腾盛博药-B(02137) - 2024 - 中期财报

Company Overview Company Profile Brii Biosciences is a biotechnology company focused on developing functional cures for Hepatitis B (HBV) by combining surface antigen reduction and immunomodulation therapies, while seeking collaborations for non-HBV projects - The company's core mission is to develop functional cures for Hepatitis B (HBV), believing this will have a profound impact on patients in China and globally[3] - The company's HBV product portfolio includes three differentiated candidates: elebsiran (siRNA), tobevibart (monoclonal antibody), and BRII-179 (therapeutic vaccine), all of which have received Breakthrough Therapy Designation from China's National Medical Products Administration (NMPA) Center for Drug Evaluation (CDE)[3] - While focusing on HBV projects, the company is actively seeking external collaborations for its HIV, Multi-drug Resistant/Extensively Drug-Resistant (MDR/XDR), and Central Nervous System (CNS) projects[3] Company Information Company Information This section provides essential legal and administrative details, including board members, company secretary, legal advisors, auditors, registered office, and stock code - The Chairman and Chief Executive Officer of the company is Dr. Zhi Hong[4] - The company's auditor is Deloitte Touche Tohmatsu[5] - The company was listed on the Hong Kong Stock Exchange on July 13, 2021, with stock code 2137[5] Management Discussion and Analysis (MD&A) Business Overview The company's strategy focuses on developing HBV functional cures, leveraging its US-China presence to advance late-stage combination therapies, with three core candidates receiving CDE breakthrough designations - The company's strategic focus is on the HBV functional cure program, believing it can bring meaningful therapeutic impact to patients in China and globally[6] - The company's three leading HBV candidates (elebsiran, tobevibart, and BRII-179) have all received Breakthrough Therapy Designation from China's NMPA CDE, which will accelerate their clinical development and regulatory review[6] - The company presented the first direct evidence that immune responses induced by the HBV therapeutic vaccine (BRII-179) are associated with HBsAg reduction and viral control, providing key support for late-stage combination trials[7] Product Pipeline Summary The company has a pipeline of 10 innovative candidates primarily for infectious and CNS diseases, with core HBV projects (Elebsiran, Tobevibart, BRII-179) in Phase 2 development Product Pipeline Overview | Indication | Project | Phase | Rights Scope | | :--- | :--- | :--- | :--- | | Hepatitis B (HBV) | Elebsiran (BRII-835) | Phase 2 | Greater China | | Hepatitis B (HBV) | Tobevibart (BRII-877) | Phase 2 | Greater China | | Hepatitis B (HBV) | BRII-179 | Phase 2 | Global | | MDR Infection | Epetraborole (BRII-658) | Phase 2/3 | Greater China | | Postpartum Depression (PPD) | BRII-296 | Phase 2 | Global | | Anxiety/Depression | BRII-297 | Phase 1 | Global | Business Review During the reporting period, the company strategically increased investment in core HBV assets, advanced clinical trials, presented key data at EASL, and is actively seeking collaborations for non-HBV projects - The company presented key data at the 2024 European Association for the Study of the Liver (EASL) conference, providing the first direct evidence that immune responses induced by the HBV therapeutic vaccine (BRII-179) are associated with HBsAg reduction and viral control[10] - With increased strategic focus on HBV, the company is actively seeking collaborations for projects in the MDR/XDR, HIV, and CNS fields[10] HBV Program Updates The company is advancing multiple HBV combination therapies to increase functional cure rates for approximately 87 million infected individuals in China, with key Phase 2 data expected in Q4 2024 - Elebsiran and Tobevibart received Breakthrough Therapy Designation from China's NMPA CDE in May 2024[11] - Multiple key clinical study results are expected to be announced in the fourth quarter of 2024, including Part B of the MARCH study, preliminary results from the ENSURE study, and additional data from the SOLSTICE Hepatitis D trial[11] - In February 2024, the company entered into an agreement with VBI to acquire the intellectual property rights and related manufacturing facilities for BRII-179 to ensure supply for clinical studies[12] Other Clinical