Core Insights - Connect Biopharma announced that data from its global Phase 2b trial of rademikibart for moderate-to-severe asthma has been accepted for presentation at the ATS 2024 International Meeting [1] - The company focuses on developing therapies for chronic inflammatory diseases through T cell-driven research [1][3] Company Overview - Connect Biopharma is a clinical-stage biopharmaceutical company dedicated to improving the lives of patients with chronic inflammatory diseases [3] - The company is developing innovative therapies, including rademikibart, which targets interleukin-4 receptor alpha (IL-4Rα) for treating atopic dermatitis and asthma [3] - Another product candidate, icanbelimod, is in development for ulcerative colitis [3] Presentation Details - The poster presentation titled "Improved Lung Function and Asthma Control Observed with Rademikibart in Patients with Moderate-to-Severe Uncontrolled Asthma" will be presented by Dr. Edward Kerwin [2] - The session is scheduled for May 22, 2024, at the San Diego Convention Center [2]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 20-F o REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 OR o TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR o SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE A ...

Financial Performance - Connect Biopharma reported a net loss of $59.5 million for the year ended December 31, 2023, a significant decrease from a net loss of $118.1 million in 2022, representing a 49.7% reduction [14]. - Research and development expenses decreased to $51.9 million in 2023 from $96.6 million in 2022, a reduction of 46.3% primarily due to fewer clinical trials and lower personnel costs [13]. - Cash, cash equivalents, and short-term investments totaled $118.7 million as of December 31, 2023, down from $161.9 million in 2022, with a decrease of $43.2 million attributed to clinical program advancements [12]. - Total assets decreased to $125.9 million in 2023 from $174.0 million in 2022, while total liabilities increased to $24.8 million from $16.5 million [17]. - Administrative expenses were reduced to $14.5 million in 2023 from $20.8 million in 2022, a decrease of 30.5% due to lower professional fees and share-based compensation [13]. Clinical Trials and Programs - The rademikibart program demonstrated significant improvements in lung function in asthma patients, with results showing early improvement as soon as Week 1 and sustained effects through Week 24 [3]. - In the China pivotal trial for atopic dermatitis, approximately 90% of patients on a four-week dosing regimen maintained clinical response through Week 52 [4]. - Connect Biopharma has scheduled two meetings with the FDA in Q2 2024 to discuss registrational programs for rademikibart in atopic dermatitis and asthma [11]. - The company anticipates receiving updates from Simcere regarding the NDA filing for rademikibart in Q2 2024 [11]. Partnerships and Agreements - The company signed an exclusive licensing agreement with Simcere, receiving an upfront payment of ¥150 million ($21 million) and potential milestone payments of up to ¥875 million ($120 million) [10].

Core Insights - Connect Biopharma Holdings Limited is a global clinical-stage biopharmaceutical company focused on developing therapies for chronic inflammatory diseases through T cell-driven research [2] - The company will participate in the H.C. Wainwright 2nd Annual Autoimmune & Inflammatory Disease Virtual Conference on March 28, 2024, featuring a fireside chat with key executives [1] Company Overview - Connect Biopharma specializes in T cell biology and drug discovery to create innovative therapies aimed at chronic inflammatory diseases, with a goal to improve the lives of millions globally [2] - The company is developing a pipeline of proprietary small molecules and antibodies, utilizing functional T cell assays to identify effective product candidates against validated immune targets [2] - The lead product candidate, rademikibart (formerly CBP-201), targets interleukin-4 receptor alpha (IL-4Rα) for treating atopic dermatitis and asthma [2] - The second product candidate, icanbelimod (formerly CBP-307), modulates S1P1 T cell receptors and is in development for ulcerative colitis [2]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 20-F ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of ...

Financial Performance - Cash, cash equivalents, and short-term and long-term investments were RMB 1,127.3 million (USD 161.9 million) as of December 31, 2022, down from RMB 1,706.9 million (USD 267.7 million) at the end of 2021[7] - Net loss for the year ended December 31, 2022, was RMB 797.1 million (USD 114.4 million), a decrease from a net loss of RMB 1,306.8 million (USD 205.0 million) in 2021[9] - Total liabilities as of December 31, 2022, were RMB 115.1 million (USD 16.5 million), with total shareholders' equity at RMB 1,096.9 million (USD 157.5 million)[15] Research and Development - R&D expenses for the year ended December 31, 2022, totaled RMB 652.2 million (USD 93.6 million), an increase from RMB 518.0 million (USD 81.2 million) in 2021, primarily due to higher clinical trial costs[8] - The ongoing CBP-201 China pivotal trial in atopic dermatitis is expected to complete the 36-week stage 2 maintenance phase in the second half of 2023[4] - Positive topline data from Stage 1 of the ongoing CBP-201 China pivotal trial in atopic dermatitis was reported on a primary analysis population of 255 patients[3] - The Company anticipates reporting top-line results from the Phase 2 trial for CBP-201 in asthma in the second half of 2023[5] - Results from the Phase 2 maintenance portion of the CBP-307 trial in ulcerative colitis are expected to be reported in Q2 2023[6] Administrative Expenses - Administrative expenses increased to RMB 139.4 million (USD 20.0 million) for the year ended December 31, 2022, compared to RMB 122.4 million (USD 19.2 million) in 2021[9] Future Plans - The Company plans to submit a New Drug Application (NDA) for CBP-201 for atopic dermatitis by the end of Q1 2024, with potential regulatory approval in China as early as 2025[2]

Financial Data and Key Metrics Changes - As of June 30, 2022, cash, cash equivalents, short-term and long-term investments were $212.9 million, a decrease from RMB1,706.9 million at December 31, 2021, primarily due to R&D and administrative costs [16][17] - R&D expenses increased to $50.8 million from RMB217.8 million, driven by higher clinical trial-related expenses [16][17] - Administrative expenses totaled $10.7 million compared to RMB48.0 million in the same period in 2021, rising due to higher personnel costs and stock-based compensation [16][18] - Net loss totaled $59.8 million compared to a net loss of RMB942.5 million for the same period in 2021, with the prior year loss being higher due to fair value adjustments on preferred stock [16][18] Business Line Data and Key Metrics Changes - CBP-201 for atopic dermatitis (AD) met primary and key secondary endpoints in the Phase 2b trial, with favorable safety data [4][5] - CBP-307 for ulcerative colitis (UC) demonstrated a statistically significant clinical remission rate at a higher dose in the Phase 2 trial [9] Market Data and Key Metrics Changes - The atopic dermatitis treatment market is becoming crowded, but the company believes there is a significant opportunity due to the number of patients who can benefit from systemic treatments [21][22] - The company is developing CBP-201 as a potentially differentiated antibody in the IL-4 antagonist space, which is currently dominated by dupilumab [22][24] Company Strategy and Development Direction - The company plans to report top-line data from the Stage 1 16-week treatment period of the China-only pivotal trial for CBP-201 in October, potentially accelerating the timeline for a BLA submission in China [5][61] - The global Phase 3 study for CBP-201 in AD is expected to enroll the first patient by the end of 2022 [6][10] - The company is open to partnerships for CBP-201, both regionally and globally, and is looking for favorable deals to facilitate drug approval and revenue generation [34][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the potential of CBP-201 in the crowded AD space, emphasizing the importance of efficacy and safety profiles [21][22] - The company anticipates completing enrollment in the global Phase 2 trial for CBP-201 in asthma patients with type 2 inflammation in the first half of 2023 [61][62] Other Important Information - The company reported that the Phase 1 trial for CBP-174 was safe and well-tolerated, with no serious adverse events [14] - The nasal polyp trial was terminated due to operational challenges, but the company sees potential in pursuing this indication in the future [50][51] Q&A Session Summary Question: What is the differentiation of CBP-201 in the crowded AD space? - Management acknowledged the crowded market but highlighted the large patient population and the potential for CBP-201 to offer improved efficacy and convenience compared to existing treatments [21][22] Question: Is there potential for a partner for CBP-307 before the end of the year? - Management confirmed ongoing discussions with potential partners but did not provide a specific timeline for announcements [24][25] Question: Can you provide updates on regulatory interactions with China CDE? - Management indicated positive feedback from CDE and expressed confidence in the data set's potential for approval [29][30] Question: What are the commercialization plans for CBP-201 in different regions? - Management is open to partnerships with local pharmaceutical companies in China to leverage their marketing capabilities [35][36] Question: When can we expect more information on CBP-174? - Management stated that they are still evaluating the next steps for CBP-174 and will provide updates as they progress [38][39]

