绿竹生物(02480) - 2024 - 中期业绩

Financial Highlights The company's financial performance for the six months ended June 30, 2024, shows increased other income but a significant rise in R&D expenses, leading to a larger loss before tax Financial Highlights for the Six Months Ended June 30, 2024 | Indicator | 2024 (Thousand RMB) | 2023 (Thousand RMB) | Change (%) | | :--- | :--- | :--- | :--- | | Other income | 9,732 | 5,339 | 82.3 | | Other expenses | (189) | (280) | (32.5) | | Net other gains and losses | 6,255 | 16,830 | (62.8) | | Administrative expenses | (44,962) | (41,239) | 9.0 | | Research and development expenses | (80,376) | (33,157) | 142.4 | | Finance costs | (398) | (386) | 3.1 | | Listing expenses | – | (26,459) | (100.0) | | Loss before tax | (109,938) | (79,352) | 38.5 | | Loss and total comprehensive expenses for the period | (109,938) | (79,352) | 38.5 | Business Highlights The group has made significant progress in clinical trials for its core product LZ901, secured invention patents, and completed construction of a second-phase production facility - The multi-center, randomized, double-blind, placebo-controlled Phase III clinical trial for core product LZ901 has completed enrollment of 26,000 healthy subjects aged 40 and above[2] - The Group was granted invention patents for its core product LZ901 in the United States and Australia in April 2024[2] - The Group completed the construction of its second-phase production facility in Zhuhai, Guangdong Province, with a planned construction area of approximately 120,000 square meters, in April 2024[3] Condensed Consolidated Financial Statements This section presents the company's financial position and performance through its condensed consolidated statements of profit or loss and financial position Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2024, the company's other income grew 82.3%, but R&D expenses surged 142.4%, expanding the loss for the period by 38.5% to RMB 109,938 thousand Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30) | Indicator | 2024 (Thousand RMB) | 2023 (Thousand RMB) | | :--- | :--- | :--- | | Other income | 9,732 | 5,339 | | Other expenses | (189) | (280) | | Net other gains and losses | 6,255 | 16,830 | | Administrative expenses | (44,962) | (41,239) | | Research and development expenses | (80,376) | (33,157) | | Finance costs | (398) | (386) | | Listing expenses | – | (26,459) | | Loss before tax | (109,938) | (79,352) | | Income tax expense | – | – | | Loss and total comprehensive expenses for the period | (109,938) | (79,352) | | Loss per share (RMB) Basic | (0.54) | (0.41) | | Loss per share (RMB) Diluted | (0.54) | (0.41) | Condensed Consolidated Statement of Financial Position As of June 30, 2024, total assets slightly decreased, with an increase in property, plant and equipment under non-current assets and a decrease in cash and cash equivalents under current assets, while total liabilities slightly rose and net assets decreased Condensed Consolidated Statement of Financial Position (As of June 30, 2024) | Indicator | June 30, 2024 (Thousand RMB) | December 31, 2023 (Thousand RMB) | | :--- | :--- | :--- | | Non-current assets | | | | Right-of-use assets | 101,874 | 104,591 | | Property, plant and equipment | 422,985 | 383,905 | | Intangible assets | 4,571 | 4,127 | | Prepayments, deposits and other receivables | 7,449 | 53,099 | | Total non-current assets | 536,879 | 545,722 | | Current assets | | | | Materials | 5,935 | 3,477 | | Prepayments, deposits and other receivables | 20,025 | 9,168 | | Financial assets at fair value through profit or loss | 351,700 | 343,345 | | Cash and cash equivalents | 187,691 | 264,982 | | Total current assets | 565,351 | 620,972 | | Current liabilities | | | | Receipts in advance and other payables | 94,141 | 89,183 | | Lease liabilities | – | 129 | | Bank borrowings | 576 | 7,000 | | Total current liabilities | 94,717 | 96,312 | | Net current assets | 470,634 | 524,660 | | Total assets less current liabilities | 1,007,513 | 1,070,382 | | Non-current liabilities | | | | Lease liabilities | 12,251 | 12,087 | | Deferred government grants | 35,065 | 37,667 | | Bank borrowings | 16,004 | – | | Total non-current liabilities | 63,320 | 49,754 | | Net assets | 944,193 | 1,020,628 | | Total equity | 944,193 | 1,020,628 | Notes to the Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures for the figures presented in the condensed consolidated financial statements 1. General Information Luzhu Biotechnology Co., Ltd. and its subsidiaries primarily engage in the research, development, and production of vaccines and therapeutic biologics in China, with financial statements presented in RMB - The Group is principally