Mabpharm Limited — Annual Report 2019

Mar 27, 2020

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

This announcement contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical fact are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, some of which are beyond the Company’s control, that may cause the actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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Mabpharm Limited 邁博葯業有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2181)

ANNUAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED DECEMBER 31, 2019

The board of directors (the “ Board ” or “ Directors ”) of Mabpharm Limited (the “ Company ”) is pleased to announce the audited consolidated financial results of the Company and its subsidiaries (collectively, the “ Group ”, “ we ”, “ our ” or “ us ”) for the year ended December 31, 2019 (“ Reporting Period ”), together with the comparative figures for the year ended December 31, 2018. Unless otherwise defined herein, capitalized terms used in this announcement shall have the same meanings as those defined in the prospectus of the Company dated May 20, 2019 (the “ Prospectus ”).

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FINANCIAL HIGHLIGHTS

	For the	year ended December 31,
	2019	2018	Change
	RMB’000	RMB’000	(%)
	(audited)	(audited)
Other income	17,999	24,059	(25.2)
Other expenses	(4,127)	(12,507)	(67.0)
Other gains and losses	15,962	(2,427)	(757.7)
Research and development expenses	(134,189)	(88,983)	50.8
Administrative expenses	(62,952)	(42,128)	49.4
Finance costs	(7,695)	(4,481)	71.7
Listing expenses	(27,527)	(26,126)	5.4
Loss before tax	(202,529)	(152,593)	32.7
Income tax credit	–	2,834	(100.0)
Loss and total comprehensive expense
for the year	(202,529)	(149,759)	35.2
Total comprehensive expense attributable to:
Owners of the Company	(202,529)	(124,883)	62.2
Non-controlling interests	–	(24,876)	(100.0)
	RMB	RMB
Loss per share
– Basic and diluted	(0.05)	(0.06)	(16.7)
	At December 31,	At December 31,
	2019	2018	Change
	RMB’000	RMB’000	(%)
	(audited)	(audited)
Non-current assets	441,338	212,469	107.7
Current assets	955,139	260,753	266.3
Current liabilities	270,334	156,450	72.8
Net current assets	684,805	104,303	556.6
Non-current liabilities	72,432	67,200	7.8
Net assets	1,053,711	249,572	322.2

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CORPORATE PROFILE

We are a leading biopharmaceutical company in China, focusing on the research, development and production of new drugs and biosimilar for cancers and autoimmune diseases. We strive to bring to market high quality and affordable innovative biologics through our efficient research and development (“ R&D ”) system and low-cost pharmaceutical production capability, and develop differentiated therapeutic products by fully utilizing our extensive R&D experience. Our pipeline of drug candidates currently consists of 11 monoclonal antibody drugs and one strong antibody drug, three of which are our core products:

• CMAB008 (infliximab) : completed clinical trial and is in the process of new drug marketing application. We have launched the “Phase I comparative study of randomized, double-blind, parallel-controlled, single-dose pharmacokinetics, safety and immunogenicity of CMAB008 and infliximab for injection in healthy male volunteers”, which is expected to be directly admitted to the markets for treating (i) rheumatoid arthritis, (ii) adult and pediatric patients with Crohn’s disease, (iii) patients with fistulizing Crohn’s disease, (iv) ankylosing spondylitis, (v) psoriasis and (vi) adult patients with ulcerative colitis;

• CMAB007 (omalizumab) : currently under phase III clinical trials;

• CMAB009 (cetuximab) : currently under phase III clinical trials (together, the “ Core Products ”).

Among our other drug candidates, CMAB809 (trastuzumab) completed phase I clinical trial and CMAB819 (nivolumab) will soon be put into clinical trials. The latest research results show that CMAB816 developed by us has a sound prospect in the treatment and prevention of tumors, especially lung cancer, as such we will give priority to the development of CMAB816. In addition, we also successfully developed a new “strong antibody” drug CMAB017 for treating cancer. It is expected that CMAB017 will have better safety and efficacy in treating tumors than other similar antibody drugs.

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We have strong in-house capabilities in pharmaceutical research, pre-clinical and clinical development, and manufacturing, and are building our sales and marketing team to prepare for the commercialization of our product candidates. We focus on the R&D of monoclonal antibodies. Our core R&D team members have more than 16 years of experience in this area, and have led three major projects under the “863” Program, among other national-level scientific research projects. In addition, one of our core R&D team members is also a member of the 11th Session of the Chinese Pharmacopoeia Commission. Our production site in Taizhou, currently equipped with a 3×1,500L monoclonal antibody bioreactor system, is one of the largest antibody drug production facilities in China in terms of production capacity.

We believe that we are well positioned to seize China’s substantial market opportunities, in particular those resulting from China’s recent healthcare regulatory reforms, including new medical insurance measures. The primary focus of our R&D – monoclonal antibody drugs targeting cancers and autoimmune diseases – has substantial untapped clinical demand in China.

With the current pandemic caused by 2019 Novel Coronavirus (“ COVID-19 ”), we have newly developed a recombinant bispecific fusion protein, CMAB020, which is expected to be used for prevention and treatment of SARS-CoV/-2 (SARS-CoV and SARS-CoV-2) infections and SARS/COVID-19 diseases (pneumonia caused by SARS-CoV/-2). We have submitted a patent application for the invention of CMAB020 to China National Intellectual Property Administration on March 23, 2020 (Application No.: 202010208906.8/PCT No.: PCT/CN2020/080859). The drug consists of two functional arms, one of which has an antibody that targets the spike protein of coronavirus and the other consists of a protein which can preserve enzyme activity to reduce vasoconstriction and increase blood flow to the infected lung tissue. It is expected that the drug can effectively treat pneumonia caused by SARS-CoV and SARS-CoV-2, and reduce lung inflammation and cytokine storms. At present, the Company has completed the lab-scale preparation and in vitro function evaluation of CMAB020, and will commence the in vivo experiment for further technical evaluation.

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Competitive marketed drugs	Xolair®	Erbitux®	Remicade®, Humira®, Enbrel®, Simponi®, Yisaipu®, Anbainuo®	Opdivo®, Keytruda®, Tyvyt®, JS001
Commercial rights	PRC and overseas (excluding Japan, North America and Europe)	PRC and overseas (excluding Japan, North America and Europe)	PRC and overseas (excluding Japan, North America and Europe)	Global
Anticipated completion of regulatory review	Quarter 2, 2021	Quarter 3, 2022	Quarter 4, 2020	Quarter 2, 2026
Expected time to reach the next regulatory milestone	Pending new drug application submission (Quarter 3, 2020)	Pending new drug application submission (Quarter 1, 2022)	New drug application submitted in Quarter 4, 2019	Phase III (Quarter 3, 2021)
Phase III
Phase II or Phase II/III
Phase I
Pre- clinical
Classification	New Drug/ Core Product	New Drug/ Core Product	New Drug/ Core Product	New Drug
Drug candidate code	CMAB007 (INN name: Omalizumab)	CMAB009 (INN name: Cetuximab)	CMAB008 (INN name: Infliximab)	CMAB819 (INN name: Nivolumab)
Indication	Asthma	Colorectal Cancer	Rheumatoid Arthritis	Non-small cell lung cancer, hepatocellular carcinoma and squamous cell carcinoma of the head and neck
Target	IgE	EGFR	TNFα	PD1
Field	Respiratory Disease	Cancer	Autoimmune Disease	Cancer

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Competitive marketed drugs	Herceptin®	Perjeta®	Synagis®	ILaris®	Vectibix®	Cosenty®	Nucala®	New drug candidate developed after December 31, 2019		Note: 1. The development of CMAB015 was suspended in March 2020. Cautionary Statement required by Rule 18A.08(3) of the Listing Rules: We may not be able to ultimately develop and market our drug candidates (including Core Products) successfully.
Commercial rights	Global	Global	Global	Global	Global	Global	Global		PRC and overseas (excluding North America and Europe)
Anticipated completion of regulatory review	Quarter 2, 2023	Quarter 2, 2024	Quarter 4, 2024	Quarter 3, 2024	Quarter 4, 2026	Quarter 4, 2024	Quarter 4, 2025		Quarter 1, 2022
Expected time to reach the next regulatory milestone	Phase III (Quarter 2, 2020)	Phase III (Quarter 4, 2021)	Phase III (Quarter 1, 2022)	Phase III (Quarter 1, 2022)	Phase III (Quarter 4, 2023)	Phase III (Quarter 2, 2022)	Phase III (Quarter 4, 2021)		Phase III (Quarter 1, 2021)
Phase III
Phase II or Phase II/III
Phase I
Pre- clinical
Classification	Biosimilar	Biosimilar	Biosimilar	Biosimilar	Innovative drug	Biosimilar	Biosimilar		Innovative drug
Drug candidate code	CMAB809 (INN name: Trastuzumab)	CMAB810 (INN name: Pertuzumab)	CMAB813 (INN name: Palivizumab)	CMAB816 (INN name: canakinumab)	CMAB017	CMAB015 (INN name: Secukinumab)1	CMAB018 (INN name: Mepolizumab)		CMAB020
Indication	Breast Cancer/ Gastric Cancer	Breast Cancer	Prevention of severe lower respiratory tract disease caused by RSV	Periodic Fever Syndromes/ Systemic Juvenile Idiopathic Arthritis/ Lung cancer	KRAS wild-type colorectal cancer	Plaque psoriasis, psoriatic arthritis and ankylosing spondylitis	Asthma and eosinophilic granulomatous polyangitis		Pneumonia infected by novel coronavirus
Target	HER2	HER2	RSV	IL-1β	EGFR	IL-17A	IL-5		SARS-CoV SARS-CoV-2
Field	Cancer	Cancer	Respiratory Disease	Cancer/ Autoimmune Disease	Cancer	Autoimmune Disease	Allergy, Inflammatory Disease		Infection

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Core Product Candidates

CMAB007 (omalizumab)

CMAB007 (omalizumab), a recombinant humanized anti-IgE monoclonal antibody, is our new drug candidate for treatment of asthma patients who remain inadequately controlled despite med/high dose of ICS plus LABA. As of December 31, 2019, CMAB007 was the only mAb asthma therapy developed in China by a local Chinese company that had reached phase III clinical trial, and we believe that, once approved by the National Medical Products Administration (the “ NMPA ”), it will be the first mAb asthma therapy developed by a local Chinese company marketed in China. CMAB007 combines with free IgE to form an anti-IgE complex that inhibits the high affinity IgE receptor and thereby prevents the allergic response. The safety and efficacy of CMAB007 have been confirmed by the results of two completed clinical trials of a total of 665 subjects, which were the largest clinical trials of mAb treating asthma in China. Based on our clinical trial results, CMAB007 can improve asthma patients’ conditions with lower-dose inhaled corticosteroids and reduce the incidence of acute asthma attacks.

