Simcere Pharmaceutical Group Limited — Capital/Financing Update 2021

Apr 15, 2021

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.

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Simcere Pharmaceutical Group Limited 先聲藥業集團有限公司

(Incorporated in Hong Kong with limited liability)

(Stock code: 2096)

CHANGE IN USE OF PROCEEDS

Reference is made to (i) the prospectus (the “ Prospectus ”) issued by Simcere Pharmaceutical Group Limited (the “ Company ” and together with its subsidiaries, the “ Group ”) dated October 13, 2020 relating to the global offering (the “ Global Offering ”) of the Company’s shares for the listing (the “ Listing ”) on the Main Board of The Stock Exchange of Hong Kong Limited, (ii) the announcement of offer price and allotment results dated October 23, 2020 (the “ Allotment Results Announcement ”), (iii) the announcement of partial exercise of the over-allotment option, stabilizing actions and end of stabilization period dated November 18, 2020 (the “ Over-allotment Option Announcement ”), (iv) announcement of annual results for the year ended December 31, 2020 (the “ Annual Results Announcement ”) in which the utilization of the net proceeds from the Global Offering and the partial exercise of the overallotment option as of December 31, 2020 was disclosed, and (v) announcement of connected transaction in relation to disposal of subsidiaries dated April 15, 2021. Unless otherwise defined, the capitalized terms used in this announcement shall have the same meanings as defined in the Prospectus.

As set out in the section headed “Future Plans and Use of Proceeds” in the Prospectus and as disclosed in the Allotment Results Announcement, Over-allotment Option Announcement and Annual Results Announcement, the net proceeds raised from the Listing and the partial exercise of the over-allotment option were approximately HK$3,513.09 million (the “ Net Proceeds ”). As of March 31, 2021, the Net Proceeds utilized was approximately HK$895.41 million and the remaining Net Proceeds was approximately HK$2,617.68 million. The Board intends to reallocate the Net Proceeds amounted to approximately HK$325.62 million for the selected cell therapy product candidates, including CD19 CAR T-cell therapy (Indication 1), CD19 CAR T-cell therapy (Indication 2), BCMA CAR T-cell therapy and SIM-325 (the “ Pipeline Products ”), to the selected oncology product candidates that are currently under development, including G1 Trilaciclib (Indication 1, Indication 2 and Indication 3), SIM395 (Kazia-Paxalisib) and SIM-364 (Docetaxel Polymeric Micellar for Injection) (the “ New Selected Products ”).

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Set out below is the utilization of the Net Proceeds as of March 31, 2021 and the proposed change of use of the unutilized Net Proceeds:

Purpose**Purpose 1:**Continued researchand development of selectedproduct candidates in theCompany’s strategically focusedtherapeutic areas(1)**Purpose 2:**Reinforcement of theCompany’s sales and marketingcapabilities**Purpose 3:**Investment incompanies in the pharmaceuticalor biotechnology sector witha view to broadening theCompany’s product portfolio**Purpose 4:**Repayment of certainoutstanding bank loans**Purpose 5:**Working capital andother general corporate purposesTotal	Purpose**Purpose 1:**Continued researchand development of selectedproduct candidates in theCompany’s strategically focusedtherapeutic areas(1)**Purpose 2:**Reinforcement of theCompany’s sales and marketingcapabilities**Purpose 3:**Investment incompanies in the pharmaceuticalor biotechnology sector witha view to broadening theCompany’s product portfolio**Purpose 4:**Repayment of certainoutstanding bank loans**Purpose 5:**Working capital andother general corporate purposesTotal	Percentage ofthe total amount	NetProceedsreceived(HK$ in million)	Net Proceedsutilized as ofMarch 31, 2021(HK$ in million)	Net Proceedsutilized as ofMarch 31, 2021(HK$ in million)	Net Proceedsunutilized as ofMarch 31, 2021(HK$ in million)2,012.53211.63351.310.0042.212,617.68
	velopment of selectedt candidates in theny’s strategically focusedeutic areas(1)**2:**Reinforcement of theny’s sales and marketinglities	60%10%	2,107.85351.31		95.32139.68	2,012.211.
	**3:**Investment innies in the pharmaceuticalechnology sector with
		10%10%10%100%	351.31351.31351.31351309	0.00351.31309.1089541
			,.		.	,.
	s of March 31, 2021, the Net Proceeds of HK$325.62 million prroducts were unutilized and will be reallocated to the New Selecf March 31, 2021, save as the aforementioned changes, there is noroceeds. Save as disclosed herein, the Company intends to apply the u1, 2021 in the manner and proportion set out in the Prospectus.				eviously allocated to the Pipelited Products under Purpose 1.other change in the use of the Nnutilized Net Proceeds as of MarE OF PROCEEDSts was primarily due to tFor details, please refer to td to connected transaction
	ONS FOR AND BENEFITS OF THE CHANGE IN USallocation of the Net Proceeds for the Pipeline Producl of the entire equity interest of Simgene Group Limited.cement of the Company dated April 15, 2021 with regarn to disposal of subsidiaries.

