SinoMab BioScience Limited — Interim / Quarterly Report 2022

Aug 22, 2022

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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SinoMab BioScience Limited 中國抗體製藥有限公司

(Incorporated in Hong Kong with limited liability)

(Stock code: 3681)

INTERIM RESULTS ANNOUNCEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2022

The board (the “ Board ” ) of directors (the “ Directors ”) of SinoMab BioScience Limited (中國抗體製藥有限公司) (the “ Company ”, together with its subsidiaries, the “ Group ”) hereby announces the unaudited interim condensed consolidated results of the Group for the six months ended 30 June 2022 (the “ Reporting Period ”), together with comparative figures for the corresponding period in 2021. The condensed consolidated financial statements of the Group for the Reporting Period, including the accounting principles and practices adopted by the Group, have been reviewed by the audit committee of the Company (the “ Audit Committee ”) in conjunction with the Company’s external auditor. Unless otherwise specified, figures in this announcement are prepared under the Hong Kong Financial Reporting Standards (the “ HKFRSs ”).

In this announcement, “we”, “us” and “our” refer to the Company and where the context otherwise requires, the Group.

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BUSINESS HIGHLIGHTS

• The Board is excited to announce that, during the Reporting Period, we achieved significant progress with respect to the Group’s clinical trial programs, pipeline development and preparation of commercialisation, including the following:

• Our flagship product SM03 (Suciraslimab), ( anti-CD22 monoclonal antibody ) — Enrollment of Phase III clinical trial for rheumatoid arthritis (“ RA ”) completed on 31 December 2021 with 530 patients, exceeding the original target of 510 patients. The preliminary result for primary endpoint of Phase III study at week 24 is expected in the third quarter of 2022 and the readout of the final study result for both safety and efficacy at week 52 is expected in the first quarter of 2023. We plan to submit our New Drug Application (“ NDA ”) to the National Medical Products Administration of the People’s Republic of China (“ PRC ”) (the “ NMPA ”) in the first half of 2023 and expect to commercialise Suciraslimab in the second half of 2023 at the earliest.

• Our key product SN1011, (BTK Inhibitor) — Currently obtained three Investigational New Drug (“ IND ”) approvals from the NMPA for the treatment of systemic lupus erythematosus (“ SLE ”), pemphigus and multiple sclerosis (“ MS ”). An IND application for neuromyelitis optica spectrum disorder (“ NMOSD ”) was also submitted and accepted by the Center for Drug Evaluation (“ CDE ”) of NMPA in June 2022.

• Another key product SM17, (Humanised Anti-IL-17RB) — IND application for asthma was approved by the U.S. Food and Drug Administration (“ FDA ”) in March 2022. The first healthy subject had been successfully dosed in a Phase I First-In-Human (FIH) clinical trial in the U.S. in June 2022 and 14 subjects have been enrolled as of 31 July 2022. The subjects are currently in normal condition.

• Commercial Production Base — We are building our commercial production base which is located in our Group’s PRC headquarters, our new Suzhou campus, at the Suzhou Dushu Lake High Education Town, China. Phase I development with a production capacity of 6,000 litres is expected to come into operation in early 2024. Together with our existing production capacity of 1,200 litres from Haikou production base, our manufacturing capacity would be up to two hundred thousand treatment courses per year. Upon completion of the new Suzhou campus, the total production capacity of the production base would be over 36,000 litres (up to one million treatment courses per year).

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FINANCIAL HIGHLIGHTS

• Loss for the period increased by RMB29.4 million from RMB114.4 million for the six months ended 30 June 2021 to RMB143.8 million for the six months ended 30 June 2022, which was mainly due to (i) the increase in foreign exchange loss, net, of approximately RMB31.9 million. During the Reporting Period, most of the Company’s cash and cash equivalents were denominated in RMB. The majority of the exchange loss, which was caused by the difference of the functional currency of Hong Kong headquarters in HKD and the presentation currency of the Group in RMB, did not represent the Company’s actual loss; (ii) the decrease in bank interest income of approximately RMB4.3 million; and offset by (iii) the decrease in costs of business development in research and development (“ R&D ”) of approximately RMB7.9 million in the Reporting Period mainly due to completion of Suciraslimab RA Phase III enrollment.

• Net cash used in operating activities for the Reporting Period was approximately RMB145.6 million which was mainly due to (i) the net cash used in operations of approximately RMB125.4 million; (ii) the increase in prepayments, deposits and other receivables of approximately RMB4.7 million and (iii) the decrease in other payables and accruals of approximately RMB15.5 million.

• Net cash used in investing activities for the Reporting Period was approximately RMB101.7 million, which was mainly due to (i) the capital expenditures of approximately RMB61.0 million, mainly for our commercial production base in Suzhou to enhance the Group’s production capacity; and (ii) the investment in a structured deposit of approximately RMB40.0 million as at 30 June 2022.

• The Directors have resolved not to declare an interim dividend for the Reporting Period.

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BUSINESS OVERVIEW

Since the outbreak of COVID-19 pandemic at the end of 2019, fighting against the pandemic has always been an important task in Hong Kong, mainland China and other parts of the world. The COVID-19 variants appeared successively from the beginning of the year, and the economic activities in Hong Kong and mainland China have been affected to varying degrees. However, with the joint efforts of the government and society, the pandemic is relatively under control, and all walks of life are recovering gradually. Despite the challenges we are still facing in 2022, all staff of the Group remain committed to working with a professional and responsible attitude and made contributions to completing each of the Group’s business activities and R&D work. In the first half of 2022, we have delivered a satisfactory performance to the shareholders as scheduled, especially as we have achieved fruitful pharmaceutical R&D attainments.

The R&D of our flagship product SM03 (Suciraslimab), a potential global first-in-target anti-CD22 monoclonal antibody for the treatment of RA, has been progressing ideally. The enrollment of Phase III clinical trial in RA in the PRC completed on 31 December 2021 with 530 patients, exceeding the original target of 510 patients. The efficacy and safety of Suciraslimab have been evaluated in a Phase II clinical study in moderate-toseverely active RA patients and have achieved desirable results. Both the high-dosage group and the low-dosage group met the primary clinical endpoint and showed significantly better performance than the placebo group. As disclosed previously, the preliminary result for primary endpoint of Phase III study at week 24 is expected in the third quarter of 2022 and the readout of the final study result for both safety and efficacy at week 52 is expected in the first quarter of 2023. We plan to submit the NDA to the NMPA in the first half of 2023 and expect to realise commercialisation in the second half of 2023 at the earliest. In the meantime, we will also advance clinical studies of Suciraslimab in other immunological diseases, further expanding the potential therapeutic area of Suciraslimab to fulfil other unmet medical needs, including SLE, Alzheimer’s disease and Sjogren’s syndrome (“ SS ”), etc. We also plan for the IND application and proof-of-concept clinical studies for Alzheimer’s disease. The IND is expected to be submitted and approved in 2022. Upon reaching the commercialisation stage of Suciraslimab, we believe that Suciraslimab can bring desirable benefits to the Company and fulfil our commitment to shareholders.

The R&D of SN1011, our key product and third-generation covalent reversible Bruton’s tyrosine kinase (“ BTK ”) inhibitor, has also achieved progress. SN1011 has currently obtained three IND approvals from the NMPA, for the treatment of SLE, pemphigus and MS. An IND application of SN1011 for NMOSD was submitted and accepted by the CDE of NMPA in June 2022.

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Another key product, SM17, a humanised anti-IL-17RB monoclonal antibody for injection, is a First-in-Class asthma therapeutic product. Its IND application was approved by the FDA, and the first healthy subject had been successfully dosed in a Phase I First-in-Human (FIH) clinical trial in the United States in June 2022. The subjects are currently in normal condition.

Our other drug candidate, SM06, is a second-generation anti-CD22 monoclonal antibody, it is a humanised version of SM03 that works with a similar mechanism of action. We believe that SM06 will be more suitable for treating chronic diseases requiring long-term administration, such as SLE, RA, and other immunological diseases. We are currently conducting a preclinical trial of SM06, collecting high-quality preclinical data, and expect to speed up the submission of SM06 for its clinical studies in the United States. We expect to submit the first IND application for SM06 to the FDA in 2023 at the earliest.

