兆科眼科(06622) - 2025 - 中期业绩

Interim Results Announcement Summary Zhaoke Ophthalmology reported expanded interim losses for the six months ended June 30, 2025, primarily due to the absence of one-time licensing income and increased R&D, while advancing drug approvals and global market presence Key Financial Data for H1 2025 (RMB thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Revenue | 15,803 | 49,769 | | Gross Profit | 8,467 | 42,840 | | Other Income | 26,268 | 44,514 | | Net Other Gains/(Losses) | 20,012 | (8,843) | | R&D Expenses | (113,050) | (89,797) | | General and Administrative Expenses | (30,559) | (31,303) | | Selling and Distribution Expenses | (23,421) | (28,399) | | Finance Costs | (4,340) | (4,814) | | Loss for the Period | (116,623) | (75,802) | | Total Comprehensive Income for the Period | (195,373) | (15,351) | | Non-HKFRS Adjusted Loss for the Period | (115,274) | (75,689) | - The company received NMPA acceptance for new drug applications for 0.01% and 0.02% atropine sulfate ophthalmic solutions in January and July 2025, respectively, becoming the only company in China with two atropine ophthalmic solution specifications under regulatory review[11][18] - The self-developed cyclosporine ophthalmic gel new drug application was accepted by the NMPA and received FDA approval for Phase III trials in the US, demonstrating its international potential[12][22] - The biologics license application for bevacizumab intravitreal injection (TAB014) was accepted by the NMPA, making it the first wAMD bevacizumab antibody to submit such an application in China[12][24] - The company's cash and cash equivalents (together with time deposits with original maturity over three months) totaled approximately RMB 1.0542 billion, providing a solid financial foundation for R&D and commercialization activities[12] Management Discussion and Analysis This section details Zhaoke Ophthalmology's strategic overview, key operational and financial highlights, R&D pipeline, commercialization efforts, global partnerships, manufacturing capabilities, and future outlook Overview Zhaoke Ophthalmology is a leading ophthalmic pharmaceutical company focused on developing and commercializing therapies for unmet medical needs, with a robust pipeline and expanding global presence - Zhaoke Ophthalmology is dedicated to the research, development, manufacturing, and commercialization of therapies to address unmet ophthalmic medical needs[9] - The company possesses three flagship drugs nearing market approval: atropine sulfate ophthalmic solution (NVK002), cyclosporine ophthalmic gel, and bevacizumab intravitreal injection (TAB014)[9] - The company is developing two promising drug candidates: BRIMOCHOL™ PF (presbyopia) and ZKY001 (corneal epithelial defect)[9] - The company has strategically expanded its business footprint to markets including the US, Australia, New Zealand, the Middle East, South Korea, Malaysia, Thailand, and Indonesia[10] Highlights This section highlights Zhaoke Ophthalmology's key advancements, including regulatory milestones for innovative drugs, strategic global expansion, US market achievements, international manufacturing recognition, and a solid financial foundation - New drug applications for 0.01% and 0.02% atropine sulfate ophthalmic solution (NVK002) were accepted by the NMPA, enhancing the company's competitiveness as the second market entrant[11] - The self-developed cyclosporine ophthalmic gel new drug application was accepted by the NMPA and received FDA approval for Phase III trials in the US[12] - The biologics license application for bevacizumab intravitreal injection (TAB014) was accepted by the NMPA, making it the first wAMD bevacizumab antibody to submit such an application in China[12] - The company has expanded its global business footprint to new markets including Australia, New Zealand, Thailand, the Middle East, and Indonesia, partnering with leading local pharmaceutical companies for product commercialization[12] - The company established a strategic partnership with US-based Somerset Therapeutics LLC and obtained Orphan Drug Designation (ODD) for its patented melphalan formulation for treating pediatric retinoblastoma[12] - The company's advanced pharmaceutical facility in Nansha, Guangzhou, has been recognized by US-based Somerset Therapeutics LLC and France's FAREVA Group as a manufacturing base for their ophthalmic drugs[12] - As of the end of June 2025, the company's cash and cash equivalents (together with time deposits with original maturity over three months) totaled approximately RMB 1.0542 billion, sufficient to support R&D and commercialization activities for several years[12] Business Review This section reviews Zhaoke Ophthalmology's comprehensive pipeline strategy, R&D progress, commercialization achievements, global partnerships, manufacturing capabilities, and ESG initiatives Pipeline Strategy Zhaoke Ophthalmology has a comprehensive innovative and generic drug pipeline targeting six major ophthalmic diseases with a multi-target therapeutic strategy - The company has