and Pre-clinical Program Updates The company is seeking partnerships for non-core projects, including commercialization of PreHevbriTM in APAC, advancing BRII-693 for MDR/XDR infections, and seeking external collaborations for HIV and CNS programs - For BRII-693, targeting MDR/XDR Gram-negative bacterial infections, an IND application for a Phase 1 PK bridging study has been submitted in China to support global Phase 3 registration trials[13] - BRII-296, for the treatment of postpartum depression (PPD), has completed a Phase 2 study, and the company is actively seeking partners[17] - Partner AN2 reported unfavorable Phase 2/3 clinical trial results for Epetraborole (BRII-658) for the treatment of Mycobacterium avium complex (MAC) lung disease and has decided to terminate the trial[17] Research and Development R&D is the company's cornerstone, led by experienced professionals with cross-border capabilities to accelerate clinical development in China and participate in global research, with R&D expenses of RMB 126.2 million in H1 2024 H1 2024 R&D Expenses | Project | Amount (RMB) | | :--- | :--- | | H1 2024 R&D Expenses | 126.2 million yuan | - The company's R&D execution team comprises several industry veterans, including CEO Dr. Zhi Hong and Chief Medical Officer Dr. David Margolis[19] Future Outlook and Strategy The long-term strategy is to lead in HBV functional cures by improving cure rates with combination therapies and initiating confirmatory studies, while expanding the pipeline through in-licensing and out-licensing opportunities - As a leading company in HBV functional cures, the company will continue to focus on improving functional cure rates through different combination therapies[21] - The company plans to explore global business development opportunities through in-licensing and out-licensing, and refine its early-stage development strategy to align with long-term pipeline interests[21] Financial Review For the six months ended June 30, 2024, revenue dropped to zero due to COVID-19 project termination, total loss expanded to RMB 283.2 million primarily from fair value losses on financial assets, while R&D and administrative expenses significantly decreased H1 2024 Key Financial Data (vs. H1 2023) | Indicator (RMB thousand) | H1 2024 (Unaudited) | H1 2023 (Unaudited) | Reason for Change | | :--- | :--- | :--- | :--- | | Revenue | 0 | 617 | Termination of COVID-19 project | | Other income | 70,879 | 85,863 | Decrease in government grants | | Other gains and losses | (115,374) | 23,326 | Fair value loss on financial assets | | Research and development expenses | (126,169) | (202,175) | Focus on HBV projects and organizational optimization | | Administrative expenses | (78,629) | (102,823) | Organizational optimization leading to lower employee costs | | Loss for the period | (283,238) | (196,826) | Primarily impacted by fair value loss on financial assets | | Adjusted loss for the period (Non-IFRS) | (280,099) | (163,700) | - | - As of June 30, 2024, total bank and cash balances were RMB 2.4778 billion, a decrease from RMB 2.6614 billion at the end of 2023, primarily used for daily operations and R&D activities[27] - The current ratio significantly increased from 2,211% at the end of 2023 to 3,781% as of June 30, 2024, mainly due to the payment of most third-party contract costs, leading to a decrease in other payables[31] Debt and Liabilities As of June 30, 2024, the company had no significant bank borrowings or financing, with main liabilities including RMB 17.8 million in bills payable and RMB 1.9 million in lease liabilities, and no contingent liabilities or asset pledges - As of June 30, 2024, the Group had no significant borrowings, pledges, or similar debts, except for RMB 17.8 million in bills payable[33] - The Group has no contingent liabilities or asset pledges[33][36] Employees and Remuneration As of June 30, 2024, the company had 95 employees, with 66% (63 people) in R&D, and total remuneration costs for H1 2024 significantly decreased to RMB 96.2 million, reflecting organizational optimization and strategic focus Employee Distribution | Function | Number of Employees | Percentage of Total | | :--- | :--- | :--- | | R&D | 63 | 66% | | Administrative | 32 | 34% | | Total | 95 | 100% | - For the six months ended June 30, 2024, the Group's total remuneration costs amounted to RMB 96.2 million, a significant decrease from RMB 155.0 