Investment Rating - The report maintains a "Buy" rating for the company, expecting a price increase of over 15% relative to the CSI 300 index in the next six months [1][24]. Core Insights - The company has seen a significant increase in sales and revenue projections, with expected revenues of 4.36 billion RMB in 2024, 14.02 billion RMB in 2025, and 22.77 billion RMB in 2026, reflecting growth rates of 469%, 221%, and 62% respectively [5][24]. - The company reported a cash balance of 14.6 billion RMB at the end of 2023, an increase of 9.7 billion RMB year-on-year, indicating strong liquidity [3][12]. - The gross margin for the company's main product, Huadongning, was 48.8% in 2023, with expectations for further improvement in 2024 [12][24]. - The company is progressing well with its second-generation GKA clinical trials in the U.S., which are expected to enhance patient compliance and extend patent protection [12][24]. Financial Summary - The company reported a total revenue of 0.77 billion RMB in 2023, with a pre-tax loss of 2.1 billion RMB, which is a 4% increase year-on-year [3][5]. - The projected net profit for 2024 is expected to improve to a loss of 1.22 billion RMB, followed by a profit of 0.61 billion RMB in 2025 and 2.80 billion RMB in 2026 [5][24]. - The diluted earnings per share (EPS) are projected to improve from -0.22 RMB in 2024 to 0.27 RMB in 2026 [5][24].

Revenue and Income - Total revenue from drug sales reached RMB 76,610,000 in 2023, a significant increase from RMB 17,599,000 in 2022, representing a growth of approximately 335%[12] - Other income totaled RMB 130,602,000 in 2023, compared to RMB 41,511,000 in 2022, marking an increase of about 215%[15] - The company reported a revenue of RMB 76,610,000 for the year ended December 31, 2023, compared to RMB 17,599,000 in 2022, representing a significant increase[39] - The gross profit for 2023 was RMB 37,374,000, up from RMB 7,689,000 in 2022, indicating a strong improvement in profitability[39] - Other income increased by 214.6% to RMB 131 million, primarily due to milestone payments recognized[111] Losses and Expenses - The company reported a pre-tax loss of RMB 178,954,000 for the year ended December 31, 2023, up from RMB 166,706,000 in 2022, indicating an increase in losses of approximately 5%[21] - The company incurred a pre-tax loss of RMB 211,234,000 for 2023, slightly higher than the loss of RMB 203,507,000 in 2022[39] - For the year ended December 31, 2023, the company reported a loss attributable to shareholders of RMB 211.2 million, compared to a loss of RMB 203.5 million for the year ended December 31, 2022[41] - The company incurred depreciation and amortization expenses totaling RMB 36,238,000 in 2023, compared to RMB 31,777,000 in 2022, reflecting an increase of about 14%[21] - Financing costs rose to RMB 7,907,000 in 2023 from RMB 3,667,000 in 2022, an increase of approximately 116%[18] Assets and Liabilities - The total assets as of December 31, 2023, were RMB 1,473,339,000, compared to RMB 933,111,000 in 2022, reflecting a growth of about 58%[3] - Non-current assets decreased from RMB 181,240,000 in 2022 to RMB 152,896,000 in 2023, a decline of approximately 16%[3] - The company’s equity attributable to owners decreased from RMB 279,580,000 in 2022 to RMB 101,151,000 in 2023, a decline of approximately 64%[5] - Total liabilities, including lease liabilities and borrowings, increased to RMB 167.8 million as of December 31, 2023, from RMB 97.6 million as of December 31, 2022[54] - The total borrowings as of December 31, 2023, were RMB 124,036,000, compared to RMB 33,923,000 in 2022, indicating a substantial increase of approximately 265.5%[65] Cash and Liquidity - The company’s cash and cash equivalents increased significantly to RMB 1,460,824,000 in 2023 from RMB 490,632,000 in 2022, representing a growth of about 197%[3] - The company has a net cash position of RMB 1,320.4 million as of December 31, 2023, compared to RMB 751.9 million in 2022, reflecting improved liquidity[32] - As of December 31, 2023, cash and cash equivalents amounted to RMB 1,460.8 million, an increase from RMB 751.9 million as of December 31, 2022[49] - The current liquidity ratio stands at 6.2, an increase from 5.0 in the previous year[96] Research and Development - The company recorded a significant increase in research and development expenses, totaling RMB 171,537,000 in 2023, compared to RMB 129,528,000 in 2022, reflecting ongoing investment in innovation[39] - Research and development costs for the year ended December 31, 2023, were RMB 166.8 million, up from RMB 110.4 million in 2022, indicating a significant investment in innovation[50] - The company is conducting clinical research on dorzagliatin for the prevention of diabetes, with a study initiated at CUHK[112] - The company is advancing research on new indications for dorzagliatin and has submitted patent applications for its use in preventing diabetes and memory deficits[123] Employee and Operational Metrics - Employee costs for the year ended December 31, 2023, were approximately RMB 163.3 million, compared to RMB 155.2 million in 2022, representing an increase of about 5.4%[74] - The company employed a total of 177 employees as of December 31, 2023, an increase from 144 employees in 2022, indicating a growth of approximately 22.9%[74] - The company has maintained a strong credit policy to minimize credit risk associated with accounts receivable, with clients possessing strong financial capabilities[44] Future Plans and Investments - The company plans to invest in Shanghai Lingang Special Area to ensure sufficient commercial supply of dorzagliatin, with future funding expected from internal resources and/or appropriate external borrowings[36] - The company plans to invest approximately RMB 400 million in 2023 and 2024 for the production and capacity expansion of dorzagliatin[111] - The company aims to develop personalized diabetes care technologies to enhance patient management[130] Corporate Governance and Compliance - The company has complied with all applicable corporate governance codes throughout the year[80] - The company did not declare or pay any dividends for the years ended December 31, 2023, and 2022[72]