During the Reporting Period, CMAB007 was under phase III clinical trials for allergic asthma. As of December 31, 2019, we had completed case recruitment for the clinic trials. Due to the current outbreak of pneumonia caused by SARS-CoV-2, being a respiratory disease, the time which the respiratory researchers can spend on this project has been greatly reduced due to illness, external transfer, outpatient closure and even quarantine. Therefore, we expect the filing of the drug marketing application with the NMPA will be delayed to the third quarter of 2020 upon completion of clinical observation and data analysis of all cases. We are also preparing for clinical trials of other indications of CMAB007. Currently, we expect that CMAB007 may be approved by the NMPA for marketing in the second quarter of 2021.

CMAB009 (cetuximab)

CMAB009 (cetuximab), a recombinant anti-EGFR chimeric monoclonal antibody, is our new drug candidate based on cetuximab for first-line treatment of metastatic colorectal cancer (“ mCRC ”) in combination with FOLFIRI. CMAB009 is the first NMPA approved chimeric anti-EGFR antibody for clinical trial developed in China by a local Chinese company. CMAB009 uses the Chinese hamster ovary cell (“ CHO ”) expression system, which is different from the mouse myeloma cell SP2/0 expression system used in marketed cetuximab product. The safety and efficacy of CMAB009 have been confirmed from the results of two completed clinical trials of a total of 530 subjects, which were the largest clinical trials of anti-EGFR mAb developed in China by a local Chinese company. Based on our clinical trial results compared to published clinical trial results for the currently marketed cetuximab products, CMAB009 significantly reduces immunogenicity and decreases the incidence of adverse reactions, such as severe hypersensitivity. We believe that CMAB009 is safer than, and as effective as, the currently marketed cetuximab drugs for treatment of mCRC.

During the Reporting Period, CMAB009 was under phase III clinical trials for colorectal cancer. Due to the current outbreak of COVID-19, there will be a delay in our research and development on CMAB009. We expect that the filing of the drug marketing application with the NMPA will be delayed to the first quarter of 2022 upon completion of clinical observation and data analysis of all cases. We are also preparing for clinical trials of other indications of CMAB009. Currently, we expect that CMAB009 may be approved by the NMPA for marketing in the third quarter of 2022.

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CMAB008 (infliximab)

CMAB008 (infliximab), a recombinant anti-TNF-alpha chimeric monoclonal antibody, is our new drug candidate based on infliximab for moderate to severe active rheumatoid arthritis and is potentially one of the best in class of chimeric anti-TNF-alpha antibody in China. CMAB008 was the first NMPA approved chimeric anti-TNF-alpha antibody for clinical trial developed in China by a local Chinese company. CMAB008 uses the CHO expression system which reduces immunogenicity, according to our clinical results compared to published results of the currently marketed infliximab products. The safety and efficacy of CMAB008 have been confirmed by the results of three completed clinical trials of a total of 588 subjects, which were the largest clinical trials of infliximab in China. Based on our clinical results compared to published clinical results of currently marketed infliximab products, we believe that CMAB008 is safer than, and as effective as, the marketed infliximab products for treatment of moderate to severe active rheumatoid arthritis as of December 31, 2019. The completed phase III head-to-head tests also show that CMAB008 and marketed infliximab products have similar safety and effectiveness.

During the Reporting Period, CMAB008 completed the clinical trial for the treatment of rheumatoid arthritis and an application was made to the NMPA on December 30, 2019 for marketing the drug. Due to the current outbreak of COVID-19, we expect there to be a delay in obtaining approval from the NMPA. Currently, we expect that CMAB008 may be approved by the NMPA for marketing in the fourth quarter of 2020. We are conducting a head-to-head study versus the currently marketed infliximab product to confirm similar pharmacokinetic profile and immunogenicity of CMAB008 (“phase I comparative study CTR20200314 of CMAB008 and Infliximab for injection in healthy male volunteers featuring randomized, double-blind, parallel control, single-dose pharmacokinetics, safety and immunogenicity”). We expect that upon completion of the trials, CMAB008 will be granted admission to target six indications, (including (i) rheumatoid arthritis, (ii) adult and pediatric patients with Crohn’s disease, (iii) patients with fistulizing Crohn’s disease, (iv) ankylosing spondylitis, (v) psoriasis and (vi) adult patients with ulcerative colitis) and be included in the medical insurance drug list.

Other Product Candidates

CMAB819 (nivolumab) is our new drug candidate pending phase I clinical trial. CMAB819 was approved by the NMPA for clinical trial in September 2017. As of December 31, 2019, we have completed the preparation of clinical samples and are preparing the initiation of phase I clinical trial. We expect that CMAB819 may be approved by the NMPA for marketing in the second quarter of 2026. CMAB819 is indicated for the treatment of metastatic non-small cell lung cancer, hepatocellular carcinoma and head and neck squamous cell carcinomas (HNSCC).

CMAB809 (trastuzumab) is our biosimilar drug candidate which has completed phase I clinical trial. CMAB809 was approved by the NMPA for clinical trial in April 2017. As of December 31, 2019, we have completed the phase I clinical trial for CMAB809. As the phase I results confirmed that its pharmacokinetic characteristics are similar to those of the reference drug (Herceptin), we are launching the phase III clinical trial directly without the need to go through phase II clinical trial. We expect that CMAB809 may be approved by the NMPA for marketing in the second quarter of 2023. CMAB809 is indicated for the (adjuvant) treatment of HER2 overexpressing breast cancer and metastatic gastric cancer.

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CMAB815 (adalimumab) was our IND-filing-stage biosimilar drug candidate. We suspended the development of CMAB815 in March 2020 in view of (i) the satisfactory results achieved in phase III clinical trials of CMAB008 which shares the same market with CMAB815, (ii) the substantial price reduction of the originator drugs of CMAB815 and (iii) the marketing of several new generic drugs with similar indications in China. CMAB815 was indicated for the treatment of rheumatoid arthritis.

CMAB810 (pertuzumab) is our pre-clinical trial biosimilar drug candidate. The related screening processes, the establishment of a cell bank, and a lab-scale process for CMAB810 have been completed. We are carrying out preclinical animal experiments for CMAB810 and expect to apply for clinical trials in the third quarter of 2020. We expect that CMAB810 may be approved by the NMPA for marketing in the second quarter of 2024. CMAB810 is indicated for the treatment of breast cancer.

CMAB813 (palivizumab) is our pre-clinical trial biosimilar drug candidate. The related screening processes and the establishment of a cell bank have been completed. The pilot processes are being developed. We expect to apply for clinical trails in the first quarter of 2022 and CMAB813 may be approved by the NMPA for marketing in the fourth quarter of 2024. CMAB813 is indicated for the prevention of severe lower respiratory tract disease caused by RSV in pediatric patients.

CMAB816 (canakinumab) is our pre-clinical trial biosimilar drug candidate. The related screening processes and the establishment of cell bank have been completed. The pilot process has been developed. It is expected to apply for clinical trials in the third quarter of 2021. We expect that CMAB816 may be approved by the NMPA for marketing in the third quarter of 2024. CMAB816 is indicated for the treatment of periodic fever syndrome and systemic juvenile idiopathic arthritis. According to the study results of “Effect of interleukin-1β inhibition with canakinumab on incident lung cancer in patients with atherosclerosis: exploratory results from a randomized, double-blind, placebo-controlled trial (CANTOS, NCT01327846)” published in The Lancet in August 2017, the total cancer mortality was significantly lower in the (including all dosages) canakinumab group than those in the placebo group. The 300 mg dose was statistically significant in its effect on total cancer mortality. Furthermore, both the 150 mg and 300 mg groups had significantly less frequent incidents of lung cancer when compared to the placebo group. Additionally, lung cancer mortality was significantly less frequent in the 300 mg group and the canakinumab group compared to the placebo group. Therefore, it is suggested that CMAB816 therapy could be beneficial in reducing incident lung cancer and lung cancer-associated mortality by targeting the interleukin-1β pathway.

CMAB017 is an innovative candidate in preclinical research stage and an innovative strong antibody drug. At present, the screening of high expression engineering cells and the establishment of engineering cell bank have been completed. The research on production process and formulation selection has been concluded. Results of the completed experimental study on tissue distribution of tumor-bearing mice show that CMAB017 concentrates locally in tumor 24-72 hours after administration. We expect to apply for clinical trial in the third quarter of 2021. We expect that CMAB017 may be approved by the NMPA for marketing in the fourth quarter of 2026. Regarding CMAB017, the design of blocking peptide is expected to significantly reduce adverse reactions of skin, gastrointestinal mucosa, etc. The selection of IgG1 constant region can enhance the effect mediated by Fc fragment of antibody and thus improve the curative effect. Based on the advantages of safety and curative effect, the cost of case medication is far lower than CMAB009, and it is expected that more new strong antibody drugs will be developed leveraging the research and development platform of CMAB017. CMAB017 is indicated for the treatment of KRAS wildtype colorectal cancer.