Notes:

(1) As of March 31, 2021, the Net Proceeds of HK$325.62 million previously allocated to the Pipeline Products were unutilized and will be reallocated to the New Selected Products under Purpose 1. As of March 31, 2021, save as the aforementioned changes, there is no other change in the use of the Net Proceeds. Save as disclosed herein, the Company intends to apply the unutilized Net Proceeds as of March 31, 2021 in the manner and proportion set out in the Prospectus.

REASONS FOR AND BENEFITS OF THE CHANGE IN USE OF PROCEEDS

The reallocation of the Net Proceeds for the Pipeline Products was primarily due to the disposal of the entire equity interest of Simgene Group Limited. For details, please refer to the announcement of the Company dated April 15, 2021 with regard to connected transaction in relation to disposal of subsidiaries.

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The decision of disposal of the entire equity interest of Simgene Group Limited is made after consideration of the following reasons:

• (1) The Latest Clinical Research Progress of the New Candidate Product in Cell Therapy Area Will Decrease the Potential Value of the Pipeline Products. According to the recent clinical research data of CAR-NK (natural killer cell) (the “ New Candidate Product ”), a new candidate product in cell therapy area, published by a competitor of the Company engaging in cellular immunotherapy for cancer and immune diseases, the New Candidate Product achieved positive clinical data in respect of the evaluation of safety, efficiency, pharmacokinetics and curative effect. As a substitute product to the Pipeline Products, it is anticipated that the New Candidate Product will be massively manufactured with high potential and will have significant lower side effects and costs compared with the Pipeline Products. The Company is of the view that, although there are uncertainties in relation to the successful launch of the New Candidate Product, once launched, the New Candidate Product will have greater advantages and more market potential than the Pipeline Products, which will significantly decrease the potential value of the Pipeline Products and the necessity to continuously research and develop the Pipeline Products;

• (2) The Pipeline Products Face Significant Competition from Other Companies with the Same or Similar Products. The number of companies engaging in research and development of same or similar products to the Pipeline Products has significantly increased in recent years, some of which have achieved progress ahead of the Company. For instance, BCMA CAR T-cell therapy of the Company is currently in the early stage of phase I clinical trial while three of the competitors of the Company have already conducted phase II clinical trial and one of the competitors filed biologics license application for the same product to U.S. Food and Drug Administration last year. In consideration of the advanced progress of competitors and the increasing number of the same or similar products in the market, the Company believes that even if the Pipeline Products are launched ultimately, the competitiveness of them will be insufficient in face of fierce market competition;

• (3) The Policies Trend Make the Market Prospect of the Pipeline Products Less Promising. According to the results of the fifth medical insurance negotiations (the “ Negotiations ”) conducted by the government of the PRC by the end of 2020, several anti-PD-1/PD-L1 therapy pharmaceuticals will be covered by the national medical insurance with the sales price decreased significantly. With years of development, the indications of most antiPD-1/PD-L1 therapy pharmaceuticals available in the market are basically the same with the efficacies and safety quiet similar, and the differences between such pharmaceuticals are relatively small. The policies trend reflected by such Negotiations indicated that the future market opportunities of anti-PD-1/PD-L1 therapy pharmaceuticals and pharmaceuticals lack of innovativeness will be substantially reduced. In consideration of the circumstances mentioned in (1) and (2) above, the Company believes that the Pipeline Products is currently confronted with the same market prospect with anti-PD-1/ PD-L1 therapy pharmaceuticals. As such, given such policies trend making the future prospect of the Pipeline Products unpromising, the Company is of the view that, once launched, the sales price of the Pipeline Products is likely to be reduced significantly in the foreseeable future.

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Therefore, the Company decided to dispose the cell therapy business by disposal of the entire equity interest of Simgene Group Limited with a view to concentrate the Company’s existing resources and manpower to better focus on its business strategies and to ensure the quality and competitiveness of the Company’s other pipeline products. As such, the allocation of the Net Proceeds to Pipeline Products is no longer required.

