CASI(US:CASI)2025-03-31 12:45PART I ITEM 3. KEY INFORMATION The company faces significant going concern risks due to recurring losses and is subject to complex PRC regulations - The company is a Cayman Islands holding company, not a Chinese operating company, with the majority of its business conducted by its subsidiaries in China21 - On June 21, 2024, the company's Chairman and CEO, Dr. Wei-Wu He, submitted a non-binding proposal to acquire the company's entire China business operations and related rights for $40.0 million, including the assumption of up to $20.0 million in debt25 - A special committee of independent directors was formed to evaluate this proposal25 Key Financial Indicators (as of and for the year ended Dec 31, 2024) | Metric | Value (USD) | | :--- | :--- | | Accumulated Deficit | $700.1 million | | Net Loss | $39.3 million | | Cash Outflow from Operations | $29.2 million | | Net Current Assets | $3.1 million | - Recurring operating losses have raised substantial doubt about the company's ability to continue as a going concern, as it will require additional liquidity to fund operations over the next 12 months27 - The PCAOB vacated its determination that it was unable to inspect the company's auditor in mainland China on December 15, 20223132 - Consequently, the company does not expect to be identified as a Commission-Identified Issuer under the HFCAA for the 2024 fiscal year, mitigating immediate delisting risk from this issue3132 - As a company with substantial operations in the PRC, future securities offerings are subject to filing procedures with the China Securities Regulatory Commission (CSRC) under the Overseas Listing Trial Measures414244 Risk Factors Key risks include financial instability, dependency on specific products, and complex US/China regulatory environments ITEM 4. INFORMATION ON THE COMPANY The company focuses on commercializing in-licensed oncology therapeutics in China with a dedicated commercial team - The company shifted its business strategy to China in 2012 and now conducts the majority of its operations through its subsidiaries, CASI China and CASI Wuxi, with a commercial team of 141 specialists197198 - In December 2022, the company returned the land use right for its planned Wuxi manufacturing facility to the local government, shifting away from a substantial investment in GMP manufacturing facilities200 - The company's business development strategy focuses on in-licensing late-stage or approved drug candidates for the China market, with a primary therapeutic focus on hematological malignancies212 Core Product and Candidate Pipeline | Product/Candidate | Name/Type | Status/Indication | | :--- | :--- | :--- | | EVOMELA® | Melphalan for Injection | Launched in China for multiple myeloma | | FOLOTYN® | Pralatrexate | Launched in China for relapsed/refractory PTCL | | CNCT19 | Inaticabtagene Autoleucel | Approved in China for r/r B-ALL | | BI-1206 | anti-FcyRIIB antibody | Phase 1 study ongoing in China for NHL | | CB-5339 | VCP/p97 inhibitor | CTA approved in China for multiple myeloma | | CID-103 | anti-CD38 mAb | IND cleared by FDA for ITP; CTA approved in China for ITP | | Thiotepa | Chemotherapeutic agent | Applying for generic registration in China | - The company faces direct competition for its key products; EVOMELA® competes with two domestically produced injectable melphalan products in China, and FOLOTYN® competes with alternative treatments on the NRDL274276 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS Revenue declined 15.8% in 2024 due to competition, leading to a net loss and significant going concern doubts Consolidated Results of Operations (Years Ended December 31) | (in thousands USD) | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Total Revenues | $28,537 | $33,879 | $43,107 | | Gross Profit | $11,146 | $20,052 | $27,280 | | Loss from operations | ($39,621) | ($25,080) | ($34,032) | | Net loss | ($39,258) | ($26,259) | ($40,257) | - Product sales revenue decreased by 15.8% to $28.5 million in 2024, primarily attributed to intensified competition for EVOMELA®391 - Costs of revenues increased by 26.1% to $17.4 million in 2024, mainly due to a $4.8 million write-down of inventories395 - The company's recurring operating losses and negative cash flow of $29.2 million in 2024 raise substantial doubt about its ability to continue as a going concern424425426 Summary of Cash Flows (Years Ended December 31) | (in thousands USD) | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Net cash used in operating activities | ($29,224) | ($19,967) | ($21,088) | | Net cash provided by (used in) investing activities | $11,244 | ($9,673) | $31,159 | | Net cash provided by (used in) financing activities | $15,434 | ($907) | ($3,267) | | Cash and cash equivalents at end of the year | $13,468 | $17,083 | $47,112 | ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES The company is led by an experienced team and board, with compensation tied to long-term incentive plans - The company's leadership includes Chairman and CEO Wei-Wu He, Ph.D, Global Chief Medical Officer Alexander A. Zukiwski, MD, and Global Chief Commercial Officer Hai Huang450 - For the year ended December 31, 2024, the aggregate compensation paid to directors and officers was $4.1 million in salary and benefits, plus $0.8 million in share-based