中国抗体(03681) - 2023 - 中期财报

Company Overview 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 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] - The company has audit, remuneration, and nomination committees, and Ernst & Young is appointed as the auditor[35] - The company's registered office is located in Hong Kong Science Park, with stock code 3681[35][62] Chairman's Report 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] - 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][57] - 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] - 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][58] - 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][49] Management Discussion and Analysis 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 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] - 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] - 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] - SN1011, a third-generation reversible covalent BTK inhibitor, has received 4 IND approvals from the NMPA for treating SLE, pemphigus, MS, and NMOSD[25] Product Pipeline and R&D Progress 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) 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] - 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] - The Phase III clinical trial completed enrollment of 530 subjects by December 31, 2021, exceeding the target[7] - A BLA was submitted to the NMPA in August 2023, with commercialization approval expected within 10-12 months post-submission[7] - 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] 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] - In vitro studies show SM17 inhibits IL-25-induced Type 2 immunity, and animal models suggest potential benefits in asthma and AD treatment[7] - 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] - 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] - The company plans to initiate SM17's Phase I clinical trial in China shortly to explore its safety in the Chinese population[10] 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] - Phase I first-in-human studies have been completed in Australia and China, showing good safety and PK characteristics[11] - It has received 4 IND approvals from the NMPA, including for the treatment of SLE, pemphigus, MS, and NMOSD[11] - The company is rescheduling SN1011's clinical study timeline to adjust its clinical research strategy[11] Other Pipeline Drugs (SM06, SM09) 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] - SM06 is suitable for treating SLE, RA, and other chronic immune diseases requiring long-term medication, and is currently undergoing CMC optimization[13] - 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] - The company holds Chinese and US invention patents for SM09[2] Intellectual Property 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] - SN1011 holds one granted and registered invention patent in the US and one granted and registered invention patent in Europe[2] - SM09 holds two granted and registered invention patents in China and three granted and registered invention patents in the US[2] 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] Manufacturing and Commercialization 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 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] - 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] - Phase I development of the Suzhou base has a capacity of 6,000 liters, expected to be operational in 2024[14] - 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][58] Market Overview and Commercialization Strategy 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] - 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][87] - The company possesses full industry chain capabilities integrating R&D, manufacturing, and commercialization, with over two decades of experience in autoimmune diseases[87] - 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] - The company is establishing its market team and plans continuous expansion to cover most provinces and cities in China, actively seeking cooperation opportunities[85] R&D Platforms 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] - 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] - 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] - Alarmin Pathway Therapy Platform: Targets upstream alarmins in immune pathways, such as IL-25, under which SM17 was developed[92] - 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] - 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] Future and Outlook 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] - It will continue to advance SM03 (Suciraslimab) clinical trials for RA and other autoimmune diseases, having already submitted a BLA for RA treatment[82] - 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] - 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] - The company will advance SM06's initial IND application process to develop better biologics and explore other immune diseases with unmet medical needs[69] - The company will actively educate existing and potential investors on product and pipeline development through non-deal roadshows and other means[67] Financial Review 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 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] - 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][94] - 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][95] - 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] Cash Flow and Liquidity 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] - 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] - 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] - 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] 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 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] - Bank borrowings are denominated in RMB and bear interest at a fixed annual rate of 3.30% and variable rates[117] - The company had unutilized bank facilities of approximately RMB 423.5 million[99] - 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] - The company maintained floating cash levels during the reporting period to monitor its gearing ratio[118] Loss Per Share 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] - 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] Interim Condensed Consolidated Financial Statements 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 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] - 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] Interim Condensed Consolidated Statement of Profit or Loss 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 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 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 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 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 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 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] - 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] - Amendments to HKAS 1 require disclosure of material accounting policy information, expected to impact accounting policy disclosures in annual consolidated financial statements[183] - 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] - Amendments to HKAS 12 regarding deferred tax arising from a single transaction had no impact on the interim condensed consolidated financial information[185][200] - 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] Operating Segment Information 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] - All external customer revenue is derived from mainland China[189] 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 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] - Revenue recognition occurs at a point in time when goods are transferred[204] - Revenue is from the sale of BTK inhibitor capsules under a sales agreement with Everest Medicines II (HK) Limited[212] Net Other Expenses 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 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] - 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] 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] Property, Plant and Equipment 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] Financial Assets at Fair Value Through Profit or Loss 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] Cash and Cash Equivalents 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] - This includes restricted bank balances of RMB 4,253 thousand designated for construction projects[265] Interest-bearing Bank Borrowings 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] - Some bank loans are secured by land use rights with a net book value of approximately RMB 14,685 thousand[266] Share Capital 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] Commitments and Related Party Transactions 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] 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 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 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] - 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] - The fair value of unlisted equity investments is estimated based on recent transaction prices from Series A financing[258] - The company invests in structured deposits and foreign exchange contracts, with their fair values measured through financial institution estimates or valuation techniques[301] Other Information 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 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] 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] Share Subscription and Use of Proceeds 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] - 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] 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 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] - 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] - 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] - As of the end of the reporting period, 16,955,500 award shares were available for grant under the Share Award Scheme[348] - 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] 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 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] Substantial Shareholders' Interests and Short Positions in Shares and Underlying Shares 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] - China CITIC Bank holds a security interest over 158,882,115 shares owned by Hainan Haiyao[228] - Haikou Rural Credit Cooperative Union holds a security interest over 51,000,000 shares owned by Ms. Xu Sijia[238] Changes in Directors' Information 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] Purchase, Sale or Redemption of 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 - During the reporting period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[229] Standard Code for Securities Transactions by Directors 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] - All directors confirmed compliance with the said code of conduct during the reporting period[381] - The company also adopted written guidelines for securities transactions by relevant employees, with no non-compliance found[372] Corporate Governance 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] - 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][374] - 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] - 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][241] No Material Changes 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] Definitions This section provides definitions for key terms and abbreviations used throughout the report to ensure consistent understanding for readers Definition of Terms 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][386]