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What changed in GYRE THERAPEUTICS, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of GYRE THERAPEUTICS, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+842 added−900 removedSource: 10-K (2025-03-17) vs 10-K (2024-03-27)

Top changes in GYRE THERAPEUTICS, INC.'s 2024 10-K

842 paragraphs added · 900 removed · 631 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

314 edited+83 added−186 removed271 unchanged
Biggest changeEastern Time on October 30, 2023 (the “Closing Date”), Catalyst (i) increased the number of authorized shares of Common Stock from 100,000,000 shares to 400,000,000 shares, (ii) effected a reverse 1-for-15 reverse stock split (the “Reverse Stock Split”) and (iii) changed its name to “Gyre Therapeutics, Inc.” Also on the Closing Date, Gyre consummated the previously announced business combination pursuant to the certain Business Combination Agreement and, after giving effect to the Reverse Stock Split, (i) GNI USA contributed all of its ordinary shares in the capital of CPI to Gyre in exchange for 45,923,340 shares of Common Stock, (ii) GNI USA contributed its interest in FC, to Gyre in exchange for 17,664,779 shares of Common Stock and (iii) each Minority Holder contributed 100% of the interest he or she holds in his or her respective Entity to Gyre in exchange for an aggregate of 10,463,627 shares of Common Stock.
Biggest changeEffective October 30, 2023, Catalyst increased its authorized shares of common stock, effected a 1-for-15 reverse stock split, and changed its name to Gyre Therapeutics, Inc. On the same date, the business combination was completed, with GNI USA and the minority shareholders contributing their respective equity interests in exchange for shares of Gyre common stock.
Phase 2 Clinical Trial of F351 for CHB-Associated Liver Fibrosis in the PRC We conducted a Phase 2 randomized, double-blind, placebo-controlled, Entecavir-based (the first-line drug for the treatment of CHB virus infection), multi-center, dose-escalation trial assessing the safety and efficacy of F351 for treatment of patients in the PRC with CHB-associated liver fibrosis.
Phase 2 PRC Clinical Trial of F351 for CHB-Associated Liver Fibrosis We conducted a Phase 2 randomized, double-blind, placebo-controlled, Entecavir-based (the first-line drug for the treatment of CHB virus infection), multi-center, dose-escalation trial assessing the safety and efficacy of F351 for treatment of patients in the PRC with CHB-associated liver fibrosis.
Chemistry, Manufacturing & Controls CMC Group The CMC group is a critical link between discovery and clinical study. It is responsible for developing chemical and pharmaceutical processes, so that drug substances can be made with the desired physical and chemical properties and formulated to achieve maximum bio availability and stability.
Chemistry, Manufacturing and Controls CMC Group The CMC group is a critical link between discovery and clinical study. It is responsible for developing chemical and pharmaceutical processes, so that drug substances can be made with the desired physical and chemical properties and formulated to achieve maximum bio availability and stability.
The Drug Administration Law and the Implementing Regulations of the Drug Administration Law of the PRC, have established the legal framework for the administration of pharmaceutical products and applies to entities and individuals engaged in the research, production, trade, application, supervision and administration of pharmaceutical products.
The Drug Administration Law and the Implementing Regulations of the PRC Drug Administration Law have established the legal framework for the administration of pharmaceutical products and applies to entities and individuals engaged in the research, production, trade, application, supervision and administration of pharmaceutical products.
Approval and Reform for Clinical Trials of New Drugs Under the Administrative Measures for Drug Registration, the PRC Drug Administration Law and Implementing Regulations of the PRC Drug Administration Law, new drug applications are subject to clinical trials.
Approval and Reform for Clinical Trials of New Drugs Under the Administrative Measures for Drug Registration, the Drug Administration Law and the Implementing Regulations of the PRC Drug Administration Law, new drug applications are subject to clinical trials.
Administrative Protection and Monitoring Periods for New Drugs Pursuant to the Implementing Regulations for the Drug Administration Law of the PRC, based on the needs for protection of public health, the NMPA may set an observation period of not more than five years for new drugs produced by drug manufacturers; and no approval shall be given to any other manufacturers to produce or import the said drugs during the observation period.
Administrative Protection and Monitoring Periods for New Drugs Pursuant to the Implementing Regulations of the PRC Drug Administration Law, based on the needs for protection of public health, the NMPA may set an observation period of not more than five years for new drugs produced by drug manufacturers; and no approval shall be given to any other manufacturers to produce or import the said drugs during the observation period.
Trade Secrets According to the Anti-Unfair Competition Law of the PRC and Provisions of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Civil Cases Involving Trade Secret Infringement, the term “trade secrets” refers to technical and business information that is unknown to the public, has utility, may create business interests or profits for its legal owners or holders and is maintained as a secret by its legal owners or holders.
Trade Secrets According to the PRC Anti-Unfair Competition Law and Provisions of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Civil Cases Involving Trade Secret Infringement, the term “trade secrets” refers to technical and business information that is unknown to the public, has utility, may create business interests or profits for its legal owners or holders and is maintained as a secret by its legal owners or holders.
According to the Civil Code of the PRC, where a defect of a product endangers the personal or property safety of another person, the manufacturer or the seller shall assume civil liabilities in accordance with the law.
According to the PRC Civil Code, where a defect of a product endangers the personal or property safety of another person, the manufacturer or the seller shall assume civil liabilities in accordance with the law.
According to Labor Contract Law of the PRC and the Implementation Regulations of the Labor Contract Law of the PRC, employers and employees must enter into written labor contracts to establish their employment relationships.
According to PRC Labor Contract Law and the Implementation Regulations of the PRC Labor Contract Law of the PRC, employers and employees must enter into written labor contracts to establish their employment relationships.
The Renminbi is freely convertible for payments of current account items such as trade and service-related foreign exchange transactions and dividend payments, but is not freely convertible for capital expenditure items such as direct investments, loans or investments in securities outside of the PRC unless approval from the SAFE or its local counterpart is obtained in advance.
Renminbi is freely convertible for payments of current account items such as trade and service-related foreign exchange transactions and dividend payments, but is not freely convertible for capital expenditure items such as direct investments, loans or investments in securities outside of the PRC unless approval from the SAFE or its local counterpart is obtained in advance.
See the section entitled “ Risk Factors—Risks Related to Our Business Operations in the PRC—Since Gyre Pharmaceuticals is a legal entity registered in Beijing, PRC, it is classified as a PRC tax resident for PRC income tax purposes by default, and such classification results in unfavorable tax consequences to Gyre Pharmaceuticals and its non-PRC shareholders .” 61 With respect to gains realized from the sale or other disposition of the shares, there is a possibility that a PRC tax authority may impose an income tax under the indirect transfer rules set out under the Announcement of the State Administration of Taxation on Several Issues Concerning the Enterprise Income Tax on Indirect Property Transfer by Non-Resident Enterprises, or SAT Circular 7, except that such transaction could fall under the safe harbor thereunder.
See the section entitled “ Risk Factors—Risks Related to Our Business Operations in the PRC—Since Gyre Pharmaceuticals is a legal entity registered in Beijing, PRC, it is classified as a PRC tax resident for PRC income tax purposes by default, and such classification results in unfavorable tax consequences to Gyre Pharmaceuticals and its non-PRC shareholders .” With respect to gains realized from the sale or other disposition of the shares, there is a possibility that a PRC tax authority may impose an income tax under the indirect transfer rules set out under the Announcement of the State Administration of Taxation on Several Issues Concerning the Enterprise Income Tax on Indirect Property Transfer by Non-Resident Enterprises, or SAT Circular 7, except that such transaction could fall under the safe harbor thereunder.
Failure to comply with applicable legal and regulatory requirements in the United States at any time during the product development process, approval process, or after approval, may subject us to a variety of 15 administrative or judicial sanctions, such as a delay in approving or refusal by the FDA to approve pending applications, withdrawal of approvals, delay or suspension of clinical trials, issuance of warning letters and other types of regulatory letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil monetary penalties, refusals of or debarment from government contracts, exclusion from the federal healthcare programs, restitution, disgorgement of profits, civil or criminal investigations by the FDA, U.S.
Failure to comply with applicable legal and regulatory requirements in the United States at any time during the product development process, approval process, or after approval, may subject us to a variety of administrative or judicial sanctions, such as a delay in approving or refusal by the FDA to approve pending applications, withdrawal of approvals, delay or suspension of clinical trials, issuance of warning letters and other types of regulatory letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil monetary penalties, refusals of or debarment from government contracts, exclusion from the federal healthcare programs, restitution, disgorgement of profits, civil or criminal investigations by the FDA, U.S.
When the foreign clinical study is not conducted under an IND, the sponsor must ensure that the study complies with applicable FDA regulatory requirements in order to use the study as support for an IND or application for marketing approval or licensure, including that the study was conducted in accordance with GCP, including review and approval by an independent ethics committee and use of proper procedures for obtaining informed consent from subjects, and the FDA is able to validate the data from the 17 study through an onsite inspection if the FDA deems such inspection necessary.
When the foreign clinical study is not conducted under an IND, the sponsor must ensure that the study complies with applicable FDA regulatory requirements in order to use the study as support for an IND or application for marketing approval or licensure, including that the study was conducted in accordance with GCP, including review and approval by an independent ethics committee and use of proper procedures for obtaining informed consent from subjects, and the FDA is able to validate the data from the study through an onsite inspection if the FDA deems such inspection necessary.
Several states have enacted legislation requiring pharmaceutical and biotechnology companies to establish marketing compliance programs, file periodic reports with 24 the state, make periodic public disclosures on sales, marketing, pricing, clinical trials and other activities and/or register their sales representatives, as well as to prohibit pharmacies and other healthcare entities from providing certain physician prescribing data to pharmaceutical and biotechnology companies for use in sales and marketing and to prohibit certain other sales and marketing practices.
Several states have enacted legislation requiring pharmaceutical and biotechnology companies to establish marketing compliance programs, file periodic reports with the state, make periodic public disclosures on sales, marketing, pricing, clinical trials and other activities and/or register their sales representatives, as well as to prohibit pharmacies and other healthcare entities from providing certain physician prescribing data to pharmaceutical and biotechnology companies for use in sales and marketing and to prohibit certain other sales and marketing practices.
During the discovery stage, drug candidates are tested for their 40 absorption, distribution, metabolism, excretion and toxicological properties, and promising compounds are optimized through structure modification to achieve maximum efficacy and minimum toxicity. Our R&D centers support a targeted drug discovery and screening platform, which can efficiently complete target identification and validation, compound design and lead optimization.
During the discovery stage, drug candidates are tested for their absorption, distribution, metabolism, excretion and toxicological properties, and promising compounds are optimized through structure modification to achieve maximum efficacy and minimum toxicity. Our R&D centers support a targeted drug discovery and screening platform, which can efficiently complete target identification and validation, compound design and lead optimization.
Later discovery of previously unknown problems with a product, including adverse events or problems with manufacturing processes of unanticipated severity or frequency, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information; imposition of post-market studies or clinical trials to assess new safety risks; or imposition of distribution or other restrictions under a REMS program.
Later discovery of previously unknown problems with a product, including adverse events or problems with manufacturing processes of unanticipated severity or frequency, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information; imposition of post-market studies or 29 clinical trials to assess new safety risks; or imposition of distribution or other restrictions under a REMS program.
Third-party payors may limit coverage to specific products on an approved list, also known as a formulary, which might not include all the FDA-approved products for a particular indication. Third-party payors are increasingly challenging the price, examining the medical necessity and reviewing the cost effectiveness of medical products, therapies and services, in addition to questioning their safety and efficacy.
Third-party payors may limit coverage to 34 specific products on an approved list, also known as a formulary, which might not include all the FDA-approved products for a particular indication. Third-party payors are increasingly challenging the price, examining the medical necessity and reviewing the cost effectiveness of medical products, therapies and services, in addition to questioning their safety and efficacy.
Meanwhile, immune cells themselves release factors like chemokines and cytokines to amplify inflammatory reactions. Next, the released factors, such as TGF-ß1, PDGF, interleukin-13 and interleukin-4, induce the limited activation and proliferation of myofibroblasts. F351 is expected to treat and reverse liver fibrosis in chronic viral hepatitis B by inhibiting the proliferation of HSCs and the TGF-ß1 signaling pathway.
Meanwhile, immune cells themselves release factors like chemokines and cytokines to amplify inflammatory reactions. Next, the released factors, such as TGF-ß1, PDGF, interleukin-13 and interleukin-4, induce the limited activation and proliferation of myofibroblasts. F351 is expected to treat and 11 reverse liver fibrosis in chronic viral hepatitis B by inhibiting the proliferation of HSCs and the TGF-ß1 signaling pathway.
The Announcement of the State Taxation Administration on Issues Relating to Withholding at Source of Income Tax of Non-resident Enterprises (“Circular 37”) purports to clarify certain issues in the implementation of the above regime, by providing, among others, the definitions of equity transfer income and tax basis, the foreign exchange rate to be used in the calculation of withholding amounts and the date of occurrence of the withholding obligation.
The Announcement of the State Taxation Administration on Issues Relating to Withholding at Source of Income Tax of Non-resident Enterprises (“Circular 37”) purports to clarify certain issues in the implementation of the above regime, by providing, among others, the definitions of equity transfer income and tax basis, the foreign 56 exchange rate to be used in the calculation of withholding amounts and the date of occurrence of the withholding obligation.
We select our raw material suppliers based on a variety of factors, including their economic status, capital, reputation, quality control management, production scale and technological strengths and evaluate them based on their qualification, feedback to our questionnaire and our on-site examination. Logistics and Delivery Management We have entered into logistics service agreements with third parties.
We select our raw material suppliers based on a variety of factors, including their economic status, capital, reputation, quality control management, production scale and technological strengths and evaluate them based on their qualification, feedback to our questionnaire and our on-site examination. Logistics and Delivery Management 40 We have entered into logistics service agreements with third parties.
The scope and rate of reimbursement are determined by provincial policies. The major aim of the Guidance on Further Deepening the Reform of the Payment Method of Basic Medical Insurance released by the General Office of the State Council is to develop a diverse reimbursement mechanism that includes diagnosis-related groups, per-capita caps and per-bed-day caps.
The scope and rate of reimbursement are determined by provincial policies. 49 The major aim of the Guidance on Further Deepening the Reform of the Payment Method of Basic Medical Insurance released by the General Office of the State Council is to develop a diverse reimbursement mechanism that includes diagnosis-related groups, per-capita caps and per-bed-day caps.
Competition The biopharmaceutical industry is intensely competitive and subject to rapid innovation and significant technological advancements. We believe the key competitive factors that will affect the development and commercial success of F351 and any future product candidates are efficacy, safety and tolerability profile, reliability, convenience of dosing, price, the level of generic competition and reimbursement.
(MASH) The biopharmaceutical industry is intensely competitive and subject to rapid innovation and significant technological advancements. We believe the key competitive factors that will affect the development and commercial success of F351 and any future product candidates are efficacy, safety and tolerability profile, reliability, convenience of dosing, price, the level of generic competition and reimbursement.
An applicant seeking approval to market and distribute a new drug in the United States must typically undertake the following: • completion of pre-clinical laboratory tests, animal studies, chemical synthesis and manufacturing and formulation studies in compliance with the FDA’s GLP, regulations; • submission to the FDA of an IND for human clinical testing, which must become effective without FDA objection before human clinical trials may begin; • approval by an independent institutional review board (“IRB”), representing each clinical site before each clinical trial may be initiated; • performance of adequate and well-controlled human clinical trials in accordance with the FDA’s good clinical practice (“GCP”), regulations, to establish the safety and effectiveness of the proposed drug product for each indication for which approval is sought; • preparation and submission to the FDA of a New Drug Application (“NDA”); • review of the NDA by an FDA advisory committee, where applicable; • satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the drug product, and the active pharmaceutical ingredient or ingredients thereof, are produced to assess compliance with cGMP, regulations and to assure that the facilities, methods, and controls are adequate to ensure the product’s identity, strength, quality, and purity; • payment of user fees, as applicable, and securing FDA approval of the NDA; and • compliance with any post-approval requirements, such as any risk evaluation and mitigation strategy (“REMS”), or post-approval studies required by the FDA.
An applicant seeking approval to market and distribute a new drug in the United States must typically undertake the following: • completion of pre-clinical laboratory tests, animal studies, chemical synthesis and manufacturing and formulation studies in compliance with the FDA’s GLP, regulations; • submission to the FDA of an IND for human clinical testing, which must become effective without FDA objection before human clinical trials may begin; • approval by an independent institutional review board (“IRB”), representing each clinical site before each clinical trial may be initiated; • performance of adequate and well-controlled human clinical trials in accordance with the FDA’s good clinical practice (“GCP”), regulations, to establish the safety and effectiveness of the proposed drug product for each indication for which approval is sought; • preparation and submission to the FDA of an NDA; • review of the NDA by an FDA advisory committee, where applicable; • satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the drug product, and the active pharmaceutical ingredient or ingredients thereof, are produced to assess compliance with cGMP, regulations and to assure that the facilities, methods, and controls are adequate to ensure the product’s identity, strength, quality, and purity; 24 • payment of user fees, as applicable, and securing FDA approval of the NDA; and • compliance with any post-approval requirements, such as any risk evaluation and mitigation strategy (“REMS”), or post-approval studies required by the FDA.
The following table sets forth the details of material licenses, permits and approvals: License/Permit ​ ​ Validity Period ​ ​ Authority Drug Production License ​ ​ September 2022 – September 2025 ​ ​ Beijing Medical Products Administration Information Service Qualification Certificate ​ ​ January 2021 – January 2026 ​ ​ Beijing Medical Products Administration Zhongguancun High- tech Enterprise ​ ​ December 2022 – December 2024 ​ ​ Administrative Commission of Zhongguancun Science Park High-tech Enterprise Certificate ​ ​ November 2022 – November 2025 ​ ​ Beijing Municipal Science & Technology Commission, Beijing Municipal Finance Bureau, Beijing Municipal Administration of Taxation Drug Registration Approval (pirfenidone) ​ ​ Valid until August 2028 ​ ​ Beijing Medical Products Administration Drug Registration Approval (pirfenidone capsule) ​ ​ Valid until August 2028 ​ ​ Beijing Medical Products Administration GMP Certificate for Pharmaceutical Products (Pirfenidone APIs) ​ ​ July 2019 – July 2024 ​ ​ Beijing Medical Products Administration Foreign Trade Operators Registration Form ​ ​ From February 2022 ​ ​ Beijing Municipal Commission of Commerce Our Research and Development We consistently devote resources to R&D to achieve long-term growth.
The following table sets forth the details of material licenses, permits and approvals: License/Permit ​ ​ Validity Period ​ ​ Authority Drug Production License ​ ​ December 2024 – September 2025 ​ ​ Beijing Medical Products Administration Information Service Qualification Certificate ​ ​ January 2021 – January 2026 ​ ​ Beijing Medical Products Administration Zhongguancun High- tech Enterprise ​ ​ December 2022 – December 2024 ​ ​ Administrative Commission of Zhongguancun Science Park High-tech Enterprise Certificate ​ ​ November 2022 – November 2025 ​ ​ Beijing Municipal Science & Technology Commission, Beijing Municipal Finance Bureau, Beijing Municipal Administration of Taxation Drug Registration Approval (pirfenidone) ​ ​ Valid until August 2028 ​ ​ Beijing Medical Products Administration Drug Registration Approval (pirfenidone capsule) ​ ​ Valid until August 2028 ​ ​ Beijing Medical Products Administration GMP Certificate for Pharmaceutical Products (pirfenidone APIs) ​ ​ Valid until August 2028 ​ ​ Beijing Medical Products Administration Foreign Trade Operators Registration Form ​ ​ From February 2022 ​ ​ Beijing Municipal Commission of Commerce Our Research and Development We consistently devote resources to R&D to achieve long-term growth.
We employ a clinical-demand-oriented and market-driven approach to our R&D efforts. We first identify suitable drug development targets and carry out project evaluation and overall project design based on our development strategies and then explore and establish experimental methodology by coordinating across different experimental platforms.
We employ a clinical-demand-oriented and market-driven approach to our R&D efforts. We first identify suitable drug development targets and carry out project evaluation and overall project design based on our development strategies and then explore and establish experimental methodology by coordinating across 38 different experimental platforms.