Our innovative R&D strengths dedicated to the past 20 years of development of monoclonal antibodies in the field of autoimmune diseases and our R&D product pipeline which addresses indications against a plethora of immunological diseases have been recognised by the biopharmaceutical industry, the government, and relevant investment institutions. In September 2021, we entered into the first license out agreement to grant the right to develop and commercialise SN1011, a key product of the Company, for the treatment of renal diseases globally. This licensing manifests the R&D potential of SN1011 through industrial recognition and brought the Company an initial upfront payment of US$4 million and potentially up to US$183 million development and sales milestone payments. In addition, after the Reporting Period, we will receive a subsidy of HK$8 million, being the highest subsidy amount, from the Clinical Translational Catalyst (“ CTC ”) program of Hong Kong Science and Technology Parks Corporation (“ HKSTP ”) for the clinical trials of our key product, SN1011, for MS. We stood out from many biopharmaceutical companies in the CTC program and were granted the highest subsidy amount, embodying the recognition by the evaluation committee of the Company’s product candidates and R&D plan. In recent years, our country has had high appreciation of Hong Kong innovative technology development. Benefitting from the potential of our own product pipeline and the geographical advantage of locating in Hong Kong Science Park, the technology innovation centre in Hong Kong, we believe we can continue to pursue further development.

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We have two production bases, which are fully prepared for the subsequent commercialisation for our pipeline product candidates. One is the China headquarters located in Suzhou Dushu Lake High Education Town, with a total floor area of approximately 75,000 sq.m., which consists of commercial manufacturing facilities, a pilot plant, an R&D centre, a quality control centre, a clinical study centre and an administration building. The total production capacity is 36,000 litres (up to one million treatment courses per year), development of which will come into operation in phases. Phase I development with a production capacity of 6,000 litres is expected to come into operation in 2024. We also have a production base with a capacity of 1,200 litres in Haikou, with a total operational area of approximately 19,163 sq.m. The production base consists of a clean area for processing, a controlled-not-classified (CNC) area for supporting activities, utility rooms, quality control laboratories, warehouse, and administrative offices, which can satisfy our needs for clinical R&D and for early commercialisation marketing. The manufacturing capacity of our existing Haikou production base together with the Phase I development in Suzhou would be up to two hundred thousand treatment courses per year.

We have developed a comprehensive and integrated industry chain, which consists of target identification, drug candidate development, pre-clinical research, clinical trials, clinical production, quality control, quality assurance, regulatory approval and commercial-scale production. Leveraging our full-spectrum platform that leads in the Greater China region and our R&D strengths of 20 years of development of monoclonal antibody drugs in the field of autoimmune diseases, coupled with our expanding production base and improving production facilities, we are able to speed up the R&D process of our product portfolio. This also assists in improving the efficiency of commercialisation of our core products, with the purpose of creating more values for the Company and shareholders and to benefit more patients with clinical needs. The field of autoimmune diseases is the second gold mine following the field of tumour treatment. Both the current domestic diagnosis technology and treatment standards are not so wellestablished, resulting in low diagnosis and treatment rates in the field of autoimmune diseases in China. The scale of the domestic market will be expanded with the continuous improvement of diagnosis and treatment technology. The Company has been developing in the R&D of monoclonal antibody drugs in the field of autoimmune diseases for 20 years, and has achieved comprehensive menu of candidate drugs in different indications in the field of autoimmune diseases. We strive to be professional in the field of autoimmune diseases, wishing to develop drugs with better efficacy and higher safety for patients suffering from chronic diseases who need long-term medication, so as to benefit more patients. We are committed to developing into a sustainable and value-creating biopharmaceutical company with strengths in R&D, production and commercialisation which has a diversified product portfolio.

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OUTLOOK

Faced with the widespread outbreak caused by COVID-19 variants, the world focus has been on accelerated vaccination rollout and easing of lockdowns to restart economic activities. Public health is still the focus of the world, and the biopharmaceutical industry receives much attention. In February 2022, nine departments, namely the Ministry of Industry and Information Technology, the National Development and Reform Commission, the Ministry of Science and Technology, the Ministry of Commerce, the National Health Commission, the Ministry of Emergency Management, the National Healthcare Security Administration, the NMPA and the National Administration of Traditional Chinese Medicine, jointly released the Plan for Development of Pharmaceutical Industry over the 14th Five-Year Plan Period. The document sets the goals of strengthening the innovation capacity, improving industry chain and supply chain, improving the supply support mechanism, upgrading the manufacturing level, intensifying the industrial upgrading and enhancing the international competitiveness. In July 2022, President XI Jinping, and the Chief Executive of the HKSAR, Mr. LEE Kachiu, visited Hong Kong Science Park, with the desire to promote Hong Kong as an international innovation and technology hub, demonstrating the country’s high appreciation of Hong Kong’s innovative technological development. Being a Hong Kong local biopharmaceutical company located in Hong Kong Science Park for 20 years, we have also been granted the highest amount of subsidy under the CTC program of HKSTP in July 2022, embodying the recognition by the Hong Kong government of the potential of our R&D pipeline and R&D plan. We hope that with the support of the government, we can carry out various clinical R&D work successfully, develop products with better efficacy and higher safety, which could benefit the large population of patients who have unmet needs for treatment in the autoimmune diseases field and create more values for the Company and the shareholders.

As a biopharmaceutical company having grown up in the Hong Kong Science Park for 20 years and driven by the favourable factors of the international environment, national policies, domestic and foreign geographical position and global market, we believe that our product candidates enjoy promising and broad market prospects in both the global and the China market. We will adhere to the vision of independent innovation, advance the development of novel drugs, further expand the product pipeline, develop greater scope of indications for drug candidates; continue to actively explore cooperation and partnership opportunities, consolidate our position in the field of autoimmune disease; strengthen product R&D, production and commercialisation capacities with the objective of growing into a global leader in novel treatments of immunological diseases that continuously contributes towards the pharmaceutical field.

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MANAGEMENT DISCUSSION AND ANALYSIS

Overview

We are the first Hong Kong-based listed biopharmaceutical company dedicated to the research, development, manufacturing and commercialisation of therapeutics, primarily monoclonal antibody (“ mAb ”)-based biologics, for the treatment of immunological diseases. Headquartered in Hong Kong, we strive to become a leading global biopharmaceutical company for the development of novel drugs to fulfil unmet medical needs through our Hong Kong-based innovative R&D, and PRC-based manufacturing capabilities. We have been dedicated to R&D since our inception, and have built a pipeline of mAb-based biologics and new chemical entities (“ NCE ”) addressing indications against a plethora of immunological diseases.

Our flagship product, SM03 (Suciraslimab), is a potential global first-in-target mAb for the treatment of RA and other immunological diseases such as SLE, SS, as well as nonHodgkin’s lymphoma (“ NHL ”). The Phase III clinical trial in RA completed its enrollment of 530 patients on 31 December 2021, exceeding the original target of 510 patients. The preliminary result for primary endpoint of Phase III study at week 24 is expected in the third quarter of 2022 and the readout of the final study result for both safety and efficacy at week 52 is expected in the first quarter of 2023. We plan to file our NDA with the NMPA in the first half of 2023 and expect to commercialise Suciraslimab in the second half of 2023 at the earliest.

Our key product, SN1011, is a third generation covalent reversible Bruton’s tyrosine kinase (“ BTK ”) inhibitor. SN1011 was designed to exhibit high selectivity with prolonged but controlled drug exposure to achieve superior efficacy and good safety profile for the potentially long-term treatment of patients with chronic immunological disorders. SN1011 currently obtained three IND approvals from the NMPA, for the treatment of SLE, pemphigus and MS. An IND application in NMOSD was also submitted and accepted by the CDE of the NMPA in June 2022. The indications of NMOSD and MS are strategically prioritised for development in our current clinical program for SN1011.

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Another key product, SM17, is a first-in-class and first-in-target humanised anti-IL17RB antibody. The IND application was submitted and accepted by the FDA in February 2022 and was subsequently approved by the FDA in March 2022. The first healthy subject had been successfully dosed in a Phase I First-in-Human (FIH) clinical study in the U.S. in June 2022 and 14 subjects have been enrolled as of 31 July 2022. The FIH study, consisting of multiple cohorts of single ascending dose (“ SAD ”) and multiple ascending dose (“ MAD ”), is expected to be completed by the third quarter of 2023 to build-up basis for follow-up various proof-of-concept studies. The compound has the potential for treating asthma, atopic dermatitis (“ AD ”), idiopathic pulmonary fibrosis (“ IPF ”) and other immunological disorder.