engaged in the research, development and production of vaccines and therapeutic biologics in the People's Republic of China[7] - The condensed consolidated financial statements are presented in RMB, which is also the functional currency of the Company[7] 2. Basis of Preparation The condensed consolidated financial statements are prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" and the disclosure requirements of the Hong Kong Stock Exchange Listing Rules - The condensed consolidated financial statements have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" issued by the International Accounting Standards Board and the applicable disclosure requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[8] 3. Principal Accounting Policies The condensed consolidated financial statements are primarily prepared on a historical cost basis, following the accounting policies used in the Group's annual consolidated financial statements as of December 31, 2023, with minor additions/changes due to the application of IFRS amendments - The condensed consolidated financial statements have been prepared on the historical cost basis[9] - The accounting policies and methods of computation used are the same as those presented in the annual consolidated financial statements for the year ended December 31, 2023, except for the additions/changes in accounting policies due to the application of amendments to IFRSs[9] Application of Amendments to International Financial Reporting Standards During the interim period, the Group first applied amendments to IFRS 16, IAS 1, and IAS 7, which had no significant impact on its financial position or performance - During the current interim period, the Group has applied, for the first time, the amendments to IFRS 16, IAS 1 and IAS 7 for the preparation of its condensed consolidated financial statements[10][11] - The application of the amendments to IFRSs has had no material impact on the Group's financial position and performance for the current and prior periods and/or on the disclosures set out in these condensed consolidated financial statements[11] 4. Segment Information The Group operates in a single operating and reportable segment, with no revenue recorded during the reporting period, and all non-current assets located in mainland China - The Group has only one operating and reportable segment, and no further analysis of this single segment is presented[12] - The Group did not record any revenue for the six months ended June 30, 2024[12] - As of June 30, 2024, all of the Group's non-current assets (excluding financial instruments) are located in mainland China[12] 5. Other Income Other income increased by 82.3% year-on-year to RMB 9,732 thousand, primarily due to a significant increase in unconditional government grants Components of Other Income (For the six months ended June 30) | Item | 2024 (Thousand RMB) | 2023 (Thousand RMB) | | :--- | :--- | :--- | | Sales income from immunoassay reagent kits | 650 | 1,023 | | Government grants - property, plant and equipment | 1,267 | 1,118 | | Government grants - right-of-use assets | 1,335 | 1,467 | | Government grants - others | 4,718 | 71 | | Interest income from bank balances | 1,752 | 1,651 | | Interest income from lease deposits | 10 | 9 | | Total | 9,732 | 5,339 | - The increase in other income was mainly due to unconditional government grants received by the Group[13] 6. Net Other Gains and Losses Net other gains and losses decreased by 62.8% year-on-year to RMB 6,255 thousand, mainly due to reduced fair value gains from financial assets at fair value through profit or loss and lower net foreign exchange gains Components of Net Other Gains and Losses (For the six months ended June 30) | Item | 2024 (Thousand RMB) | 2023 (Thousand RMB) | | :--- | :--- | :--- | | Fair value gains from financial assets at fair value through profit or loss | 5,309 | 10,226 | | Net foreign exchange gains | 975 | 6,579 | | Loss on early termination of leases | (29) | – | | Others | – | 25 | | Total | 6,255 | 16,830 | - The decrease in net other gains was mainly due to a decrease in fair value gains from financial assets at fair value through profit or loss and a decrease in net foreign exchange gains[14] 7. Income Tax Expense No income tax provision was made as the company and its Chinese subsidiaries incurred tax losses, and the Hong Kong subsidiary had no taxable profits; the Group holds substantial unused tax losses for future profit offset - No provision for PRC income tax has been made as the Company and its PRC subsidiaries incurred tax losses for both periods[15] - As of June 30, 2024, the Group had estimated unused tax losses of approximately RMB 647,602,000 available to