Inve stment
Agreement ”, together with the Series B-1 Investment Agreement the “ Serie s BA greement s”)
with Blue Ocean Healthcare Project I, Ltd. (“ Blue Oce an”) and Orient Champion Investment
Limited (“ Orient Ch ampion”) on December 29, 2018, pursuant to which Blue Ocean and Orient
Champion agreed to subscribe for 466,667 Shares and 1,633,333 Series B-2 Preferred Shares at an
aggregate subscription price of US$2 million and US$7 million, respectively (the “ Serie s B-2
Inve stment ”, together with the Series B-1 Investment, the “ Serie s BI n v estment s”). The last
installment of the Series B-2 Investment was fully settled in cash on April 25, 2019.
The subscription price of the Series B Investments was determined after arm’s length
negotiation taking into account that our Core Product, HTD1801, entered clinical stage, completed
the Phase Ia trial of HTD1801 in healthy volunteers and initiated Phase Ib/IIa clinical trial of
HTD1801 in hypercholesterolemia in Australia.
As a result of dilution from the issuance by our Company of 4,200,000 ordinary Shares on
March 25, 2019 to the 2020 ESOP Platform (see the paragraph headed “— 2020 ESOP Platform”
for details) and our Series B Investments, which Hepalink did not participate in, Hepalink’s
shareholding interest in our Company decreased to approximately 47.02% upon the completion of
the Series B Investments. Following the exercise of directors’ appointment rights of the Series B
Investors, the financial results of our Company were no longer consolidated into the consolidated
financial statement of Hepalink as Hepalink no longer controlled the composition of the Board.
Pursuant to the Sixth Amended and Restated Shareholders Agreement (as defined below)
and the Existing M&A (as defined below), prior to Listing, Dr. Liu shall have the right to designate
one Director (the “ Foun der Director ”), and may remove or designate another person in his/her
stead with or without cause in like manner of any Founder Director so designated, and the Hepalink
Entities (being Hepalink and Hepalink Biotechnology II Limited) shall have the right to jointly
designate one Director (the “ Hepalink Director ”) and may remove or designate another person in
his/her stead with or without cause in like manner of any Hepalink Director so designated. Such
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director appointment rights of Dr. Liu and the Hepalink Entities will be terminated upon Listing.
After the Listing, pursuant to the Memorandum of Association and the Articles of Association to be
adopted upon Listing, the Directors have the power to appoint any person as a Director and any
Director so appointed shall hold office only until the first annual general meeting of the Company
after his appointment and shall then be eligible for re-election. A Director may be removed by an
ordinary resolution of the Company before the expiration of his term of office and Shareholders
may by ordinary resolution appoint another in his place. For the details, please refer to “Appendix
III — Summary of the Constitution of the Company and Cayman Islands Company Law — (b)
Directors — (i) Appointment, retirement and removal”.
Transfer of Shares to 2020 ESOP Platform by Series B Investors
Pursuant to valuation adjustment provisions contained in the Series B Investment
Agreements, the pre-money valuation of the Series B-1 Investment and the Series B-2 Investment
shall be automatically (i) adjusted from US$180 million to US$200 million regarding the Series
B-1 Investment, and (ii) adjusted from US$193 million to US$213 million regarding the Series B-2
Investment upon occurrence of certain events, and each of the Series B-1 Investors and the Series
B-2 Investors shall transfer certain number of Shares to 2020 ESOP Platform in no consideration
according to a formula as agreed among the Shareholders in the Series B Investment Agreements.
Accordingly, after the occurrence of the relevant valuation adjustment triggering event
defined in the valuation adjustment provisions contained in the Series B Investment Agreements
(i.e. Phase Ib/IIa trial of HTD1801 in hypercholesterolemia was completed in Australia in 2018,
ZT Global Energy, Greaty Investment and Green Pine transferred 105,105, 105,105 and 63,063 (in
aggregate, 273,273) Series B-1 Preferred Shares, respectively, and Orient Champion and Blue
Ocean transferred 147,147 and 42,042 (in aggregate, 189,189) Series B-2 Preferred Shares,
respectively, to 2020 ESOP Platform on August 12, 2019. On the same day, such transferred Shares
were reclassified into 462,462 ordinary Shares on a one-to-one basis.
Series
#
 Investment
Our Company entered into a share purchase agreement with a number of investors (as listed
in the shareholding structure table below, the “ Serie s B+ Inve stor s”) on August 28, 2020, pursuant
to which our Company agreed to (i) issue and allot to offshore Series B+ Investors an aggregate of
7,027,600 Series B+ Preferred Shares at a consideration of US$33,100,000 and (ii) issue to each of
the Series B+ Investors that were established in the PRC a warrant (together the “ Warrants”) that
underlies an aggregate of 5,650,954 Series B+ Preferred Shares at a consideration of
US$26,616,000 (the “ Serie s B+ Inve stment ”). The subscription price of the Series B+ Investment
was determined after arm’s length negotiation after taking into consideration that our Core
Product, HTD1801, completed the 1b/2a trials trial in hypercholesterolemia. On August 24, 2021,
the Warrants were fully converted into Series B+ Preferred Shares. The last installment of the
Series B+ Investment was fully settled in cash on May 14, 2021.
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The shareholding and voting right structure of our Company following the completion of the
Series B+ Investment and full exercise of the Warrants is set forth below:
Name of Sh arehol der Serie s of Sh ares
Number
of Sh ares
Sharehol ding
Percent age
Percent age
of Votin g
Rights Hel d
The AIC Grou p
Dr. Liu (1) .................................. O rdinary Shares 13,500,000 22.93% 30.85%
Greaty Investment ........................... Series B-1 Preferred Shares 1,061,562 1.80% 1.80%
ZT Global Energy ........................... Series B-1 Preferred Shares 1,061,562 1.80% 1.80%
Orient Champion ............................ Series B-2 Preferred Shares 1,486,186 2.52% 2.52%
Subtot alo ft h eA I CG r o up.................... 17,109,310 29.06% 36.98%
2020 ESOP Platform (1) ....................... O rdinary Shares 4,662,462 7.92% nil
Hepalink .................................. O rdinary Shares 18,000,000 30.58% 30.58%
Hepalink .................................. Series A Preferred Shares 3,717,000 6.31% 6.31%
Qianhai Haichuang .......................... Series A Preferred Shares 1,260,000 2.14% 2.14%
Able Holdings .............................. Series A Preferred Shares 378,000 0.64% 0.64%
Green Pine ................................. Series B-1 Preferred Shares 636,937 1.08% 1.08%
Blue Ocean ................................ Series B-2 Preferred Shares 424,625 0.72% 0.72%
Shenzhen Taixun Enterprise Management
Consulting Partnership (Limited Partnership)
(“Shenzhen T aixun ” ) ....................... Series B+ Preferred Shares 3,184,713 5.41% 5.41%
Poly Platinum Enterprises Limited
(“Poly Pl atinum ” )......................... Series B+ Preferred Shares 3,184,713 5.41% 5.41%
Hongkong Tigermed Co., Limited (“ HK Ti germe d”). Series B+ Preferred Shares 2,123,142 3.61% 3.61%
Pluto Connection Limited (“ Pluto ” ) .............. Series B+ Preferred Shares 1,507,431 2.56% 2.56%
Xinyu Cowin Guosheng Sci-Tech
Innovation Investment Partnership
(Limited Partnership) (“ Xinyu Cowin ” )......... Series B+ Preferred Shares 1,061,571 1.80% 1.80%
Shenzhen Winzac Jingfeng Venture
Capital Enterprise (Limited Partnership)
(“Shenzhen Winz ac” ) ...................... Series B+ Preferred Shares 520,594 0.88% 0.88%
Sichuan Rongxin Zhiyuan Industrial Co., Ltd.
(“Sichu anR o ngxin” ) ....................... Series B+ Preferred Shares 459,448 0.78% 0.78%
Ningbo Borui Allen Equity Investment Partnership
(LLP) (“ Nin gbo Borui ” ) .................... Series B+ Preferred Shares 424,628 0.72% 0.72%
Shenzhen BioResearch Investment Fund, L.P.
(“Shenzhen BioRe search” ).................. Series B+ Preferred Shares 212,314 0.36% 0.36%
Total ..................................... 58,866,888 100% 100%
Note:
(1) Dr. Liu, being the investment advisor of the Family Trust, is entitled to exercise the voting rights attached to the
13,500,000 Shares held by the Founder BVI. Dr. Liu was also granted power of attorney to exercise the voting
rights attached to the 8,849,294 Shares held by the 2020 ESOP Platform. For details, please refer to the paragraph
headed “— 2020 ESOP Platform”.
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Transfer of Interest in Our Group by Tibet Ningfeng to Goldlink
On June 10, 2021, Tibet Ningfeng entered into an equity transfer agreement with HK
HighTide, and Goldlink Capital Fund SPC - Goldlink Greater China Fund SPV (“ Gol dlink ”)
entered into a share purchase agreement with, among others, our Company, pursuant to which (i)
Tibet Ningfeng agreed to transfer its equity interests in Shenzhen HighTide to HK HighTide at the
consideration of the transfer of US$4,005,885; and (ii) Goldlink agreed to subscribe for a number
of Series A Preferred Shares on a pro-rata basis with reference to Tibet Ningfeng’s equity interests
in Shenzhen HighTide, which is 945,000 Series A Preferred Shares, at the same consideration. The
consideration was determined after arm’s length negotiations with reference to the cost per Share
paid in the Series B+ Investment and was fully paid by Goldlink on June 16, 2021 and by HK
HighTide on August 17, 2021. On August 24, 2021, our Company issued and allotted 945,000
Series A Preferred Shares to Goldlink.
Series C Investment
Our Company entered into a Series C share purchase agreement (the “ Serie s CI n v estment
Agreement ”) with, among others, BAIYI Capital Limited (“ BAIYI C apital”) and Hongtu Capital
Limited (“ Hon gtu C apital”) on October 18, 2021, pursuant to which BAIYI Capital and Hongtu
Capital agreed to subscribe for 4,571,359 Shares and 7,618,932 Series C Preferred Shares at
considerations of US$30 million and US$50 million, respectively (the “ Serie s CI n v estment ”).
The subscription price of the Series C Investment was determined after arm’s length negotiation
taking into account the R&D progress and clinical development of our pipeline products since the
Series B+ Investment. The last installment of the Series C Investment was fully settled in cash on
November 16, 2021.
Inner-group Transfer of Interest by Hepalink
In December 2021, Hepalink transferred its 18,000,000 ordinary Shares in the Company to
its indirectly wholly-owned subsidiary, Hepalink Biotechnology II Limited. On December 30,
2021, the relevant registration was completed.
Series
$
 Investment
Our Company entered into a Series C+ share purchase agreement with, among others,
Guangdong Chinese Medicine Comprehensive Health Equity Investment Fund Partnership
(Limited Partnership) (Υྫ)( “ Tradition al
Chine seM e dicine Fun d”) and Guangzhou Yuexiu Jinchan Phase IV Investment Fund Partnership
(Limited Partnership) (Υྫ)( “ Yuexiu Jinch anI V ”) on
September 5, 2022 and April 26, 2022, respectively (the “ Serie s C+ Inve stment A greement s”),
pursuant to which Traditional Chinese Medicine Fund and Yuexiu Jinchan IV agreed to subscribe
for 2,987,795 Series C+ Preferred Shares and 985,972 Series C+ Preferred Shares at
considerations of US$20,000,000 and US$6,600,000, respectively (the “ Serie s C+ Inve stment ”).
The subscription price of the Series C+ Investment was determined after taking into account the
R&D progress and clinical development of our pipeline products since the Series C Investment.
The last installment of the Series C+ Investment was fully settled in cash on November 15, 2022
and December 16, 2022, respectively. The post-money valuation of our Company after the Series
C+ Investments increased to approximately US$536 million, primarily because our Company
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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completed the Phase I clinical trial of HTD1801 for T2DM in November 2021 and initiated the
Phase II clinical trial of HTD1801 for T2DM in China in March 2022. The valuation of our
Company is expected to further increase after the Series C+ Investments because our Company
initiated the Phase IIb study (HTD1801.PCT014) for MASH in the United States in December
2022 and in Hong Kong in October 2023, initiated the Phase II study (HTD1801.PCT103) for
T2DM in China in March 2022, and completed the Phase II study (HTD1801.PCT103) for T2DM
in January 2023.
Transfer of Interest in Our Group by Hepalink to Yuexiu Jinchan IV , Pingtan Rongjing and
MPCAPITAL
On April 26, 2022, May 25, 2022, June 1, 2022 and September 5, 2022, respectively,
Hepalink entered into an equity transfer agreement, as amended, with Yuexiu Jinchan IV , pursuant
to which Hepalink agreed to transfer 631,811 Series A Preferred Shares to Yuexiu Jinchan IV at a
consideration of USD3,400,000. The relevant registration was completed on November 25, 2022.
On September 15, 2022, Hepalink entered into an equity transfer agreement with Pingtan
Rongjing Investment Partnership (Limited Partnership) (Υྫ)
(“Pin gtan Ron gjin g”), pursuant to which Hepalink agreed to transfer 461,000 Series A Preferred
Shares to Pingtan Rongjing at the consideration of USD2,480,803.96. The relevant registration
was completed on November 18, 2022.
On October 18, 2022, Hepalink entered into an equity transfer agreement with MPCAPITAL
INTERNATIONAL COMPANY LIMITED (“ MPCAPITAL ”), pursuant to which Hepalink agreed
to transfer 371,654 Series A Preferred Shares to MPCAPITAL at the consideration of
USD2,000,000. The relevant registration was completed on January 18, 2023.
The share price for the above-mentioned transfer of Series A Preferred Shares by Hepalink
was lower than the subscription price of the Series C+ Preferred Shares in the Series C+
Investments, primarily because the special rights attached to the Series A Preferred Shares are less
preferential compared to the special rights attached to the Series C+ Preferred Shares. For
instance, certain special rights granted to the Shareholders of the Series C+ Preferred Shares,
including the right to preferred liquidation, right of co-sale and redemption rights, are not granted
to the Shareholders of the Series A Preferred Shares. Therefore, the prices for the transfer of Series
A Preferred Shares by Hepalink and for the subscription of the Series C+ Preferred Shares were not
determined solely based on the valuation of Company at the relevant times and the R&D progress
of the Core Product, which is correlative with the sequence of the relevant share transfers and
subscriptions, but were also determined based on the terms and conditions attached to the relevant
preferred shares involved in the relevant share transfers and subscriptions, which is not correlative
with the sequence of the relevant share transfers and subscriptions.
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The shareholding and voting right structure of our Company following the completion of the
Series C+ Investment and the transfer of interest by Hepalink is set forth below:
Name of Sh arehol der Serie s of Sh ares
Number
of Sh ares
Sharehol ding
Percent age
Percent age
of Votin g
Rights Hel d
The AIC Grou p
Dr. Liu (1) .................................. O rdinary Shares 13,500,000 16.84% 27.88%
Greaty Investment ........................... Series B-1 Preferred Shares 1,061,562 1.32% 1.32%
ZT Global Energy ........................... Series B-1 Preferred Shares 1,061,562 1.32% 1.32%
Orient Champion ............................ Series B-2 Preferred Shares 1,486,186 1.85% 1.85%
Subtot alo ft h eA I CG r o up ................... 17,109,310 21.34% 32.38%
2020 ESOP Platform (1) ....................... O rdinary Shares 8,849,294 11.04% nil
Hepalink Biotechnology II Limited .............. O rdinary Shares 18,000,000 22.45% 22.45%
Hepalink .................................. Series A Preferred Shares 2,252,535 2.81% 2.81%
Qianhai Haichuang .......................... Series A Preferred Shares 1,260,000 1.57% 1.57%
Goldlink .................................. Series A Preferred Shares 945,000 1.18% 1.18%
Able Holdings .............................. Series A Preferred Shares 378,000 0.47% 0.47%
Yuexiu Jinchan IV ........................... Series A Preferred Shares 631,811 0.79% 0.79%
Pingtan Rongjing ............................ Series A Preferred Shares 461,000 0.58% 0.58%
MPCAPITAL ............................... Series A Preferred Shares 371,654 0.46% 0.46%
Green Pine ................................. Series B-1 Preferred Shares 636,937 0.79% 0.79%
Blue Ocean ................................ Series B-2 Preferred Shares 424,625 0.53% 0.53%
Shenzhen Taixun ............................ Series B+ Preferred Shares 3,184,713 3.97% 3.97%
Poly Platinum .............................. Series B+ Preferred Shares 3,184,713 3.97% 3.97%
HK Tigermed ............................... Series B+ Preferred Shares 2,123,142 2.65% 2.65%
Pluto ..................................... Series B+ Preferred Shares 1,507,431 1.88% 1.88%
X i n y uC o w i n............................... Series B+ Preferred Shares 1,061,571 1.32% 1.32%
Shenzhen Winzac ............................ Series B+ Preferred Shares 520,594 0.65% 0.65%
Sichuan Rongxin ............................ Series B+ Preferred Shares 459,448 0.57% 0.57%
Ningbo Borui .............................. Series B+ Preferred Shares 424,628 0.53% 0.53%
Shenzhen BioResearch ....................... Series B+ Preferred Shares 212,314 0.26% 0.26%
Hongtu Capital ............................. Series C Preferred Shares 7,618,932 9.50% 9.50%
BAIYI Capital .............................. Series C Preferred Shares 4,571,359 5.70% 5.70%
Traditional Chinese Medicine Fund .............. Series C+ Preferred Shares 2,987,795 3.73% 3.73%
Yuexiu Jinchan IV ........................... Series C+ Preferred Shares 985,972 1.23% 1.23%
Total ..................................... 80,162,778 100% 100%
Note:
(1) Dr. Liu, being the investment advisor of the Family Trust, is entitled to exercise the voting rights attached to the
13,500,000 Shares held by the Founder BVI. Dr. Liu was also granted power of attorney to exercise the voting
rights attached to the 8,849,294 Shares held by the 2020 ESOP Platform. For details, please refer to the paragraph
headed “— 2020 ESOP Platform”.
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The shareholding interest of Hepalink in our Company as of December 31, 2022 was
approximately 25.73%, being an aggregate of 20,624,189 Shares held by Hepalink divided by
80,162,778 Shares issued in total by our Company as of December 31, 2022. As disclosed in
Hepalink’s annual report for the year ended December 31, 2022, Hepalink held approximately
40.19% interest in our Company as of December 31, 2022, being an aggregate of 20,624,189
Shares held by Hepalink divided by 51,320,166 Shares issued by our Company to Shareholders
holding ordinary Shares, Series A Preferred Shares, Series B-1 Preferred Shares and Series B-2
Preferred Shares as of December 31, 2022. As confirmed by Hepalink, such discrepancy in the
disclosure of shareholding is due to the reason that, when calculating its interest in our Company,
Hepalink did not count our Shares issued to Shareholders holding Series B+ Preferred Shares,
Series C Preferred Shares and Series C+ Preferred Shares into the total issued Shares of our
Company because such Shares were deemed as debt instruments instead of equity due to their
redeemable attributes based on equity methods as our Company is considered as an associate
company of Hepalink for accounting treatment.
Details of Pre-IPO Investments
The following table sets forth a summary of the details of the Pre-IPO Investments.
Angel
Roun d Serie s A Serie s B-1 Serie s B-2 Serie s B+ Serie s C Serie s C+
Number of Sh ares
subscribe d (as ad justed
after the C apitaliz ation
Issue) ...............
108,000,000
Shares
37,800,000 Series
A Preferred
Shares
16,560,366 Series
B-1 Preferred
Shares (4)
11,464,866 Series
B-2 Preferred
Shares (4)
76,071,324 Series
B+ Preferred
Shares
73,141,746 Series
C Preferred Shares
23,842,602 Series
C+ Preferred
Shares
Amount of con sideration
paid ................
RMB20,000,000 RMB100,000,000 US$13,000,000 US$9,000,000 US$59,716,000 US$80,000,000 US$26,600,000
Date of inve stment
agreement ............
October 17, 2011 June 17, 2016 and
December 19,
2016
September 25,
2018
December 29,
2018
August 28, 2020 October 18, 2021 April 26, 2022 and
September 5, 2022
Date of payment of full
con sideration ..........
November 30,
2011
December 26,
2016
December 6, 2018 April 25, 2019 May 14, 2021 November 16,
2021
December 16,
2022 and
November 15,
2022
Post-money v aluation (1) ..... RMB35,000,000 RMB600,000,000 (5) US$187,329,962 (6) US$202,000,003 (6) US$277,263,092 (7) US$499,997,980 (8) US$536,601,641 (9)
Cost per Sh are(2) ......... RMB0.19 RMB2.65 US$0.79 US$0.79 US$0.79 US$1.09 US$1.12
Discount to the
Offer Price (3) ..........
98.20% 74.36% 46.62% 46.62% 46.62% 25.62% 24.13%
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Angel
Roun d Serie s A Serie s B-1 Serie s B-2 Serie s B+ Serie s C Serie s C+
Useo f procee ds a nd
whether they h ave been
fully utilize d ..........
We utilize the proceeds to finance our research and development activities and fund our daily operations. As of the Latest Practicable Date,
approximately 100.00% of the net proceeds from the Angel Round Investment, Series A Investment, Series B-1 Investment, Series B-2
Investment and Series B+ Investment and approximately 68.1% of net proceeds from the Series C Investment had been utilized by our Group. We
had not used any net proceeds from the Series C+ Investment as of the Latest Practicable Date. As of the Latest Practicable Date, approximately
RMB368.6 million of the proceeds from the Pre-IPO Investments had not been utilized. We plan to utilize the unutilized proceeds to continue to
finance our research and development activities (including conducting the Phase IIb clinical trial of MASH in the United States, Hong Kong,
Mexico and Mainland China and the Phase III clinical trial of T2DM in China) and fund our daily operations.
Lock-u pp erio d .......... T h e Shares held by the Pre-IPO Investors
(10) will be subject to lock-up for a period of six months commencing from the Listing Date.
Str ategic benefit s of the
Pre-IPO Inve stment
brou ght to our Grou p ....
Our Group would benefit from the additional capital injected by the Pre-IPO Investors in our Group, their business resources, knowledge and
experience, potential business opportunities and benefits that may be provided by them. Our Pre-IPO Investors include a major pharmaceutical
company, private equity funds and other professional investment companies, many of which are highly experienced in investing in the healthcare
and biopharmaceutical industry. Our Directors believed that our Company could benefit from their industry insights and guidance. For example,
we have established a long-term strategic cooperative relationship with Hepalink, one of our Pre-IPO Investors, which is a major pharmaceutical
company. On August 29, 2020, we entered into the HTD1801 Agreement with Hepalink. By leveraging Hepalink’s strong sales force established
in Europe, its advantageous position in market share in the relevant jurisdictions and its established track record of sales of similar
pharmaceutical products in the European pharmaceutical market, the Company believes Hepalink will be able to successfully promote the
commercialization of innovative drug formulations containing HTD1801 in Europe. Our Directors were also of the view that the Pre-IPO
Investments demonstrate the Pre-IPO Investors’ commitment and confidence in the business performance and operations, strengths and
long-term prospects of our Group.
Notes:
(1) Equals the total consideration paid by each round of Pre-IPO Investors divided by the shareholding
percentage of it immediately following their investments.
(2) Calculated based on the currency conversion rate of USD1:RMB7.0157.
(3) Calculated based on the currency conversion rate of HKD1:RMB0.8971.
(4) Adjusted by the share transfers to the 2020 ESOP Platform. Please refer to “— Transfer of Shares to 2020
ESOP Platform by Series B Investors”.
(5) The valuation of our Company increased significantly during the period between our Angel Round
Investment and the Series A Investment, primarily because (i) HTD4010 had entered into clinical stage and
(ii) HTD1801 was granted Orphan Drug Designation for PSC indication by the FDA.
(6) The valuation of our Company increased significantly during the period between the Series A Investment
and the Series B Investments, primarily due to that the Company completed the Phase Ia trial of HTD1801
for hypercholesterolemia and initiated Phase Ib/IIa clinical trial of HTD1801 for hypercholesterolemia in
Australia.
(7) The valuation of our Company increased during the period between the Series B Investments and the Series
B+ Investment, primarily due to that the Company completed the Phase IIa trial of HTD1801 for MASH in
the United States.
(8) The valuation of our Company increased significantly during the period between the Series B+ Investment
and the Series C Investment, primarily due to that the Company completed the Phase II trial of HTD1801
for PSC and obtained the approval for clinical trial of T2DM in China.
(9) The valuation of our Company increased during the period between the Series C Investment and the Series
C+ Investment, primarily because the Company completed the Phase I clinical trial of HTD1801 for T2DM
in November 2021 and initiated the Phase II clinical trial of HTD1801 for T2DM in China in March 2022.
The valuation of our Company is expected to further increase after the Series C+ Investments because our
Company initiated the Phase IIb study (HTD1801.PCT014) for MASH in the United States in December
2022 and in Hong Kong in October 2023, initiated the Phase II study (HTD1801.PCT103) for T2DM in
China in March 2022, and completed the Phase II study (HTD1801.PCT103) for T2DM in January 2023.
(10) excluding the Shares held by Hepalink Biotechnology II Limited, which will be subject to lock-up for five
months commencing from the Listing Date.
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Speci alr i ghtsg rante d to the Pre-IPO Inve stor s
Our Company and, among others, the Pre-IPO Investors entered into the shareholders’
agreement dated September 5, 2022 (the “ Sixth Amen deda nd Re state d Sh arehol der s
Agreement ”), pursuant to which certain shareholder rights were agreed among the parties.
Pursuant to the Sixth Amended and Restated Shareholders Agreement and the then existing
amended and restated memorandum and articles of association (the “ Exi stin g M&A”) of our
Company, certain Pre-IPO Investors have, among other rights, information rights, registration
rights, the right to dividend, the right to preferred liquidation, pre-emptive rights, right of first
refusal and right of co-sale, the right to nominate Directors, drag-along and redemption rights that
are exercisable if the Listing does not take place, and conversion rights and anti-dilution rights.
The divestment rights granted to the Pre-IPO Investors, namely, the redemption rights under
the Sixth Amended and Restated Shareholders Agreement and the Existing M&A of our Company
have been automatically suspended immediately upon the Company’s submission of our
application for the Listing. Such suspended divestment rights will be restored and will become
exercisable if the Listing does not take place or if the Listing fails to consummate by the relevant
redemption restoration date as agreed between the Company and the respective parties (which in
any case is not earlier than December 31, 2023).
All other special rights of the Pre-IPO Investors granted under the foregoing documents will
be automatically terminated upon the completion of the Listing. No special rights granted to the
Pre-IPO Investors will survive after the Listing.
Com pliance with Interim Gui dance and Gui dance Letter s on Pre-IPO Inve stment s
On the basis that (i) the considerations for the Pre-IPO Investments were irrevocably settled
more than 28 clear days before the date of our first submission of the listing application to the
Stock Exchange; and (ii) the special rights granted to the Pre-IPO Investors shall cease to be
effective and be terminated upon the listing, the Joint Sponsors confirm that the investments by the
Pre-IPO Investors are in compliance with the Guidance Letter HKEX-GL29-12 issued on January
2012 and updated in March 2017 by the Stock Exchange, the Guidance Letter HKEX-GL43-12
issued in October 2012 and updated in July 2013 and in March 2017 by the Stock Exchange, and
the Guidance Letter HKEX-GL44-12 issued in October 2012 and updated in March 2017 by the
Stock Exchange.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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--- page 225 ---
Inform ation re garding the Pre-IPO Inve stor s
Our Pre-IPO Investors include two Sophisticated Investors (i.e., Greater Bay Area Fund and
Traditional Chinese Medicine Fund, each as defined below). The background information of our
Pre-IPO Investors is set out below.
Name of the
Pre-IPO Inve stor s Backgroun d
Hepalink ................. Hepalink Biotechnology II Limited is indirectly
wholly-owned by Hepalink. Hepalink is a joint stock limited
company incorporated under the laws of the PRC. Hepalink
completed its initial public offering and listing of its A shares
on the Shenzhen Stock Exchange (stock code: 002399) on May
6, 2010, and completed its initial public offering and listing of
its H shares on the Stock Exchange (stock code: 9989) on July
8, 2020. Hepalink is a leading China-based pharmaceutical
company with global pharmaceutical, innovative biotech and
CDMO businesses. Hepalink has a track record of operating
its business in the pharmaceutical industry for more than 20
years.
QianhaiH aichu ang ..... Qianhai Haichuang is a limited partnership established under
the laws of the PRC. Qianhai Haichuang has approximately
RMB20 million under its management and is principally
engaged in the investment in biopharmaceutical innovation
enterprises. The general partner of Qianhai Haichuang is
Nanfang Haichuang Funds Management (Shenzhen) Co., Ltd.
(ʮ̡ ), which is owned by
LUO Feng ( ᖯቜ) and DENG Zhineng ( ቎қঐ), both of whom
are Independent Third Parties, as to 55% and 45%,
respectively. The limited partners of Qianhai Haichuang are
YU Jielin ( ቱᆎ೙ ), LI Hao ( ҽख ), ZHAN Biao
(ڌZHONG Weizhen (ޜY ANG Jing ( เ᎑ )
and Y AN Ming (׼each of whom is an Independent Third
Party. Qianhai Haichuang is an Independent Third Party.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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--- page 226 ---
Name of the
Pre-IPO Inve stor s Backgroun d
Gol dlink ................. Goldlink Greater China Fund SP V is a segregated portfolio
under Goldlink Capital Fund SPC, which is a segregated
portfolio company incorporated under the laws of the Cayman
Islands. Goldlink Greater China Fund SP V is indirectly
wholly owned by CHINA GOLDLINK CAPITAL GROUP
LIMITED (ʮ̡ ), which is owned by
SHAN Miao ( ఊ↿) as to 9.47%, Eternal Wealth Investment
Limited as to 36%, LUO Yi ( ᖯᆇ) as to 34%, CHEN Yihong
(҃) as to 4.74%, City Energy Holdings Limited as to
6.60%, and ZHU Jun (ࠏas to 9.19%. Goldlink Capital
Fund SPC — Goldlink Greater China Fund SP V is principally
engaged in the investment in the equity of private companies
(including companies principally engaged in the
biopharmaceutical industry) with assets under management of
over HK$40 million. Each of Goldlink Greater China Fund SP
V , SHAN Miao, Eternal Wealth Investment Limited , LUO Yi,
CHEN Yihong, City Energy Holdings Limited and ZHU Jun is
an Independent Third Party.
Able Hol dings ........... Able Holdings is a limited company incorporated in the BVI
with limited liabilities, which is wholly-owned by Taitong
Fund L.P. The general partner of Taitong Fund L.P. is Taitong
Management Co., Ltd. (“ Taiton g Management ”). Taitong
Management is a limited company incorporated in the Cayman
Islands and controlled by CHIANG Chen Hsiu-Lien, an
Independent Third Party.
Yuexiu Jinch anI V ...... Y ue xiu Jinchan IV is a limited partnership established under
the laws of the PRC on November 10, 2020. Yuexiu Jinchan IV
focuses on investments in healthcare, equipment
manufacturing, information technology and consumption with
assets under management of over RMB630 million. Yuexiu
Jinchan IV is managed by its general partner, Guangzhou
Yuexiu Industrial Investment Fund Management Co., Ltd. ( ᄿ
ʮ̡ ). The limited partner
with the largest equity of Yuexiu Jinchan IV is Guangzhou
Yuexiu Industrial Investment Co., Ltd. ( ᄿψ൳Ӹପุҳ༟Ϟ
ʮ̡ ) with approximately 97.60% of equity interest in
Yuexiu Jinchan IV . Each of Yuexiu Jinchan IV , Guangzhou
Yuexiu Industrial Investment Fund Management Co., Ltd. and
Guangzhou Yuexiu Industrial Investment Co., Ltd. is an
Independent Third Party.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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--- page 227 ---
Name of the
Pre-IPO Inve stor s Backgroun d
Pin gtan Ron gjin ga nd
YuthaiI n v estment ....
Pingtan Rongjing is a limited partnership established under
the laws of the PRC on November 26, 2021. Pingtan Rongjing
is managed by its general partner, Yuthai Investment
Management Co., Ltd. (ʮ̡ )
(“YuthaiI n v estment ”), which is owned as to 80% by MA
Lixiong, our non-executive Director. The limited partner
holding the largest equity interest of Pingtan Rongjing as to
47.72% is LIU Ya ( ᄎԭ) who is an Independent Third Party.
Yuthai Investment is engaged in investments in areas,
including but not limited to, healthcare, automotive electronic,
education and recruit services.
MPCAPITAL ............ MPCAPITAL is a limited company established under the laws
of Hong Kong on August 8, 2014 and is wholly-owned by
DENG Kaiping ( ቎ක̻ ), an Independent Third Party.
MPCAPITAL is principally engaged in investments in areas,
including but limited to, healthcare and technology industries.
Gre aty Inve stment ...... Greaty Investment is a limited company incorporated under
the laws of Hong Kong and is wholly-owned by HAO Yong
Kuan ( ৠ͑ᄱ), an Independent Third Party. Mr. HAO has
more than 30 years of management experience in Viction
Group and Lamda Restaurant Group. Greaty Investment
principally invests globally in biopharmaceuticals, medical
equipment and health industries and international chain
catering businesses.
ZT Glob al Ener gy ...... ZT Global Energy is an exempted limited partnership
incorporated under the laws of the Cayman Islands that is
principally engaged in the investment in healthcare and
technology industries. The general partner of ZT Global
Energy is ML Investment Management Company which is
owned by Amaryllis Forest Limited as to 60% interests and a
group of individuals each of whom holding no more than 10%
interests therein. Amaryllis Forest Limited is wholly owned by
Equity Trustee Limited as trustee of The ML Trust. Each of ZT
Global Energy, ML Investment Management Company and
Amaryllis Forest Limited is an Independent Third Party.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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--- page 228 ---
Name of the
Pre-IPO Inve stor s Backgroun d
Green Pine ............... Green Pine is an exempted limited partnership incorporated
under the laws of the Cayman Islands, with its general partner
being Green Pine International Capital Partners (“ GPCP ”)
which is owned by LUO Fei (࠭and LI Wei ( ᄒਃ). GPCP
principally invests in artificial intelligence, healthcare and
new material industries. The limited partners of Green Pine
are (i) Lilac International Investment Company Limited which
is interested in 26.53% of its equity interests; (ii) Mizuho
Bank, Ltd which is interested in 13.53% of its equity interests;
(iii) Bondwa Enterprise Limited which is interested in 10.61%
of its equity interests; (iv) JU Xiongwei who is interested in
10.61% of its equity interests; (v) Avant Sports Industrial Co.,
Limited which is interested in 5.31% of its equity interests;
(vi) Sidereal Group Limited which is interested in 6.37% of its
equity interests; (vii) KA V Invest Holding AG which is
interested in 3.71% of its equity interests; and (viii) five
individuals each of whom is interested in no more than 10% of
its equity interests. Each of Green Pine, GPCP, LUO Fei and
LI Wei and the aforesaid limited partners is an Independent
Third Party.
Orient Ch ampion ....... Orient Champion is a limited liability company incorporated
under the laws of Hong Kong and is wholly-owned by
REN Qifeng (ࢤMr. REN is an Independent Third Party.
Orient Champion is principally engaged in the investment in
biopharmaceutical innovation enterprises.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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--- page 229 ---
Name of the
Pre-IPO Inve stor s Backgroun d
Blue Oce an and
Shenzhen
BioRe search ...........
Shenzhen BioResearch, an investment fund registered in the
PRC, is managed by Shenzhen Blue Ocean Investment Fund
Management Co., Ltd. (ʮ̡ )
(“BOCG”), which is owned as to 80% by Y ANG Feng, a former
director of our Company. The other general partner of Shenzhen
BioResearch is Wuhan Snowball Asset Management Co., Ltd.
(ʮ̡ ), whose largest shareholder is
W ANG Danli (ˮʗ஁) holding 24% equity interests and other
shareholders are Y AN Zhi ( ᎅқ), W ANG Xianyuan ( ˮ΋Ⴣ),
W ANG Hongbin ( ˮ҃ⅳ ), SUN Aijun (ࠏZHANG
Zongyu ( ੵᐽʚ) and WU Jiangang (࡝each of whom is
an Independent Third Party. The limited partners of Shenzhen
BioResearch holding more than 10% equity interests are (i)
Shenzhen Yourun Investment Consulting Partnership (Limited
Partnership) (Υྫ)
holding 36.6% which is in turn owned by Y ANG Feng as a
general partner and LIU Guanghui ( ᄎΈሾ) as a limited partner
as to 50% each, (ii) Wuhan Xueqiu Bai Aurisi Equity Investment
Partnership (Limited Partnership) (ᛆҳ༟
Υྫ) holding 30.3% whose general partner is
Wuhan Snowball Asset Management Co., Ltd. and limited
partners are eight individuals, each of Wuhan Snowball Asset
Management Co., Ltd. and the said eight individuals being an
Independent Third Party, and (iii) Y ANG Feng holding 20.7%.
Each of Blue Ocean and Shenzhen BioResearch is an
Independent Third Party.
Blue Ocean is a limited liability company incorporated under the
laws of the Cayman Islands, where Y ANG Feng is a director. The
investment manager of Blue Ocean is Blue Ocean Management
Limited, which holds 10% of the equity interests of Blue Ocean
and where Y ANG Feng acts as a director. Blue Ocean
Management Limited is wholly owned by ZHAO Cong Richard.
Blue Ocean is directly owned as to 40% by ZHAO Cong
Richard, and as to 50% by Alpha Prime Ventures Limited, which
is wholly owned by CHI Wenfu ( ϫ˖బ). Each of ZHAO Cong
Richard and CHI Wenfu is an Independent Third Party.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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--- page 230 ---
Name of the
Pre-IPO Inve stor s Backgroun d
BOCG focuses on venture capital and private equity
investment in the most innovative biotech companies with
accumulated US$300 million asset under management with
dual currency funds. Recent investments of Blue Ocean
include our Company and Suzhou Life Science Co., Ltd, a
leading siRNA drug development company in China, devoted
to the development of innovative nucleic acid therapeutic
drugs and related products.
Shenzhen T aixun ........ Shenzhen Taixun is a limited partnership established in the
PRC. Nanchang JT New Century Bioventure Partnership
(“Nanch ang JT”) is the limited partner of Shenzhen Taixun
holding approximately 99.9% of the interests in Shenzhen
Taixun. Nangchang JT is a limited partnership established
under the laws of the PRC, which manages Shenzhen Taixun, a
special purpose vehicle incorporated under the laws of the
PRC. Nanchang JT is dedicated to searching for and
supporting innovative entrepreneurships in the healthcare and
life science industry. Nanchang JT is currently managing a
RMB1 billion venture capital fund with experienced
professionals. The team is focused on supporting early to
mid-stage entrepreneurships in life science in accomplishing
their ambitious vision. Each of Shenzhen Taixun and
Nanchang JT is an Independent Third Party.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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--- page 231 ---
Name of the
Pre-IPO Inve stor s Backgroun d
Poly Pl atinum and
Gre ater B ay
Are a Fun d .............
Poly Platinum is an investment holding company incorporated
in the BVI. It is a wholly-controlled subsidiary of Greater Bay
Area Homeland Development Fund LP (࢝
Υྫ )( “Gre ater B ayA r ea Fun d”). The Greater Bay
Area Fund is a private investment fund controlled by Greater
Bay Area Homeland Development Fund (GP) Limited ( ɽᝄਜ
ږGP)ʮ̡ )( “GBAHD GP ”) and under
discretionary management by Greater Bay Area Development
Fund Management Limited (“ GBAD Fun d Management ”), a
Type 1, Type 4 and Type 9 licensed corporation under the SFO.
The Greater Bay Area Fund covers a range of activities,
including venture capital, private equity investments and
listed company investments and mergers and acquisitions.
Both GBAHD GP and GBAD Fund Management are
controlled by Greater Bay Area Homeland Investments
Limited (ʮ̡ )( “ GBAHIL ”), a
company incorporated in Hong Kong with limited liability that
was jointly owned by a number of international large-scale
industrial institutions, financial institutions and new economic
enterprises, each of which holds less than 15% shareholding in
GBAHIL. Greater Bay Area Fund has assets under
management of more than HK$1 billion and has a track record
in healthcare and biotech sectors for four years. It has invested
in a number of healthcare and biotechnology companies
including HBM Holdings Limited (ʮ̡ )
whose shares are listed on the Stock Exchange (stock code:
2142) and Elpiscience Biopharmaceuticals, Inc. Greater Bay
Area Fund is a Sophisticated Investor and has made
meaningful investment in our Company at least six months
before the Listing Date. Each of Poly Platinum, Greater Bay
Area Fund, GBAHD GP, GBAD Fund Management and
GBAHIL is an Independent Third Party.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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--- page 232 ---
Name of the
Pre-IPO Inve stor s Backgroun d
HK Ti germe da nd
Hangzhou
Tigerme d ..............
HK Tigermed a limited liability company incorporated in
Hong Kong and its principal activity is investment holding and
clinical trial operation. HK Tigermed is a wholly-owned
subsidiary of Hangzhou Tigermed Consulting Co., Ltd. (ψ
ʮ̡ )( “ Hangzhou Ti germe d”), a
company whose A shares are listed on the Shenzhen Stock
Exchange (stock code: 300347) and H Shares are listed on the
Stock Exchange (stock code: 3347). Hangzhou Tigermed is a
leading China-based provider of comprehensive
biopharmaceutical R&D services, with an expanding global
presence. Hangzhou Tigermed was one of our top five
suppliers during the Track Record Period. Each of HK
Tigermed and Hangzhou Tigermed is an Independent Third
Party.
Pluto and CITIC ........ Pluto is an indirectly wholly-owned subsidiary of CITIC
Securities Company Limited (ʮ̡ ).
CITIC Securities Company Limited is a joint stock company
incorporated in the PRC with limited liability, the H shares
and A shares of which are listed on the Stock Exchange (stock
code: 6030) and the Shanghai Stock Exchange (stock code:
600030), respectively. Each of Pluto and CITIC is an
Independent Third Party.
Xinyu Cowin ............ X i n y u C o w i n i s a limited partnership established under the laws
of the PRC. Xinyu Cowin has approximately RMB695 million
under its management and is principally engaged in the
investment in the industry of comprehensive health. The general
partner of Xinyu Cowin is Cowin Jinxiu Capital Firm
(ʮ̡ ), a wholly-owned subsidiary
of Shenzhen Cowin Asset Management Co., Ltd. ( Ν௴ਃุ༟ପ
ʮ̡ ) whose shares are listed on the National
Equities Exchange and Quotations (stock code: 832793). The
largest shareholder of Shenzhen Cowin Asset Management Co.,
Ltd. was Shenzhen Cowin Venture Capital Investment Co., Ltd.
(ʮ̡ ) holding approximately
35.01% as of the Latest Practicable Date. Shenzhen Cowin
Venture Capital Investment Co., Ltd. is owned by HUANG Li
(රট ) and ZHENG Weihe ( ቍਃᚲ ), both of whom are
Independent Third Parties, as to 55% and 45%, respectively.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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--- page 233 ---
Name of the
Pre-IPO Inve stor s Backgroun d
Shenzhen Winz ac ....... Shenzhen Winzac is a limited partnership established under the
laws of the PRC, which is principally engaged in the investment
in venture capital. The general partner of Shenzhen Winzac is
Shenzhen Winzac Asset Management Co., Ltd. ( ଉέ̹ᖢ͍༟
ʮ̡ )( “ Winz acA sset M anagement ”), which is
controlled by Shenzhen Winzac Investment Co., Ltd. ( ଉέ̹ᖢ
ʮ̡ ). The largest shareholder of Shenzhen Winzac
Investment Co., Ltd. is Shenzhen Youhe Consulting Co., Ltd. ( ଉ
ʮ̡ ) holding 47.8% equity interests of it,
which is wholly owned by HUANG Youcheng ( රʾϓ). Winzac
Asset Management principally focuses in investing in advanced
manufacturing technology, SIoT (Smart Internet of Things) and
bio-pharmaceutical industries. Each of Shenzhen Winzac,
Winzac Asset Management, Shenzhen Winzac Investment Co.,
Ltd., Shenzhen Youhe Consulting Co., Ltd. and HUANG
Youcheng is an Independent Third Party.
Sichu an Ron gxin ........ Sichuan Rongxin is a limited liability company established
under the laws of the PRC, which is wholly owned by Shannan
Jintong Runcheng Industrial Co., Ltd. (ஷᆗϓྼุϞ
ʮ̡)( “ Shannan Jinton g”). Shannan Jintong is owned by
ZENG Qingmin ( ಀᅅઽ) and ZHANG Yang ( ੵเ)a s5 0 %
and 50%, respectively, both of whom are Independent Third
Parties. Shannan Jintong is principally engaged in investment
and management of expressway service areas, commerce and
trade in tourist areas, development of gas stations and
exploration and development of minerals.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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--- page 234 ---
Name of the
Pre-IPO Inve stor s Backgroun d
Nin gbo Borui ............ Ningbo Borui is a limited partnership established under the
laws of the PRC. The general partner of Ningbo Borui is
Ningbo Yanghua Enterprise Management Consulting
Partnership (Limited Partnership) (΃ശΆุ၍ଣፔ༔Ϟ
Υྫ)( “ Nin gbo Y anghu a”). The general
partner of Ningbo Yanghua is Ningbo Baobo Investment
Management Co., Limited (ʮ̡ ),
which is owned by SUN Peng (ᘄ) as to 90% and LIU Lisha
(ᄎ஁୶) as to 10%. The limited partner of Ningbo Yanghua is
SUN Kai (௱). The limited partners of Ningbo Borui are
XIE Jianyong (ۇand Ningbo Borui Andi Equity
Investment Partnership (Limited Partnership) (ࠔ
Υྫ)( “ Nin gbo An di”), each of
which holds 49.95% of the partnerships in Ningbo Borui. The
general partner of Ningbo Andi is Ningbo Yanghua. Each of
SUN Peng, SUN Kai, XIE Jianyong and LIU Lisha is an
Independent Third Party.
Hon gtu C apital .......... Hongtu Capital is a limited liability company incorporated
under the laws of the BVI. Hongtu Capital is principally
engaged in the investment in, including but not limited to,
emerging business, high-tech, new consumption, healthcare,
big data and industrial service industries. Hongtu Capital is
owned as to 60% and 40% to LAI Hoi Man ( ፠ऎ͏) and
CHAN See Ting (Ғ), respectively, both of which are
Independent Third Parties.
BAIYI C apital ........... B AIYI Cap ital is a limited liability company incorporated
under the laws of the BVI, which is a wholly-owned
investment holding company of AIH Capital L.P. (“ AIH
Capital”). AIH Capital has approximately US$30 million
under its management and is principally engaged in the
investment in, including but not limited to, innovative
pharmaceutical and healthcare industries. AIH Capital is
controlled by MA Lixiong, our non-executive Director.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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--- page 235 ---
Name of the
Pre-IPO Inve stor s Backgroun d
Tradition al Chine se
Medicine Fun d ........
Traditional Chinese Medicine Fund is a limited partnership
established under the laws of the PRC on June 25, 2021. The
investment of Traditional Chinese Medicine Fund is primarily
focused on the fields of traditional Chinese medicine
manufacturing, traditional Chinese medicine service,
traditional Chinese medicinal material processing, and
traditional Chinese medicinal material planting. Traditional
Chinese Medicine Fund also expands its investment into the
field of medical health. Traditional Chinese Medicine Fund is
managed by its general partner, Guangdong Kaiheng Private
Equity Investment Fund Management Co., Ltd. (ක㛬ӷ
ʮ̡ ), which is ultimately owned
by China Development Bank (ක೯ვБ ) and State-owned
Assets Supervision and Administration Commission, the
People’s Government of Guangdong Province (݁
ึ ) as to 50% and 50%, both of
which are state-owned entities in the PRC, respectively. The
limited partner with the largest equity of Traditional Chinese
Medicine Fund is China Development Bank Capital Co., Ltd.
(ப΂ʮ̡ ) with approximately 49.925% of
equity interest in Traditional Chinese Medicine Fund, which is
wholly owned by China Development Bank. The other limited
partners of Traditional Chinese Medicine Fund are Guangdong
Hengjian Investment Holding Co., Ltd. (Ϟ
ʮ̡) and Guangzhou Guoju Venture Capital Co., Ltd. ( ᄿ
ʮ̡ ), both of which are state-owned
companies in the PRC. Traditional Chinese Medicine Fund has
assets under management of approximately RMB5.0 billion
with a track record in healthcare and biotech sectors for two
years. Its portfolio companies include Yichang
Shanchengshuidu Cordyceps Co., Ltd. (ࢀ
ʮ̡ ), Hunan Yineng Pharma Co., Ltd. (ي
ʮ̡ ), etc. Traditional Chinese Medicine Fund is a
Sophisticated Investor and has made meaningful investment in
our Company at least six months before the Listing Date. Each
of Traditional Chinese Medicine Fund, Guangdong Kaiheng
Private Equity Investment Fund Management Co., Ltd., and
China Development Bank Capital Co., Ltd. is an Independent
Third Party.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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--- page 236 ---
Public Flo at
The Shares held by Hepalink and Hepalink Biotechnology II Limited will not be considered
as part of the public float because they will be the Substantial Shareholders and therefore core
connected persons of our Company upon the Listing.
The Shares held by Dr. Liu together with the AIC Group will not be considered as part of the
public float because they will be the Substantial Shareholders and therefore core connected
persons of our Company upon the Listing. As such, approximately 20.42% of the total issued
Shares held or controlled by Dr. Liu, Greaty Investment, ZT Global Energy and Orient Champion
will not count towards public float after the Global Offering.
The Shares held by BAIYI Capital and Pingtan Rongjing will not be considered as part of
the public float because each of them is indirectly wholly-controlled by, and therefore a close
associate of, Mr. MA Lixiong, our non-executive Director. As a result, each of BAIYI Capital and
Pingtan Rongjing is a core connected person of our Company upon the Listing.
As of the Latest Practicable Date, Dr. Liu held 409,232 (2,455,392 as adjusted after the
Capitalization Issue) Listing Date Vesting Shares, Mr. MA Lixiong held 17,983 (107,898 as
adjusted after the Capitalization Issue) Listing Date Vesting Shares, Ms. YU Meng held 140,091
(840,546 as adjusted after the Capitalization Issue) Listing Date Vesting Shares, and Dr. ZHU Xun
held 87,063 (522,378 as adjusted after the Capitalization Issue) Listing Date Vesting Shares,
respectively. As such, an aggregate of 654,369 (3,926,214 as adjusted after the Capitalization
Issue) Listing Date Vesting Shares will not be considered as part of the public float upon the
Listing because they will be held by the Directors of our Company upon the Listing.
As disclosed above, a total of 258,291,438 Shares, representing approximately 50.18% of
our Company’s total issued Shares immediately following the completion of the Capitalization
Issue and the Global Offering, will not be considered as part of the public float upon the Listing for
the purpose of Rule 8.08 of the Listing Rules after the Global Offering.
To our Director’s best knowledge, each of the other Pre-IPO Investors is an Independent
Third Party. Accordingly, Shares held by them will be counted towards the public float for the
purpose of Rule 8.08 of the Listing Rules after the Global Offering.
Save as disclosed above, to the best of our Directors’ knowledge, all other Shareholders of
our Company are not core connected persons of our Company. As a result, over 25% of our
Company’s total issued Shares will be held by the public upon completion of the Global Offering
as required under Rule 8.08(1)(a) of the Listing Rules. In addition, the market capitalization of the
portion of the total number of the Company’s issued Shares held by the public pursuant to the
requirements under Rule 18A.07 of the Listing Rules (based on the Offer Price of HK$11.50)
would be over HK$375 million at the time of the Listing.
Shares Subject to Lock-u pa fter the Li stin g
The Shares held by the Pre-IPO Investors
(1) and the Founder BVI, being 53,313,484
(319,880,904 as adjusted after the Capitalization Issue) Shares, will be subject to lock-up for a
period of six months commencing from the Listing Date. Up to 5,744,288 (34,465,728 as adjusted
after the Capitalization Issue) Shares underlying the granted Awards under the 2020 Share
Note:
(1) including the Shares held by Greaty Investment, ZT Global Energy, Orient Champion and all other Pre-IPO
Investors, but excluding the 18,000,000 (108,000,000 as adjusted after the Capitalization Issue) ordinary Shares
held by Hepalink Biotechnology II Limited, which will be subject to lock-up for five months commencing from the
Listing Date
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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--- page 237 ---
Incentive Plan will be subject to lock-up of six months commencing from the Listing Date and up
to 1,462,372 (8,774,232 as adjusted after the Capitalization Issue) Shares (1) underlying the granted
Awardsunder the 2020 Share Incentive Plan will be subject to lock-up of 180 days commencing
from the Listing Date. Up to 1,600,000 (9,600,000 as adjusted after the Capitalization Issue)
Shares underlying the granted Awards under the 2023 Share Incentive Plan will be subject to
lock-up of 12 months commencing from the Listing Date. In addition, the 9,568,500 (after the
Capitalization Issue) Shares subscribed by the Cornerstone Investor will be subject to lock-up of
12 months commencing from the Listing Date. Therefore, an aggregate of up to 490,289,364
Shares (as adjusted after the Capitalization Issue), including certain Shares held by the Pre-IPO
Investors and the 2020 ESOP Platform, and all Shares held by the AIC Group and the 2023 ESOP
Platform, representing approximately 95.24% of our Company’s total issued Shares immediately
following the completion of the Capitalization Issue, the repurchase of Shares from the 2023 ESOP
Platform and the Global Offering, will be subject to lock-up from the Listing Date. For further
details, see the paragraph headed “— 2023 ESOP Platform” and the section “Cornerstone
Investor”.
CONCERT PARTY AGREEMENT
To ensure maximum control of voting power at general meetings of our Company and
thereby enhance the stability of our Company in terms of ownership and management prior to the
Listing, Dr. Liu, the Founder BVI, Greaty Investment, ZT Global Energy and Orient Champion
have entered into a concert party agreement (the “ Concert P arty A greement ”) on September 30,
2021, pursuant to which the Founder BVI (the voting rights attached to the Shares held by whom
are to be exercised by Dr. Liu), Greaty Investment, ZT Global Energy and Orient Champion
confirmed and ratified that, since September 1, 2019, (i) they had acted and would continue to act
in concert and collectively for all matters relating to the operation and development of our Group
that need to be approved by the Shareholders pursuant to applicable laws and the constitutional
documents of our Company; and (ii) when and if they could not reach unanimous consent, the
decision of Dr. Liu shall prevail. None of the party to the Concert Party Agreement is entitled to
terminate the Concert Party Agreement unilaterally. Each of Greaty Investment, ZT Global Energy
and Orient Champion was Independent Third Parties prior to becoming a Pre-IPO investor of our
Company. The funds of Greaty Investment, ZT Global Energy and Orient Champion used to invest
in our Company are sourced with proceeds from their respective investment operations. For
detailed information of Greaty Investment, ZT Global Energy and Orient Champion, see “Pre-IPO
Investments — Information regarding the Pre-IPO Investors” in this section.
As at the Latest Practicable Date, each of the Founder BVI, Greaty Investment, ZT Global
Energy and Orient Champion was entitled to exercise the voting rights attached to approximately
16.04%, 1.26%, 1.26% and 1.77% of the total issued Shares, respectively. The Founder BVI, which
forms part of the asset that comprises the Family Trust, is wholly owned by the Family Trust. Dr.
Liu, as the investment advisor of the Family Trust, is entitled to exercise the voting rights attached
to the 13,500,000 Shares held by the Founder BVI.
Together with the voting rights attached to the 8,849,294 Shares held by the 2020 ESOP
Platform and controlled by Dr, Liu (as further detailed below), as of the Latest Practicable Date,
Dr. Liu, the Founder BVI, Greaty Investment, ZT Global Energy and Orient Champion,
(collectively, the “ AIC Grou p”), were entitled to exercise the voting rights attached to
approximately 30.84% of the total issued Shares in aggregate and are considered our single largest
group of Shareholders prior to the Listing.
Note:
(1) including the underlying Shares that were granted to Dr. Liu.
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ADOPTION OF THE INCENTIVE PLANS
For the purpose to attract and retain the best available personnel, to provide additional
incentives to employees, Directors and consultants of our Company and to promote the success of
our Company’s business, we have adopted the Incentive Plans, including the 2020 Share Incentive
Plan and the 2023 Share Incentive Plan. For further details, please see “Statutory and General
Information — D. Incentive Plans” in Appendix IV to this prospectus.
2020 ESOP PLATFORM
We incorporated the 2020 ESOP Platform on March 8, 2019 for the purpose of facilitating
the administration of the 2020 Share Incentive Plan and holding the Shares underlying the awards
granted and to be granted under the 2020 Share Incentive Plan. On March 25, 2019, we allotted and
issued 4,200,000 ordinary Shares to the 2020 ESOP Platform. On August 12, 2019, the Series B
Investors transferred 462,462 Series B Preferred Shares to the 2020 ESOP Platform due to
valuation adjustment, all of which were reclassified into ordinary Shares on a one-to-one basis. For
further details, please refer to the paragraph headed “— Transfer of Shares to 2020 ESOP Platform
by Series B Investors”. On April 29, 2022, we allotted and issued another 4,186,832 ordinary
Shares to 2020 ESOP Platform. As of the Latest Practicable Date, the 2020 ESOP Platform held
8,849,294 ordinary Shares in total, which accounted for approximately 10.51% of the total issued
Shares of our Company. As of the Latest Practicable Date, all 8,849,294 (53,095,764 as adjusted
after the Capitalization Issue) underlying Shares held by the 2020 ESOP Platform had been granted
to specified participants under the 2020 Share Incentive Plan, representing approximately 10.31%
of the issued Shares immediately following the completion of the Capitalization Issue, the
repurchase of Shares from the 2023 ESOP Platform and the Global Offering.
In addition, pursuant to the 2020 Share Incentive Plan and the terms of the relevant grant
agreements, the vesting of all Awards under 2020 Share Incentive Plan will be subject to the
Listing, irrespective of the vesting commencement date or the vesting schedule of the relevant
grants. Accordingly, no Award has been vested as at the date of this prospectus and no Award will
be vested unless and until Listing has occurred. In other words, the Awards which are ready to be
vested in accordance with the vesting schedule specified the relevant grant agreements will only be
effectively vested after the Listing. For details of the outstanding Awards under the 2020 Share
Incentive Plan, please see section “Appendix IV — Statutory and General Information — D.
Incentive Plans — 1. 2020 Share Incentive Plan — Outstanding Awards” in this prospectus.
SHAREHOLDING AND VOTING RIGHTS OF AIC GROUP AND HEPALINK ENTITIES
Pursuant to a deed executed by Core Trust Company Limited, being the trustee and the
nominee of the 2020 ESOP Platform, and our Company on November 28, 2019, Dr. Liu was
granted power of attorney to, prior to the Listing, exercise the voting rights attached to the Shares
held by the 2020 ESOP Platform. Pursuant to such power of attorney and considering that no
Awards shall be vested prior to the Listing, Dr. Liu was entitled to exercise the voting rights
attached to the 8,849,294 Shares held by the 2020 ESOP Platform, which represented
approximately 10.51% of the total voting power at general meetings as of the Latest Practicable
Date and prior to the Listing. As a result of such arrangement, Dr. Liu was entitled to exercise the
voting rights attached to an aggregate of 22,349,294 Shares, which represented approximately
26.55% of the total voting power at general meetings as of the Latest Practicable Date and prior to
the Listing. Together with the voting rights controlled by Dr. Liu through the 2020 ESOP Platform,
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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as of the Latest Practicable Date, the AIC Group were collectively entitled to exercise the voting
rights attached to approximately 30.84% of the total issued Shares in aggregate and are considered
our single largest group of Shareholders prior to the Listing.
Our Directors are of the view that the aforesaid power of attorney allows Dr. Liu, as our
founder, executive Director and chief executive officer, to control additional voting rights and
remain, together with the parties to the Concert Party Agreement, as the single largest group of
Shareholders to ensure maximum control of voting power at general meetings and thereby enhance
the stability of the Company in terms of ownership and management prior to Listing. For the
avoidance of doubt, Dr. Liu will abstain from voting on unvested Shares held in the 2020 ESOP
Platform only upon Listing for the purpose of compliance with Rule 17.05A of the Listing Rules.
Upon Listing, the shareholdings of AIC Group and Hepalink entities in our Company are
approximately 20.42% and 23.61%, respectively. Immediately after the Listing, Dr. Liu will
abstain from voting on the 7,099,923 (42,599,538 as adjusted after the Capitalization Issue)
unvested Shares held in the 2020 ESOP Platform for the purpose of compliance with Rule 17.05A
of the Listing Rules. In addition, pursuant to the voting agreements entered into by certain
Grantees and the Company, Dr. Liu was entitled to the voting rights attached to the 1,290,139
(7,740,834 as adjusted after the Capitalization Issue) Listing Date Vesting Shares. As a result, the
exercisable voting rights of the AIC Group and the Hepalink Entities in our Company will not be
equal to their respective shareholding in our Company upon Listing. The voting rights in the
Company to be exercisable by Dr. Liu immediately after the Listing will be reduced to
approximately 19.72%, and the voting rights in the Company exercisable by the AIC Group shall
become approximately 24.40% immediately after the Listing. While the Hepalink Entities will
become the single largest group of Shareholders of our Company upon Listing with approximately
26.27% exercisable voting rights, the AIC Group will continue to have day-to-day control over the
management and operation of our Group.
DAY-TO-DAY CONTROL OVER MANAGEMENT AND OPERATION OF THE GROUP
BEFORE AND AFTER THE LISTING
Notwithstanding the aforesaid reduction of voting rights exercisable by the AIC Group after
Listing mainly as a result of Dr. Liu abstaining from voting on the unvested Shares held in the 2020
ESOP Platform in accordance with Rule 17.05A of the Listing Rules, the Listing would not result
in any material change in the influence on the management of our Company and would not affect
the actual dynamics between the AIC Group and our management for the following reasons:
(i) Our Group was founded by Dr. Liu in November 2011. Since then, our operations had
been managed by Dr. Liu with the assistance of other members of the senior
management who had been recruited and assembled under the direction of Dr. Liu.
(ii) Noting that Dr. Liu is a pioneer in the field of metabolic and digestive diseases with
over 20 years of drug development experience and has led eight IND approvals in the
United States, China, Canada and Australia for two drugs, and having over 100
patents and patent applications to her credit, Dr. Liu has led and spearheaded the
Company’s discovery development of multifunctional and multi-targeted therapies
for the treatment of metabolic and digestive diseases with the assistance of our R&D
team since the founding of our Group’s business.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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(iii) Under the aforesaid shareholding structure, major decisions of our Group, including
operational strategies, financing and investment, appointment of management and
members of the Board, had (with the exception of Hepalink’s right to nominate one
Director prior to the Listing) been driven by the executive Directors and the senior
management under the leadership and control of Dr. Liu.
(iv) Hepalink and other Pre-IPO Investors who are not members of the AIC Group had
acted as financial investors and did not involve in the day-to-day management of our
Company during the Track Record Period.
Based on the above, the AIC Group had, and will continue to have day-to-day control over
the management and operation of our Group before the Listing completes.
(v) Despite that the percentage of the voting power exercisable by the AIC Group will no
longer be the highest among all Shareholders after the Listing, the Company will
continue to have no controlling shareholder upon Listing.
(vi) In addition, while the Board will establish the Nomination Committee which will be
chaired by Dr. Liu, and candidates for directorship shall be subject to the
recommendation by the Nomination Committee under the leadership of Dr. Liu
before they are appointed by the Board or at the general meetings.
(vii) As such, major decisions of the Group, including but not limited to the strategy and
direction of its research and development of drugs for metabolic and digestive
diseases, will remain to be driven by the executive Directors and the senior
management under the leadership of Dr. Liu as the founder, chief executive officer,
executive Director and chairwoman of the Board upon Listing.
Based on the foregoing, the drop in the voting rights exercisable by the AIC Group, mainly
for the purpose of compliance with Rule 17.05A of the Listing Rules, does not give rise to any
material change to Dr. Liu’s influence over the day-to-day management of the Group, the
decision-making process at the level of the Board or at the general meetings of the Company, nor
does it result in any change in the actual dynamics between the AIC Group and the management of
the Group. It follows that the AIC Group will continue to have day-to-day control over the
management and operation of our Group upon Listing, while the designated director from
Hepalink Entities remains a non-executive Director of the Company who will not involve in the
day-to-day management of our Company.
2023 ESOP PLATFORM
We established the 2023 ESOP Platform on May 26, 2023 for the purpose of facilitating the
administration of the 2023 Share Incentive Plan and holding the Shares underlying the awards
under the 2023 Share Incentive Plan. On May 29, 2023, we allotted and issued 4,000,000 ordinary
Shares to the 2023 ESOP Platform. As of the date of this prospectus, the 2023 ESOP Platform held
4,000,000 ordinary Shares in total, which accounted for approximately 4.75% of the total issued
Shares of our Company. As of the Latest Practicable Date, all of the underlying Shares held by the
2023 ESOP Platform had been granted to specified participants under the 2023 Share Incentive
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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Plan, subject to the repurchase of 2,400,000 (14,400,000 as adjusted after the Capitalization Issue)
underlying Shares before Listing. For details of the outstanding Awards under the 2023 Share
Incentive Plan, please see section “Appendix IV — Statutory and General Information — D.
Incentive Plans — 2. 2023 Share Incentive Plan — Outstanding Awards” in this prospectus. Futu
Trust Limited serves as the trustee of the 2023 ESOP Platform.
The shareholding and voting right structure of our Company as of the date of the prospectus
and immediately upon completion of the Capitalization Issue, the repurchase of Shares from the
2023 ESOP Platform and the Global Offering is set forth below:
Name of Sh arehol der Serie s of Sh ares
Number of
Shares
Sharehol ding
percent age as
of the date of
the prospectu s
Percent ageo f
votin g rights
as of the date
of the
prospectu s
Number of
Shares hel d
imme diately u pon
com pletion of the
Capitaliz ation
Issue, the
repurch aseo f
Shares from the
2023 ESOP
Platform and the
Glob al Offerin g
Sharehol dingp ercent age
imme diately u pon com pletion
of the C apitaliz ation I ssue, the
repurch aseo fS h ares from the
2023 ESOP Pl atform and the
Glob al Offerin g
Percent age of exerci sable
votin g rights imme diately u pon
com pletion of the
Capitaliz ation I ssue, the
repurch aseo fS h ares from the
2023 ESOP Pl atform and the
Glob al Offerin g(6)
The AIC Grou p
Dr. Liu (1)(2) .......... Ordinary Shares 13,500,000 16.04% 26.55% 83,455,392 (4) 16.21% (4) 19.72% (4)
Greaty Investment (2) ...... Series B-1 Preferred Shares 1,061,562 1.26% 1.26% 6,369,372 1.24% 1.38%
ZT Global Energy (2) ...... Series B-1 Preferred Shares 1,061,562 1.26% 1.26% 6,369,372 1.24% 1.38%
Orient Champion (2) ....... Series B-2 Preferred Shares 1,486,186 1.77% 1.77% 8,917,116 1.73% 1.93%
Subtot al of the AIC Grou p .. 17,109,310 20.33% 30.84% 105,111,252 20.42% 24.40% (4)
2020 ESOP Platform (1) ..... Ordinary Shares 8,849,294 10.51% nil 42,599,538 (5) 8.28% (5) nil(5)
2023 ESOP Platform (8) ..... Ordinary Shares 4,000,000 4.75% 4.75% 9,600,000 (7) 1.86% nil (7)
Hepalink Biotechnology II
Limited (2)(3) ........
Ordinary Shares
18,000,000 21.39% 21.39% 108,000,000 20.98% 23.35%
Hepalink (2)(3) ......... Series A Preferred Shares 2,252,535 2.68% 2.68% 13,515,210 2.63% 2.92%
Qianhai Haichuang (2) ..... Series A Preferred Shares 1,260,000 1.50% 1.50% 7,560,000 1.47% 1.63%
Goldlink (2) ........... Series A Preferred Shares 945,000 1.12% 1.12% 5,670,000 1.10% 1.23%
Able Holdings (2) ........ Series A Preferred Shares 378,000 0.45% 0.45% 2,268,000 0.44% 0.49%
Yuexiu Jinchan IV (2) ...... Series A Preferred Shares 631,811 0.75% 0.75% 3,790,866 0.74% 0.83%
Pingtan Rongjing (2) ...... Series A Preferred Shares 461,000 0.55% 0.55% 2,766,000 0.54% 0.60%
MPCAPITAL (2) ........ Series A Preferred Shares 371,654 0.44% 0.44% 2,229,924 0.43% 0.48%
Green Pine (2) .......... Series B-1 Preferred Shares 636,937 0.76% 0.76% 3,821,622 0.74% 0.83%
Blue Ocean (2) ......... Series B-2 Preferred Shares 424,625 0.50% 0.50% 2,547,750 0.49% 0.55%
Shenzhen Taixun (2) ....... Series B+ Preferred Shares 3,184,713 3.78% 3.78% 19,108,278 3.71% 4.13%
Poly Platinum (2) ........ Series B+ Preferred Shares 3,184,713 3.78% 3.78% 19,108,278 3.71% 4.13%
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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Name of Sh arehol der Serie s of Sh ares
Number of
Shares
Sharehol ding
percent age as
of the date of
the prospectu s
Percent ageo f
votin g rights
as of the date
of the
prospectu s
Number of
Shares hel d
imme diately u pon
com pletion of the
Capitaliz ation
Issue, the
repurch aseo f
Shares from the
2023 ESOP
Platform and the
Glob al Offerin g
Sharehol dingp ercent age
imme diately u pon com pletion
of the C apitaliz ation I ssue, the
repurch aseo fS h ares from the
2023 ESOP Pl atform and the
Glob al Offerin g
Percent age of exerci sable
votin g rights imme diately u pon
com pletion of the
Capitaliz ation I ssue, the
repurch aseo fS h ares from the
2023 ESOP Pl atform and the
Glob al Offerin g(6)
HK Tigermed (2) ........ Series B+ Preferred Shares 2,123,142 2.52% 2.52% 12,738,852 2.47% 2.75%
Pluto (2) ............. Series B+ Preferred Shares 1,507,431 1.79% 1.79% 9,044,586 1.76% 1.96%
Xinyu Cowin (2) ......... Series B+ Preferred Shares 1,061,571 1.26% 1.26% 6,369,426 1.24% 1.38%
Shenzhen Winzac (2) ...... Series B+ Preferred Shares 520,594 0.62% 0.62% 3,123,564 0.61% 0.68%
Sichuan Rongxin (2) ....... Series B+ Preferred Shares 459,448 0.55% 0.55% 2,756,688 0.54% 0.60%
Ningbo Borui (2) ........ Series B+ Preferred Shares 424,628 0.50% 0.50% 2,547,768 0.49% 0.55%
Shenzhen BioResearch (2) . . . Series B+ Preferred Shares 212,314 0.25% 0.25% 1,273,884 0.25% 0.28%
Hongtu Capital (2) ....... Series C Preferred Shares 7,618,932 9.05% 9.05% 45,713,592 8.88% 9.88%
BAIYI Capital (2) ........ Series C Preferred Shares 4,571,359 5.43% 5.43% 27,428,154 5.33% 5.93%
Traditional Chinese Medicine
Fund (2) ...........
Series C+ Preferred Shares
2,987,795 3.55% 3.55% 17,926,770 3.48% 3.88%
Yuexiu Jinchan IV (2) ...... Series C+ Preferred Shares 985,972 1.17% 1.17% 5,915,832 1.15% 1.28%
Grantees with Listing Date
Vesting Shares (5) ......
Ordinary Shares
nil nil nil 8,040,834 1.56% 0.06% (5)
Total .............. 84,162,778 100% 100% 490,576,668 95.30% 94.77%
Notes:
(1) Dr. Liu, being the investment advisor of the Family Trust, is entitled to exercise the voting rights attached to the
13,500,000 Shares held by the Founder BVI. Dr. Liu was also granted power of attorney to exercise the voting
rights attached to the Shares held by the 2020 ESOP Platform. For details, please refer to the paragraph headed
“— 2020 ESOP Platform”. As of the Latest Practicable Date, up to 5,744,288 (34,465,728 as adjusted after the
Capitalization Issue) Shares underlying the Awards granted to the PRC Grantees under the 2020 Share Incentive
Plan will be subject to lock-up of six months commencing from the Listing Date and up to 1,612,372 (9,674,232 as
adjusted after the Capitalization Issue) Shares underlying the Awards granted to the Grantees who are U.S. citizens
(the “ U.S. Gr antee( s)”) under the 2020 Share Incentive Plan will be subject to lock-up of 180 days commencing
from the Listing Date. The difference (of approximately three days) between the lock-up periods of the Shares
underlying the Awards granted to the PRC Grantees and the U.S. Grantees is due to different local practices.
(2) The Shares held will be subject to lock-up for a period of six months commencing from the Listing Date, excluding
the 18,000,000 (108,000,000 as adjusted after the Capitalization Issue) ordinary Shares held by Hepalink
Biotechnology II Limited, which will be subject to lock-up for five months commencing from the Listing Date.
(3) Immediately following the completion of the Global Offering, Hepalink and Hepalink Biotechnology II Limited
will be entitled to exercise the voting rights attached to approximately 26.27% of the total issued Shares of our
Company.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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(4) Immediately after the Listing, Awards with up to 1,749,371 (10,496,226 as adjusted after the Capitalization Issue)
underlying Shares shall be vested (comprising 1,340,139 (8,040,834 as adjusted after the Capitalization Issue)
Listing Date Vesting Shares and 409,232 (2,455,392 as adjusted after the Capitalization Issue) underlying Shares
that were granted to Dr. Liu under the 2020 Share Incentive Plan). Pursuant to the voting agreements entered into
by certain Grantees and the Company, Dr. Liu was entitled to the voting rights attached to the 1,290,139 (7,740,834
as adjusted after the Capitalization Issue) Listing Date Vesting Shares. Immediately after the Listing, Dr. Liu will
abstain from voting on the 7,099,923 (42,599,538 as adjusted after the Capitalization Issue) unvested Shares held in
the 2020 ESOP Platform for the purpose of compliance with Rule 17.05A of the Listing Rules. As a result, The
voting rights in the Company to be exercisable by Dr. Liu immediately after the Listing will be approximately
19.72%, and the voting rights in the Company exercisable by the AIC Group shall become approximately 24.40%
immediately after the Listing. While the Hepalink Entities will become the single largest group of Shareholders of
our Company upon Listing with approximately 26.27% exercisable voting rights, the AIC Group will continue to
have day-to-day control over the management and operation of our Group.
(5) Immediately after the Listing, Awards with up to 1,749,371 (10,496,226 as adjusted after the Capitalization Issue)
underlying Shares) shall be vested (comprising 1,340,139 (8,040,834 as adjusted after the Capitalization Issue)
Listing Date Vesting Shares and 409,232 (2,455,392 as adjusted after the Capitalization Issue) underlying Shares
that were granted to Dr. Liu under the 2020 Share Incentive Plan). Based on the assumptions in note (4), the Shares
held in the 2020 ESOP Platform will be decreased from 8,849,294 to 7,099,923 (42,599,538 as adjusted after the
Capitalization Issue) unvested Shares immediately after the Listing, which will represent approximately 8.28% of
the issued Shares in the Company immediately after the Listing but shall abstain from voting after the Listing for
the purpose of compliance with Rule 17.05A of the Listing Rules.
(6) The unvested Shares held in the 2020 ESOP Platform and the 2023 ESOP Platform and the Shares to be repurchased
from the 2023 ESOP Platform have been excluded from both the denominator and the numerator when calculating
the percentage of the exercisable voting rights immediately upon Listing.
(7) As of the Latest Practicable Date, all of the underlying Shares held by the 2023 ESOP Platform had been granted to
specified participants under the 2023 Share Incentive Plan, which will remain unvested upon Listing. Pursuant to
the terms of the 2023 Share Incentive Plan, to the extent the final offer size of the Global Offering falls below
US$130 million, a portion of the Awards granted under the 2023 Share Incentive Plan shall lapse and be cancelled
automatically. With respect to the Awards granted but automatically lapsed in accordance with such condition, the
underlying Shares shall be repurchased and cancelled before the Listing. As of the Latest Practicable Date, the
expected final offer size of the Global Offering was expected to be approximately US$35.61 million. Accordingly,
60% of the Awards granted under the 2023 Share Incentive Plan shall lapse and be cancelled automatically and
2,400,000 (14,400,000 as adjusted after the Capitalization Issue) Shares held by the 2023 ESOP Platform shall be
repurchased and cancelled before the Listing. As a result, the Shares held by the 2023 ESOP Platform will be
decreased from 4,000,000 (24,000,000 as adjusted after the Capitalization Issue) Shares to 1,600,000 (9,600,000 as
adjusted after the Capitalization Issue) Shares upon the completion of the repurchase of Shares from the 2023
ESOP Platform. The Shares held by the 2023 ESOP Platform will remain unvested and shall abstain from voting
after the Listing for the purpose of compliance with Rule 17.05A of the Listing Rules.
(8) As of the Latest Practicable Date, up to 4,000,000 (24,000,000 as adjusted after the Capitalization Issue) Shares
underlying the Awards granted to the Grantees under the 2023 Share Incentive Plan will be subject to lock-up of 12
months commencing from the Listing Date.
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REORGANIZATION
The following chart sets forth the corporate structure of our Group with principal operating
entities immediately prior to our Reorganization:
Dr. Liu Hepalink
Shenzhen HighTide
(PRC)
Australia HighTide
(Australia)
Series A Investors
other than Hepalink
35.71% 57.45%
100%
6.83%
We have carried out the following Reorganization steps in preparation for the Listing:
Ste p 1. Incor poration of Our Com pany and Our Off shore Sub sidiarie s
On February 28, 2018, our Company was incorporated in the Cayman Islands as an
exempted company with limited liability and has an authorized share capital of US$50,000 divided
into 50,000 shares with a nominal value of US$1 each. Upon incorporation, one share of US$1 par
value, representing the then issued share capital of our Company, was issued and transferred to the
Founder BVI at nominal value.
BVI HighTide was incorporated in the BVI on March 16, 2018 as a direct wholly-owned
subsidiary of our Company.
HK HighTide was incorporated in Hong Kong on April 9, 2018 as a direct wholly-owned
subsidiary of BVI HighTide.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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Ste p 2. Equity Tr ansfer by Cert ain Sh arehol ders,S h are Sub divi sion and Allotment and Issue
of Sh ares to Cert ain Sh arehol ders
During the period from June 2018 to September 2018, each of Dr. Liu, Hepalink, and
Qianhai Haichuang entered into an equity transfer agreement with HK HighTide pursuant to which
they agreed to transfer the entire equity interests they held in Shenzhen HighTide to HK HighTide.
On October 16, 2018, our Company conducted a share subdivision (the “ Sh are
Sub divi sion”), pursuant to which each issued and unissued share of US$1 par value be subdivided
into 10,000 shares, each with a nominal value of US$0.0001. Immediately after the completion of
the Share Subdivision, our Company reclassified and re-designated a total of 7,590,334 unissued
shares of US$0.0001 each as 4,977,000 Series A Preferred Shares and 2,613,334 Series B-1
Preferred Shares respectively. Immediately after the completion of such reclassification and
re-designation, our Company had an authorized share capital of US$50,000 divided into
500,000,000 shares of US$0.0001 each comprising of (i) 492,409,666 ordinary Shares, (ii)
4,977,000 Series A Preferred Shares, and (iii) 2,613,334 Series B-1 Preferred Shares. On the same
day, our Company allotted and issued 280,000 Series B-1 Preferred Shares to Green Pine;
13,490,000 Ordinary Shares to Founder BVI; 18,000,000 Ordinary Shares and 3,717,000 Series A
Preferred Shares to Hepalink; 1,260,000 Series A Preferred Shares to Qianhai Haichuang;
1,166,667 Series B-1 Preferred Shares to Greaty Investment; and 1,166,667 Series B-1 Preferred
Shares to ZT Global Energy, respectively.
Ste p 3. Transfer of Intere sts in Our Grou p by Cert ain Sh arehol ders
Xinjiang Taitong and Tibet Ningfeng transferred their interests in our Group to Able
Holdings and Goldlink on March 14, 2019 and June 10, 2021, respectively. Please refer to the
paragraphs headed “— Transfer of Interest in Our Group by Xinjiang Taitong to Able Holdings”
and “— Transfer of Interest in Our Group by Tibet Ningfeng to Goldlink”, respectively, for further
details.
CAPITALIZATION ISSUE
Subject to the share premium account of our Company being credited as a result of the issue
of the Offer Shares pursuant to the Global Offering, our Company will, on the Listing Date, allot
and issue a total of 408,813,890 Shares credited as fully paid at par to the holders of Shares whose
names appear on the register of members of our Company at the close of business on the business
day preceding the Listing Date in proportion to their then-existing respective shareholdings in our
Company (on the basis that each Preferred Share is converted into one Share and no holder of
Shares shall be entitled to be allotted or issued any fraction of a Share) by capitalizing the relevant
sum from the share premium account of our Company. The Shares allotted and issued pursuant to
the Capitalization Issue will rank paripassu in all respects with the then-existing issued Shares.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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CORPORATE STRUCTURE AFTER THE REORGANIZATION AND IMMEDIATELY
PRIOR TO THE CAPITALIZATION ISSUE, THE REPURCHASE OF SHARES FROM THE
2023 ESOP PLATFORM AND THE GLOBAL OFFERING
Our corporate and shareholding structure after the Reorganization and the changes as
described above and immediately prior to the completion of the Capitalization Issue, the
repurchase of Shares from the 2023 ESOP Platform and the Global Offering is as follows:
2023 ESOP
Platform Hepalink
Mr. LI Li
Series C+
Investors
Series B+
Investors
Series C
Investors(4)
Series A
Investors(2)
Series B
Investors(3)
100%
100%
100%
100%
Our Company
(Cayman Islands)
BVI HighTide
(BVI)
HK HighTide
(Hong Kong)
Shenzhen HighTide
(PRC)
US HighTide
(United States)
100% 100% 100% 100% 100%
JSK Healthcare
(PRC)
Shanghai HighTide
(PRC)
Australia
HighTide
(Australia)
100%
Hebei Puhui
(PRC)
Shanghai Fusion
(PRC)
16.04%
100%
20.33%
10.51% 4.75 % 24.06%
62.90%
4.26% 1.26% 15.06% 9.05% 4.72%
Nanchang Fusion
(PRC)
Pingtan
Rongjing
BAIYI
CapitalFounder BVI
Family Trust
100%
Dr. Liu
AIC Group(1)
1.26%
Greaty
Investment
100%
0.55% 5.43%
Mr.
MA Lixiong
1.26%
ZT
Global Energy
1.77%
Orient
Champion
2020 ESOP
Platform
Notes:
(1) Each of the member of the AIC Group is a party to the Concert Party Agreement. Please see “Concert Party
Agreement” and “2020 ESOP Platform” in this section.
(2) Excluding Hepalink and Pingtan Rongjing, the shareholding percentages of which are separately shown
(3) Excluding Greaty Investment, ZT Global Energy and Orient Champion, the shareholding percentages of
which are separately shown
(4) Excluding BAIYI Capital, the shareholding percentage of which is separately shown
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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CORPORATE STRUCTURE IMMEDIATELY AFTER THE CAPITALIZATION ISSUE,
THE REPURCHASE OF SHARES FROM THE 2023 ESOP PLATFORM AND THE
GLOBAL OFFERING
Our corporate and shareholding structure immediately after the Capitalization Issue, the
repurchase of Shares from the 2023 ESOP Platform and the Global Offering is as follows:
2023 ESOP
Platform Hepalink
Mr. LI Li
Series B+
Investors
Series C
Investors(4)
Series A
Investors(2)
Series B
Investors(3)
100%
100%
100%
100%
Our Company
(Cayman Islands)
BVI HighTide
(BVI)
HK HighTide
(Hong Kong)
Shenzhen HighTide
(PRC)
US HighTide
(United States)
100% 100% 100% 100% 100%
JSK Healthcare
(PRC)
Shanghai HighTide
(PRC)
Australia
HighTide
(Australia)
Shanghai Fusion
(PRC)
16.21%
20.42%
8.28% 1.86% 23.61%
62.90%
Family Trust
100%
Dr. Liu
100%
4.18% 1.24% 14.78% 8.88%
Series C+
Investors
4.63%
Grantees under
2020 ESOP
Platform with
vested Shares
Other Public
Investors
4.70%1.56%
Nanchang Fusion
(PRC)
Pingtan
Rongjing
BAIYI
CapitalFounder BVI
AIC Group(1)
1.24%
Greaty
Investment
100%
0.54% 5.33%
Mr.
MA Lixiong
1.24%
ZT
Global Energy
1.73%
Orient
Champion
2020 ESOP
Platform
100%
Hebei Puhui
(PRC)
Notes:
(1) Each of the member of the AIC Group is a party to the Concert Party Agreement. Please see “Concert Party
Agreement” and “2020 ESOP Platform” in this section.
(2) Excluding Hepalink and Pingtan Rongjing, the shareholding percentages of which are separately shown
(3) Excluding Greaty Investment, ZT Global Energy and Orient Champion, the shareholding percentage of
which are separately shown
(4) Excluding BAIYI Capital, the shareholding percentage of which is separately shown
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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Together with the voting rights attached to the Shares held by the 2020 ESOP Platform and
controlled by Dr, Liu (as further detailed below), as of the Latest Practicable Date, Dr. Liu, the
Founder BVI, Greaty Investment, ZT Global Energy and Orient Champion were entitled to
exercise the voting rights attached to approximately 30.84% of the total issued Shares in aggregate
and are considered our single largest group of Shareholders prior to the Listing.
PRC LEGAL COMPLIANCE
Our PRC Legal Advisor has confirmed that the establishment of Shenzhen HighTide and
Shanghai HighTide and the increase or transfer of equity interests in respect of Shenzhen HighTide
as described above in this section have been legally completed and the requisite government
approvals or filings in all material respects, as applicable, have been obtained in accordance with
PRC laws and regulations.
ODI Re gistration
Pursuant to the Administrative Measures for the Overseas Investment of Enterprises ( Ά ุ
) promulgated by the NDRC and Administrative Measures for Overseas
Investment Management () promulgated by the MOFCOM (the “ ODI
Rule s”), a domestic institution shall undergo registration procedure for foreign investment in
accordance with the provisions of the ODI Rules, which require the domestic institution to undergo
relevant procedures for offshore investment prior to its overseas direct investment and obtain
relevant recordation, approval, certificate or permit.
As advised by our PRC Legal Advisor, each of Hepalink and Qianhai Haichuang has
completed the overseas direct investment registration with the local MOFCOM and NDRC on
October 9, 2018 and September 21, 2018, each of Shenzhen Taixun, Xinyu Cowin, Shenzhen
Winzac, Sichuan Rongxin, Ningbo Borui and Shenzhen BioResearch has completed the overseas
direct investment registration with the local MOFCOM and NDRC on January 4, 2021 and
February 2, 2021 and each of Yuexiu Jinchan IV , Traditional Chinese Medicine Fund and Pingtan
Rongjing has completed the overseas direct investment registration with the local MOFCOM and
NDRC on October 24, 2022 pursuant to the ODI Rules in relation to their overseas direct
investments in our Company as domestic institutions.
M&A Rule s
The M&A Rules require that foreign investors acquiring domestic companies by means of
asset acquisition or equity acquisition shall comply with relevant foreign investment industry
policies and shall be subject to approval by the relevant commerce authorities. Article 11 of the
M&A Rules stipulates that an offshore special purpose vehicle, or a SPV , established or controlled
by a PRC company or individual shall obtain approval from MOFCOM prior to the acquisition of
any domestic enterprise related to such company or individual. The M&A Rules, among others,
also require that an offshore SPV formed for listing purposes and controlled directly or indirectly
by PRC companies or individuals, shall obtain the approval of the CSRC prior to the listing and
trading of such SPV’s securities on an overseas stock exchange.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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As advised by our PRC Legal Advisor, the MOFCOM approvals or CSRC approvals under
the M&A Rules are not required because Shenzhen HighTide was established at the beginning as a
foreign-invested enterprise in the PRC, rather than become foreign-invested enterprises through
merger or acquisition under the M&A Rules. However, there is uncertainty as to how the M&A
Rules will be interpreted or implemented and whether the MOFCOM and other related government
authorities would promulgate future PRC laws, regulations or rules contrary to the M&A Rules.
As advised by our legal advisers, all historical share transfers and restructuring steps as
described above were compliant with applicable laws and regulations in all material aspects.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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OVERVIEW
We are a biopharmaceutical company specializing in the discovery, development and
commercialization of multifunctional, multi-targeted therapies for the treatment of metabolic and
digestive diseases. We have developed a product pipeline of five product candidates in-house,
covering nine indications in metabolic and digestive diseases among which, five are at
clinical-stage. Our Core Product, HTD1801 (berberine ursodeoxycholate), a new molecular entity,
is a gut-liver anti-inflammatory metabolic modulator which targets multiple pathways pivotal to
metabolic regulation, including those associated with metabolic and digestive diseases. It is
created by forming a novel salt between two active moieties, berberine (“ BBR ”) and
ursodeoxycholic acid (“ UDCA ”). HTD1801 has demonstrated good safety and efficacy across
multiple clinical trials, including: a Phase IIa study in metabolic dysfunction-associated
steatohepatitis (“ MASH ”, formerly known as nonalcoholic steatohepatitis or NASH) in the United
States, a Phase II study in type 2 diabetes mellitus (“ T2DM ”) in China, a Phase Ib study in T2DM
in China, a Phase II study in primary sclerosing cholangitis (“ PSC”) in the United States and
Canada, a Phase II study in primary biliary cholangitis (“ PBC”) in the United States, and a Phase
Ib/IIa study in hypercholesterolemia in Australia. We believe the good safety and efficacy profile
strongly supports the “pipeline-in-a-product” potential of HTD1801 for selected metabolic and
digestive diseases with suboptimal or no approved therapies.
Metabolic and digestive diseases are multifactorial diseases associated with comorbidities
across various organs, which greatly complicate disease management. We strategically focus our
efforts on developing innovative multifunctional and multi-target therapies for complex metabolic
and digestive diseases, which are prevalent worldwide and expected to increase in cases and
market size. According to CIC, the prevalence of major metabolic and digestive diseases was 4.9
billion as of the end of 2022 and is expected to reach 5.7 billion as of the end of 2032, with a
market size growing from US$330 billion in 2022 to US$687 billion in 2032 at a CAGR of 7.6%.
One important feature of metabolic and digestive disease which gives rise to unmet medical
needs is the coexistence of highly interrelated morbidities in patients. Current treatments of
single-target drugs or their combinations do not fully address the complications of the interrelated
comorbidities. Our goal is to offer multifunctional and multi-target therapies that treat complex
metabolic and digestive diseases with a systemic approach, providing effective and safe options to
improve overall clinical benefits of patients.
Achieving good balances of efficacy and safety is the key to develop multifunctional and
multi-target therapies. The successful development of HTD1801 enabled us to establish the
FUSIONTX
TM drug discovery approach. Through FUSIONTX TM, we integrate real-world clinical
data, network pharmacology, known and established molecules with desired therapeutic benefits to
design novel, multifunctional drug candidates to treat complex diseases with a systemic approach.
We believe our approach in creating multifunctional products are paradigm-shifting which could
lead to discovery and development of the next-generation therapies.
The two active moieties, BBR and UDCA, in our Core Product HTD1801 have a long history
of medicinal applications as remedies for gut and liver diseases in traditional Chinese medicine. In
HTD1801, BBR and UDCA work in tandem in the salt form with unique microstructure to produce
distinct and improved properties of HTD1801. The improved properties are not observed with
either of the individual active moieties or their physical mixture. We have successfully obtained
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composition of matter patent for HTD1801 in many countries and regions, including the United
States, China, the European Union and Japan, as well as crystalline form patent in the United
States and China. Our clinical results show that HTD1801 delivers a therapeutic effect for patients
including metabolic improvement, liver protection, anti-inflammation and antioxidative stress.
However, therapeutic effect of the Core Product is based on preliminary clinical data only which is
yet to be validated in later clinical trials, and the Core Product may fail to meet the primary and
secondary endpoints at the late-stage clinical trials due to higher clinical development risks. For
details, see “Risk Factors — Risks relating to the development, clinical trials and regulatory
approval of our drug candidates — the Core Product may fail to meet the primary and secondary
endpoints at the late-stage clinical trials due to higher clinical development risks resulted from
HTD1801 being a new molecular entity and potential rejection from competent authorities” in this
Prospectus. HTD1801 is currently being developed for indications across MASH, T2DM, severe
hypertriglyceridemia (“ SHTG ”), PSC and PBC, with a focus on comorbidities and a potential for
indication expansion. In China, we received government support from “Major National Science
and Technology Projects for New Drug Development” under the “National 13th Five-Year Plan”,
which may further accelerate the speed of domestic market approval for HTD1801. In the United
States, HTD1801 received FTD from FDA for MASH, and for PSC indications, as well as an ODD
for the PSC indication. For more details, please see “Regulatory Overview — Laws and
Regulations in the United States and EU — Orphan Drugs.” According to CIC, HTD1801 is the
first PSC drug candidate to receive a FTD from the FDA. The FTD designation is based on
available preclinical and clinical data that demonstrate the potential to address an unmet medical
need and is intended to facilitate an expedited regulatory review process.
Building on our expertise in the development of HTD1801, we have also invested in and
developed our pipeline to cover alcoholic hepatitis (“ AH”), obesity, inflammatory bowel disease
(“IBD”) and other metabolic diseases to address large unmet medical needs of other patient
populations. For the treatment of AH, we are advancing the early clinical development of
HTD4010. AH is one of the manifestations from alcohol-associated liver disease (“ ALD ”)
characterized by acute liver inflammation. There are currently no approved drug treatments
specifically targeting AH. The use of corticosteroids is recommended for patients with severe AH,
but it has not shown meaningful long-term survival benefit and usually carries serious side effects.
HTD4010 is a TLR4 inhibitor potentially capable of modulating the innate immune response and
the resulting liver inflammation, a major contributor to AH pathogenesis. In animal studies,
HTD4010 demonstrated potent beneficial effects for AH, alleviating signs of severe liver injury
and reducing systemic inflammation. Our completed Phase I clinical result demonstrated its
favorable safety profile in healthy humans.
An additional drug candidate, HTD1804, is under evaluation for the treatment of obesity,
which is a growing global health risk associated with a wide range of comorbidities, most notably
cardiovascular diseases (“ CVD s”) and T2DM. Preclinical studies show that HTD1804 may be an
important modulator of energy metabolism as well as offer cardiovascular protection. HTD1805,
another drug candidate in our pipeline, is a multifunctional small molecule drug for the treatment
of metabolic diseases. HTD2802 is a preclinical stage multifunctional drug for the treatment of
IBD. In preclinical studies, HTD2802 has shown positive effects on stool formation and the
occurrence of fecal occult blood, as well as reducing inflammatory cytokine levels and preventing
pathological injury. We have researched and developed all drug candidates in-house. The following
chart summarizes the development status of our drug candidates as of the Latest Practicable Date.
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Candidate Mechanism/Target Indication Right Designations Pre-Clinical Phase I Phase II Phase III Competent or
regulatory authorities
HTD1801
Berberine
ursodeoxycholate
(BUDC)
MASH
Global(1)
FTD
T2DM
Global
SHTG
Global
PSC
Global(1)
FTD, ODD
PBC
Global
HTD4010 Polypeptide drug AH
Global
HTD1804 Undisclosed Obesity
Global
HTD1805 Undisclosed Metabolic disease
Global
HTD2802 Undisclosed IBD
Global
11
Ph IIa completed in US; Ph IIb initiated in US and Hong Kong
to be initiated in Mexico and Mainland China
Ph II completed in Mainland China, Ph III initiated in Mainland China (2)
Ph II to be initiated in US
(3)
Ph II completed in US and Canada; IND approval obtained in China (4)
Ph II completed in US
Ph I completed in Australia
Core Product
 Metabolic disease Digestive disease
Upcoming Milestone
FDA, NMPA, The Federal
Commission for Protection
against Sanitary Risks,
Department of Health
Ph IIb Mexico and Mainland
China clinical sites to be
initiated in December 2023
and studies in all clinical
sites expected to be
completed in 2025
NMPA Ph III to be completed
in 2025
FDA Ph II to be initiated
in 1H 2024
FDA, Health Canada, NMPA
FDA
TGA Ph II to be initiated
in late 2024 or beyond
IND-enabling
IND-enabling
IND-enabling
Joint collaboration strategy
Joint collaboration strategy
N/A
N/A
N/A
Abbreviations: MASH: metabolic dysfunction-associated steatohepatitis formerly known as nonalcoholic steatohepatitis or NASH; T2DM: type 2 dia betes mellitus; SHTG: severe hypertriglyceridemia; PSC:
primarysclerosingcholangitis;PBC:primarybiliarycholangitis;AH:alcoholichepatitis;IBD:inflammatoryboweldisease;FTD:FastTrackDesi gnation;ODD:OrphanDrugDesignation;Ph:
Phase.
Notes:
1. Researched and developed in-house. We have granted Hepalink an exclusive, sublicensable (solely to Hepalink’s designated wholly-owned subsidi aries), non-transferable license for the commercialization
of HTD1801 for MASH and PSC in Europe. The Company reserved the rights to (i) research, develop and manufacturing HTD1801 globally; (ii) commercializ e HTD1801 for any indications outside Europe;
(iii) commercialize HTD1801 in Europe for any indications other than MASH and PSC; and (iv) import and export HTD1801. For details, see “Business — Col laboration Agreement — HTD1801 License-Out
Agreement” and “Connected Transaction”.
2. In November 2023, we initiated the two Phase III clinical trials (i.e. one with HTD1801 as a standalone treatment and one with HTD1801 as an add-on the rapy with metformin) for the T2DM indication of
our self-developed HTD1801 in China. We expect to complete those two Phase III studies in 2025. For details, see “Business — Clinical Stage Candidate — Core Product HTD1801 — Summary of Clinical
Trials of HTD1801”.
3. We have completed a Phase Ib/IIa trial for hypercholesterolemia in Australia and a Phase IIa trial for MASH in the United States. Based on FDA’s writt en responses to the pre-IND meeting, the FDA concluded
that the available preclinical and clinical data of the above trials was adequate to support the initiation of Phase II trial for SHTG.
4. We have obtained the IND approval from the NMPA to conduct the China part in the Phase II MRCT of PSC. However, due to COVID-19 pandemic, we did not initi ate the China part of the Phase II clinical
trial. After the completion of Phase II trials in the United States and Canada, the China part of the Phase II trial is not required because the Phase II tr ials had met the endpoints in the United States and Canada.
5. Competent authority in respective jurisdictions: US — FDA; Mainland China — NMPA; Canada — Health Canada; Australia — TGA; Hong Kong — The Departmen t of Health; Mexico — The Federal
Commission for Protection against Sanitary Risks.
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We have developed a strong patent portfolio, which forms an effective entry barrier against
competition. As of the Latest Practicable Date, we held 133 patents and patent applications, which
provide us with protection in all of our major markets, including the United States, China and
Europe.
We are an integrated company with operations in the United States, Mainland China, Hong
Kong and Australia. Our global presence, experience and knowledge allow us to conduct
high-quality multi-center clinical trials with sites in the United States, China, Canada, and
Australia in a cost-effective and time-efficient manner. With our accumulated extensive successful
experience in building and developing a broad pipeline of innovative therapies for metabolic and
digestive diseases, we expect to provide the market with a steady roll-out of competitive products
that aim to address unmet clinical needs in complex metabolic and digestive diseases.
STRENGTHS
Develo p novel multifunction al, multi-t arget ther apies for met abolic andd igestive diseases to
tre at the patient sa sa whole
We are a biopharmaceutical company focused on the discovery, development and
commercialization of multifunctional and multi-target therapies for the treatment of metabolic and
digestive diseases. Metabolic and digestive diseases’ pathogenesis and progress are commonly
impacted by multiple factors through a complex network of interactions, associated with various
comorbidities. The prevalence of these diseases has increased significantly in recent years due to
changing lifestyles, rising obesity rates and aging populations. The high prevalence and the
complicated disease management lead to significant unmet medical need and great market
potential. According to CIC, the prevalence of major metabolic and digestive diseases was 4.9
billion as of the end of 2022 and is expected to reach 5.7 billion as of the end of 2032, with a
market size of US$330 billion in 2022 to US$687 billion in 2032 at a CAGR of 7.6%.
Treat the patient as a whole . One important feature of metabolic and digestive disease
which gives rise to significant unmet medical needs is the co-existence of highly interrelated
morbidities in patients. Current treatments of single-target drugs or their combinations do not fully
address the complications of the interrelated comorbidities. We believe that the next-generation
therapeutics for metabolic and digestive diseases should strive to treat the patients as a whole to
provide comprehensive clinical benefits. Our goal is to offer multifunctional and multi-target
therapies that treat complex metabolic and digestive diseases with a systemic approach, providing
effective and safe options to improve overall clinical benefits to patients.
A drug discovery approach potentially facilitates higher probability of success in
disruptive innovation . Achieving good balances of efficacy and safety is the major challenge in
developing multifunctional and multi-target therapies. The successful development of HTD1801
enabled us to establish the FUSIONTX
TM drug discovery approach for the design of
multifunctional and multi-target drug candidates. Through FUSIONTX TM, we integrate real-world
clinical data, network pharmacology, known and established molecules with desired therapeutic
benefits and known safety profiles to design novel, multifunctional drug candidates to treat
complex diseases with a systemic approach. Drug discovery and design through this approach
enables systematic, precise, and efficient early-stage drug development that potentially facilitates
a higher rate of clinical success at an accelerated pace and lowers development risks, fueling our
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sustained pipeline expansion. We believe our approach in creating multifunctional drug candidates
is paradigm-shifting and could lead to disruptive discovery and development of next-generation
therapies in many diseases.
Global development strategies . With solid global IP protection, we implement global
development strategies for our drug candidates. Global regulatory and clinical plans are a strong
focus in that we plan and execute clinical trials with a global perspective to ensure that trials are
designed to meet the regulatory requirements of multiple jurisdictions. By harmonizing protocols,
endpoints, and data collection to the extent possible across different regions, we optimize global
regulatory submissions and approvals. Our exceptional regulatory capabilities are demonstrated by
many successful interactions with regulatory agencies. The superiority and innovation of our
assets have been recognized by regulatory agencies and international academic communities.
HTD1801 has been granted the FTD by the FDA for MASH and PSC, respectively. FTD is granted
by FDA for new drugs or biologics that are intended to treat serious or life-threatening conditions
and demonstrate the potential to address unmet medical needs. In addition, we submit data from
completed clinical studies to major scientific conferences with presentations at the Liver Meeting
organized by the American Association for the Study of Liver Disease (“ AASLD ”) and the
International Liver Conference organized by the European Association for the Study of the Liver
(“EASL ”). Among abstracts presented, one was selected for inclusion in the “Best of The Liver
Meeting 2021” program created by AASLD to highlight key scientific achievements presented in
the annual conference. Further, key findings of studies have been published in prestigious
peer-reviewed journals including Nature Communications and the American Journal of
Gastroenterology.
HTD1801, a “pipeline-in- a-product,” new molecul ar entity with the potenti al to become a
ther apy for MASH, T2DM and other met abolic andd igestive diseases
Our Core Product HTD1801, a new molecular entity, is a gut-liver anti-inflammatory
metabolic modulator which targets multiple pathways pivotal to metabolic regulation, including
those associated with metabolic and digestive diseases. We believe HTD1801 has the potential to
be a therapy for multiple metabolic and digestive diseases based on its safety and efficacy profile
as well as ease of administration.
1+1 >2 . HTD1801 is a salt formed from two active moieties, BBR and UDCA. The two
active moieties work in tandem in the salt form with unique microstructure to produce distinct and
improved properties of HTD1801. HTD1801 has different physico-chemical characteristics
compared to each of the BBR and UDCA active moieties or their physical mixture, including
distinct X-ray powder diffraction, melting point, infrared spectrum, solubility or dissolution and
LogD. Further, HTD1801 exhibits good pharmacokinetics (“ PK”), efficacy and safety profiles,
which are believed to owe to the unique interaction of BBR:UDCA in the ionized salt form. Those
improved properties are not observed with either of the individual active moieties or their physical
mixture. Given these unique attributes of HTD1801, the FDA has recognized HTD1801 as
distinctive from its individual constituent components or their physical mixture with therapeutic
potential across multiple indications.
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“Pipeline-in-a-product” with significant potential . HTD1801 has demonstrated good
safety and efficacy in clinical trials across MASH, T2DM, SHTG, PSC and PBC, yielding
therapeutic benefits in patients across multiple indications. We believe the demonstrated good
safety and efficacy strongly supports the “pipeline-in-a-product” potential of HTD1801 for
additional metabolic and digestive diseases with suboptimal or no approved therapies.
Development costs can be allocated more efficiently, creating discrete commercial opportunities
without additional discovery, preclinical, CMC development and early clinical development.
For MASH, we have completed a randomized, double-blind Phase I study of HTD1801 in
healthy subjects in Australia and a randomized, double-blind, placebo-controlled Phase IIa study
of HTD1801 in patients with MASH and T2DM in the United States. The Phase IIa study met the
primary endpoint, which showed that HTD1801 resulted in statistically significant, meaningful
improvements in liver fat content, as assessed by MRI-PDFF, compared to a placebo. MRI-PDFF is
commonly used to assess treatment response in early-phase, proof-of-concept clinical studies in
MASH and has been shown to be closely correlated with liver steatosis grades from histology. The
beneficial effect of HTD1801 on liver fat was accompanied by additional improvements in liver
health including liver biochemistry (ALT, AST, GGT), and non-invasive markers of fibrosis and
inflammation (cT1 and FIB-4). Treatment with HTD1801 also resulted in weight loss and
improvements in LDL cholesterol and triglycerides, both of which are independent risk factors for
cardiovascular disease. A positive effect of HTD1801 on glucose metabolism was also evident
based on meaningful reductions in fasting glucose and HbA1c. Effects were even more pronounced
in a subgroup of patients with insulin resistance (hyperinsulinemia). HTD1801 has been granted a
FTD for the treatment of MASH, which allows us to communicate with the FDA more frequently
and gives us a competitive advantage in the regulatory approval process. We are currently
conducting a Phase IIb study of HTD1801 for the treatment of MASH with T2DM or pre-diabetes.
The study has initiated in the United States and Hong Kong and we plan to initiate additional study
sites in Mexico and Mainland China in December 2023.
For T2DM, our completed Phase Ib and Phase II clinical trials in China have demonstrated a
strong therapeutic effect in improving glucose metabolism, including statistically significant
decreases in HbA1c and fasting glucose levels, which may be the result of decreased insulin
resistance based on observed reductions in HOMA-IR with HTD1801. In the clinical trials,
improvements in other disease-relevant parameters were also observed. With HTD1801 treatment,
liver biomarkers (ALT, AST, GGT) were reduced despite being within the normal range at baseline,
on average. HTD1801 also led to improvement of lipid profiles, such as reduction of LDL-c and
non-HDL-c levels. Collective results from our Phase Ib T2DM trial, Phase II T2DM trial and Phase
IIa MASH and T2DM trial suggest that HTD1801 has broad efficacy on glucose homeostasis, other
cardiometabolic markers and liver health, supporting a differentiated profile compared to other
anti-diabetic agents. We initiated Phase III registrational trials of HTD1801 for the treatment of
T2DM in China in November 2023. Based on the comprehensive benefits observed for HTD1801
treatment, coupled with its safety profile and ease of administration, we believe that HTD1801 has
the potential to become a therapy for T2DM patients who also suffer from metabolic comorbidities
such as metabolic dysfunction-associated steatotic liver disease (“ MASLD ”, formerly known as
nonalcoholic fatty liver disease or NAFLD), and dyslipidemia.
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For SHTG, preclinical studies demonstrated that HTD1801 could improve lipids in hamster
models of dyslipidemia and MASLD. In addition, in a pooled analysis of clinical studies of MASH
and hypercholesterolemia, focusing on subjects with baseline TGs above 200 mg/dL
(hypertriglyceridemia), treatment with HTD1801 was associated with clinically meaningful
reductions in TG levels. The effect on TG levels in the HTG population was paralleled by
improvement of key cardiometabolic parameters including a decrease in LDL-C, an increase in
HDL-C, improved glucose levels and marked weight loss. Efficacy beyond TG lowering
differentiates HTD1801 from currently approved therapies. While the existing therapies for SHTG
offer a benefit in treating high TGs, they offer limited benefits in the treatment of the constellation
of metabolic issues in orbit around or underlying the TG levels (e.g. T2DM, MASH, obesity). This
clinical evidence supports the therapeutic potential of HTD1801 in SHTG. We have completed
Phase I clinical trial in healthy subjects in Australia and plan to initiate a Phase II clinical trial of
HTD1801 for the treatment of SHTG in the United States in first half of 2024.
For PSC, HTD1801 provides a unique and comprehensive treatment of the gut-liver-biliary
system, acting through multiple mechanisms to address the complex pathogenesis of PSC,
including a choleretic effect achieved by displacing toxic bile acids from the bile acid pool and a
variety of anti-inflammatory effects. In addition, HTD1801 treatment has demonstrated positive
changes in the gut microbiome, an important contributor to the pathogenesis of PSC. A Phase II
clinical trial of HTD1801 for PSC in the United States and Canada met its primary endpoint, with
the HTD1801 treatment group demonstrating a statistically significant reduction in serum alkaline
phosphatase, a key biomarker indicating the presence of cholestatic liver disease, compared to the
placebo group. HTD1801 treatment was also associated with improvements in markers of liver
injury and inflammation. In addition to its efficacy profile, HTD1801 demonstrated a good safety
profile in this patient population including liver-related safety. HTD1801 has been granted FTD
and ODD from FDA for the treatment of PSC, which allows for expedited regulatory review.
A completed Phase II open-label study in the United States demonstrated proof of concept
of HTD1801 for the treatment of PBC patients with an incomplete response to UDCA treatment.
Upon transition from UDCA to HTD1801, efficacy across multiple endpoints was observed with
HTD1801 therapy, including a reduction in ALP and GGT, markers of cholestatic injury, as well as
a reduction in total bilirubin levels, indicative of improved liver function. Markers of inflammation
and blood lipids generally improved with HTD1801. Our Phase II clinical results suggest that
additional benefits are obtained with HTD1801 monotherapy over UDCA alone, potentially in part
driven by the BBR moiety of HTD1801 and the improved physicochemical characteristics of
HTD1801. In addition to the efficacy profile, HTD1801 demonstrated a good safety profile in this
patient population including liver-related safety. In particular, pruritus, a common symptom of
PBC, showed improvement with HTD1801 treatment.
Late stage global commercial potential . As of the Latest Practicable Date, 13 clinical trials
for HTD1801 have been initiated or completed with more than 500 subjects enrolled in the
aggregate, and the efficacy and safety have been well evidenced in different populations in these
trials. As described above, HTD1801 has entered the late development stage for various indications
with a good expectation of success. According to the current development progress and timeline,
we expect to submit the first NDA for HTD1801 for T2DM in 2025 in China.
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Pipeline of new molecul ar entitie s with ther apeutic profile to add ress unmet nee ds in
met abolic andd igestive diseases
Leveraging the patient-centric strategy, we have developed a pipeline of multifunctional,
multi-target therapeutics to treat metabolic and digestive diseases with unmet medical needs. In
addition to HTD1801, our pipeline comprises clinical and preclinical assets to address a wide
range of indications, including AH, obesity, IBD and other metabolism disorders.
Our HTD4010 is a Phase I clinical-stage, polypeptide drug for the treatment of complex,
life-threatening diseases such as AH, which is caused by chronic heavy alcohol abuse or a sudden,
drastic increase in alcohol consumption. It is characterized by severe inflammation and,
ultimately, liver failure and death. There is currently no approved treatment for AH and only a few
drug candidates are in clinical development. The current standard of care focuses on symptom
management, including abstinence, treating inflammation and providing nutrition. Our HTD4010,
however, has the potential to address the underlying disease mechanism. In animal studies, for
example, HTD4010 demonstrated potent beneficial effects for AH, alleviating characteristic signs
of severe liver injury and reducing systemic inflammation. Our completed Phase I clinical trial of
HTD4010 in healthy subjects demonstrated its favorable safety profile.
Our HTD1804 is a preclinical-stage, small molecule multifunctional therapy for the
treatment of obesity, a growing global health risk associated with a wide range of comorbidities,
most notably CVDs and T2DM. Preclinical studies have shown that HTD1804 may be an important
modulator of energy metabolism to provide cardiovascular protection, and can effectively reduce
the body weight of animals with obesity as well as lipid- and glucose-lowering effects. HTD1805,
another drug candidate in our pipeline, is a multifunctional small molecule drug for the treatment
of metabolic diseases. Our HTD2802 is a preclinical-stage, multifunctional drug for the treatment
of IBD, a common GI tract disorder. The existing IBD drugs fail to adequately control the
symptoms and complications in many patients. In preclinical studies, HTD2802 has shown positive
effects on improving stool formation, relieving abnormal weight loss and reducing the occurrence
of fecal occult blood, as well as reducing inflammatory cytokine levels and preventing
pathological injury.
Commerci alo pportunity in met abolic andd igestive diseases for HTD1801 and our pipeline of
other hi ghly differenti ated ther apeutic c andidates
There has been an increasing industry focus on metabolic and digestive diseases in recent
years, which has driven our continued investment in the development of new and more effective
treatments for the following indications: MASH, T2DM, SHTG, PSC and PBC. Notably,
demographic trends support continued market growth. With our innovative pipeline, we believe
that we are well positioned to address these growing therapeutic areas which represent unmet
medical need.
MASH is a growing health issue, particularly in developed countries, due to the rising rates
of obesity and metabolic syndrome. As of the end of 2022, the prevalence of MASH reached 40.4
million, 20.7 million and 35.0 million in China, the United States and Europe, respectively,
according to CIC. There are currently no approved therapies for the treatment of MASH. While
lifestyle modifications and management of underlying conditions can help slow or stop the
progression of MASH, there are currently no approved pharmacologic therapies that
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comprehensively ameliorate the full spectrum of MASH, from inflammation and liver cell damage
to fibrosis and cirrhosis. Effects on cardiometabolic parameters such as lipid metabolism,
glycemic control, and body weight are also important considerations given the prevalence of such
comorbidities in patients with MASH. Given the pathogenetic complexity and heterogeneity of the
disease, there is growing interest in developing therapies that target multiple pathways involved in
the development and progression of MASH.
T2DM is one of the most common metabolic disorders worldwide. According to CIC, China
has the largest number of T2DM patients, with approximately 123.2 million patients in 2022,
which is expected to increase to 141.8 million by 2032. T2DM and MASLD are closely interrelated
metabolic diseases. A key function of the liver is the storage and management of energy (e.g.,
sugars and lipids) in the body. As such, a dysregulation in energy management or sensitivity (e.g.,
insulin resistance in T2DM) may have a substantial impact in that function. T2DM aggravates
MASLD and results in a higher risk of disease progression and outcomes including MASH,
cirrhosis and hepatocellular carcinoma. Similarly, MASLD compounds the severity of T2DM and
correlates with an increase in comorbidities such as cardiovascular disease and liver-related
outcomes. The worldwide prevalence of MASLD among people with T2DM is 55.5% and in China
the prevalence of T2DM with MASLD was 64.1 million as of the end of 2022. The goal in treating
these patients is to halt or reverse the progression of T2DM and MASLD thereby reducing the risk
of clinical outcomes associated with advanced disease. Therefore, an ideal therapy for patients
with T2DM and MASLD should provide comprehensive benefits across a wide variety of
parameters which encapsulate the spectrum of these diseases.
SHTG is the presence of high levels of triglycerides. The diagnosis of hypertriglyceridemia
(“HTG”) is defined by the presence of serum triglycerides (“ TGs”) greater than 150 mg/dL with
SHTG being defined by TGs greater than or equal to 500 mg/dL. As of the end of 2022, the
prevalence of SHTG reached 1,586.4 thousand, 339.8 thousand and 813.0 thousand in China, the
United States and Europe, respectively, according to CIC. Nearly all patients with SHTG have a
genetic predisposition plus an additional condition or factor known to raise serum TGs (e.g.,
diabetes mellitus, alcohol abuse, or oral estrogen therapy). Lifestyle changes and dietary
modifications are the current standard treatment for patients with SHTG. The most commonly
utilized classes of therapeutics utilized for treatment of SHTG include omega-3 fatty acids,
fibrates, and statins, which have all demonstrated the ability to reduce TG levels. Unfortunately,
while each of these classes of therapeutics offers benefit in the treatment of SHTG, each of them
still leaves a large fraction of patients with an incomplete response to treatment or presents with
additional risks or adverse reactions. Furthermore, while the existing therapies for SHTG offer a
benefit in treating high TGs, they offer limited benefit in the treatment of the constellation of
metabolic issues in orbit around or underlying the TG levels (e.g., T2DM, MASLD/MASH,
obesity). For example, fenofibrate and gemfibrozil may result in elevated LDL-c and are
contraindicated for subjects with active liver disease (e.g., MASLD/MASH).
PSC is a rare, chronic cholestatic liver disease characterized by intrahepatic or extrahepatic
bile duct injury, or both. As of the end of 2022, the prevalence of PSC reached 171.9 thousand, 48.4
thousand and 60.7 thousand in China, the United States and Europe, respectively, according to
CIC. Despite the seriousness of the disease, there is no available therapy for patients with PSC, and
standard of care consists of supportive therapies to manage symptoms and prevent complications.
Given that the pathogenesis of PSC is complex and multifactorial, an effective treatment should
target multiple underlying mechanisms that contribute to the development and progression of PSC.
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PBC is a chronic, slowly progressive autoimmune, cholestatic liver disease characterized by
female predominance. As of the end of 2022, the prevalence of PBC reached 789.8 thousand, 135.4
thousand and 175.6 thousand in China, the United States and Europe, respectively, according to
CIC. There are only two approved treatments for PBC to date, each with its own limitations. While
UDCA is prescribed for patients with PBC as the current first-line therapy, up to 40% of PBC
patients do not achieve an adequate response to UDCA as a monotherapy. In the United States and
Europe, obeticholic acid (“ OCA”) is approved as second-line therapy for the treatment of patients
with PBC patients who have had an inadequate response to or are intolerant of UDCA.
Approximately 40% of patients with PBC who are incomplete responders to UDCA alone also do
not achieve a complete response with the addition of OCA. Further, OCA is contraindicated for
patients with PBC who have compensated cirrhosis with evidence of portal hypertension or
patients with decompensated cirrhosis. Tolerability concerns related to the use of OCA includes an
exacerbation of pruritu s — a common symptom of PBC.
R&D c apabilitie s bol stere d by vi sion ary m anagement te am and worl d-renowne d key o pinion
leaders with deep experti sei nm e tabolic andd igestive diseases
Our R&D team has strong expertise, deep understanding, and broad development experience
in metabolic and digestive diseases. Our R&D team pioneered the identification of compounds
designed to modulate multiple pathways underlying chronic diseases, providing a unique
advantage in addressing the unmet clinical needs across complex pathologies. Our R&D team is
led by a team of world-class scientists with years of drug development experience on average. As
of the Latest Practicable Date, our R&D team consisted of 45 members including nine members
holding PhDs and 22 members holding masters covering the fields of chemistry, biology,
pharmacology and medicine. Our global clinical development team, in particular, is comprised of
a team of industry veterans with extensive experience in the Company’s target therapeutic areas
and a track record of conducting registrational clinical trials to achieve marketing approvals in
major markets such as the United States and Europe. Some team members have experience leading
successful programs at domestic or global biopharmaceutical companies.
Our management team is led by our founder, executive Director and chief executive officer,
Dr. Liping Liu, a pioneer in the field of metabolic and digestive diseases with extensive industry
experience across the drug development cycle and a track record of leading clinical development of
highly innovative drugs internationally. Dr. Liu has over 20 years of drug development experience
and has led eight IND approvals in the United States, China, Canada and Australia for two drugs.
Dr. Liu is a prolific scientist with over 100 patents and patent applications to her credit. Dr. Liu
previously served as the senior director of R&D of Stealth Peptide Inc., worked in the translational
research department of the American Type Culture Collection and the group leader in chemistry
department of MannKind Corporation.
Our chief development officer, Dr. Leigh Anne MacConell, has more than 20 years of global
drug discovery and development experience in MASH, T2DM, PSC and PBC. She has participated
in submission of a number of NDAs and INDs and has overseen more than 20 clinical trials
worldwide. Dr. MacConell previously served as senior vice president at Intercept Pharmaceuticals
and worked at Amylin Pharmaceuticals Inc.
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Our vice president of discovery research, Dr. Tianwei Ma, has over 20 years of experiences
in drug discovery. Dr. Ma participated in the early discovery of Clevudine (Levovir), an anti-HBV
agent that was later approved in Korea and several other Asian countries. During his professional
career, Dr. Ma has led many discovery programs to achieve PCC or IND stages and he is listed as
an inventor or co-inventor for approximately 30 granted patents or applications. Dr. Ma previously
served as a director of chemistry at Eli Lilly & Company, vice president of drug discovery at
PegBio Inc. (Suzhou) and vice president and head of chemistry at BioFront Therapeutics (Beijing).
Our deputy general manager, Ms. Meng Yu, has over 15 years of experience in business
strategy management, corporate development and research and R&D operations management. Ms.
Meng Yu worked at Asymchem Laboratories (Tianjin) Co., Ltd. (ࠢ
ʮ̡), a pharmaceutical company listed on the Shenzhen Stock Exchange (stock code: 002821)
and a scientific liaison manager of Huya Biological Medicine Technology (Shanghai) Co., Ltd. ( လ
ʮ̡ ).
Our chief financial officer, Mr. Koon Yin Edmund Sim, has over 18 years of experience in
the financial sector in the United States and China. Mr. Sim holds a Bachelor of Business Degree
from the Queensland University of Technology, a Master of Science in Financial Management
from the University of London and a CPA qualification from Hong Kong. Mr. Sim previously
served as vice president of Vitasky Research Holdings Co. Limited and held key positions at China
Merchants Securities International Company Limited, Merrill Lynch (Asia Pacific) Limited,
Goldman Sachs (Asia) L.L.C., Goldman Sachs Gao Hua Securities Company Limited and
Citigroup Global Markets Asia Limited.
We engage a world-renowned expert team of clinical and regulatory advisors, including key
opinion leaders in liver and metabolic disease, to advise our development strategies to maximize
our probability of success. We have consistently been able to attract industry-leading experts and
renowned KOLs to participate in our drug discovery and development projects, which speaks to the
solid foundation of our research and development process and reflects the cutting-edge nature and
clinical potential of our drug candidates. In addition to the world-renowned KOLs, we are also a
leader in global drug development with deep expertise in navigating the drug approval process. Our
multi-jurisdictional regulatory expertise is particularly strong in our key markets such as the
United States and China. We have used this expertise to strategically form our drug development
plan, making strategic decisions regarding the direction of our drug development focus to take full
advantage of the local regulatory environment. Part of our clinical strategy is to focus on
therapeutic indications that are interrelated (i.e., T2DM, MASH and SHTG) allowing the company
to design clinical programs in a way that enables databases from multiple programs to be leveraged
across indications and regions (i.e., United States and China), further streamlining development.
We utilize consistent trial designs, statistical approaches, and bridging where possible, to allow
clinical data from each regional trial to support registrations globally (i.e., the United States and
China). Our exceptional regulatory capabilities are demonstrated thus far by many successful
interactions with the FDA including two FTD for HTD1801 (for the treatment of MASH and PSC),
and a successful end-of-Phase II meeting for PSC, among others.
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STRATEGIES
Rapidly advance our current pipeline of drug candidates throu gh clinic al develo pment, and
continue to ex pand indication cover aget om aximize the ther apeutic and economic v alue of
our assets
Leveraging our in-house development and clinical capabilities, we intend to continue to
advance our clinical programs to achieve rapid time-to-market and successful commercialization.
We plan to advance our clinical assets through the clinical developments and shorten trial timelines
with regulatory designations where appropriate. To maximize the global value of our pipeline, we
have implemented, and plan to further expand, our clinical development approach internationally.
We select the sites of our clinical trials primarily based on the experience and expertise of the
principal investigators, the reputation of our partner institutions in the relevant fields, our
multi-jurisdictional regulatory expertise and the enrollment projections. In particular, we have
formulated the following plans with respect to our drug candidates.
• HTD1801 . We will continue to advance the global development of Core Product
HTD1801 for metabolic and digestive diseases. For the T2DM program, we have
successfully completed our Phase II trial in China and we initiated two Phase III
registrational trials in China in November 2023. For the MASH program, a Phase IIb
study for the treatment of MASH with T2DM or pre-diabetes is currently ongoing.
Sites have been initiated in the United States and Hong Kong with plans to initiate
sites in Mexico and Mainland China in December 2023. For the SHTG program, we
plan to initiate a Phase II clinical trial in the United States in first half of 2024. For the
PSC program, we have completed the Phase II clinical trial in the United States and
Canada and held a successful end of Phase II (EOP2) meeting with FDA and it has no
objection for us to commence Phase III clinical trial.
In addition to HTD1801, we also plan to leverage our in-house R&D capabilities to advance
our clinical-stage candidate HTD4010’s development in treating AH and various preclinical
programs, such as HTD1804, HTD1805 and HTD2802 into clinical development in the near future.
Lever age our drugd iscovery c apabilitie sa nd teame x perti set ob u i lda n innov ative pipeline
bas
ed on the multi-mech anism approach
We will leverage our global leadership to optimize and enhance our FUSIONTX TM
development approach. We will upgrade and optimize our discovery, design and development of
potential drug candidates to maximize the potential of our novel development approach.
We will continue to build on our extensive R&D experience and strict adherence to clinical
and manufacturing protocols to ensure the efficacy, safety and commercial viability of our
innovative drug candidates. In particular, we will strictly adhere to our clinical protocols, and
maintain high standards in manufacturing consistency and quality control.
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We will continue to focus on deepening our understanding of complex disease pathogenesis
by leveraging internal and external expertise, to identify opportunities addressing unmet medical
needs. From time to time, we actively evaluate collaboration opportunities globally, such as
collaboration for artificial intelligence, to improve the probability of success for our discovery
efforts.
Expanding our R&D te am and capabilitie s
We are committed to expanding our R&D capabilities by continuing to identify potential
new indications for our existing drug candidates and expand our pipeline into new therapeutic
areas to address unmet medical needs. With respect to our development pipeline, our strategy is to
continue to focus on innovative therapies for metabolic and digestive diseases and to advance them
from preclinical research to clinical development, which we believe will support our long-term
growth. We plan to deliver one to two preclinical candidates each year and aim to advance them
into preclinical and clinical development.
To sustain our growth, we are also focused on building a global talent pool and enhancing
our capabilities across research, clinical development and commercialization. We aim to grow our
R&D team by actively recruiting talents with strong academic background and industry
experience. We believe that an expanded high-quality R&D team will enable us to accelerate our
drug discovery, development and commercialization processes. We also plan to partner with
world-leading academic institutions to conduct research on diseases, targets and mechanisms of
actions that may fit our pipeline expansion strategy.
Pur sue strategic coll abor ation s in drugd evelo pment and commerci aliz ation in the glob al
market
We currently outsource manufacturing activities of our drug candidates to CDMOs to
enhance operational efficiency and cost control. We plan to continue to outsource our
commercial-scale manufacturing to globally recognized CDMOs. We have implemented and will
continue to implement stringent protocols to ensure that our CDMOs are in full compliance with
our internal quality control polices and external regulatory requirements. We will select additional
qualified CDMOs to ensure a sufficient supply of our drug candidates. Our selection of CDMOs is
based on a number of factors, including qualifications, experience, expertise, manufacturing
capacity, geographic proximity, reputation, track record and product quality, among others.
We will pursue the commercialization strategy of win-win cooperation for future assets to
maximize the value of our drug candidates globally. We plan to partner with pharmaceutical
companies who have strong commercialization capability and rich experience in the therapeutical
fields we are focusing on, to utilize their well-established sales networks and other resources to
achieve mutually beneficial results and maximize the commercial value of our drug candidates.
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Str ategically seek partner ships to drive lon g-term growth
We intend to further expand our drug portfolio through a combination of internal discovery
and external business development efforts. We will continue to focus our in-house discovery
efforts on the development of novel metabolic and digestive diseases therapies. We will actively
seek strategic collaborations to drive our growth, including in-licensing of external assets and
out-licensing of our internally developed assets, based on strategic fit, such as disease indications,
modalities at different stages of drug discovery and development.
We intend to acquire or license-in high potential products from global enablers, including
biopharmaceutical companies and research institutions. A strong emphasis will continue to be
placed on assets that could provide us with global development and commercialization rights, have
potential combination synergies with our current pipeline and have first-in-class potential. As of
the Latest Practicable Date, we had no specific plans nor any identified target for asset acquisition
or license-in.
Partnerships have been and will continue to be an important source of innovation for our
drug portfolio. We intend to continue to explore partnerships with multinational pharmaceutical
companies through strategic collaborations including co-development arrangements. We intend to
identify the most suitable and resourceful partners for collaboration to maximize the clinical and
commercial value of our drug candidates. We believe that such collaborations will not only provide
us with technical and regulatory support for the implementation of successful global clinical
development plans, but also enable us to partially monetize the global market opportunities of our
assets at an early stage.
Continue to protect our glob alI Pb ye m ployin g variou s life-cycle m anagement patent
strategies inclu dinga new molecul ar entity ( a “com position-of-m atter” patent), the proce ss
used to m anuf acture the drug, the w ay the drug is useda nd
new formul ation s of the drug to
protect our assetsa nd maint ain the m arket exclu sivity
We believe that strong IP protection is critical to our innovative assets. We have developed a
portfolio of intellectual property rights to protect our technologies and products, which provides
an effective barrier to entry. We have successfully obtained composition of matter patent for
HTD1801 in many countries and regions, including the United States, China, the European Union
and Japan, as well as crystalline form patent in the United States and China. We will continue to
seek patent protection for other product candidates globally and file additional patent applications,
when appropriate, to cover the crystalline form and method of use for our drug candidates.
OUR PRODUCT PIPELINE
As of the Latest Practicable Date, we have researched and developed in-house a pipeline
with five proprietary drug candidates covering nine indications, including five indications that are
at clinical stage. The following chart summarizes the development status of our drug candidates as
of the Latest Practicable Date.
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Candidate Mechanism/Target Indication Right Designations Pre-Clinical Phase I Phase II Phase III Competent or
regulatory authorities
HTD1801
Berberine
ursodeoxycholate
(BUDC)
MASH
Global(1)
FTD
T2DM
Global
SHTG
Global
PSC
Global(1)
FTD, ODD
PBC
Global
HTD4010 Polypeptide drug AH
Global
HTD1804 Undisclosed Obesity
Global
HTD1805 Undisclosed Metabolic disease
Global
HTD2802 Undisclosed IBD
Global
11
Ph IIa completed in US; Ph IIb initiated in US and Hong Kong
to be initiated in Mexico and Mainland China
Ph II completed in Mainland China, Ph III initiated in Mainland China (2)
Ph II to be initiated in US
(3)
Ph II completed in US and Canada; IND approval obtained in China (4)
Ph II completed in US
Ph I completed in Australia
Core Product
 Metabolic disease Digestive disease
Upcoming Milestone
FDA, NMPA, The Federal
Commission for Protection
against Sanitary Risks,
Department of Health
Ph IIb Mexico and Mainland
China clinical sites to be
initiated in December 2023
and studies in all clinical
sites expected to be
completed in 2025
NMPA Ph III to be completed
in 2025
FDA Ph II to be initiated
in 1H 2024
FDA, Health Canada, NMPA
FDA
TGA Ph II to be initiated
in late 2024 or beyond
IND-enabling
IND-enabling
IND-enabling
Joint collaboration strategy
Joint collaboration strategy
N/A
N/A
N/A
Abbreviations: MASH: metabolic dysfunction-associated steatohepatitis formerly known as nonalcoholic steatohepatitis or NASH; T2DM: type 2 dia betes mellitus; SHTG: severe hypertriglyceridemia; PSC:
primarysclerosingcholangitis;PBC:primarybiliarycholangitis;AH:alcoholichepatitis;IBD:inflammatoryboweldisease;FTD:FastTrackDesi gnation;ODD:OrphanDrugDesignation;Ph:
Phase.
Notes:
1. Researched and developed in-house. We have granted Hepalink an exclusive, sublicensable (solely to Hepalink’s designated wholly-owned subsidi aries), non-transferable license for the commercialization
of HTD1801 for MASH and PSC in Europe. The Company reserved the rights to (i) research, develop and manufacturing HTD1801 globally; (ii) commercializ e HTD1801 for any indications outside Europe;
(iii) commercialize HTD1801 in Europe for any indications other than MASH and PSC; and (iv) import and export HTD1801. For details, see “Business — Col laboration Agreement — HTD1801 License-Out
Agreement” and “Connected Transaction”.
2. In November 2023, we initiated the two Phase III clinical trials (i.e. one with HTD1801 as a standalone treatment and one with HTD1801 as an add-on the rapy with metformin) for the T2DM indication of
our self-developed HTD1801 in China. We expect to complete those two Phase III studies in 2025. For details, see “Business — Clinical Stage Candidate — Core Product HTD1801 — Summary of Clinical
Trials of HTD1801”.
3. We have completed a Phase Ib/IIa trial for hypercholesterolemia in Australia and a Phase IIa trial for MASH in the United States. Based on FDA’s writt en responses to the pre-IND meeting, the FDA concluded
that the available preclinical and clinical data of the above trials was adequate to support the initiation of Phase II trial for SHTG.
4. We have obtained the IND approval from the NMPA to conduct the China part in the Phase II MRCT of PSC. However, due to COVID-19 pandemic, we did not initi ate the China part of the Phase II clinical
trial. After the completion of Phase II trials in the United States and Canada, the China part of the Phase II trial is not required because the Phase II tr ials had met the endpoints in the United States and Canada.
5. Competent authority in respective jurisdictions: US — FDA; Mainland China — NMPA; Canada — Health Canada; Australia — TGA; Hong Kong — The Departmen t of Health; Mexico — The Federal
Commission for Protection against Sanitary Risks.
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CLINICAL-STAGE CANDIDATES
Core Pro duct HTD1801
Overview
Our Core Product, HTD1801, a new molecular entity, is a gut-liver anti-inflammatory
metabolic modulator which targets multiple pathways pivotal to metabolic regulation, including
those associated with metabolic and digestive diseases. It is a pivotal-stage, self-developed,
multifunctional, multi-target, “pipeline-in-a-product” drug candidate. It is being developed for
multiple metabolic and digestive indications, including MASH, T2DM, SHTG, PSC and PBC.
HTD1801 contains two active moieties derived from natural ingredients, BBR and UDCA, both
with an established efficacy and long-term safety profiles in humans. We have obtained FTD for
HTD1801 for PSC and MASH, which facilitates an expedited regulatory review process and,
potentially, earlier drug approval, as well as ODD for PSC, from the FDA. Under the Orphan Drug
Act, the FDA granted the ODD to HTD1801 for PSC on the condition that HTD1801 is intended to
treat a rare disease of PSC affecting fewer than 200,000 individuals in the United States. For more
details, please see “Regulatory Overview — Laws and Regulations in the United States and EU —
Orphan Drugs.” According to CIC, HTD1801 is the first PSC drug candidate that obtained FTD
from the FDA. HTD1801’s clinical trial data demonstrated its therapeutic potential in the treatment
of MASH, T2DM and PSC with favorable safety profiles. As of the Latest Practicable Date, we
held 58 patents and patent applications in relation to our Core Product, representing four types of
patents that have been applied in different jurisdictions, including a new molecular entity (a
“composition-of-matter” patent), the process used to manufacture the drug, the way the drug is
used and new formulations of the drug to protect our assets. The reasons for applying these patents
in various jurisdictions are to provide an extensive patent protections and maintain our Core
Product’s exclusivity in these jurisdictions. We have successfully obtained composition of matter
patent for HTD1801 in many countries and regions, including the United States, China, the
European Union and Japan, as well as crystalline form patent in the United States and China.
Molecular Structure
HTD1801 is an ionic salt formed from BBR and UDCA, representing a new molecular entity
that offers the possibility of multi-functional therapy for chronic metabolic and non-viral liver
diseases in a single treatment. These moieties work in tandem in the salt form with unique
microstructure to produce distinct and improved properties of HTD1801 that are not observed with
either of the individual active moieties or their physical mixture. HTD1801 exhibits improved
physico-chemical characteristics and PK, efficacy and safety profiles, which is believed to owe to
the unique interaction of BBR:UDCA in the ionized salt form. Given these unique attributes of the
HTD1801, the FDA has recognized that HTD1801 is distinct from its individual constituent
components or their physical mixture and has therapeutic potential.
• BBR is an isoquinoline alkaloid with a long history of use for its wide-ranging
biological effects, particularly antimicrobial effects, in Chinese, Indian and Japanese
medicine and is an approved drug for the treatment of intestinal infection in mainland
China, Japan and Taiwan, according to CIC. In the United States and Canada, BBR is
also used in various dietary supplements.
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• UDCA is an endogenous, secondary bile acid approved by the FDA for the
non-surgical treatment of cholesterol gallstones dissolution and PBC. Clinical
practice demonstrated that UDCA (15-20 mg/day) improves serum liver tests and
certain surrogate markers of prognosis in PBC. According to CIC, UDCA is known
for its beneficial effects on the liver by displacing toxic bile acids and protecting
against apoptosis, through wide-ranging immunomodulatory, anti-inflammatory,
anti-fibrotic and antimicrobial actions. UDCA’s efficacy in other liver diseases have
also been extensively studied in nonclinical and clinical studies, both as a single
agent and in combination therapy with agents such as vitamin E and lipid-lowering
fibrate drugs.
Mechanism of Action (“MOA”)
MASH,T2DMandSHTGAreInterrelatedMetabolicDiseases
MASH is liver inflammation and damage caused by a buildup of fat in the liver, T2DM is a
disease in which blood glucose, or blood sugar, levels are too high, and SHTG is the presence of
high levels of triglycerides, a type of fat, in the blood. MASH, T2DM and SHTG are interrelated
metabolic diseases. In an insulin resistance state, more insulin is required to obtain the same
metabolic effects, namely glucose uptake in the muscle, suppression of lipolysis and of hepatic
glucose production. Insulin resistance is present in muscle, liver and adipose tissue in MASH.
Therefore, hepatic glucose production and adipose tissue lipolysis are only in part suppressed by
insulin, resulting in higher fasting glucose and free fatty acid concentrations, increasing the risk of
HTG in these patients and predisposition to lipotoxicity. To overcome insulin resistance, the
pancreas is stimulated to secrete more insulin, and the workload of pancreatic beta cells is
increased, leading to beta-cell dysfunction and a reduction of beta-cell mass over time, thus a
major risk factor for the development of hyperglycaemia and T2DM. In addition, glucotoxicity is
defined as chronically elevated glucose concentrations causing glucose-induced insulin resistance,
cellular dysfunction and a cycle of progressive metabolic deterioration. Glucotoxicity and
lipotoxicity are closely interrelated and both contribute to worsening insulin resistance and
impaired insulin secretion. Both lipotoxicity and glucotoxicity also contribute to oxidative stress,
mitochondrial dysfunction, lipogenesis, inflammation, and finally to beta-cell dysfunction and
vice versa. In MASH, lipotoxicity and insulin resistance have been recognized as
pathophysiological mechanisms responsible of development and progression to a more severe form
of this disease. T2DM is a chronic condition of glucotoxicity, although also lipotoxicity is often
present and are responsible not only of insulin resistance but also of impaired insulin secretion.
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MASH, T2DM and SHTG Are Interrel ated Met abolic Di seases
Insulin
resistance
Lipotoxicity Hyperlipidemia
MASH T2DM
SHTG
Hyperglycemia Glucotoxicity
Oxidative stress,
mitochondrial
dysfunction,
lipogenesis,
inflammation
Beta cell
dysfunction
Oxidative stress
mitochondrial
dysfunction,
inflammation
Source:CompanyData,modifiedfromGastaldelli,A.CusiK.JHEPReports2019,CICanalysis
MOAofHTD1801forMetabolicDisease
The following diagram demonstrates mechanism of action of HTD1801 for metabolic
disease:
HTD1801: A Gut-Liver Anti-infl ammatory Met abolic Mo dulator (“GLAM”)
Inflammation
Steatosis
Fibrosis
Cholestasis
Cholangitis
Atherogenic Lipids
Oxidative Stress
Glucose Clearance
Beneficial Microbiota
Body Weight
Inflammation
Insulin Resistance
Glycemic Control
Harmful MicrobiotaHarmful Microbiota
HTD1801
Berberine Ursodeoxycholate
Source:CompanyData
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MOA of HTD1801 for MASH
HTD1801 treats MASH through multiple pathways, which address the core aspects of the
disease including induction of the insulin receptor, activation of AMP kinase, and induction of the
LDL receptor. The BBR moiety induces the insulin receptor to improve insulin resistance, and also
induces AMP kinase, thereby leading to stimulation of hepatic fatty acid oxidation, fatty acid
oxidation and glucose uptake by skeletal muscle as well as inhibition of cholesterol and
triglyceride synthesis and denovo lipogenesis. Finally, the BBR moiety induces the LDL receptor
to lower circulating levels of LDL-C. BBR thus acts systemically but is also known to act locally
within the gastrointestinal tract via modulation of the microbiome. Potential contributions of
UDCA include anti-apoptotic effects, lowering serum tumor necrosis factor α concentrations,
decreasing endoplasmic reticulum stress, and improving hepatic insulin sensitivity (Naghibi Z,
RakhshandehH,JarahiL,HosseiniMR,YousefiM.Evaluationoftheeffectsofadditionaltherapy
with Berberis vulgaris oxymel in patients with refractory primary sclerosing cholangitis and
primary biliary cholangitis: A quasi-experimental study. Avicenna J Phytomed, 2021; 11(2):
154-167.) . The UDCA moiety of HTD1801 is thought to act both systemically and with local
gastrointestinal tract effect.
MOA of HTD1801 for T2DM
The rationale for the use of HTD1801 for the treatment of T2DM is consistent with that for
the treatment of MASH, including induction of the insulin receptor, activation of AMP kinase, and
induction of the LDL receptor. Specific to improved glucose metabolism, activation of the AMP
kinase pathway by BBR inhibits gluconeogenesis, and increases insulin sensitivity. Moreover,
results from published studies indicate that BBR promotes glycolysis, and inhibits the intestinal
absorption of carbohydrates in the diet. Nonclinical and clinical data show that UDCA can
ameliorate insulin resistance and promote insulin secretion. UDCA also exhibits clear
anti-inflammatory and anti-oxidative stress effects and protects hepatocytes.
MOA of HTD1801 for SHTG
The rationale for use of HTD1801 for the treatment of SHTG is consistent with its use in
MASH and T2DM. HTD1801 is thought to be effective in SHTG via activation of AMP kinase, and
by improving systemic insulin resistance. Induction of the LDL receptor positively regulates
lipoprotein metabolism. In addition, BBR via HTD1801 may reduce the degradation of the LDL
receptor via inhibition of PCSK9 transcription. Furthermore, there have been examples of BBR
treatment resulting in an increase in LDL receptor mRNA and protein. The combination of
reducing the degradation of the LDL receptor along with the induction of LDL receptor expression
would be expected to increase the clearance of proteins that bind the LDL receptor, resulting in a
reduction in triglycerides. Other effects on cardiometabolic parameters such as glycemic control
and body weight are important considerations, given the prevalence of such comorbidities in
patients with SHTG.
MOAofHTD1801forDigestiveDisease
MOA of HTD1801 for PSC and PBC
HTD1801 is thought to be effective in cholestatic liver diseases, like PSC and PBC, through
multiple mechanisms of action.
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The mechanisms of action of UDCA have been well studied in a variety of cholestatic liver
diseases, including PBC and PSC. Some of the key actions of UDCA include its choleretic effect (a
cytoprotective effect probably achieved by displacing toxic bile acids from the bile acid pool) and
a variety of anti-inflammatory effects. In addition, UDCA has been shown to mediate some
positive changes in the gut microbiome, an important contributor to the pathogenesis of PSC.
Patients with PBC have been also recently reported to have different gut microbiota relative to
healthy volunteers with some strains being associated with worse outcomes. BBR is thought to act
both locally within the gastrointestinal tract and biliary tree but also systemically. BBR has
beneficial effects on the gut microbiome, which may lead to further benefits to both PSC and PBC
patients. BBR has antimicrobial activity against a wide variety of microbes, including bacteria and
yeast. In particular, BBR has activity against Klebsiella pneumoniae , a bacterium thought to be a
pathobiont that is causally associated with development of PSC. BBR has anti-inflammatory
activity as well as anti-fibrotic actions that are relevant mostly within the liver, where BBR has
been shown to be concentrated. Plant-derived BBR has been shown to have beneficial effects in
lowering ALP in patients with treatment-refractory PSC and PBC, and BBR has been shown to
attenuate cholestatic liver and bile duct injury in multidrug resistance knockout mice, which is an
animal model of cholestasis (Wang,Y.,Xiang,D.,Chen,W.,Zhao,D.,Gurley,E.,Wang,X.,Pu,G.,
Tai, Y., Zhang, Y., Chen, Z., Wu, J., Yan, J., Hylemon, P.B. and Zhou, H. (2020), Berberine
attenuates cholestatic liver and bile duct injury in Mdr2−/− mice by maintaining bile acid
homeostasis.TheFASEBJournal,34:1-1.https://doi.org/10.1096/fasebj.2020.34.s1.04758) .
The following table sets forth the validation of BBR or UDCA in the digestive disease.
Validation of BBR
Drug name Manufacturer Pricing
in USA
Pricing in
China Therapeutic areas Clinical
trials 2022 sales
Stoppa Lion
corporation N/A N/A N/A
~10 million USD,
mainly sold in
Japan
Berberine ChengDu
JinHua N/A
~15 CNY for
100mg*60
tablets
N/A
~ 1.3 million USD,
mainly sold in
China
PHELLOBERIN Nihon Generic N/A N/A N/A
~ 1 million USD,
mainly sold in
Japan
Berberine ShenYang
NO.1 Pharma N/A
~10 CNY for
100mg*100
tablets
CTR20160712
CTR20200992
~ 1 million USD,
mainly sold in
China
Berberine Reyoung
Pharma N/A
~10 CNY for
100mg*24
tablets
N/A
~ 1 million USD,
mainly sold in
China
About 200 other companies produce about 140 drugs containing BBR, with a total sales of about 6 million USD in 2022
For the treatment of diarrhea accompanied by
abdominal pain; diarrhea due to indigestion;
food and water poisoning; diarrhea with
vomiting; lose bowels; loose stool.
For the treatment of intestinal infections such
as gastroenteritis and bacillary dysentery
caused by sensitive pathogens.
For the treatment of intestinal infections such
as gastroenteritis
For the treatment of intestinal infection, such
as gastroenteritis.
For the treatment of diarrhea by suppressing
intestinal peristaltic movement, proliferation
of intestinal bacteria and intestinal putrefac-
tion/fermentation, and by convergence action.
Source:FDA;NMPA;Clinicaltrials.gov;CDE;Packageinsert;Drugs.com;ChinaInsightsConsultancy
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Validation of UDCA
Drug name Manufacture Pricing in
USA
Pricing in
China Therapeutic areas Clinical trials 2022 sales
Ursofalk Dr. Falk
Pharma N/A
For the treatment of a condition where the bile ducts in the liver
become damaged; leading to a build-up of bile. This may cause
scarring of the liver. The liver should not be so damaged that it is
not functioning properly. This condition is called primary biliary
cirrhosis (PBC). – to dissolve gallstones caused by excess
cholesterol in the gall bladder where the gallstones are not visible
on a plain x-ray (gallstones that are visible will not dissolve) and
not more than 15 mm in diameter. The gall bladder should still be
working despite the gallstone(s).
For liver disease associated with a condition called cystic fibrosis
in children aged 6 to 18 years.
~115 CNY for
250mg*25
capsules
NCT01510860
NCT00285597
NCT00161083
~283 million USD,
mainly sold in
China and Europe
Udiliv Abbott N/A N/A
For the treatment of liver-related disorders, such as cirrhosis and
sclerosing cholangitis. It can also be used for treating hepatic
diseases, such as Hepatitis A, B and C. Udiliv 300 side effects
might include nausea, vomiting, diarrhoea, and jaundice.
PICTURE study,
to evaluate the
safety and
efficacy of Udiliv
~99 million USD,
mainly sold in India
Ursosan Pro Med N/A N/A
For the treatment of liver diseases such as primary biliary
cirrhosis (PBC), primary sclerosing cholangitis (PSC), and cystic
fibrosis (CF)-related cholestasis.
NA
~53 million USD,
mainly sold in
Europe
Ursodeoxycholic Acid WuHan
PuYuan N/A
~60 CNY for
250mg*24
tablets
For the treatment of cholesterol gallstones, the formation of
cholestatic lipodystrophy, the prevention of drug-induced
gallstones and the treatment of lipodystrophy (after ileectomy)
CTR20201099
~46 million USD,
mainly sold in
China
Deursil ITC Farma N/A N/A
For dissolving cholesterol crystals and cholesterol stones in
functional gallbladder, and as a pre-and post-treatment for
destroying gallstones.
For the treatment of chronic progressive liver disease (primary
biliary cholangitis and sclerosing cholangitis) with bile stasis.
NA
~26 million USD,
mainly sold in
Europe
About 500 other companies produce about 600 drugs containing UDCA, with a total sales of about 830 million USD in 2022
Source:FDA;NMPA;Clinicaltrials.gov;CDE;Packageinsert;Drugs.com;ChinaInsightsConsultancy
Market Opportunity and Competition
MASH
MASH is a condition characterized by liver inflammation and damage caused by the buildup
of fat in the liver. It is the more severe form of MASLD, an umbrella term for a range of liver
conditions affecting people who drink little to no alcohol. If left untreated, MASH can cause
scarring of the liver, potentially leading to permanent scarring (cirrhosis) and liver cancer. As of
the end of 2022, the prevalence of MASH reached 40.4 million, 20.7 million and 35.0 million in
China, the United States and Europe, respectively, according to CIC. Currently, the treatment of
MASH is limited to lifestyle modifications and treatment of specific comorbidities. No
evidence-based pharmacological therapy has been approved for MASH other than saroglitazar
magnesium, which is approved in India but has not been accepted internationally. Given the
disease’s pathogenetic complexity and heterogeneity, the treatment of MASH is trending toward a
multifunctional therapeutic approach. There are five MASH drugs under Phase III clinical
development globally and five MASH drugs under clinical development in China.
We may face uncertainties in clinical trial development for MASH. Intercept’s ocaliva, one
of the most advanced MASH drugs in the pipeline, filed the second application for MASH but it
was rejected by the FDA in June 2023. The FDA reviewers flagged increased risk of diabetes and
liver injury from using the oral tablets, called obeticholic acid (“ OCA”), for the treatment of
MASH. The FDA concluded that benefits of ocaliva did not outweigh the risks in MASH patients
with fibrosis based on current data. Intercept expressed that continuing a long-term outcomes
study as requested by the FDA may not be economically feasible and has decided to discontinue all
MASH-related investment, which has a negative impact on MASH market.
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In addition, we may also fail to develop the MASH indication, which is one of the major
indications of HTD1801, as it progresses to the late-stage clinical trials. There exists probability of
failure to achieve the primary and second efficacy endpoints in its late-stage clinical trials because
HTD1801 is based on a new molecular entity, which is yet to be tested in large-scale clinical
studies, thus facing higher clinical risks. Despite the fact that HTD1801 is different from ocaliva in
many aspects, such as mechanism of actions, PK profiles and others as applicable, our
development of HTD1801 may still be subject to development risks, including those faced by
ocaliva in their development.
T2DM
According to CIC, China has the largest number of T2DM patients in the world with
approximately 123.2 million in 2022, and this number is expected to increase to 141.8 million by
2032. Even though the diagnosed rate for T2DM is approximate 50% in 2022, the market size in
T2DM treatment reached US$7.9 billion in 2022 in China, indicating a large market potential with
high unmet medical need, according to CIC. T2DM and MASLD are intricately and
bi-directionally associated, where T2DM aggravates MASLD into more severe forms of liver
disorders, such as MASH, cirrhosis and hepatocellular carcinoma, while the presence of MASLD
increases the incidence and severity of T2DM and makes T2DM patients more susceptible to
comorbidities such as CVDs. According to CIC, worldwide prevalence of MASLD among people
with T2DM is 55.5% and the prevalence of T2DM with MASLD in China was 64.1 million as of the
end of 2022. The therapeutical target in treating this patient population is to well control the
progression of both T2DM and MASLD, and to control and improve the other CVD risk factors.
Therefore, an ideal drug for T2DM and MASLD patients should lead to comprehensive benefits
with high safety. To date, there is still clear unmet medical need in T2DM treatment, especially in
the treatment of T2DM patients with MASLD. There are 10 T2DM with MASLD drugs under
clinical development globally and two T2DM with MASLD drugs under clinical development in
China.
SHTG
SHTG is the presence of high levels of triglycerides, a type of fat, in the blood. SHTG is well
known to be associated with other complex and serious disorders such as acute pancreatitis and
CVDs. As of the end of 2022, the prevalence of SHTG reached 1,586.4 thousand, 339.8 thousand
and 813.0 thousand in China, the United States and Europe, respectively, according to CIC.
Lifestyle changes and dietary modifications are the current standard treatment for patients with
SHTG. Existing pharmacological interventions primarily include the use of fibrates, omega-3 fatty
acids, statins and niacin, but these treatment options either have limited efficacy or are associated
with safety concerns. Furthermore, while the existing therapies for SHTG offer a benefit in treating
high TGs, they offer limited benefit in the treatment of the constellation of metabolic issues in
orbit around or underlying the TG levels. It is clear that there remains a medical need for safe and
effective therapies for the treatment of adult patients with SHTG, therapies that address not only
TG levels but also comorbid conditions.
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PSC
PSC is a rare, chronic cholestatic liver disease characterized by intrahepatic and
extrahepatic bile duct injury. Inflammation and fibrosis of the bile ducts lead to structural damage,
impaired bile flow and progressive liver dysfunction. PSC has been identified by the European
Association for the Study of the Liver as one of the largest unmet clinical needs in the category of
liver disease. As of the end of 2022, the prevalence of PSC reached 171.9 thousand, 48.4 thousand
and 60.7 thousand in China, the United States and Europe, respectively, according to CIC. Due to
the diverse involvement of the liver, biliary tract and gastrointestinal tract in PSC, drugs targeting
multiple pathways are needed to comprehensively treat the disease. There are two PSC drugs under
Phase III clinical development in the United States and two PSC drugs under clinical development
in China. Due to PSC’s diversified involvement of the liver, biliary tract and GI tract, drugs that
target multiple pathways are needed to comprehensively treat the disease. HTD1801 is precisely
engineered to target the disease’s complex pathogenic mechanisms through a multifunctional
synergistic approach.
PBC
PBC is a rare and serious liver disease resulting from a slow, progressive destruction of the
intra-hepatic small bile ducts. As of the end of 2022, the prevalence of PBC reached 789.8
thousand, 135.4 thousand and 175.6 thousand in China, the United States and Europe, respectively,
according to CIC. There are two approved treatments for PBC to date, each with its own
limitations. Treatment with UDCA is considered as first line therapy for PBC and can improve
liver function tests and slow the progression of disease. However, up to 40% of patients with PBC
have an inadequate response to UDCA alone. Obeticholic acid (“ OCA”), a farnesoid x receptor
agonist, is indicated for the treatment of PBC in combination with UDCA in adults with an
inadequate response to UDCA, or as monotherapy in adults unable to tolerate UDCA.
Approximately 40% of patients with PBC who are incomplete responders to UDCA alone do not
also do not achieve a complete response with the addition of OCA. Further, OCA is associated with
worsened pruritus, a common symptom of PBC. Lastly, OCA is contraindicated for patients with
PBC who have compensated cirrhosis with evidence of portal hypertension or patients with
decompensated cirrhosis. Hence, there remains an unmet medical need in patients with PBC. To
date, 10 drug candidates for PBC are under Phase II or Phase III clinical trial development in the
United States and two drug candidates are under Phase III clinical trial development in China.
Competitive Advantages
We believe that HTD1801 has the following competitive advantages:
Combining innovation and absorbability for synergistic therapeutic effects: HTD1801 is an
innovativemolecularentitybasedontwomoietieswithefficacyandsafety
In HTD1801, BBR and UDCA work in tandem in the salt form with unique microstructure to
produce distinct and improved properties that makes it more superior than the combination of BBR
and UDCA. HTD1801 exhibits unique physico-chemical properties which are distinct from the
BBR alone, UDCA alone or their equimolar physical mixture. HTD1801’s unique molecular
structure can potentially translate into good efficacy with reduced safety concerns. With the new
structure, HTD1801 demonstrates lower melting point and improved solubility and lipophilicity as
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compared with those of BBR and UDCA, suggesting that HTD1801 improves absorbability (the
state or quality of being absorbable by an individual). The enhanced solubility and lipophilicity
have been observed for HTD1801, and additionally the dissolution profiles of BBR and UDCA in
HTD1801 exhibit a more “synchronized” pattern (i.e. peak dissolution for both BBR and UDCA
moieties from HTD1801 occurring at the same time), which further points to a unique interaction
of the moieties in HTD1801 and may further enhance the beneficial interactions (e.g. lipophilic ion
pairing, micellar solubilization) because of the simultaneous availability of the moieties in
solution.
In addition, improved exposure of BBR and UDCA from the oral administration of
HTD1801 has been observed in both systemic and enterohepatic circulation from preclinical
studies. A PK test in golden hamster studies demonstrated a significant increase in BBR exposure
in both plasma and liver in the HTD1801 group compared to BBR or physical mixture of BBR and
UDCA at a 1:1 ratio. The results showed that the exposure of BBR in plasma and liver in the 100
mg/kg and 200 mg/kg groups increased approximately 2-fold and 6-fold, respectively, compared to
equal molar of BBR-Cl alone. Thus, in our pre-clinical studies, HTD1801 significantly enhances
the bioavailability of BBR, which is known for its low blood concentration and poor solubility in
the body when administered alone. In addition, HTD1801 showed better synchronization of
dissolution for BBR and UDCA. We believe that the release characteristic will facilitate the
interaction between the two active components of HTD1801 and further promote synergistic
effects and increase the potential for other beneficial interactions.
More importantly, the preclinical results also show synergistic therapeutic effects of
HTD1801. In the golden hamster model of high fat diet-induced hyperlipidemia and MASLD,
compared to BBR alone, UDCA alone and a physical mixture of BBR and UDCA at a 1:1 ratio,
HTD1801 demonstrated efficacy in improvement of lipid profiles, reduction of liver fat content,
reduction of liver enzymes and other biomarkers related to liver functions, and improvement of
hepatic pathology. In the pre-clinical study, the golden hamster mice were fed with high-fat feed to
create MASLD mouse model. The MASLD golden hamster mice were then divided into nine
groups for six-week treatment: normal control group (treated with 0.5% CMC-Na, 10 mL/kg),
model control group (treated with 0.5% CMC-Na, 10 mL/kg), HTD1801 low-dose group (treated
with HTD1801 50 mg/kg), HTD1801 medium-dose group (treated with HTD1801 100 mg/kg),
HTD1801 high-dose group (treated with HTD1801 200 mg/kg), UDCA low-dose group (treated
with UDCA 53.9 mg/kg), UDCA high-dose group (treated with UDCA 107.8 mg/kg), BBR-Cl low
dose group (treated with BBR-Cl 51.1 mg/kg), BBR-Cl high dose group (treated with BBR-Cl
102.2 mg/kg) and BBR and UDCA mixture group at a 1:1 ratio (treated with UDCA 53.9 mg/kg +
BBR-Cl 51.1 mg/kg). The normal control group mice were treated normal feed, and other group
mice were treated high-fat feed. The results showed that compared with the model control group,
BBR alone, UDCA alone and PM, HTD1801 treatment showed a dose-dependent reduction for the
indicators of serum total cholesterol and triglycerides, low-density lipoprotein cholesterol
(“LDL-C ”), alanine aminotransferase, aspartate aminotransferase, total bile acid and total
bilirubin, liver weight, liver total cholesterol and triglycerides, MASLD activity score and fibrosis.
Importantly, while BBR alone, UDCA alone and the PM showed some efficacy acoss most
parameters, the HTD1801 200 mg/kg group showed the most significant improvement, where the
indicators of LDL-C, alanine aminotransferase, aspartate aminotransferase, total bile acid and
total bilirubin, liver weight and liver triglycerides were reduced to normal levels, suggesting the
MASLD disease state was completely reversed.
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“Pipeline-in-a-product”withsignificantpotential
HTD1801 has therapeutic benefits to patients through multiple mechanisms such as
improvement of metabolism, protection of liver and bile, anti-inflammation and anti-oxidative
stress. It is an oral therapeutic drug that can simultaneously lower blood sugar, protect liver and
comprehensively improve cardiovascular risk factors with no risk of weight gain. HTD1801 has
demonstrated good safety and efficacy in clinical trials across MASH, T2DM,
hypercholesterolemia, PSC and PBC, yielding therapeutic benefits in patients across multiple
indications. We believe the demonstrated good safety and efficacy strongly support the
“pipeline-in-a-product” potential of HTD1801 for additional metabolic and digestive diseases with
suboptimal or no approved therapies.
HTD1801
Safety and
tolerance
Lipid
Other
Reduces fasting and postprandial glucose through
decreased insulin resistance;
results in robust lowering of HbA1c
Safe and well-tolerated in
trials across multiple indications
Reduces LDL-C, non-HDL-C and TG levels;
increases HDL-C
improves markers of liver injury, non-invasive
decreases harmful microbiota
Oral administration, offering better compliance;
no risk of weight gain with
weight loss for obese patients
Glycemic Gut-liver
Source:CompanyInformation
Positive progress of HTD1801 in multiple clinical programs: efficacy endpoints have been met in
multiplestudiesgloballyacrossseveralindicationswithagoodsafetyandtolerabilityprofile
We have initiated 13 clinical studies of HTD1801 in the United States, Mainland China,
Hong Kong, Canada, and Australia, ten of which have been completed and three are currently
on-going. In these studies, we cumulatively enrolled over 500 subjects. In completed clinical
trials, HTD1801 demonstrates promising efficacy in reduction of liver fat content, improvement of
both glucose and lipid metabolism, weight loss as well as improvement in markers of liver fibrosis
and inflammation. For details of those clinical results, see “— summary of clinical trials of
HTD1801” below in this section.
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GlobaldevelopmentstrategyinboththeUnitedStatesandChina
HTD1801 has entered late stage development for various programs, with a solid expectation
of success. In the United States, we have received FTD from the FDA for HTD1801 for the
treatment of MASH, and for PSC, as well as the ODD for PSC. According to CIC, HTD1801 is the
first PSC drug candidate to receive a FTD from the FDA. The FTD is based on available preclinical
and clinical data that demonstrate the potential to address an unmet medical need and is intended to
facilitate an expedited regulatory review process. In China, we received government support from
“Major National Science and Technology Projects for New Drug Development” under the
“National 13th Five-Year Plan”, which may further accelerate the domestic market approval for
HTD1801. According to the current development progress and timeline, we expect to submit the
first NDA for HTD1801 for T2DM in 2025 in China.
Summary of Clinical Trials of HTD1801
We have completed 10 clinical studies of HTD1801, including four Phase I studies in
healthy subjects in Australia and China; a Phase Ib/IIa study in adults with hypercholesterolemia in
Australia; a Phase IIa study in adults with MASH and T2DM in the United States; a Phase Ib and
a Phase II study in Chinese subjects with T2DM; a Phase II study in subjects with PSC in the
Unites States and Canada; and a Phase II study in subjects with PBC in the United States. Three
clinical studies are ongoing, namely a Phase IIb study for the treatment of MASH with T2DM or
prediabetes in the United States and Hong Kong and two Phase III studies for the treatment of
T2DM in Mainland China.
The following table sets forth an overview of the completed and ongoing clinical studies of
HTD1801:
Stu dy Stu dy Number Ph ase Stu dyD e signS i t e s Indication s Status
Actu alP atient
Enrollment Tri alS t art D ate
Trial (Ex pecte d)
Com pletion D ate
MASH study .... HTD1801.PCT012 IIa Randomized, double-blind,
parallel-group,
proof-of-concept, dose
ranging study
comparing multiple
doses of HTD1801 to
placebo
United States MASH and T2DM
(1) Completed 100 November 2018 March 2020
HTD1801.PCT014 IIb Randomized, double-blind,
placebo-controlled
study to evaluate
efficacy and safety
United States (initiated),
Hong Kong (initiated),
Mexico (to be
initiated) and
Mainland China (to be
initiated)
MASH and T2DM or
pre-diabetes
(1)
Ongoing Ongoing
(160 subjects
enrolled as of
the Latest
Practicable
Date)
December 2022 2025
T2DM study .... HTD1801.PCT101 I
(2) Randomized, double-blind,
placebo-controlled,
single ascending dose
study to assess PK and
safety
Mainland China Healthy subjects Completed 24 September 2021 November 2021
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Stu dy Stu dy Number Ph ase Stu dyD e signS i t e s Indication s Status
Actu alP atient
Enrollment Tri alS t art D ate
Trial (Ex pecte d)
Com pletion D ate
HTD1801.PCT104 (3) I Randomized, open-label,
three-way crossover
study to evaluate the
drug-drug interaction
of HTD1801 with
metformin
Mainland China Healthy male
subjects
Completed 33 November 2022 February 2023
HTD1801.PCT102 Ib
(2) Randomized, double-blind,
placebo-controlled
study to assess safety
and tolerability, PK,
and
pharmacodynamics
(“PD”)
Mainland China T2DM Completed 49 June 2022 September 2022
HTD1801.PCT103 II Randomized, double-blind,
placebo-controlled
study to evaluate
efficacy and safety
Mainland China T2DM Completed 113 March 2022 January 2023
HTD1801.PCT105 III Randomized, double-blind,
placebo-controlled,
dose-ranging study to
evaluate efficacy and
safety of HTD1801
monotherapy
T2DM Ongoing Ongoing
(32 subjects
dosing as of the
Latest
Practicable
Date)
November 2023 2025
HTD1801.PCT106 III Randomized, double-blind,
placebo-controlled,
dose-ranging study to
evaluate efficacy and
safety of HTD1801
add-on therapy after
metformin treatment
T2DM Ongoing Ongoing
(27 subjects
dosing as of the
Latest
Practicable
Date)
November 2023 2025
P S C s t u d y ..... HTD1801.PCT003 II Randomized, double-blind,
with concurrent
placebo-control except
in Period 2,
proof-of-concept study
investigating the
efficacy and safety of
HTD1801
United States and Canada PSC Competed 59 February 2018 August 2020
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Stu dy Stu dy Number Ph ase Stu dyD e signS i t e s Indication s Status
Actu alP atient
Enrollment Tri alS t art D ate
Trial (Ex pecte d)
Com pletion D ate
P B C s t u d y ..... HTD1801.PCT013 II Open-label,
proof-of-concept study
in subjects with
primary biliary
cholangitis with
inadequate response to
standard of care
United States PBC Completed 24 May 2021 May 2022
Hypercholesterolemia
s t u d y......
HTD1801.PCT004 Ib/IIa Randomized, double-blind,
placebo-controlled,
multicenter, multiple
ascending dose study
to assess safety and
tolerability, PK, and
PD
Australia h ypercholesterolemia
and overweight/
obese
Completed 50 March 2018 December 2018
Healthy subjects . . HTD1801.PCT002
(4) I(5) Randomized, double-blind,
placebo-controlled,
single ascending dose
study to assess PK,
safety and tolerability
Australia Healthy subjects Completed 32 March 2017 October 2017
HTD1801.PCT016 I
(6) Randomized, open-label,
single-dose, cross-over
study to assess relative
bioavailability of
capsule vs tablet and
food effect
United States Healthy subjects Completed 48 May 2022 July 2022
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Notes:
(1) For example, the Phase IIa and Phase IIb trial (HTD1801.PCT012/014) IND approval of our Core Product
as well as its FTD approval were granted for the treatment of MASH in general. Although we conducted
Phase IIa and Phase IIb trials for the treatment of MASH with T2DM and MASH with T2DM or
prediabetes, respectively, our planned pivotal Phase III clinical trial for our Core Product and its planned
NDA are intended to enroll MASH patients with or without diabetes. However, the FDA may require us to
conduct additional clinical trials on MASH in general in order to issue marketing authorization of
HTD1801 for the treatment of MASH in general. See “Risk Factors — Risks Relating to Manufacturing
and Commercialization of Our Drug Candidates — If the market opportunities for our drug candidates are
smaller than we believe they are or any approval we obtain is based on a narrower definition of the patient
population, our business may suffer” in this prospectus for more details.
(2) There are two Phase I stage clinical trials for T2DM designed and conducted for different objectives. Such
design can reduce clinical risks. The Phase I clinical trial treated healthy subjects to assess PK and safety,
and the Phase Ib clinical trial treated T2DM patients to assess safety and tolerability, PK, and PD.
(3) The purpose of this HTD1801.PCT104 study is to evaluate the drug-drug interaction of HTD1801 with
metformin. In other clinical trials such as HTD1801.PCT101, HTD1801.PCT102 and HTD1801.PCT103,
the investigated drug is only HTD1801 or corresponding placebo. We plan to conduct a Phase III clinical
trial to evaluate the efficacy and safety of HTD1801 as add-on therapy with metformin treatment, and the
results of HTD1801.PCT104 Phase I study result will offer necessary supporting information to initiate
this planned Phase III clinical trial. It is a separate and standalone clinical trial program from the
completed Phase II clinical trial for T2DM. HTD1801.PCT104 study is used to evaluate drug-drug
interaction, PK and safety of HTD1801 as add-on therapy with metformin treatment in healthy subjects and
the Phase II clinical trial is used to evaluate efficacy and safety of HTD1801 in T2DM patients. These two
studies have different trial designs and primary endpoints.
(4) The PK, safety and tolerability results in healthy subjects from HTD1801.PCT002 Phase I clinical trial in
Australia provide safety profile of HTD1801 for approval of Phase II studies for several indications in the
United States, including MASH, SHTG, PSC and PBC. For more information, please see “— Material
Communications with Competent Authorities.”
(5) HTD1801.PCT002 was a Phase I, randomized, double-blind, placebo-controlled, single ascending dose
study to assess the PK and safety of HTD1801 in healthy volunteers. 24 subjects (six per one dose group)
received a single oral dose of HTD1801 500 mg, 1,000 mg, 2,000 mg or 4,000 mg; and eight subjects were
randomized to placebo. Following a single oral dose of HTD1801 of 500 to 4,000 mg, dose proportionality
was observed for BBR AUC and UDCA C
max and AUC. However, BBR C max increased in a less than dose
proportional manner but was linear within the range of 1,000 to 4,000 mg. HTD1801 was found to be safe
and well tolerated at all doses tested.
(6) HTD1801.PCT016 was a Phase I, randomized, open-label, single dose, cross-over study to assess relative
bioavailability of HTD1801 capsule vs. tablet and food effects in healthy volunteers. The capsules are the
clinical formulation for currently ongoing and planned studies and have improved stability relative to the
tablets previously utilized. After administration of the HTD1801 capsule formulation under fasting
conditions, the mean peak (C
max) and total (AUC last and AUC inf) plasma exposures of BBR, unconjugated
UDCA and total UDCA (sum of UDCA and glycine-UDCA and taurine-UDCA) were overall comparable to
the tablet formulation. As a result, no dose adjustments are recommended based on the utilization of the
capsules vs. tablets for future studies.
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All clinical trials showed improved efficacy results. The follow-up periods in the Phase II clinical trial for PBC, during which HTD1801
treatment was withdrawn, showed a worsening in liver biochemistry compared with baseline, also suggesting the efficacy of HTD1801. In addition,
there has been no impact of severe and/or life threatening TEAEs on the clinical development of HTD1801. The following table sets forth an overview
of results of key clinical studies of HTD1801:
Stu dy
Stu dy Number
(Stu dyP h ase:
Type) Stu dyD e sign
Intent-to-Tre at
Population
Key Entry
Criteri a
Number of
Subject s Enrolle d
HTD1801 Do se(s)
Formul ation
Treatment
Dur ation Follow-u p Perio d
TEAE Re porte d
by Re spective
Clinic alT r ials
(Mil d/M o derate/
Severe/Life
Thre atenin g)
Frequently Occurrin g TEAE
(Number of Subject s)
Reasons for
Discontinu ation (1)
Key Effic acy Re sult s (Ch ange
from B aseline to En d of
Treatment: Pl acebo v s
1,000 m g BID
MASH study ........ HTD1801.PCT012
(Phase IIa)
Randomized,
double-blind,
parallel-group,
proof-of-concept,
dose ranging study to
evaluate efficacy and
safety
MASH and T2DM • Diagnosis of
MASH with
LFC≥10%
• T2DM
• BMI>25
kg/m
2
100 Total (67
active/ 33
placebo)
500 mg BID
1,000 mg BID
Tablet
18 weeks 30 days Placebo: 8/11/1/0
500 mg BID:
11/9/1/0
1,000 mg
BID:
10/15/0/1
Occurring in five or more
subjects (Placebo/500 mg
BID/1,000 mg BID):
Diarrhea: 3/6/11
Nausea: 3/4/7
Headache: 2/1/3
URTI: 4/1/1
Abdominal Pain
Upper: 2/2/1
Placebo: one subject due to
adverse event
500 mg BID: one subject due
to AE, two subjects lost
follow up, one subject due to
protocol violation, one
subject due to personal
reason
1,000 mg BID: four subjects
due to AE, two subjects lost
follow up, one subject
withdrew consent
LFC (absolute) (%):
-1.9 vs -4.8
cT1 (ms): -14.7 vs -60.9
HbA1c (%): 0.1 vs -0.6
ALT (U/L): -3 vs -19
Weight (kg): -1.1 vs -3.5
HTD1801.PCT014
(Phase IIb)
Randomized,
double-blind,
placebo-controlled
study to evaluate
efficacy and safety
MASH and T2DM
or pre-diabetes
biopsy-confirmed
MASH and
evidence of
stage 2 or
stage 3 liver
fibrosis
210 Total Planned
(140 active/70
placebo)
1,250 mg BID
Capsule
Up to 60 weeks Four weeks Ongoing with no
interim data to
analyze
Ongoing with no interim data
to analyze
Ongoing with no interim data
to analyze
Ongoing with no interim data
to analyze
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Stu dy
Stu dy Number
(Stu dyP h ase:
Type) Stu dyD e sign
Intent-to-Tre at
Population
Key Entry
Criteri a
Number of
Subject s Enrolle d
HTD1801 Do se(s)
Formul ation
Treatment
Dur ation Follow-u p Perio d
TEAE Re porte d
by Re spective
Clinic alT r ials
(Mil d/M o derate/
Severe/Life
Thre atenin g)
Frequently Occurrin g TEAE
(Number of Subject s)
Reasons for
Discontinu ation (1)
Key Effic acy Re sult s (Ch ange
from B aseline to En d of
Treatment: Pl acebo v s
1,000 m g BID
T2DM study ........ HTD1801.PCT103
(Phase II)
Randomized,
double-blind,
placebo-controlled
study to evaluate
efficacy and safety
T2DM • HbA1c ≥7.0%
and ≤10.5%
113 Total (75
active/38
placebo)
500 mg BID
1,000 mg BID
Capsule
12 weeks Four weeks Placebo: 10/5/0/0
500 mg BID:
10/6/1/0
1,000 mg
BID: 18/9/0/0
Occurring in five or more
subjects (Placebo/500 mg
BID/1,000 mg BID):
Hypertriglyceridemia:
2/3/3
Sinus bradycardia: 1/2/3
Upper respiratory tract
Infection: 1/2/2
Placebo: one subject lost
follow up
500 mg BID: one subject
withdrew consent, and one
subject due to PI decision
Week 12 Results
HbA1c (%): -0.32 vs -1.04
Fasting glucose (mmol):
0.018 vs -1.023
ALT (U/L): -0.5 vs -6.9
AST (U/L): 0.6 vs -3.6
GGT (U/L): 2.9 vs -9.3
LDL-c (mmol/L): 0.077 vs
-0.316
TC (mmol/L): 0.08 vs -0.43
non-HDL-c (mmol/L):
-0.001 vs -0.452
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Stu dy
Stu dy Number
(Stu dyP h ase:
Type) Stu dyD e sign
Intent-to-Tre at
Population
Key Entry
Criteri a
Number of
Subject s Enrolle d
HTD1801 Do se(s)
Formul ation
Treatment
Dur ation Follow-u p Perio d
TEAE Re porte d
by Re spective
Clinic alT r ials
(Mil d/M o derate/
Severe/Life
Thre atenin g)
Frequently Occurrin g TEAE
(Number of Subject s)
Reasons for
Discontinu ation (1)
Key Effic acy Re sult s (Ch ange
from B aseline to En d of
Treatment: Pl acebo v s
1,000 m g BID
P S C s t u d y......... HTD1801.PCT003
(Phase II)
Randomized,
double-blind, with
concurrent
placebo-control
except in Period 2,
proof-of-concept
study to evaluate
efficacy and safety
Primary sclerosing
cholangitis
• Diagnosis of
PSC
• ALP
≥1.5xULN
55 Total 500 mg BID
(n=22)
1,000 mg BID
Tablet (n=31)
18 weeks Four weeks Placebo: 10/6/2/0
500 mg BID:
9/4/1/0
1,000 mg
BID: 6/11/3/0
Occurring in five or more
subjects (Placebo/500 mg
BID/1,000 mg BID):
Pruritus: 2/2/5
Diarrhea: 0/0/7
ALP Increase: 5/0/0
Nasopharyngitis: 2/0/3
Pyrexia: 1/2/2
Placebo: one subject due to
AE, one subject withdrew
consent
500 mg BID: one subject
lost follow up, two
subjects due to AE
HTD1801 1,000 mg:
three subjects due to AE
Week 6 Results
ALP (U/L): 94 vs -73
ALP <1.5xULN (%): 5 vs 26
GGT (U/L): 256 vs -286
ALT (U/L): 40 vs -46
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Stu dy
Stu dy Number
(Stu dyP h ase:
Type) Stu dyD e sign
Intent-to-Tre at
Population
Key Entry
Criteri a
Number of
Subject s Enrolle d
HTD1801 Do se(s)
Formul ation
Treatment
Dur ation Follow-u p Perio d
TEAE Re porte d
by Re spective
Clinic alT r ials
(Mil d/M o derate/
Severe/Life
Thre atenin g)
Frequently Occurrin g TEAE
(Number of Subject s)
Reasons for
Discontinu ation (1)
Key Effic acy Re sult s (Ch ange
from B aseline to En d of
Treatment: Pl acebo v s
1,000 m g BID
P B C s t u d y......... HTD1801.PCT013
(Phase II)
Open-label,
proof-of-concept
study to evaluate
efficacy, PK, and
safety
Primary biliary
cholangitis
• Diagnosis of
PBC
• ALP
≥1.5xULN
24 Total (24
active)
1,000 mg BID
Tablet
12 weeks Four weeks 1,000 mg BID:
14/8/1/0
Occurring in two
or more subjects
Diarrhea: 9
Abdominal distension: 4
V omiting: 3
Abdominal Pain Upper: 2
Constipation:2
Nausea:2
Pyrexia :2
Bronchitis:2
URTI: 2
Liver Function Test Increased:4
ALT Increased:2
AST Increased:2
Decreased Appetite: 2
Arthralgia: 2
Headache: 3
Oropharyngeal Pain: 2
Pruritus: 5
Two subjects due to AE ALP (U/L): -30.2
ALP Reduction ≥20% (%): 35
Total Bilirubin (mg/dL): -0.1
GGT (U/L): -34.1
LDL-C (mg/dL): -17.0
Triglycerides (mg/dL): -10.7
IgM (mg/dL): -36.8
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Stu dy
Stu dy Number
(Stu dyP h ase:
Type) Stu dyD e sign
Intent-to-Tre at
Population
Key Entry
Criteri a
Number of
Subject s Enrolle d
HTD1801 Do se(s)
Formul ation
Treatment
Dur ation Follow-u p Perio d
TEAE Re porte d
by Re spective
Clinic alT r ials
(Mil d/M o derate/
Severe/Life
Thre atenin g)
Frequently Occurrin g TEAE
(Number of Subject s)
Reasons for
Discontinu ation (1)
Key Effic acy Re sult s (Ch ange
from B aseline to En d of
Treatment: Pl acebo v s
1,000 m g BID
Hypercholesterolemia
s t u d y ..........
HTD1801.PCT004
(Phase Ib/IIa:
MAD)
Randomized,
double-blind,
placebo-controlled,
multicenter, multiple
ascending dose study
to assess safety,
tolerability, PK, and
PD
Overweight and
obese adult
subjects with
hypercholesterolemia
• BMI: >25 and
≤45 kg/m
2
• LDL-c≥2.59
mmol/L
50 Total (38
active/ 12
placebo)
250 mg BID
(n=12)
500 mg BID
(n=12) 1,000
mg BID
(n=14) (single
dose only Day
1 and Day 28)
Tablet
28 days Two weeks Placebo: 8/3/1/0
250 mg BID:
9/3/0/0
500 mg BID:
7/2/0/0
1,000 mg
BID: 10/5/0/0
Occurring in two or more
subjects (Placebo/250 mg
BID/500 mg BID/1,000 mg
BID):
Headache: 5/5/4/3
Dizziness: 0/2/0/0
Nausea: 1/2/1/0
Flatulence: 2/0/0/0
Decreased Appetite:
0/0/3/0
500 mg BID: one subject
withdrew consent
1,000 mg BID: one subject
due to AE, one subject
due to PI decision
Non-HDL Cholesterol
(mmol/L): 10.8 vs -10.4
LDL-C (mmol/L): -1.7 vs -10.4
Triglycerides (mmol/L) 40.0 vs
-1.6
Note:
(1) Such discontinuation had no material impact on the progress of the respective clinical trials.
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The following sets forth an overview of the key clinical studies of HTD1801:
MASH
HTD1801.PCT012: A Phase IIa study to evaluate the efficacy and safety of HTD1801 in adults
with MASH and T2DM in the United States
Overview. This was a multicenter, randomized, double-blind, placebo-controlled,
parallel-group, proof-of-concept, and dose ranging Phase IIa study. The primary endpoint of the
study was absolute change from baseline to week 18 in liver fat content as assessed by magnetic
resonance imaging-derived proton density fat fraction (“ MRI-PDFF ”) quantitatively. The primary
endpoints of other MASH clinical trials generally include measure of liver fat contents and/or liver
biomarkers (including ALT, AST and GGT) in order to evaluate liver functions after treatment.
Thus, the primary endpoint of the MASH clinical programs of HTD1801 was substantially in line
with other global clinical trials for the MASH indication. Despite the recent evolvement of the
measurement of efficacy of MASH treatment after multiple rounds of discussions around ocaliva
from Intercept which was declined for approval eventually by the FDA, it had no impact on the
clinical development of HTD1801 because (i) our preliminary clinical results showed that
HTD1801 had improvements on measures such as LDL, markers of glycemic control, and body
weight with no signal for liver toxicity, and (ii) the primary endpoint of the MASH clinical
programs of HTD1801 was in line with other global clinical trials for the MASH indication.
Trial design. A total of 100 subjects with MASH and T2DM were randomized 1:1:1 and
received doses of HTD1801 (500 mg or 1,000 mg) or placebo, administered BID during an
18-week time frame. The trial enrolled 33 subjects in the HTD1801 500 mg BID treatment group,
34 subjects in the HTD1801 1,000 mg BID treatment group, and 33 subjects in the placebo group.
The key inclusion criteria for the Phase IIa clinical trial included: (1) clinical diagnosis of MASH
as assessed by magnetic resonance imaging; (2) clinically documented diagnosis of T2DM; and (3)
body mass index >25 kg/m
2. The key exclusion criteria included: (1) liver disease unrelated to
MASH; (2) poorly controlled T2DM or type 1 diabetes mellitus; (3) history of alcohol or substance
abuse or dependence; (4) inability to undergo magnetic resonance imaging for any reason; or (5)
history of significant cardiovascular disease. Overall, 88 subjects (87%) completed the study: 32
subjects (97%) in the placebo group and 56 subjects (82%) in the two HTD1801 treatment groups.
Standard of care was continued during the study as a “real world” assessment of HTD1801. 32% of
subjects continued to use GLP-1 or SGLT-2 medication, and 52% of subjects continued to use
statins.
Trial status. The Phase IIa clinical trial of HTD1801 was initiated in November 2018 and
was completed in March 2020 in the United States.
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Efficacy data. The following table summarizes the improvement of key efficacy parameters
associated with HTD1801 1,000 mg BID dose treatment and predicted impact on liver histology
and comorbidities in MASH.
Parameter
Liver fat content
MRI-cT1
ALT
FIB-4
LDL-C
HbA1c
Weight
Triglycerides
19.6% -24.1% (37% 2)4 0.011
0.019
Improvement in Fibrosis and NAS
Improvement in T2DM/CV Risk
0.007
N/A
-61 ms (39% 3)4942 ms
62 U/L
1.28
107 mg/dL
7.4%
101.2 kg
174 mg/dL
-0.11
Baseline p-value1 Predicted Impact on Liver
Histology and Comorbidities
Reductions from
Baseline
-19 U/L (44% 5)
-16 mg/dL 0.072
0.005
0.012
0.120
-0.6%
-18%
-3.5 kg
Abbreviation:cT1:correctedT1;NAS:NAFLDactivityscore
Notes: 1 versusplacebo, 2 percentageachievingatleasta30%relativereduction, 3 percentageachievingatleast
a 80 ms reduction, 4 22% of all patients randomized to HTD1801 treatment vs. 12% of all patients
randomizedtoplaceboachievedboththeliverfatcontentandcT1criteria, 5 percentageachievingatleast
a17U/Lreduction
The P value is defined as the probability under the assumption of no effect or no difference (null
hypothesis),ofobtainingaresultequaltoormoreextremethanwhatwasactuallyobserved.ThePstands
forprobabilityandmeasureshowlikelyitisthatanyobserveddifferencebetweengroupsisduetochance.
A P-value less than 0.05 indicates the pattern observed is statistically significant, while a value higher
than0.05thenullhypothesisistrue,hencethepatternobservedisnotstatisticallysignificant.Thehigher
thePvalue,thelesslikelythatthedatageneratedcouldhaveoccurredunderthenullhypothesis.
Source:Companydata
Treatment with HTD1801 in subjects with MASH and T2DM resulted in meaningful
improvements in liver fat content as assessed by MRI-PDFF. MRI-PDFF was commonly used to
assess treatment response in early-phase, proof-of-concept clinical studies in MASH and has been
shown to be closely correlated with liver steatosis grades from histology. The primary endpoint of
the study was achieved with a treatment difference being observed between the HTD1801 1,000
mg BID group and placebo (p=0.011) based on the primary analysis throughout the treatment
period and follow-up period, as shown in the following figure. The mean absolute liver fat content
was reduced by -4.8% in the group receiving HTD1801 1,000 mg BID, which was statistically
more significant than the reduction of -2.0% noted in the placebo group. The relative changes of
liver fat content from baseline (19.6%) in the placebo group and groups receiving HTD1801 500
and 1,000 mg BID were 8.3%, 15.1% and 24.1%, respectively. MRI response criterion was
achieved by 2-fold more patients treated with HTD1801 (52%) compared to placebo (24%). In
addition, 37% of subjects treated with HTD1801 1,000 mg BID experienced at least a 30%
reduction in liver fat content which predicted histologic benefit in MASH. More reduction in liver
fact content from baseline after treatment indicates better efficacy.
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-6
-4
-2
0
-2.0%
-2.9%
-4.8%*
HTD1801
500 mg BIDPlacebo
Absolute Liver Fat Content
HTD1801
1,000 mg BID
Mean Percent Change from Baseline (30)
(20)
(10)
(15)
(25)
(5)
0
-8.3%
-15.1%
-24.1%*
HTD1801
500 mg BIDPlacebo
Relative Liver Fat Content
HTD1801
1,000 mg BID
Mean Percent Change from Baseline
(%)
0
10
20
30
40
50
24%
37%
Placebo
Percentage of Subjects Achieving at Least 30%
Relative Reduction in Liver Fat Content
HTD1801
1,000 mg BID
Percentage achieving at least a 30%
relative reduction (%)
Note: *p<0.05
Source:Companydata
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In this study, HTD1801 1,000 mg BID was associated with a 3.5 kg weight loss and marked
improvements in triglycerides relative to placebo in only 18 weeks — both independent risk factors
for cardiovascular disease. The following figure illustrates changes of parameters of secondary
endpoints from baseline throughout the treatment period and follow-up period. More reduction in
weight and improvement in triglycerides from baseline after treatment indicates better efficacy.
Weight (kg)
Mean Change from Baseline
-1.1
-1.6
-3.5*
Triglycerides (%)
HTD1801
500 mg BIDPlacebo
HTD1801
1,000 mg BID
-5
-4
-3
-2
-1
0
Median Percent Change from Baseline
-8
-12
-18
HTD1801
500 mg BIDPlacebo
HTD1801
1,000 mg BID
-20
-15
-10
-5
0
Note: *p<0.05
Source:Companydata
Given the frequent occurrence of impaired glucose tolerance and T2DM in subjects with
MASH, it was important to assess the effects of HTD1801 on glycemic parameters. A positive
effect of HTD1801 on glucose metabolism was evident. In particular, a mean reduction in HbA1c
(-0.6%) was observed with HTD1801 1,000 mg BID that was statistically significant compared
with a placebo, as shown in the following figure. A trend for improved fasting glucose with
HTD1801 1,000 mg BID was also apparent but the difference from a placebo was not statistically
significant. These glycemic effects appeared greater in those with worse glycemic control at
baseline.
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The following figure shows changes of key biomarkers from baseline throughout the
treatment period and follow-up period. More reduction in HbA1c from baseline after treatment
indicates better efficacy.
HbA1c (%)
All Subjects
Mean Change from Baseline
0.1
-0.3*
-0.6**
HbA1c (%)
Baseline HbA1c ≥6.85%
HTD1801
500 mg BIDPlacebo
HTD1801
1,000 mg BID
-1.0
-0.5
0.0
0.5
33
7.0%
33
6.9%
34
7.3%HbA1c baseline
Subjects No.
Placebo 500mg BID 1,000mg BID
Mean Change from Baseline
0
-0.7
-0.8
HTD1801
500 mg BIDPlacebo
HTD1801
1,000 mg BID
-1.0
-0.5
0.0
0.5
16
7.7%
13
7.4%
14
8.1%HbA1c baseline
Subjects No.
Placebo 500mg BID 1,000mg BID
Note: *p<0.05
The P value is defined as the probability under the assumption of no effect or no difference (null
hypothesis),ofobtainingaresultequaltoormoreextremethanwhatwasactuallyobserved.ThePstands
forprobabilityandmeasureshowlikelyitisthatanyobserveddifferencebetweengroupsisduetochance.
AP-valuelessthan0.05indicatesthepatternobservedisstatisticallysignificant,whileifavalueishigher
than 0.05, it fails to reject the null hypothesis, and hence the pattern observed is not statistically
significant.The higher the P value, the less likely that the data generated could have occurred under the
nullhypothesis.
Source:Companydata
The beneficial effect of HTD1801 on liver fat was accompanied by additional improvements
in liver health including liver biochemistry (alanine transaminase (“ ALT”), aspartate transaminase
(“AST”), gamma-glutamyl transferase (“ GGT”)), and non-invasive markers of fibrosis (“ FIB-4 ”).
The following figures demonstrate the reduction of ALT and the shift of FIB-4 for the HTD1801
500 mg and 1,000 mg treatment groups throughout the treatment period and follow-up period. Over
three times more subjects treated with HTD1801 achieved FIB-4 of less than 1.3, which was
associated with less severe fibrosis by histology. Approximately five times more subjects treated
with HTD1801 achieved greater than 17 U/L reduction in ALT, which was also associated with less
severe fibrosis by histology. More reduction in ALT and lowering of FIB-4 from baseline after
treatment indicates better efficacy.
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9%
21%
44%
HTD1801
500 mg BID
Placebo
≥17 U/L Reduction in ALT
HTD1801
1,000 mg BID
Percentage of Subjects
0
10
20
30
40
50
8%
21%
30%
HTD1801
500 mg BID
Placebo
FIB-4 Shift From ≥1.3 to <1.3
HTD1801
1,000 mg BID
Percentage of Subjects
0
10
20
30
40
Source:Companydata
Corrected T1 (“ cT1”) is an MRI-based quantitative metric for assessing liver inflammation
and fibrosis. Previous studies have reported that cT1 reduction >80 ms is significantly correlated
with histologic improvements in NAS and fibrosis and cT1 levels are associated with clinical
outcomes (liver and CVD) in patients with MASH. The clinical study results of HTD1801
indicated that after just 18 weeks of treatment there was a significant reduction in cT1 with
HTD1801 1,000 mg BID compared to placebo (-61 ms vs. -15 ms, p<0.05). As an impressive case
in HTD1801 1,000 mg BID group, a subject with the cT1 of 937 ms at baseline was with cT1 of 785
ms at Week 18, showing a reduction of 152 ms. Furthermore, A larger proportion of subjects
receiving HTD1801 compared to placebo experienced at least an 80 ms reduction in cT1 at Week
18 (39% vs. 16%, respectively). These data provide further evidence that HTD1801 has potential in
improving measures of inflammation and fibrosis of the liver in patients with MASH and T2DM.
The following figure shows changes of key biomarkers from baseline throughout the
treatment period and follow-up period. More reduction in cT1 from baseline after treatment
indicates better efficacy.
Signific ant Re duction s in Liver Fibro-Infl ammation (cT1)
cT1 (ms)
-80
-60
-40
-20
0
Mean Change from Baseline
Placebo
HTD1801
1,000 mg BID
-61*
-15
cT1 Reduction >80 ms
Percentage of Subjects
Placebo HTD1801
1,000 mg BID
39%
16%
Subject Receiving
HTD1801 Baseline
cT1=937 ms
Week 18
cT1=785 ms
0
10
20
30
40
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Note: *p<0.05. P-values are obtained from an ANCOVA model with treatment group as a fixed effect, and
Baseline cT1 and Baseline ALT as covariates. The P value is defined as the probability under the
assumption of no effect or no difference (null hypothesis), of obtaining a result equal to or more extreme
than what was actually observed. The P stands for probability and measures how likely it is that any
observed difference between groups is due to chance. A P-value less than 0.05 indicates the pattern
observed is statistically significant, while a value higher than 0.05 the null hypothesis is true, hence the
pattern observed is not statistically significant. The higher the P value, the less likely that the data
generatedcouldhaveoccurredunderthenullhypothesis.
Abbreviations:ALT,alanineaminotransferase;ANCOVA,analysisofcovariance;BID,twicedailydosing;
cT1,CorrectedT1
Source:Companydata
In addition, we conducted a post hoc analysis for the subgroup subjects with
hyperinsulinemia. As shown in the chart below, the results demonstrated that after HTD1801
treatment, body weight and liver fat content were significantly reduced from baseline, compared to
placebo treatment.
Baseline FIN
≥40uIU/ml (2) Placebo 500mg 1,000mg
N 10 8 11
Baseline 107.7 102.9 108.5
Baseline FIN
≥40uIU/ml (2) Placebo 500mg 1,000mg
N 10 8 11
Baseline 20.2 20.0 18.9
Absolute changes from baseline in body weight (kg)(1)
Baseline FIN ≥40uIU/ml
Placebo
-0.9
500 mg BID
-2.7
1,000 mg BID
-8.0
P=0.0041
Absolute changes from baseline in body
weight (kg)
Relative changes from baseline in liver fat content (%)(1)
-9.0
-6.0
-3.0
0.0
Baseline FIN ≥40uIU/ml
Placebo
-0.8%
500 mg BID
-13.5%
1,000 mg BID
-40.1%
P=0.0008
Relative changes from baseline in Liver
Fat Content (%)
-60.0%
-40.0%
-20.0%
0.0%
Notes:
(1) Based on efficacy population ,N=1 0i n placebo group; seven in 500 mg BID group; nine in 1,000 mg BID
group;
(2) Based on full population ,N=1 0i n placebo group; eight in 500 mg BID group; 11 in 1,000 mg BID group.
Source:Companydata
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Safety data. HTD1801 was found to be generally safe and well tolerated in this study.
Approximately two-thirds (67%) of subjects in the study overall had TEAEs. The incidence of
TEAEs was higher in the HTD1801 1,000 mg BID group (76%, 59 events) compared with the
HTD1801 500 mg BID group (64%, 47 events) and the placebo group (61%, 47 events). TEAEs
related to the study drug were more common in the HTD1801 1,000 mg BID group (50%, 25
events) compared with the HTD1801 500 mg BID group (24%, 14 events) and the placebo group
(15%, 9 events). The most common TEAEs and treatment-related TEAEs were gastrointestinal
disorders (diarrhea and nausea). 95.5% of TEAEs were Grade 1 (mild) and Grade 2 (moderate), 3%
of TEAEs were Grade 3 (severe), 1.5% of TEAEs were Grade 4 (life-threatening) and none of the
TEAEs was Grade 5 (fatal) in the study. The Grade 3 and Grade 4 TEAEs were not related to the
study drug. Other than gastrointestinal-related events, which were more common with HTD1801
1,000 mg BID compared with HTD1801 500 mg BID and placebo, the incidence of TEAEs was low
and generally not different from placebo. There were no TEAEs leading to death in the study.
Three treatment-emergent SAEs occurred during the course of the study, with one subject in each
treatment group, suggesting that the incidence of SAEs was low. In addition, incidence of SAEs
with HTD1801 was the same as placebo and all were considered unrelated to the study drug with
no pattern observed in terms of the types of events. Furthermore, TEAEs leading to discontinuation
of the study drug were also more common in the HTD1801 1,000 mg BID group (18%) compared
with the HTD1801 500 mg BID group (3%) and the placebo group (3%), as shown in details in the
following chart.
Preferre d Term, n (%) (1)
HTD1801 500
mg (N=33)
HTD1801 1,000
mg (N=34)
Placebo
(N=33)
Any TEAE Leading to Discontinuation of Stu dyD r ug ... 1 (3%) 6 (18%) (2) 1 (3%)
Diarrhoea .................................... 0 2( 6 % ) 0
Abdominal Distension ......................... 0 1( 3 % ) 0
Gastrooesophageal Reflux Disease .............. 1( 3 % ) 0 0
Melaena ..................................... 0 1( 3 % ) 0
Myocardial Infarction ......................... 0 1( 3 % ) (3) 0
Bladder Transitional Cell Carcinoma ............ 0 0 1( 3 % )
Headache .................................... 0 1( 3 % ) 0
Rash ........................................ 0 1( 3 % ) 0
Note:
(1) Percentages are based on the number of subjects randomized into each group.
(2) One subject can experience two or more AEs.
(3) This is the Grade 4 TEAE leading to discontinuation of the study drug. The Grade 4 TEAE of myocardial
infarction is not related to the study drug.
HTD1801.PCT014: A Phase IIb study to evaluate efficacy and safety of HTD1801 in adult subjects
with MASH and liver fibrosis who have T2DM or pre-diabetes in the United States, Hong Kong,
Mexico and Mainland China.
Overview. This is a multicenter, randomized, double-blind, placebo-controlled Phase IIb
study to evaluate the effect of HTD1801 on histologic improvements in adult subjects with MASH
and liver fibrosis who have T2DM or pre-diabetes. The clinical sites are expected to be in the
United States, Hong Kong, Mexico and Mainland China.
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Trial design. The study plans to enroll approximately 210 subjects in the United States,
Hong Kong, Mexico and Mainland China with biopsy-confirmed MASH and evidence of stage 2 or
stage 3 liver fibrosis. The subjects plan to be randomized 2:1 to receive HTD1801 1,250 mg twice
daily (BID) or placebo BID, for up to 60 weeks. The primary endpoint is a decrease of ≥2-points in
NAFLD activity score (“ NAS ”) with ≥1-point decrease of either lobular inflammation or
ballooning and no worsening of fibrosis; or resolution of MASH, defined as the overall
histopathologic interpretation of “no fatty liver disease” or “fatty liver disease (simple or isolated
steatosis) without steatohepatitis” and an NAS of 0 for ballooning and 0–1 for inflammation and no
worsening of fibrosis. The key inclusion criteria for the Phase IIb clinical trial included: (1)
clinical diagnosis of MASH upon central read of a liver biopsy obtained no more than 6 months
before Day 0; (2) histologic evidence of fibrosis stage 2 or stage 3 as defined by the MASH critical
ranking number scoring of fibrosis; (3) clinical diagnosis of T2DM or pre-diabetes at screening at
least 6 months prior to screening or prediabetes at screening; and (4) BMI >25 kg/m
2 (>23 kg/m 2
for Asian subjects). The key exclusion criteria included: (1) fibrosis stage 4; (2) history of alcohol
or substance abuse or dependence; (3) liver disease unrelated to MASH; (4) history of significant
cardiovascular disease; (5) history of type 1 diabetes; or (6) inability or unwillingness to undergo
two planned liver biopsies or one planned biopsy if historical liver biopsy was used to confirm
eligibility at entry. There were challenges of conducting liver biopsy in clinical trial subjects
including the instability of imaging tests, the willingness of subjects to have a biopsy, detecting
appropriate histologic disease severity for inclusion in the study, inter-reader variability between
pathologists (if multiple pathologists are utilized), and the subjectivity/inconsistency related to the
histologic staging of the biopsy by a given pathologist. However, we believe they had no impact on
our clinical trial because we tackled such challenges by (i) enhancing reach to prospective subjects
through engaging multiple clinical sites and educating the prospective subjects about the general
procedures of conducting a biopsy, as well as the importance of a biopsy to confirmation of
diagnosis and severity of the disease and the subject’s overall well-being; (ii) providing every
study site with a prescreening algorithm designed to help detect subjects with sufficiently severe
disease and to rule out subjects who are not suitable for conducing a liver biopsy; (iii) providing
guidelines for interpretation of each of the parameters (including but not limited to AST,
fibroscan-AST score and FIB-4) and cut-off values for patients who are reasonably likely to have
sufficient disease severity in order to avoid the instability of imaging tests; and (iv) having one
single pathologist to evaluate liver biopsies of patients in order to avoid inter-reader variability in
histologic staging and the instability of imaging tests.
Trial status. The clinical trial was initiated in the United States in December 2022 and in
Hong Kong in October 2023, and is currently recruiting subjects, with no interim data to analyze.
As of the Latest Practicable Date, we have enrolled 158 subjects and initiated 54 clinical sites in
the United States and also enrolled two subjects and initiated two clinical sites in Hong Kong. We
obtained the IND approval from the NMPA in Mainland China on September 8, 2023. On July 11,
2023, we submitted an IND application to initiate Phase IIb study (HTD1801.PCT014) for MASH
with T2DM or prediabetes in Mexico. We plan to initiate the Phase IIb MRCT in four clinical sites
in Mexico and four clinical sites in Mainland China in December 2023. The large time gap between
the completion of Phase IIa clinical trial and the initiation of the Phase IIb clinical trial for MASH
is due to the prioritization of our resources for clinical development of HTD1801 for T2DM.
T2DM
HTD1801.PCT102: A Phase Ib study to assess safety, tolerability, PK and PD of HTD1801 for
patients with T2DM in China
Overview. This was a single-center, randomized, double-blind, placebo-controlled,
multiple-dose, repeated-dose phase Ib study to evaluate the safety, tolerability, PK and PD
characteristics of HTD1801 in Chinese patients with type 2 diabetes mellitus. Safety evaluation
was the primary purpose of the study.
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Trial design. HTD1801.PCT102 included Part A study with three treatment dose groups of
500 mg, 750 mg and 1,000 mg HTD1801 and Part B study with one treatment dose group of
1,000 mg HTD1801. A total of 48 patients with primary T2DM who had poor results with diet and
exercise therapy were enrolled in this study. For Part A study, 36 naïve T2DM patients were
randomized into four groups with nine patients for each group. Each group was administered orally
for 28 consecutive days, twice a day, with an interval of 12 h±2 h between doses. For Part B study,
12 patients with T2DM treated with stable doses of metformin for not less than 3 months were
enrolled for two groups, with nine patients for 1,000 mg HTD1801 dose group and three patients
for placebo group. Each group was administered orally for 28 consecutive days, twice a day, with
an interval of 12 h±2 h between doses, while maintaining the same metformin regimen.
The primary endpoint of this Phase Ib clinical trial was to evaluate adverse events,
laboratory test values (including hematology, blood biochemistry, blood glucose, glycated
hemoglobin, coagulation function, urinalysis), electrocardiogram test, vital signs and physical
examination. The key inclusion criteria for the Phase Ib clinical trial included: (1) signing the
informed consent form before the trial, and fully understanding the content, process and possible
adverse effects of the trial; (2) being able to complete the study according to the requirements of
the trial protocol; (3) subjects (including partners) who are willing to voluntarily use effective
contraception from screening until 90 days after the last dose of study drug; (4) male and female
subjects between the ages of 18 (inclusive) and 75 (inclusive) years at the time of signing the
informed consent form; (5) male subjects with no less than 50 kg weight and female subjects with
no less than 45 kg weight at screening, with body mass index ≥18 kg/m
2; (6) diagnosis of T2DM
that was confirmed according to the 1999 World Health Organization (“ WHO”) criteria; (7) at
screening: 7.0 mmol/L ≤fasting glucose ≤13.3 mmol/L, and 7.5% ≤HbA1c ≤11.5%; and (8) patients
with fatty liver diagnosed by ultrasound. The key exclusion criteria included but not limited to: (1)
being allergic to multiple drug and food, or allergic to the active ingredients of the drug under
study or its excipients determined by the investigator; (2) subjects who have undergone
gastrointestinal or other gastrointestinal-related surgery within one year prior to screening, other
surgery within six months prior to screening that may have an impact on this study, or those who
are scheduled to undergo surgical treatment within three months of enrollment; (3) subjects who
have lost a significant amount of blood (>400 mL), received a blood transfusion, or used blood
products within three months prior to screening; (4) subjects who have consumed a significant
amount of alcohol within 30 days prior to screening; (5) history of substance abuse or dependence
within one year prior to screening; or (6) subjects who, in the opinion of the investigator, have
factors that make participation in this trial inappropriate.
Trial status. The Phase Ib clinical trial was initiated in June 2022 and completed in
September 2022 with 49 patients enrolled.
Safety data. HTD1801 treatment for 28 consecutive days demonstrated good safety and
tolerability in both treatment-naïve patients and the patients with stable metformin treatment. The
most common TEAEs were Grades 1-2 gastrointestinal events.
Efficacy data. HTD1801 showed clear potential in metabolism improvement after the
relatively short treatment period. The fasting blood glucose, and 2-hour post-prandial glucose of
HTD1801 groups demonstrated a dose-dependent decrease from baseline after 28-day treatment.
In addition, dose-dependent reductions in total cholesterol, triglyceride (“ TG”), LDL-C and
non-HDL-C were observed.
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HTD1801.PCT103: A Phase II, multicenter, randomized, double-blind study to evaluate the
efficacy and safety of HTD1801 in subjects with T2DM in Mainland China
Overview. The Phase II study was a multi-center, randomized, double-blind,
placebo-parallel controlled trial to assess safety and efficacy of HTD1801 for patients with T2DM
after 12 weeks of treatment. The primary objective of this study was to evaluate the effect of
HTD1801 on glycemic control in patients with T2DM.
Trial design. Subjects enrolled in this study were randomized 1:1:1 to receive the 500 mg
HTD1801, 1,000 mg HTD1801 or placebo, administered BID during a 12-week time frame. The
primary endpoint of Phase II clinical trial was to evaluate glycated hemoglobin (“ HbA1c ”) during
the entire clinical trial period. The key inclusion criteria for the Phase II clinical trial included: (1)
female or male subjects with ages of 18 years (inclusive) and 75 years (inclusive) at the time of
signing the informed consent form; (2) confirmed diagnosis of T2DM according to the 1999 World
Health Organization criteria; (3) being treated with diet and exercise alone for ≥8 weeks prior to
screening; (4) HbA1c criteria: HbA1c at screening: 7.5% ≤ HbA1c ≤ 11.0%; HbA1c before
randomization: 7.0% ≤ HbA1c ≤ 10.5%; (5) fasting blood glucose criteria: Fasting blood glucose at
screening: <13.9 mmol/L; fasting plasma glucose before randomization: <13.9 mmol/L; (6) body
mass index ranged from 18 to 40 kg/m
2 (including end values) at screening; (7) subject who agrees
to maintain the same dietary and exercise habits throughout the trial, and is willing and able to
accurately use a home blood glucose meter for self-monitoring of blood glucose and recordings;
and (8) ability to understand and willingness to sign a written informed consent form and comply
with the study protocol. The key exclusion criteria included but not limited to: (1) type 1 diabetes,
or a specific type of diabetes (e.g., diabetes due to pancreatic injury, diabetes due to Cushing’s
syndrome or acromegaly, etc.); (2) diabetic ketoacidosis or hyperglycemic hyperosmolar state
within 6 months prior to screening; (3) proliferative retinopathy or macular degeneration, severe
diabetic neuropathy, diabetic foot, or intermittent claudication that was unstable or required
treatment within 6 months prior to screening; (4) history of ≥2 grade 3 hypoglycemic episodes in
the 12 months prior to screening; (5) any condition that may cause hemolysis or red blood cell
instability that would interfere with HbA1c testing, such as hemolytic anemia, at screening; or (6)
other conditions deemed by the investigator to be inappropriate for participation in this trial.
Trial status. The Phase II clinical trial was initiated in March 2022 and completed in January
2023 with 113 patients enrolled in Mainland China. The number of randomized subjects assigned
to the placebo, 500 mg, and 1,000 mg groups was 38, 37, and 38, respectively. A total of 110
subjects completed the study (one subject in the placebo group and two subjects in the 500 mg
group withdrew early from the study).
Efficacy data. HTD1801 demonstrated a strong therapeutic effect in improving glucose
metabolism of subjects with T2DM, including statistically significant decreases in HbA1c and
glucose levels. Improvements in other disease-relevant parameters were also observed, including
reduced liver biomarkers (ALT, AST, GGT) and improvement of lipid profiles, such as reduction of
LDL-c and non-HDL-c levels.
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During the treatment period, subjects in the HTD1801 500 mg and 1,000 mg BID groups
exhibited reduced level of HbA1c compared to the baseline, with statistically significant
superiority over that of the placebo group. At Week 12, both HTD1801 500 mg BID and 1,000 mg
BID treatment groups showed significant reduction in HbA1c compared to placebo group. As
shown in the chart below, compared to baseline, 500 mg BID group showed a reduction in
HbA1c(%) by -0.7 and 1,000 mg BID group showed a reduction in HbA1c (%) by -1.0. The
proportions of patients achieving glucose control target (HbA1c <7% and <6.5%) in HTD1801
groups were 55.9% and 29.4% in 1,000 mg treatment group, compared with 15.2% and 6.1% in
placebo group, respectively. HTD1801 also demonstrated better effects in glucose metabolism
improvement for patients in high baseline subgroup with poorer glycemic control (HbA1c≥8.5%),
and 12-week HTD1801 treatment led to reduction in HbA1c by 1.0 in 500 mg treatment group and
1.4 in 1,000 mg treatment group, compared to the baseline. The results demonstrated a clear
dose-effect relationship for HTD1801 treatment.
Placebo 500mg BID 1,000mg BID
N1 31 31 4
Baseline 9.38 9.00 9.08
At 12 weeks of HTD1801 1,000mg treatment, nearly
one-third of patients had HbA1c less than the
diagnostic criteria for diabetes (HbA1c<6.5%)
P<0.05
P<0.001
Change of HbA1c from baseline (%)
-0.3
-0.7*
-1.0***
Placebo HTD1801
500 mg BID
HTD1801
1,000 mg BID
Change of HbA1cLS mean from baseline (%)
Proportion of patients that achieved target
HbA1c < 7.0%
15.2%
32.4%
55.9%
Placebo HTD1801
500 mg BID
HTD1801
1,000 mg BID
Patient Percentage
Change of HbA1c from baseline (%) in high
baseline subgroup (HbA1c≥8.5%)
-0.2
-1.0
-1.4
Placebo HTD1801
500 mg BID
HTD1801
1,000 mg BID
Change of HbA1cLS mean from baseline (%)
Placebo 500mg BID 1,000mg BID
N 38 37 38
Baseline 8.32 8.18 8.18
-1.2
-1.0
-0.8
-0.6
-0.4
-0.2
0.0
-1.6
-1.4
-1.2
-1.0
-0.8
-0.6
-0.4
-0.2
0.0
0.0
0.2
0.4
0.6
Source:Companydata
In addition, as shown in the chart below, subjects in the HTD1801 500 mg and 1,000 mg BID
groups after 12 weeks of HTD1801 treatment also exhibited reduced liver biomarkers (ALT, AST,
GGT) compared to the baseline in an approximately dose-dependent manner, with statistically
significant superiority over that of the placebo group. After 12 weeks of HTD1801 treatment,
improvement of liver function is observed even in people with normal liver enzymes. The total
cholesterol profile, LDL-c and non-HDL-c indicated similar meaningful reduction in the
HTD1801 groups.
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Changeo fA L T ,A S Tand GGT from B aseline
Placebo 500mg BID 1,000mg BID
N 38 37 38
Baseline 20.3 24.4 22.6
Placebo 500mg BID 1,000mg BID
N 38 37 38
Baseline 23.8 26.6 24.8
-3.4% -2.0%
5.8%
-15.0%
-8.6%
-19.8%
-27.8%
-14.2%
-32.8%
Placebo HTD1801 500mg BID HTD1801 1,000mg BID
ALT AST GGT
Placebo 500mg BID 1,000mg BID
N 38 37 38
Baseline 34.2 41.4 33.5
P<0.05
P<0.05
P<0.001
Change of ALT, AST and GGT from baseline, after 12 weeks of treatment (%)
Source:Companydata
After 12 weeks of HTD1801 treatment, enhanced improvement was also observed in
patients with abnormal liver biochemistry. As shown below, mean changes in ALT, AST and GGT
from baseline in the HTD1801 1,000 mg BID treatment group after 12 weeks of treatment were
much improved compared with the placebo group. Thus, HTD1801 treatment resulted in
improvements in measures of hepatic inflammation and damage (ALT, AST and GGT), particularly
relevant with the risk and frequent overlap of MASLD in patients with T2DM.
Placebo 500mg 1,000mg
N 03 2
Baseline – 54.3 54.5
Placebo 500mg 1,000mg
N2 3 53
Baseline 45.7 58.6 68.0
-25.2%
N/A1
11.4%
-23.3%
-29.5%
-59.6%
-35.1%
-25.2%
-45.6%
Placebo HTD1801 500mg BID HTD1801 1,000mg BID
ALT AST GGT
Placebo 500mg 1,000mg
N3 44 7
Baseline 90.0 151.5 75.7
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
Mean change in ALT, AST and GGT from baseline, after 12 weeks of treatment in patient group with baseline higher than ULN
Notes:
1. There was no subjects enrolled in this subgroup.
2. Efficacy is based on efficacy population at week 12 (N=3, 4, 3), and baseline is for enrolled population
(N=3, 5, 3) in placebo, 500mg treatment group and 1,000mg treatment group, respectively.
3. Efficacy is based on efficacy population at week 12 (N=4, 4, 6), and baseline is for enrolled population
(N=4, 4, 7) in placebo, 500mg treatment group and 1,000mg treatment group, respectively.
Source:Companydata
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Safety data. HTD1801 was generally well-tolerated in both 500 mg and 1,000 mg BID
groups. TEAEs that may relate to HTD1801 were reported by 13 of these subjects (11.5%), of
which five were from placebo group (13.2%), two were from HTD1801 500 mg BID group (5.4%)
and six were from HTD1801 1,000 mg BID group (15.8%). All drug-related TEAEs were Grade 1
or 2, and no drug-related SAE was reported. No life-threatening AE occurred nor did any AE lead
to permanent discontinuation of a subject from the Phase II clinical trial.
PSC
HTD1801.PCT003: A Phase II study comparing two doses of HTD1801 (500 mg BID and 1,000 mg
BID) to placebo in adult subjects with PSC in the United States and Canada
Overview. This was a Phase II, multicenter, randomized, double-blind, proof-of-concept
18-week study comparing two doses of HTD1801 (500 mg BID and 1,000 mg BID) to placebo in
adult subjects with PSC in the United States and Canada. The primary endpoint was the absolute
change in ALP from baseline to Week 6.
Trial design. The study design consisted of an initial randomized, double-blind, placebo-
and dose-controlled, parallel-group period (Period 1), followed by a dose-controlled extension
period (Period 2), followed by a placebo-controlled randomized withdrawal period (Period 3). In
the Period 1, subjects were randomized to receive BID doses of 500 mg, 1,000 mg, or matching
placebo for 6 weeks. The primary analysis was based on this initial six-week randomized,
double-blind, placebo- and dose-controlled, parallel-group period. In the Period 2, subjects
previously randomized to 500 mg BID or 1,000 mg BID continued for six more weeks at that
previous dose, while subjects previously randomized to placebo were re-randomized to receive six
weeks of either 500 mg BID or 1,000 mg BID. In the Period 3, subjects were re-randomized to
either continue on the active treatment they received in Period 2 or be assigned to placebo. Clinic
visits for efficacy assessments and safety monitoring occurred every two weeks throughout the
18-week study, with a final follow-up assessment 30 days after the last dose of study drug. A total
of 59 subjects were randomized into the study. The key inclusion criteria for the Phase II clinical
trial included: (1) male or female between 18 and 75 years of age; (2) having a clinical diagnosis of
PSC as evident by chronic cholestasis of more than six months duration with either a consistent
magnetic resonance cholangiopancreatography/endoscopic retrograde cholangiopancreatography
showing sclerosing cholangitis; (3) subjects having inflammatory bowel disease evident by prior
endoscopy or in previous medical records for ≥6 months; subjects with a partial Mayo score (an
index to assess severity of current ulcerative colitis) of 0-4, inclusively; subjects on treatment who
are stable for 3 months if taking 5-amino salicylic acid drugs, azathioprine, 6-mercaptopurine, or
methotrexate biologics; (4) a serum ALP ≥1.5 × upper limit of normal; (5) being able to understand
and sign a written informed consent form; (6) receiving allowed concomitant medications that
need to be on stable therapy for 28 days prior to the baseline visit, with the exception of UDCA that
should be stable for at least six weeks prior to the baseline visit. The key exclusion criteria
included: (1) presence of documented secondary sclerosing cholangitis (such as ischemic
cholangitis, recurrent pancreatitis, intraductal stone disease, severe bacterial cholangitis, surgical
or blunt abdominal trauma, recurrent pyogenic cholangitis, choledocholithiasis, toxic sclerosing
cholangitis due to chemical agents, or any other cause of secondary sclerosing cholangitis) on
prior clinical investigations; (2) small duct PSC; (3) presence of percutaneous drain or bile duct
stent; (4) history of cholangiocarcinoma or clinical suspicion of new dominant stricture within one
year by magnetic resonance cholangiopancreatography/endoscopic retrograde
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cholangiopancreatography; presence of dominant stricture without endoscopic retrograde
cholangiopancreatography evidence of cholangiocarcinoma is acceptable if stable for ≥1 year; (5)
ascending cholangitis within 60 days prior to screening; (6) history of alcohol or substance abuse
or dependence; (7) prior or planned liver transplantation; presence of alternative causes of chronic
liver disease, including alcoholic liver disease, MASH, PBC, autoimmune hepatitis; (8) platelet
count below 125,000/mm
3, albumin below 3.0 g/dL, international normalized ratio >1.2, or a
history of ascites, or encephalopathy, or history of esophageal variceal bleeding; or (9) severe
active IBD or flare in colitis activity within the last 90 days requiring intensification of therapy
beyond baseline treatment.
Trial status. We initiated the Phase II clinical trial of HTD1801 for PSC in the United States
and Canada in February 2018 and completed the trial in August 2020.
Efficacy data. The following figure shows changes of key biomarkers from baseline
throughout the treatment period and follow-up period. The clinical trial study showed
improvements in key markers of cholestasis and liver injury at Week 6. In particular, a clinically
meaningful, statistically significant decrease in ALP from baseline to Week 6 was observed for
both the HTD1801 500 mg BID and the 1,000 mg BID groups compared to placebo. Greater ALP
responses in the active treatment groups compared to placebo were apparent as early as Week 2 and
sustained through Week 6 with a similar magnitude of response at each visit between the two
HTD1801 treatment groups. The percentage of patients with ALP of <1.5 × upper limit of normal
(“ULN”) was much higher for both the HTD1801 500 mg BID and the 1,000 mg BID groups
compared to placebo at Week 6. In addition, there was a decrease of GGT from baseline to Week 6
compared to placebo for both the HTD1801 500 mg group (p=0.0082) and the HTD1801 1,000 mg
group (p=0.0007).
ALP (U/L)
Mean Change from Baseline
Placebo
HTD1801
500 mg
BID
HTD1801
1,000 mg
BID
-71* -73*
94
ALP<1.5 × ULN
Percentage of Subjects
GGT (U/L)
Mean Change from Baseline
-100
-50
0
50
100
Placebo HTD1801
500 mg
BID
HTD1801
1,000 mg
BID
13%
26%
6%
Placebo
HTD1801
500 mg
BID
HTD1801
1,000 mg
BID
-209**
-286**
256
-400
-200
0
200
400
0
10
20
30
Note: *p<0.05;**p<0.001
The P value is defined as the probability under the assumption of no effect or no difference (null
hypothesis),ofobtainingaresultequaltoormoreextremethanwhatwasactuallyobserved.ThePstands
forprobabilityandmeasureshowlikelyitisthatanyobserveddifferencebetweengroupsisduetochance.
A P-value less than 0.05 indicates the pattern observed is statistically significant, while a value higher
than0.05thenullhypothesisistrue,hencethepatternobservedisnotstatisticallysignificant.Thehigher
thePvalue,thelesslikelythatthedatageneratedcouldhaveoccurredunderthenullhypothesis.
Source:Companydata
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Safety data. Most TEAEs were mild or moderate in intensity and considered by the
Investigator to be unrelated to study drug. TEAEs were reported for 18 (51%) of 35 subjects during
placebo treatment, 14 (64%) of 22 subjects during HTD1801 500 mg BID treatment, and 20 (65%)
of 31 subjects during HTD1801 1,000 mg BID treatment, see the table below.
Summ ary of TEAE s (Safety Po pulation)
Number (%) of Subject s with: Pl acebo (N=35) a
HTD1801
500 m g BID
(N=22) a
1,000 m g BID
(N=31) a
TEAEs .......................................... 18(51) 14(64) 20(65)
TEAEs related to study drug ....................... 7(20) 5(23) 9(29)
TEAEs leading to discontinuation .................. 4(11) 1(5) 3(10)
Severe TEAEs ................................... 2(6) 1(5) 3(10)
SAEs related to study drug ........................ 0 0 0
a Overal l N = the number of subjects receiving a given treatment during any period of the study.
Note: Subjects are summarized according to the treatment taken on the start date of the AE. AEs are coded using
MedDRA V20.1. TEAE are those that are reported on or after the initiation of the study drug. AEs are
attributed to the most recent treatment received.
Source:Investigator’sBrochure,CompanyData
PBC
HTD1801.PCT013: A Phase II open-label, proof-of-concept study in subjects with PBC with
inadequate response to standard of care in the United States
Overview. This was a Phase II, multicenter, single-arm, 12-week, open-label,
proof-of-concept study of HTD1801 in adult subjects with PBC with an inadequate response to
standard therapy. The primary endpoint is the percent change from baseline in ALP.
Trial design. 24 subjects received at least one dose of HTD1801 and were included in the
HTD1801 1,000 mg BID (intention-to-treat (“ ITT”) population). Inadequate response was defined
as ALP ≥1.5x upper limit of normal despite having been on adequate doses of UDCA for at least six
months. Subjects discontinued use of UDCA at baseline, prior to transitioning to HTD1801. On
average subjects were on a lower dose of UDCA when administered as HTD1801. The key
inclusion criteria included: (1) a clinical diagnosis of PBC as confirmed by patient history
consistent with the American Association for the Study of Liver Diseases Practice Guideline
confirmed by two of the following three criteria: biochemical evidence of cholestasis with
elevation of ALP activity, presence of anti-mitochondrial antibody and histopathologic evidence of
non-suppurative cholangitis and destruction of small or medium-sized bile ducts if biopsy
performed; (2) taking a stable, adequate dose of at least (13-15 mg/kg/day) of UDCA for at least 6
months with a serum ALP of at least ≥1.5 × ULN at any time after being on UDCA for >6 months
(historical value) and at screening; subject who may be screened and a second ALP value should be
obtained as part of screening if the historical ALP was obtained less than 6 months prior to study
start as part of standard of care, and there must be at least a 4-week interval between the ALP
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values and the ALP values must be ≥1.5 × ULN; (3) subject who must be on a stable dose no more
than once a day for at least 8 weeks prior to baseline visit, if the subject is taking cholestramine or
other bile acid sequestrant for pruritus, and must be willing and able to take cholestyramine at least
2 hours before or after study medication; (4) females of child-bearing potential and males
participating in the study who must either agree to use at least two approved barrier methods of
contraception or be completely abstinent from sexual intercourse, if this is their usual and
preferred lifestyle, throughout the duration of the study and for three months after stopping study
drug, and post-menopausal females who must have appropriate documentation; and (5) subject
who is able to provide consent. The key exclusion criteria included but not limited to: (1)
uncontrolled concomitant autoimmune hepatitis, that subject should be on no more than 5 mg per
day of prednisone (or equivalent dose for other corticosteroids) or no more than 150 mg per day of
azathioprine at stable doses and serum ALT should b e≤5× ULN; enrollment of subjects with
controlled AIH will be limited to a total of 5 subjects; (2) history of alcohol or substance abuse; (3)
prior liver transplantation or currently listed for liver transplantation; (4) history of chronic viral
hepatitis, types B or C; (5) platelet count ≤150,000/mm
3, albumin <3.0 g/dL, international
normalized ratio >1.2, or a history of ascites, or encephalopathy, or history of variceal bleeding; or
(6) any other clinically significant disorders or prior therapy that, in the opinion of the investigator,
would make the subject unsuitable for the study or unable to comply with the dosing and protocol
requirements.
Trial status. We initiated the Phase II PBC clinical trial in the United States in May 2021 and
completed the trial in May 2022.
Efficacy data. The efficacy data of the Phase II clinical trial for PBC was favorable. The
follow-up periods in the clinical trial, during which HTD1801 treatment was withdrawn, showed
the significant rebound of ALP compared with baseline, also suggesting the efficacy of HTD1801.
Therefore, we believe it has no impact on its clinical development. Following treatment with
HTD1801 1,000 mg BID for 12 weeks, the primary endpoint of percent change from baseline in
ALP at Week 12 showed a reduction of -7.7% (p=0.0768) with >30% achieving ≥20% reduction.
Improvements in ALP were observed early in the study by Week 2 and -10.0% reductions were
observed at Week 6 (p=0.0061). Although reductions were maintained through Week 12, the
difference was no longer statistically significant. Following discontinuation of study drug at Week
12, a clear rebound in ALP back to levels higher than baseline was observed at the Week 16 follow
up visit, suggesting that the ALP level was worsened as compared with baseline. This rebound was
due to the discontinuation of HTD1801 treatment. In addition, a 7.5% reduction in total bilirubin
was observed at Week 12 with HTD1801 treatment along with reductions in immunoglobulin M
which was classically elevated in PBC. Subjects with PBC were typically dyslipidemic. The trial
results demonstrated that HTD1801 treatment resulted in reductions in LDL-C, triglycerides and
total cholesterol.
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The following figure shows changes of primary endpoint from baseline throughout the
treatment period and follow-up period:
Prim ary En dpoint: Percent Ch angef r o mBaseline in ALP at Week 12
(ITT Po pulation) Stu dy HTD1801.PCT013
0 2 4 6 8 1 01 21 41 6
-50
-25
0
25
50
50
75
100
Weeks
ALP
Mean (SD) % Change from Baseline
p=0.0768
-7.7%
Source:Companydata
Safety data. 24 subjects received at least one dose of HTD1801 and were included in the ITT
population. Treatment with HTD1801 1,000 mg BID was safe and generally well tolerated. There
were no deaths in the study. Overall, 23 (96%) subjects reported a TEAE; the majority were mild
(58%) in severity. One subject experienced a severe SAE of COVID-19 pneumonia requiring
hospitalization. Two subjects experienced TEAEs that lead to treatment discontinuation and were
considered possibly related to study drug. One subject experienced TEAEs of a decrease in
appetite and diarrhea at Week 2, which were considered mild and moderate in severity,
respectively. The subject discontinued treatment and completed the follow-up visit four weeks
later. A significant proportion of patients with PBC experience pruritus that can markedly
influence quality of life. Although subjects included in this study generally had mild pruritus at
baseline, improvements in both the average itch and worst itch in the past 24 hours were observed
at Week 12 to levels near no pruritus.
Hypercholesterolemia
HTD1801.PCT004: A randomized, double-blind, placebo-controlled, multicenter, multiple
ascending dose Phase Ib/IIa study to evaluate the safety and tolerability of HTD1801 in adults with
hypercholesterolemia in Australia
Overview. This was a Phase Ib/IIa randomized, double-blind, placebo-controlled, multiple
ascending dose study to evaluate the safety, tolerability, PK, and PD of HTD1801 in subjects with
hypercholesterolemia. Given that the subjects enrolled in this study were obese with a history of
hypercholesteremia, the focus of the efficacy and PD endpoints was lipid metabolism. Since all
subjects, with the exception of two subjects (4%), were euglycemic with normal liver-associated
enzymes at baseline, the focus of the exploratory endpoints of glucose metabolism and liver
function was safety.
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Trial design. HTD1801 was administered orally, once per day immediately after the morning
meal on Day 1 (250, 500 and 1,000 mg single dose), twice per day after the morning and evening
meals on Day 2 to Day 27 inclusive (250, 500 and 1,000 mg BID), and once per day immediately
after the morning meal on Day 28 (250, 500 and 1,000 mg single dose). The baseline (pre-dose) and
post-dose PK samples were collected. 50 overweight or obese adults with h ypercholesterolemia were
enrolled and treated with HTD1801 in this Phase I/II study. Of those 50 enrolled subjects, 47
completed the study as planned. The key inclusion criteria for the Phase Ib/IIa clinical trial
included: (1) having given written informed consent; (2) males or females aged 18 to 70 years old
at the time of first dosing; (3) having a body mass index of >25.0 and ≤45.0 kg/m
2 at screening; and
(4) having a documented history of hypercholesterolemia, defined as LDL-C ≥2.59 mmol/L. The
key exclusion criteria included: (1) use of any anti-dyslipidemia agent within 28 days prior to
dosing; (2) history of a total cholesterol ≥10.35 mmol/L or triglyceride ≥11.3 mmol/L; (3) history
of a clinically significant cardiac arrhythmia or clinically significant abnormal ECG results at
screening; (4) significant peripheral or coronary vascular disease; (5) clinically significant
abnormal blood pressure at screening or baseline, defined as supine blood pressure ≥160/100
mmHg, or ≤90/60 mmHg; (6) primary hypothyroidism (thyroid stimulating hormone > upper limit
or normal and free T4 < lower limit of normal), primary subclinical hypothyroidism (screening
TSH > ULN and free T4 within normal limits), or secondary hypothyroidism (screening TSH <
LLN and free T4 < LLN) at screening; or (7) glucose-6-phosphate dehydrogenase (G6PD)
deficiency.
Trial status. We initiated the Phase Ib/IIa trial of HTD1801 for hypercholesterolemia in
March 2018 and completed the trial in December 2018 in Australia.
Efficacy data. Among subjects receiving HTD1801, serum lipid levels generally decreased
in a dose-dependent fashion. Statistically significant improvements were observed with HTD1801,
at various dose levels, compared with placebo for triglycerides, total cholesterol, LDL-C,
non-HDL-C, very low density lipoprotein-cholesterol (“ VLDL-C ”), and lipoprotein-a. With
regard to liver enzymes, there were no changes in ALT or AST observed over the 28 days of
treatment. With regard to glucose metabolism, only two subjects presented with a history of T2DM
at study entry. All others were euglycemic at baseline. No subjects who received HTD1801
experienced hypoglycemia. The results demonstrated favorable trends of HTD1801 treatment in
efficacy endpoints related to lipid metabolism.
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Lipid Met aboli smb yM e an (SD) Percent Ch angef r o mBaseline (Effic acy Po pulation)
HTD1801
Visit on D ay 28, Me an% (SD) Pl acebo N=12
250 m g BID
(N=12)
500 m g BID
(N=12)
1,000 m g BID
(N=14)
Non-HDL Chole sterol ............... 10.8 (14.7)* -2.9 (15.4) -2.3 (14.5) -10.4 (7.6)***
Triglyceri des ....................... 39.9 (29.1)* 10.5 (38.1)** 15.1 (29.5)** -1.6 (18.5)**
Chole sterol ......................... 5 . 9 (14.0) -3.6 (10.7) -3.8 (10.9) -8.2 (6.5)***
HDL-C ............................. -7.6 (16.7) -7.0 (10.0)* -6.9 (11.4) -0.1 (8.3)
LDL-C ............................. -1.7 (18.5) -5.2 (16.3) -3.3 (13.3) -10.4 (8.5)*
VLDL-C ........................... 36.6 (36.9) 11.9 (40.6) 13.5 (28.7) -2.6 (22.8)**
Lipoprotein- a....................... 42.9 (85.0) -11.3 (32.3) 184.2 (394.6) -15.8 (31.8)*
Note: Baseline is the average of results at the screening and baseline visits. The last observation carried forward
was used for missed timepoints and timepoints with no results.
* p-value ≤0.05; based on a t-test for within treatment change over time.
** p-value ≤0.05; based on a t-test for between treatment difference vs placebo in change over.
*** p-value ≤0.05 for both t-tests.
Source:Companydata
Safety data. The majority of subjects reported at least one TEAE during the study, but most
TEAEs were mild in severity and considered by the Investigator to be unrelated to study drug.
TEAEs were reported for eight (66.7%) of 12 subjects in the placebo group, 10 (83.3%) of 12
subjects in the HTD1801 250 mg BID group, eight (66.7%) of 12 subjects in the HTD1801 500 mg
BID group, and 11 (78.6%) of 14 subjects in the HTD1801 1,000 mg BID group. The most
frequently reported TEAE in this study was headache, which was reported for five subjects in the
placebo group, five subjects in the HTD1801 250 mg BID group, four subjects in the HTD1801 500
mg BID group, and three subjects in the HTD1801 1,000 mg BID group. Other TEAEs reported by
more than two subjects in any of the treatment groups included dizziness, nausea, flatulence, and
decreased appetite. There was no relationship between the overall frequency of TEAEs and
treatment or dose group, or between the occurrence of TEAEs in a specific organ class, or
individual TEAE, and treatment or dose group. There were no deaths during the study, and no
subjects met dose escalation stopping criteria.
Pooled Analysis of HTD1801.PCT012 and HTD1801.PCT004 — Relevant to SHTG
In a pooled analysis (evaluating placebo, HTD1801 500 mg BID and HTD1801 1,000 mg
BID) of HTD1801.PCT004 (the Phase Ib/IIa study in adults with hypercholesterolemia, 4-week
treatment) and HTD1801.PCT012 (the Phase IIa study in adults with MASH and T2DM, 18-week
treatment), we compared results of HTD1801 1,000 mg treatment with placebo treatment. In a
subgroup of subjects with HTG (elevated above 200 mg/dL) at baseline, a clinically meaningful
reduction in TGs was observed (mean percent change from baseline for HTD1801 1,000 mg BID:
-16.6% vs. placebo: +11.6%). Furthermore, lowering of TGs was accompanied by improvements in
key cardiometabolic parameters (such as body weight, HDL-C, and LDL-C, etc.). These beneficial
effects are also important considerations given the prevalence of such comorbidities in patients
with SHTG, and support potential efficacy of HTD1801 for the treatment of SHTG.
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Stron g Clinic al Evi dence Su pportin g HTD1801 as a Treatment for SHTG
(Subject s with B aseline TG>200 m g/dL)
Triglycerides
Mean Percent Change from Baseline
Placebo
HTD1801
1,000 mg BID
-16.6
11.6
-25
-20
-15
-10
-5
0
5
10
15
LDL-C
Mean Percent Change from Baseline
Placebo
HTD1801
1,000 mg BID
-13.4
4.6
-15
-10
-5
0
5
10
HDL-C
Mean Percent Change from Baseline
Placebo HTD1801
1,000 mg BID
7.7
0.2
Body Weight
Mean Percent Change from Baseline
Placebo
HTD1801
1,000 mg BID
-4.6
-1.1
0
2
4
6
8
10
-5
-4
-3
-2
-1
0
Source:Companydata
Licenses, Rights and Obligations
We have granted Shenzhen Hepalink Pharmaceutical Group Co., Ltd. ( ଉέ̹ऎ౷๿ᖹุණ
ʮ̡ )( “ Hepalink ”) an exclusive, sublicensable (solely to Hepalink’s wholly-owned
subsidiaries), non-transferable license of HTD1801 for all aspects of commercialization for the
indications of NASH and PSC in Europe. We retain the rights to (i) research and develop HTD1801
worldwide; (ii) manufacture HTD1801 worldwide; (iii) commercialize HTD1801 for any
indications outside Europe; (iv) commercialize HTD1801 in any region in Europe for indications
other than for NASH and PSC; and (v) import and export HTD1801 for the purposes described
above. Please see the paragraphs headed “— Collaboration Agreement — HTD1801 License-Out
Agreement” in this section for more details.
Clinical Development Plan
We will continue to advance the global development of Core Product HTD1801 for
metabolic and digestive diseases. For the T2DM program, we filed the Phase Ib and Phase II
clinical results and Phase III study protocol to the NMPA in April 2023. We initiated registrational
Phase III trials in November 2023 and plan to complete enrollment in 2024 in Mainland China. For
the MASH program, a Phase IIb study for the treatment of MASH with T2DM or pre-diabetes is
currently ongoing. We have initiated the sites in the United States and Hong Kong and plan to
initiate sites in Mexico and Mainland China in December 2023. For the SHTG program, we plan to
file IND application to the FDA for a Phase II clinical trial of HTD1801 in the United States by the
end of 2023 and initiate a Phase II clinical trial in 2024.
Considering the market size and addressable patient population of MASH and T2DM, we
have and will continue to prioritize our resources for the clinical development of our MASH and
T2DM indications of HTD1801. We are currently conducting the Phase IIb clinical trial for the
MASH indication of our self-developed HTD1801, and may seek joint development opportunities
for its Phase III clinical trials. In November 2023, we initiated the two Phase III clinical trials (i.e.
one with HTD1801 as a standalone treatment and one with HTD1801 as an add-on therapy with
metformin) for the T2DM indication of our self-developed HTD1801 in China. We plan to
complete these two Phase III clinical trials in 2025. We have no immediate plans to conduct
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clinical trials for and commercialise T2DM outside of China. Since the completion of Phase II
clinical trials for PSC in August 2020 and for PBC in May 2022, no clinical development progress
has been made for the PSC and PBC indications of HTD1801. Considering our resources
allocation, we have no immediate development plans and will not allocate any net proceeds of the
Global Offering these two indications, and we are seeking collaboration opportunities with global
partners for future clinical development and commercialisation of HTD1801 for PSC and PBC. As
of the Latest Practicable Date, no partners had been identified. Despite the rebound in liver
biochemistry during the follow-up period in the Phase II trial for PBC and a long period of clinical
development suspension for the PBC and PSC indications, we have not encountered any
difficulties in identifying collaboration opportunities with global partners for future clinical
development and commercialisation of HTD1801 for PBC and PSC.
We designed the MRCTs for HTD1801 for MASH and PSC indications. The use of MRCT
for MASH and PSC was determined in 2017. The Phase IIb clinical trial for MASH and Phase II
clinical trial for PSC were conducted in the form of MRCT, and MRCT would also be the approach
for the clinical trials going forward for MASH and PSC. We believe MRCTs can expedite global
clinical development and facilitate registration in multiple regions across the globe. We use the
same study protocol for IND approval of clinical trials and conducting clinical trials in different
phases after obtaining IND approvals in each of MRCT’s jurisdictions. The clinical results of the
MRCT in various jurisdictions can be used to support registration approval by the competent
authorities in those jurisdictions. There are no differences in primary endpoints, extent or type of
clinical trials to be conducted across various jurisdictions but might be slight differences in
materials to be submitted among the different regulatory bodies.
For Phase IIb MRCT of HTD1801 for MASH indication in the United States, Hong Kong,
Mexico and Mainland China, the details of communications with competent authorities have been
set forth in the section “— Clinical-Stage Candidates — Core Product HTD1801 — Material
Communications with Competent Authorities”. In April 2023, we submitted the Phase IIb study
protocol to the FDA and we did not receive any comments or rejections from the FDA within the
30-day clearance period. We also obtained the IND approvals in Hong Kong and Mainland China in
August and September 2023, respectively, and filed an IND application in Mexico in July 2023.
For Phase II MRCT of HTD1801 for PSC in the United States, Mainland China and Canada,
the details of communications with competent authorities have been set forth in the section
“— Clinical-Stage Candidates — Core Product HTD1801 — Material Communications with
Competent Authorities”. We obtained IND approvals from the FDA in 2017, and from the NMPA
and the Health Canada in 2019.
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The following table sets forth details of our clinical and registration plans of HTD1801 for
T2DM, MASH and SHTG in each planned jurisdiction.
Stu dyI n dication Juri sdiction s Initi ation D ate
Expecte d
Com pletion D ate Tri alD e sign
Expecte d NDA
Submi ssion
Phase III .... T 2 D M C hina November 2023 2025 There are two randomized, double-blind, placebo-controlled,
dose-ranging Phase III studies to evaluate the efficacy and safety of
HTD1801 for monotherapy or add-on therapy after metformin
treatment in approximately total 1,000 adult subjects with T2DM.
In the monotherapy trial, subjects will be administered with
placebo BID for four weeks, then divided into two groups. The
experiment group will be administered HTD1801 1,000 mg BID for
24 weeks and the placebo group will be administered with placebo
accordingly. After 24 weeks, both groups will be administered with
HTD1801 1,000 mg BID for 24 weeks, followed by a four-week
safety follow-up period. The primary endpoint of the monotherapy
Phase III study is to evaluate changes of HbA1c relative to baseline
in the HTD1801 treatment group compared to the placebo group
after 24 weeks of treatment. The secondary endpoints are to
evaluate a series of physiological indicator levels after 24 and 52
weeks of HTD1801 treatment.
In the add-on therapy trial, subjects will be administered with placebo
and metformin BID for four weeks, then divided into two groups.
The experiment group will be administered HTD1801 1,000 mg BID
and metformin for 24 weeks and the placebo group will be
administered with placebo and metformin accordingly. After 24
weeks, both groups will be administered with HTD1801 1,000 mg
BID and metformin for 24 weeks, followed by a four-week safety
follow-up period. The primary endpoint of the add-on therapy Phase
III study is to evaluate changes of HbA1c relative to baseline in the
HTD1801 treatment group compared to the placebo group after 24
weeks of treatment. The secondary endpoints are to evaluate a series
of physiological indicator levels after 24 and 52 weeks of HTD1801
treatment.
2025
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Stu dyI n dication Juri sdiction s Initi ation D ate
Expecte d
Com pletion D ate Tri alD e sign
Expecte d NDA
Submi ssion
Phase IIb .... M A S H U nited States December 2022 2025 The study plans to enroll approximately 210 subjects in the United
States, Hong Kong and Mexico and Mainland China with
biopsy-confirmed MASH and evidence of stage 2 or stage 3 liver
fibrosis. The subjects plans to be randomized 2:1 to receive
HTD1801 1,250 mg twice daily (BID) or placebo BID, for up to 60
weeks. The primary endpoint is a decrease of ≥2-points in NAS
with ≥1-point decrease of either lobular inflammation or ballooning
and no worsening of fibrosis; or resolution of MASH, defined as the
overall histopathologic interpretation of “no fatty liver disease” or
“fatty liver disease (simple or isolated steatosis) without
steatohepatitis” and an NAS of 0 for ballooning and 0 for
inflammation and no worsening of fibrosis.
2029
Hong Kong October 2023
December 2023
(expected)
December 2023
(expected)
Mexico
Mainland
China
Phase II ..... S H T G U nited States First half of
2024
(1)
2025 It is a randomized, double-blind, placebo-controlled, Phase II study to
evaluate the efficacy and safety of HTD1801 in approximately 60
adult subjects with SHTG (TG level of ≥500 mg/dL).
2028We had not received any relevant regulatory agency’s objections to our clinical development
plans as of the Latest Practicable Date.
Note:
(1) The reasons for the large time gap between the completion of Phase Ib/IIa clinical trial for hypercholesterolemia in
December 2018 in Australia and initiation of Phase II clinical trial for SHTG in first half of 2024 are: (i) we
expanded the indication from hypercholesterolemia to SHTG in the Phase II trial by taking reference from trial
results of Phase II study for MASH (HTD1801.PCT012) which will also be submitted as supplementary data
reference for FDA to assess our IND application for Phase II study of SHTG and (ii) we prioritized resources on the
HTD1801 trial for MASH and T2DM.
Material Communications with Competent Authorities
• For MASH in dication : We have completed a Phase I trial (HTD1801.PCT002) in
Australia and a Phase IIa trial (HTD1801.PCT012) in the United States. There are not
any overlapping primary efficacy endpoints for the Phase I clinical trial conducted in
Australia and Phase IIa clinical trial conducted in the United States for MASH. The
FDA concluded that our Phase IIa MASH study could proceed forward based on
pre-clinical pharmacology, and human safety and PK data from Phase I trial
HTD1801.PCT002 results. We completed the Phase IIa trial and the FDA confirmed
we can proceed to Phase IIb trial based on safety and efficacy data from the Phase IIa
trial. The Phase IIa and Phase IIb clinical trials are regarded as two standalone trials
by the FDA due to their different endpoints and trial designs.
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• For T2DM in dication : We have completed one Phase I trial (HTD1801.PCT101) in
China with the primary endpoints met. We also obtained an approval for initiation of
a Phase II trial (HTD1801.PCT103) in China from the NMPA. The Phase II clinical
trial was initiated in March 2022 and completed in January 2023. In November 2023,
we initiated the two Phase III clinical trials (i.e. one with HTD1801 as a standalone
treatment and one with HTD1801 as an add-on therapy with metformin) for the T2DM
indication of our self-developed HTD1801 in China. We plan to complete these two
Phase III clinical trials in 2025.
• For PSC in dic ation : The Company has completed a Phase I trial
(HTD1801.PCT002) in Australia, and a Phase II trial (HTD1801.PCT003) for PSC in
the United States. The FDA concluded that our Phase II PSC study could proceed
forward based on preclinical pharmacology, and human safety and PK data from
Phase I trial HTD1801.PCT002 results. We held a successful EOP2 meeting with the
FDA and the FDA has no objection for us to commence forward from Phase II clinical
trial to conduct a Phase III clinical trial.
• For PBC in dic ation : The Company has completed a Phase I trial
(HTD1801.PCT002) in Australia, and a Phase II trial (HTD1801.PCT013) for PBC in
the United States. The FDA concluded that our Phase II PBC study could proceed
forward based on pre-clinical pharmacology, and human safety and PK data from
Phase I trial HTD1801.PCT002 results.
We will evaluate commercialization plans for HTD1801 in Australia once we receive market
authorisation from the TGA in the future. We had strategically chosen to conduct HTD1801’s
Phase I clinical trials in Australia because we have taken into account that (i) the technical
requirements, the R&D preparation and standards for conducting and completing the clinical trials
in Australia, the United States and Mainland China would be relatively similar, according to CIC
and that the development and approval process of assessing the robustness of a product candidate
in Australia, the United States and Mainland China is comparable with each other; (ii) the
standards and expertise of TGA have been consistently recognized by the international
biopharmaceutical community, and (iii) the approval processes and clinical trials in Australia is
more time-efficient than that of the United States or Mainland China based on our experience. We
continue to conduct Phase II clinical trials in the United States because we intend to commercialize
HTD1801 in the United States and the Phase II trial evaluates efficacy data in the U.S. population,
which allows us to smoothly navigate through FDA regulation. These trials are strategically
designed to be in the best interest of the Company.
The grant of approval by the FDA for us to commence the Phase II clinical trial of HTD1801
in the United States for MASH, PSC and PBC demonstrates that the FDA, being Competent
Authorities under Chapter 18A of the Main Board Rules have (i) reviewed and taken into account
the clinical trial design and data of the Phase I clinical trial in Australia in granting the approval for
us to commence the Phase II clinical trials on HTD1801 in the United States and (ii) confirmed its
acknowledgement and acceptance of the results of the Phase I clinical trial in Australia and that it
had no objection for us to progress to the Phase II clinical trials on HTD1801 based on the clinical
results of the Phase I study of HTD1801 in Australia. The completion of Phase I clinical trials in
Australia is regarded as comparable to the completion of Phase I clinical trials in the United States
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by the FDA for MASH, PSC and PBC and the FDA does not require us to conduct any additional
work or impose any other condition before the commencement of the Phase II clinical trials in the
United States on the basis that: (i) it is common practice that a foreign clinical trial being accepted
by the FDA provided that the trial meets certain criteria as set out by the FDA, according to CIC,
and (ii) the FDA accepted our well-designed, well conducted Phase I clinical trials in Australia on
healthy subjects as support for an IND because our Phase I clinical trials in Australia meet certain
criteria, including that our Phase I clinical trials in Australia were conducted in accordance with
ICH GCP, which have been incorporated by reference in the Therapeutic Goods Regulations 1990
in Australia, and the FDA is able to validate the data from the Phase I clinical trials in Australia
through an onsite inspection, if necessary.
The following table sets forth a detailed chronology of the material communications with
the TGA and FDA regarding our Phase I trials conducted in Australia and Phase II clinical trials
conducted or to be conducted in the United States for MASH, PSC, PBC and SHTG studies. We
have not yet commenced any material communications with the FDA in relation to the pre-clinical
and Phase Ib/IIa clinical trials conducted for hypercholesterolemia in Australia.
Clinic al tri als Juri sdiction
Applic ation
to the
FDA/TGA
Approval
receive d
from the
FDA/TGA M ateri al reviewe d by the FDA M ateri al reviewe d by the TGA
Sco peo fI N D
approval
Addition al
inform ation
reque sted
by the
FDA/TGA
regarding
the
pre-clinic al
and PhaseI
result s
Any
proposed or
recommen ded
revi sion s to
the study
protocol by
the
FDA/TGA
Phase IIa trial
(HTD1801.PCT012)
for MASH
with T2DM and
Phase IIb trial
(HTD1801.PCT014)
for MASH
with T2DM or
prediabetes ......
United States September
2018
October
2018
PK, safety and tolerability
results from preclinical
results, Phase I trial
(HTD1801.PCT002) results,
Phase IIa trial
(HTD1801.PCT012)
study protocol and Phase IIb
trial (HTD1801.PCT014)
study protocol
N/A Approval with
non-hold
comments
(1)
None No
Phase II trial
(HTD1801.PCT003)
f o r P S C........
United States November
2017
December
2017
PK, safety and tolerability
results from preclinical
results, Phase I trial
(HTD1801.PCT002) results,
Phase II trial
(HTD1801.PCT003)
study protocol
N/A Unconditional
approval
None No
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Clinic al tri als Juri sdiction
Applic ation
to the
FDA/TGA
Approval
receive d
from the
FDA/TGA M ateri al reviewe d by the FDA M ateri al reviewe d by the TGA
Sco peo fI N D
approval
Addition al
inform ation
reque sted
by the
FDA/TGA
regarding
the
pre-clinic al
and PhaseI
result s
Any
proposed or
recommen ded
revi sion s to
the study
protocol by
the
FDA/TGA
Phase II trial
(HTD1801.PCT013)
f o r P B C ........
United States October
2020
January
2021
PK, safety and tolerability
results from preclinical
results, Phase I trial
(HTD1801.PCT002) results,
Phase II trial
(HTD1801.PCT013)
study protocol
N/A Approval with
non-hold
comments
(2)
None No
Phase I trial
(HTD1801.PCT002)
for healthy subjects. .
Australia February
2017
March
2017
N/A PK, safety and tolerability
results from preclinical
results, Phase I trial
(HTD1801.PCT002) study
protocol
Unconditional
approval
None No
Phase Ib/IIa
(HTD1801.PCT004)
for
Hypercholesterolemia.
Australia December
2017
January
2018
N/A PK, safety and tolerability
results from preclinical
results, Phase I trial
(HTD1801.PCT002) results,
Phase Ib/IIa
(HTD1801.PCT004) study
protocol
Unconditional
approval
None No
Notes:
1. The FDA issued Study May Proceed Letter to allow us to proceed the Phase IIa study with non-hold
comments to (1) stratify randomization by HbA1c at screening, and (2) use histologic endpoints and
clinical endpoints for the Phase IIb and Phase III trial(s) and collect data from this Phase IIa proof of
concept trial that could assist with the design of the Phase IIb and Phase III trial(s). We filed the revised
protocol to reflect FDA’s comments.
2. The FDA issued Safe to Proceed Letter to allow us to proceed the Phase II study with non-hold comments
to collect sparse PK samples in all subjects and intensive PK samples in a subset of patients. We collected
additional PK samples in the PBC clinical trial accordingly to reflect FDA’s comments.
In addition, for T2DM study, we have completed a Phase I trial in China and the NMPA has
no objection for us to commence our Phase II trial in China. We have also completed a Phase II
clinical trial for PSC and the FDA confirmed no objection to commence Phase III clinical trial. Our
clinical development demonstrates that for each indication of T2DM, MASH, PSC and PBC above,
it has been developed beyond concept stage, namely it has completed Phase I trial and the
competent authorities had no objections to initiate Phase II study, it is eligible as Core Product
under the Guidance Letter GL92-18 of the Stock Exchange.
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The following table sets forth details of our material communications with competent or
regulatory authorities for our key ongoing and completed clinical trials.
Stu dy Stu dy Number Ph ase Stu dy Site s
Com petent or
regulatory authoritie s Det ails of IND applic ation and app rovals Status
MASH Study .... HTD1801.PCT012 IIa (1) US FDA (i) In September 2018, we submitted study protocol
for IND approval of Phase IIa study
(HTD1801.PCT012) for MASH with T2DM.
(ii) On October 11, 2018, the FDA communicated with
us by email to provide comments on our study
protocol including conservative enrollment criteria
and expanded safety monitoring.
(iii) On October 16, 2018, we discussed with FDA for
the entry criterion of HbA1c for T2DM.
(iv) On October 24, 2018, the FDA issued Study May
Proceed Letter to allow us to proceed the Phase IIa
study with non-hold comments to (1) stratify
randomization by HbA1c at screening, and (2) use
histologic endpoints and clinical endpoints for the
Phase IIb and Phase III trial(s) and collect data
from this Phase IIa trial that could assist with the
design of the Phase IIb and Phase III trial(s).
(v) On November 13, 2018, we filed the revised
protocol to reflect FDA’s comments.
Completed: we achieved
each endpoint set out
in the clinical trial
design. No
adjustments were
made to the endpoint
or extension of the
study as required by
the FDA.
HTD1801.PCT014 IIb
(1) US FDA (2) (i) On October 13, 2022, we filed the study protocol
for HTD1801.PCT014 for MASH with T2DM or
prediabetes to the FDA.
(ii) On February 24, 2023, the FDA issued
advice/information request letter for statistical
comments and recommendations on the protocol.
(iii) On April 4, 2023, we provided an updated clinical
protocol, and we did not receive any comments or
objections from the FDA within the 30-day
clearance period.
Ongoing (158 subjects
enrolled as of the
Latest Practicable
Date)
HTD1801.PCT014 IIb
(1) Hong Kong The Department of
Health (2)
(i) On June 28 and 29, 2023, we submitted IND
applications for two sites to initiate Phase IIb study
(HTD1801.PCT014) for MASH with T2DM or
prediabetes in Hong Kong.
(ii) On August 24, 2023, the Department of Health
issued the two approvals without inquiries or
objections.
Ongoing (2 subjects
enrolled as of the
Latest Practicable
Date)
HTD1801.PCT014 IIb
(1) Mexico The Federal Commission
for Protection against
Sanitary Risks
(2)
On July 11, 2023, we submitted an IND application to
initiate Phase IIb study (HTD1801.PCT014) for
MASH with T2DM or prediabetes in Mexico.
To be initiated in
December 2023
HTD1801.PCT014 IIb
(1) Mainland
China
NMPA(2) (i) On June 13, 2023, we submitted an IND
application to initiate Phase IIb study
(HTD1801.PCT014) for MASH with T2DM or
prediabetes in Mainland China.
(ii) On September 8, 2023, the NMPA issued the
approval without inquiries or objections.
To be initiated in
December 2023
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Stu dy Stu dy Number Ph ase Stu dy Site s
Com petent or
regulatory authoritie s Det ails of IND applic ation and app rovals Status
T2DM study .... HTD1801.PCT101 I Mainland
China
NMPA (i) In March 2021, we submitted our IND application
with study protocols of study HTD1801.PCT101 to
the NMPA.
(ii) In May 2021, The NMPA issued an umbrella IND
approval
(3) for Phase I, Phase II and Phase III
T2DM studies and recommended us to
communicate with the NMPA regarding relevant
issues of pharmacological study before Phase III
study
(iii) In April 2023, we submitted the Phase III clinical
trial protocol and the study results of Phase I and
Phase II clinical trials for T2DM in China to the
NMPA for review.
(iv) In the EOP2 meeting in October 2023, the NMPA
provided formal confirmation to proceed to the
Phase III clinical trials in China.
(v) The two Phase I clinical trials (HTD1801.PCT101
and HTD1801.PCT104) and the Phase Ib clinical
trial (HTD1801.PCT102) are all required by the
NMPA.
Completed: we achieved
each endpoint set out
in the clinical trial
design. No
adjustments were
made to the endpoint
or extension of the
study as required by
the NMPA.
HTD1801.PCT102 Ib Mainland
China
NMPA Completed: we achieved
each endpoint set out
in the clinical trial
design. No
adjustments were
made to the endpoint
or extension of the
study as required by
the NMPA.
HTD1801.PCT103 II Mainland
China
NMPA Completed: we achieved
each endpoint set out
in the clinical trial
design. No
adjustments were
made to the endpoint
or extension of the
study as required by
the NMPA.
HTD1801.PCT104 I Mainland
China
NMPA Completed: we achieved
each endpoint set out
in the clinical trial
design. No
adjustments were
made to the endpoint
or extension of the
study as required by
the NMPA.
HTD1801.PCT105 III Mainland
China
NMPA Ongoing (32 subjects
dosing as of the
Latest Practicable
Date)
HTD1801.PCT106 III Mainland
China
NMPA Ongoing (27 subjects
dosing as of the
Latest Practicable
Date)
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Stu dy Stu dy Number Ph ase Stu dy Site s
Com petent or
regulatory authoritie s Det ails of IND applic ation and app rovals Status
PSC study ...... HTD1801.PCT003 II US FDA (i) On November 9, 2017, we submitted our IND
application with study protocols of study
HTD1801.PCT003 to the FDA.
(ii) On December 5, 2017, the FDA provided written
questions on the trial design of the protocol.
(iii) On December 7, 2017, we provided an email with
response to the questions on our study protocol to
the FDA.
(iv) On December 8, 2017, the FDA issued Study May
Proceed Letter to allow us to proceed the Phase II
study.
(v) On December 13, 2017, we filed revised protocol
according to the Study May Proceed Letter.
Completed: we achieved
each endpoint set out
in the clinical trial
design. No
adjustments were
made to the endpoint
or extension of the
study as required by
the FDA.
HTD1801.PCT003 II Mainland
China
NMPA (i) In July 2019, we submitted our IND application
with study protocols of study HTD1801.PCT003 to
the NMPA.
(ii) In October 2019, The NMPA issued an IND
approval for PSC studies and also recommended us
to (1) assess benefit and risk of the safety data of
HTD1801.PCT004 to determine whether to support
the conduct of HTD1801.PCT003 and communicate
with the NMPA at a critical stage; and (2) file a
request for a communication meeting with the
NMPA before Phase III study.
Completed in the United
States and Canada:
we achieved each
endpoint set out in the
clinical trial design.
Due to COVID-19
pandemic, we did not
initiate the Phase II
clinical trial in China.
After the completion
of Phase II trials in
the United States and
Canada, the Phase II
trial in China is not
required because the
Phase II trials in the
United States and
Canada had met the
endpoints.
HTD1801.PCT003 II Canada Health Canada
(4) (i) In October 2019, we submitted our IND application
with study protocols of study HTD1801.PCT003 to
the Health Canada.
(ii) In November 2019, the Health Canada issued no
objection letter for HTD1801.PCT003 clinical
study.
Completed: we achieved
each endpoint set out
in the clinical trial
design. No
adjustments were
made to the endpoint
or extension of the
study as required by
the Health Canada.
PBC Study ..... HTD1801.PCT013 II US FDA (i) On January 5, 2021, we filed HTD1801.PCT013
protocol with amendments for PBC to the FDA.
(ii) On January 26, 2021, the FDA issued Safe to
Proceed Letter to allow us to proceed the Phase II
study with non-hold comments to collect sparse PK
samples in all subjects and intensive PK samples in
a subset of patients.
(iii) In August 2023, we submitted the clinical data
from the Phase II clinical trial for PBC to the FDA.
Completed: we achieved
each endpoint set out
in the clinical trial
design. No
adjustments were
made to the endpoint
or extension of the
study as required by
the FDA.
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Stu dy Stu dy Number Ph ase Stu dy Site s
Com petent or
regulatory authoritie s Det ails of IND applic ation and app rovals Status
SHTG study ..... HTD1801.PCT201 II US FDA (i) On February 9, 2023, we submitted a pre-IND
meeting request to the FDA to discuss the
development of HTD1801 for treatment of patients
with SHTG.
(ii) On February 15, 2023, the FDA granted our
pre-IND meeting.
(iii) On March 13, 2023, we submitted background
package with questions to the FDA for the
discussion of initiation of study HTD1801.PCT201
in the pre-IND meeting.
(iv) On April 7, 2023, the FDA provided written
response to our questions in the background
package. According to the FDA, the available
nonclinical and clinical data appear adequate to
support the initiation of the proposed phase II
study in subjects with SHTG.
To submit IND
application with the
FDA by the end of
2023 and initiate
Phase II clinical trial
in 2024.
Hypercholesterolemia
Study .......
HTD1801.PCT004 Ib/IIa Australia TGA (i) On December 13, 2017, we filed application of
HTD1801.PCT004 study for hypercholesterolemia
with the Bellberry Human Research Ethics
Committee (HREC).
(ii) On January 3, 2018, we held a meeting with the
HREC for HTD1801.PCT004 study for
hypercholesterolemia.
(iii) On January 16, 2018, the HREC approved the
HTD1801.PCT004 study for hypercholesterolemia.
(iv) On January 18, 2018, we registered the
HTD1801.PCT004 study for hypercholesterolemia
with TGA.
Completed: we achieved
each endpoint set out
in the clinical trial
design. No
adjustments were
made to the endpoint
or extension of the
study as required by
the TGA.
Notes:
(1) In line with market practice, our Phase II studies are divided into Phase IIa and Phase IIb. Phase IIa studies are pilot
studies designed to demonstrate clinical efficacy or biological activity, the proof of concept study. Phase IIb studies
are designed to determine the optimal dose at which the drug shows biological activity with minimal side-effects,
the dose-finding study. Such trial design can reduce the risk of trial failure and is cost-efficient because the sponsor
can decide whether to modify Phase IIb trial design and initiate Phase IIb study based on Phase IIa study results.
(2) The clinical trial study sites in Hong Kong, Mexico, and Mainland China for MASH study are regulated by the
Department of Health of Hong Kong, the Federal Commission for Protection against Sanitary Risks of Mexico and
the NMPA of Mainland China, respectively.
(3) The original protocol communicated with the CDE covers Phase I, Phase II and Phase III clinical trials of
HTD1801, and Phase I, Phase II and Phase III clinical trials are three separate trials with different endpoints. On
July 5, 2023, our PRC Legal Advisor consulted the CDE regarding the commencement of a Phase III clinical trial
after completion of the Phase II clinical trial, and commencement of a Phase II clinical trial after the completion of
the Phase I clinical trial. According to the CDE, (i) the NMPA is not responsible for either certifying or providing
assurance for the completion of any clinical trials and the NMPA will not confirm the completion of a Phase I
clinical trial before initiation of the Phase II clinical trial, and it will not confirm the completion of a Phase II
clinical trial before initiation of the Phase III clinical trial, (ii) for Phase I, Phase II and Phase III clinical trials for
new drugs, the NMPA has optimized its review and approval procedure and accordingly adopts one-time approvals
instead of phased declarations, reviews and approvals, and (iii) a company shall report information about suspected
and unexpected serious adverse reactions and other potential serious safety risks to the CDE during the clinical
trials, and submit the application for communication session to CDE to discuss with CDE the key technical
questions including the design of Phase III clinical trial protocol upon the completion of Phases I and II clinical
trials before commencing the Phase III clinical trial. Therefore, a company does not have to obtain additional
approval or confirmation from the NMPA for commencing the Phase II after it completes the Phase I trial if that
company has obtained an umbrella IND approval to carry out Phase I, Phase II and Phase III clinical trial without
any pre-requisite conditions imposed.
(4) The clinical trial study site in Canada for PSC is regulated by Health Canada.
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WE MAY NOT BE ABLE TO ULTIMATELY DEVELOP AND MARKET HTD1801
SUCCESSFULLY.
Phase I clinic al-stage product HTD4010
Overview
Our HTD4010 is a polypeptide drug for the treatment of complex, life-threatening diseases
such as AH, which is caused by chronic heavy alcohol abuse or a sudden, drastic increase in
alcohol consumption. It is characterized by severe inflammation and, ultimately, liver failure and
death. There is currently no approved treatment for AH and only a few drug candidates are in
clinical development. The current standard of care focuses on symptom management, including
abstinence, treating inflammation and providing nutrition. Our HTD4010, however, has the
potential to address the underlying disease mechanism. In animal studies, for example, HTD4010
demonstrated potent beneficial effects for AH, alleviating characteristic signs of severe liver injury
and reducing systemic inflammation. Our completed Phase I clinical trial of HTD4010 on healthy
subjects also demonstrated its favorable safety profile.
Mechanism of Action
AH is a type of alcohol-associated liver disease (“ ALD”) characterized by acute liver
inflammation. A variety of genetic, lifestyle and environmental factors may contribute to AH,
including alcohol consumption, obesity and ethnicity. Severe cases of AH can lead to the
progression of liver fibrosis and cirrhosis, even a high risk of death. Toll-like receptor 4 (“ TLR4 ”)
is an activator of some proinflammatory cytokines that play an important role in mediating the
innate immune response during the progress of AH.
HTD4010 is a synthetic peptide composed of 15 amino acids, homologous to an active
peptide fragment of the human regenerating islet-derived protein 3 α (“Reg3α”), or “pancreatic
associated protein” (“ PAP”). HTD4010 acts as a TLR4 inhibitor potentially capable of dampening
the innate immune response and liver inflammation of AH pathogenesis. Thus, HTD4010 has
anti-apoptotic, anti-inflammatory, anti-bacterial, and pro-regenerative effects in the pancreas, GI
tract and other tissues, both in vitro and in vivo.
Market Opportunity and Competition
AH is caused by chronic heavy alcohol use or a drastic increase in alcohol consumption. It is
characterized by severe inflammation and, ultimately, liver failure and death. According to CIC,
the market size of AH drugs is expected to reach US$1.1 billion, US$2.9 billion and US$2.2 billion
in 2032 in China, the United States and Europe, respectively. Currently, there is no approved
treatment for AH, and some drugs are in development. Corticosteroids are the only recommend
treatment, and the current standard of care focuses on abstinence, treating inflammation, and
providing nutrition, which is often inadequate in moderate and severe patients, indicating unmet
medical needs.
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The following table sets forth the details of all AH drugs under development globally.
Pipeline of AH drugs,r e gistere da t Clinic alTrials
Drug Name Target Company Indications Phase Trial Number
TLR4 Akaza Bioscience AH II 2020/11/06 NCT04620148 FDA
DNMTs Durect AH IIb 2020/09/24 NCT04563026 FDA
Canakinumab Novartis AH II 2018/12/13 NCT03775109 FDA
FXR SAH II 2022/12/06 NCT05639543 FDAINT-787
DUR-928
TAK-242
IL-1
Intercept
Pharmaceuticals
Competent
Authority
First Posted
Date
Note: InformationasofNovember27,2023.
Source: Clinicaltrials;ChinaInsightsConsultancy
Summary of Clinical Trial for HTD4010
PhaseIclinicaltrialofHTD4010inhealthyadultsinAustralia
Overview. This was a Phase I, first-in-human, randomized, double-blind study to assess
safety and tolerability, PK and PD effects of HTD4010 in healthy adults in Australia. The primary
endpoint was incidence, severity and causality of adverse events.
Trial design. A total of 32 healthy subjects were randomized 3:1 to receive single doses at
four levels (50, 100, 200, or 300 mg) of HTD4010 or placebo. The PK procedures involved
collecting 5 mL of peripheral blood from the arm contralateral to that of drug administration at the
following time points: pre-dose (5 min prior to dosing) and 5 min, 15 min, 30 min, 1 h, 2 h, 4 h,
8 h, 24 h post-dose. To maintain the study blind, blood samples were taken from all subjects
receiving either HTD4010 or placebo. The inclusion criteria for the Phase I clinical trial included:
(1) body mass index ≥18.0 to ≤30.0 kg/m
2; (2) non-diabetic, fasting plasma glucose <5.6 mmol/L;
female subjects who must be non-pregnant and non-lactating, and either surgically sterile (e.g.,
tubal occlusion, hysterectomy, bilateral salpingectomy, bilateral oophorectomy) or
post-menopausal for ≥12 months; and (3) male subjects who must be surgically sterile, abstinent or
if engaged in sexual relations of child-bearing potential, the participant and his partner must be
using an acceptable, highly effective, contraceptive method from screening and for a period of 60
days after the last dose of study drug; and (4) ability to provide written informed consent. The
exclusion criteria included: (1) systolic blood pressure >160 mmHg and/or diastolic blood pressure
>90 mmHg at screening; (2) pregnant or lactating women; (3) participation in an investigational
study within 30 days prior to dosing or five half-lives within the last dose of investigational
product whichever is longer; (4) current use of any prescription or over-the-counter medications,
including herbal products and supplements, within 14 days prior to Day one or five half-lives,
whichever is longer; use of ≤2g paracetamol per day is allowed prior to and during the study at the
investigator’s discretion; (5) any use of non-steroid anti-inflammatory drugs within 7 days prior to
dosing; (6) history of any major surgery within six months prior to screening; (7) history of any
serious adverse reaction or hypersensitivity to any of the product components; or (8) use of
parenterally administered proteins or antibodies within 12 weeks of screening.
Trial status. We initiated the Phase I clinical trial of HTD4010 in healthy adults in Australia
in October 2015 and completed the study in March 2016.
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Safety data. The most common AE was injection site reaction. All AEs reported were mild in
intensity, which were all resolved without action taken. No subjects withdrew due to an AE, and no
SAEs were reported. HTD4010 was well-tolerated up to the highest dose level (300 mg).
PK finding. This study indicate that single doses of HTD4010 exhibit linear PK over doses
ranging from 50 to 300 mg.
Clinical Development Plan for HTD4010
As HTD4010 is internally discovered and developed by us, we maintain the global rights to
develop, manufacture and commercialize HTD4010.
In October 2015, we received an approval from the TGA to initiate a Phase I clinical trial of
HTD4010 (HTD4010.PCT001) in healthy adults in Australia. We completed the Phase I clinical
trial of HTD4010 in Australia in March 2016. We expect to initiate Phase II clinical trial of
HTD4010 for AH in the United States as early as the end of 2024. This Phase II, multi-center,
open-label, dose escalation study will evaluate the safety, PK, and efficacy of HTD4010 in
approximately 24 clinically diagnosed subjects with AH. Subjects will be followed-up for a total of
28 days. The large time gap between the completion of the Phase I clinical trial and initiation of the
Phase II clinical trial for HTD4010 was because we prioritized our resources to the clinical
development of our Core Product HTD1801.
WE MAY NOT BE ABLE TO ULTIMATELY DEVELOP AND MARKET HTD4010
SUCCESSFULLY.
PRECLINICAL STAGE CANDIDATES
HTD1804
We are evaluating HTD1804 for the treatment of obesity. Obesity is a rising global health
risk associated with a wide range of comorbidities, primarily cardiovascular disease and T2DM.
The current treatment regimen may include lifestyle therapy, anti-obesity medication and surgical
intervention based on disease stage. There are two innovative medications approved for indication
of obesity globally, but none has been approved by NMPA. Some drugs are under clinical trial
development in China. Preclinical studies have shown that HTD1804 may be an important
modulator in energy metabolism, cardiovascular protection and lipid- and sugar-lowering effects.
HTD1805
Our HTD1805 is a preclinical-stage, multifunctional small molecule drug for the treatment
of metabolic diseases. HTD1805 is prepared with the similar design rational as HTD1801, and the
efficacy and safety profiles of the active moieties forming demonstrate the potential of HTD1805
in treating various metabolic diseases.
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HTD2802
Our HTD2802 is a preclinical-stage, multifunctional drug for the treatment of IBD, a
common GI tract disorder. The existing IBD drugs fail to adequately control the symptoms and
complications in many patients. In preclinical studies, HTD2802 has shown positive effects on
stool formation and occurrence of fecal occult blood, as well as reducing inflammatory cytokine
levels and preventing pathological injury.
WE MAY NOT BE ABLE TO ULTIMATELY DEVELOP AND MARKET HTD1804,
HTD1805, and HTD2802 SUCCESSFULLY.
COLLABORATION AGREEMENT
HTD1801 Licen se-Out A greement
On August 29, 2020, we entered into a license-out agreement (“ HTD1801 A greement ”)
with Shenzhen Hepalink Pharmaceutical Group Co., Ltd. (ʮ̡ )
(“Hepalink ”) to promote the commercialization of innovative drug formulations containing
HTD1801 in Europe. Hepalink is a leading multinational biopharmaceutical company dual-listed
in Hong Kong and mainland China, a connected person of the Company. The commercial rationale
for granting Hepalink the exclusive rights to commercialise NASH and PSC indications of our
Core Product in Europe is that we do not plan to expand European market by our own due to cost
efficiency consideration. In addition, Hepalink’s strong commercialization capabilities in Europe
with an experienced and specialized in-house sales and marketing team for pharmaceutical
products with international exposure enable us to achieve market penetration of our Core Product
in Europe.
Pursuant to the HTD1801 Agreement, we have granted Hepalink an exclusive, sublicensable
(solely to Hepalink’s wholly-owned subsidiaries), non-transferable license of HTD1801 for all
aspects of commercialization for the indications of NASH and PSC in Europe, including, but not
limited to, distribution, dispensing, promotion, sales, branding, pricing, import, export and use of
the product, use of the product name and packaging (“ Commerci aliz ation Ri ght”). Under the
HTD1801 Agreement, we reserved the rights to (i) research and develop HTD1801 worldwide; (ii)
manufacture HTD1801 worldwide; (iii) commercialize HTD1801 for any indications outside
Europe; (iv) commercialize HTD1801 in any region in Europe for indications other than for NASH
and PSC; and (v) import and export HTD1801 for the purposes described above. Hepalink is the
owner of new intellectual property rights generated from the commercialization of HTD1801 by
Hepalink.
As we license-out Commercialization Right in Europe for only two indications, we have
exclusive control over R&D activities, manufacturing, ownership of and protection for intellectual
properties, registration for HTD1801. We are the sole decision-maker for the aforesaid matters.
Hepalink enjoys the exclusive Commercialization Right and is responsible for sales of HTD1801
for the indication of NASH and PSC in Europe and may determine at its sole discretion for the
commercialization and sales plan of HTD1801 for these two indications in Europe. All disputes
arising from the contract shall be settled amicably by the parties. If the dispute is not resolved by
negotiation within 15 days from the date of occurrence, either party shall have the right to submit
the dispute to arbitration. Hepalink shall use commercially reasonable efforts with good faith to
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implement commercialization of HTD1801 for the indication of NASH and PSC in Europe and
bear the cost for such commercialization activities. We will bear all the costs, other than costs
incurred for commercialisation activities, in relation to the R&D, manufacturing, registration and
other costs if any for HTD1801 in Europe. We are responsible for applying for marketing
authorization, registration of pharmaceutical products, registration of drugs or drug licenses, or
any license or registration required for marketing or sale for HTD1801 for the indication of NASH
and PSC in Europe, preparing all documents required for marketing authorization, registration or
license and communicating with the regulatory authorities in Europe. We are the sole trial sponsor
and marketing authorisation holder of HTD1801 for all indications in all jurisdictions.
The cost of manufacturing HTD1801 for the two indications in Europe will be transferred to
Hepalink through payment to be received in accordance with the HTD1801 Agreement. The
pricing policy is based on our supply price of HTD1801 in similar licensed territories and
Hepalink’s target sales. In consideration of the license grant, Hepalink shall pay milestone
payments, including (i) NASH indication milestone payments, including the first milestone fee of
RMB50.0 million payable no later than five business days from the date of the new drug
application of HTD1801 for NASH indication obtaining the first marketing authorization in any
licensed territory in European Union, UK or Switzerland and the second milestone fee of RMB50.0
million payable no later than the first anniversary of obtaining such marketing authorization; (ii)
PSC indication milestone payments, including the first milestone fee of RMB30.0 million payable
no later than five business days from the date of the new drug application of HTD1801 for PSC
indication obtaining the first marketing authorization in any licensed territory in European Union,
UK or Switzerland and the second milestone fee of RMB30.0 million payable no later than the first
anniversary of obtaining such marketing authorization. In addition, during the royalty term of
HTD1801 in Europe, Hepalink is also obligated to pay tiered royalty payments calculated as a
percentage ranging from 10% to 25% of total annual net sales of HTD1801 in Europe. After
expiration of the royalty term (the patent term and/or other regulatory exclusivity terms under
administrative protection) of HTD1801 in Europe, both parties shall agree in advance on a separate
written agreement regarding the sales royalties if Hepalink plans to continue sales of HTD1801. If
the parties do not reach a separate agreement on the new sales royalties and Hepalink continues to
sell HTD1801 in Europe after expiration of the royalty term, then sales royalties shall continue to
accrue based on the foregoing royalty rates.
In the event that we propose to transfer our interest in the intellectual properties and
know-how in relation to HTD1801 for the indications of NASH and PSC in Greater China,
Hepalink is granted a right of first refusal in connection with the acquisition of the above interest.
If Hepalink decides to exercise its right of first refusal, it shall notify us within 15 days of
receiving our transfer notice, and both parties should use their best efforts to negotiate and sign a
transfer agreement. If no agreement is signed within 60 days of receiving Hepalink’s exercise
notice, the right of first refusal shall be terminated upon written notice by the Company to
Hepalink. If Hepalink does not expressly exercise the right of first refusal within 15 days after
receiving our transfer notice, Hepalink shall be deemed to have waived its right of first refusal. The
grant of the first right to acquire the intellectual properties and know-how of HTD1801 for the
indications of NASH and PSC in the Greater China territory to Hepalink will not affect our
operations as the consideration for the acquisition will not be less favorable than the amount
offered by other independent third parties.
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The term of HTD1801 Agreement shall continue in full force until the date of expiration of
the last applicable royalty term (which is either the patent expiration date or the expiration date of
regulatory exclusion for other administrative protections, whichever is later), or the date of earlier
termination in accordance with the terms therein, whichever is earlier. We have the right to
terminate the HTD1801 Agreement and are not required to return any payment that we have
received from Hepalink under the HTD1801 Agreement, if (i) Hepalink fails to pay the milestone
fee and sales royalties payment on time and rectify this breach within one month after our written
demand; (ii) Hepalink fails to commence marketing HTD1801 within one year from the date of
HTD1801 obtaining the first marketing authorization in any one or more of the licensed territories
in European Union, UK or Switzerland; (iii) Hepalink or any of its affiliates directly or indirectly
initiates, engages in, or participates in a patent challenge regarding HTD1801, or knowingly,
willfully, or indulgently assists in initiating such a patent challenge; (iv) Hepalink or its
sublicensee becomes insolvent, enters bankruptcy, liquidation or reorganization proceedings; or
(v) Hepalink fails to obtain and maintain comprehensive general liability insurance for HTD1801.
Hepalink has the right to terminate the HTD1801 Agreement, if (i) we enter bankruptcy,
liquidation or reorganization proceedings; or (ii) we fail to obtain and maintain comprehensive
general liability insurance for HTD1801. Both parties may agree in writing to terminate the
HTD1801 Agreement. If one party is unable to exercise its rights under the HTD1801 Agreement
due to a breach by the other party, and the breaching party fails to rectify the breach within one
month of receipt of notice, the non-breaching party shall be entitled to suspend performance of its
obligations under the HTD1801 Agreement to the breaching party or terminate the HTD1801
Agreement. If Hepalink’s actual sales in each of two consecutive fiscal years is lower than the
applicable target sales for the applicable fiscal year, we have the right to terminate the HTD1801
Agreement but need to return to Hepalink 50% of the milestone payments that have been received
by us.
In the event of termination of the HTD1801 Agreement, (i) the Commercialization Right
granted to Hepalink and its sublicensee shall terminate; (ii) Hepalink shall use commercially
reasonable efforts to cooperate with us or our designee to achieve a smooth and orderly transfer of
commercialization of HTD1801 in Europe; and (iii) if the first commercial sale has occurred
before the termination of the HTD1801 Agreement, upon request by us, Hepalink shall use
commercially reasonable efforts to continue to distribute HTD1801 in each licensed territory in
which regulatory approval for HTD1801 has been obtained, until we notify Hepalink in writing an
alternative supplier or distributor for HTD1801, but in no event shall Hepalink be required to do so
after six months upon termination. One party of the HTD1801 Agreement shall indemnify and hold
harmless the other party from losses suffered by the other party arising from any breach of the
breaching party’s obligations or representations and warranties under the HTD1801 Agreement.
One party of the HTD1801 Agreement shall not be liable to the other party for consequential or
punitive damages resulting from the breach.
The commercial rationales for only out-licensing NASH and PSC out of five indications of
HTD1801 in Europe include (i) the clinical trials of HTD1801 for those two indications were at the
most advanced clinical stage when the agreement was reached, and (ii) commercialization of
NASH and PSC drugs is more likely to capture the market in Europe since no therapies have been
approved for NASH and PSC there.
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The long period of clinical development suspension of the PSC indication of HTD1801
since the completion of the Phase II clinical trial in August 2020 will not impact HTD1801
Agreement. Hepalink was not involved in the research and development of HTD1801 and there is
not any R&D personnel transferred from Hepalink to us since the discovery of HTD1801.
RESEARCH AND DEVELOPMENT
We believe that our continued research and development is the key driver of our business
growth and competitiveness. Our R&D efforts are primarily driven by unmet clinical demand in
complex diseases with a mission of treating the patients as a whole, by targeting multiple
disease-critical pathways synergistically to improve overall clinical benefits in a well-balanced
manner.
Our R&D te am
Our R&D team has strong expertise, deep understanding, and broad development experience
in metabolic and digestive diseases. Our R&D team pioneered the identification of compounds
designed to modulate multiple pathways underlying chronic diseases, providing a unique
advantage in addressing the unmet clinical needs across complex pathologies. Our R&D team is
led by a team of world-class scientists with years of drug development experience. As of the Latest
Practicable Date, our core R&D personnel consisted of 11 members covering the fields of
chemistry, biology, pharmacology and medicine. Our core R&D personnel have been working in
the biopharmaceutical industry for an average of 15 years. 10 of our core R&D personnel have
been involved in and contributed to the R&D activities of the Core Product. During the Track
Record Period, none of core R&D personnel left our Group. To incentivize core R&D personnel to
remain at our Group, in addition to salary and cash incentives, we have provided share incentives
that vest over time. However, the loss of our core R&D personnel could impede the achievement of
our research, development and commercialization of our Core Product. For details, see “Risk
Factors — Risks Relating to Our Business and Industry — Our future success depends on our
ability to retain key executives and to attract, hire, retain and motivate other qualified and highly
skilled personnel” in this prospectus.
Our R&D team is generally responsible for the global development of our Core Products and
other pipeline products. Our R&D team has the capacity to conduct nine clinical programs at
various development stages in China and other jurisdiction. For our internally discovered and
developed drug candidates, we conducted drug discovery, quality assurance and clinical activities
including: (i) coordinating all clinical development activities; (ii) designing the key aspects of the
clinical studies; (iii) designing and coordinating the selection process for qualified CROs to assist
in engaging clinical sites and coordinating clinical studies once commenced; (iv) supervising the
clinical studies; and (v) overseeing extensive regulatory outreach and coordination in China and
other jurisdictions.
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The following table sets forth a breakdown of the number of R&D team by function and
jurisdiction as of the Latest Practicable Date:
Function of R&D te am Juri sdiction
Number of
employee s
Early discovery ........................................... China 4
Clinical development ...................................... China 25
United States 7
Regulatory affairs ......................................... China 5
Quality Assurance ......................................... China 4
Total .................................................... 45
The following table sets forth the identities, positions, expertise of core R&D personnel and
their involvement and contributions to the R&D activities since the discovery of the Core Product
and up to the Latest Practicable Date. There is not any core R&D personnel that have left the
Company since the discovery of the Core Product.
Identitie s Position s Experti se
Involvement and
contribution s to the
R&D activitie ss ince
the discovery of the
Core Pro duct
Date of joinin g our
Grou p
Dr. LIU Liping
(ᄎл̻) .........
CEO Over 24-year experience of drug R&D with
education experiences in Johns Hopkins
University and Nankai University
Drug discovery of the
Core Product
November 15, 2011
Ms. YU Li
(ɲ஁)..........
Vice president Over 20-year experience of drug R&D,
registration and management with
eduction experience in Shanghai
University of Traditional Chinese
Medicine
Registration and
project management
of the Core Product
November 15, 2011
Mr. LIU Kui
(۲..........)
Senior director
(i) Over 15-year experience of medical
experiments with education experience in
Fudan University
Medical experiments of
the Core Product
January 4, 2022
Ms. YU Meng
(ɲ഼)..........
Deputy general manager Over eight-year experience of clinical trial
management with education experience in
University of Nevada, Reno
Clinical trial
management of
the Core Product
May 4, 2015
Ms. BAI Ru
(ͣন)..........
Director of non-clinical
development
Over 11-year experience of prelinical trial
R&D with education experience in
Nankai University
Preclinical trials of the
Core Product
February 6, 2012
Dr. MACCONELL
Leigh Anne .......
Chief development
officer
Over 23-year experience of clinical trial
R&D with education experience in
University of California, San Diego
Clinical trials of the
Core Product
(2)
February 1, 2021
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Identitie s Position s Experti se
Involvement and
contribution s to the
R&D activitie ss ince
the discovery of the
Core Pro duct
Date of joinin g our
Grou p
Mr. CHEN ......... D r u g formulation
manager
Over 10-year experience of drug formulation
with education experience in Nanjing
University
CMC of the
Core Product
March 13, 2019
Dr. CHEN ......... Senior vice president Over 17-year experience of clinical trial
pharmaceutical R&D with education
experience in State University of New
York, Buffalo
Regulatory affairs &
quality assurance of
the Core Product
January 3, 2022
Mr. FU Xinxiang
(˹㒥ୂ) ........
Director of CMC Over eight-year experience of CMC with
education experience in Nankai
University
CMC of the
Core Product
May 18, 2015
Mr. XIE Liming
(׼........)
Clinical quality assurance
manager
Over eight-year experience of clinical trial
quality management with education
experience in University of Southern
California
Clinical trial quality
management of the
Core Product
July 27, 2015
Note:
(1) The term “director” refers to the working title of the employee, not the member of the Board.
(2) Dr. MACCONELL focused on clinical trial management and non-clinical development, especially for the
clinical trials of the PBC and MASH indication as well as communication with the FDA regarding the
EOP2 meeting for the PSC program. Prior to the joining of Dr. MACCONELL, the rest of the core R&D
personnel had sufficient experience to support the R&D of our Core Product and had been contributing to
the R&D of the Core Product throughout the process under the leadership of Dr. LIU Liping, including but
not limited to drug discovery and clinical trial management, as set out in the table above.
(3) Dr. MA Tianwei ( ৵˂ਃ) is one of the core R&D personnel with the position of vice president of discovery
research. He joined our Group on February 1, 2023, and has over 20-year experience of drug R&D with
education experiences in University of Georgia, Beijing Medical University and Nankai University.
Our FUSIONTX TM develo pment approach
Achieving good balances of efficacy and safety is the major challenge in developing
multifunctional and multi-target therapies. The successful development of HTD1801 enabled us to
establish the FUSIONTX
TM drug discovery approach that ensures higher probability of success for
the design of multifunctional and multi-target drug candidates, through which, we integrate
real-world clinical data, network pharmacology, known and established molecules with desired
therapeutic benefits and known safety profiles to design novel, multifunctional drug candidates to
treat complex diseases with a systemic approach. Drug discovery and design through this approach
enables systematic, precise, and efficient early-stage drug development that potentially facilitates
a higher rate of clinical success at an accelerated pace and lowers development risks, enabling our
sustained pipeline expansion. We believe our approach in creating multifunctional drug candidates
is paradigm-shifting and could lead to disruptive discovery and development of next-generation
therapies in many diseases.
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Our FUSIONTX TM development approach serves as the foundation for our continued
discovery and design of multifunctional drugs. The platform technology is self-developed. In
addition to our in-house know-how, we have also leveraged external AI technologies as a
supplementary analytical tool for big data.
Leveraging our profound understanding of metabolic and digestive disease biology, we have
developed FUSIONTX
TM, a development approach to develop drugs with multi-functions, through
which we strive to use real world data to map the network biology of the disease, screen known
molecules with desired therapeutic benefits, and design novel, multi-functional drug candidates
with synergistic effects across multiple organs. During the Track Record Period, FUSIONTX
TM
development approach contributes to our R&D and embodies our drug development goal to
enhance overall clinical benefits and improve patient compliance, while increasing accessibility
and lowering treatment costs, and also greatly increasing the success rate of drug development.
The following illustrates our drug discovery and design process conducted through the
FUSIONTX
TM development approach and a description of major steps in the process by using
HTD1801 for MASH as an example:
• Step One: Mapping the network biology of complex diseases. Leveraging our
profound expertise in metabolic and digestive diseases, we identified the driving role
of metabolism disorders and the other important aspects (such as oxidative stress and
inflammation, liver wound-healing process, gut-liver axis, etc.) in MASH’s
pathogenesis and progression through an in-depth analysis of the existing studies and
real world data. We also took into consideration epidemiological and natural history
studies that showed an essential relationship between obesity, T2DM, insulin
resistance, hypertension, dyslipidemia and MASH, supporting that MASH is not a
pure hepatic disease but a complex metabolic liver disease.
• Step Two: Screening known molecules for desired therapeutic benefits. We gathered
and evaluated the pharmacology profiles of known molecules through real world data
mining, based on which we screened and selected those molecules with the most
desirable therapeutic benefits. For example, we observed the use of UDCA as a
common hepatic protection treatment with high reputation in safety, and its
multi-pathway mechanisms of action, such as anti-apoptotic effects, lowering serum
TNF- α concentrations, decreasing endoplasmic reticulum stress, and improving
hepatic insulin sensitivity. Meanwhile, we took note of UDCA’s shortcomings;
UDCA appears to have only modest effects in MASH, which may be led by its modest
effects in metabolism improvement. The possible increased risk of hepatotoxicity at
very high doses was also noted.
• Step Three: Matching the selected molecules with targeted pathogenic pathways. We
categorized the molecules selected in step two according to their distinctive
mechanisms and then, based on real-world safety data, we identified the lead
molecule candidates for each targeted pathogenic pathway. For example, given our
focus on both the metabolism improvement and hepatic protection, we chose UDCA
over other molecules known for their hepatocyte protection effects, and BBR as a top
candidate among agents with comprehensive metabolism modulatory properties.
These two active moieties together were hypothesized to improve both the hepatic
and metabolic features of MASH.
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• Step Four: Validating active moieties and molecular structure. After rounds of
dose-matching experiments, we decided on UDCA and BBR as the final active
moieties for HTD1801, based on their compatibility from having comparable
molecular weight and effective dose. At this stage, we focused on synergizing the
therapeutic benefits, and mitigating the potential side effects of individual moieties.
For HTD1801, for example, we built on BBR’s well-known effects on metabolism
modulation and UDCA’s hepatic protection effect, to achieve the multi-therapeutical
effects for MASH. We further discovered that these moieties, BBR and UDCA, would
work in tandem in a novel salt form to produce, through their interaction, distinct and
preferred synergistic properties that were not observed with either of the individual
active moieties or the physical mixture of both (as in the case of drug combination).
The novel salt form would offer preferred physio-chemical properties, including
improved solubility and synergized dissolution and melting point. In our nonclinical
studies, HTD1801 significantly enhances the bioavailability of BBR, which, when
administered alone, is recognized for its low blood concentration and poor solubility
in the body. For more details, see “— Our Product Pipeline — Clinical Stage
Candidates — Core Product HTD1801 — Molecular Structure.”
• Step Five: Designating the drug candidate. We conduct pre-clinical pharmacological
and PK/PD studies and preliminary toxicity studies for each new molecular entity or
combination therapy we have designed. Only entities that have passed these
preliminary tests with a validated safety profile and pharmacodynamic effects will be
designated as our drug candidates. The pre-clinical studies we have conducted
demonstrate that HTD1801, in its unique ionized salt form, exhibits distinct PK/PD
properties and an enhanced efficacy and safety profile compared to BBR alone,
UDCA alone, or their physical mixture, and thus has the potential to offer improved
overall clinical benefits beyond a simple combination of BBR and UDCA. For more
details, see “— Our Product Pipeline — Clinical Stage Candidates — Core Product
HTD1801 — Molecular Structure.”
Our FUSIONTX
TM development approach serves as the foundation for our continued
discovery and design of multi-functional drugs. In addition to our in-house know-how, we have
also leveraged external AI technologies as a supplementary analytical tool.
Dru g Discovery
As of the Latest Practicable Date, our drug discovery members have on average 11 years’
experience. We have worked on our product candidates’ advancement for more than 10 years and
developed product candidates in-house. Our drug discovery team members have expertise in
biology, medicinal chemistry, drug metabolism and pharmacokinetics (“ DMPK ”), chemistry and
early clinical areas, which support our product development, and all of them have obtained
post-graduate degrees.
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Our drug discovery comprises (i) identifying unmet medical needs and integrating
real-world data, network pharmacology, known and established molecules with desired therapeutic
benefits to design novel, multifunctional drug candidates; (ii) performing in vitro and in vivo
assays of drug candidates including but not limited to pharmacological activities,
pharmacokinetics and toxicities; and (iii) developing formulations, and analytical assays for
quality control and assurance. During the drug discovery stage, our R&D chemistry team carries
out synthesis and optimization of the target molecules for potential drug candidates. During the
drug evaluation stage, our drug discovery team coordinates and accomplishes preclinical R&D
activities in relation to the product candidates’ pharmacology, pharmacokinetics and toxicology.
Clinic al Develo pment
Clinic al Develo pment Te am
As of the Latest Practicable Date, the clinical development team consisted of 30 members,
including scientists and physicians with strong drug development experience, who participate in
clinical development strategy development, clinical trial protocol design, clinical trial operation
organization, drug safety monitoring, and clinical trial quality control. Our clinical development
team members have average 11 years’ experience. Among our clinical development team members,
over 60% have obtained post-graduate degrees. Our clinical development staff represent a highly
skilled and experienced team of professionals who work collaboratively to design and execute
complex clinical trials and drug development programs. Our core capabilities in the area of
development include clinical trial design, regulatory and quality compliance, project management,
clinical operations, medical writing, safety monitoring and drug development strategy. Our team
has the expertise to design clinical trials that are rigorous and compliant with regulatory
requirements. This involves collaborating internally, with experts and regulatory authorities to
determine the appropriate patient population, defining endpoints, and selecting appropriate control
groups. Our regulatory team has a thorough understanding of regulatory requirements for clinical
trials in the relevant countries and regions, including knowledge of Good Clinical Practice
guidelines. The team has proven to be able to manage complex projects, including clinical trials
that involve multiple sites and stakeholders. This involves developing and managing timelines,
budgets, and resources, as well as monitoring and mitigating risks. Our team has the strategic
vision to guide drug development programs from early-stage research through clinical
development and regulatory approval.
Clinic alT r ialD e sign and Implement ation
The clinical development unit of our Company manages all stages of clinical trials,
including protocol design and oversees, operations/conduct, and the collection and analysis of
clinical data. Our rapid trial advancements are driven by (i) our strategic decision to initiate
clinical phase trials globally based on our outstanding preclinical results, (ii) rigorous trial design,
(iii) long-term partnership with various hospitals and principal investigators from different regions
globally and (iv) seamless execution.
Our clinical operations unit is also responsible for the selection of trial sites. Our site
selection criteria includes the site’s overall experience, understanding of the disease state, access
to relevant experts and patients, geographical coverage, regulatory and quality management, range
of services, staff proficiency, and technology. We have collaborated with numerous hospitals and
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principal investigators located in the United States, China and Australia that can support our
clinical trials of different indications at different stages. We believe the size and geographic
diversity of these facilities provide us with an advantage in implementing large-scale clinical trials
and also enable us to conduct multiple clinical trials concurrently. With the support of our partner
hospitals, we are capable of recruiting participants from specific populations for studies that would
otherwise be difficult to fulfill enrollment.
In 2021 and 2022 and the six months ended June 30, 2023, we cooperated with two, seven
and two leading principal investigators (“ PIs”), respectively, to conduct the clinical trials of our
drug candidates. To the best of our Company’s knowledge, none of them have any past or present
relationships with our Group, our Directors, shareholders, senior management or any of their
respective associates. The PIs are responsible for conducting site-level clinical research activities
according to our trial protocols and in accordance with laws, regulations, and the GCP Guideline,
a quality standard for the overall conduct of the clinical trial. Each trial has a leading PI with
primary responsibility to ensure compliance with trial protocol and good clinical practice over the
entire trial.
Clinical Translational Research
We conduct clinical translational research to assess the effectiveness of treatment, evaluate
different ways to customize therapies, and improve personalized medicine guidelines using the
new data generated. These insights help further guide us toward new directions in novel drug
discovery and efficiently obtain proof of concept results. We also maintain extensive collaboration
with physicians, scientists and key opinion leaders, and further develop products based on their
clinical feedback to our drug candidates, whether in terms of indications or potential treatment
combinations. We have established a rich network of top tier CROs, research institutions and
hospitals, so that our drug candidates can be quickly moved to the clinical stage.
Relationship with CROs and SMOs
We collaborate with CROs and SMOs to conduct and support our preclinical and clinical
studies in line with industry practice. We select our CROs and SMOs by weighing various factors,
such as their qualifications, academic and professional experience, industry reputation and service
fees. To the best of our Company’s knowledge, none of them have any past or present relationships
with our Group, our Directors, shareholders, senior management or any of their respective
associates.
In terms of the involvement and contributions of each of the major CROs and SMOs to the
development of our product candidates, the preclinical CROs mainly provide us with services
related to preclinical toxicity and safety evaluations, such as animal studies, of our product
candidates in accordance with agreed study design and under our supervision. The clinical CROs
provide us with an array of services necessary for complex clinical trials in accordance with agreed
trial design and under our supervision. SMOs provide a comprehensive suite of services to assist us
in implementing and managing clinical trials, including trial preparation, clinical safety
management, data management, and report preparation. We choose to engage a CRO and SMO
based on the complexity and workload of a specific trial. We closely monitor the work of our CROs
and SMOs and provide specific directions to ensure the quality and efficiency of the trial
execution. This approach allows us to leverage the experience of our in-house team to better focus
on critical clinical trial elements, such as trial design, data analysis and decision-making. All
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studies of our product candidates on humans are conducted in compliance with the applicable laws,
regulations and in line with the industry standards. We believe our ability to conduct and work
closely with CROs and SMOs to conduct preclinical studies and clinical trials helps us to shorten
the time required for product development as well as generate the requisite data in a reliable and
efficient way.
We mainly determine the service fees paid to the CROs and SMOs in accordance with
market prices of similar services, the number of enrolled patients, the duration of the clinical trials,
and the quality and contents of the services provided.
During the Track Record Period, we engaged 22 CROs in 2021, 49 CROs and four SMOs in
2022, and 35 CROs and two SMOs in the six months ended June 30, 2023 respectively. The
following table sets forth the details of our major CROs and SMOs engaged during the Track
Record Period:
Major CRO s Backgroun d Involvement and Contribution
Annu al
Transaction
Amount
(RMBinthousand)
FortheyearendedDecember31,2021
C R OA........ A global CRO headquartered in US
for drug, biologic, and medical
device programs
Safety evaluation, clinical trial
execution for Core Product
6,670.7
C R OB........ A global CRO headquartered in
Hangzhou, providing innovative
clinical research solutions across
the full life cycle of
biopharmaceutical and medical
device products
Safety evaluation, clinical trial
execution for Core Product
5,899.0
C R OC........ AC R O based in Jiangsu, mainly
providing biopharmaceutical
technology research and
development services, technology
transfer services and testing
services
Safety evaluation, clinical trial
execution for Core Product
1,676.4
C R OD........ AC R O headquartered in Shanghai,
a leading institution with
innovative drug research service
Safety evaluation, clinical trial
execution for Core Product
1,050.4
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Major CRO s Backgroun d Involvement and Contribution
Annu al
Transaction
Amount
(RMBinthousand)
FortheyearendedDecember31,2022
C R OE........ A global CRO headquartered in US
for early phase research,
delivering translational medicine
Safety evaluation, clinical trial
execution for Core Product
14,283.1
C R OA........ A global CRO headquartered in US
for drug, biologic, and medical
device programs
Safety evaluation, clinical trial
execution for Core Product
12,807.2
C R OB........ A global CRO headquartered in
Hangzhou, providing innovative
clinical research solutions across
the full life cycle of
biopharmaceutical and medical
device products
Safety evaluation, clinical trial
execution for Core Product
12,606.4
C R OF ........ A global CRO headquartered in UK,
a drug development and
manufacturing accelerator
providing integrated programs
and tailored services across the
entire development pathway
Safety evaluation, clinical trial
execution for Core Product
5,357.6
ForthesixmonthsendedJune30,2023
C R OA........ A global CRO headquartered in US
for drug, biologic, and medical
device programs
Safety evaluation, clinical trial
execution for Core Product
21,102.6
C R OC........ AC R O based in Jiangsu, mainly
providing biopharmaceutical
technology research and
development services, technology
transfer services and testing
services
Safety evaluation, clinical trial
execution for Core Product
3,123.6
C R OG........ A global CRO based in Nanjing,
providing fully integrated
laboratory R&D and
manufacturing services from drug
discovery and development to
marketability
Safety evaluation, clinical trial
execution for Core Product
2,159.9
C R OH........ A global CRO headquartered in UK,
providing clinical trial supplies
services and biological sample
management services
Depot project management for Core
Product
1,951.0
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SMO s Backgroun d Involvement and Contribution
Annu al
Transaction
Amount
(RMBinthousand)
FortheyearendedDecember31,2022
S M OA ........ AS M O based in Shanghai,
providing all-in-one medical
research services
Assist us in implementing and
managing clinical trials for Core
Product in China, including trial
preparation, clinical safety
management, data management,
and report preparation
2,353.5
S M OB ........ AS M O based in Beijing, providing
clinical research outsourcing
service
Assist us in implementing and
managing clinical trials for Core
Product in China, including trial
preparation, clinical safety
management, data management,
and report preparation
586.5
S M OC ........ AS M O based in Shanghai
undertaking SMO projects on
clinically valued innovative drugs
Assist us in implementing and
managing clinical trials for Core
Product in China, including trial
preparation, clinical safety
management, data management,
and report preparation
488.9
S M OD ........ AS M O based in Anhui Province,
providing pharmaceutical
technology consulting,
pharmaceutical product
development and technology
transfer, clinical research CRC
services, third-party audits, data
management and statistics
services
Assist us in implementing and
managing clinical trials for Core
Product in China, including trial
preparation, clinical safety
management, data management,
and report preparation
6.3
Major CRO s Backgroun d Involvement and Contribution
Semi- annu al
Transaction
Amount
(RMBinthousand)
ForthesixmonthsendedJune30,2023
S M OA ........ AS M O based in Shanghai,
providing all-in-one medical
research services
Assist us in implementing and
managing clinical trials for Core
Product in China, including trial
preparation, clinical safety
management, data management,
and report preparation
327.2
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Major CRO s Backgroun d Involvement and Contribution
Semi- annu al
Transaction
Amount
(RMBinthousand)
S M OD ........ AS M O based in Anhui Province,
providing pharmaceutical
technology consulting,
pharmaceutical product
development and technology
transfer, clinical research CRC
services, third-party audits, data
management and statistics
services
Assist us in implementing and
managing clinical trials for Core
Product in China, including trial
preparation, clinical safety
management, data management,
and report preparation
237.6
CHEMISTRY, MANUFACTURE & CONTROLS (“CMC”)
CMC Team
As of the Latest Practicable Date, our CMC team consisted of six professionals with
extensive experience in process development, production and quality management from
well-known biopharmaceutical and pharmaceutical companies. Our CMC team members have on
average approximately eight years’ experience. Among our CMC team members, over 50% have
obtained post-graduate degrees. Our CMC team specialized in preclinical and clinical support
throughout the drug development process. The CMC function in our Company plays a critical role
in drug development. It is responsible for developing safe, robust, and economically sound
production processes for our drug substances and drug products, and ensuring their quality meets
regulatory requirements.
Collaboration with CDMO Partners
In terms of the involvement and contributions of each of the major CDMO partners
(including CMOs) to the development of our product candidates, we collaborate with our CDMO
partners to manufacture a portion of our product candidates to supply for preclinical studies and
clinical trials. We did not experience any product quality issues in respect of the products
manufactured by our CDMO partners during the Track Record Period. Under our agreement with
our CDMO partners, the CDMO partners are required to perform their services according to the
prescribed time frame as set out in the agreement. Usually, we pay the CDMO partners in
installments, with a specified credit period. Our CDMO partners are responsible for manufacturing
our required products in accordance with certain product specifications, in compliance with cGMP
requirements (where applicable), our quality standards and other applicable laws and regulations.
We retain all the intellectual property rights and grant our CDMO partners the right to use our
intellectual property rights for such manufacturing and packaging activities during the contract
period. We are entitled to inspect and audit our CDMO partner’s manufacturing process. We
mainly determine the service fees paid to the CDMOs in accordance with market prices of similar
services, the number of products manufactured, and the quality and contents of the services
provided. We do not share our IPs, know-hows and trade secrets with CDMOs. CIC is of the view
that there are alternative CDMOs on comparable terms with similar quality available in the market.
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During the Track Record Period, we engaged four, nine and nine CDMOs in 2021, 2022 and
the six months ended June 30, 2023, respectively. The following table sets forth the details of our
major CDMOs engaged during the Track Record Period:
Major CDMO s Backgroun d
Involvement and
Contribution
Years of
Rel ation ship
Annu al
Transaction
Amount
(RMBin
thousand)
FortheyearendedDecember31,2021
C D M OA...... A leading CDMO headquartered in
Zhejiang, providing one-stop
customized R&D and commissioned
production services for innovative
drugs to global pharmaceutical and
biotechnology companies
Manufacture active
pharmaceutical
ingredients of our Core
Product
Since 2018 7,059.5
C D M OB...... AC D M O based in Shanghai, providing
pharmaceutical and medical device
companies with a full range of
integrated laboratory R&D and
production services from drug
discovery, development to
marketization
Process development and
quality analysis
research of drug
formulation of our
Core Product
Since 2019 1,542.3
C D M OC...... AC D M O based in Suzhou, providing
integrated, science-driven, product
development services throughout the
drug discovery and development
process to enable life science
companies to achieve their drug
development goals
Manufacture small-scale
drug formulation
products of our Core
Product
Since 2017 603.3
C D M OD...... AC D M O headquartered in Suzhou,
providing integrated and specialized
services, including API solid-state
research, crystallization,
preformulation, formulation
development, and manufacturing
Crystal morphology
research and drug
formulation of our
Core Product
Since 2015 68.9
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Major CDMO s Backgroun d
Involvement and
Contribution
Years of
Rel ation ship
Annu al
Transaction
Amount
(RMBin
thousand)
FortheyearendedDecember31,2022
C D M OA...... A leading CDMO headquartered in
Zhejiang, providing one-stop
customized R&D and commissioned
production services for innovative
drugs to global pharmaceutical and
biotechnology companies
Manufacture active
pharmaceutical
ingredients of our Core
Product
Since 2018 5,811.3
C D M OE...... AC D M O based in Shanghai, providing
pharmaceutical and medical device
companies with a full range of
integrated laboratory R&D and
production services from drug
discovery, development to
marketization
Manufacture drug
formulation of our
Core Product
Since 2019 4,526.9
C D M OB...... AC D M O based in Shanghai, providing
pharmaceutical and medical device
companies with a full range of
integrated laboratory R&D and
production services from drug
discovery, development to
marketization
Process development and
quality analysis
research of drug
formulation of our
Core Product
Since 2019 4,377.4
C D M OF...... AC D M O based in Jiangsu, providing
pharmaceutical and medical device
companies with a full range of
integrated laboratory R&D and
production services from drug
discovery, development to
marketization
Manufacture drug
formulation of our
Core Product
Since 2022 1,907.4
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Major CDMO s Backgroun d
Involvement and
Contribution
Years of
Rel ation ship
Semi- annu al
Transaction
Amount
(RMBin
thousand)
ForthesixmonthsendedJune30,2023
C D M OB...... AC D M O based in Shanghai, providing
pharmaceutical and medical device
companies with a full range of
integrated laboratory R&D and
production services from drug
discovery, development to
marketization
Process development and
quality analysis
research of drug
formulation of our
Core Product
Since 2019 1,134.7
C D M OG...... AC D M O based in Sichuan, providing
manufacture of multi-dose biochemical
and chemical drugs
Manufacture drug
formulation of Core
Product
Since 2022 1,074.3
C D M OD...... AC D M O based in Suzhou, providing
integrated and specialized services,
including API solid-state research,
crystallization, preformulation,
formulation development, and
manufacturing
Crystal morphology
research and drug
formulation of our
Core Product
Since 2015 486.7
C D M OF...... AC D M O based in Jiangsu, providing
pharmaceutical and medical device
companies with a full range of
integrated laboratory R&D and
production services from drug
discovery, development to
marketization
Manufacture drug
formulation of our
Core Product
Since 2022 478.2
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COMMERCIALIZATION
Our M arketin g Str ategy
To capture market demand under fierce competition, we will pursue the commercialization
strategy of win-win cooperation for future assets to maximize the value of our drug candidates
globally. Considering the cost of establishing in-house sales and marketing capabilities, we do not
plan to set up a full capacity commercialization team; instead, we will build a small but highly
capable marketing team, and an alliance management team to work together with our future
commercialization partner(s). Based on the expected approval timeline of each indication of
HTD1801 in our pipeline, we expect to file NDA with the NMPA for HTD1801 for T2DM in 2025.
In anticipation of the upcoming milestone, we are actively seeking domestic partners with a strong
commercialization network and expertise in T2DM. Subject to our global clinical development
plan, we also plan to commercialize HTD1801 for MASH, SHTG, PSC and PBC in multiple
jurisdictions, including but not limited to the United States, EU and China. We will continue to
pursue a flexible strategy to capture the commercial value of HTD1801’s multiple indications in
major markets, through the forging synergistic license and collaboration opportunities worldwide.
The following table sets forth the details of our commercialization plans for HTD1801 in major
global markets in the next five years. We may also consider other global markets subject to our
business strategy, clinical development and cash flow. We will formulate a detailed and
comprehensive commercialization strategy for additional jurisdictions as our drug candidates
continue to progress the clinical development.
Dru g Candidate In dication Juri sdiction Commerci aliz ation Mo del
HTD1801 .............. M A S H United States Commercialization in partnership with
pharmaceutical companies in the United
States
Europe Out-license commercialization right to Hepalink
T2DM China Commercialization in partnership with domestic
pharmaceutical companies
SHTG United States Commercialization in partnership with
pharmaceutical companies in the United
States
PSC United States Collaboration with pharmaceutical companies
with sales network established in the United
States
Europe Out-license commercialization right to Hepalink
PBC United States Collaboration with pharmaceutical companies
with sales network established in the United
States
To capture the market demand under existing prevention methods and fierce competition for
the Core Product in each targeted jurisdiction, in particular, for MASH and T2DM, we will
leverage the expertise and industry connections of our partners. We plan to market the products
primarily through a physician-targeted marketing strategy, focusing on direct and interactive
communication with key opinion leaders and physicians in the respective therapeutic areas to
promote the differentiated clinical aspects of our products. Such marketing efforts are expected to
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commence several months before the expected approval for the commercialization of a drug
candidate. In preparation for generating sales of our future approved products, we intend to
identify a number of hospitals, clinics and physicians specialized in the metabolic and digestive
disease treatment, and visit the sites and physicians in person for pre-launch training and liaison.
We also plan to sponsor numerous investigator-led clinical trials to generate local clinical
data and accumulate relevant clinical experience. We believe that these academic-oriented
marketing efforts will be beneficial for improving alignment of expert opinions on, and promoting
clinical use of, our drug candidates, after they become available for sale. We will also support
leading experts to report the results of their researches at international and domestic conventions,
symposia and other notable events to promote our brand at the forefront of the industry. Moreover,
we will actively organize academic conferences and seminars to publicize the clinical data and
research results in relation of our drug candidates in order to raise our brand awareness and
recognition.
In the field of MASH, pharmaceutical companies have long seen this as a major drug market
opportunity, but there remain no MASH drugs approved despite years of research and trials. This is
because clearing fat from the liver efficiently and safely has proven to be much more difficult than
first thought, with the MASH pipeline littered with flops and setbacks. Upon our market approval
of HTD1801, our marketing will focus on physician acceptance, patient education and drug
pricing.
• Physician acceptance: Since lifestyle modification is the initial step to manage
MASH, physicians might be reluctant to prescribe the drugs for MASH. Hence,
targeting and educating physicians will be crucial for the successful market access of
products. As physicians are expected to play a key role in this process, not only in
administering HTD1801 but also in educating patients about its potential benefits, we
intend to design our marketing and academic education strategy for maintaining
continued engagement with physicians. We believe that we have already established a
rapport with some physicians across China and the United States through the clinical
trials that we have conducted, in terms of both gaining recognition of the efficacy and
potential benefits of HTD1801 and enhancing physicians’ familiarity with HTD1801.
In addition, we plan to be pro-actively involved in the policy making framework
relating to the HTD1801 therapy by actively participating in consultation sessions
with the relevant authorities, particularly on improving medical procedures and
standards.
• Patient education: Although the prevalence of MASH is high, the diagnosis rate is
low since liver biopsy is the commonly used approach to identify the disease. Since
liver biopsy is a painful procedure, some patients may opt out of diagnosis, leading to
a low diagnosis rate. Hence, patient education on the long-term ill effects of this
largely unknown disease is vital for our marketing success. We can work with
reputable market research organizations to gather information about patients’ daily
activities, knowledge, health beliefs and level of understanding. Then we can
cooperate with some physical examination centers to hold seminars to educate
patients on treatment options, assess patients’ ability to carry out treatment plans and
identify barriers and individualize treatment plans accordingly.
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• Drugpricing: Payers may be reluctant to cover highly-priced MASH drugs, since the
drug has to be taken for a longer duration. Payers may also be reluctant to cover
potentially expensive medications, in part because lifestyle modification is often the
first line treatment for MASH. For pricing in China, we may determine pricing based
on the affordability to Chinese patients and the price of comparable products. The
pricing in overseas markets may vary according to the specific conditions in each
territory, including, among other things, the pricing of multinational competitors in
the same market. In order to gain market share against existing and future branded
and generic competitors, we will also consider seeking inclusion of our Core Product
into the NRDL and other reimbursement programs.
In the field of T2DM, we face fierce competition with approved T2DM drugs, in particular,
the GLP-1 inhibitors. Our focus will be physician and patient education to introduce them the
differentiated features of our Core Product as compared to GLP-1 inhibitors, such as its favorable
safety profiles, oral administration and “pipeline-in-a-product”. We also need to increase our
market penetration of the Core Product. In China, we plan to adopt a tiered provincial market-entry
approach with the goal of achieving nationwide coverage in the medium term. Our priority over the
next 12 months upon commercialization is to initially focus on top tier provinces that have
favorable reimbursement coverage and high patient volume capture. As we expand into tier 2 and
other lower tier provinces, we plan to continue building our on-the-ground presence and coverage.
We seek to strengthen our relationship with key stakeholders in each province to drive diagnosis
and treatment, and support reimbursement negotiation into provincial formulary.
To capture our market share in Europe for the indication of MASH and PSC, we will
leverage Hepalink’s strong commercialization capabilities to formulate our marketing strategy by
taking into account the features of the European market and adjust marketing strategies and KPIs
based on actual sales. In general, we will use a combination of academic marketing with
Hepalink’s in-house sales and marketing team and collaboration with a network of independent
distributors and third-party promotors to generate market demands for HTD1801. To enter into the
European market, we will promote HTD1801 through introducing the advantages in quality, supply
and price to physicians during its marketing activities in hospitals and academic conferences. We
can also leverage Hepalink’s capacity to fulfill the orders from hospitals and pharmacies by
presenting its integrated supply chain. As HTD1801 for MASH and PSC has not been approved,
detailed marketing strategy has not been formulated as of the Latest Practicable Date.
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Pricin g
We will determine the prices of our products based on a number of factors, including our
costs of production, prices of other similar products, our technology advantages, product quality,
health economics, market trends and changes in the levels of supply and demand. We plan to make
a detailed pricing strategy when our drug candidates progress toward commercialization.
As of the Latest Practicable Date, there was no pricing guidance or centralized procurement
set by the PRC government on our product candidates. In order to gain market share against
existing and future branded and generic competitors, we will also consider seeking inclusion of our
Core Product into the NRDL and other reimbursement programs. Inclusion into the NRDL is
evaluated and determined by the relevant government authorities and we may face significant
competition for successful inclusion. If we fail to have our Core Product included in the NRDL
after commercialization, our sales channels may be limited and our revenue from commercial sales
will be highly dependent on patient self-payments, which could make our products less
competitive. We may need to seek alternatives such as commercial private insurance coverage of
our Core Product and need to expand our sales channels and explore new collaboration
partnerships, such as engaging distribution partners in China, to maximize the sales potential of
our products and enhance our commercialization capability.
INTELLECTUAL PROPERTY RIGHTS
Intellectual property rights are central to the success of our business. Our commercial future
will depend, in part, on our ability to acquire and protect our intellectual property rights for
commercially significant technologies, inventions and know-how. This includes acquisition of new
patents, defense of existing patents, and protection of our trade secrets. We will also have to
operate without infringing, misappropriating, or otherwise violating third parties’ valid,
enforceable intellectual property rights.
As of the Latest Practicable Date, we hold 133 patents and patent applications, including 58
patents and patent applications in relation to our Core Product. All the patents and patent
applications are inventions. As of the Latest Practicable Date, we had not received any material
concerns or inquiries from relevant competent authorities that makes us to believe that any of the
pending patent applications will be rejected. As we have successfully obtained composition of
matter patent for HTD1801 in many countries and regions, including the United States, China, the
European Union and Japan, as well as crystalline form patent in the United States and China, to our
best knowledge, if any patent is not issued, it will not adversely affect the development and
commercialization of our Core Product in the United States, Mainland China and Europe in all
material aspects. The following table sets forth an overview of our material granted patents and
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filed patent applications in connection with our clinical and preclinical drug candidates as of the
Latest Practicable Date:
Pro duct N ame of patent (1) Juri sdiction (2) Status Patent ex piration (3)
Market
commerci al
rights of the
Com pany
Applic ation
date A pproval date
HTD1801 . . . Berberine Salts,
Ursodeoxycholic Salts and
Combinations, Methods of
Preparation and
Application Thereof
(4)
Australia, Brazil, Mainland
China, EAPO, EPO, Israel,
Japan, Korea, Mexico,
Singapore, United States,
South Africa, Canada, India,
New Zealand
Granted Australia: 2035/7/28,
2035/7/28
Brazil: 2035/7/28
Mainland China: 2035/7/28
EAPO: 2035/7/28,
2035/7/28
EPO: 2035/7/28
Israel: 2035/7/28, 2035/7/28
Japan: 2035/7/28
Korea: 2035/7/28
Mexico: 2035/7/28,
2035/7/28
Singapore: 2035/7/28
United States: 2035/11/12,
2035/8/25, 2035/12/20
South Africa: 2035/7/28
Canada: 2035/7/28
India: 2035/7/28
New Zealand: 2035/7/28
Ownership 2015/7/28 Australia: 2019/10/10,
2021/9/2
Brazil: 2022/11/29
Mainland China: 2019/5/17
EAPO: 2019/8/30, 2023/4/5
EPO: 2020/9/2
Israel: 2021/7/30, 2022/10/2
Japan: 2021/7/21, 2023/5/25
Korea: 2023/8/29
Mexico: 2020/3/25,
2023/7/14
Singapore: 2020/8/19
United States: 2019/5/28,
2021/4/27, 2023/6/27
South Africa: 2018/7/25
Canada: 2023/5/23
India: 2023/6/8
New Zealand: 2023/7/4
Canada, Mainland China,
EAPO, Israel, Japan, Korea,
Mexico, New Zealand,
United States
Pending – Ownership
Solid Forms of Berberine
Ursodeoxycholate and
Compositions and Methods
Thereof
(5)
Australia, Mainland China,
EAPO, United States
Granted Australia: 2038/5/11
Mainland China: 2037/5/12
EAPO: 2038/5/11
United States: 2038/6/11
Ownership 2018/5/11
(2017/5/12
in Mainland
China)
Australia: 2022/9/1
Mainland China: 2020/5/22
EAPO: 2022/9/16
United States: 2021/3/30
Australia, Canada, EPO, Hong
Kong, Israel, Japan, Korea,
New Zealand, United States
Pending – Ownership
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Pro duct N ame of patent (1) Juri sdiction (2) Status Patent ex piration (3)
Market
commerci al
rights of the
Com pany
Applic ation
date A pproval date
Compositions of Berberine
Ursodeoxycholate and
Methods Thereof for
Treating Fatty Liver
Disease, Diabetes and/or
Hyperlipidemia, and
Related Diseases and
Disorders
(6)
United States, EPO, Mainland
China
Pending – Ownership 2021/10/22
Compositions of Berberine
Ursodeoxycholate and
Methods for Treating
Primary Sclerosing
Cholangitis
(7)
United States Pending – Ownership 2022/1/28
HTD4010 . . . Compositions and Methods of
Using Islet Neogenesis
Peptides and Analogs
Thereof
Australia, Canada, Mainland
China, EPO, Hong Kong,
India, Israel, Japan, Korea,
Mexico, New Zealand,
Russia, United States, South
Africa
Granted Australia: 2034/3/14,
2034/3/14, 2034/3/14
Canada: 2034/3/14
Mainland China: 2034/3/14,
2034/3/14
EPO: 2034/3/14, 2034/3/14
Hong Kong: 2034/3/14
Israel: 2034/3/14
India: 2034/3/14
Japan: 2034/3/14, 2034/3/14
Korea: 2034/3/14
Mexico: 2034/3/14
New Zealand: 2034/3/14,
2034/3/14
Russia: 2034/3/14
United States: 2034/3/14,
2034/3/14, 2033/3/15
South Africa: 2034/3/14
Ownership 2014/3/14 Australia: 2018/11/1,
2021/1/7, 2022/8/4
Canada: 2022/10/18
Mainland China: 2019/4/16,
2021/4/6
EPO: 2018/10/3, 2022/4/13
Hong Kong: 2022/12/2
Israel: 2021/6/26
India: 2021/10/30
Japan: 2020/3/10, 2022/5/18
Korea: 2021/4/20
Mexico: 2020/12/14
New Zealand: 2020/11/3,
2020/12/1
Russia: 2019/4/23
United States: 2016/7/12,
2017/8/22, 2021/1/26
South Africa: 2016/12/21
United States Pending – Ownership
Conjugates of Islet Neogenesis
Peptides and Analogs, and
Methods Thereof
Mainland China, United States Granted Mainland China: 2037/3/9
United States: 2037/3/9,
2037/3/9
Ownership 2017/3/9 Mainland China: 2022/5/17
United States: 2020/11/10,
2023/11/7
EPO, United States Pending – Ownership
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Pro duct N ame of patent (1) Juri sdiction (2) Status Patent ex piration (3)
Market
commerci al
rights of the
Com pany
Applic ation
date A pproval date
Use of Polypeptide Compound
in Treatment of Acute
Pancreatitis
Japan, United States, Australia Granted Japan: 2037/5/11
United States: 2037/5/11,
2034/3/14
Australia: 2037/5/11
Ownership 2017/5/11 Japan: 2022/11/2
United States: 2020/9/15,
2022/12/27
Australia: 2023/7/6
Australia, Brazil, Canada,
Mainland China, EPO
Pending – Ownership
HTD2802 . . . Composition, and Application
and Pharmaceutical
Preparation Thereof
United States, Australia,
Canada, Israel
Granted Australia: 2036/11/10
Canada: 2036/11/10
United States: 2036/11/10
Israel: 2036/11/10
Ownership 2016/11/10 Australia: 2023/4/20
Canada: 2023/11/28
United States: 2022/6/28
Israel: 2023/6/2
Australia, Mainland China,
EPO, Israel, Japan, Korea,
United States
Pending – Ownership
Methods and Compositions for
Treatment of Inflammatory
Bowel Disease
Korea, Mainland China Granted Korea: 2038/8/8
Mainland China: 2038/8/8
Ownership 2018/8/8 Korea: 2023/11/7
Mainland China: 2022/9/6
Australia, Canada, EPO, Israel,
United States
Pending – Ownership
Abbreviations: EPO = European Patent Office; PCT = Patent Cooperation Treaty; EAPO = Eurasian Patent
Organization.
Notes:
(1) Unless otherwise indicated, the patent for applications within the same family is the same and is therefore
disclosed once.
(2) The reason why a patent has both granted and filed status in a jurisdiction is that we filed a number of
divisional, continuation, or other types of derivative patent applications based on the original patent
application to provide a boarder scope of patent claims and more extensive protections for our products.
(3) The patent expiration date is estimated based on current filing status, without taking into account any
possible patent term adjustments or extensions and assuming payment of all appropriate maintenance,
renewal, annuity and other government fees.
(4) The patents or patent applications direct to compounds, compositions, and methods of use of the Core
Product, covering the key characteristics of the Core Product. They provide, jointly with other patents or
patent applications in relation to the Core Product, sufficient and prolonged protections by multiple subject
matters to the development and commercialisation of the Core Product.
(5) The patents or patent applications direct to crystalline forms, methods of preparation, methods of use, and
compositions of the Core Product, covering the key characteristics of the Core Product. They provide,
jointly with other patents or patent applications in relation to the Core Product, sufficient and prolonged
protections by multiple subject matters to the development and commercialisation of the Core Product.
(6) The patent applications direct to compositions and methods of use of the Core Product, covering the key
characteristics of the Core Product. They provide, jointly with other patents or patent applications in
relation to the Core Product, sufficient and prolonged protections by multiple subject matters to the
development and commercialisation of the Core Product.
(7) The patent application directs to compositions and methods of use of the Core Product, covering the key
characteristics of the Core Product. It provides, jointly with other patents or patent applications in relation
to the Core Product, sufficient and prolonged protections by multiple subject matters to the development
and commercialisation of the Core Product.
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The term of an individual patent may vary based on the countries/regions in which it is
granted. The actual protection afforded by a patent varies on a claim-by-claim and
country-by-country basis and depends upon many factors, including the type of patent, the scope of
its coverage, the availability of any patent term extension or adjustment, the availability of legal
remedies in a particular country/region and the validity and enforceability of the patent. We cannot
provide any assurance that patents will be issued with respect to any of our pending patent
applications or any such patent applications that may be filed in the future, nor can we provide any
assurance that any of our owned, or in-licensed issued patents or any such patents that may be
issued in the future will be commercially useful in protecting our product candidates and the
methods of manufacturing the same.
With the support of freedom-to-operate analysis on HTD1801 and HTD4010, we are not
aware of any instances of potential or confirmed infringement of third parties’ IP rights in relation
to our HTD1801 and HTD4010 in China, the United States, and Europe during the Track Record
Period and up to the Latest Practicable Date. Based on the independent due diligence work
conducted by the Joint Sponsors, nothing has come to their attention that would reasonably cause
them to cast doubt on such view.
We may rely, in some circumstances, on trade secret and/or confidential information to
protect aspects of our product candidates. We seek to protect our proprietary product candidates
and processes, in part, by entering into confidentiality agreements with consultants, scientific
advisors and contractors, and invention assignment agreements with our employees. We have
entered into confidentiality agreements with our senior management and key members of our R&D
team and other employees who have access to trade secrets or confidential information about our
business. Our standard employment contract, which we used to employ each of our employees,
contains an assignment clause, under which we own all the rights to all inventions, technology,
know-how and trade secrets derived during the course of such employee’s work.
These agreements may not provide sufficient protection of our trade secret and/or
confidential information. These agreements may also be breached, resulting in the
misappropriation of our trade secret and/or confidential information, and we may not have an
adequate remedy for any such breach. In addition, our trade secret and/or confidential information
may become known or be independently developed by a third party, or misused by any collaborator
to whom we disclose such information. Despite any measures taken to protect our intellectual
property, unauthorized parties may attempt to or successfully copy aspects of our products or to
obtain or use information that we regard as proprietary without our consent. As a result, we may be
unable to sufficiently protect our trade secrets and proprietary information.
We also seek to preserve the integrity and confidentiality of our data and trade secrets by
maintaining physical security of our premises and physical and electronic security of our
information technology systems. Despite any measures taken to protect our data and intellectual
property, unauthorized parties may attempt to or successfully gain access to and use information
that we regard as proprietary. Please see the paragraphs headed “Risk Factors — Risks Relating to
Our Intellectual Property Rights” for a description of risks related to our intellectual property.
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We conduct our business under the brand name of “HighTide” or “ ё໋इ”. As of the Latest
Practicable Date, we held 34 trademarks and trademark applications in the United States, Mainland
China, Hong Kong, Europe and United Kingdom. We are also the owner of seven domain names.
We enter into collaboration agreements and other relationships with pharmaceutical
companies and other industry participants to leverage our intellectual property or gain access to the
intellectual property of others. For details, please see the paragraphs headed “— Collaboration
Agreement” in this section.
As of the Latest Practicable Date, we were not involved in any proceedings in respect of, and
we had not received notice of any claims of infringement of, any intellectual property rights that
may be threatened or pending, in which we may be a claimant or a respondent.
OUR SUPPLIERS
During the Track Record Period, our major suppliers for our R&D primarily consisted of
CROs and CDMOs and we did not experience any material disputes with our suppliers. In addition,
we believe that adequate alternative sources for such supplies exist, and we have developed
alternative sourcing strategies for these supplies. We will establish necessary relationships with
alternative sources based on supply continuity risk assessment. We generally have credit periods of
30 days.
Below is a summary of the key terms of a typical agreement with our CROs, SMOs and
CDMOs.
• Services . The CRO, SMO or CDMO provides us with services such as implementing
a clinical research project, manufacturing products as specified in the master
agreement or work order.
• Term. The CRO, SMO or CDMO is required to perform its services according to the
prescribed time frame set out in the master agreement or a work order.
• Payment. We are required to make payments to the CRO, SMO or CDMO according to
the payment schedule agreed by the parties.
• Confidentiality . We and the CRO, SMO or CDMO agree to keep confidential any
information in relation to the performance of the master agreement.
• Credit terms. We usually arrange payment within 30 days of receipt of invoice from
CRO, SMO or CDMOs. Installment payments will be made in accordance with the
milestone payment arrangements specified in the agreement.
• Intellectual Property . We own all intellectual property derived from the clinical
research project, and we are entitled to apply patent for such intellectual properties.
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• Medical Liabilities . The CDMO will be liable for medical events and accidents that
occur as a result of non-compliance with the quality of drugs manufactured by the
CDMO.
• Liabilities and termination. The liability of a CRO, SMO or CDMO arises at the
failure to provide services in accordance with the agreed upon service schedule, and
our liability arises at the failure to make timely arrangements for payment in
accordance with credit terms. If either party is prevented from or delayed in the
performance of its obligations under the agreement by force majeure for more than 60
consecutive or aggregate days or if either party is in breach of the agreement and fails
to remedy its breach for more than 30 days after notice is given by the non-breaching
party, the non-breaching party shall have the right to terminate the agreement
immediately by written notice to such breaching party.
In 2021 and 2022 and the six months ended June 30, 2023, our purchases from our five
largest R&D suppliers in each year/period in aggregate amounted to RMB26.9 million, RMB68.7
million and RMB36.4 million, representing 45.5%, 54.4% and 45.7% of our total corresponding
purchases, respectively, and our purchases from the largest R&D supplier in each year accounted
for 12.0%, 17.9% and 26.5% of our total corresponding purchases, respectively. Our material
increase in the expenses attributable to the five largest R&D suppliers during the Track Record
Period is in line with the advancement of clinical trials of our Core Product.
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The following table sets forth details of our five largest R&D suppliers during the Track
Record Period.
Supplier B ackgroun d
Major
purch ases
Commencement
of bu sine ss
rel ation ship Cre dit term s
Purch ase
amount
% of tot al
corre sponding
purch ases for
the ye ar
(RMBin
thousands)
ForthesixmonthsendedJune30,2023
Supplier C . . . A global CRO headquartered in US for
drug, biologic, and medical device
programs
CRO service Since 2019 Installment payments will
be made within 30 days
after receipt of invoices
21,103 26.5%
Supplier A . . . A global CDMO/CRO which mainly
provides pharmaceutical and
medical device companies with a
full range of integrated laboratory
R&D and production services from
drug discovery, development to
marketization
CDMO/CRO
service
Since 2016 Installment payments will
be made within 30 days
after receipt of invoices
5,167 6.5%
Supplier E . . . A meeting planning corporation
headquartered in the US, creating
communication projects for
pharmaceutical companies and a
wide range of other sectors
Meeting
planning
service
Since 2022 Installment payments will
be made upon
completion of
milestones or within
five days after the first
day of the meeting, as
applicable
4,081 5.1%
C R OC...... AC R O based in Jiangsu, mainly
providing biopharmaceutical
technology research and
development services, technology
transfer services and testing
services
CRO service Since 2013 Installment payments will
be made within 10
working days after
receipt of invoices
3,124 3.9%
Supplier F .... A n institution headquartered in the
US, mainly providing services for
performing clinical trials
Clinical site
service
Since 2023 Installment payments will
be made within 30 days
after receipt of invoices
2,927 3.7%
Total ....... 36,402 45.7%
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Supplier B ackgroun d
Major
purch ases
Commencement
of bu sine ss
rel ation ship Cre dit term s
Purch ase
amount
% of tot al
corre sponding
purch ases for
the ye ar
(RMBin
thousands)
FortheyearendedDecember31,2022
Supplier A . . . A global CDMO/CRO which mainly
provides pharmaceutical and
medical device companies with a
full range of integrated laboratory
R&D and production services from
drug discovery, development to
marketization
CDMO/CRO
service
Since 2016 Installment payments will
be made within 30 days
after receipt of invoices
22,545 17.9%
C R OE...... A global CRO headquartered in US for
early phase research, delivering
translational medicine
CRO service Since 2022 Installment payments will
be made within 30 days
after receipt of invoices
14,283 11.3%
Supplier C .... A global CRO headquartered in US for
drug, biologic, and medical device
programs
CRO service Since 2019 Installment payments will
be made within 30 days
after receipt of invoices
13,160 10.4%
Supplier B* . . . A global CDMO/CRO headquartered
in Hangzhou, providing innovative
clinical research solutions across
the full life cycle of
biopharmaceutical and medical
device products
CDMO/CRO
service
Since 2016 Installment payments will
be made within 30 days
after receipt of invoices
12,919 10.2%
CDMO A ..... A leading CDMO headquartered in
Zhejiang, providing one-stop
customized R&D and commissioned
production services for innovative
drugs to global pharmaceutical and
biotechnology companies
CDMO service Since 2018 Installment payments will
be made within 30 days
after receipt of invoices
5,811 4.6%
Total ....... 68,718 54.4%
Note: One of our pre-IPO investors is the subsidiary of Supplier B.
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Supplier B ackgroun d
Major
purch ases
Commencement
of bu sine ss
rel ation ship Cre dit term s
Purch ase
amount
% of tot al
corre sponding
purch ases for
the ye ar
(RMBin
thousands)
FortheyearendedDecember31,2021
CDMO A .... A leading CDMO headquartered in
Zhejiang, providing one-stop
customized R&D and commissioned
production services for innovative
drugs to global pharmaceutical and
biotechnology companies
CDMO service Since 2018 Installment payments will
be made within 30 days
after receipt of invoices
7,059 12.0%
Supplier C . . . A global CRO headquartered in US for
drug, biologic, and medical device
programs
CRO service Since 2019 Installment payments will
be made within 30 days
after receipt of invoices
6,836 11.6%
Supplier B* . . A global CDMO/CRO headquartered
in Hangzhou, providing innovative
clinical research solutions across
the full life cycle of
biopharmaceutical and medical
device products
CDMO/CRO
service
Since 2016 Installment payments will
be made within 30 days
after receipt of invoices
6,502 11.0%
Supplier A . . . A global CDMO/CRO which mainly
provides pharmaceutical and
medical device companies with a
full range of integrated laboratory
R&D and production services from
drug discovery, development to
marketization
CDMO/CRO
service
Since 2016 Installment payments will
be made within 30 days
after receipt of invoices
3,621 6.1%
Supplier D . . . A compliance consultant responsible
for filing of reports related to FDA
certification
Consulting
service
Since 2020 Payments will be made
within 30 days after
receipt of invoices
2,868 4.8%
Total ....... 26,886 45.5%
Note: One of our pre-IPO investors is the subsidiary of Supplier B.
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All of our five largest suppliers during the Track Record Period are Independent Third
Parties. None of our Directors or any Shareholder who, to the knowledge of our Directors, owns
more than 5% of our issued share capital immediately following completion of the Global
Offering, nor any of their respective associates had any interest in any of our five largest suppliers
during the Track Record Period.
COMPETITION
Our industry is highly competitive and subject to rapid and significant change. While we
believe that our differentiated development approach, our pipeline of drug candidates in clinical
and preclinical trials and our experienced management team provide us with competitive
advantages, we face potential competition from many different sources working to develop
therapies targeting the same indications against which we are developing our drug candidates.
These include major pharmaceutical companies, academic institutions, government agencies and
research institutions. Any drug candidates that we successfully develop and commercialize will
compete both with existing drugs and with any new drugs that may become available in the future.
We face fierce competition from existing products and product candidates under
development in the entire MASH, T2DM, SHTG, PSC and PBC market. In addition to approved
therapies, there are a large number of competing drug candidates currently under different clinical
stages. We may also face potential competition from existing products used off-label for MASH
and PSC. Those existing products may also be developed to expand their indications targeted by
the Core Product. As multiple product candidates are currently in Phase III clinical trials for each
of the targeted indications of the Core Product, our development and commercialization of Core
Product may be adversely affected some or all of such product candidates receive NDA approval
prior to the Core Product. For example, the FDA would request head-to-head studies for HTD1801
before the granting of the approval, which may impose higher risk of clinical failure and also delay
the original development plan. We face uncertainties in clinical trial development which are
subject to a variety of factors, including satisfactory safety and efficacy results from clinical trials,
successful enrollment of patients, and performance of CROs and other parties involved in clinical
trial development and others.
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A W ARDS AND RECOGNITION
The table below sets forth an indicative list of some of the awards and recognitions we have
received as of the Latest Practicable Date.
Award/Project Ye arA w ard/Gr ant Authority
OASE Partner (ᓃΆุྫМ )............ 2023 Office for Attracting Strategic Enterprises of Hong
Kong (܃)
Specialized, Excellent, Featured and
Innovative Small and Medium Enterprise
(ਖ਼ၚतอʕʃΆุ ) ..................
2023 Industry and Information Technology Bureau of
Shenzhen Municipality (ʷ҅ )
Small and Medium Innovative Enterprises
of Shenzhen
(ʕʃΆุ )...............
2022 Shenzhen Small and Medium Enterprise Service
Bureau (ਕ҅ )
Guangdong Provincial Engineering
Research Center of Multifunctional
Innovative Drug Development based on
Natural Products
(ي
Ӻʕː ) ................
2022 Department of Science and Technology of
Guangdong Province (ኪҦஔᝂ )
High-tech Enterprise ( ৷อҦஔΆุ ) ...... 2022 Shenzhen High-tech Innovation Committee
(ึ ), Shenzhen Municipal
Department of Finance (҅ ), National
Department of Taxation, Shenzhen Taxation
Bureau (೼ਕᐼ҅ଉέ̹೼ਕ҅ )
Director of HK Bio-Med Innotech
Association
(ᔼᖹ௴อ՘ึึ໨ ) ..........
2022 HK Bio-Med Innotech Association
(ᔼᖹ௴อ՘ึ )
Member of the third council of Shenzhen
Life Science and Biotechnology
Association
(֣
ଣԫึଣԫఊЗ ) .....................
2021 Shenzhen Life Science and Biotechnology
Association
(Ҧஔ՘ึ )
Top 50 Small and Medium Innovative
Enterprises of Longgang District
(Ꮂ੪ਜʕʃ௴อΆุ 50੶) ............
2020 Science and Technology Innovation Bureau of
Longgang District, Shenzhen
(Ҧ௴อ҅ )
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Award/Project Ye arA w ard/Gr ant Authority
Director Unit of Guangdong Biomedical
Innovation Technology Association
(ᔼᖹ௴อҦஔ՘ึଣԫఊЗ )
2020 Guangdong Biomedical Innovation Technology
Association (ᔼᖹ௴อҦஔ՘ึ )
Member Unit of Shenzhen Biomedicine
Promotion Association
(ఊЗ ) ......
2020 Shenzhen Biomedicine Promotion Association
(ආึ )
Shenzhen Peacock Plan Team
(ྌྠඟ ).................
2012 Shenzhen Science and Technology Innovation
Committee (ึ )
INSURANCE
We maintain insurance policies that we consider to be in line with market practice and
adequate for our business. Our principal insurance policies cover employee benefits liability and
adverse events in clinical trials. We currently do not maintain insurance for environmental liability
or property loss. Please refer to the section headed “Risk Factors — Risks Relating to our Business
and Industry — We have limited insurance coverage, and any claims beyond our insurance
coverage may result in our incurring substantial costs and a diversion of resources.” in this
prospectus.
We consider that the coverage from the insurance policies maintained by us is adequate for
our present operations and is in line with the industry norm. During the Track Record Period, we
had not made or been the subject of any material insurance claims.
EMPLOYEES
As of the Latest Practicable Date, we had 66 employees in total, and 47 employees are
stationed in our headquarters in Shenzhen. The following table sets forth the number of our
employees categorized by function and location as of the Latest Practicable Date.
Number of
employee s by
function s Percent age
Discovery and Clinical Development ........................ 3 4 5 2 %
C M C.................................................... 6 9 %
Regulatory Affairs ........................................ 5 8 %
Management Operations ................................... 2 1 3 2 %
Total ................................................... 66 100%
We enter into individual employment contracts with our employees covering salaries,
bonuses, employee benefits, workplace safety, confidentiality and non-competition, work product
assignment clause and grounds for termination.
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To maintain our workforce’s quality, knowledge, and skill levels, we provide continuing
education and training programs, including internal training, to improve their technical,
professional or management skills. We also provide training programs to our employees from time
to time to ensure their awareness and compliance with our policies and procedures in various
aspects. Furthermore, we provide various incentives and benefits to our employees, including
competitive salaries, bonuses and share-based payment, particularly our key employees.
Our employees’ remuneration comprises salaries, bonuses, provident funds, social security
contributions, and other welfare payments. We have made contributions to our employees’ social
security insurance funds (including pension plans, medical insurance, work-related injury
insurance, unemployment insurance and maternity insurance) and housing funds pursuant to
applicable laws and regulations. We have complied with all statutory social security insurance fund
and housing fund obligations applicable to us under the laws and regulations in China in all
material aspects during the Track Record Period and as of the Latest Practicable Date. Please refer
to the section headed “Risk Factors — Risks Relating to Our Business and Industry — Failure to
make social insurance and housing provident fund contributions for some of our employees timely
as required by PRC laws and regulations may subject us to late payments and fines imposed by
relevant governmental authorities.” in this prospectus.
During the Track Record Period, we had not made full contributions to the social insurance
premium and housing provident fund based on the actual salary level of some of our employees as
prescribed by relevant laws and regulations.
As advised by our PRC Legal Advisor, pursuant to relevant PRC laws and regulations, if we
fail to pay the full amount of social insurance contributions as required, we may be ordered to pay
the outstanding social insurance contributions within a prescribed period and may be subject to an
overdue fine of 0.05% of the delayed payment per day from the date on which the payment is
payable. If such payment is not made within the prescribed period, the competent authorities may
further impose a fine from one to three times the amount of any overdue payment. In view of the
above and based on the estimation of our Directors, the potential maximum penalty with respect to
fines that our Group may be exposed to during the Track Record Period, would be less than
RMB15,000, nil and nil in 2021 and 2022 and the six months ended June 30, 2023, respectively.
Our Directors believe that such non-compliance would not have a material adverse effect on
our business and results of operations, considering that: (i) as advised by our PRC Legal Advisor
and based on the written confirmations issued by the competent government authorities of our
Company and its subsidiaries, we had not been subject to any administrative penalties during the
Track Record Period and up to the Latest Practicable Date; (ii) we were neither aware of any
employee complaints filed against us nor involved in any labor disputes with our employees with
respect to social insurance and housing provident funds during the Track Record Period and up to
the Latest Practicable Date; (iii) as of the Latest Practicable Date, we had not received any
notification from the relevant PRC authorities requiring us to pay for the shortfalls or any overdue
charges with respect to social insurance and housing provident funds; and (iv) the amount of
shortfalls is low and such non-compliance will not have a material adverse effect on our financial
condition or results of operations taken as a whole. As a result, we did not make any provisions in
connection with these non-compliances during the Track Record Period and up to the Latest
Practicable Date.
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During the Track Record Period, Shenzhen HighTide engaged a third-party human resource
agency to pay social insurance premium and housing provident funds for three of our employees.
As advised by our PRC Legal Advisor, the engaging of third-party human resources agencies is not
in compliance with the applicable PRC rules and regulations. We terminated our contract with the
third-party human resource agency in September 2021.
According to the Social Insurance Law of PRC (), each
employer shall declare on its own and pay on time and in full social insurance contributions. Thus,
if an employer engages third-party human resource agencies to pay the social insurance, the
relevant authorities could order the employer to pay, within a prescribed time limit, the outstanding
amount with an additional late payment penalty at the daily rate of 0.05%, and if the employer fails
to make the overdue contributions within such time limit, a fine equal to one to three times the
outstanding amount may be imposed. According to the Regulations on the Administration of
Housing Provident Funds (၍ଣૢԷ), each employer shall apply to the housing
provident fund management center for registration of payment and deposit of the housing
provident fund and go through the formalities of opening housing provident fund accounts on
behalf of its employees. Thus, if the employer engages third-party human resource agencies to pay
the housing provident funds, the authority could order the employer to correct it within a
prescribed time limit, where failure to do so at the expiration of the time limit shall results in a fine
of not less than RMB10,000 nor more than RMB50,000 being imposed.
Our Directors believe that such non-compliance would not have a material adverse effect on
our business and results of operations, considering that: during the Track Record Period and up to
the Latest Practicable Date, (i) based on the written confirmations issued by the competent
government authorities of Shenzhen HighTide and advised by our PRC Legal Advisor, we had not
been subject to any administrative penalties relating to the engagement of the third-party human
resource agency; (ii) we were neither aware of any employee complaints filed against us nor
involved in any labor disputes with our employees relating to the engagement of the third-party
human resource agency; and (iii) we had not received any notification from the relevant PRC
authorities requiring us to pay for the shortfalls or any overdue charges relating to the engagement
of the third-party human resource agency.
In light of the foregoing, we have also adopted internal policies in relation to social
insurance and housing provident funds, which include the following on-going measures:
• we have issued an internal notice to our senior management and human resources
department in respect of the prohibition of the arrangement of third-party human
resources agencies for the newly employed employees to ensure that they are
informed of the new policy of such prohibition;
• our human resources department is responsible for conducting monthly review on
payment records of social insurance and housing provident funds to ensure that there
are no incidents of the arrangement of third-party human resources agencies. If any
incident of such arrangement is identified, the manager of our human resources
department will report to our Directors for further actions;
• we will continue to provide trainings to our employees in relation to the relevant laws
and regulations on social insurance and housing provident funds and the compliance
requirements from time to time;
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• we will continue to consult our PRC legal counsel on a regular basis for advice on
relevant PRC laws and regulations to enhance our awareness and to keep us abreast of
relevant regulatory developments.
Workplace S afety
We have adopted and maintained a series of rules, standard operating procedures, and
measures to maintain our employees’ healthy and safe environment. We implement safety
guidelines to set out information about potential safety hazards and procedures. We require
employees to participate in safety training to familiarize themselves with the relevant safety rules
and procedures. Also, we have policies in place and have adopted relevant measures to ensure the
hygiene of our work environment and the health of our employees.
Our PRC Legal Advisor has confirmed that, during the Track Record Period and up to the
Latest Practicable Date, we had not been subject to any material penalty in relation to health, work
safety, social and environmental protection.
PROPERTIES
As of the Latest Practicable Date, we did not own any real property. We leased 13 properties
in Mainland China and Hong Kong with an aggregate GFA of approximately 4,409.2 sq.m. We did
not lease any properties overseas. We believe our current facilities are sufficient to meet our
near-term needs, and additional space can be obtained on commercially reasonable terms to meet
our future needs. We will negotiate with our landlord for the renewal of the lease agreement that
will expire within three months and we do not anticipate undue difficulty in renewing our leases
upon their expiration.
The following table sets forth the details of our leased properties as of the Latest Practicable
Date:
Usage Loc ation GFA ( sq.m) Ex piry D ate
Employee Dormitory ....... Shenzhen, Mainland China 76 April 4, 2024
Office, R&D .............. Shenzhen, Mainland China 1,315.7 December 31, 2023 (1)
O f f i c e .................... Shenzhen, Mainland China 435.3 March 31, 2026
Employee Dormitory ....... Shenzhen, Mainland China 88.6 October 31, 2024
Employee Dormitory ........ Shenzhen, Mainland China 125.6 August 31, 2027
O f f i c e .................... Nanchang, Mainland China 100 September 16, 2025
Employee Dormitory ....... Shenzhen, Mainland China 62.7 February 29, 2024
Office, R&D .............. Shenzhen, Mainland China 1,672 November 19, 2028
Office, R&D .............. Shanghai, Mainland China 25 December 31, 2023 (1)
O f f i c e .................... Shanghai, Mainland China 1.6 Automatically renewed
each three months
since August 1, 2019
Office, R&D .............. Shanghai, Mainland China 333.5 May 16, 2024
O f f i c e .................... Shanghai, Mainland China 100.4 March 14, 2025
O f f i c e..................... Hong Kong 72.8 June 18, 2026
Note:
(1) We are discussing with the lessor for renewal and we do not anticipate any obstacles for such renewal.
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As of June 30, 2023, no single property interest that forms part of non-property activities
has a carrying amount of 15%, and no single property interest that forms part of property activities
has a carrying amount of 1%, of our total assets. Therefore, according to Chapter 5 of the Listing
Rules and section 6(2) of the Companies (Exemption of Companies and Prospectuses from
Compliance with Provisions) Notice (Cap. 32L of the Laws of Hong Kong), this prospectus is
exempted from compliance with the requirements of section 342(1)(b) of the Companies (Winding
Up and Miscellaneous Provisions) Ordinance in relation to paragraph 34(2) of the Third Schedule
to the Companies (Winding Up and Miscellaneous Provisions) Ordinance, which requires a
valuation report with respect to our Group’s interests in land or buildings.
As of the Latest Practicable Date, the actual usage of one leased property was inconsistent
with the usage set out in its title certificate but in compliance with the usage agreed in the lease
agreement. The usage in the title certificate is factory while our actual usage is office. As advised
by our PRC Legal Advisor, it is primarily the lessor’s responsibility to ensure the actual usage is
consistent with the approved usage, and to the extent necessary, to complete the relevant “change
of registration” procedures with the competent authorities to register the changed usage; we as the
tenant will not be subject to any administrative punishment or penalties because of the lessors’
failure to complete such procedures, but our use of this leased property may be affected by third
party claims or challenges against the lease. If the lessor does not have the requisite rights to lease
the defective leased property to us for our intended usage, the relevant lease agreement may be
deemed invalid, and as a result we may be required to vacate the defective leased property. Our
PRC Legal Advisor believes that there is a likelihood that we will be asked to vacate the
non-compliant leased property. We may incur substantial reinstatement, relocation and renovation
costs with an estimated relocation cost of no more than RMB10,000. Our Directors are of the view
that the relocation would not materially and adversely affect our business operations, considering
that (i) the leased property is highly substitutable and there is no difficulty in obtaining an
alternative property in a timely manner with the same conditions; (ii) we would be able to relocate
to a different site easily should we be required to do so given that the leased property is not
material to our operation nor used for manufacturing; (iii) the lease market in the vicinity of such
leased property is active; and (iv) the relocation cost is low.
We have enhanced our internal control measures in connection with property rentals. Before
entering into any new lease agreements, we will obtain the valid title certificates and other
necessary documentation from all of our lessors and carefully review the relevant documents
provided by the lessors, to ensure that we will not inadvertently lease any property with title
defects. All the lease agreements as well as the relevant documents provided by the lessors need to
be approved by our legal department. Our internal control consultant is of the view that our
enhanced internal control measures are effective.
Moreover, ten of our lease agreements for properties in China have not been registered with
relevant authorities in China. As advised by our PRC Legal Advisor, according to the PRC Civil
Code, failure to complete the registration and filing of lease agreements will not affect the validity
of the lease agreements. However, the relevant PRC authorities may impose a fine on us ranging
from RMB1,000 to RMB10,000 for each unregistered lease.
We have enhanced our internal control measures in connection with property rentals. We
will require all of our lessors to provide the necessary documentation before we enter into lease
agreements with them, and to cooperate with us in completing the registration of the lease
agreements. Designated staff from our legal department will conduct self-inspections from time to
time on whether the lease agreements are properly registered.
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PERMITS, LICENSES AND OTHER APPROV ALS
As of the Latest Practicable Date, we had obtained all requisite licenses, approvals and
permits from relevant authorities that are material to our operations in the United States, PRC,
Australia and Hong Kong and such licenses, permits and certifications all remain in full effect. For
more details regarding the laws and regulations to which we are subject, see “Regulatory
Overview” in this prospectus. We had not experienced any material difficulty in renewing such
licenses, permits, approvals and certificates during the Track Record Period and up to the Latest
Practicable Date, and we currently do not expect to have any material difficulty in renewing them
when they expire, if applicable. There is no material legal impediment in renewing such licenses,
permits, approvals and certificates as they expire in the future as long as we are in compliance with
applicable laws, regulations and rules. During the Track Record Period and up to the Latest
Practicable Date, we had not been penalized by any government authorities for any
non-compliance relating to maintenance and renewal of our material licenses, permits, approvals
and certificates.
The following table sets forth the details of our material licenses, permits and approvals as
of the Latest Practicable Date:
Licen se/Permit I ssuin g Authority Hol der Gr ant date
Expiration
date
Notice of Approval for Clinical Drug Trial
(No. 2023LP01784) (ஷ
ᇜ໮: 2023LP01784 ) ..............
NMPA Shenzhen
HighTide
September 8,
2023
N/A
Certificate for Clinical Trial/Medicinal Test
(No. 200213, 200214) (( ᑗґ༊᜕ /಻༊
ࣣ׼()ᇜ໮: 200213, 200214)) .........
The Department
of Health of
Hong Kong
Australia
HighTide
August 24,
2023
N/A
Decision on Approval of International
Cooperative Scientific Research on Human
Genetic Resources in China (No. (2022)
GH0605) ((߅
ࣣ֛() ᇜ໮: (2022)
GH0605)) ..............................
Administration
Office of China
Human Genetic
Resources
Shenzhen
HighTide
February 21,
2022
N/A
Notice of Approval for Clinical Drug Trial
(No. 2021LP00748) ((ஷ
ࣣٝ()ᇜ໮: 2021LP00748)) .............
NMPA Shenzhen
HighTide
May 21, 2021 N/A
Approval for HTD1801.PCT013 Clinical Trial
for Primary Biliary Cholangitis ...........
FDA Australia
HighTide
January 26,
2021
N/A
Notice of Approval for Clinical Drug Trial
(ࣣٝ..............)
NMPA Shenzhen
HighTide
October 25,
2019
N/A
Fast Track Designation of HTD1801 for
Nonalcoholic Steatohepatitis .............
FDA Australia
HighTide
November 23,
2018
N/A
Approval for HTD1801.PCT012 Clinical Trial
for Nonalcoholic Steatohepatitis and Type 2
Diabetes Mellitus .......................
FDA Australia
HighTide
October 24,
2018
N/A
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Licen se/Permit I ssuin g Authority Hol der Gr ant date
Expiration
date
Fast Track Designation of HTD1801 for
Primary Sclerosing Cholangitis ...........
FDA Australia
HighTide
September 25,
2018
N/A
Registration for HTD1801.PCT004 Clinical
Trial for Hypercholesterolemia ...........
TGA Australia
HighTide
January 18,
2018
N/A
Approval for HTD1801.PCT003 Clinical Trial
for Primary Sclerosing Cholangitis ........
FDA Australia
HighTide
December 8,
2017
N/A
Registration for HTD1801.PCT002 Clinical
Trial for Primary Sclerosing Cholangitis . . .
TGA Australia
HighTide
March 23,
2017
N/A
Orphan Drug Designation of HTD1801 for
Primary Sclerosing Cholangitis ...........
FDA Australia
HighTide
August 29,
2016
N/A
Acknowledgement of HTD4010.PCT001
Clinical Trial for Type 2 Diabetes Mellitus .
TGA Australia
HighTide
October 8,
2015
N/A
ENVIRONMENTAL, SOCIAL, AND GOVERNANCE
Govern ance
We acknowledge our environmental protection and social responsibility, and realize that
climate-related issues may affect our business operations. We are committed to, after listing,
complying with the reporting requirements related to environmental, social and governance
(“ESG”). We understand the environmental and social-related risks that will affect our business
and we, therefore, established an ESG working group for addressing such risks and formulated not
only corresponding working rules to supervise our corporate social responsibility but also
measures for sustainable development. The working group is responsible for (i) assessing and
managing our ESG-related risks and opportunities, and deliberating on the formulation of, among
others, our ESG strategic plans, management structure, systems, strategies and implementation
rules so as to ensure the continuous execution and implementation of our ESG policies; (ii) making
guidelines for and reviewing the identification and ranking of our important ESG issues; (iii)
determining our key ESG issues; (iv) reviewing our ESG work and internal monitoring systems,
and making recommendations on their appropriateness and effectiveness; (v) reviewing our
ESG-related disclosure documents, including but not limited to the annual ESG reports; (vi)
monitoring our ESG-related risks and making inquiries on and formulating corresponding
measures for major issues that affect our performance of ESG-related work, and reviewing and
supervising how such issues are handled; and (vii) providing ESG-related training and materials to
the Board of Directors.
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The Board has collective responsibility for managing the impact of the material ESG risks
and opportunities affecting the Group, formulation and establishment the Group’s ESG-related
mechanisms, policies and objectives, and reviewing the Group’s performance against the ESG
objectives on an annual basis and revising the ESG policy as appropriate if significant deviations
from the objectives are identified.
The Board has engaged an independent ESG consultant to assess ESG risks and review the
Group’s existing strategies, objectives and internal controls, and will implement necessary
improvements to mitigate the risks. The Board, ESG working group will continue to monitor the
Group’s strategic planning for risk management, including climate-related risks and those risks
that were monitored as part of standard operating procedures, to ensure that appropriate mitigation
measures are implemented as part of regular management reviews. Our ESG working group
consists of nine members, including our Director, senior managements and department heads who
will gain experience for monitoring ESG-related matters with the assistance of our independent
ESG consultant.
For the board governance structure for overseeing the ESG risks, the Group has established
three-level ESG management structure consisting of the Board, the ESG working group and the
departments. The Board will be informed of the ESG working group’s assessment on ESG matters
through regular reports, which include quarterly reports, interim reports and annual reports. When
there are important changes in the external ESG environment or policies, ESG working group will
report to the Board through special ESG reports. ESG working group meetings are divided into
regular and ad hoc meetings. Regular meetings are held at least twice a year, and ad hoc meetings
are held at the initiative of ESG working group members.
Materiality Assessment
In order to identify the scope of the Group’s ESG practices and disclosure priorities, we
commissioned an independent ESG consultant to conduct an ESG materiality analysis. This aims
to identify the ESG issues that are most relevant to the Group. After careful analysis, we have
identified following ESG material issues that are applicable to the Group’s business, taking into
account the Group’s business development direction and actual operating conditions, with
reference to the disclosure responsibilities as set out in the Appendix 27 of the Environmental,
Social and Governance Reporting Guidelines of the Main Board Listing Rules of the Stock
Exchange, the trends of the peers, and the material issues of the Sustainability Accounting
Standards Board.
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Materi ality Sub stantive I ssues Quantifie d Disclo sure s Unit
Highly material ....... Product quality and safety Pass rate for official
inspection/audit
%
Product innovation and research and
development
Expenses on research and
development to operation
revenue
%
Protecting customer privacy and
data security
Cases of data breach case
Protecting intellectual property
rights
Number of intellectual
property applications
item
Employee health and safety Lost days due to work
injury per capita
day/person
Compliant operations Training hours completed
per employee for
compliance
hour/person
Moderately material . . . Business ethics and anti-corruption Number of concluded
proceeding for corruption
case
Training hours completed
per employee for
anti-corruption
hour/person
Employee training and development Average training hours
completed per employee
hour/person
Employee benefits and protection Percentage of labor contract
signed
%
Investment in employees’
benefits
monetary unit
Employee Diversity Workforce by gender —
Waste discharge management General waste discharge per
capita
ton/person
Energy consumption Comprehensive energy
consumption per capita
kWh/person
Water consumption Water consumption per
capita
m
3/person
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Materi ality Sub stantive I ssues Quantifie d Disclo sure s Unit
Response to climate change Greenhouse gas emissions
per capita
CO2-e /person
Sustainability management of
supply chains
Percentage of employees
trained for quality
management,
environment management
and safety management
%
Number of suppliers unit
Risk management Number of events of
significant risk
case
Training hours completed
per employee for risk
management
hour/person
Responsible marketing Percentage of employees
trained
%
General material ...... Drug and antibiotic resistance in the
environment
— N/A
Risk Management
We have adopted a series of risk management policies which set out a risk management
framework to identify, assess, evaluate and monitor key risks associated with our strategic
objectives on an ongoing basis. The following internal policies and programs outline our approach
to risk management:
• The relevant departments in our Company are responsible for implementing our risk
management policy and carrying out our day-to-day risk management practice. Each
department is responsible for identifying and evaluating risks associated with its
working scope. In order to standardize risk management across our Group and set a
common level of transparency and risk management performance, the relevant
departments will (i) identify the source of the risks and potential impact, (ii) monitor
the development of such risks, and (iii) prepare risk management reports periodically
for ESG working group’s review.
• Our ESG working group will coordinate, oversee and manage the overall risks
associated with our business operations and quality control, respectively, mainly
including (i) reviewing our corporate risk in light of our corporate risk tolerance, (ii)
maintaining a key risk list and leading corresponding risk management activities, and
(iii) organizing revision and update of the key risk list. Our ESG working group will
be responsible for carrying out the risk prevention and management activities with
relevant department and conduct irregular reviews.
• Our Board will be responsible for (i) reviewing the risk management information, (ii)
reviewing annual risk management report of the Group, and (iii) overseeing ESG
working group to promulgating annual risk evaluations.
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• We will carry out a corporate risk assessment at least once a year which covers current
and potential risks that the Group faces, including but not limited to ESG risks and
strategic risks from disruptive forces (such as climate change). The Board of
Directors will, by themselves or by engaging external experts to, assess such risks,
review our existing strategies, objectives and internal control, and make necessary
improvements to reduce the risks. The Board and the ESG working group will keep
monitoring our approaches to risk management, including climate-related risks and
risks monitored as part of standard operation procedures, to ensure that appropriate
mitigation measures are implemented in regular management reviews.
• The decisions on the reduction, transfer, acceptance or control of the risks are
affected by various factors. We will incorporate climate-related issues, including the
analysis on physical and transition risks, into its risk assessment process and risk
appetite setting.We will consider the risks and opportunities in its strategic and
financial planning process if such risks and opportunities are deemed to be material.
After reviewing the environmental, social and climate-related risks and our
performance in response to such risks each year, we may revise and alter our ESG
strategies as appropriate.
We are adopting various strategies and measures to identify, assess, manage and mitigate
ESG and climate-related risks, including but not limited to:
• Reviewing and evaluating ESG reports of comparable companies in the industry so as
to ensure timely identification of all ESG-related risks.
• Discussing with the management from time to time so as to ensure that all material
ESG areas are identified and reported.
• Discussing key ESG principles and practices with key stakeholders to ensure that
important aspects are covered.
• Formulating specific ESG risk management approaches and quantified performance
indicators so as to identify and consider ESG risks and opportunities and separate
ESG risks and opportunities from other business risks and opportunities.
• Setting targets for environmental KPIs, including emissions, pollution and other
impacts on the environment, so as to reduce emissions and consumption of natural
resources.
We will review the ESG-related progress and risks made on a regular basis through direct
supervision by the Board and senior management, as well as with the assessment by our external
independent ESG consultant.
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We have carried out the following analysis on the ESG-related risks and actual and potential
impact of such risks on business, strategy and financial performance:
Typeo fR i sks Potenti alI m pact
Physical risks ..... Acute risks Frequent occurrence of
typhoons, floods, droughts
and other extreme weather
• Supplies/business interruption
resulting in loss of sales
Chronic risks Rising average temperature • Increased energy consumption in
laboratories, factories and offices
resulting in higher energy costs
• Decreased employees’ productivity
and increased labor costs
Transition risks . . . Policy and legal
risks
Industry low-carbon policy
requirements
• Government’s quotas allocation on
carbon emission and pressure on
carbon costs
Tightening regulatory
requirements
• Fines, loss of business, closure of
business, and negative publicity on
the brand and its reputation
• Stricter supply chain compliance
requirements
Litigation risk • Litigation risk brought from the
interruption of supply chain,
resulting in our failure to perform
the contract(s) on time
Market and
technology risk
Costs for transition to
low-carbon emission
technology
• Increased investment on R&D on
the new technology such as green
biocatalysis
• Increased cost on upgrading
facilities for energy saving and
high efficiency
Changes in customers’
behavior and preferences
• Loss of orders and decreased
revenue resulting from insufficient
disclosure of carbon neutrality
goals and data
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Typeo fR i sks Potenti alI m pact
• Demand from downstream
corporate customers to upstream
suppliers to provide green and
low-carbon biomedical products
and to formulate carbon-neutral
strategic goals
Rising raw material costs • Decreasing quantity and quality of
raw materials
• Increased R&D costs resulting
from insufficient resources of
laboratory supplies
Uncertain demand • Possible increased demand for
medicines and other
pharmaceutical products resulting
from the emergence of new chronic
diseases and other diseases
Reputation risk Negative publicity • Negative publicity on our
reputation resulting from its
inability to respond to
shareholders’ expectation caused
by insufficient disclosure on the
reduction targets and information
on emission
In addition, we shall take comprehensive measures to mitigate, adapt and build resilience to
the impact of the environment on our business, strategies and financial performance, as
summarized below:
Import ant Are as Key Me asure s
Solid Waste Management .................... • Requiring proper handling and disposal of solid waste
• Carrying out hazardous waste storage in accordance
with relevant standards, and establishing a system for
standardized management of hazardous waste
Energy and resources saving ................. • Establishing a “Green Office Management System”
• Replacing with energy-saving equipment in offices
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Goals, Targets and Policies
We monitor the following indicators to assess and manage our environmental and
climate-related risks arising from our business and production activities:
• Power consumption. We regularly monitor our electricity consumption levels and
implement measures to improve energy efficiency. For the years ended December 31,
2021 and 2022 and the six months ended June 30, 2023, our electricity consumption
levels were 152.9 MWh, 186.3 MWh and 109.2 MWh, respectively.
• Water consumption. We regularly monitor our water consumption levels and
implement measures to promote water conservation. For the years ended December
31, 2021 and 2022 and the six months ended June 30, 2023, our water consumption
levels were 2,121.1 tons, 2,307.4 tons and 2,017.2 tons, respectively.
• Emission of greenhouse gases. We regularly monitor the level of greenhouse gas
(“GHG”) emissions. For the years ended December 31, 2021 and 2022 and the six
months ended June 30, 2023, our greenhouse gas emissions were 87.2 tonnes of
CO
2-e, 106.2 tonnes of CO 2-e, and 62.3 tonnes of CO 2-e respectively. The waste gas
is properly treated before discharge.
• Discharge of hazardous waste. We regularly monitor the level of our hazardous waste
discharge. For the years ended December 31, 2021 and 2022 and the six months ended
June 30, 2023, our hazardous waste discharge levels were 0.5 tonnes, 0.7 tonnes and
0.3 tonnes, respectively.
We have in place a set of environmental, social and governance policies (“ ESG Policy ”)
which are in line with relevant international standards. We strive to reduce the negative impact on
the environment through our commitment to energy conservation and sustainable development. We
intend to adopt governance measures which are in compliance with all ESG-related laws and
regulations, and to monitor and collect ESG-related data so as to prepare our disclosure report after
listing and in accordance with the Environmental, Social and Governance Reporting Guide,
Appendix 27 of the Listing Rules in due course. We are preparing and shall formulate our ESG
policies in accordance with the standards under Appendix 27 of the Listing Rules, which outlines,
among other things, (i) establishment of a green management system; (ii) strict rules on waste
disposal; (iii) resources efficiency; and (iv) responses to climate change. We believe that
employees are the most valuable resource to us, and are committed to respecting their dignity and
treating them with respect. We shall continue to promote work-life balance and create a positive
workplace for all of our employees. With regard to the issues in our society and our communities,
we adopted the following policies relating to: (i) product quality and safety; (ii) employee’s
compensation and fringe benefits; and (iii) training, health, and professional and personal
development for our employees. The Board takes full responsibility for monitoring and identifying
the risks and opportunities related to our environment, society and climate, establishing and
adopting our ESG policies and objectives, and reviewing our performance based on its ESG
objectives annually. If material deviations from the objectives are found, our ESG strategies will
be revised accordingly.
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The ESG working group will set targets for each material key performance indicator at the
beginning of each financial year in accordance with the disclosure requirements under Appendix
27 of the Listing Rules and any other relevant rules and regulations after listing. Relevant targets of
the material key performance indicators will be reviewed annually to ensure that they are still
suitable for our needs. When setting the targets for environment-related KPIs, we shall take into
account our respective consumption or emission levels during the Track Record Period, and
consider our future business expansion in a comprehensive and prudent manner, with a view to
crafting a balance between business growth and environmental protection and achieving
sustainable development. We promote a low-carbon office and low-carbon travel, and implement a
number of measures including: (i) low-carbon use of electric lights and electrical equipment; (ii)
low-carbon use of ventilation equipment and air conditioners; (iii) water saving; (iv) paperless
office; (v) recycling and reuse of office supplies; (vi) improving the working environment in the
office; (vii) green travel; (viii) purchasing environmentally friendly products; and (ix) cherishing
food and avoiding food wastage. Considering that our production activities will be increased this
year, and referencing to the average of industry peers, international standards and our indicators
during the Track Record Period, we shall continue to put effort into achieving our goal of reducing
per capita water and electricity consumption and gas emissions by 3% in 2023, which may lead to
3% increase in our operation cost in 2023.
LEGAL PROCEEDINGS AND NON-COMPLIANCE
Legal Procee dings
During the Track Record Period and up to the Latest Practicable Date, we were not a party to
any actual or threatened legal or administrative proceedings. We are committed to maintaining the
standards of compliance with the laws and regulations applicable to our business. However, we
may from time to time be subject to various legal or administrative claims and proceedings arising
in the ordinary course of business.
Legal Com pliance
According to our PRC Legal Advisor, during the Track Record Period and up to the Latest
Practicable Date, we had not been and were not involved in any material non-compliance incidents
that led to fines, enforcement actions or other penalties that could, individually or in the aggregate,
have a material adverse effect on our business, financial condition or results of operations. Our
Directors confirmed that we had complied with all material applicable laws and regulations for our
operations in the United States and Australia and we were not involved in any material or systemic
non-compliance incidents in the United States, PRC and Australia.
Our legal team is responsible for building, developing and improving our compliance
management system to ensure our compliance culture is embedded into our everyday workflow.
The legal team conducts compliance training for our employees and identifies, assesses, and
reports compliance risks and expectations in a timely manner. Our legal team will also work with
the senior management team to monitor and evaluate the effectiveness of our compliance function
and structure to ensure that we comply with applicable laws and regulations.
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RISK MANAGEMENT AND INTERNAL CONTROL
RiskM anagement
We are exposed to various risks in our business operations, and we believe that risk
management is important to our success. For more details, see “Risk Factors — Risks Relating to
Our Business and Industry”. Our Directors oversee and manage the overall risks associated with
our operations. We have prepared written terms of reference in compliance with Rule 3.21 of the
Listing Rules and the Corporate Governance Code and Corporate Governance Report as set out in
Appendix 14 to the Listing Rules.
To monitor the ongoing implementation of our risk management policies and corporate
governance measures after the Listing, we have adopted or will continue to adopt, among other
things, the following risk management measures:
• establish an Audit Committee to review and supervise our financial reporting process
and internal control system;
• adopt various policies to ensure compliance with the Listing Rules, including but not
limited to aspects related to risk management, connected transactions and
information disclosure;
• provide anti-corruption and anti-bribery compliance training periodically to our
senior management and employees to enhance their knowledge and compliance with
applicable laws and regulations; and
• attend training sessions by our Directors and senior management in respect of the
relevant requirements of the Listing Rules and duties of directors of companies listed
in Hong Kong.
Intern al Control
We have employed an independent internal control consultant to assess our internal control
system in connection with the Listing. The internal control consultant has conducted a review
procedure on our internal control system in certain aspects, including financial reporting and
disclosure controls, corporate level controls, information system control management and other
procedures for our operations. We had improved our internal control system by adopting and
implementing the corresponding enhanced internal control measures. Going forward, we will
continue to regularly review and improve these internal control policies, measures and procedures.
We have also appointed external legal counsel to advise us on compliance matters, such as
compliance with the regulatory requirements on clinical R&D, which is also monitored by our
legal compliance team. Under our whistle blowing policy, we make our internal reporting channel
open and available for our employees to report, on an anonymous basis, any non-compliance
incidents and acts, including bribery and corruption. Reported incidents and persons will be
investigated and appropriate measures will be taken in response to the findings. We have also
established anti-bribery guidelines and compliance requirements. After considering the remedial
actions we have taken, our Directors are of the view that our internal control system is adequate
and effective for our current operations.
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We plan to provide our Directors, senior management, and relevant employees with
continuous training programs and updates regarding the relevant laws and regulations regularly to
proactively identify any concerns and issues relating to any potential non-compliance.
Anti-bribery
We maintain a strict code of conduct and anti-corruption policies among our employees and
distributors. We believe we will be less affected by the increasingly stringent measures taken by
the PRC government to correct corruptive practices in the pharmaceutical industry. We strictly
prohibit bribery or other improper payments in our business operations. This prohibition applies to
all business activities, anywhere globally, whether involving government officials or healthcare
professionals. Improper payments prohibited by this policy include bribes, kickbacks, excessive
gifts or entertainment, or any other payment made or offered to obtain an undue business
advantage. We keep accurate books and records that reflect transactions and asset dispositions in
reasonable detail. Requests for false invoices or payment of unusual, excessive or inadequately
described expenses should be rejected and promptly reported. Misleading, incomplete or false
entries in our books and records are never acceptable. We will also ensure that future
commercialization team personnel comply with applicable promotion and advertising
requirements, including restrictions on promoting drugs for unapproved uses or patient
populations and limitations on industry-sponsored scientific and educational activities.
Conflict of Interest and Non-Competition
Our code of conduct clearly defines the scope of conflicts of interest, including supplier and
customer relationships, hospitality and gifts, financial interests and personnel matters. Our
employees, including but not limited to our Directors and R&D team members, may not have or be
suspected of having a personal interest in business dealings with our suppliers, customers,
competitors or distributors; accept monetary, financial or other benefits from our suppliers,
customers, competitors or distributors; have close relatives who work for our suppliers, customers,
competitors or distributors; serve as a consultant or director in an association or company in the
same market or industry. At the same time, employees shall keep confidential information strictly
confidential and agree on the definition of confidential information, the content covered, the use of
intellectual properties, including but not limited to any transfer of know-how, acquisition of
technologies, and potential breach liabilities.
Our employee agreements have included non-competition clauses, which prohibit
employees from engaging in or directly or indirectly assisting any third party to engage in the
same, similar and competitive business activities as our Company for a period of two years from
the date of termination of employment. Any of our employees shall not, without prior written
approval from our Company, own, manage, operate or control any other entity that competes with
our Company.
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Data Privacy Protection
We have established procedures to protect the confidentiality of patients’ data. We
implement strict internal policies to govern the collection, handling, storage, retrieval of, and
access to our patients’ personal data and medical records and protect the security and
confidentiality of personal information to ensure compliance with all applicable national or
international rules and regulations on data protection and privacy. We usually require our
personnel to collect and safeguard personal information in their possession. Our information
technology network is configured with multiple layers of protection to secure our databases and
servers. We have also implemented a variety of protocols and procedures to safeguard our data
assets and prevent unauthorized access to our network. According to the GCP and relevant
regulations, access to clinical trial data has been strictly limited to authorized personnel. In order
to strengthen the management of our database, ensure the normal and effective operation of the
database, and ensure the security of the database, we have designated database administrator to
carry out the responsibilities of daily maintenance, authority control, security protection and other
management of the database. Additionally, we require external parties and internal employees
involved in clinical trials to comply with confidentiality requirements. Data are to be used only for
the intended use, as agreed by the patients and consistent with the informed consent form.
Furthermore, we enter into confidentiality agreements with our employees who have access
to any aforementioned privacy information. The confidentiality agreements provide that, among
other things, these employees are legally obligated not to misuse the confidential information
while in office, to surrender all confidential information in possession while resigning, and to
retain their confidential obligations after they leave office. We also implement a series of measures
to ensure our employees’ compliance with our data security measures. For instance, we provide
training to our employees on relevant data security policies.
During the Track Record Period and up to the Latest Practicable Date, we did not experience
any breach of confidential client information or any other client information-related incidents
which could cause a material adverse effect on our business, financial condition or results of
operations. Our PRC Legal Advisor have confirmed that, during the Track Record Period and up to
the Latest Practicable Date, we had not been subject to any material penalty in relation to data
privacy, had not been involved in any accident or fatality and had been in compliance with the
relevant PRC laws and regulations in all material aspects.
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DIRECTORS AND SENIOR MANAGEMENT
BOARD OF DIRECTORS
Our Board of Directors comprises nine Directors, including two executive Directors, four
non-executive Directors and three independent non-executive Directors. The following table sets
out information in respect of the Directors of the Company:
Name A geP o sition
Date of
joinin g our
Grou p
Date of
appointment
as a Director Role sa nd responsibilitie s
Dr. LIU Liping
(ᄎл̻) ........
54 Executive Director November 15,
2011
February 28,
2018
Overall management of the
business strategy,
corporate development
and research and
development of our
Group
Ms. YU Meng
(ɲ഼)...........
42 Executive Director May 4, 2015 May 11,
2023
Assisting the chief
executive officer in
management of business
strategy, corporate
development and research
and development of our
Group
M r .L IL i( ҽ቞) . . . 59 Non-executive
Director
November 15,
2011
October 16,
2018
Providing guidance and
advice on the corporate
and business strategies of
our Group
Dr. ZHU Xun
(ϡԘ) ..........
65 Non-executive
Director
November 30,
2020
November 30,
2020
Providing guidance and
advice on the corporate
and business strategies of
our Group
Mr. MA Lixiong
(৵ͭඪ) ........
49 Non-executive
Director
November 16,
2021
November 16,
2021
Providing guidance and
advice on the corporate
and business strategies of
our Group
Mr. JIANG Feng
(ࢤ..........)
44 Non-executive
Director
November 16,
2022
November 16,
2022
Providing guidance and
advice on the corporate
and business strategies of
our Group
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Name A geP o sition
Date of
joinin g our
Grou p
Date of
appointment
as a Director Role sa nd responsibilitie s
Mr. TAN Bo
(ᗈᏙ) ..........
50 Independent
non-executive
Director
Listing Date Listing Date Supervising and providing
independent
recommendations to our
Board
Dr. Jin LI ( ҽཨ) . . . 58 Independent
non-executive
Director
Listing Date Listing Date Supervising and providing
independent
recommendations to our
Board
Mr. HUNG Tak Wai
(ˆᅃਃ).........
65 Independent
non-executive
Director
Listing Date Listing Date Supervising and providing
independent
recommendations to our
Board
Executive Director s
Dr. LIU Li ping (ᄎл̻), aged 54, founder of our Group, was appointed as a Director on
February 28, 2018 and redesignated as an executive Director on May 15, 2023. Dr. Liu is primarily
responsible for overall management of the business strategy, corporate development and research
and development of our Group.
In addition to our Company, Dr. Liu has served the following positions in our Group:
• a director (and an executive director since October 2020) and chief executive officer
of Shenzhen HighTide since November 2011;
• a director of Shanghai HighTide from March 2014 to October 2020; and an executive
director and chief executive officer of Shanghai HighTide since October 2020;
• a director (and an executive director since October 2020) and chief executive officer
of JSK Healthcare since July 2015;
• an executive director and the chief executive officer of Australia HighTide since
August 2015;
• an executive director and the chief executive officer of HighTide Therapeutics, Ltd.
since March 2018;
• an executive director and the chief executive officer of U.S. HighTide since
November 2019;
• an executive director and the chief executive officer of HK HighTide since April
2018;
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• an executive director and the chief executive officer of Shanghai Fusion since May
2021;
• an executive director and the chief executive officer of Nanchang Fusion since
November 2021; and
• an executive director of Hebei Puhui since September 2023.
Dr. Liu has over 20 years of experience in the R&D of new drugs. Prior to founding our
Group, Dr. Liu worked as a postdoctoral researcher in the Hospital for Sick Children in Canada
from March 1995 to April 2000. From April 2000 to December 2002, she served as a director of
antigen discovery of CTL ImmunoTherapies Corporation. From January 2003 to September 2005,
she served as a group leader in chemistry department of MannKind Corporation. From September
2005 to May 2008, Dr. Liu worked in the translational research department of American Type
Culture Collection where she was primarily responsible for biomarker discovery, translational
research and drug discovery. Dr. Liu served as a senior director of R&D of Stealth Peptide Inc.
from May 2008 to August 2010. From February 2011 to April 2011, she served as the managing
director of ABLE BioGroup LLC. On November 15, 2011, Dr. Liu established Shenzhen HighTide
together with Hepalink. For details, please see “Our Group — Shenzhen HighTide” in the section
headed “History”.
Dr. Liu obtained her bachelor’s degree in chemistry and doctoral degree in physics of
polymers from Nankai University (කɽኪ ) in the PRC in July 1990 and December 1994,
respectively. Dr. Liu obtained a master of business administration from Johns Hopkins University
Carey Business School in May 2009 in the United States. Dr. Liu was awarded Technology
Innovation and Entrepreneurial Talent by the Ministry of Science and Technology of the PRC in
March 2014 and Distinguished Expert in Longgang District by the People’s Government of
Longgang District, Shenzhen in November 2017. She was also regarded as Top 10 Drug Innovative
Scientist by Securities Times in May 2021. Dr. Liu was awarded the EY Entrepreneurial Winning
Women Asia-Pacific in 2023.
Dr. Liu was a director, general manager and legal representative of Changzhou Aibo
Biotechnology Co., Ltd.* (ʮ̡ ), a PRC incorporated company, which was
dissolved on January 5, 2012 because it had not been in operations for a long time. Dr. Liu
confirmed that, Changzhou Aibo Biotechnology Co., Ltd was solvent before it was dissolved. Dr.
Liu also confirmed that, there was no wrongful act on the part of Dr. Liu leading to the dissolution
of Changzhou Aibo Biotechnology Co., Ltd. and that as of the Latest Practicable Date, no claims
have been made against Dr. Liu and she was not aware of any threatened or potential claims made
against her and there are no outstanding claims and/or liabilities as a result of the dissolution of
Changzhou Aibo Biotechnology Co., Ltd..
Ms. YU Men g (ɲ഼), aged 42, joined our Group on May 4, 2015 and was appointed as a
director on May 11, 2023. She was redesignated as an executive Director on May 15, 2023. Ms. Yu
Meng is primarily responsible for assisting Dr. Liu in management of business strategy, corporate
development and research and development of our Group.
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Ms. Yu Meng joined our Group on May 4, 2015 as a senior manager in Shenzhen HighTide,
and was the R&D director in Shenzhen HighTide from June 2017 to July 2021, where she was
primarily responsible for overall monitoring of CMC and pre-clinical activities of Shenzhen
HighTide. From August 2021 to September 2022, Ms. Yu Meng was the head of R&D operations of
our Group. From November 2022 to present, Ms. Yu Meng is the deputy general manager and vice
president of Shenzhen HighTide, primarily responsible for overall management and monitoring of
the research and development of the Group in China.
From September 2008 to September 2009, Ms. Yu Meng worked in Asymchem Laboratories
(Tianjin) Co., Ltd. (ʮ̡ ), a pharmaceutical company whose
shares are listed on Shenzhen Stock Exchange (stock code: 002821). From December 2009 to April
2015, Ms. Yu Meng served as a scientific liaison manager of Huya Biological Medicine
Technology (Shanghai) Co., Ltd. (ʮ̡ ).
Ms. Yu Meng obtained her bachelor’s degree in chemistry from University of Science and
Technology of China (ኪҦஔɽኪ ) in July 2004 in the PRC. Ms. Yu Meng obtained her
master of science degree in chemistry from University of Nevada, Reno in August 2008 in the
United States.
Non-executive Director s
M r .L IL i( ҽ቞), aged 59, joined our Group on November 15, 2011 as a director of
Shenzhen HighTide when Dr. Liu established Shenzhen HighTide together with Hepalink and was
appointed as a Director on October 16, 2018. He was redesignated as a non-executive Director on
May 15, 2023. Mr. Li is primarily responsible for providing guidance and advice on the corporate
and business strategies of our Group.
Mr. Li has served the following positions outside our Group:
• the chairman of the board of Hepalink since April 1998;
• a director of Shenzhen Topknow Industrial Development Co., Ltd. ( ଉέ̹ε౷ᆀྼ
ʮ̡ ) since May 2000;
• a director of Shenzhen Techdow Pharmaceutical Co., Ltd. (ʮ̡ )
since November 2010;
• a director of Urumchi Feilaishi equity investment partnership (limited partnership)
(ʮ̡ ) since June 2008;
• a director of Shenzhen Leren Technology Co., Ltd (ʮ̡ ) since
August 2007;
• a director of Hepalink Europe AB since February 2010;
• a director of Techdow (Hong Kong) Limited since May 2013;
• a director of HEPALINK USA INC. since April 2014;
• a director of Hepalink (Hong Kong) Limited since June 2014;
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• a director of Shenzhen Dekang investment development co. Ltd ( ଉέ̹ᅃੰҳ༟೯
ʮ̡ ) since March 2015;
• the chairman of the board of Shenzhen Fanpu Biological Technology Co., Ltd. ( ଉέ
ʮ̡ ) since April 2015;
• a director of Cytovance Biologics, Inc. since October 2015;
• the chairman of the board of Shenzhen Oncovent Biopharmaceuticals Co., Ltd. ( ଉέ
ʮ̡ ) since July 2016;
• a director of Shenzhen Arimab Biopharmaceuticals Co., Ltd. (ᔼᖹ
ʮ̡ ) since July 2018;
• a director of Hepalink Investment Limited since August 2019;
• a director of Hepalink Pharmaceutical (Hong Kong) Limited since August 2019;
• a director of Cytovance Cayman Inc. since August 2019;
• a director of Hepalink Capital I Inc, Hepalink Capital II Inc, Hepalink Healthcare
Partners I L.P, Hepalink Healthcare Partners II L.P, Hepalink Biotechnology I
Limited, Hepalink Biotechnology II Limited and Hepalink Biotechnology III Limited
since September 2021.
Mr. Li graduated in physics and chemistry from Chengdu University of Science and
Technology (ኪҦஔɽኪ ), which later merged with Sichuan University ( ̬ʇɽኪ ), in July
1987 in the PRC. He won many prizes as a successful entrepreneur, including the Second Prize of
Chengdu Science Technology Progress granted by Chengdu Municipal People’s Government in
March 1991 and the Chengdu Advanced Professional and Technical Individual granted by
Organization Department of the CPC Chengdu Committee in December 1990, 100 Shenzhen
Industry Leaders granted by Shenzhen Entrepreneurs Association in December 2011 and Shenzhen
Mayor Award granted by Shenzhen Municipal People’s Government in September 2012.
Since April 1998, Mr. Li has been the chairman of the board and an executive director of
Hepalink, a leading China-based pharmaceutical company with global pharmaceutical, innovative
biotech and CDMO businesses. As (i) Mr. Li is not involved in the daily management and operation
of our Company given his non-executive role in our Company, (ii) Hepalink is currently not
engaged in the development of the HTD1801, which is the Core Product of the Company; and (iii)
there is no other overlapping product between the Group and Hepalink, the roles held by Mr. Li in
Hepalink would not give rise to any material competition issue under Rule 8.10 of the Listing
Rules.
Notwithstanding that Mr. Li holds a number of company directorships, the Board believes
that he will still be able to devote sufficient time to our Board because (i) except for Hepalink, none
of the companies that Mr. Li holds a directorship is a listed Company that will require his devotion
as much as a director in a listed company; (ii) Mr. Li has demonstrated that he is able to properly
discharge his duties owed to multiple companies including Hepalink and has attended nearly all of
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the required board meetings as well as committee meetings of Hepalink; (iii) Mr. Li has been our
director since 2011 and he has demonstrated he has devoted sufficient time to our Company by
attending nearly all of the board meetings in our Company either in person or via his proxy; (iv)
Mr. Li’s experience as a director of Hepalink, a company listed in both Hong Kong and the PRC
would facilitate his understanding of corporate governance and his proper discharge of
responsibilities as a director of our Company; and (v) Mr. Li has undertaken to devote sufficient
time to attending to the management of our Company.
On December 19, 2019, the Shenzhen Securities Regulatory Bureau (the “ Shenzhen
Bure au”) of the China Securities Regulatory Commission (the “ CSRC ”) issued a letter of caution
(“Caution Letter ”) to Hepalink which identified three issues of concern, being (i) irregular
accounting treatment of Hepalink’s equity investment in Resverlogix Corp. (a company whose
shares are listed on the Toronto Stock Exchange (stock code: RVX)); (ii) Hepalink’s internal
approval process discrepancies with respect to certain related party transactions and other related
pricing policy disclosure discrepancies; and (iii) Hepalink’s inadequate registration of insiders
(the “ Concerne d Matter s”). Mr. Li, as a director of Hepalink, was subject to a regulatory
interview conducted with the CSRC in 2019 (the “ Regulatory Interview ”). As at the Latest
Practicable Date and to our best knowledge, there has not been any further correspondence
between Hepalink and the Shenzhen Bureau of the CSRC since Mr. Li completed the Regulatory
Interview in 2019, and Mr. Li has not been imposed any penalties by the Shenzhen Bureau of the
CSRC relating to the Concerned Matters.
Based on the inquiries with Mr. Li and the information available to the Company up to the
Latest Practicable Date, and on the basis that (i) Mr. Li has been the executive director of Hepalink
since its listing on the Main Board of the Hong Kong Stock Exchange Limited in 2020 and Mr. Li
remained the executive director of Hepalink as at the Latest Practicable Date; (ii) our PRC Legal
Advisor is of the view that the Caution Letter and the Regulatory Interviews are administrative
regulatory measures that do not constitute administrative penalties; (iii) Mr. Li confirmed that (a)
since he completed the Regulatory Interview in 2019, he has not been informed of any further
update of the status of the regulatory review of the Concerned Matters, nor has he been requested
to provide any further cooperation with any regulatory authorities in relation to the Concerned
Matters; and (b) he has not been punished or investigated by any regulatory authority in relation to
the Concerned Matters; and (iv) based on our due enquiry and review of related documents and
disclosure, to the best knowledge of our Company, we are not aware of any specific facts against
Mr. Li which would lead us to believe that Mr. Li is unsuitable to act as a director of a listed
company, the Directors are of the view that the Caution Letter and the Regulatory Interview do not
affect Mr. Li’s suitability as a Director under Rules 3.08 and 3.09 of the Listing Rules.
Dr. ZHU Xun ( ϡԘ), aged 65, joined our Group and was appointed as a Director on
November 30, 2020, and was redesignated as a non-executive Director on May 15, 2023. Dr. Zhu
was appointed as the chairman of the Board on December 17, 2020*. Dr. Zhu is primarily
responsible for providing guidance and advice on the corporate and business strategies of our
Group.
* Dr. Zhu was appointed as the chairman of the Board as an administrative role to chair the board meetings from
December17,2020tilltheListing,buthedidnotandwillnotinvolveintheday-to-daymanagementofourCompany.
Since the day-to-day management and operation of the Group has been and will remain to be driven by the executive
Directors and the senior management under Dr. Liu’s leadership, Dr. Liu will be appointed as the chairwoman of the
BoarduponListing.
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Dr. Zhu has served the following positions outside our Group:
• an independent non-executive director of Sihuan Pharmaceutical Holdings Group
Ltd. (ʮ̡ ), a pharmaceutical company whose shares are
listed on the Stock Exchange (stock code: 0460), since February 2014;
• a director of Changchun Yinuoke Pharmaceutical Technology Co., Ltd. (߅
ப΂ʮ̡ ) since July 2016;
• a director of Beijing Dingchi Biotechnology Co., Ltd. (ʮ̡ )
since December 2016;
• a director of Jianaishi Biomedical Technology (Hangzhou) Co., Ltd. (ᔼ
Ҧ(ψ)ʮ̡ ) since March 2018;
• an independent director of Shenzhen Chipscreen Biosciences Co., Ltd. (͛
ʮ̡ ), a technology company whose shares are listed on the
Shanghai Stock Exchange (stock code: 688321), since March 2018;
• a legal representative of Shenzhen Saibao Pengsheng Investment Co., Ltd. ( ଉέ̹ᒄ
ʮ̡ ) since November 2021; and
• an independent non-executive director of Lansen Pharmaceutical Holdings Limited
(ʮ̡ ), a pharmaceuticals and biotechnology company whose
shares are listed on the Stock Exchange (stock code: 503), since September 2022.
Dr. Zhu served several positions in Norman Bethune Medical University (ɽኪ )
(currently known as Norman Bethune Health Science Center of Jilin University (ࢸ
ᔼኪ௅)), including lecturer, professor and doctoral supervisor in the immunological department,
dean of the department and vice president of the University from December 1985 to June 2018.
From April 2004 to September 2011, he served as the vice chairman of the board of directors and
the general manager in Changchun Botai Medicine Biology Technology Co., Ltd. (௹इᔼᖹ
ப΂ʮ̡ ).
Dr. Zhu graduated in medicine from Jilin Medical College (ᔼኪ৫ ) (currently known
as Beihua University ( ̏ശɽኪ )) in December 1982 in the PRC and obtained his doctoral degree
in medicine from Norman Bethune Medical University (ɽኪ ) in April 1989 in the
PRC.
Notwithstanding that Dr. Zhu holds a number of listed company directorships, the Board
believes that he will still be able to devote sufficient time to our Board because (i) none of his
commitments to such other listed companies are of an executive nature and none of them require
his full-time involvement; (ii) Dr. Zhu has demonstrated that he is able to properly discharge his
duties owed to multiple listed companies and has attended nearly all of the required board meetings
as well as committee meetings of these listed companies; (iii) Dr. Zhu has joined our Group since
2020 and he has demonstrated he has devoted sufficient time to our Company by attending nearly
all of the required meetings in our Company; (iv) Dr. Zhu’s experience as a director of listed
companies in both Hong Kong and the PRC would facilitate his understanding of corporate
DIRECTORS AND SENIOR MANAGEMENT
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governance and his proper discharge of responsibilities as a director of our Company; and (v) Dr.
Zhu has undertaken to devote sufficient time to attending to the management of our Company.
Dr. Zhu was a director of Beijing Yitang Biotechnology Co., Ltd.* (ࠢ
ʮ̡), a PRC incorporated company, which was dissolved in June 2022 because it had not been in
operations for a long time. Dr. Zhu was a director of Shenzhen Zhongke Huierli Biotechnology
Co., Ltd.* (ʮ̡ ), a PRC incorporated company, which was wound
up due to bankruptcy on December 15, 2020. Dr. Zhu confirmed that, Beijing Yitang
Biotechnology Co., Ltd. was solvent before it was dissolved. Dr. Zhu also confirmed that, there
was no wrongful act on the part of Dr. Zhu leading to the dissolution of Beijing Yitang
Biotechnology Co., Ltd. or the winding-up of Shenzhen Zhongke Huierli Biotechnology Co., Ltd.
and that as of the Latest Practicable Date, no claims have been made against Dr. Zhu and he was not
aware of any threatened or potential claims made against him and there are no outstanding claims
and/or liabilities as a result of the dissolution of Beijing Yitang Biotechnology Co., Ltd. or the
winding-up of Shenzhen Zhongke Huierli Biotechnology Co., Ltd..
Mr. MA Lixion g (৵ͭඪ), aged 49, joined our Group and was appointed as a Director on
November 16, 2021 and was re-designated as a non-executive Director on May 15, 2023. Mr. Ma is
primarily responsible for providing guidance and advice on the corporate and business strategies of
our Group.
Mr. Ma mainly holds the current directorship and management positions in the following
companies:
• an executive director and general manager in Yuthai Investment Management Co.,
Ltd. (ʮ̡ ) since April 2015;
• an executive director and general manager in Shenzhen AIH Capital Management
Co., Ltd. (ʮ̡ ) since October 2015; and
• a director in Qide Technology Group Ltd. (ʮ̡ ) since February
2021.
Mr. Ma served as a senior auditor at the PWC from 1998 to 2003. He served as a vice
president at the Hong Kong First Investment Group Limited from 2004 to 2015.
Mr. Ma obtained his bachelor’s degree in international accounting from Shenzhen
University ( ଉέɽኪ ) in June 1998 in the PRC. He obtained the professional qualification in fund
in December 2016.
Mr. Ma was a supervisor of Foshan Boshen Investment Consulting Co., Ltd.* ( Нʆ̹௹͡
ʮ̡ ), a PRC incorporated company, which was dissolved on April 22, 2013 because
it had not been in operations for a long time. Mr. Ma was a supervisor of Shenzhen Kaimen Seven
Things Green Food Co., Ltd.* (ʮ̡ ), a PRC incorporated
company, which was dissolved because it had not been in operations for a long time. Mr. Ma
confirmed that, each of Foshan Boshen Investment Consulting Co., Ltd. and Shenzhen Kaimen
Seven Things Green Food., Ltd. was solvent before they were dissolved. Mr. Ma also confirmed
that, there was no wrongful act on the part of Mr. Ma leading to the dissolution of Foshan Boshen
DIRECTORS AND SENIOR MANAGEMENT
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Investment Consulting Co., Ltd. or Shenzhen Kaimen Seven Things Green Food Co., Ltd. and that
as of the Latest Practicable Date, no claims have been made against Mr. Ma and he was not aware
of any threatened or potential claims made against him and there are no outstanding claims and/or
liabilities as a result of the dissolution of Foshan Boshen Investment Consulting Co., Ltd. or
Shenzhen Kaimen Seven Things Green Food Co., Ltd..
Mr. JIANG Fen g (ࢤ)aged 44, joined our Group and was appointed as a Director on
November 16, 2022, and was redesignated as a non-executive Director on May 15, 2023. Mr. Jiang
is primarily responsible for providing guidance and advice on the corporate and business strategies
of our Group.
Since January 2021, Mr. Jiang has been serving as a vice general manager of Guangdong
Kaiheng Private Equity Investment Fund Management Co., Ltd. (၍ଣ
ʮ̡ ).
Mr. Jiang worked as a senior manager in the bureau of retired cadres of China Development
Bank from October 2016 to February 2018. From February 2018 to January 2021, Mr. Jiang
worked as a senior manager in the party committee office of China Development Bank Capital Co.,
Ltd.
Mr. Jiang obtained his bachelor’s degree in wireless communication from Chinese People’s
Liberation Army Communication Command College (౨ኪ৫ ) in June
2002 in the PRC and his master’s degree in military history from PLA Nanjing Institute of Politics
(ኪ৫ ) in March 2005 in the PRC.
Independent Non-executive Directors
Mr. TAN Bo ( ᗈᏙ), aged 50, was appointed as an independent non-executive Director with
effect from the Listing. He is responsible for supervising and providing independent
recommendations to our Board.
Mr. Tan has served as an independent non-executive director of Globe Metals & Mining, a
company whose shares are listed on the Australian Securities Exchange (stock code: GBE), since
October 2013, and an independent non-executive director of Akeso, Inc., a company whose shares
are listed on the Stock Exchange (stock code: 9926), where he has served as the chairman of the
audit committee, since April 2020.
Mr. Tan has extensive experience within the financial and pharmaceutical industries, and has
worked in private equity, equity research and commercial sectors for over 15 years. He worked in
Macquarie Capital Limited in Hong Kong from November 2004 to February 2006. From March
2006 to March 2007, he worked in the equity research division of Lehman Brothers Asia Limited.
From February 2009 to December 2019, Mr. Tan worked at 3SBio Inc., a company whose shares
are listed on the Stock Exchange (stock code: 1530), and served as its executive vice president,
executive director and chief financial officer (“ CFO”), being primarily responsible for the finance
management of the company. From September 2020 to January 2023, Mr. Tan served as an
independent non-executive director of Everest Medicines Limited, a company whose shares are
listed on the Stock Exchange (stock code: 1952).
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Mr. Tan obtained his bachelor’s degree in economics from Renmin University of China ( ʕ
਷ɛ͏ɽኪ ) in July 1994 in the PRC, master’s degree in economics from the University of
Connecticut in December 1996 and a master of international management from American Graduate
School of International Management (now known as Thunderbird School of Global Management)
in August 1998 in the United States.
Dr. Jin LI ( ҽཨ), aged 58, was appointed as an independent non-executive Director with
effect from the Listing. He is responsible for supervising and providing independent
recommendations to our Board.
Since August 2015, Dr. Li has served as the chairman of the board and general manager of
Beijing Orbiepharm Co., Ltd. (ʮ̡ ). Since December 2018, he has
served as an independent director at Chengdu Easton Biopharmaceuticals Co., Ltd (ي
ʮ̡ ), a company whose shares are listed on the Shanghai Stock Exchange (stock
code: 688513).
Dr. Li also holds a series of other positions outside our Group, including a director of
Huaqing Bencao Investment Arrangement Limited Company (ʮ̡ )
since May 2015, a director of Yaodu (Beijing) Medical Information Consulting Co., Ltd. ( ᖹನ
ʮ̡ ) (currently known as Pharmacodia Pharma Intelligence (Beijing)
Technology Co., Ltd. (ʮ̡ ) since July 2017, the chairman of the
board of Qingdao Orbiepharm Co., Ltd. (ʮ̡ ) from November 2013 to
April 2022, the chairman of the board of director of Qingdao Pet Love Animal Hospital
Management Co., Ltd. (ʮ̡ ) since August 2018, a director of
Beijing Zhongguancun Shangdi Biotechnology Development Co., Ltd. (Ҧ
ʮ̡ ) since September 2021, an independent non-executive Director of 3D Medicines
Inc., a company whose shares are listed on the Stock Exchange (stock code: 1244) since December
2022 and a director of Beijing Konruns Pharmaceutical Co., Ltd. (ʮ̡ ), a
company whose shares are listed on the Shanghai Stock Exchange (stock code: 603590) since
January 2023.
Dr. Li obtained his Ph.D. in chemistry from the University of Wisconsin-Milwaukee in the
United States in May 1999. He has published more than 25 papers and 14 book chapters in the
chemistry field, and is the inventor of more than 30 patents. He also obtained the Fund Practicing
Qualification Certificate in September 2018 from the Asset Management Association of China, and
the independent director certificate issued by the Shanghai Stock Exchange in November 2018.
Notwithstanding that Dr. Li holds a number of listed company directorships, the Board
believes that he will still be able to devote sufficient time to our Board because (i) none of his
commitments to such other listed companies are of an executive nature and none of them require
his full-time involvement; (ii) Dr. Li has demonstrated that he is able to properly discharge his
duties owed to multiple listed companies and has attended nearly all of the required board meetings
as well as committee meetings of these listed companies, (iii) Dr. Li’s experience as a director of
listed companies in both Hong Kong and the PRC would facilitate his understanding of corporate
governance and his proper discharge of responsibilities as a director of our Company, and (iv) Dr.
Li has undertaken to devote sufficient time to attending to the management of our Company.
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Mr. HUNG T akW ai( ˆᅃਃ), aged 65, was appointed as an independent non-executive
Director with effect from the Listing. He is responsible for supervising and providing independent
recommendations to our Board.
Mr. Hung worked at UBS AG, Hong Kong from October 2001 to March 2009. Mr. Hung was
the project director in the equity & derivatives department of BNP Paribas Hong Kong Branch from
November 2009 to August 2011, a managing director in UBS Corporate Management (Shanghai)
Co. Ltd. from October 2011 to September 2012, an assistant president in China Merchant
Securities Co. Limited from November 2012 to October 2018, a senior adviser in Macquarie
Capital Limited from June 2019 to June 2020 and a senior adviser in Expecta Capital Limited since
May 2022.
Mr. Hung obtained the senior management qualification for securities companies issued by
the CSRC in June 2007. He was a vice-chair of the Asset Securitization and Structured Financing
Professional Committee (ࡰin National Association of
Financial Market Institutional Investors (ਠ՘ึ ) from April 2018 to
September 2022.
Mr. Hung obtained his bachelor degree of science in industrial chemistry in the City
University in London in June 1981 and his master degree of science in chemical engineering in
Columbia University in the USA in January 1983.
Having considered the nature and reasons of the aforementioned dissolution or winding-up
of companies that Dr. Liu, Dr. Zhu Xun and Mr. Ma Lixiong used to hold a position in, our
Directors are of the view that such dissolution or winding-up would not affect the suitability of Dr.
Liu, Dr. Zhu Xun and Mr. Ma Lixiong to act as the Company’s directors under Rules 3.08 and 3.09
of the Listing Rules based on the following reasons: (i) the dissolution or winding-up of the
aforementioned companies was not due to the dishonesty, gross negligence or recklessness of Dr.
Liu, Dr. Zhu Xun and Mr. Ma Lixiong; and (ii) each of Dr. Liu, Dr. Zhu Xun and Mr. Ma Lixiong
has attended the relevant training provided by our Hong Kong legal counsel and is aware of the
requirements and obligations as directors of a listed company pursuant to the Listing Rules and has
undertaken to observe and comply with all the relevant rules and regulations. Based on the
independent due diligence work conducted by the Joint Sponsors, nothing has come to their
attention that would reasonably cause them to cast doubt on such view.
COMPETITION
As of the Latest Practicable Date, none of our Directors has any interests in any business,
which competes or is likely to compete, either directly or indirectly, with our business which
would require disclosure under Rule 8.10 of the Listing Rules.
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SENIOR MANAGEMENT
Our senior management is responsible for the day-to-day management of our business. The
table below shows certain information in respect of the senior management of our Company:
Name A geP o sition
Date of
joinin g our
Grou p
Date of
appointment
a sas enior
management Role sa nd responsibilitie s
Dr. LIU Liping
(ᄎл̻) ......
54 Chief executive
officer
November 15,
2011
February 28,
2018
Overall management of the
business strategy, corporate
development and research and
development of our Group
Dr. Leigh Anne
MACCONELL .
57 Chief development
officer
February 1,
2021
February 1,
2021
Leading and overseeing global
clinical and non-clinical
development, CMC, drug
safety and project
management activities of our
Group
Mr. SIM Koon Yin
Edmund
(ӏᝈሬ) ......
54 Chief financial officer December 1,
2022
December 1,
2022
Overseeing management of the
Group’s capital market
activities, finances and legal
affairs
Ms. YU Meng
(ɲ഼) ........
42 Deputy general
manager
May 4, 2015 June 1, 2017 Assisting the chief executive
officer in management of
business strategy, corporate
development and research and
development of our Group
Dr. MA Tianwei
(৵˂ਃ) ......
56 Vice president of
discovery research
February 1,
2023
February 1,
2023
Overseeing management of the
discovery research of our
Group
Ms. YU Li
(ɲ஁) ........
47 Vice president November 15,
2011
February 28,
2018
Overseeing management of
administration of our Group
Ms. BAI Ru
(ͣন
) ........
38 Director of
non-clinical
development
February 6,
2012
November 1,
2020
Management of the preclinical
pharmacology,
pharmacokinetics and
toxicology of our Group
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Dr. LIU Li ping (ᄎл̻), aged 54, was appointed as the chief executive officer of our
Company on February 28, 2018. For details of her biography, please see “— Board of Directors —
Executive Directors” in this section.
Dr. Lei gh Anne MACCONELL , aged 57, joined our Group as the chief development officer
on February 1, 2021. Dr. MacConell is primarily responsible for leading and overseeing global
clinical and non-clinical development, CMC, drug safety and project management activities of our
Group.
From October 1998 to March 2003, Dr. MacConell served as a postdoctoral research
associate of The Salk Institute. From March 2003 to February 2013, Dr. MacConell served in
Amylin Pharmaceuticals Inc. including medical research and clinical scientist with her last
position being a senior director. From June 2013 to May 2020, Dr. MacConell served in various
positions, the latest position having served as a senior vice president of clinical development and
cholestasis programme head in Intercept Pharmaceuticals Inc., a pharmaceutical company whose
shares are listed on NASDAQ Global Market (stock symbol: ICPT). Dr. MacConell has been the
chief development officer of U.S. HighTide since February 2021.
Dr. MacConell obtained her bachelor’s degree in biopsychology from University of
California, Santa Barbara in December 1989 in the United States and her master’s and doctoral
degree in neuroscience from University of California, San Diego in June 1994 and December 1998
in the United States, respectively.
Mr. SIM Koon Yin E dmun d (ӏᝈሬ), aged 54, joined our Group as the chief financial
officer on December 1, 2022. Mr. Sim is primarily responsible for overseeing the Group’s
management of the capital market activities, finances and legal affairs.
Mr. Sim has over 18 years of experience in the investment banking industry. From March
2004 to June 2008, Mr. Sim served as a director in equity capital markets in Citigroup Global
Markets Asia Limited where he was responsible for Hong Kong equity markets offerings. Mr. Sim
worked in Goldman Sachs (Asia) L.L.C. and Goldman Sachs Gao Hua Securities Company
Limited from June 2008 to May 2010 as an executive director in the financing group department.
From May 2010 to July 2012, Mr. Sim served as a managing director and co-head of the China
equity markets department in Merrill Lynch (Asia Pacific) Limited. Mr. Sim served as a managing
director and head of global capital markets from October 2012 to May 2017 and a managing
director and head of equities division from May 2017 to October 2018 in China Merchants
Securities International Company Limited, where he was primarily responsible for the equity and
debt capital market offering as well as the overall management of the institutional equities,
investment research, and financial products department as being the head of the equities division.
From November 2019 to November 2022, Mr. Sim served as a vice president of Vitasky Research
Holdings Co. Limited where he was primarily responsible for international business development
and capital markets activities. Mr. Sim has been the chief financial officer of HK HighTide since
December 2022.
Mr. Sim obtained his bachelor of business degree in accountancy from Queensland
University of Technology in August 1996 in Australia and his master of science degree in financial
management from University of London in December 2000 in the United Kingdom through long
distance learning. In May 1999, Mr. Sim was admitted as a certified practising accountant of the
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Australian Society of Certified Practising Accountants. Mr. Sim has been a Certified Public
Accountant of the Hong Kong Institute of Certified Public Accountants (“ HKICPA ”) since March
2000.
Ms. YU Men g (ɲ഼), aged 42, was appointed as the deputy general manager of our Group
on June 1, 2017. For details of her biography, please see “— Board of Directors — Executive
Directors” in this section.
Dr. MA Ti anwei ( ৵˂ਃ), aged 56, was appointed as the vice president of discovery
research of our Group on February 1, 2023. Dr. Ma is primarily responsible for leading and
overseeing the discovery research of our Group.
From March 2000 to March 2018, Dr. Ma worked in Eli Lilly China. From April 2011 to
December 2017, Dr. Ma served as a R&D pharmaceutical director in Lilly China Research and
Development Center. From July 2018 to August 2019, Dr. Ma served as a vice president in PegBio
Co., Ltd. From September 2019 to January 2023, Dr. Ma served as a vice president and the head of
chemistry in BioFront Therapeutics, Beijing. Dr. Ma has been the vice president of Shanghai
Fusion since February 2023.
Dr. Ma obtained his bachelor of science degree in organic chemistry from Nankai University
(කɽኪ ) in July 1989 in the PRC and his master of science degree in medicinal chemistry from
Beijing Medical Sciences University in July 1992 in the PRC, which was later merged into Peking
University ( ̏ԯɽኪ ) in April 2000 in the PRC. Dr. Ma obtained his doctorate degree from
University of Georgia in June 1997.
Ms.Y UL i( ɲ஁), aged 47, was appointed as the vice president of our Group on February
28, 2018. Ms. Yu Li joined our Group on November 15, 2011 as a vice general manager of
Shenzhen HighTide. Ms. Yu Li is primarily responsible for the management of administration of
our Group.
Ms.Yu Li served as an engineer of Shandong Xinhua Pharmaceutical Co., Ltd. (อശႡ
ʮ̡ ), a pharmaceutical company whose shares are listed on Shenzhen Stock
Exchange (stock code: 000756) from July 1998 to February 2003, where she was mainly
responsible for supervising production. From May 2003 to December 2007, Ms. Yu Li served in
Shanghai Yoseen New Drug R&D Co., Ltd. (ʮ̡ ) with her last position
being a senior manager of registration department, where she was mainly responsible for
development and regulatory affairs of new drugs. From July 2009 to February 2010, Ms. Yu Li
served as a regulatory affairs manager of Stealth Peptides International (Shanghai) Inc. ( ੰ㹻ᅃ͛
ʮ̡ ) (currently known as Tealth Peptides International (Shanghai) Inc.
(ʮ̡ )). From March 2010 to August 2011, Ms. Yu Li served as a
regulatory affairs manager of All Pharma (Shanghai) Trading Co., Ltd. (ࠢ
ʮ̡). Ms. Yu Li has been the vice president of Shenzhen HighTide since November 2011, the vice
president of Australia HighTide since August 2015 and the manager of Hebei Puhui since
September 2023.
Ms. Yu Li obtained her bachelor’s degree in traditional Chinese medicine from Shandong
University of Traditional Chinese Medicine (ʕᔼᖹɽኪ ) in July 1998 in the PRC. Ms. Yu Li
obtained her master’s degree in traditional Chinese medicine from Shanghai University of
Traditional Chinese Medicine ( ɪऎʕᔼᖹɽኪ ) through on-the-job learning in July 2007 in the
PRC.
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Ms. BAI Ru ( ͣন), aged 38, was appointed as the director of non-clinical development of
our Group on November 1, 2020. Ms. Bai joined our Group on February 6, 2012 as a project
manager of pharmacology. Ms. Bai is primarily responsible for management of the preclinical
pharmacology, pharmacokinetics and toxicology of our Group.
Ms. Bai served in Shenzhen Dong Yangguang Industrial Development Co., Ltd. (؇
ʮ̡ ) from July 2011 to February 2012. Ms. Bai has been the non-clinical
development director of Shenzhen HighTide since November 2020.
Ms. Bai obtained her bachelor’s degree in biotechnology from China Pharmaceutical
University (ɽኪ ) in July 2008 in the PRC. Ms. Bai obtained her master’s degree in
chemical biology from Nankai University (කɽኪ ) in June 2011 in the PRC. She was qualified
as an intermediate pharmaceutical manufacturing engineer by Shenzhen Pharmaceutical Senior
Professional Title Review Committee in May 2022.
Other than the information disclosed above and the information as set out in the section
headed “Statutory and General Information — F. Miscellaneous information in relation to Rule
13.51(2) of the Listing Rules” in Appendix IV to this prospectus, none of the Directors or senior
management of the Company held position of director in any other listed companies during the
Track Record Period, and no other information relating to Directors is required to be disclosed
pursuant to Rule 13.51(2) of the Hong Kong Listing Rules, and no other matters are required to be
brought to the attention of Shareholders. As of the Latest Practicable Date, none of our Directors or
senior management is related to other Directors or senior management of our Company.
JOINT COMPANY SECRETARIES
Ms.Y UL i( ɲ஁), aged 47, one of our joint company secretaries, was appointed on May 15,
2023. See her biography under “— Senior Management” for details.
Ms. CHU Pik M an( ϡᓴઽ), aged 27, one of our joint company secretaries, was appointed
on December 11, 2023. Ms. Chu is an assistant manager of SWCS Corporate Services Group (Hong
Kong) Limited.
Ms. Chu obtained her bachelor’s degree of business administration (honours) in corporate
governance concentration from Hong Kong Shue Yan University in July 2018. Ms. Chu is an
associate member of The Hong Kong Chartered Governance Institute (formerly known as The
Hong Kong Institute of Chartered Secretaries) and The Chartered Governance Institute (formerly
known as the Institute of Chartered Secretaries and Administrators).
BOARD COMMITTEES
Our Company has established three committees under the Board pursuant the corporate
governance practice requirements under the Hong Kong Listing Rules, including the Audit
Committee, Remuneration Committee and Nomination Committee.
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Audit Committee
We have established an Audit Committee in compliance with Rule 3.21 of the Listing Rules
and the Corporate Governance Code set out in Appendix 14 to the Listing Rules. The primary
duties of the Audit Committee are to review and supervise the financial reporting process and
internal controls system of the Group, review and approve connected transactions and to advise the
Board. The Audit Committee comprises three independent non-executive Directors, namely Mr.
T A NB o(ᗈᏙ), Dr. Jin LI ( ҽཨ) and Mr. HUNG Tak Wai ( ˆᅃਃ). Mr. TAN Bo ( ᗈᏙ) being the
chairman of the committee, is appropriately qualified as required under Rules 3.10(2) and 3.21 of
the Listing Rules.
Remuner ation Committee
We have established a Remuneration Committee in compliance with Rule 3.25 of the Listing
Rules and the Corporate Governance Code set out in Appendix 14 to the Listing Rules. The
primary duties of the Remuneration Committee are to review and make recommendations to the
Board regarding the terms of remuneration packages, bonuses and other compensation payable to
our Directors and senior management. The Remuneration Committee comprises one executive
Director and two independent non-executive Directors, namely Dr. LIU Liping ( ᄎл̻), Mr. TAN
Bo ( ᗈᏙ) and Dr. Jin LI ( ҽཨ). Dr. Jin LI ( ҽཨ) is the chairman of the committee.
Nomin ation Committee
We have established a Nomination Committee in compliance with with Rule 3.27A of the
Listing Rules and the Code on Corporate Governance set out in Appendix 14 to the Listing Rules.
The primary duties of the Nomination Committee are to make recommendations to our Board
regarding the appointment of Directors and Board succession. The Nomination Committee
comprises one executive Director and two independent non-executive Directors, namely Dr. LIU
Liping ( ᄎл̻), Dr. Jin LI ( ҽཨ) and Mr. HUNG Tak Wai ( ˆᅃਃ). Dr. LIU Liping ( ᄎл̻)i s
the chairwoman of the committee
*.
BOARD DIVERSITY POLICY
In order to enhance the effectiveness of our Board and to maintain the high standard of
corporate governance, we have adopted the board diversity policy (the “ Board Diver sity Policy ”)
which sets out the objective and approach to achieve and maintain diversity of our Board. Pursuant
to the Board Diversity Policy, we seek to achieve the diversity of the Board through the
consideration of a number of factors when selecting the candidates to our Board, including but not
limited to gender, skills, age, professional experience, knowledge, cultural, education background,
ethnicity and length of service. The ultimate decision of the appointment will be based on merit
and the contribution which the selected candidates will bring to our Board.
Our Directors have a balanced mix of knowledge and skills, including in biochemistry,
pharmaceuticals, business development, research and development, investment management and
corporate finance. They obtained degrees in various majors including biology, pharmaceuticals,
* effectiveuponListing
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economics and business development, among others. We have three independent non-executive
Directors with different industry backgrounds, representing at least one third of the members of
our Board. Furthermore, In respect of gender diversity, we recognize the particular importance of
gender diversity. Our Board currently comprises two female Directors and seven male Directors.
We have taken and will continue to take steps to promote and enhance gender diversity at all levels
of our Company, including but without limitation at our Board and senior management levels.
After the Listing, we expect to maintain such gender ratio at the Board level going forward. In
particular, we will actively identify female individuals suitably qualified to become our Board
members. We will ensure that there is gender diversity when recruiting staff at mid to senior level
so that we will have a pipeline of female senior management and potential successors to our Board
in due time to ensure gender diversity of the Board. Our Group will continue to emphasize training
of female talent and providing long-term development opportunities for our female staff.
Our Nomination Committee is responsible for ensuring the diversity of our Board members.
After the Listing, our Nomination Committee will monitor the implementation of the Board
Diversity Policy and review the Board Diversity Policy from time to time to ensure its continued
effectiveness and we will disclose in our corporate governance report about the implementation of
the Board Diversity Policy on an annual basis.
CODE PROVISION C.2.1 OF THE CORPORATE GOVERNANCE CODE
Under paragraph C.2.1 of the Corporate Governance Code, the roles of the chairman and
chief executive officer should be separate and should not be performed by the same individual. Dr.
Liu will be our chairwoman of the Board and the chief executive officer of our Company after the
Listing. With extensive experience in the pharmaceutical industry and having served in our
Company since its establishment, Dr. Liu is in charge of overall strategic planning, business
direction and operational management of our Group. Our Board considers that vesting the roles of
chairwoman and chief executive officer in the same person is beneficial to the management of our
Group. The balance of power and authority is ensured by the operation of our Board and our senior
management, which comprises experienced and diverse individuals. Our Board currently
comprises two executive Directors, four non-executive Directors and three independent
non-executive Directors, and therefore has a strong independence element in its composition.
Save as disclosed above, our Company intends to comply with all code provisions under the
Corporate Governance Code after the Listing.
KEY TERMS OF EMPLOYMENT CONTRACTS
We normally enter into employment contracts, confidentiality agreements and
non-competition agreements with our senior management members and other key personnel.
Below sets forth the key terms of these contracts we enter into with our senior management and
other key personnel.
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Non-com petition
Within two years from the date of the employee’s departure (the “ Non-com pete Perio d”)
and during the course of employment by our Group, he/she shall not, among others, be engaged by,
hold equity or beneficiary interests in, any entity that competes with us. In addition, the employee
shall not (i) solicit or attempt to induce any of our customers, suppliers or clients who are used to
deal with our Group to become a customer or supplier of others or terminate its relationship with
us; or (ii) solicit or attempt to induce any person who is employed by our Group to leave our Group.
We will pay compensation to the relevant employee during the Non-compete Period if any
losses was incurred to the relevant employees due to the non-competition obligation.
Confi denti ality
The employee shall keep in confidence and shall not disclose our trade secrets, including but
not limited to our technical information and operational information in confidence during the term
of their employment and thereafter.
Service Invention
The intellectual property rights in any invention, work or non-patent technical result that is
(i) resulted from performing employee duties (ii) developed within one year after resignation or
change of job and is relevant to performing employee duties before the resignation or change of
job, or (iii) developed mainly using our material, technologies and information shall belong to us.
COMPLIANCE ADVISOR
We have appointed Fosun International Capital Limited as our compliance advisor (the
“Com pliance A dvisor”) pursuant to Rule 3A.19 of the Listing Rules. Our Compliance Advisor
will provide us with guidance and advice as to compliance with the Listing Rules and applicable
Hong Kong laws. Pursuant to Rule 3A.23 of the Listing Rules, our Compliance Advisor will advise
our Company in certain circumstances including:
(a) before the publication of any regulatory announcement, circular, or financial report;
(b) where a transaction, which might be a notifiable or connected transaction, is
contemplated, including share issues and share repurchases;
(c) where we propose to use the proceeds of the Global Offering in a manner different
from that detailed in this prospectus or where the business activities, development or
results of our Group deviate from any forecast, estimate or other information in this
prospectus; and
(d) where the Stock Exchange makes an inquiry to our Company regarding unusual
movements in the price or trading volume of its listed securities or any other matters
in accordance with Rule 13.10 of the Listing Rules.
The term of appointment of our Compliance Advisor shall commence on the Listing Date
and is expected to end on the date on which we comply with Rule 13.46 of the Listing Rules in
respect of our financial results for the first full financial year commencing after the Listing Date.
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REMUNERATION OF DIRECTORS AND SENIOR MANAGEMENT
For details on the service contracts and appointment letters signed between the Company
and our Directors, please refer to the section “Statutory and General Information — C. Further
Information about Our Directors — 1. Particulars of Directors’ service contracts and appointment
letters” in Appendix IV to this prospectus.
For the years ended December 31, 2021 and 2022 and the six months ended June 30, 2023
the total amount paid by us for payments of emoluments, salaries, allowances, discretionary bonus,
defined contribution retirement plans and other benefits in kind (if applicable) to Directors were
RMB8.8 million, RMB10.9 million and RMB12.6 million, respectively. For remuneration details
of all Directors during the Track Record Period, please refer to Note 8 to the Accountants’ Report
as set out in Appendix I to this prospectus.
According to existing effective arrangements, the total amount of remuneration (excluding
any possible payment of discretionary bonus) shall be paid by us to Directors for the financial year
ending December 31, 2023 is expected to be approximately RMB3.9 million.
The remuneration of Directors has been determined with reference to the salaries of
comparable companies and their experience, duties and performance.
For the years ended December 31, 2021 and 2022 and the six months ended June 30, 2023,
the five highest remunerated individuals of our Company included one Director, one Director and
two Directors, respectively, whose remunerations were included in the total amount paid by us for
the emoluments, salaries, allowances, discretionary bonus, defined contribution retirement plans
and other benefits in kind (if applicable) of the relevant Directors. For the years ended December
31, 2021 and 2022 and the six months ended June 30, 2023, the total amount of remuneration and
benefits in kind (if applicable) paid by us to the five highest remunerated individuals were
RMB14.9 million, RMB25.8 million and RMB22.7 million, respectively.
Save as disclosed in the section headed “Statutory and General Information — C. Further
Information about Our Directors — 3. Disclosure of interests” in Appendix IV to this prospectus,
each of our Directors has no interests in the Shares within the meaning of Part XV of the SFO.
For the years ended December 31, 2021 and 2022 and the six months ended June 30, 2023,
RMB0.3 million, RMB0.1 million and nil was paid to the five highest remunerated individuals of
our Company, respectively, as incentives for joining or as rewards upon joining our Company.
None of such payees is our Director. Other than the aforementioned payments, during the Track
Record Period, no remuneration was paid by us nor receivable by Directors or the five highest
remunerated individuals as incentives for joining or as rewards upon joining our Company. During
the Track Record Period, no remuneration was paid by us nor receivable by Directors, past
Directors or the five highest remunerated individuals as compensation for leaving positions
relating to management affairs in any subsidiary of the Company.
During the Track Record Period, none of our Directors has waived any remuneration. Save
as disclosed above, during the Track Record Period, no other amounts shall be paid or payable by
us or any of our subsidiaries to the Directors or the five highest remunerated individuals.
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INCENTIVE PLANS
We have adopted the Incentive Plans, including the 2020 Share Incentive Plan and the 2023
Share Incentive Plan. For further details, please see “Statutory and General Information — D.
Incentive Plans” in Appendix IV to this prospectus.
Save as disclosed above, no Director is entitled to receive other special benefits from the
Company.
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AUTHORIZED AND ISSUED SHARE CAPITAL
The following is a description of the authorized and issued share capital of our Company in
issue and to be issued as fully paid or credited as fully paid immediately following the completion
of the Capitalization Issue and the Global Offering.
Upon the Global Offering, our authorized capital will be US$100,000.00 divided into
1,000,000,000 Shares of US$0.0001 each. As at the Latest Practicable Date, our authorized share
capital was US$50,000.00 divided into 500,000,000 Shares of US$0.0001 each, which include: (i)
460,186,516 ordinary Shares, (ii) 6,300,000 Series A Preferred Shares; (iii) 2,760,061 Series B-1
Preferred Shares, (iv) 1,910,811 Series B-2 Preferred Shares, (v) 12,678,554 Series B+ Preferred
Shares, (vi) 12,190,291 Series C Preferred Shares, and (vii) 3,973,767 Series C+ Preferred Shares.
As at the date of this prospectus, our issued share capital consisted of: (i) 44,349,294
ordinary Shares, (ii) 6,300,000 Series A Preferred Shares; (iii) 2,760,061 Series B-1 Preferred
Shares, (iv) 1,910,811 Series B-2 Preferred Shares, (v) 12,678,554 Series B+ Preferred Shares, (vi)
12,190,291 Series C Preferred Shares, and (vii) 3,973,767 Series C+ Preferred Shares. Each
Preferred Share in the Company held by the Pre-IPO Investors will be redesignated and reclassified
into one ordinary Share upon the Global Offering becoming unconditional.
The share capital of our Company immediately after the Global Offering will be as follows:
Authorized Share Capital Nominal Value
As of the Latest Practicable Date (1) :
500,000,000 of US$0.0001 each ................................................. US$50,000
Upon the Global Offering
1,000,000,000 of US$0.0001 each ................................................ US$100,000
Issued Share Capital Nominal Value
Ordinary Shares in issue upon completion of the repurchase of Shares
from the 2023 ESOP Platform:
41,949,294 of US$0.0001 each .................................................. US$4,194.93
Preferred Shares to be converted to Shares on a one-for-one basis:
39,813,484 of US$0.0001 each .................................................. US$3,981.35
Shares to be issued pursuant to the Capitalization Issue:
408,813,890 of US$0.0001 each ................................................. US$40,881.39
Shares to be issued pursuant to the Global Offering:
24,194,000 of US$0.0001 each .................................................. US$2,419.40
Total
514,770,668 of US$0.0001 each ................................................. US$51,477.07
Note:
(1) The Preferred Shares will be converted into Shares on a one-to-one basis by way of re-designation to Shares on the
Listing Date.
SHARE CAPITAL
– 378 –