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CMAB015 is a biosimilar candidate for secukinumab, which is under preclinical study. At present, the screening of high expression engineering cells and the establishment of engineering cell bank have been completed. The research on production process is in progress and it is expected that we will apply for clinical trial in the second quarter of 2022. We expect that CMAB015 may be approved by the NMPA for marketing in the fourth quarter of 2024. CMAB015 targets interleukin 17A (IL-17A) for treating plaque psoriasis, psoriatic arthritis and ankylosing spondylitis.

CMAB018 is a biosimilar candidate for mepolizumab, which is under preclinical study. At present, the screening of high expression engineering cells and the establishment of engineering cell bank have been completed, the research on production process is in progress and it is expected that we will apply for clinical trial in the fourth quarter of 2021. We expect that CMAB018 may be approved by the NMPA for marketing in the fourth quarter of 2025. CMAB018 targets interleukin 5 (IL-5) for treating severe asthma and eosinophilic granulomatous polyangiitis.

New Product Candidate developed after the Reporting Period

With the current outbreak of COVID-19, we started to develop a recombinant bispecific fusion protein, CMAB020, which is expected to be used for prevention and treatment of SARS-CoV/-2 (SARS-CoV and SARS-CoV-2) infections and SARS/COVID-19 diseases (pneumonia caused by SARS-CoV/-2) in the first quarter of 2020.

CMAB020 is designed with two functional arms: (1) one of the arms is a fully human monoclonal antibody (“ Ab ”) targeting the spike protein of SARS-CoV, SARS CoV-2 and some other SARS-like CoV with high affinity; and (2) the other arm is a truncated angiotensin converting enzyme 2 (“ ACE2 ”) protein. The binding epitopes of the Ab and ACE2 to the spike protein are different. The truncated ACE2 preserves the enzyme activity in converting angiotensin II to angiotensin 1-7, resulting in reduced vasoconstriction and increased blood flow to the infected lung tissue. It could potentially confer organ protection and lessen severe acute respiratory distress syndrome caused by COVID-19. In addition, CMAB020 could potentially antagonize the binding of receptor binding domain with CD147 and mitigate lung inflammation and cytokine storm.

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While CMAB020’s primary functionality is to interfere with the viral infection cycle, our current research and development result suggests that the fusion protein with an active ACE2 enzyme may have therapeutic potential for late-stage COVID-19 infections. Such dual functionality of the fusion protein may have a synergistic effect and CMAB020 could help generate passive immunity and shield people, in particular healthcare workers, elderlies and patients with compromised immune systems, from coronavirus such as SARS-CoV/-2. Our current research and development result also shows that the bispecific fusion protein could bind with spike protein with much tighter affinity as compared to that of the individual Ab or ACE2 protein.

We have submitted a patent application for the invention of CMAB020 to China National Intellectual Property Administration on March 23, 2020 (Application No.: 202010208906.8/PCT No.: PCT/ CN2020/080859). At present, the Company has completed the lab-scale preparation and in vitro function evaluation of CMAB020, and will commence the in vivo experiment for further technical evaluation.

Research and development of new drug candidates

We have launched a series of follow-up R&D of new antibody drugs for the treatment of autoimmune diseases and/or tumor diseases. We expect to successfully complete the screening of several new antibody drugs, cell banking and even start pre-clinical animal experiments by the end of 2020, thus further expand our product line and provide sufficient drug candidate pipeline expansion for our long-term development.

Research and development system

We have developed efficient R&D capabilities, broad and advanced preparation technologies, and low-cost drug production capabilities that will allow us to offer high quality and affordable innovative biopharmaceutical products to patients in China and other emerging markets. Within our product pipeline, we currently have three Core Products, one of which has completed clinical trial and applied for marketing and the other two are under phase III clinical development. Two other drug products have been approved for clinical trials, one of which has completed phase I clinical trial. We also own a number of patents for our core technologies, including antibody engineering and humanization technologies, efficient expression vector construction technologies, efficient clone screening technologies, as well as a proprietary R&D animal model. Our R&D activities are carried out by three core teams: basic R&D, clinical trials, and industrialized good manufacturing practices (“ GMP ”). The operations, design, and construction needs of these three core teams are supported by an assisting engineering team. Our R&D teams consist of professionals who have extensive industry experience in biologics R&D and have gained valuable work experience at global pharmaceutical companies. Employees in our R&D teams possess strong academic background from leading institutions in immunology, molecular biology, oncology or monoclonal antibody development.

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DRUG CANDIDATES COMMERCIALIZATION AND PRODUCTION FACILITIES CONSTRUCTION

Existing production facilities

Our production site in Taizhou has two buildings of 15,000 square meters each and houses our mAb production facilities. The first building is equipped with production facilities currently in operation, including (i) a 3×1,500L antibody bioreactor system and related purification lines, (ii) an injection vial filling line capable of manufacturing four million units per annum and (iii) a pre-filled syringes production line capable of manufacturing one million units per annum. We have not commenced commercial manufacturing at our production facilities.

Construction of new production facilities

We plan to construct new production facilities in the second building of our Taizhou production site and on the parcel of industrial land of approximately 100,746 square meters in Taizhou Hi-tech Zone. Our expansion plan includes the construction of (i) three cGMP-certified workshops, each with a 3×1,500L stainless steel bioreactor system, and corresponding purification lines, which has kicked off construction and is expected to be put into operation in the second half of 2020; (ii) two large-scale monoclonal antibody drug substance production lines with production capacities of 2×18,000L and 3×7,500L, respectively, and (iii) two drug product filling lines which have obtained construction approval and kicked off construction.

Marketing and distribution

We are in the process of building our sales and marketing strategy. We expect our marketing strategies to focus on precision marketing through academic promotion and center around increasing knowledge and awareness of the clinical benefits of our pharmaceuticals among medical professionals. We intend to focus on hospitals with potential clinical demand for our products as our primary customer base. We intend to continue to communicate frequently with major hospitals in China to understand the hospitals and their doctors’ academic views on antibody drugs and patient demands. We also intend to continue to meet industry experts regularly to understand industry trends. We will continue to participate in academic conferences, seminars and symposia, which include large-scale national and provincial conferences organized by the Chinese Medical Association or its local chapters, as well as smaller events tailored to specific cities and hospital departments to promote our brand awareness.

Half of our current core sales team members have over a decade of experience in sales and management of antibody drugs, including the first antibody drug produced by a local Chinese company marketed in China. Our sales team has maintained direct relationships with hospitals through its participation in and support of our clinical trials. In anticipation of the launch of our products, we have been expanding our sales and marketing force. In line with our sales and marketing strategy, we will focus on the recruitment of sales and marketing personnel who has notable academic profile in medicine and pharmacy, and who has over three years’ clinical experience in therapeutic areas of cancers and autoimmune diseases. We expect to implement certain procedures to ensure that our academic promotion and general marketing efforts are in compliance with applicable laws and regulations.

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We expect to sell our products to (i) distributors that sell our products to hospitals and (ii) direct-to-patient pharmacies and others. We plan to build our network of distributors when our products are approved by the NMPA for commercialization. We anticipate that our distribution model will be consistent with customary industry practice and serves to ensure efficient coverage of our sales network while controlling our cost of distribution and account receivables. We intend to select our distributors based on their qualifications, reputation, market coverage and sales experience. To distribute our products in the future, a distributor must maintain its business license and other requisite licenses and permits. A distributor must also maintain extensive hospital coverage in the designated region. A distributor must be capable of delivering our products to covered hospitals in a safe and timely manner. We plan to actively monitor the inventory levels of our distributors to increase the efficiency of our distribution network. To date, we have not entered into any distribution agreement with distributors.

Quality assurance

We believe that an effective quality management system for our raw materials, equipment and finished products is critical to ensure the quality of our services and maintain our reputation and success. To ensure that our products and services consistently meet high industry standards and requirements, we have also established a company-level quality assurance department to inspect the quality of our products and services. It is also responsible for the approval, organization and coordination of quality control and quality assurance procedures within each subsidiary. Facilities and equipment are subject to inspection measures such as united registrar systems, factory acceptance testing, site acceptance testing, installation qualification, operator qualification, performance qualification, and regular maintenance throughout their entire life cycles. Our manufacturing business lines are inspected in accordance with the PRC national laboratory quality control standard and the GMP management requirements; our research and development business lines are also inspected in accordance with the GMP management requirements.

FUTURE AND OUTLOOK

Continue to advance the clinical research and commercialization of our drug candidates

Over the short-term, we intend to focus on completing clinical trials and the eventual commercialization of our current pipeline of drug candidates, particularly our Core Products, CMAB007, CMAB009 and CMAB008. To bring our Core Products to market, we aim to reinforce our R&D teams, particularly the clinical medicine team, through the provision of regular professional training and pushing ahead with the clinical trials for CMAB007, CMAB009 and CMAB008. We are also in the process of establishing a sales team consisting of staff with strong academic promotion experience and capabilities. Our goal is to generate stable revenue and profits in the future by creating our own sales team in China and strengthening our commercialization capabilities by further building our sales team.

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Continue to maintain investments in advanced technologies and product development

We believe R&D is the key element to support our future growth and our ability to maintain our competitiveness in a global biopharmaceutical market. We plan to upgrade the development of our integrated technological platforms from molecular design to commercialized production, and focus on the R&D of biologics with huge clinical demand and the potential for sustained and rapid growth in China. In order to capture new opportunities in the biopharmaceutical market, we plan to continue increasing our investment into innovative technologies for the development of drugs with improved curative effects and less toxic side effects in order to maintain our industry leading position. We also expect to invest in talent to expand and enhance our R&D team.

Continue to attract and nurture high quality talent to support our rapid growth

Recruiting and retaining high quality scientific and technological talent as well as other leaders in R&D technology will be key to our success. We plan to leverage our close cooperation with elite universities in China and internationally to recruit and develop outstanding R&D personnel. We also plan to provide systematic and sophisticated training and development programs to our research teams in order to enhance and optimize their scientific and technical abilities to benefit our Company. Part of this strategy involves the creation of an incentive scheme to retain and motivate high-performing team members.