[About This Annual Report](index=5&type=section&id=ABOUT%20THIS%20ANNUAL%20REPORT) This section clarifies that "The Company" refers to Connect Biopharma Holdings Limited and its direct and indirect wholly-owned subsidiaries - The Company refers to **Connect Biopharma Holdings Limited** and its direct and indirect wholly-owned subsidiaries, including **Connect Biopharma HongKong Limited**, **Connect Biopharm LLC**, **Connect Biopharma Australia PTY LTD**, **Suzhou Connect Biopharma Co., Ltd.**, **Connect Biopharma (Shanghai) Co., Ltd.**, **Connect Biopharma (Beijing) Co., Ltd.**, and **Connect Biopharma (Shenzhen) Co., Ltd.**[7](index=7&type=chunk) [Presentation of Financial Information](index=5&type=section&id=PRESENTATION%20OF%20FINANCIAL%20INFORMATION) This section outlines the financial reporting standards, currency, and exchange rates used in the consolidated financial statements - Consolidated financial statements are prepared in accordance with **International Financial Reporting Standards (IFRS)** as issued by the **IASB**, not **U.S. GAAP**[8](index=8&type=chunk) - The reporting currency is **Renminbi (RMB)**. All monetary amounts are in **RMB** unless otherwise indicated[8](index=8&type=chunk) - Translations from **RMB** to **U.S. dollars** are for convenience, using an exchange rate of **RMB 6.3757 to $1.00** as of **December 31, 2021**[8](index=8&type=chunk) [Cautionary Statement Regarding Forward-Looking Statements](index=6&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This statement warns that the report contains forward-looking statements subject to risks and uncertainties that may cause actual results to differ materially - The annual report includes "**forward-looking statements**" regarding future results, operations, business strategy, product development, and financial position[11](index=11&type=chunk) - These statements involve known and unknown risks, uncertainties, and important factors that may cause actual results to differ materially from projections[11](index=11&type=chunk)[13](index=13&type=chunk) - Examples of **forward-looking statements** include those about clinical trial efficacy, timing of regulatory approvals, commercialization plans, market opportunities, and financial performance[11](index=11&type=chunk) [Part I](index=8&type=section&id=PART%20I) Part I of the annual report provides comprehensive company information, covering business operations, financial performance, governance, and significant risk factors - **Part I** includes detailed information on the company's identity, offer statistics, key information (including risk factors), business overview, organizational structure, property, plants and equipment, unresolved staff comments, operating and financial review and prospects, directors, senior management and employees, major shareholders and related party transactions, financial information, the offer and listing, additional information, and market risk disclosures[4](index=4&type=chunk)[5](index=5&type=chunk) [Item 1. Identity of Directors, Senior Management and Advisors.](index=8&type=section&id=ITEM%201.%20IDENTITY%20OF%20DIRECTORS%2C%20SENIOR%20MANAGEMENT%20AND%20ADVISORS.) This item states that the information regarding the identity of directors, senior management, and advisors is "Not applicable" in this specific section, implying it is covered elsewhere in the report - Information on the identity of directors, senior management, and advisors is explicitly stated as "**Not applicable**" in this item[16](index=16&type=chunk) [Item 2. Offer Statistics and Expected Timetable.](index=8&type=section&id=ITEM%202.%20OFFER%20STATISTICS%20AND%20EXPECTED%20TIMETABLE.) This item states that the offer statistics and expected timetable are "Not applicable" in this specific section - Offer statistics and expected timetable are explicitly stated as "**Not applicable**" in this item[16](index=16&type=chunk) [Item 3. Key Information.](index=8&type=section&id=ITEM%203.%20KEY%20INFORMATION.) Item 3 presents essential company information, including capitalization, offer details, and a detailed analysis of various risk factors - **Item 3** covers key information, including capitalization, indebtedness, reasons for the offer, use of proceeds, and a detailed section on risk factors[16](index=16&type=chunk)[17](index=17&type=chunk) [A. [Reserved]](index=8&type=section&id=A.%20%5BReserved%5D) This section is reserved and contains no specific content - This section is reserved and contains **no specific content**[16](index=16&type=chunk) [B. Capitalization and Indebtedness](index=8&type=section&id=B.%20Capitalization%20and%20Indebtedness) This item states that information on capitalization and indebtedness is "Not applicable" in this specific section - Information on capitalization and indebtedness is explicitly stated as "**Not applicable**" in this item[16](index=16&type=chunk) [C. Reasons for the Offer and Use of Proceeds](index=8&type=section&id=C.%20Reasons%20for%20the%20Offer%20and%20Use%20of%20Proceeds) This item states that reasons for the offer and use of proceeds are "Not applicable" in this specific section - Reasons for the offer and use of proceeds are explicitly stated as "**Not applicable**" in this item[16](index=16&type=chunk) [D. Risk Factors](index=8&type=section&id=D.%20Risk%20Factors) This section details various risks, including those related to operating in the PRC, the company's limited operating history, product development, reliance on third parties, commercialization, business operations, intellectual property, and ADS ownership [Risks Related to Doing Business in the PRC](index=8&type=section&id=Risks%20Related%20to%20Doing%20Business%20in%20the%20PRC) Risks associated with operating in the PRC include political tensions with the U.S., potential government intervention, delisting threats under the HFCAA due to PCAOB inspection issues, compliance costs with new data security and privacy laws, uncertainties in legal interpretation, and restrictions on capital raising and data transfer. The company also faces potential PRC tax liabilities on global income and dividends for non-PRC investors - Rising political tensions between the **U.S.** and **PRC**, and potential government intervention, could materially and adversely affect business, financial condition, and results of operations[18](index=18&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk) - The company's **ADSs** face delisting risk under the **HFCAA** if **PCAOB** cannot inspect **PRC** auditors for three consecutive **years** (potentially accelerated to two **years**)[18](index=18&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk) - Compliance with new **PRC** data security and personal information protection laws may entail significant expenses and affect business, with uncertainties in interpretation and enforcement[18](index=18&type=chunk)[58](index=58&type=chunk)[60](index=60&type=chunk) - The company may be treated as a **PRC tax resident**, subjecting its global income to **25% PRC enterprise income tax** and dividends/gains for non-PRC investors to withholding tax[81](index=81&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk) - **PRC** regulations on offshore investment activities by **PRC** residents (**Circular 37**) may restrict the ability of **PRC** subsidiaries to change capital or distribute profits, and governmental control of currency conversion may limit fund remittance out of the **PRC**[96](index=96&type=chunk)[97](index=97&type=chunk)[100](index=100&type=chunk) [Risks Related to Our Limited Operating History, Financial Position and Capital Requirements](index=25&type=section&id=Risks%20Related%20to%20Our%20Limited%20Operating%20History%2C%20Financial%20Position%20and%20Capital%20Requirements) The company has a limited operating history, has incurred significant operating losses since inception (RMB 1,306.8 million in 2021), and expects continued losses. It will require substantial additional financing to fund product development, clinical trials (especially Phase 3), and commercialization efforts, with existing capital insufficient for regulatory approval. Failure to secure financing could delay or terminate programs - The company has a limited