中国抗体(03681) - 2021 - 中期财报

Company Information This section provides fundamental company information, including governance structure and key contact details Company Overview and Governance Structure This chapter provides China Antibody Pharmaceutical Limited's basic company information as of June 30, 2021, including board members, key contacts, and governance structure - The company's board of directors comprises executive, non-executive, and independent non-executive directors, with Dr. Liang Ruian serving as Chairman and CEO[1] - Membership lists for the Audit, Remuneration, and Nomination Committees are provided, noting changes such as Dr. Li Zhiming's appointment to the Audit Committee on June 15, 2021[1] - The company's registered office is in Hopewell Centre, Hong Kong, with Ernst & Young as auditor and stock code 3681[1] Chairman's Report This report reviews the company's significant achievements, R&D progress, and strategic direction for future growth Business Review and Milestones The Chairman's Report reviews the company's 20th anniversary milestones and outlines H1 2021 R&D and production progress, including SM03 and SN1011 clinical trials, and COVID-19's impact on commercialization timelines - The company celebrates its 20th anniversary, evolving from a startup to a Main Board listed company on the HKEX[2] - Despite COVID-19, employees advanced business and R&D, though SM03's commercialization timeline was revised due to patient recruitment[2] Core Product R&D Progress This section details the latest R&D progress for core products SM03 and SN1011, including clinical trial phases, patient recruitment, regulatory plans, and commercialization timelines, highlighting SN1011's potential in pemphigus vulgaris treatment - Flagship product SM03's Phase III clinical trial for rheumatoid arthritis (RA) has enrolled 408 patients, with recruitment planned for completion by end of 2021, BLA submission in H2 2022, and commercialization expected in H2 2023[2] - SM03's Phase II clinical study for systemic lupus erythematosus (SLE) is anticipated to commence in H2 2021[2] - Third-generation BTK inhibitor SN1011 received NMPA approval for Investigational New Drug (IND) applications for SLE (August 2020) and pemphigus vulgaris (PV) (June 2021)[3][4] - SN1011's Phase I dose-escalation study in China completed with 71 healthy subjects, demonstrating good tolerability and safety; Phase II trials for PV are starting in China, with SLE Phase II trials planned[4] Production Facilities and Strategic Platform The company is expanding production capacity at Haikou and constructing a Suzhou plant to meet future commercialization needs, while also developing an integrated platform covering the entire industry chain to enhance R&D and commercialization efficiency - Haikou production base has a capacity of 1,200 liters, with its operational area expanded from approximately 4,526 square meters to 19,163 square meters[4] - A plant with 32,000 liters capacity and a total floor area of approximately 75,000 square meters is under construction in Suzhou Dushu Lake Higher Education Area, expected to complete by end of 2022, bringing total capacity to 44,000 liters[5] - The company developed an integrated platform covering the entire industry chain, from target identification and drug development to clinical trials, production, quality control, regulatory approval, and commercial-scale manufacturing[6] Future Outlook and Strategic Objectives The company anticipates broader development opportunities in the post-pandemic capital market for the pharmaceutical industry, committing to independent innovation, enhancing drug R&D and commercialization capabilities, and aiming to be a global leader in innovative immunotherapies - The Chinese government supports the industrialization and internationalization of antibody drugs, providing a favorable environment for the company's development[6] - The company will uphold independent innovation, research novel drug target identification, and develop excellent clinical and marketing teams to enhance drug R&D and commercialization capabilities[6] - The company's vision is to become a global leader in innovative therapies for immunological diseases[6] Management Discussion and Analysis This section provides an in-depth analysis of the company's operational performance, financial position, and future strategic initiatives New Drug Development Phase This section outlines the company's position as Hong Kong's first