[Performance Summary](index=2&type=section&id=%E6%91%98%E8%A6%81) [Business Highlights](index=2&type=section&id=%E6%A5%AD%E5%8B%99%E6%91%98%E8%A6%81) During the reporting period, the Group achieved significant progress in clinical trials and pipeline development, with flagship product Suciraslimab (SM03) nearing NMPA approval and key product SM17 advancing in clinical trials in both the US and China, while its intellectual property portfolio nearly doubled - The Biologics License Application (BLA) for flagship product **Suciraslimab (SM03)** for rheumatoid arthritis (RA) has entered the final review stage with China's National Medical Products Administration (NMPA), with necessary on-site inspections completed in January 2024[2](index=2&type=chunk) - Key product **SM17** (anti-IL-25 receptor antibody) demonstrated good safety, tolerability, and pharmacokinetic (PK) profiles in its Phase I first-in-human clinical trial in the US, with the first patient dosed in the China Phase 1b clinical trial on June 5, 2024[2](index=2&type=chunk) - The Group achieved significant intellectual property progress, with the number of authorized and pending invention patents nearly doubling by **June 30, 2024**, compared to the beginning of the reporting period, primarily due to new preclinical candidate discoveries[2](index=2&type=chunk) [Financial Highlights](index=3&type=section&id=%E8%B2%A1%E5%8B%99%E6%91%98%E8%A6%81) During the reporting period, the Group's loss significantly narrowed to RMB 90.6 million, a 32.4% year-on-year reduction, primarily due to effective control over R&D and administrative expenses, and reduced exchange losses, with total available funds at period-end of RMB 220.0 million supported by net financing cash inflow Financial Performance Summary | Metric | H1 2024 (RMB million) | H1 2023 (RMB million) | Change | | :--- | :--- | :--- | :--- | | Loss for the Period | 90.6 | 134.1 | ↓ 32.4% | | Total Available Funds (Period-end) | 220.0 | - | - | | Net Cash from Financing Activities | 93.4 | - | - | - The reduction in loss was primarily due to: (i) decreased laboratory consumables and trial costs in R&D following the acceptance of the **Suciraslimab BLA** and receipt of the **SM17 Phase I report**; (ii) a reduction of approximately **RMB 7.5 million** in share-based non-cash payments; and (iii) a decrease of approximately **RMB 17.1 million** in net exchange losses[3](index=3&type=chunk) - Completed 15 subscription agreements in **January 2024**, raising net proceeds of approximately **HKD 73.2 million**[3](index=3&type=chunk) - The Board resolved not to declare an interim dividend[3](index=3&type=chunk) [Management Discussion and Analysis](index=4&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%A4%E8%A8%8E%E8%AB%96%E8%88%87%E5%88%86%E6%9E%90) [Business Review and Outlook](index=4&type=section&id=%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7%E8%88%87%E5%B1%95%E6%9C%9B) The company adheres to the philosophy of discovering and developing first-in-class drugs, focusing on innovative treatments for immunological diseases, with flagship product Suciraslimab (SM03) nearing commercialization and key product SM17 making significant progress, while remaining optimistic about future profitability and shareholder value creation - The company positions itself in the new era of **Biotechnology 3.0**, focusing on drug development for prevalent diseases such as age-related conditions, autoimmune diseases, and mental health disorders[4](index=4&type=chunk) - The BLA application for flagship product **Suciraslimab (SM03)** is in the final review stage with the NMPA, with its Phase III extension trial demonstrating durable efficacy and long-term sustainable benefits[4](index=4&type=chunk) - Key product **SM17** has achieved significant progress in treating atopic dermatitis (AD), with preclinical study results published in a prestigious journal and Phase 1b clinical trials initiated[5](index=5&type=chunk) - Looking ahead, the company anticipates commercial profitability upon **Suciraslimab's** market approval and aims to confirm **SM17's** differentiated advantages over existing therapies[6](index=6&type=chunk) [Product Pipeline and Clinical Progress](index=6&type=section&id=%E7%94%A2%E5%93%81%E7%AE%A1%E7%B7%9A%E8%88%87%E8%87%A8%E5%BA%8A%E9%80%B2%E5%B1%95) The company has established a robust product pipeline focused on immunological diseases, with flagship product Suciraslimab (SM03) for RA nearing commercialization, and key products SM17 and SN1011 showing positive clinical development progress across multiple indications, complemented by preclinical-stage investigational drugs Product Pipeline Overview | Product | Target/Type | Key Indications | Latest Progress | | :--- | :--- | :--- | :--- | | **Suciraslimab (SM03)** | Anti-CD22 mAb (First-in-class) | Rheumatoid Arthritis (RA) | China BLA application in final review stage | | **SM17** | Anti-IL-25R mAb (First-in-class) | Atopic Dermatitis (AD), Asthma | US Phase I completed, China Phase 1b initiated | | **SN1011** | Third-gen BTK Inhibitor | Systemic Lupus Erythematosus (SLE), Pemphigus, etc. | 4 IND approvals from NMPA | | **SM06** | Second-gen Anti-CD22 mAb | Systemic Lupus Erythematosus (SLE), etc. | IND-enabling stage, CMC optimization | | **SM09** | Anti-CD20 mAb | Non-Hodgkin Lymphoma (NHL) | Preclinical research optimization | [Flagship Product: Suciraslimab (SM03)](index=8&type=section&id=%E8%88%92%E8%A5%BF%E5%88%A9%E5%96%AE%E6%8A%97%20(Suciraslimab%2C%20SM03)) SM03 is a first-in-class anti-CD22 monoclonal antibody for rheumatoid arthritis (RA) and other immunological diseases, with its Phase III clinical study meeting primary endpoints and BLA application accepted by the NMPA in September 2023, positioning it as the company's first potential commercialized drug following completed GMP inspections - **SM03's** BLA application for RA was accepted by the NMPA in **September 2023**, nearing commercialization, with clinical site and GMP inspections completed in **January 2024**[15](index=15&type=chunk)[8](index=8&type=chunk) - Phase III extension trial data indicate **SM03** offers durable efficacy, with response rates continuously increasing over time, demonstrating long-term sustainable benefits superior to conventional biologics[14](index=14&type=chunk) [Key Product: SM17](index=9&type=section&id=SM17) SM17 is a first-in-class humanized monoclonal antibody targeting the IL-25 receptor, with potential for treating atopic dermatitis (AD), asthma, and idiopathic pulmonary fibrosis (IPF), demonstrating good safety and PK profiles in its US Phase I trial and successfully dosing its first patient in China's Phase 1b clinical trial for AD in June 2024 - The US Phase I clinical trial report, obtained in **Q1 2024**, indicated **SM17** demonstrated good overall safety, tolerability, and PK profiles[18](index=18&type=chunk)[9](index=9&type=chunk) - China's Phase 1b clinical trial for AD completed its first patient dosing on **June 5, 2024**, aiming to explore preliminary efficacy and safety[18](index=18&type=chunk) - Preclinical study results published in **Allergy** journal demonstrated **SM17** was as effective as JAK1 inhibitors in treating mouse AD[18](index=18&type=chunk)[9](index=9&type=chunk) [Key Product: SN1011](index=10&type=section&id=SN1011) SN1011 is a third-generation reversible covalent BTK inhibitor targeting various autoimmune diseases, including systemic lupus erythematosus (SLE), pemphigus, and multiple sclerosis (MS), having shown good safety and PK profiles in its Phase I studies in Australia and China, and currently holding four IND approvals from the NMPA for different indications - **SN1011** has received **4 IND approvals** from the NMPA for the treatment of SLE, pemphigus, MS, and NMOSD, respectively[20](index=20&type=chunk)[9](index=9&type=chunk) [Manufacturing, Intellectual Property, and Collaborations](index=11&type=section&id=%E7%94%A2%E7%94%9F%E3%80%81%E7%9F%A5%E8%AD%98%E7%94%A2%E6%AC%8A%E8%88%87%E5%90%88%E4%BD%9C) The company operates a 1,200-liter capacity manufacturing facility in Haikou, which has completed GMP inspections supporting the SM03 BLA application, while a second commercial-scale facility is