offset against future profits[15] 8. Loss for the Period The loss for the period was primarily impacted by increased staff costs, depreciation and amortization, and higher material and subcontracting costs within R&D expenses Items Deducted in Loss for the Period (For the six months ended June 30) | Item | 2024 (Thousand RMB) | 2023 (Thousand RMB) | | :--- | :--- | :--- | | Total staff costs | 48,752 | 47,410 | | Total depreciation and amortization | 12,379 | 7,750 | | Short-term lease expenses | 32 | 85 | | Material costs included in R&D expenses | 3,729 | 1,180 | | Subcontracting costs included in R&D expenses | 51,290 | 12,907 | 9. Dividends The Board of Directors decided not to declare an interim dividend for the six months ended June 30, 2024 - No dividends were paid, declared or proposed during the interim period[17] 10. Loss Per Share For the six months ended June 30, 2024, basic and diluted loss per share was RMB 0.54, higher than RMB 0.41 in the prior year, reflecting an expanded loss Loss Per Share (For the six months ended June 30) | Indicator | 2024 (Thousand RMB) | 2023 (Thousand RMB) | | :--- | :--- | :--- | | Loss for the period attributable to owners of the Company | (109,938) | (79,352) | | Weighted average number of ordinary shares for basic and diluted loss per share (thousand shares) | 202,450 | 195,162 | | Loss per share (RMB) Basic and Diluted | (0.54) | (0.41) | 11. Property, Plant and Equipment During the reporting period, construction in progress for the Group's facilities in Beijing and Zhuhai increased by RMB 46,995 thousand and RMB 1,896 thousand, respectively - Construction in progress for the Group's R&D and commercial production facilities in Beijing increased by RMB 46,995,000[19] - Construction in progress for the Group's commercial production facilities in Zhuhai increased by RMB 1,896,000[19] 12. Prepayments, Deposits and Other Receivables As of June 30, 2024, total prepayments, deposits, and other receivables significantly decreased to RMB 27,474 thousand from RMB 62,267 thousand at the end of 2023, mainly due to reduced recoverable VAT and prepayments for property, plant and equipment purchases Prepayments, Deposits and Other Receivables (As of June 30, 2024) | Item | June 30, 2024 (Thousand RMB) | December 31, 2023 (Thousand RMB) | | :--- | :--- | :--- | | Recoverable VAT | 14,971 | 39,762 | | Prepayments for purchase of property, plant and equipment | 5,837 | 13,499 | | Prepayments to suppliers and service providers | 4,551 | 7,930 | | Prepayments for intangible assets | 954 | – | | Lease deposits | 341 | 371 | | Others | 820 | 705 | | Total | 27,474 | 62,267 | | Analyzed as follows: | | | | Non-current | 7,449 | 53,099 | | Current | 20,025 | 9,168 | 13. Receipts in Advance and Other Payables As of June 30, 2024, total receipts in advance and other payables increased to RMB 94,141 thousand from RMB 89,183 thousand at the end of 2023, mainly due to higher payables for property, plant and equipment acquisition and R&D activities Receipts in Advance and Other Payables (As of June 30, 2024) | Item | June 30, 2024 (Thousand RMB) | December 31, 2023 (Thousand RMB) | | :--- | :--- | :--- | | Payables for acquisition of property, plant and equipment | 53,494 | 51,247 | | Payables for R&D activities | 37,993 | 32,416 | | Payables for intangible assets | – | 904 | | Accrued salaries and other allowances | 2,122 | 4,070 | | Other tax payables | 111 | 222 | | Others | 421 | 324 | | Total | 94,141 | 89,183 | | Denominated in the following currencies: | | | | RMB | 91,929 | 87,685 | | USD | 1,896 | 496 | | HKD | 316 | 98 | | GBP | – | 904 | 14. Bank Borrowings As of June 30, 2024, total bank borrowings increased to RMB 16,580 thousand, primarily due to new bank borrowings for the Beijing R&D and production facility construction, partially offset by repayments Analysis of Bank Borrowings (As of June 30, 2024) | Item | June 30, 2024 (Thousand RMB) | December 31, 2023 (Thousand RMB) | | :--- | :--- | :--- | | Non-current | 16,004 | – | | Current | 576 | 7,000 | | Total | 16,580 | 7,000 | - A subsidiary of the Group entered into a bank borrowing agreement for a principal amount of RMB 200,000,000 for the construction of R&D and commercial production facilities in Beijing[21] - In April and May 2024, the Group drew down bank borrowings of RMB 16,564,000, maturing from April 2027 to January 2029[21] 15. Capital Commitments As of June 30, 2024, capital commitments decreased to RMB 25,559 thousand, mainly due to the completion of certain construction projects Capital Commitments (As of June 30, 2024) | Item | June 30, 2024 (Thousand RMB) | December 31, 2023 (Thousand RMB) | | :--- | :--- | :--- | | Capital expenditure