Financial Performance - The company achieved revenue of RMB 70.3 million in the first half of 2023, representing an increase of approximately 299.6% compared to the sales in the second half of 2022[37]. - Total sales of Huadongning® reached RMB 87.9 million from its launch in late October 2022 to June 30, 2023, driven by new regulations allowing patients to purchase chronic care medications online[37]. - The company reported total revenue of approximately RMB 70.3 million for the six months ended June 30, 2023, reflecting sales of about 212,000 boxes of Huadongning®[75]. - Gross profit for the same period was approximately RMB 44.0 million, with a gross margin of 62.6%, an increase of 18.9% from 43.7% for the year ended December 31, 2022[65]. - The company reported a loss before tax of RMB 90,096,000, an improvement from a loss of RMB 104,619,000 in the previous year[146]. Cash and Liquidity - As of June 30, 2023, the company's cash balance was RMB 881.3 million, an increase of approximately 79.6% from RMB 490.6 million as of December 31, 2022[31]. - Operating cash flow generated RMB 258.8 million for the six months ending June 30, 2023, compared to a cash outflow of RMB 116.7 million in the same period of 2022[100]. - The cash inflow from financing activities for the six months ended June 30, 2023, was RMB 122.7 million, primarily from short-term and long-term bank loans[125]. - The company’s net asset value decreased to RMB 208,426,000 from RMB 279,580,000 year-over-year[147]. - As of June 30, 2023, the company reported a current ratio of 3.8, down from 5.0 as of December 31, 2022[132]. Expenses and Costs - Total expenses for the six months ended June 30, 2023, amounted to approximately RMB 181.5 million, with around RMB 71.0 million allocated to research and development expenses[35]. - The total comprehensive expenses for the six months ended June 30, 2023, decreased by approximately RMB 14.0 million or about 13.4% to approximately RMB 90.5 million compared to the same period in 2022[36]. - Administrative expenses decreased from RMB 68.5 million to RMB 54.0 million, primarily due to a reduction in employee costs and consulting fees[67]. - The company recorded sales expenses of RMB 52.9 million for the six months ended June 30, 2023, which included employee compensation of RMB 15.0 million and promotional expenses of RMB 29.0 million[117]. - The cash operating costs totaled RMB 220.4 million for the six months ended June 30, 2023, compared to RMB 142.3 million for the same period in 2022[122]. Research and Development - The company is conducting clinical research on dorzagliatin for diabetes prevention, with the SENSITIZE II study initiated at the Chinese University of Hong Kong[33]. - The company is advancing the development of fixed-dose combination candidates of dorzagliatin with metformin, sitagliptin, and empagliflozin as part of its lifecycle management strategy[55]. - Dorzagliatin has shown potential for new indications related to endogenous GLP-1, encouraging further research into its combination with GLP-1 receptor agonists for postprandial blood sugar control[47]. - The company is preparing to conduct real-world studies to address unmet medical needs related to dorzagliatin[53]. - The company is developing a clinical research plan to reverse IGT to NGT in China, targeting the 500 million global IGT patients, which is a major cause of type 2 diabetes[81]. Milestones and Partnerships - The company received a non-repayable milestone payment of RMB 400 million from Bayer after the successful launch of Huadongning® for two indications of type 2 diabetes (T2D) in China, with total cash received from Bayer and government funding amounting to RMB 402.6 million in the first half of 2023[31]. - The company completed a milestone event with Bayer, resulting in a milestone payment of RMB 800 million[61]. - The company is actively seeking business partners to advance its R&D plans and commercialization efforts globally[60]. - The company plans to submit an IND application in the U.S. by the end of 2023 or early 2024 for the development of a second-generation GKA targeting diabetic kidney disease[55]. - The company is preparing to submit an IND application for its second-generation glucose kinase activator in the U.S. by the end of 2023 or early 2024[73]. Employee and Compensation - The company had 170 employees as of June 30, 2023, an increase from 144 employees as of December 31, 2022[136]. - Employee costs for the six months ended June 30, 2023, were approximately RMB 81.9 million, compared to RMB 80.4 million for the same period in 2022[162]. - The company plans to continue providing competitive compensation and may grant stock options and bonuses based on employee performance[137]. - As of June 30, 2023, there were 42,533,262 shares available for future grants under the post-IPO share option plan[141]. - The company has two share incentive plans in place, which were adopted prior to the effective date of the new listing rules[164]. Market and Risk Factors - The company faces various market risks, including currency, interest rate, credit, and liquidity risks, and currently does not hedge any of these risks[105]. - The company has not implemented any interest rate hedging policies to mitigate interest rate risks but is monitoring these risks and will consider hedging if necessary[12]. - The company has conducted sensitivity analysis to assess the risks associated with currency fluctuations[129]. - The impact on profit and loss from USD was a loss of RMB 9,342,000 for the first half of 2023, an improvement from a loss of RMB 9,893,000 in the same period of 2022[130]. - The impact from HKD was a loss of RMB 2,499,000 as of June 30, 2023, compared to a loss of RMB 2,250,000 at the end of 2022[130].