operating history and has incurred significant operating losses since inception, with net losses of **RMB 1,306.8 million (USD 205.0 million)** in **2021** and **RMB 779.2 million (USD 119.4 million)** in **2020**[128](index=128&type=chunk)[131](index=131&type=chunk)[793](index=793&type=chunk) - The company expects to incur significant losses for the foreseeable future due to ongoing **R&D**, clinical trials, increased production capacity, regulatory approvals, and commercialization efforts[131](index=131&type=chunk)[794](index=794&type=chunk) - Substantial additional financing will be required to achieve goals, as existing capital is insufficient to fund product candidates through regulatory approval and commercialization[133](index=133&type=chunk)[134](index=134&type=chunk) - Raising additional capital may dilute shareholder ownership, impose restrictive covenants, or require relinquishing rights to technologies or product candidates[140](index=140&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk) [Risks Related to the Discovery, Development and Regulatory Approval of Our Product Candidates](index=28&type=section&id=Risks%20Related%20to%20the%20Discovery%2C%20Development%20and%20Regulatory%20Approval%20of%20Our%20Product%20Candidates) Clinical drug development is a lengthy, expensive, and uncertain process, with no guarantee of successful completion or regulatory approval. Product candidates may have serious adverse events, and data from foreign trials may not be accepted by the FDA. The company is in early development stages with only three clinical candidates, and its T cell modulation approach is unproven. Delays or failures in trials, or changes in regulatory policies, could substantially harm the business - Clinical drug development is lengthy, expensive, and uncertain; failure can occur at any stage, and preclinical/early-stage results may not predict later success[144](index=144&type=chunk)[145](index=145&type=chunk) - Delays or difficulties in patient enrollment, as experienced with **CBP-307** and **CBP-174** due to **COVID-19**, can materially adversely affect **R&D** efforts[155](index=155&type=chunk)[158](index=158&type=chunk)[160](index=160&type=chunk) - Product candidates may be associated with **serious adverse events or undesirable side effects**, which could delay or halt clinical development, prevent regulatory approval, or limit commercial potential[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk) - The **FDA** or comparable foreign regulatory authorities may not accept data from trials conducted in foreign locations, potentially requiring additional costly and time-consuming trials[166](index=166&type=chunk)[167](index=167&type=chunk) - The company is in early development with only three clinical candidates (**CBP-201**, **CBP-307**, **CBP-174**), and its **T cell modulation discovery approach** is unproven, posing risks to commercial value and potential obsolescence[176](index=176&type=chunk)[177](index=177&type=chunk)[181](index=181&type=chunk) - Regulatory approval processes are lengthy, time-consuming, and unpredictable, with no guarantee of approval, and disruptions at regulatory agencies (e.g., due to **COVID-19**) could cause further delays[189](index=189&type=chunk)[190](index=190&type=chunk)[197](index=197&type=chunk) [Risks Related to Our Reliance on Third Parties](index=38&type=section&id=Risks%20Related%20to%20Our%20Reliance%20on%20Third%20Parties) The company heavily relies on third parties, including CROs and manufacturers, for preclinical studies, clinical trials, and commercial manufacturing. This reliance increases risks such as failure to meet contractual duties, non-compliance with regulations (GCP, cGMP), supply chain disruptions (e.g., due to COVID-19 or geopolitical conflicts), and potential misappropriation of trade secrets. Difficulties in establishing or maintaining collaborations also pose risks - The company relies on third parties (clinical investigators, **CROs**) to conduct preclinical studies and clinical trials, and failure to comply with regulations (**GCPs**) or meet deadlines could harm development[204](index=204&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk) - Reliance on third-party manufacturers for product candidates increases risks of insufficient quantities, unacceptable costs, and supply chain disruptions (e.g., due to **COVID-19**)[211](index=211&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk) - Dependence on third parties necessitates sharing **trade secrets**, increasing the risk of misappropriation or unauthorized disclosure[216](index=216&type=chunk)[217](index=217&type=chunk) - Geopolitical events, such as the **Russia-Ukraine conflict**, may impact **CROs'** ability to conduct trials in affected regions, hindering completion and data acquisition[208](index=208&type=chunk)[151](index=151&type=chunk) - Future collaborations, licenses, or similar arrangements may not be successful or on favorable terms, potentially requiring relinquishment of valuable rights or loss of control over product development[218](index=218&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk) [Risks Related to Commercialization of Our Product Candidates](index=42&type=section&id=Risks%20Related%20to%20Commercialization%20of%20Our%20Product%20Candidates) Even if approved, product candidates face significant post-marketing regulatory requirements, including ongoing review, safety monitoring, and potential restrictions. Commercial success depends on market acceptance by physicians, patients, and payors, with no guarantee of adequate coverage or reimbursement. The company lacks internal marketing and sales capabilities, requiring significant investment or third-party collaborations. Operating in foreign markets introduces additional regulatory burdens and risks - Approved product candidates will be subject to ongoing regulatory review, significant post-marketing requirements, and potential limitations on use, warnings, or risk management strategies (**REMS**)[226](index=226&type=chunk)[227](index=227&type=chunk) - Failure to comply with post-approval requirements can lead to sanctions, including product recalls, withdrawal of approvals, fines, and criminal penalties[229](index=229&type=chunk) - Commercial success depends on market acceptance by physicians, patients, and healthcare payors, which is influenced by efficacy, safety, convenience, cost-effectiveness, and reimbursement policies[233](index=233&type=chunk)[234](index=234&type=chunk)[236](index=236&type=chunk) - Obtaining and maintaining adequate reimbursement from governmental authorities and health insurers is crucial, but uncertain, and increasing cost-containment efforts may limit pricing and coverage[237](index=237&type=chunk)[238](index=238&type=chunk)[241](index=241&type=chunk) - The company currently lacks marketing and sales organizations and will need to invest significantly or collaborate with third parties to commercialize products, facing risks in building and managing such capabilities[252](index=252&type=chunk)[253](index=253&type=chunk) - Operating in foreign markets, including the **PRC**, subjects the company to additional regulatory burdens, reduced intellectual property protection, and economic/political risks[254](index=254&type=chunk)[256](index=256&type=chunk)[257](index=257&type=chunk) [Risks Related to Our Business Operations and Industry](index=46&type=section&id=Risks%20Related%20to%20Our%20Business%20Operations%20and%20Industry) The company faces significant risks from epidemic diseases like COVID-19, which have caused and may continue to cause disruptions to clinical trials, supply chains, and financial markets. Operating results may fluctuate due to various factors, making future predictions difficult. Dependence on key management and scientific personnel, and challenges in managing growth and expanding operations, also pose risks. The company is exposed to liabilities under anti-corruption laws and healthcare fraud and abuse regulations. Information technology systems are vulnerable to cyberattacks and security breaches, which could disrupt operations and compromise sensitive data - The **COVID-19** pandemic has caused and may continue to cause disruptions to clinical trials (e.g., enrollment delays for **CBP-307** and **CBP-174**), supply chains, and financial markets[258](index=258&type=chunk)[259](index=259&type=chunk)[262](index=262&type=chunk) - Operating results may fluctuate significantly due to factors like **R&D** costs, regulatory approvals, market acceptance, manufacturing costs, and competition, making future predictions difficult[269](index=269&type=chunk)[270](index=270&type=chunk)[271](index=271&type=chunk) - The company's success depends on retaining highly qualified management and scientific personnel, and difficulties in attracting or retaining such individuals could harm the business[272](index=272&type=chunk)[273](index=273&type=chunk)[276](index=276&type=chunk) - Managing growth and expanding operations, including constructing facilities in the **PRC**, presents