under construction in Suzhou, intellectual property holdings have significantly increased to 67 patents, and active collaborations with LifeArc and Everest Medicines are accelerating drug development and commercialization - The Haikou manufacturing facility completed GMP inspections in **January 2024**, supporting **SM03's BLA** approval, with the new Suzhou manufacturing base expected to pass completion acceptance in late **2024**[24](index=24&type=chunk)[25](index=25&type=chunk) Invention Patents Owned | Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Number of Invention Patents Owned* | 67 | 35 | - Collaborated with UK-based **LifeArc** for the development and commercialization of **SM17**, and partnered with **Everest Medicines** to license global development rights for **SN1011** for kidney diseases[23](index=23&type=chunk) [Market Overview and Strategic Platforms](index=17&type=section&id=%E5%B8%82%E5%A0%B4%E6%A6%82%E8%A6%BD%E8%88%87%E6%88%B0%E7%95%A5%E5%B9%B3%E5%8F%B0) The company focuses on the autoimmune disease sector with significant market potential, projecting the Chinese RA market to reach RMB 83.3 billion and the global AD market USD 27.7 billion by 2030, and has established five internal strategic R&D platforms to continuously identify innovative targets and develop new drugs for competitive advantage - Broad market prospects: The Chinese RA market is projected to reach **RMB 83.3 billion** by **2030**, and the global AD market is expected to reach **USD 27.7 billion**[39](index=39&type=chunk)[40](index=40&type=chunk) - The company has established **five internal strategic R&D platforms** to support continuous drug innovation: - **B-cell Therapy Platform** (producing SM03, SM06, SM09, SN1011) - **Alarmins Pathway Therapy Platform** (producing SM17) - **Selective T-cell Therapy Platform** - **Neurological Diseases Platform** - **Antibody Framework Remodeling Humanization Platform** (for SM06, SM09)[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk) [Financial Review](index=21&type=section&id=%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) During the reporting period, the Group's financial position showed positive changes, with R&D costs decreasing 17.5% year-on-year to RMB 55.0 million and administrative expenses decreasing 31.9% year-on-year to RMB 34.2 million due to cost optimization and reduced non-cash expenses, while total available funds were RMB 220.0 million and the gearing ratio increased to 73.6% Expense Analysis | Expense Item | H1 2024 (RMB million) | H1 2023 (RMB million) | Reason for Change | | :--- | :--- | :--- | :--- | | **Research and Development Costs** | 55.0 | 66.8 | Decreased trial costs after SM03 BLA acceptance and SM17 Phase I report | | **Administrative Expenses** | 34.2 | 50.2 | Reduced share-based payments and depreciation/amortization | Liquidity and Capital Position | Liquidity and Capital | June 30, 2024 (RMB million) | December 31, 2023 (RMB million) | | :--- | :--- | :--- | | Total Available Funds | 220.0 | 233.1 | | Interest-bearing Bank Borrowings | 423.8 | 391.4 | | Gearing Ratio | 73.6% | 53.5% | - During the reporting period, net cash outflow from operating activities was **RMB 70.6 million**, net cash outflow from investing activities was **RMB 76.4 million**, and net cash inflow from financing activities was **RMB 93.4 million**[54](index=54&type=chunk) [Use of Proceeds](index=24&type=section&id=%E6%89%80%E5%BE%97%E6%AC%BE%E9%A0%85%E7%94%A8%E9%80%94) The company adjusted the use of net proceeds from the global offering, reallocating HKD 15.0 million to working capital and general corporate purposes, with HKD 98.0 million of IPO proceeds remaining unutilized as of June 30, 2024, and detailed the usage of funds from 2022 and 2023 share subscriptions primarily for core product R&D and clinical studies - The Board resolved to change the use of listing proceeds, reallocating **HKD 15.0 million** to 'working capital, expansion of internal capabilities, and other general corporate purposes'[62](index=62&type=chunk) Proceeds Utilization Summary | Source of Funds | Net Proceeds (HKD million) | Used as of 2024/6/30 (HKD million) | Unused as of 2024/6/30 (HKD million) | | :--- | :--- | :--- | :--- | | Global Offering (IPO) | 1,272.8 | 1,174.8 | 98.0 | | 2022 Share Subscription | 50.9 | 38.4 | 12.5 | | 2023 Share Subscription | 73.2 | 8.4 | 64.8 | [Interim Condensed Consolidated Financial Statements](index=32&type=section&id=%E4%B8%AD%E6%9C%9F%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8) [Interim Condensed Consolidated Statement of Profit or Loss](index=32&type=section&id=%E4%B8%AD%E6%9C%9F%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%90%8D%E7%9B%8A%E8%A1%A8) For the six months ended June 30, 2024, the company recorded revenue of RMB 2.0 million and gross profit of RMB 0.5 million, with a significantly narrowed loss for the period of RMB 90.6 million compared to RMB 134.1 million in the prior year, resulting in a basic loss per share of RMB 0.08 Statement of Profit or Loss | Item (RMB thousands) | H1 2024 (Unaudited) | H1 2023 (Unaudited) | | :--- | :--- | :--- | | Revenue | 2,026 | 1,365 | | Gross Profit | 543 | 422 | | Research and Development Costs | (55,035) | (66,750) | | Administrative Expenses | (34,205) | (50,200) | | **Loss for the Period** | **(90,622)** | **(134,096)** | | **Loss Per Share (RMB)** | **(0.08)** | **(0.13)** | [Interim Condensed Consolidated Statement of Financial Position](index=34&type=section&id=%E4%B8%AD%E6%9C%9F%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8) As of June 30, 2024, the company's total assets were RMB 841.8 million, total liabilities were RMB 564.9 million, and net assets were RMB 276.9 million, with non-current assets primarily consisting of property, plant, and equipment, and liabilities mainly composed of interest-bearing bank borrowings Statement of Financial Position | Item (RMB thousands) | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | **Total Non-Current Assets** | 575,746 | 577,603 | | **Total Current Assets** | 266,056 | 270,183 | | *Of which: Cash and Cash Equivalents* | 153,617 | 203,664 | | **Total Current Liabilities** | 202,696 | 172,646 | | **Total Non-Current Liabilities** | 362,176 | 379,557 | | **Net Assets** | **276,930** | **295,583** | | **Total Equity** | **276,930** | **295,583** | [Other Information](index=30&type=section&id=%E5%85%B6%E4%BB%96%E4%BF%A1%E6%81%AF) [Corporate Governance and Dividends](index=30&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E8%88%87%E8%82%A1%E6%81%AF) The company is committed to high standards of corporate governance, applying the principles of the Corporate Governance Code despite a deviation where Dr. Liang Ruian serves as both Chairman and CEO, an arrangement the Board deems in the company's best interest, and has resolved not to declare an interim dividend for the six months ended June 30, 2024 - The company deviates from Corporate Governance Code Provision C.2.1, where the roles of Chairman and Chief Executive Officer are combined and held by Dr. Liang Ruian. The Board believes this arrangement is in the Group's best interest, given Dr. Liang's founder status and extensive business knowledge[76](index=76&type=chunk) - The Board has resolved not to declare an interim dividend for the six months ended **June 30, 2024**[78](index=78&type=chunk)[3](index=3&type=chunk) - The company's independent auditor, **Ernst & Young**, has reviewed the interim condensed consolidated financial information. The Audit Committee, in conjunction with management and the auditor, has reviewed and deemed the interim results to be in compliance with applicable accounting standards[97](index=97&type=chunk)

截至二零二三年十二月三十一日止年度,董事會組成變更如下： 董事之履歷資料載於本年報第23至30頁之「董事及管理層」一節。 主席及首席執行官 根據授權協議,本公司已於二零二一年收取初始預付款4百萬美元,並有權收取最多合共183百萬美元的發展和銷售里程 碑付款。本公司保留SN1011 腎病之自身免疫相關領域外的其他適應症的全部免疫權利,並會繼續推進其研發活動。 各獨立非執行董事已與本公司簽署委任書,初步任期為期三年並須根據細則及上市規則接受重新委任、輪值退任及廖選 連任。 委任及重遴董事 董事會應負責領導及監控本公司,並共同負責指導及監督本公司事務。 童事須向本公司披露彼等擔任的其他職務的詳情。 中國抗體製蔡有限公司 2023年年報 √ J Dylan Carlo TINKER先生 每名新委任的董事於其獲委任之初將接受正式全面的就任需知·以確保彼對本公司業務及營運有適當的了解·並完全知 悉董事在上市規則及相關法律規定下的職責及責任。 培訓類型(附註1) 附註： 2. 於二零二三年九月六日辭任 蘇州生產基地 1. 於二零二三年九月六日辭任 董事於截至二零二三年十二月三十一日止年度舉行的董事會會議及股東大會的出席記錄 ...