Sales and Revenue - Total sales of Dorzagliatin (branded as Huatangning®) reached RMB 879 million since its launch in October 2022 until June 30, 2023, with revenue of RMB 703 million in the first half of 2023, representing a growth of approximately 299.6% compared to the second half of 2022[2]. - The company generated total revenue of approximately RMB 70.3 million in the first half of 2023, reflecting sales of about 212,000 boxes of Huatangning®[6]. - Revenue for the six months ended June 30, 2023, was RMB 70,331,000, compared to no revenue in the same period of 2022[104]. Financial Performance - Hua Medicine recorded a gross profit of approximately RMB 44.0 million for the six months ended June 30, 2023, with a gross margin of 62.6%, an increase of 18.9% from 43.7% for the year ended December 31, 2022, due to increased sales and reduced unit production costs[20]. - The net loss for the six months ended June 30, 2023, was RMB 90,096,000, compared to a net loss of RMB 104,619,000 in the same period of 2022, representing a 13.8% improvement[104]. - The company reported a basic and diluted loss per share of RMB 0.09 for the first half of 2023, compared to RMB 0.11 in the same period of 2022[96]. Cash and Liquidity - As of June 30, 2023, the company's cash balance was RMB 881.3 million, an increase of approximately 79.6% from RMB 490.6 million as of December 31, 2022[2]. - Cash generated from operating activities for the six months ended June 30, 2023, was RMB 258.8 million, compared to a cash outflow of RMB 116.7 million for the same period in 2022[73]. - Cash and cash equivalents increased significantly to RMB 881,289,000 from RMB 490,632,000 year-over-year, indicating improved liquidity[97]. Research and Development - Total expenses for the first half of 2023 were approximately RMB 181.5 million, with research and development expenses accounting for about RMB 71.0 million, a decrease of approximately 1.8% from RMB 72.3 million in the same period of 2022[6]. - The company is actively developing a new fixed-dose combination of dorzagliatin with metformin, sitagliptin, and empagliflozin, which is expected to provide greater benefits to more patients in China[24]. - The company is exploring the potential of dorzagliatin in new indications related to endogenous GLP-1, which may provide more effective methods for diabetes remission in obese patients[29]. Milestone Payments and Collaborations - The company received a non-repayable milestone payment of RMB 400 million from Bayer after the approval of Huatangning® for two Type 2 diabetes indications, with total cash and government funding received amounting to RMB 402.6 million in the first half of 2023[2]. - The company anticipates receiving specific milestone payments related to the development of Hua Tang Ning® in the second half of 2023 from Bayer[28]. - The company is entitled to receive a milestone payment of RMB 800 million from Bayer related to the development of Huadongning®[62]. Production and Capacity Expansion - The company is expanding production capacity for Dorzagliatin in collaboration with partners, with a total investment of approximately RMB 400 million planned for commercial drug production and capacity expansion from 2023 to 2024[8]. - The company plans to continue investing in Shanghai Lingang Special Area to ensure sufficient commercial supply of dorzagliatin, with expected funding from internal resources and/or external borrowings[92]. Employee and Administrative Costs - Employee costs, including salaries and other benefits, amounted to RMB 70,298,000 in the first half of 2023, up from RMB 63,561,000 in 2022, reflecting a growth of 11.3%[113]. - Administrative expenses decreased from RMB 68.5 million to RMB 54.0 million, mainly due to a reduction in labor costs by RMB 11.2 million and consulting fees by RMB 5.3 million[42]. Clinical Research and Studies - The SEED-DREAM study published in June 2023 reported a 65% probability of diabetes remission in non-obese diabetic patients after 52 weeks of Dorzagliatin treatment, with significant improvements in TIR (Time in Range)[10]. - Clinical trials indicate that dorzagliatin can effectively restore glycemic homeostasis in specific T2D patient populations by improving β-cell function and reducing insulin resistance[19]. Corporate Governance and Compliance - The group’s unaudited consolidated financial performance for the six months ended June 30, 2023, has been reviewed by Deloitte, confirming compliance with applicable accounting principles and sufficient disclosure[157]. - The company is committed to adhering to the corporate governance code as outlined in the listing rules appendix[160].

中國建設銀行股份有限公司上海張江分行 中國上海科苑路232號 | --- | |----------------------------------| | | | 招商銀行股份有限公司臨港藍灣支行 | | 上海臨港區雲櫻路 271 號 | | 本公司網站 | | www.huamedicine.com | | 股份代號 | | 2552 | 華領醫藥 年度報告 2022 4 業務及財務摘要 業務摘要 • 於2022年10月，我們收到中國國家藥品監督管理局(NMPA)就華堂寧®（又名dorzagliatin）的商業批准發出的正式 通知。華堂寧®是全球範圍內首個獲批上市的葡萄糖激酶激活劑(GKA)藥物。 • 華堂寧®獲批兩個適應症，用於改善2型糖尿病(T2D)患者的血糖控制，即單獨用藥治療T2D患者，或者在單獨使 用二甲雙胍血糖控制不佳時，與二甲雙胍聯合使用，以控制成人T2D患者的血糖水平。 • 此外，華堂寧®的批准包含三項許可。對於慢性腎病(CKD)及2型糖尿病（即糖尿病腎病）患者，無需調整劑 量。華堂寧®聯合恩格列淨（SGLT-2抑制劑）或西格列汀（DPP-4抑制劑），聯合用藥的效果優於單獨用藥， 有望更好地 ...

