Clinical Trials and Product Development - The flagship product SM03 (Suciraslimab) achieved its primary endpoint in the Phase III clinical trial for rheumatoid arthritis (RA) in April 2023, with topline data indicating effective reduction in disease activity [16]. - The clinical trial for the main product SM17 (targeting IL-25 receptor humanized monoclonal antibody) in the US has completed patient enrollment, with the study expected to finish by the end of 2023, six months ahead of schedule [11]. - Two IND applications for SM17 targeting asthma and atopic dermatitis (AD) were submitted in May and June 2023, respectively, with the asthma IND approved on August 11, 2023 [11]. - The company plans to initiate a Phase I clinical trial for SM17 in the Chinese population to explore its safety shortly [11]. - Suciraslimab (SM03) has successfully achieved the primary endpoint in a Phase III clinical trial for treating RA, with 530 participants recruited, exceeding the target of 510 [30]. - The company is advancing the clinical research of Suciraslimab for other immune diseases and plans to apply for IND for mild cognitive impairment (MCI) or Alzheimer's disease [30]. - The company is also progressing the development of SM17, targeting asthma and atopic dermatitis, to enhance its product pipeline competitiveness [20]. - The Phase I clinical trial for SM17 is expected to be completed by the end of 2023 [50]. - The company is exploring new mechanisms for treating autoimmune diseases through collaboration with key opinion leaders in the clinical field [104]. - The company is focused on advancing its R&D projects and establishing a commercialization team to enhance its product portfolio [168]. Financial Performance - The loss for the six months ended June 30, 2023, decreased to RMB 134.1 million from RMB 143.8 million for the same period in 2022, primarily due to a reduction in R&D costs related to the completion of Phase III clinical trials for RA by approximately RMB 15.3 million [43]. - Cash used in investing activities during the reporting period was approximately RMB 61.9 million, mainly for capital expenditures to enhance the group's commercialization production capacity at the Suzhou commercial production base [43]. - Cash generated from financing activities was approximately RMB 42.0 million, primarily due to an increase in net bank borrowings [43]. - The company reported a decrease in cash used in operating activities, mainly due to the completion of the Phase III clinical trial for SM03 [43]. - The group reported a net foreign exchange loss of approximately RMB 20.0 million for the six months ended June 30, 2023 [129]. - The total administrative expenses for the six months ended June 30, 2023, were approximately RMB 50.2 million, an increase from RMB 33.8 million in the same period of 2022 [148]. - The company incurred an operating loss before tax of RMB 134,096 million, an improvement from a loss of RMB 143,790 million in the previous year [192]. - The total assets as of June 30, 2023, were RMB 732,548 million, down from RMB 820,957 million at the end of 2022 [196]. - The company’s cash and cash equivalents amounted to RMB 286,463 million as of June 30, 2023, compared to RMB 345,712 million at the end of 2022 [196]. Production and Capacity Expansion - The company is constructing a commercial production base in Suzhou, China, which will have a maximum total production capacity exceeding 36,000 liters, equating to over one million treatments annually [16]. - The production facility in Suzhou is set to have a first-phase capacity of 6,000 liters, expected to be operational by 2024, while the Haikou facility has a capacity of 1,200 liters [19]. - The new Suzhou facility, covering 43,158 square meters, is under construction and will include commercial production facilities, a research center, and a quality control center, with an expected capacity of 6,000 liters by 2024, increasing total capacity to 200,000 treatments per year [63]. - The company is constructing a second production base in Suzhou to support its growth strategy [39]. - The establishment of a production base in Suzhou is expected to cost RMB 87.6 million, aimed at enhancing large-scale production capabilities [174]. Market Strategy and Business Development - The company aims to expand its market reach and explore additional indications for its products [11]. - The company is actively educating existing and potential investors about product and pipeline development through non-deal roadshows [1]. - The company has established a strong internal strategy development platform for pipeline building [3]. - The company aims to maximize value for investors through a self-sustaining model for future development [46]. - The company is actively seeking collaboration opportunities to enhance its sales and business development capabilities, including licensing and partnerships [80]. - The company has established a market team and plans to continue expanding its sales and marketing teams across most provinces in China to support future commercialization of its research drugs [80]. Research and Development Focus - The company has established a product pipeline based on monoclonal antibodies to address unmet medical needs in various immune diseases [49]. - The company is committed to becoming a global leader in innovative therapies for immune and other degenerative diseases, leveraging its R&D capabilities in Hong Kong and production capabilities in China [49]. - The company is focused on independent innovation and expanding its product pipeline to provide effective treatment options for patients globally [47]. - The company is committed to developing a comprehensive treatment approach for autoimmune diseases, enhancing its market share in this sector [98]. - The company is exploring the potential of SM03 (Suciraslimab) for treating MCI and Alzheimer's disease, based on significant expression of CD22 in neuroglial and other nerve cells [125]. Corporate Governance and Compliance - The company has adhered to high standards of corporate governance, ensuring shareholder interests and increasing transparency [188]. - The company has complied with all applicable corporate governance rules, except for the disclosed deviations [188]. - The company plans to utilize the unutilized proceeds according to the stated intended use [185].

Financial Performance - The company reported a net loss per share of approximately RMB 15.0 million as of December 31, 2022[15]. - For the year ended December 31, 2022, the basic and diluted loss per share was RMB 0.29, consistent with the previous year[54]. - Other income and gains for the reporting period totaled approximately RMB 55.1 million, an increase of about RMB 26.3 million compared to the previous year, primarily due to gains from the sale of investments and government subsidies[156]. - The company reported a foreign exchange loss of approximately RMB 61.9 million for the year ended December 31, 2022, compared to a foreign exchange gain of RMB 9.9 million in 2021[160]. - Cash and cash equivalents at the end of the reporting period amounted to RMB 562,983 thousand[161]. - The total employee cost for the year ending December 31, 2023, was approximately RMB 83.2 million, including director salaries but excluding retirement plan contributions[138]. Borrowings and Liabilities - As of December 31, 2022, the company had bank borrowings secured by land use rights valued at approximately RMB 15.0 million[16]. - As of December 31, 2022, the group's outstanding borrowings amounted to RMB 268.8 million, an increase from RMB 198.8 million as of December 31, 2021[193]. - The borrowings are subject to a fixed annual interest rate of 3.30% and a variable interest rate based on the People's Bank of China's lending benchmark rate, ranging from -0.30% to +0.25%[193]. - The company has no contingent liabilities as of December 31, 2022, compared to none in the previous year[18]. Shareholder Communication and Governance - The company has implemented a shareholder communication policy to ensure shareholder concerns are addressed effectively[3]. - The company regularly reviews its shareholder communication policy to ensure its effectiveness[3]. - The board has approved changes to the use of unutilized funds from share subscriptions to enhance financial resource allocation for future development[20]. - The board is responsible for overseeing the company's ESG-related matters, with various departments executing ESG work and reporting to the board[8]. - The company has established clear responsibilities for managing ESG issues, ensuring accountability at the board level[8]. Research and Development - Research and development costs for 2022 amounted to RMB 180,368,000, a decrease from RMB 199,113,000 in 2021[61]. - The company aims to expand its product pipeline and enhance drug development, production, and commercialization capabilities to become a global leader in innovative therapies for immune diseases[68]. - The company has received 4 IND approvals from the National Medical Products Administration for its main product SN1011, which targets SLE, pemphigus, multiple sclerosis (MS), and neuromyelitis optica spectrum disorder (NMOSD)[72]. - The company is currently prioritizing the clinical development of SN1011 for NMOSD and MS, with strategic plans to submit IND applications and conduct global Phase II clinical trials[81]. - The company is conducting IND applications for asthma treatment, with the first human clinical trial successfully initiated in the U.S. and 59 subjects recruited without serious adverse events reported[83]. - The company has established a product pipeline based on monoclonal antibodies to treat various immune diseases and new chemical entities (NCEs)[71]. - The company is focusing on advancing its flagship product SM03 (Suciraslimab) towards commercialization and expanding its existing product pipeline[121]. Product Development and Clinical Trials - The flagship product SMO3 (Suciraslimab) is a potential first-in-class anti-CD22 monoclonal antibody for treating rheumatoid arthritis, with final study results expected in Q2 2023[51]. - The company plans to submit a Biologics License Application (BLA) to the National Medical Products Administration in China in Q3 2023, aiming for commercialization within 10 to 12 months post-submission[51]. - The company has completed the enrollment for a Phase III clinical trial for rheumatoid arthritis in December 2021[77]. - The Phase I clinical trial for another major product, SM17, commenced in June 2022, with 59 participants enrolled by December 31, 2022, and is expected to complete by Q2 2024[97]. - The company aims to initiate clinical studies for Suciraslimab in treating Alzheimer's disease and Sjögren's syndrome, expanding its therapeutic applications beyond rheumatoid arthritis[104]. - The company reported a successful recruitment of 79 participants for the extended Phase III trial of Suciraslimab, with final efficacy and safety results expected in Q2 2023[96][104]. Production and Capacity Expansion - The company has two production bases, with the Suzhou facility expected to have a capacity of 6,000 liters by early 2024, contributing to a total capacity exceeding 36,000 liters across both sites[52]. - The production capacity at the Haikou facility is approximately 1,200 liters, while the Suzhou facility, upon completion, will exceed 36,000 liters, enhancing the company's manufacturing capabilities[92][93]. - The new Suzhou production base is expected to have an initial capacity of 6,000 liters, projected to be operational by early 2024, contributing to a total capacity of 200,000 treatments annually when combined with the existing 1,200 liters capacity in Haikou[134]. - The maximum total capacity of the Suzhou production base will exceed 36,000 liters, enabling the production of over 1,000,000 treatments annually upon completion[134]. Market and Strategic Focus - The company has a strategic focus on expanding its market presence and enhancing product development capabilities[29]. - The Chinese rheumatoid arthritis (RA) treatment market is projected to reach RMB 28 billion by 2023 and RMB 88.3 billion by 2030, indicating significant growth potential[147]. - The global market for autoimmune disease drugs is projected to grow from USD 120.5 billion in 2020 to USD 163.8 billion by 2030, with a CAGR of 6.0%[171]. - The company aims to become a global leader in innovative therapies for immune and other degenerative diseases, leveraging its R&D capabilities in Hong Kong and production capabilities in China[140]. Collaborations and Partnerships - The company is actively exploring innovative drug target identification and has established a long-term collaboration with D2M Biotherapeutics Limited for this purpose[124]. - The company has established international collaborations to further develop its innovative therapies, including the humanization of SM17 through a partnership with LifeArc[107]. - The company is actively seeking collaboration opportunities to enhance its sales and business development capabilities[170]. Intellectual Property - The company has submitted two invention patent applications for Suciraslimab in the United States and one in China, with a total of four pending patent applications in the U.S. and five in China as of December 31, 2022[115]. - The company holds 27 invention patents, including those pending approval, as of December 31, 2022[138].