established a comprehensive portfolio of innovative and generic drugs targeting six major ophthalmic diseases: dry eye, myopia, presbyopia, wAMD/DME, glaucoma, and CED[13] - The company believes that addressing the numerous complex causes of diseases with targeted treatments is the optimal approach, thus selecting multiple drug candidates for these conditions[13] Research and Development (R&D) R&D is Zhaoke Ophthalmology's cornerstone, with the company transforming into an R&D and commercialization entity, advancing late-stage assets, and increasing R&D expenses due to new clinical trials Innovative Drugs Zhaoke Ophthalmology's innovative drug pipeline includes strategically important drugs for myopia, dry eye, wAMD, presbyopia, CED, and pediatric retinoblastoma, showing significant clinical and regulatory progress Atropine Sulfate Ophthalmic Solution (NVK002) for Myopia Treatment NVK002, a patented, preservative-free atropine sulfate ophthalmic solution for myopia progression, completed two China Phase III trials, with 0.01% and 0.02% dosages now accepted for NMPA review - NVK002 is a cutting-edge drug for controlling myopia progression in children and adolescents, featuring a patented, preservative-free formulation with an expected shelf life of over 24 months[16] - The company has successfully completed two Phase III clinical trials for atropine sulfate ophthalmic solution in China (mini-CHAMP and China CHAMP)[16] - In January 2025, the NMPA officially accepted the simplified new drug application for 0.01% atropine sulfate ophthalmic solution; in July 2025, the new drug application for the 0.02% dosage was also accepted[18] - Zhaoke is currently the only company in China with two specifications of atropine sulfate ophthalmic solution under regulatory review[18] Cyclosporine Ophthalmic Gel for Dry Eye Treatment Cyclosporine ophthalmic gel, a self-developed, once-daily hydrogel for moderate to severe dry eye, shows improved compliance and faster onset, with NMPA acceptance and FDA approval for US Phase III trials - Cyclosporine ophthalmic gel, self-developed by Zhaoke Ophthalmology, is administered once daily, aiming to significantly improve patient compliance and quality of life[19] - The patented hydrogel formulation has received patent protection in China and internationally, enhancing the pharmacokinetic efficacy of cyclosporine A on the ocular surface[19] - In the Phase III clinical trial (COSMO), the treatment demonstrated a faster onset of action, showing significant efficacy in approximately two weeks[19] - In May 2025, the new drug application for cyclosporine ophthalmic gel was accepted by the NMPA; in June 2025, the FDA approved the initiation of Phase III clinical trials in the US[22] Bevacizumab Intravitreal Injection (TAB014) for wAMD Treatment TAB014, a bevacizumab intravitreal injection for wAMD, is China's first clinical-stage bevacizumab antibody, successfully completed Phase III trials, and its biologics license application is accepted by the NMPA - TAB014 is China's first clinical-stage bevacizumab-based antibody for treating wAMD[20] - In January 2025, the company announced positive top-line results from this clinical trial, successfully meeting all primary and key secondary endpoints[21] - The Phase III clinical trial was a randomized, double-blind, non-inferiority study involving 488 patients across approximately 60 centers[23] - In June 2025, the NMPA accepted the biologics license application for bevacizumab intravitreal injection[24] BRIMOCHOL™ PF and CARBACHOL™ PF for Presbyopia Treatment BRIMOCHOL™ PF and CARBACHOL™ PF are preservative-free, once-daily pupil-modulating drops for presbyopia, with BRIMOCHOL™ PF showing positive Phase III results and FDA acceptance, while China initiates Phase I/II trials - BRIMOCHOL™ PF and CARBACHOL™ PF are preservative-free, once-daily pupil-modulating ophthalmic solutions for correcting near vision loss due to presbyopia[24] - This therapy creates a pinhole effect through pupil constriction, sharpening intermediate and near vision[25] - In January 2025, licensing partner Tenpoint announced positive top-line results from BRIO-II (Phase III pivotal trial), showing BRIMOCHOL™ PF achieved statistically significant improvement in near vision for over 8 hours[25] - In June 2025, Tenpoint announced that the US FDA accepted the new drug application for BRIMOCHOL™ PF for presbyopia treatment[25] - The company has commenced patient enrollment for Phase I and II clinical trials in China, with Phase II completion expected by or before the end of 2025[25] ZKY001 for Corneal Epithelial Defect Treatment ZKY001, a seven-amino acid peptide for corneal repair, completed multiple Phase II trials, now focusing on post-ophthalmic surgery corneal epithelial defects (TPRK) as its primary indication, with Phase III discussions ongoing with CDE - ZKY001 is a seven-amino acid peptide derived from a functional fragment of thymosin beta 4, which binds to actin and promotes corneal wound healing[26][28] - The company has conducted Phase II clinical trials and an