listed biopharmaceutical company focused on immunological diseases, detailing its rich product pipeline, including flagship SM03, key product SN1011, and other investigational drugs SM17, SM06, SM09, and TNF2, with their latest clinical progress and therapeutic potential - The company is Hong Kong's first listed biopharmaceutical company focused on R&D, production, and commercialization of immunological disease therapies, primarily developing monoclonal antibody (mAb) biologics[8] - Flagship product SM03 is the world's first potential mAb for rheumatoid arthritis (RA) with its target, projected for commercialization in H2 2023, though the timeline was revised due to COVID-19[8] - SM03's Phase III clinical trial for RA has recruited 408 patients, with recruitment expected to conclude by end of 2021, and BLA submission planned for H2 2022[12] - SM03 will also advance to a Phase II clinical trial for systemic lupus erythematosus (SLE), anticipated to commence in H2 2021[12] - Key product SN1011, a third-generation reversible covalent BTK inhibitor, received IND approval in China for SLE and pemphigus vulgaris (PV), completing its Phase I dose-escalation study with good tolerability and safety[13][14] - The company is initiating Phase II clinical studies for PV in China and plans to launch Phase II clinical studies for SLE[14] - SM17, a first-in-class and first-in-target humanized anti-IL17RB antibody for asthma and idiopathic pulmonary fibrosis, is slated for global human clinical trials in Q1 2022[10] - SM06, a humanized variant of SM03, is expected to receive IND approval in the US as early as H2 2022[10][17] Production and R&D Activities This section details the company's production facility expansion plans, including capacity increases at Haikou and Suzhou, R&D investment in flagship product SM03, and intellectual property protection, alongside human resource investments, particularly the growth in R&D personnel - Haikou production base has a capacity of 1,200 liters, with its operational area expanded to approximately 19,163 square meters[17] - The China headquarters, R&D center, and production base in Suzhou Dushu Lake Higher Education Area are under construction, with a total floor area of approximately 75,000 square meters, expected to complete by end of 2022, and production capacity exceeding 32,000 liters[17] - During the reporting period, the Group incurred approximately RMB 55.3 million in R&D expenditures for SM03[18] - The company holds multiple invention patents for SM03 (applicable to SM06) in China and the US, and for SM09 in China and the US[19] - As of June 30, 2021, the Group had 262 employees, with R&D personnel increasing from 25 to 47 during the period[20][21] Future Outlook and Strategic Planning The company aims to be a global leader in innovative therapies for immunological diseases, achieving this vision by advancing flagship product commercialization, developing its pipeline, expanding production, and strengthening global operations, while actively exploring novel drug target identification and planning to establish a sales team for future product commercialization - The company's vision is to become a global leader in innovative therapies for immunological and other debilitating diseases[22] - The Group will continue to advance SM03 commercialization, develop its existing product pipeline, discover and develop novel drugs, expand production scale, and strengthen global operations[24] - The company plans to establish a sales team by 2022, covering most provinces and cities in China, to support future commercialization of investigational drugs[29] - The company has established a long-term partnership with D2M Biotherapeutics Limited to actively explore innovative drug target identification[30] - The COVID-19 pandemic continues to impact clinical trial development, primarily affecting patient recruitment and hospital visits[30] Financial Review This section provides an overview of financial performance for the six months ended June 30, 2021, including key financial indicators such as other income and gains, R&D costs, administrative expenses, liquidity, bank borrowings, and loss per share, with comparisons to the prior period Other Income and Gains (For the six months ended June 30) | Indicator | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Total other income and gains | 12,745 | 18,659 | | Change | Decrease of 6,000 | - | | Primary reason | Decrease in unrealized fair value gains on