Financial Performance - The company reported a net loss attributable to ordinary shareholders of RMB 243,111,000 for the year, compared to a loss of RMB 284,158,000 in the previous year[25]. - There was no declaration or payment of dividends for the years ended December 31, 2023, and December 31, 2022[3]. - The company has not made adjustments to the basic loss per share for the year ended December 31, 2023, despite the potential dilution effect of unexercised share options[2]. - Losses for the year decreased by RMB 41.1 million, from RMB 284.2 million in 2022 to RMB 243.1 million in 2023, primarily due to the completion of Phase III clinical trials for SM03[68]. - Cash and cash equivalents totaled RMB 233.1 million as of December 31, 2023, down from RMB 345.7 million a year earlier[68]. - Net cash used in operating activities decreased from RMB 300.5 million in 2022 to RMB 133.8 million in 2023 due to cost-saving measures[68]. - Administrative expenses totaled approximately RMB 97.6 million for the year ended December 31, 2023, compared to RMB 82.6 million in 2022, with the increase mainly attributed to share-based payments rising by approximately RMB 15.2 million[176]. - The net cash flow used in operating activities was RMB (133.8) million for the year ended December 31, 2023, compared to RMB (300.5) million in 2022, indicating an improvement in operational cash flow[179]. - The total cash and cash equivalents at the end of the year were RMB 203.7 million, down from RMB 342.9 million at the beginning of the year, reflecting a net decrease of RMB (148.5) million[179]. - Other income and gains amounted to approximately RMB 10.7 million during the reporting period, a decrease of about RMB 44.4 million compared to the year ended December 31, 2022, mainly due to a prior year gain from the fair value of investments[194]. Share Capital and Financing - The weighted average number of ordinary shares issued during the year was 1,018,115,585 shares, an increase from 991,956,078 shares in the previous year[25]. - The total number of issued ordinary shares as of December 31, 2023, was 1,034,920,400, unchanged from the previous year[8]. - The company's overdraft financing amounted to RMB 907,555,000, up from RMB 750,000,000 in the previous year, with RMB 409,657,000 utilized by the end of the reporting period[27]. - As of the announcement date, 49,878,400 share options were granted under the 2022 share option plan, with 49,778,400 options remaining unexercised[38]. - The company plans to seek approval from the Stock Exchange for the proposed increase in the share option scheme limit, which will not exceed 10% of the total issued shares as of the date of the approval[18]. Research and Development - The company is focused on research, development, production, and commercialization of innovative therapies for immune-related diseases[67]. - The main product SM17 is a first-in-class humanized IgG4-k monoclonal antibody targeting IL-25, with potential applications in treating AD, asthma, and IPF[30]. - The company completed all patient enrollment for Phase I clinical trials of SM17 in the U.S. by September 2023, with plans to initiate Phase Ib studies for AD patients shortly[48]. - Two IND applications for asthma and AD were submitted to the National Medical Products Administration in China in May and June 2023, respectively, and were approved in August and September 2023[48]. - The flagship product SM03 (Suciraslimab) achieved primary study endpoints in the Phase III clinical trial for treating RA in China, demonstrating effective reduction of disease activity in moderate to severe RA patients[56]. - The company submitted a Biologics License Application (BLA) for Suciraslimab to the National Medical Products Administration of China in August 2023, with approval expected within 10 to 12 months post-submission[56]. - The company is developing another major product, SN1011, a third-generation reversible covalent BTK inhibitor, which has received four IND approvals from the National Medical Products Administration of China for treating SLE, pemphigus, MS, and NMOSD[58]. - The clinical trial for Suciraslimab included 530 participants, exceeding the initial target of 510, and the extended trial continues to gather data on long-term efficacy and safety[61]. - The company is focusing on the commercialization of SM03 for rheumatoid arthritis (RA) before considering the advancement of SM03 for other indications such as systemic lupus erythematosus (SLE) and Alzheimer's disease[109]. - The company is currently optimizing the chemistry, manufacturing, and controls (CMC) processes for SM06, a second-generation anti-CD22 antibody[89]. - The company is developing a preclinical research platform to study the mechanisms of autoimmune diseases and explore effective treatment methods[127]. - The internal R&D team is focusing on new mechanisms for treating various autoimmune diseases, including rheumatic diseases and skin diseases[127]. Market and Industry Outlook - The macroeconomic environment is gradually recovering to pre-pandemic levels, presenting growth opportunities for innovative drug companies in 2023[44]. - The company is optimistic about the biotechnology market in 2024, supported by favorable policies in Hong Kong for the pharmaceutical industry[73]. - The global autoimmune disease drug market is projected to grow from $120.5 billion in 2020 to $163.8 billion by 2030, with a CAGR of 6.0%[155]. - The estimated market size for rheumatoid arthritis (RA) treatment in China is expected to reach RMB 28 billion by 2023 and RMB 83.3 billion by 2030[155]. - The Chinese market for atopic dermatitis (AD) drugs was valued at $600 million in 2019 and is expected to grow to $1.5 billion by 2024 and further to $4.3 billion by 2030[134]. - The number of asthma patients globally is projected to reach approximately 86 million by 2030, with a significant increase in China, which is expected to reach 7.81 million patients[135]. Production and Facilities - The Haikou production base is the primary site for product commercialization and has supported multiple product development efforts since its completion[50]. - The Suzhou production base is steadily developing to support future research and commercialization efforts[50]. - The production base in Haikou covers an area of approximately 19,163 square meters with a capacity of 1,200 liters, sufficient for clinical and initial commercialization needs[95]. - The company is constructing a second production base in Suzhou, which will include commercial production facilities, a research center, and a quality control center, covering a total area of approximately 75,000 square meters[96]. - The company completed the GMP inspection of the Haikou production base in January 2024, which is a necessary requirement for BLA approval[95]. Strategic Initiatives - The company aims to explore potential business collaboration opportunities and expand its commercial footprint in the biotechnology market in 2024[73]. - The company aims to solidify its leading position in the immunology field through specialized research on innovative therapies for immune diseases[124]. - The company plans to actively educate existing and potential investors about product and pipeline development through non-deal roadshows[125]. - The company is enhancing its proactive strategy research and will continue to invest in new drug development while adhering to prudent principles[166]. - The company acknowledges the high risks and long development cycles associated with new drug development, which may face various challenges at different stages[142]. Intellectual Property - The company has submitted patent applications for SM18 and SM32 in the United States, along with several PCT patent applications during the reporting period[99]. - The company has received four invention patents registered in China and four in the United States for SM03 (Suciraslimab), which also applies to SM06[97]. - As of December 31, 2023, the company has a total of 35 patents, including pending and granted patents[122].

[Company Overview](index=2&type=section&id=Company%20Overview) This section provides an overview of the company's corporate information and the Chairman's report on R&D breakthroughs and future strategies [Company Information](index=2&type=section&id=Company%20Information) This section outlines SinoMab Bio-Pharmaceutical Holdings Limited's board members, key corporate roles, registered office, committees, and auditor - The company's board of directors comprises executive directors, non-executive directors, and independent non-executive directors, including Chairman and CEO Dr. Liang Rui'an[35](index=35&type=chunk) - The company has audit, remuneration, and nomination committees, and Ernst & Young is appointed as the auditor[35](index=35&type=chunk) - The company's registered office is located in Hong Kong Science Park, with stock code 3681[35](index=35&type=chunk)[62](index=62&type=chunk) [Chairman's Report](index=4&type=section&id=Chairman's%20Report) The Chairman's Report highlights H1 2023 R&D breakthroughs, including SM03's successful Phase III trial and BLA submission, SM17's progress, and plans for production capacity expansion - The company's business activities progressed orderly in H1 2023, with several R&D breakthroughs achieved[38](index=38&type=chunk) - Flagship product SM03 (Suciraslimab) met its primary endpoint in the Phase III clinical trial for RA in China, with a Biologics License Application (BLA) submitted in August 2023[40](index=40&type=chunk)[57](index=57&type=chunk) - SM17's US Phase I clinical study is expected to complete six months ahead of schedule by end of 2023, and IND applications for asthma and atopic dermatitis (AD) have been submitted to the NMPA, with the asthma IND approved[40](index=40&type=chunk) - Phase I development of the Suzhou production base has a capacity of **6,000 liters**, expected to be operational in 2024, with total capacity exceeding **36,000 liters** upon completion[40](index=40&type=chunk)[58](index=58&type=chunk) - The company aims to maximize investor value through a 'self-sustaining' model and become a global leader in innovative therapies for immune and other debilitating diseases[40](index=40&type=chunk)[49](index=49&type=chunk) [Management Discussion and Analysis](index=7&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an in-depth analysis of the company's business, product pipeline, R&D progress, manufacturing, commercialization strategies, and future outlook [Business Overview](index=7&type=section&id=Business%20Overview) The company is a Hong Kong-based biopharmaceutical firm focused on R&D, manufacturing, and commercialization of monoclonal antibody biologics for immune diseases - The company is the first Hong Kong-based biopharmaceutical listed company, specializing in R&D, manufacturing, and commercialization of monoclonal antibody biologics, primarily for immune diseases[25](index=25&type=chunk) - Flagship product SM03 (Suciraslimab), the world's first potential anti-CD22 monoclonal antibody for rheumatoid arthritis (RA) and other immune diseases, met its primary endpoint in China's Phase III clinical study for RA and submitted a BLA in August 2023[25](index=25&type=chunk) - Key product SM17, a first-in-class humanized monoclonal antibody targeting the IL-25 receptor, received US FDA approval for its asthma IND and is undergoing Phase I clinical trials in the US; IND applications for asthma and AD in China have also been submitted and accepted[25](index=25&type=chunk) - SN1011, a third-generation reversible covalent BTK inhibitor, has received **4 IND approvals** from the NMPA for treating SLE, pemphigus, MS, and NMOSD[25](index=25&type=chunk) [Product Pipeline and R&D Progress](index=8&type=section&id=Product%20Pipeline%20and%20R%26D%20Progress) This section details the R&D progress, mechanisms, clinical trial status, and potential indications of key pipeline products, along with the company's intellectual property strategy [SM03 (Suciraslimab)](index=9&type=section&id=SM03%20(Suciraslimab)) SM03, a potential first-in-class anti-CD22 monoclonal antibody, has achieved its primary endpoint in a Phase III RA trial in China and submitted a BLA, positioning it as the company's first commercial drug candidate - SM03 is a potential first-in-class anti-CD22 monoclonal antibody for treating RA, SLE, SS, MCI, Alzheimer's disease, and NHL[7](index=7&type=chunk) - On April 26, 2023, SM03 met its primary endpoint in the Phase III clinical study for RA in China, demonstrating effective reduction in disease activity and symptom relief[7](index=7&type=chunk) - The Phase III clinical trial completed enrollment of **530 subjects** by December 31, 2021, exceeding the target[7](index=7&type=chunk) - A BLA was submitted to the NMPA in August 2023, with commercialization approval expected within **10-12 months** post-submission[7](index=7&type=chunk) - The company plans to advance SM03's clinical development for other indications such as MCI, Alzheimer's disease, and SS, with an IND submission for MCI or Alzheimer's disease anticipated by the end of 2023[7](index=7&type=chunk) [SM17](index=9&type=section&id=SM17) SM17, a novel first-in-class humanized IgG4-k monoclonal antibody, targets the IL-25 receptor to modulate Type 2 allergic reactions, showing potential for asthma, AD, and IPF, with US Phase I trials progressing and China IND approved - SM17 is a novel, first-in-class humanized IgG4-k monoclonal antibody that targets the IL-25 receptor, modulating the Type 2 allergic reaction pathway[7](index=7&type=chunk) - In vitro studies show SM17 inhibits IL-25-induced Type 2 immunity, and animal models suggest potential benefits in asthma and AD treatment[7](index=7&type=chunk) - The IND application for asthma was approved by the US FDA in March 2022, with **77 subjects** recruited for Phase I clinical trials, expected to complete by the end of 2023[10](index=10&type=chunk) - IND applications for asthma and AD were submitted to the NMPA in May and June 2023, respectively, with the asthma IND approved in August 2023[10](index=10&type=chunk) - The company plans to initiate SM17's Phase I clinical trial in China shortly to explore its safety in the Chinese population[10](index=10&type=chunk) [SN1011](index=10&type=section&id=SN1011) SN1011, a third-generation reversible covalent BTK inhibitor, demonstrates high selectivity, durable efficacy, and good safety for rheumatic or neuro-immune diseases, with 4 NMPA IND approvals and ongoing clinical study rescheduling - SN1011 is a third-generation reversible covalent BTK inhibitor with differentiated advantages in treating diseases such as SLE, pemphigus, MS, and NMOSD[13](index=13&type=chunk) - Phase I first-in-human studies have been completed in Australia and China, showing good safety and PK characteristics[11](index=11&type=chunk) - It has received **4 IND approvals** from the NMPA, including for the treatment of SLE, pemphigus, MS, and NMOSD[11](index=11&type=chunk) - The company is rescheduling SN1011's clinical study timeline to adjust its clinical research strategy[11](index=11&type=chunk) [Other Pipeline Drugs (SM06, SM09)](index=10&type=section&id=Other%20Pipeline%20Drugs%20(SM06%2C%20SM09)) SM06 is a second-generation anti-CD22 antibody, a fully humanized variant of SM03 with enhanced immunomodulatory efficacy and lower immunogenicity for chronic immune diseases, while SM09 is a framework-reshaped anti-CD20 antibody for NHL and other autoimmune diseases - SM06 is a second-generation anti-CD22 antibody humanized using proprietary framework reshaping technology, a fully humanized variant of SM03, potentially offering stronger efficacy and weaker immunogenicity[13](index=13&type=chunk) - SM06 is suitable for treating SLE, RA, and other chronic immune diseases requiring long-term medication, and is currently undergoing CMC optimization[13](index=13&type=chunk) - SM09 is a framework-reshaped anti-CD20 antibody for treating NHL and other autoimmune diseases with significant unmet medical needs, targeting a different epitope than other anti-CD20 antibodies on the market[13](index=13&type=chunk) - The company holds Chinese and US invention patents for SM09[2](index=2&type=chunk) [Intellectual Property](index=12&type=section&id=Intellectual%20Property) The company holds multiple granted and pending invention patents for its key drugs (SM03, SN1011, SM09) and operates under the "SinoMab" brand, with a total of **32 invention patents** as of June 30, 2023 - The company holds **two granted and registered invention patents** for SM03 (Suciraslimab) in China, and **four granted and registered invention patents** in the US[2](index=2&type=chunk) - SN1011 holds **one granted and registered invention patent** in the US and **one granted and registered invention patent** in Europe[2](index=2&type=chunk) - SM09 holds **two granted and registered invention patents** in China and **three granted and registered invention patents** in the US[2](index=2&type=chunk) Group's Number of Invention Patents | Patent Item | As of June 30, 2023 | As of December 31, 2022 | | :------- | :--------------------- | :------------------------- | | Number of invention patents held by the Group * | 32 | 31 | - The company operates its business under the "SinoMab" brand and holds multiple pending trademark applications[2](index=2&type=chunk) [Manufacturing and Commercialization](index=11&type=section&id=Manufacturing%20and%20Commercialization) The company operates a production base in Haikou and is constructing a second in Suzhou to support future large-scale commercial production, while actively building market teams and seeking partnerships to enhance sales and business development [Production Bases](index=11&type=section&id=Production%20Bases) The company's Haikou production base has a **1,200-liter** capacity for clinical and initial marketing needs, while the new Suzhou base, with a Phase I capacity of **6,000 liters** expected in 2024, will boost total capacity to over **36,000 liters** upon completion - The Haikou production base has a total operating area of approximately **19,163 square meters** and a capacity of **1,200 liters**, sufficient for clinical and initial marketing needs[14](index=14&type=chunk) - The Suzhou production base is under construction, with a total floor area of approximately **75,000 square meters**, including commercial production facilities and an R&D center[14](index=14&type=chunk) - Phase I development of the Suzhou base has a capacity of **6,000 liters**, expected to be operational in 2024[14](index=14&type=chunk) - Upon completion of the Suzhou base, the maximum total capacity of both production bases will exceed **36,000 liters** (up to one million treatment courses annually)[14](index=14&type=chunk)[58](index=58&type=chunk) [Market Overview and Commercialization Strategy](index=16&type=section&id=Market%20Overview%20and%20Commercialization%20Strategy) The global autoimmune disease drug market is projected to grow, with China's RA treatment market expanding rapidly; the company leverages its two decades of R&D experience and full industry chain capabilities to precisely formulate strategies for SM03's commercial launch - The global autoimmune disease drug market size is projected to grow from **USD 120.5 billion** in 2020 to **USD 163.8 billion** in 2030, with a CAGR of **6.0%**[72](index=72&type=chunk) - China has approximately **5 million RA patients**, and its RA treatment market is expected to reach **RMB 28.0 billion** by 2023 and **RMB 83.3 billion** by 2030[72](index=72&type=chunk)[87](index=87&type=chunk) - The company possesses full industry chain capabilities integrating R&D, manufacturing, and commercialization, with over two decades of experience in autoimmune diseases[87](index=87&type=chunk) - The successful launch of SM03 will be a significant milestone for the Group, and the company will precisely formulate