investigator-initiated trial for ZKY001 across multiple potential indications, including CED, TPRK, pterygium, and NK[28] - The company has chosen to focus on TPRK, specifically treating corneal epithelial defects after ophthalmic surgery as ZKY001's first indication, and is discussing Phase III clinical trial procedures with the CDE[28] Melphalan for Pediatric Retinoblastoma Treatment Melphalan, a patented alkylating antineoplastic drug for pediatric retinoblastoma (RB), received US FDA Orphan Drug Designation (ODD) in July 2025, establishing a clear IND pathway and potential for seven years of market exclusivity - Melphalan is an alkylating antineoplastic drug that exerts its anticancer effect by chemically modifying DNA strands within tumors, offering potential advantages for local administration in pediatric retinoblastoma (RB)[27] - In July 2025, the US FDA granted Orphan Drug Designation (ODD) to Zhaoke's patented melphalan formulation for treating pediatric RB[29] - Obtaining ODD establishes a clear regulatory pathway for submitting an Investigational New Drug (IND) application in the US, potentially granting the company seven years of US market exclusivity upon approval[29] - The company is preparing for pre-IND discussions with the FDA to maintain potential first-mover advantage[29] PAN-90806 for wAMD and DME Treatment PAN-90806, an innovative eye drop for wAMD and DME, aims to reduce injections, offering a less invasive option; the company has optimized its formulation and is preparing to submit an IND application to the NMPA - PAN-90806 is an innovative drug for treating wAMD and DME, a novel eye drop formulation designed to reduce the number of required injections[30] - If approved as a maintenance therapy, this drug will offer patients significant convenience and a less invasive treatment option, reducing the frequency of intravitreal injections[30] - The company has optimized the formulation of PAN-90806 and developed a comprehensive clinical study plan based on completed pharmaceutical and non-clinical studies[31] - Following successful pre-IND communication with the NMPA in June 2025, the company is now preparing to submit its Investigational New Drug (IND) application[31] Generic Drugs Zhaoke Ophthalmology has a balanced generic drug pipeline, including six approved glaucoma generics and the TONO-i medical device, with epinastine ophthalmic solution for allergic conjunctivitis expected to receive approval soon - The company has six market-approved generic glaucoma drugs, forming a complete glaucoma product portfolio for effective intraocular pressure control[31][32][36] Approved Generic Glaucoma Drugs | Drug Name | Indication | Approval Date | | :--- | :--- | :--- | | Bimatoprost Timolol Ophthalmic Solution (Jingbeiying®) | Glaucoma/Ocular Hypertension | February 2023 | | Bimatoprost Ophthalmic Solution (Jingbeiqing®) | Open-angle glaucoma and ocular hypertension | September 2024 | | Latanoprost Ophthalmic Solution | Open-angle glaucoma and ocular hypertension | December 2024 | | Latanoprost Timolol Ophthalmic Solution | Refractory open-angle glaucoma | March 2025 | | Travoprost Ophthalmic Solution | Open-angle glaucoma and ocular hypertension | December 2024 | | Travoprost Timolol Ophthalmic Solution | Open-angle glaucoma or ocular hypertension | December 2024 | - In August 2025, the company obtained the NMPA medical device registration certificate for TONO-i (portable, non-contact tonometer), aiming to improve glaucoma diagnosis and treatment rates in China[33] - The company expects to obtain regulatory approval for epinastine ophthalmic solution for allergic conjunctivitis in the coming months[33] R&D Warning The company issued a warning under Listing Rule 18A.08(3) that it may not ultimately succeed in developing and commercializing its drug candidates - The company warns that it may not ultimately succeed in developing and commercializing its drug candidates[34] R&D Team Zhaoke Ophthalmology's R&D strength is driven by a team of approximately 70 experienced international ophthalmic experts with extensive global pharmaceutical and biotechnology expertise - As of the end of the reporting period, Zhaoke's R&D team comprised approximately 70 experienced international ophthalmic experts[35] R&D Expenses For H1 2025, R&D expenses increased by approximately RMB 23.3 million to RMB 113.1 million, primarily due to new clinical trials for BRIMOCHOL™ PF, CARBACHOL™ PF, and cyclosporine ophthalmic gel R&D Expenses Comparison | Metric | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | R&D Expenses | 113,050 | 89,797 | - R&D expenses increased by approximately RMB 23.3 million, primarily due to the initiation of Phase I and II clinical trials for BRIMOCHOL™ PF and CARBACHOL™ PF, and a new round of Phase III clinical trials for cyclosporine ophthalmic gel[37] Commercialization Since 2024, Zhaoke Ophthalmology transformed into an R&D and commercial enterprise with eight approved ophthalmic drugs, expanding its omnichannel distribution network to over 1,200 public hospitals and digital