Financial Performance - The company reported a total revenue of RMB 100 million for the first half of 2020, representing a year-on-year increase of 20%[1]. - The company's operating revenue for the first half of 2020 was ¥86,789,952.44, a decrease of 18.85% compared to ¥106,951,252.81 in the same period last year[22]. - The net profit attributable to shareholders for the first half of 2020 was ¥15,430,296.71, down 74.14% from ¥59,672,513.79 in the previous year[22]. - The net cash flow from operating activities was -¥28,180,575.74, a decline of 142.23% compared to ¥66,733,861.55 in the same period last year[22]. - The company's basic earnings per share for the first half of 2020 were ¥0.04, a decrease of 76.47% from ¥0.17 in the same period last year[23]. - The decline in revenue was primarily due to a decrease in screening income, impacted by global pandemic-related delays and laboratory closures[22]. - The company reported a significant increase in prepayments, which rose to RMB 8,594,689.38 from RMB 2,831,609.24, reflecting a growth of about 203.5%[168]. - The company reported a decrease in profit distribution amounting to CNY -50,085,000.00 for the current period[197]. Research and Development - New product development includes a pipeline of 5 innovative drugs currently in clinical trials, with expected market launch in 2021[1]. - The proportion of R&D investment to operating revenue increased by 18.94 percentage points to 53.59% from 34.65% in the previous year[23]. - The total R&D investment for the reporting period was ¥46,508,575.10, accounting for 53.59% of the total revenue[66]. - The company has developed over 20 new drug projects at different preclinical stages and successfully advanced the HDAC I/IIb project to clinical phase I[30]. - The company is focusing on early pharmacology research platforms, including in vivo and in vitro efficacy studies related to tumors and inflammation[61]. - The company is committed to increasing the success rate and efficiency of its innovative drug development through advanced platforms and methodologies[60][61]. Market Expansion and Strategy - The company plans to expand its market presence in Southeast Asia, targeting a 10% market share by the end of 2021[1]. - The company is enhancing its market presence in North America through a wholly-owned subsidiary dedicated to business promotion and client engagement[42]. - The company aims to become a global "seed bank" for innovative drugs and a new engine for drug creation, leveraging its core DEL technology[31]. - The company has a diverse client base, including multinational pharmaceutical companies, biotech firms, and some non-pharmaceutical entities, with a focus on expanding market reach[41]. Financial Position and Assets - The company's net assets attributable to shareholders increased by 139.30% to ¥1,224,685,285.12 from ¥511,772,243.86 at the end of the previous year[22]. - Total assets rose by 113.68% to ¥1,357,613,540.57 from ¥635,353,287.73 at the end of the previous year[22]. - Cash and cash equivalents increased by 166.84% compared to the beginning of the year, primarily due to funds raised from the initial public offering[72]. - The total liabilities as of June 30, 2020, were RMB 132,928,255.45, compared to RMB 123,581,043.87 at the end of 2019, showing a slight increase of about 2.2%[170]. Risks and Challenges - The company is facing potential risks related to regulatory changes, which could impact future product approvals[1]. - The company faced significant delays in receiving imported screening materials due to customs regulations and international flight suspensions[22]. - The company is exposed to foreign exchange risks, as a significant portion of its revenue is denominated in USD and EUR, making it vulnerable to fluctuations in the RMB exchange rate[89]. - The ongoing COVID-19 pandemic has caused delays in logistics and project execution, impacting the company's ability to deliver services on time[90]. Shareholder Commitments and Governance - The company commits to a 36-month lock-up period for shares held by controlling shareholder JIN LI, during which no transfers or management delegation of shares will occur[111]. - The company will report any changes in shareholdings by its directors and senior management during their tenure[116]. - The company guarantees to strictly fulfill all public commitments made during the issuance and listing process, and will take responsibility for any failures to do so[140]. - The controlling shareholder has pledged to ensure the company maintains independence in business, assets, finance, and personnel[139]. Operational Efficiency - The company has invested RMB 50 million in new technology for drug discovery, aiming to improve efficiency by 30%[1]. - The company reported a decrease in management expenses to ¥17,220,942.59 from ¥20,315,301.72 in the previous year, reflecting a cost control strategy[180]. - The company has established a fundraising management system to ensure effective use of raised funds for project construction[128]. - The company plans to optimize product and production processes to reduce operational costs and improve efficiency[128].