Establish global brand awareness and foster deeper and more extensive cooperative relationship with domestic and overseas renowned pharmaceutical companies

To build our brand internationally and to support our sustainable growth, we plan to in-license products from global pharmaceutical companies for sales in China and/or to transfer or out-license overseas product rights of certain of our drug candidates to other pharmaceutical companies. We may also consider developing collaborative partnerships with global pharmaceutical companies in order to enter and expand our market share in markets outside of China and to further broaden the geographic coverage of our business. As part of this strategy, we may take advantage of strategic opportunities for merger and acquisition internationally to expand our pipeline of products for R&D development and sales in overseas markets.

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FINANCIAL INFORMATION

The financial information set out below in this announcement represents an extract from the audited consolidated financial information for the year ended December 31, 2019 with comparative figures for the corresponding period in the previous year, which is audited and has been reviewed by the audit committee of the Company (“ Audit Committee ”).

FINANCIAL REVIEW

The following table summarizes our results of operations for the year ended December 31, 2019 and 2018:

	For the year ended	December 31,
	2019	2018	Change	Change
	RMB’000	RMB’000	RMB’000	(%)
Other income	17,999	24,059	(6,060)	(25.2)
Other expenses	(4,127)	(12,507)	8,380	(67.0)
Other gains and losses	15,962	(2,427)	18,389	(757.7)
Research and development
expenses	(134,189)	(88,983)	(45,206)	50.8
Administrative expenses	(62,952)	(42,128)	(20,824)	49.4
Finance costs	(7,695)	(4,481)	(3,214)	71.7
Listing expenses	(27,527)	(26,126)	(1,401)	5.4
Loss before tax	(202,529)	(152,593)	(49,936)	32.7
Income tax credit	–	2,834	(2,834)	(100.0)
Loss and total comprehensive
expense for the year	(202,529)	(149,759)	(52,770)	35.2
Total comprehensive expense
attributable to:
Owners of the Company	(202,529)	(124,883)	(77,646)	62.2
Non-controlling interests	–	(24,876)	24,876	(100.0)
	RMB	RMB
Loss per share
– Basic and diluted	(0.05)	(0.06)	0.01	(16.7)

OTHER INCOME

Other income of the Group decreased by 25.2% from approximately RMB24.1 million for the year ended December 31, 2018 to approximately RMB18.0 million for the year ended December 31, 2019, which was primarily due to the absence of income from provision of preparation process services during the Reporting Period as the Company was committed to the R&D of self-owned products and ceased to provide preparation process services to other companies. During the Reporting Period, the Group recorded an amount for sales of raw materials to an independent third party, which was one-off in nature.

– 15 –

Set out below are the components of other income for the periods indicated:

Bank interest income Government grants and subsidies related to income Income from preparation process service – Related parties – Third party Income from sales of raw materials	For the year ended December 31, 2019 2018 RMB’000 RMB’000 3,925 132 9,013 9,694 – 13,968 – 265 5,061 – 17,999 24,059	For the year ended December 31, 2019 2018 RMB’000 RMB’000 3,925 132 9,013 9,694 – 13,968 – 265 5,061 – 17,999 24,059
		24,059

OTHER EXPENSES

Other expenses of the Group decreased by 67.0% from approximately RMB12.5 million for the year ended December 31, 2018 to approximately RMB4.1 million for the year ended December 31, 2019, which was primarily due to the Group ceased to provide preparation process services to other companies during the Reporting Period and therefore no corresponding cost was incurred.

Other expenses of the Group for the year ended December 31, 2019 primarily represent cost of raw materials sold to an independent third party.

OTHER GAINS AND LOSSES

Other gains and losses of the Group increased by 757.7% from approximately RMB2.4 million losses for the year ended December 31, 2018 to approximately RMB16.0 million gains for the year ended December 31, 2019, which was primarily due to foreign exchange gains generated from the continuous appreciation of US dollar and Hong Kong dollar denominated deposits held by the Group against Renminbi.

Other gains and losses of the Group primarily represent foreign exchange gains and losses.

RESEARCH AND DEVELOPMENT EXPENSES

Research and development expenses of pipelines of the Group increased by 50.8% from approximately RMB89.0 million for the year ended December 31, 2018 to approximately RMB134.2 million for the year ended December 31, 2019, which was primarily due to the increase in contracting costs, staff cost and depreciation of equipment with the progress of clinical trials.

The Group’s research and development expenses mainly include contracting costs, raw materials and consumables, staff costs and depreciation and amortization.

– 16 –

Set out below are the components of research and development expenses for the periods indicated:

Contracting costs Raw materials and consumables Staff Cost Depreciation and amortization Others Total	For the year ended December 31, 2019 2018 RMB’000 RMB’000 55,361 32,897 25,092 32,959 34,241 14,805 7,824 2,907 11,671 5,415 134,189 88,983	For the year ended December 31, 2019 2018 RMB’000 RMB’000 55,361 32,897 25,092 32,959 34,241 14,805 7,824 2,907 11,671 5,415 134,189 88,983
		88,983

ADMINISTRATIVE EXPENSES

Administrative expenses of the Group increased by 49.4% from approximately RMB42.1 million for the year ended December 31, 2018 to approximately RMB63.0 million for the year ended December 31, 2019, which was primarily due to the increase in staff salary and benefits as well as depreciation and amortization as a result of the continuous expansion of the Group’s business and the initial application of International Financial Reporting Standards (“ IFRS ”) 16.

Administrative expenses of the Group primarily comprise of staff salary and benefit costs of our non-R&D personnel, utilities, rental and general office expenses, depreciation and agency and consulting fees.

Set out below are the components of administrative expenses for the periods indicated:

	For the year ended	December 31,
	2019	2018
	RMB’000	RMB’000
Staff Cost	34,418	22,878
Building rental fees	22	2,944
Depreciation	14,373	8,067
Others	14,139	8,239
Total	62,952	42,128

FINANCE COSTS

Finance costs of the Group increased by 71.7% from approximately RMB4.5 million for the year ended December 31, 2018 to approximately RMB7.7 million for the year ended December 31, 2019, which was primarily due to a higher interest rate on bank borrowings when compared it with the interest rate of related party loans and the initial application of IFRS 16.

– 17 –

The Group’s finance costs mainly include interests on related party loans, bank borrowings and lease liabilities.

A portion of subsidies included in other income are discount on loans offered by the government. Taking into account such loan discounts, the effective interest rate on our bank borrowings is relatively low.

LISTING EXPENSES

Listing expenses of the Group increased by 5.4% from approximately RMB26.1 million for the year ended December 31, 2018 to approximately RMB27.5 million for the year ended December 31, 2019 which is in line with the progress of Listing and it is expected that no such expenses will be incurred in the future.

LIQUIDITY AND CAPITAL RESOURCES

Our bank balances and cash increased by approximately RMB390.5 million from approximately RMB198.2 million at December 31, 2018 to approximately RMB588.7 million at December 31, 2019, which was primarily due to the listing of our shares on the Main Board of The Stock Exchange of Hong Kong Limited (“ The Stock Exchange ”) and the net proceeds received by the Company from the Global Offering.

Current pledged bank deposits increased by RMB129.4 million from approximately RMB0.5 million as at December 31, 2018 to RMB129.9 million as at December 31, 2019, which was primarily attributable to bank deposits pledged by the Company in order to secure bank borrowings for Taizhou Mabtech Pharmaceutical Limited, a subsidiary of the Company.

Time deposits increased by RMB179.2 million from nil as at December 31, 2018 to RMB179.2 million as at December 31, 2019, which was primarily attributable to time deposits placed by the Company to improve capital yields.

Set out below is an analysis of the liquidity and capital resources at the dates indicated:

	At December 31,
	2019	2018	Change
	RMB’000	RMB’000	(%)
Prepayments and other receivables	21,904	20,826	5.2
Amounts due from related parties	–	668	(100.0)
Inventories	22,224	27,551	(19.3)
Contract costs	13,240	12,991	1.9
Pledged bank deposits	129,891	522	24,783.3
Time deposit	179,160	–	–
Bank balances and cash	588,720	198,195	197.0
Total	955,139	260,753	266.3

– 18 –

INDEBTEDNESS

Borrowings

As of December 31, 2019, we had total borrowings of approximately RMB63.2 million (inclusive of interest), non-trade amount due to a related party of approximately RMB2.4 million and lease liabilities of approximately RMB42.4 million. As of the same date, none of our existing indebtedness included any material covenants or covenants that could potentially limit our ability to incur new indebtedness.

Set out below is a breakdown of our outstanding borrowings, non-trade amount due to a related party and lease liabilities at the dates indicated:

	At December 31,
	2019	2018
	RMB’000	RMB’000
Unsecured and unguaranteed loans from Biomabs	–	40,000
Unsecured and unguaranteed loan from Ms. Guo Xiaoxin	–	65,000
Unsecured and unguaranteed amount due to Biomabs	2,431	13,051
Lease liabilities	42,418	–
Secured borrowings from the bank	63,205	–

As at December 31, 2019, we have repaid all principal and corresponding interests to Shanghai Biomabs Pharmaceuticals Co., Ltd. ( 上海百邁博製藥有限公司 ) (“ Biomabs ”) and Ms. Guo Xiaoxin, of which RMB89.6 million was repaid with the proceeds from our drawdowns between April 2019 and June 2019 of an aggregate amount of RMB95.1 million under a RMB100.0 million bank facility. The outstanding balance of the loans from Ms. Guo Xiaoxin was repaid by our own cash.

Upon application of IFRS 16 since January 1, 2019, we recognized right-of-use assets and corresponding lease liabilities in respect of all leases, except for short-term leases. As at December 31, 2019, we, as a lessee, had outstanding lease liabilities for the remaining terms of relevant lease agreements (excluding our contingent rental agreements) in an aggregate amount of approximately RMB42.4 million.