R&D and sales strategies based on its first-mover and safety advantages[87](index=87&type=chunk) - The company is establishing its market team and plans continuous expansion to cover most provinces and cities in China, actively seeking cooperation opportunities[85](index=85&type=chunk) [R&D Platforms](index=16&type=section&id=R%26D%20Platforms) The company has established multiple innovative drug target identification and therapeutic platforms, including humanized antibody, B-cell therapy, alarmin pathway therapy, selective T-cell therapy, and neurological disease platforms, to support novel antibody development and treatment of various immune diseases - The company possesses innovative technologies and therapeutic platforms capable of launching novel antibody candidates targeting new targets[72](index=72&type=chunk) - **Humanized Antibody Platform:** Employs a novel "framework reshaping" method to humanize mouse antibodies without affecting affinity and specificity, as used for SM06 and SM09[92](index=92&type=chunk) - **B-cell Therapy Platform:** Focuses on developing B-cell targeting therapeutics, including anti-CD22 antibodies (SM03, SM06), anti-CD20 antibodies (SM09), and BTK inhibitors (SN1011)[92](index=92&type=chunk) - **Alarmin Pathway Therapy Platform:** Targets upstream alarmins in immune pathways, such as IL-25, under which SM17 was developed[92](index=92&type=chunk) - **Selective T-cell Therapy Platform:** Aims to isolate antibodies that selectively bind to T-cell related receptors, covering a wide range of immune diseases[92](index=92&type=chunk) - **Neurological Disease Platform:** Investigates the potential of anti-CD22 antibodies (e.g., SM03/SM06) for treating degenerative neurological diseases such as MCI and Alzheimer's disease[92](index=92&type=chunk) [Future and Outlook](index=14&type=section&id=Future%20and%20Outlook) The company aims to be a global leader in innovative therapies for immune and other debilitating diseases, continuing SM03's clinical trials and commercialization, expanding its neuro-immune indications, accelerating SM17's R&D, and enhancing investor communication - The company's vision is to become a global leader in innovative therapies for immune and other debilitating diseases[81](index=81&type=chunk) - It will continue to advance SM03 (Suciraslimab) clinical trials for RA and other autoimmune diseases, having already submitted a BLA for RA treatment[82](index=82&type=chunk) - Plans include IND applications and proof-of-concept studies for MCI or Alzheimer's disease, and initiating IND applications and Phase II proof-of-concept clinical studies for SS in China, further expanding SM03's therapeutic areas[82](index=82&type=chunk) - SM17's US Phase I clinical trial results are expected six months ahead of schedule, and Phase I clinical trials will commence in China, followed by proof-of-concept studies[69](index=69&type=chunk) - The company will advance SM06's initial IND application process to develop better biologics and explore other immune diseases with unmet medical needs[69](index=69&type=chunk) - The company will actively educate existing and potential investors on product and pipeline development through non-deal roadshows and other means[67](index=67&type=chunk) [Financial Review](index=18&type=section&id=Financial%20Review) This section reviews the company's key financial indicators, cash flow, liquidity, bank borrowings, assets and liabilities, and loss per share for the reporting period [Key Financial Indicators](index=18&type=section&id=Key%20Financial%20Indicators) In H1 2023, the company's net other income and gains slightly decreased, R&D costs significantly reduced due to SM03 Phase III trial completion and team streamlining, while administrative expenses increased due to higher share-based payment expenses - Total other income and gains were **RMB 7.2 million**, a decrease of approximately **RMB 0.7 million** from H1 2022, primarily due to reduced bank interest income partially offset by increased government grants[74](index=74&type=chunk) - R&D costs were **RMB 66.8 million**, a decrease of approximately **RMB 15.3 million** from **RMB 82.1 million** in H1 2022, mainly due to reduced laboratory consumables and trial costs following SM03 Phase III clinical trial completion, and lower R&D personnel employment costs and milestone payments[75](index=75&type=chunk)[94](index=94&type=chunk) - Total administrative expenses were **RMB 50.2 million**, an increase of approximately **RMB 16.4 million** from **RMB 33.8 million** in H1 2022, primarily due to an increase of approximately **RMB 10.3 million** in non-cash share-based payment expenses and higher depreciation and amortization[76](index=76&type=chunk)[95](index=95&type=chunk) - Net other expenses were **RMB 21.5 million**, a decrease from **RMB 30.4 million** in H1 2022, mainly attributable to net exchange losses[204](index=204&type=chunk) [Cash Flow and Liquidity](index=19&type=section&id=Cash%20Flow%20and%20Liquidity) The company maintains a prudent treasury management policy and stable liquidity; net decrease in cash and cash equivalents in H1 2023 was mainly due to capital expenditure for the Suzhou production base and operating cash outflows, partially offset by financing cash inflows and exchange rate changes - The company adopts a prudent treasury management policy, maintaining a stable liquidity position and sufficient standby bank facilities[77](index=77&type=chunk) - As of June 30, 2023, cash and cash equivalents and structured deposits totaled **RMB 286.5 million**, a decrease of approximately **RMB 59.2 million** from **RMB 345.7 million** as of December 31, 2022[113](index=113&type=chunk) - The net decrease in cash and cash equivalents was primarily due to capital expenditure for the Suzhou commercial production base (approximately **RMB 61.3 million**) and net cash outflow from operating activities (approximately **RMB 62.8 million**)[113](index=113&type=chunk) - This decrease was partially offset by net cash inflow from financing activities (approximately **RMB 42.0 million**) and the net effect of changes in foreign exchange rates (approximately **RMB 19.1 million**)[113](index=113&type=chunk) Summary of Interim Condensed Consolidated Statement of Cash Flows | Indicator | H1 2023 (RMB thousands) | H1 2022 (RMB thousands) | | :--- | :------------------------ | :------------------------ | | Net cash flows used in operating activities | (62,750) | (145,587) | | Net cash flows used in investing activities | (61,942) | (101,687) | | Net cash flows from financing activities | 42,044 | 20,905 | | Net decrease in cash and cash equivalents | (82,648) | (226,369) | | Cash and cash equivalents at end of period | 282,210 | 367,387 | [Bank Borrowings and Assets & Liabilities](index=20&type=section&id=Bank%20Borrowings%20and%20Assets%20%26%20Liabilities) As of June 30, 2023, the company's outstanding bank borrowings increased, and it maintained floating cash levels to monitor capital, with land use rights pledged as collateral for bank loans - As of June 30, 2023, outstanding bank borrowings were **RMB 331.9 million**, an increase from **RMB 268.8 million** as of December 31, 2022[117](index=117&type=chunk) - Bank borrowings are denominated in RMB and bear interest at a fixed annual rate of **3.30%** and variable rates[117](index=117&type=chunk) - The company had unutilized bank facilities of approximately **RMB 423.5 million**[99](index=99&type=chunk) - As of June 30, 2023, land use rights with a net book value of approximately **RMB 14.7 million** were pledged as collateral for bank loans[127](index=127&type=chunk) - The company maintained floating cash levels during the reporting period to monitor its gearing ratio[118](index=118&type=chunk) [Loss Per Share](index=20&type=section&id=Loss%20Per%20Share) For the six months ended June 30, 2023, the company's basic and diluted loss per share was **RMB 0.13**, an improvement from **RMB 0.15** in the prior year period - For the six months ended June 30, 2023, basic and diluted loss per share was **RMB 0.13**, a decrease from **RMB 0.15** in the corresponding period of 2022[121](index=121&type=chunk) - Loss per share is calculated based on the consolidated loss attributable to ordinary equity holders of the parent company of **RMB 134,096,000** and the weighted average number of ordinary shares outstanding of **1,017,964,900** during the period[217](index=217&type=chunk) [Interim Condensed Consolidated Financial Statements](index=22&type=section&id=Interim%20Condensed%20Consolidated%20Financial%20Statements) This section presents the independent review report and the interim condensed consolidated financial statements, including the statement of profit or loss, comprehensive income, financial position, changes in equity, and cash flows [Independent Review Report](index=22&type=section&id=Independent%20Review%20Report) Ernst & Young reviewed SinoMab Bio-Pharmaceutical Holdings Limited's interim financial information for the six months ended June 30, 2023, finding no matters suggesting it was not prepared in all material respects in accordance with Hong Kong Accounting Standard 34 - Ernst & Young conducted a review, not an audit, of the interim financial information, and therefore did not express an audit opinion[145](index=145&type=chunk) - The review concluded that nothing came to their attention to suggest the interim financial information was not prepared in accordance with Hong Kong Accounting Standard 34[134](index=134&type=chunk) [Interim Condensed Consolidated Statement of Profit or Loss](index=23&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) For the six months ended June 30, 2023, the company reported revenue of **RMB 1,365 thousand** and gross profit of **RMB 422 thousand**, with a loss for the period of **RMB 134,096 thousand**, narrowing from **RMB 143,790 thousand** in the prior year period Summary of Interim Condensed Consolidated Statement of Profit or Loss | Indicator | H1 2023 (RMB thousands) | H1 2022 (RMB thousands) | Change | | :--- | :------------------------ | :------------------------ | :--- | | Revenue | 1,365 | - | Increase | | Cost of sales | (943) | - | Increase | | Gross profit | 422 | - | Increase | | Net other income and gains | 7,155 | 7,903 | Decrease | | Research and development costs | (66,750) | (82,131) | Decrease | | Administrative expenses | (50,200) | (33,849) | Increase | | Net other expenses | (21,521) | (30,382) | Decrease | | Finance costs | (3,202) | (2,140) | Increase | | Loss before tax | (134,096) | (143,790) | Decrease | | Loss for the period | (134,096) | (143,790) | Decrease | | Basic and diluted loss per share (RMB) | 0.13 | 0.15 | Decrease | [Interim Condensed Consolidated Statement of Comprehensive Income](index=24&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) For the six months ended June 30, 2023, the company's total comprehensive loss for the period was **RMB 113,902 thousand**, a slight increase from **RMB 111,472 thousand** in the prior year period, primarily due to exchange differences on translation of presentation currency Summary of Interim Condensed Consolidated Statement of Comprehensive Income | Indicator | H1 2023 (RMB thousands) | H1 2022 (RMB thousands) | Change | | :--- | :------------------------ | :------------------------ | :--- | | Loss for the period | (134,096) | (143,790) | Decrease | | Exchange differences on translation of presentation currency | 20,194 | 32,318 | Decrease | | Total comprehensive loss for the period | (113,902) | (111,472) | Increase | [Interim Condensed Consolidated Statement of Financial Position](index=25&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2023, the company's total assets were **RMB 907,389 thousand** and net assets were **RMB 406,138 thousand**, a decrease from December 31, 2022, primarily due to a reduction in net current assets Summary of Interim Condensed Consolidated Statement of Financial Position | Indicator | As of June 30, 2023 (RMB thousands) | As of December 31, 2022 (RMB thousands) | Change | | :--- | :------------------------- | :-------------------------- | :--- | | Total non-current assets | 563,866 | 561,255 | Increase | | Total current assets | 343,523 | 447,093 | Decrease | | Total current liabilities | 174,841 | 187,391 | Decrease | | Net current assets | 168,682 | 259,702 | Decrease | | Total assets less current liabilities | 732,548 | 820,957 | Decrease | | Total non-current liabilities | 326,410 | 311,382 | Increase | | Net assets | 406,138 | 509,575 | Decrease | | Total equity | 406,138 | 509,575 | Decrease | [Interim Condensed Consolidated Statement of Changes in Equity](index=27&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) For the six months ended June 30, 2023, the company's total equity decreased from **RMB 509,575 thousand** at the beginning of the period to **RMB 406,138 thousand**, mainly due to a loss of **RMB 134,096 thousand**, partially offset by exchange differences on translation of presentation currency and equity-settled share-based payment expenses Summary of Interim Condensed Consolidated Statement of Changes in Equity | Indicator | As of January 1, 2023 (RMB thousands) | As of June 30, 2023 (RMB thousands) | Change | | :--- | :------------------------ | :------------------------ | :--- | | Total equity (beginning of period) | 509,575 | - | - | | Loss for the period | (134,096) | (134,096) | - | | Exchange differences on translation of presentation currency | - | 20,194 | Increase | | Equity-settled share-based payment expenses | - | 10,465 | Increase | | Total equity (end of period) | - | 406,138 | Decrease | [Interim Condensed Consolidated Statement of Cash Flows](index=29&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2023, the company's net decrease in cash and cash equivalents was **RMB 82,648 thousand**, primarily due to cash outflows from operating and investing activities, partially offset by cash inflows from financing activities Summary of Interim Condensed Consolidated Statement of Cash Flows | Indicator | H1 2023 (RMB thousands) | H1 2022 (RMB thousands) | Change | | :--- | :------------------------ | :------------------------ | :--- | | Net cash flows used in operating activities | (62,750) | (145,587) | Decrease outflow | | Net cash flows used in investing activities | (61,942) | (101,687) | Decrease outflow | | Net cash flows from financing activities | 42,044 | 20,905 | Increase inflow | | Net decrease in cash and cash equivalents | (82,648) | (226,369) | Decrease outflow | | Cash and cash equivalents at end of period | 282,210 | 367,387 | Decrease | [Notes to the Interim Condensed Consolidated Financial Information](index=30&type=section&id=Notes%20to%20the%20Interim%20Condensed%20Consolidated%20Financial%20Information) This section details the basis of preparation, changes in accounting policies, operating segment information, revenue analysis, other expenses, income tax, dividends, property, plant and equipment, financial assets, cash and cash equivalents, interest-bearing bank borrowings, share capital, commitments, related party transactions, and fair value of financial instruments [Basis of Preparation and Changes in Accounting Policies](index=30&type=section&id=Basis%20of%20Preparation%20and%20Changes%20in%20Accounting%20Policies) The interim condensed consolidated financial information is prepared in accordance with HKAS 34 and incorporates first-time adoption of several revised HKFRSs, including amendments on accounting policy disclosure, definition of accounting estimates, deferred tax, and international tax reform - The interim condensed consolidated financial information is prepared in accordance with Hong Kong Accounting Standard 34[169](index=169&type=chunk) - The company first adopted HKFRS 17 (Insurance Contracts), and amendments to HKAS 1 (Disclosure of Accounting Policies), HKAS 8 (Definition of Accounting Estimates), and HKAS 12 (Deferred Tax) were applied[183](index=183&type=chunk) - Amendments to HKAS 1 require disclosure of material accounting policy information, expected to impact accounting policy disclosures in annual consolidated financial statements[183](index=183&type=chunk) - Amendments to HKAS 8 clarify the distinction between changes in accounting estimates and changes in accounting policies, with no impact on financial position or performance[200](index=200&type=chunk) - Amendments to HKAS 12 regarding deferred tax arising from a single transaction had no impact on the interim condensed consolidated financial information[185](index=185&type=chunk)[200](index=200&type=chunk) - Amendments to HKAS 12 regarding international tax reform (Pillar Two Model Rules) introduced a mandatory temporary exemption, which had no impact on the Group[201](index=201&type=chunk) [Operating Segment Information](index=32&type=section&id=Operating%20Segment%20Information) The company's management monitors the Group's overall operating results, with all revenue derived from mainland China and non-current assets primarily located in mainland China and Hong Kong - Management monitors the Group's overall operating results to make decisions on resource allocation and performance assessment[188](index=188&type=chunk) - All external customer revenue is derived from mainland China[189](index=189&type=chunk) Geographical Distribution of Non-current Assets | Region | As of June 30, 2023 (RMB thousands) | As of December 31, 2022 (RMB thousands) | | :--- | :------------------------- | :-------------------------- | | Mainland China | 556,686 | 552,362 | | Hong Kong | 5,953 | 6,888 | | Total | 562,639 | 559,250 | [Revenue Analysis](index=32&type=section&id=Revenue%20Analysis) For the six months ended June 30, 2023, the company's revenue was **RMB 1,365 thousand**, entirely from capsule sales, recognized in mainland China upon transfer of goods at a point in time Revenue from Contracts with Customers | Indicator | H1 2023 (RMB thousands) | H1 2022 (RMB thousands) | | :--- | :------------------------ | :------------------------ | | Revenue from contracts with customers | 1,365 | - | - All revenue is derived from capsule sales and recognized in mainland China[204](index=204&type=chunk) - Revenue recognition occurs at a point in time when goods are transferred[204](index=204&type=chunk) - Revenue is from the sale of BTK inhibitor capsules under a sales agreement with Everest Medicines II (HK) Limited[212](index=212&type=chunk) [Net Other Expenses](index=33&type=section&id=Net%20Other%20Expenses) For the six months ended June 30, 2023, net other expenses totaled **RMB 21,521 thousand**, primarily comprising net exchange losses of **RMB 19,974 thousand** and other expenses of **RMB 1,547 thousand** Details of Net Other Expenses | Indicator | H1 2023 (RMB thousands) | H1 2022 (RMB thousands) | | :--- | :------------------------ | :------------------------ | | Net exchange losses | 19,974 | 29,546 | | Others | 1,547 | 836 | | Total | 21,521 | 30,382 | [Income Tax](index=34&type=section&id=Income%20Tax) For the six months ended June 30, 2023, neither the company nor its Chinese subsidiaries generated assessable profits, thus no provision for Hong Kong profits tax or PRC enterprise income tax was made - The company did not generate assessable profits during the period, so no Hong Kong profits tax was provided[215](index=215&type=chunk) - Chinese subsidiaries have an estimated tax rate of **25%**, but no estimated assessable profits were generated during the period, so no PRC enterprise income tax provision was made[206](index=206&type=chunk) [Dividends](index=34&type=section&id=Dividends) For the six months ended June 30, 2023 and 2022, the company's board of directors did not pay or declare any dividends - The company's board of directors did not pay or declare any dividends for the six months ended June 30, 2023 and 2022[217](index=217&type=chunk) [Property, Plant and Equipment](index=34&type=section&id=Property%2C%20Plant%20and%20Equipment) For