financial assets at fair value through profit or loss of approximately RMB 6.4 million | - | Research and Development Costs (For the six months ended June 30) | Indicator | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Laboratory consumables and trial costs | 70,258 | 37,246 | | Employment costs | 15,113 | 7,749 | | Others | 4,611 | 2,821 | | Total | 89,982 | 47,816 | | Change | Increase of 42,166 | - | | Primary reason | Increase in laboratory consumables and trial costs of approximately RMB 33.1 million; increase in employment costs of approximately RMB 7.4 million due to increased R&D personnel | - | Administrative Expenses (For the six months ended June 30) | Indicator | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Total administrative expenses | 32,861 | 50,030 | | Change | Decrease of 17,169 | - | | Primary reason | Non-cash share-based payments under the Restricted Share Unit Scheme not recognized during the period (2020: RMB 34.9 million), partially offset by increased employment-related costs, depreciation costs, and rental property management fees | - | Cash and Cash Equivalents (As of June 30) | Indicator | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | 643,060 | 810,370 | | Change | Decrease of 167,310 | - | | Primary reason | Capital expenditures, share purchases, investments in structured deposits and D2M, operating expenses, partially offset by increased bank borrowings and proceeds from the disposal of China Medical Fund | - | Loss Per Share (For the six months ended June 30) | Indicator | 2021 (RMB) | 2020 (RMB) | | :--- | :--- | :--- | | Basic and diluted loss per share | 0.11 | 0.08 | | Loss attributable to ordinary equity holders of the parent | 114,403 | 80,840 | | Weighted average number of ordinary shares issued during the period | 1,006,240,400 | 1,001,741,519 | - As of June 30, 2021, outstanding bank borrowings were RMB 125.5 million (December 31, 2020: RMB 60.5 million), with the company maintaining a net cash position[38] Significant Investments and Related Party Transactions This section discloses a significant investment disposal during the reporting period, namely the sale of China Medical Fund, and details a lapsed related party transaction, the convertible bond subscription agreement with Haiyao International Group Co., Ltd - The company disposed of 775,347.912 Class A participating shares in China Medical Fund for approximately HKD 110.6 million (approximately RMB 92.0 million), recognizing an unrealized fair value gain of approximately RMB 28.3 million, with an investment return rate of approximately 41.76%[41] - The convertible bond subscription agreement with Haiyao International Group Co., Ltd. (a related party) for a principal amount of HKD 100,000,000 lapsed due to certain conditions precedent not being met or waived[43] Independent Review Report This report presents the independent auditor's review opinion on the interim condensed consolidated financial information Review Opinion Ernst & Young conducted an independent review of China Antibody Pharmaceutical Limited's interim condensed consolidated financial information for the six months ended June 30, 2021, concluding that nothing came to their attention suggesting the interim financial information was not prepared in all material respects in accordance with HKAS 34 - Ernst & Young reviewed the interim financial information in accordance with Hong Kong Standard on Review Engagements 2410[46] - The review concluded that nothing came to the reviewer's attention suggesting the interim financial information was not prepared in all material respects in accordance with Hong Kong Accounting Standard 34[47] Interim Condensed Consolidated Financial Statements This section presents the company's interim condensed consolidated financial statements, including profit or loss, comprehensive income, financial position, equity changes, and cash flows Interim Condensed Consolidated Statement of Profit or Loss For the six months ended June 30, 2021, the company reported a loss of RMB 114,403 thousand, an increase from RMB 80,840 thousand in the prior period, primarily due to higher R&D costs and reduced fair value gains on financial assets Summary of Interim Condensed Consolidated Statement of Profit or Loss (For the six months ended June 30) | Indicator | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Other income and gains | 12,745 | 18,659 | | Research and development costs | (89,982) | (47,816) | | Administrative expenses | (32,861) | (50,030) | | Finance costs | (2,499) | (1,524) | | Loss before tax | (114,403) | (80,840) | | Loss for the period | (114,403) | (80,840) | | Loss per share attributable to ordinary equity holders of the parent (RMB) | 0.11 | 0.08 | Interim Condensed Consolidated Statement of Comprehensive Income For the six months ended June 30, 2021, the company reported a total comprehensive loss of RMB 123,734 thousand, an increase from RMB 63,033 thousand in the prior period, mainly due to expanded loss for the period and a shift from exchange gain to loss Summary of Interim Condensed Consolidated Statement of Comprehensive Income (For the six months ended June 30) | Indicator | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Loss for the period | (114,403) | (80,840) | | Exchange differences on translation to presentation currency | (9,331) | 17,807 | | Total comprehensive loss for the period | (123,734) | (63,033) | Interim Condensed Consolidated Statement of Financial Position As of June 30, 2021, the company's total assets less current liabilities were RMB 991,732 thousand, down from RMB 1,070,719 thousand on December 31, 2020, with net assets at RMB 803,604 thousand, primarily impacted by decreased current assets and increased non-current liabilities Summary of Interim Condensed Consolidated Statement of Financial Position (As of June 30) | Indicator | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Total non-current assets | 303,964 | 195,169 | | Total current assets | 735,704 | 934,354 | | Total current liabilities | 47,936 | 58,804 | | Net current assets | 687,768 | 875,550 | | Total assets less current liabilities | 991,732 | 1,070,719 | | Total non-current liabilities | 188,128 | 83,708 | | Net assets | 803,604 | 987,011 | | Total equity | 803,604 | 987,011 | - Property, plant, and equipment increased from RMB 101,093 thousand on December 31, 2020, to RMB 143,409 thousand on June 30, 2021, reflecting increased capital expenditures[51] - Cash and cash equivalents decreased from RMB 810,370 thousand on December 31, 2020, to RMB 643,060 thousand on June 30, 2021[51] Interim Condensed Consolidated Statement of Changes in Equity For the six months ended June 30, 2021, the company's total equity decreased from RMB 987,011 thousand at the beginning of the period to RMB 803,604 thousand, primarily due to the total comprehensive loss for the period and the impact of share purchases under the share award scheme Summary of Interim Condensed Consolidated Statement of Changes in Equity (For the six months ended June 30) | Indicator | January 1, 2021 (RMB thousands) | Loss for the period (RMB thousands) | Exchange differences (RMB thousands) | Purchase of shares (RMB thousands) | June 30, 2021 (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | :--- | | Total equity | 987,011 | (114,403) | (9,331) | (59,673) | 803,604 | - Share purchases under the share award scheme resulted in an equity decrease of RMB 59,673 thousand[55] Interim Condensed Consolidated Statement of Cash Flows For the six months ended June 30, 2021, the company's cash and cash equivalents decreased by RMB 159,214 thousand, primarily due to net cash outflows from operating, investing, and financing activities Summary of Interim Condensed Consolidated Statement of Cash Flows (For the six months ended June 30) | Indicator | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Net cash flows used in operating activities | (88,857) | (73,924) | | Net cash flows used in investing activities | (62,511) | (633,666) | | Net cash flows used in financing activities | (7,846) | (12,814) | | Net decrease in cash and cash equivalents | (159,214) | (720,404) | | Cash and cash equivalents at end of period | 643,060 | 496,896 | - Cash outflow from investing activities primarily included purchases of property, plant, and equipment (RMB 67,539 thousand), financial assets at fair value through profit or loss (RMB 50,000 thousand), and an increase in pledged deposits (RMB 20,982 thousand), partially offset by proceeds from disposal of financial assets (RMB 92,046 thousand)[57] - Cash outflow from financing activities primarily included share purchases under the share award scheme (RMB 59,673 thousand) and principal portion of lease payments (RMB 10,077 thousand), partially offset by new bank borrowings (RMB 67,582 thousand)[57] Notes to the Interim Condensed Consolidated Financial Information This section provides detailed notes to the interim condensed consolidated