Clinical Trials and Product Development - The flagship product SM03 (Suciraslimab) completed recruitment of 530 participants for its Phase III clinical trial, exceeding the target of 510 participants, with results expected in Q2 2023[4]. - The main product SN1011 (BTK inhibitor) received four IND approvals from the National Medical Products Administration, including for systemic lupus erythematosus (SLE), multiple sclerosis (MS), and neuromyelitis optica spectrum disorder (NMOSD)[5]. - The company successfully initiated the first-in-human clinical trial for SM17 (anti-IL-17RB) in the U.S., recruiting 59 participants without reporting serious adverse events[5]. - The Phase III clinical trial for rheumatoid arthritis (RA) has completed recruitment, with efficacy and safety results expected in Q2 2023[22]. - The Phase I clinical trial for SN1011 in Australia was conducted in 2019, and the trial in China was completed in 2021, showing good safety and pharmacokinetic characteristics[41]. - The Phase I clinical trial for SM17 successfully dosed the first healthy subject in June 2022, with 59 participants recruited by December 31, 2022, reporting no serious adverse events[51]. - The company plans to initiate clinical studies for Alzheimer's disease and/or SS in China to expand Suciraslimab's therapeutic applications[47]. - The company aims to prioritize the development of SN1011 for NMOSD and MS in its clinical project strategy[41]. Financial Performance and Investments - The net loss for the year ended December 31, 2022, was RMB 284.2 million, a slight decrease of RMB 4.0 million from RMB 288.2 million for the year ended December 31, 2021[14]. - Cash used in operating activities during the reporting period was approximately RMB 300.5 million, primarily due to cash used in operations of RMB 277.3 million[14]. - Cash generated from financing activities was approximately RMB 102.3 million, mainly from net proceeds of RMB 46.1 million from share issuance and net increase of RMB 66.8 million from bank borrowings[14]. - The company reported a decrease in administrative expenses to approximately RMB 82.6 million in 2022 from RMB 133.4 million in 2021, primarily due to a reduction in non-cash share-based payments[150]. - The company reported a net foreign exchange loss of approximately RMB 61.9 million for the year ended December 31, 2022, compared to a net foreign exchange gain of RMB 9.9 million in 2021[114]. - The company reported a net income of 355,117,000 for other income and gains, compared to 28,751,000 in the previous period[200]. Production and Commercialization - The company is constructing a commercial production base in Suzhou, China, with a maximum production capacity exceeding 36,000 liters, equating to over 1 million treatments annually[5]. - The Suzhou production base is under construction with a total floor area of approximately 75,000 square meters, expected to have a first-phase capacity of 6,000 liters by early 2024[17]. - The combined maximum production capacity of the two production bases will exceed 36,000 liters, capable of producing up to one million treatment courses annually[17]. - The company plans to expand its marketing team and improve production facilities in preparation for upcoming commercialization[19]. - The company aims to commercialize its flagship product SM03 (Suciraslimab) and expand its product pipeline to develop new drugs for treating immune diseases[70]. Research and Development - The company achieved significant advancements in clinical trials, pipeline development, and commercialization preparations during the reporting period[4]. - The company is focused on transitioning from a global pharmaceutical R&D enterprise to a biopharmaceutical company with commercialization capabilities and international vision[9]. - The company is committed to independent innovation and expanding its product pipeline to meet unmet medical needs globally[32]. - The company is developing dual-specific antibodies targeting anti-inflammatory cell surface antigens and Aβ protein for the treatment of Alzheimer's disease and other neurological disorders[101]. - The company has developed a platform to identify a series of antibodies with different functions targeting T cells, addressing a significant gap in its immunotherapy product pipeline[118]. Corporate Governance and Strategy - The company has confirmed compliance with corporate governance standards throughout the reporting period[173]. - The board consists of one executive director, five non-executive directors, and four independent non-executive directors, ensuring a balanced accountability structure[195]. - The company believes that the dual role of the chairman and CEO is in the best interest of the group, despite deviations from corporate governance guidelines[195]. - The company aims to maintain high standards of corporate governance to protect shareholder interests and enhance corporate value[193]. Market Outlook and Future Plans - The company anticipates a rebound in global business activities due to the easing of COVID-19 restrictions, which will facilitate the development and commercialization of its products[19]. - The global market for autoimmune disease drugs is projected to grow from $120.5 billion in 2020 to $163.8 billion by 2030, with a CAGR of 6.0%[96]. - The company aims to enhance its innovation capabilities and increase R&D investment to address industry and policy risks, while also expanding production capacity and reducing unit costs[145]. - The company plans to diversify its product portfolio by discovering and developing new drugs that are currently not in its pipeline[142].

Product Development and Clinical Trials - The flagship product SM03 (Suciraslimab) has completed recruitment of 530 participants in a Phase III clinical trial, exceeding the target of 510[4] - Preliminary results for the primary clinical endpoint of the Phase III study are expected in Q3 2022, with final results for safety and efficacy anticipated in Q1 2023[5] - The company plans to submit a New Drug Application (NDA) for Suciraslimab to the National Medical Products Administration in H1 2023, aiming for commercialization in H2 2023[5] - The third-generation reversible covalent Bruton’s tyrosine kinase inhibitor SN1011 has received three IND approvals for treating systemic lupus erythematosus, pemphigus, and multiple sclerosis[6] - The IND application for SN1011 targeting neuromyelitis optica spectrum disorder was submitted in June 2022 and has been accepted[6] - The first-in-class injectable humanized anti-IL-17RB monoclonal antibody SM17 has received FDA approval for its IND application, with the first human trial initiated in June 2022[6] - The flagship product SM03 (Suciraslimab) completed recruitment for its Phase III clinical trial for rheumatoid arthritis (RA) with 530 participants, exceeding the target of 510[15] - The preliminary results for the primary clinical endpoint of the Phase III study are expected in Q3 2022, with final results for safety and efficacy anticipated in Q1 2023[15] - The company plans to submit a New Drug Application (NDA) for Suciraslimab to the National Medical Products Administration (NMPA) in China in H1 2023, aiming for commercialization in H2 2023[15] - The main product SN1011, a third-generation reversible covalent BTK inhibitor, has received three IND approvals for treating systemic lupus erythematosus (SLE), pemphigus, and multiple sclerosis (MS)[16] - The IND application for NMOSD has been submitted and accepted by the Center for Drug Evaluation (CDE) in June 2022, with NMOSD and MS being strategic priorities for SN1011[16] - The product SM17, a first-in-class humanized anti-IL-17RB antibody, has received FDA approval for its IND application and commenced Phase I clinical trials in the US in June 2022[17] - As of July 31, 2022, 14 participants have been enrolled in the Phase I trial for SM17, which is expected to complete by Q3 2023[17] - The company is also developing SM06, a second-generation anti-CD22 antibody, with plans for IND submission in the US by Q2 2023[17] Financial Performance and Funding - The company reported a net loss attributable to ordinary equity holders of RMB 143.8 million for the six months ended June 30, 2022, compared to a loss of RMB 114.4 million for the same period in 2021, reflecting an increase in losses of 25.7%[60] - The net cash used in operating activities for the six months ended June 30, 2022, was RMB 145.6 million, compared to RMB 88.9 million for the same period in 2021, indicating an increase of 63.8%[56] - The company’s cash flow from operating activities showed a negative trend, with a net outflow of RMB (145,587) thousand, indicating challenges in operational efficiency[77] - The company’s cash flow from financing activities turned positive, suggesting improved access to financing options compared to the previous year[77] - The company reported other income and gains totaling approximately RMB 7.9 million, a decrease of about RMB 4.8 million compared to the same period last year, primarily due to a reduction in bank interest income of approximately RMB 4.3 million[50] - Research and development expenses for Suciraslimab amounted to RMB 514 million during the reporting period[31] - The company received an initial payment of $4 million from Everest Medicines for the global rights to SN1011 for kidney disease, with potential milestone payments totaling $183 million[26] - The company is set to receive a maximum grant of HKD 8 million from the Hong Kong Science Park for clinical trials of SN1011 targeting multiple sclerosis[8] Market and Industry Insights - The global market for autoimmune disease drugs is projected to grow from $120.5 billion in 2020 to $163.8 billion by 2030, with a compound annual growth rate (CAGR) of 6.0%[12] - The Chinese autoimmune disease therapy market is expected to grow from $2.9 billion in 2020 to $24.1 billion by 2030, with a CAGR of 27.7% from 2020 to 2024[12] - The market share of China's autoimmune drug market is expected to increase from 28.6% in 2020 to 68.8% by 2030[12] Research and Development Strategy - The company has been developing monoclonal antibody drugs in the autoimmune disease field for 20 years, with a comprehensive layout across different indications[9] - The company has developed an integrated platform covering drug development, clinical trials, and commercial production, enhancing efficiency in product commercialization[10] - The company aims to create better and safer drugs for patients with unmet treatment needs in the autoimmune disease field[9] - The company is focused on developing innovative antibody candidates targeting new pathways, which may enhance treatment efficacy[49] - Future research strategies include a strong emphasis on B-cell therapy platforms and the development of new therapeutic antibodies[49] Corporate Governance and Compliance - The company has adopted a written guideline for employees regarding securities trading to prevent insider trading[130] - The company is committed to high standards of corporate governance to protect shareholder interests and enhance corporate value[131] - The board of directors confirmed compliance with the standard code of conduct for securities trading during the reporting period[130] - The audit committee, consisting of