platforms, preparing for future core product launches - Since 2024, Zhaoke has transformed into an R&D and commercial enterprise[38] - Currently, eight ophthalmic drugs are approved for commercialization, including six glaucoma drugs, the corneal ulcer therapy Rebot, and China's first preservative-free azelastine ophthalmic solution (Shunmin®)[38] - Through an omnichannel sales and marketing strategy, the company's distribution network covers over 1,200 public hospitals across 30 provinces in China, strengthening collaborations with private hospitals and optometry centers[39] - The company expanded its digital footprint by opening flagship stores on JD Health and Tmall, and operates the WeChat platform 'Zhaoke Boshu', with 15,600 followers[40] - The company is undertaking commercialization preparations for the launch of key products next year, including atropine sulfate ophthalmic solution, cyclosporine ophthalmic gel, and bevacizumab intravitreal injection[41] Partnerships and Globalization Efforts Zhaoke Ophthalmology actively expands its global footprint through strategic partnerships, commercializing products in Australia, New Zealand, Thailand, the Middle East, and Indonesia, while achieving US market milestones and strengthening China operations - The company partnered with AFT Pharmaceuticals Limited to commercialize BRIMOCHOL™ PF in Australia and New Zealand (January 2025)[42] - The company collaborated with Interpharma Public Company Limited to sell atropine sulfate ophthalmic solution, BRIMOCHOL™ PF, and six glaucoma drugs in Thailand (April 2025)[42] - The company partnered with Lunatus Marketing & Consulting FZCO to commercialize BRIMOCHOL™ PF in GCC member states (late April 2025)[42] - The company established a partnership with Jamjoom Pharmaceuticals Factory Company to sell cyclosporine ophthalmic gel in the Middle East and Africa (June 2025)[42] - The company partnered with France's FAREVA Group, with Zhaoke designated as a reliable partner for manufacturing their drugs in China (July 2025)[42] - The company collaborated with PT Ferron Par Pharmaceuticals to handle the commercialization of atropine sulfate ophthalmic solution in Indonesia (August 2025)[43] - In June 2025, the IND application for cyclosporine ophthalmic gel received FDA approval, permitting the initiation of Phase III trials in the US[43] - In July 2025, melphalan for pediatric RB treatment received ODD, with potential for seven years of US market exclusivity[44] - In February 2025, Zhaoke and Visionary Pharma jointly launched China's first preservative-free, single-dose azelastine hydrochloride ophthalmic solution (Shunmin®)[44] Manufacturing Zhaoke Ophthalmology's state-of-the-art Nansha facility, compliant with NMPA, FDA, and EMA, validates its global manufacturing capabilities through partnerships, operating four production lines for approved products and preparing for atropine sulfate ophthalmic solution commercial manufacturing - Zhaoke Ophthalmology operates a state-of-the-art, self-owned manufacturing facility in Guangdong Province, China, with full in-house capabilities compliant with stringent regulations from major global regulatory bodies, including the NMPA, FDA, and EMA[46] - Partnerships with US-based Somerset Therapeutics LLC and France's FAREVA Group demonstrate the company's ophthalmic drug manufacturing capabilities are recognized by major global manufacturers[46] - The company currently operates four production lines for efficient large-scale manufacturing, having produced multiple approved products, including six glaucoma ophthalmic solutions[47] - The company has successfully transferred the production of atropine sulfate ophthalmic solution to its Nansha, Guangzhou facility and is fully preparing for commercial manufacturing[47] Environmental, Social and Governance (ESG) Updates Zhaoke Ophthalmology promotes sustainable healthcare by assessing impacts, implementing sustainable strategies, fulfilling social responsibilities through health seminars, fostering employee development, and annually publishing ESG reports, with its fifth report released in April 2025 - Zhaoke Ophthalmology is committed to promoting sustainable healthcare industry development and continuously assessing its operational impact on the environment and society[48] - The company organized multiple in-person and online health seminars covering topics such as glaucoma and corneal diseases to raise public awareness and encourage early intervention[48] - The company is dedicated to creating an environment where employees can thrive, implementing tiered mentorship and job rotation programs[49] - Adhering to the highest standards of transparency and compliance, the company released its fifth ESG report in April 2025[49] Future and Outlook Zhaoke Ophthalmology achieved significant H1 2025 R&D and market expansion milestones, with three core assets in NDA phase; H2 focus is on market approvals and pipeline advancement, with optimism for 2026, targeting 12 commercialized drugs to strengthen revenue and global brand - In H1 2025, three core