[Important Notice](index=3&type=section&id=Item%20I.%20Important%20Notice) [Management Statement](index=3&type=section&id=Item%201.1%20The%20Company%27s%20Board%20of%20Directors%2C%20Supervisory%20Board%2C%20Directors%2C%20Supervisors%2C%20and%20Senior%20Management%20Guarantee%20the%20Truthfulness%2C%20Accuracy%2C%20and%20Completeness%20of%20the%20Quarterly%20Report%20Content) The company's management guarantees the truthfulness and completeness of this unaudited quarterly report, assuming full legal responsibility - The company's management guarantees the truthfulness, accuracy, and completeness of this quarterly report[5](index=5&type=chunk) - This company's Q1 2020 report is unaudited[5](index=5&type=chunk) [Company Profile](index=3&type=section&id=Item%20II.%20Company%20Profile) [Key Financial Data](index=3&type=section&id=Item%202.1%20Key%20Financial%20Data) Q1 2020 saw significant declines in revenue and net profit, with operating cash flow turning negative, despite an increase in R&D investment as a percentage of revenue Key Financial Indicators for Q1 2020 | Indicator | Current Reporting Period | Prior Year Period | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue (Yuan) | 44,112,298.63 | 50,753,027.36 | -13.08% | | Net Profit Attributable to Listed Company Shareholders (Yuan) | 8,740,267.66 | 44,423,346.20 | -80.33% | | Net Profit Attributable to Listed Company Shareholders (Excluding Non-recurring Items) (Yuan) | 7,322,862.37 | 8,661,384.83 | -15.45% | | Net Cash Flow from Operating Activities (Yuan) | -1,897,162.63 | 44,898,574.81 | -104.23% | | Basic Earnings Per Share (Yuan/Share) | 0.02 | 0.12 | -80.33% | | Weighted Average Return on Net Assets (%) | 1.69% | 10.79% | Decreased by 9.10 percentage points | | R&D Investment as % of Operating Revenue (%) | 50.72% | 37.16% | Increased by 13.56 percentage points | - Total non-recurring gains and losses for the period amounted to **1.42 million yuan**, primarily comprising **1.64 million yuan** in government subsidies[8](index=8&type=chunk)[9](index=9&type=chunk) [Shareholder Holdings](index=5&type=section&id=Item%202.2%20Total%20Number%20of%20Shareholders%2C%20Top%20Ten%20Shareholders%2C%20and%20Top%20Ten%20Shareholders%20with%20Non-Restricted%20Shares%20as%20of%20the%20End%20of%20the%20Reporting%20Period) As of the reporting period end, the company had 13 shareholders, with the top ten holding significant restricted stakes, led by JIN LI (Li Jin) - As of the end of the reporting period, the company had **13 shareholders**[11](index=11&type=chunk) Top Five Shareholder Holdings | Shareholder Name | Number of Shares Held (Shares) | Proportion (%) | | :--- | :--- | :--- | | JIN LI (Li Jin) | 81,876,948 | 22.744 | | Lhasa Economic and Technological Development Zone Huabo Medical Devices Co., Ltd. | 59,153,274 | 16.431 | | Chengdu Juzhi Kechuang Biotechnology Partnership (Limited Partnership) | 38,651,163 | 10.737 | | Lhasa Economic and Technological Development Zone Dongfang Jiayu Investment Partnership (Limited Partnership) | 37,667,721 | 10.463 | | Shenzhen Juntian Investment Enterprise (Limited Partnership) | 24,059,859 | 6.683 | - Shareholder JIN LI (Li Jin) and Chengdu Juzhi Kechuang Biotechnology Partnership (Limited Partnership) are parties acting in concert[13](index=13&type=chunk) [Significant Events](index=7&type=section&id=Item%20III.%20Significant%20Events) [Analysis of Significant Changes in Key Financial Items](index=7&type=section&id=Item%203.1%20Significant%20Changes%20and%20Reasons%20for%20Major%20Accounting%20Statement%20Items%20and%20Financial%20Indicators%20of%20the%20Company) Significant changes in financial items include increased receivables and inventory, negative finance expenses due to exchange rates, sharp declines in other income and sales expenses, and a 104% drop in operating cash flow Changes and Reasons for Key Accounting Items | Item | Change (%) | Reason for Change | | :--- | :--- | :--- | | **Balance Sheet** | | | | Other Receivables | 67% | Primarily due to IPO issuance expenses advanced by the company using its own funds | | Inventory | 41% | Primarily due to increased raw material procurement | | **Income Statement** | | | | Selling Expenses | -31% | Primarily due to decreased market expansion and legal service fees caused by the global pandemic | | Finance Expenses | -260% | Primarily due to fluctuations in the RMB to USD exchange rate | | Other Income | -96% | Primarily due to the absence of significant one-time operating-related government subsidies in this period | | **Cash Flow Statement** | | | | Net Cash Flow from Operating Activities | -104% | Primarily due to the absence of significant one-time operating-related government subsidies and increased raw material procurement in this period | [Progress of Significant Events](index=8&type=section&id=Item%203.2%20Analysis%20and%20Explanation%20of%20the%20Progress%2C%20Impact%2C%20and%20Solutions%20of%20Significant%20Events) The company had no significant events requiring disclosure during the reporting period - Not applicable[14](index=14&type=chunk) [Performance Forecast and Warning](index=9&type=section&id=Item%203.4%20Warning%20and%20Explanation%20of%20Reasons%20for%20Potential%20Cumulative%20Net%20Loss%20or%20Significant%20Change%20Compared%20to%20the%20Same%20Period%20Last%20Year%20from%20the%20Beginning%20of%20the%20Year%20to%20the%20End%20of%20the%20Next%20Reporting%20Period) The company has not issued any performance forecasts or warnings regarding cumulative net profit - Not applicable[15](index=15&type=chunk) [Appendix](index=9&type=section&id=Item%20IV.%20Appendix) [Financial Statements](index=9&type=section&id=Item%204.1%20Financial%20Statements) This section presents the company's unaudited consolidated and parent company financial statements for Q1 2020, serving as the source for all reported financial data [Consolidated Balance Sheet](index=9&type=section&id=Consolidated%20Balance%20Sheet) As of March 31, 2020, total assets were 634.17 million yuan, total liabilities 113.08 million yuan, and parent company equity 521.09 million yuan Key Items from Consolidated Balance Sheet (March 31, 2020) | Item | Amount (Yuan) | | :--- | :--- | | Total Assets | 634,167,874.02 | | Total Liabilities | 113,076,032.51 | | Total Equity Attributable to Parent Company Owners | 521,091,841.51 | [Consolidated Income Statement](index=14&type=section&id=Consolidated%20Income%20Statement) Q1 2020 saw total operating revenue of 44.11 million yuan, with R&D expenses exceeding 50% of revenue, leading to a net profit of 8.74 million yuan Key Items from Consolidated Income Statement (Q1 2020) | Item | Amount (Yuan) | | :--- | :--- | | Total Operating Revenue | 44,112,298.63 | | Total Operating Costs | 34,858,761.09 | | Including: R&D Expenses | 22,375,778.77 | | Total Profit | 10,921,073.17 | | Net Profit | 8,740,267.66 | [Consolidated Cash Flow Statement](index=18&type=section&id=Consolidated%20Cash%20Flow%20Statement) Q1 2020 operating cash flow was -1.90 million yuan, with significant outflows from investing and financing activities, and period-end cash balance of 297.10 million yuan Key Items from Consolidated Cash Flow Statement (Q1 2020) | Item | Amount (Yuan) | | :--- | :--- | | Net Cash Flow from Operating Activities | -1,897,162.63 | | Net Cash Flow from Investing Activities | -33,424,459.92 | | Net Cash Flow from Financing Activities | -5,224,241.78 | | Cash and Cash Equivalents at Period End | 297,098,724.92 | [Changes and Adjustments to Accounting Standards](index=21&type=section&id=Item%204.2%20Information%20on%20Adjustments%20to%20Financial%20Statements%20at%20the%20Beginning%20of%20the%20First%20Year%20of%20Implementation%20of%20New%20Revenue%20Recognition%20Standards%20and%20New%20Lease%20Standards%20from%202020) The company adopted new revenue recognition standards from January 1, 2020, reclassifying certain balance sheet items without impacting net assets or net profit - The company adopted new revenue recognition standards from January 1, 2020, adjusting financial statement items at the beginning of 2020 based on cumulative impact, without adjusting comparable period data[36](index=36&type=chunk)[41](index=41&type=chunk) Key Consolidated Balance Sheet Adjustment Items (January 1, 2020) | Item | Before Adjustment (Yuan) | Adjustment Amount (Yuan) | After Adjustment (Yuan) | | :--- | :--- | :--- | :--- | | Accounts Receivable | 33,108,079.00 | -5,658,736.70 | 27,449,342.30 | | Contract Assets | 0 | 5,658,736.70 | 5,658,736.70 | | Prepayments | 35,269,606.50 | -35,269,606.50 | 0 | | Contract Liabilities | 0 | 35,269,606.50 | 35,269,606.50 |