In general, our relationships with our major distributors have remained stable. Product Pricing We take into account a number of factors in determining our prices, which primarily includes our R&D, production and marketing costs and expenses, the perceived value of products, our market share and the competitive landscape.
In general, our relationships with our major distributors have remained stable. 41 Product Pricing We take into account a number of factors in determining our prices, which primarily includes our R&D, production and marketing costs and expenses, the perceived value of products, our market share and the competitive landscape.
The identities of our key competitors vary by product or drug candidate, and in certain cases, our competitors may have greater financial resources and expertise in 41 R&D, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved drugs than we do.
The identities of our key competitors vary by product or drug candidate, and in certain cases, our competitors may have greater financial resources and expertise in R&D, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved drugs than we do.
According to the Drug Administration Law of the PRC (the “Drug Administration Law”), drugs refer to articles which are used in the prevention, treatment and diagnosis of human diseases and intended for the regulation of the physiological functions of human beings, for which indications or functions, usage and dosage are specified, including traditional PRC drugs, chemical drugs and biological products.
According to the PRC Drug Administration Law (the “Drug Administration Law”), drugs refer to articles which are used in the prevention, treatment and diagnosis of human diseases and intended for the regulation of the physiological functions of human beings, for which indications or functions, usage and dosage are specified, including traditional Chinese drugs, chemical drugs and biological products.
The gains are computed based on the difference between the sales proceeds and the original investment basis. Stamp duty is also payable upon a direct transfer of equity interest in a PRC resident enterprise. The stamp duty is calculated at 0.05% on the transfer value, payable by each of the transferor and transferee.
The gains are computed based on the difference between the sales proceeds and the basis price of the original investment. Stamp duty is also payable upon a direct transfer of equity interest in a PRC resident enterprise. The stamp duty is calculated at 0.05% on the transfer value, payable by each of the transferor and transferee.
Healthcare Laws and Compliance Requirements In the United States, our activities are potentially subject to regulation by various federal, state and local authorities in addition to the FDA, including but not limited to the Centers for Medicare & Medicaid Services (“CMS”), other divisions of the U.S.
Healthcare Laws and Compliance Requirements In the United States, our activities are potentially subject to regulation by various federal, state and local authorities in addition to the FDA, including but not limited to the Centers for Medicare and Medicaid Services, other divisions of the U.S.
Special Examination and Fast Track Approval for Drugs Targeting Rare Diseases Pursuant to the Notice on Publishing the Procedures of Developing the Rare Disease List, the following four criteria must be met at the same time for rare disease designation: (i) the disease has a low incidence or prevalence in PRC and abroad; (ii) the disease significantly impacts the patient and his or her family; (iii) there is a clear diagnosis method; and (iv) the disease can be treated or intervened in an economically feasible way, or it has been included in a national scientific research project if there is no effective treatment or intervention for such disease.
Special Examination and Fast Track Approval for Drugs Targeting Rare Diseases Pursuant to the Circular on Publishing the Procedures of Developing the Rare Disease List, the following four criteria must be met at the same time for rare disease designation: (i) the disease has a low incidence or prevalence in PRC and abroad; (ii) the disease significantly impacts the patient and his or her family; (iii) there is a clear diagnosis method; and (iv) the disease can be treated or intervened in an economically feasible way, or it has been included in a national scientific research project if there is no effective treatment or intervention for such disease.
In addition, several studies in patients with type 1 and type 2 diabetes indicate increased renal production of TGF-ß1. The TNF-α’ system has also recently been linked with human DKD on the basis of circulating blood levels and gene expression in kidneys from patients with 31 DKD.
In addition, several studies in patients with type 1 and type 2 diabetes indicate increased renal production of TGF-ß1. The TNF-α’ system has also recently been linked with human DKD on the basis of circulating blood levels and gene expression in kidneys from patients with DKD.
Leveraging our extensive knowledge and experience in clinical trials, our clinical development experts identify unique therapeutic opportunities for our drug candidates based on the differentiating properties observed in clinical trials and improve clinical plans accordingly. Competition The organ fibrosis market is subject to rapid change.
Leveraging our extensive knowledge and experience in clinical trials, our clinical development experts identify unique therapeutic opportunities for our drug candidates based on the differentiating properties observed in clinical trials and improve clinical plans accordingly. 39 Competition The organ fibrosis market is subject to rapid change.
The inner label of a drug should bear such information as the drug’s name, indication or function, strength, dose and usage, production date, batch number, expiry date and drug manufacturer, and the outer label of a drug should indicate such information as the drug’s name, ingredients, description, indication or function, strength, dose and usage, adverse reaction, contraindications, precautions, storage, production date, batch number, expiry date, approval number and drug manufacturer.
The inner label of a drug should bear such information as the drug’s name, indication 48 or function, strength, dose and usage, production date, batch number, expiry date and drug manufacturer, and the outer label of a drug should indicate such information as the drug’s name, ingredients, description, indication or function, strength, dose and usage, adverse reaction, contraindications, precautions, storage, production date, batch number, expiry date, approval number and drug manufacturer.
The FDA’s Decision on an NDA On the basis of the FDA’s evaluation of the NDA and accompanying information, including the results of the inspection of the manufacturing facilities, the FDA may issue an approval letter or a complete response letter. An approval letter authorizes commercial marketing of the product with specific prescribing information for specific 18 indications.
The FDA’s Decision on an NDA On the basis of the FDA’s evaluation of the NDA and accompanying information, including the results of the inspection of the manufacturing facilities, the FDA may issue an approval letter or a complete response letter. An approval letter authorizes commercial marketing of the product with specific prescribing information for specific indications.
Under the Circular of the CFDA on the Matters Relating to Promotion of the Pilot Program for the Drug Marketing Authorization Holder System (the “Circular on Drug Marketing Authorization Holder System”), the drug marketing authorization holder must establish a drug quality assurance system and be equipped with special personnel to take charge of quality management on drugs independently.
Under the Circular on the Matters Relating to Promotion of the Pilot Program for the Drug Marketing Authorization Holder System (the “Circular on Drug Marketing Authorization Holder System”), the drug marketing authorization holder must establish a drug quality assurance system and be equipped with special personnel to take charge of quality management on drugs independently.
Pursuant to the Administrative Measures for the Outbound Investment of Enterprises, an enterprise in the territory of the PRC (“the PRC Investor”) shall, in overseas investment, undergo the formalities for the confirmation or recordation, among others, of an overseas investment project (the “Investment Project”), report the relevant information and cooperate in supervisory inspection.
Pursuant to the Administrative Measures for the Overseas Investment of Enterprises, an enterprise in the territory of the PRC (“the PRC Investor”) shall, in overseas investment, undergo the formalities for the confirmation or recordation, among others, of an overseas investment project (the “Investment Project”), report the relevant information and cooperate in supervisory inspection.
In the NASH mouse model, F351 significantly reduced the severity of fibrosis, as well as demonstrated improvements in the functional, biochemical and histopathological attributes of the affected liver tissue, including a significant reduction of hydroxyproline content and liver enzymes (ALT), aspartate (AST), a decrease in liver fat degeneration, and decreases in the levels of several of inflammatory cytokines at doses of 3-10 mg/kg/day, as well as a decrease in the NAS score in the CCl 4 and WD-induced fibrosis and cell ballooning NASH models at doses of 15-50 mg/kg bid (HEDs of 144 – 480 mg) which are relevant to human exposure.
In the MASH mouse model, F351 significantly reduced the severity of fibrosis, as well as demonstrated improvements in the functional, biochemical and histopathological attributes of the affected liver tissue, including a significant reduction of hydroxyproline content and liver enzymes (ALT), aspartate (AST), a decrease in liver fat degeneration, and decreases in the levels of several of inflammatory cytokines at doses of 3-10 mg/kg/day, as well as a decrease in the NAS score in the CCl 4 and WD-induced fibrosis and cell ballooning MASH models at doses of 15-50 mg/kg bid (HEDs of 144 – 480 mg) which are relevant to human exposure.
Currently, there is no conclusive clinical trial evidence showing that existing drugs can slow down the long-term decline in lung function. For late-stage COPD patients, currently-available treatment options achieve limited therapeutic effects.
Currently, there is no conclusive clinical trial evidence 19 showing that existing drugs can slow down the long-term decline in lung function. For late-stage COPD patients, currently-available treatment options achieve limited therapeutic effects.
This Phase 1 clinical trial of F351 was conducted on the 13 basis of an IND that was filed in 2016 for F351 as an anti-fibrotic agent with a focus on liver fibrosis associated with a spectrum of chronic liver diseases.
This Phase 1 clinical trial of F351 was conducted on the basis of an IND that was filed in 2016 for F351 as an anti-fibrotic agent with a focus on liver fibrosis associated with a spectrum of chronic liver diseases.
Mechanism of Action Pulmonary fibrosis is caused by activation of alveolar cells after epithelial damage, which secretes a series of pro-inflammatory cytokines, activating fibroblast proliferation and myofibroblast differentiation and reducing the rate of apoptosis.
ETUARY Mechanism of Action Pulmonary fibrosis is caused by activation of alveolar cells after epithelial damage, which secretes a series of pro-inflammatory cytokines, activating fibroblast proliferation and myofibroblast differentiation and reducing the rate of apoptosis.
Fast Track Designation, Accelerated Approval, Priority Review, Orphan Drug Designation and Breakthrough Therapy Programs Fast Track There are several FDA programs intended to help facilitate the development of new drugs that meet certain criteria.
Fast Track Designation, Accelerated Approval, Priority Review, Orphan Drug Designation and Breakthrough Therapy Programs 27 Fast Track There are several FDA programs intended to help facilitate the development of new drugs that meet certain criteria.
Additional Regulation In addition to the foregoing, state and federal laws regarding environmental protection and hazardous substances, including the Occupational Safety and Health Act, the Resource Conservancy and Recovery Act and the Toxic Substances Control Act, affect our business.
Additional Regulation 35 In addition to the foregoing, state and federal laws regarding environmental protection and hazardous substances, including the Occupational Safety and Health Act, the Resource Conservancy and Recovery Act and the Toxic Substances Control Act, affect our business.
This exclusivity, however, could also block the approval of its product for seven years if a competitor obtains earlier approval of the same drug for the same indication. The FDA’s interpretation of the scope of orphan drug exclusivity may change.
This exclusivity, however, could also block the approval of its product for seven years if a competitor obtains earlier approval of the same drug for the same indication. 28 The FDA’s interpretation of the scope of orphan drug exclusivity may change.
As a result of a modification made by the Fraud Enforcement and Recovery Act of 2009, a claim includes 23 “any request or demand” for money or property presented to the U.S. government.
As a result of a modification made by the Fraud Enforcement and Recovery Act of 2009, a claim includes “any request or demand” for money or property presented to the U.S. government.
Even if favorable coverage 25 and reimbursement status is attained for one or more products for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.
Even if favorable coverage and reimbursement status is attained for one or more products for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.
A clinical hold is an order issued by the FDA to the sponsor to delay a proposed clinical investigation or to suspend an ongoing 16 investigation. A partial clinical hold is a delay or suspension of only part of the clinical work requested under the IND.
A clinical hold is an order issued by the FDA to the sponsor to delay a proposed clinical investigation or to suspend an ongoing investigation. A partial clinical hold is a delay or suspension of only part of the clinical work requested under the IND.
This responsibility is executed through training, formulation and implementation of strategies, policies, standards and metrics, communication of environmental, health and safety policies and procedures through a team of coordinators, environmental, health and safety audits and incident response planning and implementation.
This responsibility is executed through training, formulation and implementation of strategies, policies, standards and metrics, communication of environmental, health and safety policies and procedures through a team of coordinators, environmental, health and safety audits and incident response 37 planning and implementation.
In all cases, again, the clinical trials are conducted in accordance with GCP and the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.
In all cases, again, the clinical trials are conducted in accordance with GCP and the 59 applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.
A drug marketing authorization holder who manufactures drugs on its own shall obtain a drug production license in accordance with the Circular on Drug Marketing Authorization 47 Holder System and entrust a qualified drug manufacturer.
A drug marketing authorization holder who manufactures drugs on its own shall obtain a drug production license in accordance with the Circular on Drug Marketing Authorization Holder System and entrust a qualified drug manufacturer.
Phases of Clinical Trials and the Communication with the CDE According to the Administrative Measures for Drug Registration, a clinical trial consists of Phases 1, 2, 3, 4 and bioequivalence trial.
Phases of Clinical Trials and Communication with the CDE According to the Administrative Measures for Drug Registration, a clinical trial consists of Phase 1, 2, 3 and 4 trials and a bioequivalence trial.
The Phase 2 trial was randomized in 240 patients divided into four dose-escalating groups (placebo; 180 mg/day; 270 mg/day; and 360 mg/day) with a primary endpoint of the reduction of the liver fibrosis score (Ishak Scoring System) by greater than or equal to one grade after taking F351 in combination with Entecavir.
The Phase 2 trial was randomized in 240 patients divided into four dose-escalating groups (placebo; 180 mg/day; 270 mg/day; and 360 mg/day) with a primary endpoint of the reduction of the liver fibrosis score (Ishak Scoring System) by greater than or equal to one stage after taking F351 in combination with Entecavir.
If we need to find a new supplier, we conduct comparative research and, after confirming, the supplier is added to our Qualified Supplier Directory to ensure product supply.
If we need to find a new 42 supplier, we conduct comparative research and, after confirming, the supplier is added to our Qualified Supplier Directory to ensure product supply.
Value-added Tax (“VAT”) According to the Provisional Regulations on VAT of the PRC and its implementation rules, unless otherwise specified by relevant laws and regulations, any enterprise or individual engaged in the sale of goods, provision of processing, repair and replacement services, sales of service, intangible assets and real estate and the importation of goods in the PRC are generally required to pay VAT.
Value-added Tax (“VAT”) According to the Interim Regulations on VAT of the PRC and its implementation rules, unless otherwise specified by relevant laws and regulations, any enterprise or individual engaged in the sale of goods, provision of processing, repair and replacement services, sales of service, intangible assets and real estate and the importation of goods in the PRC are generally required to pay VAT.
Treatment-emergent AEs reported following single dose administration in Part I of the trial included a single AE of rhinorrhoea and scattered, isolated, reversible laboratory abnormalities. Treatment-emergent AEs reported following repeated dose administration in Part II of the trial included headache (25.0%), constipation (16.7%) and somnolence (12.5%). Abdominal discomfort and flatulence were also reported as gastrointestinal AEs in one subject each.
Treatment-emergent AEs reported following single dose administration in Part I of the trial included a single AE of rhinorrhea and scattered, isolated, reversible laboratory abnormalities. Treatment-emergent AEs reported following repeated dose administration in Part II of the trial included headache (25.0%), constipation (16.7%) and somnolence (12.5%). Abdominal discomfort and flatulence were also reported as gastrointestinal AEs in one subject each.
Non-Clinical Research and Animal Testing The State Administration for Market Regulation requires preclinical data to support registration applications for imported and domestic drugs.
Non-Clinical Research and Animal Testing 43 The State Administration for Market Regulation requires preclinical data to support registration applications for imported and domestic drugs.
Trademarks Pursuant to the Trademark Law of the PRC and the Regulations on the Implementation of the Trademark Law of the PRC, the validity period of registered trademarks is 10 years, calculated from the date of approval of the registration.
Trademarks Pursuant to the PRC Trademark Law and the Implementation Regulations of the PRC Trademark Law, the validity period of registered trademarks is 10 years, calculated from the date of approval of the registration.
The critical pathophysiologic mechanisms underlying the development and progression of NASH include reduced ability to metabolize clear lipids, increased insulin resistance, injury to hepatocytes and liver fibrosis in response to hepatocyte injury. NASH patients have an excessive accumulation of fat in the liver resulting primarily from a caloric intake above and beyond energy needs.
The critical pathophysiologic mechanisms underlying the development and progression of MASH include reduced ability to metabolize clear lipids, increased insulin resistance, injury to hepatocytes and liver fibrosis in response to hepatocyte injury. MASH patients have an excessive accumulation of fat in the liver resulting primarily from a caloric intake above and beyond energy needs.
Mechanism of Action When injuries occur and epithelial and/or endothelial cells are damaged, pro-inflammatory cytokines are released by the coagulation cascade for immune cell recruitment, mainly neutrophils and macrophages. These recruited immune cells function as the scavenger to remove tissue debris and dead cells, resulting in acute inflammation.
F351 Mechanism of Action in CHB When injuries occur and epithelial and/or endothelial cells are damaged, pro-inflammatory cytokines are released by the coagulation cascade for immune cell recruitment, mainly neutrophils and macrophages. These recruited immune cells function as the scavenger to remove tissue debris and dead cells, resulting in acute inflammation.
During the year ended December 31, 2023, we were not subject to any material claims, lawsuits, penalties or administrative actions relating to non-compliance with occupational health and safety laws or regulations and had not experienced any strikes, labor disputes or industrial actions which have had a material effect on our business.
During the year ended December 31, 2024, we were not subject to any material claims, lawsuits, penalties or administrative actions relating to non-compliance with occupational health and safety laws or regulations and had not experienced any strikes, labor disputes or industrial actions which have had a material effect on our business.
Product Liability 54 Pursuant to the Product Quality Law of the PRC, manufacturers shall be liable for the quality of products they produce and guarantee that the product quality meets the requirements stipulated by laws and shall not mix impurities or imitations into products, pass fake goods off as genuine ones or shoddy products as good ones or sub-standard products as standard ones.
Product Quality Pursuant to the PRC Product Quality Law of the PRC, manufacturers shall be liable for the quality of products they produce and guarantee that the product quality meets the requirements stipulated by laws and shall not mix impurities or imitations into products, pass fake goods off as genuine ones or shoddy products as good ones or sub-standard products as standard ones.
The sixth patent family is for F351 compositions and methods of using F351 for treating liver fibrosis, liver cirrhosis, advanced hepatitis B and NASH and consists of one PCT patent application and one pending patent application in each of the PRC, Australia, Canada, Europe, Israel, Japan, South Korea, Mexico, New Zealand, Singapore, and the U.S.
The fifth patent family is for F351 compositions and methods of using F351 for treating liver fibrosis, liver cirrhosis, advanced hepatitis B and NASH and consists of one PCT patent application and one pending patent application in each of the PRC, Australia, Canada, Europe, Israel, Japan, Mexico, New Zealand, Singapore, South Korea and the U.S.
In some cases, cirrhosis progresses to decompensated cirrhosis, which results in permanent liver damage that can lead to liver failure. In addition, it is estimated that 8% of patients with advanced fibrosis will develop HCC. NASH is a complex, multifaceted disease that does not just affect the liver.
In some cases, cirrhosis progresses to decompensated cirrhosis, which results in permanent liver damage that can lead to liver failure. In addition, it is estimated that 8% of patients with advanced fibrosis will develop HCC. MASH is a complex, multifaceted disease that does not just affect the liver.
Pursuant to the Administrative Measures for Communication on Drug Research, Development and Technical Reviews, during the research and development periods and in the registration applications of the innovative new drugs (among others), the applicants may propose to conduct communication meetings with the CDE. The communication meetings can be classified into three types.
Pursuant to the Administrative Measures for Communication on Drug Research, Development and Technical Reviews, during the R&D periods and in the registration applications of the innovative new drugs (among others), the applicants may propose to conduct communication meetings with the CDE. The communication meetings can be classified into three types.
In vitro anti-fibrotic effects of F351 were also confirmed in several established in vivo rodent models of liver fibrosis, such as carbon tetrachloride (“CCl 4 ”)-induced liver fibrosis mouse model, DMN-induced liver fibrosis rat model, and HSA-induced liver fibrosis rat model, as well as mouse model of NASH fibrosis (CCl 4 +Western [High Fat] Diet).
In vitro anti-fibrotic effects of F351 were also confirmed in several established in vivo rodent models of liver fibrosis, such as carbon tetrachloride (“CCl 4 ”)-induced liver fibrosis mouse model, DMN-induced liver fibrosis rat model, and HSA-induced liver fibrosis rat model, as well as mouse model of MASH fibrosis (CCl 4 +Western [High Fat] Diet).
Production and Quality Control In-House Manufacturing Facilities Our manufacturing facilities are situated in Beijing and Cangzhou, Hebei province, in the PRC. During the years ended December 31, 2022 and 2023, 100% of pirfenidone we sold was manufactured at our Beijing and Cangzhou facilities. Our manufacturing facilities are designed and operated in compliance with cGMP regulations.