--- page 389 ---
ASSUMPTIONS
The above table assumes that the Global Offering becomes unconditional, Shares are issued
pursuant to the Capitalization Issue and the Global Offering and the Shares held by the Pre-IPO
Investors are re-designated into ordinary Shares on a one-to-one basis. It takes no account of any
Shares which may be issued or repurchased by our Company pursuant to the general mandates
granted to our Directors to issue or repurchase Shares as referred to below or any additional Shares
which may be issued pursuant to the Incentive Plans.
RANKING
The Offer Shares will rank paripassu in all respects with all Shares currently in issue or to
be issued as mentioned in this prospectus, and will qualify and rank in full for all dividends or
other distributions declared, made or paid on the Shares in respect of a record date which falls after
the date of this prospectus.
CIRCUMSTANCES UNDER WHICH GENERAL MEETINGS ARE REQUIRED
Our Company will have only one class of Shares, namely ordinary Shares, and each ranks
paripassu with other Shares upon completion of the Capitalization Issue and the Global Offering.
Pursuant to the Cayman Companies Act and the terms of the Memorandum of Association
and Articles of Association, our Company may from time to time by ordinary resolution of
Shareholders (i) increase its capital; (ii) consolidate and divide its capital into Shares of larger
amount; (iii) divide its Shares into several classes; (iv) subdivide its Shares into Shares of smaller
amount; and (v) cancel any Shares which have not been taken or agreed to be taken. In addition, our
Company may subject to the provisions of the Cayman Companies Act reduce its share capital or
capital redemption reserve by special resolution of Shareholders.
See the section headed “Appendix III — Summary of the Constitution of the Company and
Cayman Islands Company Law” in this prospectus for further details.
GENERAL MANDATE TO ISSUE SHARES
Subject to the Global Offering becoming unconditional, our Directors have been granted a
general unconditional mandate to allot, issue and deal with Shares with a total number of not more
than the sum of:
• 20% of the total number of the Shares in issue immediately following completion of
the Capitalization Issue and the Global Offering; and
• the total number of Shares repurchased by us under the authority referred to in the
paragraph headed “— General Mandate to Repurchase Shares” in this section.
This general mandate to issue Shares will expire at the earliest of:
• the conclusion of the next annual general meeting of our Company unless otherwise
renewed by an ordinary resolution of our Shareholders in a general meeting, either
unconditionally or subject to conditions;
SHARE CAPITAL
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--- page 390 ---
• the expiration of the period within which our Company’s next annual general meeting
is required by the Memorandum of Association and Articles of Association or any
other applicable laws to be held; or
• the date on which it is varied or revoked by an ordinary resolution of our Shareholders
passed in a general meeting.
See the section headed “Statutory and General Information — A. Further Information about
our Group — 4. Written Resolutions Passed by Our Shareholders on December 11, 2023” in
Appendix IV to this prospectus for further details of this general mandate to allot, issue and deal
with Shares.
INCENTIVE PLANS
The Company has adopted the Incentive Plans, including the 2020 Share Incentive Plan and
the 2023 Share Incentive Plan. For further details, please see “Statutory and General Information
— D. Incentive Plans” in Appendix IV to this prospectus.
GENERAL MANDATE TO REPURCHASE SHARES
Subject to the Global Offering becoming unconditional, our Directors have been granted a
general unconditional mandate to exercise all the powers of our Company to repurchase our own
securities with nominal value of up to 10% of the total number of our Shares in issue immediately
following the completion of the Capitalization Issue and the Global Offering.
The repurchase mandate only relates to repurchases made on the Stock Exchange, or on any
other stock exchange on which our Shares are listed (and which are recognized by the SFC and the
Stock Exchange for this purpose), and which are in accordance with the Listing Rules. A summary
of the relevant Listing Rules is set out in the section headed “Statutory and General Information —
A. Further Information about our Group — 5. Repurchase of our own securities” in Appendix IV to
this prospectus.
This general mandate to repurchase Shares will expire at the earliest of:
• the conclusion of the next annual general meeting of our Company unless otherwise
renewed by an ordinary resolution of our Shareholders in a general meeting, either
unconditionally or subject to conditions; or
• the expiration of the period within which our Company’s next annual general meeting
is required by the Memorandum of Association and Articles of Association or any
other applicable laws to be held; or
• the date on which it is varied or revoked by an ordinary resolution of our Shareholders
passed in a general meeting.
See “Statutory and General Information — A. Further Information about our Group — 5.
Repurchase of our own securities” in Appendix IV to this prospectus for further details of the
repurchase mandate.
SHARE CAPITAL
– 380 –