contracted but not provided for in the condensed consolidated financial statements relating to the acquisition of equipment and machinery and construction projects | 25,559 | 49,768 | Management Discussion and Analysis This section provides an overview of the Group's operational and financial performance, including business developments, financial results, liquidity, and future outlook Business Review The Group continued to advance its pipeline products' R&D, with core product LZ901 clinical trials progressing well, while establishing innovative R&D platforms and a quality system, and outlining clear future development strategies R&D of Pipeline Products The Group has established an innovative precision protein engineering platform and a diversified product pipeline, including human vaccines, monoclonal antibodies, and bispecific antibodies - The Group has established an innovative precision protein engineering platform to empower the full lifecycle of drug development[24] - The Group's internally developed next-generation bispecific antibody development platform, Fabite®, possesses independent intellectual property rights and offers a competitive advantage in developing bispecific antibody products for recurrent/refractory hematological malignancies[24] - The Group has established a diversified and advanced product pipeline, covering human vaccines, monoclonal antibody pipeline products, and bispecific antibody pipeline products under development[24] LZ901 LZ901, the Group's self-developed recombinant herpes zoster vaccine, is the world's first herpes zoster vaccine with a tetramer molecular structure, with Phase III clinical trials completed and BLA submission expected by January 2025 - LZ901 is the Group's self-developed recombinant herpes zoster vaccine and core product, becoming the world's first herpes zoster vaccine with a tetramer molecular structure[25] - The Group initiated the multi-center, randomized, double-blind, placebo-controlled Phase III clinical trial for LZ901 in China in September 2023 and completed enrollment of 26,000 healthy subjects aged 40 and above in January 2024[26] - The Group expects to submit the Biologics License Application (BLA) for LZ901 to the NMPA no later than January 2025 and achieve commercialization in the fourth quarter of 2025[26] K3 K3, a recombinant human anti-tumor necrosis factor-α monoclonal antibody, is a biosimilar to Humira® (adalimumab), with Phase I clinical trials completed and Phase III trials planned for 2025 in China - K3 is the Group's self-developed recombinant human anti-tumor necrosis factor-α monoclonal antibody injection pipeline product, a biosimilar to Humira® (adalimumab)[27] - The Group initiated Phase I clinical trials in China in September 2018 and completed them in December 2019[27] - The Group plans to initiate Phase III clinical trials for K3 in China in 2025[27] K193 K193, a bispecific antibody injection for B-cell leukemia and lymphoma, is the world's first CD19/CD3 bispecific antibody with an asymmetric structure, showing high anti-tumor activity in preclinical studies, with Phase I trials ongoing - K193 is the Group's self-developed bispecific antibody injection for the treatment of B-cell leukemia and lymphoma, and is the world's first CD19/CD3 bispecific antibody with an asymmetric structure[28] - In preclinical studies, K193 demonstrated high in vivo and in vitro anti-tumor activity[28] - In December 2019, the Group initiated Phase I clinical trials for K193 in China, with completion expected in 2025[28] Updates on Other Preclinical Pipeline Products As of June 30, 2024, the Group has four preclinical pipeline products, including recombinant varicella vaccine, recombinant RSV vaccine, K333 bispecific antibody, and K1932 bispecific antibody - As of June 30, 2024, the Group has a total of four preclinical pipeline products, namely recombinant varicella vaccine, recombinant RSV vaccine, K333 bispecific antibody for myeloid leukemia, and K1932 bispecific antibody for lymphoma[29] Status of the Group's Product Pipeline (As of June 30, 2024) | Product Type | Product Pipeline | Indication | Preclinical | Phase I | Clinical Trial Phase II | Phase III | BLA | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Vaccine Pipeline | | | | | | | | | Recombinant Vaccine | LZ901(1) | Herpes Zoster | | | | China | | | Recombinant Vaccine | LZ901(1) | Herpes Zoster | | US | | | | | Recombinant Vaccine | Recombinant Varicella Vaccine | Varicella | China | | | | | | Recombinant Vaccine | Recombinant RSV Vaccine | RSV-induced lower respiratory tract disease | China | | | | | | Antibody Pipeline | | | | | | | | | Monoclonal Antibody | K3(2) | Ankylosing Spondylitis, Rheumatoid