the six months ended June 30, 2023, the company's additions to property, plant and equipment amounted to **RMB 57,086 thousand**, primarily for the Suzhou commercial production base - For the six months ended June 30, 2023, additions to property, plant and equipment amounted to **RMB 57,086 thousand** (at cost), a significant increase from **RMB 29,326 thousand** in the corresponding period of 2022[218](index=218&type=chunk) [Financial Assets at Fair Value Through Profit or Loss](index=34&type=section&id=Financial%20Assets%20at%20Fair%20Value%20Through%20Profit%20or%20Loss) As of June 30, 2023, the company held financial assets at fair value through profit or loss totaling **RMB 31,619 thousand**, primarily representing unlisted equity investments in D2M Financial Assets at Fair Value Through Profit or Loss | Indicator | As of June 30, 2023 (RMB thousands) | As of December 31, 2022 (RMB thousands) | | :--- | :------------------------- | :-------------------------- | | Unlisted equity investments, at fair value | 31,619 | 30,476 | - This asset refers to the Group's **7.29%** Series A1 preferred share investment in D2M Biotherapeutics Limited[209](index=209&type=chunk) [Cash and Cash Equivalents](index=35&type=section&id=Cash%20and%20Cash%20Equivalents) As of June 30, 2023, the company's total cash and cash equivalents were **RMB 286,463 thousand**, primarily denominated in RMB, including restricted bank balances designated for construction projects Details of Cash and Cash Equivalents | Indicator | As of June 30, 2023 (RMB thousands) | As of December 31, 2022 (RMB thousands) | | :--- | :------------------------- | :-------------------------- | | Cash and bank balances | 153,934 | 141,174 | | Time deposits | 132,529 | 204,538 | | Total | 286,463 | 345,712 | - Cash and cash equivalents are primarily denominated in RMB (**RMB 257,446 thousand**), USD (**RMB 11,263 thousand**), and HKD (**RMB 17,348 thousand**)[265](index=265&type=chunk) - This includes restricted bank balances of **RMB 4,253 thousand** designated for construction projects[265](index=265&type=chunk) [Interest-bearing Bank Borrowings](index=36&type=section&id=Interest-bearing%20Bank%20Borrowings) As of June 30, 2023, the company's total interest-bearing bank borrowings amounted to **RMB 331,917 thousand**, comprising non-current and current portions, with some borrowings secured by land use rights Details of Interest-bearing Bank Borrowings | Indicator | As of June 30, 2023 (RMB thousands) | As of December 31, 2022 (RMB thousands) | | :--- | :------------------------- | :-------------------------- | | Non-current bank borrowings | 270,530 | 238,358 | | Current bank borrowings | 61,387 | 30,421 | | Total | 331,917 | 268,779 | - Bank loans have repayment periods distributed within one year, the second year, and the third to fifth years[266](index=266&type=chunk) - Some bank loans are secured by land use rights with a net book value of approximately **RMB 14,685 thousand**[266](index=266&type=chunk) [Share Capital](index=36&type=section&id=Share%20Capital) As of June 30, 2023, the company's issued and fully paid ordinary shares totaled **1,034,920,400**, with a share capital amount of **RMB 1,725,211 thousand**, consistent with December 31, 2022 Share Capital Information | Indicator | As of June 30, 2023 (RMB thousands) | As of December 31, 2022 (RMB thousands) | | :--- | :------------------------- | :-------------------------- | | Issued and fully paid ordinary shares (1,034,920,400 shares) | 1,725,211 | 1,725,211 | - There were no changes in the company's share capital during the reporting period[120](index=120&type=chunk) [Commitments and Related Party Transactions](index=37&type=section&id=Commitments%20and%20Related%20Party%20Transactions) As of June 30, 2023, the company had contracted but unprovided capital commitments of **RMB 133,458 thousand**, engaged in long-term lease payment transactions with a related party (Haikou Pharmaceutical Factory Co., Ltd.), and saw an increase in total key management personnel compensation Capital Commitments | Item | As of June 30, 2023 (RMB thousands) | As of December 31, 2022 (RMB thousands) | | :--- | :------------------------- | :-------------------------- | | Contracted but not provided for · Buildings · Plant and machinery | 133,458 | 162,013 | - Long-term lease payments with related party Haikou Pharmaceutical Factory Co., Ltd. amounted to **RMB 11,845 thousand** during the period[282](index=282&type=chunk) Outstanding Balances with Related Parties | Item | As of June 30, 2023 (RMB thousands) | As of December 31, 2022 (RMB thousands) | | :--- | :------------------------- | :-------------------------- | | Other payables and accrued expenses: Haikou Pharmaceutical Factory Co., Ltd. | 787 | 1,179 | | Prepayments: Haikou Pharmaceutical Factory Co., Ltd. | 1,250 | 417 | | Lease liabilities: Haikou Pharmaceutical Factory Co., Ltd. | 62,368 | 72,652 | Total Key Management Personnel Compensation | Item | H1 2023 (RMB thousands) | H1 2022 (RMB thousands) | | :--- | :------------------------ | :------------------------ | | Salaries · allowances and benefits in kind | 8,307 | 6,963 | | Equity-settled share-based payment expenses | 4,854 | - | | Pension scheme contributions | 88 | 119 | | Total key management personnel compensation paid | 13,249 | 7,082 | [Financial Instruments by Category](index=38&type=section&id=Financial%20Instruments%20by%20Category) As of June 30, 2023, the company's total financial assets amounted to **RMB 320,688 thousand**, and total financial liabilities amounted to **RMB 493,384 thousand** Financial Assets by Category | Financial Asset Category | As of June 30, 2023 (RMB thousands) | As of December 31, 2022 (RMB thousands) | | :--- | :------------------------- | :-------------------------- | | Cash and cash equivalents | 286,463 | 345,712 | | Financial assets at fair value through profit or loss | 31,619 | 30,476 | | Financial assets included in prepayments, deposits and other receivables | 2,606 | 6,381 | | **Total Financial Assets** | **320,688** | **382,569** | Financial Liabilities by Category | Financial Liability Category | As of June 30, 2023 (RMB thousands) | As of December 31, 2022 (RMB thousands) | | :--- | :------------------------- | :-------------------------- | | Interest-bearing bank borrowings | 331,917 | 268,779 | | Financial liabilities included in other payables and accrued expenses | 92,538 | 127,796 | | Lease liabilities | 68,929 | 88,404 | | **Total Financial Liabilities** | **493,384** | **484,979** | [Fair Value and Fair Value Hierarchy of Financial Instruments](index=40&type=section&id=Fair%20Value%20and%20Fair%20Value%20Hierarchy%20of%20Financial%20Instruments) The carrying amounts of all the company's financial instruments approximate their fair values, with fair value measurements categorized into a hierarchy, and unlisted equity investments estimated based on recent Series A financing transaction prices - The carrying amounts of all the Group's financial instruments approximate their fair values[291](index=291&type=chunk) - Fair value measurements of financial instruments are categorized into three levels, with no transfers between Level 1 and Level 2, or into or out of Level 3 during the period[248](index=248&type=chunk) - The fair value of unlisted equity investments is estimated based on recent transaction prices from Series A financing[258](index=258&type=chunk) - The company invests in structured deposits and foreign exchange contracts, with their fair values measured through financial institution estimates or valuation techniques[301](index=301&type=chunk) [Other Information](index=42&type=section&id=Other%20Information) This section covers the use of proceeds from listing and share subscriptions, share incentive schemes, directors' and substantial shareholders' interests, changes in directors' information, securities transactions, corporate governance, and confirmation of no material changes [Use of Proceeds from Listing](index=42&type=section&id=Use%20of%20Proceeds%20from%20Listing) The company's net proceeds from listing were **HKD 1,272.8 million**, primarily allocated to R&D, commercialization, team expansion, and production base construction; as of June 30, 2023, most funds were utilized as planned, with **HKD 183.1 million** remaining unutilized - Net proceeds from listing amounted to **HKD 1,272.8 million**[237](index=237&type=chunk) Use of Proceeds from Listing and Utilization | Use of Proceeds | Planned Use (HKD millions) | Actual Use as of June 30, 2023 (HKD millions) | Net Unutilized Proceeds (HKD millions) | | :--- | :------------------------ | :--------------------------------------- | :------------------------------ | | R&D and commercialization of core product SM03 | 250.9 | 225.8 | 25.1 | | Other pipeline drugs | 299.4 | 288.5 | 10.9 | | Further R&D projects, R&D team expansion, commercialization team establishment, etc. | 52.4 | 52.3 | 0.1 | | Discovery and development of new pipeline drugs not currently in pipeline | 99.9 | 89.4 | 10.5 | | Construction of Suzhou production base | 85.8 | 48.4 | 37.4 | | Purchase of laboratory equipment | 59.7 | 9.9 | 49.8 | | Construction of additional R&D facilities and purchase of laboratory equipment | 87.6 | 87.2 | 0.4 | | Construction of upstream production facilities and downstream purification facilities | 28.2 | 6.7 | 21.5 | | Purchase of land in Suzhou Dushu Lake Higher Education Zone and related expenses | 117.9 | 98.9 | 19.0 | | Working capital, expansion of internal capabilities, and other general corporate purposes | 152.2 | 143.8 | 8.4 | | Collaboration with D2M Group | 38.8 | 38.8 | – | | **Total** | **1,272.8** | **1,089.7** | **183.1** | - The expected timetable for unutilized net proceeds is based on the Group's best estimates and may change due to future developments[305](index=305&type=chunk) [Share Subscription and Use of Proceeds](index=43&type=section&id=Share%20Subscription%20and%20Use%20of%20Proceeds) In