Venus Medtech (Hangzhou) Inc.

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

This announcement appears for information purposes only and does not constitute any invitation or offer to acquire, purchase or subscribe for any securities.

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杭州啓明醫療器械股份有限公司

(A joint stock company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 2500)

DISCLOSEABLE TRANSACTION ACQUISITION OF EQUITY INTERESTS IN MITRALTECH AND SUBSCRIPTION OF CONVERTIBLE LOAN

SHARE PURCHASE AGREEMENT

The Board announces that, on December 7, 2021 (after trading hours), the Company entered into the Share Purchase Agreement with the Purchaser, the Target Company, Target Company Selling Shareholders and Selling Shareholders’ Representative, pursuant to which the Purchaser has agreed to acquire, and each of the Target Company Selling Shareholders has agreed to sell, all of the issued and outstanding shares of the Target Company (other than the Company-Owned Equity).

The Consideration under the Share Purchase Agreement consists of (i) the Aggregate Closing Consideration, and (ii) the Earn-Out Consideration, which represents contingent payments upon the achievement of certain milestone events and may include the Regulatory Mitral Earn-Out Consideration, the Regulatory Tricuspid Earn-Out Consideration, and the Minimum Patient Earn-Out Consideration. Upon the Closing of the Share Purchase, the Company will hold the entire share capital of the Target Company through the Purchaser.

For details, see the sections headed “Share Purchase and Provision of Convertible Loan” and “Share Purchase Agreement” below.

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CONVERTIBLE LOAN AGREEMENT

On December 7, 2021, concurrently with the execution of the Share Purchase Agreement, and as an inducement to the Target Company entering into the Share Purchase Agreement and to cause the Share Purchase and the other transactions thereunder to be consummated, the Company and Venus HK, a wholly-owned subsidiary of the Company, also entered into the Convertible Loan Agreement with the Target Company and Cardiovalve, which is a non wholly-owned subsidiary of the Target Company as of the date of this announcement and will become a wholly-owned subsidiary of the Target Company prior to the Closing, pursuant to which Venus HK has agreed to provide US$23,000,000 to the Cardiovalve in the form of a convertible loan. For details, see the sections headed “Share Purchase and Provision of Convertible Loan” and “Convertible Loan Agreement” below.

IMPLICATIONS OF THE LISTING RULES

As one or more of the applicable percentage ratio(s) in respect of the Share Purchase and the Convertible Loan, when aggregated, is more than 5% but less than 25%, the entering into of the Share Purchase Agreement and the Convertible Loan Agreement constitutes a discloseable transaction on the part of the Company under Chapter 14 of the Listing Rules and is subject to the notification and announcement requirements but exempt from the Shareholders’ approval requirement under Chapter 14 of the Listing Rules.

Completion of the Share Purchase is subject to the conditions precedent as set out in the Share Purchase Agreement. Accordingly, the Share Purchase may or may not proceed. Shareholders and potential investors of the Company are advised to exercise caution when dealing in the H Shares and other securities of the Company.

SHARE PURCHASE AND PROVISION OF CONVERTIBLE LOAN

The Board announces that, on December 7, 2021 (after trading hours), the Company entered into the Share Purchase Agreement with Athena Medtech Holding Ltd, being the Purchaser, Mitraltech Holdings Ltd., being the Target Company, certain selling shareholders of the Target Company, being the Target Company Selling Shareholders, and MTH Shareholder Representative LLC, being the Selling Shareholders’ Representative, pursuant to which the Company has agreed to acquire, and each of the Target Company Selling Shareholders has agreed to sell, all of the issued and outstanding shares of the Target Company (other than Company-Owned Equity).

The Consideration under the Share Purchase Agreement consists of (i) the Aggregate Closing Consideration, and (ii) the Earn-Out Consideration which represents contingent payments upon the achievement of certain milestone events and may include the Regulatory Mitral Earn-Out Consideration, the Regulatory Tricuspid Earn-Out Consideration, and the Minimum Patient Earn-Out Consideration. Upon Closing, the Company will hold the entire share capital of the Target Company.

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For details, see the section headed “Share Purchase Agreement” below.