Production and Quality Control In-House Manufacturing Facilities Our manufacturing facilities are situated in Beijing and Cangzhou, Hebei province, in the PRC. During the years ended December 31, 2023 and 2024, 100% of pirfenidone we sold was manufactured at our Beijing and Cangzhou facilities. Our manufacturing facilities are designed and operated in compliance with cGMP regulations.
The legal representative of and principal person in charge of a drug manufacturer are fully responsible for the drug manufacturing activities of the enterprise.
The legal representative of and principal person in charge of a drug manufacturer are fully responsible for the drug manufacturing activities.
If F351 is approved for the treatment of NASH-associated liver fibrosis, future competition could also arise from five main classes of drugs aiming to reach the market in the current NASH landscape: Farnesoid X receptor agonists, fibroblast grow factor 21, thyroid hormone receptor-β agonists, glucagon-like peptide 1 (“GLP-1”) agonists, and PPAR agonists, but there are others as well.
If F351 is approved for the treatment of MASH-associated liver fibrosis, future competition could arise from five main classes of drugs aiming to reach the market in the current MASH landscape: Farnesoid X receptor agonists, fibroblast grow factor 21, thyroid hormone receptor-β agonists, glucagon-like peptide 1 (“GLP-1”) agonists, and PPAR agonists, but there are others as well.
Employees in the United States 26 We consider our ability to recruit, retain and motivate our employees to be critical to our success. We are an equal opportunity employer and are fundamentally committed to creating and maintaining a work environment in which employees are treated with respect and dignity.
Employees in the United States 22 We consider our ability to recruit, retain and motivate our employees to be critical to our success. We are an equal opportunity employer and are fundamentally committed to creating and maintaining a work environment in which employees are treated with respect and dignity.
As of December 31, 2023, there was one approved treatment for DKD in many parts of the world, finerenone (marketed under the name KERENDIA). Pirfenidone has demonstrated positive therapeutic effects on DKD due to its unique mechanism of action.
As of December 31, 2024, there was one approved treatment for DKD in many parts of the world, finerenone (marketed under the name KERENDIA). Pirfenidone has demonstrated positive therapeutic effects on DKD due to its unique mechanism of action.
The Phase 3 clinical trial was designed to be randomized in 248 patients with a primary endpoint of the reduction of the liver fibrosis score (Ishak Scoring System) by at least one grade after taking F351 in combination with Entecavir.
The Phase 3 clinical trial was designed to be randomized in 248 patients with a primary endpoint of the reduction of the liver fibrosis score (Ishak Scoring System) by at least one stage after taking F351 in combination with Entecavir.
This abnormal liver fat contributes to the progression to NASH, a liver necro-inflammatory state, that can lead to scarring, also known as fibrosis, and, for some, can progress to cirrhosis and liver failure—cirrhosis develops in approximately 20% to 45% of patients.
This abnormal liver fat contributes to the progression to MASH, a liver necro-inflammatory state, that can lead to scarring, also known as fibrosis, and, for some, can progress to cirrhosis and liver failure—cirrhosis develops in approximately 20% to 45% of patients.
To support the IND filing and initiation of the proposed Phase 2a clinical trial, we plan to cross-reference all nonclinical and clinical data obtained in trials completed under the currently-active IND in the United States, as well as those previously completed in the PRC.
To support the IND filing and initiation of the proposed Phase 2 clinical trial, we plan to cross-reference all nonclinical and clinical data obtained in trials completed under the currently-active IND in the United States, as well as those previously completed in the PRC.
The Good Manufacturing Practice for Drugs provided guidance for the quality management, organization and staffing, production premises and facilities, equipment, material and products, recognition and inspection, documentation maintenance, manufacture management, quality control and quality assurance, contractual manufacture and contractual inspection for the products, product delivery and recalls of a manufacturer.
The Good Manufacturing Practice for Drugs provided guidance for, among others, the quality management, organization and staffing, production premises and facilities, equipment, material and products, recognition and inspection, documentation maintenance, manufacture management, quality control and quality assurance, contractual manufacture and contractual inspection for the products, product delivery and recalls of a manufacturer.
The CCPA/CPRA applies to personal data of consumers, business representatives, and employees, and imposes obligations on certain businesses that do business in California, including to provide specific disclosures in privacy notices, rights to California residents in relation to their personal information.
The CCPA applies to personal data of consumers, business representatives, and employees, and imposes obligations on certain businesses that do business in California, including to provide specific disclosures in privacy notices, and affords rights to California residents in relation to their personal information.
The second patent family is for a method of preparing F351 and consists of one granted patent in the PRC that expires in 2028, two granted pants in Japan, both of which expire in 2037, and 2 PCT patent applications and 6 pending patent applications in the PRC.
The first patent family is for a method of preparing F351 and consists of one granted patent in the PRC that expires in 2028, two granted pants in Japan, both of which expire in 2037, and 2 PCT patent applications and 6 pending patent applications in the PRC.
The social insurance and housing provident funds for our employees have been paid in full during the years ended December 31, 2022 and 2023. We are also subject to safety laws and regulations of the PRC.
The social insurance and housing provident funds for our employees have been paid in full during the years ended December 31, 2024 and 2023. We are also subject to safety laws and regulations of the PRC.
As of the date of this Annual Report, we are the owner of all the patents and patent applications which are material to our business. The term of individual patents depends on the legal term for patents in the jurisdictions in which they are granted.
As of the date of this Annual Report, we are the owner of all the patents and patent applications that are material to our business. 20 The term of individual patents depends on the legal term for patents in the jurisdictions in which they are granted.
Regulatory Requirements in the PRC Government authorities in the PRC extensively regulate, among other things, the research, development, testing, product approval, manufacture, quality control, manufacturing changes, packaging, storage, recordkeeping, labeling, promotion, advertising, sales, distribution, marketing, and import and export of drugs and biologic products. Our current product candidates are expected to be regulated as drugs.
Government Regulations in the PRC Government authorities in the PRC extensively regulate, among other things, the research, development, testing, product approval, manufacture, quality control, manufacturing changes, packaging, storage, recordkeeping, labeling, promotion, advertising, sales, distribution, marketing, and import and export of drugs and biologic products. Our current product candidates are expected to be regulated as drugs.
Due to the severity of the disease and the clinical trial progress of F351 compared with the currently available treatments, in March 2021, the Center for Drug Evaluation (“CDE”) of the NMPA in the PRC granted F351 a Breakthrough Therapy designation, which helps to accelerate the review of drugs that have early evidence to suggest that the drug may demonstrate a substantial improvement over currently available therapies.
Due to the severity of the disease and the clinical trial progress of F351, in March 2021, the Center for Drug Evaluation (“CDE”) of the NMPA in the PRC granted F351 a Breakthrough Therapy designation, which helps to accelerate the review of drugs that have early evidence to suggest that the drug may demonstrate a substantial improvement over currently available therapies.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe requirements for approval of F351 by the NMPA, FDA and comparable foreign regulatory authorities are unknown, may be difficult to predict, and may change over time, which makes it difficult to predict the timing and costs of clinical development and the likelihood of marketing approval. • Our ongoing success is reliant on our capacity to retain key executives and to recruit, maintain, and inspire skilled professionals. • If our intangible assets are impaired, our results of operations and financial condition may be adversely affected. • Modifications to laws, regulations, and rules by the PRC government could lead to alterations in our operational processes and business approaches. • There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations. • The market price of our common stock is expected to be volatile. • We may be unable to integrate successfully and realize the anticipated benefits of the Contributions. • We will continue to incur significant costs as a result of operating as a public company, and our management is required to devote substantial time to compliance with regulations related to operating as a public company.
Biggest changeHowever, there is no guarantee we will fully achieve the anticipated benefits from these collaborations, alliances, or licensing agreements, and conflicts could emerge with our present or prospective partners. • Clinical drug development involves a lengthy and expensive process and outcomes are uncertain, and we may not successfully complete clinical trials for drugs under development, including ETUARY for future indications in the PRC, F573 in the PRC, and F351 in the PRC and in additional markets beyond the PRC, or demonstrate the safety and efficacy of our product candidates to the satisfaction of regulatory authorities. • Our ongoing success is reliant on our capacity to retain key executives and to recruit, maintain, and inspire skilled professionals. • If our intangible assets are impaired, our results of operations and financial condition may be adversely affected. • Modifications to laws, regulations, and rules by the PRC government could lead to alterations in our operational processes and business approaches. • There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations. • The market price of our common stock has been, and may continue to be, volatile. • We will continue to incur significant costs as a result of operating as a public company, and our management is required to devote substantial time to compliance with regulations related to operating as a public company.
These regulations include: • the Federal Healthcare Anti-Kickback Statute that prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid, and which will constrain our marketing practices and the marketing practices of our licensees, educational programs, pricing policies, and relationships with healthcare providers or other entities; • the federal physician self-referral prohibition, commonly known as the Stark Law, which prohibits physicians from referring Medicare or Medicaid patients to providers of “designated health services” with whom the physician or a member of the physician’s immediate family has an ownership interest or compensation arrangement, unless a statutory or regulatory exception applies; • federal false claims laws that prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other government reimbursement programs that are false or fraudulent, and which may expose entities that provide coding and billing advice to customers to potential criminal and civil penalties, including through civil whistleblower or qui tam actions, and including as a result of claims presented in violation of the Federal Healthcare Anti-Kickback Statute, the Stark Law or other healthcare-related laws, including laws enforced by the FDA; • HIPAA, which imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program and also created federal criminal laws that prohibit knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statements in connection with the delivery of or payment for healthcare benefits, items or services that, as amended by HITECH, also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; 98 • federal physician sunshine requirements under the ACA, which requires manufacturers of approved drugs, devices, biologics and medical supplies to report annually to the U.S.
These regulations include: • the Federal Healthcare Anti-Kickback Statute that prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid, and which will constrain our marketing practices and the marketing practices of our licensees, educational programs, pricing policies, and relationships with healthcare providers or other entities; • the federal physician self-referral prohibition, commonly known as the Stark Law, which prohibits physicians from referring Medicare or Medicaid patients to providers of “designated health services” with whom the physician or a member of the physician’s immediate family has an ownership interest or compensation arrangement, unless a statutory or regulatory exception applies; • federal false claims laws that prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other government reimbursement programs that are false or fraudulent, and which may expose entities that provide coding and billing advice to customers to potential criminal and civil penalties, including through civil whistleblower or qui tam actions, and including as a result of claims presented in violation of the Federal Healthcare Anti-Kickback Statute, the Stark Law or other healthcare-related laws, including laws enforced by the FDA; • HIPAA, which imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program and also created federal criminal laws that prohibit knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statements in connection with the delivery of or payment for healthcare benefits, items or services that, as amended by HITECH, also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; • federal physician sunshine requirements under the ACA, which requires manufacturers of approved drugs, devices, biologics and medical supplies to report annually to the U.S.
Some of the factors that may cause the market price of our common stock to fluctuate include: • timing and results of INDs, preclinical studies and clinical trials of our product candidates, or those of our competitors or our existing or future collaborators; • the success of competitive products or announcements by potential competitors of their product development efforts; • failure to meet or exceed financial and development projections we may provide to the public; • failure to meet or exceed the financial and development projections of the investment community; • if we do not achieve the perceived benefits of the Contributions as rapidly or to the extent anticipated by financial or industry analysts; • announcements of significant acquisitions, strategic collaborations, joint ventures or capital commitments by us or our competitors; • actions taken by regulatory agencies with respect to our product, product candidates, clinical studies, manufacturing process or sales and marketing terms; • disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies; • additions or departures of key personnel; • lawsuits, including patent or stockholder litigation; • if securities or industry analysts do not publish research or reports about our business, or if they issue adverse or misleading opinions regarding our business and stock; • changes in the market valuations of similar companies; • geo-political developments, general market or macroeconomic conditions including inflation and interest rates; 117 • market conditions in the pharmaceutical and biotechnology sectors; • changes in the structure of healthcare payment systems; • announcement of expectation of additional financing efforts; • sales of securities by us or our securityholders in the future; • if we fail to raise an adequate amount of capital to fund our operations and continued development of our product candidates; • trading volume of our common stock; • publicity or announcements by competitors of new commercial products, clinical progress or lack thereof, significant contracts, commercial relationships or capital commitments; • the impact of any natural disasters or public health emergencies; • the introduction of technological innovations or new products or product candidates that compete with our product, ETUARY, and product candidates and our services; and • period-to-period fluctuations in our financial results.
Some of the factors that may cause the market price of our common stock to fluctuate include: • timing and results of INDs, preclinical studies and clinical trials of our product candidates, or those of our competitors or our existing or future collaborators; • the success of competitive products or announcements by potential competitors of their product development efforts; • failure to meet or exceed financial and development projections we may provide to the public; • failure to meet or exceed the financial and development projections of the investment community; • if we do not achieve the perceived benefits of the Contributions as rapidly or to the extent anticipated by financial or industry analysts; • announcements of significant acquisitions, strategic collaborations, joint ventures or capital commitments by us or our competitors; • actions taken by regulatory agencies with respect to our product, product candidates, clinical studies, manufacturing process or sales and marketing terms; • disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies; • additions or departures of key personnel; • lawsuits, including patent or stockholder litigation; • if securities or industry analysts do not publish research or reports about our business, or if they issue adverse or misleading opinions regarding our business and stock; • changes in the market valuations of similar companies; • geo-political developments, general market or macroeconomic conditions including inflation and interest rates; • market conditions in the pharmaceutical and biotechnology sectors; • changes in the structure of healthcare payment systems; • announcement of expectation of additional financing efforts; • sales of securities by us or our securityholders in the future; • if we fail to raise an adequate amount of capital to fund our operations and continued development of our product candidates; • trading volume of our common stock; • publicity or announcements by competitors of new commercial products, clinical progress or lack thereof, significant contracts, commercial relationships or capital commitments; • the impact of any natural disasters or public health emergencies; • the introduction of technological innovations or new products or product candidates that compete with our product, ETUARY, and product candidates and our services; and • period-to-period fluctuations in our financial results.
Any completed, in-process or potential acquisition or strategic partnership may entail numerous risks, including: • inability to identify suitable acquisition targets and reach agreement on acceptable terms; • lack of access to financing for acquisitions on acceptable terms or at all, or otherwise on assumption of additional indebtedness or contingents and issuance of our equity securities; • failure to obtain or secure the governmental approvals and third-party consents necessary to consummate any proposed acquisition; • increased operating expenses, including research and development expenses due to an increased number of product candidates, administrative expenses and selling expenses; • assimilation of operations, intellectual property and products of an acquired company, including difficulties associated with integrating new personnel; • diversion of our management’s attention from our existing product programs and initiatives in pursuing such a strategic merger or acquisition; • difficulty in retention of key employees, the loss of key personnel and uncertainties in our ability to maintain key business relationships; • risks and uncertainties associated with the other party to such a transaction, including the prospects of that party and their existing products and product candidates; • inability to generate revenue from acquired technology and/or products sufficient to meet our objectives in undertaking the acquisition or even to offset the associated acquisition and maintenance costs; and/or • deficiencies in internal controls, data adequacy and integrity, product quality and regulatory compliance and product liabilities in the acquired business we discover after such acquisition.
Any completed, in-process or potential acquisition or strategic partnership may entail numerous risks, including: • inability to identify suitable acquisition targets and reach agreement on acceptable terms; • lack of access to financing for acquisitions on acceptable terms or at all, or otherwise on assumption of additional indebtedness or contingents and issuance of our equity securities; • failure to obtain or secure the governmental approvals and third-party consents necessary to consummate any proposed acquisition; • increased operating expenses, including research and development expenses due to an increased number of product candidates, administrative expenses and selling expenses; 65 • assimilation of operations, intellectual property and products of an acquired company, including difficulties associated with integrating new personnel; • diversion of our management’s attention from our existing product programs and initiatives in pursuing such a strategic merger or acquisition; • difficulty in retention of key employees, the loss of key personnel and uncertainties in our ability to maintain key business relationships; • risks and uncertainties associated with the other party to such a transaction, including the prospects of that party and their existing products and product candidates; • inability to generate revenue from acquired technology and/or products sufficient to meet our objectives in undertaking the acquisition or even to offset the associated acquisition and maintenance costs; and/or • deficiencies in internal controls, data adequacy and integrity, product quality and regulatory compliance and product liabilities in the acquired business we discover after such acquisition.
The NMPA, FDA and comparable foreign regulatory authorities have substantial discretion in the approval process and may refuse to accept any application or may decide that our data are insufficient for approval and require additional preclinical, clinical or other data. our product candidates could be delayed in receiving, or fail to receive, regulatory approval for many reasons, including: 95 • the NMPA, FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials; • We may be unable to demonstrate to the satisfaction of the NMPA, FDA or comparable foreign regulatory authorities that a product candidate is safe and effective for its proposed indication; • the results of clinical trials may not meet the level of statistical significance required by the NMPA, FDA or comparable foreign regulatory authorities for approval; serious and unexpected drug-related side effects may be experienced by participants in our clinical trials or by individuals using drugs similar to our product candidates; • We may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; the NMPA, FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials; • the data collected from clinical trials of our product candidates may not be acceptable or sufficient to support the submission of an NDA or other submission or to obtain regulatory approval in the PRC, United States or elsewhere, and we may be required to conduct additional clinical trials; • the NMPA, FDA or the applicable foreign regulatory authority may disagree regarding the formulation, labeling and/or the specifications of our product candidates; • the NMPA, FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which we contracts for clinical and commercial supplies; and • the approval policies or regulations of the NMPA, FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.
The NMPA, FDA and comparable foreign regulatory authorities have substantial discretion in the approval process and may refuse to accept any application or may decide that our data are insufficient for approval and require additional preclinical, clinical or other data. our product candidates could be delayed in receiving, or fail to receive, regulatory approval for many reasons, including: • the NMPA, FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials; • We may be unable to demonstrate to the satisfaction of the NMPA, FDA or comparable foreign regulatory authorities that a product candidate is safe and effective for its proposed indication; • the results of clinical trials may not meet the level of statistical significance required by the NMPA, FDA or comparable foreign regulatory authorities for approval; serious and unexpected drug-related side effects may be experienced by participants in our clinical trials or by individuals using drugs similar to our product candidates; • We may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; the NMPA, FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials; • the data collected from clinical trials of our product candidates may not be acceptable or sufficient to support the submission of an NDA or other submission or to obtain regulatory approval in the PRC, United States or elsewhere, and we may be required to conduct additional clinical trials; • the NMPA, FDA or the applicable foreign regulatory authority may disagree regarding the formulation, labeling and/or the specifications of our product candidates; • the NMPA, FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which we contracts for clinical and commercial supplies; and • the approval policies or regulations of the NMPA, FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.
Department of Health and Human Services, information related to payments and other transfers of value to physicians, other healthcare providers, and teaching hospitals, and ownership and investment interests held by physicians and other healthcare providers and their immediate family members and applicable group purchasing organizations; • the Federal Food, Drug, and Cosmetic Act, which, among other things, strictly regulates drug product marketing, prohibits manufacturers from marketing drug products for off-label use and regulates the distribution of drug samples; and • state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, state laws requiring pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government and which may require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures, and state and foreign laws governing the privacy and security of health information in specified circumstances, many of which differ from each other in significant ways and often are not preempted by federal laws such as HIPAA, thus complicating compliance efforts.
Department of Health and Human Services, information related to payments and other transfers of value to physicians, other healthcare providers, and teaching hospitals, and ownership and investment interests held by physicians and other healthcare providers and their immediate family members and applicable group purchasing organizations; • the Federal Food, Drug, and Cosmetic Act, which, among other things, strictly regulates drug product marketing, prohibits manufacturers from marketing drug products for off-label use and regulates the distribution of drug samples; and • state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, state laws requiring pharmaceutical companies to comply with the pharmaceutical industry’s 101 voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government and which may require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures, and state and foreign laws governing the privacy and security of health information in specified circumstances, many of which differ from each other in significant ways and often are not preempted by federal laws such as HIPAA, thus complicating compliance efforts.