--- page 391 ---
So far as our Directors are aware, immediately following the completion of the
Capitalization Issue, the repurchase of Shares from the 2023 ESOP Platform and the Global
Offering, the following persons will have interests and/or short positions (as applicable) in the
Shares or underlying Shares of our Company, which would be required to be disclosed to us and the
Stock Exchange pursuant to the provisions of Divisions 2 and 3 of Part XV of the SFO or will,
directly or indirectly, be interested in 5% or more of the nominal value of any class of share capital
carrying rights to vote in all circumstances at the general meetings of the Company or any other
members of the Group:
Lon g Position s in the Sh ares of our Com pany
Name of Sub stanti al
Sharehol der N ature of intere st
Shares hel da s of
the date of thi sp rospectu s
Shares hel d with
exerci sable votin g rights
entitle d imme diately
followin g the com pletion
of the C apitaliz ation
Issue, the re purch aseo f
Shares from the 2023
ESOP Pl atform and
Glob al Offerin g(6)
Number of
Shares
Approxim ate
percent age
Number of
Shares
Approxim ate
percent age
D r .L i u ................ F ounder of a
discretionary trust (1)
13,500,000 16.04% 81,000,000 17.51%
Interest held through voting
powers entrusted by
other persons and/or
vested Shares
(2)
8,849,294 10.51% 10,196,226 2.20%
Founder BVI ........... Beneficial owner (1) 13,500,000 16.04% 81,000,000 17.51%
The Bryn Mawr Trust
Company of
Delaware
(1) ..........
Trustee of a trust 13,500,000 16.04% 81,000,000 17.51%
The Core Trust
Company Limited (2) ..
Trustee of a trust 8,849,294 10.51% 42,599,538 nil
2020 ESOP Platform (2) . . Beneficial owner 8,849,294 10.51% 42,599,538 nil
M r .L IL i(3) ............. Interest in controlled
corporation
20,252,535 24.06% 121,515,210 26.27%
Hepalink Biotechnology
II Limited (3) ..........
Beneficial owner 18,000,000 21.39% 108,000,000 23.35%
SUBSTANTIAL SHAREHOLDERS
– 381 –