Arthritis, Plaque Psoriasis | | China | | | | | Bispecific Antibody | K193 | Recurrent/Refractory B-cell Lymphoma, Leukemia | | China | | | | | Bispecific Antibody | K333 | Myeloid Leukemia | China | | | | | | Bispecific Antibody | K1932 | Recurrent/Refractory B-cell Lymphoma | China | | | | | Research and Development The Group's internal R&D team is involved in all stages of novel vaccine and biotherapeutic drug development, establishing comprehensive in-house product discovery capabilities and a diversified product pipeline - The Group's internal R&D team is involved in all stages of novel vaccine and biotherapeutic drug development, establishing comprehensive in-house product discovery capabilities[32] - The Group now possesses a diversified and advanced product pipeline, covering human vaccines, monoclonal antibody pipeline products, and bispecific antibody pipeline products under development[32] Production and Quality Assurance The Group has R&D and production facilities in Beijing and Zhuhai, with plans for future expansion, and maintains a quality management system compliant with national GMP standards - The Group has R&D and production facilities in both Beijing and Zhuhai, and plans to further expand the scale of its R&D and production facilities as it develops its business in the future[33] - The Group has a quality management system designed to comply with national standards, including GMP standards, covering every aspect of its operations[33] - As of June 30, 2024, the Group's production team comprised 38 personnel, and the quality management team consisted of 32 personnel[33] Future and Outlook The Group aims to actively promote the clinical development of its pipeline drugs, accelerate preclinical product development, formulate commercialization strategies, and expand its product pipeline through independent development and/or collaborations - Actively promote the clinical development of the Group's pipeline drugs, including LZ901, K3, and K193[34] - Rapidly advance the development of the Group's other preclinical pipeline products, including recombinant varicella vaccine, recombinant RSV vaccine, K333, and K1932[34] - Formulate strategic plans to promote commercialization processes both domestically and internationally; and expand the Group's product pipeline through independent development and/or collaborations[34] Financial Review This section provides a detailed analysis of changes in various financial indicators and their primary causes during the reporting period, including income, expenses, losses, and taxes, offering in-depth insights into the Group's financial performance Other Income The Group's other income increased by approximately 82.3% from RMB 5.3 million for the six months ended June 30, 2023, to approximately RMB 9.7 million for the six months ended June 30, 2024 - The Group's other income increased by approximately 82.3% from approximately RMB 5.3 million for the six months ended June 30, 2023, to approximately RMB 9.7 million for the six months ended June 30, 2024[35] - This was primarily due to the unconditional government grants received by the Group[35] Other Expenses The Group's other expenses decreased by approximately 32.5% from approximately RMB 0.3 million for the six months ended June 30, 2023, to approximately RMB 0.2 million for the six months ended June 30, 2024 - The Group's other expenses decreased by approximately 32.5% from approximately RMB 0.3 million for the six months ended June 30, 2023, to approximately RMB 0.2 million for the six months ended June 30, 2024[37] - This reflects a decrease in the cost of immunoassay reagent kits sold[37] Net Other Gains and Losses The Group's net other gains decreased by approximately 62.8% from approximately RMB 16.8 million for the six months ended June 30, 2023, to approximately RMB 6.3 million for the six months ended June 30, 2024 - The Group's net other gains decreased by approximately 62.8% from approximately RMB 16.8 million for the six months ended June 30, 2023, to approximately RMB 6.3 million for the six months ended June 30, 2024[38] - This was primarily due to a decrease in fair value gains from financial assets at fair value through profit or loss and a decrease in net foreign exchange gains[38] Administrative Expenses The Group's administrative expenses increased by approximately 9.0% from approximately RMB 41.2 million for the six months ended June 30, 2023, to approximately RMB 45.0 million for the six months ended June 30, 2024 - The Group's administrative expenses increased by approximately 9.0% from approximately RMB 41.2 million for the six months ended June 30, 2023, to approximately RMB 45.0 million for the six months ended June 30, 