Among other things, these provisions will: • continue the use of a classified board of directors such that not all members of our board of directors are elected at one time; • allow the authorized number of our directors to be changed only by resolution of our board of directors; • limit the manner in which stockholders can remove directors from our board of directors; • provide for advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and for nominations to our board of directors; • limit who may call stockholder meetings; • limit actions by our stockholders by written consent; • authorize our board of directors to issue preferred stock without stockholder approval, which could be used to institute a “poison pill” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by our board of directors; and • require the approval of the holders of at least two-thirds of the votes that all stockholders would be entitled to cast to amend or repeal certain provisions of our certificate of incorporation or bylaws.
Among other things, these provisions will: 124 • continue the use of a classified board of directors such that not all members of our board of directors are elected at one time; • allow the authorized number of our directors to be changed only by resolution of our board of directors; • limit the manner in which stockholders can remove directors from our board of directors; • provide for advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and for nominations to our board of directors; • limit who may call stockholder meetings; • limit actions by our stockholders by written consent; • authorize our board of directors to issue preferred stock without stockholder approval, which could be used to institute a “poison pill” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by our board of directors; and • require the approval of the holders of at least two-thirds of the votes that all stockholders would be entitled to cast to amend or repeal certain provisions of our certificate of incorporation or bylaws.
We may experience delays in completing planned clinical trials for a variety of reasons, including delays related to: • the availability of financial resources to commence and complete the planned trials; • inability to reach agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • obtaining approval at each clinical trial site by an IRB; • recruiting suitable patients to participate in trials; • having patients complete a trial or return for post-treatment follow-up; • clinical trial sites deviating from trial protocol or dropping out of a trial; • adding new clinical trial sites; and • manufacturing sufficient quantities of qualified materials under Current Good Manufacturing Practice (“cGMPs”) regulations and applying them on a subject-by-subject basis for use in clinical trials.
We may experience delays in completing planned clinical trials for a variety of reasons, including delays related to: • the availability of financial resources to commence and complete the planned trials; 98 • inability to reach agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • obtaining approval at each clinical trial site by an IRB; • recruiting suitable patients to participate in trials; • having patients complete a trial or return for post-treatment follow-up; • clinical trial sites deviating from trial protocol or dropping out of a trial; • adding new clinical trial sites; and • manufacturing sufficient quantities of qualified materials under Current Good Manufacturing Practice (“cGMPs”) regulations and applying them on a subject-by-subject basis for use in clinical trials.
Events that may prevent successful or timely completion of clinical development may include: • regulators, institutional review boards or ethics committees not authorizing us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; • our inability to reach agreements on acceptable terms with prospective CROs, SMOs and hospitals as trial centers; • manufacturing issues, including problems with manufacturing, supply quality, compliance with GMP, or obtaining sufficient quantities of a product candidate for use in a clinical trial in a timely manner; • clinical trials producing negative or inconclusive results, resulting in additional clinical trials or abandoning drug development programs; • changes to the clinical trial protocol; • our third-party contractors’ failing to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; • our suspending or terminating clinical trials for various reasons, including negative or inconclusive clinical response or a finding that participants are being exposed to unacceptable health risks or experiencing adverse effects; • the cost of clinical trials being greater than we anticipate; • the supply or quality of our product candidates or other materials necessary to conduct clinical trials being insufficient or inadequate; • delays in having patients complete participation in a trial or return for post-treatment follow-up; 70 • participants choosing an alternative treatment for the indication for which we are developing our product candidates, or participating in competing clinical trials; • occurrence of adverse effects or serious adverse effects associated with the product candidate that are viewed to outweigh its potential benefits; • the occurrence of serious adverse events in clinical trials of competing products or conducted by competitors; • third-party clinical investigators losing the licenses or permits necessary to perform our clinical trials, not performing our clinical trials on our anticipated schedule or consistent with the clinical trial protocol or other regulatory requirements or committing fraud; and • the results of pre-clinical studies or early clinical trials not being predictive of the results of later-stage clinical trials, and initial or interim results of a trial not being predicative of final results.
Events that may prevent successful or timely completion of clinical development may include: • regulators, institutional review boards or ethics committees not authorizing us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; • our inability to reach agreements on acceptable terms with prospective CROs, SMOs and hospitals as trial centers; • manufacturing issues, including problems with manufacturing, supply quality, compliance with GMP, or obtaining sufficient quantities of a product candidate for use in a clinical trial in a timely manner; • clinical trials producing negative or inconclusive results, resulting in additional clinical trials or abandoning drug development programs; • changes to the clinical trial protocol; • our third-party contractors’ failing to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; • our suspending or terminating clinical trials for various reasons, including negative or inconclusive clinical response or a finding that participants are being exposed to unacceptable health risks or experiencing adverse effects; • the cost of clinical trials being greater than we anticipate; • the supply or quality of our product candidates or other materials necessary to conduct clinical trials being insufficient or inadequate; • delays in having patients complete participation in a trial or return for post-treatment follow-up; 69 • participants choosing an alternative treatment for the indication for which we are developing our product candidates, or participating in competing clinical trials; • occurrence of adverse effects or serious adverse effects associated with the product candidate that are viewed to outweigh its potential benefits; • the occurrence of serious adverse events in clinical trials of competing products or conducted by competitors; • third-party clinical investigators losing the licenses or permits necessary to perform our clinical trials, not performing our clinical trials on our anticipated schedule or consistent with the clinical trial protocol or other regulatory requirements or committing fraud; and • the results of pre-clinical studies or early clinical trials not being predictive of the results of later-stage clinical trials, and initial or interim results of a trial not being predicative of final results.
Additionally, a clinical trial may be suspended or terminated by us, the IRBs for the institutions in which the trials are being conducted, the Data Monitoring Committee for the trial, or by the NMPA, FDA or other regulatory authorities for a number of reasons, including failure to conduct the clinical trial in accordance with regulatory requirements or its clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues, or adverse side effects, failure to demonstrate a benefit from using a product candidate, 96 changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.
Additionally, a clinical trial may be suspended or terminated by us, the IRBs for the institutions in which the trials are being conducted, the Data Monitoring Committee for the trial, or by the NMPA, FDA or other regulatory authorities for a number of reasons, including failure to conduct the clinical trial in accordance with regulatory requirements or its clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues, or adverse side effects, failure to demonstrate a benefit from using a product candidate, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.
If we fail to comply with applicable regulatory requirements, or there are safety or efficacy problems with a product, a regulatory agency or enforcement authority may, among other things: • issue warning or notice of violation letters; • impose civil or criminal penalties; • suspend or withdraw regulatory approval; • suspend any of our ongoing clinical studies; 103 • refuse to approve pending applications or supplements to approved applications submitted by us; • impose restrictions on our operations, including closing our contract manufacturers’ facilities; • seize or detain products, or require a product recall; or • require entry into a consent decree.
If we fail to comply with applicable regulatory requirements, or there are safety or efficacy problems with a product, a regulatory agency or enforcement authority may, among other things: • issue warning or notice of violation letters; • impose civil or criminal penalties; • suspend or withdraw regulatory approval; • suspend any of our ongoing clinical studies; • refuse to approve pending applications or supplements to approved applications submitted by us; • impose restrictions on our operations, including closing our contract manufacturers’ facilities; • seize or detain products, or require a product recall; or • require entry into a consent decree.
Given that the term “state secret” is not clearly defined, if and to the extent any data collected or generated in connection with our R&D of medical drug candidates are subject to the Scientific Data Measures and any subsequent laws as required by the relevant government authorities, there can be no assurance that we can always obtain relevant approvals for sending scientific data (such as the results of our pre-clinical studies or clinical trials conducted within the PRC) abroad or to our foreign partners in the PRC.
Given that the term “state secret” is not clearly 110 defined, if and to the extent any data collected or generated in connection with our R&D of medical drug candidates are subject to the Scientific Data Measures and any subsequent laws as required by the relevant government authorities, there can be no assurance that we can always obtain relevant approvals for sending scientific data (such as the results of our pre-clinical studies or clinical trials conducted within the PRC) abroad or to our foreign partners in the PRC.
See “ —Risks Related to Our Reliance on Third Parties—Because we rely on a limited number of suppliers for certain of our raw materials, we may experience supply interruptions that could harm our ability to manufacture products .” 76 For details regarding the risks related to the relations between the PRC and the United States, see “ —Risks Related to Our Business Operations in the PRC — Changes in the political and economic policies of the PRC government or relations between the PRC and the United States may affect our business, financial condition and results of operations. ” Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.
See “ —Risks Related to Our Reliance on Third Parties—Because we rely on a limited number of suppliers for certain of our raw materials, we may experience supply interruptions that could harm our ability to manufacture products .” For details regarding the risks related to the relations between the PRC and the United States, see “—Risks Related to Our Business Operations in the PRC—Changes in the political and economic policies of the PRC government or relations between the PRC and the United States may affect our business, financial condition and results of operations. ” Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.
Failure to comply with applicable regulations could lead to: • increased expense and result in sanctions being imposed on us (including fines, injunctions, civil penalties, requirements to suspend or pause one or more of our clinical trials); • failure to obtain marketing approval of our product candidates; • delays, suspension or withdrawal of approvals; supply disruptions; • license revocation; seizures or recalls of product, generic drugs or product candidates; and • operating restrictions and criminal prosecutions, any of which could materially and adversely harm our business.
Failure to comply with applicable regulations could lead to: • increased expense and result in sanctions being imposed on us (including fines, injunctions, civil penalties, requirements to suspend or pause one or more of our clinical trials); • failure to obtain marketing approval of our product candidates; 84 • delays, suspension or withdrawal of approvals; supply disruptions; • license revocation; seizures or recalls of product, generic drugs or product candidates; and • operating restrictions and criminal prosecutions, any of which could materially and adversely harm our business.
Under the “first-to-file” system adopted by the PRC, and, recently, the United States, even after reasonable investigation, we may be unable to determine with certainty whether our product, product candidates, processes, technologies, improvement and other related matters are or may become unpatentable because a third party filed or may file a patent application earlier than we have or do for inventions thereunder that are the same or substantially similar to our inventions.
Under the “first-to-file” system adopted by the PRC, and the United States, even after reasonable investigation, we may be unable to determine with certainty whether our product, product candidates, processes, technologies, improvement and other related matters are or may become unpatentable because a third party filed or may file a patent application earlier than we have or do for inventions thereunder that are the same or substantially similar to our inventions.
As we have only generated revenue from commercial sales of ETUARY and certain generic drugs to date and do not expect to generate any revenue from our other product candidates until they obtain regulatory approval, if ever, we will need to raise substantial additional capital in order to fund our future research and development, including any new clinical trials, product development, partnerships with third parties and strategic collaborations.
As we have only generated revenue from commercial sales of ETUARY and certain generic drugs to date and do not expect to generate any revenue from our other product candidates until they obtain regulatory approval, if ever, we will need to raise 63 substantial additional capital in order to fund our future research and development, including any new clinical trials, product development, partnerships with third parties and strategic collaborations.
Damage or extended periods of interruption to our and our partners’ administration, development, research, manufacturing or storage facilities due to fire, natural disaster, health epidemic, power loss, communications failure, unauthorized entry or other events could cause us to cease or delay development or commercialization of some or all of ETUARY, our generic products or product candidates, seriously harm our and our partners’ operations and financial condition and increase our and our partners’ costs and expenses.
Damage or extended periods of interruption to our and our partners’ administration, development, research, manufacturing or storage facilities due to fire, natural disaster, health epidemic, power loss, communications failure, unauthorized entry or other events could cause us to cease or delay development or commercialization of some or all of ETUARY, our generic products or product 76 candidates, seriously harm our and our partners’ operations and financial condition and increase our and our partners’ costs and expenses.
The PRC government has implemented various measures to encourage economic development and guide the allocation of resources, but some of these measures may have a negative effect on us. For example, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations that are currently applicable to us.
The PRC government has implemented various measures to encourage economic development and guide the allocation of resources, but some of these measures may have a negative effect 108 on us. For example, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations that are currently applicable to us.
These sanctions could include, but are not limited to, a regulator’s refusal to approve pending applications, withdrawal of an approval, license revocation, a clinical hold, warning or untitled letters, voluntary or mandatory product recalls, product seizures, total or partial suspension of production or distribution, import alerts, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties.
These sanctions could include, but are not limited to, a regulator’s refusal to approve pending applications, withdrawal of an approval, license revocation, a clinical hold, warning or untitled letters, voluntary or mandatory product 96 recalls, product seizures, total or partial suspension of production or distribution, import alerts, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties.
Such factors affecting the market acceptance of a current or future approved product, if any, may include: • the clinical indications for which the product is approved; • the safety and efficacy of the product; • the potential and perceived advantages and disadvantages of the product, relative to competing or alternative products or treatments; • the affordability of the product; • the cost of treatment in relation to alternative treatments and therapies; • the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; • the strength of our relationships with patient communities; 69 • the availability of third-party coverage and adequate reimbursement; • the willingness of patients to pay out-of-pocket in the absence of coverage and adequate reimbursement by third-party payors and government authorities; • the strength of marketing and distribution support; • the prevalence and severity of any side effects; • the current diagnostic conditions of the disease for which the product is indicated, which may be influenced by the number of physicians from the relevant department and their respective experiences, available diagnostic methods and equipment therefor; and • the effectiveness of our sales and marketing efforts.
Such factors affecting the market acceptance of a current or future approved product, if any, may include: • the clinical indications for which the product is approved; • the safety and efficacy of the product; • the potential and perceived advantages and disadvantages of the product, relative to competing or alternative products or treatments; • the affordability of the product; • the cost of treatment in relation to alternative treatments and therapies; • the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; • the strength of our relationships with patient communities; • the availability of third-party coverage and adequate reimbursement; • the willingness of patients to pay out-of-pocket in the absence of coverage and adequate reimbursement by third-party payors and government authorities; • the strength of marketing and distribution support; • the prevalence and severity of any side effects; • the current diagnostic conditions of the disease for which the product is indicated, which may be influenced by the number of physicians from the relevant department and their respective experiences, available diagnostic methods and equipment therefor; and 68 • the effectiveness of our sales and marketing efforts.
As a result, any reduction in sales or profit margins of ETUARY will have a material negative impact on our business and results of operations. In addition, the pharmaceutical industries are characterized by rapid changes in technology, constant enhancement of industrial know-how and frequent emergence of new products, which renders our targeted markets highly competitive.
As a result, any reduction in sales or profit margins of ETUARY will have a material negative impact on our business and results of operations. 61 In addition, the pharmaceutical industries are characterized by rapid changes in technology, constant enhancement of industrial know-how and frequent emergence of new products, which renders our targeted markets highly competitive.
While we intend to closely monitor the evolving laws and regulations in this area and take all reasonable 109 measures to mitigate compliance risks, we cannot guarantee that our business and operations will not be adversely affected by the potential impact of the Revised CAC Measures, the Draft Management Regulations or other laws and regulations related to privacy, data protection and information security.
While we intend to closely monitor the evolving laws and regulations in this area and take all reasonable measures to mitigate compliance risks, we cannot guarantee that our business and operations will not be adversely affected by the potential impact of the Revised CAC Measures, the Draft Management Regulations or other laws and regulations related to privacy, data protection and information security.
An adverse determination or outcome of a third-party submission, proceeding or litigation may result in loss of patent rights or exclusivity, or in patent claims being narrowed, invalidated or held unenforceable, 92 which could limit our ability to prevent competitors from using or commercializing similar or identical technologies and products, or limit the duration of the patent protection of our technologies, product, ETUARY, and product candidates.
An adverse determination or outcome of a third-party submission, proceeding or litigation may result in loss of patent rights or exclusivity, or in patent claims being narrowed, invalidated or held unenforceable, which could limit our ability to prevent competitors from using or commercializing similar or identical technologies and products, or limit the duration of the patent protection of our technologies, product, ETUARY, and product candidates.
As of the date of this Annual Report, we have not received any notice from any PRC regulatory authority identifying us as a “critical information infrastructure operator,” “online platform operator” or “data processor,” or requiring us to go through the cybersecurity review procedures pursuant to the Revised CAC Measures and the Draft Management Regulations.
As of the date of this Annual Report, we have not received any notice from any PRC regulatory authority identifying us as a “critical information infrastructure operator,” “online platform operator” or “data processor,” or requiring us to go through the cybersecurity review procedures pursuant to the Revised CAC 113 Measures and the Draft Management Regulations.
It cannot be predicted whether, when, in what form or with what effective dates tax laws, regulations and rulings may be enacted, promulgated or issued, which could result in an increase in our or our stockholders’ tax liability or require changes in the manner in which we operate in order to minimize or mitigate any adverse effects of changes in tax law.
It cannot be predicted 126 whether, when, in what form or with what effective dates tax laws, regulations and rulings may be enacted, promulgated or issued, which could result in an increase in our or our stockholders’ tax liability or require changes in the manner in which we operate in order to minimize or mitigate any adverse effects of changes in tax law.
Accordingly, you may not have the same protections 121 afforded to stockholders of companies that are subject to all of the corporate governance requirements of Nasdaq. In the event we cease to be a "controlled company" and our shares continue to be listed on Nasdaq, we will be required to comply with these provisions within the applicable transition periods.
Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of Nasdaq. In the event we cease to be a "controlled company" and our shares continue to be listed on Nasdaq, we will be required to comply with these provisions within the applicable transition periods.
Conversely, as a result of the same factors, our clinical trials may indicate an apparent positive effect of a product candidate that is greater than the actual positive effect, if any. We cannot commercialize product candidates in the PRC or United States without first obtaining regulatory approval from the NMPA or the FDA, respectively.
Conversely, as a result of the same factors, our clinical trials may indicate an apparent positive effect of a product candidate that is greater than the actual positive effect, if any. 97 We cannot commercialize product candidates in the PRC or United States without first obtaining regulatory approval from the NMPA or the FDA, respectively.
The pool of suitable candidates is limited, and we may not be able to hire and retain enough skilled and experienced scientists or other technical personnel at the current level of wages, and may need to offer 88 higher compensation and other benefits, which could materially and adversely affect our financial condition and results of operations.
The pool of suitable candidates is limited, and we may not be able to hire and retain enough skilled and experienced scientists or other technical personnel at the current level of wages, and may need to offer higher compensation and other benefits, which could materially and adversely affect our financial condition and results of operations.
The China National Intellectual Property Administration (the “CNIPA”) and other governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the 91 patent application process. For example, in several stages over the lifetime of a patent, periodic maintenance fees are due to be paid to the CNIPA and other patent agencies.
The China National Intellectual Property Administration (the “CNIPA”) and other governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. For example, in several stages over the lifetime of a patent, periodic maintenance fees are due to be paid to the CNIPA and other patent agencies.
In addition, macroeconomic conditions, a recession, depression or other sustained adverse market event or otherwise could materially and adversely affect our business and the value of our common stock. In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted class action securities litigation against such companies.
In addition, macroeconomic conditions, a recession, depression 123 or other sustained adverse market event or otherwise could materially and adversely affect our business and the value of our common stock. In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted class action securities litigation against such companies.
Any system damage or failure that interrupts data 122 input, retrieval or transmission or increases service time could disrupt our normal operations, including the loss of clinical trial data from completed or future clinical trials. Loss of clinical trial data could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data.
Any system damage or failure that interrupts data input, retrieval or transmission or increases service time could disrupt our normal operations, including the loss of clinical trial data from completed or future clinical trials. Loss of clinical trial data could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data.
Our certificate of incorporation and bylaws provide that, unless the company consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) is the sole and exclusive forum for the following types of proceedings: (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or stockholders to the company or our stockholders, (3) any action asserting a claim arising pursuant to any provision of the DGCL or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware or (4) any action asserting a claim arising pursuant to any provision of our restated certificate of incorporation or our bylaws (in each case, as they may be amended from time to time) or governed by the internal affairs doctrine.
Our certificate of incorporation and bylaws provide that, unless the company consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) is the sole and exclusive forum for the following types of proceedings: (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers, employees or stockholders to the company or our stockholders, (3) any action asserting a claim arising pursuant to any provision of the DGCL or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware or (4) any action asserting a claim arising pursuant to any provision of our restated certificate of incorporation or our bylaws (in each case, as they may be amended from time to time) or that is governed by the internal affairs doctrine.
Our expansion could be constrained by the current and emerging number of IPF patients in the PRC, pending the approval and profitable launch of expanded applications for ETUARY for future indications in the PRC, and our other product candidates. • The approval procedures of the NMPA, FDA, and comparable foreign regulatory authorities are extensive, protracted, and inherently uncertain.