--- page 392 ---
Name of Sub stanti al
Sharehol der N ature of intere st
Shares hel da s of
the date of thi sp rospectu s
Shares hel d with
exerci sable votin g rights
entitle d imme diately
followin g the com pletion
of the C apitaliz ation
Issue, the re purch aseo f
Shares from the 2023
ESOP Pl atform and
Glob al Offerin g(6)
Number of
Shares
Approxim ate
percent age
Number of
Shares
Approxim ate
percent age
Hepalink (3) ............. Beneficial owner 2,252,535 2.68% 13,515,210 2.92%
Hongtu Capital (4) ....... Beneficial owner 7,618,932 9.05% 45,713,592 9.88%
Mr. MA Lixiong (5) ...... Interest in controlled
corporation
5,032,359 5.98% 30,194,154 6.53%
Interest held through voting
powers of vested Shares (5)
nil nil 107,898 0.02%
Baiyi Capital (5) ......... Beneficial owner 4,571,359 5.43% 27,428,154 5.93%
Pingtan Rongjing (5) ..... Beneficial Owner 461,000 0.55% 2,766,000 0.60%
Notes:
(1) As of the Latest Practicable Date, the Founder BVI held approximately 16.04% of the total issued Shares of the
Company and Dr. Liu, being the investment advisor of the Family Trust, is entitled to exercise the voting rights
attached to the 13,500,000 Shares held by the Founder BVI. The Founder BVI is wholly-owned by the Family Trust.
The Bryn Mawr Trust Company of Delaware serves as the trustee of the Family Trust.
(2) As of the Latest Practicable Date, the 2020 ESOP Platform held approximately 10.51% of the total issued Shares of
our Company, and Dr. Liu was granted power of attorney to exercise the voting rights attached to the Shares held by
the 2020 ESOP Platform pursuant to a deed executed by the trustee and the nominee of the Incentive Plans as well
as our Company on November 28, 2019. The Core Trust Company Limited serves as the trustee of the 2020 ESOP
Platform.
(3) Hepalink Biotechnology II Limited is wholly-owned by Hepalink Healthcare Partners I L.P., which is a limited
partnership established under the laws of the Cayman Islands. The general partner of Healthcare Partners I L.P. is
Medi Prosperity Capital Inc.. The limited partner of Hepalink Healthcare Partners I L.P. is Hepalink (Hong Kong)
Limited, which holds 100% of the interest in Hepalink Healthcare Partners I L.P. As of the Latest Practicable Date,
Mr. LI Li was interested in approximately 62.90% of the shares in Hepalink, which in turn indirectly wholly-owned
Hepalink Biotechnology II Limited. Therefore, Mr. LI Li was deemed to be interested in the Shares held by
Hepalink Biotechnology II Limited and Hepalink. Immediately following the completion of the Global Offering,
The Hepalink Entities will be entitled to exercise the voting rights attached to approximately 26.27% of the total
issued Shares. While the Hepalink Entities will become the single largest group of Shareholders of our Company
upon Listing with approximately 26.27% exercisable voting rights, the AIC Group will continue to have day-to-day
control over the management and operation of our Group.
(4) Hongtu Capital is owned as to 60% and 40% by LAI Hoi Man ( ፠ऎ͏) and CHAN See Ting (Ғ), respectively,
both of whom are Independent Third Parties.
SUBSTANTIAL SHAREHOLDERS
– 382 –


--- page 393 ---
(5) BAIYI Capital is wholly-owned investment holding company of AIH Capital L.P., which is controlled by Mr. MA
Lixiong, our non-executive Director. Pingtan Rongjing is managed by its general partner, Yuthai Investment
Management Co., Ltd., which is owned as to 80% by Mr. MA Lixiong, our non-executive Director. On the Listing
Date, Awards with up to 17,983 (107,898 as adjusted after the Capitalization Issue) underlying Shares that were
granted to Mr. MA Lixiong shall be Listing Date Vesting Shares.
(6) The unvested Shares held in the 2020 ESOP Platform and the 2023 ESOP Platform and the Shares to be repurchased
from the 2023 ESOP Platform have been excluded from both the denominator and the numerator when calculating
the percentage of the exercisable voting rights immediately upon Listing.
Save as otherwise disclosed herein, our Directors are not aware of any persons who will,
immediately following completion of the Capitalization Issue, the repurchase of Shares from the
2023 ESOP Platform and the Global Offering, have any interests and/or short positions in the
Shares or underlying shares of our Company which would fall to be disclosed to the Company and
the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or, will be,
directly or indirectly, interested in 5% or more of the nominal value of any class of share capital
carrying rights to vote in all circumstances at general meetings of our Company or any other
member of our Group.
SUBSTANTIAL SHAREHOLDERS
– 383 –


--- page 394 ---
OVERVIEW
Prior to the Listing, we entered into certain transaction with party who will, upon the
Listing, become a connected person of the Company. Details of such continuing connected
transaction of the Company following the Listing are set out below.
CONNECTED PERSON
We have entered into certain transaction with the following connected person, which will
constitute our continuing connected transaction upon Listing:
Connecte d Per son Connecte d Rel ation ship
Hepalink As at the Latest Practicable Date, Hepalink was a substantial
shareholder of the Company and a company in which Mr. LI
Li, our non-executive Director, was interested in
approximately 62.90% of its shares. Therefore, Hepalink is a
connected person of the Company
SUMMARY OF OUR NON-EXEMPT CONTINUING CONNECTED TRANSACTION
Nature of Tr ansaction
Applic able
Listin g Rule s
Connecte d
Per son W aiver sought
HTD1801 Agreement
License and
commercialization
cooperation with
Hepalink ..............
Rule 14A.35,
Rule 14A.36,
Rule 14A.52
and Rule
14A.53
Hepalink Waiver from strict compliance with
(i) the requirement of limiting the
term of agreement to three years
or less and (ii) the fixed monetary
annual cap requirement
CONNECTED TRANSACTION
– 384 –


--- page 395 ---
NON-EXEMPT CONTINUING CONNECTED TRANSACTION
HTD1801 A greement
Principal Terms of the Transaction
The Company entered into the HTD1801 Agreement with Hepalink on August 29, 2020,
pursuant to which the Company has granted Hepalink an exclusive, sublicensable (solely to
Hepalink’s wholly-owned subsidiaries) and non-transferable license under certain intellectual
property rights and know-how
(1) in relation to HTD1801 for the commercialization of the
therapeutic products containing HTD1801 (the “ Licen sed Pro duct s”) for the MASH indication
and PSC indication in all European countries specified therein (the “ Licen sed Territorie s”).
Hepalink also has the first right to acquire or obtain on the same terms as those offered by a third
party the rights to any intellectual property rights and know-how in relation to the Licensed
Products in Greater China in the event that the Company proposes to sell or transfer to a third party
its title and interest in the intellectual properties and know-how in relation to HTD1801 for such
Greater China territory. For further details, please see the section headed “Business —
Collaboration Agreement — HTD1801 License-Out Agreement” in this prospectus. In
consideration of the rights granted to Hepalink, Hepalink is required to make various milestone
and royalty payments to the Company as follows:
Mile stone payment: Hepalink is required to pay the Company milestone
payment in cash in an amount of (i) RMB50.0 million no
later than five business days from the date of the new drug
application of HTD1801 for MASH indication obtaining
the first marketing authorization in any one of the specified
Licensed Territories; (ii) RMB50.0 million no later than
one year after the approval of such marketing
authorization; (iii) RMB30.0 million no later than five
business days from the date of the new drug application of
HTD1801 for PSC indication obtaining the first marketing
authorization in any one of the specified Licensed
Territories; and (iv) RMB30.0 million no later than one
year after the approval of such marketing authorization.
As at the Latest Practicable Date, no milestone payment
was made by Hepalink to the Company.
Roy alty payment: Hepalink is required to pay the Company royalty payments
in cash for the sales of the Licensed Products based on
annual net sales in the Licensed Territories.
As at the Latest Practicable Date, no royalty payment was
made by Hepalink to the Company.
Note:
(1) intellectual property and know-how of HTD1801, including (i) the PCT and Europe patent application of Berberine
Salts, Ursodeoxycholic Salts and Combinations, Methods of Preparation and Application Thereof, EAPO patent
application of Berberine Ursodeoxycholic Acid Salt and Application Thereof and the EAPO patent application of
Berberine Salts, Ursodeoxycholic Salts and Their Combinations, Methods for Producing and Use; and (ii) new
intellectual property rights generated from the development, registration and production of HTD1801 after the
signing date of the HTD1801 Agreement.
CONNECTED TRANSACTION
– 385 –


--- page 396 ---
Expecte d mile stone payment: The expected milestone payment to be paid by Hepalink to
the Company pursuant to the HTD1801 Agreement will be
nil, nil and nil for 2023, 2024 and 2025, respectively,
taking into account the uncertainties on the precise timing
of the milestone event triggering the milestone payment
(i.e. the first marketing authorization being obtained for
HTD1801 for MASH indication or PSC indication).
Formul a for roy alty payment: The annual amount for royalty payment to be paid by
Hepalink to the Company pursuant to the HTD1801
Agreement for 2023, 2024 and 2025 will be determined in
accordance with the following formula:
Annual cap for royalty payment = 25% × annual net sales
of the relevant products
The “annual net sales” means in one year, the total amount
of the sale or other disposal or transfer of the Licensed
Products by Hepalink in the Licensed Territory, less actual
payments or allowances made in accordance with the
applicable laws and regulations in the Licensed Territory
and the Chinese Accounting Standards for Business
Enterprises in relation to the sale of the Licensed Products
which include (a) commercial discounts; (b) freight,
transportation, insurance, postage and import taxes and
duties; (c) credits, rebates, discounts, chargebacks,
retroactive price reductions and adjustments, and amounts
due to returns, recalls, or refunds; (d) commissions paid to
third party purchasers in connection with the importation,
distribution or advertising of Licensed Products; (e) sales
tax, excise tax and value-added tax (other than general
income tax) levied on the invoice amount; and (f) taxes,
duties and other governmental charges levied or measured
on the import, export, use, manufacture or sale of Licensed
Products.
The HTD1801 Agreement was entered into on August 29, 2020 and will remain effective
until the expiration of the latest applicable royalty term as further explained below. The expected
expiration dates for existing intellectual properties in the European Union, United Kingdom or
Switzerland will be 2035. The royalty term commences upon the first commercial sales of the
Licensed Products in the Licensed Territories, and ends on the later of (i) the expiration of the
last-to-expire valid claim within the existing intellectual properties and know-how and the new
intellectual properties, including all of the data, results, information, documents, know-how,
intellectual properties, clinical trial data, manufacturing technology and design, supply
information, regulatory filings and packaging of development, registration and production relating
to the Licensed Products in the European Union, United Kingdom or Switzerland within the
Licensed Territories; or (ii) the expiration of all regulatory exclusivity, including market
exclusivity (the period of exclusive right to market and sell the Licensed Product within the
Licensed Territories, during which an application for a new drug based on published data or
CONNECTED TRANSACTION
– 386 –


--- page 397 ---
containing an identical active ingredient is not acceptable) or data exclusivity (the period of
protection to clinical data in relation to Licensed Products, during which the clinical data cannot be
accessed by third parties), granted for the Licensed Products in the European Union, United
Kingdom or Switzerland as within the Licensed Territories, with an exception that the royalty term
would be earlier terminated immediately after the entry of a generic product of the Licensed
Products into the European Union as part of the Licensed Territories. We have not yet applied for
orphan designation from the EMA for the PSC indication of HTD1801. For more details of orphan
designation by the EMA, please see “Regulatory Overview — Laws and Regulations in the United
States and EU — Orphan Drugs”. The HTD1801 Agreement may also be terminated earlier by
mutual agreement in writing, or (a) by the Company if Hepalink materially breaches the payment
terms of the HTD1801 Agreement and such breach cannot be cured within one month upon
receiving notice from the Company; (b) by the Company for Hepalink’s failure to initiate the
commercialization of Licensed Products in a Licensed Territory within one year after the first
marketing authorization has been obtained in such License Territory is obtained, (c) by the
Company if Hepalink, directly or indirectly, commences, engages in or participates in any
proceedings of challenging the Company’s patents licensed to Hepalink under the HTD1801
Agreement, or intentionally or knowingly assists with or acquiesces in the commencement of such
challenges; (d) by the Company if Hepalink fails to acquire and maintain the required insurance
policy; or (e) by either party upon the dissolution or bankruptcy of the other party. CIC has
confirmed that it is a market practice in the biotechnology pharmaceutical industry for similar
cooperation agreement to be entered into for a long term or for an indefinite term, primarily due to
the substantial amount of capital committed by the collaboration partners and the risks involved.
Reasons for and benefits of the transaction
The Company has a long-term strategic cooperative relationship with Hepalink, which is a
major pharmaceutical company. Due to Hepalink’s strong presence in Europe, the Company
believes it would be more cost effective and efficient to license the commercialization of the
Licensed Products in the Licensed Territories to Hepalink. By leveraging Hepalink’s strong sales
force established in Europe, its advantageous position in market share in the relevant jurisdictions
and its established track record of sales of similar pharmaceutical products in the European
pharmaceutical market, the Company believes Hepalink will be able to successfully promote the
commercialization of the Licensed Products in the Licensed Territories, which is consistent with
our long term operational strategies.
The royalty payment is a revenue sharing arrangement which was determined after arm’s
length negotiations between us and Hepalink. CIC has confirmed that the HTD1801 Agreement
entered into by the Company and Hepalink is in line with the industry practice. Taking into
consideration of the above, the Company believes that the HTD1801 Agreement is in the interest of
the Company and its Shareholders as a whole.
Historical Amount
As HTD1801 has not been commercialized in the Licensed Territories and it is currently at
clinical stage, there are no fees received under the HTD1801 Agreement. For the two years ended
December 31, 2021 and 2022 and the six months ended June 30, 2023, there were no fees paid by
Hepalink to the Company under the HTD1801 Agreement.
CONNECTED TRANSACTION
– 387 –


--- page 398 ---
Corporate Governance Measures
During the ordinary and usual course of business of our Company, we review potential
product licensing opportunities, including product in-licensing and out-licensing, from time to
time. When potential opportunity arises, we would normally assess the advantages and
development prospect of the product, market forecasts for the demand of the product, competitive
landscape and regulatory requirements of the product for that market as well as the regulatory and
commercial capability of the potential business partner to commercialize the product.
Furthermore, our business development team routinely evaluates licensing arrangement by third
parties with similar mechanism of action for deal benchmarking and for term sheet evaluation
purposes.
In addition, the commercial negotiations with potential licensing partners are led by our
senior management, who are not interested in the licensing and will independently evaluate the
terms taking into account all relevant factors as we consider necessary. A decision on whether to
enter into licensing arrangements with another company will be made purely based on commercial
considerations and only if we consider it is in the best interest of our Company and the
Shareholders to enter into such licensing arrangement.
Listing Rule implications
Although the revenue ratio and the profit ratio are not applicable given that the Company is
a pre-revenue biopharmaceutical company, the highest applicable percentage ratio in respect of
each of the caps as the Company currently expects is, on an annual basis, more than 5%. As such,
the transactions under the HTD1801 Agreement will be subject to the reporting, annual review,
announcement and independent shareholders’ approval requirements under Chapter 14A of the
Listing Rules.
Waiver from strict compliance with contractual term requirements
Under Rule 14A.52 of the Listing Rules, a listed issuer is required to set a contractual term
not exceeding three years. It is impracticable and extremely difficult for us to set a contractual term
not exceeding three years in respect of the HTD1801 Agreement. Therefore, the Company applied
to the Stock Exchange for, and the Stock Exchange has granted to the Company, a waiver under
Rule 14A.52 of the Listing Rules from strict compliance with the contractual term requirements for
the following reasons:
(i) it is impractical and difficult for the Company to set a term of not exceeding three
years in respect of the HTD1801 Agreement, as the Licensed Products have a product
life cycle of more than three years from its development stage to commercialization;
(ii) maintaining a long-term, exclusive cooperative relationship with Hepalink is critical
to our businesses and development. Our continuous business relationship with
Hepalink provides a strategic advantage for us to expand our drug portfolio covering
different jurisdictions and to enhance our competitiveness. The indefinite term of the
HTD1801 Agreement can secure a long-term, exclusive cooperative relationship with
Hepalink, which provides strategic benefits for us to engage in commercialization of
the Licensed Products in the Licensed Territories;
CONNECTED TRANSACTION
– 388 –


--- page 399 ---
(iii) a contractual arrangement of indefinite term is necessary and critical to the
sustainability of our business and to ensure our smooth and continued operations, as
well as stable revenue and cash flows from the future commercialization of the
Licensed Products. If the HTD1801 Agreement is subject to renewal every three years
and independent shareholders’ approval, we may face the unnecessary and substantial
risks of failing to renew such agreement upon expiry and bringing disruptions to the
commercialization of the Licensed Products, and losing our competitive advantages.
This may even prevent us from carrying on our business, bringing uncertainty to our
continued operation; and
(iv) our Directors consider that the terms of the HTD1801 Agreement are consistent with
normal business practices for agreements of a similar nature in the biotechnology
pharmaceutical industry and are in the best interest of our Group and our
Shareholders as a whole, because (a) the indefinite term of the HTD1801 Agreement
can secure a long-term exclusive cooperative relationship with Hepalink, thus
avoiding unnecessary disruptions to our business and enable long-term development
and continuity of our operations; and (b) as confirmed by CIC, it is common in the
biotechnology pharmaceutical industry where similar long-term licensing
arrangements or licensing arrangements with an indefinite-term are adopted.
Waiver from strict compliance with annual cap requirements
Under Rule 14A.53 of the Listing Rules, the listed issuer must set an annual cap for the
continuing connected transactions. The Directors believe that strict compliance with the
requirements of Rule 14A.53 of the Listing Rules for setting a fixed monetary annual cap in respect
of the HTD1801 Agreement is impracticable and not in the best interests of the Shareholders.
Therefore, the Company applied to the Stock Exchange for a waiver under Rule 14A.53 of the
Listing Rules from strict compliance with the annual cap requirements for the following reasons:
(i) it is impractical and difficult for the Company to set a monetary annual cap in respect
of the milestone payment and/or the royalty payment under the HTD1801 Agreement.
The Company cannot accurately estimate (a) the precise timing of the milestone event
triggering the milestone payment (i.e. the first marketing authorization being
obtained for HTD1801 for MASH indication or PSC indication); and (b) the amount
of the royalty payment to be paid by Hepalink annually pursuant to the HTD1801
Agreement as the revenue to be derived from the sale of Licensed Products depends
on the actual addressable market of the Licensed Products, which will in turn depend
on various factors including the acceptance by the medical community and patient
access, drug pricing, reimbursement and the number of affordable patients;
CONNECTED TRANSACTION
– 389 –


--- page 400 ---
(ii) as at the Latest Practicable Date, the Company has not commenced
commercialization of HTD1801 and we have not generated revenue from sales of any
of our drug products developed by us. Therefore, our historical financial results are
not an appropriate basis for estimating our future transaction volume. The Company
does not have sufficient reference to enable it to estimate the future transaction
volume and amount. Accordingly, imposing an arbitrary monetary cap would be
unduly burdensome and not in the interests of the Company’s Shareholders after the
Listing;
(iii) all of our products are in the research and development stage, and the revenue
generated from the Licensed Products may account for a significant portion of the
Company’s revenue before the commercialization of the other products of the
Company. Therefore, the disclosure of the annual caps in monetary terms would in
effect provide Shareholders and investors as well as competitors of the Company with
an indication of the Company’s estimated revenue. The disclosure of such
information is highly sensitive and would therefore put the Company in
disadvantageous position in relation to its business operation and competition with
other market players;
(iv) imposing an arbitrary cap on the potential sales volume of the Licensed Products does
not demonstrate commercial reasonableness and would be counter-productive as far
as the interests of the Company and our Shareholders are concerned. It would also not
be in the interest of the Company and the Shareholders to adopt a fixed monetary cap
for such transactions as such a cap will impose an arbitrary ceiling on the profits that
the Company could derive from the commercialization of the Licensed Products. In
addition, a fixed annual cap is not helpful to incentivize our Group to generate more
revenue and profit from commercializing the Licensed Products, and will restrict
business growth of our Group, which would go against the commercial objective of
the HTD1801 Agreement. If the actual sales volume of the Licensed Products exceeds
the cap, Hepalink would be suspended from selling the Licensed Products to the
market until relevant shareholder approval of the adjusted annual caps is obtained,
which will affect not only our business but also the patients who need the Licensed
Products for treatment. As far as the transactions are on normal commercial terms or
better, and the profit margin of the Licensed Products and the revenue sharing
percentage are commercially reasonable and in line with market standards, the
interests of our Group and our Shareholders are protected, and there is no reason or
benefit to impose such fixed cap; and
(v) instead of setting a fixed annual cap in respect of the milestone payment and/or the
royalty payment under the HTD1801 Agreement, if there is any material change to the
milestone payment or the percentage of the royalty payment under the HTD1801
Agreement, we will re-comply with the applicable rules under Chapter 14A of the
Listing Rules, including seeking independent shareholders’ approval as the case may
require, so as to further ensure the interest of our Group and our Shareholders.
CONNECTED TRANSACTION
– 390 –