2024[40] - This was mainly due to increased depreciation of property, plant and equipment resulting from the completion of construction projects[40] Research and Development Expenses The Group's R&D expenses increased by approximately 142.4% from approximately RMB 33.2 million for the six months ended June 30, 2023, to approximately RMB 80.4 million for the six months ended June 30, 2024 - The Group's research and development expenses increased by approximately 142.4% from approximately RMB 33.2 million for the six months ended June 30, 2023, to approximately RMB 80.4 million for the six months ended June 30, 2024[40] - This was primarily due to the ongoing Phase III clinical trial for LZ901 in China for the six months ended June 30, 2024[40] Finance Costs The Group's finance costs remained stable at approximately RMB 0.4 million for both the six months ended June 30, 2023, and June 30, 2024 - The Group's finance costs remained stable at approximately RMB 0.4 million for both the six months ended June 30, 2023, and the six months ended June 30, 2024[41] Listing Expenses The Group's listing expenses decreased from approximately RMB 26.5 million for the six months ended June 30, 2023, to zero for the six months ended June 30, 2024 - The Group's listing expenses decreased from approximately RMB 26.5 million for the six months ended June 30, 2023, to zero for the six months ended June 30, 2024[41] - This was due to the listing of the Company's H shares on the Stock Exchange in May 2023[41] Loss Before Tax The Group's loss before tax increased by approximately 38.5% from approximately RMB 79.4 million for the six months ended June 30, 2023, to approximately RMB 109.9 million for the six months ended June 30, 2024 - The Group's loss before tax increased by approximately 38.5% from approximately RMB 79.4 million for the six months ended June 30, 2023, to approximately RMB 109.9 million for the six months ended June 30, 2024[42] Income Tax Expense No income tax expense was incurred as the Group recorded losses for both the six months ended June 30, 2023, and June 30, 2024 - No income tax expense was incurred as the Group recorded losses for the six months ended June 30, 2023, and 2024[43] Liquidity and Capital Resources The Group's bank balances and cash decreased due to increased R&D expenses but new bank financing was secured; the gearing ratio slightly rose, capital commitments decreased, and foreign exchange risk is present but not hedged Bank Balances and Cash Bank balances and cash decreased by approximately RMB 77.3 million from approximately RMB 265.0 million as of June 30, 2023, to approximately RMB 187.7 million as of June 30, 2024 - Bank balances and cash decreased by approximately RMB 77.3 million from approximately RMB 265.0 million as of June 30, 2023, to approximately RMB 187.7 million as of June 30, 2024[44] - This was primarily due to increased research and development expenses[44] - For the six months ended June 30, 2024, the Group obtained bank financing with a principal amount of RMB 200.0 million for the construction of R&D and production facilities in Beijing, of which approximately RMB 16.6 million has been utilized[44] Pledge of Assets On February 5, 2024, the Group pledged property with a gross floor area of approximately 21,185 square meters as collateral for bank financing of RMB 200.0 million - On February 5, 2024, the Group pledged property with a gross floor area of approximately 21,185 square meters as security for bank financing with a principal amount of RMB 200.0 million[45] Contingent Liabilities As of June 30, 2024, the Group had no significant contingent liabilities - As of June 30, 2024, the Group did not have any significant contingent liabilities[45] Gearing Ratio As of June 30, 2024, the Group's gearing ratio was 14.3% (December 31, 2023: 12.5%) - As of June 30, 2024, the Group's gearing ratio was 14.3% (December 31, 2023: 12.5%)[46] Capital Expenditure The Group's capital commitments decreased from approximately RMB 49.8 million as of December 31, 2023, to approximately RMB 25.6 million as of June 30, 2024 - The Group's capital commitments decreased from approximately RMB 49.8 million as of December 31, 2023, to approximately RMB 25.6 million as of June 30, 2024[47] - This was primarily due to the completion of certain construction projects for the six months ended June 30, 2024[47] Foreign Exchange The Group primarily operates in China and faces foreign exchange risk mainly related to HKD, with no currency hedging transactions entered into during the reporting period - The Group primarily operates in China and is exposed to foreign exchange risk arising from various currencies (mainly related to