Our other drug candidate, SM06, is a second-generation humanised anti-CD22 antibody derived from Suciraslimab with similar mechanism of action. Our in-house in-vitro studies demonstrated SM06 to have potentially enhanced efficacy in enacting immunomodulatory effects. The compound is at IND enabling stage for U.S. submission, and currently in the process of optimisation for clinical studies by the second quarter of 2023 at the earliest.

Our vision is to become a global leader in the innovation of therapeutics for immunological and other debilitating diseases.

Progress of clinical projects

Product pipeline

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IND Enabling
Pipeline Indication Territory Stage I Stage II Stage III Phase I Phase II Phase III BLA
Rheumatoid arthritis (RA)
SM03 Non-Hodgkin’s lymphoma (NHL)
(anti-CD22) Systemic lupus erythematosus (SLE) China
(First-in-Target) Alzheimer’s Diseases
Sjogren’s syndrome (SS)
Pemphigus
SN1011 Systemic lupus erythematosus (SLE) China
(Third-Generation)(BTK Inhibitor) Neuromyelitis Optica Spectrum Disorder (NMOSD) US
Multiple Sclerosis (MS)
SM17 Asthma
(Humanised Anti-IL-17RB)(First-in-Class & Atopic dermatitis (AD) CUShina
First-in-Target) Idiopathic Pulmonary fibrosis (IPF)
Systemic lupus erythematosus (SLE)
SM06 Rheumatoid arthritis (RA) US
(Humanised Anti-CD22) Neuromyelitis Optica Spectrum Disorder (NMOSD) China
Sjogren’s syndrome (SS)
SM09 Non-Hodgkin’s lymphoma (NHL) China
(Humanised Anti-CD20) Autoimmune Diseases
RA Phase III completed enrollment in December 2021 IND enabling stage
IND enabling stage I – R&D
IND enabling stage II – chemistry, manufacturing and control processes (CMC)
IND enabling stage III – Preclinical
Completed study
Clinical stage
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Flagship product

SM03 (Suciraslimab)

Our self-developed SM03 (Suciraslimab) is a potential first-in-target anti-CD22 mAb for the treatment of RA and other immunological diseases such as SLE, SS as well as NHL. Suciraslimab adopts a novel mechanism of action, which differentiates itself from the current treatments available in the market. Suciraslimab for RA is currently in Phase III clinical trial in China, and we expect it to be our first commercially available drug candidate.

We plan to rapidly advance the development of Suciraslimab. On 31 December 2021, Suciraslimab Phase III clinical trial for RA completed its enrollment of 530 patients, exceeding the original target of 510 patients. The Phase III clinical trial is a multi-centre, randomised, double-blind, placebo-controlled, parallel group study to confirm the clinical efficacy and long-term safety in active RA patients receiving methotrexate (MTX). The efficacy and safety of Suciraslimab was previously evaluated in a Phase II clinical study in moderate-to-severely active RA patients. The study results were published recently and shown that Suciraslimab at a dose of 600 mg with 4 and 6 infusions respectively, were both efficacious and well-tolerated throughout the 24 weeks of treatment when compared with the placebo group. Suciraslimab was effective in suppressing disease activity and alleviates symptoms of active, moderate-to-severely RA patients receiving stable doses of background MTX. The preliminary result for primary endpoint of Phase III study at week 24 is expected in the third quarter of 2022, and the readout of the final study result for both safety and efficacy at week 52 is expected in the first quarter of 2023. We plan to file our NDA with the NMPA in the first half of 2023 and expect to commercialise Suciraslimab upon health authority’s approval in the second half of 2023 at the earliest. In addition to the RA program, we will advance Suciraslimab clinical development in other indications to broaden the therapeutic uses of Suciraslimab for addressing other unmet medical needs. Due to strategic prioritisation on specific therapeutic area other than RA, we expect to initiate proof-of-concept clinical studies for Alzheimer’s disease and/or SS in China.

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Key products

SN1011

SN1011 is a third generation, covalent reversible BTK inhibitor designed to exhibit high selectivity with prolonged but controlled drug exposure to achieve superior efficacy and good safety profile for the potentially long-term treatment of SLE, pemphigus, MS, and other rheumatology or neuro-immunological diseases. SN1011 differentiates from existing BTK inhibitors currently available in the market, such as Ibrutinib, in terms of mechanism of action, affinity, selectivity and safety.

The Phase I study (First-in-Human) was conducted in Australia and China in 2019 and was completed in July 2021. The study has demonstrated good safety and pharmacokinetics (“ PK ”) profile. IND application of SN1011 for the treatment of SLE and pemphigus was also approved by the NMPA on 27 August 2020 and 23 June 2021 respectively. Following SN1011 IND approval for pemphigus and SLE, a new IND submission in MS was submitted to the NMPA CDE in January 2022, and was approved by the NMPA in April 2022. A parallel IND application for MS is also scheduled for submission in the U.S in the third quarter of 2022, with a follow-up global Phase II clinical trial planned for initiation in the fourth quarter of 2022. An IND application for NMOSD was also submitted and accepted by the CDE of the NMPA in June 2022. The Company plans to initiate the Phase II clinical study for NMOSD in China upon IND approval. In addition to the above indications, the compound has also received regulatory approval for conducting clinical studies on SLE and pemphigus in China. Please also refer to the Company’s announcements dated 14 November 2019, 29 January 2020, 29 June 2020, 1 September 2020, 15 January 2021, 24 June 2021, 23 July 2021, 7 February 2022, 20 April 2022 and 9 June 2022 for further information about the latest R&D progress of SN1011. The indications of NMOSD and MS are strategically prioritised for development in our current clinical program for SN1011.

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SM17

SM17 is developed to treat asthma via blockage of IL-25 signalling via the IL-17RB receptor expressed on specific subgroup of lymphoid cells known as type II innate lymphoid (ILC-2) cell. The antibody is specific to IL-17RB, which is found to be significantly upregulated in biopsy tissues of asthmatic patients. When evaluated in a murine-based Ovalbumin (OVA)-induced Allergic Asthma Model, blockage of receptor signalling by the antibody enhanced protection against airways resistance, and significantly reduced cell infiltration into the lungs and serum levels of antigen specific immunoglobulin E (IgE). This potential first-in-class and first-in-target antibody was further humanised by the Group’s international partner, LifeArc (a medical research charity based in the United Kingdom), using their proprietary humanisation technology. The antibody is also found to exhibit other therapeutic potential, including other T2 helper cell pathway involved allergic diseases, such as AD, IPF and type II ulcerative colitis.

The IND application for asthma was submitted and accepted by the FDA in February 2022 and was subsequently approved by the FDA in March 2022. The first healthy subject had been successfully dosed in a Phase I First-in-Human (FIH) clinical trial in the U.S. in June 2022 and 14 subjects have been enrolled as of 31 July 2022. The subjects are currently in normal condition. The Phase I clinical study consisting of SAD and MAD cohorts to evaluate its safety, tolerability, and PK in healthy subject. Please also refer to the Company’s announcements dated 16 February 2022, 14 March 2022 and 15 June 2022 for further information about the latest R&D progress of SM17.

Other drug candidates

SM06

SM06 is a second-generation anti-CD22 antibody that is humanised using our proprietary framework-patching technology. SM06 is a humanised version of SM03 (Suciraslimab), SM06 works with a similar mechanism of action. Our in-house in-vitro studies demonstrated SM06 to have potentially enhanced efficacy in enacting immunomodulatory effects. It is found to be less immunogenic as the more “human-like” antibody has the potentially improved safety profiles. We believe that the lower immunogenicity of SM06 would be more suitable for treating chronic diseases requiring long-term administration, such as SLE, RA and other immunological diseases. We are currently in the process of optimising the chemistry, manufacturing and control processes (CMC) for SM06. Furthermore, we are collecting process and pre-clinical data for speedy filing of SM06 in the U.S. for global clinical studies. We expect to submit the first IND application for SM06 in the U.S. in the second quarter of 2023 at the earliest.