Product Approval and Commercialization - The company received formal commercial approval from the NMPA for Huadongning® (dorzagliatin) in October 2022, marking it as the world's first glucose kinase activator (GKA) drug approved for market[3]. - Huadongning® is approved for two indications to improve blood glucose control in Type 2 Diabetes (T2D) patients, either as monotherapy or in combination with metformin[3]. - The approval includes three permissions, allowing for use in chronic kidney disease (CKD) and T2D patients without dose adjustment, and shows improved efficacy when combined with SGLT-2 or DPP-4 inhibitors[4]. - The company received a milestone payment of RMB 400 million from Bayer Pharmaceuticals upon the commercial approval of Huadongning®[5]. - Initial commercialization of Huadongning® in China has been successful, with voluntary sales restrictions implemented to ensure adequate supply for patients[11]. - Approximately 148,000 boxes of Huadongning® (28 tablets per box) were sold from late October 2022 to the end of January 2023, resulting in net sales revenue of approximately RMB 49 million[21]. - The company plans to seek inclusion of Huadongning® in the national medical insurance catalog while continuing to develop a fixed-dose combination of dorzagliatin[26]. Financial Performance - As of December 31, 2022, the company reported total revenue of approximately RMB 17.6 million, reflecting sales since the launch of Huadongning® in Q4 2022[7]. - Total revenue for the year ended December 31, 2022, was RMB 17.6 million, with a gross profit of RMB 7.7 million, resulting in a gross margin of 43.7%[56]. - The company recorded a pre-tax loss of RMB 203.5 million for the year ended December 31, 2022, compared to a pre-tax loss of RMB 325.7 million for the previous year[48]. - Cash used in operating activities for the year ended December 31, 2022, was RMB 230.1 million, primarily due to the pre-tax loss and an increase in working capital[65]. - The company reported a basic and diluted loss attributable to owners of the company of RMB (203,507,000) for the year ended December 31, 2022, compared to RMB (325,734,000) in 2021[140]. - The company’s total equity attributable to owners was RMB 279.6 million as of December 31, 2022, down from RMB 450.3 million in 2021, reflecting a decrease of approximately 37.9%[103]. Research and Development - The company completed multiple clinical trials, including eight Phase I trials in China and four in the U.S., demonstrating a diabetes remission rate of 65.2% in a 52-week clinical study[17]. - The DREAM study showed a diabetes remission rate of 65.2% among T2D patients after 52 weeks without any hypoglycemic medication, indicating the potential effectiveness of dorzagliatin[19]. - The company is advancing the development of its second-generation glucose kinase activator (GKA) with potential for once-daily dosing and more efficient manufacturing processes[23]. - The company continues to develop glucose kinase compounds for congenital hyperinsulinism following the acquisition of Shengderuil[26]. - The company has allocated 39% of the net proceeds from the global offering, amounting to RMB 291.4 million, for the research and development of Dorzagliatin[194]. Expenses and Cost Management - Total expenses for the year ended December 31, 2022, were approximately RMB 278.7 million, with R&D expenses comprising about RMB 129.5 million, a decrease of approximately RMB 57.3 million or 31%[7]. - Research and development expenses decreased from RMB 186.8 million for the year ended December 31, 2021, to RMB 129.5 million for the year ended December 31, 2022, a reduction of RMB 57.3 million[43]. - Administrative expenses decreased from RMB 134.8 million for the year ended December 31, 2021, to RMB 129.9 million for the year ended December 31, 2022, mainly due to reduced employee compensation and marketing costs[76]. - Employee costs for the year ended December 31, 2022, were approximately RMB 155.2 million, down from RMB 163.3 million in 2021, indicating a reduction of 4.9%[191]. Cash Flow and Liquidity - The company’s cash and cash equivalents amounted to RMB 490.6 million as of December 31, 2022, with operating activities consuming RMB 230.1 million during the year[83]. - The company reported a net cash outflow from operating activities of RMB 230.1 million for the year ended December 31, 2022, an improvement from RMB 273.0 million in the previous year[114]. - The net cash generated from financing activities for the year ended December 31, 2022, was RMB 21.5 million, compared to a net cash used of RMB 6.1 million for the year ended December 31, 2021[67]. - The company’s cash and cash equivalents decreased to RMB 490.6 million as of December 31, 2022, from RMB 675.2 million in the previous year, a decline of about 27.4%[102]. Corporate Governance - The company has appointed Mr. Cheung Yiu Leung as an independent non-executive director and audit committee chairman since January 1, 2023, ensuring compliance with listing rules[198]. - The audit committee must consist of at least three members, including one independent non-executive director with appropriate professional qualifications or relevant financial management expertise[197]. - The company has met the requirements of listing rules 3.10(2) and 3.21 following the recent appointment of the audit committee chairman[198].