Our expansion could be constrained by the current and emerging number of IPF patients in the PRC, pending the approval and profitable launch of expanded applications for ETUARY for future indications in the PRC, and our other product candidates. 60 • The approval procedures of the NMPA, FDA, and comparable foreign regulatory authorities are extensive, protracted, and inherently uncertain.
If any or all of the foregoing were to occur, our sales revenue may decrease, which in turn would have a material adverse impact on our financial condition, profitability and results of operation. 74 The true market potential for our product and product candidates may be less than expected.
If any or all of the foregoing were to occur, our sales revenue may decrease, which in turn would have a material adverse impact on our financial condition, profitability and results of operation. The true market potential for our product and product candidates may be less than expected.
There is no guarantee that the NMPA, FDA and other comparable foreign regulatory authorities will consider the data that is expected to be obtained in the planned Phase 2a trial in the United States sufficient to allow us to expand the development of F351 in a larger Phase 2 or confirmatory Phase 3 clinical trial.
There is no guarantee that the NMPA, FDA and other comparable foreign regulatory authorities will consider the data that is expected to be obtained in the planned Phase 2 trial in the United States sufficient to allow us to expand the development of F351 in a larger Phase 2 or confirmatory Phase 3 clinical trial.
The loss of the services of any of our executive officers, other key employees, and our inability to find suitable replacements, or our inability to hire new clinical development and manufacturing personnel, could result in delays in product development and harm our business. We conduct our U.S. operations at our facility in San Diego, California.
The loss of the services of any of our executive officers, 89 other key employees, and our inability to find suitable replacements, or our inability to hire new clinical development and manufacturing personnel, could result in delays in product development and harm our business. We conduct our U.S. operations at our facility in San Diego, California.
Our management team has not previously managed and operated a U.S. public company. These executive officers and other personnel will need to devote substantial time to gaining expertise related to public company reporting requirements and compliance with applicable laws and regulations to ensure that we comply with all of these 89 requirements.
Our management team has not previously managed and operated a U.S. public company. These executive officers and other personnel will need to devote substantial time to gaining expertise related to public company reporting requirements and compliance with applicable laws and regulations to ensure that we comply with all of these requirements.
Interference proceedings provoked by third parties or brought by us may be necessary to determine the priority of inventions with respect to our patents or patent applications or those of our licensors. An unfavorable outcome could require us to cease using the related technology or to attempt to license rights from the prevailing party.
Interference proceedings provoked by third parties or brought by us may be necessary to determine the priority of inventions with respect to our patents or patent applications or those of our licensors. An unfavorable 94 outcome could require us to cease using the related technology or to attempt to license rights from the prevailing party.
We are subject to extensive ongoing regulatory obligations and continued regulatory review related to our commercialized product, ETUARY, which is approved in the PRC, and we may be subject to such obligations and review related to our future product candidates, if approved, which may result in significant additional expense and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our product candidates.
We are subject to extensive ongoing regulatory obligations and continued regulatory review related to our commercialized product, ETUARY, which is approved in the PRC, and we may be subject to such obligations and review related to our future product candidates, if approved, which may result in 105 significant additional expense and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our product candidates.
According to the Social Insurance Law, employees must participate in pension insurance, work-related injury insurance, medical insurance, unemployment insurance and maternity insurance, and the employers must, together with their employees or separately, pay the social insurance premiums for such employees. Recently, the PRC government enhanced its measures relating to social insurance collection, which may lead to stricter enforcement.
According to the Social Insurance Law, employees must participate in pension insurance, work-related injury insurance, medical insurance, unemployment insurance and maternity insurance, and the employers must, together with their employees or separately, pay the social 109 insurance premiums for such employees. Recently, the PRC government enhanced its measures relating to social insurance collection, which may lead to stricter enforcement.
In addition, it is typical that the prices of pharmaceutical products will decline over the life of the product as a result of, among other things, increased competition from substitute products, the tender process by the hospitals or the 73 government authorities, pricing policies of the relevant government authorities, or voluntary price adjustments by pharmaceutical companies.
In addition, it is typical that the prices of pharmaceutical products will decline over the life of the product as a result of, among other things, increased competition from substitute products, the tender process by the hospitals or the government authorities, pricing policies of the relevant government authorities, or voluntary price adjustments by pharmaceutical companies.
On the other hand, if we underestimate demand, we may experience inventory shortages which may, in turn, result in unfulfilled customer orders, leading to a negative impact on our customer relationships. Risks Related to Our Reliance on Third Parties 85 We have established, and may continue to establish, collaborative agreements and strategic partnerships.
On the other hand, if we underestimate demand, we may experience inventory shortages which may, in turn, result in unfulfilled customer orders, leading to a negative impact on our customer relationships. Risks Related to Our Reliance on Third Parties We have established, and may continue to establish, collaborative agreements and strategic partnerships.
Research programs to pursue the development of our product candidates for additional indications and to identify new product candidates and product targets require substantial technical, financial and human resources. Even if we are successful in continuing to build our pipeline, the potential product candidates that we identify may not be suitable for clinical 77 development.
Research programs to pursue the development of our product candidates for additional indications and to identify new product candidates and product targets require substantial technical, financial and human resources. Even if we are successful in continuing to build our pipeline, the potential product candidates that we identify may not be suitable for clinical development.
The Amended PRC Patent Law and relevant implementing regulations provide a cause of action to allow a patent holder to initiate a declarative action during the regulatory review process of a drug to determine whether the drug falls within the patent scope, which may be comparable to the patent linkage system in the United States.
The Amended PRC Patent Law and relevant implementing regulations provide a cause of action to allow a patent holder to initiate a declarative action during the regulatory review process of a drug to determine whether the drug in review falls within the relevant scope of the patent of such patent holder, which may be comparable to the patent linkage system in the United States.
The system requires that the NMPA continue to review the potentially infringing follow-on application during any lawsuit by the innovator. However, the NMPA may not approve the follow-on application pending resolution of the patent litigation in favor of the 90 follow-on application or for a specified period of time, whichever is shorter.
The system requires that the NMPA continue to review the potentially infringing follow-on application during any lawsuit by the innovator. However, the NMPA may not approve the follow-on application pending resolution of the patent litigation in favor of the follow-on application or for a specified period of time, whichever is shorter.
Our liquidity and cash flow are directly affected 68 by our customers’ ability to pay us in a timely manner, but there can be no assurance that our customers will not default on us in the future, despite our efforts to conduct credit assessments.
Our liquidity and cash flow are directly affected by our customers’ ability to pay us in a timely manner, but there can be no assurance that our customers will not default on us in the future, despite our efforts to conduct credit assessments.
Moreover, if any products comparable or similar to our product, generic drugs or product candidates if commercialized are included in the centralized volume-based procurement, patients’ willingness to use such products may be materially and adversely affected and we may need to change our pricing strategy.
Moreover, if any 73 products comparable or similar to our product, generic drugs or product candidates if commercialized are included in the centralized volume-based procurement, patients’ willingness to use such products may be materially and adversely affected and we may need to change our pricing strategy.
Certain residents of the PRC may hold direct or indirect interests in our company, and we will request residents of the PRC who we know hold direct or indirect interests in our company, if any, to make the necessary applications, filings and amendments as required under SAFE Circular 37 and other related rules.
Certain residents of the PRC may hold direct or indirect interests in our company, and we will request residents of the PRC who we know hold direct or indirect interests in our company, if any, to make the necessary 115 applications, filings and amendments as required under SAFE Circular 37 and other related rules.
Conversion or exercise of these securities into shares of our common stock will cause dilution to the other holders of our common stock, and all such stock may 118 be sold in the public market after conversion or exercise, subject to restrictions under the securities laws, which may lead to a decline in the market price of our common stock.
Conversion or exercise of these securities into shares of our common stock will cause dilution to the other holders of our common stock, and all such stock may be sold in the public market after conversion or exercise, subject to restrictions under the securities laws, which may lead to a decline in the market price of our common stock.
We have only obtained regulatory approval for one product, ETUARY for the treatment of IPF in the PRC, that we have developed, and it is possible that none of our existing product candidates or any product candidates we may seek to develop in the future will ever obtain regulatory approval.
We have only obtained regulatory approval for one product that we developed, ETUARY for the treatment of IPF in the PRC, and it is possible that none of our existing product candidates in development or any product candidates we may seek to develop in the future will ever obtain regulatory approval.
Further, any researcher conducting research 106 funded at least in part by the PRC government is required to submit relevant scientific data for management by the entity to which such researcher is affiliated before such data may be published in any foreign academic journal.
Further, any researcher conducting research funded at least in part by the PRC government is required to submit relevant scientific data for management by the entity to which such researcher is affiliated before such data may be published in any foreign academic journal.
For example, there can be no assurance that we were the first to make the inventions claimed in our patents or pending patent applications because of the delay between publications of discoveries in scientific or patent literature and actual discoveries and patent applications.
For example, there can be no assurance that we were the first to make the inventions claimed in our patents or pending patent applications because of the delay between publications 91 of discoveries in scientific or patent literature and actual discoveries and patent applications.
Our employment policies and practices may violate the labor contract law or its implementation rules, and we may thus be subject to related penalties, fines or legal fees. 105 Compliance with the labor contract law and its implementation rules may increase our operating expenses, in particular, our personnel expenses.
Our employment policies and practices may violate the labor contract law or its implementation rules, and we may thus be subject to related penalties, fines or legal fees. Compliance with the labor contract law and its implementation rules may increase our operating expenses, in particular, our personnel expenses.
If Gyre Pharmaceuticals fails to adhere to such requirements or obtain such approval, Gyre Pharmaceuticals’ ability to capitalize or otherwise fund Gyre Pharmaceuticals’ PRC operations, including Gyre Pharmaceuticals’ technology development may be 110 negatively affected, which could materially and adversely affect Gyre Pharmaceuticals’ ability to fund and expand Gyre Pharmaceuticals’ business.
If Gyre Pharmaceuticals fails to adhere to such requirements or obtain such approval, Gyre Pharmaceuticals’ ability to capitalize or otherwise fund Gyre Pharmaceuticals’ PRC operations, including Gyre Pharmaceuticals’ technology development may be negatively affected, which could materially and adversely affect Gyre Pharmaceuticals’ ability to fund and expand Gyre Pharmaceuticals’ business.
PRC There may be significant delays in obtaining reimbursement for newly approved drugs, and coverage may be more limited than the purposes for which the drug is approved by the NMPA, FDA or similar regulatory authorities outside the PRC and United States.
PRC 121 There may be significant delays in obtaining reimbursement for newly approved drugs, and coverage may be more limited than the purposes for which the drug is approved by the NMPA, FDA or similar regulatory authorities outside the PRC and United States.
Furthermore, if the NMPA or FDA believes that additional data is necessary to supplement our clinical study data and Phase 2a clinical trial data, then the NMPA or the FDA may require us to conduct additional trials before expanding into a broader Phase 2 clinical trial.
Furthermore, if the NMPA or FDA believes that additional data is necessary to supplement our clinical study data and Phase 2 clinical trial data, then the NMPA or the FDA may require us to conduct additional trials before expanding into a broader Phase 2 clinical trial.
Where the payor fails to withhold any or sufficient tax, the transferor shall declare and pay such tax to the tax authority by itself within the statutory time limit. Late payment of applicable tax will subject the transferor to 112 default interest.
Where the payor fails to withhold any or sufficient tax, the transferor shall declare and pay such tax to the tax authority by itself within the statutory time limit. Late payment of applicable tax will subject the transferor to default interest.
There can be no assurance that our existing or potential collaborators will not alter their perception of us or their preferences as a result of adverse changes to the state of political relationships 107 between the PRC and the relevant foreign countries or regions, and such alteration may cause a decline in the demand for our product, ETUARY, and future products, if approved, and adversely affect our business, financial condition, results of operations, cash flows and prospects.
There can be no assurance that our existing or potential 111 collaborators will not alter their perception of us or their preferences as a result of adverse changes to the state of political relationships between the PRC and the relevant foreign countries or regions, and such alteration may cause a decline in the demand for our product, ETUARY, and future products, if approved, and adversely affect our business, financial condition, results of operations, cash flows and prospects.
As a result, if we are unable to effectively train our in-house sales representatives or monitor and evaluate their academic marketing performances, our sales and marketing may be less successful than desired.
As a 74 result, if we are unable to effectively train our in-house sales representatives or monitor and evaluate their academic marketing performances, our sales and marketing may be less successful than desired.
Patient enrollment is affected by other factors including: • the severity of the disease under investigation; • the eligibility criteria for the study in question; • the perceived risks and benefits of the product candidate under study; • the efforts to facilitate timely enrollment in clinical trials; • clinical trials of other product candidates in the same indication; • laboratory testing and turnaround time for samples needed for eligibility assessments; • the patient referral practices of physicians; 72 • the ability to monitor patients adequately during and after treatment; and • the proximity and availability of clinical trial sites for prospective patients.
Patient enrollment is affected by other factors including: • the severity of the disease under investigation; • the eligibility criteria for the study in question; 71 • the perceived risks and benefits of the product candidate under study; • the efforts to facilitate timely enrollment in clinical trials; • clinical trials of other product candidates in the same indication; • laboratory testing and turnaround time for samples needed for eligibility assessments; • the patient referral practices of physicians; • the ability to monitor patients adequately during and after treatment; and • the proximity and availability of clinical trial sites for prospective patients.
United States Healthcare providers, physicians and third-party payors will play a primary role in the recommendation and prescription of any product candidates for which we obtain marketing approval.
United States 100 Healthcare providers, physicians and third-party payors will play a primary role in the recommendation and prescription of any product candidates for which we obtain marketing approval.
It may be necessary for us to use the patented or proprietary technology of third parties to commercialize our product candidates, in which case we would be required to obtain a license from these third parties on commercially reasonable terms, or our business could be harmed, possibly materially. 93 We may fail to protect our trademarks and trade names, which may negatively affect our ability to build brand recognition in our markets of interest.
It may be necessary for us to use the patented or proprietary technology of third parties to commercialize our product candidates, in which case we would be required to obtain a license from these third parties on commercially reasonable terms, or our business could be harmed, possibly materially. 95 We may fail to protect our trademarks and trade names, which may negatively affect our ability to build brand recognition in our markets of interest.
Furthermore, the Administrative Regulations on Human Genetic Resources of the PRC (the “Human Genetic Resources Regulation”) stipulates that collecting human genetic resources of the PRC’s important genetic families and specific regions, or collecting those human genetic resources in such categories and quantities as prescribed by the administrative department for science and technology under the State Council, preserving the PRC’s human genetic resources and providing the basic platform for scientific research, utilization of the PRC’s human genetic resources for international cooperation in scientific research, as well as transporting the PRC’s materials of human genetic resources abroad shall be subject to the approval of the administrative department for science and technology under the State Council.
Furthermore, the Administrative Regulations on Human Genetic Resources of the PRC stipulates that collecting human genetic resources of the PRC’s important genetic families and specific regions, or collecting those human genetic resources in such categories and quantities as prescribed by the administrative department for science and technology under the State Council, preserving the PRC’s human genetic resources and providing the basic platform for scientific research, utilization of the PRC’s human genetic resources for international cooperation in scientific research, as well as transporting the PRC’s materials of human genetic resources abroad shall be subject to the approval of the administrative department for science and technology under the State Council.
If personal data are compromised due to a material breach of our information, the market perception of the effectiveness of our security measures could be harmed and our reputation and credibility could be damaged.
If personal data are compromised due to a material breach of our information, the market perception of the 128 effectiveness of our security measures could be harmed and our reputation and credibility could be damaged.
Any limitation on our ability to conduct clinical trials could delay or prevent regulatory approval or limit the size of the patient population to which we may market our product candidates, if approved. 78 Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in late-stage NASH clinical trials after achieving positive results in earlier development, and we may face similar setbacks.
Any limitation on our ability to conduct clinical trials could delay or prevent regulatory approval or limit the size of the patient population to which we may market our product candidates, if approved. 78 Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in late-stage MASH clinical trials after achieving positive results in earlier development, and we may face similar setbacks.
During the years ended December 31, 2023 and 2022, we did not identify material inventory items requiring impairment provisioning, and we believe that maintaining appropriate levels of inventory helps us meet market demands in a timely manner. We generally purchase supplies based on our estimated demand and manufacturing capacity, and our management system covers each stage of the warehousing process.
During the years ended December 31, 2024 and 2023, we did not identify material inventory items requiring impairment provisioning, and we believe that maintaining appropriate levels of inventory helps us meet market demands in a timely manner. We generally purchase supplies based on our estimated demand and manufacturing capacity, and our management system covers each stage of the warehousing process.
The PRC tax authorities may pursue such non-resident enterprises with respect to a filing or the transferees with respect to withholding obligation, and request Gyre Pharmaceuticals to assist in the filing.
The PRC tax authorities may pursue such 117 non-resident enterprises with respect to a filing or the transferees with respect to withholding obligation, and request Gyre Pharmaceuticals to assist in the filing.
As a result, obtaining market acceptance of, and gaining significant share of the market for, any of our product candidates that we successfully introduce to the market will pose challenges.
As a result, obtaining 120 market acceptance of, and gaining significant share of the market for, any of our product candidates that we successfully introduce to the market will pose challenges.
Any of these occurrences can create negative publicity and significantly harm our 81 business reputation, product brand name, commercial operations and financial condition, including our share price.
Any of these occurrences can create negative publicity and significantly harm our business reputation, product brand name, commercial operations and financial condition, including our share price.
In addition, the regulatory authorities in the PRC, United States and the EU have not approved any products for the treatment of NASH, and while there are guidelines issued by the NMPA and FDA for the development of drugs for the treatment of NASH and an NMPA and FDA surrogate endpoint table for drug approval, respectively, it is unclear whether the requirements for approval will change in the future or whether the NMPA or FDA will rely on regulatory precedent for future regulatory approvals.
In addition, the regulatory authorities in the PRC, United States and the EU have not approved any products for the treatment of MASH, and while there are guidelines issued by the NMPA and FDA for the development of drugs for the treatment of MASH and an NMPA and FDA surrogate endpoint table for drug approval, respectively, it is unclear whether the requirements for approval will change in the future or whether the NMPA or FDA will rely on regulatory precedent for future regulatory approvals.
Our information systems may fail and are subject to risks of breakdown, breach, interruption or damage from computer viruses, computer hackers, malicious code, employee error or malfeasance, theft or misuse, denial-of-service attacks, sophisticated nation-state and nation-state-supported actors, unauthorized access, natural disasters, terrorism, war, telecommunication and electrical failures or other compromise.
Our information systems may fail and are subject to risks of breakdown, breach, interruption or damage from computer viruses, ransomware and other cyber-attacks, computer hackers, malicious code, employee error or malfeasance, theft or misuse, denial-of-service attacks, sophisticated nation-state and nation-state-supported actors, unauthorized access, natural disasters, terrorism, war, telecommunication and electrical failures or other compromise.
These risks are discussed more fully below. • Our business is significantly dependent on the sales of ETUARY®, our marketed product in the PRC, amid a competitive landscape, and there is a possibility that we may not be able to sustain or boost the sales volume, pricing, and profitability of ETUARY. • There is a risk that our marketed product in the PRC, ETUARY, along with any other products that may receive approval in the future, may not attain sufficient market acceptance among physicians, healthcare facilities, pharmacies, patients, third-party payers, and the broader medical community, which is crucial for their commercial viability. • The future of our business and financial outcomes is largely contingent on the progress and success of our product candidates in clinical and pre-clinical stages, such as ETUARY for future indications in the PRC, F573 in the PRC, and F351 in the PRC and in additional markets beyond the PRC.
These risks are discussed more fully below. • Our business is significantly dependent on the sales of ETUARY®, our marketed product in the PRC, amid a competitive landscape, and there is a possibility that we may not be able to sustain or boost the sales volume, pricing, and profitability of ETUARY. • There is a risk that our marketed product in the PRC, ETUARY, along with any other products that we may commercialize in the future, including nintedanib and avatrombopag, and may receive approval in the future, may not attain sufficient market acceptance among physicians, healthcare facilities, pharmacies, patients, third-party payers, and the broader medical community, which is crucial for their commercial viability. • The future of our business and financial outcomes is largely contingent on the progress and success of our product candidates in clinical and pre-clinical stages, such as ETUARY for future indications in the PRC, F573 in the PRC, and F351 in the PRC and in additional markets beyond the PRC.