million in the same period of 2023[38] Corporate Governance and Other Information Use of Proceeds from Global Offering The company's 2021 IPO raised approximately HKD 2.614 billion, with HKD 1.422 billion utilized by June 30, 2024, primarily for HBV and CNS projects, and remaining funds expected to be fully used by end of 2027 Use of Proceeds from Global Offering (as of June 30, 2024) | Category of Use | Net Allocated (HKD million) | Amount Utilized (HKD million) | Amount Unutilized (HKD million) | | :--- | :--- | :--- | :--- | | HBV Functional Cure Projects | 994.1 | 589.6 | 404.5 | | HIV Projects | 176.0 | 150.4 | 25.6 | | MDR/XDR Infection Projects | 294.0 | 60.8 | 233.2 | | CNS Projects | 496.3 | 276.9 | 219.4 | | Pipeline Expansion | 392.0 | 83.2 | 308.8 | | Working Capital and General Corporate Purposes | 261.4 | 261.4 | 0 | | Total | 2,613.8 | 1,422.3 | 1,191.5 | Corporate Governance Practices The company complied with corporate governance code provisions during the period, except for the combined roles of Chairman and CEO, which the board believes enhances management efficiency and strategic execution - The company deviated from Corporate Governance Code Provision C.2.1, where the roles of Chairman and Chief Executive Officer are held by the same person (Dr. Zhi Hong)[44] - The Board believes this arrangement facilitates management efficiency and strategic execution, and its effectiveness will be continuously reviewed[44] Share Schemes This section details the company's share incentive plans, including pre- and post-IPO option and award schemes, and the new 2023 plans, outlining their purpose, eligibility, share limits, and changes in outstanding options and restricted share units Pre-IPO Share Incentive Scheme Adopted in October 2018 to attract and incentivize key personnel, this scheme ceased new grants post-IPO, with 19,127,468 outstanding options as of June 30, 2024, representing approximately 2.6% of issued share capital - After listing, the company no longer grants any share options or awards under this scheme[62] - As of June 30, 2024, there were 19,127,468 outstanding share options under this scheme, involving directors Dr. Zhi Hong, Dr. Ankang Li, and other employees and consultants[62] Post-IPO Share Option Scheme Adopted in June 2021 and terminated on September 1, 2023, by the new 2023 scheme, this plan no longer grants new options but has 34,120,333 outstanding options as of June 30, 2024, representing approximately 4.7% of issued share capital - This scheme was terminated on September 1, 2023, and no new share options will be granted, but previously granted options remain valid[64] - As of June 30, 2024, there were 34,120,333 outstanding share options under this scheme[71] Post-IPO Share Award Scheme Adopted in June 2021 and terminated on September 1, 2023, by the new 2023 scheme, this plan no longer grants new awards but has 8,048,817 unvested restricted share units as of June 30, 2024, representing approximately 1.1% of issued share capital - This scheme was terminated on September 1, 2023, and no new share awards will be granted[73] - As of June 30, 2024, there were 8,048,817 unvested restricted share units under this scheme[79][80] 2023 Share Option Scheme Adopted on September 1, 2023, with a 10-year validity and a shared authorization limit of 72,813,078 shares, the company granted 5,752,500 options on March 28, 2024, with 5,752,500 unexercised options as of June 30, 2024 - On March 28, 2024, the company granted 5,752,500 share options to employees under this scheme, with an exercise price of HKD 0.964[92] - As of June 30, 2024, the total number of share options available for future grant under this scheme was 66,239,078[91] 2023 Share Award Scheme Adopted on September 1, 2023, with a 10-year validity and a shared authorization limit, the company granted 821,500 restricted share units on March 28, 2024, with 821,500 unvested units as of June 30, 2024 - On March 28, 2024, the company granted 821,500 restricted share units to employees under this scheme[102] - As of June 30, 2024, the total number of share awards available for future grant under this scheme was 66,239,078 (shared with the Share Option Scheme)[100] Condensed Consolidated Financial Statements Review Report Deloitte Touche Tohmatsu reviewed the condensed consolidated financial statements for the six months ended June 30, 2024, concluding that no matters indicated