challenges such as obtaining permits and meeting timelines, potentially leading to penalties or loss of incentives[277](index=277&type=chunk)[278](index=278&type=chunk) - The company is subject to the **FCPA** and Chinese anti-corruption laws, and violations could result in material adverse effects on business or reputation[287](index=287&type=chunk)[288](index=288&type=chunk) - Compliance with various foreign, federal, and state healthcare laws and regulations (e.g., **Anti-Kickback Statute**, **False Claims Act**, **HIPAA**, **GDPR**, **CCPA**) is complex and failure to comply could lead to significant liabilities, fines, and operational restrictions[290](index=290&type=chunk)[291](index=291&type=chunk)[293](index=293&type=chunk) - Information technology systems are vulnerable to **cyberattacks**, **security breaches**, and **system failures**, which could disrupt product development, compromise sensitive information, and lead to significant legal and financial exposure[321](index=321&type=chunk)[322](index=322&type=chunk)[323](index=323&type=chunk) [Risks Related to Intellectual Property](index=60&type=section&id=Risks%20Related%20to%20Intellectual%20Property) The company's success relies on obtaining, maintaining, protecting, and enforcing intellectual property (patents, trade secrets, trademarks). The patent application process is uncertain, expensive, and subject to challenges, potentially leading to invalidation or narrow scope. Reliance on third-party licensors for patent prosecution and enforcement introduces risks. Changes in patent laws (e.g., in PRC or US) could diminish patent value. Failure to protect trade secrets or claims of wrongful use of third-party confidential information could harm the business - Success depends on obtaining, maintaining, protecting, and enforcing intellectual property (**patents**, **trade secrets**, **trademarks**) for product candidates and technologies[348](index=348&type=chunk)[349](index=349&type=chunk)[605](index=605&type=chunk) - The patent application process is subject to numerous risks and uncertainties, including potential challenges, invalidation, or narrow scope of **patents**, and the inability to prevent competitors from commercializing similar products[351](index=351&type=chunk)[363](index=363&type=chunk)[366](index=366&type=chunk) - Reliance on third parties for filing, prosecuting, and maintaining licensed **patents** introduces risks of insufficient control, non-compliance, or disputes that could compromise patent rights[370](index=370&type=chunk)[371](index=371&type=chunk) - Changes in patent laws (e.g., in the **U.S.** or **PRC**) or their interpretation could diminish the value of **patents** and impair the ability to protect product candidates[364](index=364&type=chunk)[365](index=365&type=chunk)[408](index=408&type=chunk) - Failure to protect the confidentiality of **trade secrets**, or claims of wrongful use/disclosure of third-party confidential information by employees, could harm the business and competitive position[417](index=417&type=chunk)[419](index=419&type=chunk)[420](index=420&type=chunk) - Compulsory standards for remuneration to inventors under **PRC** laws could impose considerable costs[416](index=416&type=chunk) [Risks Related to Ownership of Our ADSs](index=73&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20ADSs) The trading price of ADSs is highly volatile due to various factors, including clinical trial results, regulatory developments, and market conditions. Unstable market and economic conditions, including geopolitical events, can adversely affect the business and ADS price. Failure to meet Nasdaq listing requirements could lead to delisting. Concentrated ownership by executive officers, directors, and principal shareholders allows them to control significant matters. The company does not intend to pay dividends, and investment return depends on ADS price appreciation. Sales of substantial numbers of ADSs by existing shareholders could cause price declines. As an emerging growth company and foreign private issuer, the company has reduced disclosure requirements and different corporate governance practices, which may make ADSs less attractive or afford less protection to shareholders. Holders of ADSs have limited rights and may not be entitled to a jury trial. Material weaknesses in internal control over financial reporting could impair financial statement accuracy. Anti-takeover provisions and exclusive forum provisions could limit shareholder opportunities and legal recourse - The trading price of **ADSs** is highly volatile due to factors like clinical trial results, regulatory approvals, market conditions, and competitor actions, potentially leading to substantial losses for purchasers[431](index=431&type=chunk) - Unstable market and economic conditions, including geopolitical events (e.g., **Russia-Ukraine conflict**), can adversely affect the business, financial condition, and **ADS** price[434](index=434&type=chunk)[435](index=435&type=chunk) - Failure to meet **Nasdaq** continued listing requirements could result in delisting, negatively impacting **ADS** price and liquidity[436](index=436&type=chunk) - Concentrated ownership by executive officers, directors, and principal shareholders (approximately **78.8%** of outstanding **shares**) allows them to control or significantly influence matters submitted to shareholders[437](index=437&type=chunk)[438](index=438&type=chunk) - The company does not intend to pay dividends, so investment return depends solely on **ADS** price appreciation[439](index=439&type=chunk)[441](index=441&type=chunk) - Sales of a substantial number of **ADSs** or ordinary **shares** by existing shareholders could significantly reduce the market price[442](index=442&type=chunk)[443](index=443&type=chunk) - As an **emerging growth company** and foreign private issuer, the company benefits from reduced disclosure requirements and may follow home country corporate governance practices, which could limit information available to shareholders and afford less protection[444](index=444&type=chunk)[445](index=445&type=chunk)[448](index=448&type=chunk) - Holders of **ADSs** have fewer rights than shareholders, must act through the depositary, and may not be entitled to a jury trial for claims under the deposit agreement[461](index=461&type=chunk)[471](index=471&type=chunk)[472](index=472&type=chunk) - **Material weaknesses** in internal control over financial reporting (lack of sufficient personnel, ineffective closing policies) could impair the ability to produce accurate and timely financial statements[479](index=479&type=chunk)[481](index=481&type=chunk)[1123](index=1123&type=chunk) - Anti-takeover provisions in the memorandum and articles of association could discourage third-party acquisitions, limiting shareholder opportunities to sell **shares** at a premium[485](index=485&type=chunk)[486](index=486&type=chunk) - Exclusive forum provisions in the articles of association designate Cayman Islands courts and **U.S.** federal courts as exclusive forums for disputes, potentially limiting shareholders' ability to choose a favorable judicial forum[487](index=487&type=chunk)[488](index=488&type=chunk)[489](index=489&type=chunk) [Implications of Being an Emerging Growth Company and a Foreign Private Issuer](index=10&type=section&id=Implications%20of%20Being%20an%20Emerging%20Growth%20Company%20and%20a%20Foreign%20Private%20Issuer) This section details the implications of the company's status as an "emerging growth company" under the JOBS Act and a "foreign private issuer" under the Exchange Act. These statuses allow for exemptions from various reporting and disclosure requirements, such as auditor attestation, executive compensation disclosures, and quarterly reports, which may make the ADSs less attractive to some investors and affect market volatility - As an "**emerging growth company**" under the **JOBS Act**, the company is exempt from certain reporting requirements, including auditor attestation for internal controls and some executive compensation disclosures[30](index=30&type=chunk)[32](index=32&type=chunk) - As a "**foreign private issuer**," the company is exempt from specific **Exchange Act** provisions applicable to **U.S.** domestic public companies, such as proxy solicitation rules, insider trading reports, and quarterly reports on **Form 10-Q**[34](index=34&type=chunk) - These exemptions may make the company's **ADSs** less attractive to some investors, potentially leading to a less active trading market and increased price volatility[32](index=32&type=chunk) [Item 4. Information on the Company.](index=79&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY.) Item 4 provides comprehensive information about the company, including its history and development, a detailed business overview of its product candidates and strategy, its organizational structure, and details regarding its property, plants, and equipment - **Item 4** covers the company's history, business overview, organizational structure, and property, plants, and equipment[4](index=4&type=chunk) [A. History and Development of the Company](index=79&type=section&id=A.