CONTINGENT LIABILITIES, CHARGE OF ASSETS AND GUARANTEES

As of December 31, 2019, the Group has outstanding bank borrowings of approximately RMB63,205,000. Such bank borrowings are secured by the land use right amounting to RMB37,402,000 and pledged bank deposit amounting to RMB129,891,000. Save as disclosed, the Group did not have any other outstanding debt securities, charges, mortgages, or other similar indebtedness, hire purchase commitments, liabilities under acceptances (other than normal trade bills), acceptance credits, which are guaranteed, unguaranteed, secured or unsecured, any guarantees or other material contingent liabilities.

– 19 –

CAPITAL STRUCTURE

On April 8, 2019, in preparing for the Global Offering, the then existing shareholders of the Company passed resolutions to conditionally approve, among other things, (i) to increase in the authorized share capital of the Company from 500,000,000 ordinary shares of US$0.0001 par value each to 50,000,000,000 ordinary shares of US$0.0001 par value each; (ii) to allot and issue at par 3,265,500,000 shares as fully paid, which shall rank pari passu in all respects with the then existing shares for allotment and issue, to the persons whose names appear on the register of members of the Company on the day preceding the Listing Date in proportion to their respective shareholdings (as nearly as possible without involving fractions) in the Company by way of capitalization of an amount of US$326,550 standing to the credit of the share premium account of the Company. On May 30, 2019, 3,265,500,000 shares of the Company were issued under the Capitalization Issue.

Subsequently, 783,580,000 ordinary shares of the Company were issued under the Global Offering and the shares were listed on the Main Board of the Stock Exchange on May 31, 2019. There were no changes in the capital structure of the Group since then. The share capital of the Group only comprises ordinary shares. As at December 31, 2019, the total issued share capital of the Company was US$412,408 divided into 4,124,080,000 shares.

The capital structure of the Group was 24.5% debt and 75.5% equity as at December 31, 2019, compared with 47.3% debt and 52.7% equity as at December 31, 2018.

FOREIGN EXCHANGE

Foreign currency risk refers to the risk of loss resulting from changes in foreign currency exchange rates. Fluctuations in exchange rates between RMB and other currencies in which our Group conducts business may affect our financial condition and results of operation. The Group mainly operates in the PRC and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to Hong Kong dollars and the U.S. dollars. The conversion of foreign currencies into RMB, including Hong Kong dollars and the U.S. dollars, has been based on rates set by the People’s Bank of China. The Group primarily limites our exposure to foreign currency risk by closely monitoring the foreign exchange market. During the Reporting Period, the Group did not enter into any currency hedging transactions. The foreign exchange loss and gain denominated in foreign currencies represented 100% of other losses and gains for the year ended December 31, 2018 and the Reporting Period, respectively.

– 20 –

GEARING RATIO

Gearing ratio is calculated using total liabilities divided by total assets and multiplied by 100%. As at December 31, 2019, the gearing ratio of the Group was 24.5% (as at December 31, 2018: 47.3%).

The following table sets forth our other key financial ratios as of the dates indicated.

	At December 31,
	2019	2018
Current ratio(1)	3.5	1.7
Quick ratio(2)	3.5	1.5

Notes:

• (1) Current ratio represents current assets divided by current liabilities as of the same date.

• (2) Quick ratio represents current assets less inventories and divided by current liabilities as of the same date.

Our current ratio increased from 1.7 as of December 31, 2018 to 3.5 as of December 31, 2019, and our quick ratio increased from 1.5 as of December 31, 2018 to 3.5 as of December 31, 2019, primarily due to a significant increase in bank balances and cash as a result of the proceeds received from the Global Offering.

– 21 –

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

		For the year ended	December 31,
		2019	2018
	Notes	RMB’000	RMB’000
Other income	4	17,999	24,059
Other expenses		(4,127)	(12,507)
Other gains and losses	5	15,962	(2,427)
Research and development expenses		(134,189)	(88,983)
Administrative expenses		(62,952)	(42,128)
Finance costs	6	(7,695)	(4,481)
Listing expenses		(27,527)	(26,126)
Loss before tax	7	(202,529)	(152,593)
Income tax credit	8	–	2,834
Loss and total comprehensive expense for the year		(202,529)	(149,759)
Total comprehensive expense attributable to:
Owners of the Company		(202,529)	(124,883)
Non-controlling interests		–	(24,876)
		(202,529)	(149,759)
		RMB	RMB
Loss per share	10
–Basic and diluted		(0.05)	(0.06)

– 22 –

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Notes Non-current assets Plant and equipment Right-of-use assets 11 Other non-current assets Rental deposit to a related party Pledged bank deposits Current assets Prepayments and other receivables 12 Amounts due from related parties Inventories Contract costs Pledged bank deposits Time deposit Bank balances and cash Current liabilities Trade and other payables 13 Amounts due to related parties Lease liabilities Lease liabilities to a related party Contract liabilities Bank borrowings 14 Loan from a related party Deferred income Net Current Assets Total Assets Less Current Liabilities	At December 31, 2019 2018 RMB’000 RMB’000 255,049 122,833 77,346 – 85,415 89,225 411 411 23,117 – 441,338 212,469 21,904 20,826 – 668 22,224 27,551 13,240 12,991 129,891 522 179,160 – 588,720 198,195 955,139 260,753 128,119 38,262 2,538 19,526 2,823 – 4,472 – 58,662 58,662 63,205 – – 40,000 10,515 – 270,334 156,450 684,805 104,303 1,126,143 316,772	At December 31, 2019 2018 RMB’000 RMB’000 255,049 122,833 77,346 – 85,415 89,225 411 411 23,117 – 441,338 212,469 21,904 20,826 – 668 22,224 27,551 13,240 12,991 129,891 522 179,160 – 588,720 198,195 955,139 260,753 128,119 38,262 2,538 19,526 2,823 – 4,472 – 58,662 58,662 63,205 – – 40,000 10,515 – 270,334 156,450 684,805 104,303 1,126,143 316,772
		212,469
		20,826 668 27,551 12,991 522 – 198,195
		260,753
		38,262 19,526 – – 58,662 – 40,000 –
		156,450
		104,303
		316,772

– 23 –

Notes Non-current liabilities Deferred income Loan from a related party Lease liabilities Lease liabilities to a related party Net Assets Capital and reserves Share capital 15 Reserves Total Equity	At December 31, 2019 2018 RMB’000 RMB’000 37,309 2,200 – 65,000 30,737 – 4,386 – 72,432 67,200 1,053,711 249,572 2,804 51 1,050,907 249,521 1,053,711 249,572	At December 31, 2019 2018 RMB’000 RMB’000 37,309 2,200 – 65,000 30,737 – 4,386 – 72,432 67,200 1,053,711 249,572 2,804 51 1,050,907 249,521 1,053,711 249,572
		67,200
		249,572
		51 249,521
		249,572

– 24 –

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2019

1. GENERAL INFORMATION, GROUP REORGANIZATION AND BASIS OF PREPARATION AND PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS

1.1 General Information

Mabpharm Limited (the “ Company ”) was incorporated in the Cayman Islands as an exempted company with limited liability on June 1, 2018, and its shares are listed on The Stock Exchange of Hong Kong Limited on May 31, 2019 (the “ Listing Date ”). The address of the registered office of the Company is Cayman Corporate Centre, 27 Hospital Road, George Town, Grand Cayman KYl-9008, Cayman Islands. The address of the principal place of business of the Company is Block G79, Lujia Road East, Koutai Road West, China Medical City, Taizhou, PRC.

The Company is an investment holding company. The Company and its subsidiaries (collectively referred to as the “ Group ”) is principally engaged in research, development and production of monoclonal antibody drugs for cancers and autoimmune diseases.

The immediate holding company of the Company is Asia Mabtech Limited, a limited liability company incorporated in the British Virgin Islands, which is ultimately controlled by Mr. Guo Jianjun.

The functional currency of the Company is Renminbi (“ RMB ”), which is the same as the presentation currency of the consolidated financial statements.

1.2 Group reorganization and basis of preparation and presentation of the consolidated financial statements

The consolidated financial statements have been prepared in accordance with the accounting policies set out in Note 3 which conforms with International Financial Reporting Standards (“ IFRSs ”) and the principles of merger accounting (details are set out below).

The companies and business comprising the Group underwent a group reorganization as described below (the “ Group Reorganization ”).

The major steps of the Group Reorganization comprised the following steps:

• On June 1, 2018, the Company was incorporated in the Cayman Islands with an authorized share capital of US Dollar (“ US$ ”) 50,000 divided into 500,000,000 shares of US$0.0001 each and 1 share of which was issued to a nominal shareholder and was subsequently transferred to Asia Mabtech Limited.

• On June 8, 2018, the Company incorporated Mabpharm Holdings Limited (“ Mabpharm Holdings ”) in the British Virgin Islands with an issued capital of US$1.

• On June 27, 2018, the Company issued 46,249,999 and 3,750,000 shares to Asia Mabtech Limited and United Circuit Limited which are ultimately controlled by Mr. Guo Jianjun at US$0.0001 per share, respectively. The total cash consideration of such issue is US$5,000 (equivalent to RMB34,000).

• On July 5, 2018, Mabpharm Holdings incorporated Mabpharm HK in Hong Kong with an issued capital of Hong Kong Dollars (“ HK$ ”) 1.

• On July 20, 2018, the Company issued 25,000,000 shares to a group of non-controlling shareholders of the Company at a total cash consideration of approximately US$60.0 million (equivalent to RMB410,450,000).

– 25 –

• On July 25, 2018, Mabpharm HK entered into a share transfer agreement with Mabtech Holdings Limited, which is ultimately controlled by Mr. Guo Jianjun through the trust arrangement with Ms. Gu Nana. Pursuant to the agreement, Mabpharm HK acquired the entire equity interests of Taizhou Pharmaceutical and Taizhou Biotech from Mabtech Holdings Limited at a cash consideration of US$20,000,000 and US$8,700,000, respectively (totaling US$28,700,000 which is equivalent to RMB194,993,000). Such consideration was funded by the Company through a loan to Mabpharm HK.