four independent non-executive directors, reviewed the interim report and financial statements[134] - The company adhered to all applicable corporate governance code provisions during the reporting period, except for the separation of the roles of Chairman and CEO[131] Production and Capacity Expansion - The company has two production bases, with a total capacity of 36,000 liters, aiming for the first phase of production to achieve 6,000 liters by 2024[9] - The company is expanding its production facilities to accelerate the R&D process of pipeline products and improve commercialization efficiency[10] - The company is constructing a second production facility in Suzhou, in addition to its existing site in Haikou[27] - The Suzhou production base, currently under construction, will have a total floor area of approximately 75,000 square meters and an initial production capacity of 6,000 liters, expected to be operational by early 2024, increasing total capacity to 200,000 treatment courses annually[29] Shareholder Information - As of June 30, 2022, the company had 1,006,240,400 issued shares, with major shareholders holding significant stakes, including 285,713,036 shares (28.39%) by Ms. Liu and 129,729,200 shares (12.89%) by Dr. Liang[122][124] - The share incentive plan allows for a maximum of 20,124,808 shares to be awarded to any single participant, which is 2% of the issued shares as of the adoption date[120] - Major shareholders include Shanghai Xingze Investment Management Co., Ltd. with 212,889,400 shares (21.16%) and Hainan Haicai Co., Ltd. with 158,882,115 shares (15.79%)[124] - The shareholding structure indicates that Ms. Liu controls several entities holding shares, including Apricot Oversea Holdings Limited and West Biolake Holdings Limited[125][127] Employment and Human Resources - The total number of employees as of June 30, 2022, was 296, with employee costs incurred during the reporting period amounting to approximately RMB 385 million[33] - The total number of R&D personnel increased from 38 to 40 during the reporting period, with 8 holding doctoral degrees[34] - The total remuneration for key management personnel increased to RMB 7,082,000 for the six months ended June 30, 2022, up from RMB 4,486,000 for the same period in 2021, representing a growth of approximately 58.5%[99][100]

Product Development and Clinical Trials - The flagship product Suciraslimab (SM03) completed recruitment for its Phase III clinical trial in China, exceeding the target with 530 participants against an expected 510[6]. - The company plans to submit a New Drug Application (NDA) for SM03 to the National Medical Products Administration in China in the first half of 2023, with commercialization expected in the second half of 2023[6]. - The company is advancing clinical studies for SM03 in treating systemic lupus erythematosus (SLE) and plans to initiate a Phase II trial in the second half of 2022[6]. - The first-in-human clinical trial for the third-generation reversible covalent Bruton’s tyrosine kinase (BTK) inhibitor SN1011 was completed in July 2021, showing good safety and pharmacokinetic profiles[7]. - The company received approval for SN1011's clinical trial applications for SLE and pemphigus, with plans to start a Phase II global trial for multiple sclerosis (MS) in the third quarter of 2022[7]. - The company has submitted an IND application for its innovative asthma treatment product SM17, which targets IL17RB, with plans to initiate the first human clinical trial in Q1 2022[8]. - The company is optimizing the production of its second-generation anti-CD22 antibody SM06, with plans to submit the first IND application in 2022[8]. - The flagship product SM03 (Suciraslimab) will continue to advance towards commercialization, with clinical trials for rheumatoid arthritis and other autoimmune diseases planned[43]. - The company aims to become a global leader in innovative therapies for immune diseases, focusing on expanding its product pipeline and exploring larger potential indications[14]. - Another product, SM06, is a second-generation anti-CD22 antibody, currently in the optimization process for clinical research expected to begin in Q1 2023[21]. Financial Performance and Investments - The R&D expenses for the year amounted to RMB 199,113 thousand, reflecting a significant investment in product development[4]. - The company reported a loss before tax of RMB 288,194 thousand for the year, which is an increase from RMB 122,600 thousand in the previous year[4]. - Total non-current assets increased to RMB 445,970 thousand from RMB 195,169 thousand in the previous year, indicating growth in long-term investments[4]. - Current assets decreased to RMB 595,685 thousand from RMB 934,354 thousand in the previous year, indicating a reduction in liquid assets[4]. - The total equity of the company decreased to RMB 680,226 thousand from RMB 987,011 thousand in the previous year, reflecting challenges in maintaining shareholder value[4]. - Other income and gains totaled approximately RMB 28.8 million, a decrease of about RMB 29.7 million compared to the previous year, primarily due to a reduction in fair value gains on financial assets by approximately RMB 26.9 million[52]. - Research and development costs increased to approximately RMB 199.1 million in 2021 from RMB 103.4 million in 2020, driven by an increase in laboratory supplies and trial costs by approximately RMB 71.8 million[53]. - Administrative expenses rose to approximately RMB 133.4 million in 2021 from RMB 72.0 million in 2020, mainly due to an increase in non-cash share-based payments by approximately RMB 28.0 million[54]. - As of December 31, 2021, cash and cash equivalents totaled RMB 563.0 million, down from RMB 810.4 million a year earlier, primarily due to capital expenditures of approximately RMB 211.3 million[56]. - The company reported a basic and diluted loss per share of RMB 0.29 for the year ended December 31, 2021, compared to RMB 0.12 for the previous year[59]. Corporate Governance and Management - The company has a dividend policy without a predetermined payout ratio, subject to financial conditions and board recommendations[138]. - The board of directors consists of 1 executive director, 6 non-executive directors, and 4 independent non-executive directors, ensuring a high level of independence[96]. - The company has appointed independent non-executive directors in compliance with listing rules, with at least one possessing appropriate professional qualifications or expertise in accounting or related financial management[97]. - The company has established a three-year specific term for non-executive directors, with reappointment subject to shareholder approval at the annual general meeting[98]. - The company has conducted training courses for all directors, covering a wide range of topics related to their duties and responsibilities under listing rules[101]. - The board of directors held regular meetings, with attendance records showing that all executive directors attended 100% of the meetings[108]. - The audit committee conducted two meetings during the year, with all members present, ensuring oversight of financial reporting and internal controls[112]. - The remuneration committee held three meetings, reviewing the compensation policies for all directors and senior management, with full attendance from the members[114]. - The nomination committee is responsible for reviewing the composition of the board and providing recommendations for director appointments[115]. - The company has established clear written terms of reference for all committees, ensuring accountability and governance standards[109]. Research and Development Focus - The company has developed a comprehensive platform for drug development, clinical trials, and commercialization, enhancing its ability to manage product development and accelerate clinical research[12]. - The company has established a strong R&D and production capability in Hong Kong and China, focusing on monoclonal antibody-based biopharmaceuticals[18]. - The company is actively seeking more collaboration opportunities to enrich its pipeline and expand its global business[9]. - The company aims to strengthen its strategic direction and overall operations through its board members' expertise[72]. - The management team includes members with extensive backgrounds in finance, investment, and clinical research, enhancing the company's strategic capabilities[82]. Employee and Workplace Policies - The company has implemented measures to protect employee health during the COVID-19 pandemic, including temperature checks and flexible work arrangements[13]. - The company has a commitment to creating a fair and healthy work environment, providing diverse growth support and employee benefits[192]. - Total number of employees is 303, with 141 male and 162 female[196]. - Employee turnover rate is 18.11%, with male turnover at 20.79% and female turnover at 15.63%[197]. - The company has implemented a dual-track promotion mechanism for management and professional development[200]. - The company has revised its employee benefits system, increasing transportation and communication subsidies, and providing annual health check-ups[199]. - The company has a strict policy against child labor, with no incidents reported in the current year[194]. - The company employs a flexible working hours system to ensure employee health and safety during the pandemic[199]. ESG and Corporate Responsibility - The report covers the ESG performance of China Antibody Pharmaceutical Co., Ltd. for the year 2021, focusing on environmental, social, and governance aspects[141]. - The company emphasizes its commitment to becoming a global leader in innovative therapies for immune and other debilitating diseases, aiming to meet unmet medical needs[146]. - The board of directors is responsible for overseeing ESG-related matters and has established environmental goals linked to business operations[145]. - Key ESG issues identified include labor standards, product responsibility, and anti-corruption, with active engagement from stakeholders such as government, investors, employees, and the community[149][150]. - The company has implemented a governance structure led by the board, involving multiple functional departments to ensure effective ESG management[147][148]. Quality Control and Compliance - The company has established a comprehensive quality management system, ensuring compliance with the Drug Administration Law and GMP standards, with the CEO overseeing overall quality responsibilities[157]. - A full-cycle quality control system is implemented, covering product development, material selection, production, and clinical trials, ensuring safety and efficacy throughout the product lifecycle[159]. - The company has optimized supplier management and material control processes, implementing a three-tier quality check system for raw materials[160]. - Quality control procedures for finished products have been established, with QC testing and QA review before release, utilizing automated packaging lines to minimize human error[163]. - The company has developed a robust pipeline of innovative therapies, focusing on monoclonal antibodies for various immune diseases, enhancing research and development capabilities[155].