%20History%20and%20Development%20of%20the%20Company) This section details the company's incorporation, reorganization, restructuring, and initial public offering (IPO), including the cash raised and restricted net assets of PRC subsidiaries - **Connect Biopharma Holdings Limited** was incorporated in **November 2015** in the Cayman Islands, with its business initially conducted by **Suzhou Connect Biopharma Co., Ltd. (Connect SZ)**, incorporated in **May 2012**[494](index=494&type=chunk) - The company underwent a reorganization in **January 2016** and a restructuring in **October 2018**, resulting in **Connect Biopharma Holdings Limited** becoming the ultimate parent of all its subsidiaries[499](index=499&type=chunk)[500](index=500&type=chunk) - The company completed its initial public offering (**IPO**) on **March 23, 2021**, raising a total cash consideration of **USD 219.9 million**[500](index=500&type=chunk) - As of **December 31, 2021**, restricted net assets of **PRC** subsidiaries, including paid-in capital and statutory reserve funds, amounted to **RMB 288.9 million (USD 45.3 million)**[496](index=496&type=chunk) [B. Business Overview](index=80&type=section&id=B.%20Business%20Overview) This section provides an overview of Connect Biopharma as a clinical-stage biopharmaceutical company, its lead product candidates (CBP-201, CBP-307, CBP-174), their development status, global operations, and the highly regulated pharmaceutical industry landscape - **Connect Biopharma** is a global clinical-stage biopharmaceutical company developing therapies for **T cell-driven inflammatory diseases**, utilizing functional cellular assays for drug discovery[501](index=501&type=chunk)[504](index=504&type=chunk)[516](index=516&type=chunk) - Lead product candidates include **CBP-201** (anti-IL-4Ra antibody for atopic dermatitis, asthma, CRSwNP), **CBP-307** (S1P1 modulator for inflammatory bowel disease), and **CBP-174** (H3R antagonist for chronic itch)[501](index=501&type=chunk)[503](index=503&type=chunk)[505](index=505&type=chunk) - **CBP-201** met primary and key secondary endpoints in a **Phase 2b trial** for **moderate-to-severe AD**, with plans for a global **Phase 3 program** in **H2 2022**[501](index=501&type=chunk)[505](index=505&type=chunk)[529](index=529&type=chunk) - **CBP-307** is in a global **Phase 2 trial for ulcerative colitis** (top-line results expected **Q2 2022**); a **Phase 2 trial for Crohn's disease** ended prematurely due to **COVID-19** enrollment challenges[503](index=503&type=chunk)[555](index=555&type=chunk)[577](index=577&type=chunk) - **CBP-174**, licensed from Arena Pharmaceuticals, is a **peripherally acting H3R antagonist for chronic itch**, with **Phase 1 top-line results** expected in **H1 2022**[507](index=507&type=chunk)[584](index=584&type=chunk) - The company operates globally with **R&D** and clinical activities in the **US**, **PRC**, Europe, and Australia, aiming to retain significant commercial rights while considering high-value partnerships[508](index=508&type=chunk)[511](index=511&type=chunk) - The pharmaceutical industry is **highly regulated** in the **US**, **PRC**, and Europe, with extensive requirements for drug development, approval, manufacturing, marketing, and post-approval surveillance[618](index=618&type=chunk)[619](index=619&type=chunk)[676](index=676&type=chunk) - The **PRC regulatory framework** is undergoing significant changes, including expedited programs for innovative drugs and acceptance of foreign clinical data, but also includes strict data security and human genetic resources regulations[677](index=677&type=chunk)[686](index=686&type=chunk)[691](index=691&type=chunk) [C. Organizational Structure](index=128&type=section&id=C.%20Organizational%20Structure) This section describes the company's structure as a holding company with six wholly-owned subsidiaries engaged in pharmaceutical R&D across multiple geographies - The company is a holding company with six wholly-owned subsidiaries primarily engaged in pharmaceutical **R&D** across the **PRC**, **U.S.**, and Australia[781](index=781&type=chunk)[782](index=782&type=chunk) - **Connect Biopharma HongKong Limited** is a direct subsidiary, which then holds **Connect Biopharm LLC (U.S.)** and **Connect Biopharma Australia PTY LTD**[781](index=781&type=chunk)[782](index=782&type=chunk) - **Suzhou Connect Biopharma Co., Ltd.** holds **Connect Biopharma (Shanghai) Co., Ltd.**, **Connect Biopharma (Beijing) Co., Ltd.**, and **Connect Biopharma (Shenzhen) Co., Ltd.**[781](index=781&type=chunk)[782](index=782&type=chunk) [D. Property, Plants and Equipment](index=128&type=section&id=D.%20Property%2C%20Plants%20and%20Equipment) This section details the company's leased office and laboratory spaces, as well as the acquisition of land use rights in Taicang, PRC, for future development - The company leases **25,476 sq ft** of office and laboratory space in Taicang, **PRC**, and **3,600 sq ft** of office space in San Diego, California[783](index=783&type=chunk) - In **May 2021**, the company acquired **70,400 square meters** of state-owned land use rights in Taicang, **PRC**, for **50 years**, for future **R&D**, manufacturing, and office facilities[784](index=784&type=chunk) - As of **December 31, 2021**, **RMB 22.3 million (USD 3.5 million)** was paid for land use rights and **RMB 7.0 million (USD 1.1 million)** for related construction costs, but the project is on hold pending permits[784](index=784&type=chunk) [Item 4A. Unresolved Staff Comments.](index=129&type=section&id=ITEM%204A.%20UNRESOLVED%20STAFF%20COMMENTS.) This item states that there are no unresolved staff comments - There are **no unresolved staff comments**[787](index=787&type=chunk) [Item 5. Operating and Financial Review and Prospects.](index=129&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS.) Item 5 provides a detailed operating and financial review, including an overview of the company's business, key factors affecting results (such as the impact of COVID-19 on clinical trials), and a breakdown of key components of operations (revenue, R&D, administrative expenses, other income/losses, finance income/cost, fair value loss of financial instruments, and income taxes). It also covers liquidity and capital resources, highlighting significant losses and the need for future financing, and discusses critical accounting policies and estimates - The company is a clinical-stage biopharmaceutical company focused on **T cell-driven inflammatory diseases**, with lead product candidates **CBP-201** and **CBP-307**[790](index=790&type=chunk) - The company has incurred significant losses and negative operating cash flows from operations since inception, with a net loss of **RMB 1,306.8 million (USD 205.0 million)** in **2021** and an accumulated deficit of **RMB 2.4 billion (USD 373.0 million)**[792](index=792&type=chunk)[793](index=793&type=chunk) - The **COVID-19** pandemic has impacted clinical trials, causing premature termination of a **Phase 2 trial** for **CBP-307** in China and slow enrollment for **CBP-307** and **CBP-174** in Australia[797](index=797&type=chunk) - The company expects to continue incurring significant expenses and operating losses, requiring substantial additional funding for late-stage clinical trials and commercialization[794](index=794&type=chunk)[795](index=795&type=chunk)[796](index=796&type=chunk) - Key components of operating results include **R&D expenses** (increased significantly in **2021** due to clinical trials), administrative expenses (increased due to public company infrastructure), other income (government grants), and fair value losses on financial instruments[800](index=800&type=chunk)[803](index=803&type=chunk)[807](index=807&type=chunk) [A. Operating Results](index=129&type=section&id=A.%20Operating%20Results) This section details the company's net losses, research and development expenses, administrative expenses, and fair value losses on financial instruments for 2020 and 2021 Net Loss (2020-2021) | Year Ended December 31, | 2020 (RMB'000) | 2021 (RMB'000) | 2021 (USD'000) | | :---------------------- | :------------- | :------------- | :------------- | | Net Loss | (779,225) | (1,306,824) | (204,969) | Research and Development Expenses (2020-2021) | Year Ended December 31, | 2020 (RMB'000) | 2021 (RMB'000) | 2021 (USD'000) | | :---------------------- | :------------- | :------------- | :------------- | | R&D Expenses | (150,932) | (518,021) | (81,249) | - The increase in **R&D expenses** was primarily due to a **RMB 323.6 million** increase in third-party clinical trial costs for advancing lead product candidates (**CBP-201** and **CBP-307**) into later clinical trial phases[819](index=819&type=chunk) Administrative Expenses (2020-2021) | Year Ended December 31, | 2020 (RMB'000) | 2021 (RMB'000) | 2021 (USD'000) | | :---------------------- | :------------- | :------------- | :------------- | | Administrative Expenses | (47,720) | (122,445) | (19,205) | - Administrative expenses increased due to a **RMB 43.1 million** increase in payroll and related expenses for additional headcount and a **RMB 26.6 million** increase in professional fees for public company infrastructure[820](index=820&type=chunk) Fair Value Loss of Financial Instruments with Preferred Rights (2020-2021) | Year Ended December 31, | 2020 (RMB'000) | 2021 (RMB'000) | 2021 (USD'000) | | :---------------------- | :------------- | :------------- | :------------- | | Fair Value Loss | (579,286) | (674,269) | (105,756) | - The increase in fair value loss was primarily related to the issuance of Series C Preferred Shares in **2020** and higher fair value of preferred **shares** in **2021** prior to the **IPO**[825](index=825&type=chunk) [B. Liquidity and Capital Resources](index=136&type=section&id=B.