Our future funding requirements, both near and long-term, will depend on many factors, including, but not limited to: • the costs and results of preclinical studies or clinical trials of ETUARY, F351, F573, F528 and F230 or other product candidates, and expenses related to potential clinical development of such candidates; • the expenses associated with promoting academic marketing and expanding our sales and distribution network; • the number and characteristics of product candidates that we pursue; • the costs we incur related to the sale of our legacy assets or claims; • the terms and timing of any future collaboration, licensing or other arrangements that we may establish; • our need and ability to retain key management and hire scientific, technical, business and medical personnel; • the outcome, timing and cost of regulatory approvals; • our efforts to maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights; • the effect of competing technological and market developments; • the costs and timing associated with manufacturing our products, including ETUARY and generic products and product candidates for which we may receive regulatory approval, and establishing commercial supplies and sales, marketing and distribution capabilities; • market acceptance of any product candidates for which we may receive regulatory approval; • the capital expenditure required to increase our production capacity and to expand and upgrade our facilities; • the costs of continuing to operate our business, including costs associated with being a public company; and • the extent to which we acquire, license or invest in businesses, products or technologies.
Our future funding requirements, both near and long-term, will depend on many factors, including, but not limited to: • the costs and results of preclinical studies or clinical trials of ETUARY, F351, F573, F528 and F230 or other product candidates, and expenses related to potential clinical development of such candidates; • the expenses associated with promoting academic marketing and expanding our sales and distribution network; • the number and characteristics of product candidates that we pursue; • the terms and timing of any future collaboration, licensing or other arrangements that we may establish; • our need and ability to retain key management and hire scientific, technical, business and medical personnel; • the outcome, timing and cost of regulatory approvals; • our efforts to maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights; • the effect of competing technological and market developments; • the costs and timing associated with manufacturing our products, including ETUARY and generic products and product candidates for which we may receive regulatory approval, and establishing commercial supplies and sales, marketing and distribution capabilities; • market acceptance of any product candidates for which we may receive regulatory approval; • the capital expenditure required to increase our production capacity and to expand and upgrade our facilities; 64 • the costs of continuing to operate our business, including costs associated with being a public company; and • the extent to which we acquire, license or invest in businesses, products or technologies.
Any strategic downward price adjustments of our existing or future approved products due to market competition could have a materially adverse effect on our business and results of operations. Moreover, our marketed ETUARY is subject to the risk of being included in the PRC’s centralized volume-based procurement scheme.
Any strategic downward price adjustments of our existing 72 or future approved products due to market competition could have a materially adverse effect on our business and results of operations. Moreover, our marketed product ETUARY is subject to the risk of being included in the PRC’s centralized volume-based procurement scheme.
Our ability to generate revenue and realize profitability depends on the successful completion of the development of our product candidates, obtaining necessary regulatory approvals, and manufacturing and commercializing our product candidates, which is contingent upon various factors, including: • the clinical development of ETUARY for future indications, F573, F528, and F230 in the PRC, and F351 in the PRC and potentially additional markets beyond the PRC; • enhancing our commercial manufacturing capabilities; • our ability to attract, hire and retain skilled personnel; • the successful enrollment in, and completion of, clinical trials, as well as completion of pre-clinical studies and favorable safety and efficacy data therefrom; • receipt of regulatory approvals; • the performance by contract research organizations (“CROs”), or other third parties, of their duties to us in a manner that complies with our trial protocols and applicable laws and protects the integrity of the resulting data; • our ability to acquire or in-license other product candidates and technologies; • obtaining, maintaining, protecting and enforcing patent, trade secret and other intellectual property and proprietary protection and regulatory exclusivity, and ensuring we do not infringe, misappropriate or 64 otherwise violate the patent, trade secret or other intellectual property and proprietary rights of third parties; • successfully launching commercial sales; • obtaining and/or maintaining favorable governmental and private medical reimbursement; • efficiently and cost-effectively enhancing our marketing platform and distribution capabilities; • competition with other products and product candidates; • continued acceptable safety profile following regulatory approval, including of ETUARY; • creating additional infrastructure to support operations as a public company and our product development and planned future commercialization efforts; and • delays or other issues with any of the above.
Our ability to generate revenue and realize profitability depends on the successful completion of the development of our product candidates, obtaining necessary regulatory approvals, and manufacturing and commercializing our product candidates, which is contingent upon various factors, including: • the clinical development of ETUARY for future indications, F573, F528, and F230 in the PRC, and F351 in the PRC and potentially additional markets beyond the PRC; • enhancing our commercial manufacturing capabilities; 62 • our ability to attract, hire and retain skilled personnel; • the successful enrollment in, and completion of, clinical trials, as well as completion of pre-clinical studies and favorable safety and efficacy data therefrom; • receipt of regulatory approvals; • the performance by contract research organizations (“CROs”), or other third parties, of their duties to us in a manner that complies with our trial protocols and applicable laws and protects the integrity of the resulting data; • our ability to acquire or in-license other product candidates and technologies; • obtaining, maintaining, protecting and enforcing patent, trade secret and other intellectual property and proprietary protection and regulatory exclusivity, and ensuring we do not infringe, misappropriate or otherwise violate the patent, trade secret or other intellectual property and proprietary rights of third parties; • successfully launching commercial sales, including our plan to commercially launch nintedanib and avatrombopag; • obtaining and/or maintaining favorable governmental and private medical reimbursement; • efficiently and cost-effectively enhancing our marketing platform and distribution capabilities; • competition with other products and product candidates; • continued acceptable safety profile following regulatory approval, including of ETUARY; • creating additional infrastructure to support operations as a public company and our product development and planned future commercialization efforts; and • delays or other issues with any of the above.
For details of the risk associated with concentrations of credit risk that we are exposed to, see “— Our five largest customers accounted for a substantial amount of our revenue during the years ended December 31, 2023 and 2022, which subjects us to concentration risks. ” in this Risk Factors section.
For details of the risk associated with concentrations of credit risk that we are exposed to, see “— Our five largest customers accounted for a substantial amount of our revenue during the years ended December 31, 2024 and 2023, which subjects us to concentration risks. ” in this Risk Factors section.
Furthermore, there are inherent difficulties in enrolling NASH patients, which can currently only be definitively diagnosed through a liver biopsy. Specifically, identifying patients most likely to meet NASH enrollment criteria on biopsy is an on-going challenge, with existing clinical indicators lacking both sensitivity and specificity.
Furthermore, there are inherent difficulties in enrolling MASH patients, which can currently only be definitively diagnosed through a liver biopsy. Specifically, identifying patients most likely to meet MASH enrollment criteria on biopsy is an on-going challenge, with existing clinical indicators lacking both sensitivity and specificity.
Because we rely on a limited number of suppliers for certain of our raw materials, we may experience supply interruptions that could harm our ability to manufacture products. During the years ended December 31, 2023 and 2022, we had a small number of suppliers, with whom we believe we have stable relationships.
Because we rely on a limited number of suppliers for certain of our raw materials, we may experience supply interruptions that could harm our ability to manufacture products. During the years ended December 31, 2024 and 2023, we had a small number of suppliers, with whom we believe we have stable relationships.
We have intangible assets primarily consisting of product development in progress, patents, technological know-how, and computer software, which accounted for a considerable portion of our total assets as of December 31, 2023 and 2022. The value of our intangible assets is based on a number of assumptions made by our management.
We have intangible assets primarily consisting of product development in progress, patents, technological know-how, and computer software, which accounted for a considerable portion of our total assets as of December 31, 2024 and 2023. The value of our intangible assets is based on a number of assumptions made by our management.
Any disruption to our distribution network, including our failure to maintain relationships, form new relationships or renew our existing distribution agreements, could negatively affect our ability to sell our commercialized product, ETUARY, and any other future products, if approved, and may materially and adversely affect our business, results of operations, financial condition and prospects.
Any disruption to our distribution network, including our failure to maintain relationships, form new relationships or renew our existing distribution agreements, could negatively affect our ability to sell our commercialized product, ETUARY, future commercialized products, including nintedanib and avatrombopag, and any other future products, if approved, and may materially and adversely affect our business, results of operations, financial condition and prospects.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur Gyre Pharmaceuticals IT department senior supervisor, who reports directly to our General Manager at Gyre Pharmaceuticals and has over 20 years of experience managing information technology and cyber security matters, is responsible for assessing and managing Gyre Pharmaceuticals’ cybersecurity risks. Our General Manager at Gyre Pharmaceuticals reports the Board of Directors.
Biggest changeOur Gyre Pharmaceuticals information security team, who reports to the Secretary of the General Manager at Gyre Pharmaceuticals, comprises of three employees with an average of 20 years of experience managing information technology and cyber 130 security matters.
At Gyre Therapeutics, these processes are managed and monitored by a third-party information technology (“IT”) consulting company (the “Managed Service Provider”) and are overseen by our Chief Financial Officer. At Gyre Pharmaceuticals, these processes are managed and monitored by a dedicated IT team, which is led by the General Manager.
At Gyre Therapeutics, these processes are managed and monitored by a third-party information technology (“IT”) consulting company (the “Managed Service Provider”) and are overseen by our Chief Financial Officer. At Gyre Pharmaceuticals, these processes are managed and monitored by a dedicated Information Security team, which is led by the General Manager.
In the last fiscal year, we have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected us, but we face certain ongoing cybersecurity risks that, if realized, are reasonably likely to materially affect us.
Since the beginning of the last fiscal year, we have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected us, but we face certain ongoing cybersecurity risks that, if realized, are reasonably likely to materially affect us.
In addition, both companies consult with outside advisors and experts on a regular basis to assist with assessing, identifying, and managing cybersecurity risks, including to anticipate future threats and trends, and their impact on the Company’s risk environment. 123 Our Chief Financial Officer, who reports directly to our Chief Executive Officer, is responsible for assessing and managing Gyre Therapeutics’ cybersecurity risks with support from the Managed Service Provider, which employs IT consultants with over 20 years of experience managing information technology and cybersecurity matters and are certified as Microsoft Certified Systems Engineers.
Our Chief Financial Officer, who reports directly to our Chief Executive Officer, is responsible for assessing and managing Gyre Therapeutics’ cybersecurity risks with support from the Managed Service Provider, which employs IT consultants with over 20 years of experience managing information technology and cybersecurity matters and are certified as Microsoft Certified Systems Engineers.
Gyre Therapeutics’ and Gyre Pharmaceuticals’ processes include mechanisms, controls, technologies, systems, and other processes designed to prevent or mitigate data loss, theft, misuse, or other security incidents or vulnerabilities affecting the data. For example, Gyre Therapeutics and Gyre Pharmaceuticals maintain software and hardware inventories, perform security monitoring and alerting, and complete ongoing risk assessments.
Gyre Therapeutics’ and Gyre Pharmaceuticals’ processes include mechanisms, controls, technologies, systems, and other processes designed to prevent or mitigate data loss, theft, misuse, or other security incidents or vulnerabilities affecting the data.
We consider cybersecurity, along with other significant risks that we face, within our overall enterprise risk management framework.
The Secretary of the General Manager reports to the General Manager at Gyre Pharmaceuticals, and the General Manager reports to the Board of Directors and is responsible for assessing and managing Gyre Pharmaceuticals’ cybersecurity risks. We consider cybersecurity, along with other significant risks that we face, within our overall enterprise risk management framework.
Gyre Therapeutics and Gyre Pharmaceuticals also conduct regular employee trainings on cyber and information security, among other topics.
Gyre Therapeutics and Gyre Pharmaceuticals also conduct regular employee trainings on cyber and information security, among other topics. In addition, both companies consult with outside advisors and experts on a regular basis to assist with assessing, identifying, and managing cybersecurity risks, including to anticipate future threats and trends, and their impact on the Company’s risk environment.
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In the process of advancing the systematic development of information security, we seek to maintain a robust approach that encompasses policy formulation, organizational structuring, technological application enhancement, process optimization, and personnel training. For example, Gyre Therapeutics and Gyre Pharmaceuticals maintain software and hardware inventories, perform security monitoring and alerting, and complete ongoing risk assessments.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeGyre Pharmaceuticals’ two production centers are in Beijing, PRC and Cangzhou, PRC. Leased Properties Gyre Pharmaceuticals leases 21 properties in the PRC. Among Gyre Pharmaceuticals’ 21 leased properties, eight are used as offices, 12 are used as employee dormitories and one is operated as a laboratory.
Biggest changeGyre Pharmaceuticals’ two production centers are in Beijing, PRC and Cangzhou, PRC. Leased Properties Gyre Pharmaceuticals leases 22 properties in the PRC. Among Gyre Pharmaceuticals’ 22 leased properties, 10 are used as offices, and 12 are used as employee dormitories.
Gyre Pharmaceuticals’ Properties Owned Properties Gyre Pharmaceuticals has land use right certificates for two parcels of land in Shunyi District, Beijing, PRC and Cangzhou, Hebei province, PRC with an aggregate site area of 66,559 square meters and building ownership certificates for six properties with an aggregate gross floor area of 12,206 square meters.
Gyre Pharmaceuticals’ Properties Owned Properties Gyre Pharmaceuticals has land use right certificates for two parcels of land in Shunyi District, Beijing, PRC and Cangzhou, Hebei province, PRC with an aggregate site area of 66,559 square meters and building ownership certificates for eight properties with an aggregate gross floor area of 22,169 square meters.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeRegardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity, reputational harm and other factors, and there can be no assurances that favorable outcomes will be obtained. Item 4. MINE SAFETY DISCLOSURES. Not applicable. 124 PART II
Biggest changeRegardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity, reputational harm and other factors, and there can be no assurances that favorable outcomes will be obtained. Item 4. MINE SAFETY DISCLOSURES. Not applicable. 131 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeWe currently intend to retain all future earnings, if any, for use in our business and do not anticipate paying any cash dividends on our common stock in the foreseeable future.
Biggest changeOn August 26, 2024, we distributed approximately $12.6 million (or $0.40 per contingent value right) to the CVR Holders. We currently intend to retain all future earnings, if any, for use in our business and do not anticipate paying any cash dividends on our common stock in the foreseeable future.
On January 12, 2023, we paid a special, one-time cash dividend of approximately $7.6 million (or $0.24 per share) to our common stockholders of record as of the close of business on January 5, 2023.
Dividend Policy On January 12, 2023, we paid a cash dividend of approximately $7.6 million (or $0.24 per share) to our common stockholders of record as of the close of business on January 5, 2023.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PUR CHASES OF EQUITY SECURITIES. Market Information for Common Stock Gyre Therapeutics, Inc. is listed on the Nasdaq Capital Market under the symbol “GYRE.” Holders of Common Stock As of March 19, 2024, there were approximately 46 stockholders of record of our common stock.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PUR CHASES OF EQUITY SECURITIES. Market Information for Common Stock Gyre Therapeutics, Inc. is listed on the Nasdaq Capital Market under the symbol “GYRE.” Holders of Common Stock As of March 7, 2025, there were approximately 44 stockholders of record of our common stock.
Removed
Dividend Policy On September 20, 2022, we paid a special, one-time cash dividend of approximately $45.0 million (or $1.43 per share) to our common stockholders of record as of the close of business on September 6, 2022.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

74 edited+41 added−27 removed41 unchanged
Biggest changeResults of Operations The following tables summarize our results of operations for the years ended December 31, 2023 and 2022 (in thousands, except percentage change): Year Ended December 31, 2023 2022 Change ($) Change (%) Revenues $ 113,450 $ 102,290 $ 11,160 10.9 % Cost of revenues 4,636 4,793 (157 ) (3.3 )% Gross Profit 108,814 97,497 11,317 11.6 % Operating expenses excluding cost of revenues: Selling and marketing 61,159 54,238 6,921 12.8 % Research and development 13,780 16,686 (2,906 ) (17.4 )% General and administrative 14,662 17,370 (2,708 ) (15.6 )% Acquired in-process research and development 83,104 — 83,104 ** Divestiture losses 2,711 — 2,711 ** Loss on disposal of property and equipment 628 — 628 ** Total operating expenses excluding cost of revenues 176,044 88,294 87,750 99.4 % (Loss) income from operations (67,230 ) 9,203 (76,433 ) ** Other income (expense), net: Interest income, net 1,044 726 318 43.8 % Other income 1,076 857 219 25.6 % Change in fair value of warrant liability (9,261 ) — (9,261 ) ** Other expenses (2,594 ) (1,374 ) (1,220 ) 88.8 % (Loss) income before income taxes (76,965 ) 9,412 (86,377 ) ** Provision for income taxes (8,515 ) (5,098 ) (3,417 ) 67.0 % Net (loss) income from operations (85,480 ) 4,314 (89,794 ) ** Net income attributable to noncontrolling interest 7,453 2,012 5,441 270.4 % Net (loss) income attributable to common stockholders $ (92,933 ) $ 2,302 $ (95,235 ) ** ** Not meaningful.
Biggest changeResults of Operations The following table summarizes our results of operations for the years ended December 31, 2024 and 2023 (in thousands, except percentage change): Year Ended December 31, 2024 2023 Change ($) Change (%) Revenues $ 105,757 $ 113,450 $ (7,693 ) (6.8 )% Cost of revenues 3,884 4,636 (752 ) (16.2 )% Gross Profit 101,873 108,814 (6,941 ) (6.4 )% Operating expenses excluding cost of revenues: Selling and marketing 57,511 61,159 (3,648 ) (6.0 )% Research and development 12,024 13,780 (1,756 ) (12.7 )% General and administrative 16,109 14,662 1,447 9.9 % Acquired in-process research and development — 83,104 (83,104 ) ** Divestiture losses — 2,711 (2,711 ) ** Loss on disposal of property and equipment 66 628 (562 ) (89.5 )% Total operating expenses excluding cost of revenues 85,710 176,044 (90,334 ) (51.3 )% Income (loss) from operations 16,163 (67,230 ) 83,393 ** Other income (expense), net: Interest income, net 1,547 1,044 503 48.2 % Other expense, net (1,659 ) (1,518 ) (141 ) 9.3 % Change in fair value of warrant liability 7,167 (9,261 ) 16,428 ** Income (loss) before income taxes 23,218 (76,965 ) 100,183 ** Provision for income taxes (5,320 ) (8,515 ) 3,195 (37.5 )% Net income (loss) from operations 17,898 (85,480 ) 103,378 ** Net income attributable to noncontrolling interest 5,813 7,453 (1,640 ) (22.0 )% Net income (loss) attributable to common stockholders $ 12,085 $ (92,933 ) $ 105,018 ** ** Not meaningful.
Factors that may affect financing requirements include, but are not limited to: • the timing, progress, cost and results of our clinical trials, preclinical studies and other discovery and research and development activities; 133 • the timing and outcome of, and costs involved in, seeking and obtaining marketing approvals for our products, and in maintaining quality systems standards for our products; • the timing of, and costs involved in, commercial activities, including product marketing, sales and distribution; • our ability to successfully commercialize and to obtain regulatory approval for, and successfully commercialize our other or future product candidates; • increases or decreases in revenue from our marketed products, including decreases in revenue resulting from generic entrants or health epidemics or pandemics; • the number and development requirements of other product candidates that we pursue; • our ability to manufacture sufficient quantities of our products to meet expected demand; • the costs of preparing, filing, prosecuting, maintaining and enforcing any patent claims and other intellectual property rights, litigation costs and the results of litigation; • our ability to enter into collaboration, licensing or distribution arrangements and the terms and timing of these arrangements; • the potential need to expand our business, resulting in additional payroll and other overhead expenses; • the potential in-licensing of other products or technologies; • the emergence of competing technologies or other adverse market or technological developments; and • the impacts of inflation and resulting cost increases.
Factors that may affect financing requirements include, but are not limited to: • the timing, progress, cost and results of our clinical trials, preclinical studies and other discovery and research and development activities; • the timing and outcome of, and costs involved in, seeking and obtaining marketing approvals for our products, and in maintaining quality systems standards for our products; • the timing of, and costs involved in, commercial activities, including product marketing, sales and distribution; • our ability to successfully commercialize and to obtain regulatory approval for, and successfully commercialize our other or future product candidates; • increases or decreases in revenue from our marketed products, including decreases in revenue resulting from generic entrants or health epidemics or pandemics; • the number and development requirements of other product candidates that we pursue; • our ability to manufacture sufficient quantities of our products to meet expected demand; • the costs of preparing, filing, prosecuting, maintaining and enforcing any patent claims and other intellectual property rights, litigation costs and the results of litigation; • our ability to enter into collaboration, licensing or distribution arrangements and the terms and timing of these arrangements; • the potential need to expand our business, resulting in additional payroll and other overhead expenses; • the potential in-licensing of other products or technologies; • the emergence of competing technologies or other adverse market or technological developments; and • the impacts of inflation and resulting cost increases.