On December 7, 2021, concurrently with the execution of the Share Purchase Agreement, and as an inducement to the Target Company entering into the Share Purchase Agreement and to cause the Share Purchase and the other transactions thereunder to be consummated, the Company and Venus HK, a wholly-owned subsidiary of the Company, also entered into the Convertible Loan Agreement with the Target Company and the Borrower, pursuant to which Venus HK has agreed to provide US$23,000,000 to the Borrower in the form of a Convertible Loan. For details, see the section headed “Convertible Loan Agreement” below.

SHARE PURCHASE AGREEMENT

The principal terms of the Share Purchase Agreement are set out as follows:

Date

December 7, 2021

Parties

Parties to the Share Purchase Agreement include:

(i) the Company;
(ii) the Purchaser;
(iii) the Target Company;
(iv) the Target Company Selling Shareholders, being all current shareholders of the Target Company excluding Keystone, a wholly-owned subsidiary of the Company, which currently holds 799,443 Series C Preferred Shares of the Target Company; and
(v) the Selling Shareholders’ Representative, which has been appointed by each of the Target Company Selling Shareholders as his, her or its agent and attorney-in-fact to enter into any agreement in connection with the Share Purchase Agreement and any documents in connection therewith.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, each of the counterparties and their ultimate beneficial owners is a third party independent of, and not connected with, the Company and its connected persons.

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Subject of Share Purchase

Subject to the terms and conditions in the Share Purchase Agreement, the Purchaser has agreed to acquire, and each of the Target Company Selling Shareholders has agreed to sell all of the issued and outstanding shares of the Target Company (other than the Company-Owned Equity).

Consideration

Pursuant to the Share Purchase Agreement, the Consideration for the Share Purchase shall consist of the following:

the Aggregate Closing Consideration (as described below); and
the Earn-Out Consideration (as described below) payable upon the achievement of certain milestone events.

Aggregate Closing Consideration

The Aggregate Closing Consideration payable by the Purchaser is an amount equal to (a) US$150,000,000, which will be subject to certain customary adjustments contemplated by the Share Purchase Agreement, including but not limited to estimates of (b) an increase to account for the aggregate exercise price of all outstanding and unexercised options to purchase ordinary shares in the Target Company granted pursuant to the Target Company’s share option plan immediately prior to the Closing, (c) an increase to account for the total amount of cash of the Target Company as of the date of the Closing, (d) a positive, negative or zero amount by which the working capital of the Target Company as of the date of the Closing less than an agreed amount, (e) a reduction for the amount of US$1,000,000 payable by the Purchaser to the Selling Shareholders’ Representative, (f) a reduction for the indebtedness of the Target Company as of the date of the Closing, and (g) a reduction for the transaction expenses incurred as of the date of the Closing.

At the Closing, the Purchaser shall make, or cause to be made, the payments contemplated by the Share Purchase Agreement, including the payment of (i) a cash amount equal to the estimated Aggregate Closing Consideration based on the Target Company’s calculations to be delivered by the Target Company to the Purchaser prior to the date of the Closing (the “ Estimated Closing Consideration ”), (ii) general escrow amount in cash equal to US$18,750,000, and (iii) adjustment escrow amount in cash equal to US$250,000 (the “ Adjustment Escrow Amount ”).

By no later than 90 days after the Closing, the Purchaser shall deliver to the Selling Shareholders’ Representative a closing statement containing the Purchaser’s calculations of the Aggregate Closing Consideration. The Estimated Aggregate Closing Consideration will be subject to a customary post-Closing adjustment based on the actual amount of the Aggregate Closing Consideration to be determined in accordance with the Share Purchase Agreement, provided that in no circumstances shall the amount of the adjustment exceed the Adjustment Escrow Amount.

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Earn-Out Consideration

As additional consideration for the Share Purchase, the Purchaser has agreed to make the following contingent payments to the Participating Holders not exceeding US$116,000,000 in the event that certain milestones can be achieved during the earn-out period as defined in the Share Purchase Agreement (the “ Earn-Out Period ”):