compensation463 - The company maintains multiple long-term incentive plans to grant equity awards, with options for 3,560,120 ordinary shares outstanding as of March 21, 2025465466468469 - The Board of Directors consists of five members and has three primary committees: Audit, Compensation, and Nominating and Corporate Governance483487 Employee Count by Function (as of Dec 31, 2024) | Function | Number of Employees | | :--- | :--- | | Management and General Administration | 31 | | Medical, Clinical and Registration | 19 | | Commercial | 141 | | Manufactory, Quality Control, R&D | 42 | | Total | 233 | - As of March 21, 2025, Chairman and CEO Dr. Wei-Wu He beneficially owned approximately 21.5% of the company's outstanding ordinary shares513515 ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS Key related party transactions include a PIPE financing with the CEO and agreements with other affiliated entities - In the July 2024 PIPE transaction, Chairman and CEO Dr. Wei-Wu He and his family trust purchased 300,000 ordinary shares for an aggregate price of $1.5 million522523 - The company entered into a service agreement in December 2024 with Human Longevity Inc (HLI), where CASI's Chairman and CEO also serves as Executive Chairman524 - The company has a sublicense agreement with PAT, from which it recognized a $5.0 million upfront payment as revenue in 2022 and received $4.4 million in expense reimbursements in 2023525526527 ITEM 8. FINANCIAL INFORMATION The company is engaged in significant legal arbitrations with partners Juventas and Acrotech over key product agreements - The company is in an ongoing arbitration with Juventas regarding the purported termination of the CNCT19 commercialization agreements, with assets of both parties frozen by PRC courts532533 - Acrotech has filed a complaint in New York to enforce the termination of the EVOMELA® license agreement, which CASI disputes and plans to counter with its own arbitration534 - The company has never paid cash dividends and does not intend to do so in the foreseeable future535 ITEM 10. ADDITIONAL INFORMATION The company operates under Cayman Islands law but is treated as a US corporation for tax purposes, facing PRC tax risks - Holders of ordinary shares are entitled to one vote per share on all matters557 - The company is an exempted company incorporated under the laws of the Cayman Islands584 - For U.S. federal income tax purposes, the company is treated as a U.S. corporation pursuant to Section 7874 of the Internal Revenue Code631 - The company faces the risk of being classified as a "resident enterprise" for PRC tax purposes, which could subject its global income to a 25% PRC enterprise income tax621624626 ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Primary market risks are foreign exchange exposure from RMB-denominated operations and minimal interest rate risk - The company's primary market risk is foreign exchange risk, as substantially all of its revenues and a significant portion of its expenses are denominated in RMB655 - The company has not used any derivative financial instruments to hedge its exposure to foreign exchange or interest rate risk655658 PART II ITEM 15. CONTROLS AND PROCEDURES Management concluded that both disclosure controls and internal control over financial reporting were effective as of year-end 2024 - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2024667 - Based on an assessment using the COSO 2013 framework, management concluded that the company's internal control over financial reporting was effective as of December 31, 2024669 ITEM 16. CORPORATE GOVERNANCE AND OTHER MATTERS The company follows home country governance practices and has established a cybersecurity risk management framework - The Board of Directors has determined that Thomas Folinsbee is an audit committee financial expert671 Principal Accountant Fees (KPMG) | (in thousands USD) | 2024 | 2023 | | :--- | :--- | :--- | | Audit fees | $736 | $600 | | Tax fees | $0 | $5 | | Total | $736 | $605 | - As a foreign private issuer, the company follows certain home country corporate governance practices, which may afford less protection to shareholders than if it fully complied with Nasdaq rules684685 - The company has implemented a cybersecurity risk management framework with oversight from the board of directors and has identified no material cybersecurity incidents to date691694695 PART III ITEM 18. FINANCIAL STATEMENTS The audited financial statements include a "Going Concern" warning from the auditor due to recurring operating losses - The Report of Independent Registered Public Accounting Firm includes a paragraph highlighting that recurring operating losses raise substantial doubt about the company's ability to continue as a going concern714 - The auditor identified the assessment of impairment triggering events related to the manufacturing asset group as a critical audit matter720721 Consolidated Balance Sheet Summary (as of Dec 31) | (in thousands USD) | 2024 | 2023 | | :--- | :--- | :--- | | Total Current Assets | $39,576 | $59,344 | | Total Assets | $53,674 | $75,268 | | Total Current Liabilities | $36,452 | $16,726 | | Total Liabilities | $51,823 | $51,103 | | Total Shareholders' Equity | $1,851 | $24,165 | - In July 2024, the company closed a PIPE transaction, raising gross proceeds of $15.0 million895