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SM09

SM09 is a framework-patched (humanised) anti-CD20 antibody that targets an epitope different from that of other market-approved anti-CD20 antibodies such as rituximab, obinutuzumab and ofatumumab for the treatment of NHL and other auto-immune diseases with significant unmet medical needs.

Collaboration

In September 2021, the Company entered into a licence agreement with Suzhou Sinovent Pharmaceutical Technology Co., Ltd. (蘇州信諾維醫藥科技股份有限公司), now known as Evopoint Bioscience Co., Ltd. (蘇州信諾維醫藥科技股份有限公司), together with the Company as licensor, and Everest Medicines II (HK) Limited, as licensee, to out-license the right to develop and commercialise SN1011 globally for the treatment of renal diseases.

Pursuant to the Licence Agreement, the Company received an upfront payment of US$4 million in 2021, and is entitled to up to an aggregate of US$183 million in total development and sales milestones. The Company retains all other immunological rights for all indications (other than immunological related renal diseases) relating to SN1011 and will continue its research and development, including Phase II clinical study currently initiating in China.

Production

We have a production base in Haikou. We are also constructing our second production base in Suzhou, Jiangsu.

Haikou Production Base

We carried out our manufacturing activities at our Haikou production base, where we manufacture our drug candidates for pre-clinical research, clinical trials and future largescale production. The Haikou production base occupies a total operational area of approximately 19,163 square metres with a production capacity of 1,200 litres, which is sufficient for clinical and initial marketing needs. The plant has an operational area consisting of a clean area for processing, a controlled-not-classified (CNC) area for supporting activities, utility rooms, quality control laboratories, warehouse and administrative offices and R&D laboratories for on-going and new product development projects.

• For identification purposes only

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Suzhou Production Base

As part of our commercialisation plan, we purchased a piece of land of 43,158 square metres in Suzhou Dushu Lake High Education Town, China, in June 2020. The land is used for constructing the Group’s PRC headquarters, an R&D centre as well as another production base, and the total floor area would be approximately 75,000 square metres. This new Suzhou campus consists of commercial manufacturing facilities, a pilot plant, an R&D centre, a quality control centre, a clinical study centre and an administration building. The new production base would be of commercial-scale manufacturing facilities and is currently under construction. The superstructure works have been completed in December 2021 and the interior fitting-out works are planned to commence in the second half of 2022. The development of our Suzhou campus will be completed and come into operation in phases. Phase I development with a production capacity of 6,000 litres is expected to come into operation in early 2024. Together with our existing production capacity of 1,200 litres from Haikou production base, our manufacturing capacity would be up to two hundred thousand treatment courses per year. Upon completion of the development, the total production capacity of the production base would be over 36,000 litres (up to one million treatment courses per year).

Intellectual property

Core technology of main drugs (products)

For SM03 (Suciraslimab), the Group has two invention patents granted and registered in the PRC, of which one invention patent is also applicable to SM06, and four invention patents which are granted and registered in the United States, all of which are also applicable to SM06.

For SN1011, the Group has one invention patent granted and registered in the United States.

For SM09, the Group has two invention patents granted and registered in the PRC. The Group also holds three invention patents granted and registered in the United States for SM09.

During the Reporting Period, the Group has filed one invention patent application for Suciraslimab in the United States. As at 30 June 2022, the Group has five pending patent applications in the United States, two pending patent applications in the PRC, and two pending patent applications in the Europe.

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Well-known or famous trademarks

The Company conducts its business under the brand name of “SinoMab” (“ 中國抗體 ”). As at the end of the Reporting Period, the Company had various registered trademarks in Hong Kong and the PRC, with multiple trademark applications pending approval in the PRC.

Patents

		As at	As at
	30	June	31 December
Item		2022	2021
Number of invention patents owned by the Group*		26	25

• including patent pending and granted patent

R&D personnel

		Number at the
	Number at the	beginning
	end of the	of the
	Reporting	Reporting
Education level	Period	Period
Ph. D.	7	8
Master	21	17
Undergraduate or below	12	13
Total number of R&D personnel	40	38

The above number of R&D personnel does not include our employees in manufacturing, quality assurance or quality control for the clinically related operation.

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Future and prospects

We strive to become a leading global biopharmaceutical company for the development of novel drugs to fulfil unmet medical needs through our Hong Kong-based innovative R&D, and PRC-based manufacturing capabilities. Our vision is to become a global leader in the innovation of therapeutics for immunological and other debilitating diseases.

Our portfolio of drug candidates encompasses the entire immunological field which, we believe, it will enable us to provide comprehensive treatment options for field-wide indications to patients. We believe our dedication, experience and achievements in the field of immunology have expedited the process, and elevated the industry standard, for the discovery and development of novel therapeutics against a variety of immunological diseases. As a result, we have accumulated significant experience in the discovery of new treatment modalities for immunological diseases, which will allow us to better capture a substantial share of the immunological disease market. We believe that our strategic specialisation and dedicated focus on immunological diseases is an effective way to differentiate ourselves from our peers. By specialising in innovative treatments of immunological diseases, we seek to solidify our leading position in the field, thereby creating a higher barrier to entry for our peers to compete with us in the development of first-in-target or first-in-class drug candidates.

Further, our product pipeline is backed by our established full-spectrum platform integrating in-house capabilities across the industry chain, for instance, our strong and independent target identification, drug candidate development, pre-clinical research, clinical trials, clinical production, quality control, quality assurance, regulatory approval and commercial-scale production up to the commercialisation stage, as well as all other processes in the discovery and development of our drug candidates. We believe that this full-fledged capability is matched by only a few biopharmaceutical companies in the Greater China region.

With a diverse and expanding product pipeline, we believe that we are well positioned to become an industry leader in the development of treatments for immunological diseases.

The Group will continue to focus on the advancement of our flagship product SM03 (Suciraslimab) towards commercialisation, further progress our existing product pipeline, discover and develop novel drugs for the treatment of immunological diseases by leveraging our R&D capabilities, expand our production scale to support our product commercialisation and strengthen our global presence through leveraging our position as a Hong Kong-based biopharmaceutical company.

The Company is committed to educating its current and potential investors in respect of the Company’s products and pipeline development, for example, through non-deal roadshows.

– 16 –

Clinical development plan

We will continue to advance clinical trials for SM03 (Suciraslimab) for RA and other autoimmune diseases. As previously mentioned, we expect to file our Suciraslimab NDA for RA with the NMPA in the coming year. In terms of the broader indication development, we will advance clinical trials for SS and other autoimmune diseases. We plan to initiate IND application and proof-of-concept Phase II clinical study for SS in China. We are also in the process of further broadening therapeutic area of Suciraslimab, seeking regulatory pathways to extrapolate the clinical indications of neuroimmunological diseases for Suciraslimab. We are in the process of planning for IND application and proof-of-concept study targeting Alzheimer’s disease, based on the recent innovative R&D findings about potential treatment of Suciraslimab. The IND is expected to be submitted and approved in 2022.

We will continue the global clinical development program for SN1011 in the immunological/neurological disease areas. As mentioned in previous sections, based on INDs obtained from the NMPA for the treatment of SLE, pemphigus and MS, and the pending approval for the treatment of NMOSD, the Company currently strategically prioritises its clinical program for SN1011 for the indications of NMOSD and MS. The Company plans to submit its IND application for the treatment of MS in the U.S. in the third quarter of 2022 and plans to initiate a global Phase II clinical study in the fourth quarter of 2022. In addition to the expected global Phase II clinical trial for MS, the Company also plans to initiate Phase II clinical study for NMOSD in China upon obtaining its IND approval. The Company also plans to apply for other INDs and/or proof-of-concept clinical studies for SN1011 in the near future.

In respect of SM17, the Phase I first-in-human clinical trial was entered into in the U.S. in June 2022, and the earliest time for Phase I results will be in the third quarter of 2023. As of 31 July 2022, 14 subjects have been enrolled in the FIH clinical trial. Proof-ofconcept studies will then be conducted to evaluate the primary efficacy of SM17 in asthma or other indications, if supported by good tolerability and safety results from Phase I, which is expected.