November 2022, the company issued **28,680,000 new ordinary shares**, raising net proceeds of approximately **HKD 50,890,400**, primarily for R&D and commercialization of SM03, advancing R&D projects, expanding R&D and commercialization teams, and general working capital - On November 16, 2022, the company completed the issuance of **28,680,000 new ordinary shares**, raising net proceeds of approximately **HKD 50,890,400**[307](index=307&type=chunk) - The subscription price was **HKD 1.78 per share**, representing a discount of approximately **0.56%** to the average closing price for the five trading days preceding the subscription agreement date[307](index=307&type=chunk) Use of Proceeds from Share Subscription and Utilization | Intended Use of Proceeds | Planned Use (HKD millions) | Actual Use as of June 30, 2023 (HKD millions) | Net Unutilized Proceeds (HKD millions) | | :--- | :------------------------ | :--------------------------------------- | :------------------------------ | | R&D and commercialization of pipeline drugs (SM03) | 39.6 | 25.0 | 14.6 | | Further R&D projects, R&D team expansion, commercialization team establishment, etc. (SN1011 R&D) | 0.2 | 0.2 | - | | Further R&D projects, R&D team expansion, commercialization team establishment, etc. (Funding R&D team expansion) | 4.0 | - | 4.0 | | Further R&D projects, R&D team expansion, commercialization team establishment, etc. (Establishing commercialization team, etc.) | 2.0 | - | 2.0 | | General working capital purposes | 5.1 | 2.3 | 2.8 | | **Total** | **50.9** | **27.5** | **23.4** | [Share Incentive Schemes](index=45&type=section&id=Share%20Incentive%20Schemes) The company maintains three share incentive schemes (Restricted Share Unit Scheme, Share Award Scheme, and Share Option Scheme) to incentivize and retain talent; the Restricted Share Unit Scheme terminated in March 2023, while the Share Award Scheme and Share Option Scheme remain in effect with available shares for grant - The company maintains a Restricted Share Unit Scheme (terminated on March 20, 2023), a Share Award Scheme, and a Share Option Scheme[339](index=339&type=chunk) - The Restricted Share Unit Scheme aimed to incentivize employees, with **26,111,996 restricted share units** granted and vested to Mr. Qiang Jing on December 14, 2021[324](index=324&type=chunk) - The Share Award Scheme aims to incentivize directors, senior management, employees, and consultants, with a maximum of **50,312,020 award shares** over the entire scheme period[348](index=348&type=chunk) - As of the end of the reporting period, **16,955,500 award shares** were available for grant under the Share Award Scheme[348](index=348&type=chunk) - The 2022 Share Option Scheme aims to provide opportunities to acquire ownership interests in the company, with an authorized limit of **50,312,020 shares**[330](index=330&type=chunk) Details of Outstanding Share Options (as of June 30, 2023) | Category of Participants | Date of Grant | Number of Outstanding Share Options | | :--- | :--- | :--- | | Employees | November 3, 2022 | 25,156,000 | [Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures](index=49&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests%20and%20Short%20Positions%20in%20Shares%2C%20Underlying%20Shares%20and%20Debentures) As of June 30, 2023, Ms. Liu Wanyi and Dr. Liang Rui'an, as directors and chief executives, held interests in the company's shares Directors' and Chief Executive's Interests in Shares | Name of Director/Chief Executive | Capacity/Nature of Interest | Number of Shares | Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Ms. Liu Wanyi | Interest of controlled corporation and spouse's interest | 285,703,036 | 27.61% | | Dr. Liang Rui'an | Interest of controlled corporation | 129,729,200 | 12.54% | - All interests are long positions[367](index=367&type=chunk) [Substantial Shareholders' Interests and Short Positions in Shares and Underlying Shares](index=50&type=section&id=Substantial%20Shareholders'%20Interests%20and%20Short%20Positions%20in%20Shares%20and%20Underlying%20Shares) As of June 30, 2023, the company's substantial shareholders, including Mr. Qiang Jing, Shanghai Xingze Investment Management Co., Ltd., and Hainan Haiyao Co., Ltd., held various interests in the company's shares Substantial Shareholders' Interests in Shares | Name of Shareholder/Entity | Capacity/Nature of Interest | Number of Shares | Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Mr. Qiang Jing | Beneficial interest, interest of controlled corporation and spouse's interest | 285,703,036 | 27.61% | | Shanghai Xingze Investment Management Co., Ltd. | Interest of controlled corporation | 212,879,400 | 20.57% | | Shanghai Yueyi Investment Center (Limited Partnership) | Interest of controlled corporation | 212,879,400 | 20.57% | | Hainan Haiyao Co., Ltd. | Beneficial interest | 158,882,115 | 15.35% | | Skytech Technology | Beneficial interest | 129,729,200 | 12.54% | | Apricot Oversea Holdings Limited | Beneficial interest | 108,306,600 | 10.47% | | Ms. Xu Sijia | Beneficial interest | 89,802,105 | 8.68% | | West Biolake Holdings Limited | Beneficial interest | 72,339,000 | 6.99% | | China CITIC Bank Corporation Limited Haikou Branch | Person with security interest in shares | 158,882,115 | 15.35% | - All interests are long positions[359](index=359&type=chunk) - China CITIC Bank holds a security interest over **158,882,115 shares** owned by Hainan Haiyao[228](index=228&type=chunk) - Haikou Rural Credit Cooperative Union holds a security interest over **51,000,000 shares** owned by Ms. Xu Sijia[238](index=238&type=chunk) [Changes in Directors' Information](index=52&type=section&id=Changes%20in%20Directors'%20Information) During the reporting period, Ms. Liu Jie, a non-executive director, ceased to serve as Deputy General Manager and Chief R&D Engineer of Hainan Haiyao Co., Ltd - Non-executive Director Ms. Liu Jie ceased to serve as Deputy General Manager and Chief R&D Engineer of Hainan Haiyao Co., Ltd., effective January 11, 2023[361](index=361&type=chunk) [Purchase, Sale or Redemption of Listed Securities](index=52&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20Listed%20Securities) During the reporting period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities - During the reporting period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[229](index=229&type=chunk) [Standard Code for Securities Transactions by Directors](index=52&type=section&id=Standard%20Code%20for%20Securities%20Transactions%20by%20Directors) The company has adopted the Standard Code as a code of conduct for securities transactions by directors and relevant employees; all directors confirmed compliance with this code during the reporting period - The company has adopted the Standard Code as a code of conduct for securities transactions by directors[362](index=362&type=chunk) - All directors confirmed compliance with the said code of conduct during the reporting period[381](index=381&type=chunk) - The company also adopted written guidelines for securities transactions by relevant employees, with no non-compliance found[372](index=372&type=chunk) [Corporate Governance](index=53&type=section&id=Corporate%20Governance) The company is committed to high standards of corporate governance and has applied the Corporate Governance Code; the roles of Chairman and CEO are held by the same person (Dr. Liang Rui'an), an arrangement the company believes is in the Group's best interest, with a balanced board of directors, and the Audit Committee has reviewed the interim report - The company has applied the principles and code provisions set out in the Corporate Governance Code[373](index=373&type=chunk) - The roles of Chairman and Chief Executive Officer are combined and held by Dr. Liang Rui'an, which deviates from code provision C.2.1[232](index=232&type=chunk)[374](index=374&type=chunk) - The Board believes this arrangement is in the Group's best interest, as Dr. Liang possesses extensive business knowledge, and the Board's high independent component ensures a balance of power and authority[383](index=383&type=chunk) - The Audit Committee, together with management and external auditors, has reviewed the accounting principles and policies adopted by the Group, audit and internal control, and financial reporting matters, including the unaudited condensed consolidated financial statements in this interim report[234](index=234&type=chunk)[241](index=241&type=chunk) [No Material Changes](index=53&type=section&id=No%20Material%20Changes) Except as disclosed in this interim report, there were no material changes affecting the company's performance requiring disclosure under paragraph 46 of Appendix 16 to the Listing Rules during the reporting period - During the reporting period, there were no material changes affecting the company's performance requiring disclosure under paragraph 46 of Appendix 16 to the Listing Rules[233](index=233&type=chunk) [Definitions](index=54&type=section&id=Definitions) This section provides definitions for key terms and abbreviations used throughout the report to ensure consistent understanding for readers [Definition of Terms](index=54&type=section&id=Definition%20of%20Terms) This section provides definitions for key terms and abbreviations used throughout the report to ensure consistent understanding for readers - Definitions are provided for terms such as "Audit Committee," "Board," "Corporate Governance Code," "Company," "Directors," "US FDA," "Group," "HKFRSs," "HKD," "Listing Rules," "Standard Code," "NMPA," "Nomination Committee," "PRC," "Prospectus," "R&D," "Remuneration Committee," "Reporting Period," "RMB," "Restricted Share Unit," "Restricted Share Unit Scheme," "SFO," "Shares," "Shareholders," "Skytech Technology," "Stock Exchange," "Subsidiaries," "US," "we," "Xingze Xinghe," and "Xingze Xingzhan"[385](index=385&type=chunk)[386](index=386&type=chunk)

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)