Interest income is recognized on an accrual basis using the effective interest method by applying the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, when appropriate, to the net carrying amount of the financial asset. Other Income Other income consists mostly of government grants.
Interest income is recognized on an accrual basis using the effective interest method by applying the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, when appropriate, to the net carrying amount of the financial asset. Other (Expense) Income, Net Other income consists mostly of government grants.
Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in us reporting expenses that are too high or too low in any particular period.
Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services 145 performed may vary and may result in us reporting expenses that are too high or too low in any particular period.
Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates, and such differences may be material.
Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the 144 carrying values of assets and liabilities. Actual results may differ from these estimates, and such differences may be material.
The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. 137 Interest and penalties related to unrecognized tax benefits are recorded as a component of income tax expense, if any.
The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. Interest and penalties related to unrecognized tax benefits are recorded as a component of income tax expense, if any.
Pursuant to the Business Combination Agreement, at the Effective Time of the Contributions, and after giving effect to the 1-for-15 reverse stock split: a) GNI USA contributed all of its ordinary shares in the capital of CPI to Catalyst in exchange for 45,923,340 shares of Gyre Common Stock (the “CPI Contribution”), b) GNI USA contributed its interest in Further Challenger International Limited (“Further Challenger”) for 17,664,779 shares of Gyre Common Stock (the “FC Contribution” and together with the CPI Contribution, the “GNI USA Contributions”), and c) each Minority Holder contributed 100% of the interest he or she held in his or her respective entity in exchange for an aggregate of 10,463,627 shares of Gyre Common Stock (the “Minority Holder Contributions” and together with the GNI USA Contributions, the “Contributions”).
Pursuant to the Business Combination Agreement, at the Effective Time of the Contributions, and after giving effect to the 1-for-15 reverse stock split: a) GNI USA contributed all of its ordinary shares in the capital of CPI to Catalyst in exchange for 45,923,340 shares of Common Stock (the “CPI Contribution”), 134 b) GNI USA contributed its interest in Further Challenger International Limited (“Further Challenger”) for 17,664,779 shares of Common Stock (the “FC Contribution” and together with the CPI Contribution, the “GNI USA Contributions”), and c) each Minority Holder contributed 100% of the interest he or she held in his or her respective entity in exchange for an aggregate of 10,463,627 shares of Common Stock (the “Minority Holder Contributions” and together with the GNI USA Contributions, the “Contributions”).
Each CVR entitles the CVR Holder thereof to receive certain cash payments in the future. For additional information, see Note 13 — Commitments and Contingencies to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Each CVR entitles the CVR Holder thereof to receive certain cash payments in the future. For additional information, see Note 13 — Commitments and 135 Contingencies to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Business Combination Agreement 126 On December 26, 2022, Catalyst entered into a Business Combination Agreement, as amended on March 29, 2023 and August 30, 2023 (the “Business Combination Agreement”) with GNI USA, GNI Japan, GNI Hong Kong, SG (collectively with GNI USA, GNI Japan and GNI Hong Kong, the “Contributors,” and each a “Contributor”), certain individuals and CPI .
Business Combination Agreement On December 26, 2022, Catalyst entered into a Business Combination Agreement, as amended on March 29, 2023 and August 30, 2023 (the “Business Combination Agreement”) with GNI USA, GNI Japan, GNI Hong Kong, SG (collectively with GNI USA, GNI Japan and GNI Hong Kong, the “Contributors,” and each a “Contributor”), certain individuals and CPI.
Cash Flows from Financing Activities Cash provided by financing activities for the year ended December 31, 2023 was $2.5 million due to the portion of proceeds from the issuance of Convertible Preferred Stock and Preferred Stock Warrants in the Private Placement received after the GNI USA Contributions.
Cash provided by financing activities for the year ended December 31, 2023 was $2.5 million due to the portion of proceeds from the issuance of Convertible Preferred Stock and Preferred Stock Warrants in the Private Placement received after the GNI USA Contributions.
Change in Fair Value of Warrant Liability In connection with the Private Placement, we issued the Preferred Stock Warrants, which are freestanding financial instruments classified as warrant liability since the underlying securities are contingently redeemable upon the occurrence of events which are outside of our control.
Change in Fair Value of Warrant Liability 138 In connection with the Private Placement, we issued the Preferred Stock Warrants, which are freestanding financial instruments classified as warrant liability since the underlying securities are contingently redeemable upon the occurrence of events which are outside of our control.
Recent Accounting Pronouncements Refer to Note 2 — Summary of Significant Accounting Policies to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for a discussion of recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one yet, of their potential impact on our financial condition of results of operations. 138
Recent Accounting Pronouncements Refer to Note 2 — Summary of Significant Accounting Policies to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for a discussion of recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one yet, of their potential impact on our financial condition of results of operations. 147
No fractional shares were issued in connection with the Reverse Stock Split and stockholders who would otherwise be entitled to a fraction of one share received a proportional cash payment. Private Placement and Securities Purchase Agreement On October 27, 2023, we entered into the Securities Purchase Agreement for a private placement with GNI USA.
No fractional shares were issued in connection with the Reverse Stock Split and stockholders who would otherwise be entitled to a fraction of one share received a proportional cash payment. Private Placement and Securities Purchase Agreement On October 27, 2023, we entered into the Securities Purchase Agreement for a private placement with GNI USA (the “Private Placement”).
Revenue Recognition We record revenue in accordance with ASC Topic 606 (“ASC 606”), Revenue from Contracts with Customers, whereby revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration expected to be received in exchange for those goods or services.
Revenue Recognition We recognize revenue in accordance with ASC Topic 606 (“ASC 606”), Revenue from Contracts with Customers, whereby revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration expected to be received in exchange for those goods or services.
The Preferred Stock Warrants are recorded at fair value upon issuance and are subject to remeasurement at the end of each reporting period.
The Preferred Stock Warrants are recorded at fair value upon issuance and are subject to 146 remeasurement at the end of each reporting period.
(“Nanjing Healthnice”), an independent third party, pursuant to which Nanjing Healthnice agreed to transfer to us the avatrombopag maleate tablets for the treatment of CLD-associated thrombocytopenia and all relevant technologies, complete any research or trials and transfer to us all materials necessary for the application of marketing approval by CDE.
(“Nanjing Healthnice”), an independent third party, pursuant to which Nanjing Healthnice agreed to transfer to us the avatrombopag maleate tablets for the treatment of CLD-associated thrombocytopenia and all relevant technologies, complete any research or trials and transfer to us all materials necessary for the application of marketing approval by the NMPA.
(“New Jiyuan”), an independent third party, pursuant to which New Jiyuan agreed to transfer to us the minocycline hydrochloride foam for the treatment of moderate to severe acne and all relevant technologies, complete product development and transfer to us all materials necessary for the application of marketing approval of CDE.
(“New Jiyuan”), an independent third party, pursuant to which New Jiyuan agreed to transfer to us the minocycline hydrochloride foam for the treatment of moderate to severe acne and all relevant technologies, complete product development and transfer to us all materials necessary for the application of marketing approval of NMPA.
We estimate the amount of work completed through discussions with internal personnel and external service providers in conjunction with reporting information obtained directly from the external service providers as to the progress or stage of completion of the services and the agreed-upon fee to be paid for such services.
We estimate the amount of work completed through discussion with internal personnel and external service providers in conjunction with reporting information obtained directly from the external service providers as to the progress or stage of completion of the services and the agreed-upon fee to be paid for such services.
Provision for Income Taxes Provision for income taxes are comprised primarily of current income tax provision, mainly attributable to the profitable Gyre Pharmaceuticals operations in the PRC, and deferred income tax provision, mainly including deferred tax recognized for temporary differences in relation to research and development tax credit and net operating loss carry forwards for U.S. tax purposes, deemed income inclusions from controlled foreign corporations for U.S. tax purposes, and fixed and intangible assets, net of valuation allowances.
Provision for Income Taxes Provision for income taxes are comprised primarily of current income tax provision, mainly attributable to the profitable Gyre Pharmaceuticals operations in the PRC, and deferred income tax provision, mainly including deferred tax recognized for temporary differences in relation to research and development tax credit and net operating loss carryforwards for U.S. tax purposes, deemed income inclusions from controlled foreign corporations for U.S. tax purposes, and fixed and intangible assets, net of valuation allowances.
We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as our ordinary shares held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our ordinary shares held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.
We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as our common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.
In exchange, we will pay a total amount of $1.0 million and the payments will be made by installments conditioned upon certain milestones ( e.g. , the completion of bioequivalence study, or the registration application to CDE) being met. Process verification has been completed. As of December 31, 2023, we have made total payments of approximately $0.7 million.
In exchange, we will pay a total amount of $1.0 million and the payments will be made by installments conditioned upon certain milestones (e.g., the completion of bioequivalence study, or the registration application to NMPA) being met. Process verification has been completed. As of December 31, 2024, we have made total payments of approximately $0.7 million.
We will continue to use judgment in evaluating the assumptions utilized for our warrant liability fair value calculations on a prospective basis. Smaller Reporting Company Status We are a “smaller reporting company” as defined in the Exchange Act.
We will continue to use judgment in evaluating the assumptions utilized for our warrant liability fair value calculations on a prospective basis. Smaller Reporting Company and Accelerated Filer Status We are a “smaller reporting company” as defined in the Exchange Act.
Contingent Value Rights Agreement Concurrent with the signing of the Business Combination Agreement on December 26, 2022, Catalyst and the Rights Agent (as defined in the CVR Agreement) executed a contingent value rights agreement (the “CVR Agreement”), as amended on March 29, 2023, pursuant to which each CVR Holder, excluding the Sellers, received one contractual contingent value right (a “CVR”) issued by the Company for each share of Catalyst common stock held by such holders.
Contingent Value Rights Agreement Concurrent with the signing of the Business Combination Agreement on December 26, 2022, Catalyst and the Rights Agent (as defined in the CVR Agreement) executed a contingent value rights agreement (the “CVR Agreement”), as amended on March 29, 2023, pursuant to which each CVR Holder, excluding GNI Japan and GNI Hong Kong, received one contractual contingent value right (a “CVR”) issued by the Company for each share of Catalyst common stock held by such holders.
Contractual Obligations and Other Commitments Leases We have entered into lease arrangements in (1) San Diego, California for our headquarters, which expires on the last day of the 38th full calendar month beginning on or after November 11, 2023, and (2) the PRC, for office and laboratory spaces through August 2024.
Contractual Obligations and Other Commitments Leases 143 We have entered into lease arrangements in (1) San Diego, California for our headquarters, which expires on the last day of the 38th full calendar month beginning on or after November 11, 2023, and (2) the PRC, for office and laboratory spaces through May 2027.
Despite potential efficacy in IPF, we are prioritizing F351 for the treatment of liver fibrosis due to the large potential addressable market and significant unmet need. Gyre Pharmaceuticals has completed a Phase 2 trial of F351 in the PRC for CHB-associated liver fibrosis.
We are prioritizing F351 for the treatment of liver fibrosis due to the large potential addressable market and significant unmet need. 133 Gyre Pharmaceuticals has completed a Phase 2 trial of F351 in the PRC for CHB-associated liver fibrosis.
Reverse Stock Split We effected a 1-for-15 reverse stock split immediately prior to the Effective Time of the Contributions. The par value of the Catalyst Common Stock following the Reverse Stock Split was not adjusted and remains at $0.001 per share.
Reverse Stock Split On October 30, 2023, we effected a 1-for-15 reverse stock split immediately prior to the Effective Time of the Contributions. The par value of the Catalyst Common Stock following the Reverse Stock Split was not adjusted and remains at $0.001 per share.
Cash Flows from Investing Activities Cash used in investing activities for the year ended December 31, 2023 was $19.8 million, which consisted of $15.7 million in purchases of certificates of deposit, $8.5 million in purchases of property and equipment and $1.0 million paid for equity method investment, partially offset by $5.6 million of cash acquired in connection with the GNI USA Contributions. 134 Cash used in investing activities for the year ended December 31, 2022 was $13.8 million, which consisted of $7.5 million in purchases of certificates of deposit, $5.0 million in purchases of property and equipment and $1.3 million in cash paid for equity method investments.
Cash used in investing activities for the year ended December 31, 2023 was $19.8 million, which consisted of $15.7 million in purchases of certificates of deposit, $8.5 million in purchases of property and equipment and $1.0 million paid for equity method investment, partially offset by $5.6 million of cash acquired in connection with the GNI USA Contributions.
As of December 31, 2023, our fixed lease payment obligations were $0.4 million, with $0.2 million payable within 12 months. Other Contractual Obligations and Commitments In June 2021, we entered into a transfer agreement with Nanjing Healthnice Pharmaceutical Technology Co., Ltd.
As of December 31, 2024, our fixed lease payment obligations were $1.7 million, with $0.8 million payable within 12 months. Other Contractual Obligations and Commitments In June 2021, we entered into a transfer agreement with Nanjing Healthnice Pharmaceutical Technology Co., Ltd.
Pirfenidone, the first anti-fibrotic drug approved for IPF in Japan, the EU, the U.S., and the PRC, is a small molecule drug that inhibits the synthesis of TGF-ß1, TNF-α, and other fibrosis and inflammation modulators. We have obtained approval for ETUARY (pirfenidone) in the PRC for IPF.
Pirfenidone, the first anti-fibrotic drug approved for IPF in Japan, the EU, the United States, and the PRC, is a small molecule drug that inhibits the synthesis of TGF-ß1, Tumor Necrosis Factor-α, and other fibrosis and inflammation modulators. We have obtained approval for ETUARY (pirfenidone) in the PRC for IPF.
While there are numerous potential targets for anti-fibrotic therapy, both established and emerging, addressing a single molecular pathway may not be sufficient to prevent, halt, or reverse fibrosis. Our strategy is to use our experience in the successful development and commercialization of ETUARY® (Pirfenidone) to expand into new indications and develop similar drug candidates.
While there are numerous potential targets for anti-fibrotic therapy, both established and emerging, addressing a single molecular pathway may not be sufficient to prevent, halt, or reverse fibrosis. Our strategy is to build on our success in the development and commercialization of ETUARY® (pirfenidone) to expand into new indications and advance our pipeline of innovative drug candidates.
Following results from the PRC Phase 3 trial in CHB-associated liver fibrosis and pending approval of our IND, we expect to initiate a Phase 2a trial to evaluate F351 for the treatment of NASH-associated liver fibrosis in 2025.
Following results from the PRC Phase 3 trial in CHB-associated liver fibrosis and pending approval of an IND submission, we expect to initiate a Phase 2 trial to evaluate F351 for the treatment of MASH-associated liver fibrosis in 2025.
We have completed the bioequivalence study and received CDE acceptance on August 1, 2022, and as of December 15, 2023, we have made total payments of approximately $1.8 million. In September 2022, we entered into a transfer agreement with New Jiyuan (Beijing) Pharmaceutical Technology Co., Ltd.
We have completed the bioequivalence study and received NMPA acceptance on August 1, 2022, and as of December 31, 2024, we have made total payments of approximately $2.3 million. In September 2022, we entered into a transfer agreement with New Jiyuan (Beijing) Pharmaceutical Technology Co., Ltd.
(a) Sale of Pharmaceutical Products Revenue from the sale of pharmaceutical products is recognized at the point in time when control of the asset is transferred to the customer, generally on completion of delivery of the pharmaceutical products and quality inspection by the customer. For the sales of pharmaceutical products, most of our customers are distributors.
For the sale of pharmaceutical products, revenue is recognized at a point in time when control of the asset is transferred to the customer, generally on completion of delivery of the pharmaceutical products. For the sales of pharmaceutical products, most of our customers are distributors. Revenue from product sales is recognized net of estimated sales discounts.
Other Income (Expense), Net Interest income increased by $0.3 million, or 43.8%, for the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to additional investments in long-term certificates of deposit. Other income increased by $0.2 million, or 25.6%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Other Income (Expense), Net Interest income increased by $0.5 million, or 48.2%, for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to additional investments in long-term certificates of deposit.
Overview We are a financially-sustainable pharmaceutical company with a record of financial success that develops and commercializes small-molecule anti-inflammatory and anti-fibrotic drugs targeting organ diseases, focusing specifically on organ fibrosis. Fibrotic diseases represent a large patient population with significant unmet medical needs. Fibrosis involves a complex, multi-stage process with multiple pathways.
Overview We are a commercial-stage biotechnology company with a proven track record of financial success developing and commercializing small-molecule anti-inflammatory and anti-fibrotic drugs targeting organ diseases, focusing specifically on organ fibrosis. Fibrotic diseases represent a large patient population with significant unmet medical needs and involves a complex, multi-stage process with multiple pathways.
The Phase 2 trial showed that F351 was well-tolerated without notable toxicity and patients treated showed statistically-significant improvement of liver fibrosis, with the best efficacy results achieved at 270 mg/day dosing. Based on these results, a confirmatory Phase 3 trial is ongoing in the PRC.
The Phase 2 trial showed that F351 was well-tolerated without notable toxicity and patients treated showed statistically-significant improvement of liver fibrosis, with the best efficacy results achieved at 270 mg/day dosing.
We believe that our existing cash and cash equivalents, cash flows from operations, and access to capital markets will be sufficient to fund our operating activities and obligations for at least 12 months following the filing date of this Annual Report.
We believe that our existing cash and cash equivalents, cash flows from operations, and access to capital markets will be sufficient to fund our operating activities and obligations for at least 12 months following the filing date of this Annual Report. 141 Future Funding Requirements We expect to use cash flows from operations to meet our current and future financial obligations, including funding our operations, and capital expenditures.
This expense was reflected in our consolidated statements of operations and comprehensive (loss) income. The loss is presented net of the direct costs incurred with the transaction. Loss on Disposal of Property and Equipment Prior to the GNI USA Contributions, we recorded a loss on disposal of property and equipment.
This expense was reflected in our consolidated statements of operations and comprehensive income (loss). The loss is presented net of the direct costs incurred with the transaction. Loss on Disposal of Property and Equipment The net loss on the sale and disposal of property and equipment is reflected in our consolidated statements of operations and comprehensive income (loss).
The majority stockholder of Gyre is GNI USA and the majority stockholder of GNI USA is GNI Japan. The GNI USA Contributions were treated as an asset acquisition under U.S. generally accepted accounting principles (“U.S. GAAP”), with CPI treated as the accounting acquirer and presented as the predecessor for post-acquisition reporting purposes.
The GNI USA Contributions were treated as an asset acquisition under U.S. generally accepted accounting principles (“U.S. GAAP”), with CPI treated as the accounting acquirer and presented as the predecessor for post-acquisition reporting purposes. Since Catalyst is the legal acquirer, the GNI USA Contributions were accounted for as a reverse asset acquisition.
Upon the completion of the transfer, we expect that we will be approved by NMPA as the marketing authorization holder of the avatrombopag maleate tablets. In exchange, we will pay a total of approximately $2.3 million upon certain milestones ( e.g. , the completion of bioequivalence study, or the registration application to CDE) being met.
We were approved by the NMPA as the marketing authorization holder of the avatrombopag maleate tablets on June 25, 2024. In exchange, we paid a total of approximately $2.3 million upon certain milestones (e.g., the completion of bioequivalence study, or the registration application to the NMPA) being met.
The Preferred Stock Warrants are recorded at fair value upon issuance and are subject to remeasurement at the end of each reporting period, with any change in fair value recognized in our statements of operations as other (income) expense. 130 Other Expenses Other expense consists of any non-operating costs, such as loss from equity method investments.
The Preferred Stock Warrants are recorded at fair value upon issuance and are subject to remeasurement at the end of each reporting period, with any change in fair value recognized in our statements of operations as other (income) expense.
F351, our lead development candidate, is a structural derivative of ETUARY (Pirfenidone). It is a new oral chemical entity with an anti-fibrotic, TGF-ß1-targeting mechanism of action, for which we hold patents in major markets. Studies suggest that F351 and its major metabolites have minimal drug-drug interaction risks.