Financial Performance - Total revenue for the six months ended June 30, 2022, was RMB 21,352,000, compared to RMB 3,612,000 for the same period in 2021, representing a significant increase[58]. - The company reported a pre-tax loss of RMB 104,619,000 for the six months ended June 30, 2022, an improvement from a loss of RMB 165,292,000 in the same period of 2021, reflecting a decrease in losses of about 36.6%[58]. - The total comprehensive loss for the period was RMB 104,547,000, compared to RMB 165,294,000 in the previous year, marking a reduction of about 36.7%[59]. - The basic and diluted loss per share for the period was RMB 0.11, compared to RMB 0.17 for the same period in 2021, showing an improvement in per-share performance[59]. - The company reported a net loss of RMB 104,619 thousand for the six months ended June 30, 2022, an improvement from a net loss of RMB 165,292 thousand in the same period of 2021, indicating a reduction of about 36.6%[64]. Research and Development - Total expenses for the six months ended June 30, 2022, were approximately RMB 142.6 million, with approximately RMB 72.3 million allocated for R&D expenses[6]. - R&D expenses decreased by approximately RMB 25.7 million or about 26.2% compared to the six months ended June 30, 2021, totaling approximately RMB 72.3 million[6]. - The company continues to advance the development of its second-generation glucose kinase activator (GKA) with potential for once-daily dosing and more efficient production processes[5]. - The company is focusing on expanding its market presence and enhancing its product offerings through ongoing research and development initiatives[58]. - The company has submitted a patent application for a fixed-dose combination of dorzagliatin with selected approved oral antidiabetic therapies[11]. Clinical Trials and Product Development - The SEED and DAWN Phase III trials achieved their primary efficacy endpoints, with a total of 1,230 patients recruited across 110 research centers in China[7]. - In May 2022, two peer-reviewed papers regarding the Phase III clinical trial results of dorzagliatin were published in the journal Nature Medicine[4]. - The DREAM study showed a diabetes remission rate of 65.2% at week 52 for participants who achieved glycemic control without any hypoglycemic medications[8]. - Dorzagliatin demonstrated a 65.2% diabetes remission rate over 52 weeks without any antidiabetic medication after discontinuation[10]. - The DREAM study indicated that dorzagliatin could potentially restore early insulin secretion and improve beta-cell function in newly diagnosed patients[10]. Financial Position and Cash Flow - As of June 30, 2022, the bank balance and cash amounted to approximately RMB 586.3 million[6]. - Cash used in operating activities was RMB 116.7 million for the six months ended June 30, 2022, compared to RMB 164.3 million for the same period in 2021[26]. - Cash flow from investing activities generated RMB 17.0 million for the six months ended June 30, 2022, compared to a cash outflow of RMB 10.1 million in the same period of 2021[25]. - The net cash generated from investing activities for the six months ended June 30, 2022, was RMB 17.0 million, an increase from RMB 10.1 million for the same period in 2021, primarily due to government subsidies and interest from bank deposits[27]. - Current assets decreased from RMB 704.6 million as of December 31, 2021, to RMB 622.3 million as of June 30, 2022, with cash and cash equivalents dropping from RMB 675.2 million to RMB 586.3 million[29]. Government Grants and Other Income - Other income for the six months ended June 30, 2022, was RMB 21.4 million, an increase from RMB 3.6 million for the same period in 2021, primarily due to government subsidies[16]. - The company received government grants amounting to RMB 20,000 thousand during the investment activities, which was not reported in the previous year[64]. - The company received government subsidies totaling RMB 19,654 thousand for the six months ended June 30, 2022, compared to RMB 481 thousand in the same period of 2021[71]. Employee and Management Information - As of June 30, 2022, the company had a total of 147 employees, with 53% in R&D, 41% in general and administrative roles, and 6% in management[45]. - Employee costs for the six months ended June 30, 2022, were approximately RMB 80.4 million, a decrease from RMB 85.4 million for the same period in 2021, representing a reduction of about 6%[45]. - The company continues to provide competitive compensation and has not faced significant recruitment challenges or major employee turnover during the reporting period[46]. - The company has implemented continuous learning and training programs to enhance employee skills and maintain competitiveness[46]. - The company reported a decrease in total compensation for key management personnel to RMB 9,609,000 for the six months ended June 30, 2022, down from RMB 14,340,000 for the same period in 2021[104]. Corporate Governance and Compliance - The company has adopted a corporate governance code since its listing date to enhance shareholder value and transparency, and it has complied with all applicable provisions during the reporting period[120]. - The company is committed to maintaining high levels of corporate governance to protect shareholder interests and enhance corporate value[120]. - The financial review was conducted in accordance with the International Accounting Standards, ensuring compliance and accuracy in reporting[56]. - The company will report its compliance with the latest version of the corporate governance code in its corporate governance report for the year ending December 31, 2022[120]. - The company has undergone changes in its board of directors, with Robert Taylor Nelsen and William Robert Keller resigning from their respective positions in June and May 2022[121].