US$50,000,000 payable upon the Company, the Purchaser or any of their respective affiliates receiving a CE Mark, FDA approval or NMPA approval for the Cardiovalve MV Device on or prior to the last day of the Earn-Out Period (the “ Regulatory Mitral Earn-Out Consideration ”);
US$50,000,000 payable upon the Company, the Purchaser or any of their respective affiliates receiving a CE Mark, FDA Approval or NMPA Approval for the Cardiovalve TV Device on or prior to the last day of the Earn-Out Period (the “ Regulatory Tricuspid Earn-Out Consideration ”); and
US$16,000,000 payable in the event that, on or prior to the end of the Earn-Out Period, at least ten total patients (i) are implanted in mainland China with the Cardiovalve MV Device and/or the Cardiovalve TV Device by the Company, the Purchaser or any of their respective affiliates, (ii) are subsequently discharged from the hospital and (iii) survive for 90 days of follow-up from the time of implantation with the implanted Cardiovalve MV Device or Cardiovalve TV Device appearing to be functioning as designed (the “ Minimum Patient Earn-Out Consideration ”, and together with the Regulatory Mitral Earn-Out Consideration and the Regulatory Tricuspid Earn-Out Consideration, the “ Earn-Out Consideration ” or “ Contingent Payments ”);

Upon the consummation of a Change in Control transaction of the Company or the Target Company at any time following the Closing and prior to the end of the Earn-Out Period, (i) 35% of each outstanding and unpaid Contingent Payment(s) will be accelerated and payable by the Purchaser, which shall be immediately deposited by the Purchaser with the paying agent for further distribution to the Participating Holders, and (ii) the remaining 65% of each outstanding and unpaid Contingent Payment(s) shall remain obligations of the Purchaser and shall be assumed by, and remain obligations of, the transferees or purchasers in such Change in Control transaction in accordance with the terms and conditions in the Share Purchase Agreement.

In the event that, during the Earn-Out Period, the Company, the Purchaser or any of their respective affiliates (including the Target Company) sells or assigns to any person the intellectual property owned or licensed by the Target Company or assets of the Target Company as of immediately prior to the Closing or assets primarily relating to the Cardiovalve TV Device or the Cardiovalve MV Device, (i) 35% of each outstanding and unpaid Contingent Payment(s) will be accelerated and payable by the Purchaser, which shall be immediately deposited by the Purchaser with the paying agent for further distribution to the Participating Holders, and (ii) the remaining 65% of each outstanding and unpaid Contingent Payment(s) shall remain obligations of the Purchaser and shall be deemed due and payable by the Purchaser in accordance with the terms and conditions in the Share Purchase Agreement.

At the Closing, the Target Company will set aside a retention bonus of up to US$6,000,000 payable in cash to certain employees identified in the Share Purchase Agreement subject to the vesting schedules, targets and other conditions identified in a schedule to the Share Purchase Agreement.

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Basis for determining the Consideration in relation to the Share Purchase Agreement

The Consideration was determined based on arm’s length negotiations on normal commercial terms principally with reference to, among others, (a) the pre-money valuation of the Target Company of US$250,000,000 when the Company acquired the Company-Owned Equity; (b) the Company’s review of the Target Company’s historical performance and its business and outlook; and (c) the Company’s assessment on the prospects of the biological technology industry and the synergies that can be created between the Target Company and the Company.

Conditions precedent

The obligations of each party to the Share Purchase Agreement to effect the Share Purchase shall be conditional upon the satisfaction of the conditions as set out below:

(1) no governmental entity will have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, executive order, decree, injunction or other order (whether temporary, preliminary or permanent) which is in effect and which has the effect of making the Share Purchase illegal or otherwise prohibiting consummation of the Share Purchase;
(2) no temporary restraining order, preliminary or permanent injunction or other order, legal restraint or prohibition issued by any court of competent jurisdiction preventing the consummation of the Share Purchase will be in effect; and
(3) all authorizations, consents, orders or approvals of, or declarations or filings with, or expirations of waiting periods imposed by, any governmental entity will have been filed, occurred or been obtained to the extent set forth in the disclosure schedule provided by the Target Company to the Company and the Purchaser on the date of the Share Purchase Agreement.