assets (0.01% and 0.02% atropine sulfate ophthalmic solution, cyclosporine ophthalmic gel, and bevacizumab intravitreal injection) all entered the new drug application phase[50] - The company has expanded into several new markets, including Australia, New Zealand, the Middle East, and Indonesia, while deepening its presence in existing markets like Thailand[51] - The primary R&D focus for H2 2025 is maintaining effective communication with regulatory bodies, aiming for prompt market approval of atropine sulfate ophthalmic solution, cyclosporine ophthalmic gel, and bevacizumab intravitreal injection[51] - The company will focus on completing BRIMOCHOL™ PF Phase I and II clinical trials and continue advancing the development of ZKY001[51] - Regulatory approval is expected for epinastine hydrochloride ophthalmic solution (a generic drug for allergic conjunctivitis), which is in the final stages of simplified new drug application review[52] - Several assets in the early-stage innovative pipeline are expected to progress, including submitting an IND application for PAN90806 to the NMPA and conducting IND discussions for melphalan with the US FDA[52] - Looking ahead to 2026, the company expects three core drugs to receive market approval and aims to have 12 commercialized drugs by year-end, significantly strengthening its revenue base and enhancing its global brand image[53] Financial Performance Analysis This section analyzes Zhaoke Ophthalmology's financial performance, covering consolidated income statement, liquidity, key financial ratios, employee and remuneration details, and foreign currency risk management Consolidated Income Statement Analysis For H1 2025, Zhaoke Ophthalmology's loss expanded to RMB 116.6 million, primarily due to the absence of one-time licensing income and increased R&D expenses, despite reduced administrative costs Consolidated Income Statement Key Data Comparison (RMB thousands) | Metric | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | 15,803 | 49,769 | (33,966) | | Other Income | 26,268 | 44,514 | (18,246) | | Net Other Gains/(Losses) | 20,012 | (8,843) | +28,855 | | R&D Expenses | (113,050) | (89,797) | (23,253) | | General and Administrative Expenses | (30,559) | (31,303) | +744 | | Selling and Distribution Expenses | (23,421) | (28,399) | +4,978 | | Finance Costs | (4,340) | (4,814) | +474 | | Loss for the Period | (116,623) | (75,802) | (40,821) | | Non-HKFRS Adjusted Loss for the Period | (115,274) | (75,689) | (39,585) | - The decrease in revenue was primarily due to the company's change in sales strategy, focusing more on expanding its distribution network and reorganizing its sales team, leading to a short-term and phased decline in overall sales[57] - The decrease in other income was mainly due to the absence of a one-time government subsidy of RMB 5.1 million received in the prior period, and reduced bank interest income due to lower global bank interest rates in 2025[61] - Net other gains primarily include net exchange gains arising from the translation of assets and liabilities denominated in Euro, US Dollar, or Hong Kong Dollar[62] - The increase in R&D expenses was primarily due to the initiation of Phase I and II clinical trials for BRIMOCHOL™ PF and CARBACHOL™ PF, and a new round of Phase III clinical trials for cyclosporine ophthalmic gel[63] - Non-HKFRS adjusted loss for the period is defined as the loss for the period adjusted by adding back equity-settled share-based payment expenses[70][71] Liquidity and Sources of Funding Zhaoke Ophthalmology's cash funds R&D and operations, with RMB 1.475 billion in current assets as of June 30, 2025, including RMB 1.0513 billion in cash and equivalents, managed under a prudent fiscal policy - The company's cash is primarily used for clinical trials, production, equipment and raw material procurement, and other expenses, with working capital needs mainly met by net proceeds from the global offering[75] - As of June 30, 2025, the Group's current assets were approximately RMB 1.475 billion, including cash and cash equivalents of approximately RMB 1.0513 billion, time deposits with original maturity over three months of approximately RMB 3 million, and pledged bank deposits of approximately RMB 343.9 million[76] - As of June 30, 2025, the Group's current liabilities were approximately RMB 335.1 million[76] - The company adopts a prudent fiscal policy for cash and financial management, with most cash denominated in US Dollar, Hong Kong Dollar, and Renminbi[77] - As of June 30, 2025, pledged bank balances were approximately RMB 343.9 million, used for bank financing facilities[78] Key Financial Ratios and Commitments As of June 30, 2025, Zhaoke Ophthalmology's current ratio was 4.4 (down from 5.2), remaining in a net cash position with no significant contingent liabilities, and capital commitments decreased to RMB 89.4 million Key Financial Ratios | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Current Ratio | 4.4 | 5.2 | | Debt-to-Equity Ratio | Not applicable | Not applicable | - As of June 30, 2025, the