In addition, given oncology is one of the Company’s strategically focused therapeutic areas, the Company targets to constantly devote sufficient resources into this area. In consideration that the New Selected Products have entered or will enter into certain critical development stages which will further expand the breadth of the Company’s oncology product pipeline, the Company believes that the New Selected Products have promising prospects and will allocate the Net Proceeds to accelerate their future research and development. Details of the New Selected Products and their respective stages were set out as below:

Products Name	Introduction of the Products	Stage of the Researchand Development
G1 Trilaciclib	Indication 1This is a First-in-Class product forthe treatment of chemotherapy-induced myelosuppression (transientCDK4/6 inhibitor for injection),and is the first product to be usedfor bone marrow (red blood cells,neutrophils, platelets) protectionp r i o r c h e m o t h e r a p y f o r a n t i -tumor treatment. This productwas granted breakthrough therapydesignation by the U.S. Foodand Drug Administration (FDA)and was approved on February12, 2021 (U.S. time) to decreasethe incidence of chemotherapy-induced myelosuppression in adultpatients when administered priorto a platinum/etoposide-containingregimen or topotecan-containingregimen for extensive-stage smallcell lung cancer.	The Company obtained a clinical trialapproval on January 18, 2021 for thedevelopment of this product in Chinafor small cell lung cancer.

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Products Name	Products Name	Introduction of the Products	Introduction of the Products	Stage of the Researchand Development	Stage of the Researchand Development	Stage of the Researchand Development	Stage of the Researchand Development
		Indication 2This is a product indicated for bonemarrow protection in patients withlrtl nr Thr i rrntl		The Company plans to join theglobal multi-center phase III studysponsored by G1 therapeutics,Inc. and obtained the clinical trialrl n Aril 14 2021 Th
		cooeca cace. ee s cuno similar competitive prodeveloped for this indication.	yduct	appovpatient routside oin Chinaquarter o	o p ,ecruitment has bf China while tis expected tof this year.	. eeen initiatedhe enrolmentstart in third
		Indication 3This is a product indicatedpatients with triple negative bcancer (TNBC). The results of a pII study of this product indicthat Trilaciclib administratedto chemotherapy (gemcitacombined with carboplatin)clinical significant improvemenprogression-free survival and ovil	forreasthaseatedpriorbineh	The Coglobal msponsorThe clinproduct2021. Tworldwi2021 anis expect	mpany plansulti-center phaed by G1 theraical trial applichas been accephe first patientde will be initid the enrollmened in the first ha	to join these III studypeutics, Inc.ation of thisted in Aprilenrollmentated in Aprilt completionlf f 2022
			asts inerall			o .
		survva.
SIM-395(Kazia-Pax	alisib)	Paxalisib is an effective inhibitthe PI3K pathway and can penethe blood-brain barrier. It has nobeen approved for commercializi n a n y c o u n t r i e s . T h e r e sof the phase IIa study targglioblastoma multiforme showthis product largely improve patiprogression-free survival and ovsurvival.	or oftratet yetationu l t setedthatents’erall	The ComII/III glstudy anthe inveapplicatexpectedcarry out	pany plans to jobal clinicald is currently pstigational newion. The INDto be obtainedregistered clini	oin its pregistrareparindrug (Iapprovthis yecal trials	hasetiong forND)al isar to.
SIM-364(Docetaxel PolymericMicellar for Injection)		Compared with traditional docet	axel,	This pr	oduct is curr	ently b
		Docetaxel-Polymeric Micereplaced the toxic cosolventspolymeric micelles. This will simpre-treatment process, reduce adevents like allergic reactions, alctoxicity, skin toxicity, and impthe tolerance.	llarwithplifyverseoholrove	investiga	ted in a phase I

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In view of the above, the Board considers that the aforesaid change in the use of the Net Proceeds will facilitate an effective use of the financial resources of the Group, strengthen the future development of the Group and is in the best interest of the Company and its shareholders as a whole. The Directors confirm that there is no material effect on the Group’s business strategies or material change in the nature of business of the Group as set out in the Prospectus. Save for the aforesaid changes, there is no other change in the use of the Net Proceeds.

By order of the Board of Simcere Pharmaceutical Group Limited Mr. Ren Jinsheng Chairman and executive Director

Hong Kong, April 15, 2021

As at the date of this announcement, the Board comprises Mr. REN Jinsheng as the Chairman and executive Director, Mr. WAN Yushan and Mr. TANG Renhong as the executive Directors; Mr. ZHAO John Huan as the non-executive Director; and Mr. SONG Ruilin, Mr. WANG Jianguo and Mr. WANG Xinhua as the independent non-executive Directors.

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