non-compliance with IAS 34 - Auditor Deloitte issued a review conclusion, not an audit opinion, on the interim financial statements[107] - The review concluded that no matters indicated non-compliance with International Accounting Standard 34[108] Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2024, the company reported a loss of RMB 283.2 million, an increase from RMB 196.8 million last year, primarily due to a significant shift in net other gains and losses from gain to loss, while R&D and administrative expenses decreased Profit or Loss Statement Core Data (RMB thousand) | Item | H1 2024 (Unaudited) | H1 2023 (Unaudited) | | :--- | :--- | :--- | | Revenue | – | 617 | | Research and development expenses | (126,169) | (202,175) | | Administrative expenses | (78,629) | (102,823) | | Net other gains and losses | (115,374) | 23,326 | | Loss for the period | (283,238) | (196,826) | | Loss per share (RMB) | (0.38) | (0.26) | Condensed Consolidated Statement of Financial Position As of June 30, 2024, total assets were RMB 2.897 billion and net assets RMB 2.810 billion, both decreased from year-end 2023 mainly due to a reduction in time deposits, while current liabilities significantly decreased, maintaining a robust financial position Balance Sheet Core Data (RMB thousand) | Item | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | Non-current assets | 337,255 | 415,473 | | Current assets | 2,559,350 | 2,782,778 | | Including: Cash and cash equivalents | 656,256 | 489,650 | | Including: Time deposits | 1,730,517 | 2,171,011 | | Total assets | 2,896,605 | 3,198,251 | | Current liabilities | 67,695 | 125,869 | | Non-current liabilities | 18,617 | – | | Total liabilities | 86,312 | 125,869 | | Net assets | 2,810,293 | 3,072,382 | Condensed Consolidated Statement of Cash Flows For the six months ended June 30, 2024, net cash used in operating activities decreased to RMB 226 million, indicating improved cost control, while investing activities generated a net inflow of RMB 394 million, primarily from withdrawal of time deposits, increasing period-end cash to RMB 656 million Cash Flow Statement Core Data (RMB thousand) | Item | H1 2024 (Unaudited) | H1 2023 (Unaudited) | | :--- | :--- | :--- | | Net cash used in operating activities | (225,788) | (353,761) | | Net cash from (used in) investing activities | 393,908 | (353,409) | | Net cash used in financing activities | (4,422) | (4,782) | | Net increase (decrease) in cash and cash equivalents | 163,698 | (711,952) | | Cash and cash equivalents at end of period | 656,256 | 487,494 | Notes to the Condensed Consolidated Financial Statements These notes provide detailed explanations of financial statement items, including segment reporting, sources of other income and losses, significant transactions with VBI Vaccines and related impairment, and detailed changes in share-based payment schemes Note 19: Significant Transactions (with VBI Vaccines) The company entered into significant transactions with VBI Vaccines Inc. (VBI) to acquire BRII-179 IP and other assets; however, VBI's July 2024 restructuring and delisting raised recoverability concerns, leading to a full impairment provision for the USD 4.6 million prepayment - The company entered into multiple significant transactions with VBI to acquire BRII-179 intellectual property, VBI-1901 license, and related assets[164][165] - VBI initiated restructuring procedures in July 2024 and delisted from Nasdaq in August, introducing significant uncertainty to the transactions[165] - Due to VBI's financial risks, the company has fully provided for an expected credit loss allowance on the USD 4.6 million (approximately RMB 33 million) prepayment[165] Note 18: Share-based Payment Transactions This note details changes in the company's equity-settled share option and award schemes, including new grants under the 2023 plans and forfeiture of some milestone-based awards, with total share-based payment expenses of RMB 1.41 million for options and RMB 1.73 million for awards in H1 2024 - In September 2023, the company adopted new "2023 Share Award Scheme" and "2023 Share Option Scheme," replacing previous post-listing schemes[156] - As of June 30, 2024, the total number of outstanding share options under all schemes was 59,000,301[159] - As of June 30, 2024, the total number of unvested restricted share units under all schemes was 8,870,317 (8,048,817 + 821,500)[152][154]