company had no significant contingent liabilities[79] - As of June 30, 2025, the company's capital commitments were approximately RMB 89.4 million, a decrease of approximately RMB 6 million from December 31, 2024, primarily due to progress in production facility engineering and R&D activities[80] - The company is in a net cash position, thus the debt-to-equity ratio is not applicable[81] Employees and Remuneration As of June 30, 2025, Zhaoke Ophthalmology had 270 employees, with R&D, production, and sales & marketing as major functions; total staff costs decreased to RMB 56.1 million due to reduced headcount, partially offset by increased share-based payment expenses - As of June 30, 2025, the Group had a total of 270 employees[82] Employee Functional Distribution (June 30, 2025) | Function | Number of Employees | Percentage of Total (%) | | :--- | :--- | :--- | | Management | 5 | 1.9 | | R&D | 72 | 26.6 | | Production | 59 | 21.9 | | Quality Control | 37 | 13.7 | | Sales & Marketing | 57 | 21.1 | | Environment, Health & Safety | 1 | 0.4 | | Administration | 39 | 14.4 | | Total | 270 | 100.0 | - For the six months ended June 30, 2025, the Group's total staff costs were approximately RMB 56.1 million, a decrease from RMB 62.6 million in the same period of 2024[83] - The decrease in total staff costs primarily resulted from a reduction in employee headcount, leading to a decrease of approximately RMB 7.8 million in employee salaries and benefits, partially offset by an increase of approximately RMB 1.3 million in equity-settled share-based payment expenses[83] Foreign Currency Risk Zhaoke Ophthalmology primarily operates in mainland China with RMB-settled transactions, but most cash is USD-denominated; foreign exchange risk is managed by regularly reviewing net exposure without long-term hedging contracts - The Group primarily operates in mainland China, with most of its transactions settled in RMB, which is the functional currency of the company's principal subsidiaries[84] - As of June 30, 2025, the majority of the Group's cash and cash equivalents were denominated in US Dollar[84] - The Group manages foreign exchange risk by regularly reviewing its net foreign exchange exposure and currently does not use any long-term contracts, currency borrowings, or other means to hedge foreign currency risk[84] Consolidated Financial Statements This section presents Zhaoke Ophthalmology's unaudited consolidated financial statements, including the income statement, statement of comprehensive income, and statement of financial position Consolidated Income Statement This section presents Zhaoke Ophthalmology's unaudited consolidated income statement for the six months ended June 30, 2025, detailing revenue, cost of sales, gross profit, expenses, and loss for the period - Detailed unaudited consolidated income statement data for the six months ended June 30, 2025[85] Consolidated Statement of Profit or Loss and Other Comprehensive Income This section presents Zhaoke Ophthalmology's unaudited consolidated statement of profit or loss and other comprehensive income for the six months ended June 30, 2025, including loss for the period and exchange differences for non-RMB functional currency entities - Detailed unaudited consolidated statement of profit or loss and other comprehensive income data for the six months ended June 30, 2025, including loss for the period and exchange differences[87] Consolidated Statement of Financial Position This section presents Zhaoke Ophthalmology's unaudited consolidated statement of financial position as of June 30, 2025, detailing non-current assets, current assets, current liabilities, non-current liabilities, and total equity - Detailed unaudited consolidated statement of financial position data as of June 30, 2025, including assets, liabilities, and equity[89][90] Notes to the Interim Results Announcement This section provides detailed notes to the interim financial statements, covering the basis of preparation, revenue and segment reporting, loss before tax, earnings per share, and analyses of trade and other receivables and payables Basis of Preparation and Changes in Accounting Policies This section details the interim financial report's preparation basis, adhering to HKEX Listing Rules and HKAS 34, reviewed by KPMG and the audit committee, with no significant impact from new accounting standards - The interim financial report has been prepared in accordance with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and Hong Kong Accounting Standard 34 'Interim Financial Reporting' issued by the Hong Kong Institute of Certified Public Accountants[91] - The interim financial report is unaudited but has been reviewed by KPMG and the company's audit committee[92] - The Group has applied HKAS 21 (Revised) 'The Effects of Changes in Foreign Exchange Rates – Lack of Exchangeability' issued by the HKICPA to the interim financial report for this accounting period, with no significant impact[93] Revenue and Segment Reporting This section details Zhaoke Ophthalmology's revenue breakdown by