--- page 401 ---
The Stock Exchange has granted the waiver from strict compliance with the requirement
under Rule 14A.52 and Rule 14A.53 of the Listing Rules in respect of the continuing connected
transaction under the HTD1801 Agreement subject to the following conditions:
(1) the Company will comply with the announcement, circular and independent
shareholders’ approval requirements under Chapter 14A of the Listing Rules if there
is any material change to the terms of the HTD1801 Agreement;
(2) the Company will designate a team to execute and ensure that the transactions in
relation to the HTD1801 Agreement are undertaken in accordance with the terms
therein;
(3) the chief executive officer of the Company will use her best endeavours to supervise
the compliance with the terms of the HTD1801 Agreement and applicable Listing
Rules requirements to the extent not waived by the Stock Exchange on a regular basis;
(4) the independent non-executive Directors and the auditors of the Company will review
the transactions in relation to the HTD1801 Agreement on an annual basis and
confirm in our annual reports the matters set out in Rules 14A.55 and 14A.56 of the
Listing Rules, respectively;
(5) the Company will disclose in the prospectus the background for entering into the
HTD1801 Agreement, the terms of the HTD1801 Agreement, the grounds for the
waiver sought and the Directors’ and Joint Sponsors’ views on the fairness and
reasonableness of the transactions under the HTD1801 Agreement; and
(6) in the event of any future amendments to the Listing Rules imposing more stringent
requirements than those as at the date of this prospectus on the above continuing
connected transaction, the Company will take immediate steps to ensure compliance
with such new requirements.
The waiver from strict compliance with the requirement under Rule 14A.53 of the Listing
Rules is for a term of three years ending on December 31, 2025. When there is visibility with the
timing and amounts payable under the HTD1801 Agreement, the Company will, after taking into
account, among other things, the addressable market, the drug pricing and the historical
transaction amount of the relevant products, re-assess whether a further waiver is required at the
expiry of such initial term.
CONNECTED TRANSACTION
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DIRECTORS’ CONFIRMATION
The Directors (including the independent non-executive Directors) are of the view that (i)
the continuing connected transaction as set out above have been and will be entered into in the
ordinary and usual course of business of the Company and on normal commercial terms, and are
fair and reasonable and in the interest of the Company and the Shareholders as a whole, and the
absence of annual caps for the years ending December 31, 2023, 2024 and 2025 is fair and
reasonable and in the interests of the Company and the Shareholders as a whole; and (ii) the
indefinite term of those transactions under the HTD1801 Agreement is in accordance with normal
business practice, and the purpose of the agreements is to provide stability and certainty to the
business of the Company and that therefore the indefinite term of those transactions is fair and
reasonable, and in the interests of Shareholders as a whole.
JOINT SPONSORS’ CONFIRMATION
Taken into account of the Directors’ considerations as stated above and the relevant
documents and information provided by the Company, the Joint Sponsors are of the view that: (i)
the continuing connected transaction as set out above have been and will be entered into in the
ordinary and usual course of business of the Company and on normal commercial terms, and are
fair and reasonable and in the interest of the Company and the Shareholders as a whole, and the
absence of annual caps for the years ending December 31, 2023, 2024 and 2025 is fair and
reasonable and in the interests of the Company and the Shareholders as a whole; and (ii) the
indefinite term of those transactions under the HTD1801 Agreement is in accordance with normal
business practice, and the purpose of the agreements is to provide stability and certainty to the
business of the Company and that therefore the indefinite term of those transactions is fair and
reasonable, and in the interests of Shareholders as a whole.
In forming a view on the above matters, the Joint Sponsors have considered, among others,
the nature of the transactions and coverage of the licenses, the rationale and basis for determining
the pricing policies or mechanism, measures to review and adjust the pricing policies on a regular
basis, the duration for similar arrangements for other companies, the business plan of the
Company, information and data in the public domain, as well as the views and opinions of Industry
Consultant, CIC, and the internal controls and measures to monitor the non-exempt continuing
connected transaction.
CONNECTED TRANSACTION
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Y ou should read the following discussion and analysis in conjunction with our
audited consolidated financial information, including the notes thereto, included in the
Accountants’ Report set out in Appendix I to this prospectus. Our audited consolidated
financial information has been prepared in accordance with International Financial
Reporting Standards (“IFRSs”).
The following discussion and analysis contain forward-looking statements that reflect
our current views with respect to future events and financial performance that involve risks
and uncertainties. These statements are based on assumptions and analysis made by us in
light of our experience and perception of historical events, current conditions and expected
future developments, as well as other factors we believe are appropriate under the
circumstances. Our actual results may differ materially from those anticipated in these
forward-looking statements as a result of certain factors. We discuss factors that we believe
could cause or contribute to these differences below and elsewhere in this prospectus,
including those set forth in “Risk Factors” and “Forward-Looking Statements” in this
prospectus.
For the purpose of this section, unless the context otherwise requires, references to
2021 and 2022 refer to our financial year ended December 31 of such years. Unless the
context otherwise requires, financial information described in this section is described on a
consolidated basis.
OVERVIEW
We are a biopharmaceutical company specializing in the discovery, development and
commercialization of multifunctional, multi-targeted therapies for the treatment of metabolic and
digestive diseases. We have developed a product pipeline of five product candidates in-house,
covering nine indications in metabolic and digestive diseases among which, five are at
clinical-stage. Our Core Product, HTD1801 (berberine ursodeoxycholate), a new molecular entity,
is a gut-liver anti-inflammatory metabolic modulator which targets multiple pathways pivotal to
metabolic regulation, including those associated with metabolic and digestive diseases. It is
created by forming a novel salt between two active moieties, berberine (“ BBR ”) and
ursodeoxycholic acid (“ UDCA ”). HTD1801 has demonstrated good safety and efficacy across
multiple clinical trials, including: a Phase IIa study in metabolic dysfunction-associated
steatohepatitis (“ MASH ”) in the United States, a Phase II study in type 2 diabetes (“ T2DM ”) in
China, a Phase Ib study in T2DM in China, a Phase II study in primary sclerosing cholangitis
(“PSC”) in the United States and Canada, a Phase II study in primary biliary cholangitis (“ PBC”)
in the United States, and a Phase Ib/IIa study in hypercholesterolemia in Australia. We believe the
good safety and efficacy profile strongly supports the “pipeline-in-a-product” potential of
HTD1801 for selected metabolic and digestive diseases with suboptimal or no approved therapies.
BASIS OF PRESENTATION AND PREPARATION
Our consolidated financial information has been prepared in accordance with IFRSs, which
comprise all standards and interpretations approved by the International Accounting Standards
Board (“ IASB ”). All IFRSs effective for the accounting period commencing from January 1, 2022,
together with the relevant transitional provisions, have been early adopted by our Group in the
preparation of the consolidated financial information throughout the Track Record Period.
FINANCIAL INFORMATION
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The historical financial information has been prepared under the historical cost convention
except for certain financial instruments, which have been measured at fair value at the end of each
of the reporting period.
KEY FACTORS AFFECTING OUR RESULTS OF OPERATIONS
Our results of operations have been, and are expected to continue to be, affected by a number
of factors, many of which may be beyond our control. The following are the principal factors that
have affected, and we expect will continue to affect, our business, financial condition, results of
operations and prospects.
Our Ability to Succe ssfully Develo p Our Dru g Candidates
Our business and results of operations depend on our ability to successfully develop our
drug candidates. As of the Latest Practicable Date, we have researched and developed in-house a
pipeline with five proprietary drug candidates covering nine indications, including five indications
that are at clinical stage. For more information on the development status of our various drug
candidates, see “Business — Our Product Pipeline” in this prospectus. Our business and results of
operations depend on our drug candidates demonstrating favorable safety and efficacy clinical trial
results, and our ability to obtain the requisite regulatory approvals for our drug candidates to
initiate clinical trials, or to advance to the next stage of clinical development.
Our Ability to Succe ssfully Commerci alize Our Dru g Candidates
As of the Latest Practicable Date, all of our drug candidates were in clinical development or
preclinical development. We currently have no product approved for commercial sale and have not
generated any revenue from product sales. However, we expect to commercialize one or more of
our drug candidates over the coming years as they move towards the final stages of development.
Our ability to generate revenue depends on our ability to obtain regulatory approvals for and to
commercialize our drug candidates, establish manufacturing capabilities and sales channels, and
undertake extensive sales and marketing activities. If our drug candidates fail to achieve the degree
of market acceptance that we anticipate, we may not be able to generate revenue as expected.
Our Re search and Develo pment Co sts
We believe our ability to successfully develop drug candidates is the primary factor
affecting our long-term competitiveness, as well as our future growth and development.
Developing high quality drug candidates requires significant investments of financial resources
over a prolonged period of time, and our core strategy is to continue making sustained investments
in this area. As a result of this commitment, our pipeline of preclinical and clinical-stage drug
candidates has been steadily advancing and expanding. Our operations have consumed substantial
amounts of cash since our inception. Our research and development costs were RMB84.0 million,
RMB182.7 million and RMB120.1 million in 2021, 2022 and the six months ended June 30, 2023,
respectively. We expect our expenditures to increase significantly in connection with our ongoing
activities, particularly as we advance the clinical development of our clinical assets and continue
research and development of our preclinical assets and initiate additional clinical trials of, and
seek regulatory approvals for, these and other future drug candidates.
FINANCIAL INFORMATION
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Fun ding for Our O peration s
In 2021 and 2022 and six months ended June 30, 2023, we funded our operations primarily
through equity financing. Going forward, in the event of the successful commercialization of more
of our drug candidates, we expect to fund our operations in part with revenue generated from sales
of our drug products. However, with the continuing expansion of our business and the development
of new drug candidates, we may require further funding through public or private equity offerings,
debt financing and other sources. Any changes in our ability to fund our operations will affect our
cash flow and results of operations.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our discussion and analysis of our financial condition and results of operations are based on
our financial statements, which have been prepared in accordance with accounting principles that
conform with IFRSs issued by the IASB. The preparation of these financial statements requires us
to make estimates, assumptions and judgments that affect the reported amounts of assets,
liabilities, revenues, costs and expenses. We evaluate our estimates and judgments on an ongoing
basis, and our actual results may differ from these estimates. We base our estimates on historical
experience, known trends and events, contractual milestones and other various factors that are
believed to be reasonable under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not readily apparent from
other sources.
Our most critical accounting policies, judgments and estimates are summarized below. See
Note 2.4 and Note 3 to the Accountants’ Report set out in Appendix I to this prospectus for a
description of our significant accounting policies, judgments, and estimates.
Research and Develo pment Co sts
All research costs are charged to the statement of profit or loss as incurred. Expenditure
incurred on projects to develop new products is capitalized and deferred only when we can
demonstrate the technical feasibility of completing the intangible asset so that it will be available
for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will
generate future economic benefits, the availability of resources to complete the project and the
ability to measure reliably the expenditure during the development. Product development
expenditure which does not meet these criteria is expensed when incurred.
Fair Value Me asurement
We measure certain financial instruments at fair value at each end of the Track Record
Period. Fair value is the price that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date. The fair value
measurement is based on the presumption that the transaction to sell the asset or transfer the
liability takes place either in the principal market for the asset or liability, or in the absence of a
principal market, in the most advantageous market for the asset or liability. The principal or the
most advantageous market must be accessible by us. The fair value of an asset or a liability is
measured using the assumptions that market participants would use when pricing the asset or
liability, assuming that market participants act in their economic best interest.
FINANCIAL INFORMATION
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We use valuation techniques that are appropriate in the circumstances and for which
sufficient data are available to measure fair value, maximizing the use of relevant observable
inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial
statements are categorized within the fair value hierarchy, described as follows, based on the
lowest level input that is significant to the fair value measurement as a whole:
Level 1 — based on quoted prices (unadjusted) in active markets for identical assets or
liabilities;
Level 2 — based on valuation techniques for which the lowest level input that is significant
to the fair value measurement is observable, either directly or indirectly; and/or
Level 3 — based on valuation techniques for which the lowest level input that is significant
to the fair value measurement is unobservable.
For assets and liabilities that are recognized in the financial statements on a recurring basis,
we determine whether transfers have occurred between levels in the hierarchy by reassessing
categorization (based on the lowest level input that is significant to the fair value measurement as
a whole) at the end of each of the Track Record Period.
During the Track Record Period, we had certain financial liabilities categorized within
Level 3 of fair value measurement (“ Level 3 Fin anci alL i abilitie s”). Our Level 3 Financial
Liabilities include convertible redeemable preferred shares. Key valuation assumptions used to
determine the fair value of convertible redeemable preferred shares are as follows:
Asa t
31 December,
2021
Asa t
31 December,
2022
As of
June 30,
2023
Risk-free interest rate ............................ 0.73% 4.70% 5.15%
Discount for lack of marketability (“ DLOM ” ) ....... 1 1 % 1 4 % 4 %
V olatility ....................................... 5 4 % 6 1 % 6 0 %
We estimated the risk-free interest rate based on the yield of the U.S. Government Bond as
of the valuation date. The DLOM was estimated based on the option-pricing method. Under the
option-pricing method, the cost of a put option, which can hedge the price change before the
privately held share can be sold, was considered as a basis to determine the discount for the lack of
marketability. The volatility was estimated based on the annualised standard deviation of the daily
stock price return of comparable companies for the period from the respective valuation date and
with similar span as time to expiration.
FINANCIAL INFORMATION
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Details of the fair value measurement of our level 3 financial instruments, particularly the
fair value hierarchy, the valuation techniques and key inputs, are disclosed in Note 31 of the
Accountants’ Report set out in Appendix I to this prospectus. The Reporting Accountants
performed its work in accordance with Hong Kong Standard on Investment Circular Reporting
Engagement 200 “Accountants’ Report on Historical Financial Information in Investment
Circulars” issued by the Hong Kong Institute of Certified Public Accountants for the purpose of
expressing an opinion on our historical financial information for the Track Record Period as a
whole, and its opinion on the Group for the Track Record Period as a whole is set out in the
Accountants’ Report in Appendix I to this prospectus.
In relation to the valuation of the Level 3 Financial Liabilities, with reference to the
“Guidance note on directors’ duties in the context of valuations in corporate transactions” issued
by the SFC, our Directors have adopted the following procedures: (i) reviewing the terms of the
relevant agreements and documents regarding the financial liabilities; (ii) engaging an independent
valuer (the “ Valuer ”) to perform valuation procedures with necessary financial and non-financial
information and discussing with the valuer on the relevant assumptions; (iii) obtaining sufficient
understanding of the valuation model, methodologies and techniques on which the valuation is
based; and (iv) reviewing the valuation works and results and the financial statements prepared in
accordance with IFRS. Based on the above procedures, our Directors are of the view that the
valuation analysis performed during the Track Record Period is fair and reasonable, and our
financial statements are properly prepared. In addition, our Directors are satisfied with the
valuation work for the Level 3 Financial Liabilities performed during the Track Record Period.
The Joint Sponsors have conducted relevant due diligence work in relation to the Level 3
Financial Liabilities, including: (i) reviewed the terms of the relevant agreements and documents
in respect of the Level 3 Financial Liabilities, including the relevant investment agreements of the
Company; (ii) reviewed the valuation report prepared by the Valuer; (iii) discussed with the Valuer
to understand the basis for determining the valuation methodologies applied, including but not
limited to the major assumptions and key parameters adopted in the valuation process; (iv)
discussed with the management of the Company to understand the valuation methodology of the
Level 3 Financial Liabilities, judgement of the management and the internal policies associated
with the valuation of Level 3 Financial Liabilities; (v) reviewed the relevant notes in the
Accountant’s Report as contained in Appendix I to this Prospectus; and (vi) discussed with the
Reporting Accountant to understand the audit standards relied by the Reporting Accountant in
relation to the valuation of the Level 3 Financial Liabilities, the procedures they have conducted
and their views on our Group’s historical financial information as a whole. Based upon the due
diligence work conducted as stated above, nothing came to the Joint Sponsors’ attention that would
cause them to question the valuation performed by us or the Valuer in relation to the Level 3
Financial Liabilities.
Leases
We assess at contract inception whether a contract is, or contains, a lease. A contract is, or
contains, a lease if the contract conveys the right to control the use of an identified asset for a
period of time in exchange for consideration.
FINANCIAL INFORMATION
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Our Group as a lessee
We apply a single recognition and measurement approach for all leases, except for
short-term leases and leases of low-value assets. We recognize lease liabilities to make lease
payments and right of-use assets representing the right to use the underlying assets.
(a) Right-of-useassets
We recognize right-of-use assets at the commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use assets are measured at cost, less any
accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease
liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial
direct costs incurred, and lease payments made at or before the commencement date less any lease
incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of
the lease terms and the estimated useful lives of the assets as follows:
Property, office premises and plant 5 years
Equipment 3 years
If ownership of the leased asset transfers to the Group by the end of the lease term or the cost
reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life
of the asset.
(b) Leaseliabilities
Lease liabilities are recognized at the commencement date of the lease at the present value
of lease payments to be made over the lease term. The lease payments include fixed payments
(including in-substance fixed payments) less any lease incentives receivable, variable lease
payments that depend on an index or a rate, and amounts expected to be paid under residual value
guarantees. The lease payments also include the exercise price of a purchase option reasonably
certain to be exercised by us and payments of penalties for terminating the lease, if the lease term
reflects our exercising the option to terminate the lease. The variable lease payments that do not
depend on an index or a rate are recognized as expenses in the period in which the event or
condition that triggers the payment occurs.
In calculating the present value of lease payments, we use its incremental borrowing rate at
the lease commencement date because the interest rate implicit in the lease is not readily
determinable. After the commencement date, the amount of lease liabilities is increased to reflect
the accretion of interest and reduced for the lease payments made. In addition, the carrying amount
of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in
the lease payments (e.g., changes to future payments resulting from a change in an index or rate
used to determine such lease payments) or a change in the assessment of an option to purchase the
underlying asset.
FINANCIAL INFORMATION
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(c) Short-termleasesandleasesoflow-valueassets
We apply the short-term lease recognition exemption to its short-term leases of machinery
and equipment (that is, those leases that have a lease term of 12 months or less from the
commencement date and do not contain a purchase option). It also applies the recognition
exemption for leases of low-value assets to leases of office equipment that are considered to be of
low value.
Lease payments on short-term leases and leases of low-value assets are recognized as an
expense on a straight-line basis over the lease term.
Inve stment sa nd Other Fin anci alA ssets
Initial Recognition and Measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortized
cost, fair value through other comprehensive income, and fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial asset’s
contractual cash flow characteristics and the Group’s business model for managing them. With the
exception of trade receivables that do not contain a significant financing component or for which
the Group has applied the practical expedient of not adjusting the effect of a significant financing
component, the Group initially measures a financial asset at its fair value plus in the case of a
financial asset not at fair value through profit or loss, transaction costs.
In order for a financial asset to be classified and measured at amortized cost or fair value
through other comprehensive income, it needs to give rise to cash flows that are solely payments of
principal and interest on the principal amount outstanding. Financial assets with cash flows that
are not solely payments of principal and interest are classified and measured at fair value through
profit or loss, irrespective of the business model.
Our business model for managing financial assets refers to how it manages its financial
assets in order to generate cash flows. The business model determines whether cash flows will
result from collecting contractual cash flows, selling the financial assets, or both. Financial assets
classified and measured at amortized cost are held within a business model with the objective to
hold financial assets in order to collect contractual cash flows, while financial assets classified and
measured at fair value through other comprehensive income are held within a business model with
the objective of both holding to collect contractual cash flows and selling. Financial assets which
are not held within the aforementioned business models are classified and measured at fair value
through profit or loss.
All regular way purchases and sales of financial assets are recognized on the trade date, that
is, the date that we commit to purchase or sell the asset. Regular way purchases or sales are
purchases or sales of financial assets that require delivery of assets within the period generally
established by regulation or convention in the marketplace.
FINANCIAL INFORMATION
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Subsequent Measurement
The subsequent measurement of financial assets depends on their classification:
Short-Term Time Deposits (Debt Instruments)
Short-term time deposits are subsequently measured using the effective interest method and
are subject to impairment. Gains and losses are recognized in profit or loss when the asset is
derecognized, modified or impaired.
Financial Assets Measured at Fair V alue through Profit or Loss (“FVTPL”)
Financial assets at fair value through profit or loss are carried in the statement of financial
position at fair value with net changes in fair value recognized in profit or loss.
Financial Liabilities at Amortized Cost
After initial recognition, interest-bearing loans and borrowings, trade payables, financial
liabilities included in other payable and accruals and other borrowings are subsequently measured
at amortized cost, using the effective interest rate method unless the effect of discounting would be
immaterial, in which case they are stated at cost. Gains and losses are recognized the consolidated
statement of profit or loss when the liabilities are derecognized as well as through the effective
interest rate amortization process.
Other Financial Instruments
If the conversion option of other financial instruments exhibits characteristics of an
embedded derivative, it is separated from its liability component. On initial recognition, the
derivative component of other financial instruments is measured at fair value and presented as part
of financial instruments at FVTPL. Any excess of proceeds over the amount initially recognized as
the derivative component is recognized as the liability component. Transaction costs are
apportioned between the liability and derivative components of other financial instruments based
on the allocation of proceeds to the liability and derivative components when the instruments are
initially recognized. The portion of the transaction costs relating to the liability component is
recognised initially as part of the liability. The portion relating to the derivative component is
recognised immediately in the consolidated statement of profit or loss.
FINANCIAL INFORMATION
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Financial Liabilities at FVTPL
Financial liabilities at fair value through profit or loss include financial liabilities held for
trading and financial liabilities designated upon initial recognition as at fair value through profit or
loss.
Government Gr ants
Government grants are recognized at their fair value where there is reasonable assurance
that the grant will be received and all attaching conditions will be complied with. When the grant
relates to an expense item, it is recognized as income on a systematic basis over the periods that the
costs, for which it is intended to compensate, are expensed.
Where the grant relates to an asset, the fair value is credited to a deferred income account
and is released to the statement of profit or loss over the expected useful life of the relevant asset
by equal annual instalments or deducted from the carrying amount of the asset and released to the
statement of profit or loss by way of a reduced depreciation charge.
Share-b ased Payment s
We have set up the employee long term incentive plan for our directors and employees. The
fair value of the options is determined by the binomial model at the grant dates.
Estimating fair value for share-based payment transactions requires determination of the
most appropriate valuation model, which depends on the terms and conditions of the grant. This
estimate also requires determination of the most appropriate inputs to the valuation model
including the expected life of the share option, volatility, employee turnover rate, and dividend
yield and making assumptions about them. The assumptions and models used for estimating fair
value for share-based payment transactions are disclosed in note 27 to the Accountants’ Report set
out in Appendix I to this prospectus.
FINANCIAL INFORMATION
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DESCRIPTION OF CERTAIN KEY ITEMS OF THE CONSOLIDATED STATEMENTS OF
PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
The following table sets forth a summary of our consolidated statements of profit or loss and
other comprehensive income for the years indicated. Our historical results presented below are not
necessarily indicative of the results that may be expected for any future period. During the Track
Record Period and as of the Latest Practicable Date, we had not generated any revenue.
For the ye are n ded
December 31,
For the six month s ended
June 30,
2021 2022 2022 2023
(unaudited)
(RMBinthousands)
Other income and gains ....................... 13,821 20,581 3,925 22,722
Fair value (losses)/gains on convertible
redeemable preferred shares ................. (93,656) 23,242 31,247 (399,635)
Other expenses .............................. ( 1 ) (7,518) (4,381) (502)
Fair value losses on financial liabilities at FVTPL (4,609) – – –
Research and development costs ............... (84,012) (182,651) (76,322) (120,088)
Administrative expenses ...................... (48,064) (43,433) (28,357) (52,014)
Finance costs ................................ (4,528) (426) (217) (201)
Loss before t ax ............................. (221,049) (190,205) (74,105) (549,718)
Income tax expense .......................... (96) (32) (72) (26)
Loss for the ye ar/perio d ..................... (221,145) (190,237) (74,177) (549,744)
Total com prehen sive lo ss for the ye ar/perio d . . (217,410) (223,888) (92,387) (586,343)
Attribut able to:
Owners of the parent ....................... (217,410) (223,888) (92,387) (586,343)
FINANCIAL INFORMATION
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Other Income and Gains
Other income and gains primarily consist of (i) government grants, which primarily
represent our subsidies received from the local governments for the purpose of our research and
clinical trial activities, allowance for new drug development and funds for talents; (ii) bank interest
income, representing interest income from our deposits in banks; (iii) investment income from
short-term time deposits, which primarily represents the short-term time deposits which are
deposited with creditworthy banks through a reputable financial institution; (iv) other investment
income from financial assets at FVTPL, which primarily represents interest income from the
wealth management products that we purchased from commercial banks; and (v) foreign exchange
gains, which primarily represent the benefit of foreign currency translation.
The following table summarizes a breakdown of our other income and gains for the years
indicated.
For the ye are n ded
December 31,
For the six month s ended
June 30,
2021 2022 2022 2023
(unaudited)
(RMBinthousands)
Government grants ........................... 9,843 8,014 1,113 8,942
Bank interest income ......................... 9 6 4 3,545 2,290 696
Investment income from short-term
time deposits .............................. – 7,822 – 12,931
Other investment income from financial assets at
FVTPL ................................... 2,366 1,012 521 120
Foreign exchange gains, net ................... 6 0 3 – – –
Others ...................................... 4 5 1 8 8 1 3 3
Total ....................................... 13,821 20,581 3,925 22,722
Fair Value (Lo sses)/G ains on Convertible Re deem able Preferre d Shares
Fair value (losses)/gains on convertible redeemable preferred shares are resulted from
changes in valuation of the fair value of our convertible redeemable preferred shares issued to
investors. We issued Series B+ Preferred Shares in September 2020 and August 2021, Series C
Preferred Shares in November 2021 and Series C+ Preferred Shares in November 2022 and
December 2022. For more details regarding Preferred Shares, see “History, Reorganization and
Corporate Structure — Pre-IPO Investments”. The convertible redeemable preferred shares will be
re-classified as equity as the convertible redeemable preferred shares will automatically convert
into Shares upon Listing, after which we do not expect to recognize any further loss or gain on fair
value changes from the convertible redeemable preferred shares.
FINANCIAL INFORMATION
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Other Ex penses
Other expenses consist of (i) foreign exchange loss, net, which primarily represents the
impact of foreign currency translation and (ii) loss on disposal of items of property, plant and
equipment.
The following table sets forth the breakdown of our other expenses for the years indicated.
For the ye are n ded
December 31,
For the six month s ended
June 30,
2021 2022 2022 2023
(unaudited)
(RMBinthousands)
Loss on disposal of items of property, plant and
equipment ................................ ( 1 ) – – –
Foreign exchange losses, net .................. – (7,518) (4,381) (502)
Total ....................................... (1) (7,518) (4,381) (502)
Fair Value Lo sses on Fin anci alL i abilitie sa t FVTPL
Fair value losses on financial liabilities as FVTPL are resulted from our issuance of warrants
to Series B+ investors in September 2020 (“ Serie s B+ W arrants”), which were subsequently
converted to Series B+ Preferred Shares in the first half of 2021.
Research and Develo pment Co sts
Our research and development costs primarily consist of (i) third-party contracting expenses
primarily includes the early stage discovery expense, preclinical expenses, clinical development
expenses for our drug candidates; (ii) staff costs, primarily consisting of salaries and benefits for
our R&D team; (iii) ESOP expenses, representing expenses associated with share awards granted
to our R&D team; and (iv) others, primarily including rental, depreciation and amortization in
relation to fixed assets, intangible assets, right-of-use assets and raw materials.
FINANCIAL INFORMATION
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The following table sets forth a breakdown of our research and development costs for the
years indicated.
For the ye are n ded December 31, For the six month s ended June 30,
2021 2022 2022 2023
(unaudited)
(RMBinthousands,exceptforpercentages)
Third-party contracting
expenses ................. 53,058 63% 123,377 68% 52,215 69% 75,526 63%
Staff costs ................. 19,827 24% 35,148 19% 14,812 19% 20,338 17%
ESOP expenses ............. 5,455 6% 20,406 11% 7,936 10% 19,548 16%
Others ..................... 5,672 7% 3,720 2% 1,359 2% 4,676 4%
Total ...................... 84,012 100.0% 182,651 100.0% 76,322 100.0% 120,088 100.0%
The following table sets forth the clinical development expenses incurred for the Core
Product HTD1801 during the Track Record Period by development stage.
For the ye are n ded December 31, For the six month s ended June 30,
2021 2022 2022 2023
(unaudited)
(RMBinthousands,exceptforpercentages)
Phase I .................... 2,692 14% 36,690 44% 18,547 52% 2,240 4%
Phase II ................... 16,399 86% 47,328 56% 16,917 48% 49,752 94%
Phase III ................... –––––– 1,237 2%
Total ...................... 19,091 100.0% 84,018 100.0% 35,464 100.0% 53,229 100.0%
FINANCIAL INFORMATION
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The following table sets forth the clinical development expenses incurred for the Core
Product HTD1801 during the Track Record Period by clinical program. Other studies mainly
include the Phase I clinical trials on healthy subjects for the Core Product.
For the ye are n ded December 31, For the six month s ended June 30,
2021 2022 2022 2023
(unaudited)
(RMBinthousands,exceptforpercentages)
T2DM ..................... 2,752 14% 38,180 45% 13,824 39% 4,514 8%
P S C ....................... 9 5 9 5 % 1 5 4 0 % 1 2 8 0 % – –
P B C....................... 13,917 73% 8,046 10% 7,039 20% 249 1%
M A S H..................... 1,463 8% 15,396 18% 636 2% 47,907 90%
Other studies
(i) .............. – – 22,242 27% 13,837 39% 559 1%
Total ...................... 19,091 100.0% 84,018 100.0% 35,464 100.0% 53,229 100.0%
Note:
(i) The clinical development expenses incurred for other studies are not dedicated to a single indication
specifically and therefore such expenses cannot be attributed to a specific indication directly.
Admini strative Ex penses
Our administrative expenses primarily consist of compensation expenses for administrative
and management personnel (including staff costs and ESOP expenses), professional services fees
(mainly in relation to our financing transactions, business consulting and other professional
service fees). The following table summarizes a breakdown of our administrative expenses for the
years indicated.
For the ye are n ded December 31, For the six month s ended June 30,
2021 2022 2022 2023
(unaudited)
(RMBinthousands,exceptforpercentages)
Professional service fees* .... 39,146 81% 26,804 62% 19,538 69% 30,868 59%
Staff costs ................. 5,338 11% 8,330 19% 5,225 18% 8,951 17%
ESOP expenses ............. 1,849 4% 5,215 12% 2,330 8% 8,897 17%
Others ..................... 1,731 4% 3,084 7% 1,264 5% 3,298 7%
Total ...................... 48,064 100.0% 43,433 100.0% 28,357 100.0% 52,014 100.0%
Note: The listing expenses included in the professional service fees amounted to RMB6.1 million, RMB4.1
million and RMB16.3 million in 2021, 2022 and the six months ended June 30, 2023, respectively.
FINANCIAL INFORMATION
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Fin ance Co sts
Our finance costs primarily consist of interest on interest-bearing bank borrowings, other
borrowings and lease liabilities. The other borrowing represents a loan in the first half of 2021
which the accrual interests of such loan will be automatically waived upon the exercise of the
Series B+ Warrants in the first half of 2021. The table below summarizes a breakdown of our
finance costs for the years indicated.
For the ye are n ded
December 31,
For the six month s ended
June 30,
2021 2022 2022 2023
(unaudited)
(RMBinthousands)
Interest on interest-bearing bank borrowings .... 3 0 9 3 0 3 1 6 4 1 3 7
Interest on other borrowings ................... 4,152 – – –
Interest on lease liabilities .................... 6 7 1 2 3 5 3 6 4
Total ....................................... 4,528 426 217 201
Income T axE x penses
We are subject to income tax on an entity basis on profits arising in or derived from the
jurisdictions in which members of our Group are domiciled and operate.
Cayman Islands
Under the current laws of the Cayman Islands, we are not subject to tax on income or capital
gains. In addition, upon payments of dividends by us to our shareholders, no Cayman Islands
withholding tax is imposed.
BVI
Under the current laws of the BVI, the subsidiary incorporated in the BVI is not subject to
tax on income or capital gains. In addition, upon payments of dividends by these subsidiaries to
their shareholders, no BVI withholding tax is imposed.
Hong Kong
Our subsidiary incorporated in Hong Kong is subject to income tax at the rate of 8.25% on
the estimated assessable profits arising in Hong Kong during the Track Record Period.
The PRC
No provision for Mainland China income tax pursuant to the Corporate Income Tax Law of
the PRC and the respective regulations (the “ CIT L aw”) has been made as the Group’s
subsidiaries, which operate in the PRC are in loss position and have no estimated taxable profits.
FINANCIAL INFORMATION
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Shenzhen HighTide has been approved as a high technology enterprise under the relevant
tax rules and regulations in December 2019, and accordingly, is entitled to a preferential CIT rate
of 15% from 2019 to 2021. This qualification is subject to review by the relevant tax authority in
the PRC for every three years. The renewed qualification was obtained in December 2022 and
Shenzhen HighTide is entitled a preferential income tax rate of 15% from 2022 to 2024.
Australia
Our subsidiary incorporated in Australia is subject to income tax at the rate of 26% on the
estimated assessable profits arising in Australia in 2021, 25% in 2022 and 2023.
United States
The subsidiary incorporated in Maryland is subject to a statutory federal corporate income
tax at a rate of 21%. In addition, it is also subject to the state income tax in Maryland at a rate of
8.25% during the Track Record Period. Other states including California, Florida and New Jersey
also impose state income tax on the subsidiary to the extent that a sufficient nexus, or taxable
connection, exists between the subsidiary and the state. The subsidiary is subject to the state
income tax in California at a rate of 8.84%, in Florida at a rate of 5.50% and in New Jersey at a rate
of 7.50% during the Track Record Period.
PERIOD-TO-PERIOD COMPARISON OF RESULTS OF OPERATIONS
Six Month s Ended June 30, 2023 Com pared with Six Month s Ended June 30, 2022
Other Income and Gains
Our other income and gains significantly increased by 478.9% from RMB3.9 million in the
six months ended June 30, 2022 to RMB22.7 million in the six months ended June 30, 2023. The
increase was primarily attributable to an increase of RMB12.9 million in investment income from
short-term time deposits and RMB7.8 million in government grants. The increase in the investment
income from short-term time deposits in the six months ended June 30, 2023 was primarily due to
an increase in time deposits and fluctuations in foreign currency interest rates.
Fair V alue (Losses)/Gains on Convertible Redeemable Preferred Shares
We recorded fair value losses on convertible redeemable preferred shares of RMB399.6
million in the six months ended June 30, 2023 mainly due to the increase in fair value of our
convertible redeemable preferred shares.
Other Expenses
Our other expenses decreased significantly from RMB4.4 million in the six months ended
June 30, 2022 to RMB0.5 million in the six months ended June 30, 2023, primarily attributable to
the decrease in foreign exchange losses, resulted from fluctuations in foreign currency exchange
rates.
FINANCIAL INFORMATION
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Research and Development Costs
Our research and development costs increased by 57.3% from RMB76.3 million in the six
months ended June 30, 2022 to RMB120.1 million in the six months ended June 30, 2023. The
increase was primarily attributable to an increase in expenditures for our clinical and preclinical
development activities, including the increase in third-party contracting expenses, ESOP expenses
and staff costs.
Administrative Expenses
Our administrative expenses increased by 83.4% from RMB28.4 million in the six months
ended June 30, 2022 to RMB52.0 million in the six months ended June 30, 2023. The increase was
primarily attributable to the increased professional service fees for the Global Offering and the
increased ESOP expenses and staff costs.
Finance Costs
Our finance costs remained stable at RMB217 thousand in the six months ended June 30,
2022 and RMB201 thousand in the six months ended June 30, 2023.
Loss for the Period
As a result of the above, we recorded a loss of RMB74.2 million in the six months ended
June 30, 2022, as compared to a loss of RMB549.7 million in the six months ended June 30, 2023.
YearE n ded December 31, 2022 Com pared with Ye arE n ded December 31, 2021
Other Income and Gains
Our other income and gains increased by 48.9% from RMB13.8 million in 2021 to RMB20.6
million in 2022. The increase was primarily attributable to an increase of RMB2.6 million in bank
interest income and RMB7.8 million in investment income from short-term time deposits,
reflecting the significant increase in the balance of deposits in 2022 due to cash inflow from Series
C Financing in 2021 and Series C+ Financing in 2022 respectively, which was partially offset by (i)
decrease in government grants and (ii) decrease in other investment income from financial assets at
FVTPL.
Fair V alue (Losses)/Gains on Convertible Redeemable Preferred Shares
We recorded fair value losses on convertible redeemable preferred shares of RMB93.7
million in 2021 mainly because of the increase in fair value of Series B+ convertible redeemable
preferred shares as of 31 December 2021 compared with 31 December 2020. We recorded fair
value gains on convertible redeemable preferred shares of RMB23.2 million in 2022 mainly
because of the decrease in fair value of Series B+ and C convertible redeemable preferred shares as
of 31 December 2022 compared with 31 December 2021, resulting from the issuance of Series C+
convertible redeemable preferred shares in 2022, which retained with more preferential rights.
FINANCIAL INFORMATION
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Other Expenses
Our other expenses increased significantly from RMB one thousand in 2021 to RMB7.5
million in 2022, primarily attributable to the foreign exchange losses, net of RMB7.5 million in
2022 due to fluctuations in foreign currency exchange rates and currency translation.
Fair V alue Losses on Financial Liabilities at FVTPL
We incurred fair value losses on financial liabilities at FVTPL of RMB4.6 million in 2021,
primarily due to fair value changes in our warrants to the Series B+ Warrants, which were
subsequently converted to Series B+ Preferred Shares in the first half of 2021. We did not record
any fair value losses on financial liabilities at FVTPL due to fair value changes in our warrants in
2022, as the Series B+ Warrants have been fully converted in 2021.
Research and Development Costs
Our research and development costs increased significantly by 117.4% from RMB84.0
million in 2021 to RMB182.7 million in 2022. The increase was primarily attributable to an
increase in expenditures for our clinical and preclinical development activities, including increase
in third-party contracting expenses, staff costs and ESOP expenses.
Administrative Expenses
Our administrative expenses decreased by 9.6% from RMB48.1 million in 2021 to RMB43.4
million in 2022. The decrease was primarily attributable to decreased professional services
expenses as we incurred financial advisor expenses for our Series C financing in 2021 and partially
offset by increase of ESOP expenses and staff costs as we recruited more employees in 2022 and
raised salaries to the existing employees.
Finance Costs
Our finance costs decreased by 90.6% from RMB4.5 million in 2021 to RMB0.4 million in
2022. The decrease was primarily attributable to a decrease of RMB4.2 million in interests on
other borrowings as all the Series B+ Warrants have been exercised as agreed and we have repaid
the loans in first half of 2021.
Loss for the Y ear
As a result of the above, we recorded a loss of RMB190.2 million in 2022, as compared to a
loss of RMB221.1 million in 2021.
DESCRIPTION OF CERTAIN SELECTED ITEMS FROM THE CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
The following table sets forth a summary of our consolidated statements of financial
position for the years indicated.
FINANCIAL INFORMATION
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--- page 421 ---
As of December 31, A s of June 30,
2021 2022 2023
(RMBinthousands)
Total non-current assets ........................... 3,450 4,806 5,263
Total current assets ............................... 775,182 851,018 753,319
Total assets ..................................... 778,632 855,824 758,582
Total current liabilities ............................ 28,534 1,319,720 310,888
Total non-current liabilities ........................ 1,022,360 6,632 1,476,120
Totall i abilitie s .................................. 1,050,894 1,326,352 1,787,008
Net li abilitie s ................................... (272,262) (470,528) (1,028,426)
Net current assets/(liabilities) ...................... 746,648 (468,702) 442,431
Share Capital .................................... 3 3 3 6 3 9
Deficits ......................................... (272,262) (470,528) (1,028,456)
The following table sets forth our current assets and current liabilities as of the dates
indicated:
As of December 31, A s of June 30, A s of October 31,
2021 2022 2023 2023
(unaudited)
(RMBinthousands)
CURRENT ASSETS
Prepayments, other receivables and other assets .... 9,892 10,821 20,399 39,491
Short-term time deposits ...................... – 427,857 – –
Cash and bank balances ...................... 765,290 412,340 732,920 612,309
Total current assets ......................... 775,182 851,018 753,319 651,800
CURRENT LIABILITIES
Trade payables ............................. 6,091 21,699 29,752 37,687
Other payables and accruals ................... 15,192 28,747 22,356 25,157
Interest-bearing bank borrowings ............... 7,000 8,150 8,000 6,600
Lease liabilities ............................. 2 5 1 1,111 1,646 707
Convertible redeemable preferred shares .......... – 1,260,013 249,134 –
Total current li abilitie s ...................... 28,534 1,319,720 310,888 70,151
NET CURRENT ASSETS/(LIABILITIES) ....... 746,648 (468,702) 442,431 581,649
FINANCIAL INFORMATION
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--- page 422 ---
As of June 30, 2023, we maintained a net liabilities position, primarily due to the
recognition of convertible redeemable preferred shares issued to investors as our non-current
liabilities. We had net liabilities of RMB272.3 million, RMB470.5 million and RMB1,028.4
million as of December 31, 2021 and 2022, and June 30, 2023, respectively. The increase in our net
liabilities was primarily due to the total comprehensive loss. Our total comprehensive loss
increased from RMB217.4 million in 2021 to RMB223.9 million in 2022 and our total
comprehensive loss increased from RMB92.4 million for the six months ended June 30, 2022 to
RMB586.3 million for the six months ended June 30, 2023. The increase in total comprehensive
loss was driven by the expanded research and development activities, fair value changes on
convertible redeemable preferred shares issued to investors, as well as administrative expenses.
The majority of our convertible redeemable preferred shares was reclassified from current
liabilities as of December 31, 2022, to non-current liabilities as of June 30, 2023, as we entered
into the supplementary deferred redemption agreement with majority of our investors of series B+,
series C and series C+ convertible redeemable preferred shares. All preferred shares will be
reclassified from financial liabilities to equity as a result of the automatic conversion into our
Shares upon Listing, which will reverse our net liability position to a net asset position. See the
Accountants’ Report set out in Appendix I to this prospectus for a detailed description of our
statements of changes in equity.
Pre payment s, Other Receiv able sa nd Other A ssets
Our prepayments, other receivables and other assets primarily consist of (i) prepayments to
suppliers of third-party services mainly used in our preclinical and clinical research and
development; (ii) input value-added tax, representing input value-added taxes paid with respect to
our procurement; (iii) rental deposit to our leased properties and (iv) other receivables and other
current assets which represent rental deposits, social security paid for employees and capitalized
IPO expense.
The following table sets forth components of our prepayments, other receivables and other
assets as of the dates indicated.
As of December 31, A s of June 30,
2021 2022 2023
(RMBinthousands)
Prepayments to suppliers ......................... 3,854 5,728 11,066
Input value-added tax ............................ 3,367 1,870 4,544
Deposits ........................................ 4 9 7 4 0 4 7 1 6
Other receivables ................................ 2 7 5 4 6 9 5 6 5
Other current assets .............................. 1,899 2,350 3,508
Total ........................................... 9,892 10,821 20,399
Our prepayments, other receivables and other assets increased significantly from RMB9.9
million as of December 31, 2021 to RMB10.8 million as of December 31, 2022 and further
increased to RMB20.4 million as of June 30, 2023, which was primarily attributable to an increase
of RMB5.3 million in our prepayments to suppliers of third-party services mainly used in our
preclinical and clinical research and development.
As of October 31, 2023, approximately RMB9.9 million, or 48.3% of our prepayments,
other receivables and other assets as of June 30, 2023 were settled.
FINANCIAL INFORMATION
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Cash and Bank B alance s
Our cash and bank balances primarily consist of cash in hand and at bank and short-term
time deposits. Short term time deposits are made for varying periods of between one day and three
months which depending on the immediate cash requirements of us and with the respective interest
rates. The bank balances and restricted cash are deposited with banks.
Our cash and bank balances increased by 77.7% from RMB412.3 million as of December 31,
2022 to RMB732.9 million as of June 30, 2023, primarily attributable to cash inflow from our
deposit transfers from a reputable financial institution.
Our cash and bank balances decreased by 46.1% from RMB765.3 million as of
December 31, 2021 to RMB412.3 million as of December 31, 2022, primarily attributable to the
withdrawal of deposits, which are deposited with creditworthy banks through a reputable financial
institution of RMB427.8 million.
The following table sets forth a breakdown of our cash and bank balances as of the dates
indicated.
As of December 31, A s of June 30,
2021 2022 2023
(RMBinthousands)
Cash and bank balances ........................... 765,290 412,340 732,920
Less:
Bank deposits over three months ................. – – (170,498)
Restricted cash (Note(i)) ........................ – (139,293) (144,524)
Cash and cash equivalents ......................... 765,290 273,047 417,898
Denominated in:
Renminbi ..................................... 72,700 83,832 158,986
US dollars .................................... 692,037 328,207 573,769
Australia dollars ............................... 5 5 3 2 8 3 5 6
HK dollars .................................... – 1 8 1 0 9
Cash and bank b alance s ......................... 765,290 412,340 732,920
Note:
(i) represents the proceeds from the issuance of the convertible redeemable preferred shares, which have been
placed in a restricted bank account to be used for core research and development activities and for the
redemption of the convertible redeemable preferred shares. None of the amounts are impaired.
FINANCIAL INFORMATION
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TradeP ayable s
Our trade payables mainly consist of payables for R&D services. Our trade payables
increased significantly from RMB6.1 million as of December 31, 2021 to RMB21.7 million as of
December 31, 2022 and further increased to RMB29.8 million as of June 30, 2023, primarily
driven by the increase in third-party contracting expenses for clinical development of our Core
Product HTD1801.
The following table sets forth an aging analysis of our trade payables as of the dates
indicated.
As of December 31, A s of June 30,
2021 2022 2023
(RMBinthousands)
Within 12 months ................................ 6,091 21,699 29,752
Total ........................................... 6,091 21,699 29,752
Our Directors confirm that we had no material defaults in payment of trade payables during
the Track Record Period and up to the Latest Practicable Date.
As of October 31, 2023, RMB29.5 million or 99.2% of our trade payables as of June 30,
2023 were subsequently settled.
Other P ayable sa nd Accru als
Our other payables and accruals primarily consist of payables in relation to (i) professional
service fees; (ii) payroll; and (iii) others.
The following table sets forth components of our other payables and accruals as of the dates
indicated.
As of December 31, A s of June 30,
2021 2022 2023
(RMBinthousands)
Professional service fees .......................... 9,484 14,384 12,652
Payroll ......................................... 5,263 9,166 7,393
Other .......................................... 4 4 5 5,197 2,311
Total ........................................... 15,192 28,747 22,356
FINANCIAL INFORMATION
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Our other payables and accruals decreased from RMB28.7 million as of December 31, 2022
to RMB22.4 million as of June 30, 2023, primarily attributable to a decrease of RMB1.8 million in
payroll and RMB1.7 million in professional service fees.
Our other payables and accruals increased significantly from RMB15.2 million as of
December 31, 2021 to RMB28.7 million as of December 31, 2022, primarily attributable to an
increase of RMB4.9 million in professional service fees in relation to our Global Offering payable
to third parties, RMB3.9 million in payroll payable resulting from an increase in employee
compensations and RMB4.8 million in other payable.
As of October 31, 2023, RMB11.6 million or 52.1% of our other payables and accruals as of
June 30, 2023 were subsequently settled.
Intere st-be arin g Bank Borrowin gs
The following table sets forth our interest-bearing bank borrowings as of the dates
indicated.
As of December 31, A s of June 30,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Current
Bank loans – secured ............................. 7,000 3,840 2,880
Bank loans – unsecured ........................... – 4,310 5,120
Total ........................................... 7,000 8,150 8,000
LeaseL i abilitie s
The following table sets forth our lease liabilities as of the dates indicated.
As of December 31, A s of June 30,
2021 2022 2023
(RMBinthousands)
Current ......................................... 2 5 1 1,111 1,646
Non current ..................................... 9 0 2 1,513 1,549
Total ........................................... 1,153 2,624 3,195
Our lease liabilities increased significantly from RMB1.2 million as of December 31, 2021
to RMB2.6 million as of December 31, 2022 and further increased to RMB3.2 million as of June
30, 2023, which were primarily in relation to the properties we leased for our office premises and
R&D facilities.
FINANCIAL INFORMATION
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Convertible Re deem able Preferre d Shares
The following table sets for our convertible redeemable preferred shares as of the dates
indicated.
As of December 31, A s of June 30,
2021 2022 2023
(RMBinthousands)
Current ......................................... – 1,260,013 249,134
Non current ..................................... 1,005,903 – 1,472,519
Total ........................................... 1,005,903 1,260,013 1,721,653
Our convertible redeemable preferred shares represent the carrying amount of Preferred
Shares we issued pursuant to our Series B+ Investment, Series C Investment and Series C+
Investment. For more details regarding our Preferred Shares, see “History, Reorganization and
Corporate Structure — Pre-IPO Investments”. Our convertible redeemable preferred shares
increased from RMB1,005.9 million as of December 31, 2021 to RMB1,260.0 million as of
December 31, 2022 and further increased to RMB1,721.7 million as of June 30, 2023 primarily due
to (i) the currency translation differences; (ii) changes in the fair value of our Preferred Shares and
(iii) the issuance of Series C+ Preferred Shares in 2022.
INDEBTEDNESS
As of December 31, 2021 and 2022, June 30, 2023 and October 31, 2023, except as disclosed
in the table below, we did not have any outstanding mortgages, charges, debentures, other issued
debt capital, bank overdrafts, borrowings, liabilities under acceptance or other similar
indebtedness, any guarantees, litigations or claims of immaterial importance, pending or
threatened against any member of our Company or other material contingent liabilities. Since
October 31, 2023, the latest practicable date for the purpose of the indebtedness statement, and up
to the date of this prospectus, there had been no material adverse change to our indebtedness.
FINANCIAL INFORMATION
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The following table sets forth the breakdown of our indebtedness as of the dates indicated.
As of December 31, A s of June 30, A s of October 31,
2021 2022 2023 2023
(unaudited)
(RMBinthousands)
Current
Interest-bearing bank borrowings ...... 7,000 8,150 8,000 6,600
Lease liabilities .................. 2 5 1 1,111 1,646 708
Convertible redeemable preferred shares . – 1,260,013 249,134 –
Non current
Lease liabilities .................. 9 0 2 1,513 1,549 804
Convertible redeemable preferred shares . 1,005,903 – 1,472,519 1,786,672
Total .......................... 1,014,056 1,270,787 1,732,848 1,794,784
As of October 31, 2023, we had no unutilized bank facilities.
KEY FINANCIAL RATIOS
As of December 31,
As of the six month s ended
June 30,
2021 2022 2022 2023
(unaudited)
Gearing Ratio (1) ..................... ( 3 % ) ( 2 % ) ( 2 % ) ( 1 % )
Current Ratio (2) ...................... 27.2 0.6 0.7 2.4
Notes:
(1) Equals bank loans and other borrowings divided by total equity as of the same date.
(2) Equals current assets divided by current liabilities as of the same date.
LIQUIDITY AND CAPITAL RESOURCES
Overview
Our primary uses of cash relate to the research and development of our drug candidates. We
primarily funded our working capital requirement through equity financing during the Track
Record Period. We monitor and maintain a level of cash and cash equivalents deemed adequate to
finance our operations and mitigate the effects of fluctuations in cash flows. As our business
develops and expands, we expect to generate more cash from our operating activities through the
launch of our drug candidates. We believe our future liquidity requirements will be mainly
satisfied by using funds from a combination of our existing cash, net proceeds from the Global
Offering and bank borrowings if necessary.
FINANCIAL INFORMATION
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Cash Flow s
The following table sets forth a summary of our cash flows for the years indicated.
For the ye are n ded
December 31,
For the six month s ended
June 30,
2021 2022 2022 2023
(unaudited)
(RMBinthousands)
Operating loss before changes in working capital (103,864) (197,141) (92,936) (136,606)
Changes in working capital ................... 13,327 24,786 18,531 (7,197)
Income tax paid ............................. ( 9 ) (24) (14) (105)
Net c ash flow s used in o peratin ga ctivitie s .... (90,546) (172,379) (74,419) (143,908)
Net c ash flow s from/(u sed in) inve stin g
activitie s ................................. 1,588 (415,661) 2,749 271,034
Net c ash flow s from fin ancin ga ctivitie s ....... 493,982 46,034 845 (1,946)
Net incre ase/( decre ase) in c ash and cash
equiv alent s ............................... 405,024 (542,006) (70,825) 125,180
Cash and cash equivalents at beginning of year . . 367,252 765,290 765,290 273,047
Effects of foreign exchange rate changes, net .... (6,986) 49,763 29,290 19,671
Cash and cash equiv alent sa te n d of ye ar ...... 765,290 273,047 723,755 417,898
Operating Activities
In the six months ended June 30, 2023, our net cash used in operating activities was
RMB143.9 million. This net outflow from operating activities primarily reflected loss before tax of
RMB549.7 million, positively adjusted primarily by (i) fair value gains on convertible redeemable
preferred shares of RMB399.6 million, (ii) equity-settled share option arrangements of RMB28.4
million, and (iii) an increase in trade payables of RMB8.1 million, partially offset by (i) an
increase in prepayments, other receivable and other assets of RMB8.4 million, and (ii) a decrease
in other payables and accruals of RMB6.3 million.
In 2022, our net cash used in operating activities was RMB172.4 million. This net outflow
from operating activities primarily reflected loss before tax of RMB190.2 million, positively
adjusted primarily by (i) equity-settled share option arrangements of RMB25.6 million and
(ii) foreign exchange differences, net of RMB7.5 million. The amount was further adjusted by
changes in working capital, primarily including (i) an increase in trade payables of RMB15.6
million and (ii) an increase in other payables and accruals of RMB13.5 million, partially offset by
a decrease in deferred income of RMB3.9 million.
FINANCIAL INFORMATION
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In 2021, our net cash used in operating activities was RMB90.5 million. This net outflow
from operating activities primarily reflected loss before tax of RMB221.0 million, positively
adjusted primarily by (i) fair value losses on convertible redeemable preferred shares of RMB93.7
million and (ii) transaction costs for preferred shares of RMB16.2 million. This amount was
further adjusted by changes in working capital, primarily including (i) an increase in other
payables and accruals of RMB14.4 million and (ii) an increase in deferred income of RMB3.4
million, partially offset by an increase in prepayments, other receivables and other assets of
RMB3.6 million.
We monitor and maintain a level of cash and cash equivalents deemed adequate to finance
our operations and mitigate the effects of fluctuations in cash flows. As our business develops and
expands, we expect to generate net cash from our operating activities, through increasing sales
revenue of our expected commercialized product. In view of our net operating cash outflows
throughout the Track Record Period, we plan to improve such position by (i) rapidly advancing our
pipeline products towards commercialization to generate revenue from product sales; (ii) adopting
comprehensive measures to effectively control our cost and operating expenses, primarily
including research and development costs and administrative expenses; (iii) enhancing working
capital management efficiency; and (iv) successfully launching the Global Offering to obtain the
proceeds.
Investing Activities
In the six months ended June 30, 2023, our net cash from investing activities was RMB271.0
million, which was primarily attributable to proceeds from disposal of short-term time deposits of
RMB462.1 million, partially offset by purchase of bank deposits over three months of RMB166.6
million and purchase of short-term time deposits of RMB38.2 million.
In 2022, our net cash used in investing activities was RMB415.7 million, which was
primarily attributable to purchase of financial assets at FVTPL of RMB717.8 million and purchase
of short-term time deposits of RMB621.4 million, partially offset by proceeds from disposal of
financial assets at FVTPL of RMB717.8 million, proceeds from disposal of short-term time
deposits of RMB197.5 million, receipts of investment income from short-term time deposits of
RMB3.9 million and bank interest received of RMB3.5 million.
In 2021, our net cash from investing activities was RMB1.6 million, which was primarily
attributable to proceeds of financial assets at FVTPL of RMB1,545.7 million, partially offset by
purchase of financial assets at FVTPL of RMB1,545.7 million.
In 2021, 2022 and the six months ended June 30, 2023, we purchased short-term wealth
management products in order to generate reasonable low-risk returns. With regards to the
purchase of wealth management products, we have formulated the investment policy of
diversifying risks and generating steady returns on the premise of ensuring the safety of funds. Our
Chief Financial Officer and the finance department are mainly responsible for making,
implementing and supervising our investment decisions. We have implemented the following
treasury policies and internal authorization controls:
• We have formulated the internal control measures to control our process of
investment in wealth management products;
FINANCIAL INFORMATION
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--- page 430 ---
• Our Board is responsible for the approval of our material investments in wealth
management products through a strict review and decision making process;
• Our finance department is responsible for implementation and management of our
wealth management products; and
• All investments must be rated at least investment grade with a low risk of default at
the beginning of the fixed interest term, except for wealth management product
investments that are not rated, as long as such wealth management products are issued
by a commercial bank or other financial institution that is regulated by its respective
reputable regulatory authority.
Prior to making an investment, we ensure that there remains sufficient working capital for
our business needs, operating activities, research and development and capital expenditures even
after purchasing such wealth management products. We adopt a prudent approach in investing
wealth management products. Our investment decisions are made on a case-by-case basis and after
due and careful consideration of a number of factors, such as the duration of the investment and the
expected returns. To control our risk exposure, we have in the past sought, and may continue in the
future to seek, other low-risk wealth management products issued by a commercial bank or other
financial institution that is regulated by its respective reputable regulatory authority. Our
investments in wealth management products after the Listing will be subject to compliance with
Chapter 14 of the Listing Rules.
Financing Activities
In the six months ended June 30, 2023, our net cash used in financing activities was RMB1.9
million, which was mainly attributable to the repayment of existing bank loans of RMB5.2 million
and the settlement of listing expenses of RMB1.2 million, partially offset by the addition of bank
loans of RMB5.0 million.
In 2022, our net cash from financing activities was RMB46.0 million, which was primarily
attributable to proceeds from Series C+ preferred shares of RMB47.1 million and new bank loans
of RMB15.0 million, partially offset by repayment of bank loans of RMB13.9 million.
In 2021, our net cash from financing activities was RMB494.0 million, which was primarily
attributable to (i) proceeds from issuance of series B+ convertible redeemable preferred shares of
RMB179.9 million and (ii) proceeds from issuance of series C convertible redeemable preferred
shares of RMB511.3 million, partially offset by repayments of other borrowings of RMB184.5
million.
FINANCIAL INFORMATION
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CASH OPERATING COSTS
The following table sets forth information on our cash operating costs for the years
indicated.
For the ye are n ded
December 31,
For the
six month s
ended
June 30,
2021 2022 2023
(RMBinthousands)
Research andd evelo pment co sts
ResearchanddevelopmentcostsforCoreProduct
Third-party contracting expenses ............................ 53,437 103,808 73,838
Staff costs ................................................ 13,612 28,097 19,412
Others ................................................... 2,274 1,538 1,701
Researchanddevelopmentcostsforotherproductcandidates
Third-party contracting expenses ............................ 2,486 2,577 1,240
Staff costs ................................................ 2,348 3,896 2,157
Others ................................................... 1,951 1,146 1,188
Workforce em ployment co sts ................................ 4,297 7,582 9,492
Taxes ...................................................... 1 7 4 6,821 433
Total ...................................................... 80,579 155,465 109,461
WORKING CAPITAL CONFIRMATION
Our Directors are of the opinion that, taking into account the financial resources available to
us, including cash and cash equivalents and the estimated net proceeds from the Global Offering,
and considering our cash burn rate, we have sufficient working capital to cover at least 125% of our
costs, including research and development expenses and administrative expenses for at least the
next 12 months from the date of this prospectus.
Our cash burn rate refers to our average monthly (i) net cash used in operating activities; (ii)
capital expenditures and (iii) lease payments. Assuming an average cash burn rate going forward of
2.1 times the level in 2022, we estimate that our total cash balance as of June 30, 2023, will be able
to maintain our financial viability for approximately 25 months or, if taking into account the
estimated net proceeds from the Global Offering, for at least 31 months. We will continue to
monitor our cash flows from operations closely and expect to raise our next round of financing, if
needed, with a minimum buffer of 12 months.
FINANCIAL INFORMATION
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--- page 432 ---
CAPITAL EXPENDITURES
Our capital expenditures primarily consist of the purchase of items of (i) machinery and
equipment, (ii) furniture, fittings and equipment and (iii) leasehold improvements. In 2021, 2022
and the six months ended June 30, 2023, our capital expenditure was RMB1.7 million, RMB0.2
million and RMB72 thousand, respectively.
The following table sets forth our capital expenditures for the years indicated.
For the ye are n ded of
December 31,
For the six month s ended
June 30,
2021 2022 2022 2023
(unaudited)
(RMBinthousands)
Machinery and equipment ..................... 1,104 – – 8
Furniture, fittings and equipment .............. 3 7 6 1 8 3 6 2 6 4
Leasehold improvements ...................... 2 6 5 – – –
Total ....................................... 1,745 183 62 72
The decrease of our capital expenditure during the Track Record Period was primarily due to
the one-off purchase of our machinery and equipment in 2021. We expect that our capital
expenditures in 2023 will be approximately RMB120 thousand, which will primarily include
purchases of furniture, fittings and equipment. We plan to fund our planned capital expenditures
using our cash and cash equivalent and the net proceeds received from the Global Offering. See
“Future Plans and Use of Proceeds”. We may reallocate the fund to be utilized on capital
expenditure based on our ongoing business needs.
CAPITAL COMMITMENTS
As of December 31, 2021 and 2022 and June 30, 2023, we did not have any capital
commitments.
CONTINGENT LIABILITIES
As of December 31, 2021 and 2022 and June 30, 2023, we did not have any contingent
liabilities. Our Directors confirm that there has been no material change in our contingent
liabilities as of the Latest Practicable Date.
OFF-BALANCE SHEET COMMITMENTS AND ARRANGEMENTS
As of the Latest Practicable Date, we had not entered into any off-balance sheet
arrangements.
FINANCIAL INFORMATION
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QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
We are exposed to a variety of market risks, including foreign currency risk, credit risk and
liquidity risk set out below. We manage and monitor these exposures to ensure appropriate
measures are implemented in a timely and effective manner. See Note 32 to the Accountants’
Report set out in Appendix I to this prospectus for a detailed description of our financial risk
management.
Forei gn Currency Ri sk
Foreign currency risk is the risk of loss resulting from changes in foreign currency exchange
rates. Certain bank balances, trade and other payables and convertible redeemable preferred shares
of our Group are denominated in currencies other than the functional currency, which exposes us to
foreign currency risk. We currently do not have a foreign currency hedging policy. However, our
management monitors foreign exchange exposure and will consider hedging significant foreign
currency exposure should the need arise.
For details and the sensitivity analysis of our profit before tax and our equity to a reasonably
possible change in the U.S. dollar exchange rate for each year during the Track Record Period, with
all other variables held constant, see note 32 to the Accountants’ Report set out in Appendix I to
this prospectus.
Cre dit Ri sk
Credit risk refers to the risk that a counter party will default on contractual obligations
resulting in financial loss to the Group. We are exposed to credit risk which arises from the amount
of each class of financial assets. In order to minimize the credit risk, our management reviews the
recoverable amount of each individual debt to ensure that adequate impairment losses are made for
irrecoverable amounts. Other monitoring procedures are in place to ensure that follow-up action is
taken to recover overdue debts. For further details, see note 32 to the Accountants’ Report set out
in Appendix I to this prospectus.
Liqui dity Ri sk
We monitor and maintain a level of cash and cash equivalents deemed adequate by our
management to finance our operations and mitigate the effects of fluctuations in cash flows. For
details and the maturity profile of our financial liabilities as of the end of each year during the
Track Record Period, see note 32 in the Accountants’ Report set out in Appendix I to this
prospectus.
MATERIAL RELATED PARTY TRANSACTIONS
During the Track Record Period, our only related party transaction is the key management
personnel remuneration. Details of our transactions, with and the outstanding balances with related
parties during the Track Record Period, are set out in Note 29 to the Accountants’ Report set out in
Appendix I to this prospectus.
FINANCIAL INFORMATION
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--- page 434 ---
DIVIDENDS
We have never declared or paid regular cash dividends on our Shares. Any declaration and
payment as well as the amount of dividends will be subject to our Memorandum and Articles and
the Cayman Companies Act. Our Board of Directors has the discretion to pay interim dividends
and to recommend to Shareholders to pay final dividends and will depend on a number of factors,
including our earnings, capital requirements, overall financial condition and contractual
restrictions. In addition, our Shareholders in a general meeting may approve any declaration of
dividends, which must not exceed the amount recommended by our Board. As advised by our
Cayman counsel, under the Cayman Companies Act, a Cayman Islands company may pay a
dividend out of either profits and/or share premium account, provided that in no circumstances
may a dividend be paid our of share premium if this would result in the company being unable to
pay its debts as they fall due in the ordinary course of business. In light of our accumulated losses
as disclosed in this prospectus, it is unlikely that we will be eligible to pay a dividend out of our
profits in the foreseeable future. We may, however, pay a dividend out of our share premium
account unless the payment of such a dividend would result in our Company being unable to pay
our debts as they fall due in the ordinary course of business. There is no assurance that dividends of
any amount will be declared to be distributed in any year.
If we pay dividends in the future, in order for us to distribute dividends to our Shareholders,
we will rely to some extent on any dividends distributed by our PRC subsidiaries. Any dividend
distributions from our PRC subsidiaries to us will be subject to PRC withholding tax. In addition,
regulations in the PRC currently permit payment of dividends of a PRC company only out of
accumulated distributable after-tax profits as determined in accordance with its articles of
association and the accounting standards and regulations in China. See “Risk Factors — Risks
Relating to Doing Business in the PRC” in this prospectus.
DISTRIBUTABLE RESERVES
As of June 30, 2023, we did not have any distributable reserves.
LISTING EXPENSES
Our listing expenses represent professional fees, underwriting commissions and other fees
incurred in connection with the Global Offering. Assuming an Offer Price of HK$11.50 per Share,
we estimated that the total listing expenses for the Global Offering are approximately HK$84.1
million, accounting for approximately 30.24% of the gross proceeds from the Global Offering,
including HK$32.5 million that we have incurred for the years ended December 31, 2021 and 2022
and the six months ended June 30, 2023, of which HK$28.7 million was charged to our
consolidated statements of profit or loss, while the remaining amount of HK$3.8 million was
directly attributable to the issue of Shares as of June 30, 2023 and will be subsequently deducted
from equity upon completion of the Global Offering, and HK$51.6 million that we expect to
further incur after June 30, 2023, of which HK$27.4 million will be charged to our consolidated
income statements, and HK$24.2 million is expected to be accounted for as a deduction from
equity upon the completion of Global Offering. The above expenses comprise of (i)
underwriting-related expenses, including underwriting commission and other expenses, of
HK$30.9 million; and (ii) non-underwriting-related expenses of HK$53.2 million, including (a)
fee paid and payable to legal advisors and reporting accountants of HK$41.7 million, and (b) other
FINANCIAL INFORMATION
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--- page 435 ---
fees and expenses of HK$11.5 million. The listing expenses above are the latest practicable
estimate for reference only, and the actual amount may differ from this estimate.
UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET
TANGIBLE ASSETS
The unaudited pro forma statement of adjusted consolidated net tangible assets of the Group
has been prepared for illustrative purposes only and, because of its hypothetical nature, it may not
give a true picture of the consolidated net tangible assets of the Group had the Global Offering
been completed as at 30 June 2023 or at any future date.
Con soli dated net
tangible li abilitie s
of the Grou p
attribut able to the
owner s of the
Com pany as a t
30 June 2023
Estim ated net
Procee ds from the
Glob al Offerin g
Estim ated impact
to the
con soli dated net
tangible li abilitie s
upon the
conver sion of
preferre ds hares
Unaudite dp ro
form aa d justed
con soli dated net
tangible assets
attribut able to
owner s of the
Com pany as a t
30 June 2023
Unaudite dp ro form aa d justed
con soli dated net t angible assets
attribut able to owner s of the Com pany
per Sh are as a t
30 June 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB HK$
(Note1) (Note2) (Note3) (Note4) (Note5)
Based on an an Offer Price of
HK$11.50 per Share ...... (1,028,426) 202,813 1,721,653 896,040 1.74 1.91
Notes:
1. The consolidated net tangible liabilities attributable to owners of the Company as at 30 June 2023 was equal to the
audited consolidated net liabilities attributable to owners of the Company as at 30 June 2023 of RMB1,028,426,000
set out in the Accountants’ Report in Appendix I to this Prospectus, since no intangible assets existed.
2. The estimated net proceeds from the Global Offering are based on the Offer Price of HK$11.50 per Share, after
deduction of the underwriting fees and other related expenses payable by the Company (excluding listing expenses
of RMB26,420,000 which have been charged to the consolidated statements of profit or loss during the Track
Record Period).
3. Upon the Listing and the completion of the Global Offering, all preferred shares will be automatically converted
into Ordinary Shares. The preferred shares will then be transferred from liabilities to equity. Accordingly, for the
purpose of the unaudited pro forma financial information, the unaudited pro forma adjusted net tangible liabilities
attributable to owners of the parent will be decreased by RMB1,721,653,000, being the carrying amounts of the
preferred shares as at 30 June 2023.
4. The unaudited pro forma adjusted consolidated net tangible assets per Share is arrived at after adjustments referred
in note 2 and 3 above and on the basis of 514,770,668 Shares that are in issue, assuming that the conversion of
Preferred Shares into the ordinary shares and the Global Offering has been completed on 30 June 2023.
5. For the purpose of this unaudited pro forma statement of adjusted net tangible assets, the balances stated in HK$ are
converted into RMB at the rate of HK$1.00 to RMB0.9088.
6. No adjustment has been made to reflect any trading results or open transactions of the Group entered into
subsequent to 30 June 2023.
FINANCIAL INFORMATION
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--- page 436 ---
NO MATERIAL ADVERSE CHANGE
Our Directors confirm that, up to the date of this prospectus, there has been no material
adverse change in our financial or trading position since June 30, 2023 (being the date on which the
latest consolidated financial information of our Group was prepared) and there has been no event
since June 30, 2023 which would materially and adversely affect the information shown in our
historical financial information included in the Accountants’ Report in Appendix I to this
prospectus.
DISCLOSURE UNDER RULES 13.13 TO 13.19 OF THE LISTING RULES
Our Directors have confirmed that, as of the Latest Practicable Date, there was no
circumstance that would give rise to a disclosure requirement under Rules 13.13 to 13.19 of the
Listing Rules.
FINANCIAL INFORMATION
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THE CORNERSTONE PLACING
We have entered into a cornerstone investment agreement (the “ Corner stone Inve stment
Agreement ”) with the cornerstone investor set out below (the “ Corner stone Inve stor”), pursuant
to which the Cornerstone Investor has agreed to, subject to certain conditions, subscribe at the
Offer Price for a certain number of Offer Shares (rounded down to the nearest whole board lot of
500 Shares) that may be purchased for an aggregate amount of RMB100.00 million (equivalent of
HK$110.04 million calculated based on the conversion rate of HK$1.00 to RMB0.9088) (exclusive
of brokerage, SFC transaction levy, AFRC transaction levy and Stock Exchange trading fee) (the
“Corner stone Pl acin g”).
At the Offer Price of HK$11.50, the total number of Offer Shares to be subscribed by the
Cornerstone Investor would be 9,568,500 Offer Shares, representing approximately 39.55% of the
Offer Shares pursuant to the Global Offering and approximately 1.86% of our total issued share
capital immediately upon completion of the Global Offering.
Our Company is of the view that the Cornerstone Placing will help to raise our profile and
signify that such investor has confidence in the business and prospect of our Group. Our Company
became acquainted with the Cornerstone Investor at a commercial event.
To the best knowledge of our Company and as confirmed by the Cornerstone Investor, none
of the Cornerstone Investor or its shareholders is listed on any stock exchange. The Cornerstone
Investor has confirmed that all necessary approvals have been obtained with respect to the
Cornerstone Placing.
To the best knowledge of our Company, (i) the Cornerstone Investor and the QDII (as
defined below) are Independent Third Parties of the Company and are independent of our
connected persons and their respective close associates; (ii) the Cornerstone Investor is not
accustomed to take instructions and has not taken instructions from our Company, the Directors,
chief executive, our Substantial Shareholders, existing Shareholders or any of their subsidiaries or
their respective close associates in relation to the acquisition, disposal, voting or other disposition
of the Offer Shares; and (iii) the subscription of the relevant Offer Shares by the Cornerstone
Investor is not financed by our Company, the Directors, chief executive, our Substantial
Shareholders, existing Shareholders or any of their subsidiaries or their respective close
associates.
The Cornerstone Placing will form part of the International Offering and the Cornerstone
Investors will not subscribe for any Offer Shares under the Global Offering other than pursuant to
the Cornerstone Investment Agreement. The Offer Shares to be subscribed by the Cornerstone
Investors will rank paripassu in all respect with the fully paid Shares in issue and will be counted
towards the public float of our Company under Rule 8.08 of the Listing Rules but will not be
counted towards the public float of our Company for the purpose of Rule 18A.07 of the Listing
Rules. As a result, over 25% of our issued share capital with a market capitalization of at least
HK$375 million will be held by the public upon completion of the Global Offering as required
under Rule 8.08(1)(a) and Rule 18A.07 of the Listing Rules. Immediately following the
completion of the Global Offering, the Cornerstone Investor will not become a Substantial
Shareholder of our Company, and the Cornerstone Investor will not will have any Board
representation in our Company. Other than a guaranteed allocation of the relevant Offer Shares at
the Offer Price, the Cornerstone Investor does not have any preferential rights in the Cornerstone
CORNERSTONE INVESTOR
– 427 –


--- page 438 ---
Investment Agreement compared with other public Shareholders. As confirmed by the Cornerstone
Investor, its subscription under the Cornerstone Placing would be financed by its own internal
resources. There are no side arrangements between our Company and the Cornerstone Investor or
any benefit, direct or indirect, conferred on the Cornerstone Investor by virtue of or in relation to
the Cornerstone Placing, other than a guaranteed allocation of the relevant Offer Shares at the
Offer Price.
The total number of Offer Shares to be subscribed by the Cornerstone Investor may be
affected by reallocation of the Offer Shares between the International Offering and the Hong Kong
Public Offering in the event of over-subscription under the Hong Kong Public Offering as
described in the paragraph headed “Structure of the Global Offering — The Hong Kong Public
Offering — Reallocation” in this prospectus. Details of the actual number of the Offer Shares to be
allocated to the Cornerstone Investor will be disclosed in the allotment results announcement of
our Company to be issued by our Company on or around December 21, 2023.
There will be no delayed delivery or deferred settlement of Offer Shares to be subscribed by
the Cornerstone Investor pursuant to the Cornerstone Investment Agreement and the payment for
the Offer Shares subscribed by the Cornerstone Investor will be settled and paid in full before
dealings in the Offer Shares commence on the Stock Exchange.
OUR CORNERSTONE INVESTOR
Set out below is the aggregate number of Offer Shares to be subscribed by the Cornerstone
Investor, and the corresponding percentages to our Company’s total issued share capital under the
Cornerstone Placing:
Corner stone Inve stor
Inve stment
Amount
Hon g Kongd oll ar
equiv alent
Number of Offer
Shares (roun ded
do w nt on earest
whole bo ard lot of
500 Sh ares)(3)
Approxim ate %
of tot al number of
Offer Sh ares
Approxim ate %
of tot alS h ares
in i ssue
imme diately
followin g the
com pletion of the
Glob al Offerin g
(RMBinmillion) (2) (HKDinmillion) (2)
(approximate)
(approximate) (approximate)
Cangzhou Chuangrong (1) ................... 100.0 110.04 9,568,500 39.55% 1.86%
Total ............................... 100.0 110.04 9,568,500 39.55% 1.86%
Notes:
1. As defined below.
2. To be converted to Hong Kong dollars based on the applicable exchange rate disclosed in this Prospectus.
3. The exact number of Shares to be subscribed by the Cornerstone Investor will be subject to the exchange
rate as prescribed in the Cornerstone Investment Agreement.
CORNERSTONE INVESTOR
– 428 –


--- page 439 ---
The following information about the Cornerstone Investor was provided to our Company by
the Cornerstone Investor in relation to the Cornerstone Placing.
Cangzhou Chu angron g Equity Inve stment Fun d Co., Lt d. (“C angzhou Chu angron g”)
Cangzhou Chuangrong Equity Investment Fund Co., Ltd. (ʮ̡ )
is a company established in 2019 in the PRC with limited liability, and is wholly-owned by Hebei
State-owned Nandagang Farm Group Co., Ltd. (ʮ̡ )
(“Nandaga ng Farm”), a company held as to 10% by Cangzhou Bohai New Area Nandagang
Industrial Park Management Committee (ึ ) and as to
90% by Hebei Cangzhou State-owned Assets Holding Group Co., Ltd. (ණ
ʮ̡ ), which is wholly owned by Cangzhou Municipal People’s Government State-owned
Funds Supervision and Administration Commission (ึ ).
Nandagang Farm is engaged in extensive industry sectors, including but not limited to, agriculture,
animal husbandry, fishery planting and breeding; agricultural product processing and sales; land
management; project preparation, operation and management; infrastructure construction;
property management; activity organization and supporting services; road freight transport
services; and equity investments. Cangzhou Chuangrong is primarily engaged in equity investment
in private companies and non-public offered stocks of listed companies, and provides related
consulting services. The fund manager of Cangzhou Chuangrong is Hebei Guofu Equity
Investment Fund Management Co., Ltd. (ʮ̡ )( “ Hebei
Guofu ”), an independent private equity fund manager. Hebei Guofu and its affiliates have more
than RMB2 billion of assets under management and have invested in 31 private companies. Hebei
Guofu’s investments cover high-end equipment manufacturing, food processing industry, chemical
manufacturing industry, cold chain warehousing, logistics and transportation and other industries.
For the purpose of the cornerstone investment, Cangzhou Chuangrong has engaged a
qualified domestic institutional investor approved by the relevant PRC authorities (the “ QDII ”) to
subscribe for and hold such Offer Shares on behalf of it. Cangzhou Chuangrong will procure the
QDII to comply with the terms of the Cornerstone Investment Agreement in order to ensure the
compliance of Cangzhou Chuangrong with its obligations under the Cornerstone Investment
Agreement. The QDII is not a connected client of the Overall Coordinators, any syndicate
members or any distributors (as defined in paragraph 5 of the Placing Guidelines).
CLOSING CONDITIONS
The obligation of the Cornerstone Investor to subscribe for the Offer Shares under the
Cornerstone Investment Agreement is subject to, among other things, the following closing
conditions:
(i) the Underwriting Agreements being entered into and having become effective and
unconditional (in accordance with their respective original terms or as subsequently
waived or varied by agreement of the parties thereto) by no later than the time and
date as specified in the Underwriting Agreements, and neither of the Underwriting
Agreements having been terminated;
CORNERSTONE INVESTOR
– 429 –


--- page 440 ---
(ii) the Offer Price having been agreed upon between the Company and the Overall
Coordinators and the Joint Global Coordinators (for themselves and on behalf of the
Underwriters);
(iii) the Listing Committee having granted the listing of, and permission to deal in, the
Shares (including the Shares under the Cornerstone Placing) as well as other
applicable waivers and approvals) and such approval, permission or waiver having not
been revoked prior to the commencement of dealings in the Shares on the Stock
Exchange;
(iv) no laws shall have been enacted or promulgated by any governmental authority which
prohibits the consummation of the transactions contemplated in the Global Offering
or the Cornerstone Investment Agreement and there shall be no orders or injunctions
from a court of competent jurisdiction in effect precluding or prohibiting
consummation of such transactions; and
(v) the representations, warranties, undertakings, acknowledgements and confirmations
of the Cornerstone Investor under the Cornerstone Investment Agreement are
accurate and true in all respects and not misleading or deceptive and that there is no
material breach of the Cornerstone Investment Agreement on the part of the
Cornerstone Investor.
RESTRICTIONS ON THE CORNERSTONE INVESTOR
The Cornerstone Investor has agreed that it will not, whether directly or indirectly, at any
time during the period of twelve months from and including the Listing Date (the “ Lock-u p
Perio d”), dispose of any of the Offer Shares they have purchased pursuant to the Cornerstone
Investment Agreement, save for certain limited circumstances, such as transfers to any of its
wholly-owned subsidiaries, or any affiliated fund under common management or control with the
Cornerstone Investor, who will be bound by the same obligations of the Cornerstone Investor,
including the Lock-up Period restriction.
CORNERSTONE INVESTOR
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FUTURE PLANS
For more details of our future plans, see “Business — Strategies”.
USE OF PROCEEDS
We estimate that we will receive net proceeds of approximately HK$194.1 million after
deducting the underwriting fees and expenses payable by us in the Global Offering, assuming an
Offer Price of HK$11.50 per Offer Share.
We intend to use the net proceeds from the Global Offering for the following purposes:
• Approximately HK$155.2 million, representing 80.0% of the net proceeds, will be
used to fund the continuing clinical research and development activities of our Core
Product HTD1801:
• Approximately HK$75.6 million, representing 39.0% of the net proceeds, will
be used to fund the continuing research and development of HTD1801 in Phase
IIb clinical trial including R&D personnel costs and third party contracting
expenses for MASH, covering the jurisdictions of the United States, Hong
Kong, Mexico and Mainland China. The trial was initiated in the United States
in December 2022 and in Hong Kong in October 2023, and we are actively
enrolling patients in the United States and Hong Kong. We plan to initiate
Phase IIb clinical trial sites in Mexico and Mainland China in December 2023:
• Approximately HK$60.5 million, representing 31.2% of the net
proceeds, will be used to fund the continuing research and development
of HTD1801 in Phase IIb clinical trial for MASH in United States;
• Approximately HK$2.5 million, representing 1.3% of the net
proceeds, will be used to fund the R&D personnel cost of
HTD1801 in Phase IIb clinical trial for MASH in United States;
• Approximately HK$58.0 million, representing 29.9% of the net
proceeds, will be used to fund the third party contracting
expenses of HTD1801 in Phase IIb clinical trial for MASH in
United States;
• Approximately HK$2.3 million, representing 1.2% of the net proceeds,
will be used to fund the R&D personnel costs and third party contracting
expenses of HTD1801 in Phase IIb clinical trial for MASH in Hong
Kong;
• Approximately HK$10.5 million, representing 5.4% of the net proceeds,
will be used to fund the R&D personnel costs and third party contracting
expenses of HTD1801 in Phase IIb clinical trial for MASH in Mexico;
and
FUTURE PLANS AND USE OF PROCEEDS
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--- page 442 ---
• Approximately HK$2.3 million, representing 1.2% of the net proceeds,
will be used to fund the R&D personnel costs and third party contracting
expenses of HTD1801 in Phase IIb clinical trial for MASH in Mainland
China.
• Approximately HK$75.7 million, representing 39.0% of the net proceeds, will
be used to fund the research and development of HTD1801 in Phase III clinical
trial including R&D personnel costs and third party contracting expenses for
T2DM. The Phase II clinical trial for T2DM was initiated in Mainland China in
March 2022 and completed in January 2023 with 113 patients enrolled. We
initiated two Phase III registrational trials, one with HTD1801 as a standalone
treatment for T2DM patients and one with HTD1801 as an add-on therapy with
metformin treatment in November 2023 and plan to complete enrollment in
2024 in Mainland China:
• Approximately HK$36.9 million, representing 19.0% of the net
proceeds, will be used to fund the research and development of
HTD1801 in the Phase III clinical trial for T2DM as a standalone
treatment;
• Approximately HK$36.1 million, representing 18.6% of the net
proceeds, will be used to fund the third party contracting
expenses of HTD1801 in the Phase III clinical trial for T2DM as a
standalone treatment;
• Approximately HK$0.8 million, representing 0.4% of the net
proceeds, will be used to fund R&D personnel costs of HTD1801
in the Phase III clinical trial for T2DM as a standalone treatment;
• Approximately HK$38.8 million, representing 20.0% of the net
proceeds, will be used to fund the research and development of
HTD1801 in the Phase III clinical trial for T2DM as an add-on therapy
with metformin treatment;
• Approximately HK$38.0 million, representing 19.6% of the net
proceeds, will be used to fund the third party contracting
expenses of HTD1801 in the Phase III clinical trial for T2DM as
an add-on therapy with metformin treatment;
• Approximately HK$0.8 million, representing 0.4% of the net
proceeds, will be used to fund R&D personnel costs of HTD1801
in the Phase III clinical trial for T2DM as an add-on therapy with
metformin treatment;
FUTURE PLANS AND USE OF PROCEEDS
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--- page 443 ---
• Approximately HK$3.9 million, representing 2.0% of the net proceeds, will be
used to fund the research and development of HTD1801 in Phase II clinical
trial including the R&D personnel costs and third party contracting expenses
for SHTG. We plan to initiate a Phase II clinical trial of HTD1801 for the
treatment of SHTG in the United States in the first half of 2024:
• Approximately HK$0.2 million, representing 0.1% of the net proceeds,
will be used to fund the R&D personnel costs of HTD1801 in Phase II
clinical trial for SHTG in the United States;
• Approximately HK$3.7 million, representing 1.9% of the net proceeds,
will be used to fund the third party contracting expenses of HTD1801 in
Phase II clinical trial for SHTG in the United States.
Compared to the R&D expenses incurred for the clinical development of HTD1801 during
the Track Record Period, the use of proceeds to be allocated to the development of HTD1801 is
higher because (i) the total number of patients planned to be enrolled in HTD1801’s Phase III
clinical trials are significantly higher than the patient enrolment size of the Phase I and Phase II
clinical trials for the same indications during the Track Record Period; (ii) the expected duration of
both the Phase II and III clinical trials will be around 24 to 48 months, whereas the completion time
of the Phase I clinical trials was within 12 months; (iii) we plan to conduct MRCTs and the
engagements of overseas CROs, SMOs and CDMOs and the communications and filings with
relevant authorities in these jurisdictions would potentially incur additional expenses. Depending
on the regulations in each territory, we may be required to conduct additional local clinical studies
prior to commencing registrational trials; (iv) subject to the communication with the competent
authorities, we may also submit NDAs for HTD1801’s indication expansion, where additional
clinical studies might be required. According to CIC, our R&D costs are in line with the industry’s
average. In addition, for PSC and PBC indications, we plan to collaborate with other companies for
clinical development and commercialization. Therefore, no net proceeds will be allocated to the
clinical development of PSC and PBC indications of the Core Product.
• Approximately HK$9.7 million, representing 5.0% of the net proceeds, will be used
to fund the ongoing research and development including R&D personnel costs and
third party contracting expenses for HTD1804 for obesity. We are currently
conducting the preclinical study of HTD1804 in China.
FUTURE PLANS AND USE OF PROCEEDS
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• Approximately HK$19.5 million, representing 10.0% of the net proceeds, will be
used for the early drug discovery and development of other drug candidates from
continuously upgrading and enhancing our FUSIONTX™ development approach:
• Approximately HK$9.7 million, representing 5.0% of the net proceeds, for the
research and development of three innovative multifunctional drugs to advance
from drug discovery to IND-enabling stage leveraging our FUSIONTX™
development approach in the next five years:
• Approximately HK$7.8 million, representing 4.0% of the net proceeds,
will be used to fund the third party contracting expenses of drug
discovery and preclinical studies to discover three innovative
multifunctional drugs. Approximately HK$4.0 million of the net
proceeds will be used to fund the third party contracting expenses for
each innovative multifunctional drug;
• Approximately HK$1.9 million, representing 1.0% of the net proceeds,
will be used to fund the R&D personnel costs incurred for research and
development of those three innovative multifunctional drugs and
enhancing our FUSIONTX™ development approach;
• Approximately HK$9.8 million, representing 5.0% of the net proceeds, for the
ongoing research and development of our other drug candidates including but
not limited to HTD4010, HTD1805 and HTD2802. We plan to leverage our
R&D capabilities to advance our clinical-stage candidate HTD4010’s
development in treating AH and are currently conducting the preclinical
studies for HTD1805 and HTD2802:
• Approximately HK$7.4 million, representing 3.8% of the net proceeds,
will be used to fund the Phase II clinical trial of HTD4010. We expect to
initiate Phase II clinical trial of HTD4010 for AH in the United States as
early as the end of 2024.
• Approximately HK$1.0 million, representing 0.5% of the net proceeds,
will be used to fund the preclinical studies of HTD1805.
• Approximately HK$1.4 million, representing 0.7% of the net proceeds,
will be used to fund the preclinical studies of HTD2802.
• Approximately HK$9.7 million, representing 5.0% of the net proceeds, will be used
for working capital and other general corporate purposes.
If the net proceeds of the Global Offering are not immediately applied to the above
purposes, we will only deposit those net proceeds into short-term interest-bearing accounts at
licensed commercial banks and/or other authorised financial institutions (as defined under the
Securities and Futures Ordinance).
FUTURE PLANS AND USE OF PROCEEDS
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--- page 445 ---
HONG KONG UNDERWRITERS
UBS AG Hong Kong Branch
Huatai Financial Holdings (Hong Kong) Limited
CLSA Limited
CMB International Capital Limited
BOCOM International Securities Limited
Yue Xiu Securities Company Limited
CCB International Capital Limited
Fosun International Securities Limited
Goldlink Securities Limited
I Win Securities Limited
Shenwan Hongyuan Securities (H.K.) Limited
uSmart Securities Limited
Winbull Securities International (Hong Kong) Limited
UNDERWRITING ARRANGEMENTS AND EXPENSES
Hon g Kong Public Offerin g
Hong Kong Underwriting Agreement
Pursuant to the Hong Kong Underwriting Agreement, our Company has agreed to offer the
Hong Kong Offer Shares for subscription by the public in Hong Kong on and subject to the terms
and conditions of this prospectus relating thereto.
Subject to the Listing Committee of the Stock Exchange granting the listing of, and
permission to deal in, the Shares to be offered as mentioned herein, and to certain other conditions
set out in the Hong Kong Underwriting Agreement, the Hong Kong Underwriters have agreed
severally to subscribe or procure subscribers for, their respective applicable proportions of the
Hong Kong Offer Shares which are being offered but are not taken up under the Hong Kong Public
Offering on the terms and subject to the conditions of this prospectus relating thereto and the Hong
Kong Underwriting Agreement.
Grounds for termination
The obligations of the Hong Kong Underwriters to subscribe or procure subscribers for the
Hong Kong Offer Shares under the Hong Kong Underwriting Agreement are subject to termination
by notice from the Overall Coordinators (for themselves and on behalf of the Hong Kong
Underwriters) and the Joint Sponsors to the Company, if, at any time prior to 8:00 a.m. on the
Listing Date:
(a) there develops, occurs, exists or comes into force:
(i) any local, national, regional or international event, or series of events, or
circumstance in the nature of force majeure (including, without limitation, any
acts of government, declaration of a national, regional or international
emergency or war, calamity, crisis, epidemic, pandemic, outbreaks, escalation,
UNDERWRITING
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--- page 446 ---
mutation or aggravation of diseases, economic sanctions, strikes, labor
disputes, lock-outs, other industrial actions, fire, explosion, flooding,
earthquake, tsunami, volcanic eruption, civil commotion, riots, rebellion, civil
commotion, calamity, public disorder, acts of war, outbreak or escalation of
hostilities (whether or not war is declared), acts of God or acts of terrorism
(whether or not responsibility has been claimed), economic sanctions,
paralysis in government operations, interruptions or delay in transportation) in
or affecting the Cayman Islands, Hong Kong, the British Virgin Islands, the
PRC, the United States, the United Kingdom, Japan, Singapore, Switzerland,
the European Union (or any member thereof), Australia or any other relevant
jurisdiction relevant to the Group (each a “ Relev ant Juri sdiction ”); or
(ii) any change or development involving a prospective change, or any event or
circumstances or series of events likely to result in any change or development
involving a prospective change in any local, national, regional or international
financial, economic, political, military, industrial, legal, fiscal, regulatory,
currency, credit or market matters or conditions, equity securities or exchange
control or any monetary or trading settlement system or other financial markets
(including, without limitation, conditions in the stock and bond markets,
money and foreign exchange markets, the interbank markets and credit
markets), in or affecting any of the Relevant Jurisdictions; or
(iii) any moratorium, suspension or restriction (including, without limitation, any
imposition of or requirement for any minimum or maximum price limit or price
range) in or on trading in securities generally on the Stock Exchange, the New
York Stock Exchange, the NASDAQ Global Market, the London Stock
Exchange, the Shanghai Stock Exchange, the Shenzhen Stock Exchange, the
Singapore Stock Exchange or the Tokyo Stock Exchange; or
(iv) any general moratorium on commercial banking activities in Hong Kong
(imposed by the Financial Secretary or the Hong Kong Monetary Authority or
other competent authority), New York (imposed at the U.S. Federal or New
York State level or by any other competent authority), London, the PRC, the
European Union (or any member thereof) or any of the other Relevant
Jurisdictions (declared by the relevant authorities) or any disruption in
commercial banking or foreign exchange trading or securities settlement or
clearance services, procedures or matters in or affecting any of the Relevant
Jurisdictions; or
(v) any new laws, or any change or development involving a prospective change or
any event or circumstance likely to result in a change or a development
involving a prospective change in (or in the interpretation or application by any
court or other competent authority of) existing laws, in each case, in or
affecting any of the Relevant Jurisdictions; or
(vi) the imposition of economic sanctions, or the withdrawal of trading privileges,
in whatever form, directly or indirectly, by, or for, any of the Relevant
Jurisdictions or any other jurisdiction relevant to any member of the Group; or
UNDERWRITING
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--- page 447 ---
(vii) any change or development involving a prospective change or amendment in or
affecting taxation or foreign exchange control, currency exchange rates or
foreign investment regulations (including, without limitation, a devaluation of
the United States dollar, the Hong Kong dollar, RMB or Euro against any
foreign currencies, a change in the system under which the value of the Hong
Kong dollar is linked to that of the United States dollar or RMB is linked to any
foreign currency or currencies), or the implementation of any exchange
control, in any of the Relevant Jurisdictions or affecting an investment in the
Offer Shares; or
(viii) other than with the prior written consent of the Overall Coordinators, the issue
or requirement to issue by the Company of a supplement or amendment to the
Hong Kong Prospectus, the CSRC Filings (as defined in the Hong Kong
Underwriting Agreement) or other documents in connection with the offer and
sale of the Offer Shares pursuant to the Companies (Winding Up and
Miscellaneous Provisions) Ordinance or the Listing Rules or the CSRC Rules
(as defined in the Hong Kong Underwriting Agreement) or upon any
requirement or request of the Stock Exchange, the SFC and/or the CSRC; or
(ix) any demand by creditors for repayment of indebtedness or an order or petition
for the winding up or liquidation of any member of the Group or any
composition or arrangement made by any member of the Group with its
creditors or a scheme of arrangement entered into by any member of the Group
or any resolution for the winding-up of any member of the Group or the
appointment of a provisional liquidator, receiver or manager over all or part of
the assets or undertaking of any member of the Group or anything analogous
thereto occurring in respect of any member of the Group; or
(x) any litigation, dispute, legal action or claim or regulatory or administrative
investigation or action being threatened, instigated or announced against any
member of the Group or any Director; or
(xi) any contravention by any member of the Group or any Director of any
applicable laws or the Listing Rule; or
(xii) any non-compliance of this prospectus (or any other documents used in
connection with the contemplated subscription and sale of the Offer Shares),
the CSRC Filings or any aspect of the Global Offering with the Listing Rules,
the CSRC Rules or any other applicable laws; or
(xiii) any change or prospectus change or development, or a materialization of, any
of the risks set out in the section headed “Risk Factors” in this prospectus; or
which, individually or in the aggregate, in the sole and absolute opinion of the Joint
Sponsors and the Overall Coordinators (for themselves and on behalf of the Hong
Kong Underwriters),
UNDERWRITING
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--- page 448 ---
i. has or will or may have a material adverse effect on the assets, liabilities,
business, general affairs, management, prospects, shareholders’ equity, profits,
losses, earnings, results of operations, performance, position or condition,
financial or otherwise, of the Group as a whole or to any present or prospective
shareholder of the Company in its capacity as such;
ii. has or will have or may have a material adverse effect on the success or
marketability of the Global Offering or the level of applications or the
distribution of the Offer Shares under the Hong Kong Public Offering or the
level of interest under the International Offering;
iii. makes or will make or may likely make it inadvisable or inexpedient or
impracticable or incapable for the Hong Kong Public Offering and/or the
International Offering to proceed or to market the Global Offering or the
delivery or distribution of the Offer Shares on the terms and in the manner
contemplated by this prospectus; or
iv. has or will have or may have the effect of making any material part of the Hong
Kong Underwriting Agreement (including underwriting the Hong Kong Public
Offering and/or the Global Offering) incapable of performance in accordance
with its terms or preventing the processing of applications and/or payments
pursuant to the Global Offering or pursuant to the underwriting thereof; or
(b) there has come to the notice of the Joint Sponsors and the Overall Coordinators that:
(i) any statement contained in any of this prospectus and/or any notices,
announcements, advertisements, communications or other documents
(including any announcement, circular, document or other communication
pursuant to the Hong Kong Underwriting Agreement) issued or used by or on
behalf of the Company in connection with the Hong Kong Public Offering
(including any supplement or amendment thereto) was, when it was issued, or
has become, untrue, incorrect, inaccurate, incomplete in any material respects
or misleading or deceptive, or that any estimate, forecast, expression of
opinion, intention or expectation contained in any of such documents is not fair
and honest and based on reasonable grounds or reasonable assumptions; or
(ii) any of the CSRC Filings relating to or in connection with the Global Offering,
or any amendments or supplements thereto (in each case, whether or not
approved by the Joint Sponsors, the Overall Coordinators, the Joint Global
Coordinators, the Joint Bookrunners, the Joint Lead Managers, the
Underwriters and the Capital Market Intermediaries, or any of them)
containing any untrue, incorrect or inaccurate or alleged untrue, incorrect or
inaccurate statement of fact, or omitting or being alleged to have omitted a fact
necessary to make any statement therein, in the light of the circumstances
under which it was made, misleading, or not containing, or being alleged not to
contain, all information in the context of the Global Offering or otherwise
UNDERWRITING
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--- page 449 ---
required to be contained thereto or being or alleged to be defamatory of any
person or any jurisdiction; or
(iii) any matter has arisen or has been discovered which would, had it arisen or been
discovered immediately before the date of this prospectus, constitutes a
material omission from, or misstatement in, any of this prospectus, the formal
notice and/or in any notices, announcements, advertisements, communications
or other documents (including any announcement, circular, document or other
communication pursuant to the Hong Kong Underwriting Agreement) issued or
used by or on behalf of the Company in connection with the Hong Kong Public
Offering (including any supplement or amendment thereto) and the CSRC
Filings; or
(iv) there is a breach of, or any event or circumstance rendering untrue, incorrect,
incomplete or misleading in any respect, any of the warranties given by the
warrantors in the Hong Kong Underwriting Agreement or the International
Underwriting Agreement, as applicable; or
(v) there is a breach of any of the obligations imposed upon the warrantors in the
Hong Kong Underwriting Agreement or the International Underwriting
Agreement, as applicable; or
(vi) there is an event, act or omission which gives or is likely to give rise to any
liability of the warrantors pursuant to the indemnities given by any of them
under the Hong Kong Underwriting Agreement or the International
Underwriting Agreement, as applicable; or
(vii) there is any Material Adverse Change (as defined in the Hong Kong
Underwriting Agreement); or
(viii) the approval of the Listing Committee of the listing of, and permission to deal
in, the Shares in issue and to be issued pursuant to the Global Offering, other
than subject to customary conditions, on or before the date of the Listing, or if
granted, the approval is subsequently withdrawn, cancelled, qualified (other
than by customary conditions), revoked or withheld; or
(ix) any person named as an expert in this prospectus (other than the Joint
Sponsors) has withdrawn its consent to the issue of this prospectus with the
inclusion of its reports, letters and/or legal opinions (as the case may be) and
references to its name included in the form and context in which it respectively
appears; or
(x) the Company withdraws this prospectus (and/or any other documents issued or
used in connection with the Global Offering) or the Global Offering; or
(xi) there is a prohibition on the Company for whatever reason from offering,
allotting, issuing or selling any of the Offer Shares pursuant to the terms of the
Global Offering; or
UNDERWRITING
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--- page 450 ---
(xii) any Director or any other member of senior management of the Company is
vacating his or her office; or
(xiii) any Director or member of senior management of the Company is being
charged with an indictable offence or is prohibited by operation of law or
otherwise disqualified from taking part in the management of a company or
there is the commencement by any governmental, political or regulatory body
of any investigation or other action against any Director in his or her capacity
as such or any member of the Group or an announcement by any governmental,
political or regulatory body that it intends to commence any such investigation
or take any such action; or
(xiv) there is any order or petition for the winding-up of any member of the Group or
any composition or arrangement made by any member of the Group with its
creditors or a scheme of arrangement entered into by any member of the Group
or any resolution for the winding-up of any member of the Group or the
appointment of a provisional liquidator, receiver or manager over all or part of
the material assets or undertaking of any member of the Group or anything
analogous thereto occurring in respect of any member of the Group; or
(xv) any cornerstone investor fails or is unlikely to fulfil its obligation (including
obligation to make payment on or before the specified deadline) under the
respective agreement; or
(xvi) a material portion of the orders placed or confirmed in the bookbuilding
process, or of the investment commitments made by any cornerstone investors
under agreements signed with such cornerstone investors, have been
withdrawn, terminated or cancelled.
then the Overall Coordinators (for themselves and on behalf of the Hong Kong
Underwriters) may in their sole discretion and upon giving notice to the Company on
or prior to 8:00 a.m. on the Listing Date, terminate the Hong Kong Underwriting
Agreement with immediate effect.
Undert akin gs to the Stock Exch ange pursuant to the Li stin g Rule s
Undertakings by our Company
Pursuant to Rule 10.08 of the Listing Rules, our Company has undertaken to the Stock
Exchange that no further Shares or securities convertible into our Company’s equity securities
(whether or not of a class already issued) may be issued by our Company or form the subject of any
agreement to such an issue by our Company within six months from the Listing Date (whether or
not such issue of Shares or our Company’s securities will be completed within six months from the
Listing Date), except for Shares issued or to be issued pursuant to the Global Offering or any of the
circumstances provided under Rule 10.08 of the Listing Rules.
UNDERWRITING
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--- page 451 ---
Undertakings by the AIC Group
Pursuant to Rule 10.07 of the Listing Rules and Guidance Letter HKEX-GL89-16 issued by
the Stock Exchange, each of Dr. Liu, the Founder BVI, ZT Global Energy, Greaty Investment and
Orient Champion (the “ AIC Grou p”) has undertaken to the Stock Exchange and to us that, save as
disclosed in this prospectus, she/it will not, and shall procure that none of her/its close associates
will, without the prior written consent of the Stock Exchange or unless otherwise permitted under
the Listing Rules, in the period commencing on the date by reference to which disclosure of her/its
holding of Shares is made in this prospectus and ending on the date which is six months from the
Listing Date (the “ Fir st Six-month Perio d”), dispose of, nor enter into any agreement to dispose
of or otherwise create any options, rights, interests or encumbrances in respect of, any Shares in
respect of which she/it is shown by this prospectus to be the beneficial owner.
As at the Latest Practicable Date, the AIC Group were entitled to exercise the voting rights
attached to approximately 30.84% of the total issued Shares in aggregate. Immediately following
the completion of the Global Offering, the exercisable voting rights in the Company to be
controlled by the AIC Group will be approximately 24.40%. Accordingly, pursuant to Guidance
Letter HKEX-GL 89-16, each member of the AIC Group is subject to the lock-up requirements
pursuant to Rule 10.07 of the Listing Rules for the First Six-month Period, but not the period of six
months commencing on the date on which the First Six-month Period expires.
Undert akin gs p ursuant to the Hon g Kong Underwritin g Agreement
Undertakings by our Company
Pursuant to the Hong Kong Underwriting Agreement, the Company has undertaken to each
of the Joint Sponsors, the Overall Coordinators, the Joint Global Coordinators, the Joint
Bookrunners, the Joint Lead Managers, the Hong Kong Underwriters and the Capital Market
Intermediaries not to (save for the issue, offer or sale of the Offer Shares by the Company pursuant
to the Global Offering, it will not, without the prior written consent of the Joint Sponsors and the
Overall Coordinators (for themselves and on behalf of the Hong Kong Underwriters) and unless in
compliance with the requirements of the Listing Rules, at any time during the First Six-month
Period:
(1) offer, allot, issue, sell, accept subscription for, contract to allot, issue or sell, contract
or agree to allot, issue or sell, assign, mortgage, charge, pledge, hypothecate, lend,
grant or sell any option, warrant, right or contract to purchase, purchase any option or
contract to sell, grant or agree to grant any option, right or warrant to purchase or
subscribe for, or otherwise transfer or dispose of or create an encumbrance over, or
agree to transfer or dispose of or create an encumbrance over, either directly or
indirectly, conditionally or unconditionally, or repurchase, any legal or beneficial
interest in any Shares or other securities of the Company or any interests in any of the
foregoing (including, but not limited to, any securities that are convertible into or
exercisable or exchangeable for, or that represent the right to receive, or any warrants
or other rights to subscribe for or purchase, any Shares or other securities of the
Company or any interests in any of the foregoing), or deposit any Shares or other
securities of the Company, with a depositary in connection with the issue of
UNDERWRITING
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--- page 452 ---
depositary receipts, except for the Shares to be issued and allotted upon the exercise
of the share options granted under the share schemes that may be adopted in
accordance with Chapter 17 of Listing Rules; or
(2) enter into any swap or other arrangement that transfers to another, in whole or in part,
any of the economic consequences of subscription or ownership (legal or beneficial)
of any Shares or other securities of the Company or any interest in any of the
foregoing (including, without limitation, any securities of which are convertible into
or exchangeable or exercisable for, or represent the right to receive, or any warrants
or other rights to purchase, any Shares or other securities of the Company or any
shares or any interests in any of the foregoing); or
(3) enter into any transaction with the same economic effect as any transaction described
in paragraphs (1) or (2) above; or
(4) agree or contract to, or publicly announce any intention to enter into, any transaction
described in (1), (2) or (3) above,
whether any of the foregoing transactions described in sub-paragraphs (1) to (4) above is to
be settled by delivery of share capital or such other equity securities of the Company or
share capital or other equity securities of such other member of the Group, as applicable, or
in cash or otherwise (whether or not the issue of such share capital or other securities
convertible into equity securities will be completed within the First Six-Month Period).
If the Company enters into any of the foregoing transactions described in sub-paragraphs (1)
to (4) above during the period of six months commencing on the date on which the First Six-Month
Period expires, the Company must take all reasonable steps to ensure that it will not create a
disorderly or false market in the securities of the Company.
Indemnity
Each of our Company and Dr. Liu jointly and severally undertakes to indemnify the Joint
Sponsors, the Overall Coordinators, the Joint Global Coordinators, the Joint Bookrunners, the
Joint Lead Managers, the Hong Kong Underwriters and the Capital Market Intermediaries for
certain losses which they may suffer, including losses arising from their performance of their
obligations under the Hong Kong Underwriting Agreement and any breach by our Company of the
Hong Kong Underwriting Agreement.
Intern ation al Offerin g
In connection with the International Offering, it is expected that our Company will enter
into the International Underwriting Agreement with, inter alia, the International Underwriters.
Under the International Underwriting Agreement, the International Underwriters will severally
agree to subscribe or purchase or procure subscribers for the International Offering Shares being
offered pursuant to the International Offering.
Commi ssion sa nd Expenses
The Underwriters and the Capital Market Intermediaries will receive an underwriting
commission equal to 5.5% of the aggregate Offer Price payable for the Offer Shares (the “ Fixe d
UNDERWRITING
– 442 –


--- page 453 ---
Fees”). Our Company may, at our sole and absolute discretion, pay to one or more Underwriters or
Capital Market Intermediaries an incentive fee of up to 4.5% of the Offer Price payable for the
Offer Shares (the “ Discretion ary Fee s”). Assuming the Discretionary Fees are paid in full, the
ratio of Fixed Fees and Discretionary Fees payable to all Underwriters and Capital Market
Intermediaries is therefore 55:45. For unsubscribed Hong Kong Offer Shares reallocated to the
International Offering, we will pay an underwriting commission at the rate applicable to the
International Offering and such commission will be paid to the relevant International Underwriters
and not the Hong Kong Underwriters. Each of the Joint Sponsors is entitled to sponsor fee in the
amount of US$500,000.
The aggregate underwriting commissions, incentive fee (if any), documentation fee, listing
fees, Stock Exchange trading fee and AFRC transaction levy, legal and other professional fees, and
printing and other expenses in relation to the Global Offering are estimated to amount to
approximately HK$84.1 million in total, and are payable by our Company.
UNDERWRITERS’ AND CAPITAL MARKET INTERMEDIARIES’ INTEREST IN OUR
GROUP
Except as disclosed in this prospectus and the obligations under the Hong Kong
Underwriting Agreement and the International Underwriting Agreement, none of the Underwriters
and the Capital Market Intermediaries has any shareholding interest in any member of our Group
or any right (whether legally enforceable or not) to subscribe for or to nominate persons to
subscribe for securities in any member of our Group.
Following the completion of the Global Offering, the Hong Kong Underwriters and their
affiliated companies may hold a certain portion of the Shares as a result of fulfilling their
obligations under the Hong Kong Underwriting Agreement.
ACTIVITIES BY SYNDICATE MEMBERS
The Underwriters, together referred to as “ Syn dicate Member s”, may each individually
undertake a variety of activities (as further described below) which do not form part of the
underwriting process.
The Syndicate Members and their affiliates are diversified financial institutions with
relationships in countries around the world. These entities engage in a wide range of commercial
and investment banking, brokerage, funds management, trading, hedging, investing and other
activities for their own account and for the account of others. In relation to the Shares, those
activities could include acting as agent for buyers and sellers of the Shares, entering into
transactions with those buyers and sellers in a principal capacity, proprietary trading in the Shares
and entering into over the counter or listed derivative transactions or listed and unlisted securities
transactions (including issuing securities such as derivative warrants listed on a stock exchange)
which have the Shares as their or part of their underlying assets. Those activities may require
hedging activity by those entities involving, directly or indirectly, buying and selling the Shares.
All such activities could occur in Hong Kong and elsewhere in the world and may result in the
Syndicate Members and their affiliates holding long and/or short positions in the Shares, in baskets
of securities or indices including the Shares, in units of funds that may purchase the Shares, or in
derivatives related to any of the foregoing.
UNDERWRITING
– 443 –


--- page 454 ---
In relation to issues by Syndicate Members or their affiliates of any listed securities having
the Shares as their or part of their underlying assets, whether on the Stock Exchange or on any
other stock exchange, the rules of the relevant exchange may require the issuer of those securities
(or one of its affiliates or agents) to act as a market maker or liquidity provider in the security, and
this will also result in hedging activity in the Shares in most cases.
These activities may affect the market price or value of the Shares, the liquidity or trading
volume in the Shares and the volatility of their share price, and the extent to which this occurs from
day to day cannot be estimated.
When engaging in any of these activities, it should be noted that the Syndicate Members are
subject to certain restrictions, including the following:
• the Syndicate Members must not, in connection with the distribution of the Offer
Shares, effect any transactions (including issuing or entering into any option or other
derivative transactions relating to the Offer Shares), whether in the open market or
otherwise, with a view to stabilizing or maintaining the market price of any of the
Offer Shares at levels other than those which might otherwise prevail in the open
market; and
• all of them must comply with all applicable laws, including the market misconduct
provisions of the SFO, the provisions prohibiting insider dealing, false trading, price
rigging and stock market manipulation.
UNDERWRITERS’ INTERESTS IN OUR COMPANY
The Underwriters will receive an underwriting commission. Particulars of these
underwriting commission and expenses are set out in the paragraph headed “— Commissions and
Expenses” in this section for further information.
Save for their obligations under the Underwriting Agreements, as of the Latest Practicable
Date, none of the Underwriters is interested legally or beneficially in any shares of any member of
our Group nor has any right or option (whether legally enforceable or not) to subscribe for or
purchase or to nominate persons to subscribe for or purchase securities in any member of our
Group nor any interest in the Global Offering.
JOINT SPONSORS’ INDEPENDENCE
Each of the Joint Sponsors satisfies the independence criteria applicable to sponsors as set
out in Rule 3A.07 of the Listing Rules.
UNDERWRITING
– 444 –


--- page 455 ---
THE GLOBAL OFFERING
This prospectus is published in connection with the Hong Kong Public Offering as part of
the Global Offering. The Global Offering comprises:
(a) the Hong Kong Public Offering of initially 2,419,500 Shares (subject to reallocation
as mentioned below) for subscription by the public in Hong Kong as described in the
paragraph headed “— The Hong Kong Public Offering” below; and
(b) the International Offering of initially 21,774,500 Shares (subject to reallocation as
mentioned below) outside the United States (including to professional and
institutional investors within Hong Kong) in offshore transactions in reliance on
Regulation S, and in the United States solely to QIBs as defined in Rule 144A
pursuant to an exemption from registration under the U.S. Securities Act, as described
below in “— The International Offering”.
The 24,194,000 Offer Shares initially being offered in the Global Offering will represent
approximately 4.70% of our enlarged total number of issued Shares immediately after completion
of the Global Offering. The underwriting arrangements, and the respective Underwriting
Agreements, are summarized in “Underwriting” in this prospectus.
Investors may apply for Offer Shares under the Hong Kong Public Offering or apply for or
indicate an interest for the Offer Shares under the International Offering, but may not apply under
both of these methods for the Offer Shares.
References in this prospectus to applications, application monies or the procedure for
application relate solely to the Hong Kong Public Offering.
THE HONG KONG PUBLIC OFFERING
The Hong Kong Public Offering is fully underwritten by the Hong Kong Underwriters on a
several basis under the terms of the Hong Kong Underwriting Agreement and is subject to the
Company and the Overall Coordinators and the Joint Global Coordinators, for themselves and on
behalf of the Underwriters, agreeing on the Offer Price. The Hong Kong Public Offering and the
International Offering are subject to the conditions set forth in the paragraph headed
“— Conditions of the Global Offering” in this section. The Hong Kong Underwriting Agreement
and the International Underwriting Agreement are expected to be conditional upon each other.
Number of Sh ares Initi ally Offere d
The Hong Kong Public Offering is a fully underwritten public offer (subject to agreement as
to pricing and satisfaction or waiver of the other conditions set forth in the Hong Kong
Underwriting Agreement and described in the paragraph headed “Conditions of the Global
Offering” in this section) for the subscription in Hong Kong of, initially 2,419,500 Shares at the
Offer Price (representing approximately 10% of the total number of the Offer Shares).
The Hong Kong Public Offering is open to members of the public in Hong Kong as well as
to institutional and professional investors.
STRUCTURE OF THE GLOBAL OFFERING
– 445 –


--- page 456 ---
Allocation of Shares to investors under the Hong Kong Public Offering will be based solely
on the level of valid applications received under the Hong Kong Public Offering. The basis of
allocation may vary, depending on the number of Hong Kong Offer Shares validly applied for by
applicants. Such allocation could, where appropriate, consist of balloting, which would mean that
some applicants may receive a higher allocation than others who have applied for the same number
of Hong Kong Offer Shares, and those applicants who are not successful in the ballot may not
receive any Hong Kong Offer Shares.
The total number of Offer Shares available under the Hong Kong Public Offering (after
taking into account of any reallocation) is to be divided into two pools for allocation purposes:
Pool A and Pool B. Accordingly, the maximum number of Hong Kong Offer Shares initially in Pool
A and Pool B will be 1,210,000 and 1,209,500, respectively. The Offer Shares in Pool A will be
allocated on an equitable basis to applicants who have applied for Offer Shares with an aggregate
price of HK$5.0 million (excluding the brokerage, SFC transaction levy, Stock Exchange trading
fee and AFRC transaction levy payable) or less. The Offer Shares in Pool B will be allocated on an
equitable basis to applicants who have applied for Offer Shares with an aggregate price of more
than HK$5.0 million and up to a total value of Pool B (excluding the brokerage, SFC transaction
levy, Stock Exchange trading fee and AFRC transaction levy payable).
Investors should be aware that applications in Pool A and applications in Pool B may receive
different allocation ratios. If Offer Shares in one (but not both) of the pools are under-subscribed,
the surplus Offer Shares will be transferred to the other pool to satisfy demand in that other pool
and be allocated accordingly. For the purpose of this paragraph only, the “price” for Offer Shares
means the price payable on application therefor (without regard to the Offer Price as finally
determined). Applicants can only receive an allocation of Offer Shares from either Pool A or Pool
B but not from both pools. Multiple or suspected multiple applications and any application for
more than 1,209,500 Hong Kong Offer Shares (being 50% of the 2,419,500 Hong Kong Offer
Shares initially available under the Hong Kong Public Offering) are liable to be rejected.
Realloc ation
The allocation of Offer Shares between the Hong Kong Public Offering and the International
Offering is subject to reallocation. Paragraph 4.2 of Practice Note 18 of the Listing Rules requires
a clawback mechanism to be put in place which would have the effect of increasing the number of
Offer Shares under the Hong Kong Public Offering to a certain percentage of the total number of
Offer Shares offered under the Global Offering if certain prescribed total demand levels are
reached as further described below:
(a) In the event that the International Offer Shares are fully subscribed or oversubscribed
under the International Offering:
(1) if the Hong Kong Offer Shares are undersubscribed, the Overall Coordinators
(for themselves and on behalf of the Underwriters), at their sole and absolute
discretion (but shall not be under any obligation), may reallocate all or any of
the unsubscribed Shares from the Hong Kong Public Offering to the
International Offering;
STRUCTURE OF THE GLOBAL OFFERING
– 446 –


--- page 457 ---
(2) if the number of Offer Shares validly applied for under the Hong Kong Public
Offering represents less than 15 times the number of Offer Shares initially
available for subscription under the Hong Kong Public Offering, then up to
2,419,500 Offer Shares may be reallocated to the Hong Kong Public Offering
from the International Offering, so that the total number of Offer Shares
available under the Hong Kong Public Offering will increase to up to 4,839,000
Offer Shares, representing two times of the Offer Shares initially available
under the Hong Kong Public Offering;
(3) if the number of Offer Shares validly applied for under the Hong Kong Public
Offering represents 15 times or more but less than 50 times the number of Offer
Shares initially available for subscription under the Hong Kong Public
Offering, then an additional 4,839,000 Offer Shares will be reallocated to the
Hong Kong Public Offering from the International Offering so that the total
number of Offer Shares available under the Hong Kong Public Offering will be
7,258,500 Offer Shares, representing approximately 30% of the Offer Shares
initially available under the Global Offering;
(4) if the number of Offer Shares validly applied for under the Hong Kong Public
Offering represents 50 times or more but less than 100 times the number of
Offer Shares initially available for subscription under the Hong Kong Public
Offering, then an additional 7,258,500 Offer Shares will be reallocated to the
Hong Kong Public Offering from the International Offering so that the total
number of Offer Shares available under the Hong Kong Public Offering will be
9,678,000 Offer Shares, representing approximately 40% of the Offer Shares
initially available under the Global Offering; and
(5) if the number of Offer Shares validly applied for under the Hong Kong Public
Offering represents 100 times or more the number of Offer Shares initially
available for subscription under the Hong Kong Public Offering, then an
additional 9,677,500 Offer Shares will be reallocated to the Hong Kong Public
Offering from the International Offering so that the total number of Offer
Shares available under the Hong Kong Public Offering will be 12,097,000
Offer Shares, representing approximately 50% of the Offer Shares initially
available under the Global Offering.
(b) In the event that the International Offer Shares are undersubscribed under the
International Offering:
(1) if the Hong Kong Offer Shares are undersubscribed, the Global Offering shall
not proceed unless fully underwritten by the Underwriters; and
(2) if the Hong Kong Offer Shares are fully subscribed or oversubscribed
irrespective of the number of times, then up to 2,419,500 Offer Shares may be
reallocated to the Hong Kong Public Offering from the International Offering,
so that the total number of Hong Kong Offer Shares available for subscription
under the Hong Kong Public Offering will increase up to 4,839,000 Offer
Shares, representing two times of the Offer Shares initially available under the
Hong Kong Public Offering.
STRUCTURE OF THE GLOBAL OFFERING
– 447 –


--- page 458 ---
The Offer Shares to be offered in the Hong Kong Public Offering and the International
Offering may, in certain circumstances, be reallocated as between these offerings at the discretion
of the Overall Coordinators. If either the Hong Kong Public Offering or the International Offering
is not fully subscribed for, the Overall Coordinators have the authority to reallocate all or any
unsubscribed Offer Shares from such offering to the other, in such proportion as the Overall
Coordinators deem appropriate.
In addition, the Overall Coordinators, in their sole and absolute discretion, may (but shall
have no obligation to) reallocate Offer Shares from the International Offer Shares to the Hong
Kong Public Offering to satisfy valid applications under the Hong Kong Public Offering. In
accordance with the Guidance Letter HKEx-GL91-18 issued by the Stock Exchange, if such
allocation is done other than pursuant to Practice Note 18 of the Listing Rules, the maximum total
number of Offer Shares that may be reallocated to the Hong Kong Public Offering following such
reallocation shall be not more than double the initial allocation to the Hong Kong Public Offering
(i.e. 4,839,000 Offer Shares).
Details of any reallocation of Offer Shares between the Hong Kong Public Offering and the
International Offering will be disclosed in the results announcement of the Hong Kong Public
Offering, which is expected to be published on Thursday, December 21, 2023.
Applic ation s
Each applicant under the Hong Kong Public Offering will also be required to give an
undertaking and confirmation in the application submitted by him that he and any person(s) for
whose benefit he is making the application have not applied for or taken up, or indicated an interest
for, and will not apply for or take up, or indicate an interest for, any Offer Shares under the
International Offering, and such applicant’s application is liable to be rejected if the said
undertaking and/or confirmation is breached and/or untrue (as the case may be) or it has been or
will be placed or allocated Offer Shares under the International Offering.
The listing of the Shares on the Stock Exchange is sponsored by the Joint Sponsors.
Applicants under the Hong Kong Public Offering are required to pay, on application, the Offer
Price of HK$11.50 per Offer Share in addition to the brokerage, SFC transaction levy, Stock
Exchange trading fee and AFRC transaction levy payable on each Offer Share.
STRUCTURE OF THE GLOBAL OFFERING
– 448 –


--- page 459 ---
THE INTERNATIONAL OFFERING
The International Offering is expected to be fully underwritten by the International
Underwriters on a several basis. The Company expects to enter into the International Underwriting
Agreement relating to the International Offering on or about Tuesday, December 19, 2023.
Number of Offer Sh ares Offere d
Subject to reallocation as described above, the International Offering will consist of an
initial offering of 21,774,500 Shares offered by the Company, representing approximately 90% of
the total number of Offer Shares initially available under the Global Offering. The International
Offering will be offered by us outside of the United States in reliance on Regulation S, and in the
United States only to QIBs as defined in Rule 144A pursuant to an exemption from registration
under the U.S. Securities Act.
Alloc ation
The International Offering will include selective marketing of Offer Shares to institutional
and professional investors and other investors anticipated to have a sizeable demand for such Offer
Shares. Professional investors generally include brokers, dealers, companies (including fund
managers) whose ordinary business involves dealing in shares and other securities and corporate
entities which regularly invest in shares and other securities. Allocation of Offer Shares pursuant
to the International Offering will be effected in accordance with the “book-building” process
described in the paragraph headed “— Pricing and Allocation” below and based on a number of
factors, including the level and timing of demand, the total size of the relevant investor’s invested
assets or equity assets in the relevant sector and whether or not it is expected that the relevant
investor is likely to buy further Shares, and/or hold or sell its Shares, after the listing of the Shares
on the Stock Exchange. Such allocation is intended to result in a distribution of the Shares on a
basis which would lead to the establishment of a solid professional and institutional shareholder
base to the benefit of our Company and the Shareholders as a whole.
The Overall Coordinators (for themselves and on behalf of the Underwriters) may require
any investor who has been offered Offer Shares under the International Offering, and who has
made an application under the Hong Kong Public Offering, to provide sufficient information to the
Overall Coordinators so as to allow them to identify the relevant applications under the Hong Kong
Public Offering and to ensure that they are excluded from any application of Offer Shares under the
Hong Kong Public Offering.
STRUCTURE OF THE GLOBAL OFFERING
– 449 –


--- page 460 ---
PRICING AND ALLOCATION
The International Underwriters will be soliciting from prospective investors indications of
interest in acquiring Offer Shares in the International Offering. Prospective professional and
institutional investors will be required to specify the number of Offer Shares under the
International Offering they would be prepared to acquire either at different prices or at a particular
price. This process, known as “book-building,” is expected to continue up to, and to cease on or
about, the last day for lodging applications under the Hong Kong Public Offering.
The Offer Price will be HK$11.50 per Offer Share.
The Overall Coordinators (for themselves and on behalf of the Underwriters) may, where
considered appropriate, based on the level of interest expressed by prospective professional and
institutional investors during the book-building process, and with our consent, reduce the number
of Offer Shares and/or the Offer Price below as stated in this prospectus at any time on or prior to
the morning of the last day for lodging applications under the Hong Kong Public Offering. In such
a case, we will, as soon as practicable following the decision to make such reduction, issue a
supplemental prospectus updating investors of such reduction and in any event not later than the
morning of the last day for lodging applications under the Hong Kong Public Offering, cause there
to be published on the website of our Company ( www.hi ghti detx.com ) and the website of the
Stock Exchange ( www.hkexnew s.hk) notices of the reduction. Upon issue of such a notice, the
revised Offer Price will be final and conclusive. Applicants should have regard to the possibility
that any announcement of a reduction in the number of Offer Shares and/or the Offer Price may not
be made until the last day for lodging applications under the Hong Kong Public Offering. Such
notice will also include confirmation or revision, as appropriate, of the working capital statement
and the Global Offering statistics as currently set out in this prospectus, and any other financial
information which may change as a result of any such reduction. In the absence of any such notice
so published, the number of Offer Shares and/or the Offer Price as stated in this prospectus will not
be reduced.
In the event of a reduction in the number of Offer Shares, the Overall Coordinators may, at
their discretion, reallocate the number of Offer Shares to be offered in the Hong Kong Public
Offering and the International Offering, provided that the number of Offer Shares comprised in the
Hong Kong Public Offering shall not be less than 10% of the total number of Offer Shares available
under the Global Offering. The Offer Shares to be offered in the Hong Kong Public Offering and
the Offer Shares to be offered in the International Offering may, in certain circumstances, be
reallocated between these offerings at the discretion of the Overall Coordinators.
If there is any change to the offer size due to change in the number of Offer Shares offered
in the Global Offering (other than pursuant to the reallocation mechanism as disclosed in this
prospectus), or change to the Offer Price which leads to the resulting price falling below the Offer
Price of HK$11.50 per Offer Share as stated in this prospectus, or if the Company becomes aware
that there has been a significant change affecting any matter contained in this prospectus or a
significant new matter has arisen, the inclusion of information in respect of which would have been
required to be in this prospectus if it had arisen before this prospectus was issued, after the issue of
this prospectus and before the commencement of dealings in our Shares as prescribed under Rule
11.13 of the Listing Rules, we are required to cancel the Global Offering and relaunch the offer and
issue a supplemental prospectus or a new prospectus.
STRUCTURE OF THE GLOBAL OFFERING
– 450 –


--- page 461 ---
Save for any subsequent changes in the number of Offer Shares and/or the Offer Price, the
level of indications of interest in the International Offering, the level of applications in the Hong
Kong Public Offering and the basis of and results of allocations of Offer Shares under the Hong
Kong Public Offering are expected to be announced on Thursday, December 21, 2023 on the
website of our Company at www.hi ghti detx.com and the website of the Stock Exchange at
www.hkexnew s.hk.
CONDITIONS OF THE GLOBAL OFFERING
Acceptances of all applications for Offer Shares will be conditional on:
(a) the Listing Committee granting the approval for the listing of, and permission to deal
in, the Shares in issue and to be issued pursuant to the Global Offering and such
listing and permission not subsequently having been revoked prior to the
commencement of dealings in the Shares on the Stock Exchange;
(b) the execution and delivery of the International Underwriting Agreement on or around
Wednesday, December 20, 2023; and
(c) the obligations of the Hong Kong Underwriters under the Hong Kong Underwriting
Agreement and the obligations of the International Underwriters under the
International Underwriting Agreement becoming and remaining unconditional and
not having been terminated in accordance with the terms of the respective
agreements, in each case on or before the dates and times specified in the Hong Kong
Underwriting Agreement or the International Underwriting Agreement (unless and to
the extent such conditions are validly waived on or before such dates and times);
in each case on or before the dates and times specified in the respective Underwriting Agreements
(unless and to the extent such conditions are validly waived on or before such dates and times) and
in any event not later than the date which is 30 days after the date of this prospectus.
The consummation of each of the Hong Kong Public Offering and the International Offering
is conditional upon, among other things, the other offering becoming unconditional and not having
been terminated in accordance with its terms.
If the above conditions are not fulfilled or waived prior to the times and dates specified, the
Global Offering will lapse and the Stock Exchange will be notified immediately. Notice of the
lapse of the Hong Kong Public Offering will be published by our Company on the website of our
Company at www.hi ghti detx.com and the website of the Stock Exchange at www.hkexnew s.hk on
the next day following such lapse. In such eventuality, all application monies will be returned,
without interest, on the terms set out in the section headed “How to Apply for Hong Kong Offer
Shares” in this prospectus. In the meantime, all application monies will be held in (a) separate bank
account(s) with the receiving bank or other bank(s) in Hong Kong licensed under the Banking
Ordinance (Chapter 155 of the Laws of Hong Kong).
STRUCTURE OF THE GLOBAL OFFERING
– 451 –