[Company Information](index=1&type=section&id=Company%20Information) This section provides fundamental company information, including governance structure and key contact details [Company Overview and Governance Structure](index=1&type=section&id=Company%20Overview%20and%20Governance%20Structure) This chapter provides China Antibody Pharmaceutical Limited's basic company information as of June 30, 2021, including board members, key contacts, and governance structure - The company's board of directors comprises executive, non-executive, and independent non-executive directors, with **Dr. Liang Ruian** serving as Chairman and CEO[1](index=1&type=chunk) - Membership lists for the Audit, Remuneration, and Nomination Committees are provided, noting changes such as **Dr. Li Zhiming's appointment to the Audit Committee on June 15, 2021**[1](index=1&type=chunk) - The company's registered office is in Hopewell Centre, Hong Kong, with **Ernst & Young** as auditor and stock code **3681**[1](index=1&type=chunk) [Chairman's Report](index=4&type=section&id=Chairman's%20Report) This report reviews the company's significant achievements, R&D progress, and strategic direction for future growth [Business Review and Milestones](index=4&type=section&id=Business%20Review%20and%20Milestones) The Chairman's Report reviews the company's 20th anniversary milestones and outlines H1 2021 R&D and production progress, including SM03 and SN1011 clinical trials, and COVID-19's impact on commercialization timelines - The company celebrates its **20th anniversary**, evolving from a startup to a Main Board listed company on the HKEX[2](index=2&type=chunk) - Despite COVID-19, employees advanced business and R&D, though **SM03's commercialization timeline was revised due to patient recruitment**[2](index=2&type=chunk) [Core Product R&D Progress](index=4&type=section&id=Core%20Product%20R%26D%20Progress) This section details the latest R&D progress for core products SM03 and SN1011, including clinical trial phases, patient recruitment, regulatory plans, and commercialization timelines, highlighting SN1011's potential in pemphigus vulgaris treatment - Flagship product SM03's Phase III clinical trial for rheumatoid arthritis (RA) has enrolled **408 patients**, with recruitment planned for completion by **end of 2021**, BLA submission in **H2 2022**, and commercialization expected in **H2 2023**[2](index=2&type=chunk) - SM03's Phase II clinical study for systemic lupus erythematosus (SLE) is anticipated to **commence in H2 2021**[2](index=2&type=chunk) - Third-generation BTK inhibitor SN1011 received NMPA approval for Investigational New Drug (IND) applications for SLE (August 2020) and pemphigus vulgaris (PV) (June 2021)[3](index=3&type=chunk)[4](index=4&type=chunk) - SN1011's Phase I dose-escalation study in China completed with **71 healthy subjects**, demonstrating good tolerability and safety; Phase II trials for PV are starting in China, with SLE Phase II trials planned[4](index=4&type=chunk) [Production Facilities and Strategic Platform](index=5&type=section&id=Production%20Facilities%20and%20Strategic%20Platform) The company is expanding production capacity at Haikou and constructing a Suzhou plant to meet future commercialization needs, while also developing an integrated platform covering the entire industry chain to enhance R&D and commercialization efficiency - Haikou production base has a capacity of **1,200 liters**, with its operational area expanded from approximately **4,526 square meters to 19,163 square meters**[4](index=4&type=chunk) - A plant with **32,000 liters** capacity and a total floor area of approximately **75,000 square meters** is under construction in Suzhou Dushu Lake Higher Education Area, expected to complete by **end of 2022**, bringing total capacity to **44,000 liters**[5](index=5&type=chunk) - The company developed an integrated platform covering the entire industry chain, from target identification and drug development to clinical trials, production, quality control, regulatory approval, and commercial-scale manufacturing[6](index=6&type=chunk) [Future Outlook and Strategic Objectives](index=5&type=section&id=Future%20Outlook%20and%20Strategic%20Objectives) The company anticipates broader development opportunities in the post-pandemic capital market for the pharmaceutical industry, committing to independent innovation, enhancing drug R&D and commercialization capabilities, and aiming to be a global leader in innovative immunotherapies - The Chinese government supports the industrialization and internationalization of antibody drugs, providing a favorable environment for the company's development[6](index=6&type=chunk) - The company will uphold independent innovation, research novel drug target identification, and develop excellent clinical and marketing teams to enhance drug R&D and commercialization capabilities[6](index=6&type=chunk) - The company's vision is to become a **global leader in innovative therapies for immunological diseases**[6](index=6&type=chunk) [Management Discussion and Analysis](index=6&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an in-depth analysis of the company's operational performance, financial position, and future strategic initiatives [New Drug Development Phase](index=6&type=section&id=New%20Drug%20Development%20Phase) This section outlines the company's position as Hong Kong's first listed biopharmaceutical company focused on immunological diseases, detailing its rich product pipeline, including flagship SM03, key product SN1011, and other investigational drugs SM17, SM06, SM09, and TNF2, with their latest clinical progress and therapeutic potential - The company is Hong Kong's first listed biopharmaceutical company focused on R&D, production, and commercialization of immunological disease therapies, primarily developing monoclonal antibody (mAb) biologics[8](index=8&type=chunk) - Flagship product SM03 is the **world's first potential mAb for rheumatoid arthritis (RA)** with its target, projected for commercialization in **H2 2023**, though the timeline was revised due to COVID-19[8](index=8&type=chunk) - SM03's Phase III clinical trial for RA has recruited **408 patients**, with recruitment expected to conclude by **end of 2021**, and BLA submission planned for **H2 2022**[12](index=12&type=chunk) - SM03 will also advance to a Phase II clinical trial for systemic lupus erythematosus (SLE), anticipated to **commence in H2 2021**[12](index=12&type=chunk) - Key product SN1011, a third-generation reversible covalent BTK inhibitor, received IND approval in China for SLE and pemphigus vulgaris (PV), completing its Phase I dose-escalation study with good tolerability and safety[13](index=13&type=chunk)[14](index=14&type=chunk) - The company is initiating Phase II clinical studies for PV in China and plans to launch Phase II clinical studies for SLE[14](index=14&type=chunk) - SM17, a first-in-class and first-in-target humanized anti-IL17RB antibody for asthma and idiopathic pulmonary fibrosis, is slated for global human clinical trials in **Q1 2022**[10](index=10&type=chunk) - SM06, a humanized variant of SM03, is expected to receive IND approval in the US as early as **H2 2022**[10](index=10&type=chunk)[17](index=17&type=chunk) [Production and R&D Activities](index=9&type=section&id=Production%20and%20R%26D%20Activities) This section details the company's production facility expansion plans, including capacity increases at Haikou and Suzhou, R&D investment in flagship product SM03, and intellectual property protection, alongside human resource investments, particularly the growth in R&D personnel - Haikou production base has a capacity of **1,200 liters**, with its operational area expanded to approximately **19,163 square meters**[17](index=17&type=chunk) - The China headquarters, R&D center, and production base in Suzhou Dushu Lake Higher Education Area are under construction, with a total floor area of approximately **75,000 square meters**, expected to complete by **end of 2022**, and production capacity exceeding **32,000 liters**[17](index=17&type=chunk) - During the reporting period, the Group incurred approximately **RMB 55.3 million** in R&D expenditures for SM03[18](index=18&type=chunk) - The company holds multiple invention patents for SM03 (applicable to SM06) in China and the US, and for SM09 in China and the US[19](index=19&type=chunk) - As of June 30, 2021, the Group had **262 employees**, with R&D personnel increasing from **25 to 47** during the period[20](index=20&type=chunk)[21](index=21&type=chunk) [Future Outlook and Strategic Planning](index=12&type=section&id=Future%20Outlook%20and%20Strategic%20Planning) The company aims to be a global leader in innovative therapies for immunological diseases, achieving this vision by advancing flagship product commercialization, developing its pipeline, expanding production, and strengthening global operations, while actively exploring novel drug target identification and planning to establish a sales team for future product commercialization - The company's vision is to become a **global leader in innovative therapies for immunological and other debilitating diseases**[22](index=22&type=chunk) - The Group will continue to advance SM03 commercialization, develop its existing product pipeline, discover and develop novel drugs, expand production scale, and strengthen global operations[24](index=24&type=chunk) - The company plans to establish a sales team by **2022**, covering most provinces and cities in China, to support future commercialization of investigational drugs[29](index=29&type=chunk) - The company has established a long-term partnership with D2M Biotherapeutics Limited to actively explore innovative drug target identification[30](index=30&type=chunk) - The COVID-19 pandemic continues to impact clinical trial development, primarily affecting patient recruitment and hospital visits[30](index=30&type=chunk) [Financial Review](index=14&type=section&id=Financial%20Review) This section provides an overview of financial performance for the six months ended June 30, 2021, including key financial indicators such as other income and gains, R&D costs, administrative expenses, liquidity, bank borrowings, and loss per share, with comparisons to the prior period Other Income and Gains (For the six months ended June 30) | Indicator | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Total