financial statements, covering basis of preparation, accounting policy changes, operating segment information, loss before tax, income tax, dividends, loss per share calculation, property, plant and equipment, financial assets, cash and pledged deposits, share capital, commitments, related party transactions, and fair value of financial instruments - The interim condensed consolidated financial information is prepared in accordance with Hong Kong Accounting Standard 34 'Interim Financial Reporting'[58] - For the six months ended June 30, 2021, the Group acquired assets at a cost of RMB 46,272 thousand, a significant increase from RMB 5,069 thousand in the prior period[66] Financial Assets at Fair Value Through Profit or Loss (As of June 30) | Indicator | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Structured deposits | 50,245 | - | | Unlisted investments | - | 93,058 | | Total | 50,245 | 93,058 | - As of June 30, 2021, the Group's pledged deposits amounted to RMB 20,982 thousand (December 31, 2020: nil)[69] - As of June 30, 2021, the Group's capital commitments (contracted but not provided for plant and machinery) were RMB 294,974 thousand, a significant increase from RMB 64,260 thousand on December 31, 2020[71] Key Management Personnel Compensation (For the six months ended June 30) | Indicator | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Short-term employee benefits | 4,382 | 5,873 | | Contributions to pension schemes | 104 | 61 | | Equity-settled share-based payment expenses | - | 34,903 | | Total compensation paid to key management personnel | 4,486 | 40,837 | - The carrying amounts of all the Group's financial instruments approximate their fair values, measured using a three-level fair value hierarchy, with structured deposits classified as Level 2 and unlisted investments (disposed of) as Level 3[78][79][81][82] Other Information This section covers the use of listing proceeds, equity incentive schemes, disclosure of interests, and corporate governance matters Use of Proceeds from Listing This section details the intended use and actual application of the company's net listing proceeds of HKD 1,272.8 million as of June 30, 2021, indicating most funds were allocated to R&D, commercialization, and production base construction - The company raised net proceeds of HKD 1,272.8 million from its listing[86] Use of Proceeds from Listing (As of June 30, 2021) | Use of Proceeds | Intended Use (HKD millions) | Actual Use (HKD millions) | Unutilized Net Proceeds (HKD millions) | | :--- | :--- | :--- | :--- | | R&D and commercialization of core product SM03 | 190.9 | 135.0 | 55.9 | | Funding for other investigational drugs in the pipeline | 279.4 | 115.6 | 163.8 | | Further R&D projects, team expansion, establishment of commercialization team, etc. | 42.4 | 42.3 | 0.1 | | Discovery and development of new investigational drugs not currently in the pipeline | 84.9 | 51.1 | 33.8 | | Construction of Suzhou production base (laboratory equipment) | 85.8 | 11.2 | 74.6 | | Construction of Suzhou production base (production facilities) | 59.7 | - | 59.7 | | Construction of additional R&D facilities and purchase of laboratory equipment | 107.6 | 22.3 | 85.3 | | Construction of upstream production facilities and downstream purification facilities | 88.2 | - | 88.2 | | Purchase of land in Suzhou Dushu Lake Higher Education Area and expansion expenses | 167.9 | 58.2 | 109.7 | | Working capital, expansion of internal capabilities, and other general corporate purposes | 127.2 | 84.2 | 43.0 | | Cooperation with D2M Group | 38.8 | 38.8 | - | | Total | 1,272.8 | 558.7 | 714.1 | Equity Incentive Schemes The company has a Restricted Share Unit Scheme and a Share Award Scheme to incentivize and retain talent; no new grants were made under the RSU scheme during the period, while shares were purchased by the trustee under the Share Award Scheme but no awards have been granted yet - The Restricted Share Unit Scheme was adopted on October 18, 2019, to incentivize directors, senior management, and employees[93] - On June 5, 2020, 10,062,404 restricted share units were granted to an employee under the Restricted Share Unit Scheme and vested; no new grants were made during the reporting period[94][95] - The Share Award Scheme was adopted on February 4, 2021, with a maximum of 50,312,020 award shares for the entire scheme period[96] - During the reporting period, the trustee purchased 18,095,500 shares from the market for a total of