--- page 462 ---
We expect to issue share certificates for the Offer Shares on Thursday, December 21, 2023.
Share certificates issued in respect of Hong Kong Offer Shares will only become valid at 8:00 a.m.
on the Listing Date, provided that (1) the Global Offering has become unconditional in all respects
and (2) the right of termination as described in the section headed “Underwriting — Underwriting
Arrangements and Expenses — Hong Kong Public Offering — Grounds for termination” in this
prospectus has not been exercised.
APPLICATION FOR LISTING ON THE STOCK EXCHANGE
We have applied to the Listing Committee for the granting of the listing of, and permission
to deal in, the Shares in issue and to be issued pursuant to the Global Offering.
No part of our Company’s share or loan capital is listed on or dealt in on any other stock
exchange and no such listing or permission to deal is being or proposed to be sought in the near
future.
SHARES WILL BE ELIGIBLE FOR CCASS
All necessary arrangements have been made for the Shares to be admitted into CCASS. If
the Stock Exchange grants the listing of, and permission to deal in, the Shares and our Company
complies with the stock admission requirements of HKSCC, the Shares will be accepted as eligible
securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the date of
commencement of dealings in the Shares on the Stock Exchange or any other date HKSCC
chooses. Settlement of transactions between participants of the Stock Exchange is required to take
place in CCASS on the second settlement day after any trading day.
All activities under CCASS are subject to the General Rules of HKSCC and HKSCC
Operational Procedures in effect from time to time.
DEALING
Assuming that the Hong Kong Public Offering becomes unconditional at or before 8:00 a.m.
in Hong Kong on Friday, December 22, 2023, it is expected that dealings in the Shares on the Stock
Exchange will commence at 9:00 a.m. on Friday, December 22, 2023. The Shares will be traded in
board lots of 500 Shares each. The stock code of the Shares will be 2511.
STRUCTURE OF THE GLOBAL OFFERING
– 452 –


--- page 463 ---
IMPORTANT NOTICE TO INVESTORS
OF HONG KONG OFFER SHARES
FULLY ELECTRONIC APPLICATION PROCESS
We h ave adopteda fully electronic applic ation proce ss for the Hon g Kong Public
Offer and below are the proce dure s for applic ation.
Thi sp ro sp ectu s isa vail able at the web site of the Stock Exch ange at
www.hkexnew s.hk un der the “HKEXnew s > New Li stin gs > New Li stin g Inform ation”
section, and our web site at www.hi ghti detx.com.
The contents of this prospectus are identical to the prospectus as registered with the
Registrar of Companies in Hong Kong pursuant to Section 342C of the Companies (Winding
Up and Miscellaneous Provisions) Ordinance.
A. APPLICATION FOR HONG KONG OFFER SHARES
1. Who C anA pply
You can apply for Hong Kong Offer Shares if you or the person(s) for whose benefit
you are applying for:
• are 18 years of age or older; and
• have a Hong Kong address (forthe White Form eIPO serviceonly).
Unless permitted by the Listing Rules or any relevant waivers and/ or consents have
been granted by the Stock Exchange to us, you cannot apply for any Hong Kong Offer
Shares if you or the person(s) for whose benefit you are applying for if:
• you are an existing beneficial owner of Shares and/or a substantial shareholder
of any of our subsidiaries;
• you are our Director or chief executive and/or a director or chief executive
officer of our subsidiaries;
• you are a close associate of any of the above persons; or
• you have been allocated or have applied for any International Offer Shares or
otherwise participate in the International Offering or if the person indicated its
interests in International Offer Shares;
2. A pplic ation Ch annel s
The Hon g Kon g Public Offer perio d will be gin at 9:00 am on Thur sda y,
December 14, 2023 and enda t 12:00 noon on Tue sday, December 19, 2023 (Hon g Kong
time).
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 453 –


--- page 464 ---
To apply for Hong Kong Offer Shares, you may use one of the following application
channels:
Applic ation Ch annel Pl atform T arget Inve stor s Applic ation Time
White Form eIPO
service ............
www.ei po.com.hk Applicants who would like
to receive a physical
Share certificate. Hong
Kong Offer Shares
successfully applied for
will be allotted and
issued in your own
name.
From 9:00 am on
Thursday, December
14, 2023 to 11:30
a.m. on Tuesday,
December 19, 2023,
Hong Kong time.
The latest time for
completing full
payment of
application monies
will be 12:00 noon on
Tuesday, December
19, 2023, Hong Kong
time.
HKSCC EIPO
channel ...........
Your broker or
custodian who is a
HKSCC Participant
will submit an EIPO
application on your
behalf through
HKSCC’s FINI
system in
accordance with
your instruction
Applicants who would not
like to receive a physical
Share certificate. Hong
Kong Offer Shares
successfully applied for
will be allotted and
issued in the name of
HKSCC Nominees,
deposited directly into
CCASS and credited to
your designated HKSCC
Participant’s stock
account.
Contact your broker or
custodian for the
earliest and latest
time for giving such
instructions, as this
may vary by broker
or custodian.
The White Form eIPO service and the HKSCC EIPO channel are facilities subject to
capacity limitations and potential service interruptions and you are advised not to wait until
the last day of the application period to apply for Hong Kong Offer Shares.
For those applying through the White Form eIPO service, once you complete
payment in respect of any application instructions given by you or for your benefit through
the White Form eIPO service to make an application for Hong Kong Offer Shares, an actual
application shall be deemed to have been made. If you are a person for whose benefit the
electronic application instructions are given, you shall be deemed to have declared that only
one set of electronic application instructions has been given for your benefit. If you are an
agent for another person, you shall be deemed to have declared that you have only given one
set of electronic application instructions for the benefit of the person for whom you are an
agent and that you are duly authorized to give those instructions as an agent.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 465 ---
For the avoidance of doubt, giving an application instruction under the White Form
eIPO service more than once and obtaining different application reference numbers without
effecting full payment in respect of a particular reference number will not constitute an
actual application.
If you apply through the White Form eIPO service, you are deemed to have
authorized the White Form eIPO service provider to apply on the terms and conditions in
this prospectus, as supplemented and amended by the terms and conditions of the White
Form eIPO service.
By instructing your broker or custodian to apply for the Hong Kong Offer Shares on
your behalf through the HKSCC EIPO Channel, you (and, if you are joint applicants, each of
you jointly and severally) are deemed to have instructed and authorized HKSCC to cause
HKSCC Nominees (acting as nominee for the relevant HKSCC Participants) to apply for
Hong Kong Offer Shares on your behalf and to do on your behalf all the things stated in this
prospectus and any supplement to it.
For those applying through HKSCC EIPO channel, an actual application will be
deemed to have been made for any application instructions given by you or for your benefit
to HKSCC (in which case an application will be made by HKSCC Nominees on your behalf)
provided such application instruction has not been withdrawn or otherwise invalidated
before the closing time of the Hong Kong Public Offer.
HKSCC Nominees will only be acting as a nominee for you and neither HKSCC nor
HKSCC Nominees shall be liable to you or any other person in respect of any actions taken
by HKSCC or HKSCC Nominees on your behalf to apply for Hong Kong Offer Shares or for
any breach of the terms and conditions of this prospectus.
3. Inform ation Require d to Apply
You must provide the following information with your application:
For In divi dual/Joint A pplic ants For Cor porate Applic ants
• Full name(s) 2 as shown on your identity
document
• Identity document’s issuing country or
jurisdiction
• Identity document type, with order of
priority:
i. HKID card; or
ii. National identification document;
or
iii. Passport; and
• Identity document number
• Full name(s)
2 as shown on your identity
document
• Identity document’s issuing country or
jurisdiction
• Identity document type, with order of
priority:
i. LEI registration document; or
ii. Certificate of incorporation; or
iii. Business registration certificate;
or
iv. Other equivalent document; and
• Identity document number
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--- page 466 ---
Notes:
1. If you are applying through the White Form eIPO service, you are required to provide a valid
e-mail address, a contact telephone number and a Hong Kong Address. You are also required to
declare that the identity information provided by you follows the requirements as described in
Note 2 below. In particular, where you cannot provide a HKID number, you must confirm that you
do not hold a HKID card.
2. The applicant’s full name as shown on their identity document must be used. If an applicant’s
identity document contains both an English and Chinese name, both English and Chinese names
must be used. Otherwise, either English or Chinese names will be accepted. The order of priority of
the applicant’s identity document type must be strictly followed and where an individual applicant
has a valid HKID card, the HKID number must be used when making an application to subscribe
for shares in a public offer. Similarly for corporate applicants, a LEI number must be used if an
entity has a LEI certificate.
3. If the applicant is a trustee, the client identification data (“ CID”) of the trustee, as set out above,
will be required. If the applicant is an investment fund (i.e. a collective investment scheme, or
CIS), the CID of the asset management company or the individual fund, as appropriate, which has
opened a trading account with the broker will be required, as above.
4. The maximum number of joint applicants on FINI is capped at 4 in accordance with market
practice.
5. If you are applying as a nominee, you must provide: (i) the full name (as shown on the identity
document), the identity document’s issuing country or jurisdiction, the identity document type;
and (ii), the identity document number, for each of the beneficial owners or, in the case(s) of joint
beneficial owners, for each joint beneficial owner. If you do not include this information, the
application will be treated as being made for your benefit.
6. If you are applying as an unlisted company and (i) the principal business of that company is dealing
in securities; and (ii) you exercise statutory control over that company, then the application will be
treated as being for your benefit and you should provide the required information in your
application as stated above.
“Unlisted company” means a company with no equity securities listed on the Stock Exchange or
any other stock exchange.
“Statutory control” means you:
• control the composition of the board of directors of the company;
• control more than half of the voting power of the company; or
• hold more than half of the issued share capital of the company (not counting any part of it
which carries no right to participate beyond a specified amount in a distribution of either
profits or capital).
For those applying through HKSCC EIPO channel, and making an application under
a power of attorney, we and the Overall Coordinators, as our agent, have discretion to
consider whether to accept it on any conditions we think fit, including evidence of the
attorney’s authority.
Failing to provide any required information may result in your application being
rejected.
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4. Permitte d Number of Hon g Kong Offer Sh ares for Applic ation
Board lot size : 500 Shares
Permitte d number of
Hon g Kong Offer
Shares for
applic ation and
amount payable on
applic ation/
succe ssful allotment
: Hong Kong Offer Shares are available for
application in specified board lot sizes only. Please
refer to the amount payable associated with each
specified board lot size in the table below.
The Offer Price is HK$11.50 per Share. If you are
applying through the HKSCC EIPO channel, you are
required to pre-fund your application based on the
amount specified by your broker or custodian, as
determined based on the applicable laws and
regulations in Hong Kong.
By instructing your broker or custodian to apply for
the Hong Kong Offer Shares on your behalf through
the HKSCC EIPO Channel, you (and, if you are joint
applicants, each of you jointly and severally) are
deemed to have instructed and authorized HKSCC to
cause HKSCC Nominees (acting as nominee for the
relevant HKSCC Participants) to arrange payment of
the Offer Price, brokerage, SFC transaction levy, the
Stock Exchange trading fee and the AFRC
transaction levy by debiting the relevant nominee
bank account at the Designated Bank for your broker
or custodian.
If you are applying through the White Form IPO
service, you may refer to the table below for the
amount payable for the number of Shares you have
selected. You must pay the respective maximum
amount payable on application in full upon
application for Hong Kong Offer Shares.
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--- page 468 ---
HighTi de Ther apeutic s, Inc. (Stock Co de: 2511)
(HK$11.50 per Hon g Kong Offer Sh are)
NUMBER OF HONG KONG OFFER SHARES THAT MAY BE APPLIED FOR AND PAYMENTS
No. of Hon g
Kong Offer
Shares
applie d for
Amount
payable on
applic ation
No. of Hon g
Kong Offer
Shares
applie d for
Amount
payable on
applic ation
No. of Hon g
Kong Offer
Shares
applie d for
Amount
payable on
applic ation
No. of Hon g
Kong Offer
Shares
applie d for
Amount
payable on
applic ation
HK$ HK$ HK$ HK$
500 5,807.99 7,000 81,311.84 50,000 580,798.88 400,000 4,646,391.00
1,000 11,615.98 8,000 92,927.82 60,000 696,958.66 450,000 5,227,189.88
1,500 17,423.97 9,000 104,543.80 70,000 813,118.43 500,000 5,807,988.76
2,000 23,231.95 10,000 116,159.78 80,000 929,278.20 600,000 6,969,586.50
2,500 29,039.94 15,000 174,239.67 90,000 1,045,437.98 700,000 8,131,184.26
3,000 34,847.93 20,000 232,319.56 100,000 1,161,597.76 800,000 9,292,782.00
3,500 40,655.92 25,000 290,399.43 150,000 1,742,396.63 900,000 10,454,379.76
4,000 46,463.91 30,000 348,479.33 200,000 2,323,195.50 1,000,000 11,615,977.50
4,500 52,271.90 35,000 406,559.21 250,000 2,903,994.38 1,100,000 12,777,575.26
5,000 58,079.89 40,000 464,639.10 300,000 3,484,793.26 1,209,500
(1) 14,049,524.78
6,000 69,695.86 45,000 522,718.99 350,000 4,065,592.13
(1) Maximum number of Hong Kong Offer Share you may apply for.
(2) This is 50% of the Hong Kong Offer Shares initially offered, and the amount payable is inclusive of
brokerage, SFC transaction levy, the Stock Exchange trading fee and Accounting and Financial Reporting
Council (“ AFRC ”) transaction levy. If your application is successful, brokerage will be paid to the
Exchange Participants (as defined in the Listing Rules) and the SFC transaction levy, the Stock Exchange
trading fee and AFRC transaction levy are paid to the Stock Exchange (in the case of the SFC transaction
levy and the AFRC transaction levy, collected by the Stock Exchange on behalf of the SFC and the AFRC
respectively).
5. Multi ple Applic ation s Prohibite d
You or your joint applicant(s) shall not make more than one application for your own
benefit, except where you are a nominee and provide the information of the underlying
investor in your application as required under the paragraph headed “ — A. Application for
Hong Kong Offer Shares — 3. Information Required to Apply”in this section. If you are
suspected of submitting or cause to submit more than one application, all of your
applications will be rejected.
Multiple applications made either through (i) the White Form eIPO service, (ii)
HKSCC EIPO channel, or (iii) both channels concurrently are prohibited and will be
rejected. If you have made an application through the White Form eIPO service or HKSCC
EIPO channel, you or the person(s) for whose benefit you have made the application shall
not apply for any Offer Shares.
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--- page 469 ---
6. Term sa nd Con dition s of An A pplic ation
By applying for Hong Kong Offer Shares through the White Form eIPO service or
HKSCC EIPO channel, you (or as the case may be, HKSCC Nominees will do the following
things on your behalf):
(i) undertake to execute all relevant documents and instruct and authorise us
and/or the Overall Coordinators, as our agents, to execute any documents for
you and to do on your behalf all things necessary to register any Hong Kong
Offer Shares allocated to you in your name or in the name of HKSCC
Nominees as required by the Articles of Association, and (if you are applying
through the HKSCC EIPO channel) to deposit the allotted Hong Kong Offer
Shares directly into CCASS for the credit of your designated HKSCC
Participant’s stock account on your behalf;
(ii) confirm that you have read and understand the terms and conditions and
application procedures set out in this prospectus and the designated website of
the White Form eIPO service (or as the case may be, the agreement you
entered into with your broker or custodian), and agree to be bound by them;
(iii) (if you are applying through the HKSCC EIPO channel) agree to the
arrangements, undertakings and warranties under the participant agreement
between your broker or custodian and HKSCC and observe the General Rules
of HKSCC and the HKSCC Operational Procedures for giving application
instructions to apply for Hong Kong Offer Shares;
(iv) confirm that you are aware of the restrictions on offers and sales of shares set
out in this prospectus and they do not apply to you, or the person(s) for whose
benefit you have made the application;
(v) confirm that you have read this prospectus and any supplement to it and have
relied only on the information and representations contained therein in making
your application (or as the case may be, causing your application to be made)
and will not rely on any other information or representations;
(vi) agree that the Relevant Persons
1, the Hong Kong Share Registrar and HKSCC
will not be liable for any information and representations not in this prospectus
and any supplement to it;
1 As defined in the prospectus, Relevant Persons would include the Company, Joint Sponsors, the Overall
Coordinators, the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Underwriters,
the Capital Market Intermediaries, and any of their respective directors, officers, employees, partners, agents,
advisers, representatives and any other parties involved in the Global Offering.
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--- page 470 ---
(vii) agree to disclose the details of your application and your personal data and any
other personal data which may be required about you and the person(s) for
whose benefit you have made the application to us, the Relevant Persons, the
Hong Kong Share Registrar, HKSCC, HKSCC Nominees, the Stock Exchange,
the SFC and any other statutory regulatory or governmental bodies or
otherwise as required by laws, rules or regulations, for the purposes under the
paragraph headed “— G. Personal Data — 3. Purposes and 4. Transfer of
personaldata ” in this section;
(viii) agree (without prejudice to any other rights which you may have once your
application (or as the case may be, HKSCC Nominees’ application) has been
accepted) that you will not rescind it because of an innocent misrepresentation;
(ix) agree that subject to Section 44A(6) of the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, any application made by you or HKSCC
Nominees on your behalf cannot be revoked once it is accepted, which will be
evidenced by the notification of the result of the ballot by the Hong Kong Share
Registrar by way of publication of the results at the time and in the manner as
specified in the paragraph headed “— B. Publication of Results ” in this
section;
(x) confirm that you are aware of the situations specified in the paragraph headed
“— C. Circumstances In Which You Will Not Be Allocated Hong Kong Offer
Shares ” in this section;
(xi) agree that your application or HKSCC Nominees’ application, any acceptance
of it and the resulting contract will be governed by and construed in accordance
with the laws of Hong Kong;
(xii) agree to comply with the Companies Ordinance, the Companies (Winding Up
and Miscellaneous Provisions) Ordinance, the Articles of Association and laws
of any place outside Hong Kong that apply to your application and that neither
we nor the Relevant Persons will breach any law inside and/ or outside Hong
Kong as a result of the acceptance of your offer to purchase, or any action
arising from your rights and obligations under the terms and conditions
contained in this prospectus;
(xiii) confirm that (a) your application or HKSCC Nominees’ application on your
behalf is not financed directly or indirectly by the Company, any of the
directors, chief executives, substantial Shareholder(s) or existing
shareholder(s) of the Company or any of its subsidiaries or any of their
respective close associates; and (b) you are not accustomed or will not be
accustomed to taking instructions from the Company, any of the directors,
chief executives, substantial shareholder(s) or existing shareholder(s) of the
Company or any of its subsidiaries or any of their respective close associates in
relation to the acquisition, disposal, voting or other disposition of the Shares
registered in your name or otherwise held by you;
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 471 ---
(xiv) warrant that the information you have provided is true and accurate;
(xv) confirm that you understand that we and the Overall Coordinators will rely on
your declarations and representations in deciding whether or not to allocate
any Hong Kong Offer Shares to you and that you may be prosecuted for making
a false declaration;
(xvi) agree to accept Hong Kong Offer Shares applied for or any lesser number
allocated to you under the application;
(xvii) declare and represent that this is the only application made and the only
application intended by you to be made to benefit you or the person for whose
benefit you are applying;
(xviii) (if the application is made for your own benefit) warrant that no other
application has been or will be made for your benefit by giving electronic
application instructions to HKSCC directly or indirectly or through the
application channel of the Hong Kong Share Registrar or by any one as your
agent or by any other person; and
(xix) (if you are making the application as an agent for the benefit of another person)
warrant that (1) no other application has been or will be made by you as agent
for or for the benefit of that person or by that person or by any other person as
agent for that person by giving electronic application instructions to HKSCC
and (2) you have due authority to give electronic application instructions on
behalf of that other person as its agent.
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--- page 472 ---
B. PUBLICATION OF RESULTS
Result s of Alloc ation
You can check whether you are successfully allocated any Hong Kong Offer Shares
through:
Platform D ate/ Time
Applying through White Form eIPO service or HKSCC EIPO ch annel :
Website .... T h e designated results of allocations
website at www.i pore sult s.com.hk
(alternatively:
www.ei po.com.hk/eIPOAllotment )
with a “search by ID” function on a
24-hour basis.
The full list of (i) wholly or partially
successful applicants using the White
Form eIPO service and HKSCC EIPO
channel, and (ii) the number of Hong
Kong Offer Shares conditionally
allotted to them, among other things,
will be displayed on the “Allotment
Results” page of the White Form eIPO
service at www.i pore sult s.com.hk
(alternatively:
www.ei po.com.hk/eIPOAllotment ).
24 hours, from 11:00 p.m. on Thursday,
December 21, 2023 to 12:00 midnight
on Wednesday, December 27, 2023
(Hong Kong time)
The Stock Exchange’s website at
www.hkexnew s.hk and our website at
www.hi ghti detx.com which will
provide links to the above mentioned
websites of the Hong Kong Share
Registrar.
No later than 11:00 p.m. on Thursday,
December 21, 2023 (Hong Kong time).
Telephone . . +852 2862 8555 - the allocation results
telephone enquiry line provided by the
Hong Kong Share Registrar
between 9:00 a.m. and 6:00 p.m., from
Friday, December 22, 2023 to Friday,
December 29, 2023 (Hong Kong time)
on a business day
For those applying through HKSCC EIPO channel, you may also check with your broker or custodian
from 6:00 p.m. on Wednesday, December 20, 2023 (Hong Kong time)
HKSCC Participants can log into FINI and review the allotment result from 6:00 p.m.
on Wednesday, December 20, 2023 on a 24-hour basis and should report any discrepancies
on allotments to HKSCC as soon as practicable.
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--- page 473 ---
Alloc ation Announcement
We expect to announce, the level of indications of interest in the International
Offering, the level of applications in the Hong Kong Public Offer and the basis of
allocations of Hong Kong Offer Shares on the Stock Exchange’s website at
www.hkexnew s.hk and our website at www.hi ghti detx.com by no later than 11:00 p.m. on
Thursday, December 21, 2023 (Hong Kong time).
C. CIRCUMSTANCES IN WHICH YOU WILL NOT BE ALLOCATED HONG KONG
OFFER SHARES
You should note the following situations in which Hong Kong Offer Shares will not be
allocated to you or the person(s) for whose benefit you are applying for:
1. If your applic ation i s revoke d:
Your application or the application made by HKSCC Nominees on your behalf may be
revoked pursuant to Section 44A(6) of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance.
2. If we or our agent s exerci se our discretion to reject your applic ation:
We, the Overall Coordinators, the Hong Kong Share Registrar and their respective
agents and nominees have full discretion to reject or accept any application, or to accept
only part of any application, without giving any reasons.
3. If the alloc ation of Hon g Kong Offer Sh ares is voi d:
The allocation of Hong Kong Offer Shares will be void if the Stock Exchange does
not grant permission to list the Shares either:
• within three weeks from the closing date of the application lists; or
• within a longer period of up to six weeks if the Stock Exchange notifies us of
that longer period within three weeks of the closing date of the application
lists.
4. If:
• you make multiple applications or suspected multiple applications. You may
refer to the paragraph headed “ —A.ApplicationforHongKongOfferShares—
5. Multiple Applications Prohibited ” in this section on what constitutes
multiple applications;
• your application instruction is incomplete;
• your payment (or confirmation of funds, as the case may be) is not made
correctly;
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--- page 474 ---
• the Underwriting Agreements do not become unconditional or are terminated;
• we or the Overall Coordinators believe that by accepting your application, it or
we would violate applicable securities or other laws, rules or regulations.
5. If there i s money settlement f ailure for allotte d Shares:
Based on the arrangements between HKSCC Participants and HKSCC, HKSCC
Participants will be required to hold sufficient application funds on deposit with their
Designated Bank before balloting. After balloting of Hong Kong Offer Shares, the
Receiving Bank will collect the portion of these funds required to settle each HKSCC
Participant’s actual Hong Kong Offer Share allotment from their Designated Bank.
There i sa risk of money settlement f ailure. In the extreme event of money
settlement failure by a HKSCC Participant (or its Designated Bank), who is acting on your
behalf in settling payment for your allotted shares, HKSCC will contact the defaulting
HKSCC Participant and its Designated Bank to determine the cause of failure and request
such defaulting HKSCC Participant to rectify or procure to rectify the failure.
However, if it is determined that such settlement obligation cannot be met, the
affected Hong Kong Offer Shares will be reallocated to the International Offering. Hong
Kong Offer Shares applied for by you through the broker or custodian may be affected to the
extent of the settlement failure. In the extreme case, you will not be allocated any Hong
Kong Offer Shares due to the money settlement failure by such HKSCC Participant. None of
us, the Relevant Persons, the Hong Kong Share Registrar and HKSCC is or will be liable if
Hong Kong Offer Shares are not allocated to you due to the money settlement failure.
D. DESPATCH OF SHARE CERTIFICATES AND REFUND OF APPLICATION
MONIES
You will receive one Share certificate for all Hong Kong Offer Shares allotted to you under
the Hong Kong Public Offer (except pursuant to applications made through the HKSCC EIPO
channel where the Share certificates will be deposited into CCASS as described below).
No temporary document of title will be issued in respect of the Shares. No receipt will be
issued for sums paid on application.
Share certificates will only become valid at 8:00 a.m. on Friday, December 22, 2023 (Hong
Kong time), provided that the Global Offering has become unconditional and the right of
termination described in the section headed “Underwriting” has not been exercised. Investors who
trade Shares prior to the receipt of Share certificates or the Share certificates becoming valid do so
entirely at their own risk.
The right is reserved to retain any Share certificate(s) and (if applicable) any surplus
application monies pending clearance of application monies.
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--- page 475 ---
The following sets out the relevant procedures and time:
White Form eIPO service HKSCC EIPO ch annel
Despatch/collection of Sh are certific ate2
For physical share certific ates
of equ al or over 1,000,000
Offer Sh ares issued under
your own n ame ...........
Collection in person at the Hong Kong Share Registrar,
Computershare Hong Kong Investor Services Limited, at
Shops 1712-1716, 17th Floor, Hopewell Centre, 183
Queen’s Road East, Wan Chai, Hong Kong
Time: from 9:00 a.m. to 1:00 p.m. on Friday, December
22, 2023 (Hong Kong time)
If you are an individual, you must not authorise any
other person to collect for you. If you are a corporate
applicant, your authorised representative must bear a
letter of authorization from your corporation stamped
with your corporation’s chop.
Both individuals and authorised representatives must
produce, at the time of collection, evidence of identity
acceptable to the Hong Kong Share Registrar.
Note: If you do not collect your Share certificate(s)
personally within the time above, it/they will be sent to
the address specified in your application instructions by
ordinary post at your own risk.
Share certificate(s) will be issued in the
name of HKSCC Nominees,
deposited into CCASS and credited
to your designated HKSCC
Participant’s stock account
No action by you is required
For physical share certific ates
of le ss than 1,000,000 Offer
Shares issued under your
own n ame ...............
Your Share certificate(s) will be sent to the address
specified in your application instructions by ordinary
post at your own risk
Time: Thursday, December 21, 2023
Refun d mech anismf o r surplus app lic ation monie sp a i
d by you
Date ..................... Friday, December 22, 2023 Subject to the arrangement between
you and your broker or custodian
Responsible party .......... Hong Kong Share Registrar Your broker or custodian
Applic ation monie sp a id
throu gh single b ank account .
e-Refund payment instructions to your designated bank
account
Your broker or custodian will arrange
refund to your designated bank
account subject to the arrangement
between you and itApplic ation monie sp a id
throu gh multi ple b ank
account s ...............
Refund cheque(s) will be despatched to the address as
specified in your application instructions by ordinary
post at your own risk
2 Except in the event of a tropical cyclone warning signal number 8 or above, a black rainstorm warning and/or an
“extreme conditions” announcement issued after a super typhoon in force in Hong Kong in the morning on Friday,
December 22, 2023 rendering it impossible for the relevant share certificates to be dispatched to HKSCC in a
timely manner, the Company shall procure the Hong Kong Share Registrar to arrange for delivery of the supporting
documents and share certificates in accordance with the contingency arrangements as agreed between them. You
may refer to “— E.SevereWeatherArrangements ” in this section.
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--- page 476 ---
E. SEVERE WEATHER ARRANGEMENTS
The O penin ga nd Clo sing of the A pplic ation Li sts
The application lists will not open or close on Tuesday, December 19, 2023 if, there
is:
• a tropical cyclone warning signal number 8 or above;
• a black rainstorm warning; and/or
• an Extreme Conditions,
(collectively, “ Severe We ather Si gnals”),
in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on Tuesday, December
19, 2023.
Instead they will open between 11:45 a.m. and 12:00 noon and/or close at 12:00 noon
on the next business day which does not have Severe Weather Signals in force at any time
between 9:00 a.m. and 12:00 noon.
Prospective investors should be aware that a postponement of the opening/closing of
the application lists may result in a delay in the listing date. Should there be any changes to
the dates mentioned in the section headed “Expected Timetable” in this prospectus, an
announcement will be made and published on the Stock Exchange’s website at
www.hkexnew s.hk and our website at www.hi ghti detx.com of the revised timetable.
If a Severe Weather Signal is hoisted on Thursday, December 21, 2023, the Hong
Kong Share Registrar will make appropriate arrangements for the delivery of the share
certificates to the CCASS Depository’s service counter so that they would be available for
trading on Friday, December 22, 2023.
If a Severe Weather Signal is hoisted on Friday, December 22, 2023: for physical
share certificates of 1,000,000 or more offer shares issued under your own name, you may
pick them up from the Hong Kong Share Registrar’s office after the Severe Weather Signal
is lowered or cancelled (e.g. in the afternoon of Friday, December 22, 2023 or on
Wednesday, December 27, 2023).
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--- page 477 ---
If a Severe Weather Signal is hoisted on Thursday, December 21, 2023: for physical
share certificates of less than 1,000,000 of offer shares issued under your own name,
despatch will be made by ordinary post when the post office re-opens after the Severe
Weather Signal is lowered or cancelled (e.g. in the afternoon of Thursday, December 21,
2023 or on Friday, December 22, 2023).
Pro spective inve stor ss houl d be aware th at if they choo set or e c e i v ephysical
share certific ates issued in their own n ame, there m ayb e ad elay in receivin g the share
certific ates.
F. ADMISSION OF THE SHARES INTO CCASS
If the Stock Exchange grants the listing of, and permission to deal in, the Shares on the
Stock Exchange and we comply with the stock admission requirements of HKSCC, the Shares will
be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with
effect from the date of commencement of dealings in the Shares or any other date HKSCC chooses.
Settlement of transactions between Exchange Participants is required to take place in CCASS on
the second settlement day after any trading day.
All activities under CCASS are subject to the General Rules of HKSCC and HKSCC
Operational Procedures in effect from time to time.
All necessary arrangements have been made enabling the Shares to be admitted into CCASS.
You should seek the advice of your broker or other professional advisor for details of the
settlement arrangement as such arrangements may affect your rights and interests.
G. PERSONAL DATA
The following Personal Information Collection Statement applies to any personal data
collected and held by the Company, the Hong Kong Share Registrar, the receiving bank and the
Relevant Persons about you in the same way as it applies to personal data about applicants other
than HKSCC Nominees. This personal data may include client identifier(s) and your identification
information. By giving application instructions to HKSCC, you acknowledge that you have read,
understood and agree to all of the terms of the Personal Information Collection Statement below.
1. Per sonal Inform ation Collection St atement
This Personal Information Collection Statement informs the applicant for, and holder
of, Hong Kong Offer Shares, of the policies and practices of the Company and the Hong
Kong Share Registrar in relation to personal data and the Personal Data (Privacy) Ordinance
(Chapter 486 of the Laws of Hong Kong).
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 467 –


--- page 478 ---
2. Re asons for the collection of your personal data
It is necessary for applicants and registered holders of Hong Kong Offer Shares to
ensure that personal data supplied to the Company or its agents and the Hong Kong Share
Registrar is accurate and up-to-date when applying for Hong Kong Offer Shares or
transferring Hong Kong Offer Shares into or out of their names or in procuring the services
of the Hong Kong Share Registrar.
Failure to supply the requested data or supplying inaccurate data may result in your
application for Hong Kong Offer Shares being rejected, or in the delay or the inability of the
Company or the Hong Kong Share Registrar to effect transfers or otherwise render their
services. It may also prevent or delay registration or transfers of Hong Kong Offer Shares
which you have successfully applied for and/or the despatch of Share certificate(s) to which
you are entitled.
It is important that applicants for and holders of Hong Kong Offer Shares inform the
Company and the Hong Kong Share Registrar immediately of any inaccuracies in the
personal data supplied.
3. Pur poses
Your personal data may be used, held, processed, and/or stored (by whatever means)
for the following purposes:
• processing your application and refund cheque and e-Refund payment
instruction(s), where applicable, verification of compliance with the terms and
application procedures set out in this prospectus and announcing results of
allocation of Hong Kong Offer Shares;
• compliance with applicable laws and regulations in Hong Kong and elsewhere;
• registering new issues or transfers into or out of the names of the holders of the
Shares including, where applicable, HKSCC Nominees;
• maintaining or updating the register of members of the Company;
• verifying identities of applicants for and holders of the Shares and identifying
any duplicate applications for the Shares;
• facilitating Hong Kong Offer Shares balloting;
• establishing benefit entitlements of holders of the Shares, such as dividends,
rights issues, bonus issues, etc.;
• distributing communications from the Company and its subsidiaries;
• compiling statistical information and profiles of the holder of the Shares;
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 468 –


--- page 479 ---
• disclosing relevant information to facilitate claims on entitlements; and
• any other incidental or associated purposes relating to the above and/or to
enable the Company and the Hong Kong Share Registrar to discharge their
obligations to applicants and holders of the Shares and/or regulators and/or any
other purposes to which applicants and holders of the Shares may from time to
time agree.
4. Tr ansfer of personal data
Personal data held by the Company and the Hong Kong Share Registrar relating to the
applicants for and holders of Hong Kong Offer Shares will be kept confidential but the
Company and the Hong Kong Share Registrar may, to the extent necessary for achieving any
of the above purposes, disclose, obtain or transfer (whether within or outside Hong Kong)
the personal data to, from or with any of the following:
• the Company’s appointed agents such as financial advisers, receiving bank and
overseas principal share registrar;
• HKSCC or HKSCC Nominees, who will use the personal data and may transfer
the personal data to the Hong Kong Share Registrar, in each case for the
purposes of providing its services or facilities or performing its functions in
accordance with its rules or procedures and operating FINI and CCASS
(including where applicants for the Hong Kong Offer Shares request a deposit
into CCASS);
• any agents, contractors or third-party service providers who offer
administrative, telecommunications, computer, payment or other services to
the Company or the Hong Kong Share Registrar in connection with their
respective business operation;
• the Stock Exchange, the SFC and any other statutory regulatory or
governmental bodies or otherwise as required by laws, rules or regulations,
including for the purpose of the Stock Exchange’s administration of the Listing
Rules and the SFC’s performance of its statutory functions; and
• any persons or institutions with which the holders of Hong Kong Offer Shares
have or propose to have dealings, such as their bankers, solicitors, accountants
or brokers etc.
5. Retention of personal data
The Company and the Hong Kong Share Registrar will keep the personal data of the
applicants and holders of Hong Kong Offer Shares for as long as necessary to fulfil the
purposes for which the personal data were collected. Personal data which is no longer
required will be destroyed or dealt with in accordance with the Personal Data (Privacy)
Ordinance (Chapter 486 of the Laws of Hong Kong).
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 469 –


--- page 480 ---
6. Acce ss to and correction of personal data
Applicants for and holders of Hong Kong Offer Shares have the right to ascertain
whether the Company or the Hong Kong Share Registrar hold their personal data, to obtain
a copy of that data, and to correct any data that is inaccurate. The Company and the Hong
Kong Share Registrar have the right to charge a reasonable fee for the processing of such
requests. All requests for access to data or correction of data should be addressed to the
Company and the Hong Kong Share Registrar, at their registered address disclosed in the
section headed “Corporate information” in this prospectus or as notified from time to time,
for the attention of the company secretary, or the Hong Kong Share Registrar for the
attention of the privacy compliance officer.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 470 –


--- page 481 ---
The following is the text of a report, prepared for the purpose of incorporation in this
prospectus,receivedfromtheindependentreportingaccountants,Ernst&Young,CertifiedPublic
Accountants,HongKong.
۱
ਸ਼छଳ
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㶣
Tel 曢婘: +852 2846 9888
Fax ₚ䜆: +852 2868 4432
ey.com
Ernst & Young
27/F, One Taikoo Place
979 King’s Road
Quarry Bay, Hong Kong

ACCOUNTANTS’ REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE
DIRECTORS OF HIGHTIDE THERAPEUTICS, INC., UBS SECURITIES HONG KONG
LIMITED, AND HUATAI FINANCIAL HOLDINGS (HONG KONG) LIMITED
Intro duction
We report on the historical financial information of HighTide Therapeutics, Inc. (the
“Com pany”) and its subsidiaries (together, the “ Grou p”) set out on pages I-4 to I-71, which
comprises the consolidated statements of profit or loss, statements of comprehensive income,
statements of changes in equity and statements of cash flows of the Group for each of years ended
31 December 2021 and 2022, and the six months ended 30 June 2023 (“ the Relev ant Perio ds”),
and the consolidated statements of financial position of the Group and the statements of financial
position of the Company as at 31 December 2021 and 2022 and 30 June 2023 and material
accounting policy information and other explanatory information (together, the “ Historic al
Fin anci al Inform ation ”). The Historical Financial Information set out on pages I-4 to I-71 forms
an integral part of this report, which has been prepared for inclusion in the prospectus of the
Company dated 14 December 2023 (the “ Pro spectu s”) in connection with the initial listing of the
shares of the Company on the Main Board of The Stock Exchange of Hong Kong Limited (the
“Stock Exch ange”).
Director s’r e sponsibility for the Hi storic al Fin anci al Inform ation
The directors of the Company are responsible for the preparation of the Historical Financial
Information that gives a true and fair view in accordance with the basis of presentation and the
basis of preparation set out in notes 2.1 and 2.2 to the Historical Financial Information,
respectively, and for such internal control as the directors determine is necessary to enable the
preparation of the Historical Financial Information that is free from material misstatement,
whether due to fraud or error.
Reportin ga ccount ants’r e sponsibility
Our responsibility is to express an opinion on the Historical Financial Information and to
report our opinion to you. We conducted our work in accordance with Hong Kong Standard on
Investment Circular Reporting Engagements 200 Accountants’ Reports on Historical Financial
Information in Investment Circulars issued by the Hong Kong Institute of Certified Public
Accountants (“ HKICPA ”). This standard requires that we comply with ethical standards and plan
and perform our work to obtain reasonable assurance about whether the Historical Financial
Information is free from material misstatement.
APPENDIX I ACCOUNTANTS’ REPORT
– I-1 –


--- page 482 ---
Our work involved performing procedures to obtain evidence about the amounts and
disclosures in the Historical Financial Information. The procedures selected depend on the
reporting accountants’ judgement, including the assessment of risks of material misstatement of
the Historical Financial Information, whether due to fraud or error. In making those risk
assessments, the reporting accountants consider internal control relevant to the entity’s preparation
of the Historical Financial Information that gives a true and fair view in accordance with the basis
of presentation and the basis of preparation set out in notes 2.1 and 2.2 to the Historical Financial
Information, respectively, in order to design procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
control. Our work also included evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the Historical Financial Information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Opinion
In our opinion, the Historical Financial Information gives, for the purposes of the
accountants’ report, a true and fair view of the financial position of the Group and the Company as
at 31 December 2021 and 2022 and 30 June 2023, and of the financial performance and cash flows
of the Group for each of the Relevant Periods in accordance with the basis of presentation and the
basis of preparation set out in notes 2.1 and 2.2 to the Historical Financial Information,
respectively.
Review of interim com parative fin anci al inform ation
We have reviewed the interim comparative financial information of the Group which
comprises the consolidated statement of profit or loss, statement of comprehensive income,
statement of changes in equity and statement of cash flows for the six months ended 30 June 2022
and other explanatory information (the “ Interim Com parative Fin anci al Inform ation ”). The
directors of the Company are responsible for the preparation and presentation of the Interim
Comparative Financial Information in accordance with the basis of presentation and the basis of
preparation set out in notes 2.1 and 2.2 to the Historical Financial Information, respectively. Our
responsibility is to express a conclusion on the Interim Comparative Financial Information based
on our review. We conducted our review in accordance with Hong Kong Standard on Review
Engagements 2410 ReviewofInterimFinancialInformationPerformedbytheIndependentAuditor
of the Entity issued by the HKICPA. A review consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in accordance with
Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we
would become aware of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion. Based on our review, nothing has come to our attention that causes
us to believe that the Interim Comparative Financial Information, for the purposes of the
accountants’ report, is not prepared, in all material respects, in accordance with the basis of
presentation and the basis of preparation set out in notes 2.1 and 2.2 to the Historical Financial
Information, respectively.
APPENDIX I ACCOUNTANTS’ REPORT
– I-2 –


--- page 483 ---
Report on m atter s under the Rule s Governin g the Li stin g of Securitie s on the Stock Exch ange
and the Com panie s (Win ding Upa nd Miscell aneou s Provi sion s)O r dinance
Adjustment s
In preparing the Historical Financial Information, no adjustments to the Underlying
Financial Statements as defined on page I-4 have been made.
Divi dends
We refer to note 11 to the Historical Financial Information which states that no dividends
have been paid by the Company in respect of the Relevant Periods.
No hi storic alf i nanci al statement s for the Com pany
As at the date of this report, no statutory financial statements have been prepared for the
Company since its date of incorporation.
Ern st & Youn g
CertifiedPublicAccountants
Hong Kong
14 December 2023
APPENDIX I ACCOUNTANTS’ REPORT
– I-3 –


--- page 484 ---
I HISTORICAL FINANCIAL INFORMATION
Pre paration of Hi storic al Fin anci al Inform ation
Set out below is the Historical Financial Information which forms an integral part of this
accountants’ report.
The financial statements of the Group for the Relevant Periods, on which the Historical
Financial Information is based, were audited by Ernst & Young in accordance with Hong Kong
Standards on Auditing issued by the HKICPA (the “ Underlyin g Fin anci alS t atement s”).
The Historical Financial Information is presented in Renminbi (“ RMB”) and all values are
rounded to the nearest thousand (RMB’000) except when otherwise indicated.
APPENDIX I ACCOUNTANTS’ REPORT
– I-4 –


--- page 485 ---
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS
Yeare n ded 31 December Six month s ended 30 June
Notes 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Other income and gains .................. 5 13,821 20,581 3,925 22,722
Fair value (losses)/gains on convertible
redeemable preferred shares ............ 6 (93,656) 23,242 31,247 (399,635)
Other expenses ......................... 5 ( 1 ) (7,518) (4,381) (502)
Fair value losses on financial liabilities
at fair value through profit or loss
(“FVTPL ” )........................... 6 (4,609) – – –
Research and development costs .......... (84,012) (182,651) (76,322) (120,088)
Administrative expenses ................. (48,064) (43,433) (28,357) (52,014)
Finance costs ........................... 7 (4,528) (426) (217) (201)
LOSS BEFORE TAX .................... 6 (221,049) (190,205) (74,105) (549,718)
Income tax expenses ..................... 1 0 (96) (32) (72) (26)
LOSS FOR THE YEAR/PERIOD .......... (221,145) (190,237) (74,177) (549,744)
Attributable to:
Owners of the parent .................. (221,145) (190,237) (74,177) (549,744)
LOSS PER SHARE ATTRIBUTABLE TO
ORDINARY EQUITY HOLDERS OF
THE PARENT
Basic and diluted
For loss for the year/period
(RMBpershare) ..................... 1 2 (5.26) (4.48) (1.75) (12.94)
APPENDIX I ACCOUNTANTS’ REPORT
– I-5 –


--- page 486 ---
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Yeare n ded 31 December Six month s ended 30 June
2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
LOSS FOR THE YEAR/PERIOD .................... (221,145) (190,237) (74,177) (549,744)
OTHER COMPREHENSIVE INCOME/(LOSS)
Other comprehensive income/(loss) that may be
reclassified to profit or loss in subsequent periods:
Exchange differences on translation of the financial
statements of subsidiaries ...................... 4,625 (20,342) (11,442) (8,896)
Other comprehensive loss that will not be reclassified to
profit or loss in subsequent periods:
Exchange differences on translation of the financial
statements of the Company ..................... (890) (13,309) (6,768) (27,703)
OTHER COMPREHENSIVE INCOME/(LOSS)
FOR THE YEAR/PERIOD, NET OF TAX .......... 3,735 (33,651) (18,210) (36,599)
TOTAL COMPREHENSIVE LOSS
FOR THE YEAR/PERIOD ........................ (217,410) (223,888) (92,387) (586,343)
Attributable to:
Owners of the parent ............................ (217,410) (223,888) (92,387) (586,343)
APPENDIX I ACCOUNTANTS’ REPORT
– I-6 –


--- page 487 ---
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Asa t 31 December A sa t3 0J u n e
Notes 2021 2022 2023
RMB’000 RMB’000 RMB’000
NON-CURRENT ASSETS
Property, plant and equipment .................. 1 3 2,379 2,153 2,036
Right-of-use assets ........................... 1 4 1,071 2,653 3,035
Other non-current assets ....................... 1 5 – – 1 9 2
Total non-current assets ....................... 3,450 4,806 5,263
CURRENT ASSETS
Prepayments, other receivables and other assets . . 17 9,892 10,821 20,399
Short-term time deposits ...................... 1 8 – 427,857 –
Cash and bank balances ....................... 1 9 765,290 412,340 732,920
Total current assets ........................... 775,182 851,018 753,319
CURRENT LIABILITIES
Trade payables ............................... 2 0 6,091 21,699 29,752
Other payables and accruals ................... 2 1 15,192 28,747 22,356
Interest-bearing bank borrowings ............... 2 2 7,000 8,150 8,000
Lease liabilities .............................. 1 4 2 5 1 1,111 1,646
Convertible redeemable preferred shares ......... 2 6 – 1,260,013 249,134
Total current liabilities ........................ 28,534 1,319,720 310,888
NET CURRENT ASSETS/(LIABILITIES) ....... 746,648 (468,702) 442,431
TOTAL ASSETS LESS CURRENT
LIABILITIES .............................. 750,098 (463,896) 447,694
NON-CURRENT LIABILITIES
Lease liabilities .............................. 1 4 9 0 2 1,513 1,549
Deferred income ............................. 2 5 15,555 5,119 2,052
Convertible redeemable preferred shares ......... 2 6 1,005,903 – 1,472,519
Total non-current liabilities .................... 1,022,360 6,632 1,476,120
Net liabilities ................................ (272,262) (470,528) (1,028,426)
EQUITY
Equity attributable to owners of the parent .......
Share capital ................................. 2 8 3 3 3 6 3 9
Treasury shares .............................. ( 3 ) ( 6 ) ( 9 )
Deficits ..................................... 2 9 (272,292) (470,558) (1,028,456)
Total deficit ................................. (272,262) (470,528) (1,028,426)
APPENDIX I ACCOUNTANTS’ REPORT
– I-7 –


--- page 488 ---
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Yeare n ded 31 December 2021
Attribut ab l et oo w n e rs of the parent
Share
capital**
Treasury
shares
Premium on
ordinary
shares*
Premium on
Serie s A
convertible
preferre d
shares*
Premium on
Serie s B1
and B2
convertible
preferre d
shares*
Share o ption
reserve*
Exch ange
fluctu ation
reserve*
Accumul ated
losses*T o t al equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2021 ...... 3 2 ( 3 ) 30,612 96,401 156,319 107 (2) (345,623) (62,157)
Loss for the year ....... ––––––– ( 2 21,145) (221,145)
Other comprehensive
income for the year .... –––––– 3,735 – 3,735
Total comprehensive
loss for the year ...... –––––– 3,735 (221,145) (217,410)
Equity-settled share option
arrangements ........ ––––– 7 , 3 0 4–– 7 , 3 0 4
Issue of shares (note28) . .1–––––––1
At 31 December 2021 .... 3 3 ( 3 ) 30,612 96,401 156,319 7,411 3,733 (566,768) (272,262)
APPENDIX I ACCOUNTANTS’ REPORT
– I-8 –


--- page 489 ---
Yeare n ded 31 December 2022
Attribut ab l et oo w n e rs of the parent
Share
capital**
Treasury
shares
Premium on
ordinary
shares*
Premium on
Serie s A
convertible
preferre d
shares*
Premium on
Serie s B1
and B2
convertible
preferre d
shares*
Share o ption
reserve*
Exch ange
fluctu ation
reserve*
Accumul ated
losses*
Total
equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2022 ...... 3 3 ( 3 ) 30,612 96,401 156,319 7,411 3,733 (566,768) (272,262)
Loss for the year ....... ––––––– ( 1 90,237) (190,237)
Other comprehensive loss
for the year ......... –––––– (33,651) – (33,651)
Total comprehensive loss
for the year ......... –––––– (33,651) (190,237) (223,888)
Consolidation of special
purpose vehicles
for the share-based
payment plan (note28) . .3 ( 3 ) –––––––
Equity-settled share option
arrangements ........ ––––– 25,622 – – 25,622
At 31 December 2022 .... 3 6 ( 6 ) 30,612 96,401 156,319 33,033 (29,918) (757,005) (470,528)
APPENDIX I ACCOUNTANTS’ REPORT
– I-9 –


--- page 490 ---
Six month s ended 30 June 2022
Attribut ab l et oo w n e rs of the parent
Share
capital**
Treasury
shares
Premium on
ordinary
shares*
Premium on
Serie s A
convertible
preferre d
shares*
Premium on
Serie s B1
and B2
convertible
preferre d
shares*
Share o ption
reserve*
Exch ange
fluctu ation
reserve*
Accumul ated
losses*
Total
equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2022 ...... 3 3 ( 3 ) 30,612 96,401 156,319 7,411 3,733 (566,768) (272,262)
Loss for the period
(unaudited) ......... ––––––– ( 7 4 ,177) (74,177)
Other comprehensive loss
for the period
(unaudited) ......... –––––– (18,210) – (18,210)
Total comprehensive loss
for the period
(unaudited) ......... –––––– (18,210) (74,177) (92,387)
Consolidation of special
purpose vehicles for the
share-based payment plan
(note28) (unaudited) . . . 3 (3) –––––––
Equity-settled share option
arrangements
(unaudited) ......... ––––– 10,266 – – 10,266
At 30 June 2022
(unaudited) ......... 3 6 ( 6 ) 30,612 96,401 156,319 17,677 (14,477) (640,945) (354,383)
APPENDIX I ACCOUNTANTS’ REPORT
– I-10 –


--- page 491 ---
Six month s ended 30 June 2023
Attribut ab l et oo w n e rs of the parent
Share
capital**
Treasury
shares
Premium on
ordinary
shares*
Premium on
Serie s A
convertible
preferre d
shares*
Premium on
Serie s B1
and B2
convertible
preferre d
shares*
Share o ption
reserve*
Exch ange
fluctu ation
reserve*
Accumul ated
losses*T o t al equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2023 ...... 3 6 ( 6 ) 30,612 96,401 156,319 33,033 (29,918) (757,005) (470,528)
Loss for the period ...... ––––––– ( 5 49,744) (549,744)
Other comprehensive loss
for the period ........ –––––– (36,599) – (36,599)
Total comprehensive loss
for the period ........ –––––– (36,599) (549,744) (586,343)
Consolidation of special
purpose vehicles for the
share-based payment plan
(note28) .......... 3 ( 3 ) –––––––
Equity-settled share option
arrangements ........ ––––– 28,445 – – 28,445
At 30 June 2023 ....... 3 9 ( 9 ) 30,612 96,401 156,319 61,478 (66,517) (1,306,749) (1,028,426)
* These reserve accounts comprise the consolidated deficits of RMB272,292,000, RMB470,558,000 and
RMB1,028,456,000 in the consolidated statements of financial position as at 31 December 2021 and 2022 and 30
June 2023, respectively.
** Share capital includes share capital for both ordinary shares and preferred shares.
APPENDIX I ACCOUNTANTS’ REPORT
– I-11 –


--- page 492 ---
CONSOLIDATED STATEMENTS OF CASH FLOWS
Yeare n ded 31 December Six month s ended 30 June
Notes 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax ............................... (221,049) (190,205) (74,105) (549,718)
Adjustments for:
Finance costs ............................... 7 4,528 426 217 201
Depreciation of property, plant and equipment . . 13 276 409 211 189
Depreciation of right-of-use assets ............ 1 4 1,314 865 329 628
Equity-settled share option arrangements ...... 3 0 7,304 25,622 10,266 28,445
Transaction costs for preferred shares ......... 6 16,205 501 – –
Bank interest income ........................ 5 (964) (3,545) (2,290) (696)
Investment income from short-term time
deposits ................................. 5 – (7,822) – (12,931)
Fair value losses/(gains) on convertible
redeemable preferred shares ................ 2 6 93,656 (23,242) (31,247) 399,635
Fair value losses on financial liabilities at
FVTPL .................................. 2 4 4,609 – – –
Amortisation of government grants income ..... 2 5 (6,775) (6,544) (102) (2,741)
Covid-19-related rent concessions from lessors . 14 – (112) (75) –
Loss on disposal of items of property, plant and
equipment ............................... 5 1–––
Other investment income from financial assets
at FVTPL ................................ 5 (2,366) (1,012) (521) (120)
Foreign exchange differences, net ............. 5 (603) 7,518 4,381 502
Operating loss before changes in working capital . (103,864) (197,141) (92,936) (136,606)
(Increase)/decrease in prepayments, other
receivables and other assets .................. (3,637) (477) 747 (8,420)
Increase in other non-current assets .............. – – – (192)
Increase/(decrease) in other payables and accruals 14,360 13,547 9,945 (6,312)
(Decrease)/increase in trade payables ............ (811) 15,608 7,839 8,053
Increase/(decrease) in deferred income .......... 2 5 3,415 (3,892) – (326)
Cash used in operations ........................ (90,537) (172,355) (74,405) (143,803)
Income tax paid .............................. ( 9 ) (24) (14) (105)
Net cash flows used in operating activities ....... (90,546) (172,379) (74,419) (143,908)
APPENDIX I ACCOUNTANTS’ REPORT
– I-12 –


--- page 493 ---
Yeare n ded 31 December Six month s ended 30 June
Notes 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of items of
property, plant and equipment ................ 3–––
Purchases of items of property, plant and
equipment ................................. 1 3 (1,745) (183) (62) (72)
Purchase of short-term time deposits ............ – (621,429) – (38,200)
Purchase of bank deposits over three months ...... – – – (166,557)
Purchase of financial assets at FVTPL ............ (1,545,686) (717,841) (330,481) (24,200)
Bank interest received ......................... 9 6 4 3,545 2,290 696
Receipts of investment income
from short-term time deposits ................ – 3,881 – 12,931
Proceeds from disposal of
short-term time deposits ...................... – 197,513 – 462,116
Proceeds from disposal of financial assets at
FVTPL .................................... 1,545,686 717,841 330,481 24,200
Receipts of investment income from
financial assets at FVTPL .................... 5 2,366 1,012 521 120
Net cash flows from/(used in) investing activities . 1,588 (415,661) 2,749 271,034
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of other borrowings ................ 2 3 (184,515) – – –
New bank loans ............................... 10,000 15,000 10,000 5,000
Repayment of bank loans ...................... (3,000) (13,850) (8,500) (5,150)
Principal portion of lease payments ............. 1 4 (1,270) (987) (119) (502)
Bank loan interest paid ........................ 7 (309) (303) (164) (137)
Listing expenses paid ......................... (1,899) (451) (372) (1,157)
Proceeds from issuance of Series B+ convertible
redeemable preferred shares .................. 179,873 – – –
Proceeds from issuance of Series C convertible
redeemable preferred shares .................. 2 6 511,307 – – –
Proceeds from Series C+ preferred shares ........ – 47,126 – –
Financing fees from Series C preferred shares .... (16,205) – – –
Financing fees from Series C+ preferred shares . . . – (501) – –
Net cash flows from/(used in)
financing activities .......................... 493,982 46,034 845 (1,946)
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 494 ---
Yeare n ded 31 December Six month s ended 30 June
Notes 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
NET INCREASE/(DECREASE) IN CASH
AND CASH EQUIV ALENTS ................. 405,024 (542,006) (70,825) 125,180
Cash and cash equivalents at beginning of
year/period ................................. 367,252 765,290 765,290 273,047
Effect of foreign exchange rate changes, net ...... (6,986) 49,763 29,290 19,671
CASH AND CASH EQUIV ALENTS AT END OF
YEAR/PERIOD ............................ 1 9 765,290 273,047 723,755 417,898
ANALYSIS OF BALANCES OF CASH AND
CASH EQUIV ALENTS
Cash and bank balances ........................ 1 9 765,290 412,340 723,755 732,920
Bank deposits over three months ................ 1 9 – – – (170,498)
Restricted cash ................................ 1 9 – (139,293) – (144,524)
Cash and cash equivalents as stated in
the consolidated statements of cash flows ....... 765,290 273,047 723,755 417,898
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 495 ---
STATEMENTS OF FINANCIAL POSITION OF THE COMPANY
Asa t
31 December
Asa t
30 June
Notes 2021 2022 2023
RMB’000 RMB’000 RMB’000
NON-CURRENT ASSETS
Interests in subsidiaries ....................... 1 6 242,971 420,613 604,433
Total non-current assets ....................... 242,971 420,613 604,433
CURRENT ASSETS
Prepayments and other receivables ............. 1 7 297,179 197,778 269,275
Short-term time deposits ...................... 1 8 – 427,857 –
Cash and bank balances ....................... 1 9 578,146 360,284 562,089
Total current assets .......................... 875,325 985,919 831,364
CURRENT LIABILITIES
Other payables and accruals ................... 2 1 8,785 24,824 10,771
Convertible redeemable preferred shares ........ 2 6 – 1,260,013 249,134
Total current liabilities ....................... 8,785 1,284,837 259,905
NET CURRENT ASSETS/(LIABILITIES) ...... 866,540 (298,918) 571,459
TOTAL ASSETS LESS
CURRENT LIABILITIES ..................... 1,109,511 121,695 1,175,892
NON-CURRENT LIABILITIES
Convertible redeemable preferred shares ........ 2 6 1,005,903 – 1,472,519
Total non-current liabilities ................... 1,005,903 – 1,472,519
Net assets/(liabilities) ........................ 103,608 121,695 (296,627)
EQUITY
Share capital ................................ 2 8 3 3 3 6 3 9
Reserves/(deficits) ............................ 2 9 103,575 121,659 (296,666)
Total equity/(deficits) ........................ 103,608 121,695 (296,627)
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 496 ---
II NOTES TO THE HISTORICAL FINANCIAL INFORMATION
1. CORPORATE INFORMATION
HighTide Therapeutics, Inc. was established in the Cayman Islands on 28 February 2018 by Great Mantra Group
Limited and its registered address is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111,
Cayman Islands.
The Company is an investment holding company. The Company and its subsidiaries now comprising the Group
underwent the reorganisation as set out in the paragraph headed “Reorganisation” in the section headed “History,
Reorganisation and Corporate Structure” in the Prospectus (the “ Reor ganisation ”). During the Relevant Periods,
the Company and its subsidiaries were involved in the research and development of pharmaceutical products.
As at the date of this report, the Company had direct and indirect interests in its subsidiaries, all of which are
private limited liability companies (or, if incorporated outside Hong Kong, have substantially similar
characteristics to a private company incorporated in Hong Kong), the particulars of which are set out below:
Name
Place andd a te of
incor poration/
registration and
place of o peration s
Issued ordinary/
registere ds hare
capital
Percent age of equity
attribut able to
the Com pany Princi pal activitie s
Direct In direct
HighTide Therapeutics Ltd (c) .... B ritish Virgin Islands
16 March 2018
1,000 shares of par
value USD1 each
100% – Investment holding
HighTide Therapeutics USA, LLC
(“HighTi de USA ” )( c ) ........
United States of
America (“ USA”)
24 January 2018
USD0 100% – Assist in research and
development
HighTide Therapeutics
(Hong Kong) Limited
(“HK Hi g
hTi de” )( b ).........
Hong Kong
9 April 2018
1 share of par value
HKD1
– 100% Investment holding
Shenzhen HighTide
Biopharmaceutical Ltd.
(“Shenzhen Hi ghTi de”) (a)* . . .
Mainland China
15 November 2011
RMB310,800,000 – 100% Research and
development
Shanghai HighTide
Biopharmaceutical Ltd. (a)* ....
Mainland China
14 March 2014
RMB5,000,000 – 100% Research and
development
JSK Consumer Healthcare
Ltd (a)* ....................
Mainland China
21 July 2015
RMB5,000,000 – 100% Research and
development
HighTide Biopharma Pty.
L t d .( c )....................
Australia
15 July 2015
10,000 shares of par
value AUD0.1 each
– 100% Research and
development
Shanghai Fusion Therapeutics
Ltd. (a)* ..................
Mainland China
20 May 2021
RMB1,000,000 – 100% Research and
development
Nanchang Fusion Therapeutics
Ltd. (a)* ..................
Mainland China
29 November 2021
RMB56,000,000 – 100% Research and
development
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 497 ---
Notes:
(a) The statutory financial statements of these entities for the years ended 31 December 2021 and 2022
prepared in accordance with PRC Generally Accepted Accounting Principles (“ PRC GAAP ”) were audited
by Shenzhen Lingnan Certified Public Accountants (הcertified public accountants
registered in the People’s Republic of China (the “ PRC”).
(b) The statutory financial statements of this entity for the years ended 31 December 2021 and 2022 prepared
in accordance with Hong Kong Financial Reporting Standards (“ HKFRS s”) issued by the Hong Kong
Institute of Certified Public Accountants (“ HKICPA ”) were audited by RICHFUL CPA LIMITED ( ๿ᔮึ
ʮ̡ ), certified public accountants registered in Hong Kong.
(c) No financial statements have been prepared for these entities for the years ended 31 December 2021 and
2022 and the six months ended 30 June 2023, as the entities were not subject to such requirements under
the relevant rules and regulations in their jurisdictions of incorporation.
* The English names of these companies represent the best effort made by the directors of the Company (the
“Director s”) to translate the Chinese names as these companies have not been registered with any official
English names.
2.1 BASIS OF PRESENTATION
Pursuant to the Reorganisation, as more fully explained in the paragraph headed “Reorganisation” in the section
headed “History, Reorganisation and Corporate Structure” in the Prospectus, the Company became the holding
company of the companies now comprising the Group after the Reorganisation.
As the Reorganisation mainly involved inserting new holding companies at the top of an existing company,
Shenzhen HighTide, and has not resulted in any change of economic substance, for the purpose of this report, the
Historical Financial Information for the Relevant Periods has been presented as a continuation of Shenzhen
HighTide and its subsidiaries using the pooling of interest method as if the Company had been the holding company
of Shenzhen HighTide and its subsidiaries at the beginning of the Relevant Periods.
The consolidated statements of profit or loss, statements of comprehensive income, statements of changes in equity
and statements of cash flows of the Group for the Relevant Periods and the six months ended 30 June 2022 include
the results and cash flows of all companies now comprising the Group as if the current group structure had been in
existence throughout the Relevant Periods and the six months ended 30 June 2022. The consolidated statements of
financial position of the Group as at 31 December 2021 and 2022 and 30 June 2023 have been prepared to present
the assets and liabilities of the subsidiaries or businesses using the existing book values. No adjustments are made
to reflect fair values, or recognise any new assets or liabilities as a result of the Reorganisation.
All intra-group transactions and balances have been eliminated on consolidation.
The Historical Financial Information has been prepared on the assumption that the Group will continue as a going
concern notwithstanding that the Group has recorded net liabilities of RMB1,028,426,000 as at 30 June 2023. The
directors of the Company are of the opinion that the Group will be able to meet its financial liabilities and
obligations as and when they fall due to sustain its operations for the next 12 months from at 30 June 2023 as the
Group has entered into a supplemental agreement with the holders of Series B+, Series C and Series C+ convertible
redeemable preferred shares in 2023 and such holders agree not to exercise their QIPO redemption rights (as
defined and detailed in note 26) before 31 December 2024, meanwhile such holders will not require the Company
to redeem such preferred shares within the next 12 months from 30 June 2023. The directors of the Company are
also of the opinion that the Group will have sufficient working capital to meet the expenditure for its research and
developments activities for the next 12 months from 30 June 2023.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 498 ---
2.2 BASIS OF PREPARATION
The Historical Financial Information has been prepared in accordance with International Financial Reporting
Standards (“ IFRS s”), which comprise all standards and interpretations approved by the International Accounting
Standards Board (“ IASB ”). All IFRSs effective for the accounting period commencing from 1 January 2023,
together with the relevant transitional provisions, have been early adopted by the Group in the preparation of the
Historical Financial Information throughout the Relevant Periods and in the period covered by the Interim
Comparative Financial Information.
The Historical Financial Information has been prepared under the historical cost convention except for certain
financial instruments which have been measured at fair value at the end of each of the Relevant Periods.
2.3 ISSUED BUT NOT YET EFFECTIVE IFRS s
The Group has not applied the following revised IFRSs, that have been issued but are not yet effective, in the
Historical Financial Information.
Amendments to IFRS 10 and
IAS 28
Sale or Contribution of Assets between an Investor and its Associate or
JointVenture
2
Amendments to IFRS 16 LeaseLiabilityinaSaleandLeaseback 1
Amendments to IAS 1 ClassificationofLiabilitiesasCurrentorNon-current 1
Amendments to IAS 1 Non-currentLiabilitieswithCovenants 1
Amendments to IAS 7 and IFRS 7 SupplierFinanceArrangements 1
1 Effective for annual periods beginning on or after 1 January 2024
2 No mandatory effective date yet determined but available for adoption
The Group is in the process of making an assessment of the impact of these revised IFRSs upon initial application.
So far, the Group considers that these standards will not have any significant impact on the Group’s financial
statements.
2.4 MATERIAL ACCOUNTING POLICY INFORMATION
Sub sidiarie s
A subsidiary is an entity (including a structured entity), directly or indirectly, controlled by the Company. Control
is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and
has the ability to affect those returns through its power over the investee (i.e., existing rights that give the Group the
current ability to direct the relevant activities of the investee).
The financial statements of the subsidiaries are prepared for the same Relevant Periods as the Company, using
consistent accounting policies. The results of subsidiaries are consolidated from the date on which the Group
obtains control, and continue to be consolidated until the date that such control ceases.
Profit or loss and each component of other comprehensive income are attributed to the owners of the parent of the
Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit
balance. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions
between members of the Group are eliminated in full on consolidation.
The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control described above. The results of subsidiaries are included in
the Company’s profit or loss to the extent of dividends received and receivable. The Company’s investments in
subsidiaries are stated at cost less any impairment losses.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 499 ---
Fair v alue me asurement
The Group measures certain financial instruments at fair value at the end of Relevant Periods. Fair value is the price
that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. The fair value measurement is based on the presumption that the transaction
to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the
absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most
advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using the
assumptions that market participants would use when pricing the asset or liability, assuming that market
participants act in their economic best interest.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the Historical Financial Information are
categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant
to the fair value measurement as a whole:
Level 1 – based on quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 – based on valuation techniques for which the lowest level input that is significant to the fair value
measurement is observable, either directly or indirectly
Level 3 – based on valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable
For assets and liabilities that are recognised in the Historical Financial Information on a recurring basis, the Group
determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on
the lowest level input that is significant to the fair value measurement as a whole) at the end of each of the Relevant
Periods.
Impairment of non-fin anci al assets
Where an indication of impairment exists, or when annual impairment testing for an asset is required (other than
financial assets), the asset’s recoverable amount is estimated. An asset’s recoverable amount is the higher of the
asset’s or cash-generating unit’s value in use and its fair value less costs of disposal, and is determined for an
individual asset, unless the asset does not generate cash inflows that are largely independent of those from other
assets or groups of assets, in which case the recoverable amount is determined for the cash-generating unit to which
the asset belongs. In testing a cash-generating unit for impairment, a portion of the carrying amount of a corporate
asset (e.g., a headquarters building) is allocated to an individual cash-generating unit if it can be allocated on a
reasonable and consistent basis or, otherwise, to the smallest group of cash-generating units.
An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. In
assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset. An
impairment loss is charged to the consolidated statements of profit or loss in the period in which it arises in those
expense categories consistent with the function of the impaired asset.
An assessment is made at the end of each of the Relevant Periods as to whether there is an indication that previously
recognised impairment losses may no longer exist or may have decreased. If such an indication exists, the
recoverable amount is estimated. A previously recognised impairment loss of an asset other than goodwill is
reversed only if there has been a change in the estimates used to determine the recoverable amount of that asset, but
not to an amount higher than the carrying amount that would have been determined (net of any
depreciation/amortisation) had no impairment loss been recognised for the asset in prior years. A reversal of such
an impairment loss is credited to the consolidated statements of profit or loss in the period in which it arises.
APPENDIX I ACCOUNTANTS’ REPORT
– I-19 –


--- page 500 ---
Rel atedp a rtie s
A party is considered to be related to the Group if:
(a) the party is a person or a close member of that person’s family and that person
(i) has control or joint control over the Group;
(ii) has significant influence over the Group; or
(iii) is a member of the key management personnel of the Group or of a parent of the Group;
or
(b) the party is an entity where any of the following conditions applies:
(i) the entity and the Group are members of the same group;
(ii) one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow
subsidiary of the other entity);
(iii) the entity and the Group are joint ventures of the same third party;
(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity;
(v) the entity is a post-employment benefit plan for the benefit of employees of either the Group or an
entity related to the Group;
(vi) the entity is controlled or jointly controlled by a person identified in (a);
(vii) a person identified in (a)(i) has significant influence over the entity or is a member of the key
management personnel of the entity (or of a parent of the entity); and
(viii) the entity, or any member of a group of which it is a part, provides key management personnel
services to the Group or to the parent of the Group.
Pro perty, plant and equi pment andd epreci ation
Property, plant and equipment other than construction in progress are stated at cost less accumulated depreciation
and any impairment losses. The cost of an item of property, plant and equipment comprises its purchase price and
any directly attributable costs of bringing the asset to its working condition and location for its intended use.
Expenditure incurred after items of property, plant and equipment have been put into operation, such as repairs and
maintenance, is normally charged to profit or loss in the period in which it is incurred. In situations where the
recognition criteria are satisfied, the expenditure for a major inspection is capitalised in the carrying amount of the
asset as a replacement. Where significant parts of property, plant and equipment are required to be replaced at
intervals, the Group recognises such parts as individual assets with specific useful lives and depreciates them
accordingly.
Depreciation is calculated on the straight-line basis to write off the cost of each item of property, plant and
equipment to its residual value over its estimated useful life. The principal annual rates used for this purpose are as
follows:
Machinery and equipment 9.5% to 19%
Furniture, fittings and equipment 9.5% to 19%
Leasehold improvements The shorter of remaining lease terms and
estimated useful lives
Where parts of an item of property, plant and equipment have different useful lives, the cost of that item is allocated
on a reasonable basis among the parts and each part is depreciated separately. Residual values, useful lives and the
depreciation method are reviewed, and adjusted if appropriate, at least at the end of each of the Relevant Periods.
APPENDIX I ACCOUNTANTS’ REPORT
– I-20 –


--- page 501 ---
An item of property, plant and equipment including any significant part initially recognised is derecognised upon
disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or
retirement recognised in the consolidated statements of profit or loss in the year the asset is derecognised is the
difference between the net sales proceeds and the carrying amount of the relevant asset.
Construction in progress represents leasehold improvement under construction, which is stated at cost less any
impairment losses, and is not depreciated. Cost comprises the direct costs of construction and capitalised
borrowing costs on related borrowed funds during the period of construction. Construction in progress is
reclassified to the appropriate category of property, plant and equipment when completed and ready for use.
Research andd evelo pment co sts
All research costs are charged to profit or loss as incurred.
Expenditure incurred on projects to develop new products is capitalised and deferred only when the Group can
demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its
intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits,
the availability of resources to complete the project and the ability to measure reliably the expenditure during the
development. Product development expenditure which does not meet these criteria is expensed when incurred.
Leases
The Group assesses at contract inception whether a contract is, or contains, a lease. A contract is, or contains, a
lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration.
The Group as a lessee
The Group applies a single recognition and measurement approach for all leases, except for short-term leases and
leases of low-value assets. The Group recognises lease liabilities to make lease payments and right-of-use assets
representing the right to use the underlying assets.
(a) Right-of-useassets
The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of
right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and
lease payments made at or before the commencement date less any lease incentives received. Right-of-use
assets are depreciated on a straight-line basis over the shorter of the lease terms and the estimated useful
lives of the assets as follows:
Property, office premises and plant 2 to 5 years
Equipment 3 years
If ownership of the leased asset transfers to the Group by the end of the lease term or the cost reflects the
exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.
(b) Leaseliabilities
Lease liabilities are recognised at the commencement date of the lease at the present value of lease
payments to be made over the lease term. The lease payments include fixed payments (including
in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on
an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments
also include the exercise price of a purchase option reasonably certain to be exercised by the Group and
payments of penalties for terminating the lease, if the lease term reflects the Group exercising the option to
terminate the lease. The variable lease payments that do not depend on an index or a rate are recognised as
expenses in the period in which the event or condition that triggers the payment occurs.
APPENDIX I ACCOUNTANTS’ REPORT
– I-21 –


--- page 502 ---
In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the
lease commencement date because the interest rate implicit in the lease is not readily determinable. After
the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and
reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if
there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future
payments resulting from a change in an index or rate used to determine such lease payments) or a change in
the assessment of an option to purchase the underlying asset.
(c) Short-termleasesandleasesoflow-valueassets
The Group applies the short-term lease recognition exemption to its short-term leases of machinery and
equipment (that is those leases that have a lease term of 12 months or less from the commencement date and
do not contain a purchase option). It also applies the recognition exemption for leases of low-value assets
to leases of office equipment that are considered to be of low value.
Lease payments on short-term leases and leases of low-value assets are recognised as an expense on a
straight-line basis over the lease term.
Inve stment sa nd other fin anci al assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through
other comprehensive income, and fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow
characteristics and the Group’s business model for managing them. With the exception of trade receivables that do
not contain a significant financing component or for which the Group has applied the practical expedient of not
adjusting the effect of a significant financing component, the Group initially measures a financial asset at its fair
value plus in the case of a financial asset not at fair value through profit or loss, transaction costs.
In order for a financial asset to be classified and measured at amortised cost or fair value through other
comprehensive income, it needs to give rise to cash flows that are solely payments of principal and interest
(“SPPI ”) on the principal amount outstanding. Financial assets with cash flows that are not SPPI are classified and
measured at fair value through profit or loss, irrespective of the business model.
The Group’s business model for managing financial assets refers to how it manages its financial assets in order to
generate cash flows. The business model determines whether cash flows will result from collecting contractual cash
flows, selling the financial assets, or both. Financial assets classified and measured at amortised cost are held
within a business model with the objective to hold financial assets in order to collect contractual cash flows, while
financial assets classified and measured at fair value through other comprehensive income are held within a
business model with the objective of both holding to collect contractual cash flows and selling. Financial assets
which are not held within the aforementioned business models are classified and measured at fair value through
profit or loss.
All regular way purchases and sales of financial assets are recognised on the trade date, that is, the date that the
Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial
assets that require delivery of assets within the period generally established by regulation or convention in the
marketplace.
Subsequent measurement
The subsequent measurement of financial assets depends on their classification as follows:
Financialassetsmeasuredatamortisedcost(debtinstruments)
Financial assets measured at amortised cost are subsequently measured using the effective interest method and are
subject to impairment. Gains and losses are recognised the consolidated statements of profit or loss when the asset
is derecognised, modified or impaired.
APPENDIX I ACCOUNTANTS’ REPORT
– I-22 –


--- page 503 ---
Financialassetsatfairvaluethroughprofitorloss
Financial assets at fair value through profit or loss are carried in the statements of financial position at fair value
with net changes in fair value recognised in the consolidated statements of profit or loss.
Dividends on equity investments classified as financial assets at fair value through profit or loss are also recognised
as other income in the consolidated statements of profit or loss when the right of payment has been established, it
is probable that the economic benefits associated with the dividend will flow to the Group and the amount of the
dividend can be measured reliably
Dereco gnition of fin anci al assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is
primarily derecognised (i.e., removed from the Group’s consolidated statements of financial position) when:
• the rights to receive cash flows from the asset have expired; or
• the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay
the received cash flows in full without material delay to a third party under a “pass-through” arrangement;
and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group
has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred
control of the asset.
When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through
arrangement, it evaluates if, and to what extent, it has retained the risk and rewards of ownership of the asset. When
it has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of
the asset, the Group continues to recognise the transferred asset to the extent of the Group’s continuing
involvement. In that case, the Group also recognises an associated liability. The transferred asset and the associated
liability are measured on a basis that reflects the rights and obligations that the Group has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the
original carrying amount of the asset and the maximum amount of consideration that the Group could be required
to repay.
Impairment of fin anci al assets
The Group recognises an allowance for expected credit losses (“ ECL s”) for all debt instruments not held at fair
value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance
with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the
original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or
other credit enhancements that are integral to the contractual terms.
General approach
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit
risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible
within the next 12 months (a 12-month ECL). For those credit exposures for which there has been a significant
increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the
remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
At each reporting date, the Group assesses whether the credit risk on a financial instrument has increased
significantly since initial recognition. When making the assessment, the Group compares the risk of a default
occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial
instrument as at the date of initial recognition and considers reasonable and supportable information that is
available without undue cost or effort, including historical and forward-looking information. The Group considers
that there has been a significant increase in credit risk when contractual payments are more than 30 days past due.
The Group considers a financial asset in default when contractual payments are 90 days past due. However, in
certain cases, the Group may also consider a financial asset to be in default when internal or external information
indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account
any credit enhancements held by the Group.
APPENDIX I ACCOUNTANTS’ REPORT
– I-23 –


--- page 504 ---
A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.
Financial assets measured at amortised cost are subject to impairment under the general approach and they are
classified within the following stages for measurement of ECLs except for trade receivables which apply the
simplified approach as detailed below.
Stage 1 – F inancial instruments for which credit risk has not increased significantly since initial
recognition and for which the loss allowance is measured at an amount equal to 12-month ECLs
Stage 2 – Financial instruments for which credit risk has increased significantly since initial recognition
but that are not credit-impaired financial assets and for which the loss allowance is measured at
an amount equal to lifetime ECLs
Stage 3 – Financial assets that are credit-impaired at the reporting date (but that are not purchased or
originated credit-impaired) and for which the loss allowance is measured at an amount equal to
lifetime ECLs
Simplified approach
For trade receivables that do not contain a significant financing component or when the Group applies the practical
expedient of not adjusting the effect of a significant financing component, the Group applies the simplified
approach in calculating ECLs. Under the simplified approach, the Group does not track changes in credit risk, but
instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a
provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific
to the debtors and the economic environment.
Fin anci all i abilitie s
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss,
loans and borrowings, payables, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables,
net of directly attributable transaction costs.
The Group’s financial liabilities include trade payables, financial liabilities at fair value through profit or loss,
financial liabilities included in other payables and accruals, interest-bearing bank and other borrowings and
convertible redeemable preferred shares.
Subsequent measurement
The subsequent measurement of financial liabilities depends on their classification as follows:
Financialliabilitiesatamortisedcost
After initial recognition, interest-bearing loans and borrowings, trade payables, financial liabilities included in
other payable and accruals and other borrowings are subsequently measured at amortised cost, using the effective
interest rate method unless the effect of discounting would be immaterial, in which case they are stated at cost.
Gains and losses are recognised the consolidated statements of profit or loss when the liabilities are derecognised
as well as through the effective interest rate amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that
are an integral part of the effective interest rate. The effective interest rate amortisation is included in finance costs
in the consolidated statements of profit or loss.
APPENDIX I ACCOUNTANTS’ REPORT
– I-24 –


--- page 505 ---
Otherfinancialinstruments
If the conversion option of other financial instruments exhibits characteristics of an embedded derivative, it is
separated from its liability component. On initial recognition, the derivative component of other financial
instruments is measured at fair value and presented as part of financial instruments at FVTPL. Any excess of
proceeds over the amount initially recognised as the derivative component is recognised as the liability component.
Transaction costs are apportioned between the liability and derivative components of other financial instruments
based on the allocation of proceeds to the liability and derivative components when the instruments are initially
recognised. The portion of the transaction costs relating to the liability component is recognised initially as part of
the liability. The portion relating to the derivative component is recognised immediately in the consolidated
statements of profit or loss.
Financialliabilitiesatfairvaluethroughprofitorloss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial
liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities held for trading include derivative financial instruments entered into by the Group that are not
designated as hedging instruments in hedge relationships as defined by IFRS 9. Separated embedded derivatives are
also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on
liabilities held for trading are recognised in the consolidated statements of profit or loss.
Financial liabilities such as the convertible redeemable preferred shares designated upon initial recognition as at
fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in IFRS 9 are
satisfied. Gains or losses on liabilities designated at fair value through profit or loss are recognised in the
consolidated statements of profit or loss, except for the gains or losses arising from the Group’s own credit risk
which are presented in other comprehensive income with no subsequent reclassification to the consolidated
statements of profit or loss.
The convertible redeemable preferred shares with embedded derivatives whose economic risks and characteristics
are not closely related to those of the host contract (the liability component) as a whole are designated as financial
liabilities at fair value through profit or loss on initial recognition. Any directly attributable transaction costs are
recognised as finance costs the consolidated statements of profit or loss. Subsequent to initial recognition, the
convertible redeemable preferred shares are carried at fair value with changes in fair value recognised in the
consolidated statements of profit or loss.
Deriv ative fin anci ali n strument s
Initial recognition and subsequent measurement
The Group’s derivative financial instruments are initially recognised at fair value on the date on which a derivative
contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as assets when the
fair value is positive and as liabilities when the fair value is negative. Any gains or losses arising from changes in
fair value of derivatives are taken directly to the consolidated statements of profit or loss.
Dereco gnition of fin anci all i abilitie s
A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or
the terms of an existing liability are substantially modified, such an exchange or modification is treated as a
derecognition of the original liability and a recognition of a new liability, and the difference between the respective
carrying amounts is recognised in the consolidated statements of profit or loss.
Treasury shares
Own equity instruments which are reacquired and held by the Company or the Group (treasury shares) are
recognised directly in equity at cost. No gain or loss is recognised in the consolidated statements of profit or loss on
the purchase, sale, issue or cancellation of the Group’s own equity instruments.
APPENDIX I ACCOUNTANTS’ REPORT
– I-25 –


--- page 506 ---
Cash and cash equiv alent s
For the purpose of the consolidated statements of cash flows, cash and cash equivalents comprise cash on hand and
demand deposits, and short term highly liquid investments that are readily convertible into known amounts of cash,
are subject to an insignificant risk of changes in value, and have a short maturity of generally within three months
when acquired, less bank overdrafts which are repayable on demand and form an integral part of the Group’s cash
management.
For the purpose of the consolidated statements of financial position, cash and cash equivalents comprise cash on
hand and at banks, including term deposits, and assets similar in nature to cash, which are not restricted as to use.
Income t ax
Income tax comprises current and deferred tax. Income tax relating to items recognised outside profit or loss is
recognised outside profit or loss, either in other comprehensive income or directly in equity.
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation
authorities, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of each of
the Relevant Periods, taking into consideration interpretations and practices prevailing in the countries in which the
Group operates.
Deferred tax is provided, using the liability method, on all temporary differences at the end of each of the Relevant
Periods between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
• when the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; and
• in respect of taxable temporary differences associated with investments in subsidiaries, associates and joint
ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable
that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, and the carryforward of unused tax
credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable
profit will be available against which the deductible temporary differences, and the carryforward of unused tax
credits and unused tax losses can be utilised, except:
• when the deferred tax asset relating to the deductible temporary differences arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable profit or loss; and
• in respect of deductible temporary differences associated with investments in subsidiaries, associates and
joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary
differences will reverse in the foreseeable future and taxable profit will be available against which the
temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at the end of each of the Relevant Periods and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred
tax asset to be utilised. Unrecognised deferred tax assets are reassessed at the end of each of the Relevant Periods
and are recognised to the extent that it has become probable that sufficient taxable profit will be available to allow
all or part of the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the
asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively
enacted by the end of each of the Relevant Periods.
APPENDIX I ACCOUNTANTS’ REPORT
– I-26 –


--- page 507 ---
Deferred tax assets and deferred tax liabilities are offset if and only if the Group has a legally enforceable right to
set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to
income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities
which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the
liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are
expected to be settled or recovered.
Government grants
Government grants are recognised at their fair value where there is reasonable assurance that the grant will be
received and all attaching conditions will be complied with. When the grant relates to an expense item, it is
recognised as income on a systematic basis over the periods that the costs, for which it is intended to compensate,
are expensed.
Where the grant relates to an asset, the fair value is credited to a deferred income account and is released to the
consolidated statements of profit or loss over the expected useful life of the relevant asset by equal annual
instalments or deducted from the carrying amount of the asset and released to the consolidated statements of profit
or loss by way of a reduced depreciation charge.
Revenue reco gnition
Other income
Interest income is recognised on an accrual basis using the effective interest method by applying the rate that
exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter
period, when appropriate, to the net carrying amount of the financial asset.
Share-b asedp a yment s
The Group operates an employee long term incentive plan for the purpose of providing incentives and rewards to
eligible participants who contribute to the success of the Group’s operations. Employees (including directors) of
the Group receive remuneration in the form of share-based payments, whereby employees render services in
exchange for equity instruments (“ equity- settle d transaction s”).
The cost of equity-settled transactions with employees for grants is measured by reference to the fair value at the
date at which they are granted. The fair value is determined by an external valuer using a binomial model, further
details of which are given in note 30 to the Historical Financial Information.
The cost of equity-settled transactions is recognised in expenses, together with a corresponding increase in equity,
over the period in which the performance and/or service conditions are fulfilled. The cumulative expense
recognised for equity-settled transactions at the end of each of the Relevant Periods until the vesting date reflects
the extent to which the vesting period has expired and the Group’s best estimate of the number of equity
instruments that will ultimately vest. The charge or credit to profit or loss for a period represents the movement in
the cumulative expense recognised as at the beginning and end of that period.
Service and non-market performance conditions are not taken into account when determining the grant date fair
value of awards, but the likelihood of the conditions being met is assessed as part of the Group’s best estimate of the
number of equity instruments that will ultimately vest. Market performance conditions are reflected within the
grant date fair value. Any other conditions attached to an award, but without an associated service requirement, are
considered to be non-vesting conditions. Non-vesting conditions are reflected in the fair value of an award and lead
to an immediate expensing of an award unless there are also service and/or performance conditions.
For awards that do not ultimately vest because non-market performance and/or service conditions have not been
met, no expense is recognised. Where awards include a market or non-vesting condition, the transactions are treated
as vesting irrespective of whether the market or non-vesting condition is satisfied, provided that all other
performance and/or service conditions are satisfied.
Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had
not been modified, if the original terms of the award are met. In addition, an expense is recognised for any
modification that increases the total fair value of the share-based payments, or is otherwise beneficial to the
employee as measured at the date of modification.
APPENDIX I ACCOUNTANTS’ REPORT
– I-27 –


--- page 508 ---
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any
expense not yet recognised for the award is recognised immediately. This includes any award where non-vesting
conditions within the control of either the Group or the employee are not met. However, if a new award is
substituted for the cancelled award, and is designated as a replacement award on the date that it is granted, the
cancelled and new awards are treated as if they were a modification of the original award, as described in the
previous paragraph.
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of earnings
per share.
Other em ployee benefit s
Pension schemes
The employees of the Group’s subsidiaries which operate in Mainland China are required to participate in a central
pension scheme operated by the local municipal government. These subsidiaries are required to contribute a certain
percentage of their payroll costs to the central pension scheme. The contributions are charged to profit or loss as
they become payable in accordance with the rules of the central pension scheme.
The subsidiary in the USA maintains multiple qualified contributory savings plans as allowed under Internal
Revenue Code section 401(k) in the USA. These plans are defined contribution plans covering substantially all its
qualifying employees and provide for voluntary contributions by employees, subject to certain limits. The
contributions are made by both the employees and the employer. The employees’ contributions are primarily based
on specified dollar amounts or percentages of employee compensation. The only obligation of the subsidiary in the
USA with respect to the retirement benefits plans is to make the specified contributions under the plans.
The Group operates a defined contribution Mandatory Provident Fund retirement benefit scheme (the “ MPF
Scheme ”) under the Mandatory Provident Fund Schemes Ordinance for the eligible employees from Hong Kong.
Contributions are made based on a percentage of the employees’ basic salaries and are charged to the consolidated
statements of profit or loss as they become payable in accordance with the rules of the MPF Scheme. The assets of
the MPF Scheme are held separately from those of the Group in an independently administered fund. The Group’s
employer contributions vest fully with the employees when contributed into the MPF Scheme.
Borrowin g costs
All other borrowing costs are expensed in the period in which they are incurred. Borrowing costs consist of interest
and other costs that an entity incurs in connection with the borrowing of funds.
Forei gn currencie s
The Historical Financial Information is presented in RMB, which is different from the Company’s functional
currency, the United States dollar (“ USD”). As the major assets of the Group are derived from operations in
Mainland China, RMB is chosen as the presentation currency to present the Historical Financial Information. Each
entity in the Group determines its own functional currency and items included in the financial statements of each
entity are measured using that functional currency. Foreign currency transactions recorded by the entities in the
Group are initially recorded using their respective functional currency rates prevailing at the dates of the
transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the functional
currency rates of exchange ruling at the end of each of the Relevant Periods. Differences arising on settlement or
translation of monetary items are recognised the consolidated statements of profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rates at the dates of the initial transactions.
In determining the exchange rate on initial recognition of the related asset, expense or income on the derecognition
of a non-monetary asset or non-monetary liability relating to an advance consideration, the date of initial
transaction is the date on which the Group initially recognises the non-monetary asset or non-monetary liability
arising from the advance consideration. If there are multiple payments or receipts in advance, the Group determines
the transaction date for each payment or receipt of the advance consideration. As at the end of each of the Relevant
Periods, the assets and liabilities of these entities are translated into RMB at the exchange rates prevailing at the
end of each of the Relevant Periods and the consolidated statements of profit or loss are translated into RMB at the
exchange rates that approximate to those prevailing at the dates of the transactions.
APPENDIX I ACCOUNTANTS’ REPORT
– I-28 –


--- page 509 ---
The resulting exchange differences are recognised in other comprehensive income and accumulated in the
exchange fluctuation reserve. On disposal of a foreign operation, the component of other comprehensive income
relating to that particular foreign operation is recognised in the consolidated statements of profit or loss.
3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES
The preparation of the Group’s Historical Financial Information requires management to make judgements,
estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and their
accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and
estimates could result in outcomes that could require a material adjustment to the carrying amounts of the assets or
liabilities affected in the future.
Judgement s
In the process of applying the Group’s accounting policies, management has made the following judgements, apart
from those involving estimations, which have the most significant effect on the amounts recognised in the
Historical Financial Information:
Research and development costs
All research costs are charged to the consolidated statements of profit or loss as incurred. Expenses incurred on
each pipeline to develop new products are capitalised and deferred in accordance with the accounting policy for
research and development expenses in note 2.4 to the Historical Financial Information. Determining the amounts to
be capitalised requires management to make judgements regarding the technical feasibility of the existing pipelines
to be successfully commercialised and to generate economic benefits for the Company. The Group currently
expenses all the milestone and upfront payments under the drug licensing agreements.
Estim ation uncert ainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the end of each of the
Relevant Periods, that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year, are described below.
Fair value of financial liabilities at FVTPL
The convertible redeemable preferred shares and the warrants are not traded in an active market and the respective
fair value is determined by using valuation techniques. The Group applies back-solve method and discounted cash
flow method to determine the underlying equity value of the Company and adopts the equity allocation model to
determine the fair value of the convertible redeemable preferred shares and the warrants. Such valuation is based on
certain assumptions about discounts for lack of marketability and volatility, which are subject to uncertainty and
might materially differ from the actual results. Further details are included in note 24, note 26 and note 34 to the
Historical Financial Information.
Recognition of income taxes and deferred tax assets
Determining income tax provision involves judgement on the future tax treatment of certain transactions and when
certain matters relating to the income taxes have not been confirmed by the local tax bureau. Management evaluates
tax implications of transactions and tax provisions are set up accordingly. The tax treatments of such transactions
are reconsidered periodically to take into account all changes in tax legislation. Deferred tax assets are recognised
in respect of deductible temporary differences and unused tax losses. As those deferred tax assets can only be
recognised to the extent that it is probable that future taxable profits will be available against which the deductible
temporary differences and the losses can be utilised, management’s judgement is required to assess the probability
of future taxable profits. Management’s assessment is revised as necessary and additional deferred tax assets are
recognised if it becomes probable that future taxable profits will allow the deferred tax asset to be recovered.
Further details are included in note 10 to the Historical Financial Information.
APPENDIX I ACCOUNTANTS’ REPORT
– I-29 –


--- page 510 ---
Share-based payments
The Group has set up the employee long term incentive plan for the Company’s directors and the Group’s
employees. The fair value of the options is determined by the binomial model at the grant dates.
Estimating the fair value of share-based payment transactions requires the determination of the most appropriate
valuation model, which depends on the terms and conditions of the grant. This estimate also requires the
determination of the most appropriate inputs to the valuation model including the expected life of the share option,
volatility, employee turnover rate, and dividend yield and making assumptions about them. The assumptions and
models used to estimate the fair value of share-based payment transactions are disclosed in note 30.
Impairment of non-financial assets
The Group assesses whether there are any indicators of impairment for all non-financial assets (including the
right-of-use assets) at the end of each of the Relevant Periods. Non-financial assets are tested for impairment when
there are indicators that the carrying amounts may not be recoverable. An impairment exists when the carrying
value of an asset or a cash-generating unit exceeds its recoverable amount, which is the higher of its fair value less
costs of disposal and its value in use. The calculation of the fair value less costs of disposal is based on available
data from binding sales transactions in an arm’s length transaction of similar assets or observable market prices less
incremental costs for disposing of the asset. When value in use calculations are undertaken, management must
estimate the expected future cash flows from the asset or cash-generating unit and choose a suitable discount rate
in order to calculate the present values of those cash flows.
4. OPERATING SEGMENT INFORMATION
The Group is engaged in biopharmaceutical research and development, which is regarded as a single reportable
segment in a manner consistent with the way in which information is reported internally to the Group’s senior
management for purposes of resource allocation and performance assessment. Therefore, no further operating
segment analysis thereof is presented.
Geo graphic al inform ation
Since all of the Group’s non-current assets were located in Mainland China, no geographical segment information
in accordance with IFRS 8 OperatingSegments is presented.
Inform ation about m ajor cu stomer s
No revenue was derived during the Relevant Periods and the six months ended 30 June 2022. Therefore, no
information about major customer is presented.
APPENDIX I ACCOUNTANTS’ REPORT
– I-30 –


--- page 511 ---
5. OTHER INCOME AND GAINS, AND OTHER EXPENSES
An analysis of other income and gains, and other expenses is as follows:
Yeare n ded 31 December Six month s ended 30 June
2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Other income andg a ins
Government grants related to expense items* ..... 9,631 7,828 1,011 8,875
Government grants related to assets** ........... 2 1 2 1 8 6 1 0 2 6 7
Bank interest income .......................... 9 6 4 3,545 2,290 696
Investment income from short-term time deposits . . – 7,822 – 12,931
Other investment income from financial assets at
FVTPL .................................... 2,366 1,012 521 120
Foreign exchange gains, net .................... 6 0 3 – – –
Others ....................................... 4 5 1 8 8 1 3 3
13,821 20,581 3,925 22,722
Other ex penses
Loss on disposal of items of property, plant and
equipment .................................. ( 1 ) – – –
Foreign exchange losses, net .................... – (7,518) (4,381) (502)
(1) (7,518) (4,381) (502)
* Government grants related to expense items mainly represent subsidies received from local governments
for the purpose of compensation of expenses for research and clinical trial activities, allowance for new
drug development and talent funds. The main grantor is the Shenzhen Science and Technology Innovation
Committee. Government grants received for which related expenses have not yet been incurred are
included in deferred income in the statements of financial position.
** Grants related to assets are credited to deferred income and released to the consolidated statements of
profit or loss in equal annual instalments over the estimated useful lives of the related assets.
APPENDIX I ACCOUNTANTS’ REPORT
– I-31 –


--- page 512 ---
6. LOSS BEFORE TAX
The Group’s loss before tax is arrived at after charging/(crediting):
Yeare n ded 31 December Six month s ended 30 June
Notes 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Depreciation of property, plant and
equipment ........................ 1 3 2 7 6 4 0 9 2 1 1 1 8 9
Depreciation of right-of-use assets ..... 1 4 1,314 865 329 628
Listing expenses .................... 6,054 4,051 3,949 16,315
Transaction costs for preferred shares . . 16,205 501 – –
Other professional service fees* ....... 16,525 22,158 15,589 14,553
Lease payments not included in the
measurement of
lease liabilities .................... 5 5 9 1,195 694 835
Foreign exchange differences, net ..... 5 (603) 7,518 4,381 502
Loss on disposal of items of property,
plant and equipment ............... 5 1–––
Other investment income from financial
assets at FVTPL ................... 5 (2,366) (1,012) (521) (120)
Fair value losses/(gains):
Fair value losses/(gains) on
convertible redeemable preferred
shares ......................... 2 6 93,656 (23,242) (31,247) 399,635
Fair value losses on financial
liabilities at FVTPL ............. 2 4 4,609 – – –
Employee benefit expense (excluding
directors’ and
chief executive’s remuneration):
Wages and salaries ................ 17,202 34,337 16,221 23,897
Pension scheme contributions
(defined contribution scheme),
social welfare and other welfare . . . 2,136 2,850 1,700 2,793
Equity-settled share option expense . . 2,221 18,818 6,863 18,622
21,559 56,005 24,784 45,312
* Other professional service fees mainly consisted of business consulting fees and other service fees paid to
third-party professional service providers.
7. FINANCE COSTS
An analysis of finance costs is as follows:
Yeare n ded 31 December Six month s ended 30 June
Notes 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Interest on interest-bearing bank
borrowings ....................... 3 0 9 3 0 3 1 6 4 1 3 7
Interest on other borrowings .......... 2 3 4,152 – – –
Interest on lease liabilities ............ 1 4 6 7 1 2 3 5 3 6 4
4,528 426 217 201
APPENDIX I ACCOUNTANTS’ REPORT
– I-32 –


--- page 513 ---
8. DIRECTORS’ REMUNERATION
Dr. Liu Liping was appointed as an executive director and the chief executive of the Company since 28 February
2018.
Ms. Yu Meng was appointed as an executive director of the Company on 11 May 2023.
Mr. Zhu Xun was appointed as a non-executive director of the Company on 30 November 2020.
Mr. Li Li was appointed as a non-executive director of the Company on 16 October 2018.
Mr. Yang Feng was appointed as a non-executive director of the Company on 4 September 2020 and resigned on 11
May 2023 for the reason that he would like to devote more time to his investment businesses.
Mr. Li Xiaoguang was appointed as a non-executive director of the Company on 4 September 2020 and resigned on
16 November 2021 for the reason that he would like to devote more time to his investment businesses.
Mr. Ma Lixiong was appointed as a non-executive director of the Company on 16 November 2021.
Mr. Jiang Feng was appointed as a non-executive director of the Company on 16 November 2022.
Certain of the directors received remuneration from the subsidiaries now comprising the Group for their
appointment as the executive director, non-executive directors and chief executive of these subsidiaries. The
remuneration of each director is set out below:
Yeare n ded 31 December Six month s ended 30 June
2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Fees ...................................... ––––
Other emoluments:
Salaries, bonuses, allowances and benefits in
kind .................................. 3,723 4,051 1,986 2,699
Equity-settled share option expense ......... 5,083 6,804 3,403 9,823
Pension scheme contributions .............. 3 6 3 7 2 0 7 4
8,842 10,892 5,409 12,596
During the Relevant Periods and the six months ended 30 June 2022, certain directors were granted share options in
respect of their services to the Group under the share option scheme of the Company, further details of which are set
out in note 30 to the Historical Financial Information. The fair values of such options, which have been recognised
in the consolidated statements of profit or loss over the vesting periods, were determined as at the dates of grant and
the amounts included in the Historical Financial Information for the Relevant Periods and the six months ended 30
June 2022 are included in the above directors’ and chief executive’s remuneration disclosures.
APPENDIX I ACCOUNTANTS’ REPORT
– I-33 –


--- page 514 ---
Yeare n ded
31 December 2021
Salarie s,
bonu ses,
allow ance s
and benefit s
in kin d
Perform ance
rel ated
bonu ses
Pen sion
scheme
contribution s
Equity- settle d
share o ption
expenseT o t al
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Executive director:
Dr. Liu Liping ...... 3,269 – 36 3,854 7,159
Non-executive
director s:
D r .Z h uX u n ........ 4 5 4 – – 9 9 8 1,452
M r .L iL i ........... –––––
Mr. Yang Feng ...... – – – 2 2 9 2 2 9
Mr. Li Xiaoguang . . . –––––
Mr. Ma Lixiong ..... –––22
454 – – 1,229 1,683
Yeare n ded
31 December 2022
Salarie s,
bonu ses,
allow ance s
and benefit s
in kin d
Perform ance
rel ated
bonu ses
Pen sion
scheme
contribution s
Equity- settle d
share o ption
expenseT o t al
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Executive director:
Dr. Liu Liping ...... 3,578 – 37 3,850 7,465
Non-executive
director s:
D r .Z h uX u n ........ 4 7 3 – – 1,721 2,194
M r .L iL i ........... –––––
Mr. Yang Feng ...... – – – 3 9 5 3 9 5
Mr. Ma Lixiong ..... – – – 8 3 8 8 3 8
Mr. Jiang Feng ...... –––––
473 – – 2,954 3,427
APPENDIX I ACCOUNTANTS’ REPORT
– I-34 –


--- page 515 ---
Six month s ended
30 June 2022
Salarie s,
bonu ses,
allow ance s
and benefit s
in kin d
Perform ance
rel ated
bonu ses
Pen sion
scheme
contribution s
Equity- settle d
share o ption
expenseT o t al
(unaudited) RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Executive director:
Dr. Liu Liping ...... 1,758 – 20 1,930 3,708
Non-executive
director s:
D r .Z h uX u n ........ 2 2 8 – – 8 5 8 1,086
M r .L iL i ........... –––––
Mr. Yang Feng ...... – – – 1 9 7 1 9 7
Mr. Ma Lixiong ..... – – – 4 1 8 4 1 8
228 – – 1,473 1,701
Six month s ended
30 June 2023
Salarie s,
bonu ses,
allow ance s
and benefit s
in kin d
Perform ance
rel ated
bonu ses
Pen sion
scheme
contribution s
Equity- settle d
share o ption
expenseT o t al
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Executive director s:
Dr. Liu Liping ...... 1,822 – 19 3,994 5,835
M s .Y uM e n g ........ 6 3 2 – 5 5 2,887 3,574
2,454 – 74 6,881 9,409
Non-executive
director s:
D r .Z h uX u n ........ 2 4 5 – – 5 7 4 8 1 9
M r .L iL i ........... –––––
Mr. Yang Feng ...... – – – 8 7 8 7
Mr. Ma Lixiong ..... – – – 2,281 2,281
Mr. Jiang Feng ...... –––––
245 – – 2,942 3,187
There was no arrangement under which a director waived or agreed to waive any remuneration during the Relevant
Periods and the six months ended 30 June 2022.
APPENDIX I ACCOUNTANTS’ REPORT
– I-35 –


--- page 516 ---
9. FIVE HIGHEST PAID EMPLOYEES
The five highest paid employees included one director during 2021, 2022 and the six months ended 30 June 2022,
and two directors during the six months ended 30 June 2023, details of whose remuneration are set out in note 8
above. Details of the remuneration of the remaining highest paid employees who are neither a director nor chief
executive of the Company are as follows:
Yeare n ded 31 December Six month s ended 30 June
2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Salaries, bonuses, allowances, and benefits in
kind .................................... 6,231 8,067 4,812 3,241
Equity-settled share option expenses .......... 1,239 9,796 3,637 9,884
Pension scheme contributions ................ 2 9 9 4 2 7 1 5 3 1 6 6
7,769 18,290 8,602 13,291
The numbers of non-director highest paid employees whose remuneration fell within the following bands are as
follows:
Yeare n ded 31 December Six month s ended 30 June
2021 2022 2022 2023
(unaudited)
Nil to HKD1,000,000 ........................ ––––
HKD1,000,001 to HKD1,500,000 ............. 2–––
HKD1,500,001 to HKD2,000,000 ............. ––1–
HKD2,000,001 to HKD2,500,000 ............. 1–––
HKD2,500,001 to HKD3,000,000 ............. ––2–
HKD3,000,001 to HKD3,500,000 ............. ––1–
HKD3,500,001 to HKD4,000,000 ............. –1–1
HKD4,000,001 to HKD4,500,000 ............. –2–1
HKD4,500,001 to HKD5,000,000 ............. 1–––
HKD7,500,001 to HKD8,000,000 ............. –––1
HKD8,000,001 to HKD8,500,000 ............. –1––
4443
During the Relevant Periods and the six months ended 30 June 2022, share options were granted to four
non-director highest paid employees in respect of their services to the Group, further details of which are included
in the disclosures in note 30 to the Historical Financial Information. The fair value of such options, which has been
recognised in the consolidated statements of profit or loss over the vesting period, was determined as at the date of
grant and the amount included in the Historical Financial Information for the Relevant Periods and the six months
ended 30 June 2022 is included in the above non-director highest paid employees’ remuneration disclosures.
APPENDIX I ACCOUNTANTS’ REPORT
– I-36 –


--- page 517 ---
10. INCOME TAX
The Group is subject to income tax on an entity basis on profits arising in or derived from the jurisdictions in which
members of the Group are domiciled and operate.
CaymanI slands
Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gains. In
addition, upon payments of dividends by the Company to its shareholders, no Cayman Islands withholding tax is
imposed.
Briti shV i rgin I slands
Under the current laws of the British Virgin Islands (“ BVI”), the subsidiary incorporated in the BVI is not subject
to tax on income or capital gains. In addition, upon payments of dividends by the subsidiary to its shareholders, no
BVI withholding tax is imposed.
Hon g Kong
The subsidiary incorporated in Hong Kong was subject to income tax at the rate of 8.25% on the estimated
assessable profits arising in Hong Kong during the Relevant Periods and the six months ended 30 June 2022.
Mainl and Chin a
No provision for Mainland China income tax pursuant to the Corporate Income Tax Law of the PRC and the
respective regulations (the “ CIT L aw”) has been made as the Group’s subsidiaries which operate in Mainland
China are in loss position and have no estimated taxable profits.
Shenzhen HighTide was approved as a high technology enterprise under the relevant tax rules and regulations in
December 2019, and accordingly, was entitled to a reduced preferential CIT rate of 15% from 2019 to 2021. This
qualification is subject to review by the relevant tax authority in the PRC for every three years. The renewed
qualification was obtained in December 2022 and Shenzhen HighTide is entitled a preferential income tax rate from
2022 to 2024.
JSK Consumer Healthcare Ltd, Shanghai HighTide Biopharmaceutical Ltd., Shanghai Fusion Therapeutics Inc. and
Nanchang Fusion Therapeutics Inc. have met the requirement under the relevant tax rules and regulations for small
and low-profit enterprises, and accordingly, were subject to a reduced preferential CIT rate of 20%, and the portion
of the annual taxable income not more than RMB1,000,000 was entitled to be included in the actual taxable income
at reduced rates of 12.50% in 2021, 2022 and 25% in the six months ended 30 June 2023, while the portion of the
annual taxable income exceeding RMB1,000,000 but not exceeding RMB3,000,000 was entitled to be included in
the actual taxable income at reduced rates of 50% in 2021 and, 25% in 2022 and the six months ended 30 June 2023.
Australia
The subsidiary incorporated in Australia was subject to income tax at the rate of 26% on the estimated assessable
profits arising in Australia for the six months ended 30 June 2021 and it is subject to income tax at the rate of 25%
afterwards.
USA
The subsidiary incorporated in Maryland, the USA is subject to statutory United States federal corporate income
tax at a rate of 21%. In addition, it is also subject to the state income tax in Maryland at a rate of 8.25% during the
Relevant Periods and the six months ended 30 June 2022. Other states including California, Florida and New Jersey
also impose state income tax on the subsidiary to the extent that a sufficient nexus, or taxable connection, exists
between the subsidiary and the respective states. The subsidiary was subject to the states income tax in California
at a rate of 8.84%, in Florida at a rate of 5.50% and in New Jersey at a rate of 7.50% during the Relevant Periods and
the six months ended 30 June 2022.
APPENDIX I ACCOUNTANTS’ REPORT
– I-37 –


--- page 518 ---
The income tax expense of the Group during the Relevant Periods and the six months ended 30 June 2022 is
analysed as follows:
Yeare n ded 31 December Six month s ended 30 June
2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Current tax:
Charge for the year/period ................. 1 0 0 3 2 7 2 2 6
Deferred tax (Note27) ...................... (4) – – –
Total tax expense for the year/period .......... 9 6 3 2 7 2 2 6
A reconciliation of the tax expense applicable to loss before tax at the statutory rate for the jurisdictions in which
the Company and the majority of its subsidiaries are domiciled to the tax expense at the effective tax rates, is as
follows:
Yeare n ded 31 December Six month s ended 30 June
2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Loss before tax ............................. (221,049) (190,205) (74,105) (549,718)
Tax at the applicable tax rate (25%) ........... (55,262) (47,551) (18,526) (137,430)
Different tax rates enacted by local authorities . 14,474 23,233 8,287 118,966
Additional deductible allowance for qualified
research and development costs ............ (3,621) (12,287) (4,888) (5,117)
Income not subject to tax .................... (60) (12) (11) (2)
Expenses not deductible for tax .............. 5 3 6 1 9 5 3 8 3,175
Tax losses not recognised .................... 44,512 36,030 14,672 20,434
Tax charge at the Group’s effective rates ....... 9 6 3 2 7 2 2 6
Deferred tax assets have not been recognised in respect of the following items:
Asa t 31 December
Asa t
30 June
2021 2022 2023
RMB’000 RMB’000 RMB’000
Unused tax losses ................................... 136,302 408,706 555,955
The Group has accumulated tax losses in Mainland China of RMB131,029,000, RMB406,439,000, and
RMB551,964,000 as at 31 December 2021, 31 December 2022, and 30 June 2023, respectively, that will expire in
one to ten years for offsetting against future taxable profits of the companies in which the losses arose.
The Group also has accumulated tax losses in Australia of RMB5,273,000, nil, and nil as at 31 December 2021, 31
December 2022, and 30 June 2023, respectively, that will be carried forward indefinitely for offsetting against
future taxable profits of the company in which the losses arose.
The Group also has accumulated tax losses in Hong Kong of nil, RMB2,267,000, and RMB3,991,000 as at 31
December 2021, 31 December 2022, and 30 June 2023, respectively, that will be carried forward indefinitely for
offsetting against future taxable profits of the companies in which the losses arose.
APPENDIX I ACCOUNTANTS’ REPORT
– I-38 –


--- page 519 ---
Deferred tax assets have not been recognised in respect of these losses as they have arisen in subsidiaries that have
been loss-making for some time and it is not considered probable that taxable profits in foreseeable future will be
available against which the tax losses can be utilised.
11. DIVIDENDS
No dividend was paid or declared by the Company during the Relevant Periods and the six months ended 30 June
2022.
12. LOSS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT
The calculation of the basic loss per share amounts is based on the loss for the Relevant Periods and the six months
ended 30 June 2022 attributable to ordinary equity holders of the parent, and the weighted average numbers of
ordinary shares in issue during the Relevant Periods and the six months ended 30 June 2022, respectively.
No adjustment was made to the basic loss per share amounts presented for the Relevant Periods and the six months
ended 30 June 2022 in respect of a dilution as the impact of the warrants, the convertible redeemable preferred
shares and share-based payment had an anti-dilutive effect on the basic loss per share amounts presented.
The calculations of basic and diluted loss per share are based on:
Yeare n ded 31 December Six month s ended 30 June
2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Loss
Loss attributable to equity holders of the parent,
used in the basic loss per share calculation:
– Ordinary shares ........................ (165,707) (141,096) (55,016) (407,737)
– Series A convertible preferred shares ...... (30,867) (28,219) (11,003) (81,547)
– Series B1 convertible preferred shares ..... (14,519) (12,363) (4,821) (35,726)
– Series B2 convertible preferred shares ..... (10,052) (8,559) (3,337) (24,734)
(221,145) (190,237) (74,177) (549,744)
Yeare n ded 31 December Six month s ended 30 June
2021 2022 2022 2023
(unaudited)
Shares
Weighted average number of participating
equity instruments in issue during the
year/period used in the basic loss per share
calculation
– Ordinary shares ........................ 31,500,000 31,500,000 31,500,000 31,500,000
– Series A convertible preferred shares ...... 5,867,630 6,300,000 6,300,000 6,300,000
– Series B1 convertible preferred shares ..... 2,760,061 2,760,061 2,760,061 2,760,061
– Series B2 convertible preferred shares ..... 1,910,811 1,910,811 1,910,811 1,910,811
42,038,502 42,470,872 42,470,872 42,470,872
Loss per share (basic and diluted)
(RMBpershare) ......................... (5.26) (4.48) (1.75) (12.94)
APPENDIX I ACCOUNTANTS’ REPORT
– I-39 –


--- page 520 ---
13. PROPERTY, PLANT AND EQUIPMENT
Machinery
and
equi pment
Furniture,
fittin gs a nd
equi pment
Leasehol d
improvement s Total
RMB’000 RMB’000 RMB’000 RMB’000
31 December 2021
At 1 January 2021:
Cost ................................. 3,133 538 – 3,671
Accumulated depreciation .............. (2,356) (401) – (2,757)
Net carrying amount ................... 7 7 7 1 3 7 – 9 1 4
At 1 January 2021, net of accumulated
depreciation .......................... 7 7 7 1 3 7 – 9 1 4
Additions ............................. 1,104 376 265 1,745
Disposals ............................. – ( 4 ) – ( 4 )
Depreciation provided during the year .... (181) (67) (28) (276)
At 31 December 2021, net of accumulated
depreciation .......................... 1,700 442 237 2,379
At 31 December 2021:
Cost ................................. 4,237 872 265 5,374
Accumulated depreciation .............. (2,537) (430) (28) (2,995)
Net carrying amount ................... 1,700 442 237 2,379
31 December 2022
At 1 January 2022:
Cost ................................. 4,237 872 265 5,374
Accumulated depreciation .............. (2,537) (430) (28) (2,995)
Net carrying amount ................... 1,700 442 237 2,379
At 1 January 2022, net of accumulated
depreciation .......................... 1,700 442 237 2,379
Additions ............................. – 1 8 3 – 1 8 3
Depreciation provided during the year .... (236) (117) (56) (409)
At 31 December 2022, net of accumulated
depreciation .......................... 1,464 508 181 2,153
At 31 December 2022:
Cost ................................. 4,237 1,055 265 5,557
Accumulated depreciation .............. (2,773) (547) (84) (3,404)
Net carrying amount ................... 1,464 508 181 2,153
APPENDIX I ACCOUNTANTS’ REPORT
– I-40 –


--- page 521 ---
Machinery
and
equi pment
Furniture,
fittin gs a nd
equi pment
Leasehol d
improvement s Total
RMB’000 RMB’000 RMB’000 RMB’000
30 June 2023
At 1 January 2023:
Cost .................................. 4,237 1,055 265 5,557
Accumulated depreciation ............... (2,773) (547) (84) (3,404)
Net carrying amount .................... 1,464 508 181 2,153
At 1 January 2023, net of accumulated
depreciation .......................... 1,464 508 181 2,153
Additions ............................. 8 6 4 – 7 2
Depreciation provided during the period . . (96) (65) (28) (189)
At 30 June 2023, net of accumulated
depreciation ........................... 1,376 507 153 2,036
At 30 June 2023:
Cost .................................. 4,245 1,119 265 5,629
Accumulated depreciation ............... (2,869) (612) (112) (3,593)
Net carrying amount .................... 1,376 507 153 2,036
As at 31 December 2021 and 2022 and 30 June 2023, there were no pledged property, plant and equipment.
APPENDIX I ACCOUNTANTS’ REPORT
– I-41 –


--- page 522 ---
14. LEASES
The Grou pa sa lessee
The Group has lease contracts for various items of properties and equipment used in its operations. Leases of
properties generally have lease terms of two to five years and leases of equipment generally have lease terms of
three years. Generally, the Group is restricted from assigning and subleasing the leased assets outside the Group.
(a) Right-of use assets
The carrying amounts of the Group’s right-of-use assets and the movements during the Relevant Periods
are as follows:
Pro perty,
office
premi ses
andp lant Equi pment Tot al
RMB’000 RMB’000 RMB’000
Asa t 31 December 2021
As at 1 January 2021 ......................... 1,125 – 1,125
Additions ................................... 1,260 – 1,260
Depreciation charge .......................... (1,314) – (1,314)
As at 31 December 2021 ...................... 1,071 – 1,071
Asa t 31 December 2022
As at 1 January 2022 ......................... 1,071 – 1,071
Additions ................................... – 2,447 2,447
Depreciation charge .......................... (253) (612) (865)
As at 31 December 2022 ...................... 8 1 8 1,835 2,653
Asa t 30 June 2023 ...........................
As at 1 January 2023 ......................... 8 1 8 1,835 2,653
Additions ................................... 1,051 – 1,051
Depreciation charge .......................... (224) (404) (628)
Exchange realignment ........................ (41) – (41)
As at 30 June 2023 ........................... 1,604 1,431 3,035
APPENDIX I ACCOUNTANTS’ REPORT
– I-42 –


--- page 523 ---
(b) Lease liabilities
The carrying amounts of lease liabilities and the movements during the Relevant Periods are as follows:
Asa t 31 December
Asa t
30 June
2021 2022 2023
RMB’000 RMB’000 RMB’000
Carrying amount at 1 January .................. 1,096 1,153 2,624
New leases .................................. 1,260 2,447 1,051
Accretion of interest recognised during
the year/period ............................. 6 7 1 2 3 6 4
Covid-19-related rent concessions from lessors . . – (112) –
Lease payment ............................... (1,270) (987) (502)
Exchange realignment ......................... – – (42)
Carrying amount at 31 December/30 June ....... 1,153 2,624 3,195
Analysed into:
Current portion ............................ 2 5 1 1,111 1,646
Non-current portion ........................ 9 0 2 1,513 1,549
(c) The amounts recognised in the consolidated statements of profit or loss in relation to leases are as follows:
Yeare n ded 31 December Six month s ended 30 June
2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Interest on lease liabilities ............ 6 7 1 2 3 5 3 6 4
Depreciation charge of right-of-use
assets ............................ 1,314 865 329 628
Expenses relating to short-term and
low-value leases* ................. 5 5 9 1,307 769 835
Covid-19-related rent concessions
from lessors ...................... – (112) (75) –
Total amount recognised in the
consolidated statements of
profit or loss ...................... 1,940 2,183 1,076 1,527
* Included in “Administrative expenses” and “Research and development costs” in the consolidated
statements of profit or loss.
(d) The total cash outflow for leases included in the consolidated statements of cash flows is disclosed in
note 31(c) to the Historical Financial Information.
APPENDIX I ACCOUNTANTS’ REPORT
– I-43 –