%20Liquidity%20and%20Capital%20Resources) This section discusses the company's liquidity, capital resources, accumulated losses, cash flows from operations, principal funding sources, capital commitments, and cash transfers between entities - The company has incurred significant losses and negative cash flows from operations since inception, with an accumulated loss of **RMB 2.4 billion (USD 373.0 million)** as of **December 31, 2021**[842](index=842&type=chunk) Cash and Cash Equivalents (2020-2021) | As of December 31, | 2020 (RMB'000) | 2021 (RMB'000) | 2021 (USD'000) | | :----------------- | :------------- | :------------- | :------------- | | Cash & Equivalents | 1,010,076 | 1,706,880 | 267,716 | - Principal funding sources include equity financing, such as the **USD 219.9 million IPO** completed in **March 2021**[843](index=843&type=chunk) - Net cash used in operating activities was **RMB 544.9 million (USD 85.5 million)** in **2021**, compared to **RMB 167.2 million** in **2020**[847](index=847&type=chunk)[849](index=849&type=chunk)[850](index=850&type=chunk) Capital Commitments (2020-2021) | Item | 2020 (RMB'000) | 2021 (RMB'000) | | :---------------------------------- | :------------- | :------------- | | Equipment and intangible assets | 23,243 | 146,878 | - Capital commitments as of **December 31, 2021**, were **RMB 146.9 million (USD 23.0 million)**, primarily for the Taicang campus construction, which is currently on hold[858](index=858&type=chunk) - Cash transfers from the holding company to operating subsidiaries totaled **RMB 672.5 million (USD 105.5 million)** in **2021**, with no distributions from **PRC** entities to offshore entities[845](index=845&type=chunk)[863](index=863&type=chunk) [C. Research, Development, Patents and Licenses, etc.](index=144&type=section&id=C.%20Research%2C%20Development%2C%20Patents%20and%20Licenses%2C%20etc.) This section cross-references information on research, development, patents, and licenses to other relevant sections of the report - Information on research, development, **patents**, and licenses is cross-referenced to "**Item 4. Information on the Company—B. Business Overview**" and "**Item 5. Operating and Financial Review and Prospects—A. Operating Results.**"[864](index=864&type=chunk) [D. Trend Information](index=144&type=section&id=D.%20Trend%20Information) This section cross-references trend information to the operating results section of the report - Trend information is cross-referenced to "**Item 5. Operating and Financial Review and Prospects—A. Operating Results.**"[865](index=865&type=chunk) [E. Critical Accounting Estimates](index=140&type=section&id=E.%20Critical%20Accounting%20Estimates) This section details the critical accounting estimates and judgments required for preparing consolidated financial statements under IFRS, including R&D expenses, fair value of financial instruments, and share-based compensation - Consolidated financial statements are prepared in accordance with **IFRS**, requiring significant accounting estimates and judgments[827](index=827&type=chunk) - Critical accounting estimates include research and development expenses, fair value of financial instruments with preferred rights, and recognition of share-based compensation expenses[828](index=828&type=chunk)[832](index=832&type=chunk)[833](index=833&type=chunk) - **R&D** expenditures are expensed as incurred, as they have not met criteria for asset recognition[828](index=828&type=chunk)[831](index=831&type=chunk) - Fair value of financial instruments with preferred rights is determined using valuation techniques like OPM or hybrid methods, involving assumptions on discount **rate**, volatility, and risk-free rates[832](index=832&type=chunk) - Share-based compensation expenses are determined using a **Binomial Option Pricing model**, requiring estimates for grant date **share** price, volatility, risk-free interest **rate**, and dividend yield[833](index=833&type=chunk)[834](index=834&type=chunk) [Item 6. Directors, Senior Management and Employees.](index=141&type=section&id=ITEM%206.%20DIRECTORS%2C%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES.) Item 6 provides details on the company's executive officers and directors, their compensation, board practices, employee numbers, and share ownership. It lists key management personnel, outlines their employment agreements and severance terms, and describes the non-employee director compensation program. The section also covers the company's equity incentive plans (2021 Stock Incentive Plan, 2019 Stock Incentive Plan, 2021 Employee Share Purchase Plan) and corporate governance practices, including board composition and committee responsibilities - The company's executive officers include **Zheng Wei (CEO)**, **Wubin Pan (President & Chairman)**, **Selwyn Ho (CBO)**, **Steven Chan (CFO)**, and **Chin Lee (CMO)**[871](index=871&type=chunk) - Aggregate compensation for directors and executive officers in **2021** was approximately **USD 7.3 million**, with **USD 0.1 million** set aside for pension/retirement benefits[883](index=883&type=chunk) - A non-employee director compensation program was adopted in **January 2022**, providing cash retainers and annual option grants[885](index=885&type=chunk)[886](index=886&type=chunk) - The company has three equity incentive plans: **2021 Stock Incentive Plan**, **2019 Stock Incentive Plan**, and **2021 Employee Share Purchase Plan**, with **3,748,389 options** outstanding as of **December 31, 2021**[911](index=911&type=chunk)[919](index=919&type=chunk)[926](index=926&type=chunk) - The board of directors has seven **members**, with **Dr. Pan** as **Chairman** and **Dr. Xanthopoulos** as **Lead Independent Director**. All directors except **Dr. Pan** and **Dr. Wei** are considered independent[941](index=941&type=chunk)[943](index=943&type=chunk) - As a foreign private issuer, the company follows some Cayman Islands home country corporate governance practices, differing from **Nasdaq** rules in areas like independent director majority and committee composition[946](index=946&type=chunk)[949](index=949&type=chunk)[1133](index=1133&type=chunk) [A. Directors and Senior Management](index=141&type=section&id=A.%20Directors%20and%20Senior%20Management) This section lists the company's executive officers and directors, including their ages and positions, highlighting key leadership roles and recent appointments Executive Officers and Directors | Name | Age | Position | | :------------------------ | :-- | :------------------------------------- | | Zheng Wei, Ph.D. | 58 | Chief Executive Officer and Director | | Wubin Pan, Ph.D. | 57 | President and Chairman of the Board | | Selwyn Ho, MB BS | 51 | Chief Business Officer | | Steven Chan | 50 | Chief Financial Officer | | Chin Lee, M.D. | 52 | Chief Medical Officer | | Kleanthis G. Xanthopoulos | 63 | Lead Independent Director | | Derek DiRocco, Ph.D. | 41 | Director | | Kan Chen, Ph.D. | 40 | Director | | Jean Liu | 53 | Director | | Karen J. Wilson | N/A | Director | - **Dr. Zheng Wei (CEO)** and **Dr. Wubin Pan (President & Chairman)** are co-founders with extensive experience in drug discovery and biopharmaceutical leadership[869](index=869&type=chunk)[870](index=870&type=chunk) - **Steven Chan** joined as **CFO** in **November 2021**, and **Dr. Chin Lee** joined as **CMO** in **March 2022**[874](index=874&type=chunk)[875](index=875&type=chunk) [B. Compensation](index=143&type=section&id=B.