other income and gains | 12,745 | 18,659 | | Change | Decrease of 6,000 | - | | Primary reason | Decrease in unrealized fair value gains on financial assets at fair value through profit or loss of approximately RMB 6.4 million | - | Research and Development Costs (For the six months ended June 30) | Indicator | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Laboratory consumables and trial costs | 70,258 | 37,246 | | Employment costs | 15,113 | 7,749 | | Others | 4,611 | 2,821 | | **Total** | **89,982** | **47,816** | | Change | Increase of 42,166 | - | | Primary reason | Increase in laboratory consumables and trial costs of approximately RMB 33.1 million; increase in employment costs of approximately RMB 7.4 million due to increased R&D personnel | - | Administrative Expenses (For the six months ended June 30) | Indicator | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Total administrative expenses | 32,861 | 50,030 | | Change | Decrease of 17,169 | - | | Primary reason | Non-cash share-based payments under the Restricted Share Unit Scheme not recognized during the period (2020: RMB 34.9 million), partially offset by increased employment-related costs, depreciation costs, and rental property management fees | - | Cash and Cash Equivalents (As of June 30) | Indicator | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | 643,060 | 810,370 | | Change | Decrease of 167,310 | - | | Primary reason | Capital expenditures, share purchases, investments in structured deposits and D2M, operating expenses, partially offset by increased bank borrowings and proceeds from the disposal of China Medical Fund | - | Loss Per Share (For the six months ended June 30) | Indicator | 2021 (RMB) | 2020 (RMB) | | :--- | :--- | :--- | | Basic and diluted loss per share | 0.11 | 0.08 | | Loss attributable to ordinary equity holders of the parent | 114,403 | 80,840 | | Weighted average number of ordinary shares issued during the period | 1,006,240,400 | 1,001,741,519 | - As of June 30, 2021, outstanding bank borrowings were **RMB 125.5 million** (December 31, 2020: RMB 60.5 million), with the company maintaining a net cash position[38](index=38&type=chunk) [Significant Investments and Related Party Transactions](index=17&type=section&id=Significant%20Investments%20and%20Related%20Party%20Transactions) This section discloses a significant investment disposal during the reporting period, namely the sale of China Medical Fund, and details a lapsed related party transaction, the convertible bond subscription agreement with Haiyao International Group Co., Ltd - The company disposed of **775,347.912 Class A participating shares** in China Medical Fund for approximately **HKD 110.6 million** (approximately **RMB 92.0 million**), recognizing an unrealized fair value gain of approximately **RMB 28.3 million**, with an investment return rate of approximately **41.76%**[41](index=41&type=chunk) - The convertible bond subscription agreement with Haiyao International Group Co., Ltd. (a related party) for a principal amount of **HKD 100,000,000** lapsed due to certain conditions precedent not being met or waived[43](index=43&type=chunk) [Independent Review Report](index=18&type=section&id=Independent%20Review%20Report) This report presents the independent auditor's review opinion on the interim condensed consolidated financial information [Review Opinion](index=18&type=section&id=Review%20Opinion) Ernst & Young conducted an independent review of China Antibody Pharmaceutical Limited's interim condensed consolidated financial information for the six months ended June 30, 2021, concluding that nothing came to their attention suggesting the interim financial information was not prepared in all material respects in accordance with HKAS 34 - Ernst & Young reviewed the interim financial information in accordance with **Hong Kong Standard on Review Engagements 2410**[46](index=46&type=chunk) - The review concluded that nothing came to the reviewer's attention suggesting the interim financial information was not prepared in all material respects in accordance with **Hong Kong Accounting Standard 34**[47](index=47&type=chunk) [Interim Condensed Consolidated Financial Statements](index=19&type=section&id=Interim%20Condensed%20Consolidated%20Financial%20Statements) This section presents the company's interim condensed consolidated financial statements, including profit or loss, comprehensive income, financial position, equity changes, and cash flows [Interim Condensed Consolidated Statement of Profit or Loss](index=19&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) For the six months ended June 30, 2021, the company reported a loss of **RMB 114,403 thousand**, an increase from **RMB 80,840 thousand** in the prior period, primarily due to higher R&D costs and reduced fair value gains on financial assets Summary of Interim Condensed Consolidated Statement of Profit or Loss (For the six months ended June 30) | Indicator | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Other income and gains | 12,745 | 18,659 | | Research and development costs | (89,982) | (47,816) | | Administrative expenses | (32,861) | (50,030) | | Finance costs | (2,499) | (1,524) | | Loss before tax | (114,403) | (80,840) | | Loss for the period | (114,403) | (80,840) | | Loss per share attributable to ordinary equity holders of the parent (RMB) | 0.11 | 0.08 | [Interim Condensed Consolidated Statement of Comprehensive Income](index=20&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) For the six months ended June 30, 2021, the company reported a total comprehensive loss of **RMB 123,734 thousand**, an increase from **RMB 63,033 thousand** in the prior period, mainly due to expanded loss for the period and a shift from exchange gain to loss Summary of Interim Condensed Consolidated Statement of Comprehensive Income (For the six months ended June 30) | Indicator | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Loss for the period | (114,403) | (80,840) | | Exchange differences on translation to presentation currency | (9,331) | 17,807 | | Total comprehensive loss for the period | (123,734) | (63,033) | [Interim Condensed Consolidated Statement of Financial Position](index=21&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2021, the company's total assets less current liabilities were **RMB 991,732 thousand**, down from **RMB 1,070,719 thousand** on December 31, 2020, with net assets at **RMB 803,604 thousand**, primarily impacted by decreased current assets and increased non-current liabilities Summary of Interim Condensed Consolidated Statement of Financial Position (As of June 30) | Indicator | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Total non-current assets | 303,964 | 195,169 | | Total current assets | 735,704 | 934,354 | | Total current liabilities | 47,936 | 58,804 | | Net current assets | 687,768 | 875,550 | | Total assets less current liabilities | 991,732 | 1,070,719 | | Total non-current liabilities | 188,128 | 83,708 | | Net assets | 803,604 | 987,011 | | Total equity | 803,604 | 987,011 | - Property, plant, and equipment increased from **RMB 101,093 thousand** on December 31, 2020, to **RMB 143,409 thousand** on June 30, 2021, reflecting increased capital expenditures[51](index=51&type=chunk) - Cash and cash equivalents decreased from **RMB 810,370 thousand** on December 31, 2020, to **RMB 643,060 thousand** on June 30, 2021[51](index=51&type=chunk) [Interim Condensed Consolidated Statement of Changes in Equity](index=23&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) For the six months ended June 30, 2021, the company's total equity decreased from **RMB 987,011 thousand** at the beginning of the period to **RMB 803,604 thousand**, primarily due to the total comprehensive loss for the period and the impact of share purchases under the share award scheme Summary of Interim Condensed Consolidated Statement of Changes in Equity (For the six months ended June 30) | Indicator | January 1, 2021 (RMB thousands) | Loss for the period (RMB thousands) | Exchange differences (RMB thousands) | Purchase of shares (RMB thousands) | June 30, 2021 (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | :--- | | Total equity | 987,011 | (114,403) | (9,331) | (59,673) | 803,604 | - Share purchases under the share award scheme resulted in an equity decrease of **RMB 59,673 thousand**[55](index=55&type=chunk) [Interim Condensed Consolidated Statement of Cash Flows](index=25&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2021, the company's cash and cash equivalents decreased by **RMB 159,214 thousand**, primarily due to net cash outflows from operating, investing, and financing activities Summary of Interim Condensed Consolidated Statement of Cash Flows (For the six months ended June 30) | Indicator | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Net cash flows used in operating activities | (88,857) | (73,924) | | Net cash flows used in investing activities | (62,511) | (633,666) | | Net cash flows used in financing activities | (7,846) | (12,814) | | Net decrease in cash and cash equivalents | (159,214) | (720,404) | | Cash and cash equivalents at end of period | 643,060 | 496,896 | - Cash outflow from investing activities primarily included purchases of property, plant, and equipment (**RMB 67,539 thousand**), financial assets at fair value through profit or loss (**RMB 50,000 thousand**), and an increase in pledged deposits (**RMB 20,982 thousand**), partially offset by proceeds from disposal of financial assets (**RMB 92,046 thousand**)[57](index=57&type=chunk) - Cash outflow from financing activities primarily included share purchases under the share award scheme (**RMB 59,673 thousand**) and principal portion of lease payments (**RMB 10,077 thousand**), partially offset by new bank borrowings (**RMB 67,582 thousand**)[57](index=57&type=chunk) [Notes to the Interim Condensed Consolidated Financial Information](index=26&type=section&id=Notes%20to%20the%20Interim%20Condensed%20Consolidated%20Financial%20Information) This section provides detailed notes to the interim condensed consolidated financial statements, covering basis of preparation, accounting policy changes, operating segment information, loss before tax, income tax, dividends, loss per share calculation, property, plant and equipment, financial assets, cash and pledged deposits, share