As for SM06, we will advance the first IND application process, aiming for a bio-better product development for known indications based on good therapeutic potential of Suciraslimab as well as further exploration into other immunological diseases with unmet medical needs worldwidely.

– 17 –

Pre-clinical R&D

We are in the process of building a pre-clinical R&D platform for studying pathogenesis of autoimmune diseases, as well as exploring and identifying solid treatment for them. Our internal R&D team is in the process of discovering novel mechanisms for treatment of multiple autoimmune diseases areas for rheumatology, neuro-immunology, respiratory and dermatology. Our R&D team possesses the capability of generating pre-clinical pharmacology internally and is developing in-depth collaboration with well-known clinical KOLs from our on-going clinical programs. By utilising established business and cooperation relationship with vendors/patterners, the Company is in the process of generating and collecting the IND-enabling data package for our multiple products under pre-clinical development, such as SM06, and will thereafter conduct pre-clinical studies to test their efficacies, safety and PK/pharmacodynamics, and fulfil other regulatory requirements.

The Company continues to optimise production and preclinical research for SM09 and TNF2. It is expected that these pre-clinical researches will be completed in one year, after which the Company will engage NMPA and/or the FDA to initiate clinical trials.

Novel drug targets identification

The Company has been actively exploring novel targets identification. The Company has engaged D2M for a long-term collaboration for the identification of novel drug targets, for which the Company is entitled to conduct subsequent researches, development and commercialisation with regards to qualified drug targets which are chosen by the Company from the original results of D2M’s target identification works according to a prioritised target-selection mechanism.

Production

As previously reported, the Group purchased a piece of land of 43,158 square metres in Suzhou Dushu Lake High Education Town in China in June 2020. The land is used for constructing the Group’s PRC headquarters, an R&D centre as well as another production base, and the total floor area would be of approximately 75,000 square metres. This new Suzhou campus consists of commercial manufacturing facilities, a pilot plant, an R&D centre, a quality control centre, a clinical study centre and an administration building. The superstructure works have been completed in December 2021 and the interior fitting-out works are expected to commence in the second half of 2022. The development of the new Suzhou campus will be completed and come into operation in phases. Phase I development with a production capacity of 6,000 litres (up to two hundred thousand treatment courses per year) is expected to come into operation in early 2024. Upon completion of the new Suzhou campus, the total production capacity of the production base would be over 36,000 litres (up to one million treatment courses per year).

– 18 –

Commercialisation

Albeit uncertainties associated with COVID-19, we expect to build up our sales team by 2022. The leader of sales and marketing was on board in February 2022. Our commercialisation team is expected to cover a majority of provinces and municipalities in China and to support the future commercialisation of our drug candidates. We are actively exploring and identifying opportunities for collaboration and/or partnership, including but not limited to licensing in or licensing out, to enhance our sales and business development capabilities.

MARKET OVERVIEW

In 2020, the total sales volume of the TOP100 drugs in global sales is about US$355.8 billion, and autoimmune and inflammatory drugs ranked second (about US$94 billion, accounting for 26.4%). The current global market for autoimmune diseases is mainly divided into three categories including rheumatism, skin, and gastrointestinal diseases. Among them, the single market size in the treatment fields of RA, psoriasis, and Crohn’s disease all exceed US$10 billion, but there is still a large unmet clinical need for various autoimmune and inflammatory diseases. According to Frost & Sullivan, the global market for autoimmune disease drugs is expected to increase from US$120.5 billion in 2020 to US$163.8 billion in 2030, at a CAGR of 6.0%. In the global market for autoimmune diseases, the market share of biological drugs is expected to increase from 68.4% in 2020 to 81.4% in 2030.

Driven by the development of diagnostic techniques for autoimmune diseases, the PRC market for therapeutics for autoimmune diseases is expected to grow rapidly and is expected to increase from US$2.9 billion in 2020 to US$24.1 billion in 2030 and is expected to increase at a CAGR of 27.7% from 2020 to 2024, and at a CAGR of 20.9% from 2024 to 2030. The biologics market for autoimmune disease in China is expected to increase from US$0.8 billion in 2020 to US$16.6 billion in 2030 at a CAGR of 47.6% from 2020 to 2024, and at a CAGR of 27.9% from 2024 to 2030, and the biopharmaceutical market share in the PRC market for autoimmune diseases is expected to increase from 28.6% in 2020 to 68.8% in 2030.

– 19 –

The overall scale of existing patients with autoimmune diseases in China is huge. With the continuous improvement of the diagnosis and treatment rate of autoimmune diseases in China and the continuous progress of related medical technologies, the market size of RA in China is expected to expand rapidly. According to Frost & Sullivan, the market size of RA in China is expected to increase from US$2.4 billion in 2020 to US$12.8 billion in 2030 and is expected to increase at a CAGR of 22.5% from 2020 to 2024 and at a CAGR of 15.5% from 2024 to 2030. We have been focusing on the R&D of monoclonal antibody drugs in the field of autoimmune diseases for more than 20 years, our existing product pipeline covers all indications in the field of autoimmune diseases. We are one of a few biopharmaceutical companies in China with full-fledged capability that integrates all-industry functionalities, including R&D, production and commercialisation. Once Suciraslimab can be successfully commercialised, leveraging on the first-mover advantage in the first-in-target and first-in-class of Suciraslimab and its competitive advantage in its relatively safety profile over existing and potential market competitors, precisely formulating R&D and sales strategies, and focusing on the target group, we believe that we can create certain values in the huge market share, and the successful launch of Suciraslimab will be an important milestone in the development of the Group.

COVID-19

Where the outbreak of COVID-19 continues and/or worsens, the Company’s clinical trial development will continue to be affected. As of the date of this announcement, the pandemic has affected one clinical trial in the PRC, since a number of out-patient clinics have closed temporarily, patients or subjects have generally avoided visiting hospitals and certain hospitals have put on hold the enrollment of patients or subjects for clinical trials. The pandemic has also affected and will have continuous negative impact on logistic and related preparations for global clinical studies, due to the strict boarder control and travel limitations during pandemic. Save as disclosed in this announcement, as at the date of this announcement, all other operations of the Company have been conducted as normal so far, but can be impacted if the pandemic continues.

STRATEGIC IN-HOUSE PLATFORMS FOR ESTABLISHING STRONG PIPELINE

We are armed with several innovative technological and therapeutic platforms, allowing us to come up with novel antibody candidates that are specific for novel targets, achieving therapeutic effects via novel mechanisms of actions:

Antibody Humanisation Platform

Most antibodies are produced in a murine background, and antibody humanisation (a genetic engineering approach) is needed to convert the murine sequence into human sequence without affecting the affinity and specificity of the original antibody (parent antibody). We employ a novel approach known as “Framework-patching” to introduce “human-ness” in a functional perspective (functional humanisation). Our SM06 and SM09 antibodies were humanised using this novel technology unique to the Company.

– 20 –

B-cell Therapeutic Platform

The Company was established with an initial focus on developing therapeutics that target B cells. As more and more data accumulated and the functions of these B cell antigens/ targets and the roles of B cells played in the immune system were better understood, their potentials for treating autoimmune diseases had become prominent — forming our bases for “B cell therapy approach”. There are possibilities of use in combination of our different products developed on our B cell therapeutic platform in the future. These antigens and targets include:

• a. CD22 — our SM03 and SM06, anti-CD22 antibody, were developed under our B-cell therapeutic platform.

• b. CD20 — our SM09, a framework-patched version of a novel anti-CD20 antibody, was developed under our B-cell therapeutic platform.

• c. BTK — our SN1011, a third generation covalent reversible BTK inhibitor, was developed to maximise the therapeutic benefits of B cell therapy.

Alarmins-pathway Therapeutic Platform

The immune system is an interplay between different cell lineages and factors; but the majority of which include B cell, T cell and cytokines. Albeit our good coverage on B cell specific targets, there are other areas we need to fill in in order to address other immune related ailments. While most cytokines are well studied, and products against which approved, there emerges a new class of factors known as alarmins that are upstream of the immune pathway. These alarmins play crucial roles in autoimmune diseases involving the respiratory tract and dermatological tissues such as asthma, AD, IPF, etc.