%20Compensation) This section details the aggregate compensation for directors and executive officers, outlines the non-employee director compensation program, and describes the company's equity incentive plans - Aggregate compensation for current directors and executive officers for **2021** was approximately **USD 7.3 million**, with **USD 0.1 million** for pension/retirement benefits[883](index=883&type=chunk) Non-Employee Director Annual Compensation (Effective Jan 1, 2022) | Role | Annual Retainer | Annual Option Award (shares) | | :------------------------ | :-------------- | :--------------------------- | | Non-employee Director | $35,000 | 21,269 | | Lead Independent Director | $17,500 | 7,090 | | Audit Committee Chair | $15,000 | — | | Audit Committee Member | $7,500 | — | | Compensation Committee Chair | $10,000 | — | | Compensation Committee Member | $7,500 | — | | Nominating Committee Chair | $10,000 | — | | Nominating Committee Member | $7,500 | — | - As of **December 31, 2021**, **1,890,232 ordinary share options** were outstanding for executive officers and directors, with an additional **800,800 options** approved in **2022**[887](index=887&type=chunk) - Employment agreements for executive officers include severance packages (e.g., **12 months base salary** for **Dr. Pan** and **Dr. Wei**) and accelerated equity vesting under specific termination or change-in-control events[892](index=892&type=chunk)[895](index=895&type=chunk)[901](index=901&type=chunk) - The **2021 Stock Incentive Plan** reserves **6,000,000 ordinary shares** (plus **shares** from the **2019 Plan**) for awards, with annual increases[912](index=912&type=chunk) - The **2021 Employee Share Purchase Plan** initially reserves **600,000 ordinary shares**, with annual increases, allowing employees to purchase **shares** at a discount[928](index=928&type=chunk)[933](index=933&type=chunk) [C. Board Practices](index=151&type=section&id=C.%20Board%20Practices) This section describes the board of directors' composition, election, risk oversight, and committee structures, noting differences in corporate governance practices as a foreign private issuer - The board of directors must consist of at least **three members**, elected by board resolution or ordinary resolution of shareholders, and serve until removed by shareholders[939](index=939&type=chunk)[961](index=961&type=chunk) - The board oversees risk management, with the audit committee focusing on financial risk, the nominating committee on corporate governance, and the compensation committee on compensation-related risks[945](index=945&type=chunk) - As a foreign private issuer, the company is permitted to follow Cayman Islands corporate governance practices, which differ from **Nasdaq** rules regarding the majority of independent directors, compensation committee independence, and regularly scheduled independent director meetings[946](index=946&type=chunk)[949](index=949&type=chunk)[1133](index=1133&type=chunk) - The audit committee comprises **Ms. Wilson (Chairman)**, **Ms. Liu**, and **Dr. Xanthopoulos**, all deemed independent and financially literate, with **Ms. Wilson** as an "**audit committee financial expert**"[952](index=952&type=chunk)[1128](index=1128&type=chunk) - The compensation committee consists of **Dr. Xanthopoulos (Chairman)**, **Dr. DiRocco**, and **Ms. Wilson**, all meeting heightened independence standards[955](index=955&type=chunk) - The nominating and corporate governance committee consists of **Ms. Liu (Chairman)**, **Dr. Wei**, and **Dr. Chen**[957](index=957&type=chunk) [D. Employees](index=154&type=section&id=D.%20Employees) This section provides a breakdown of the company's full-time employees by function and geography for 2020 and 2021, noting satisfactory labor relations Full-time Employees by Function (2020-2021) | Function | 2021 | 2020 | | :------------------------ | :--- | :--- | | Research and development | 69 | 38 | | General and administrative | 39 | 15 | | Total | 108 | 53 | Full-time Employees by Geography (2020-2021) | Geography | 2021 | 2020 | | :---------------- | :--- | :--- | | PRC and Hong Kong | 82 | 49 | | United States | 25 | 3 | | Other | 1 | 1 | | Total | 108 | 53 | - The company has never experienced labor-related work stoppages or strikes and maintains satisfactory relations with its **employees**[966](index=966&type=chunk) [E. Share Ownership](index=155&type=section&id=E.%20Share%20Ownership) This section cross-references information on share ownership of directors and officers and equity incentive plans to other relevant sections of the report - Information on **share** ownership of directors and officers is cross-referenced to "**Item 7.A. Major Shareholders and Related Party Transactions—Major Shareholders.**"[967](index=967&type=chunk) - Information on equity incentive plans is cross-referenced to "**Item 6.B. Director, Senior Management and Employees—Compensation—Incentive Programs.**"[967](index=967&type=chunk) [Item 7. Major Shareholders and Related Party Transactions.](index=156&type=section&id=ITEM%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS.) Item 7 details the beneficial ownership of ordinary shares by major shareholders (5% or more) and executive officers/directors as of March 1, 2022. It also describes material related party transactions, including preferred share private placements, the Shareholders Agreement, arrangements with executive officers and directors, and contract research organization (CRO) services - **Item 7** covers major shareholders, related party transactions, and interests of experts and counsel[4](index=4&type=chunk) [A. Major Shareholders](index=156&type=section&id=A.%20Major%20Shareholders) This section lists major shareholders with 5% or more beneficial ownership and the collective ownership of all directors and executive officers as of March 1, 2022 Major Shareholders (as of March 1, 2022) | Name | Number of Shares Beneficially Owned | Percentage of Shares Beneficially Owned | | :----------------------------------------------------------------- | :---------------------------------- | :-------------------------------------- | | Entities affiliated with RA Capital Management | 6,991,003 | 12.7% | | BioFortune Inc. | 5,948,929 | 10.8% | | Shanghai Minhui Enterprise Management Consulting Partnership (Limited Partnership) | 5,306,149 | 9.6% | | Entities affiliated with Qiming Venture Partners | 4,840,898 | 8.8% | | Advantech Capital II Connect Partnership L.P. | 4,762,185 | 8.6% | | FMR LLC | 3,417,564 | 6.2% | | Zheng Wei, Ph.D. | 6,070,761 | 11.0% | | Wubin Pan, Ph.D. | 6,135,908 | 11.1% | | All directors and executive officers as a group (ten persons) | 12,444,553 | 22.6% | - The percentage of ordinary **shares** beneficially owned is computed on the basis of **55,076,319 ordinary shares** outstanding as of **December 31, 2021**[971](index=971&type=chunk) - **Dr. Wubin Pan** is the sole shareholder of BioFortune Inc. and may be deemed to have voting and investment power over its **shares**[973](index=973&type=chunk) [B. Related Party Transactions](index=157&type=section&id=B.%20Related%20Party%20Transactions) This section describes material related party transactions, including preferred share financings, the Shareholders Agreement, share repurchases, consulting services, and CRO services - The company completed Series Pre-A, A, B, and C preferred **share** financings, which converted to ordinary **shares** upon **IPO**[981](index=981&type=chunk)[982](index=982&type=chunk)[1334](index=1334&type=chunk) - The Shareholders Agreement, which terminated at **IPO** (except for registration rights), granted specific rights to holders and designated current directors[987](index=987&type=chunk)[988](index=988&type=chunk)[989](index=989&type=chunk) - In **March 2021**, the company repurchased **20,765 ordinary shares** from **Dr. Zheng Wei** for **RMB 2.5 million (USD 0.4 million)** to cover employee withholding taxes related to **share-based awards**[990](index=990&type=chunk) - Consulting services were provided by Artemis Catalyst Ltd., owned by **Selwyn Ho (CBO)**, totaling **USD 0.3 million** in **2021**, before his full-time employment commenced in **January 2021**[992](index=992&type=chunk) - The company engaged in **CRO** services with entities affiliated with former directors, totaling **RMB 9.5 million** in **2020**[994](index=994&type=chunk)[995](index=995&type=chunk) [C. Interests of Experts and Counsel](index=160&type=section&id=C.%20Interests%20of%20Experts%20and%20Counsel) This item states that information on the interests of experts and counsel is "Not applicable" - Information on the interests of experts and counsel is explicitly stated as "**Not applicable**"[997](index=997&type=chunk) [Item 8. Financial Information.](index=161&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION.) Item 8 directs readers to Item 18 for audited consolidated financial statements and discusses the company's litigation status and dividend policy. The company has no material litigation and does not anticipate paying dividends in the foreseeable future, intending to retain earnings for business development - Audited consolidated financial statements are filed as part of **Item 18**[998](index=998&type=chunk) - The company is not currently a party to any material legal proceedings[998](index=998&type=chunk) - The company has never declared or paid any cash dividend and does not anticipate doing so in the foreseeable future, intending to retain future earnings for business development[999](index=999&type=chunk)[1000](index=1000&type=chunk) [A. Consolidated Statements and Other Financial Information](index=161&type=section&id=A.