• On August 13, 2018, the Company and Taizhou Pharmaceutical entered into a business spin-off agreement with Sinomab Limited and its subsidiary, Biomabs, pursuant to which, Biomabs transferred its Clinical Business, which was principally engaged in clinical research and development of monoclonal antibody drugs, namely CMAB007 (omalizumab) and CMAB008 (infliximab), to the Company and Taizhou Pharmaceutical (“ Business Transfer ”) at nil consideration. The transfer of the operations of the Clinical Business was completed on August 18, 2018.

• On August 13, 2018, the Company entered into an exclusive licensing agreement with Sinomab Limited, pursuant to which, Sinomab Limited exclusively licensed its interests in CMAB007 and CMAB008 in the People’s Republic of China (the “ PRC ”) to the Company at nil consideration.

• On August 13, 2018, the Company entered into a drug technology transfer agreement with Sinomab Limited, pursuant to which, Sinomab Limited shall transfer its rights and interests in CMAB007, CMAB008 and CMAB009 (cetuximab) in the overseas areas (excluding North America, Japan and Europe) to the Company at nil consideration.

• On August 28, 2018, Taizhou Pharmaceutical established Shanghai Shengheng Biotechnology Limited ( 上海晟珩 生物技術有限公司 ) (“ Shengheng Biotech ”) in the PRC with a paid-in capital of RMB5,000,000.

Taizhou Pharmaceutical, Taizhou Biotech and the Clinical Business are under common control of Mr. Guo Jianjun before and after the Group Reorganization. Therefore, the acquisition of Taizhou Pharmaceutical, Taizhou Biotech and the Clinical Business are accounted for as business combination under common control by applying the principles of merger accounting.

The consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows of the Group for the year ended December 31, 2018 include the results, changes in equity and cash flows of the entities comprising the Group and of the Clinical Business, on the basis stated below, as if Taizhou Pharmaceutical, Taizhou Biotech and the Clinical Business had been operated under a group since January 1, 2018 with consideration of the controlling interest of Mr. Guo Jianjun in these entities and business.

To the extent the income and expenses that are specifically identified to the Clinical Business, such items are included in the consolidated financial statements throughout the year ended December 31, 2018. To the extent the income and expenses that are impracticable to identify specifically, these items are allocated to the Clinical Business on the basis set out below (such items include certain administrative expenses). Items that do not meet the criteria above are not included in the consolidated financial statements of the Group.

Expenses which are impracticable to identify specifically to the Clinical Business are determined on the following basis: (1) included in the administrative expenses are administrative and support department staff salaries and staff welfare which were allocated based on the percentage of headcount of the Clinical Business to the total headcount of Biomabs; (2) income tax expense was calculated based on the tax rate of Biomabs as if the Clinical Business is a separate tax reporting entity. The directors of the Company believe that the method of allocation of the above expense items presents a reasonable basis of estimating what the Clinical Business’s operating results would have been on a stand-alone basis for the year ended December 31, 2018. Other than those items mentioned above, all other items of income and expenses of the Clinical Business are specifically identified.

– 26 –

2. APPLICATION OF NEW AND AMENDMENTS TO IFRSs

New and Amendments IFRSs that are mandatorily effective for the current year

The Group has applied the following new and amendments to IFRSs issued by the International Accounting Standards Board (“ IASB ”) for the first time in the current year:

IFRS 16 Leases IFRIC 23 Uncertainty over Income Tax Treatments Amendments to IFRS 9 Prepayment Features with Negative Compensation Amendments to IAS 19 Plan Amendment, Curtailment or Settlement Amendments to IAS 28 Long-term Interests in Associates and Joint Ventures Amendments to IFRSs Annual Improvements to IFRSs 2015 – 2017 Cycle

Except as described below, the application of the new and amendments to IFRSs in the current year has had no material impact on the Group’s financial positions and performance for the current and prior years and/or on the disclosures set out in these consolidated financial statements.

IFRS 16 Leases

The Group has applied IFRS 16 for the first time in the current year. IFRS 16 superseded IAS 17 Leases (“ IAS 17 ”), and the related interpretations.

Definition of a lease

The Group has elected the practical expedient to apply IFRS 16 to contracts that were previously identified as leases applying IAS 17 and IFRIC 4 Determining whether an Arrangement contains a Lease and not apply this standard to contracts that were not previously identified as containing a lease. Therefore, the Group has not reassessed contracts which already existed prior to the date of initial application.

For contracts entered into or modified on or after January 1, 2019, the Group applies the definition of a lease in accordance with the requirements set out in IFRS 16 in assessing whether a contract contains a lease.

As a lessee

The Group has applied IFRS 16 retrospectively with the cumulative effect recognized at the date of initial application, January 1, 2019.

As at January 1, 2019, the Group recognized additional lease liabilities and right-of-use assets at amounts equal to the related lease liabilities adjusted by any accrued lease payments by applying IFRS 16.C8(b)(ii) transition.

When applying the modified retrospective approach under IFRS 16 at transition, the Group applied the following practical expedients to leases previously classified as operating leases under IAS 17, on lease-by-lease basis, to the extent relevant to the respective lease contracts:

• i. relied on the assessment of whether leases are onerous by applying IAS 37 Provisions, Contingent Liabilities and Contingent Assets as an alternative of impairment review;

• ii. excluded initial direct costs from measuring the right-of-use assets at the date of initial application; and

• iii. applied a single discount rate to a portfolio of leases with a similar remaining terms for similar class of underlying assets in similar economic environment.

– 27 –

When recognizing the lease liabilities for leases previously classified as operating leases, the Group has applied incremental borrowing rates of the relevant group entities at the date of initial application. The weighted average incremental borrowing rates by the relevant group entities range from 7.13% to 7.35%.

Note Operating lease commitments disclosed at December 31, 2018 Less: Value added tax (“VAT”) included in operating lease commitments Operating lease commitments excluded VAT at December 31, 2018 Lease liabilities discounted at relevant incremental borrowing rates Add: Accrued lease liabilities at January 1, 2019 (a) Less: Recognition exemption – short-term lease Lease liabilities at January 1, 2019 Analysed as Current Non-current

At January 1, 2019 RMB’000 67,711 (6,154) 61,557 42,633 1,229 (22) 43,840 7,095 36,745 43,840

The carrying amount of right-of-use assets for own use at January 1, 2019 comprises the following:

Note Right-of-use assets relating to operating leases recognized upon application of IFRS 16 Less: Accrued lease liabilities at January 1, 2019 (a) By class: Buildings Note:	Right-of-use assets RMB’000 43,840 (1,229) 42,611 42,611

a. Accrued lease liabilities at January 1, 2019 were reclassified from amounts due to related parties and trade and other payables relating to accrued lease payments recognized in the statement of financial position immediately before the date of initial application.

– 28 –

The following adjustments were made to the amounts recognized in the consolidated statement of financial position at January 1, 2019. Line items that were not affected by the changes have not been included.

	Carrying amounts
	previously reported		Carrying amounts
	at December 31,		under IFRS 16 at
	2018	Adjustments	January 1, 2019
	RMB’000	RMB’000	RMB’000
Non-current assets
Right-of-use assets	–	42,611	42,611
Current Liabilities
Amounts due to related parties	19,526	(374)	19,152
Trade and other payables	38,262	(855)	37,407
Lease liabilities	–	2,664	2,664
Lease liabilities to a related party	–	4,431	4,431
Non-current Liabilities
Lease liabilities	–	32,399	32,399
Lease liabilities to a related party	–	4,346	4,346

Note: For the purpose of reporting cash flows from operating activities under indirect method for the year ended December 31, 2019, movements in working capital have been computed based on opening consolidated statement of financial position at January 1, 2019 as disclosed above.

New and amendments to IFRSs in issue but not yet effective

The Group has not early applied the following new and amendments to IFRSs that have been issued but are not yet effective:

IFRS 17 Insurance Contracts[1] Amendments to IFRS 3 Definition of a Business[2] Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture[3] Amendments to IAS 1 Classification of Liabilities as Current or Non-current[5] Amendments to IAS 1 and IAS 8 Definition of Material[4] Amendments to IFRS 9, IAS 39 and IFRS 7 Interest Rate Benchmark Reform[4]

• 1 Effective for annual periods beginning on or after January 1, 2021.

• 2 Effective for business combinations and asset acquisitions for which the acquisition date is on or after the beginning of the first annual period beginning on or after January 1, 2020.

• 3 Effective for annual periods beginning on or after a date to be determined.

• 4 Effective for annual periods beginning on or after January 1, 2020

• 5 Effective for annual periods beginning on or after January 1, 2022

In addition to the above new and amendments to IFRSs, a revised Conceptual Framework for Financial Reporting was issued in 2018. Its consequential amendments, the Amendments to References to the Conceptual Framework in IFRS Standards, will be effective for annual periods beginning on or after January 1, 2020.

The directors of the Company anticipate that the application of the new and amendments to IFRSs will have no material impact on the consolidated financial statements in the foreseeable future.

– 29 –

3. REVENUE AND SEGMENT INFORMATION

Intellectual property transfer agreement with a customer

In December 2016, the Group entered into an agreement with a third party customer for transferring of an intellectual property in relation to CMAB806 at a consideration of RMB65,180,000 (the consideration is further increased to RMB65,680,000 as at December 31, 2019) (“ Intellectual Property Transfer Agreement ”). Upon the Group transfers the control of rights of the intellectual property to the customer, the Group will recognize revenue. The Group did not recognize revenue from this contract during the reporting period since the control of rights of the intellectual property had not been transferred to the customer. The research and development cost amounting to RMB10,407,000 incurred on this intellectual property before the Group entered into the Intellectual Property Transfer Agreement with the customer were all charged to profit or loss. While, after the inception of the Intellectual Property Transfer Agreement, the research and development cost incurred on this intellectual property, amounting to RMB13,240,000 at December 31, 2019 (2018: RMB12,991,000), was capitalized as cost to fulfil the contract and were included in contract costs in the consolidated statement of financial position.