Financial Performance - As of December 31, 2021, the bank balance and cash amounted to approximately RMB 675.2 million[5]. - Total expenses for the year ended December 31, 2021, were approximately RMB 327.2 million, with about RMB 186.8 million allocated for R&D expenses[5]. - R&D expenses decreased by approximately RMB 34.1 million or about 15% to approximately RMB 186.8 million for the year ended December 31, 2021[5]. - Pre-tax loss reduced by approximately RMB 67.4 million or about 17% to approximately RMB 325.7 million for the year ended December 31, 2021[5]. - Total comprehensive expenses for the year decreased by approximately RMB 68.3 million or about 17% to approximately RMB 325.3 million[5]. - Other income decreased from RMB 15.9 million in 2020 to RMB 11.9 million in 2021, primarily due to a reduction in government subsidies and rental concessions[18]. - The company reported a loss of RMB 10.4 million in other gains and losses for the year ended December 31, 2021, a decrease from a loss of RMB 41.8 million in 2020, attributed to currency fluctuations[19]. - Administrative expenses decreased from RMB 140.1 million in 2020 to RMB 134.8 million in 2021, mainly due to reduced employee compensation and marketing costs[21]. - The company has not generated any revenue from product sales or services, only recognizing limited income from government subsidies and interest income, leading to significant expected losses in the foreseeable future[14]. - Total revenue for the year ended December 31, 2021, was RMB 11,871,000, a decrease of 25.5% from RMB 15,859,000 in 2020[198]. - Basic and diluted loss per share for the year was RMB 0.34, compared to RMB 0.41 in 2020, reflecting a 17.1% reduction in loss per share[199]. - The company’s net assets decreased to RMB 450,331,000 from RMB 732,495,000, a drop of 38.5% year-over-year[200]. Research and Development - The company is actively pursuing intellectual property filings related to glucose kinase discoveries and fixed-dose combinations involving dorzagliatin[4]. - The DREAM study showed a diabetes remission rate of 65.2% among participants after 52 weeks without any hypoglycemic medication[3]. - The SEED and DAWN trials achieved a glycated hemoglobin control rate of 45% among participants, demonstrating the efficacy of dorzagliatin[8][11]. - The company is exploring the utility of dorzagliatin for type 1 diabetes and advancing the development of a second-generation glucose kinase activator[10]. - The company has completed eight phase I trials in China and four in the U.S., along with one phase II trial and two phase III trials, recruiting a total of 1,230 patients[11]. - The company continues to develop other compounds in the preclinical stage, including mGLUR5 for Parkinson's disease and a fructokinase inhibitor for metabolic diseases[13]. - Research and development expenses for the year were RMB 186,835,000, down 15.5% from RMB 220,962,000 in the previous year[198]. - The majority of R&D expenses were payments to contract research organizations (CROs), site management organizations (SMOs), and contract manufacturing organizations (CMOs)[192]. Strategic Partnerships and Collaborations - In March 2021, the company submitted a New Drug Application (NDA) for dorzagliatin to the NMPA, which was accepted in April 2021[2]. - The company established a strategic agreement with China National Pharmaceutical Group for logistics and supply chain management related to dorzagliatin[4]. - A pharmaceutical company was established in Shanghai Lingang to ensure sufficient commercial supply of dorzagliatin[4]. - The company is preparing for the commercialization of dorzagliatin in China in collaboration with Bayer after obtaining NMPA approval[10][13]. - The company has a strategic collaboration with Bayer, which includes an upfront payment of RMB 300 million and potential milestone payments up to RMB 4.18 billion based on sales[147]. Market and Future Outlook - The company plans to accelerate activities related to dorzagliatin upon approval, targeting the large population in China and eventually expanding globally[6][10]. - The company aims to apply for an extension of dorzagliatin's patent in China, potentially extending market exclusivity until 2034[7]. - The company is focused on enhancing internal controls and financial reporting processes to ensure compliance with international standards[195]. - Future outlook includes continued investment in R&D and potential market expansion strategies to improve financial performance[197]. Corporate Governance and Management - The board of directors consists of two executive directors, two non-executive directors, and four independent non-executive directors, ensuring compliance with listing rules regarding board composition[153]. - The company has established a remuneration committee to determine compensation policies based on performance, qualifications, and market practices[95]. - The company has received written confirmations of independence from all independent non-executive directors, affirming their status as independent individuals[155]. - The audit committee conducted four meetings to review financial reports, risk management, and internal control effectiveness[162]. - The company emphasizes the importance of board diversity, considering factors such as gender, age, and professional qualifications[167]. Risks and Challenges - The company faces various risks and uncertainties that could impact its performance and operations, including inherent risks in the pharmaceutical industry[133]. - There is uncertainty regarding dorzagliatin's reimbursement status in China, which could impact sales and profitability[137]. - The company relies on third-party CMO for the production of dorzagliatin, and any issues with CMO could delay production and marketing efforts[135]. Shareholder Communication - The company emphasizes effective communication with shareholders to enhance investor relations and understanding of business performance and strategies[185]. - The company has established a shareholder communication policy to ensure that shareholder opinions and concerns are properly addressed[187]. - The company is committed to continuous communication with shareholders, particularly through annual general meetings and other shareholder meetings[185].