product and service, highlights its diversified customer base and single operating segment, and provides geographical revenue and non-current asset information - The Group's principal activities are the development, manufacturing, and marketing of ophthalmic drugs and products[96] Revenue Disaggregation by Customer Contracts (RMB thousands) | Revenue Type | 2025 | 2024 | | :--- | :--- | :--- | | Sales of ophthalmic drugs | 11,725 | 13,572 | | Sales of other drugs | 2,622 | – | | Sales of ophthalmic products | 757 | 2,076 | | Licensing income | – | 33,523 | | Exclusive distribution rights income | 676 | 598 | | CMO service income | 23 | – | | Total | 15,803 | 49,769 | - As of June 30, 2025, the total transaction price allocated to the Group's remaining performance obligations under existing contracts was RMB 15.107 million, representing revenue expected to be recognized in the future from distribution and supply contracts with customers[99] - The Group has only one operating segment, and therefore no segment information is presented[100] Geographical Revenue and Specific Non-Current Assets (RMB thousands) | Region | 2025 Revenue | 2024 Revenue | June 30, 2025 Specific Non-Current Assets | December 31, 2024 Specific Non-Current Assets | | :--- | :--- | :--- | :--- | :--- | | Hong Kong | 350 | 457 | 296,964 | 313,363 | | Mainland China | 14,708 | 48,714 | 273,819 | 292,327 | | South Korea | 601 | 598 | – | – | | Others | 144 | – | – | – | | Total | 15,803 | 49,769 | 570,783 | 605,690 | Loss Before Tax and Income Tax This section details the composition of loss before tax, including finance costs, amortization, depreciation, and investment fair value changes, and clarifies income tax policies, noting no provision was made due to entities incurring losses Finance Costs (RMB thousands) | Type of Finance Costs | 2025 | 2024 | | :--- | :--- | :--- | | Interest on bank loans | 3,752 | 4,061 | | Interest on lease liabilities | 588 | 753 | | Total | 4,340 | 4,814 | Components of Loss Before Tax (RMB thousands) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Amortization of intangible assets | 7,063 | 6,411 | | Depreciation expenses – owned property, plant and equipment | 16,286 | 16,025 | | Depreciation expenses – right-of-use assets | 4,088 | 4,056 | | Gain on disposal of property, plant and equipment | – | (559) | | Fair value changes of investments recognized in profit or loss – realized | (2,352) | – | | Fair value changes of investments recognized in profit or loss – unrealized | – | (159) | - There is no income tax in the Cayman Islands. Hong Kong and mainland China entities incurred tax losses, thus no provision for Hong Kong profits tax and mainland China enterprise income tax was made[106][107] Loss Per Share and Dividends This section calculates Zhaoke Ophthalmology's basic and diluted loss per share for H1 2025, both at RMB (0.21), with no dividends paid or declared during the period Loss Per Share (RMB) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Basic loss per share | (0.21) | (0.14) | | Diluted loss per share | (0.21) | (0.14) | - For the six months ended June 30, 2025 and 2024, the company neither paid nor declared any dividends[110] Trade and Other Receivables This section provides an aging analysis of trade and other receivables as of June 30, 2025, with trade receivables (net of loss allowance) at RMB 4.288 million and recoverable VAT at RMB 8.544 million, with most expected to be recovered within one year Aging Analysis of Trade and Other Receivables (RMB thousands) | Aging | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Within 1 month | 3,751 | 857 | | 1 to 2 months | 100 | – | | 2 to 3 months | – | 78 | | Over 3 months but within 6 months | 220 | 67 | | Over 6 months | 217 | 377 | | Trade receivables (net of loss allowance) | 4,288 | 1,379 | | Recoverable VAT | 8,544 | 7,345 | | Prepayments to suppliers | 53,299 | 52,770 | | Other receivables | 18,648 | 12,887 | | Total | 84,779 | 74,381 | - Trade receivables are due within 30 to 90 days from the invoice date[111] - Except for the disclosed non-current portion, all other trade and other receivables are expected to be recovered or recognized as expenses within one year[112] Trade and Other Payables This section presents an aging analysis of trade and other payables as of June 30, 2025, with trade payables at RMB 0.83 million and accrued R&D expenses at RMB 43.321 million, all expected to be settled within one year Aging Analysis of Trade and Other Payables (RMB thousands) | Aging | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Within 1 month | 120 | 720 | | 1 to 3 months | – | 15 | | Over 3 months but within 6 months | 710 | 138 | | Over 6 months | – | 296 | | Trade payables | 830 | 1,169 | | Payables for purchase of property, plant and equipment | 2,728 | 4,634 | | Accrued salaries | 10,952 | 18,250 | | Accrued R&D expenses | 43,321 | 49,485 | | Payables for purchase of materials | 816 | 1,612 | | Accrued office expenses and others | 7,163 | 8,480 | | Other tax payables | 965 | 1,058 | | Total trade and other payables | 66,775 | 84,688 | - All trade and other payables are expected to be settled within one year or repaid on demand[113] Other Information This section covers post-reporting events, corporate governance, use of global offering proceeds, securities transactions, litigation, and the audit committee's review of the interim report Events After Reporting Period and Interim Dividends No other significant events affecting the Group occurred after the reporting period, and the Board does not recommend an interim dividend for the six months ended June 30, 2025 - No other significant events affecting the Group occurred after the end of the reporting period and up to the date of this announcement[114] - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025[115] Corporate Governance Zhaoke Ophthalmology maintains high corporate governance standards, with Dr. Li Xiaoyi serving as Chairman and CEO for leadership consistency, and confirmed compliance with Listing Rule Appendix C1's Corporate Governance Code - The roles of Chairman and Chief Executive Officer are concurrently held by Dr. Li Xiaoyi, an arrangement the Board believes ensures consistent leadership and effective executive functions for the Group[116] - The Board has approved amendments to the terms of reference for the Nomination Committee and appointed Mr. Wong Hin Wing, Professor Lo Yuk Lam, and Ms. Li Yenie as members[117] - The company has complied with all applicable code provisions of the Corporate Governance Code set out in Appendix C1 of the Listing Rules during the reporting period and up to the date of this announcement[118] Use of Proceeds from Global Offering Zhaoke Ophthalmology's global offering yielded HKD 1.9323 billion net proceeds; HKD 1.4952 billion utilized by June 30, 2025, with HKD 437.12 million unutilized and held as short-term deposits, and core product development utilization expected to be slightly delayed - The net proceeds from the global offering were approximately HKD 1.9323 billion[120] Use of Proceeds from Global Offering (HKD millions) | Use of Listing Proceeds | Planned Use | Percentage of Total Net Proceeds (%) | Utilized as of December 31, 2024 | Utilized during the reporting period | Unutilized as of June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Clinical development and commercialization of two core products | 618.34 | 32.00 | 300.94 | 32.11 | 285.29 | | Ongoing R&D activities and commercialization of other pipeline drug candidates | 888.86 | 46.00 | 681.01 | 56.02 | 151.83 | | Expansion of Nansha advanced manufacturing facility production lines | 135.27 | 7.00 | 135.27 | – | – | | Business development activities and expansion of drug pipeline | 96.62 | 5.00 | 96.62 | – | – | | Working capital and other general corporate purposes | 193.23 | 10.00 | 193.23 | – | – | | Total | 1,932.32 | 100.00 | 1,407.07 | 88.13 | 437.12 | - As of June 30, 2025, all unutilized net proceeds were placed by the company as short-term deposits with licensed banks or authorized financial institutions in Hong Kong and China[121] - The company anticipates that the utilization of net proceeds allocated for the clinical development and commercialization of two core products will be slightly later than originally expected[121] Securities Transactions and Litigation All Zhaoke Ophthalmology directors confirmed compliance with Listing Rule Appendix C3's Model Code for Securities Transactions; no listed securities were purchased, sold, or redeemed, and no significant litigation or arbitration occurred during the reporting period - Following specific inquiries by the company to all directors, they have all confirmed compliance with the Model Code during the reporting period and up to the date of this announcement[119] - During the reporting period and up to the date of this announcement, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[122] - The company was not involved in any significant litigation or arbitration for the six months ended June 30, 2025[123] Audit Committee Review and Report Publication Zhaoke Ophthalmology's Audit Committee reviewed accounting principles, audit, internal control, and financial reporting, including the unaudited interim financial report for H1 2025, with the announcement and report published on HKEX and company websites - The Audit Committee reviewed the Group's adopted accounting principles and practices, and discussed audit, internal control, and financial reporting matters, including the review of the Group's unaudited interim financial report for the six months ended June 30, 2025[124] - This announcement is published on the HKEX website (www.hkexnews.hk) and the company's website (zkoph.com)[125] Definitions This section provides definitions for key terms and abbreviations used in this interim results announcement to ensure accurate understanding of the report content - This section contains detailed definitions of key terms and abbreviations used in this announcement, such as 'Simplified New Drug Application', 'Biologics License Application', 'CED', 'ODD', etc[127][128][129][130][131][132][133]