--- page 524 ---
15. OTHER NON-CURRENT ASSETS
Grou p
Asa t 31 December
Asa t
30 June
2021 2022 2023
RMB’000 RMB’000 RMB’000
Rental deposits ..................................... – – 1 9 2
16. INTERESTS IN SUBSIDIARIES
Com pany
Asa t 31 December
Asa t
30 June
2021 2022 2023
RMB’000 RMB’000 RMB’000
Cost of investments in subsidiaries ..................... 240,750 399,574 561,884
Equity-settled share-based payment* ................... 2,221 21,039 42,549
242,971 420,613 604,433
* The amount represents share-based payment expenses arising from the grant of restricted shares in the
Company to employees of the subsidiaries (Note 30) in exchange for their services to these subsidiaries,
which were deemed to be investments made by the Company in these subsidiaries.
17. PREPAYMENTS, OTHER RECEIV ABLES AND OTHER ASSETS
Grou p
Asa t 31 December
Asa t
30 June
2021 2022 2023
RMB’000 RMB’000 RMB’000
Prepayments ........................................ 3,854 5,728 11,066
Input value-added tax ................................ 3,367 1,870 4,544
Deposits ........................................... 4 9 7 4 0 4 7 1 6
Other receivables .................................... 2 7 5 4 6 9 5 6 5
Other current assets ................................. 1,899 2,350 3,508
9,892 10,821 20,399
APPENDIX I ACCOUNTANTS’ REPORT
– I-44 –


--- page 525 ---
Com pany
Asa t 31 December
Asa t
30 June
2021 2022 2023
RMB’000 RMB’000 RMB’000
Amounts due from related parties ..................... 295,280 195,428 263,599
Other current assets ................................. 1,899 2,350 5,676
297,179 197,778 269,275
Other receivables had no historical default. The financial assets included in the above balances relate to receivables
for which there was no recent history of default and past due amounts. In calculating the expected credit loss rate,
the Group considers the historical loss rate and adjusts for forward-looking factors and information. As at 31
December 2021 and 2022 and 30 June 2023, the expected credit loss rates and the loss allowances were assessed to
be minimal.
The Group seeks to maintain strict control over its outstanding receivables to minimise credit risk. Long ageing
balances are reviewed regularly by senior management. In view of the fact that deposits and other receivables relate
to diversified counterparties, there is no significant concentration of credit risk. The Group does not hold any other
credit enhancements over its deposits and other receivable balances.
18. SHORT-TERM TIME DEPOSITS
Grou p
Asa t 31 December
Asa t
30 June
2021 2022 2023
RMB’000 RMB’000 RMB’000
Short-term time deposits ............................. – 427,857 –
Com pany
Asa t 31 December
Asa t
30 June
2021 2022 2023
RMB’000 RMB’000 RMB’000
Short-term time deposits ............................. – 427,857 –
As at 31 December 2022, short-term time deposits were made for varying periods of between one week and six
months depending on the immediate cash requirements of the Company, and earned interest at the respective short
term period rates of these financial assets. As at 31 December 2022, the deposits were deposited with creditworthy
banks with no recent history of default through a reputable financial institution based on an investment agreement
entered into between the Company and the financial institution.
In calculating the expected credit loss rate, the Group considers the historical loss rate and adjusts for
forward-looking factors and information. As at 31 December 2022, the expected credit loss rate and the loss
allowances for the short-term time deposits were assessed to be minimal.
APPENDIX I ACCOUNTANTS’ REPORT
– I-45 –


--- page 526 ---
19. CASH AND BANK BALANCES
Grou p
Asa t 31 December
Asa t
30 June
2021 2022 2023
RMB’000 RMB’000 RMB’000
Cash and bank balances ............................... 765,290 412,340 732,920
Less:
Bank deposits over three months ..................... – – (170,498)
Restricted cash (i) ................................. – (139,293) (144,524)
Cash and cash equivalents ............................ 765,290 273,047 417,898
Denominated in:
R M B ............................................ 72,700 83,832 158,986
U S D ............................................. 692,037 328,207 573,769
A U D ............................................ 5 5 3 2 8 3 5 6
H K D ............................................ – 1 8 1 0 9
Cash and bank balances .............................. 765,290 412,340 732,920
Com pany
Asa t 31 December
Asa t
30 June
2021 2022 2023
RMB’000 RMB’000 RMB’000
Cash and bank balances ............................... 578,146 360,284 562,089
Less:
Bank deposits over three months ..................... – – (170,498)
Restricted cash (i) ................................. – (139,293) (144,524)
Cash and cash equivalents ............................ 578,146 220,991 247,067
Denominated in:
R M B ............................................ – 40,613 5,595
U S D ............................................. 578,146 319,671 556,494
Cash and bank balances .............................. 578,146 360,284 562,089
Note(i) This represents the proceeds from the issuance of the convertible redeemable preferred shares, which
havebeenplacedinarestrictedbankaccounttobeusedforcoreresearchanddevelopmentactivitiesand
fortheredemptionoftheconvertibleredeemablepreferredshares.Noneoftheamountsareimpaired.
The RMB is not freely convertible into other currencies, however, under Mainland China’s Foreign Exchange
Control Regulations and Administration of Settlement, and Sale and Payment of Foreign Exchange Regulations,
the Group is permitted to exchange RMB for other currencies through banks authorised to conduct foreign
exchange business.
APPENDIX I ACCOUNTANTS’ REPORT
– I-46 –


--- page 527 ---
Cash at banks earns interest at floating rates based on daily bank deposit rates. Short term time deposits are made
for varying periods of between one day and six months depending on the immediate cash requirements of the
Group, and earn interest at the respective short term time deposits rates. The bank balances and restricted cash are
deposited with creditworthy banks with no recent history of default.
20. TRADE PAYABLES
An ageing analysis of the trade payables as at the end of each of the Relevant Periods, based on the invoice date, is
as follows:
Asa t 31 December
Asa t
30 June
2021 2022 2023
RMB’000 RMB’000 RMB’000
Within one year ..................................... 6,091 21,699 29,752
The trade payables are non-interest-bearing and are normally settled within one month after the receipt of the
invoice.
21. OTHER PAYABLES AND ACCRUALS
Grou p
Asa t 31 December
Asa t
30 June
2021 2022 2023
RMB’000 RMB’000 RMB’000
Deposits received from vendors ....................... 9 1 2 1 2
Payroll payables .................................... 5,263 9,166 7,393
Other tax payables ................................... 2 3 1 3 1 1 3 0 2
Professional service fees .............................. 9,484 14,384 12,652
Government grants repayable .......................... – 4,642 1,400
Others ............................................. 2 0 5 2 3 2 5 9 7
15,192 28,747 22,356
Com pany
Asa t 31 December
Asa t
30 June
2021 2022 2023
RMB’000 RMB’000 RMB’000
Professional service fees .............................. 7,302 13,999 9,710
Amounts due to related parties ......................... – 9,196 –
Payroll payable ...................................... 1,292 1,561 1,049
Others .............................................. 1 9 1 6 8 1 2
8,785 24,824 10,771
APPENDIX I ACCOUNTANTS’ REPORT
– I-47 –


--- page 528 ---
Other payables and accruals are unsecured, non-interest-bearing and repayable on demand. The carrying amounts
of financial liabilities included in other payables and accruals as at the end of each of the Relevant Periods
approximated to their fair values due to their short-term maturities.
22. INTEREST-BEARING BANK BORROWINGS
Asa t 31 December
2021
Effective
intere str ate M aturity
(%) RMB’000
Current
Bank loans – secured* ............................... 3.85% 2022 7,000
Bank loans – unsecured .............................. – – –
7,000
Asa t 31 December
2022
Effective
intere str ate M aturity
(%) RMB’000
Current
Bank loans – secured* ............................... 3.65% 2023 3,840
Bank loans – unsecured .............................. 3.65%-3.90% 2023 4,310
8,150
Asa t3 0J u n e
2023
Effective
intere str ate M aturity
(%) RMB’000
Current
Bank loans – secured* ............................... 3.65% 2023 2,880
Bank loans – unsecured ............................... 3.65%-3.80% 2023-2024 5,120
8,000
Asa t 31 December
Asa t
30 June
2021 2022 2023
RMB’000 RMB’000 RMB’000
Analysed into:
Bank loans repayable:
Within one year on demand ....................... 7,000 8,150 8,000
APPENDIX I ACCOUNTANTS’ REPORT
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* Certain of the Group’s bank loans are guaranteed by third parties as follows:
(i) Shenzhen Hi-tech Investment and Financing Guarantee Co., Ltd., a third party, has guaranteed a bank loan
of RMB3,500,000 as at 31 December 2021, a bank loan of RMB3,840,000 as at 31 December 2022 and a
bank loan of RMB2,880,000 as at 30 June 2023;
(ii) Shenzhen SME Financing Guarantee Co., Ltd., a third party, has guaranteed a bank loan of RMB3,500,000
as at 31 December 2021.
All bank loans are denominated in RMB.
23. OTHER BORROWINGS
In September 2020, Shenzhen HighTide entered into loan agreements with certain independent investors (the
“Inve stor s”) to obtain loans with an aggregate principal amount of RMB184,515,000 (approximately
USD26,616,000) at a simple interest rate of 6% per annum. The contractual maturity of the loans was six months.
RMB184,515,000 of the principal amount was received between September 2020 and December 2020. Meanwhile,
the Company issued certain warrants (the “ Serie s B+ W arrants”) to the Investors for no consideration. The
warrants allow the holders to purchase 5,650,954 Series B+ Preferred Shares at USD4.71 per share for
USD26,616,000. Pursuant to the loan agreements, Shenzhen HighTide will repay the loans to the Investors to
enable them to exercise the Series B+ Warrants to subscribe for 5,650,954 Series B+ Preferred Shares in the
Company for USD26,616,000 upon the completion of the required outbound direct investment (“ ODI”) filing with
the relevant Chinese government authorities. The Investors have agreed that Shenzhen HighTide’s obligation to
repay the accrued interest on these loans will be automatically waived upon exercise of the Series B+ Warrants.
In the first half year of 2021, the Investors exercised all the warrants as agreed and Shenzhen HighTide repaid the
loans.
The loan component was measured at amortised cost over the period from the issuance date to the maturity date
using the effective interest rate method. The derivative component was classified as financial liabilities at FVTPL
and the movements are presented in note 24.
24. FINANCIAL LIABILITIES AT FVTPL
The movements of financial liabilities at FVTPL during the Relevant Periods are as follows:
Fin anci al
liabilitie sa t
FVTPL
RMB’000
As at 1 January 2021 ............................................................... 5,435
Fair value changes ................................................................. 4,609
Exercise of warrants ............................................................... (10,044)
As at 31 December 2021 ........................................................... –
The Group has used the discounted cash flow method to determine the underlying share value of the Company and
adopted the equity allocation model to determine the fair value of the financial instrument as of 1 January 2021.
APPENDIX I ACCOUNTANTS’ REPORT
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25. DEFERRED INCOME
Asa t 31 December
Asa t3 0
June
2021 2022 2023
RMB’000 RMB’000 RMB’000
As at 1 January ..................................... 18,915 15,555 5,119
Grants received ..................................... 3,415 750 –
Grants repayable .................................... – (4,642) (326)
Amortisation ........................................ (6,775) (6,544) (2,741)
As at 31 December/30 June ........................... 15,555 5,119 2,052
The Group’s deferred government grants represented government grants received for projects and are credited to
the consolidated statements of profit or loss on a straight-line basis over the expected lives of the related assets or
recognised as income on a systematic basis over the periods that the costs, for which they are intended to
compensate, are expensed.
26. CONVERTIBLE REDEEMABLE PREFERRED SHARES
Asa t 31 December
Asa t
30 June
2021 2022 2023
RMB’000 RMB’000 RMB’000
Series B+ convertible redeemable preferred shares (note(iii)) . . 496,438 540,553 750,454
Series C convertible redeemable preferred shares (note(iv)) .... 509,465 534,202 722,065
Series C+ convertible redeemable preferred shares (note(v)) . . . – 185,258 249,134
As at 31 December/30 June ................................ 1,005,903 1,260,013 1,721,653
Analysed into:
Current portion ......................................... – 1,260,013 249,134
Non-current portion ..................................... 1,005,903 – 1,472,519
(i) Serie s A Convertible Preferre d Shares
In June 2016 and December 2016, Shenzhen HighTide raised up to RMB100,000,000 from certain onshore
investors and one existing shareholder (“ Serie s AI n v estor s”).
On 28 February 2018, the Company was incorporated in the Cayman Islands, and on 9 April 2018 HK
HighTide was incorporated. Dr. Liu Liping, Shenzhen Hepalink Pharmaceutical Group Co., Ltd., and other
Series A Investors then transferred their respective interests in Shenzhen HighTide to HK HighTide for a
consideration of RMB130,640,000 (approximately USD19,339,000) and subscribed for 31,500,000
ordinary shares and 6,300,000 Series A convertible preferred shares (the “ Serie s A Convertible Preferre d
Shares”) in the Company for the same amount of USD19,339,000.
(ii) Serie s B1 and B2 Convertible Preferre d Shares
In October 2018 and February 2019, the Company issued 3,033,334 Series B1 Convertible Preferred Shares
(the “ Serie s B1 Convertible Preferre d Shares”) to certain independent investors at USD4.2857 per share
for a total consideration of USD13,000,000. The Company received proceeds of USD13,000,000
(approximately RMB89,876,000) from the issuance of the Series B1 Preferred Shares in 2018.
APPENDIX I ACCOUNTANTS’ REPORT
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In February 2019, the Company issued 2,100,000 Series B2 Convertible Preferred Shares (the “ Serie s B2
Convertible Preferre d Shares”, together with the Series B1 Convertible Preferred Shares, the “Series B
Preferred Shares”) to certain independent investors at USD4.2857 per share for total consideration of
USD9,000,000. The Company received proceeds of USD9,000,000 (approximately RMB60,443,000) from
the issuance of the Series B2 Preferred Shares in 2019.
(iii) Serie s B+ Convertible Re deem able Preferre d Shares
In September 2020 and April 2021, the Company issued 6,815,286 and 212,314 Series B+ Convertible
Redeemable Preferred Shares (the “ Serie s B+ Convertible Re deem able Preferre d Shares”) to certain
independent investors at USD4.71 per share for total consideration of USD32,100,000 and USD1,000,000,
respectively. The Company received proceeds of USD32,100,000 and USD1,000,000 (approximately
RMB217,995,000 and RMB6,545,000) from the issuance of Series B+ Convertible Redeemable Preferred
Shares in 2020 and 2021, respectively. In April and May 2021, the holders of the Series B+ Warrants
exercised the warrants and subscribed for 5,650,954 shares of Series B+ Convertible Redeemable Preferred
Shares of the Company for USD26,616,000. The Company received proceeds of USD26,616,000
(approximately RMB173,328,000) from the issuance of the Series B+ Convertible Preferred Shares in
April and May 2021 upon the exercise of the Series B+ Warrants.
(iv) Serie s C Convertible Re deem able Preferre d Shares
In October 2021 and November 2021, the Company issued 7,618,932 and 4,571,359 Series C Convertible
Redeemable Preferred Shares (the “ Serie s C Convertible Re deem able Preferre d Shares”) to certain
independent investors at USD6.5626 per share for total considerations of USD50,000,000 and
USD30,000,000, respectively. The Company received proceeds of USD50,000,000 and USD30,000,000
(approximately RMB319,535,000 and RMB191,772,000) from the issuance of the Series C Convertible
Redeemable Preferred Shares in October 2021 and November 2021, respectively.
(v) Serie s C+ Convertible Re deem able Preferre d Shares
In November 2022 and December 2022, the Company issued 985,972 and 2,987,795 Series C+ Convertible
Redeemable Preferred Shares (the “ Serie s C+ Convertible Re deem able Preferre d Sh are s”) at
USD6.6939 per share to certain independent investors for total consideration of USD6,600,000 and
USD20,000,000, respectively. The Company received proceeds of RMB45,577,000 and USD20,000,000
(approximately RMB186,419,000 in total) from the issuance of the Series C+ Convertible Redeemable
Preferred Shares in November 2022 and December 2022, respectively.
According to the original and amended Memorandum and Articles of Association (“ MOA”) upon the
issuance of each series of Convertible Preferred Shares, the Group classified the Series A, B1 and B2
Convertible Preferred Shares as equity and designated the Series B+, C and C+ Convertible Redeemable
Preference Shares as financial liabilities measured at fair value through profit or loss. According to MOA
of the Company in November 2022, the key terms of the Series A, B1, and B2 Convertible Preferred Shares,
Series B+ Convertible Redeemable Preferred Shares, Series C Convertible Redeemable Preferred Shares
and Series C+ Convertible Redeemable Preferred Shares (collectively, the “ Preferre d Shares”) are as
follows:
(a) Liquidation preferences
The shareholders of the Series B1 and B2 Convertible Preferred Shares, Series B+ Convertible
Redeemable Preferred Shares, Series C Convertible Redeemable Preferred Shares and Series C+
Convertible Redeemable Preferred Shares are entitled to require the Company to initiate the
dissolution process and liquidate if any of the following occurs (the “ Liqui dation Event ”): (i)
liquidation, dissolution or winding up of the Company by any reason, (ii) any consolidation,
amalgamation, scheme of arrangement or merger (including without limitation the statutory
merger) of the Company or any subsidiaries (the “ Grou p Com pany”) with or into any other person
or any other corporate reorganisation in which the members of the Company or the Group
Company immediately prior to such consolidation, amalgamation, merger, scheme of arrangement
or reorganisation own less than a majority of the Company’s or the Group Company’s voting power
immediately after such consolidation, merger, amalgamation, scheme of arrangement or
reorganisation or any transaction or series of related transactions to which the Company or any
APPENDIX I ACCOUNTANTS’ REPORT
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Group Company is a party and in which at least a majority of the Company’s or such Group
Company’s voting power is transferred; (iii) a sale, transfer, lease, exclusive licence or other
disposition, in a single transaction or series of related transactions, of all or substantially all of the
assets or the intellectual property of the Company and the Group Companies, taken as a whole; or
(iv) a sale of a majority of the outstanding voting securities of the Company.
In case of a Liquidation Event, the distributable assets shall be distributed in the following order:
(a) Pay the liquidation fee, the salary of the employees, social insurance premiums and the
statutory compensation according to the relevant laws and regulations and pay the due and
outstanding taxes (the “ Statutory Fee ”); (b) After payment in full of the Statutory Fee by the
Company, the holders of the Series C+ Preferred Share shall be entitled to receive, prior and in
preference to any distribution of any of the assets or surplus funds of the Company to the holders
of the Ordinary Shares, Series A, B1 and B2 Convertible Preferred Shares and Series B+ Preferred
Shares and Series C Preferred Shares or any other class or series of shares by reason of their
ownership of such shares, with respect to each Series C+ Preferred Share (the “ Serie s C+
Preference Amount ”): an amount equal to IP × (1.08)
N, where IP is the Original Issue Price of
such Share and N is (i) the number of calendar days between the Original Issue Date of such Share
and the date of payment in full of the Liquidation Preference Amount in respect of such Share,
divided by (ii) three hundred and sixty five (365) days; and plus an amount equal to all accrued or
declared but unpaid dividends on such Series C+ Preferred Share.
After distribution or payment in full of the Series C+ Preference Amount for all the Series C+
Preferred Shares, the holders of the Series C Preferred Share shall be entitled to receive, prior and
in preference to any distribution of any of the assets or surplus funds of the Company to the holders
of the Ordinary Shares, Series A Preferred Shares and Series B1 Preferred Shares, Series B2
Preferred Shares and Series B+ Preferred Shares or any other class or series of shares by reason of
their ownership of such shares, with respect to each Series C Convertible Redeemable Preferred
Share (the “ Serie s C Preference Amount ”): an amount equal to IP × (1.08)
N, where IP is the
Original Issue Price of such Share and N is (i) the number of calendar days between the Original
Issue Date of such Share and the date of payment in full of the Liquidation Preference Amount in
respect of such Share, divided by (ii) three hundred and sixty five (365) days; and plus an amount
equal to all accrued or declared but unpaid dividends on such Series C Preferred Share.
After distribution or payment in full of the Series C+ Preference Amount for all the Series C+
Preferred Shares and Series C Preference Amount for all the Series C Preferred Shares, the holders
of the Series B+ Preferred Share shall be entitled to receive, prior and in preference to any
distribution of any of the assets or surplus funds of the Company to the holders of the Ordinary
Shares, Series A Preferred Shares and Series B1 Preferred Shares, Series B2 Preferred Shares or
any other class or series of shares by reason of their ownership of such shares, with respect to each
Series B+ Convertible Redeemable Preferred Share (the “ Serie s B+ Preference Amount ”): an
amount equal to IP × (1.08)
N, where IP is the Original Issue Price of such Share and N is (i) the
number of calendar days between the Original Issue Date of such Share and the date of payment in
full of the Liquidation Preference Amount in respect of such Share, divided by (ii) three hundred
and sixty five (365) days; and plus an amount equal to all accrued or declared but unpaid dividends
on such Series B+ Preferred Share.
After distribution or payment in full of the Series C+ Preference Amount for all the Series C+
Preferred Shares, Series C Preference Amount for all the Series C Preferred Shares and the Series
B+ Preference Amount for all the Series B+ Preferred Shares and before any distribution or
payment shall be made to the holders of Ordinary Shares and Series A Preferred Shares, or any
other class or series of shares by reason of their ownership of such shares, the holders of the Series
B1 Preferred Shares and the holders of Series B2 Preferred Shares shall be entitled to receive, with
respect to each Series B1 Preferred Share and/or Series B2 Preferred Share (the “ Serie s B1/B2
Preference Amount ”): an amount equal to IP × (1.06)
N, but in no event higher than 130% of the
Series B Issue Price, where IP is the Original Issue Price of such Share and N is (i) the number of
calendar days between the Original Issue Date of such Share and the date of payment in full of the
Liquidation Preference Amount in respect of such Share, divided by (ii) three hundred and sixty
five (365) days.
APPENDIX I ACCOUNTANTS’ REPORT
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After paying in full the Series C+ Preference Amount, Series C Preference Amount, Series B+
Preference Amount and the Series B1/B2 Preference Amount due, the remaining assets and funds
of the Company available for distribution to Shareholders, if any, shall be distributed to the holders
of the Ordinary Shares, the Series A Convertible Preferred Shares and Series B+ Convertible
Redeemable Preferred Shares and Series C+ Preferred Shares on a pro rata basis, based on the
number of Ordinary Shares then held by each holder (assuming all Series A Convertible Preferred
Shares and Series B+ Convertible Redeemable Preferred Shares and Series C+ Preferred Shares
held by such holders held by such holders have been converted into Ordinary Shares at the then
effective Conversion Price).
(b) Conversion rights
Each Preferred Share shall automatically be converted into Ordinary Share, at the then applicable
Conversion Price (i) immediately prior to the closing of a Qualified IPO, or (ii) upon the prior
written approval of the holders of at least two thirds of the Preferred Shares on an as-converted
basis.
Unless converted automatically, each holder of the Preferred Shares shall have the right, at such
holder’s sole discretion, to convert all or any portion of the Preferred Shares into such number of
fully paid and non-assessable Ordinary Shares at any time. The conversion rate for Preferred
Shares shall be determined by dividing 100% of the Preferred Share Issue Price by the conversion
price then in effect at the date of the conversion. The initial conversion price will be the Preferred
Share Issue Price, which will be subject to adjustments to reflect share dividends, share splits and
other events, as provided below (the “ Conver sion Price ”):
In the event that after the Original Issue Date, the Company issues additional equity securities
without consideration or for a consideration per share received by the Company less than the
applicable Conversion Price in effect on the date of and immediately prior to such issue, then and
in such event, the Conversion Price for the respective Series B1, B2, B+, C and C+ Preferred
Shares shall each be reduced, concurrently with such issue, to a price (calculated to the nearest one
hundredth of a cent) determined in accordance with the following formula: CP2 = CP1 * (A + B) /
(A + C). The following definitions shall apply for the foregoing formula: (a) CP2 shall mean the
applicable Conversion Price in effect immediately after such issue of Additional Equity Securities;
(b) CP1 shall mean the applicable Conversion Price in effect immediately prior to such issue of
additional equity securities, which shall initially be equal to the applicable Original Issue Price;
(c) “A” shall mean the number of Ordinary Shares outstanding immediately prior to such issue of
additional equity securities, treating for this purpose as outstanding all Ordinary Shares issuable
upon exercise of Options outstanding immediately prior to such issue or upon conversion or
exchange of Convertible Securities (including the Preferred Shares) outstanding immediately prior
to such issue; (d) “B” shall mean the number of Ordinary Shares that would have been issued if
such additional equity securities had been issued at a price per share equal to CP1 (determined by
dividing the aggregate consideration received by the Company in respect of such issue by CP1);
and (e) “C” shall mean the number of such additional equity securities issued in such transaction.
All rights with respect to such shares shall immediately cease and terminate at the time of such
conversion, except only the right of the holders thereof to receive Ordinary Shares in exchange
therefor and to receive payment of any dividends declared but unpaid thereon.
(c) Series B+/C/C+ Preferred Shares redemption preferences
Qualified IPO (“ QIPO ”) means (i) a firm commitment underwritten registered public offering by
the Company of its Ordinary Shares (or depositary receipts or depositary shares therefore) on the
NASDAQ or New York Stock Exchange in the United States, the Main Board of Hong Kong Stock
Exchange, the Shanghai Stock Exchange, or the Shenzhen Stock Exchange or another
internationally recognised stock exchange (or any combination of such exchanges and
jurisdictions) reasonably acceptable to the Preferred Shareholders; or (ii) with the approval of the
Board, a “back door listing” or “special purpose acquisition company” transaction through a
merger, acquisition, stock exchange, amalgamation or consolidation with or into, or a reverse
takeover of, another enterprise already listed on such stock exchange (including a special purpose
acquisition company or its subsidiary), where the Shares are exchanged for cash or publicly listed
securities, in each case of (i) and (ii), with an offering price or merger valuation that implies a
market capitalisation of the Company immediately prior to such offering or transaction of not less
than the amount agreed among parties and being consummated without the Company completing
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 534 ---
any additional equity financing pursuant to which the Company sells and issues additional Equity
Securities after the last closing of the purchase and sale of Series C+ Preferred Shares by all Series
C+ Preferred Shareholders and the Company and prior to the submission of Listing Application
(excluding for the avoidance of doubt the issuance of any Ordinary Shares or other Equity
Securities convertible into Ordinary Shares pursuant to the ESOP Plan, as may be amended and
restated).
Redemption Event means the earlier occurrence of any of the following events: (a) the Company
fails to submit the listing application within twelve (12) months after the closing with the lead
Series C+ investor under the subscription agreement; (b) the Company fails, for any reason, to
consummate a QIPO on or before 31 December 2023; (c) the ongoing phase II trial of T2DM in
Mainland China does not conclude on or before 31 December 2023; and (d) prior to the submission
of the Company’s listing application, the Company, Dr Liping Liu (“ the Foun der”), and Great
Mantra Group Limited (“ the Foun der Hol d Com pany”), any of whom has committed a material
breach of the terms of any transaction document that cannot be cured or remains uncured after
sixty (60) days upon delivery of the written notice by any holder of Series B+ Preferred Shares,
Series C Preferred Shares or Series C+ Preferred Shares.
The Company shall, at any time after the occurrence of the Redemption Event, upon the request
from time to time of any holder of Series C+ Preferred Shares Series C and/or Series B+
Convertible Redeemable Preferred Shares, redeem the Series C+ Preferred Shares, the Series C or
Series B+ Convertible Redeemable Preferred Shares held by such holder of Series C+ Preferred
Shares Series C or Series B+ Convertible Redeemable Preferred Shares in accordance with the
following terms: (i) the redemption price (the “ Redemption Price ”) for each Series C+ Preferred
Share redeemed shall be equal to (i) 100% of the Series C+ Issue Price, proportionally adjusted for
any share splits, share dividends, combinations, recapitalisations or similar transactions, plus (ii)
any accrued or declared but unpaid dividend; plus (iii) an amount that would provide for a
compound rate of return of 8% per annum commencing from the applicable Original Issue Date
based on the applicable Original Issue Price of the Series C+, Series C and Series B+ Preferred
Shares, minus (iv) the applicable Recovered Losses in respect to such Preferred Share.
In the event that the Company fails to redeem all the Series B+ Preferred Shares, Series C Preferred
Shares and Series C+ Preferred Shares held by any holder of Series B+, C and C+ Preferred Shares
requesting the Redemption, each of the holders of Series B+, C and C+ Convertible Redeemable
Preferred Shares requesting the Redemption shall have the right to request the Founder to redeem
its Series B+,C and C+ Convertible Redeemable Preferred Shares and the Founder shall redeem
within thirty (30) days after receipt of such request from such holder of Series B+, C and C+
Convertible Redeemable Preferred Shares, provided that the Founder’s liability for such
redemption shall be limited to any and all the equity securities the holder directly or indirectly
holds in the Group.
The redemption rights have been automatically suspended immediately upon the Company’s
submission of its application for a Qualified IPO and becomes exercisable if the Qualified IPO
does not take place and will be in any event suspended upon Qualified IPO. The redemption rights
shall be automatically restored and immediately resume to be exercisable if the Qualified IPO fails
to consummate by the redemption restoration date agreed among parties (which is not earlier than
31 December 2023).
(d) Dividend Rights
If the Board shall declare any dividends to the shareholders, no dividends shall be made, whether
in cash, in property, or in any other shares of the Company, with respect to any other class or series
of shares of the Company, unless and until a dividend in like amount is first paid in full on Series
C+ Preferred Shares. After the payment of such dividend on Series C+ Preferred Shares in full, a
dividend in like amount shall be paid in full on Series B+ Preferred Shares if the Board declares
any dividends to the Shareholders. After the payment of such dividend on Series B+ Preferred
Shares in full, a dividend in like amount may be paid by the Company on the Shares on a pari passu
and pro rata basis.
All the rights set forth above shall terminate upon the consummation of a Qualified IPO by the
Company.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 535 ---
Presentation and classification
Series A, B1 and B2 Convertible Preferred Shares were entitled with Conversion Rights and Dividend
Rights. The Group classified the Series A, B1 and B2 Convertible Preferred Shares as equity in accordance
with the relevant IFRS mainly because the Company does not have any contractual obligation to deliver
cash or another financial asset to the holders of the Series A, B1 and B2 Convertible Preferred Shares or to
exchange financial assets or financial liabilities under conditions that are potentially unfavourable to the
Company with the holders of the Series A, B1 and B2 Convertible Preferred Shares, nor does the Company
have any contractual obligations to deliver a variable number of its own equity instruments for the
settlement of the Series A, B1, and B2 Convertible Preferred Shares. Apart from Conversion Rights,
Dividend Rights and Liquidation Preferences, Series B+, C and C+ Convertible Preferred Shares were
further entitled with Redemption Rights. The Group designated the Series B+ Convertible Redeemable
Preferred Shares, the Series C Convertible Redeemable Preferred Shares and the Series C+ Convertible
Redeemable Preferred Shares as financial liabilities at fair value through profit or loss, presented as
convertible redeemable preferred shares in the consolidated statements of financial position. The change in
fair value of convertible redeemable preferred shares is charged to profit or loss except for the portion
attributable to credit risk change that shall be charged to other comprehensive income. Management
considered that fair value change in the Series B+ Convertible Redeemable Preferred Shares, Series C
Convertible Redeemable Preferred Shares and Series C+ Convertible Redeemable Preferred Shares
attributable to changes of its own credit risk is not significant.
The movements of the Series B+ Convertible Redeemable Preferred Shares, Series C Convertible
Redeemable Preferred Shares and Series C+ Convertible Redeemable Preferred Shares during the Relevant
Periods are as follows:
Asa t 31 December
Asa t
30 June
2021 2022 2023
RMB’000 RMB’000 RMB’000
Carrying amount at 1 January .................. 217,009 1,005,903 1,260,013
Issuance of Series B+ Convertible Redeemable
Preferred Shares ........................... 195,255 – –
Issuance of Series C Convertible Redeemable
Preferred Shares ........................... 511,307 – –
Issuance of Series C+ Convertible Redeemable
Preferred Shares ........................... – 186,419 –
Fair value changes ........................... 93,656 (23,242) 399,635
Currency translation differences ................ (11,324) 90,933 62,005
Carrying amount at 31 December/30 June ....... 1,005,903 1,260,013 1,721,653
Analysed into:
Current portion ............................ – 1,260,013 249,134
Non-current portion ........................ 1,005,903 – 1,472,519
The Group applies back-solve method and discounted cash flow method to determine the underlying equity
value of the Company and adopts the equity allocation model to determine the fair value of the Preferred
Shares as at the end of each of the Relevant Periods.
APPENDIX I ACCOUNTANTS’ REPORT
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Key valuation assumptions used to determine the fair value of the Preferred Shares are as follows:
Asa t 31 December
Asa t
30 June
2021 2022 2023
Risk-free interest rate ......................... 0.73% 4.70% 5.15%
Discount for lack of marketability (“ DLOM ”) . . . 11% 14% 4%
V olatility .................................... 5 4 % 6 1 % 6 0 %
The Group estimated the risk-free interest rate based on the yield of the US Government Bond as of the
valuation date. The DLOM was estimated based on the option-pricing method. Under the option-pricing
method, the cost of a put option, which can hedge the price change before the privately held share can be
sold, was considered as a basis to determine the discount for the lack of marketability. The volatility was
estimated based on the annualised standard deviation of the daily stock price return of comparable
companies for the period from the respective valuation date and with similar span as time to expiration.
27. DEFERRED TAX LIABILITIES
Deferre d taxl i abilitie s
Asa t 31 December
Asa t
30 June
2021 2022 2023
RMB’000 RMB’000 RMB’000
Carrying amount at 1 January ......................... 1 6 9 1 6 1 3 9 4
Deferred tax (credited)/charged to the consolidated
statements of profit or loss occurred from
right-of-use assets (note10) ........................ ( 8 ) 2 3 3 (14)
Carrying amount at 31 December/30 June ............... 1 6 1 3 9 4 3 8 0
Deferre d tax assets
Asa t 31 December
Asa t
30 June
2021 2022 2023
RMB’000 RMB’000 RMB’000
Carrying amount at 1 January ......................... 1 6 5 1 6 1 3 9 4
Deferred tax (charged)/credited to the consolidated
statements of profit or loss occurred from lease
liabilities (note10) ................................ ( 4 ) 2 3 3 (14)
Carrying amount at 31 December/30 June .............. 1 6 1 3 9 4 3 8 0
Net deferred tax liabilities at 31 December/30 June ...... – – –
APPENDIX I ACCOUNTANTS’ REPORT
– I-56 –


--- page 537 ---
28. SHARE CAPITAL
The Company was incorporated on 28 February 2018. As of 30 June 2023, the Company has an authorised share
capital of US$50,000 divided into 500,000,000 shares with a nominal value of US$0.0001, of which (1) 44,349,294
are classified as ordinary shares of a par value of USD0.0001 each, all of which have been issued and outstanding;
(2) 6,300,000 are classified as Series A Preferred Shares of a par value of USD0.0001 each, all of which have been
issued and outstanding; (3) 2,760,061 are classified as Series B1 Preferred Shares of a par value of USD0.0001
each, all of which have been issued and outstanding; (4) 1,910,811 are classified as Series B2 Preferred Shares of
a par value of USD0.0001 each, all of which have been issued and outstanding; (5) 12,678,554 are classified as
Series B+ Preferred Shares of par value of USD0.0001 each, all of which have been issued and outstanding as
aforementioned in note 26; (6) 12,190,291 are classified as Series C Preferred Shares of a par value of USD0.0001
each, all of which have been issued and outstanding as aforementioned in note 26; and (7) 3,973,767 are classified
as Series C+ Preferred Shares of a par value of USD0.0001 each, all of which have been issued and outstanding as
aforementioned in note 26.
Issued and fully paid as at 31 December 2021:
Issueds hare c apital
Number of
shares in
issue Sh are c apital
RMB
equiv alent
USD’000 RMB’000
Issued and fully paid:
Ordinary shares of USD0.0001 each ................. 36,162,462 4 26
Series A Convertible Preferred Shares of USD0.0001
each ........................................... 6,300,000 1 7
Series B1 Convertible Preferred Shares of USD0.0001
each ........................................... 2,760,061 – –
Series B2 Convertible Preferred Shares of USD0.0001
each ........................................... 1,910,811 – –
47,133,334 5 33
Issued and fully paid as at 31 December 2022:
Issueds hare c apital
Number of
shares in
issue Sh are c apital
RMB
equiv alent
USD’000 RMB’000
Issued and fully paid:
Ordinary shares of USD0.0001 each ................. 40,349,294 4 29
Series A Convertible Preferred Shares of USD0.0001
each ........................................... 6,300,000 1 7
Series B1 Convertible Preferred Shares of USD0.0001
each ........................................... 2,760,061 – –
Series B2 Convertible Preferred Shares of USD0.0001
each ........................................... 1,910,811 – –
51,320,166 5 36
APPENDIX I ACCOUNTANTS’ REPORT
– I-57 –


--- page 538 ---
Issued and fully paid as at 30 June 2023:
Issueds hare c apital
Number of
shares in
issue Sh are c apital
RMB
equiv alent
USD’000 RMB’000
Issued and fully paid:
Ordinary shares of USD0.0001 each ................. 44,349,294 4 32
Series A Convertible Preferred Shares of
USD0.0001 each ................................. 6,300,000 1 7
Series B1 Convertible Preferred Shares of
USD0.0001 each ................................. 2,760,061 – –
Series B2 Convertible Preferred Shares of
USD0.0001 each ................................. 1,910,811 – –
55,320,166 5 39
Movements in the issued share capital from 1 January 2021 to 30 June 2023 were as follows:
Number of
share in i ssue Sh are c apital
RMB’000
At 1 January 2021 ................................................ 46,188,334 32
Issue of Series A Convertible Preferred Shares ....................... 945,000 1
At 31 December 2021 and 1 January 2022 ........................... 47,133,334 33
Issue of ordinary shares ........................................... 4,186,832 3
At 31 December 2022 and 1 January 2023 ........................... 51,320,166 36
Issue of ordinary shares ........................................... 4,000,000 3
At 30 June 2023 .................................................. 55,320,166 39
29. DEFICITS
Grou p
The amounts of the Group’s deficits and the movements therein for the Relevant Periods and the six months ended
30 June 2022 are presented in the consolidated statements of changes in equity.
Share premium
The share premium represents the difference between the par value of the shares issued and the consideration
received for ordinary shares and Series A, B1 and B2 convertible preferred shares.
Share option reserve
The share option reserve of the Group represents the equity-settled share-based payments granted by the Group.
Please refer to note 30 for details.
APPENDIX I ACCOUNTANTS’ REPORT
– I-58 –


--- page 539 ---
Exchange fluctuation reserve
The exchange fluctuation reserve represents exchange differences arising from the translation of the financial
statements of group companies whose functional currencies are different from the Group’s presentation currency.
Com pany
The amounts of the Company’s total deficits and the movements therein for the Relevant Periods are presented as
follows:
Share
premium
reserve*
Share
option
reserve
Exch ange
fluctu ation
reserve
Accumulated
losses
Total
deficit s
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2021 ............ 257,664 107 (6,861) (23,363) 227,547
Loss for the year ............. – – – (156,054) (156,054)
Other comprehensive loss for
the year ................... – – (890) – (890)
Equity-settled share options . . . – 7,304 – – 7,304
Issue of shares ............... 25,668 – – – 25,668
At 31 December 2021 and
1 January 2022 ............ 283,332 7,411 (7,751) (179,417) 103,575
Loss for the year ............. – – – 5,771 5,771
Other comprehensive loss for
the year ................... – – (13,309) – (13,309)
Equity-settled share options . . . – 25,622 – – 25,622
Issue of shares ............... –––––
At 31 December 2022 and
1 January 2023 ............. 283,332 33,033 (21,060) (173,646) 121,659
Loss for the period ............ – – – (419,067) (419,067)
Other comprehensive loss for
the period .................. – – (27,703) – (27,703)
Equity-settled share options .... – 28,445 – – 28,445
Issue of shares ............... –––––
At 30 June 2023 .............. 283,332 61,478 (48,763) (592,713) (296,666)
* Sharepremiumreserveincludespremiumsforordinarysharesandpreferredshares.
30. SHARE-BASED PAYMENTS
In January 2020, the Company adopted an employee long-term incentive plan (the “ 2020 Sh are Incentive Pl an”)
for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the
Group. Eligible participants of the employee long-term incentive plan may include any officers, directors and
employees of the Company who render or have rendered bona fide services to the Company. The maximum
aggregate number of shares that may be issued is 4,662,462 shares (proportionally adjusted to reflect any share
dividends, share splits, or similar transactions). In March 2022, the Company amended and restated the employee
long-term incentive plan to attract and retain the best available personnel and to provide additional incentives to
employees and directors to promote the success of the Company’s business. The maximum aggregate number of
shares underlying all awards made under the 2020 Share Incentive Plan shall not exceed 8,849,294 shares
(proportionally adjusted to reflect any share dividends, share splits, or similar transactions and excluding the
awards that have lapsed or been cancelled or forfeited in accordance with this plan). In May 2023, the Company
adopted a new employee long-term incentive plan to attract, retain and award the eligible adopted talents with
4,000,000 ordinary shares of the Company issuable under such plan.
APPENDIX I ACCOUNTANTS’ REPORT
– I-59 –


--- page 540 ---
From 17 December 2020 to 30 June 2023, the Company had granted awards to 44 grantees to subscribe for an
aggregate of 7,962,201 awards under the 2020 Share Incentive Plan. The awards shall be vested in four (4) years
and the awards shall be vested in equal yearly instalments of 25% at each anniversary date commencing from the
vesting commencement date. Additionally, subject to any restriction contained in the second plan, each award
under the second plan shall not be vested if the IPO hasn’t occurred on or prior to the applicable vesting date of the
individual Awards, and the vesting of such corresponding part of individual Awards shall be deferred to and
effected on the date of IPO (or the immediately following trading day if such date is not a trading day).
The following share awards were outstanding under the equity share option plan during the years ended 31
December 2021 and 2022 and the six months ended 30 June 2023:
Total awards
Exerci se
price per
share
Fair v alue
per share
US$ US$
At 1 January 2021 ................................... 653,846 0.81 1.35-1.37
Granted during the year .............................. 1,177,369 1.06-1.72 3.24-3.77
At 31 December 2021 and 1 January 2022 .............. 1,831,215 0.81-1.72 1.35-3.77
Granted during the year .............................. 1,893,406 1.06-1.72 3.28-3.75
At 31 December 2022 and 1 January 2023 ............... 3,724,621 0.81-1.72 1.35-3.77
Granted during the period ............................ 4,237,580 1.97-2.82 4.26-4.81
Forfeited during the period ............................ (243,628) 0.81-2.82 1.36-4.26
At 30 June 2023 ..................................... 7,718,573 0.81-2.82 1.35-4.81
The fair values of the share awards granted during the years ended 31 December 2021 and 2022 and the six months
ended 30 June 2023 were RMB21,006,000, RMB44,165,000 and RMB129,831,000, respectively, and the Group
recognised share award expenses of RMB7,304,000, RMB25,622,000 and RMB28,445,000 during the years ended
31 December 2021 and 2022 and the six months ended 30 June 2023, respectively.
The fair value of the equity-settled share awards was estimated as at the date of grant using a binomial model,
taking into account the terms and conditions upon which the awards were granted. The following table lists the
inputs to the model used:
Grant D ay
On
1 December
2020
On
1J anuary
2021
On
1 Febru ary
2021
On
1M arch
2021
On
30 December
2021
On
31 M arch
2022
On
1A pril
2023
Expected volatility (%) . . . 46.1 46.1 47.5 47.9 48.7 52.0 53.1
Risk-free interest rate (%) . 0.9 0.9 1.1 1.4 1.5 2.3 3.6
Exercise multiple ....... 2.5–2.8 2.5 2.8 2.8 2.2–2.8 2.2–2.8 2.2–2.8
The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may
also not necessarily be the actual outcome.
APPENDIX I ACCOUNTANTS’ REPORT
– I-60 –


--- page 541 ---
31. NOTES TO THE CONSOLIDATED STATEMENTS OF CASH FLOWS
(a)M ajor non-c asht r ansaction s
During the years ended 31 December 2021 and 2022 and the six months ended 30 June 2023, the Group had
non-cash additions to right-of-use assets and lease liabilities of RMB1,260,000, RMB2,447,000 and
RMB1,051,000, respectively, in respect of lease arrangements for plant and equipment.
(b) Ch anges in li abilitie sa rising from fin ancin ga ctivitie s
Lease
liabilitie s
Other
borrowin gs
Convertible
redeem able
preferre d
shares
Bank and
other lo ans
Fin anci al
liabilitie s
at FVTPL Tot al
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2021 ................. 1,096 185,701 217,009 – 5,435 409,241
Changes from fin ancin g cash flow s:
Lease payment .................... (1,270) –––– (1,270)
Proceeds from issuance of convertible
redeemable preferred shares ...... – – 691,180 – – 691,180
Proceeds from bank loans .......... – – – 10,000 – 10,000
Repayments of bank and other loans . – (184,515) – (3,000) – (187,515)
Payments of bank loan interest ...... – – – (309) – (309)
Total changes from financing cash
f l o w s .......................... (1,270) (184,515) 691,180 6,691 – 512,086
Other ch anges:
New leases ....................... 1,260 –––– 1,260
Accretion of interest ............... 6 7 4,152 – 309 – 4,528
Fair value changes ................. – –
93,656 – 4,609 98,265
Exercise of warrants ............... – (5,338) 15,382 – (10,044) –
Currency translation differences ..... – – (11,324) – – (11,324)
Total other changes ................ 1,327 (1,186) 97,714 309 (5,435) 92,729
At 31 December 2021 .............. 1,153 – 1,005,903 7,000 – 1,014,056
APPENDIX I ACCOUNTANTS’ REPORT
– I-61 –


--- page 542 ---
Lease
liabilitie s
Other
borrowin gs
Convertible
redeem able
preferre d
shares
Bank and
other lo ans
Fin anci al
liabilitie s
at FVTPL Tot al
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2022 ................. 1,153 – 1,005,903 7,000 – 1,014,056
Changes from fin ancin g cash flow s:
Lease payment .................... (987) –––– (987)
Proceeds from issuance of convertible
redeemable preferred shares ...... – – 186,419 – – 186,419
Proceeds from bank loans .......... – – – 15,000 – 15,000
Repayments of bank and other loans . – – – (13,850) – (13,850)
Payments of bank loan interest ...... – – – (303) – (303)
Total changes from financing cash
f l o w s .......................... (987) – 186,419 847 – 186,279
Other ch anges:
New leases ....................... 2,447 –––– 2,447
Accretion of interest ............... 1 2 3 – – 3 0 3 – 4 2 6
Covid-19-related rent concessions
from lessors ....................
(112) –––– (112)
Fair value changes ................. – – (23,242) – – (23,242)
Currency translation differences ..... – – 90,933 – – 90,933
Total other changes ................ 2,458 – 67,691 303 – 70,452
At 31 December 2022 .............. 2,624 – 1,260,013 8,150 – 1,270,787
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 543 ---
Lease
liabilitie s
Other
borrowin gs
Convertible
redeem able
preferre d
shares
Bank and
other lo ans
Fin anci al
liabilitie s
at FVTPL Tot al
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2023 .................. 2,624 – 1,260,013 8,150 – 1,270,787
Changes from fin ancin g cash flow s:
Lease payment ..................... (502) –––– (502)
Proceeds from bank loans ........... – – – 5,000 – 5,000
Repayments of bank and other loans. . – – – (5,150) – (5,150)
Payments of bank loan interest ....... – – – (137) – (137)
Total changes from financing cash
f l o w s........................... (502) – – (287) – (789)
Other ch anges:
New leases ........................ 1,051 –––– 1,051
Accretion of interest ............... 6 4 – – 1 3 7 – 2 0 1
Fair value changes ................. – – 399,635 – – 399,635
Currency translation differences ..... (42) – 62,005 – – 61,963
Total other changes
................ 1,073 – 461,640 137 – 462,850
At 30 June 2023 ................... 3,195 – 1,721,653 8,000 – 1,732,848
Lease
liabilitie s
Other
borrowin gs
Convertible
redeem able
preferre d
shares
Bank and
other lo ans
Fin anci al
liabilitie s
at FVTPL Tot al
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2022 .................. 1,153 – 1,005,903 7,000 – 1,014,056
Changes from fin ancin g cash flow s:
Lease payment ..................... (119) –––– (119)
Proceeds from bank loans ........... – – – 10,000 – 10,000
Repayments of bank and other loans. . – – – (8,500) – (8,500)
Payments of bank loan interest ....... – – – (164) – (164)
Total changes from financing cash
f l o w s........................... (119) – – 1,336 – 1,217
Other ch anges:
New leases ........................ 1,260 –––– 1,260
Accretion of interest ............... 5 3 – – 1 6 4 – 2 1 7
Fair value changes ................. – – (31,247) – – (31,247)
Currency translation differences ..... – – 51,884 – – 51,884
Total other changes
................ 1,313 – 20,637 164 – 22,114
At 30 June 2022 (unaudited) ......... 2,347 – 1,026,540 8,500 – 1,037,387
APPENDIX I ACCOUNTANTS’ REPORT
– I-63 –


--- page 544 ---
(c) Tot alc ash outflow for le ases
The total cash outflow for leases included in the consolidated statements of cash flows is as follows:
Yeare n ded 31 December Six month s ended 30 June
2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Within operating activities ............ 5 5 9 1,307 769 835
Within financing activities ............ 1,270 987 119 502
1,829 2,294 888 1,337
32. RELATED PARTY TRANSACTIONS
The Group had the following transactions with related parties during the Relevant Periods and the six months ended
30 June 2022.
Compensation of key management personnel of the Group:
Yeare n ded 31 December Six month s ended 30 June
2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Short term employee benefits ................ 8,675 8,790 5,061 7,254
Equity-settled share option arrangements ...... 4,791 15,207 5,830 19,324
Total compensation paid to key management
personnel ................................ 13,466 23,997 10,891 26,578
Further details of directors’ emoluments are included in note 8 to the Historical Financial Information.
33. FINANCIAL INSTRUMENTS BY CATEGORY
The carrying amounts of each of the categories of financial instruments as at the end of each of the Relevant Periods
are as follows:
Asa t 31 December 2021
Financial assets
Fin anci al
assets
measure da t
amorti sed cost
RMB’000
Financial assets included in prepayments and other receivables .......................... 7 7 2
Cash and bank balances ............................................................ 765,290
766,062
APPENDIX I ACCOUNTANTS’ REPORT
– I-64 –


--- page 545 ---
Financial liabilities
Fin anci al
liabilitie sa t
fair v alue
throu gh
pr o f i to rl oss
Fin anci al
liabilitie sa t
amorti sed
costT o t al
RMB’000 RMB’000 RMB’000
Trade payables ...................................... – 6,091 6,091
Interest-bearing bank borrowings ...................... – 7,000 7,000
Financial liabilities included in other payables and
accruals .......................................... – 9,698 9,698
Convertible redeemable preferred shares ............... 1,005,903 – 1,005,903
1,005,903 22,789 1,028,692
Asa t 31 December 2022
Financial assets
Fin anci al
assets
measure da t
amorti sed cost
RMB’000
Financial assets included in prepayments, other receivables and other assets ............... 8 7 3
Short-term time deposits ............................................................ 427,857
Cash and bank balances ............................................................. 412,340
841,070
Financial liabilities
Fin anci al
liabilitie sa t
fair v alue
throu gh
pr o f i to rl oss
Fin anci al
liabilitie sa t
amorti sed
costT o t al
RMB’000 RMB’000 RMB’000
Trade payables ...................................... – 21,699 21,699
Interest-bearing bank borrowings ...................... – 8,150 8,150
Financial liabilities included in other payables and
accruals .......................................... – 19,270 19,270
Convertible redeemable preferred shares ............... 1,260,013 – 1,260,013
1,260,013 49,119 1,309,132
APPENDIX I ACCOUNTANTS’ REPORT
– I-65 –


--- page 546 ---
Asa t 30 June 2023
Financial assets
Fin anci al
assets
measure da t
amorti sed cost
RMB’000
Financial assets included in prepayments, other receivables and other assets ............... 1,281
Financial assets included in other non-current assets .................................... 1 9 2
Cash and bank balances ............................................................. 732,920
734,393
Financial liabilities
Fin anci al
liabilitie sa t
fair v alue
throu gh
pr o f i to rl oss
Fin anci al
liabilitie sa t
amorti sed
costT o t al
RMB’000 RMB’000 RMB’000
Trade payables ...................................... – 29,752 29,752
Interest-bearing bank borrowings ...................... – 8,000 8,000
Financial liabilities included in other payables and
accruals .......................................... – 14,661 14,661
Convertible redeemable preferred shares ................ 1,721,653 – 1,721,653
1,721,653 52,413 1,774,066
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 547 ---
34. FAIR V ALUE AND FAIR V ALUE HIERARCHY OF FINANCIAL INSTRUMENTS
The carrying amounts and fair values of the Group’s financial instruments, other than those with carrying amounts
that reasonably approximate to fair values, are as follows:
Carryin ga mount s Fair v alue
Asa t 31 December
Asa t
30 June A sa t 31 December
Asa t
30 June
2021 2022 2023 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Fin anci all i abilitie s
Convertible redeemable
preferred shares .............. 1,005,903 1,260,013 1,721,653 1,005,903 1,260,013 1,721,653
Management has assessed that the fair values of cash and bank balances, short-term time deposits, financial assets
included in prepayments and other receivables, trade payables, interest-bearing bank borrowings, and financial
liabilities included in other payables and accruals approximate to their carrying amounts largely due to the short
term maturities of these instruments.
The Group’s finance department is responsible for determining the policies and procedures for the fair value
measurement of financial instruments. At the end of each of the Relevant Periods, the finance department analyses
the movements in the values of financial instruments and determines the major inputs applied in the valuation. The
Directors review the results of the fair value measurement of financial instruments periodically for financial
reporting.
The fair values of the financial assets and liabilities are included at the amount at which the instrument could be
exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
The Group applies back-solve method and discounted cash flow method to determine the underlying equity value of
the Company and adopts the equity allocation model to determine the fair value of the Preferred Shares as at the end
of each of the Relevant Periods.
Fair v alue hier archy
Unobservable inputs and sensitivity analysis of Level 3 assets and liabilities
Set out below is a summary of significant unobservable inputs to the valuation of financial instruments together
with a quantitative sensitivity analysis as at the end of each of the Relevant Periods.
Signific ant unob serv able in puts
Incre ase/
(decre ase)
in the
inputs
Incre ase/( decre ase)
in f air v alue of
Convertible re deem able preferre ds hares
Asa t 31 December
Asa t
30 June
2021 2022 2023
RMB’000 RMB’000 RMB’000
Risk-free interest rate ....................... 1 % /
(1%)
(3,936)/
4,700
(2,947)/
2,573
(2,863)/
3,814
DLOM .................................... 1 % /
(1%)
(5,422)/
5,422
(6,019)/
6,020
(18,410)/
18,411
V olatility .................................. 1 % /
(1%)
5/
1,207
(302)/
(332)
(319)/
140
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 548 ---
The following tables illustrate the fair value measurement hierarchy of the Group’s financial instruments:
Asat31December2021
Fair v alue me asurement u sing
Quote d
price s in
active
market s
(Level 1)
Signific ant
observ able
inputs
(Level 2)
Signific ant
unob serv able
inputs
(Level 3) Tot al
RMB’000 RMB’000 RMB’000 RMB’000
Fin anci all i abilitie s
Convertible redeemable preferred shares . . – – 1,005,903 1,005,903
Asat31December2022
Fair v alue me asurement u sing
Quote d
price s in
active
market s
(Level 1)
Signific ant
observ able
inputs
(Level 2)
Signific ant
unob serv able
inputs
(Level 3) Tot al
RMB’000 RMB’000 RMB’000 RMB’000
Fin anci all i abilitie s
Convertible redeemable preferred shares . . – – 1,260,013 1,260,013
Asat30June2023
Fair v alue me asurement u sing
Quote d
price s in
active
market s
(Level 1)
Signific ant
observ able
inputs
(Level 2)
Signific ant
unob serv able
inputs
(Level 3) Tot al
RMB’000 RMB’000 RMB’000 RMB’000
Fin anci all i abilitie s
Convertible redeemable preferred shares . . . – – 1,721,653 1,721,653
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 549 ---
35. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial instruments comprise interest-bearing bank borrowings, convertible redeemable
preferred shares and cash and bank balances. The main purpose of these financial instruments is to raise finance for
the Group’s operations. The Group has various other financial assets and liabilities such as trade payables, other
receivables and other payables, which arise directly from its operations.
The main risks arising from the Group’s financial instruments are foreign currency risk, credit risk and liquidity
risk. The Board of Directors reviews and agrees policies for managing each of these risks and they are summarised
below.
Forei gn currency ri sk
The Group has transactional currency exposures. Such exposures arise from financing by the Company or
purchases by operating units in currencies other than their functional currencies.
The following table demonstrates the sensitivity at the end of each of the Relevant Periods to a reasonably possible
change in foreign currency exchange rate, with all other variables held constant, of the Group’s loss before tax (due
to changes in the fair values of monetary assets and liabilities) and the Group’s equity.
Incre ase/
(decre ase)
in r ate of
forei gn
currency
Incre ase/
(decre ase)
in lo ss
before t ax
Incre ase/
(decre ase)
in equity
% RMB’000 RMB’000
31 December 2021
If RMB weakens against USD ......................... 5 1 0 (177)
If RMB strengthens against USD ...................... ( 5 ) (10) 177
31 December 2022
If RMB weakens against USD ......................... 5 2,563 4,246
If RMB strengthens against USD ...................... ( 5 ) (2,563) (4,246)
30 June 2023
If RMB weakens against USD ......................... 5 (31) 1,995
If RMB strengthens against USD ....................... ( 5 ) 3 1 (1,995)
Cre dit ri sk
Credit risk is the risk that a counterparty will default on contractual obligations resulting in financial loss to the
Group.
The credit risk of the Group’s financial assets, which primarily comprise cash and bank balances and financial
assets included in prepayments and other receivables, arises from default of the counterparty, with a maximum
exposure equal to the carrying amounts of these instruments.
As at the end of each of the Relevant Periods, cash and bank balances were deposited in reputable financial
institutions without significant credit risk. For financial assets included in prepayments and other receivables,
management makes periodic collective assessment as well as individual assessment on the recoverability of such
assets based on historical settlement records and past experience.
None of the financial assets included in prepayments and other receivables at the end of each of the Relevant
Periods were overdue, and all balances were categorised within Stage 1 for the measurement of expected credit
losses. The Directors believe that there is no material credit risk inherent in the Group’s outstanding balances.
APPENDIX I ACCOUNTANTS’ REPORT
– I-69 –


--- page 550 ---
Liqui dity ri sk
The Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management of the
Group to finance the operations and mitigate the effects of fluctuations in cash flows.
The maturity profile of the Group’s financial liabilities as at the end of each of the Relevant Periods, based on the
contractual undiscounted payments, is as follows:
Asa t 31 December 2021
Less
than
1y e ar
1t o2
years
2t o3
years
More
than
3y e ars Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade payables ....................... 6,091 – – – 6,091
Lease liabilities ....................... 2 9 9 2 9 8 2 9 9 3 7 3 1,269
Financial liabilities included in other
payables and accruals ................ 9,698 – – – 9,698
Interest-bearing bank borrowings ........ 7,021 – – – 7,021
Convertible redeemable preferred shares . – 947,462 – – 947,462
23,109 947,760 299 373 971,541
Asa t 31 December 2022
Less than
1y e ar
1t o2
years
2t o3
years
More
than
3y e ars Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade payables ....................... 21,699 – – – 21,699
Lease liabilities ....................... 1,210 1,029 472 74 2,785
Financial liabilities included in other
payables and accruals ................ 19,270 – – – 19,270
Interest-bearing bank borrowings ........ 8,286 – – – 8,286
Convertible redeemable preferred shares . 1,211,293 – – – 1,211,293
1,261,758 1,029 472 74 1,263,333
Asa t 30 June 2023
Less than
1y e ar
1t o2
years
2t o3
years
More
than
3y e ars Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade payables ........................ 29,752 – – – 29,752
Lease liabilities ....................... 1,528 1,190 408 – 3,126
Financial liabilities included in other
payables and accruals ................ 14,661 – – – 14,661
Interest-bearing bank borrowings ........ 8,147 – – – 8,147
Convertible redeemable preferred shares . . 195,348 1,063,066 – – 1,258,414
249,436 1,064,256 408 – 1,314,100
APPENDIX I ACCOUNTANTS’ REPORT
– I-70 –


--- page 551 ---
Capitalm anagement
The primary objectives of the Group’s capital management are to safeguard the Group’s ability to continue as a
going concern and to maintain healthy capital ratios in order to support its business and maximise shareholders’
value.
The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions and
the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Group may return
capital to shareholders or issue new shares. The Group is not subject to any externally imposed capital
requirements. No changes were made in the objectives, policies or processes for managing capital during the
Relevant Periods and the six months ended 30 June 2022.
36. EVENTS AFTER THE RELEV ANT PERIODS
There were no significant events after the end of the Relevant Periods that require additional disclosure or
adjustments.
37. SUBSEQUENT FINANCIAL STATEMENTS
No audited financial statements have been prepared by the Company, the Group or any of the companies now
comprising the Group in respect of any period subsequent to 30 June 2023.
APPENDIX I ACCOUNTANTS’ REPORT
– I-71 –


--- page 552 ---
The following information does not form part of the Accountants’ Report from Ernst &
Young,CertifiedPublicAccountants,HongKong,theCompany’sreportingaccountants,assetout
inAppendixItothisProspectus,andisincludedforinformationpurposesonly.Theunauditedpro
forma financial information should be read in conjunction with the section headed “Financial
Information” in this Prospectus and the Accountants’ Report set out in Appendix I to this
Prospectus.
A. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET
TANGIBLE ASSETS
The following unaudited pro forma adjusted consolidated net tangible assets of the Group
has been prepared in accordance with paragraph 4.29 of the Rules Governing the Listing of
Securities on the Stock Exchange of Hong Kong Limited and with reference to Accounting
Guideline 7 Preparation of Pro Forma Financial Information for inclusion in Investment
Circulars issued by the Hong Kong Institute of Certified Public Accountants (“ HKICPA ”)
for illustration purpose only, and is set out below to illustrate the effect of the Global
Offering on the consolidated net tangible liabilities of the Group attributable to owners of
the Company as of 30 June 2023 as if it had taken place on that date.
The unaudited pro forma statement of adjusted consolidated net tangible assets of the Group
has been prepared for illustrative purposes only and, because of its hypothetical nature, it
may not give a true picture of the consolidated net tangible assets of the Group had the
Global Offering been completed as at 30 June 2023 or at any future date.
Con soli dated net
tangible li abilitie s
of the Grou p
attribut able to the
owner s of the
Com pany as a t
30 June 2023
Estim ated net
Procee ds from the
Glob al Offerin g
Estim ated impact
to the
con soli dated net
tangible li abilitie s
upon the
conver sion of
preferre ds hares
Unaudite dp ro
form aa d justed
con soli dated net
tangible assets
attribut able to
owner s of the
Com pany as a t
30 June 2023
Unaudite dp ro form aa d justed
con soli dated net t angible assets
attribut able to owner s of the Com pany
per Sh are as a t
30 June 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB HK$
(Note1) (Note2) (Note3) (Note4) (Note5)
Based on an Offer
Price of HK$11.50
per Share ...... (1,028,426) 202,813 1,721,653 896,040 1.74 1.91
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-1 –


--- page 553 ---
Notes:
1. The consolidated net tangible liabilities attributable to owners of the Company as at 30 June 2023 was equal to the
audited consolidated net liabilities attributable to owners of the Company as at 30 June 2023 of RMB1,028,426,000
set out in the Accountants’ Report in Appendix I to this Prospectus, since no intangible assets existed.
2. The estimated net proceeds from the Global Offering are based on the Offer Price of HK$11.50 per Share, after
deduction of the underwriting fees and other related expenses payable by the Company (excluding listing expenses
of RMB26,420,000 which have been charged to the consolidated statements of profit or loss during the Track
Record Period).
3. Upon the Listing and the completion of the Global Offering, all preferred shares will be automatically converted
into Ordinary Shares. The preferred shares will then be transferred from liabilities to equity. Accordingly, for the
purpose of the unaudited pro forma financial information, the unaudited pro forma adjusted net tangible liabilities
attributable to owners of the parent will be decreased by RMB1,721,653,000, being the carrying amounts of the
preferred shares as at 30 June 2023.
4. The unaudited pro forma adjusted consolidated net tangible assets per Share is arrived at after adjustments referred
in note 2 and 3 above and on the basis of 514,770,668 Shares that are in issue, assuming that the conversion of
Preferred Shares into the ordinary shares and the Global Offering has been completed on 30 June 2023.
5. For the purpose of this unaudited pro forma statement of adjusted net tangible assets, the balances stated in HK$ are
converted into RMB at the rate of HK$1.00 to RMB0.9088.
6. No adjustment has been made to reflect any trading results or open transactions of the Group entered into
subsequent to 30 June 2023.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-2 –


--- page 554 ---
The following is the text of a report, prepared for the purpose of incorporation in this
prospectus,receivedfromthereportingaccountants,Ernst&Young,CertifiedPublicAccountants,
HongKong,inrespectoftheunauditedproformafinancialinformation.
B. INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE
COMPILATION OF PRO FORMA FINANCIAL INFORMATION
۱
ਸ਼छଳ
垹
㶣
Tel 曢婘: +852 2846 9888
Fax ₚ䜆: +852 2868 4432
ey.com
Ernst & Young
27/F, One Taikoo Place
979 King’s Road
Quarry Bay, Hong Kong

To the Directors of HighTide Therapeutics, Inc.
We have completed our assurance engagement to report on the compilation of pro forma
financial information of HighTide Therapeutics, Inc. (the “ Com pany”) and its subsidiaries
(hereinafter collectively referred to as the “ Grou p”) by the directors of the Company (the
“Director s”) for illustrative purposes only. The pro forma financial information consists of the pro
forma consolidated net tangible assets as at 30 June 2023, and related notes as set out on pages II-1
to II-2 of the prospectus dated 14 December 2023 issued by the Company (the “ Pro Form a
Fin anci al Inform ation ”). The applicable criteria on the basis of which the Directors have
compiled the Pro Forma Financial Information are described in Part A of Appendix II to the
prospectus.
The Pro Forma Financial Information has been compiled by the Directors to illustrate the
impact of the global offering of shares of the Company on the Group’s financial position as at 30
June 2023 as if the transaction had taken place at 30 June 2023. As part of this process, information
about the Group’s financial position, has been extracted by the Directors from the Group’s
financial statements for the period ended 30 June 2023, on which an accountants’ report has been
published.
Director s’r e sponsibility for the Pro Form a Fin anci al Inform ation
The Directors are responsible for compiling the Pro Forma Financial Information in
accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited (the “ Listin g Rule s”) and with reference to Accounting
Guideline (“ AG”) 7 Preparation of Pro Forma Financial Information for Inclusion in Investment
Circulars issued by the Hong Kong Institute of Certified Public Accountants (the “ HKICPA ”).
Our in dependence and quality m anagement
We have complied with the independence and other ethical requirements of the Code of
Ethics for Professional Accountants issued by the HKICPA, which is founded on fundamental
principles of integrity, objectivity, professional competence and due care, confidentiality and
professional behavior.
Our firm applies Hong Kong Standard on Quality Management 1 Quality Management for
Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related
ServicesEngagements which requires the firm to design, implement and operate, and accordingly
maintains a comprehensive system of quality management including documented policies or
procedures regarding compliance with ethical requirements, professional standards and applicable
legal and regulatory requirements.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-3 –


--- page 555 ---
Reportin ga ccount ants’r e sponsibilitie s
Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the Listing
Rules, on the Pro Forma Financial Information and to report our opinion to you. We do not accept
any responsibility for any reports previously given by us on any financial information used in the
compilation of the Pro Forma Financial Information beyond that owed to those to whom those
reports were addressed by us at the dates of their issue.
We conducted our engagement in accordance with Hong Kong Standard on Assurance
Engagements 3420 AssuranceEngagementstoReportontheCompilationofProFormaFinancial
Information Included in a prospectus issued by the HKICPA. This standard requires that the
reporting accountants plan and perform procedures to obtain reasonable assurance about whether
the Directors have compiled the Pro Forma Financial Information in accordance with paragraph
4.29 of the Listing Rules and with reference to AG 7 issued by the HKICPA.
For purposes of this engagement, we are not responsible for updating or reissuing any
reports or opinions on any historical financial information used in compiling the Pro Forma
Financial Information, nor have we, in the course of this engagement, performed an audit or review
of the financial information used in compiling the Pro Forma Financial Information.
The purpose of the Pro Forma Financial Information included in the prospectus is solely to
illustrate the impact of the global offering of shares of the Company on unadjusted financial
information of the Group as if the transaction had been undertaken at an earlier date selected for
purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome
of the transaction would have been as presented.
A reasonable assurance engagement to report on whether the Pro Forma Financial
Information has been properly compiled on the basis of the applicable criteria involves performing
procedures to assess whether the applicable criteria used by the Directors in the compilation of the
Pro Forma Financial Information provide a reasonable basis for presenting the significant effects
directly attributable to the transaction, and to obtain sufficient appropriate evidence about
whether:
• the related pro forma adjustments give appropriate effect to those criteria; and
• the Pro Forma Financial Information reflects the proper application of those
adjustments to the unadjusted financial information.
The procedures selected depend on the reporting accountants’ judgment, having regard to
the reporting accountants’ understanding of the nature of the Group, the transaction in respect of
which the Pro Forma Financial Information has been compiled, and other relevant engagement
circumstances.
The engagement also involves evaluating the overall presentation of the Pro Forma Financial
Information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-4 –


--- page 556 ---
Opinion
In our opinion:
(a) the Pro Forma Financial Information has been properly compiled on the basis stated;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purpose of the Pro Forma Financial
Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.
Ern st & Youn g
CertifiedPublicAccountants
Hong Kong
14 December 2023
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-5 –


--- page 557 ---
Set out below is a summary of certain provisions of the Memorandum and Articles of
Association of the Company and of certain aspects of Cayman company law.
The Company was incorporated in the Cayman Islands as an exempted company with
limited liability on 28 February 2018 under the Companies Act (As Revised) of the Cayman Islands
(the “ Com panie s Act”). The Company’s constitutional documents consist of its Memorandum of
Association (the “ Memor andum”) and its Articles of Association (the “ Article s”).
1. MEMORANDUM OF ASSOCIATION
(a) The Memorandum states, inter alia, that the liability of members of the Company is
limited to the amount, if any, for the time being unpaid on the shares respectively held
by them and that the objects for which the Company is established are unrestricted
(including acting as an investment company), and that the Company shall have and be
capable of exercising all the functions of a natural person of full capacity irrespective
of any question of corporate benefit, as provided in section 27(2) of the Companies
Act and in view of the fact that the Company is an exempted company that the
Company will not trade in the Cayman Islands with any person, firm or corporation
except in furtherance of the business of the Company carried on outside the Cayman
Islands.
(b) The Company may by special resolution alter its Memorandum with respect to any
objects, powers or other matters specified therein.
2. ARTICLES OF ASSOCIATION
The Articles were conditionally adopted on December 11, 2023 with effect from the Listing
Date. The following is a summary of certain provisions of the Articles:
(a)S h ares
(i) Classes of shares
The share capital of the Company consists of ordinary shares.
(ii) V ariation of rights of existing shares or classes of shares
Subject to the Companies Act, if at any time the share capital of the Company
is divided into different classes of shares, all or any of the special rights attached to
the shares or any class of shares may (unless otherwise provided for by the terms of
issue of that class) be varied, modified or abrogated either with the consent in writing
of the holders of not less than three-fourths in nominal value of the issued shares of
that class or with the sanction of a special resolution passed at a separate general
meeting of the holders of the shares of that class. To every such separate general
meeting the provisions of the Articles relating to general meetings will mutatis
mutandis apply, but so that the necessary quorum (including at an adjourned meeting)
APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY
AND CAYMAN ISLANDS COMPANY LA W
– III-1 –


--- page 558 ---
shall be two persons holding or representing by proxy not less than one-third in
nominal value of the issued shares of that class. Every holder of shares of the class
shall be entitled to one vote for every such share held by him.
Any special rights conferred upon the holders of any shares or class of shares
shall not, unless otherwise expressly provided in the rights attaching to the terms of
issue of such shares, be deemed to be varied by the creation or issue of further shares
ranking paripassu therewith.
(iii) Alteration of capital
The Company may by ordinary resolution of its members:
(i) increase its share capital by the creation of new shares;
(ii) consolidate all or any of its capital into shares of larger amount than its
existing shares;
(iii) divide its shares into several classes and attach to such shares any
preferential, deferred, qualified or special rights, privileges, conditions
or restrictions as the Company in general meeting or as the directors
may determine;
(iv) subdivide its shares or any of them into shares of smaller amount than is
fixed by the Memorandum; or
(v) cancel any shares which, at the date of passing of the resolution, have
not been taken and diminish the amount of its capital by the amount of
the shares so cancelled.
The Company may reduce its share capital or any capital redemption reserve or
other undistributable reserve in any way by special resolution.
(iv) Transfer of shares
All transfers of shares may be effected by an instrument of transfer in the usual
or common form or in a form prescribed by The Stock Exchange of Hong Kong
Limited (the “ Stock Exch ange”) or in such other form as the board may approve and
which may be under hand or, if the transferor or transferee is a clearing house or its
nominee(s), by hand or by machine imprinted signature or by such other manner of
execution as the board may approve from time to time.
Notwithstanding the foregoing, for so long as any shares are listed on the Stock
Exchange, titles to such listed shares may be evidenced and transferred in accordance
with the laws applicable to and the rules and regulations of the Stock Exchange that
are or shall be applicable to such listed shares. The register of members in respect of
its listed shares (whether the principal register or a branch register) may be kept by
APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY
AND CAYMAN ISLANDS COMPANY LA W
– III-2 –


--- page 559 ---
recording the particulars required by Section 40 of the Companies Act in a form
otherwise than legible if such recording otherwise complies with the laws applicable
to and the rules and regulations of the Stock Exchange that are or shall be applicable
to such listed shares.
The instrument of transfer shall be executed by or on behalf of the transferor
and the transferee provided that the board may dispense with the execution of the
instrument of transfer by the transferee. The transferor shall be deemed to remain the
holder of the share until the name of the transferee is entered in the register of
members in respect of that share.
The board may, in its absolute discretion, at any time transfer any share upon
the principal register to any branch register or any share on any branch register to the
principal register or any other branch register.
The board may decline to recognise any instrument of transfer unless a fee (not
exceeding the maximum sum as the Stock Exchange may determine to be payable)
determined by the Directors is paid to the Company, the instrument of transfer is
properly stamped (if applicable), it is in respect of only one class of share and is
lodged at the relevant registration office or registered office or such other place at
which the principal register is kept accompanied by the relevant share certificate(s)
and such other evidence as the board may reasonably require to show the right of the
transferor to make the transfer (and if the instrument of transfer is executed by some
other person on his behalf, the authority of that person so to do).
The registration of transfers may be suspended and the register closed on
giving notice by advertisement in any newspaper or by any other means in accordance
with the requirements of the Stock Exchange, at such times and for such periods as
the board may determine. The register of members must not be closed for periods
exceeding in the whole thirty (30) days in any year. The period of thirty (30) days may
be extended for a further period or periods not exceeding thirty (30) days in respect of
any year if approved by members by ordinary resolution.
Subject to the above, fully paid shares are free from any restriction on transfer
and free of all liens in favour of the Company.
(v) Power of the Company to purchase its own shares
The Company is empowered by the Companies Act and the Articles to purchase
its own shares subject to certain restrictions and the board may only exercise this
power on behalf of the Company subject to any applicable requirements imposed
from time to time by the Stock Exchange.
The board may accept the surrender for no consideration of any fully paid
share.
APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY
AND CAYMAN ISLANDS COMPANY LA W
– III-3 –


--- page 560 ---
(vi) Power of any subsidiary of the Company to own shares in the Company
There are no provisions in the Articles relating to ownership of shares in the
Company by a subsidiary.
(vii) Calls on shares and forfeiture of shares
The board may from time to time make such calls upon the members in respect
of any monies unpaid on the shares held by them respectively (whether on account of
the nominal value of the shares or by way of premium). A call may be made payable
either in one lump sum or by installments. If the sum payable in respect of any call or
instalment is not paid on or before the day appointed for payment thereof, the person
or persons from whom the sum is due shall pay interest on the same at such rate not
exceeding twenty per cent. (20%) per annum as the board may agree to accept from
the day appointed for the payment thereof to the time of actual payment, but the board
may waive payment of such interest wholly or in part. The board may, if it thinks fit,
receive from any member willing to advance the same, either in money or money’s
worth, all or any part of the monies uncalled and unpaid or installments payable upon
any shares held by him, and upon all or any of the monies so advanced the Company
may pay interest at such rate (if any) as the board may decide.
If a member fails to pay any call on the day appointed for payment thereof, the
board may serve not less than fourteen (14) clear days’ notice on him requiring
payment of so much of the call as is unpaid, together with any interest which may
have accrued and which may still accrue up to the date of actual payment and stating
that, in the event of non-payment at or before the time appointed, the shares in respect
of which the call was made will be liable to be forfeited.
If the requirements of any such notice are not complied with, any share in
respect of which the notice has been given may at any time thereafter, before the
payment required by the notice has been made, be forfeited by a resolution of the
board to that effect. Such forfeiture will include all dividends and bonuses declared in
respect of the forfeited share and not actually paid before the forfeiture.
A person whose shares have been forfeited shall cease to be a member in
respect of the forfeited shares but shall, notwithstanding, remain liable to pay to the
Company all monies which, at the date of forfeiture, were payable by him to the
Company in respect of the shares, together with (if the board shall in its discretion so
require) interest thereon from the date of forfeiture until the date of actual payment at
such rate not exceeding twenty per cent. (20%) per annum as the board determines.
APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY
AND CAYMAN ISLANDS COMPANY LA W
– III-4 –


--- page 561 ---
(b) Director s
(i) Appointment, retirement and removal
At each annual general meeting, one third of the Directors for the time being
(or if their number is not a multiple of three, then the number nearest to but not less
than one third) shall retire from office by rotation provided that every Director shall
be subject to retirement at an annual general meeting at least once every three years.
The Directors to retire by rotation shall include any Director who wishes to retire and
not offer himself for re-election. Any further Directors so to retire shall be those who
have been longest in office since their last re-election or appointment but as between
persons who became or were last re-elected Directors on the same day those to retire
will (unless they otherwise agree among themselves) be determined by lot.
Neither a Director nor an alternate Director is required to hold any shares in the
Company by way of qualification. Further, there are no provisions in the Articles
relating to retirement of Directors upon reaching any age limit.
The Directors have the power to appoint any person as a Director either to fill
a casual vacancy on the board or as an addition to the existing board. Any Director so
appointed shall hold office only until the first annual general meeting of the Company
after his appointment and shall then be eligible for re-election.
A Director (including a managing or other executive Director) may be removed
by an ordinary resolution of the Company before the expiration of his term of office
(but without prejudice to any claim which such Director may have for damages for
any breach of any contract between him and the Company) and members of the
Company may by ordinary resolution appoint another in his place. Unless otherwise
determined by the Company in general meeting, the number of Directors shall not be
less than two. There is no maximum number of Directors.
The office of director shall be vacated if:
(aa) he resigns by notice in writing delivered to the Company;
(bb) he becomes of unsound mind or dies;
(cc) without special leave, he is absent from meetings of the board for six (6)
consecutive months, and the board resolves that his office is vacated;
(dd) he becomes bankrupt or has a receiving order made against him or
suspends payment or compounds with his creditors;
(ee) he is prohibited from being a director by law; or
APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY
AND CAYMAN ISLANDS COMPANY LA W
– III-5 –


--- page 562 ---
(ff) he ceases to be a director by virtue of any provision of law or is removed
from office pursuant to the Articles.
The board may appoint one or more of its body to be managing director, joint
managing director, or deputy managing director or to hold any other employment or
executive office with the Company for such period and upon such terms as the board
may determine and the board may revoke or terminate any of such appointments. The
board may delegate any of its powers, authorities and discretions to committees
consisting of such Director or Directors and other persons as the board thinks fit, and
it may from time to time revoke such delegation or revoke the appointment of and
discharge any such committees either wholly or in part, and either as to persons or
purposes, but every committee so formed must, in the exercise of the powers,
authorities and discretions so delegated, conform to any regulations that may from
time to time be imposed upon it by the board.
(ii) Power to allot and issue shares and warrants
Subject to the provisions of the Companies Act and the Memorandum and
Articles and to any special rights conferred on the holders of any shares or class of
shares, any share may be issued (a) with or have attached thereto such rights, or such
restrictions, whether with regard to dividend, voting, return of capital, or otherwise,
as the Directors may determine, or (b) on terms that, at the option of the Company or
the holder thereof, it is liable to be redeemed.
The board may issue warrants or convertible securities or securities of similar
nature conferring the right upon the holders thereof to subscribe for any class of
shares or securities in the capital of the Company on such terms as it may determine.
Subject to the provisions of the Companies Act and the Articles and, where
applicable, the rules of the Stock Exchange and without prejudice to any special
rights or restrictions for the time being attached to any shares or any class of shares,
all unissued shares in the Company are at the disposal of the board, which may offer,
allot, grant options over or otherwise dispose of them to such persons, at such times,
for such consideration and on such terms and conditions as it in its absolute discretion
thinks fit, but so that no shares shall be issued at a discount to their nominal value.
Neither the Company nor the board is obliged, when making or granting any
allotment of, offer of, option over or disposal of shares, to make, or make available,
any such allotment, offer, option or shares to members or others with registered
addresses in any particular territory or territories being a territory or territories
where, in the absence of a registration statement or other special formalities, this
would or might, in the opinion of the board, be unlawful or impracticable. Members
affected as a result of the foregoing sentence shall not be, or be deemed to be, a
separate class of members for any purpose whatsoever.
APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY
AND CAYMAN ISLANDS COMPANY LA W
– III-6 –


--- page 563 ---
(iii) Power to dispose of the assets of the Company or any of its subsidiaries
There are no specific provisions in the Articles relating to the disposal of the
assets of the Company or any of its subsidiaries. The Directors may, however,
exercise all powers and do all acts and things which may be exercised or done or
approved by the Company and which are not required by the Articles or the
Companies Act to be exercised or done by the Company in general meeting.
(iv) Borrowing powers
The board may exercise all the powers of the Company to raise or borrow
money, to mortgage or charge all or any part of the undertaking, property and assets
and uncalled capital of the Company and, subject to the Companies Act, to issue
debentures, bonds and other securities of the Company, whether outright or as
collateral security for any debt, liability or obligation of the Company or of any third
party.
(v) Remuneration
The ordinary remuneration of the Directors is to be determined by the
Company in general meeting, such sum (unless otherwise directed by the resolution
by which it is voted) to be divided amongst the Directors in such proportions and in
such manner as the board may agree or, failing agreement, equally, except that any
Director holding office for part only of the period in respect of which the
remuneration is payable shall only rank in such division in proportion to the time
during such period for which he held office. The Directors are also entitled to be
prepaid or repaid all travelling, hotel and incidental expenses reasonably expected to
be incurred or incurred by them in attending any board meetings, committee meetings
or general meetings or separate meetings of any class of shares or of debentures of the
Company or otherwise in connection with the discharge of their duties as Directors.
Any Director who, by request, goes or resides abroad for any purpose of the
Company or who performs services which in the opinion of the board go beyond the
ordinary duties of a Director may be paid such extra remuneration as the board may
determine and such extra remuneration shall be in addition to or in substitution for
any ordinary remuneration as a Director. An executive Director appointed to be a
managing director, joint managing director, deputy managing director or other
executive officer shall receive such remuneration and such other benefits and
allowances as the board may from time to time decide. Such remuneration may be
either in addition to or in lieu of his remuneration as a Director.
The board may establish or concur or join with other companies (being
subsidiary companies of the Company or companies with which it is associated in
business) in establishing and making contributions out of the Company’s monies to
any schemes or funds for providing pensions, sickness or compassionate allowances,
life assurance or other benefits for employees (which expression as used in this and
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the following paragraph shall include any Director or past Director who may hold or
have held any executive office or any office of profit with the Company or any of its
subsidiaries) and ex-employees of the Company and their dependents or any class or
classes of such persons.
The board may pay, enter into agreements to pay or make grants of revocable or
irrevocable, and either subject or not subject to any terms or conditions, pensions or
other benefits to employees and ex-employees and their dependents, or to any of such
persons, including pensions or benefits additional to those, if any, to which such
employees or ex-employees or their dependents are or may become entitled under any
such scheme or fund as is mentioned in the previous paragraph. Any such pension or
benefit may, as the board considers desirable, be granted to an employee either before
and in anticipation of, or upon or at any time after, his actual retirement.
The board may resolve to capitalise all or any part of any amount for the time
being standing to the credit of any reserve or fund (including a share premium
account and the profit and loss account) whether or not the same is available for
distribution by applying such sum in paying up unissued shares to be allotted to (i)
employees (including directors) of the Company and/or its affiliates (meaning any
individual, corporation, partnership, association, joint-stock company, trust,
unincorporated association or other entity (other than the Company) that directly, or
indirectly through one or more intermediaries, controls, is controlled by or is under
common control with, the Company) upon exercise or vesting of any options or
awards granted under any share incentive scheme or employee benefit scheme or
other arrangement which relates to such persons that has been adopted or approved by
the members in general meeting, or (ii) any trustee of any trust to whom shares are to
be allotted and issued by the Company in connection with the operation of any share
incentive scheme or employee benefit scheme or other arrangement which relates to
such persons that has been adopted or approved by the members in general meeting.
(vi) Compensation or payments for loss of office
Pursuant to the Articles, payments to any Director or past Director of any sum
by way of compensation for loss of office or as consideration for or in connection
with his retirement from office (not being a payment to which the Director is
contractually entitled) must be approved by the Company in general meeting.
(vii) Loans and provision of security for loans to Directors
The Company must not make any loan, directly or indirectly, to a Director or
his close associate(s) if and to the extent it would be prohibited by the Companies
Ordinance (Chapter 622 of the laws of Hong Kong) as if the Company were a
company incorporated in Hong Kong.
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(viii) D isclosure of interests in contracts with the Company or any of its
subsidiaries
A Director may hold any other office or place of profit with the Company
(except that of the auditor of the Company) in conjunction with his office of Director
for such period and upon such terms as the board may determine, and may be paid
such extra remuneration therefor in addition to any remuneration provided for by or
pursuant to the Articles. A Director may be or become a director or other officer of, or
otherwise interested in, any company promoted by the Company or any other
company in which the Company may be interested, and shall not be liable to account
to the Company or the members for any remuneration, profits or other benefits
received by him as a director, officer or member of, or from his interest in, such other
company. The board may also cause the voting power conferred by the shares in any
other company held or owned by the Company to be exercised in such manner in all
respects as it thinks fit, including the exercise thereof in favour of any resolution
appointing the Directors or any of them to be directors or officers of such other
company, or voting or providing for the payment of remuneration to the directors or
officers of such other company.
No Director or proposed or intended Director shall be disqualified by his office
from contracting with the Company, either with regard to his tenure of any office or
place of profit or as vendor, purchaser or in any other manner whatsoever, nor shall
any such contract or any other contract or arrangement in which any Director is in any
way interested be liable to be avoided, nor shall any Director so contracting or being
so interested be liable to account to the Company or the members for any
remuneration, profit or other benefits realised by any such contract or arrangement by
reason of such Director holding that office or the fiduciary relationship thereby
established. A Director who to his knowledge is in any way, whether directly or
indirectly, interested in a contract or arrangement or proposed contract or
arrangement with the Company must declare the nature of his interest at the meeting
of the board at which the question of entering into the contract or arrangement is first
taken into consideration, if he knows his interest then exists, or in any other case, at
the first meeting of the board after he knows that he is or has become so interested.
A Director shall not vote (nor be counted in the quorum) on any resolution of
the board approving any contract or arrangement or other proposal in which he or any
of his close associates is materially interested, but this prohibition does not apply to
any of the following matters, namely:
(aa) the giving of any security or indemnity either:-
(aaa) to the Director or his close associate(s) in respect of money lent or
obligations incurred or undertaken by him or any of them at the
request of or for the benefit of the Company or any of its
subsidiaries; or
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(bbb) to a third party in respect of a debt or obligation of the Company
or any of its subsidiaries for which the Director or his close
associate(s) has himself/ themselves assumed responsibility in
whole or in part and whether alone or jointly under a guarantee or
indemnity or by the giving of security;
(bb) any proposal c oncerning an offer of shares or debentures or other
securities of or by the Company or any other company which the
Company may promote or be interested in for subscription or purchase
where the Director or his close associate(s) is/are or is/are to be
interested as a participant in the underwriting or sub-underwriting of the
offer;
(cc) any proposal or arrangement concerning the benefit of employees of the
Company or its subsidiaries including:
(aaa) the adoption, modification or operation of any employees’ share
scheme or any share incentive or share option scheme under
which the Director or his close associate(s) may benefit; or
(bbb) the adoption, modification or operation of a pension fund or
retirement, death or disability benefits scheme which relates to
the Directors, his close associate(s) and employee(s) of the
Company or any of its subsidiaries and does not provide in respect
of any Director, or his close associate(s), as such any privilege or
advantage not generally accorded to the class of persons to which
such scheme or fund relates;
(dd) any contract or arrangement in which the Director or his close
associate(s) is/are interested in the same manner as other holders of
shares or debentures or other securities of the Company by virtue only of
his/their interest in shares or debentures or other securities of the
Company.
(c) Procee dings of the Bo ard
The board may meet for the despatch of business, adjourn and otherwise regulate its
meetings as it considers appropriate. Questions arising at any meeting shall be determined
by a majority of votes. In the case of an equality of votes, the chairman of the meeting shall
have an additional or casting vote.
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(d) Alter ation s to con stitution al document sa nd the Com pany’s name
The Articles may be rescinded, altered or amended by the Company in general
meeting by special resolution. The Articles state that a special resolution shall be required to
alter the provisions of the Memorandum, to amend the Articles or to change the name of the
Company.
(e) Meetin gs of member s
(i) Special and ordinary resolutions
A special resolution of the Company must be passed by a majority of not less
than three-fourths of the votes cast by such members as, being entitled so to do, vote
in person or, in the case of such members as are corporations, by their duly authorised
representatives or, where proxies are allowed, by proxy at a general meeting of which
notice has been duly given in accordance with the Articles.
Under the Companies Act, a copy of any special resolution must be forwarded
to the Registrar of Companies in the Cayman Islands within fifteen (15) days of being
passed.
An ordinary resolution is defined in the Articles to mean a resolution passed by
a simple majority of the votes of such members of the Company as, being entitled to
do so, vote in person or, in the case of corporations, by their duly authorised
representatives or, where proxies are allowed, by proxy at a general meeting of which
notice has been duly given in accordance with the Articles.
(ii) V oting rights and right to demand a poll
Subject to any special rights or restrictions as to voting for the time being
attached to any shares, at any general meeting on a poll every member present in
person or by proxy or, in the case of a member being a corporation, by its duly
authorised representative shall have one vote for every fully paid share of which he is
the holder but so that no amount paid up or credited as paid up on a share in advance
of calls or installments is treated for the foregoing purposes as paid up on the share. A
member entitled to more than one vote need not use all his votes or cast all the votes
he uses in the same way.
At any general meeting a resolution put to the vote of the meeting is to be
decided by way of a poll save that the chairman of the meeting may in good faith,
allow a resolution which relates purely to a procedural or administrative matter to be
voted on by a show of hands in which case every member present in person (or being
a corporation, is present by a duly authorized representative), or by proxy(ies) shall
have one vote provided that where more than one proxy is appointed by a member
which is a clearing house (or its nominee(s)), each such proxy shall have one vote on
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a show of hands. V otes (whether on a show of hands or by way of poll) may be cast by
such means, electronic or otherwise, as the Directors or the chairman of the meeting
may determine.
Any corporation which is a member may by resolution of its directors or other
governing body authorise such person as it thinks fit to act as its representative at any
general meeting of the Company or at any meeting of any class of members.
The person so authorised shall be entitled to exercise the same powers on
behalf of such corporation as the corporation could exercise if it were an individual
member and such corporation shall for the purposes of the Articles be deemed to be
present in person at any such meeting if a person so authorised is present thereat.
If a recognised clearing house (or its nominee(s)) is a member of the Company
it may authorise such person or persons as it thinks fit to act as its representative(s) at
any meeting of the Company or at any meeting of any class of members of the
Company provided that, if more than one person is so authorised, the authorisation
shall specify the number and class of shares in respect of which each such person is so
authorised. A person authorised pursuant to this provision shall be deemed to have
been duly authorised without further evidence of the facts and be entitled to exercise
the same powers on behalf of the recognised clearing house (or its nominee(s)) as if
such person was the registered holder of the shares of the Company held by that
clearing house (or its nominee(s)) including, the right to speak and to vote, and where
a show of hands is allowed, the right to vote individually on a show of hands.
All members have the right to speak and vote at a general meeting except where
a member is required, by the rules of the Stock Exchange, to abstain from voting to
approve the matter under consideration.
Where the Company has any knowledge that any member is, under the rules of
the Stock Exchange, required to abstain from voting on any particular resolution of
the Company or restricted to voting only for or only against any particular resolution
of the Company, any votes cast by or on behalf of such member in contravention of
such requirement or restriction shall not be counted.
(iii) Annual general meetings and extraordinary general meetings
The Company must hold an annual general meeting of the Company for each
financial year and such general meeting must be held within six (6) months after the
end of the Company’s financial year unless a longer period would not infringe the
rules of the Stock Exchange.
Extraordinary general meetings may be convened on the requisition of one or
more members holding, at the date of deposit of the requisition, not less than
one-tenth of the paid up capital of the Company having the right of voting at general
meetings, on a one vote per share basis. Such requisition shall be made in writing to
the board or the secretary for the purpose of requiring an extraordinary general
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meeting to be called by the board for the transaction of any business or resolution
specified in such requisition. Such meeting shall be held within 2 months after the
deposit of such requisition. If within 21 days of such deposit, the board fails to
proceed to convene such meeting, the requisitionist(s) himself/herself (themselves)
may do so in the same manner, and all reasonable expenses incurred by the
requisitionist(s) as a result of the failure of the board shall be reimbursed to the
requisitionist(s) by the Company.
Notwithstanding any provisions in the Articles, any general meeting or any
class meeting may be held by means of such telephone, electronic or other
communication facilities as to permit all persons participating in the meeting to
communicate with each other, and participation in such a meeting shall constitute
presence at such meeting.
(iv) Notices of meetings and business to be conducted
An annual general meeting must be called by notice of not less than
twenty-one (21) days. All other general meetings must be called by notice of at least
fourteen (14) days. The notice is exclusive of the day on which it is served or
deemed to be served and of the day for which it is given, and must specify the time
and place of the meeting and particulars of resolutions to be considered at the
meeting and, in the case of special business, the general nature of that business.
In addition, notice of every general meeting must be given to all members of
the Company other than to such members as, under the provisions of the Articles or
the terms of issue of the shares they hold, are not entitled to receive such notices from
the Company, and also to, among others, the auditors for the time being of the
Company.
Any notice to be given to or by any person pursuant to the Articles may be
served on or delivered to any member of the Company personally, by post to such
member’s registered address or by advertisement in newspapers in accordance with
the requirements of the Stock Exchange. Subject to compliance with Cayman Islands
law and the rules of the Stock Exchange, notice may also be served or delivered by the
Company to any member by electronic means.
All business that is transacted at an extraordinary general meeting and at an
annual general meeting is deemed special, save that in the case of an annual general
meeting, each of the following business is deemed an ordinary business:
(aa) the declaration and sanctioning of dividends;
(bb) the consideration and adoption of the accounts and balance sheet and the
reports of the directors and the auditors;
(cc) the election of directors in place of those retiring;
(dd) the appointment of auditors and other officers; and
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(ee) the fixing of the remuneration of the directors and of the auditors.
(v) Quorum for meetings and separate class meetings
No business shall be transacted at any general meeting unless a quorum is
present when the meeting proceeds to business, but the absence of a quorum shall not
preclude the appointment of a chairman.
The quorum for a general meeting shall be two members present in person (or,
in the case of a member being a corporation, by its duly authorised representative) or
by proxy or, for quorum purposes only, two persons appointed by the clearing house
as authorized representative or proxy, and entitled to vote. In respect of a separate
class meeting (including an adjourned meeting) convened to sanction the
modification of class rights the necessary quorum shall be two persons holding or
representing by proxy not less than one-third in nominal value of the issued shares of
that class.
(vi) Proxies
Any member of the Company entitled to attend and vote at a meeting of the
Company is entitled to appoint another person as his proxy to attend and vote instead
of him. A member who is the holder of two or more shares may appoint more than one
proxy to represent him and vote on his behalf at a general meeting of the Company or
at a class meeting. A proxy need not be a member of the Company and is entitled to
exercise the same powers on behalf of a member who is an individual and for whom
he acts as proxy as such member could exercise. In addition, a proxy is entitled to
exercise the same powers on behalf of a member which is a corporation and for which
he acts as proxy as such member could exercise as if it were an individual member.
V otes may be given either personally (or, in the case of a member being a corporation,
by its duly authorised representative) or by proxy.
(f) Account sa nda udit
The board shall cause true accounts to be kept of the sums of money received and
expended by the Company, and the matters in respect of which such receipt and expenditure
take place, and of the property, assets, credits and liabilities of the Company and of all other
matters required by the Companies Act or necessary to give a true and fair view of the
Company’s affairs and to explain its transactions.
The accounting records must be kept at the registered office or at such other place or
places as the board decides and shall always be open to inspection by any Director. No
member (other than a Director) shall have any right to inspect any accounting record or book
or document of the Company except as conferred by law or authorised by the board or the
Company in general meeting. However, an exempted company must make available at its
registered office in electronic form or any other medium, copies of its books of account or
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parts thereof as may be required of it upon service of an order or notice by the Tax
Information Authority pursuant to the Tax Information Authority Act of the Cayman Islands.
A copy of every balance sheet and profit and loss account (including every document
required by law to be annexed thereto) which is to be laid before the Company at its general
meeting, together with a printed copy of the Directors’ report and a copy of the auditors’
report, shall not less than twenty-one (21) days before the date of the meeting and at the
same time as the notice of annual general meeting be sent to every person entitled to receive
notices of general meetings of the Company under the provisions of the Articles; however,
subject to compliance with all applicable laws, including the rules of the Stock Exchange,
the Company may send to such persons summarised financial statements derived from the
Company’s annual accounts and the directors’ report instead provided that any such person
may by notice in writing served on the Company, demand that the Company sends to him, in
addition to summarised financial statements, a complete printed copy of the Company’s
annual financial statement and the directors’ report thereon.
At the annual general meeting or at a subsequent extraordinary general meeting in
each year, the members shall by ordinary resolution appoint an auditor to audit the accounts
of the Company and such auditor shall hold office until the next annual general meeting.
Moreover, the members may, at any general meeting, by ordinary resolution remove the
auditor at any time before the expiration of his terms of office and shall by ordinary
resolution at that meeting appoint another auditor for the remainder of his term. The
remuneration of the auditors shall be fixed and approved by the Company by an ordinary
resolution passed at a general meeting or in such manner as the members may by ordinary
resolution determine.
The financial statements of the Company shall be audited by the auditor in
accordance with generally accepted auditing standards which may be those of a country or
jurisdiction other than the Cayman Islands. The auditor shall make a written report thereon
in accordance with generally accepted auditing standards and the report of the auditor must
be submitted to the members in general meeting.
(g)D i v i dends a nd other metho ds of distribution
The Company in general meeting may declare dividends in any currency to be paid to
the members but no dividend shall be declared in excess of the amount recommended by the
board.
The Articles provide dividends may be declared and paid out of the profits of the
Company, realised or unrealised, or from any reserve set aside from profits which the
directors determine is no longer needed. With the sanction of an ordinary resolution
dividends may also be declared and paid out of share premium account or any other fund or
account which can be authorised for this purpose in accordance with the Companies Act.
Except in so far as the rights attaching to, or the terms of issue of, any share may
otherwise provide, (i) all dividends shall be declared and paid according to the amounts paid
up on the shares in respect whereof the dividend is paid but no amount paid up on a share in
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advance of calls shall for this purpose be treated as paid up on the share and (ii) all dividends
shall be apportioned and paid pro rata according to the amount paid up on the shares during
any portion or portions of the period in respect of which the dividend is paid. The Directors
may deduct from any dividend or other monies payable to any member or in respect of any
shares all sums of money (if any) presently payable by him to the Company on account of
calls or otherwise.
Whenever the board or the Company in general meeting has resolved that a dividend
be paid or declared on the share capital of the Company, the board may further resolve either
(a) that such dividend be satisfied wholly or in part in the form of an allotment of shares
credited as fully paid up, provided that the members entitled thereto will be entitled to elect
to receive such dividend (or part thereof) in cash in lieu of such allotment, or (b) that
members entitled to such dividend will be entitled to elect to receive an allotment of shares
credited as fully paid up in lieu of the whole or such part of the dividend as the board may
think fit.
The Company may also upon the recommendation of the board by an ordinary
resolution resolve in respect of any one particular dividend of the Company that it may be
satisfied wholly in the form of an allotment of shares credited as fully paid up without
offering any right to members to elect to receive such dividend in cash in lieu of such
allotment.
Any dividend, interest or other sum payable in cash to the holder of shares may be
paid by cheque or warrant sent through the post addressed to the holder at his registered
address, or in the case of joint holders, addressed to the holder whose name stands first in
the register of the Company in respect of the shares at his address as appearing in the register
or addressed to such person and at such addresses as the holder or joint holders may in
writing direct. Every such cheque or warrant shall, unless the holder or joint holders
otherwise direct, be made payable to the order of the holder or, in the case of joint holders,
to the order of the holder whose name stands first on the register in respect of such shares,
and shall be sent at his or their risk and payment of the cheque or warrant by the bank on
which it is drawn shall constitute a good discharge to the Company. Any one of two or more
joint holders may give effectual receipts for any dividends or other moneys payable or
property distributable in respect of the shares held by such joint holders.
Whenever the board or the Company in general meeting has resolved that a dividend
be paid or declared the board may further resolve that such dividend be satisfied wholly or in
part by the distribution of specific assets of any kind.
All dividends or bonuses unclaimed for one year after having been declared may be
invested or otherwise made use of by the board for the benefit of the Company until claimed
and the Company shall not be constituted a trustee in respect thereof. All dividends or
bonuses unclaimed for six years after having been declared may be forfeited by the board
and shall revert to the Company.
No dividend or other monies payable by the Company on or in respect of any share
shall bear interest against the Company.
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(h) In spection of cor porate recor ds
Pursuant to the Articles, the register and branch register of members maintained in
Hong Kong shall be open to inspection for at least two (2) hours during business hours by
members without charge, or by any other person upon a maximum payment of HK$2.50 or
such lesser sum specified by the board, at the registered office or such other place at which
the register is kept in accordance with the Companies Act or, upon a maximum payment of
HK$1.00 or such lesser sum specified by the board, at the office where the branch register of
members is kept, unless the register is closed in accordance with the Articles.
(i) Ri ghts of minoritie s in rel ation to fr aud or o ppression
There are no provisions in the Articles relating to rights of minority shareholders in
relation to fraud or oppression. However, certain remedies are available to members of the
Company under Cayman Islands law, as summarised in paragraph 3(f) of this Appendix.
(j) Proce dure s on liqui dation
Unless otherwise provided by the Companies Act, a resolution that the Company be
wound up by the court or be wound up voluntarily shall be a special resolution.
Subject to any special rights, privileges or restrictions as to the distribution of
available surplus assets on liquidation for the time being attached to any class or classes of
shares:
(i) if the Company is wound up and the assets available for distribution amongst
the members of the Company shall be more than sufficient to repay the whole
of the capital paid up at the commencement of the winding up, the excess shall
be distributed pari passu amongst such members in proportion to the amount
paid up on the shares held by them respectively; and
(ii) if the Company is wound up and the assets available for distribution amongst
the members as such shall be insufficient to repay the whole of the paid-up
capital, such assets shall be distributed so that, as nearly as may be, the losses
shall be borne by the members in proportion to the capital paid up, or which
ought to have been paid up, at the commencement of the winding up on the
shares held by them respectively.
If the Company is wound up (whether the liquidation is voluntary or by the court) the
liquidator may, with the authority of a special resolution and any other sanction required by
the Companies Act divide among the members in specie or kind the whole or any part of the
assets of the Company whether the assets shall consist of property of one kind or shall
consist of properties of different kinds and the liquidator may, for such purpose, set such
value as he deems fair upon any one or more class or classes of property to be divided as
aforesaid and may determine how such division shall be carried out as between the members
or different classes of members. The liquidator may, with the like authority, vest any part of
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the assets in trustees upon such trusts for the benefit of members as the liquidator, with the
like authority, shall think fit, but so that no contributory shall be compelled to accept any
shares or other property in respect of which there is a liability.
(k) Sub scri ption ri ghts reserve
The Articles provide that to the extent that it is not prohibited by and is in compliance
with the Companies Act, if warrants to subscribe for shares have been issued by the
Company and the Company does any act or engages in any transaction which would result in
the subscription price of such warrants being reduced below the par value of a share, a
subscription rights reserve shall be established and applied in paying up the difference
between the subscription price and the par value of a share on any exercise of the warrants.
3. CAYMAN ISLANDS COMPANY LA W
The Company is incorporated in the Cayman Islands subject to the Companies Act and,
therefore, operates subject to Cayman Islands law. Set out below is a summary of certain
provisions of Cayman company law, although this does not purport to contain all applicable
qualifications and exceptions or to be a complete review of all matters of Cayman company law and
taxation, which may differ from equivalent provisions in jurisdictions with which interested
parties may be more familiar:
(a) Com pany o peration s
As an exempted company, the Company’s operations must be conducted mainly
outside the Cayman Islands. The Company is required to file an annual return each year with
the Registrar of Companies of the Cayman Islands and pay a fee which is based on the
amount of its authorised share capital.
(b) Sh are c apital
The Companies Act provides that where a company issues shares at a premium,
whether for cash or otherwise, a sum equal to the aggregate amount of the value of the
premiums on those shares shall be transferred to an account, to be called the “share premium
account”. At the option of a company, these provisions may not apply to premiums on shares
of that company allotted pursuant to any arrangement in consideration of the acquisition or
cancellation of shares in any other company and issued at a premium.
The Companies Act provides that the share premium account may be applied by the
company subject to the provisions, if any, of its memorandum and articles of association in
(a) paying distributions or dividends to members; (b) paying up unissued shares of the
company to be issued to members as fully paid bonus shares; (c) the redemption and
repurchase of shares (subject to the provisions of section 37 of the Companies Act); (d)
writing-off the preliminary expenses of the company; and (e) writing-off the expenses of, or
the commission paid or discount allowed on, any issue of shares or debentures of the
company.
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No distribution or dividend may be paid to members out of the share premium account
unless immediately following the date on which the distribution or dividend is proposed to
be paid, the company will be able to pay its debts as they fall due in the ordinary course of
business.
The Companies Act provides that, subject to confirmation by the Grand Court of the
Cayman Islands (the “ Court ”), a company limited by shares or a company limited by
guarantee and having a share capital may, if so authorised by its articles of association, by
special resolution reduce its share capital in any way.
(c) Fin anci al assistance to purch ase shares of a com pany or it s hol ding com pany
There is no statutory restriction in the Cayman Islands on the provision of financial
assistance by a company to another person for the purchase of, or subscription for, its own or
its holding company’s shares. Accordingly, a company may provide financial assistance if
the directors of the company consider, in discharging their duties of care and acting in good
faith, for a proper purpose and in the interests of the company, that such assistance can
properly be given. Such assistance should be on an arm’s-length basis.
(d) Purch aseo f sharesa nd warrants by a com pany and itss ubsidiarie s
A company limited by shares or a company limited by guarantee and having a share
capital may, if so authorised by its articles of association, issue shares which are to be
redeemed or are liable to be redeemed at the option of the company or a shareholder and the
Companies Act expressly provides that it shall be lawful for the rights attaching to any
shares to be varied, subject to the provisions of the company’s articles of association, so as
to provide that such shares are to be or are liable to be so redeemed. In addition, such a
company may, if authorised to do so by its articles of association, purchase its own shares,
including any redeemable shares. However, if the articles of association do not authorise the
manner and terms of purchase, a company cannot purchase any of its own shares unless the
manner and terms of purchase have first been authorised by an ordinary resolution of the
company. At no time may a company redeem or purchase its shares unless they are fully
paid. A company may not redeem or purchase any of its shares if, as a result of the
redemption or purchase, there would no longer be any issued shares of the company other
than shares held as treasury shares. A payment out of capital by a company for the
redemption or purchase of its own shares is not lawful unless immediately following the
date on which the payment is proposed to be made, the company shall be able to pay its debts
as they fall due in the ordinary course of business.
Shares purchased by a company is to be treated as cancelled unless, subject to the
memorandum and articles of association of the company, the directors of the company
resolve to hold such shares in the name of the company as treasury shares prior to the
purchase. Where shares of a company are held as treasury shares, the company shall be
entered in the register of members as holding those shares, however, notwithstanding the
foregoing, the company is not to be treated as a member for any purpose and must not
exercise any right in respect of the treasury shares, and any purported exercise of such a
right shall be void, and a treasury share must not be voted, directly or indirectly, at any
APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY
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--- page 576 ---
meeting of the company and must not be counted in determining the total number of issued
shares at any given time, whether for the purposes of the company’s articles of association
or the Companies Act.
A company is not prohibited from purchasing and may purchase its own warrants
subject to and in accordance with the terms and conditions of the relevant warrant
instrument or certificate. There is no requirement under Cayman Islands law that a
company’s memorandum or articles of association contain a specific provision enabling
such purchases and the directors of a company may rely upon the general power contained in
its memorandum of association to buy and sell and deal in personal property of all kinds.
Under Cayman Islands law, a subsidiary may hold shares in its holding company and,
in certain circumstances, may acquire such shares.
(e) Divi dends a ndd istribution s
The Companies Act permits, subject to a solvency test and the provisions, if any, of
the company’s memorandum and articles of association, the payment of dividends and
distributions out of the share premium account. With the exception of the foregoing, there
are no statutory provisions relating to the payment of dividends. Based upon English case
law, which is regarded as persuasive in the Cayman Islands, dividends may be paid only out
of profits.
No dividend may be declared or paid, and no other distribution (whether in cash or
otherwise) of the company’s assets (including any distribution of assets to members on a
winding up) may be made to the company, in respect of a treasury share.
(f) Protection of minoritie sa nds harehol ders’ suit s
The Courts ordinarily would be expected to follow English case law precedents which
permit a minority shareholder to commence a representative action against or derivative
actions in the name of the company to challenge (a) an act which is ultra vires the company
or illegal, (b) an act which constitutes a fraud against the minority and the wrongdoers are
themselves in control of the company, and (c) an irregularity in the passing of a resolution
which requires a qualified (or special) majority.
In the case of a company (not being a bank) having a share capital divided into shares,
the Court may, on the application of members holding not less than one fifth of the shares of
the company in issue, appoint an inspector to examine into the affairs of the company and to
report thereon in such manner as the Court shall direct.
Any shareholder of a company may petition the Court which may make a winding up
order if the Court is of the opinion that it is just and equitable that the company should be
wound up or, as an alternative to a winding up order, (a) an order regulating the conduct of
the company’s affairs in the future, (b) an order requiring the company to refrain from doing
or continuing an act complained of by the shareholder petitioner or to do an act which the
shareholder petitioner has complained it has omitted to do, (c) an order authorising civil
APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY
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--- page 577 ---
proceedings to be brought in the name and on behalf of the company by the shareholder
petitioner on such terms as the Court may direct, or (d) an order providing for the purchase
of the shares of any shareholders of the company by other shareholders or by the company
itself and, in the case of a purchase by the company itself, a reduction of the company’s
capital accordingly.
Generally claims against a company by its shareholders must be based on the general
laws of contract or tort applicable in the Cayman Islands or their individual rights as
shareholders as established by the company’s memorandum and articles of association.
(g)D i sposalo f assets
The Companies Act contains no specific restrictions on the power of directors to
dispose of assets of a company. However, as a matter of general law, every officer of a
company, which includes a director, managing director and secretary, in exercising his
powers and discharging his duties must do so honestly and in good faith with a view to the
best interests of the company and exercise the care, diligence and skill that a reasonably
prudent person would exercise in comparable circumstances.
(h) Accountin ga nda uditin g requirement s
A company must cause proper books of account to be kept with respect to (i) all sums
of money received and expended by the company and the matters in respect of which the
receipt and expenditure takes place; (ii) all sales and purchases of goods by the company;
and (iii) the assets and liabilities of the company.
Proper books of account shall not be deemed to be kept if there are not kept such
books as are necessary to give a true and fair view of the state of the company’s affairs and
to explain its transactions.
An exempted company must make available at its registered office in electronic form
or any other medium, copies of its books of account or parts thereof as may be required of it
upon service of an order or notice by the Tax Information Authority pursuant to the Tax
Information Authority Act of the Cayman Islands.
(i) Exch ange control
There are no exchange control regulations or currency restrictions in the Cayman
Islands.
APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY
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--- page 578 ---
(j) T axation
Pursuant to the Tax Concessions Act of the Cayman Islands, the Company has
obtained an undertaking:
(1) that no law which is enacted in the Cayman Islands imposing any tax to be
levied on profits, income, gains or appreciation shall apply to the Company or
its operations; and
(2) that the aforesaid tax or any tax in the nature of estate duty or inheritance tax
shall not be payable on or in respect of the shares, debentures or other
obligations of the Company.
The undertaking for the Company is for a period of twenty years from 20 September
2021.
The Cayman Islands currently levy no taxes on individuals or corporations based
upon profits, income, gains or appreciations and there is no taxation in the nature of
inheritance tax or estate duty. There are no other taxes likely to be material to the Company
levied by the Government of the Cayman Islands save for certain stamp duties which may be
applicable, from time to time, on certain instruments executed in or brought within the
jurisdiction of the Cayman Islands. The Cayman Islands are a party to a double tax treaty
entered into with the United Kingdom in 2010 but otherwise is not party to any double tax
treaties.
(k) St ampd uty on tr ansfer s
No stamp duty is payable in the Cayman Islands on transfers of shares of Cayman
Islands companies except those which hold interests in land in the Cayman Islands.
(l) Lo ans to director s
There is no express provision in the Companies Act prohibiting the making of loans
by a company to any of its directors.
(m) In spection of cor porate recor ds
The notice of registered office is a matter of public record. A list of the names of the
current directors and alternate directors (if applicable) is made available by the Registrar of
Companies for inspection by any person on payment of a fee. The register of mortgages is
open to inspection by creditors and members.
Members of the Company have no general right under the Companies Act to inspect
or obtain copies of the register of members or corporate records of the Company. They will,
however, have such rights as may be set out in the Company’s Articles.
APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY
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--- page 579 ---
(n) Re gister of member s
An exempted company may maintain its principal register of members and any branch
registers at such locations, whether within or without the Cayman Islands, as the directors
may, from time to time, think fit. The register of members shall contain such particulars as
required by Section 40 of the Companies Act. A branch register must be kept in the same
manner in which a principal register is by the Companies Act required or permitted to be
kept. The company shall cause to be kept at the place where the company’s principal register
is kept a duplicate of any branch register duly entered up from time to time.
There is no requirement under the Companies Act for an exempted company to make
any returns of members to the Registrar of Companies of the Cayman Islands. The names
and addresses of the members are, accordingly, not a matter of public record and are not
available for public inspection. However, an exempted company shall make available at its
registered office, in electronic form or any other medium, such register of members,
including any branch register of members, as may be required of it upon service of an order
or notice by the Tax Information Authority pursuant to the Tax Information Authority Act of
the Cayman Islands.
(o) Re gister of Director sa nd Officer s
The Company is required to maintain at its registered office a register of directors and
officers which is not available for inspection by the public. A copy of such register must be
filed with the Registrar of Companies in the Cayman Islands and any change must be
notified to the Registrar within thirty (30) days of any change in such directors or officers.
(p) Benefici al Owner ship Register
An exempted company is required to maintain a beneficial ownership register at its
registered office that records details of the persons who ultimately own or control, directly
or indirectly, 25% or more of the equity interests or voting rights of the company or have
rights to appoint or remove a majority of the directors of the company. The beneficial
ownership register is not a public document and is only accessible by a designated
competent authority of the Cayman Islands. Such requirement does not, however, apply to
an exempted company with its shares listed on an approved stock exchange, which includes
the Stock Exchange. Accordingly, for so long as the shares of the Company are listed on the
Stock Exchange, the Company is not required to maintain a beneficial ownership register.
APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY
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--- page 580 ---
(q) Win ding up
A company may be wound up (a) compulsorily by order of the Court, (b) voluntarily,
or (c) under the supervision of the Court.
The Court has authority to order winding up in a number of specified circumstances
including where the members of the company have passed a special resolution requiring the
company to be wound up by the Court, or where the company is unable to pay its debts, or
where it is, in the opinion of the Court, just and equitable to do so. Where a petition is
presented by members of the company as contributories on the ground that it is just and
equitable that the company should be wound up, the Court has the jurisdiction to make
certain other orders as an alternative to a winding-up order, such as making an order
regulating the conduct of the company’s affairs in the future, making an order authorising
civil proceedings to be brought in the name and on behalf of the company by the petitioner
on such terms as the Court may direct, or making an order providing for the purchase of the
shares of any of the members of the company by other members or by the company itself.
A company (save with respect to a limited duration company) may be wound up
voluntarily when the company so resolves by special resolution or when the company in
general meeting resolves by ordinary resolution that it be wound up voluntarily because it is
unable to pay its debts. In the case of a voluntary winding up, such company is obliged to
cease to carry on its business (except so far as it may be beneficial for its winding up) from
the time of passing the resolution for voluntary winding up or upon the expiry of the period
or the occurrence of the event referred to above.
For the purpose of conducting the proceedings in winding up a company and assisting
the Court therein, there may be appointed an official liquidator or official liquidators; and
the court may appoint to such office such person, either provisionally or otherwise, as it
thinks fit, and if more persons than one are appointed to such office, the Court must declare
whether any act required or authorised to be done by the official liquidator is to be done by
all or any one or more of such persons. The Court may also determine whether any and what
security is to be given by an official liquidator on his appointment; if no official liquidator is
appointed, or during any vacancy in such office, all the property of the company shall be in
the custody of the Court.
As soon as the affairs of the company are fully wound up, the liquidator must make a
report and an account of the winding up, showing how the winding up has been conducted
and how the property of the company has been disposed of, and thereupon call a general
meeting of the company for the purposes of laying before it the account and giving an
explanation thereof. This final general meeting must be called by at least 21 days’ notice to
each contributory in any manner authorised by the company’s articles of association and
published in the Gazette.
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--- page 581 ---
(r) Recon struction s
There are statutory provisions which facilitate reconstructions and amalgamations
approved by (i) a majority in number representing seventy-five per cent. (75%) in value of
creditors, or (ii) seventy-five per cent. (75%) in value of shareholders or class of
shareholders, as the case may be, as are present at a meeting called for such purpose and
thereafter sanctioned by the Court. Whilst a dissenting shareholder would have the right to
express to the Court his view that the transaction for which approval is sought would not
provide the shareholders with a fair value for their shares, the Court is unlikely to
disapprove the transaction on that ground alone in the absence of evidence of fraud or bad
faith on behalf of management.
The Companies Act also contains statutory provisions which provide that a company
may present a petition to the Court for the appointment of a restructuring officer on the
grounds that the company (a) is or is likely to become unable to pay its debts within the
meaning of section 93 of the Companies Act; and (b) intends to present a compromise or
arrangement to its creditors (or classes thereof) either, pursuant to the Companies Act, the
law of a foreign country or by way of a consensual restructuring. The petition may be
presented by a company acting by its directors, without a resolution of its shareholders or an
express power in its articles of association. On hearing such a petition, the Court may,
among other things, make an order appointing a restructuring officer or make any other
order as the Court thinks fit.
(s)T ake-over s
Where an offer is made by a company for the shares of another company and, within
four (4) months of the offer, the holders of not less than ninety per cent. (90%) of the shares
which are the subject of the offer accept, the offeror may at any time within two (2) months
after the expiration of the said four (4) months, by notice in the prescribed manner require
the dissenting shareholders to transfer their shares on the terms of the offer. A dissenting
shareholder may apply to the Court within one (1) month of the notice objecting to the
transfer. The burden is on the dissenting shareholder to show that the Court should exercise
its discretion, which it will be unlikely to do unless there is evidence of fraud or bad faith or
collusion as between the offeror and the holders of the shares who have accepted the offer as
a means of unfairly forcing out minority shareholders.
(t) In demnific ation
Cayman Islands law does not limit the extent to which a company’s articles of
association may provide for indemnification of officers and directors, except to the extent
any such provision may be held by the Court to be contrary to public policy (e.g. for
purporting to provide indemnification against the consequences of committing a crime).
APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY
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--- page 582 ---
(u) Economic Sub stance Requirement s
Pursuant to the International Tax Cooperation (Economic Substance) Act of the
Cayman Islands (“ ES Act ”) that came into force on 1 January 2019, a “relevant entity” is
required to satisfy the economic substance test set out in the ES Act. A “relevant entity”
includes an exempted company incorporated in the Cayman Islands as is the Company;
however, it does not include an entity that is tax resident outside the Cayman Islands.
Accordingly, for so long as the Company is a tax resident outside the Cayman Islands,
including in Hong Kong, it is not required to satisfy the economic substance test set out in
the ES Act.
4. GENERAL
Conyers Dill & Pearman, the Company’s special legal counsel on Cayman Islands law, have
sent to the Company a letter of advice summarising certain aspects of Cayman Islands company
law. This letter, together with a copy of the Companies Act, is available for inspection as referred
to in the paragraph headed “Documents on display” in Appendix V to this prospectus. Any person
wishing to have a detailed summary of Cayman Islands company law or advice on the differences
between it and the laws of any jurisdiction with which he is more familiar is recommended to seek
independent legal advice.
APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY
AND CAYMAN ISLANDS COMPANY LA W
– III-26 –