It is a new oral chemical entity with an anti-fibrotic, TGF-ß1-targeting mechanism of action. Studies suggest that F351 and its major metabolites have minimal drug-drug interaction risks.
F351 Asset Acquisition On December 26, 2022, Catalyst, purchased the F351 Assets from GNI Japan and GNI Hong Kong, other than such assets and intellectual property rights located in the PRC, pursuant to the F351 Agreement.
(“Nanjing Healthnice”) in June 2021 and is planning to start commercializing the avatrombopag product by 2025. F351 Asset Acquisition On December 26, 2022, we purchased the F351 Assets from GNI Japan and GNI Hong Kong, other than such assets and intellectual property rights located in the PRC, pursuant to the F351 Agreement.
Property and Equipment Our commitments related to the purchase of property and equipment contracted but not yet reflected in the consolidated financial statements were $2.8 million as of December 31, 2023 and are expected to be incurred within one year. Critical Accounting Policies and Estimates The preparation of the consolidated financial statements and related disclosures in conformity with U.S.
Property and Equipment Our commitments related to the purchase of property and equipment contracted but not yet reflected in the consolidated financial statements were $1.4 million as of December 31, 2024 and are expected to be incurred within one year.
Future Funding Requirements We expect to use cash flows from operations to meet our current and future financial obligations, including funding our operations, and capital expenditures. Our ability to make these payments depends on our future performance, which will be affected by financial, business, economic, regulatory, and other factors, many of which we cannot control.
Our ability to make these payments depends on our future performance, which will be affected by financial, business, economic, regulatory, and other factors, many of which we cannot control.
Components of Results of Operations Revenues Sales of Pharmaceutical Products We generate revenue primarily through sales of ETUARY and certain generic drugs in the PRC. Distributors are our direct customers, and sales to distributors accounted for 100% of the revenue from ETUARY. Such distributors sell ETUARY to certain outlets, including hospitals and other medical institutions, as well as pharmacies.
Distributors are our direct customers, and sales to distributors accounted for 100.0% of the revenue from ETUARY. Such distributors sell ETUARY to certain outlets, including hospitals and other medical institutions, as well as pharmacies.
Liquidity and Capital Resources Sources of Liquidity As of December 31, 2023, we had cash and cash equivalents of $33.5 million and long-term certificates of deposit of $23.4 million, which are available to fund operations, and an accumulated deficit of $85.5 million.
Liquidity and Capital Resources Sources of Liquidity As of December 31, 2024, we had cash and cash equivalents of $11.8 million, short-term bank deposit of $14.9 million and long-term certificates of deposit of $24.6 million, which are available to fund operations, and an accumulated deficit of $73.5 million.
The following table summarizes our cash flows for the periods presented (in thousands): Year Ended December 31, 2023 2022 Cash Flow Data: Net cash provided by operating activities $ 25,892 $ 10,677 Net cash used in investing activities (19,760 ) (13,814 ) Net cash provided by financing activities 2,500 — Effect of exchange rate changes on cash and cash equivalents (298 ) (1,891 ) Net change in cash and cash equivalents $ 8,334 $ (5,028 ) Cash Flows from Operating Activities Cash provided by operating activities for the year ended December 31, 2023 was $25.9 million, reflecting our net loss of $85.5 million, offset by non-cash items of $103.9 million primarily related to the acquired IPR&D of $83.1 million in connection with the GNI USA Contributions, $9.3 million related to the change in fair value of warrant liability, stock-based compensation of $7.3 million, divestiture losses of $2.7 million, and equity loss of unconsolidated affiliates of $1.3 million.
The following table summarizes our cash flows for the periods presented (in thousands): Year Ended December 31, 2024 2023 Cash Flow Data: Net cash (used) provided by operating activities $ (3,641 ) $ 25,892 Net cash used in investing activities (19,884 ) (19,760 ) Net cash provided by financing activities 2,102 2,500 Effect of exchange rate changes on cash and cash equivalents (273 ) (298 ) Net change in cash and cash equivalents $ (21,696 ) $ 8,334 Cash Flows from Operating Activities 142 Cash used in operating activities for the year ended December 31, 2024 was $3.6 million, reflecting our net income of $17.9 million, offset by non-cash items of $5.9 million primarily related to the $7.2 million cash used in change in fair value of warrant liability, depreciation and amortization of $1.5 million, stock-based compensation of $0.8 million.
Pursuant to the Securities Purchase Agreement, GNI USA agreed to purchase (i) 811 shares of Gyre’s Convertible 128 Preferred Stock and (ii) warrants to purchase up to 811 shares of Convertible Preferred Stock (the “Preferred Stock Warrants”) for an aggregate purchase price of $5.0 million. The Private Placement closed immediately after the closing of the Contributions.
Pursuant to the Securities Purchase Agreement, GNI USA agreed to purchase (i) 811 shares of our Convertible Preferred Stock, par value $0.001 per share (the “Convertible Preferred Stock”) and (ii) warrants to purchase up to 811 shares of Convertible Preferred Stock (the “Preferred Stock Warrants”) for an aggregate purchase price of $5.0 million.
Research and Development Expenses The table below details our costs for research and development for the years ended December 31, 2023 and 2022 (in thousands, except percentage change): Year Ended December 31, 2023 2022 Change ($) Change (%) Direct program expenses: Clinical trials $ 4,228 $ 4,132 $ 96 2.3 % Materials and utilities 2,607 2,877 (270 ) (9.4 )% Pre-clinical research 2,038 3,236 (1,198 ) (37.0 )% Indirect expenses: Personnel-related costs including stock-based compensation 4,092 5,716 (1,624 ) (28.4 )% Facilities, depreciation and other 815 725 90 12.4 % Total research and development expenses $ 13,780 $ 16,686 $ (2,906 ) (17.4 )% Research and development expenses decreased by $2.9 million, or 17.4%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Research and Development Expenses The table below details our costs for research and development for the years ended December 31, 2024 and 2023 (in thousands, except percentage change): Year Ended December 31, 2024 2023 Change ($) Change (%) Direct program expenses: Clinical trials $ 4,328 $ 4,228 $ 100 2.4 % Materials and utilities 2,294 2,607 (313 ) (12.0 )% Pre-clinical research 766 2,038 (1,272 ) (62.4 )% Indirect expenses: Personnel-related costs including stock-based compensation 3,253 4,092 (839 ) (20.5 )% Facilities, depreciation and other 1,383 815 568 69.7 % Total research and development expenses $ 12,024 $ 13,780 $ (1,756 ) (12.7 )% Research and development expenses decreased by $1.8 million, or 12.7%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
License of Intellectual Property Revenue from licensing intellectual property is recognized when the control of the right to use the license is transferred to the customer. Operating Expenses Cost of Revenue Cost of revenue mainly consists of cost of sales representing direct and indirect costs incurred to bring the product to saleable condition.
Operating Expenses Cost of Revenue Cost of revenue mainly consists of cost of sales representing direct and indirect costs incurred to bring the product to saleable condition.
For the year ended December 31, 2022, our net income was $4.3 million and net income attributable to common stockholders was $2.3 million. As of December 31, 2023, we had accumulated deficit of $85.5 million and cash and cash equivalents of $33.5 million. As of December 31, 2022, we had retained earnings of $7.4 million and cash of $25.2 million.
For the year ended December 31, 2023, our net loss was $85.5 million and net loss attributable to common stockholders was $92.9 million. As of December 31, 2024, we had accumulated deficit of $73.5 million and cash and cash equivalents of $11.8 million.
Change in fair value of warrant liability was a $9.3 million expense for the year ended December 31, 2023 and was related to the remeasurement of the Preferred Stock Warrants liability. There were no warrants outstanding during the year ended December 31, 2022.
Change in fair value of warrant liability was a decrease of $7.2 million and an increase of $9.3 million for the years ended December 31, 2024 and 2023, respectively. The decrease is related to the remeasurement of the Preferred Stock Warrants liability.
Provision for Income Taxes Provision for income taxes was $8.5 million and $5.1 million for the years ended December 31, 2023 and 2022, respectively. The increase was primarily attributable to a higher profit from Gyre Pharmaceuticals operations and an increase in deferred tax asset.
Provision for Income Taxes Provision for income taxes was $5.3 million and $8.5 million for the years ended December 31, 2024 and 2023, respectively. The decrease was primarily attributable to a lower profit from Gyre Pharmaceuticals' operations for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Revenue from product sales is recognized net of estimated sales discounts. These discounts are estimated based on sales volumes from the preceding months and applying the discount percentages specified in each contract.
These discounts are estimated based on sales volumes from the preceding months and applying the discount percentages specified in each contract. The estimation process requires management judgment, particularly in determining the amount of sales discounts based on historical sales volumes and contractually agreed-upon discount percentages.
Our net loss during the year ended December 31, 2023 was $85.5 million, while cash provided by operating activities was $25.9 million.
Our net income during the year ended December 31, 2024 was $17.9 million, while cash used in operating activities was $3.6 million.
Other expenses increased by $1.2 million, or 88.8%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. This increase was primarily driven by a $0.7 million increase in loss from equity method investments and $0.5 million in sponsorships for local charity events.
Other expenses, net increased by $0.1 million, or 9.3%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. The increase was primarily due to a $1.0 million increase in loss from equity method investment, partially offset by a $0.9 million decrease in government grants.
Gyre Pharmaceuticals successfully advanced Pirfenidone from R&D to commercialization in the PRC for the treatment of IPF. ETUARY’s annual sales have consistently grown each year, reaching $112.1 million in 2023. In addition to IPF, Pirfenidone is undergoing three additional Phase 3 studies for CTD-ILD to broaden its indications and market: SSc-ILD, DM-ILD and PD.
Gyre Pharmaceuticals successfully advanced pirfenidone from research and development to commercialization in the PRC for the treatment of IPF. In addition to IPF, pirfenidone is undergoing one additional Phase 3 trial in the PRC for the treatment of pneumoconiosis (“PD”) to broaden its indications and market.
Acquired IPR&D Acquired IPR&D expenses of $83.1 million for the year ended December 31, 2023 represent costs of incurred for acquisitions of IPR&D with no alternative future use, which were expensed immediately upon the closing of GNI USA Contributions. 132 Divestiture Losses During the year ended December 31, 2023, we recorded a loss of $2.7 million from the divestiture of almost all our assets other than our 56.0% indirect ownership interest in Gyre Pharmaceuticals.
Acquired IPR&D There was no acquired IPR&D expense for the year ended December 31, 2024 compared to $83.1 million for the year ended December 31, 2023. The acquired IPR&D represents costs incurred for acquisitions of IPR&D with no alternative future use, which were expensed immediately upon the closing of GNI USA Contributions.
Upon receiving the CDE's final approval, we will make an additional $40,000 in payments. 135 Research and Development Programs As of December 31, 2023, we have committed to allocate $12.7 million toward future research and development activities for various programs.
Research and Development Programs As of December 31, 2024, we have committed to allocate $33.0 million toward future research and development activities for various programs.
The increase was primarily driven by a $3.8 million increase in selling and marketing payroll costs due to an increase in staff headcount, a $3.5 million increase in promotional expenses, and a $0.7 million increase in traveling expenses of our sales staff, partially offset by a $1.3 million decrease in stock-based compensation.
The decrease was primarily driven by a $2.4 million decrease in conference costs and promotion expense due to decreased sales activities, a $0.9 million decrease in selling and marketing payroll costs due to the decrease of sales of ETUARY in 2024, a $0.3 million decrease in share base compensation expense, and a $0.1 million decrease in miscellaneous expenses.
The capitalized amounts are then expensed as the related goods are delivered or services are performed, or until it is no longer expected that the goods or services will be delivered. 129 Research and development costs consist primarily of costs related to the pre-clinical and clinical development of our product candidates, which include payroll and other personnel-related expenses, laboratory supplies and reagents, contract research and development services for pre-clinical research and clinical trials, materials, and consulting costs, as well as allocations of facilities, depreciation and other overhead costs.
Research and development costs consist primarily of costs related to the pre-clinical and clinical development of our product candidates, which include payroll and other personnel-related expenses, laboratory supplies and reagents, contract research and development services for pre-clinical research and clinical trials, materials, and consulting costs, as well as allocations of facilities, depreciation and other overhead costs. 137 We manage our research and development expenses by identifying the research and development activities we expect to be performed during a given period and then prioritizing efforts based on anticipated probability of successful technical development and regulatory approval, market potential, available human and capital resources, scientific data and other considerations.
The Preferred Stock Warrants are exercisable at an exercise price of $4,915.00 per share of Convertible Preferred Stock and expire on October 30, 2033. Each share of Convertible Preferred Stock is convertible into approximately 666.67 shares of the Gyre Common Stock, as adjusted for the Reverse Stock Split.
The Private Placement closed immediately after the closing of the Contributions. The Preferred Stock Warrants are exercisable at an exercise price of $4,915.00 per share of Convertible Preferred Stock and expire on October 30, 2033. Jiangsu Wangao Agreement In May 2024, Gyre Pharmaceuticals entered into an agreement with Jiangsu Wangao Pharmaceuticals Co., Ltd.
Cash provided by operating activities for the year ended December 31, 2022 was $10.7 million, reflecting our net income of $4.3 million and non-cash items of $14.2 million primarily related to stock-based compensation of $13.4 million, partially offset by net cash outflow of $7.8 million from the changes in net operating assets and liabilities.
Cash provided by operating activities for the year ended December 31, 2023 was $25.9 million, reflecting our net loss of $85.5 million, offset by non-cash items of $103.9 million primarily related to the acquired IPR&D of $83.1 million in connection with the GNI USA Contributions, $9.3 million related to the change in fair value of warrant liability, stock-based compensation of $7.3 million, divestiture losses of $2.7 million, and equity loss of unconsolidated affiliates of $1.3 million.
General and Administrative Expenses General and administrative expenses decreased by $2.7 million, or 15.6%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease was primarily driven by a $2.8 million decrease in stock-based compensation.
Selling and Marketing Expenses Selling and marketing expenses decreased by $3.6 million, or 6.0%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
This expense was reflected in our consolidated statements of operations and comprehensive (loss) income. The loss is presented net of loses incurred in connection with the sale of property and equipment. Other Income (Expense), Net Interest Income, Net Interest income consists primarily of interest earned on our long-term certificates of deposit.
Other Income (Expense), Net Interest Income, Net Interest income consists primarily of interest earned on our long-term certificates of deposit.
The registered office of Gyre Pharmaceuticals is located at 60 Shunkang Road, Shunyi District, Beijing, PRC. 127 The immediate holding company of Gyre Pharmaceuticals is BJContinent Pharmaceuticals Limited (“BJC”). The intermediate holding company of Gyre Pharmaceuticals is CPI. Immediately following the GNI USA Contributions, the immediate holding company of CPI is Gyre.
The majority shareholder of Gyre Pharmaceuticals is BJContinent Pharmaceuticals Limited (“BJC”). The immediate holding company of BJC is CPI. Immediately following the GNI USA Contributions, the immediate holding company of CPI is Gyre. The majority stockholder of Gyre is GNI USA, which is indirectly wholly owned by GNI Japan.
The loss is presented net of the direct costs incurred with the transaction. Loss on Disposal of Property and Equipment We recorded a loss on disposal of property and equipment of $0.6 million during the year ended December 31, 2023. The loss is presented net of loses incurred in connection with the sale of property and equipment.
Loss on Disposal of Property and Equipment We recorded a net loss on the sale and disposal of property and equipment of $66.0 thousand and $628.0 thousand for the years ended December 31, 2024 and 2023, respectively, in our consolidated statements of operations and comprehensive income (loss).
Research and Development Expenses and Accruals Research and development expenses are expensed as incurred when these expenditures relate to our research and development services and have no alternative future uses. Pre-clinical and clinical trial costs are a significant component of our research and development expenses.
The estimates for these rebates are reviewed regularly, and adjustments are made as necessary. Research and Development Expenses and Accruals Research and development costs are expensed as incurred when the expenditures relate to ongoing research activities without alternative future use.
Comparison of the Years Ended December 31, 2023 and 2022 Revenues Revenues for the years ended December 31, 2023 and 2022 were $113.5 million and $102.3 million, respectively.
Comparison of the Years Ended December 31, 2024 and 2023 Revenues Revenues for the years ended December 31, 2024 and 2023 were $105.8 million and $113.5 million, respectively. The $7.7 million decrease was primarily driven by a $7.1 million decrease in ETUARY's revenue and a $0.6 million decrease in generic drug revenue as a result of decreased sales volumes.
The decrease was primarily driven by a $1.8 million decrease in stock-based compensation, related to options being fully vested in 2022 and the modification of option terms in 2023, as well as by a $1.2 million decrease in pre-clinical research expenses.
The decrease was primarily from Gyre Pharmaceuticals, and was driven by a $0.3 million decrease in materials and utilities, a $1.3 million decrease in pre-clinical research expense due to several research and development projects advancing to the clinical trials stage or reaching the application phase in 2024, a $0.4 million decrease in staff cost due to reduced headcount, and a $0.5 million decrease in stock-based compensation related to options being fully vested in 2023, which did not occur in 2024.
The Preferred Stock Warrants issued are considered freestanding financial instruments and classified as a liability. Financial Operations Overview During the year ended December 31, 2023, we had a net loss of $85.5 million and a net loss attributable to common stockholders of $92.9 million.
As of December 31, 2024, our total investment into the partnership and the carrying value of the Company’s long-term investment in this affiliate was $1.7 million and $1.6 million, respectively. Financial Operations Overview During the year ended December 31, 2024, we had a net income of $17.9 million and a net income attributable to common stockholders of $12.1 million.
The latter is a result of several research and development projects advancing to the clinical trials stage or reaching the application phase in 2023. This overall decrease was partially offset by a $0.2 million increase in research and development payroll costs due to increased headcount.
This overall decrease was partially offset by a $0.7 million increase in research and development expense from Gyre Therapeutics due to increased consulting fees. General and Administrative Expenses General and administrative expenses increased by $1.4 million, or 9.9%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
We have a history of contracting with third parties that perform various pre-clinical and clinical trial activities on our behalf in the ongoing development of our product candidates. Expenses related to pre-clinical and clinical trials are accrued based on our estimates of the actual services performed by the third parties for the respective period.
A significant portion of our research and development expenses consists of pre-clinical and clinical trial costs, which involve contracts with third-party service providers such as contract research organizations. These costs are accrued based on management’s estimates of the services performed during the respective period.
Removed
The enrollment of 248 patients for the confirmatory Phase 3 trial has been completed, with last patient out expected in 2024 and clinical results expected by early 2025. In the U.S., we have completed a Phase 1 clinical trial of F351 in healthy volunteers. We are preparing an IND application and expect to submit it in late 2024.
Added
In May 2024, Gyre Pharmaceuticals executed a comprehensive agreement with Jiangsu Wangao Pharmaceuticals Co., Ltd. to acquire the commercial rights to nintedanib, a small-molecule drug for the treatment of IPF. With this acquisition, we acquired the other product approved for the treatment of IPF, which is currently approved globally for the treatment of IPF.
Removed
In connection with the Contributions, and immediately prior to the Effective Time of the Contributions, Catalyst amended its certificate of incorporation, increased the number of authorized shares of its common stock, par value $0.001 per share (the “Catalyst Common Stock”) from 100,000,000 shares to 400,000,000 shares, effected the Reverse Stock Split and changed its name to Gyre Therapeutics, Inc.
Added
Nintedanib is expected to provide patients with more choices and benefits, and further enhance Gyre Pharmaceuticals’ leading position in the pulmonary fibrosis market.
Removed
Shares of Catalyst Common Stock were previously listed on The Nasdaq Capital Market under the symbol “CBIO.” Catalyst filed a listing application for the combined company with the Nasdaq Stock Market Inc. (“Nasdaq”). On October 31, 2023, Gyre’s common stock commenced trading on the Nasdaq Capital Market under the symbol “GYRE”, on a post-reverse stock split adjusted basis.
Added
Gyre Pharmaceutical is planning to initiate commercialization of the nintedanib product in the PRC in 2025, which is to help offset declines in ETUARY sales as a result of the fluctuations in the Chinese economy significantly affecting demand for anti-fibrosis drugs and decreasing healthcare spending generally.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeOur inability or failure to do so could harm our business, financial condition, and results of operations. 139
Biggest changeOur inability or failure to do so could harm our business, financial condition, and results of operations. 148

Other GYRE 10-K year-over-year comparisons