HKD 71,822,420.26 (approximately RMB 59,460,435.28), but no awards have been granted to any eligible persons yet[97] Disclosure of Interests This section discloses the interests and short positions of the company's directors, chief executives, and substantial shareholders in the company's shares and related shares as of June 30, 2021, including beneficial and controlled corporate interests Interests of Directors and Chief Executive in Shares (As of June 30, 2021) | Director/Chief Executive Name | Capacity/Nature of Interest | Number of Shares | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Ms. Liu Wenyu | Controlled corporation interest and spouse's interest | 257,721,040 | 25.61% | | Mr. Qiang Jing | Controlled corporation interest and spouse's interest | 257,721,040 | 25.61% | | Dr. Liang Ruian | Controlled corporation interest | 157,721,196 | 15.67% | | Mr. Ma Huiyuan | Spouse's interest | 61,500,740 | 6.11% | Interests of Substantial Shareholders in Shares (As of June 30, 2021) | Shareholder Name/Entity | Capacity/Nature of Interest | Number of Shares | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Shanghai Xingze Investment Management Co., Ltd. | Controlled corporation interest | 212,889,400 | 21.16% | | Shanghai Yueyi Investment Center (Limited Partnership) | Controlled corporation interest | 212,889,400 | 21.16% | | Skytech Technology | Beneficial interest | 157,721,196 | 15.67% | | Hainan Haiyao Co., Ltd. | Beneficial interest | 158,882,115 | 15.79% | | Apricot Oversea Holdings Limited | Beneficial interest | 108,316,600 | 10.76% | | Ms. Xu Sijia | Beneficial interest | 89,802,105 | 8.92% | | West Biolake Holdings Limited | Beneficial interest | 72,349,000 | 7.19% | | For Best Holding Capital Group Investment Inc. | Controlled corporation interest | 61,500,740 | 6.11% | | Zhiyu Investment Group Co., Ltd. | Beneficial interest | 61,500,740 | 6.11% | | Ms. Tian Huimin | Controlled corporation interest | 61,500,740 | 6.11% | | Mr. Weng Kang | Controlled corporation interest | 61,500,740 | 6.11% | | Yunnan Baiyao Group Co., Ltd. | Beneficial interest | 51,599,400 | 5.13% | | China CITIC Bank Corporation Limited Haikou Branch | Person with security interest in shares | 158,882,115 | 15.79% | | Haikou Rural Credit Cooperative Union | Person with security interest in shares | 51,000,000 | 5.07% | Corporate Governance and Compliance This section updates director information changes and confirms the company's compliance with the Model Code for Securities Transactions by Directors and relevant employee dealing guidelines during the reporting period, demonstrating commitment to high corporate governance standards and explaining the rationale for combining the Chairman and CEO roles - Executive Director Dr. Liang Ruian's annual remuneration was adjusted to HKD 5,060,000 effective January 2021[106] - The company confirms that all directors and relevant employees complied with the Model Code for Securities Transactions and employee written guidelines during the reporting period[108][109] - The company complied with all applicable code provisions of the Corporate Governance Code, except for Code Provision A.2.1 (roles of chairman and chief executive should be separate)[110] - The Board believes that Dr. Liang Ruian serving concurrently as Chairman and CEO is in the Group's best interest due to his extensive business knowledge and the Board's balanced responsibilities[111] - The Audit Committee reviewed the Group's adopted accounting principles and policies, audit and internal controls, and financial reporting matters, including the unaudited condensed consolidated financial statements for the reporting period[113] Definitions This section provides definitions for key terms and abbreviations used throughout the report to ensure clarity and understanding Definition of Terms This section provides definitions for key terms and abbreviations used in the report to ensure clear understanding of the content - Lists definitions for terms such as 'Audit Committee', 'Board', 'Corporate Governance Code', 'Company', 'connected person', 'Director', 'FDA', 'Group', 'HKFRS', 'HKD', 'Listing Rules', 'Model Code', 'NMPA', 'Nomination Committee', 'PCT', 'PRC', 'Prospectus', 'R&D', 'Remuneration Committee', 'Reporting Period', 'RMB', 'Restricted Share Unit', 'Restricted Share Unit Scheme', 'SFO', 'Shares', 'Shareholder', 'Skytech Technology', 'Stock Exchange', 'subsidiary', 'US', 'we', 'Xingze Xinghe', and 'Xingze Xingzhan'[115][116]