Financial Performance - Total revenue for the six months ended June 30, 2021, was RMB 3,612,000, compared to RMB 3,554,000 for the same period in 2020, representing an increase of 1.63%[4] - The net loss for the six months ended June 30, 2021, was RMB 165,292,000, compared to a net loss of RMB 173,455,000 for the same period in 2020, indicating an improvement of 4.5%[4] - The total comprehensive loss for the period was RMB 165,294,000, compared to RMB 173,657,000 in the prior year, marking a 4.8% reduction[54] - The company reported a basic and diluted loss attributable to owners of RMB 165,292,000 for the six months ended June 30, 2021, compared to a loss of RMB 173,455,000 for the same period in 2020, representing a decrease of approximately 4.5%[73] - The company reported a pre-tax loss of RMB 90,644,000 for the six months ended June 30, 2021, compared to RMB 92,497,000 for the same period in 2020, indicating a slight improvement[68] Research and Development - Research and development expenses for the first half of 2021 were RMB 97,982,000, a decrease of 12.5% from RMB 112,253,000 in the first half of 2020[4] - The company has submitted a New Drug Application (NDA) for dorzagliatin to the NMPA in March 2021, which was accepted in April 2021[5] - Dorzagliatin has completed two Phase III trials in China, recruiting 1,230 patients across 110 sites, achieving its primary efficacy endpoints[5] - The company plans to conduct further studies on dorzagliatin and its combination therapies in T2D patients, potentially improving standard treatments[9] - The product pipeline includes multiple candidates, with dorzagliatin for Type 2 diabetes having an NDA submitted, and other compounds in various stages of development[7] Financial Position - Non-current assets as of June 30, 2021, were RMB 152,756,000, slightly down from RMB 153,244,000 at the end of 2020[4] - Current assets decreased to RMB 874,367,000 from RMB 1,045,277,000 at the end of 2020, reflecting a significant reduction in liquidity[4] - As of June 30, 2021, the net current assets decreased to RMB 791.6 million from RMB 938.7 million as of December 31, 2020[24] - The company's lease liabilities as of June 30, 2021, amounted to RMB 76.3 million, a decrease from RMB 80.7 million as of December 31, 2020[26] - The total equity attributable to owners of the company decreased to RMB 589,416 thousand as of June 30, 2021, from RMB 732,495 thousand at the end of 2020[55] Cash Flow - Cash used in operating activities for the six months ended June 30, 2021, was RMB 164.3 million, compared to RMB 167.4 million for the same period in 2020[18] - The company reported a net cash decrease of RMB 185.2 million for the six months ended June 30, 2021, compared to a decrease of RMB 156.0 million for the same period in 2020[20] - The net cash used in investing activities for the six months ended June 30, 2021, was RMB 10.1 million, mainly due to the purchase of equipment and intangible assets[22] - The net cash used in financing activities for the six months ended June 30, 2021, was RMB 5.8 million, arising from the repayment of lease liabilities[23] - The company incurred a total cash outflow from investing activities of RMB (10,124) thousand for the first half of 2021, compared to a cash inflow of RMB 2,871 thousand in the same period of 2020[58] Employee and Management - As of June 30, 2021, the company had a total of 154 employees, with 47% in R&D and 47% in general and administrative roles[37] - Employee costs for the six months ended June 30, 2021, were approximately RMB 85.4 million, a decrease of 5.1% from RMB 90.8 million for the same period in 2020[37] - The total compensation for key management personnel for the six months ended June 30, 2021, was RMB 14,340,000, a decrease from RMB 20,778,000 in the same period of 2020[95] - The company has granted stock options and bonuses based on competitive compensation policies, which are regularly reviewed by management[38] - The company continues to provide ongoing learning and training programs to enhance employee skills and knowledge[38] Share Options and Incentives - As of June 30, 2021, there were 92,960,978 unexercised stock options granted under the pre-IPO share incentive plan[40] - The total number of stock options exercised during the reporting period was 1,965,291[40] - The company has not granted any further restricted stock units under the pre-IPO share incentive plan since the listing date[42] - The company has a total of 117,000,000 shares available for issuance under the pre-IPO share incentive plan established in March 2013[88] - The company recognized share-based payment expenses of RMB 18,710,000 for the six months ended June 30, 2021, compared to RMB 28,800,000 for the same period in 2020[92] Corporate Governance - The company has adopted a corporate governance code since its listing date to enhance transparency and accountability[119] - The board confirmed compliance with applicable standards of the corporate governance code during the six months ended June 30, 2021[119] - The company has maintained high levels of corporate governance to protect shareholder interests and enhance corporate value[119] - The company has established a framework for compliance with international financial reporting standards, enhancing transparency[124] - The group includes the company and its subsidiaries, indicating a comprehensive operational structure[124] Future Plans and Investments - The company plans to continue investing in the pharmaceutical company established in Shanghai Lingang Special Area to ensure sufficient commercial supply of dorzagliatin[48] - The company plans to continue utilizing the proceeds in accordance with the future plans outlined in the prospectus[101] - The company expects to carry forward and utilize part of the net proceeds in the fiscal year 2022 due to slight adjustments in the production capacity development timeline[101] - The company has a responsibility to make a milestone payment of USD 3,000,000 upon the approval of the licensed product in China[71] - The company continues to collaborate with leading partners, including Bayer, to prepare for the market launch of dorzagliatin in China[6]