HKD)[48] - For the six months ended June 30, 2024, the Group did not enter into any currency hedging transactions[48] Material Investments, Acquisitions and Disposals For the six months ended June 30, 2024, the Group had no material investments, acquisitions, or disposals of subsidiaries, associates, and joint ventures - For the six months ended June 30, 2024, the Group had no material investments, acquisitions and disposals of subsidiaries, associates and joint ventures[49] Future Plans for Material Investments or Capital Assets As of June 30, 2024, the Group had no specific future plans for material capital expenditures, investments, or capital assets, which would be announced in accordance with Listing Rules if any arise - As of June 30, 2024, the Group had no specific plans for material capital expenditures, investments or capital assets[50] Other Information This section covers the interim dividend policy, use of global offering proceeds and timetable adjustments, employee and remuneration policies, employee incentive plans, compliance with corporate governance and securities dealing codes, and share repurchases after the reporting period Interim Dividend The Board of Directors does not recommend the payment of an interim dividend for the six months ended June 30, 2024 - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2024[50] Use of Net Proceeds from Global Offering The Company received total net proceeds of approximately HKD 241.6 million from its H-share global offering, with adjustments to the expected utilization timetable for certain funds - The Company received total net proceeds of approximately HKD 241.6 million from its H-share global offering[50] - The proceeds allocated for funding K3's clinical trials will not be fully utilized by the end of 2024 and are expected to be fully utilized by the end of 2026[53] Use of Net Proceeds from Global Offering (As of June 30, 2024) | Intended Use of Proceeds | Total Net Proceeds Allocated (Million HKD) | Percentage (%) | Unutilized Amount as of December 31, 2023 (Million HKD) | Amount Utilized for the Six Months Ended June 30, 2024 (Million HKD) | Unutilized Amount as of June 30, 2024 (Million HKD) | Expected Timeline for Full Utilization of Remaining Global Offering Proceeds | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | For clinical development, manufacturing and commercialization of core product LZ901 | 140.7 | 58.2 | 107.9 | 45.4 | 62.5 | By end of 2026 | | To fund ongoing and planned clinical trials for LZ901 in China and the US | 97.0 | 40.2 | 64.2 | 45.4 | 18.8 | By end of 2026 | | To fund commercial manufacturing of LZ901 | 14.6 | 6.0 | 14.6 | – | 14.6 | By end of 2026 | | To fund marketing and sales activities | 29.1 | 12.0 | 29.1 | – | 29.1 | By end of 2026 | | For clinical development and manufacturing of K3 | 53.4 | 22.1 | 53.4 | – | 53.4 | By end of 2026 | | To fund planned clinical trials for K3 | 38.8 | 16.1 | 38.8 | – | 38.8 | By end of 2026(2) | | To fund commercial manufacturing of K3 | 14.6 | 6.0 | 14.6 | – | 14.6 | By end of 2026 | | For construction of Zhuhai Phase II commercial production facility | 38.8 | 16.1 | 21.0 | 20.9 | 0.1 | By end of 2026 | | For working capital and other general corporate purposes | 8.7 | 3.6 | 8.7 | 1.4 | 7.3 | By end of 2026 | | Total | 241.6 | 100.0 | 191.0 | 67.7 | 123.3 | | Employees and Remuneration Policy As of June 30, 2024, the Group employed 148 full-time employees, with a performance-based evaluation system for remuneration and contributions to social insurance and housing provident fund in China - As of June 30, 2024, the Group employed 148 full-time employees[54] - The Group has designed an evaluation system to regularly assess employee performance to determine salary increases, bonuses, or promotions[54] - The Group contributes to social insurance and housing provident fund for all employees in China[54] Employee Incentive Scheme The Company adopted an employee incentive scheme on December 15, 2021, prior to its listing, which involves granting interests in the Group's employee incentive platform rather than new shares - The Company adopted an employee incentive scheme on December 15, 2021, prior to its listing[55] - The employee incentive scheme does not involve the grant of new shares, but rather eligible participants are granted interests in Hengqin Luzhu Limited Partnership, the Group's employee incentive platform[55] Compliance with Corporate Governance Code The Company's corporate governance practices are based on the principles and code provisions of the Corporate Governance Code, with a deviation regarding the Chairman and General Manager roles, which the Board believes does not affect the balance of power - The Company's corporate governance practices are based on the principles and code provisions set out in Appendix C1 to the Listing Rules, the Corporate Governance Code[56] - Mr. Kong currently serves as both the Chairman of the Board and the General Manager of the Company, which deviates from code provision C.2.1 of the Corporate Governance Code[57] - The Board believes that this structure does not affect the balance of responsibilities, given the Board's composition includes three independent non-executive directors, and Mr. Kong's dual role helps maintain policy continuity and operational stability of the Company[57] Compliance with Model Code for Securities Transactions The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers, and all directors and supervisors confirmed compliance as of June 30, 2024 - The Company has adopted the Model Code set out in Appendix C3 to the Listing Rules to regulate all dealings in the Company's securities by directors, supervisors and relevant employees[57] - All Directors and Supervisors have confirmed that they have complied with the applicable standards set out in the Model Code up to June 30, 2024[57] Purchase, Sale or Redemption of the Company's Listed Securities As of June 30, 2024, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed securities, though the Company repurchased 1,436,000 H shares after the reporting period - Up to June 30, 2024, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed securities[58] - After June 30, 2024, and up to the date of this announcement, the Company repurchased a total of 1,436,000 H shares (representing approximately 0.71% of the Company's total issued share capital as of the date of this announcement)[58] Events After Reporting Period No material events affecting the Group occurred after June 30, 2024, up to the date of this announcement, other than those disclosed herein - Save as disclosed in this announcement, there were no material events affecting the Group that occurred after June 30, 2024, and up to the date of this announcement[59] Review of Interim Results The Audit Committee and independent auditor have reviewed the Group's interim results for the period, confirming their preparation in accordance with applicable accounting standards, rules, and regulations, with no objections to the accounting treatment - The Audit Committee, together with the Company's management, has considered and reviewed the Group's interim results for the reporting period and is of the opinion that the Group's interim results have been prepared in accordance with applicable accounting standards, rules and regulations[60] - The Company's independent auditor, Deloitte Touche Tohmatsu, has also reviewed the Group's interim financial information for the six months ended June 30, 2024, in accordance with Hong Kong Standard on Review Engagements 2410 issued by the Hong Kong Institute of Certified Public Accountants[60] - Neither the Audit Committee nor the Company's independent auditor has raised any objections to the accounting treatment adopted by the Company[60] Publication of Interim Results and Interim Report This announcement is published on the HKEXnews and Company websites, and the interim report for the six months ended June 30, 2024, will be dispatched to shareholders and published online in due course - This announcement is published on the HKEXnews website (www.hkexnews.hk) and the Company's website (http://www.luzhubiotech.com/)[61](index=61&type=chunk) - The Company's interim report for the six months ended June 30, 2024, will be dispatched to shareholders (if requested) and published on the aforesaid HKEXnews website and the Company's website in due course in accordance with the Articles of Association, the Listing Rules and applicable laws and regulations[61] Definitions This section provides definitions of key terms used in the announcement to ensure readers' accurate understanding of the report content - This section provides definitions of key terms used in the announcement to ensure readers' accurate understanding of the report content[61][62][63][64][65] Board of Directors As of the announcement date, the Board of Directors comprises executive directors Mr. Kong Jian, Ms. Jiang Xianmin, and Ms. Zhang Yanping; non-executive directors Mr. Ma Biao and Mr. Kong Shuangquan; and independent non-executive directors Mr. Leung Wai Yip, Mr. Leung Yit She, and Ms. Hou Aijun - As of the date of this announcement, the Board comprises executive directors Mr. Kong Jian, Ms. Jiang Xianmin and Ms. Zhang Yanping; non-executive directors Mr. Ma Biao and Mr. Kong Shuangquan; and independent non-executive directors Mr. Leung Wai Yip, Mr. Leung Yit She and Ms. Hou Aijun[65]