capital, commitments, related party transactions, and fair value of financial instruments - The interim condensed consolidated financial information is prepared in accordance with **Hong Kong Accounting Standard 34 'Interim Financial Reporting'**[58](index=58&type=chunk) - For the six months ended June 30, 2021, the Group acquired assets at a cost of **RMB 46,272 thousand**, a significant increase from **RMB 5,069 thousand** in the prior period[66](index=66&type=chunk) Financial Assets at Fair Value Through Profit or Loss (As of June 30) | Indicator | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Structured deposits | 50,245 | - | | Unlisted investments | - | 93,058 | | **Total** | **50,245** | **93,058** | - As of June 30, 2021, the Group's pledged deposits amounted to **RMB 20,982 thousand** (December 31, 2020: nil)[69](index=69&type=chunk) - As of June 30, 2021, the Group's capital commitments (contracted but not provided for plant and machinery) were **RMB 294,974 thousand**, a significant increase from **RMB 64,260 thousand** on December 31, 2020[71](index=71&type=chunk) Key Management Personnel Compensation (For the six months ended June 30) | Indicator | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Short-term employee benefits | 4,382 | 5,873 | | Contributions to pension schemes | 104 | 61 | | Equity-settled share-based payment expenses | - | 34,903 | | **Total compensation paid to key management personnel** | **4,486** | **40,837** | - The carrying amounts of all the Group's financial instruments approximate their fair values, measured using a three-level fair value hierarchy, with structured deposits classified as Level 2 and unlisted investments (disposed of) as Level 3[78](index=78&type=chunk)[79](index=79&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk) [Other Information](index=40&type=section&id=Other%20Information) This section covers the use of listing proceeds, equity incentive schemes, disclosure of interests, and corporate governance matters [Use of Proceeds from Listing](index=40&type=section&id=Use%20of%20Proceeds%20from%20Listing) This section details the intended use and actual application of the company's net listing proceeds of **HKD 1,272.8 million** as of June 30, 2021, indicating most funds were allocated to R&D, commercialization, and production base construction - The company raised net proceeds of **HKD 1,272.8 million** from its listing[86](index=86&type=chunk) Use of Proceeds from Listing (As of June 30, 2021) | Use of Proceeds | Intended Use (HKD millions) | Actual Use (HKD millions) | Unutilized Net Proceeds (HKD millions) | | :--- | :--- | :--- | :--- | | R&D and commercialization of core product SM03 | 190.9 | 135.0 | 55.9 | | Funding for other investigational drugs in the pipeline | 279.4 | 115.6 | 163.8 | | Further R&D projects, team expansion, establishment of commercialization team, etc. | 42.4 | 42.3 | 0.1 | | Discovery and development of new investigational drugs not currently in the pipeline | 84.9 | 51.1 | 33.8 | | Construction of Suzhou production base (laboratory equipment) | 85.8 | 11.2 | 74.6 | | Construction of Suzhou production base (production facilities) | 59.7 | - | 59.7 | | Construction of additional R&D facilities and purchase of laboratory equipment | 107.6 | 22.3 | 85.3 | | Construction of upstream production facilities and downstream purification facilities | 88.2 | - | 88.2 | | Purchase of land in Suzhou Dushu Lake Higher Education Area and expansion expenses | 167.9 | 58.2 | 109.7 | | Working capital, expansion of internal capabilities, and other general corporate purposes | 127.2 | 84.2 | 43.0 | | Cooperation with D2M Group | 38.8 | 38.8 | - | | **Total** | **1,272.8** | **558.7** | **714.1** | [Equity Incentive Schemes](index=42&type=section&id=Equity%20Incentive%20Schemes) The company has a Restricted Share Unit Scheme and a Share Award Scheme to incentivize and retain talent; no new grants were made under the RSU scheme during the period, while shares were purchased by the trustee under the Share Award Scheme but no awards have been granted yet - The Restricted Share Unit Scheme was adopted on **October 18, 2019**, to incentivize directors, senior management, and employees[93](index=93&type=chunk) - On **June 5, 2020**, **10,062,404 restricted share units** were granted to an employee under the Restricted Share Unit Scheme and vested; no new grants were made during the reporting period[94](index=94&type=chunk)[95](index=95&type=chunk) - The Share Award Scheme was adopted on **February 4, 2021**, with a maximum of **50,312,020 award shares** for the entire scheme period[96](index=96&type=chunk) - During the reporting period, the trustee purchased **18,095,500 shares** from the market for a total of **HKD 71,822,420.26** (approximately **RMB 59,460,435.28**), but no awards have been granted to any eligible persons yet[97](index=97&type=chunk) [Disclosure of Interests](index=44&type=section&id=Disclosure%20of%20Interests) This section discloses the interests and short positions of the company's directors, chief executives, and substantial shareholders in the company's shares and related shares as of June 30, 2021, including beneficial and controlled corporate interests Interests of Directors and Chief Executive in Shares (As of June 30, 2021) | Director/Chief Executive Name | Capacity/Nature of Interest | Number of Shares | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Ms. Liu Wenyu | Controlled corporation interest and spouse's interest | 257,721,040 | 25.61% | | Mr. Qiang Jing | Controlled corporation interest and spouse's interest | 257,721,040 | 25.61% | | Dr. Liang Ruian | Controlled corporation interest | 157,721,196 | 15.67% | | Mr. Ma Huiyuan | Spouse's interest | 61,500,740 | 6.11% | Interests of Substantial Shareholders in Shares (As of June 30, 2021) | Shareholder Name/Entity | Capacity/Nature of Interest | Number of Shares | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Shanghai Xingze Investment Management Co., Ltd. | Controlled corporation interest | 212,889,400 | 21.16% | | Shanghai Yueyi Investment Center (Limited Partnership) | Controlled corporation interest | 212,889,400 | 21.16% | | Skytech Technology | Beneficial interest | 157,721,196 | 15.67% | | Hainan Haiyao Co., Ltd. | Beneficial interest | 158,882,115 | 15.79% | | Apricot Oversea Holdings Limited | Beneficial interest | 108,316,600 | 10.76% | | Ms. Xu Sijia | Beneficial interest | 89,802,105 | 8.92% | | West Biolake Holdings Limited | Beneficial interest | 72,349,000 | 7.19% | | For Best Holding Capital Group Investment Inc. | Controlled corporation interest | 61,500,740 | 6.11% | | Zhiyu Investment Group Co., Ltd. | Beneficial interest | 61,500,740 | 6.11% | | Ms. Tian Huimin | Controlled corporation interest | 61,500,740 | 6.11% | | Mr. Weng Kang | Controlled corporation interest | 61,500,740 | 6.11% | | Yunnan Baiyao Group Co., Ltd. | Beneficial interest | 51,599,400 | 5.13% | | China CITIC Bank Corporation Limited Haikou Branch | Person with security interest in shares | 158,882,115 | 15.79% | | Haikou Rural Credit Cooperative Union | Person with security interest in shares | 51,000,000 | 5.07% | [Corporate Governance and Compliance](index=47&type=section&id=Corporate%20Governance%20and%20Compliance) This section updates director information changes and confirms the company's compliance with the Model Code for Securities Transactions by Directors and relevant employee dealing guidelines during the reporting period, demonstrating commitment to high corporate governance standards and explaining the rationale for combining the Chairman and CEO roles - Executive Director **Dr. Liang Ruian's annual remuneration was adjusted to HKD 5,060,000** effective January 2021[106](index=106&type=chunk) - The company confirms that all directors and relevant employees complied with the Model Code for Securities Transactions and employee written guidelines during the reporting period[108](index=108&type=chunk)[109](index=109&type=chunk) - The company complied with all applicable code provisions of the Corporate Governance Code, except for Code Provision A.2.1 (roles of chairman and chief executive should be separate)[110](index=110&type=chunk) - The Board believes that **Dr. Liang Ruian** serving concurrently as Chairman and CEO is in the Group's best interest due to his extensive business knowledge and the Board's balanced responsibilities[111](index=111&type=chunk) - The Audit Committee reviewed the Group's adopted accounting principles and policies, audit and internal controls, and financial reporting matters, including the unaudited condensed consolidated financial statements for the reporting period[113](index=113&type=chunk) [Definitions](index=50&type=section&id=Definitions) This section provides definitions for key terms and abbreviations used throughout the report to ensure clarity and understanding [Definition of Terms](index=50&type=section&id=Definition%20of%20Terms) This section provides definitions for key terms and abbreviations used in the report to ensure clear understanding of the content - Lists definitions for terms such as 'Audit Committee', 'Board', 'Corporate Governance Code', 'Company', 'connected person', 'Director', 'FDA', 'Group', 'HKFRS', 'HKD', 'Listing Rules', 'Model Code', 'NMPA', 'Nomination Committee', 'PCT', 'PRC', 'Prospectus', 'R&D', 'Remuneration Committee', 'Reporting Period', 'RMB', 'Restricted Share Unit', 'Restricted Share Unit Scheme', 'SFO', 'Shares', 'Shareholder', 'Skytech Technology', 'Stock Exchange', 'subsidiary', 'US', 'we', 'Xingze Xinghe', and 'Xingze Xingzhan'[115](index=115&type=chunk)[116](index=116&type=chunk)