Unsatisfied performance obligations

The following table shows the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied at the end of each reporting period:

	2019	2018
	RMB’000	RMB’000
Intellectual property transfer	65,680	65,180

The Group expects that 100% of the transaction price allocated to the unsatisfied contract at December 31, 2019 will be recognized as revenue within one year from December 31, 2019.

For the purpose of resources allocation and performance assessment, the key management of the entities and business comprising the Group, being the chief operating decision maker, reviews the consolidated results when making decisions about allocating resources and assessing performance of the Group as a whole and hence, the Group has only one reportable segment and no further analysis of this single segment is presented.

The Group did not record any revenue during the reporting period and the Group’s non-current assets are substantially located in the PRC, accordingly, no analysis of geographical segment is presented.

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4. OTHER INCOME

Bank interest income Government grants and subsidies related to income Income from preparation process service (Note a) – related parties – third party Income from sales of raw materials (Note b)	2019 RMB’000 3,925 9,013 – – 5,061 17,999	2018 RMB’000 132 9,694 13,968 265 –
		24,059

Notes:

• a. Preparation process includes process parameters, process formulation and sample products prepared through the established process for drug manufacturing. The Group provided preparation process service to its related parties and a third party. Such income is recognized at a point in time upon the delivery of the process report and sample products to the counterparties and recorded in the “Other income” line item in profit or loss; and the relevant costs were included in “Other expenses” line item.

• b. The Group recognized income from sales of raw materials upon the delivery of raw materials to the counterparty and recorded it in the “Other income” line item in profit or loss. The relevant costs were included in “Other expenses” line item.

5. OTHER GAINS AND LOSSES

Net foreign exchange gain (loss) 6. FINANCE COSTS Interest on related party loans Interest on bank borrowings Interest on lease liabilities	2019 RMB’000 15,962 2019 RMB’000 1,639 3,056 3,000 7,695	2018 RMB’000 (2,427)
		2018 RMB’000 4,481 – –
		4,481

– 31 –

7. LOSS BEFORE TAX

Loss before tax has been arrived at after charging:

Depreciation for plant and equipment Depreciation for right-of-use assets Less: capitalized in contract costs Write downs of inventories recognized as an expense Staff cost (including directors’ emoluments): – Salaries and other benefits – Retirement benefit scheme contributions – Share-based payment expenses – Consultation fee Less: capitalized in construction in progress/contract costs Auditors’ remuneration Minimum operating lease payment in respect of rented premises Short-term lease payments Less: capitalized in contract costs Cost of inventories recognized as expense (included in research and development expenses)	2019 RMB’000 14,548 7,682 (32) 22,198 272 47,908 4,653 13,844 510 66,915 (1,089) 65,826 3,043 – 22 – 22 25,092	2018 RMB’000 12,231 – (515) 11,716 839 33,793 3,372 5,445 481 43,091 (2,090) 41,001 2,658 5,200 – (158) 5,042 27,259

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8. INCOME TAX CREDIT

The Company was incorporated in the Cayman Islands and is exempted from income tax.

No Hong Kong profit tax was provided for as there was no estimated assessable profit of the Group’s Hong Kong subsidiary that was subject to Hong Kong profit tax during the year.

Under the Law of the PRC of Enterprise Income Tax (the “ EIT Law ”) and Implementation Regulation of the EIT Law, the tax rate of the Group’s PRC subsidiaries is 25% throughout the reporting period.

The EIT of the Clinical Business is estimated by treating the Clinical Business as a separate tax payer using the tax rate of Biomabs at 25% throughout the year ended December 31, 2018.

Taizhou Pharmaceutical was accredited as a “High and New Technology Enterprise” in November 2018 and therefore is entitled to a preferential tax rate of 15% for a three-year period since 2018. The qualification as a High and New Technology Enterprise will be subject to review by the relevant tax authority in the PRC for every three years and Taizhou Pharmaceutical should self-evaluate whether it meets the criteria of High and New Technology Enterprise each year. For the year ended December 31, 2019, after the self-evaluation, the Group’s management is in a view that Taizhou Pharmaceutical failed to meet the criteria of the High and New Technology Enterprise and therefore the tax rate of Taizhou Pharmaceutical is 25% for the current year.

Pursuant to the relevant EIT Laws, Taizhou Pharmaceutical enjoys super deduction of 175% on qualifying research and development expenditures during the year ended December 31, 2019 and 2018.

The tax credit for the year can be reconciled to the loss before tax per the consolidated statement of profit or loss and other comprehensive income as follows:

Loss before tax Income tax credit calculated at 25% Tax effect of expenses not deductible for tax purpose Effect of research and development expenses that are additionally deducted Tax effect of tax losses and deductible temporary differences not recognized Income tax at concessionary rate Income tax credit recognized in profit or loss	2019 RMB’000 (202,529) (50,632) 8,711 (15,711) 57,632 – –	2018 RMB’000 (152,593) (38,148) 13,306 (3,144) 23,263 1,889
		(2,834)

The Group has unused tax losses of RMB322,142,000 available for offset against future profits as of December 31, 2019 (2018: RMB117,345,000). The Group had deductible temporary differences of RMB54,300,000 at December 31, 2019 and (2018: RMB28,568,000), which are mainly related to deferred income and accrued expenses. Deferred taxation had not been recognized on the unused tax losses and deductible temporary differences due to the unpredictability of future profit streams.

The unrecognized tax losses will be carried forward and expire in years as follows:

2021 2022 2023 2024 2026 2027 2028	2019 RMB’000 406 7,364 65,543 204,797 26,094 17,938 – 322,142	2018 RMB’000 406 7,364 12,146 – 26,094 17,938 53,397
		117,345

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9. DIVIDENDS

No dividend was paid or proposed for ordinary shareholders of the Company during 2019, nor has any dividend been proposed since the end of the reporting period (2018: Nil).

10. LOSS PER SHARE

The calculation of the basic and diluted loss per share attributable to the owners of the Company is based on the following data:

Loss figures are calculated as follows:

Loss for the year attributable to owners of the Company for the purpose of calculating basic and diluted loss per share Number of shares (’000): Weighted average number of ordinary shares for the purpose of calculating basic and diluted loss per share	2019 RMB’000 (202,529) 2019 3,802,061	2018 RMB’000 (124,883) 2018 2,212,075

The computation of basic and diluted loss per share for the year ended December 31, 2019 and 2018 is based on weighted average number of shares assumed to be in issue after taking into account the retrospective adjustments on the assumption that the Group Reorganization as disclosed in Note 1.2 and the Capitalization Issue as disclosed in Note 15(b) had been in effect on January 1, 2018.

The computation of diluted loss per share for the year ended December 31, 2019 and 2018 did not assume the exercise of the pre-IPO share options of the over-allocation option since their inclusion would be anti-dilutive.

11. RIGHT-OF-USE ASSETS

At January 1, 2019 Carrying amount At December 31, 2019 Carrying amount For the year ended December 31, 2019 Depreciation charge Capitalized in contracts costs Expense relating to short-term leases Total cash outflow for leases Additions to right-of-use assets	Leasehold land RMB’000 – 37,402 771 – 771	Buildings RMB’000 42,611 39,944 6,911 (9) 6,902	Total RMB’000 42,611 77,346 7,682 (9) 7,673 22 8,688 42,417

The Group regularly entered into short-term leases for buildings. As at December 31, 2019, the portfolio of short-term leases is similar to the portfolio of short-term leases to which the short-term lease expense disclosed in Note 2.

– 34 –

Restrictions or covenants on leases

In addition, lease liabilities of RMB42,418,000 are recognized with related right-of-use assets of RMB39,944,000 as at December 31, 2019. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessors. Leased assets may not be used as security for borrowing purposes.

12. PREPAYMENTS AND OTHER RECEIVABLES

Other receivables Prepayments for research and development services Interest receivables Other deposits and prepayments VAT recoverable Deferred issue costs	2019 RMB’000 1,616 11,780 3,437 3,239 1,832 – 21,904	2018 RMB’000 1,604 12,924 – 1,845 – 4,453
		20,826

13. TRADE AND OTHER PAYABLES

Trade payables Accrued expenses for research and development services Other payables Salary and bonus payables Other taxes payable Accrued listing expenses and issue costs	2019 RMB’000 4,401 23,902 66,369 9,645 514 23,288 128,119	2018 RMB’000 1,797 9,880 5,669 9,046 1,755 10,115
		38,262

Payment terms with suppliers are mainly on credit with 60 days from the time when the goods and/or services are received from the suppliers. The aging analysis of the trade payables presented based on the receipt of goods/services by the Group at the end of each reporting period is as follows:

Within 60 days Over 60 days but within 1 year Over 1 year	2019 RMB’000 2,459 1,942 – 4,401	2018 RMB’000 1,059 668 70
		1,797

Accrued lease liabilities included in other payables were adjusted in lease liabilities upon the initial application of IFRS 16. Details of the adjustment are set out in Note 2.

– 35 –

14. BANK BORROWINGS

	2019	2018
	RMB’000	RMB’000
Secured bank loans	63,205	–

The loans carry interest at upfloat 30% over the benchmark interest rate published by the People’s Bank of China and are repayable within one year. The loans are secured by the land use right amounting to RMB37,402,000 and pledged bank deposit amounting to RMB129,891,000.