IL25 is one of the three alarmins that targets a particular receptor called IL-17RB. Our SM17 is a humanised, IgG4-k monoclonal antibody targeting IL-17RB, developed under our alarmins-pathway therapeutic platform.

Selective-T Cell Therapeutic Platform

Our pipeline covers B cell and Alarmins/cytokines, and there exists a major missing piece in the immunotherapy portfolio — T cells. The T-cell associated receptor is not well researched in the biopharma area as its function is promiscuous. We have developed a platform to isolate antibodies that have selective binding to the receptor, resulting in the identification of a battery of antibodies with differentiated functionality covering a wide range of immunological diseases.

– 21 –

Neurological Disease Platform

In 2019, there was a paper published on the journal Nature that demonstrated that antiCD22 antibody would have therapeutic effects on degenerative neurological disease in a murine model. We researched the possibility of using SM03 for treating Alzheimer’s disease and found that CD22 is significantly expressed in microglia and other neurological cells.

The discovery that anti-CD22 antibody can induce the internalisation of Aβ protein has led to the development of bispecific antibodies that target anti-inflammatory cell surface antigens and Aβ protein for treating Alzheimer’s and other neurological diseases. Product candidates are descendants of the SM03/SM06 lineage.

FINANCIAL REVIEW

Other income and gains, net

Our other income and gains consist primarily of bank interest income, changes in fair value on a financial asset at fair value through profit or loss, government grants and foreign exchange gain. Total other income and gains were approximately RMB7.9 million for the Reporting Period, representing a decrease of approximately RMB4.8 million from the six months ended 30 June 2021, was mainly due to a decrease in bank interest income of approximately RMB4.3 million.

R&D costs

Laboratory consumable and experiment costs Employment costs Milestone payment of co-developed products Others	Six months ended 30 June 2022 2021 RMB’000 RMB’000 (unaudited) (unaudited) 43,086 70,258 27,307 15,113 4,324 – 7,414 4,611 82,131 89,982	Six months ended 30 June 2022 2021 RMB’000 RMB’000 (unaudited) (unaudited) 43,086 70,258 27,307 15,113 4,324 – 7,414 4,611 82,131 89,982
		89,982

Our R&D costs mainly include laboratory consumables, experiment costs, employment costs of R&D employees, co-development fee, depreciation of right-of-use assets relating to leases of research facilities and depreciation of research and testing equipment.

– 22 –

For the six months ended 30 June 2022 and 2021, we incurred R&D costs of approximately RMB82.1 million and RMB90.0 million, respectively. The decrease in costs of business development in R&D during the Reporting Period was mainly attributable to (i) a decrease in laboratory consumable and experiment cost amounting to approximately RMB27.2 million due to completion of patients enrollment for Suciraslimab phase III clinical trial for RA as of 31 December 2021 and completion of Phase I study (First-in-Human) for SN1011 in Australia and China in July 2021; offset by (ii) an increase in employment costs of R&D employees in particular for the expansion of our clinical department amounting to approximately RMB12.2 million; (iii) an increase of approximately RMB4.3 million in milestone payment following the IND application approval for SM17; and (iv) an increase of approximately RMB2.5 million in depreciation and amortisation charges in relation to R&D activities.

Administrative expenses

Our administrative expenses primarily consist of employee costs of administrative personnel, depreciation of right-of-use assets relating to leases of office space, depreciation and amortisation, rental and property management fees, consulting and auditing fees, legal and other professional advisory service fees, office expenses, transportation costs and others.

For the six months ended 30 June 2022 and 2021, our total administrative expenses were approximately RMB33.8 million and RMB32.9 million, respectively. The slight increase was mainly due to (i) an increase in the employment related costs for our business expansion of approximately RMB4.0 million; and offset by (ii) a decrease in the legal and professional fee of approximately RMB2.0 million in the Reporting Period.

Other expenses, net

For the six months ended 30 June 2022, there was foreign exchange loss, net, of approximately RMB29.5 million (six months ended 30 June 2021: foreign exchange gain, net RMB2.4 million). During the Reporting Period, most of the Company’s cash and cash equivalents were denominated in RMB. The majority of the exchange loss, which was caused by the difference of the functional currency of Hong Kong headquarters in HKD and the presentation currency of the Group in RMB, did not represent the Company’s actual loss.

Liquidity and capital resources

The Group has always adopted a prudent treasury management policy. The Group places strong emphasis on having funds readily available and accessible and is in a stable liquidity position with sufficient funds in standby banking facilities to cope with daily operations and meet its future development demands for capital.

– 23 –

As at 30 June 2022, cash and cash equivalents and structured deposit totalled RMB407.8 million, as compared to RMB563.0 million as at 31 December 2021. The net decrease of approximately RMB155.2 million was mainly due to spending on (i) the capital expenditures of approximately RMB61.0 million, mainly for our commercial production base in Suzhou; (ii) the net cash used in operating activities, of approximately RMB145.6 million; offset by (iii) the net increase in the bank borrowing of approximately RMB26.5 million; and (iv) the net effect of foreign exchange rate change of approximately RMB30.8 million mainly due to weakening of RMB in the Reporting Period.

The following table sets forth a condensed summary of the Group’s interim condensed consolidated statement of cash flows for the periods indicated and analysis of balances of cash and cash equivalents for the periods ended indicated:

Net cash flows used in operating activities Net cash flows used in investing activities Net cash flows from/(used in) financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the period Effect of foreign exchange rate changes, net Cash and cash equivalents at the end of the period Analysis of balances of cash and cash equivalents Cash and cash equivalents as stated in the interim condensed consolidated statement of financial position Bank balances restricted for special purpose Cash and cash equivalents as stated in the interim condensed consolidated statement of cash flows

Six months ended 30 June 2022 2021 RMB’000 RMB’000 (unaudited) (unaudited) (145,587) (88,857) (101,687) (62,511) 20,905 (7,846) (226,369) (159,214) 562,983 810,370 30,773 (8,096) 367,387 643,060 Six months ended 30 June 2022 2021 RMB’000 RMB’000 (unaudited) (unaudited) 367,638 643,060 (251) – 367,387 643,060

As at 30 June 2022, cash and cash equivalents were mainly denominated in Renminbi, United States dollars and Hong Kong dollars.

Note: Together with structured deposit of RMB40.0 million, the total funding available to use is approximately RMB407.4 million.

– 24 –

Bank borrowings and gearing

As at 30 June 2022, the Group’s outstanding bank borrowings of RMB225.6 million (31 December 2021: RMB198.8 million) were denominated in RMB and carried at a fixed interest rate of 3.30% per annum and variable rates of interest ranging from the People’s Bank of China RMB Loan Prime Rate minus 0.30% per annum to the People’s Bank of China RMB Loan Prime Rate plus 0.25% per annum.

As at 30 June 2022, the amount of unutilised banking facilities for Suzhou production base is approximately RMB471.9 million.

The Group monitored capital using gearing ratio. Gearing ratio is calculated using interest-bearing bank borrowing less cash and cash equivalents divided by total equity and multiplied by 100%. During the Reporting Period, the Group always maintained a net cash position.

Pledge of assets

As at 30 June 2022, land use right of net carrying amount of approximately RMB15.2 million was pledged to secure one of the bank loans borrowed by the Group (31 December 2021: RMB15.5 million).

Capital commitments

Particulars of capital commitments of the Group as at 30 June 2022 are set out in the interim condensed consolidated financial information.

Contingent liabilities

As at 30 June 2022, the Group had no contingent liabilities (2021: Nil).

Significant investments

The Group did not have any significant investment which accounted for more than 5% of the Group’s total assets as at 30 June 2022.

– 25 –

Global offering and use of proceeds

On 12 November 2019, the Company’s shares were listed on The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) (the “ Listing ”) and the Company raised net proceeds of HK$1,272.8 million.

Reference is made to the Company’s prospectus dated 31 October 2019 (the “ Prospectus ”) and announcements dated 22 July 2020, 14 August 2020 and 21 March 2022.