Product Development and Clinical Trials - The flagship product SM03 for treating rheumatoid arthritis has successfully completed Phase II clinical trials and is currently in Phase III trials, with interim analysis showing satisfactory safety and tolerability[6]. - The company plans to commercialize SM03 by the end of 2021, marking a significant step in its development as the first potential anti-CD22 monoclonal antibody for rheumatoid arthritis[6]. - The third-generation reversible covalent BTK inhibitor SN1011 has achieved key success in clinical trials assessing safety and tolerability in healthy adult subjects[7]. - The company submitted an IND application for SN1011 to the National Medical Products Administration of China, which was approved on August 27, 2020, allowing for comprehensive clinical development for systemic lupus erythematosus[8]. - The company is accelerating the IND application for the humanized antibody SM17 targeting innovative sites for asthma treatment in the United States[8]. - The flagship product SM03 is in Phase III clinical trials for rheumatoid arthritis (RA) and is expected to be commercialized by the end of 2021[16]. - The company is developing SN1011, a third-generation reversible covalent BTK inhibitor, with plans to initiate Phase II clinical trials for systemic lupus erythematosus (SLE) in the second half of 2021[13]. - SM03's Phase III clinical trial for rheumatoid arthritis has recruited a total of 332 patients as of December 31, 2020, with safety data consistent with Phase II results[17]. - The company expects to complete patient recruitment for the SM03 Phase III trial by mid-2021 and plans to submit a Biologics License Application (BLA) to the National Medical Products Administration (NMPA) in China by the second half of 2021[17]. - The company anticipates commercializing SM03 by the end of 2021, although the timeline has been extended due to uncertainties related to COVID-19[17]. - SN1011, a third-generation reversible covalent BTK inhibitor, is being evaluated for safety and tolerability in a Phase I trial in Australia, with 40 subjects completing the single ascending dose (SAD) trial as of January 15, 2020[19]. - The company has initiated a Phase I clinical trial for SN1011 in China, with 27 subjects enrolled as of the report date, and expects to complete the Phase I trial by mid-2021[19]. - SM17 is in the process of compiling data for an IND application, with initial toxicity studies showing good tolerability in monkeys, and global IND submission planned for the second half of 2021[22]. - The company plans to advance SM03 for systemic lupus erythematosus clinical trials to address unmet medical needs, with a Phase II trial expected to start in the second half of 2021[17]. - SM06, a humanized variant of SM03, is being optimized for production, with clinical trials planned following the commercialization of SM03[23]. Financial Performance - Research and development costs for 2020 amounted to RMB 103,402 thousand, a decrease from RMB 214,342 thousand in 2019[4]. - The company reported a loss before tax of RMB 122,600 thousand for 2020, compared to RMB 276,282 thousand in 2019[4]. - Total non-current assets increased significantly to RMB 195,169 thousand in 2020 from RMB 69,123 thousand in 2019[4]. - Current assets decreased to RMB 934,354 thousand in 2020 from RMB 1,215,042 thousand in 2019[4]. - Total equity for the company was RMB 987,011 thousand in 2020, down from RMB 1,131,916 thousand in 2019[4]. - Other income and gains totaled approximately RMB 584 million, an increase of about RMB 554 million compared to the previous year, primarily due to unrealized fair value gains of RMB 283 million on financial assets[45]. - Research and development costs for 2020 amounted to approximately RMB 1,034 million, a decrease from RMB 2,143 million in 2019, mainly due to the absence of new product intellectual property transfer fees and milestone payments[47]. - Administrative expenses increased to approximately RMB 720 million in 2020 from RMB 615 million in 2019, driven by non-cash share-based payments and increased employee-related costs[48]. - As of December 31, 2020, cash and cash equivalents totaled RMB 810.4 million, down from RMB 1,200.9 million in 2019, primarily due to investments and operational expenditures[49]. - The net cash flow used in operating activities was RMB (141.3) million in 2020, an improvement from RMB (222.5) million in 2019[50]. - The company reported a basic and diluted loss per share of RMB 0.12 for the year ended December 31, 2020, compared to RMB 0.33 in 2019[52]. - As of December 31, 2020, the company's outstanding bank borrowings amounted to RMB 605 million, an increase from RMB 203 million in 2019[51]. Production and Facilities - The company has a GMP-compliant production capacity of 1,200 liters in Haikou, with a second facility in Suzhou under construction, expected to have a capacity of 6,000 liters by the second half of 2021[9]. - The new Suzhou facility will enable the production of 2.5 to 3.0 million bottles of monoclonal antibody injections annually, enhancing the commercialization process of the product pipeline[9]. - The company is expanding its production capacity with a new facility in Suzhou, expected to be operational in the second half of 2021, with a capacity exceeding 30,000 liters[42]. - The Haikou production base has an operational area of approximately 4,526 square meters and a capacity of 1,200 liters, sufficient for clinical and initial marketing needs[27]. - The company is constructing a commercial-scale production facility in Suzhou with a capacity of 6,000 liters, compliant with FDA's Good Manufacturing Practice (GMP) standards[27]. Research and Development Strategy - The company has established a comprehensive platform covering drug discovery, clinical trials, and commercial-scale production, aiming for vertical integration to support drug development and commercialization[10]. - The company aims to strengthen its R&D capabilities through continuous research on innovative drug targets and the development of a strong clinical and marketing team[10]. - The product pipeline includes multiple candidates targeting various immune diseases, with ongoing clinical trials for several products[15]. - The company is committed to independent innovation and global collaboration to contribute to the healthcare industry and society[10]. - The company aims to accelerate drug development and market launch based on its existing drug portfolio and R&D capabilities, enhancing global cooperation and technological innovation[138]. - The company has multiple first-in-target and first-in-class drugs in development, addressing significant unmet clinical needs in diseases like rheumatoid arthritis and systemic lupus erythematosus[146]. Corporate Governance and Management - The company has appointed independent non-executive directors with extensive backgrounds in finance and management, including over 35 years of experience in accounting and treasury[76]. - The board includes members with significant experience in various industries, ensuring high standards of corporate governance[76]. - The independent directors are responsible for providing independent judgment to the board, ensuring effective oversight[75]. - The company has a strong commitment to corporate governance, with independent directors actively participating in key committees[76]. - The management team has a diverse background, with experience in both local and international markets[77]. - The company aims to leverage its board's expertise to drive strategic initiatives and market expansion[76]. - The board consists of one executive director, six non-executive directors, and four independent non-executive directors, ensuring a high level of independence and balance of power[88]. - The board held regular meetings, with attendance records showing all directors attended 100% of the meetings during the year[98]. - The company provided training for all directors to ensure they are updated on regulatory developments and their responsibilities[96]. - The board is responsible for leading and monitoring the company, ensuring good internal control and risk management systems are in place[93]. Environmental, Social, and Governance (ESG) Initiatives - The company identified key ESG issues including "product responsibility," "employment," and "emissions," which are crucial for sustainable development[144]. - The company actively engages with stakeholders, including government, investors, employees, and customers, to address ESG concerns[141]. - The company’s environmental, social, and governance (ESG) report for 2020 aims to objectively disclose its performance in these areas, adhering to the guidelines set by the Hong Kong Stock Exchange[133]. - The report covers the company's ESG performance in mainland China and Hong Kong for the period from January 1, 2020, to December 31, 2020[134]. - The company ensures the accuracy and reliability of the information in its reports, committing to no false or misleading statements[135]. - The company is committed to effective communication with shareholders to enhance investor relations and ensure transparency regarding business performance and strategies[130]. - The company has implemented a shareholder communication policy to address shareholder concerns and feedback effectively[131]. Quality Control and Compliance - The company established a comprehensive quality management system, implementing strict quality control measures in compliance with the new Drug Administration Law and GMP standards, with 45 internal quality management documents added or revised in 2020[148]. - A total of 102 quality standards and inspection procedures were revised according to the 2020 edition of the Chinese Pharmacopoeia, ensuring compliance with current regulations[148]. - The company introduced an automated ultrafiltration system to enhance the stability of cell culture processes, maintaining zero contamination during cell culture, which lays a solid foundation for future product commercialization[154]. - A dedicated quality control laboratory was established, equipped with professional testing facilities to support the implementation of quality control measures as per GMP and pharmacopoeia requirements[153]. - The company implemented a three-tier quality control process for raw materials, including verification at the warehouse, issuance, and workshop handover, with a dual-review system for high-risk materials[151]. - Strict monitoring of clinical trial drug quality was enforced, including temperature-controlled storage and transportation, with immediate reporting and evaluation procedures for any deviations[156]. - The company signed quality assurance agreements with cold chain transport service providers to ensure compliance with storage conditions during drug transportation[156]. - A professional quality control team led by the CEO was established to oversee the overall quality responsibility, ensuring that products are safe and effective[148]. - The company developed quality control procedures for products nearing commercialization, with automated packaging lines