%20Consolidated%20Statements%20and%20Other%20Financial%20Information) This section directs to Item 18 for financial statements and confirms no material litigation or plans for dividend payments - Audited consolidated financial statements are available in **Item 18**[998](index=998&type=chunk) - The company is **not involved in any material litigation**[998](index=998&type=chunk) - The company has **no plans to pay dividends**, retaining earnings for business development[999](index=999&type=chunk) [B. Significant Changes](index=161&type=section&id=B.%20Significant%20Changes) This item states that no significant changes have occurred since the date of the financial statements included in this annual report - **No significant changes** have occurred since the date of the financial statements included in this annual report[1002](index=1002&type=chunk) [Item 9. The Offer and Listing.](index=161&type=section&id=ITEM%209.%20THE%20OFFER%20AND%20LISTING.) Item 9 provides details on the company's offer and listing, including the commencement of trading of its ADSs on the Nasdaq Global Market on March 19, 2021. It also states that there is no information applicable to plan of distribution, selling shareholders, dilution, or expenses of the issuer in this section - The company's **ADSs** commenced trading on the **Nasdaq Global Market** on **March 19, 2021**, with no prior public market[1002](index=1002&type=chunk) [A. Offer and Listing Details](index=161&type=section&id=A.%20Offer%20and%20Listing%20Details) This section confirms that ADSs commenced trading on the Nasdaq Global Market on March 19, 2021 - **ADSs** commenced trading on the **Nasdaq Global Market** on **March 19, 2021**[1002](index=1002&type=chunk) [B. Plan of Distribution](index=161&type=section&id=B.%20Plan%20of%20Distribution) This item states that information on the plan of distribution is "Not applicable" - Plan of distribution is explicitly stated as "**Not applicable**"[1002](index=1002&type=chunk) [C. Markets](index=162&type=section&id=C.%20Markets) This section confirms the company's ADSs are listed on Nasdaq under the symbol "CNTB" - The company's **ADSs** are listed on **Nasdaq** under the symbol "**CNTB**"[1004](index=1004&type=chunk) [D. Selling Shareholders](index=162&type=section&id=D.%20Selling%20Shareholders) This item states that information on selling shareholders is "Not applicable" - Information on selling shareholders is explicitly stated as "**Not applicable**"[1004](index=1004&type=chunk) [E. Dilution](index=162&type=section&id=E.%20Dilution) This item states that information on dilution is "Not applicable" - Information on dilution is explicitly stated as "**Not applicable**"[1004](index=1004&type=chunk) [F. Expenses of the Issuer](index=162&type=section&id=F.%20Expenses%20of%20the%20Issuer) This item states that information on expenses of the issuer is "Not applicable" - Information on expenses of the issuer is explicitly stated as "**Not applicable**"[1004](index=1004&type=chunk) [Item 10. Additional Information.](index=162&type=section&id=ITEM%2010.%20ADDITIONAL%20INFORMATION.) Item 10 provides additional information on the company's share capital, memorandum and articles of association (including corporate governance differences from US law), material contracts, exchange controls in the PRC, taxation (Cayman Islands, PRC, US federal income tax), and documents on display. It details the rights of shareholders, the process for mergers, and the implications of being an exempted company under Cayman Islands law - **Item 10** covers **share** capital, memorandum and articles of association, material contracts, exchange controls, taxation, dividends, expert statements, and documents on display[5](index=5&type=chunk) [A. Share Capital](index=162&type=section&id=A.%20Share%20Capital) This item states that information on share capital is "Not applicable" in this specific section - Information on **share** capital is explicitly stated as "**Not applicable**" in this item[1004](index=1004&type=chunk) [B. Memorandum and Articles of Association](index=162&type=section&id=B.%20Memorandum%20and%20Articles%20of%20Association) This section details the company's governing documents, shareholder rights, meeting requirements, share transfer policies, and the implications of being an exempted company under Cayman Islands law - The company's affairs are governed by its amended and restated memorandum and articles of association and the **Companies Act of the Cayman Islands**[1005](index=1005&type=chunk) - Ordinary **shares** are issued in registered form, each carrying **one vote**, and dividends are declared by the board of directors[1006](index=1006&type=chunk)[1007](index=1007&type=chunk)[1008](index=1008&type=chunk) - Shareholder general meetings require at least **ten calendar days'** advance notice and a quorum of one or more shareholders holding at least **one-third of all votes**[1011](index=1011&type=chunk) - The board of directors has discretion to decline **share** transfers under specific conditions, such as incomplete payment or lack of proper documentation[1014](index=1014&type=chunk) - The company is an **exempted company** under **Cayman Islands law**, which provides exemptions from certain filing requirements (e.g., annual return of shareholders) and does not require annual general meetings[1022](index=1022&type=chunk)[1023](index=1023&type=chunk) - **Cayman Islands corporate law** differs from **U.S.** corporate law regarding mergers, shareholder suits, and director fiduciary duties, potentially offering less protection to shareholders in some areas[1024](index=1024&type=chunk)[1031](index=1031&type=chunk)[1034](index=1034&type=chunk) [C. Material Contracts](index=168&type=section&id=C.%20Material%20Contracts) This item states that the company has not been a party to any material contract in the last two years, other than those disclosed or in the ordinary course of business - The company has not been a party to any material contract in the last two **years**, other than those disclosed in the annual report or entered into in the ordinary course of business[1046](index=1046&type=chunk) [D. Exchange Controls](index=169&type=section&id=D.%20Exchange%20Controls) This section details PRC government controls on currency convertibility and fund remittances, including dividend restrictions, statutory reserve requirements, and SAFE registration for offshore investment activities - **PRC** government imposes controls on the convertibility of **RMB** into non-PRC currencies and the remittance of funds out of the **PRC**, requiring approval or registration for foreign exchange transactions[1048](index=1048&type=chunk)[1049](index=1049&type=chunk)[1051](index=1051&type=chunk) - **PRC** subsidiaries are restricted in their ability to pay dividends to offshore entities, requiring them to pay dividends only out of accumulated after-tax profits, set aside **10%** for statutory reserve funds (until **50%** of registered capital), and complete foreign exchange control procedures, with a **10% withholding tax**[1052](index=1052&type=chunk) - The company has not transferred **cash** out of its **PRC** entities, thus experiencing no foreign exchange control issues to date[1051](index=1051&type=chunk)[1053](index=1053&type=chunk) - **PRC** residents' offshore investment activities are subject to **SAFE registration requirements (Circular 37)**, and non-compliance could restrict foreign exchange activities of onshore companies[1055](index=1055&type=chunk)[1057](index=1057&type=chunk) [E. Taxation](index=170&type=section&id=E.%20Taxation) This section covers taxation implications for the company in the Cayman Islands and PRC, and for U.S. Holders of ADSs or ordinary shares, including potential PFIC classification and mitigation elections - The company is incorporated in the Cayman Islands and is exempt from Cayman Islands income **tax**[1060](index=1060&type=chunk) - If deemed a **PRC tax resident enterprise**, the company's worldwide income could be subject to a **25% PRC enterprise income tax**, and dividends/gains for non-PRC investors could face **10% (or 20% for individuals) withholding tax**[1063](index=1063&type=chunk)[1065](index=1065&type=chunk) - **U.S.** Holders of **ADSs** or ordinary **shares** are subject to **U.S.** federal income **tax** on dividends and dispositions, with dividends potentially taxed at lower capital gains rates if certain conditions are met[1078](index=1078&type=chunk)[1079](index=1079&type=chunk)[1081](index=1081&type=chunk) - The company may be classified as a **Passive Foreign Investment Company (PFIC)** for **U.S.** federal income **tax** purposes, which could result in adverse **tax** consequences for **U.S.** Holders, including special rules for "**excess distributions**" and recognized gains[1084](index=1084&type=chunk)[1085](index=1085&type=chunk)[1087](index=1087&type=chunk) - **U.S.** Holders may make a "**mark-to-market**" election for marketable stock (like **ADSs** on **Nasdaq**) or a "**qualified electing fund (QEF)**" election to mitigate **PFIC** rules, but these have specific requirements and implications[1090](index=1090&type=chunk)[1093