--- page 583 ---
A. FURTHER INFORMATION ABOUT OUR GROUP
1. Incor poration
Our Company is an exempted company with limited liability incorporated in the
Cayman Islands on February 28, 2018. Our registered office address is at Cricket Square,
Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands. Accordingly,
our Company’s corporate structure and Memorandum and Articles are subject to the relevant
laws of the Cayman Islands, a summary of which is set out in “Summary of the Constitution
of the Company and Cayman Islands Company Law” in Appendix III to this prospectus.
Our registered place of business in Hong Kong is at 40/F, Dah Sing Financial Centre,
No. 248 Queen’s Road East, Wanchai, Hong Kong. We were registered as a non-Hong Kong
company under Part 16 of the Companies Ordinance on February 10, 2022. Ms. CHU Pik
Man ( ϡᓴઽ) has been appointed as the authorized representative of our Company for the
acceptance of service of process in Hong Kong. The address for service of process in Hong
Kong is at 40/F, Dah Sing Financial Centre, No. 248 Queen’s Road East, Wanchai, Hong
Kong.
2. Ch anges in the share c apital of our Com pany
Our Company was incorporated in the Cayman Islands as an exempted company with
limited liability on February 28, 2018. As of the date of our Company’s incorporation, the
authorized share capital of our Company was US$50,000 divided into 50,000 shares with a
par value of US$1 each.
On November 2, 2022, our Company reclassified and re-designated 3,973,767
ordinary Shares as 3,973,767 Series C+ Preferred Shares, following which, our authorized
share capital was changed from US$50,000 divided into 500,000,000 shares of US$0.0001
each, comprising of (i) 464,160,283 ordinary Shares, (ii) 6,300,000 Series A Preferred
Shares; (iii) 2,760,061 Series B-1 Preferred Shares, (iv) 1,910,811 Series B-2 Preferred
Shares, (v) 12,678,554 Series B+ Preferred Shares, and (vi) 12,190,291 Series C Preferred
Shares, to US$50,000 divided into 500,000,000 shares of US$0.0001 each, comprising of (i)
460,186,516 ordinary Shares, (ii) 6,300,000 Series A Preferred Shares; (iii) 2,760,061
Series B-1 Preferred Shares, (iv) 1,910,811 Series B-2 Preferred Shares, (v) 12,678,554
Series B+ Preferred Shares, (vi) 12,190,291 Series C Preferred Shares, and (vii) 3,973,767
Series C+ Preferred Shares.
For the share capital of our Company as at the Latest Practicable Date, see the section
headed “Share Capital” in this prospectus for details.
Save as disclosed in the section headed “History, Reorganization and Corporate
Structure”, “2. Changes in the share capital of the Company” as mentioned above and “4.
Written Resolutions Passed by Our Shareholders on December 11, 2023” below in this
prospectus, there is no alteration in our share capital within two years immediately
preceding the date of this prospectus.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 1–


--- page 584 ---
3. Ch anges in the share c apitalo fo u r subsidiarie s
A summary of the corporate information and the particulars of our subsidiaries are set
out in Note 1 to the Accountants’ Report as set out in Appendix I to this prospectus.
The following sets out the alterations in the registered capital of our subsidiaries that
took place within two years preceding the date of this prospectus:
Shenzhen HighTide
On January 30, 2023, the registered capital of Shenzhen HighTide was
increased from RMB66,450,000 to RMB70,000,000. And on April 26, 2023, the
registered capital of Shenzhen HighTide was increased from RMB70,000,000 to
RMB310,800,000.
Nanchang Fusion
On April 27, 2023, the registered capital of Nanchang Fusion was increased
from RMB12,000,000 to RMB56,000,000.
Hebei Puhui
On September 27, 2023, Hebei Puhui was established with registered capital of
RMB100,000,000.
Save as disclosed above, there is no alteration in the share capital of any of the
subsidiaries of our Company within the two years immediately preceding the date of
this prospectus.
4. Written Re solution s Passed by Our Sh arehol ders on December 11, 2023
Written resolutions of the Shareholders of our Company were passed on December
11, 2023, pursuant to which, among others:
(a) our Company approved and conditionally adopted the Memorandum and
Articles of Association with effect from the Listing;
(b) our authorized share capital was increased from US$50,000 to US$100,000 by
the creation of an additional 500,000,000 ordinary Shares, and following such
increase, the authorized share capital of our Company was US$100,000
divided into 1,000,000,000 shares of US$0.0001 each, comprising of (i)
960,186,516 ordinary Shares, (ii) 6,300,000 Series A Preferred Shares; (iii)
2,760,061 Series B-1 Preferred Shares, (iv) 1,910,811 Series B-2 Preferred
Shares, (v) 12,678,554 Series B+ Preferred Shares, (vi) 12,190,291 Series C
Preferred Shares, and (vii) 3,973,767 Series C+ Preferred Shares;
(c) conditional on (1) the Listing Committee granting listing of, and permission to
deal in, the Shares in issue and to be issued as stated in this prospectus and such
listing and permission not subsequently having been revoked prior to the
commencement of dealing in the Shares on the Stock Exchange; (2) the Offer
Price having been determined and (3) the obligations of the Underwriters under
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 2–


--- page 585 ---
the Underwriting Agreements becoming unconditional and the Underwriting
Agreements not being terminated in accordance with their terms or otherwise,
in each case on or before such dates as may be specified in the Underwriting
Agreements:
(i) all the issued Preferred Shares, of a par value of US$0.0001, be
redesignated and reclassified into Shares, on a one-to-one basis,
following which:
(A) our authorized share capital would be US$100,000 divided into
1,000,000,000 Shares, with par value of US$0.0001 each; and
(B) all the ordinary Shares of a par value of US$0.0001 in issue to
remain as Shares.
(ii) the Capitalization Issue and the Global Offering was approved, and the
proposed allotment and issue of the Offer Shares under the
Capitalization Issue and the Global Offering were approved, and the
Board was authorized to determine the Offer Price for, and to allot and
issue the Offer Shares;
(iii) a general mandate was given to our Directors to exercise all powers of
our Company to allot, issue and deal with Shares or securities
convertible into Shares and to make or grant offers, agreements or
options (including any warrants, bonds, notes and debentures conferring
any rights to subscribe for or otherwise receive Shares) which might
require Shares to be allotted and issued or dealt with subject to the
requirement that the aggregate number of our Shares so allotted and
issued or agreed conditionally or unconditionally to be allotted and
issued, otherwise than by way of the Global Offering, rights issue or
pursuant to the exercise of any subscription rights attaching to any
warrants which may be allotted and issued by the Company from time to
time or allotment and issue of Shares in lieu of the whole or part of a
dividend on Shares in accordance with the Articles of Association on a
specific authority granted by our Shareholders in a general meeting,
shall not exceed the sum of (i) 20% of the aggregate number of our
Shares in issue immediately following the completion of the
Capitalization Issue and the Global Offering; and (ii) the aggregate
number of shares of the Company purchased by the Company pursuant
to the authority granted to the Directors as referred to in (b)(iv) below;
(iv) a general mandate was given to our Directors to exercise all powers of
our Company to repurchase its own Shares (the “ Re purch as e
Mandate”) on the Stock Exchange or on any other stock exchange on
which the securities of our Company may be listed and which is
recognized by the SFC and the Stock Exchange for this purpose, in
accordance with all applicable laws and the requirement of the Listing
Rules such number of Shares as will represent up to 10% of the
aggregate number of our Shares in issue immediately following the
completion of the Capitalization Issue and the Global Offering; and
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 3–


--- page 586 ---
(v) the general mandate as mentioned in paragraph (iii) above was extended
by the addition to the aggregate number of our Shares which may be
allotted and issued or agreed to be allotted and issued by our Directors
pursuant to such general mandate of an amount representing the
aggregate number of our Shares purchased by our Company pursuant to
the Repurchase Mandate referred to in paragraph (iv) above (up to 10%
of the aggregate number of our Shares in issue immediately following
the completion of the Global Offering).
Each of the general mandates referred to in paragraphs (c)(iii), (c)(iv), and (c)(v)
above will remain in effect until whichever is the earliest of:
• the conclusion of the next annual general meeting of our Company;
• the expiration of the period within which the next annual general meeting of
our Company is required to be held by any applicable law or the Articles; or
• the time when such mandate is revoked or varied by an ordinary resolution of
the Shareholders in a general meeting.
5. Re purch aseo fo u ro w n securitie s
The following paragraphs include, among others, certain information required by the
Stock Exchange to be included in this prospectus concerning the repurchase of our own
securities.
(a) Provision of the Listing Rules
The Listing Rules permit companies with a primary listing on the Stock
Exchange to repurchase their own securities on the Stock Exchange subject to certain
restrictions, the most important of which are summarized below:
(i) Shareholder’sapproval
All proposed repurchases of securities (which must be fully paid up in
the case of shares) by a company with a primary listing on the Stock Exchange
must be approved in advance by an ordinary resolution of the shareholders in a
general meeting, either by way of general mandate or by specific approval of a
particular transaction.
Pursuant to a resolution passed by our Shareholders on December 11,
2023, the Repurchase Mandate was given to our Directors authorizing them to
exercise all powers of our Company to repurchase Shares on the Stock
Exchange, or on any other stock exchange on which the securities of our
Company may be listed and which is recognized by the SFC and the Stock
Exchange for this purpose, with a total nominal value up to 10% of the
aggregate number of our Shares in issue immediately following the completion
APPENDIX IV STATUTORY AND GENERAL INFORMATION
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--- page 587 ---
of the Capitalization Issue and theGlobal Offering with such mandate to expire
at the earliest of (i) the conclusion of the next annual general meeting of our
Company (unless otherwise renewed by an ordinary resolution of our
Shareholders in a general meeting, either unconditionally or subject to
conditions), (ii) the expiration of the period within which our Company’s next
annual general meeting is required by the Articles of Association or any other
applicable laws to be held, and (iii) the date on which it is varied or revoked by
an ordinary resolution of our Shareholders in a general meeting.
(ii) Sourceoffunds
Purchases must be funded out of funds legally available for the purpose
in accordance with the Memorandum and Articles and the applicable laws and
regulations of Hong Kong and the Cayman Islands. A listed company may not
purchase its own securities on the Stock Exchange for a consideration other
than cash or for settlement otherwise than in accordance with the trading rules
of the Stock Exchange from time to time. As a matter of Cayman law, any
purchases by our Company may be made out of profits or out of the proceeds of
a new issue of shares made for the purpose of the purchase or from sums
standing to the credit of our share premium account and, in the case of any
premium payable on the purchase over the par value of the shares to be
purchased must have been provided for out of profits or from sums standing to
the credit of our share premium account. Subject to the Cayman Companies
Act, a repurchase of Shares may also be paid out of capital.
(iii) Tradingrestrictions
The total number of shares which a listed company may repurchase on
the Stock Exchange is the number of shares representing up to a maximum of
10% of the aggregate number of shares in issue.
A company may not issue or announce a proposed issue of new
securities for a period of 30 days immediately following a repurchase (other
than an issue of securities pursuant to an exercise of warrants, share options or
similar instruments requiring the company to issue securities which were
outstanding prior to such repurchase) without the prior approval of the Stock
Exchange. In addition, a listed company is prohibited from repurchasing its
shares on the Stock Exchange if the purchase price is 5% or more than the
average closing market price for the five preceding trading days on which its
shares were traded on the Stock Exchange. The Listing Rules also prohibit a
listed company from repurchasing its securities if the repurchase would result
in the number of listed securities which are in the hands of the public falling
below the relevant prescribed minimum percentage as required by the Stock
Exchange. A listed company is required to procure that the broker appointed by
it to effect a repurchase of securities discloses to the Stock Exchange such
information with respect to the repurchase as the Stock Exchange may require.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 5–


--- page 588 ---
(iv) StatusofrepurchasedShares
The listing of all purchased securities (whether on the Stock Exchange
or otherwise) is automatically canceled and the relative certificates must be
canceled and destroyed. Under the laws of the Cayman Islands, unless, prior to
the purchase the Directors of our Company resolve to hold the shares
purchased by our Company as treasury shares, shares purchased by our
Company shall be treated as canceled and the amount of our Company’s issued
share capital shall be diminished by the nominal value of those shares.
However, the purchase of shares will not be taken as reducing the amount of the
authorized share capital under Cayman Islands laws.
(v) Suspensionofrepurchase
A listed company may not make any repurchase of securities after a
price sensitive development has occurred or has been the subject of a decision
until such time as the price sensitive information has been made publicly
available. In particular, during the period of one month immediately preceding
the earlier of (a) the date of the board meeting (as such date is first notified to
the Stock Exchange in accordance with the Listing Rules) for the approval of a
listed company’s results for any year, half-year, quarterly or any other interim
period (whether or not required under the Listing Rules) and (b) the deadline
for publication of an announcement of a listed company’s results for any year
or half-year under the Listing Rules, or quarterly or any other interim period
(whether or not required under the Listing Rules), the listed company may not
repurchase its shares on the Stock Exchange other than in exceptional
circumstances. In addition, the Stock Exchange may prohibit a repurchase of
securities on the Stock Exchange if a listed company has breached the Listing
Rules.
(vi) Reportingrequirements
Certain information relating to repurchases of securities on the Stock
Exchange or otherwise must be reported to the Stock Exchange not later than
30 minutes before the earlier of the commencement of the morning trading
session or any pre-opening session on the following Business Day. In addition,
a listed company’s annual report is required to disclose details regarding
repurchases of securities made during the year, including a monthly analysis of
the number of securities repurchased, the purchase price per share or the
highest and lowest price paid for all such repurchases, where relevant, and the
aggregate prices paid.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 6–


--- page 589 ---
(vii) Coreconnectedpersons
The Listing Rules prohibit a company from knowingly purchasing
securities on the Stock Exchange from a “core connected person”, that is, a
director, chief executive or substantial shareholder of the company or any of its
subsidiaries or a close associate of any of them (as defined in the Listing Rules)
and a core connected person shall not knowingly sell his securities to the
company.
(b) Reasons for repurchases
Our Directors believe that it is in the best interests of our Company and
Shareholders for our Directors to have a general authority from the Shareholders to
enable our Company to repurchase Shares in the market. Such repurchases may,
depending on market conditions and funding arrangements at the time, lead to an
enhancement of the net asset value per Share or earnings per Share and will only be
made where our Directors believe that such repurchases will benefit our Company
and Shareholders.
(c) Funding of repurchases
Repurchase of the Shares must be funded out of funds legally available for such
purpose in accordance with the Articles of Association and the applicable laws of the
Cayman Islands.
Our Directors may not repurchase the Shares on the Stock Exchange for a
consideration other than cash or for settlement otherwise than in accordance with the
trading rules of the Stock Exchange. Subject to the foregoing, our Directors may
make repurchases out of profits of the Company, out of the share premium account of
the Company or out of the proceeds of a new issuance of shares made for the purpose
of the repurchase and, in the case of any premium payable on the repurchase, out of
profits of our Company or from sums standing to the credit of the share premium
account of our Company. Subject to the Cayman Companies Act, a repurchase may
also be made out of capital.
However, our Directors do not propose to exercise the general mandate to such
an extent as would, in the circumstances, have a material adverse effect on the
working capital requirements of our Company or its gearing levels which, in the
opinion of our Directors, are from time to time appropriate for our Company.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 7–


--- page 590 ---
(d) General
The exercise in full of the Repurchase Mandate, on the basis of 514,770,668
Shares in issue immediately following the completion of the Capitalization Issue and
the Global Offering could accordingly result in up to approximately 51,477,066
Shares being repurchased by our Company during the period prior to the earliest of:
• the conclusion of the next annual general meeting of our Company
unless renewed by an ordinary resolution of our Shareholders in a
general meeting, either unconditionally or subject to conditions;
• the expiration of the period within which our Company’s next annual
general meeting is required by the Articles of Association or any other
applicable laws to be held; or
• the date on which it is varied or revoked by an ordinary resolution of our
Shareholders in a general meeting.
None of our Directors nor, to the best of their knowledge having made all
reasonable enquiries, any of their associates currently intends to sell any Shares to
our Company.
Our Directors have undertaken to the Stock Exchange that, so far as the same
may be applicable, they will exercise the Repurchase Mandate in accordance with the
Listing Rules and the applicable laws in the Cayman Islands.
If, as a result of any repurchase of Shares, a Shareholder’s proportionate
interest in the voting rights of our Company increases, such increase will be treated as
an acquisition for the purposes of the Takeovers Code. Accordingly, a Shareholder or
a group of Shareholders acting in concert could obtain or consolidate control of our
Company and become obliged to make a mandatory offer in accordance with Rule 26
of the Takeovers Code. Save as aforesaid, our Directors are not aware of any
consequences which would arise under the Takeovers Code as a consequence of any
repurchases pursuant to the Repurchase Mandate.
Any repurchase of Shares that results in the number of Shares held by the
public being reduced to less than 25% of the Shares then in issue could only be
implemented if the Stock Exchange agreed to waive the Listing Rules requirements
regarding the public shareholding referred to above. It is believed that a waiver of this
provision would not normally be granted other than in exceptional circumstances.
No core connected person of our Company has notified our Company that he or
she has a present intention to sell Shares to our Company, or has undertaken not to do
so, if the Repurchase Mandate is exercised.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 8–


--- page 591 ---
B. FURTHER INFORMATION ABOUT OUR BUSINESS
1. Summ ary of m ateri al contr acts
The following contract (not being contracts entered into in the ordinary course of
business) has been entered into by members of our Group within the two years preceding the
date of this prospectus and are or may be material:
(a) the sixth amended and restated shareholders agreement dated September 5, 2022
entered into among our Company, HighTide Therapeutics USA, LLC, HighTide
Therapeutics, Ltd., HighTide Therapeutics (Hong Kong) limited, HighTide
Biopharma Pty. Ltd., Shenzhen HighTide Biopharmaceutical, Ltd. ( ଉέё໋इ
ʮ̡ ), Shanghai HighTide Biopharmaceutical, Ltd. ( ɪऎё໋इ
ʮ̡ ), JSK Consumer Healthcare Ltd. (ࠢ
ʮ̡), Shanghai Fusion Therapeutics, Ltd. (ʮ̡ ),
Nanchang Fusion Therapeutics, Ltd. (ʮ̡ ), LIU Liping,
Great Mantra Group Limited, Wisdom Spring Group Limited, Shenzhen
Hepalink Pharmaceutical Group Co., Ltd. (ࠢ
ʮ̡), Hepalink Biotechnology II Limited, Shenzhen Qianhai Haichuang Fund
Partnership (Limited Partnership) (ࠢ
Υྫ), Able Holdings International Limited, Goldlink Capital Fund SPC –
Goldlink Greater China Fund SP V , Green Pine Growth Fund I LP, Greaty
Investment Limited, ZT Global Energy Investment Fund I LP, Blue Ocean
Healthcare Project I, Ltd, Orient Champion Investment Limited, Poly Platinum
Enterprises Limited, Hongkong Tigermed Co., Limited, Pluto Connection
Limited, Shenzhen Taixun Enterprise Management Consulting Partnership
(Limited Partnership) (Υྫ ),
Shenzhen BioResearch Investment Fund, L.P. (ҳ༟ΥྫΆุ
Υྫ), Shenzhen Winzac Jingfeng Venture Capital Enterprise (Limited
Partnership) (Υྫ), Sichuan Rongxin
Zhiyuan Industrial Co., Ltd (ʮ̡ ), Xinyu Cowin
Guosheng Sci-Tech Innovation Investment Partnership (Limited Partnership)
(Υྫ), Ningbo Borui Allen
Equity Investment Partnership (LLP) (ࠢ
Υྫ), BAIYI Capital Limited, Hongtu Capital Limited, Guangzhou Yuexiu
Jinchan Phase IV Investment Fund Partnership (Limited Partnership) ( ᄿψ൳
Υྫ) and Guangdong Chinese Medicine
Comprehensive Health Equity Investment Fund Partnership (Limited
Partnership) (Υྫ ),
together with (i) the deed of adherence dated November 2, 2022 entered into
between our Company and Pingtan Rongjing Investment Partnership (Limited
Partnership) (Υྫ), and (ii) the deed of
adherence dated November 2, 2022 entered into between our Company and
MPCAPITAL INTERNATIONAL COMPANY LIMITED, both in the form of
the exhibit A to the sixth amended and restated shareholders agreement,
pursuant to which the parties agreed on the terms and conditions to regulate the
affairs of the Company and the rights of the shareholders;
(b) the cornerstone investment agreement dated December 10, 2023 entered into
among our Company, Cangzhou Chuangrong Equity Investment Fund Co., Ltd.
(ʮ̡ ) (the “ Inve stor ”), UBS Securities Hong
Kong Limited, UBS AG Hong Kong Branch and Huatai Financial Holdings
(Hong Kong) Limited, pursuant to which the Investor agreed to subscribe for
such number of Shares under the International Offering at the Offer Price in the
aggregate amount of Hong Kong dollar equivalent of RMB100,000,000; and
(c) the Hong Kong Underwriting Agreement.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 9–


--- page 592 ---
2. Intellectu al property ri ghts
(a) Trademarks
As of the Latest Practicable Date, we had registered the following trademarks
which we consider to be or may be material to our business:
No. M arks Category Owner
Place of
Registration
Registration
Number
Registration
date Ex piry D ate
1.
 Class 5 Shenzhen
HighTide
PRC 12220709 August 14,
2014
August 13,
2024
2.
 Class 5 Shenzhen
HighTide
PRC 12220741 January 14,
2015
January 13,
2025
3.
 Class 5 Shenzhen
HighTide
PRC 12220722 August 14,
2014
August 13,
2024
4.
 Class 5
Class 10
Class 42
Class 44
Shenzhen
HighTide
Hong Kong 305577607 August 10,
2021
March 28,
2031
5.
Class 5
Class 10
Shenzhen
HighTide
PRC 58399584
58383642
February 7,
2022
February 14,
2022
February 6,
2032
February 13,
2032
6.
 Class 5
Class 10
Class 42
Class 44
Shenzhen
HighTide
Hong Kong 305739355 January 31,
2022
September 6,
2031
7.
Class 5
Class 10
Class 42
Class 44
Shenzhen
HighTide
Hong Kong 305577599 August 10,
2021
March 28,
2031
8.
Class 10
Class 35
Class 44
Shenzhen
HighTide
PRC 70397866
70415719
70410955
September 7,
2023
September 6,
2033
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-10 –


--- page 593 ---
As of the Latest Practicable Date, we had applied for the registration of the
following trademarks which we consider to be or may be material to our business:
No. Tr ademark
Place of
Applic ation
Applic ation
Number A pplic ant
Applic ation
Date
1.
 PRC 71496879 Shenzhen
HighTide
May 11, 2023
2.
 US 88047574 Shenzhen
HighTide
July 22, 2018
3.
 US 88047279 Shenzhen
HighTide
July 21, 2018
4.
 US 97313672 U.S. HighTide March 15, 2022
5.
 Hong Kong 306242409 Shenzhen
HighTide
May 12, 2023
6.
 PRC 72529296 Shenzhen
HighTide
June 29, 2023
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-11 –


--- page 594 ---
(b) Patents
As of the Latest Practicable Date, we owned the following registered patent
which we consider to be or may be material to our business:
No. Ty peP atent
Place of
Registration P atent Number Owner
Authoriz ation
Announcement
Date
1. Invention Berberine salts,
ursodeoxycholic
salts and
combinations,
methods of
preparation and
application thereof
Australia
Canada
EPO
Japan
PRC
US
2015296098
3174874
6917144
201580041177.9
10301303
2945609
Shenzhen
HighTide
June 17, 2019
September 2, 2020
August 11, 2021
May 17, 2019
May 28, 2019
May 23, 2023
2. Invention Pharmaceutical
composition
comprising berberine
ursodeoxycholic acid
salt for the treatment
of various diseases
or disorders
US 10988471 Shenzhen
HighTide
April 27, 2021
3. Invention Solid forms of
berberine
ursodeoxycholate
and compositions
and methods thereof
Australia
PRC
US
AU2018264384
108864077
10959999
Shenzhen
HighTide
May 19, 2022
May 22, 2020
March 30, 2021
4. Invention Compositions and
methods of using
islet neogenesis
peptides and analogs
thereof
Australia
Canada
EPO
Japan
PRC
South Korea
US
US
2014231444
CA2906240
2970385
7075918
201410096363.X
102244349
9388215
9738695
Shenzhen
HighTide
July 19, 2018
October 18, 2022
October 3, 2018
May 26, 2022
April 16, 2019
April 23, 2021
July 12, 2016
August 22, 2017
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-12 –


--- page 595 ---
As of the Latest Practicable Date, we filed the following patent applications
which we consider to be or may be material to our business:
No. Ty peP atent
Place of
Registration
Applic ation
Number A pplic ant
Date of
Applic ation
1. Invention Berberine salts,
ursodeoxycholic salts
and combinations,
methods of preparation
and application thereof
South Korea KR2017-7004835 Shenzhen
HighTide
July 28, 2015
2. Invention Solid forms of berberine
ursodeoxycholate and
compositions and
methods thereof
Canada
EPO
Japan
South Korea
CA3062833
EP2018798004
JP2019562655
KR2019-7036227
Shenzhen
HighTide
May 11, 2018
C. FURTHER INFORMATION ABOUT OUR DIRECTORS
1. P articul ars of Director s’ service contr actsa nd app ointment letter s
(a) Executive Directors
Each of our executive Directors, Dr. LIU Liping and Ms. YU Meng, has entered
into a service contract with our Company on December 11, 2023. The initial term of
their service contract shall commence from the date of their appointment as a Director
and continue for a period of three years after or until the third annual general meeting
of our Company since the Listing Date, whichever is earlier, and shall be
automatically renewed for successive periods of three years (subject always to
re-election as and when required under the Articles), until terminated in accordance
with the terms and conditions of the service contract or by either party giving to the
other not less than three months’ prior notice in writing.
(b) Non-executive Directors and Independent non-executive Directors
Each of our non-executive Directors and independent non-executive Directors
has entered into an appointment letter with our Company on December 11, 2023. The
initial term for their appointment letters shall commence from the date of his
appointment as a Director and continue for a period of three years after or until the
third annual general meeting of our Company since the Listing Date, whichever is
earlier, and shall be automatically renewed for successive periods of three years
(subject always to re-election as and when required under the Articles), until
terminated in accordance with the terms and conditions of the appointment letter or
by either party giving to the other not less than three months’ prior notice in writing.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-13 –


--- page 596 ---
2. Remuner ation of Director s
Remuneration and benefits in kind of RMB8.8 million, RMB10.9 million and
RMB12.6 million in aggregate were paid and granted by our Group to our Directors in
respect of the years ended December 31, 2021 and 2022 and the six months ended June 30,
2023, respectively.
Under the arrangements currently in force, our Directors will be entitled to receive
remuneration and benefits in kind which, for the year ending December 31, 2023, is
expected to be approximately RMB3.91 million in aggregate (excluding discretionary bonus
and share-based compensation).
3. Di sclo sure of intere sts
(a) Interests and Short Positions of Our Directors and the Chief Executive of
Our Company in the Share Capital of our Company and Its Associated
Corporations Following Completion of the Capitalization Issue and the
Global Offering
Immediately following completion of the Capitalization Issue, the repurchase
of Shares from the 2023 ESOP Platform and the Global Offering, the interests or short
positions of our Directors and chief executives in the Shares, underlying shares and
debentures of our Company and its associated corporations, within the meaning of
Part XV of the SFO, which will have to be notified to our Company and the Stock
Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests
and short positions which he/she is taken or deemed to have under such provisions of
the SFO), or which will be required, pursuant to Section 352 of the SFO, to be
recorded in the register referred to therein, or which will be required to be notified to
our Company and the Stock Exchange pursuant to the Model Code for Securities
Transactions by Directors of Listed Issuers contained in the Listing Rules, will be as,
follows:
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-14 –


--- page 597 ---
Name of Director
or Chief Executive N ature of Intere st
Shares Hel da s of the L atest
Practic able D ate
Shares Hel da nd Votin g
Rights Entitle d imme diately
Followin g the Com pletion
of the C apitaliz ation I ssue,
the re purch aseo fS h ares
from the 2023 ESOP
Platform and the Glob al
Offerin g(8)
Number
Approximate
percentage Number
Approximate
percentage
Dr. Liu. ........... F ounder of a
discretionary trust (1)
13,500,000 16.04% 81,000,000 17.51%
Interest held through
voting powers entrusted
by other persons and/or
vested Shares
(2)
8,849,294 10.51% 10,196,226 2.20%
M r .L IL i . ......... Interest in a controlled
corporation (3)
20,252,535 24.06% 121,515,210 26.27%
Mr. MA Lixiong . . . Interest in a controlled
corporation (4)
5,032,359 5.98% 30,194,154 6.53%
Interest held through
voting powers of
vested Shares
(5)
nil nil 107,898 0.02%
M s .Y UM e n g...... Interest held through
voting powers of
vested Shares
(6)
nil nil 840,546 0.18%
D r .Z H UX u n ...... Interest held through
voting powers of
vested Shares
(7)
nil nil 522,378 0.11%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-15 –


--- page 598 ---
Notes:
(1) Dr. Liu, being the investment advisor of the Family Trust, is entitled to exercise the voting rights attached
to the 13,500,000 Shares held by the Founder BVI.
(2) Dr. Liu was granted power of attorney to exercise the voting rights attached to the Shares held by the 2020
ESOP Platform pursuant to a deed executed by the trustee and the nominee of the 2020 Share Incentive
Plan as well as our Company on November 28, 2019. Dr. Liu will not vote with unvested Shares upon
Listing in compliance with Rule 17.05(A) of the Listing Rules.
Based on the vesting schedule of the Awards granted under the 2020 Share Incentive Plan, as of the Latest
Practicable Date and immediately after the Listing, Awards with up to 1,749,371 (10,496,226 as adjusted
after the Capitalization Issue) underlying Shares shall be vested (comprising 1,340,139 (8,040,834 as
adjusted after the Capitalization Issue) Listing Date Vesting Shares and 409,232 (2,455,392 as adjusted
after the Capitalization Issue) underlying Shares that were granted to Dr. Liu under the 2020 Share
Incentive Plan). Pursuant to the voting agreements entered into by certain Grantees and the Company, Dr.
Liu was entitled to the voting rights attached to the 1,290,139 (7,740,834 as adjusted after the
Capitalization Issue) Listing Date Vesting Shares. Immediately after the Listing, Dr. Liu will abstain from
voting on the 7,099,923 (42,599,538 as adjusted after the Capitalization Issue) unvested Shares held in the
2020 ESOP Platform for the purpose of compliance with Rule 17.05A of the Listing Rules. As a result, the
voting rights in the Company to be exercisable by Dr. Liu immediately after the Listing will be
approximately 19.72%, and the voting rights in the Company exercisable by the AIC Group shall become
approximately 24.40% immediately after the Listing. While the Hepalink Entities will become the single
largest group of Shareholders of our Company upon Listing with approximately 26.27% exercisable voting
rights as a result of Dr. Liu having to abstain from voting the approximately 8.28% unvested Shares as
aforementioned, the AIC Group remains the group of Shareholders controlling the largest number of voting
rights when taking into account the unvested Shares held by the 2020 ESOP Platform, and will continue to
have day-to-day control over the management and operation of our Group.
(3) As at the Latest Practicable Date, Mr. LI Li was interested in approximately 62.90% of the shares in
Hepalink, which in turn indirectly wholly-owned Hepalink Biotechnology II Limited. Therefore, Mr. LI Li
was deemed to be interested in the Shares held by Hepalink Biotechnology II Limited.
(4) BAIYI Capital is wholly-owned investment holding company of AIH Capital L.P., which is controlled by
Mr. MA Lixiong. Pingtan Rongjing is managed by its general partner, Yuthai Investment Management Co.,
Ltd., which is owned as to 80% by Mr. MA Lixiong. Therefore, Mr. MA Lixiong is deemed to be interested
in the Shares held by BAIYI Capital and Pingtan Rongjing under the SFO.
(5) On the Listing Date, Awards with up to 17,983 (107,898 as adjusted after the Capitalization Issue)
underlying Shares that were granted to Mr. MA Lixiong shall be Listing Date Vesting Shares.
(6) On the Listing Date, Awards with up to 140,091 (840,546 as adjusted after the Capitalization Issue)
underlying Shares that were granted to Ms. YU Meng shall be Listing Date Vesting Shares.
(7) On the Listing Date, Awards with up to 87,063 (522,378 as adjusted after the Capitalization Issue)
underlying Shares that were granted to Dr. ZHU Xun shall be Listing Date Vesting Shares.
(8) The unvested Shares held in the 2020 ESOP Platform and the 2023 ESOP Platform and the Shares to be
repurchased from the 2023 ESOP Platform have been excluded from both the denominator and the
numerator when calculating the percentage of the exercisable voting rights immediately upon Listing.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-16 –


--- page 599 ---
(b) Interests and Short Positions Discloseable under Divisions 2 and 3 of Part
XV of the SFO
For information on the persons who will, immediately following the
completion of the Capitalization Issue, the repurchase of Shares from the 2023 ESOP
Platform and the Global Offering, having or be deemed or taken to have beneficial
interests or short position in our Shares or underlying shares which would fall to be
disclosed to our Company under the provisions of 2 and 3 of Part XV of the SFO, or
directly or indirectly be interested in 5% or more of the nominal value of any class of
share capital carrying rights to vote in all circumstances at general meetings of any
other member of our Company, see the section headed “Substantial Shareholders” in
this prospectus.
Save as set out above, as of the Latest Practicable Date, our Directors were not
aware of any persons who would, immediately following the completion of the
Capitalization Issue and the Global Offering, be interested, directly or indirectly, in
5% or more of the nominal of any class of share capital carrying rights to vote in all
circumstances at general meetings of any member of our Group or had option in
respect of such capital.
4. Di sclaimer s
Save as disclosed in this prospectus:
(a) there are no existing or proposed service contracts (excluding contracts
expiring or determinable by the employer within one year without payment of
compensation (other than statutory compensation)) between our Directors and
any member of our Group;
(b) none of our Directors or the experts named in the paragraph headed “— E.
Other Information — 4. Qualifications and consents of Experts” in this
Appendix has any direct or indirect interest in the promotion of, or in any
assets which have been, within the two years immediately preceding the date of
this prospectus, acquired or disposed of by or leased to any member of our
Group, or are proposed to be acquired or disposed of by or leased to any
member of our Group;
(c) save as in connection with the Underwriting Agreements, none of our Directors
nor any of the experts named in the paragraph headed “— E. Other Information
— 4. Qualifications and consents of experts” in this Appendix is materially
interested in any contract or arrangement subsisting at the date of this
prospectus which is significant in relation to the business of our Group as a
whole;
(d) taking no account of any Shares which may be taken up under the
Capitalization Issue and the Global Offering, so far as is known to any Director
or chief executive of our Company, no other person (other than a Director or
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-17 –


--- page 600 ---
chief executive of the Company) will, immediately following completion of the
Capitalization Issue and the Global Offering, have interests or short positions
in the Shares and underlying Shares which would fall to be disclosed to the
Company and the Stock Exchange under the provisions of Divisions 2 and 3 of
Part XV of the SFO or (not being a member of the Group), be interested,
directly or indirectly, in 5% or more of the nominal value of any class of share
capital carrying rights to vote in all circumstances at general meetings of any
member of our Group;
(e) none of our Directors or chief executive of our Company has any interests or
short positions in the Shares, underlying shares or debentures of the Company
or its associated corporations (within the meaning of Part XV of the SFO)
which will have to be notified to the Company and the Stock Exchange
pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and
short positions which he is taken or deemed to have under such provisions of
the SFO) or which will be required, pursuant to Section 352 of the SFO, to be
entered into the register referred to therein, or will be required, pursuant to the
Model Code for Securities Transaction by Directors of Listed Issuers, to be
notified to the Company and the Stock Exchange once the Shares are listed
thereon;
(f) save in connection with the Underwriting Agreements, none of the experts
named in the paragraph headed “— E. Other Information — 4. Qualifications
and consents of experts” in this Appendix: (i) is interested legally or
beneficially in any of our Shares or any shares in any of our subsidiaries; or (ii)
has any right (whether legally enforceable or not) to subscribe for or to
nominate persons to subscribe for securities in any member of our Group; and
(g) none of our Directors or their respective close associates or any Shareholders
of our Company (who to the knowledge of out Directors owns more than 5% of
the number of our issued shares) has any interest in our five largest suppliers or
our five largest customers.
D. INCENTIVE PLANS
1. 2020 SHARE INCENTIVE PLAN
The 2020 Share Incentive Plan was originally adopted by the Board on January 22,
2020, amended and restated by the Board on October 18, 2021 and further amended and
restated in its entirety on March 4, 2022. The terms of the 2020 Share Incentive Plan are not
subject to the provisions of Chapter 17 of the Listing Rules as it does not involve any grant
of awards by our Company to subscribe for new Shares after the Listing. After Listing, no
further awards or other type of awards would be granted pursuant to the 2020 Share
Incentive Plan. All the Shares underlying the Awards granted under the 2020 Share Incentive
Plan have been issued and alloted to the 2020 ESOP Platform for future exercise of the
Awards.
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--- page 601 ---
The following is a summary of the principal terms of the 2020 Share Incentive Plan.
Summary of Key Terms
(a) Purpose
The purpose of the 2020 Share Incentive Plan is to enable the Company to
attract and retain the best available personnel, to provide additional incentives to
employees, Directors and consultants and to promote the success of the Company’s
business.
(b) WhoMayJoin
Eligible participants (“ Eli gible P artici pants”) means any person belonging to
any of the following classes of persons:
(i) any person who is in the employment of the Group;
(ii) a member of the Board or the board of directors of any affiliate of the
Company; or
(iii) any person who is eng aged by the Group to render consulting or
advisory services.
Subject to above classes,
share options (the “ Option s”) or restricted share units (the “ RSU s”) shall be granted
to the grantee who:
(i) is department manager, key technical staff of the Group;
(ii) has made a significant contribution to the Company; or
(iii) meet such other conditions as determined by Board.
restricted shares (“ Restricte d Shares”, together with the Options and the RSUs, the
“Awards”) or RSUs shall be granted to the grantee who is management personnel
and:
(i) has established labor/employment relationship with the Company or its
subsidiaries before December 31, 2015 and the continuous service of the
grantee is not terminated up to the date of the Award agreement;
(ii) has made a significant contribution to the Company;
(iii) is critical to the future development of the Company; or
(iv) meet such other conditions as determined by Board.
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--- page 602 ---
(c) Administrationofthe2020ShareIncentivePlan
The 2020 Share Incentive Plan shall be administered by (A) the Board, (B) a
committee (the “ Committee ”) designated by the Board, which Committee shall be
constituted in accordance with the applicable laws and the Articles of Association, or
(C) any person appointed by the Board (“ Per son”, together with the Board and the
Committee, the “ Admini str ator ”). Once appointed, such Committee or the
Administrator shall continue to serve in its designated capacity until otherwise
directed by the Board. The Board may authorize one or more officers or Directors to
grant the Awards and may limit such authority as the Board determines from time to
time.
Subject to applicable laws and the provisions of the 2020 Share Incentive Plan
(including any other powers given to the Administrator under the 2020 Share
Incentive Plan), and except as otherwise provided by the Board, the Administrator
shall have the authority, in its discretion:
(i) to select Eligible Participants to whom Awards may be granted from
time to time;
(ii) to determine whether and to what extent Awards are granted;
(iii) to determine the type or the number of Awards to be granted, the number
of Shares or the amount of consideration to be covered by each Award
granted;
(iv) to approve forms of Award agreements for use, to amend terms of the
Award agreements;
(v) to determine the terms and conditions of any Award granted under the
2020 Share Incentive Plan (including without limitation the vesting
schedule and exercise price set forth in the notice of Award and the
Award agreements), including the purchase, exercise or base price, the
time or times when Awards may be exercised (which may be based on
performance criteria), any forfeiture events, any vesting acceleration or
waiver of forfeiture restrictions, and any restriction or limitation
regarding any Award or the Shares relating thereto, based in each case on
such factors as the Administrator determines;
(vi) to amend the terms of any outstanding Award granted under the 2020
Share Incentive Plan;
(vii) to construe and interpret the terms of the 2020 Share Incentive Plan and
Awards, including without limitation the vesting schedule and exercise
price set forth in the notice of Award and the Award agreements;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
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--- page 603 ---
(viii) to require the grantee to provide representation or evidence that any
currency used to pay the exercise price of any Award was legally
acquired and taken out of the jurisdiction in which the grantee resides in
accordance with the applicable laws;
(ix) to establish sub-plans or separate program under the Share Incentive
Plan, containing such limitations and other terms and conditions as the
Administrator determines are necessary or desirable, for the purpose of
satisfying blue sky, securities, tax or other laws of various jurisdictions
in which the Company intends to grant Awards or qualifying for
favorable tax treatment under applicable foreign laws;
(x) to correct any defect, omission or inconsistency in the Share Incentive
Plan or any Award agreement, in a manner and to the extent it deems
necessary or advisable to make the 2020 Share Incentive Plan fully
effective;
(xi) to authorize any individual to execute, on behalf of the Company, any
instrument required to carry out the purpose of the 2020 Share Incentive
Plan;
(xii) to determine the fair market value;
(xiii) to take such other action, not inconsistent with the terms of the 2020
Share Incentive Plan and the applicable laws, as the Administrator
deems appropriate.
(d) TermandtransferabilityoftheAward
The management personnel should nominate eligible candidates according to
the 2020 Share Incentive Plan and advice the conditions of the Award to be granted to
such candidates.
The term of each Award shall be the term stated in the Award agreement.
Notwithstanding the foregoing, the specified term of any Award shall not include any
period for which the grantee has elected to defer the receipt of the Shares of cash
issuable pursuant to the Award. In the case of an Option granted to an United States
taxpayer who, at the time the Option is granted (“ Grant D ate”), owns (or, pursuant to
Section 424(d) of the United States Code, is deemed to own) stock representing more
than 10% of the total combined voting power of all classes of Shares of the Company
or any subsidiary or affiliate, the term of the Option will not be longer than ten years
from the Grant Date. The Grant Date of an Award shall for all purposes be the date on
which the Administrator makes the determination to grant such Award, or such other
date as is determined by the Administrator.
Subject to the Applicable Laws, Awards shall be transferable by will and by the
laws of descent and distribution, only to the extent and in the manner approved by the
Administrator. Notwithstanding the foregoing, the grantee may designate one or more
APPENDIX IV STATUTORY AND GENERAL INFORMATION
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--- page 604 ---
beneficiaries of the grantee’s Award in the event of the grantee’s death on a
beneficiary designation form provided by the Administrator.
(e) ExerciseorPurchasePrice
The exercise price of the Options and the purchase price of the RSUs shall be
the price determined by the Administrator as of the Grant Date. There is no purchase
price for the Restricted Shares. Subject to Applicable Laws, the consideration to be
paid for the Shares to be issued upon exercise or purchase of an Award including the
method of payment, shall be determined by the Administrator. In addition to any other
types of consideration the Administrator may determine, the Administrator is
authorized to accept as consideration for Shares issued under the 2020 Share
Incentive Plan the following:
(i) cash;
(ii) cheque;
(iii) if the exercise or purchase occurs on or after the Listing Date, or as
otherwise permitted by the Administrator, surrender of Shares or
delivery of a properly executed form of attestation of ownership of
Shares as the Administrator may require which have a fair market value
on the date of surrender or attestation equal to the aggregate exercise
price of the Shares as to which said Award shall be exercised;
(iv) with respect to Options or RSUs, if the exercise occurs on or after the
Listing Date, payment through a broker-dealer sale and remittance
procedure pursuant to which the grantee (A) shall provide written
instructions to a Company designated brokerage firm to effect the
immediate sale of some or all of the purchased Shares and remit to the
Company sufficient funds to cover the aggregate exercise price payable
for the purchased Shares and (B) shall provide written directives to the
Company to deliver the certificates for the purchased Shares directly to
such brokerage firm in order to complete the sale transaction; or
(v) any combination of the foregoing methods of payment.
(f) ExerciseofAward
Any Award granted under the 2020 Share Incentive Plan shall be exercisable at
such times and under such conditions as determined by the Administrator under the
terms of the 2020 Share Incentive Plan and specified in the Award agreement.
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--- page 605 ---
An Award shall be deemed to be exercised when written notice of such exercise
has been given to the Company in accordance with the terms of the Award by the
person entitled to exercise the Award and full payment for the Shares with respect to
which the Award is exercised, including to the extent selected, use of the
broker-dealer sale and remittance procedure to pay the purchase price as provided in
paragraph (e)(iv).
An Award may not be exercised after the termination date of such Award set
forth in the Award agreement and may be exercised following the termination of a
grantee’s continuous service only to the extent provided in the Award agreement.
Where the Award agreement permits a grantee to exercise an Award following the
termination of the grantee’s continuous service for a specified period, the Award shall
terminate to the extent not exercised on the last day of the specified period or the last
day of the original term of the Award, whichever occurs first.
Notwithstanding the foregoing, regardless of whether an Award has otherwise
become exercisable, the Award shall not be exercised if the Administrator (in its sole
discretion) determines that an exercise would violate any applicable laws. Shares
shall not be issued pursuant to the exercise of an Award unless the exercise of such
Award and the issuance and delivery of such Shares pursuant thereto shall comply
with all applicable laws (including all relevant filings, approvals and registrations (if
any) required under the laws PRC) with respect to the exercise of such Award
including without limitation, those required with the PRC State Administration of
Foreign Exchange as determined to be necessary or desirable by the Board of
Directors in its discretion), and shall be further subject to the approval of counsel for
the Company with respect to such compliance.
(g) Termination
An Award shall lapse automatically and not be exercisable (to the extent not
already exercised):
(i) in the event the grantee’s continuous service terminates as a result of
his/her retirement, death, permanent disability prevents from working,
resignation or company terminates his/her employment;
(ii) in the event the grantee’s continuous service terminates due to bad faith
causes;
(iii) in the event change in control of the Company or corporate transaction
as defined as below:
• (as determined by the Administrator acting reasonably) a change
in ownership or control of the Company effected through the
direct or indirect acquisition by any person or related group of
persons (other than an acquisition from or by the Company or by
a Company sponsored employee benefit plan or by an affiliate of
the Company) of beneficial ownership of securities possessing
APPENDIX IV STATUTORY AND GENERAL INFORMATION
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--- page 606 ---
more than fifty percent (50%) of the total combined voting power
of the Company’s outstanding securities pursuant to a tender or
exchange offer made directly to the Company’s shareholders
which a majority of the Directors who are not affiliates or
associates of the offeror do not recommend such shareholders
accept;
• (as determined by the Administrator acting reasonably) a merger,
amalgamation, consolidation or other business combination of the
Company with or into any person, in which the Company is not
the surviving entity, or any other transaction or series of
transactions, as a result of which the Shareholders of the
Company immediately prior to such transaction or series of
transactions will cease to own a majority of the voting power of
the surviving entity immediately after consummation of such
transaction or series of transactions, except for a transaction the
principal purpose of which is to change the state in which the
Company is incorporated;
• the sale, transfer, exclusive license or other disposition of all or
substantially all of the assets of the Group;
• the complete liquidation or dissolution of the Company;
• any reverse merger or series of related transactions culminating in
a reverse merger (including, but not limited to, a tender offer
followed by a reverse merger) in which the Company is the
surviving entity but (A) the ordinary Shares outstanding
immediately prior to such merger are converted or exchanged by
virtue of the merger into other property, whether in the form of
securities, cash or otherwise, or (B) in which securities
possessing more than fifty percent (50%) of the total combined
voting power of the Company’s outstanding securities are
transferred to a person or persons different from those who held
such securities immediately prior to such merger or the initial
transaction culminating in such merger, but excluding any such
transaction or series of related transactions that the Administrator
determines shall not be a corporate transaction; or
• acquisition in a single or series of related transactions by any
person or related group of persons of beneficial ownership of
securities possessing more than fifty percent (50%) of the total
combined voting power of the Company’s outstanding securities,
but excluding any such transaction or series of related
transactions that the Administrator determines shall not be a
corporate transaction.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
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--- page 607 ---
(h) MaximumNumberofShares
The maximum number of Shares in respect of which Awards may be granted
under the 2020 Share Incentive Plan is 8,849,294 (53,095,764 as adjusted after the
Capitalization Issue) Shares (the “ 2020 Scheme Limit ”). All 8,849,294 Shares
underlying the Awards granted under the 2020 Share Incentive Plan have been issued
and alloted to the 2020 ESOP Platform for future exercise of the Awards.
Any Shares covered by an Award (or portion of an Award) which is forfeited,
canceled or expires (whether voluntarily or involuntarily) shall be deemed not to have
been issued for purposes of determining the maximum aggregate number of Shares
which may be issued under the 2020 Share Incentive Plan. Shares that actually have
been issued under the 2020 Share Incentive Plan pursuant to an Award shall not be
returned to the 2020 Share Incentive Plan and shall not become available for future
issuance under the 2020 Share Incentive Plan, except that if the Shares subject to an
outstanding Award are not issued or delivered or are returned to the Company by
reason of (i) expiration, termination, cancellation or forfeiture of such Award, (ii) the
settlement of such Award in cash, (iii) the delivery or withholding of Shares to pay all
or a portion of the exercise price of an Award, if any, or to satisfy all or a portion of
the tax withholding obligations relating to an Award, such Shares shall revert to and
become available for future grant under the 2020 Share Incentive Plan. To the extent
not prohibited by the applicable law and the listing requirements of the applicable
stock exchange or national market system on which the Shares are traded, any Shares
covered by an Award which are surrendered (i) in payment of the Award exercise or
purchase price or (ii) in satisfaction of tax withholding obligations incident to the
exercise of an Award shall be deemed not to have been issued for purposes of
determining the maximum number of Shares which may be issued pursuant to all
Awards under the 2020 Share Incentive Plan, unless otherwise determined by the
Administrator.
(i) AdjustmentsuponChangesinCapitalization
Subject to any required action by Shareholders of the Company, the number of
Shares covered by each outstanding Award, the number of Shares which have been
authorized for issuance under the 2020 Share Incentive Plan but as to which no
Awards have yet been granted or which have been returned to the 2020 Share
Incentive Plan, the exercise or purchase price of each such outstanding Award, the
maximum number of Shares with respect to which Awards may be granted to any
Grantee in any fiscal year of the Company, as well as any other terms that the
Administrator determines require adjustment shall be proportionately adjusted for (i)
any increase or decrease in the number of issued Shares resulting from a share split,
reverse share split, share dividend, combination or reclassification of the Shares, or
similar transaction affecting the Shares, (ii) any other increase or decrease in the
number of issued Shares effected without receipt of consideration by the Company, or
(iii) as the Administrator may determine in its discretion, any other transaction with
respect to Shares including a corporate merger, consolidation, acquisition of property
or equity, separation (including a spin-off or other distribution of shares or property),
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-25 –


--- page 608 ---
reorganization, liquidation (whether partial or complete) or any similar transaction;
provided, however that conversion of any convertible securities of the Company shall
not be deemed to have been “effected without receipt of consideration.” Such
adjustment shall be made by the Administrator and its determination shall be final,
binding and conclusive. Except as the Administrator determines, no issuance by the
Company of Shares of any class, or securities convertible into Shares of any class,
shall affect, and no adjustment by reason hereof shall be made with respect to, the
number or price of Shares subject to an Award. In the event of a spin-off transaction,
the Administrator may in its discretion make such adjustments and take such other
action as it deems appropriate with respect to outstanding Awards under the 2020
Share Incentive Plan, including but not limited to: (i) adjustments to the number and
kind of Shares, the exercise or purchase price per Share and the vesting periods of
outstanding Options, (ii) prohibit the exercise of Awards during certain periods of
time prior to the consummation of the spin-off transaction, or (iii) the substitution,
exchange or grant of Awards to purchase securities of the subsidiary; provided that
the Administrator shall not be obligated to make any such adjustments or take any
such action under the 2020 Share Incentive Plan.
(j) Amendment,SuspensionorTerminationofthe2020ShareIncentivePlan
The Board may at any time amend, suspend or terminate the 2020 Share
Incentive Plan; provided, however, that no such amendment shall be made without the
approval of the Shareholders to the extent such approval is required by applicable
laws or if such amendment would change the provision of this paragraph:
(k) Dividendandvotingrights
Unless and until the Shares underlying an Award are actually issued (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to receive dividends or other
distributions will exist with respect to the Shares underlying such Award,
notwithstanding the exercise of the Award. If any such dividends or distributions are
paid in Shares, such Shares will be subject to the same restrictions on transferability
and forfeitability as the Restricted Shares with respect to which they were paid. The
dividends and distributions shall be held by the 2020 ESOP Platform and distributed
to the Grantees, unless the Grantee has held relevant Shares of the Company as
permitted by the Administrator.
Except as otherwise provided in the 2020 Share Incentive Plan or the
applicable Award agreement, no Grantee will be deemed to be the holder of, or to
have any of the rights of a holder with respect to, any Shares underlying an Award
which has not been vested and exercised. All the rights of a holder with respect to any
such Shares shall be exercised by the 2020 ESOP Platform prior to the Listing.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-26 –


--- page 609 ---
Details of the Awards granted, including Awards exercised or outstanding,
under this scheme shall be disclosed in the circular to shareholders of the Company
seeking approval of the new scheme established after the termination of this scheme.
Outstanding Awards
As of the Latest Practicable Date, all the Awards available for granting under
the 2020 Share Incentive Plan have been granted, and therefore the aggregate number
of underlying Shares pursuant to the outstanding Awards granted under the 2020
Share Incentive Plan is 8,849,294 (53,095,764 as adjusted after the Capitalization
Issue) Shares, representing all Shares held by the 2020 ESOP Platform. Upon
completion of the Capitalization Issue, the repurchase of Shares from the 2023 ESOP
Platform and the Global Offering, the aggregate number of Shares underlying all
Awards granted represents approximately 10.31% of the issued Shares immediately
following the completion of the Capitalization Issue, the repurchase of Shares from
the 2023 ESOP Platform and the Global Offering.
As of the Latest Practicable Date, the outstanding Awards which have been
granted under the 2020 Share Incentive Plan for an aggregate of 8,849,294
(53,095,764 as adjusted after the Capitalization Issue) Shares have been granted to a
total of 55 Eligible Participants, 13 of whom are Directors or members of the senior
management or connected persons of our Company or consultants of our Group. The
outstanding Awards granted under the 2020 Share Incentive Plan were granted at nil
consideration to each of the relevant Eligible Participant with an exercise price of
US$0.81 to US$2.82 per Share. The exercise period of the Awards granted is ten years
commencing from the date upon which the Awards are deemed to be granted and
accepted pursuant to the terms of the 2020 Share Incentive Plan.
All the Shares subject to the Awards have been allotted and issued and are held
by the 2020 ESOP Platform as of the Latest Practicable Date. Accordingly, if all the
Awards granted under the 2020 Share Incentive Plan are exercised, there will not be
any dilution effect on the shareholdings of our Shareholders nor any impact on the
earnings per Share arising from the exercise of the outstanding Awards. The Shares
underlying the Awards under the 2020 Share Incentive Plan that have not been granted
to any specific grantee prior to Listing will be repurchased and cancelled.
An application has been made to the Stock Exchange for the listing of, and
permission to deal in, the Shares held by the 2020 ESOP Platform for the purpose of
the 2020 Share Incentive Plan. Unvested Shares under the 2020 Share Incentive Plan
will abstain from voting upon Listing in compliance with Rule 17.05(A) of the
Listing Rules.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-27 –


--- page 610 ---
The table below shows the details of Awards (all being Options) granted under
the 2020 Share Incentive Plan that are outstanding as of the Latest Practicable Date.
Grantee Po sition/ Rel ation ship Address
Number of Sh ares
under out standing
Awards g rante d before
the com pletion of the
Capitaliz ation I ssue D ate of Gr ant Ve stin g Perio d Exerci se price
Con sideration
paid by the
Grantee (1)
Approxim ate
percent ageo f
enl arged issued
Shares upon
com pletion of the
Capitaliz ation I ssue,
the re purch aseo f
Shares from the 2023
ESOP Pl atform and
the Glob al
Offerin g(3)
(US$per
Share)
Director s
D r . L i u ...... F ounder, executive Director
and chief executive officer
of our Company
703, Building 4, Jiaxin Garden,
Longcheng Street, Longgang
District, Shenzhen,
Guangdong, PRC
545,642 December 17, 2020 Four years
(2) 0.81 Nil 0.64%
272,821 December 30, 2021 Four years (2) 1.06 Nil 0.32%
849,031 April 1, 2023 Four years (2) 2.82 Nil 0.99%
Ms. YU Meng
(ɲ഼).....
Executive Director, deputy
general manager of our
Company
6-2-506 Wendelford Garden,
Houhai Avenue, Nanshan
District, Shenzhen,
Guangdong, PRC
280,182 March 31, 2022 Four years
(2) 1.06 Nil 0.33%
325,246 April 1, 2023 Four years (2) 1.97 Nil 0.38%
Dr. ZHU Xun
(ϡԘ).....
Non-executive Director Room 402, Building 33,
Yumingbieyuan Guangsheng
Road, Jiangang Hill, Bao’an
District, Shenzhen,
Guangdong, PRC
174,126 December 30, 2021 Four years
(2) 1.06 Nil 0.20%
48,692 April 1, 2023 Four years (2) 1.97 Nil 0.06%
Mr. MA Lixiong
(৵ͭඪ)....
Non-executive Director Room 1608, International Chamber
of Commerce Center, No. 168
Fuhua 3rd Road, Futian District,
Shenzhen, Guangdong, PRC
71,932 December 30, 2021 Four years
(2) 1.06 Nil 0.08%
515,832 April 1, 2023 Four years (2) 1.97 Nil 0.60%
Subtot al ..... 3,083,504 3.59%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-28 –


--- page 611 ---
Grantee Po sition/ Rel ation ship Address
Number of Sh ares
under out standing
Awards g rante d before
the com pletion of the
Capitaliz ation I ssue D ate of Gr ant Ve stin g Perio d Exerci se price
Con sideration
paid by the
Grantee (1)
Approxim ate
percent ageo f
enl arged issued
Shares upon
com pletion of the
Capitaliz ation I ssue,
the re purch aseo f
Shares from the 2023
ESOP Pl atform and
the Glob al
Offerin g(3)
(US$per
Share)
Senior m anagement of our Com pany who are not Director s
Dr. Leigh Anne
MACCONELL. .
Chief development officer of
our Company
773 Corinia Court, Olivenhain, CA
92024 United States
240,000 February 1, 2021 Four years (2) 0.81 Nil 0.28%
248,031 April 1, 2023 Four years (2) 2.82 Nil 0.29%
Mr. SIM Koon
Yin Edmund
(ӏᝈሬ)....
Chief financial officer of our
Company
Flat F, 6/F, Tower 16,
South Horizons, Ap
Lei Chau, Hong Kong
800,000 April 1, 2023 Four years
(2) 1.97 Nil 0.93%
Dr. MA Tianwei
(৵˂ਃ)....
Vice president of discovery
research
Room 901, No. 6 Lane 288, Yupan
North Road, Pudong New Area,
Shanghai, PRC
206,960 April 1, 2023 Four years
(2) 2.82 Nil 0.24%
Ms. BAI Ru
(ͣন).....
Director of non-clinical
development
Room 4603, Building 1, Baolan
Yayuan, No. 1 Cuiqing Road,
Baolong Street, Longgang
District, Shenzhen,
Guangdong, PRC
234,387 March 31, 2022 Four years
(2) 1.06 Nil 0.27%
122,067 April 1, 2023 Four years (2) 1.97 Nil 0.14%
Ms. YU Li
(ɲ஁).....
Vice president Room 1618, Building 16,
Zhonghaixin Innovation
Industrial City, Ganli 2nd Road,
Jihua Street, Longgang District,
Shenzhen, Guangdong, PRC
762,088 March 31, 2022 Four years
(2) 1.06 Nil 0.89%
365,851 April 1, 2023 Four years (2) 1.97 Nil 0.43%
970,175 September 1, 2023 Four years (2) 1.97 Nil 1.13%
Subtot al ..... 3,949,559 4.60%
Connecte dp erson of our Com pany who i s not a Director
Mr. Y ANG Feng
(เቜ).....
Former director of our
Company (5)
Block 10-2B, Xi’Gu Garden,
Xicheng Villa, Bao’an District,
Shenzhen, Guangdong, PRC
39,999 December 30, 2021 Four years
(2) 1.06 Nil 0.05%
Subtot al ..... 39,999 0.05%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-29 –


--- page 612 ---
Grantee Po sition/ Rel ation ship Address
Number of Sh ares
under out standing
Awards g rante d before
the com pletion of the
Capitaliz ation I ssue D ate of Gr ant Ve stin g Perio d Exerci se price
Con sideration
paid by the
Grantee (1)
Approxim ate
percent ageo f
enl arged issued
Shares upon
com pletion of the
Capitaliz ation I ssue,
the re purch aseo f
Shares from the 2023
ESOP Pl atform and
the Glob al
Offerin g(3)
(US$per
Share)
Con sult ants of our Grou p(6)
Dr. Adrian M. DI
BISCEGLIE. . .
Medical advisor of our Group 3005 Salena Street, St. Louis,
MO 63118 United States
68,393 January 1, 2021 Four years (2) 0.81 Nil 0.08%
Ms. Gwen A.
MELINCOFF . .
Business Advisor of our
Group
262 South 16th Street, Unit 4,
Philadelphia, PA 19102
United States
18,860 December 17, 2020 Four years
(2) 0.81 Nil 0.02%
M r .L IC h u n
(݆.....)
Organization Advisor of our
Group
Room 1001, No. 29 Baihuiyuan,
Lane 183, Yunjin Road, Xuhui
District, Shanghai, PRC
50,951 April 1, 2023 Four years
(2) 1.97 Nil 0.06%
Subtot al ..... 138,204 0.16%
Other em ployee s of our Grou p
FU Xinxiang
(˹㒥ୂ)....
Director (4) B2102, Yaxuan, Tianyue No. 1,
Section 25, Bao’an District,
Shenzhen, Guangdong, PRC
141,372 March 31, 2022 Four years
(2) 1.06 Nil 0.16%
88,891 April 1, 2023 Four years (2) 1.97 Nil 0.10%
Myleen Ignacio
LEONCA V A . .
Senior vice president 630 Elk River Drive, Ormond
Beach, FL 32174 USA
50,000 March 31, 2022 Four years (2) 1.72 Nil 0.06%
FU Wenjun
(ڲ....)
Director (4) 703, Building 2, Nanshan Jian
Gong Village, Nantou Street,
Nanshan District, Shenzhen,
Guangdong, PRC
92,244 March 31, 2022 Four years
(2) 1.06 Nil 0.11%
52,028 April 1, 2023 Four years (2) 1.97 Nil 0.06%
Jeffrey J. DAO . . Head of U.S. Operations 726 Barneson Avenue, San Mateo,
CA 94402 U.S.
64,775 March 31, 2021 Four years (2) 0.81 Nil 0.08%
40,299 April 1, 2023 Four years (2) 2.82 Nil 0.05%
XIE Liming
(׼....)
Clinical Quality assurance
Manager
5H, Unit 2, Building 3, North
Zone, Zuotingyouyuan, Nanwan
Street, Longgang District,
Shenzhen, Guangdong, PRC
91,176 March 31, 2022 Four years
(2) 1.06 Nil 0.11%
40,680 April 1, 2023 Four years (2) 1.97 Nil 0.05%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-30 –


--- page 613 ---
Grantee Po sition/ Rel ation ship Address
Number of Sh ares
under out standing
Awards g rante d before
the com pletion of the
Capitaliz ation I ssue D ate of Gr ant Ve stin g Perio d Exerci se price
Con sideration
paid by the
Grantee (1)
Approxim ate
percent ageo f
enl arged issued
Shares upon
com pletion of the
Capitaliz ation I ssue,
the re purch aseo f
Shares from the 2023
ESOP Pl atform and
the Glob al
Offerin g(3)
(US$per
Share)
Jin CHEN .... Senior vice president 6 Tulip Lane Randolph, NJ 07869,
U.S.
130,084 December 30, 2021 Four years (2) for
Awards underlying
which are 70,084
Shares; vesting per
milestone for
remaining Awards
(7)
1.72 Nil 0.15%
Cathryn M.
BENNETT . . .
Vice president 5295 Oswego Circle, Palm Springs,
CA 92264 U.S.
71,792 December 17, 2020 Four years (2) 1.72 Nil 0.08%
LIU Kui (۲Senior director (4) Room 101, No. 22 Lane 1169,
Kongjiang Road, Yangpu
District, Shanghai, PRC
48,228 April 1, 2023 Four years
(2) 1.97 Nil 0.06%
GAO Liping
(৷ᘆറ)....
Director (4) No. 299 Xuanhua Road, Changning
District, Shanghai, PRC
49,457 April 1, 2023 Four years (2) 1.97 Nil 0.06%
Alexander
LIBERMAN . .
Associate director (4) 836 West Pennsylvania Ave Apt
307, San Diego, CA 92103, U.S.
23,423 December 30, 2021 Four years (2) 1.06 Nil 0.03%
12,256 April 1, 2023 Four years (2) 2.82 Nil 0.01%
ZHANG Yanli
(ੵ䝙ᘆ)....
Regulatory affairs department
manager
Unit 607, Building 4, Unit 1, Blue
Diamond Tiancheng, No. 969
Moganshan Road, Xiangfu
Street, Gongshu District,
Hangzhou, Zhejiang, PRC
19,254 March 31, 2022 Four years
(2) 1.06 Nil 0.02%
26,740 April 1, 2023 Four years (2) 1.97 Nil 0.03%
ZHANG Lin
(ੵ೙).....
Director (4) Room 308, Building 10, Huilong
Garden, No. 30 Kaifeng Road,
Futian District, Shenzhen,
Guangdong, PRC
23,423 March 31, 2022 Four years
(2) 1.06 Nil 0.03%
12,952 April 1, 2023 Four years (2) 1.97 Nil 0.02%
CHEN Zhaobin
(௓Ίⅳ)....
Formulation manager Room 1519, Building 8, Xinge
District, No. 9 Linyuan East
Road, Futian District, Shenzhen,
Guangdong, PRC
14,209 March 31, 2022 Four years
(2) 1.06 Nil 0.02%
15,694 April 1, 2023 Four years (2) 1.97 Nil 0.02%
ZHOU Haoran
(մೱ್)....
Director (4) Room 2205, Weijian Building,
No. 1005, Fuqiang Road, Futian
District, Shenzhen, Guangdong,
PRC
26,774 April 1, 2023 Four years
(2) 1.97 Nil 0.03%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-31 –


--- page 614 ---
Grantee Po sition/ Rel ation ship Address
Number of Sh ares
under out standing
Awards g rante d before
the com pletion of the
Capitaliz ation I ssue D ate of Gr ant Ve stin g Perio d Exerci se price
Con sideration
paid by the
Grantee (1)
Approxim ate
percent ageo f
enl arged issued
Shares upon
com pletion of the
Capitaliz ation I ssue,
the re purch aseo f
Shares from the 2023
ESOP Pl atform and
the Glob al
Offerin g(3)
(US$per
Share)
Kjersti
SWEARINGEN .
Associate director (4) 3210 219th Avenue SE,
Snohomish, W A 98290, U.S.
23,423 December 30, 2021 Four years (2) 1.06 Nil 0.03%
W ANG Niwen
(ˮ֋˖)....
Executive assistant,
administrative manager
Room 309, Building 7, Phase 1,
Chengxiang Garden, No. 28
Zhonghao 2nd Road, Longgang
District, Shenzhen, Guangdong,
PRC
10,833 March 31, 2022 Four years
(2) 1.06 Nil 0.01%
8,918 April 1, 2023 Four years (2) 1.97 Nil 0.01%
Rochelle Rubik S.
BARLIS ....
Manager 1778 Paterna Drive, Chula Vista,
CA 91913 U.S.
17,552 December 17, 2020 Four years (2) 0.81 Nil 0.02%
W ANG Rong
(ˮ✫).....
Director (4) 1103, Building B1,
Ganglongcheng, Baomin 2nd
Road, Xixiang Street, Bao’an
District, Shenzhen, Guangdong,
PRC
15,238 April 1, 2023 Four years
(2) 1.97 Nil 0.02%
LI Yingzi
(۶ߵ....)
Director (4) B1-18b, Tianji Mansion, No. 45
Longguan East Road, Longhua
Stage, Longhua District,
Shenzhen, Guangdong, PRC
15,238 April 1, 2023 Four years
(2) 1.97 Nil 0.02%
FAN Ziqi
(ᇍɿೡ)....
Senior project manager Room 604, Unit C, Building 3,
Phase 2, Shiwufeng Garden,
Longzhu 6th Road, Nanshan
District, Shenzhen, Guangdong,
PRC
14,457 April 1, 2023 Four years
(2) 1.97 Nil 0.02%
LIU Haowen
(ᄎख˖)....
Project manager Room 1405, Building 1, Phase I,
Bantian Chengxiang Garden,
Longgang, Shenzhen,
Guangdong, PRC
7,708 April 1, 2023 Four years
(2) 1.97 Nil 0.01%
HUANG Weixin
(රਃ㒥)....
Project manager Room 1412, No. 63, East Sixth
Lane, Fenghuanggang Village,
Xixiang, Bao’an District,
Guangdong, PRC
7,641 April 1, 2023 Four years
(2) 1.97 Nil 0.01%
HUANG Yi
(֝.....)
Senior project manager 9A401, Langlu Homeland,
No. 3355, Liuxian Avenue,
Nanshan District, Shenzhen,
Guangdong, PRC
10,638 April 1, 2023 Four years
(2) 1.97 Nil 0.01%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-32 –


--- page 615 ---
Grantee Po sition/ Rel ation ship Address
Number of Sh ares
under out standing
Awards g rante d before
the com pletion of the
Capitaliz ation I ssue D ate of Gr ant Ve stin g Perio d Exerci se price
Con sideration
paid by the
Grantee (1)
Approxim ate
percent ageo f
enl arged issued
Shares upon
com pletion of the
Capitaliz ation I ssue,
the re purch aseo f
Shares from the 2023
ESOP Pl atform and
the Glob al
Offerin g(3)
(US$per
Share)
LI Youlan
(ҽϞᚆ)....
Senior project manager Chengxiang Garden Phase I,
Xiangjiaotang Community,
Bantian Street, Longgang
District, Shenzhen, Guangdong,
PRC
7,569 April 1, 2023 Four years
(2) 1.97 Nil 0.01%
ZHONG Lijun
(ᙒᘆё)....
Quality assurance manager 4A1003, Shangshui Tiancheng
Community, Xiashui Path, Jihua
Street, Longgang District,
Guangdong, PRC
5,562 April 1, 2023 Four years
(2) 1.97 Nil 0.01%
SONG Yanqin
(҂䝙ೞ)....
Office manager Room 901, No. 179, Lane 6130,
Jiasong North Road, Jiading
District, Shanghai, PRC
5,000 March 31, 2022 Four years
(2) 1.72 Nil 0.01%
2,180 April 1, 2023 Four years (2) 1.97 Nil 0.003%
JOSEPH
GUGLIOTTA . .
Clinical operation manager 1383 Oakridge Court, Thousand
Oaks, CA 91362 U.S.
4,000 March 31, 2022 Four years (2) 1.72 Nil 0.005%
LEI Fen
(ځ.....)
Vice president of
corporate affairs
Room 1405, Biyue Pavilion, Biling
Huating, Taibai Road, Luohu
District, Shenzhen, Guangdong,
PRC
220,000 September 1, 2023 Four years
(2) 1.97 Nil 0.26%
LI Guodong
(ҽ਷ಊ)....
Drug metabolism and
pharmacokinetics
project director
Room 801, No. 18, Lane 1978,
Yuqiao Road, Beicai Town,
Pudong New Area, Shanghai,
PRC
11,455 September 1, 2023 Four years
(2) 1.97 Nil 0.01%
SHEN Zhengnan
(ӏ፾Ӳ)....
Principal scientist Room 301, No. 20, Lane 1296,
Gaosi Road, Pudong New Area,
Shanghai, PRC
15,000 September 1, 2023 Four years
(2) 1.97 Nil 0.02%
XIA Guoping
(ெ̻)....
Director of discovery
pharmacokinetic/
pharmacodynamic
Room 301, No. 29, Lane 31,
Shouguang Road, Pudong New
Area, Shanghai, PRC
11,455 September 1, 2023 Four years
(2) 1.97 Nil 0.01%
JIANG Lidan
(ɢʗ)....
Deputy medical director Room 1304, No. 10, Shuirong
Street One, Haizhu District,
Guangzhou, Guangdong, PRC
11,455 September 1, 2023 Four years
(2) 1.97 Nil 0.01%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-33 –


--- page 616 ---
Grantee Po sition/ Rel ation ship Address
Number of Sh ares
under out standing
Awards g rante d before
the com pletion of the
Capitaliz ation I ssue D ate of Gr ant Ve stin g Perio d Exerci se price
Con sideration
paid by the
Grantee (1)
Approxim ate
percent ageo f
enl arged issued
Shares upon
com pletion of the
Capitaliz ation I ssue,
the re purch aseo f
Shares from the 2023
ESOP Pl atform and
the Glob al
Offerin g(3)
(US$per
Share)
T i a n Y u L I U .... O f f i c e m anager Room 707, Building 16,
Zhonghaixin Apartment, Jihua
Street, Longgang District,
Shenzhen, Guangdong, PRC
11,455 September 1, 2023 Four years
(2) 1.97 Nil 0.01%
SONG Heng
(҂㛬).....
Formulation project manager Room 221, Xintaozhijia, No. 6
Xinwucun Industrial Zone,
Taoyuan Street, Nanshan
District, Shenzhen, Guangdong,
PRC
7,500 September 1, 2023 Four years
(2) 1.97 Nil 0.01%
ZHANG Liyang
(ੵɢ౮)....
Clinical operations project
manager
Room 806, Phase 2, Faraway
Home, Yongfeng Community,
Xixiang Street, Bao’an District,
Shenzhen, Guangdong, PRC
7,500 September 1, 2023 Four years
(2) 1.97 Nil 0.01%
CHENG Junwei
(ϓё⒜)....
Preclinical assistant project
manager
Room 703, Building 1, Gushu
Garden Complex Building,
Xixiang, Bao’an District,
Shenzhen, Guangdong, PRC
7,000 September 1, 2023 Four years
(2) 1.97 Nil 0.01%
ZHU Simin
(ઽ)....
Registered assistant project
manager
Room 103, Mezzanine, No. 21
Xinhe East Lane Two, Fuhai
Street, Bao’an District,
Shenzhen, Guangdong, PRC
7,000 September 1, 2023 Four years
(2) 1.97 Nil 0.01%
YUAN Xiaojing
(঺ወവ)....
Registered assistant project
manager
Room 2801, Building 55,
Xiyuanshanyuan, Minzhi Street,
Longhua District, Shenzhen,
Guangdong, PRC
7,000 September 1, 2023 Four years
(2) 1.97 Nil 0.01%
HUANG Mengjiao
(රྫྷᄮ)....
Clinical registration project
manager
B803, Huatong Smart Park
Apartment Building, No. 7,
Ganli Road Two, Jihua Street,
Longgang District, Shenzhen,
Guangdong, PRC
7,000 September 1, 2023 Four years
(2) 1.97 Nil 0.01%
ZHANG Jingxiao
(ੵ᎑ᖋ)....
Assistant researcher Room 201, Building 117, Landsea
Future Tree, Lane 88, Qiuting
Road, Zhuqiao Town, Pudong
New Area, Shanghai, PRC
7,500 September 1, 2023 Four years
(2) 1.97 Nil 0.01%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-34 –


--- page 617 ---
Grantee Po sition/ Rel ation ship Address
Number of Sh ares
under out standing
Awards g rante d before
the com pletion of the
Capitaliz ation I ssue D ate of Gr ant Ve stin g Perio d Exerci se price
Con sideration
paid by the
Grantee (1)
Approxim ate
percent ageo f
enl arged issued
Shares upon
com pletion of the
Capitaliz ation I ssue,
the re purch aseo f
Shares from the 2023
ESOP Pl atform and
the Glob al
Offerin g(3)
(US$per
Share)
LIU Haiqing
(ᄎऎ૶)....
Financial officer Room 704, Building 92, Hebei
Village, Xiameilin, Futian
District, Shenzhen, Guangdong,
PRC
7,500 September 1, 2023 Four years
(2) 1.97 Nil 0.01%
LIU Weijian
(ᄎਃᒟ)....
Laboratory supervisor No. 605, No. 5, Yixue Street,
Nantou Street, Nanshan District,
Shenzhen, Guangdong, PRC
7,500 September 1, 2023 Four years
(2) 1.97 Nil 0.01%
Subtot al ..... 1,638,028 1.91%
Total ....... 8,849,294 (8) 10.31%
Notes:
(1) Refers to any consideration of the acceptance of grant, other than exercise price to be paid by
grantees.
(2) The Awards shall vest in four years subject to the Listing. The Awards representing 25% of the
Awards granted shall vest in equal, yearly installments at each anniversary date commencing from
the vesting commencement date set forth in the notice of Award and the Award agreements. For the
avoidance of doubt, no Awards shall be vested if the Listing has not occurred on or prior to the
applicable vesting date of the individual Awards. The vesting of the Awards that become ready to
be vested according to their respective designated vesting schedule in the notice of Award on a date
prior to the Listing will be deferred and only effected on the Listing Date. For details, please refer
to “History, Reorganization and Corporate Structure — Adoption of the Incentive Plans — 2020
ESOP Platform”. The vesting of the Awards is also subject to other vesting conditions, including
the Grantee’s provision of continuous service to the Company or its affiliates and the performance
criteria to be satisfied by each of the Grantees set forth in their respective notice of Award and
Award agreements. The performance criteria comprise a mixture of attaining satisfactory key
performance indicators of the Company, the department of the Company and the individual
Grantee, respectively. Based on the vesting schedule of the Awards granted under the 2020 Share
Incentive Plan, Awards with up to 1,749,371 (10,496,226 as adjusted after the Capitalization Issue)
underlying Shares shall be be vested on the date of Listing, Awards with up to 1,978,382
(11,870,292 as adjusted after the Capitalization Issue) underlying Shares shall be be vested by
December 31, 2023, Awards with up to 3,617,972 (21,707,832 as adjusted after the Capitalization
Issue) underlying Shares shall be be vested on or before April 1, 2024, Awards with up to 5,785,697
(34,714,182 as adjusted after the Capitalization Issue) underlying Shares shall be be vested on or
before April 1, 2025, Awards with up to 7,180,594 (43,083,564 as adjusted after the Capitalization
Issue) underlying Shares shall be be vested on or before April 1, 2026, and Awards with up to
8,520,170 (51,121,020 as adjusted after the Capitalization Issue) underlying Shares shall be be
vested on or before April 1, 2027. Awards with 361,009 (2,166,054 as adjusted after the
Capitalization Issue) underlying Shares had lapsed as of the Latest Practicable Date due to the
termination of the employment of the Grantees.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-35 –


--- page 618 ---
(3) The table above assumes (i) the Global Offering becomes unconditional and the Offer Shares are
issued pursuant to the Global Offering and (ii) each Series A Preferred Share, Series B Preferred
Share, Series B+ Preferred Share, Series C Preferred Shares and Series C+ Preferred Share will be
converted into ordinary Shares at the conversion ratio of 1:1 by way of re-designation immediately
prior to the completion of the Capitalization Issue and the Global Offering.
(4) The term “director” refers to the working title of employee, not member of the Board.
(5) Mr.Y ANG Feng resigned from our Company on May 11, 2023 for the reason that he would like to
devote more time to his investment businesses.
(6) The Company granted Shares under the 2020 Share Incentive Plan to the consultants of the
Company to recognize their contribution to the business development of the Company and to
incentivize them to continue to cooperate with the Company and contribute to the Company. The
consultants that were granted Shares under the 2020 Share Incentive Plan include Dr. Adrian M. Di
BISCEGLIE, Ms. Gwen A. MELINCOFF and Mr. LI Chun. Pursuant to the consulting agreement
entered into between our Company and Dr. Adrian M. DI BISCEGLIE (“ D r .D iB isceglie”), Dr. Di
Bisceglie has been providing medical support to Company’s clinical studies since May 2019.
Pursuant to a consulting agreement, Ms. Gwen A. MELINCOFF (“ Ms. MELINCOFF ”) has been
providing business development consulting services to the Company since January 2019. Pursuant
to the consulting agreement entered into between our Company and Mr. LI Chun, Mr. LI Chun has
been providing corporate strategy and human resource consulting services to the Company since
February 2022. Each of Dr. DI BISCEGLIE, Ms. MELINCOFF and Mr. LI Chun is independent
from our Group, the Shareholders, Directors and/or senior management other than the services
provided by them to our Group.
(7) Subject to the Listing, Awards underlying 30,000 Shares have been vested as at the Latest
Practicable Date, as the proposed global clinical pharmacology and drug metabolism and
pharmacokinetics plan for HTD1801 has been finalized on or before December 31, 2022. Subject
to the Listing, the remaining Awards underlying 30,000 Shares shall be vested on December 31,
2023 only if the Grantee has been continuously serving in certain position responsible for specified
programs which are successfully executed throughout 2022 and 2023. For the avoidance of doubt,
no Awards shall be vested until and unless the Listing occurs. For details please see “History,
Reorganization and Corporate Structure — Adoption of the Incentive Plans — 2020 ESOP
Platform”.
(8) As of the Latest Practicable Date, up to 5,744,288 (34,465,728 as adjusted after the Capitalization
Issue) Shares underlying the granted Awards under the 2020 Share Incentive Plan will be subject to
lock-up of six months commencing from the Listing Date and up to 1,612,372 (9,674,232 as
adjusted after the Capitalization Issue) Shares underlying the granted Awards under the 2020 Share
Incentive Plan will be subject to lock-up of 180 days commencing from the Listing Date.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-36 –


--- page 619 ---
2. 2023 SHARE INCENTIVE PLAN
The 2023 Share Incentive Plan was adopted by the Board on May 24, 2023. The terms
of the 2023 Share Incentive Plan are not subject to the provisions of Chapter 17 of the
Listing Rules as it does not involve any grant of awards by our Company to subscribe for
new Shares after Listing. After the Listing, no further awards would be granted pursuant to
this 2023 Share Incentive Plan. All the Shares underlying the Awards granted under the 2023
Share Incentive Plan have been issued and alloted to the 2023 ESOP Platform for future
exercise of the Awards.
The following is a summary of the principal terms of the 2023 Share Incentive Plan.
Summary of Key Terms
(a) Purpose
The purpose of the 2023 Share Incentive Plan is to enable the Company to
attract and retain the best available personnel, to provide additional incentives to
employees, Directors and consultants and to promote the success of the Company’s
business.
(b) WhoMayJoin
Eligible participants (“ Eli gible P artici pants”) means any person belonging to
any of the following classes of persons:
(i) any person who is in the employment of the Group;
(ii) a member of the Board or the board of directors of any affiliate of the
Company; or
(iii) any person who is eng aged by the Group to render consulting or
advisory services.
Subject to above classes,
share options (the “ Option s”), restricted share units (“ RSU s”) or restricted shares
(“Restricte d Shares”, together with the Options and the RSUs, the “ Awards”) shall
be granted to the grantee who:
(i) is department manager, key technical staff of the Group;
(ii) has made a significant contribution to the Company; or
(iii) meet such other conditions as determined by the Administrator (as
defined below).
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-37 –


--- page 620 ---
(c) Administrationofthe2023ShareIncentivePlan
The 2023 Share Incentive Plan shall be administered by (A) the Board or (B) a
committee (the “ Committee ”) designated by the Board (the “ Admini strator ”),
which Committee shall be constituted in accordance with the applicable laws and the
Articles of Association, or (C) any person appointed by the Board (the “ Per son”,
together with the Board and the Committee, the “ Admini strator”). Once appointed,
such Committee or the Administrator shall continue to serve in its designated
capacity until otherwise directed by the Board. The Board may authorize one or more
officers or Directors to grant the Awards and may limit such authority as the Board
determines from time to time.
Subject to applicable laws and the provisions of the 2023 Share Incentive Plan
(including any other powers given to the Administrator under the 2023 Share
Incentive Plan), and except as otherwise provided by the Board, the Administrator
shall have the authority, in its discretion:
(i) to select Eligible Participants to whom Awards may be granted from
time to time;
(ii) to determine whether and to what extent Awards are granted;
(iii) to determine the type or the number of Awards to be granted, the number
of Shares or the amount of consideration to be covered by each Award
granted;
(iv) to approve forms of Award agreements for use, to amend terms of the
Award agreements;
(v) to determine the terms and conditions of any Award granted under the
2023 Share Incentive Plan (including without limitation the vesting
schedule and exercise price set forth in the notice of Award and the
Award agreements), including the purchase, exercise or base price, the
time or times when Awards may be exercised (which may be based on
performance criteria), any forfeiture events, any vesting acceleration or
waiver of forfeiture restrictions, and any restriction or limitation
regarding any Award or the Shares relating thereto, based in each case on
such factors as the Administrator determines;
(vi) to amend the terms of any outstanding Award granted under the 2023
Share Incentive Plan;
(vii) to construe and interpret the terms of the 2023 Share Incentive Plan and
Awards, including without limitation the vesting schedule and exercise
price set forth in the notice of Award and the Award agreements;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-38 –


--- page 621 ---
(viii) to require the grantee to provide representation or evidence that any
currency used to pay the exercise price of any Award was legally
acquired and taken out of the jurisdiction in which the grantee resides in
accordance with the applicable laws;
(ix) to establish sub-plans or separate program under the Share Incentive
Plan, containing such limitations and other terms and conditions as the
Administrator determines are necessary or desirable, for the purpose of
satisfying blue sky, securities, tax or other laws of various jurisdictions
in which the Company intends to grant Awards or qualifying for
favorable tax treatment under applicable foreign laws;
(x) to correct any defect, omission or inconsistency in the Share Incentive
Plan or any Award agreement, in a manner and to the extent it deems
necessary or advisable to make the 2023 Share Incentive Plan fully
effective;
(xi) to authorize any individual to execute, on behalf of the Company, any
instrument required to carry out the purpose of the 2023 Share Incentive
Plan;
(xii) to determine the fair market value;
(xiii) to take such other action, not inconsistent with the terms of the 2023
Share Incentive Plan and the applicable laws, as the Administrator
deems appropriate.
(d) TermandtransferabilityoftheAward
The management personnel should nominate eligible candidates according to
the 2023 Share Incentive Plan and advice the conditions of the Award to be granted to
such candidates.
The term of each Award shall be the term stated in the Award agreement.
Notwithstanding the foregoing, the specified term of any Award shall not include any
period for which the grantee has elected to defer the receipt of the Shares of cash
issuable pursuant to the Award. In the case of an Option granted to an United States
taxpayer who, at the time the Option is granted (“ Grant D ate”), owns (or, pursuant to
Section 424(d) of the United States Code, is deemed to own) stock representing more
than 10% of the total combined voting power of all classes of Shares of the Company
or any subsidiary or affiliate, the term of the Option will not be longer than ten years
from the Grant Date. The Grant Date of an Award shall for all purposes be the date on
which the Administrator makes the determination to grant such Award, or such other
date as is determined by the Administrator.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-39 –


--- page 622 ---
Subject to the Applicable Laws, Awards shall be transferable by will and by the
laws of descent and distribution, only to the extent and in the manner approved by the
Administrator. Notwithstanding the foregoing, the grantee may designate one or more
beneficiaries of the grantee’s Award in the event of the grantee’s death on a
beneficiary designation form provided by the Administrator.
(e) ExerciseorPurchasePrice
The exercise or purchase price shall be the price determined by the
Administrator as of the Grant Date. Subject to Applicable Laws, the consideration to
be paid for the Shares to be issued upon exercise or purchase of an Award including
the method of payment, shall be determined by the Administrator. In addition to any
other types of consideration the Administrator may determine, the Administrator is
authorized to accept as consideration for Shares issued under the 2023 Share
Incentive Plan the following:
(i) cash;
(ii) cheque;
(iii) if the exercise or purchase occurs on or after the Listing Date, or as
otherwise permitted by the Administrator, surrender of Shares or
delivery of a properly executed form of attestation of ownership of
Shares as the Administrator may require which have a fair market value
on the date of surrender or attestation equal to the aggregate exercise
price of the Shares as to which said Award shall be exercised;
(iv) with respect to Options or RSUs, if the exercise occurs on or after the
Listing Date, payment through a broker-dealer sale and remittance
procedure pursuant to which the grantee (A) shall provide written
instructions to a Company designated brokerage firm to effect the
immediate sale of some or all of the purchased Shares and remit to the
Company sufficient funds to cover the aggregate exercise price payable
for the purchased Shares and (B) shall provide written directives to the
Company to deliver the certificates for the purchased Shares directly to
such brokerage firm in order to complete the sale transaction; or
(v) any combination of the foregoing methods of payment.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-40 –


--- page 623 ---
(f) ExerciseofAward
Any Award granted under the 2023 Share Incentive Plan shall be exercisable at
such times and under such conditions as determined by the Administrator under the
terms of the 2023 Share Incentive Plan and specified in the Award agreement.
An Award shall be deemed to be exercised when written notice of such exercise
has been given to the Company in accordance with the terms of the Award by the
person entitled to exercise the Award and full payment for the Shares with respect to
which the Award is exercised, including to the extent selected, use of the
broker-dealer sale and remittance procedure to pay the purchase price as provided in
paragraph (e)(iv).
An Award may not be exercised after the termination date of such Award set
forth in the Award agreement and may be exercised following the termination of a
grantee’s continuous service only to the extent provided in the Award agreement.
Where the Award agreement permits a grantee to exercise an Award following the
termination of the grantee’s continuous service for a specified period, the Award shall
terminate to the extent not exercised on the last day of the specified period or the last
day of the original term of the Award, whichever occurs first.
Notwithstanding the foregoing, regardless of whether an Award has otherwise
become exercisable, the Award shall not be exercised if the Administrator (in its sole
discretion) determines that an exercise would violate any applicable laws. Shares
shall not be issued pursuant to the exercise of an Award unless the exercise of such
Award and the issuance and delivery of such Shares pursuant thereto shall comply
with all applicable laws (including all relevant filings, approvals and registrations (if
any) required under the laws PRC) with respect to the exercise of such Award
including without limitation, those required with the PRC State Administration of
Foreign Exchange as determined to be necessary or desirable by the Board of
Directors in its discretion), and shall be further subject to the approval of counsel for
the Company with respect to such compliance.
(g) Termination
An Award shall lapse automatically and not be exercisable (to the extent not
already exercised):
(i) in the event the grantee’s continuous service terminates as a result of
his/her retirement, death, permanent disability prevents from working,
resignation or company terminates his/her employment;
(ii) in the event the grantee’s continuous service terminates due to bad faith
causes;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-41 –


--- page 624 ---
(iii) in the event change in control of the Company or corporate transaction
as defined as below:
• (as determined by the Administrator acting reasonably) a change
in ownership or control of the Company effected through the
direct or indirect acquisition by any person or related group of
persons (other than an acquisition from or by the Company or by
a Company sponsored employee benefit plan or by an affiliate of
the Company) of beneficial ownership of securities possessing
more than fifty percent (50%) of the total combined voting power
of the Company’s outstanding securities pursuant to a tender or
exchange offer made directly to the Company’s shareholders
which a majority of the Directors who are not affiliates or
associates of the offeror do not recommend such shareholders
accept;
• (as determined by the Administrator acting reasonably) a merger,
amalgamation, consolidation or other business combination of the
Company with or into any person, in which the Company is not
the surviving entity, or any other transaction or series of
transactions, as a result of which the Shareholders of the
Company immediately prior to such transaction or series of
transactions will cease to own a majority of the voting power of
the surviving entity immediately after consummation of such
transaction or series of transactions, except for a transaction the
principal purpose of which is to change the state in which the
Company is incorporated;
• the sale, transfer, exclusive license or other disposition of all or
substantially all of the assets of the Group;
• the complete liquidation or dissolution of the Company;
• any reverse merger or series of related transactions culminating in
a reverse merger (including, but not limited to, a tender offer
followed by a reverse merger) in which the Company is the
surviving entity but (A) the ordinary Shares outstanding
immediately prior to such merger are converted or exchanged by
virtue of the merger into other property, whether in the form of
securities, cash or otherwise, or (B) in which securities
possessing more than fifty percent (50%) of the total combined
voting power of the Company’s outstanding securities are
transferred to a person or persons different from those who held
such securities immediately prior to such merger or the initial
transaction culminating in such merger, but excluding any such
transaction or series of related transactions that the Administrator
determines shall not be a corporate transaction; or
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-42 –


--- page 625 ---
• acquisition in a single or series of related transactions by any
person or related group of persons of beneficial ownership of
securities possessing more than fifty percent (50%) of the total
combined voting power of the Company’s outstanding securities,
but excluding any such transaction or series of related
transactions that the Administrator determines shall not be a
corporate transaction; or
(iv) in the event that the Company incurs an insolvency event as defined as
below:
• circumstances under which the Company (a) has a receiver or
similar officer appointed over all or a material part of its assets or
business; (b) passes a resolution for winding-up of all or a
material part of its assets or business (other than a winding-up for
the purpose of, or in connection with, any solvent amalgamation
or reconstruction) or a court enters an order to that effect; (c) has
entered against it an order for relief recognizing it as a debtor
under any insolvency or bankruptcy laws (or any equivalent order
in any jurisdiction); or (d) enters into any composition or
arrangement with its creditors with respect to all or a material part
of its assets or business (other than relating to a solvent
restructuring).
(h) AdditionalConditionsofLapse
(i) Any Award granted under the 2023 Share Incentive Plan shall lapse and
be cancelled automatically if the Company’s listing application (the
“Listin g Applic ation ”) to the Stock Exchange has been rejected in
writing or if the Company has otherwise withdrawn or not renewed
within six months after the lapse of the Listing Application.
(ii) The Awards granted under the 2023 Share Incentive Plan to any Grantee
shall be subject to the Company completing an IPO of a final offer size
(the “ Fin al Offer Size ”) of US$130 million or above. To the extent the
Final Offer Size falls below US$130 million, a corresponding portion of
each of the Awards granted under this Plan shall lapse and be cancelled
automatically. With respect to any Awards granted but automatically
lapsed in accordance with such condition, the underlying Shares shall be
repurchased and cancelled before the Listing.
(i) MaximumNumberofShares
The maximum number of Shares in respect of which Awards may be granted
under the 2023 Share Incentive Plan is 4,000,000 (24,000,000 as adjusted after the
Capitalization Issue) Shares (the “ 2023 Scheme Limit ”). All 4,000,000 Shares
underlying the Awards granted under the 2023 Share Incentive Plan have been issued
and alloted to the 2023 ESOP Platform for future exercise of the Awards.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-43 –


--- page 626 ---
Any Shares covered by an Award (or portion of an Award) which is forfeited,
canceled or expires (whether voluntarily or involuntarily) shall be deemed not to have
been issued for purposes of determining the maximum aggregate number of Shares
which may be issued under the 2023 Share Incentive Plan. Shares that actually have
been issued under the 2023 Share Incentive Plan pursuant to an Award shall not be
returned to the 2023 Share Incentive Plan and shall not become available for future
issuance under the 2023 Share Incentive Plan, except that if the Shares subject to an
outstanding Award are not issued or delivered or are returned to the Company by
reason of (i) expiration, termination, cancellation or forfeiture of such Award, (ii) the
settlement of such Award in cash, (iii) the delivery or withholding of Shares to pay all
or a portion of the exercise price of an Award, if any, or to satisfy all or a portion of
the tax withholding obligations relating to an Award, such Shares shall revert to and
become available for future grant under the 2023 Share Incentive Plan. To the extent
not prohibited by the applicable law and the listing requirements of the applicable
stock exchange or national market system on which the Shares are traded, any Shares
covered by an Award which are surrendered (i) in payment of the Award exercise or
purchase price or (ii) in satisfaction of tax withholding obligations incident to the
exercise of an Award shall be deemed not to have been issued for purposes of
determining the maximum number of Shares which may be issued pursuant to all
Awards under the 2023 Share Incentive Plan, unless otherwise determined by the
Administrator.
(j) AdjustmentsuponChangesinCapitalization
Subject to any required action by Shareholders of the Company, the number of
Shares covered by each outstanding Award, the number of Shares which have been
authorized for issuance under the 2023 Share Incentive Plan but as to which no
Awards have yet been granted or which have been returned to the 2023 Share
Incentive Plan, the exercise or purchase price of each such outstanding Award, the
maximum number of Shares with respect to which Awards may be granted to any
Grantee in any fiscal year of the Company, as well as any other terms that the
Administrator determines require adjustment shall be proportionately adjusted for (i)
any increase or decrease in the number of issued Shares resulting from a share split,
reverse share split, share dividend, combination or reclassification of the Shares, or
similar transaction affecting the Shares, (ii) any other increase or decrease in the
number of issued Shares effected without receipt of consideration by the Company, or
(iii) as the Administrator may determine in its discretion, any other transaction with
respect to Shares including a corporate merger, consolidation, acquisition of property
or equity, separation (including a spin-off or other distribution of shares or property),
reorganization, liquidation (whether partial or complete) or any similar transaction;
provided, however that conversion of any convertible securities of the Company shall
not be deemed to have been “effected without receipt of consideration.” Such
adjustment shall be made by the Administrator and its determination shall be final,
binding and conclusive. Except as the Administrator determines, no issuance by the
Company of Shares of any class, or securities convertible into Shares of any class,
shall affect, and no adjustment by reason hereof shall be made with respect to, the
number or price of Shares subject to an Award. In the event of a spin-off transaction,
the Administrator may in its discretion make such adjustments and take such other
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-44 –


--- page 627 ---
action as it deems appropriate with respect to outstanding Awards under the 2023
Share Incentive Plan, including but not limited to: (i) adjustments to the number and
kind of Shares, the exercise or purchase price per Share and the vesting periods of
outstanding Options, (ii) prohibit the exercise of Awards during certain periods of
time prior to the consummation of the spin-off transaction, or (iii) the substitution,
exchange or grant of Awards to purchase securities of the subsidiary; provided that
the Administrator shall not be obligated to make any such adjustments or take any
such action under the 2023 Share Incentive Plan.
(k) Amendment,SuspensionorTerminationofthe2023ShareIncentivePlan
The Board may at any time amend, suspend or terminate the 2023 Share
Incentive Plan; provided, however, that no such amendment shall be made without the
approval of the Shareholders to the extent such approval is required by applicable
laws or if such amendment would change the provision of this paragraph:
Details of the Awards granted, including Awards exercised or outstanding,
under this scheme shall be disclosed in the circular to shareholders of the Company
seeking approval of the new scheme established after the termination of this scheme.
(l) Dividendandvotingrights
Unless and until the Shares underlying an Award are actually issued or
transferred (as evidenced by the appropriate entry on the books of the Company or of
a duly authorized transfer agent of the Company), no right to receive dividends or
other distributions will exist with respect to the Shares underlying such Award,
notwithstanding the exercise of the Award. If any such dividends or distributions are
paid in Shares, such Shares will be subject to the same restrictions on transferability
and forfeitability as the Restricted Shares with respect to which they were paid. The
dividends and distributions which the grantees who are PRC citizens or otherwise
designated by the Company as PRC grantees (the “ PRC Gr antee( s)”) are entitled to
shall be held by the 2023 ESOP Platform and distributed to the PRC Grantees, unless
the PRC Grantee has held relevant Shares of the Company as permitted by the
Administrator.
No Award gives the Grantee any of the rights of a shareholder of the Company
unless and until Shares are in fact issued or transferred to such Grantee upon vesting
and exercising of such Award. Except as otherwise provided in the 2023 Share
Incentive Plan or the applicable Award agreement, no PRC Grantee will be deemed to
be the holder of, or to have any of the rights of a holder with respect to, any Shares
unless and until the Shares underlying an Award are actually issued or transferred (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company). All the rights of a PRC Grantee with
respect to any Trust Shares shall be exercised by the 2023 ESOP Platform.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-45 –


--- page 628 ---
Outstanding Awards
As of the Latest Practicable Date, all the Awards available for granting under
the 2023 Share Incentive Plan have been granted, and therefore the aggregate number
of underlying Shares pursuant to the outstanding Awards granted under the 2023
Share Incentive Plan is 4,000,000 (24,000,000 as adjusted after the Capitalization
Issue) Shares. Upon completion of the Capitalization Issue, the repurchase of Shares
from the 2023 ESOP Platform and the Global Offering, the aggregate number of
Shares underlying all Awards granted represents approximately 1.86% of the issued
Shares.
As of the Latest Practicable Date, the outstanding Awards which have been
granted under the 2023 Share Incentive Plan for an aggregate of 4,000,000
(24,000,000 as adjusted after the Capitalization Issue) Shares have been granted to a
total of four Eligible Participants, all of whom are Directors or members of the senior
management of our Company. The outstanding Awards granted under the 2023 Share
Incentive Plan were granted at nil consideration to each of the relevant Eligible
Participants with an exercise price of US$1.97 per Share. The exercise period of the
Awards granted is ten years commencing from the date upon which the Awards are
deemed to be granted and accepted pursuant to the terms of the 2023 Share Incentive
Plan.
All the Shares subject to the Awards have been allotted and issued and are held
by the 2023 ESOP Platform as of the date of this prospectus. Accordingly, if all the
Awards granted under the 2023 Share Incentive Plan are exercised, there will not be
any dilution effect on the shareholdings of our Shareholders nor any impact on the
earnings per Share arising from the exercise of the outstanding Awards. The Shares
underlying the Awards under the 2023 Share Incentive Plan that have not been granted
to any specific grantee prior to Listing will be repurchased and cancelled.
An application has been made to the Stock Exchange for the listing of, and
permission to deal in, the Shares held by the 2023 ESOP Platform for the purpose of
the 2023 Share Incentive Plan. Unvested Shares under the 2023 Share Incentive Plan
will abstain from voting upon Listing in compliance with Rule 17.05(A) of the
Listing Rules.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-46 –


--- page 629 ---
The table below shows the details of Awards (all being Options) granted under
the 2023 Share Incentive Plan that are outstanding as of the Latest Practicable Date.
Grantee Po sition/Rel ation ship Address
Number of Sh ares
under out standing
Awards g rante d before
the com pletion of the
Capitaliz ation I ssue D ate of Gr ant Ve stin g Perio d Exerci se price
Con sideration
paid by the
Grantee (1)
Approxim ate
percent ageo f
enl arged issued
Shares followin g the
com pletion of the
Capitaliz ation I ssue
the re purch aseo f
Shares from the 2023
ESOP Pl atform and
the Glob al
Offerin g(3)
(US$perShare)
Director s
Ms. YU Meng
(ɲ഼).....
Executive Director, deputy
general manager of our
Company
6-2-506 Wendelford Garden,
Houhai Avenue, Nanshan
District, Shenzhen, Guangdong,
PRC
1,000,000 September 1, 2023 Four years
(2) 1.97 Nil 0.47%
Mr. MA Lixiong
(৵ͭඪ)....
Non-executive Director Room 1608, International Chamber
of Commerce Center, No. 168
Fuhua 3rd Road, Futian District,
Shenzhen, Guangdong, PRC
1,000,000 September 1, 2023 Four years
(2) 1.97 Nil 0.47%
Subtot al ..... 2,000,000 0.93%
Senior m anagement of our Com pany who are not Director s
Mr. SIM Koon
Yin Edmund
(ӏᝈሬ)....
Chief financial officer of our
Company
Flat F, 6/F, Tower 16, South
Horizons, Ap Lei Chau, Hong
Kong
1,000,000 September 1, 2023 Four years
(2) 1.97 Nil 0.47%
Ms. YU Li
(ɲ஁).....
Vice president Room 1618, Building 16,
Zhonghaixin Innovation
Industrial City, Ganli 2nd Road,
Jihua Street, Longgang District,
Shenzhen, Guangdong, PRC
1,000,000 September 1, 2023 Four years
(2) 1.97 Nil 0.47%
Subtot al ..... 2,000,000 0.93%
Total ....... 4,000,000 (4) 1.86%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-47 –


--- page 630 ---
Notes:
(1) Refers to any consideration of the acceptance of grant, other than exercise price to be paid by
grantees.
(2) The Awards representing 25% of the Awards granted shall vest in equal, yearly installments at each
of the first anniversary date, the second anniversary date, the third anniversary date and the fourth
anniversary date commencing from the Listing Date. The vesting of the Awards is also subject to
other vesting conditions, including the Grantee’s provision of continuous service to the Company
or its affiliates and the performance criteria to be satisfied by each of the Grantees set forth in their
respective notice of Award and Award agreements. The performance criteria comprise a mixture of
attaining satisfactory key performance indicators of the Company, the department of the Company
and the individual Grantee, respectively.
(3) The table above assumes (i) the Global Offering becomes unconditional and the Offer Shares are
issued pursuant to the Global Offering and (ii) each Series A Preferred Share, Series B Preferred
Share, Series B+ Preferred Share, Series C Preferred Shares and Series C+ Preferred Share will be
converted into ordinary Shares at the conversion ratio of 1:1 by way of re-designation immediately
prior to the completion of the Capitalization Issue and the Global Offering.
(4) As of the Latest Practicable Date, up to 4,000,000 (24,000,000 as adjusted after the Capitalization
Issue) Shares underlying the granted Awards under the 2023 Share Incentive Plan will be subject to
lock-up of 12 months commencing from the Listing Date.
E. OTHER INFORMATION
1. E state duty
Our Directors have been advised that no material liability for estate duty is likely to
fall on our Company or any of our subsidiaries.
2. Liti gation
As of the Latest Practicable Date, our Directors were not aware of any pending or
threatened litigation, arbitration or administrative proceedings against us or our Directors
which may have a material adverse impact on our business, financial condition or results of
operations.
3. Joint S ponsors
The Joint Sponsors have made an application on our behalf to the Listing Committee
for the listing of, and permission to deal in, the Shares in issue (including the Shares to be
converted from the Preferred Shares), the Shares to be issued pursuant to the Capitalization
Issue and the Global Offering and the share options granted under the Incentive Plans. All
necessary arrangements have been made to enable such Shares to be admitted into CCASS.
The Joint Sponsors will be paid by our Company an aggregate fee of US$1,000,000 to
act as the joint sponsors to the Company in connection with the Listing.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-48 –


--- page 631 ---
4. Qu alific ation sa nd con sent s of ex pert s
The following experts have each given and have not withdrawn their respective
written consents to the issue of this prospectus with copies of their reports, letters, opinions
or summaries of opinions (as the case may be) and the references to their names included
herein in the form and context in which they are respectively included.
Name Qu alific ation
UBS Securities Hong Kong
Limited
Licensed corporation to conduct Type 1 (dealing in
securities), Type 2 (dealing in futures contracts), Type 6
(advising on corporate finance) and Type 7 (providing
automated trading services) regulated activities as defined
under the SFO
Huatai Financial Holdings
(Hong Kong) Limited
Licensed corporation to conduct Type 1 (dealing in
securities), Type 2 (dealing in futures contracts), Type 4
(advising on securities), Type 6 (advising on corporate
finance), Type 7 (providing automated trading services)
and Type 9 (asset management) of the regulated activities
as defined under the SFO
Han Kun Law Offices Legal advisor as to PRC law
Conyers Dill & Pearman Cayman Islands attorneys-at-law
Ernst & Young Certified Public Accountants and Registered Public Interest
Entity Auditor
China Insights Industry
Consultancy Limited
Independent industry consultant
As of the Latest Practicable Date, none of the experts named above had any
shareholding interest in our Company or any of our subsidiaries or the right (whether legally
enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any
member of our Group.
5. Bin ding effect
This prospectus shall have the effect, if an application is made in pursuance hereof, of
rendering all persons concerned bound by all the provisions (other than the penal
provisions) of Sections 44A and 44B of the Companies Ordinance so far as applicable.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-49 –


--- page 632 ---
6. No m ateri al anda d ver sec h ange
Our Directors confirm that, save as disclosed in the prospectus, as far as they are
aware, there had been no material adverse change in our financial, trading position or
prospects since December 31, 2022, being the date of our consolidated financial statements
as set out in “Appendix I — Accountants’ Report” of this prospectus, up to the date of this
prospectus.
7. Bilin gual document
The English language and Chinese language versions of this prospectus are being
published separately in reliance upon the exemption provided by Section 4 of Companies
(Exemption of Companies and Prospectuses from Compliance with Provisions) Notice
(Chapter 32L of the Laws of Hong Kong).
8. Prelimin ary ex penses
As of the Latest Practicable Date, our Company has not incurred any material
preliminary expenses.
9. Promoter s
We have no promoter for the purpose of the Listing Rules. Save as disclosed in this
prospectus, within the two years immediately preceding the date of this prospectus, no cash,
securities or other benefit has been paid, allotted or given nor are any proposed to be paid,
allotted or given to any promoters in connection with the Global Offering and the related
transactions described in this prospectus.
10. Di sclaimer s
(a) Save as disclosed in this prospectus:
(i) within the two years immediately preceding the date of this prospectus,
neither we nor any of our subsidiaries has issued or agreed to issue any
share or loan capital fully or partly paid up either for cash or for a
consideration other than cash;
(ii) no share or loan capital of our Company or any of our subsidiaries is
under option or is agreed conditionally or unconditionally to be put
under option;
(iii) within the two years immediately preceding the date of this prospectus,
no commissions, discounts, brokerage or other special terms have been
granted in connection with the issue or sale of any shares or loan capital
of any member of the Group;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-50 –


--- page 633 ---
(iv) within the two years immediately preceding the date of this prospectus,
no commission has been paid or payable to any persons for subscription,
agreeing to subscribe, procuring subscription or agreeing to procure
subscription of any shares of the Company or any of its subsidiaries;
(v) no founder, management or deferred shares of the Company or any of its
subsidiaries have been issued or agreed to be issued;
(vi) the Company has no outstanding convertible Preferred Shares;
(vii) there is no arrangement under which future dividends are waived or
agreed to be waived or is agreed conditionally or unconditionally to be
put under option; and
(viii) there has not been any interruption in the business of our Group which
may have or have had a significant effect on the financial position of our
Group in the 12 months immediately preceding the date of this
prospectus.
(b) The principal register of members of our Company will be maintained by our
Principal Share Registrar, Conyers Trust Company (Cayman) Limited, in the
Cayman Islands and our Hong Kong register of members will be maintained by
our Hong Kong Share Registrar, Computershare Hong Kong Investor Services
Limited, in Hong Kong. Unless our Directors otherwise agree, all transfer and
other documents of title of Shares must be lodged for registration with and
registered by our Hong Kong Share Registrar and may not be lodged in the
Cayman Islands.
(c) No company within our Group is presently listed on any stock exchange or
traded on any trading system and no listing or permission to deal is being or is
proposed to be sought.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-51 –


--- page 634 ---
DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES IN HONG KONG
The documents attached to the copy of this prospectus and delivered to the Registrar of
Companies in Hong Kong for registration were:
(a) the written consents referred to in the section headed “Statutory and General
Information — E. Other information — 4. Qualifications and consents of Experts” in
Appendix IV to this prospectus; and
(b) a copy of each of the material contracts referred to in the section headed “Statutory
and General Information — B. Further Information about our business — 1. Summary
of material contracts” in Appendix IV to this prospectus.
DOCUMENTS ON DISPLAY
Copies of the following documents will be published on the Stock Exchange’s website at
www.hkexnew s.hk and our Company’s website at www.hi ghti detx.com during a period of 14
days from the date of this prospectus:
(a) the Memorandum of Association and Articles of our Company;
(b) the Accountants’ Report of our Group prepared by Ernst & Young, the texts of which
are set out in Appendix I;
(c) the report from Ernst & Young on the unaudited pro forma financial information of
our Group, the texts of which are set out in Appendix II;
(d) the audited financial statements of the companies comprising our Group for the years
ended December 31, 2021 and 2022 and the six months ended June 30, 2023;
(e) the legal opinion issued by Han Kun Law Offices, our PRC Legal Advisor in respect
of general matters and property interests of our Group in the PRC;
(f) the letter of advice from Conyers Dill & Pearman, our legal advisor on Cayman
Islands law, summarizing certain aspects of the Cayman Islands company law
referred to in Appendix III to this prospectus;
(g) the industry report prepared by China Insights Industry Consultancy Limited;
(h) the material contracts referred to in the section entitled “B. Further Information about
Our Business — 1. Summary of Material Contracts” in Appendix IV to this
prospectus;
(i) the written consents referred to in the section entitled “E. Other Information — 4.
Qualifications and consents of Experts” in Appendix IV to this prospectus;
APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES AND ON DISPLAY
–V - 1–


--- page 635 ---
(j) the service contracts and letters of appointment referred to in the section headed “C.
Further Information about Our Directors — 1. Particulars of Directors’ service
contracts and appointment letters” in Appendix IV to this prospectus;
(k) the terms of the 2020 Share Incentive Plan and the 2023 Share Incentive Plan; and
(l) the Cayman Companies Act.
APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES AND ON DISPLAY
–V - 2–


--- page 636 ---