introduced to minimize human error[155]. - A comprehensive investigation and corrective action plan (CAPA) was implemented for handling out-of-specification (OOS) results, focusing on five key modules: personnel, equipment, materials, methods, and environment[154]. - The company has established a comprehensive drug tracking system to strictly review the expiration dates of drugs, ensuring timely notifications for soon-to-expire drugs and implementing recall procedures for expired products[158]. - No customer complaints or product recalls were reported during the reporting period, indicating effective complaint and recall management systems are in place[160]. Employee and Supplier Management - The company has a total of 178 employees, with 94 males and 84 females, indicating a gender distribution of approximately 52.8% male and 47.2% female[181]. - The employee turnover rate for the year is 13%, with 28 employees leaving the company[181]. - Among employees under 30 years old, the turnover rate is 4%, while for those aged 30-50, it is 9%, and for those over 50, it is 0.5%[181]. - The company has established a centralized procurement system, with major purchases conducted through a bidding process[173]. - In 2020, the company evaluated its main suppliers, continuing cooperation with those that could rectify identified risks within acceptable limits[174]. - The company emphasizes ESG risk management in supplier relationships, conducting on-site audits for major material suppliers[174]. - The company has a total of 39 suppliers in Hong Kong and Macau, 218 suppliers in mainland China, and 12 suppliers overseas, representing 15%, 81%, and 4% of the total suppliers respectively[171]. - The company provides competitive salaries and benefits, including medical, housing, transportation subsidies, and various insurances[182]. - The company strictly adheres to labor laws and regulations, ensuring fair employment practices and prohibiting child labor[179]. - The company actively collaborates with suppliers to enhance sustainability performance in the industry[170]. Health and Safety - The company has not reported any employee injuries or fatalities during the reporting period, adhering strictly to safety regulations and implementing a comprehensive EHS management system[187]. - In 2020, the company conducted fire safety training for all employees, ensuring familiarity with fire safety equipment and emergency escape routes[189]. - The company maintained strict COVID-19 prevention measures, including temperature checks and provision of protective equipment, to ensure employee safety during the pandemic[190]. Environmental Compliance - The company strictly complied with environmental laws and regulations, with no major violations reported in 2020[192]. - The company implemented energy-saving measures, including the use of energy-efficient lighting and temperature optimization, resulting in reduced electricity consumption[193]. - The company replaced steam system components to minimize steam leakage, contributing to lower energy waste[194]. - The company actively promotes green commuting and remote work to reduce gasoline consumption from business travel[194]. - The company has established internal regulations for waste management, ensuring compliance with hazardous and non-hazardous waste disposal[196]. - The company has adopted measures to treat greenhouse gas emissions and wastewater, ensuring compliance with discharge standards[197]. - The company is addressing climate change risks by enhancing operational resilience against extreme weather events[198]. - The company is closely monitoring changes in environmental laws and policies to ensure compliance and adapt to market demands[199]. - The company is exploring new energy-saving technologies to improve resource utilization efficiency[200]. - The company aims to expand market opportunities in response to climate change-related health challenges[200].

SinoMab BioScience Limited 中國抗體製藥有限公司 Interim Report 2020 中期報告 SinoMab BioScience Limited 中國抗體製藥有限公司 （於香港註冊成立的有限公司 股份代號：36 81 中期報告 2020 2 GM | --- | --- | --- | --- | --- | --- | |--------|-------|-------------------------------|-------|-------|-------| | | | | | | | | | | | | | | | 目 | | 錄 | | | | | 2 | | 公司資料 | | | | | | | 主席報告書 | | | | | 3 | | | | | | | 5 16 | | 管理層討論與分析 獨立審閱報告 | | | | | | | 中期簡明綜合財務報表 | | | | | 17 | | | | | | | | 17 | 中期簡明綜合損益表 | | | | | | 18 | 中期簡明綜合全面收益表 | | | | | | 19 | 中期簡明綜合財務狀況表 | ...

Financial Performance - The company experienced a loss before tax of RMB 276,282,000 in 2019, compared to a loss of RMB 83,610,000 in 2018, indicating a worsening financial performance [4]. - The total equity of the company reached RMB 1,131,916,000 in 2019, a significant increase from a negative equity of RMB 50,952,000 in 2017 [4]. - Basic and diluted loss per share for the year ended December 31, 2019, was RMB 0.33, compared to RMB 0.12 for 2018, with total losses attributable to equity holders of the parent amounting to RMB 276.3 million in 2019 [44]. - The company's debt-to-equity ratio decreased from 36% as of December 31, 2018, to 2% as of December 31, 2019, indicating improved financial stability [42]. - Other income and gains for the year ended December 31, 2019, totaled approximately RMB 3.0 million, a decrease of about RMB 5.7 million compared to the previous year [37]. Research and Development - The company reported a research and development cost of RMB 214,342,000 for the year ended December 31, 2019, an increase from RMB 47,283,000 in 2018, reflecting a significant investment in innovation [4]. - The company is actively developing new targeted drugs to address unmet medical needs, enhancing its research and innovation capabilities [6]. - The company has a pipeline of 6 investigational drugs covering over 10 indications, demonstrating a strong commitment to expanding its product offerings [6]. - The company is focused on developing innovative therapies for immune diseases, aiming to become a global leader in this field [29]. - The company is committed to reducing R&D timelines and enhancing efficiency, completing the first phase of SAD studies for SN1011 within three months [7]. Product Development and Clinical Trials - The flagship product SM03 has entered Phase III clinical trials for the treatment of rheumatoid arthritis, with plans to submit a new drug application to the US FDA and other regulatory bodies in 2020 [6]. - SM03's Phase III clinical trial for rheumatoid arthritis has recruited 288 patients as of December 31, 2019, with safety data aligning with Phase II results [14]. - The company expects to complete patient recruitment for SM03 by the second half of 2020 and plans to submit a Biologics License Application to the NMPA in the first half of 2021 [14]. - SN1011, a third-generation BTK inhibitor, is undergoing safety and tolerability trials in Australia, with a completed SAD Phase I trial involving 40 participants [16]. - The company plans to submit an IND application for SN1011 targeting autoimmune diseases in China in 2020, although timelines have been extended due to COVID-19 uncertainties [16]. Corporate Governance - The company emphasizes high standards of corporate governance to protect shareholder interests and enhance corporate value since its listing on November 12, 2019 [77]. - The board consists of 11 members, including 2 executive directors, 5 non-executive directors, and 4 independent non-executive directors [80]. - The company has maintained compliance with listing rules by appointing at least three independent non-executive directors, representing one-third of the board [81]. - The board is responsible for leading and monitoring the company, ensuring effective internal controls and risk management systems are in place [83]. - The company has established a director and officer liability insurance policy, which is reviewed annually [84]. Environmental, Social, and Governance (ESG) Initiatives - The company’s environmental, social, and governance (ESG) report covers its performance in these areas for the year 2019, emphasizing the importance of stakeholder concerns [121]. - The company has established a comprehensive quality management system to ensure compliance with GMP standards and product safety [135]. - The company emphasizes community investment and social responsibility as part of its ESG initiatives [130]. - The company has implemented strict supplier qualification audits, ensuring that suppliers can consistently provide high-quality materials and comply with legal regulations [148]. - The company is committed to integrating sustainable development principles into its operations to enhance ESG management [123]. Employee and Workforce Management - The company has a total of 112 employees as of December 31, 2019, emphasizing the importance of human resources for sustainable operations [26]. - The workforce composition includes 48% male employees and 52% female employees, indicating a balanced gender representation [154]. - Employee activities are organized to enhance team cohesion and improve employee satisfaction, including various recreational events [157]. - The company has established multiple internal communication channels to gather employee feedback and suggestions, ensuring timely responses [158]. - The company emphasizes employee welfare, providing competitive salaries and various benefits, including medical insurance and annual bonuses [155]. Strategic Development and Market Position - The company is transitioning to a vertically integrated biopharmaceutical company, with a new production facility in Haikou and a second facility in Suzhou expected to be operational in the second half of 2021, featuring three 2,000-liter stainless steel bioreactors [8]. - The company is expanding its footprint in Hong Kong, Haikou, Suzhou, and Australia to meet the growing global demand for quality healthcare [8]. - The company aims to strengthen global collaborations and technological innovations to become a significant player in the global healthcare industry [10]. - The company is focused on diversifying its product portfolio through new product licensing and collaborations, which is reflected in the significant increase in R&D expenditures [39]. - The company has identified significant risks in new drug development, including long development cycles and low success rates, and plans to implement rigorous evaluation processes [192].