At the end of the reporting period, the Group has the following undrawn banking facilities:

	2019	2018
	RMB’000	RMB’000
Floating rate
– expiring within one year	36,914	–

15. SHARE CAPITAL

The details of the movements of the Company’s authorized and issued ordinary shares are set out as below:

	Authorized number
	of shares	US$
Ordinary shares of US$0.0001 each
At June 1, 2018 (date of incorporation) and December 31, 2018	500,000,000	50,000
Increase (Note a)	49,500,000,000	4,950,000
At December 31, 2019	50,000,000,000	5,000,000

– 36 –

Ordinary shares of US$0.0001 each At June 1, 2018 (date of incorporation) Ordinary shares issued (Note 1.2) At December 31, 2018 Issue of shares pursuant to Capitalization Issue (Note b) Issue of shares upon initial public offering (Note c) At December 31, 2019	Issued and fully paid number of shares 1 74,999,999 75,000,000 3,265,500,000 783,580,000 4,124,080,000	US$ – 7,500 7,500 326,550 78,358 412,408	Shown in the condensed consolidated statement of financial position as RMB’000 – 51
			51 2,212 541
			2,804

Notes:

• a. On April 8, 2019, a shareholders’ resolution was passed under which the authorized share capital of the Company was increased from 500,000,000 ordinary shares of US$0.0001 par value each to 50,000,000,000 ordinary shares of US$0.0001 par value each.

• b. In accordance with a shareholders’ resolution passed on April 8, 2019, 3,265,500,000 ordinary shares of the Company were allotted and issued to the shareholders on the register of members of the Company on the day preceding the Listing Date in proportion to their then existing shareholdings in the Company by capitalizing the sum of US$326,550, equivalent to RMB2,212,000 from the share premium account of the Company (the “ Capitalization Issue ”).

• c. On May 31, 2019, the Company issued a total of 783,580,000 ordinary shares of US$0.0001 each at the price of HK$1.5 per share by means of Global Offering.

All these new shares shall rank pari passu in all respects with the then existing issued shares of the Company.

– 37 –

OTHER INFORMATION

Final Dividend

The Board does not recommend the payment of a final dividend for the year ended December 31, 2019.

Use of Net Proceeds from Listing

With the Shares of the Company listed on the Stock Exchange on May 31, 2019, the net proceeds from the Global Offering were approximately HK$1,144.5 million. As at the date of this announcement, the Company used a total of approximately RMB331.3 million of the proceeds, including approximately RMB202.3 million for research and development of our Core Products, approximately RMB5.0 million for research and development of our other candidate products and approximately RMB124.0 million for working capital and general purpose. The Company intends to apply such net proceeds in accordance with the purposes as set out in the Prospectus.

Significant Investments, Material Acquisitions and Disposals

As at the date of this announcement, there were no significant investments held by the Group or future plans regarding significant investment or capital assets. For the year ended December 31, 2019, we did not have material acquisitions or disposals of subsidiaries, associates and joint ventures.

Employee and Remuneration Policy

As of December 31, 2019, we had a total of 308 employees, of which 102 are located in Shanghai and 206 are located in Taizhou. The table below sets forth a breakdown of our employees by function:

Function Business units R&D personnel(1) Sales and marketing(2) Administration Management Total Notes:	Number of Employees 47 181 16 23 41 308

(1) The number of R&D personnel here excludes 21 R&D team members who have been included in our management.

• (2) The number of sales and marketing personnel here excludes our seven core sales and marketing team members, who have been included in our management.

– 38 –

Our success depends on our ability to attract, recruit and retain qualified employees. We provide our employees with opportunities to work on cutting-edge biologics projects with world-class scientists. We aim to attract qualified employees with overseas educational backgrounds and relevant experience gained from global pharmaceutical or biotechnology companies. As of the date of this announcement, Dr. Qian Weizhu, Dr. Li Jing and Dr. Wang Hao of our scientists held a Ph.D. degree or equivalent in fields that are highly relevant to our business. In addition, as of the same date, 124 out of our 202 R&D personnel (including those who are our management) held a bachelor’s degree or above.

Our employment agreements typically cover matters such as wages, benefits and grounds for termination. The remuneration package of our employees generally includes salary and bonus elements. In general, we determine the remuneration package based on the qualifications, position and performance of our employees. We also make contributions to the social insurance fund, including basic pension insurance, medical insurance, unemployment insurance, childbirth insurance, work-related injury insurance funds, and housing reserve fund.

We have established a labor union at Taizhou that represents employees with respect to the promulgation of bylaws and internal protocols. As of December 31, 2019, all of our employees at Taizhou were members of the labor union. We believe that we maintain a good working relationship with our employees. We had not experienced any material labor disputes or any material difficulty in recruiting employees for our operations during the Reporting Period and up to the date of this announcement.

COMPLIANCE WITH THE CG CODE

The Group is committed to maintaining high standard of corporate governance to safeguard the interests of the Shareholders, enhance corporate value, formulate its business strategies and policies, and enhance its transparency and accountability.

The Company’s corporate governance practices are based on the principles and code provisions as set out in the Corporate Governance Code contained in Appendix 14 to the Listing Rules (“ CG Code ”) and the Company has adopted the CG code as its own code of corporate governance. The CG Code has been applicable to the Company with effect from the Listing Date. The Board is of the view that the Company has complied with the applicable code provisions as set out in the CG Code since the Listing Date up to the date of this announcement. The Board will periodically review and enhance its corporate governance practices to ensure that the Company continues to meet the requirements of the CG Code.

Further information concerning the corporate governance practices of the Company will be set out in the corporate governance report in the annual report of the Company for the year ended December 31, 2019.

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COMPLIANCE WITH THE MODEL CODE FOR SECURITIES TRANSACTIONS

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules (the “ Model Code ”) as the guidelines for the directors’ dealings in the securities of the Company since the Listing Date.

Specific enquiry has been made to each Director and all Directors have confirmed that they have complied with the applicable standards set out in the Model Code since the Listing Date and up to the date of this announcement.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES

Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s securities listed on the Stock Exchange during the Reporting Period.

MATERIAL LITIGATION

The Company was not involved in any material litigation or arbitration during the Reporting Period. The Directors are also not aware of any material litigation or claims that are pending or threatened against the Group since the Listing Date and up to December 31, 2019.

SCOPE OF WORK OF MESSRS • DELOITTE TOUCHE TOHMATSU

The figures in respect of the Group’s consolidated statement of financial position, consolidated statement of profit or loss and other comprehensive income and the related notes thereto for the year ended December 31, 2019 as set out in the preliminary announcement have been agreed by the Group’s auditor, Messrs. Deloitte Touche Tohmatsu, to the amounts set out in the Group’s audited consolidated financial statements for the year. The work performed by Messrs. Deloitte Touche Tohmatsu in this respect did not constitute an assurance engagement in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements or Hong Kong Standards on Assurance Engagements issued by the Hong Kong Institute of Certified Public Accountants and consequently no assurance has been expressed by Messrs. Deloitte Touche Tohmatsu on the preliminary announcement.

– 40 –

AUDIT COMMITTEE

The Company has established an audit committee with written terms of reference in accordance with the Listing Rules. The Audit Committee consists of two independent non-executive Directors, namely Dr. Liu Linqing and Mr. Guo Liangzhong and one non-executive Director namely Mr. Jiao Shuge. Dr. Liu Linqing is the chairman of the Audit Committee.

The Audit Committee has reviewed the audited consolidated financial statements of the Group for the year ended December 31, 2019 and has met with the independent auditor, Messrs. Deloitte Touche Tohmatsu. The Audit Committee has also discussed matters with respect to the accounting principles and policies adopted by the Company and internal control with members of senior management of the Company.

IMPORTANT EVENTS AFTER THE REPORTING DATE

The outbreak of the COVID-19 in the PRC and the subsequent mandatory quarantine measures imposed by the PRC government as well as the travel restrictions imposed by other countries in early 2020 has impacted the business and operations of the Group as majority of the Group’s operations are located in the PRC. As required by the local government offices in which the Group’s operate, entities including the Group were not allowed to resume operations until mid-February 2020 in an effort to contain the spread of the epidemic. As a result, certain clinical trials commenced by the Company have to be delayed. The Board will closely monitor the development of the COVID-19 pandemic and continue to assess its impact on the Group’s operating activities and financial position. The Group will issue announcements to make relevant disclosures as and when appropriate and necessary.

Save as disclosed above, no important events affecting the Company occurred since December 31, 2019 and up to the date of this announcement.

ANNUAL GENERAL MEETING

The annual general meeting is scheduled to be held on Tuesday, June 23, 2020 (the “ AGM ”). A notice convening the AGM will be published on the respective websites of the Stock Exchange (www.hkexnews.hk) and the Company (http://www.mabpharm.cn) and will be dispatched to the Shareholders within the prescribed time and in such manner as required under the Listing Rules.

CLOSURE OF THE REGISTER OF MEMBERS

The register of members of the Company will be closed from Thursday, June 18, 2020 to Tuesday, June 23, 2020, both days inclusive, in order to determine the identity of the Shareholders who are entitled to attend and vote at the AGM, during which period no share transfers will be registered. To be eligible to attend and vote at the AGM, unregistered holders of shares must lodge all properly completed transfer forms accompanied by the relevant share certificates with the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong for registration not later than 4:30 p.m. on Wednesday, June 17, 2020.

– 41 –

PUBLICATION OF ANNUAL RESULTS ANNOUNCEMENT AND ANNUAL REPORT

This announcement is published on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (http://www.mabpharm.cn).

The annual report for the year ended December 31, 2019 containing all the information required by Appendix 16 to the Listing Rules will be despatched to Shareholders and published on the websites of the Stock Exchange and the Company in due course.

APPRECIATION

On behalf of the Board, I wish to express my sincere gratitude to our Shareholders and business partners for their continued support, and to our employees for their dedication and hard work.

By Order of the Board Mabpharm Limited Jiao Shuge Chairman

Hong Kong, March 27, 2020

As at the date of this announcement, the executive Directors are Dr. Qian Weizhu, Dr. Wang Hao, Mr. Li Yunfeng and Dr. Li Jing; the non-executive Directors are Mr. Guo Jianjun and Mr. Jiao Shuge; and the independent non-executive Directors are Mr. Guo Liangzhong, Dr. Zhang Yanyun and Dr. Liu Linqing.

– 42 –