Financial Performance - Total expenses for the year ended December 31, 2020, were approximately RMB 367.2 million, with about RMB 221.0 million allocated for R&D expenses[3]. - Pre-tax loss decreased by approximately RMB 32.1 million or about 8% to approximately RMB 393.1 million for the year ended December 31, 2020[3]. - Total loss and comprehensive expenses for the year decreased by approximately RMB 31.7 million or about 7% to approximately RMB 393.6 million[3]. - Other income decreased from RMB 296 million in 2019 to RMB 159 million in 2020, primarily due to a reduction in government subsidies[30]. - The company reported a loss of RMB 418 million in other income and losses due to currency fluctuations, compared to a gain of RMB 163 million in the previous year[31]. - The company has not generated any revenue from product sales or services, relying instead on government subsidies and interest income[28]. - The company anticipates significant losses in the foreseeable future until the commercialization of dorzagliatin is achieved[28]. - Administrative expenses decreased from RMB 146.6 million in 2019 to RMB 140.1 million in 2020, primarily due to a reduction in share-based payment costs by RMB 10.6 million[33]. - Operating cash flow used was RMB 20.9 million in 2020, compared to RMB 342.1 million in 2019, indicating a significant reduction in cash outflow[42][43]. - The company’s net current assets decreased from RMB 1,011.7 million as of December 31, 2019, to RMB 938.7 million as of December 31, 2020[46]. Research and Development - Total expenses for the year ended December 31, 2020, were approximately RMB 367.2 million, with about RMB 221.0 million allocated for R&D expenses[3]. - R&D expenses decreased by approximately RMB 100.9 million or about 31% to approximately RMB 221.0 million for the year ended December 31, 2020[3]. - The company is advancing the fructose kinase inhibitor (FKI) project to strengthen its drug discovery pipeline[10]. - The company has completed eight Phase I clinical trials in China and four in the U.S., with two Phase II and two Phase III trials conducted in China, recruiting a total of 1,230 patients[11]. - The company is evaluating the combination of dorzagliatin with GLP-1R agonists and insulin in T1D and late-stage T2D patients[10]. - The company is developing a globally innovative oral drug for diabetes treatment, Dorzagliatin (HMS5552), which is a glucose kinase activator aimed at restoring glucose homeostasis in Type 2 Diabetes patients[83]. - The company has invested significant resources to ensure the quality and development of Dorzagliatin, with key registration trials ongoing in China[148]. - The company has a limited operating history and has incurred losses, requiring necessary regulatory approvals to generate revenue from Dorzagliatin[148]. Clinical Trials and Regulatory Approvals - Completed two large Phase III registration trials in China with a total of over 1,200 patients across 110 hospitals, demonstrating the efficacy of dorzagliatin in lowering blood glucose levels[4]. - The first 52-week study results showed that dorzagliatin effectively reduced blood glucose levels while exhibiting safety and tolerability[4]. - In 2020, the company announced successful completion of the Phase III SEED trial for dorzagliatin, demonstrating sustained efficacy over 52 weeks with a very low incidence of hypoglycemic events[5]. - The Phase III DAWN trial also achieved its primary efficacy endpoint, showing good safety and low hypoglycemic event rates in T2D patients inadequately controlled on maximum tolerated doses of metformin[6]. - The combined results of SEED and DAWN trials confirmed dorzagliatin's clinical advantages in glycemic control and insulin sensitivity compared to existing therapies[7]. - The company received drug production licenses from Chinese regulatory authorities, allowing for the submission of the NDA in 2021[5]. - The company aims to submit the NDA for dorzagliatin in China in 2021 and establish commercial partnerships for global distribution[10]. - Dorzagliatin's NMPA NDA submission process is complex and costly, with potential additional research required even if Phase III results are successful[143]. - Delays in clinical trial recruitment and completion may increase costs and hinder regulatory approval for Dorzagliatin[144]. Partnerships and Collaborations - Achieved commercial cooperation agreements with Bayer Healthcare in mainland China and established a commercial supply agreement with Zhejiang Ruibo Pharmaceutical[3]. - The company announced a strategic partnership with Bayer AG to promote dorzagliatin in the Chinese market, leveraging Bayer's 20+ years of experience in the diabetes sector[5]. - The company has entered a commercial cooperation agreement with Bayer, receiving an upfront payment of RMB 300 million and potential milestone payments up to RMB 4.18 billion[152]. Financial Position and Cash Flow - Cash and cash equivalents as of December 31, 2020, were RMB 1,032.1 million[39]. - The company's lease liabilities amounted to RMB 80.7 million as of December 31, 2020, down from RMB 90.0 million as of December 31, 2019[48]. - The current ratio decreased from 10.3 to 9.8, and the quick ratio also decreased from 10.3 to 9.8 as of December 31, 2020, attributed to research activities and operational costs[56]. - The company has raised funds through multiple rounds of overseas financing, receiving funds in USD, HKD, and RMB[51]. - The company has no other debt obligations apart from lease liabilities as of December 31, 2020[48]. Governance and Management - The board of directors consists of two executive directors, two non-executive directors, and four independent non-executive directors, ensuring compliance with listing rules regarding independent directors[159][162]. - The company has established a compensation committee to formulate a remuneration policy for directors and senior management based on performance and market practices[104]. - The independent non-executive directors confirmed their independence according to the guidelines set out in the listing rules[109]. - The board believes it has complied with all applicable code provisions during the reporting period, maintaining high corporate governance standards[157]. - The company has established clear written terms of reference for all board committees to define their powers and responsibilities[168]. Shareholder Communication and Relations - The company has established a shareholder communication policy to ensure shareholder opinions and concerns are properly addressed[194]. - The company is committed to continuous communication with shareholders, particularly through annual general meetings[192]. - The company emphasizes the importance of effective communication with shareholders to enhance investor relations[192]. Stock Options and Employee Incentives - The total unexercised stock options as of December 31, 2020, amounted to 126,128,867[134]. - The total stock options granted during 2020 were 10,255,000, while 3,817,764 options were exercised[134]. - The company has a stock option plan effective for 10 years from the IPO date, expiring on September 14, 2028[133]. - The company granted a total of 7,422,975 restricted shares to an executive under the pre-IPO share incentive plan, with 1,855,752 units vested by the end of the fiscal year 2020[141]. Risks and Challenges - The company faces various risks and uncertainties that could impact its performance and operations, including inherent risks in the pharmaceutical industry[142]. - The company relies on third-party CROs and SMOs for clinical trials, and any performance issues could adversely affect business operations[145]. - Dorzagliatin's potential adverse side effects as a monotherapy or in combination with other T2D treatments may delay regulatory approval[146].