Details of the planned applications of the net proceeds from the Listing (adjusted on a pro-rata basis based on the actual net proceeds) were disclosed in the Prospectus and subsequently revised and disclosed in the Company’s announcements dated 22 July 2020, 14 August 2020 and 21 March 2022. The following table sets out the planned applications of the net proceeds and the actual usage up to 30 June 2022:

				Expected
		Actual	Unutilised	timeline for full
		utilisation	net proceeds	utilisation of
	Planned	up to	as at	the unutilised
Use of proceeds	applications(Note 1)	30 June 2022	30 June 2022	net proceeds(Note 2)
	(HK$ million)	(HK$ million)	(HK$ million)
For the R&D and commercialisation of our drug
candidates
For the R&D and commercialisation of our core
product, SM03, to fund clinical trials for SM03
including (i) ongoing and planned clinical trials
in the PRC; (ii) additional clinical trials to be
initiated in the PRC for additional indications;
(iii) clinical trials in Australia and the United
States; and (iv) New Drug Application
registration filings and the commercial
launch of SM03	220.9	199.1	21.8	By the end of 2022
To fund pre-clinical research, clinical trials,
production, preparation for registration filings
and potential commercial launches of the other
drug candidates in our pipeline	279.4	237.5	41.9	By the end of 2023
To further advance our R&D programmes, expand
our R&D team, build our commercialisation
team, develop our proprietary technology and
enhance our full-spectrum platform	52.4	47.1	5.3	By the end of 2022
For the discovery and development of new drug
candidates not currently in our pipeline to
diversify our product portfolio	84.9	57.0	27.9	N/A_(Note 3)_
For the construction of our Suzhou production base
primarily for the commercial-scale production of
our core product SM03
For the purchase of laboratory equipment, primarily
for the R&D of SM03 and potentially for the
R&D of other products in our pipeline	85.8	27.6	58.2	By the end of 2022
For the purchase of manufacturing equipment,
primarily for the production of SM03	59.7	9.9	49.8	By the end of 2022

– 26 –

				Expected
		Actual	Unutilised	timeline for full
		utilisation	net proceeds	utilisation of
	Planned	up to	as at	the unutilised
Use of proceeds	applications(Note 1)	30 June 2022	30 June 2022	net proceeds(Note 2)
	(HK$ million)	(HK$ million)	(HK$ million)
For the construction of the Suzhou production base
For the construction of additional R&D facilities
and purchase of laboratory equipment to aid the
ongoing R&D of SM03 for the treatment of
rheumatoid arthritis, systemic lupus
erythematosus, non-Hodgkin’s lymphoma and
other potential indications, R&D of SM03 at
commercialisation to enhance craftsmanship for
large- scale production, as well as the
development of other products in our pipeline	107.6	53.2	54.4	By the end of 2022
For the construction of an upstream production
facility and downstream purification facility	88.2	6.1	82.1	By the end of 2022
For the purchase of land from the Suzhou Dushu
Lake Higher Education Town and other expenses
related to the expansion of our Suzhou
production base	117.9	86.4	31.5	By the end of 2023
For our working capital, expanding internal
capabilities and other general corporate
purposes	137.2	118.3	18.9	N/A
Collaboration with D2M Group	38.8	38.8	–	N/A
Total	1,272.8	881.0	391.8

Notes:

• (1) Planned applications as revised and disclosed in the Company’s announcements dated 22 July 2020, 14 August 2020 and 21 March 2022.

• (2) The expected timeline for utilising the unutilised net proceeds is based on the best estimation made by the Group. It is subject to change based on the future development and events which may be outside of the Group’s control.

• (3) As the discovery and development of new drug candidates not currently in pipeline is a continuous and ongoing process, the Company is unable to set out a detailed timeline for the utilisation of such net proceeds.

Such utilisation of the net proceeds was in accordance with the planned applications as set out in the above. The unutilised portion of the net proceeds will be applied in a manner consistent with the above planned applications.

– 27 –

PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES

During the Reporting Period, neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of the Company’s listed securities.

MODEL CODE FOR DIRECTORS’ 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 Rules Governing the Listing of Securities on the Stock Exchange (the “ Listing Rules ”) as its own code of conduct regarding Directors’ securities transactions. Having made specific enquiries with each of the Directors, all the Directors confirmed that they had complied with such code of conduct throughout the Reporting Period and to the date of this announcement.

PRELIMINARY ANNOUNCEMENT OF INTERIM RESULTS

The financial information relating to the year ended 31 December 2021 included in this preliminary results announcement does not constitute the Company’s statutory annual consolidated financial statements for that year but is derived from those financial statements. Further information relating to these statutory financial statements required to be disclosed in accordance with section 436 of the Companies Ordinance (Chapter 622 of the Laws of Hong Kong) (the “ Companies Ordinance ”) is as follows:

• The Company has delivered the financial statements for the year ended 31 December 2021 to the Registrar of Companies as required by section 662(3) of, and Part 3 of Schedule 6 to, the Companies Ordinance.

• The Company’s auditor has reported on the financial statements of the Group for the year ended 31 December 2021. The auditor’s report was unqualified and not modified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying its reports, and did not contain a statement under sections 406(2), 407(2) or 407(3) of the Companies Ordinance.

– 28 –

CORPORATE GOVERNANCE

The Board is committed to achieving high corporate governance standards. The Board believes that high corporate governance standards are essential to providing a framework for the Group to safeguard the interests of shareholders, enhance corporate value, formulate its business strategies and policies, and enhance its transparency and accountability. The Company has applied the principles and code provisions as set out in the Corporate Governance Code (the “ CG Code ”) contained in Appendix 14 to the Listing Rules during the six months ended 30 June 2022.

The Board is of the view that during the six months ended 30 June 2022, the Company has complied with all applicable code provisions as set out in the CG Code, save for the deviation as disclosed below.

Pursuant to code provision C.2.1 in the CG Code, the roles of chairman and chief executive should be separate and should not be performed by the same individual. Dr. Shui On LEUNG (“ Dr. Leung ”) is currently both the chairman and the chief executive officer of the Company. The Board believes that Dr. Leung is the Director best suited, among all Directors, to identify strategic opportunities and focus in view of his extensive understanding of the Company’s business as a founder and the chief executive officer. The Board further believes that the combined role of chairman and chief executive officer will not impair the balance of power and authority between the Board and the management of our Company, given that: (i) decisions to be made by the Board require approval by at least a majority of the Directors; (ii) Dr. Leung and the other Directors are aware of and have undertaken to fulfil their fiduciary duties as Directors, which require, amongst other things, that they act for the benefit and in the best interests of the Company as a whole and will make decisions for the Company accordingly; (iii) the balance of power and authority is protected by the operations of the Board, which consists of an executive Director (Dr. Leung), five non-executive Directors and four independent non-executive Directors, and has a fairly strong independence element; and (iv) the overall strategies and other key business, financial, and operational policies of the Company are made collectively after thorough discussions at both the Board and senior management levels. Therefore, the Board considers that it is in the best interests of the Group for Dr. Leung to take up both roles for business development and effective management, and the deviation from the code provision C.2.1 in the CG Code is appropriate in such circumstances.

Save as disclosed in this announcement, from 1 January 2022 to 30 June 2022, there were no other material changes in respect of the Company that needed to be disclosed under paragraph 46 of Appendix 16 to the Listing Rules.

– 29 –

INTERIM DIVIDENDS

The Directors have resolved not to declare an interim dividend for the six months ended 30 June 2022 (2021: Nil).

INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS

For the six months ended 30 June 2022

Notes Other income and gains, net Research and development costs Administrative expenses Finance costs Other expenses, net 3 Share of loss of an associate LOSS BEFORE TAX Income tax expense 4 LOSS FOR THE PERIOD LOSS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT Basic and diluted (RMB) 5	2022 RMB’000 (Unaudited) 7,903 (82,131) (33,849) (2,140) (30,382) (3,191) (143,790) – (143,790) 0.15	2021 RMB’000 (Unaudited) 12,745 (89,982) (32,861) (2,499) (138) (1,668) (114,403) – (114,403) 0.11

– 30 –

INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2022

LOSS FOR THE PERIOD OTHER COMPREHENSIVE INCOME/(LOSS) Other comprehensive income/(loss) that will not be reclassified to profit or loss in subsequent periods: Exchange differences on translation to the presentation currency TOTAL COMPREHENSIVE LOSS FOR THE PERIOD	2022 RMB’000 (Unaudited) (143,790) 32,318 (111,472)	2021 RMB’000 (Unaudited) (114,403) (9,331) (123,734)

– 31 –

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

30 June 2022

Notes NON-CURRENT ASSETS Property, plant and equipment Right-of-use assets Investment in an associate Intangible assets Deposits Other non-current assets Total non-current assets CURRENT ASSETS Prepayments, deposits and other receivables Financial asset at fair value through profit or loss 7 Cash and cash equivalents Total current assets CURRENT LIABILITIES Other payables and accruals Lease liabilities Interest-bearing bank borrowings Total current liabilities NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES NON-CURRENT LIABILITIES Lease liabilities Interest-bearing bank borrowings Total non-current liabilities Net assets EQUITY Equity attributable to owners of the parent Share capital 8 Reserves Total equity	30 June 2022 RMB’000 (unaudited) 275,920 95,804 25,079 1,928 2,477 72,944 474,152 40,121 40,204 367,638 447,963 56,203 11,060 12,500 79,763 368,200 842,352 60,536 213,062 273,598 568,754 1,679,126 (1,110,372) 568,754	31 December 2021 RMB’000 (audited) 253,285 102,922 26,933 1,921 2,444 58,465 445,970 32,702 – 562,983 595,685 85,970 7,394 5,000 98,364 497,321 943,291 69,288 193,777 263,065 680,226 1,679,126 (998,900) 680,226

– 32 –

NOTES

1. BASIS OF PREPARATION

The interim condensed consolidated financial information for the six months ended 30 June 2022 has been prepared in accordance with Hong Kong Accounting Standard (“ HKAS ”) 34 Interim Financial Reporting . The interim condensed consolidated financial information does not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group’s annual consolidated financial statements for the year ended 31 December 2021.

The financial information relating to the year ended 31 December 2021 that is included in the interim condensed consolidated statement of financial position as comparative information does not constitute the Company’s statutory annual consolidated financial statements for that year but is derived from those financial statements. Further information relating to those statutory financial statements required to be disclosed in accordance with section 436 of the Hong Kong Companies Ordinance is as follows:

The Company has delivered the financial statements for the year ended 31 December 2021 to the Registrar of Companies as required by section 662(3) of, and Part 3 of Schedule 6 to, the Hong Kong Companies Ordinance. The Company’s auditors have reported on the financial statements for the year ended 31 December 2021. The auditor’s report was unqualified; and did not contain a statement under sections 406(2), 407(2) or 407(3) of the Hong Kong Companies Ordinance.

2. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

The accounting policies adopted in the preparation of the interim condensed consolidated financial information are consistent with those applied in the preparation of the Group’s annual consolidated financial statements for the year ended 31 December 2021, except for the adoption of the following revised Hong Kong Financial Reporting Standards (“ HKFRSs ”) for the first time for the current period’s financial information.

Amendments to HKFRS 3	Reference to the Conceptual Framework
Amendments to HKAS 16	Property, Plant and Equipment: Proceeds before
	Intended Use
Amendments to HKAS 37	Onerous Contracts — Cost of Fulfilling a Contract
Annual Improvements to	Amendments to HKFRS 1, HKFRS 9, Illustrative Examples
HKFRSs 2018-2020	accompanying HKFRS 16, and HKAS 41

The nature and impact of the revised HKFRSs are described below:

• (a) The Amendments to HKFRS 3, HKAS 16 and HKAS 37 are not expected to have any significant impact on the financial position or performance of the Group.

• (b) Annual Improvements to HKFRSs 2018-2020 sets out amendments to HKFRS 1, HKFRS 9, Illustrative Examples accompanying HKFRS 16, and HKAS 41. HKFRS 16 Leases removes the illustration of payments from the lessor relating to leasehold improvements in Illustrative Example 13 accompanying HKFRS 16, which removes potential confusion regarding the treatment of lease incentives when applying HKFRS 16. Other amendments above did not have any impact on the financial position or performance of the Group.

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3. OTHER EXPENSES, NET

Foreign exchange loss, net Others	Six months ended 30 June 2022 2021 RMB’000 RMB’000 (unaudited) (unaudited) 29,546 – 836 138 30,382 138	Six months ended 30 June 2022 2021 RMB’000 RMB’000 (unaudited) (unaudited) 29,546 – 836 138 30,382 138
		138

4. INCOME TAX

No Hong Kong profits tax has been made as the Company did not generate any assessable profit during the period (six months ended 30 June 2021: Nil).

Under the Law of the PRC of Enterprise Income Tax (the “ EIT Law ”) and Implementation Regulation of the EIT Law, the estimated tax rate of the Group’s PRC subsidiaries is 25% during the periods presented in the interim condensed consolidated financial statements. No PRC Enterprise Income Tax was provided for as there was no estimated assessable profit of the Group’s PRC subsidiaries during the periods presented in the interim condensed consolidated financial statements.

Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the countries (or jurisdictions) in which the Group operates.

5. LOSS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT

The calculation of the basic loss per share amounts is based on the consolidated loss for the period attributable to ordinary equity holders of the parent, and the weighted average number of ordinary shares of 988,144,900 (six months ended 30 June 2021: 1,001,741,519) in issue during the period, as adjusted to exclude the shares held under the share award scheme of the Company.

No adjustment has been made to basic loss per share presented for the six months ended 30 June 2022 and 2021 as the Group has no potentially dilutive ordinary shares in issue during those periods.

6. DIVIDENDS

No dividend was paid or declared by the Company during the six months ended 30 June 2022 and 2021.

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7. FINANCIAL ASSET AT FAIR VALUE THROUGH PROFIT OR LOSS

		30 June	31 December
		2022	2021
	Note	RMB’000	RMB’000
		(unaudited)	(audited)
Structured deposit	(i)	40,204	–

Note:

• (i) The structured deposit is principal-protected and a minimum rate of return is guaranteed. The structured deposit was mandatorily classified as financial asset at fair value through profit or loss as its contractual cash flows are not solely payments of principal and interest. The Group has estimated the fair value of the structured deposit based on fair value provided by the financial institution. As of 30 June 2022, the maturity of the structured deposit is within one month, with an expected return rate ranging from 1.60% to 3.80% per annum.

8. SHARE CAPITAL

	30 June	31 December
	2022	2021
	RMB’000	RMB’000
Issued and fully paid:
1,006,240,400 (2021: 1,006,240,400) ordinary shares	1,679,126	1,679,126

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REVIEW OF INTERIM RESULTS

The independent auditor of the Company, Ernst & Young, has reviewed the interim condensed consolidated financial information in accordance with the Hong Kong Standard on Review Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Hong Kong Institute of Certified Public Accountants.

The Audit Committee currently comprises four independent non-executive Directors being Mr. Ping Cho Terence HON (Chairman), Mr. George William Hunter CAUTHERLEY, Dr. Chi Ming LEE and Mr. Dylan Carlo TINKER. The Audit Committee has jointly reviewed with the management and the independent auditor of the Company the accounting principles and policies adopted by the Company and discussed internal control and financial reporting matters (including the review of the unaudited interim results for the six months ended 30 June 2022) of the Group. The Audit Committee considered that the interim results are in compliance with the applicable accounting standards, laws and regulations, and the Company has made appropriate disclosures thereof.

PUBLICATION OF CONDENSED CONSOLIDATED INTERIM RESULTS AND 2022 INTERIM REPORT ON WEBSITES OF STOCK EXCHANGE AND COMPANY

This interim results announcement is published on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (www.sinomab.com). The 2022 interim report of the Company containing all the information required by the Listing Rules will be despatched to the shareholders of the Company and published on the respective websites of the Stock Exchange and the Company in due course.

By order of the Board of SinoMab BioScience Limited Dr. Shui On LEUNG

Executive Director, Chairman and Chief Executive Officer

Hong Kong, 22 August 2022

As at the date of this announcement, the executive Director is Dr. Shui On LEUNG, the non-executive Directors are Dr. Haigang CHEN, Mr. Xun DONG, Ms. Wenyi LIU, Ms. Jie LIU and Mr. Lei SHI, and the independent non-executive Directors are Mr. George William Hunter CAUTHERLEY, Mr. Ping Cho Terence HON, Dr. Chi Ming LEE and Mr. Dylan Carlo TINKER.

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