In addition to the conditions to obligations of each party to the Share Purchase Agreement to effect the Share Purchase as set out above, the obligations of the Company and the Purchaser to effect the Share Purchase shall be conditional upon the satisfaction of the conditions including but not limited to the ones as summarized below:

(1) the Target Company and the Target Company Selling Shareholders will have performed and complied in all material respects with those covenants that the Target Company and the Target Company Selling Shareholders, as applicable, are required to perform or comply with at or prior to the Closing;
(2) from the date of the Share Purchase Agreement until the date of the Closing, no fact, condition or event will have occurred and be continuing which has had or would reasonably be expected to have a Company Material Adverse Effect;
(3) each of the restrictive covenant agreements executed by Lawrence C. Best, Amir Gross and certain other Target Company Selling Shareholders in favour of the Purchaser concurrently with the Share Purchase Agreement shall be in full force and effect shall not have been revoked or rescinded by the respective signatories thereto;

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(4) the Target Company will have delivered to the Purchaser duly executed written resignation letters, in form and substance reasonably acceptable to the Purchaser (which shall not contain any form of release), from, or evidence of removal in accordance with applicable law and the Target Company’s and each of its subsidiaries’ organizational documents of, each of the directors and officers of the Target Company and its subsidiaries (other than those directors or officers designated in writing by the Company or the Purchaser to the Target Company not less than three business days prior to the Closing) from their positions as such, in each case to be effective as of the Closing;
(5) certificates, to the extent issued, representing all of the shares of Cardiovalve transferred by the Cardiovalve Minority Shareholders (as defined below) to the Target Company, duly executed by an authorized officer of Cardiovalve on behalf of Cardiovalve and duly executed by each such founder in favor of the Target Company; and
(6) the share registry of Cardiovalve accurately reflecting that, as of immediately prior to the Closing, the Target Company holds 100% of the issued and outstanding share capital of Cardiovalve.

In addition to the conditions to obligations of each party to the Share Purchase Agreement to effect the Share Purchase as set out above, the obligations of the Target Company and the Target Selling Shareholders to effect the Share Purchase shall be conditional upon the satisfaction of the conditions including but not limited to the ones as summarized below:

(1) except for those representations and warranties which address matters only as of a particular date prior to the date of the Share Purchase Agreement (which such representations and warranties will have been true and correct in all material respects as of such particular date), (i) each representation and warranty of the Company and the Purchaser that is qualified by materiality, material adverse effect or any similar phrase will be true and correct as so qualified as of the date of the Closing as though then made, and (ii) each representation and warranty of the Company and the Purchaser that is not qualified by materiality, material adverse effect or any similar phrase will be true and correct in all material respects as of the date of the Closing as though then made; and
(2) each of the Company and the Purchaser will have performed and complied with all of its covenants in all material respects through the Closing.

Guarantee of the Company

The Company has agreed to guarantee the timely performance of, and be jointly and severally liable for, all obligations of the Purchaser under the Share Purchase Agreement.

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Termination

The Share Purchase Agreement may be terminated at any time prior to the Closing as follows:

(1) by mutual written consent of the Company, the Purchaser and the Target Company;
(2) by written notice by the Company or the Purchaser to the Target Company in the event that the Target Company is in breach of any representation, warranty or covenant contained in the Share Purchase Agreement, and such breach (i) individually or in combination with any other such breach, would cause the Closing conditions to the Share Purchase Agreement not to be satisfied as of the date of the Closing and (ii) is not cured within 20 days following delivery by the Company or the Purchaser to the Target Company of written notice of such breach;
(3) by written notice by the Company or the Purchaser to the Target Company if the Closing has not occurred on or before June 6, 2022 by reason of the failure of any Closing condition (unless the Company or the Purchaser has breached in any material respect its obligations under the Share Purchase Agreement in any manner that shall have proximately caused the failure of the Closing to occur on or before such date);
(4) by written notice by the Target Company to the Purchaser in the event that the Company or the Purchaser is in breach of any representation, warranty or covenant contained in the Share Purchase Agreement, and such breach (i) individually or in combination with any other such breach, would cause the Closing conditions not to be satisfied as of the date of the Closing and (ii) is not cured within 20 days following delivery by the Target Company to the Purchaser of written notice of such breach;
(5) by written notice by the Target Company to the Purchaser if the Closing has not occurred for any reason on or before March 31, 2022 (unless the Company has breached in any material respect its obligations under the Share Purchase Agreement in any manner that shall have proximately caused the failure of the Closing to occur on or before such date); and
(6) by written notice by the Target Company to the Purchaser in the event that the Target Company has not actually received the Convertible Loan on or prior to January 3, 2022.

CONVERTIBLE LOAN AGREEMENT

Immediately following the Closing of the Share Purchase, the Convertible Loan will remain outstanding, pursuant to the Share Purchase Agreement.

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The principal terms of the Convertible Loan Agreement are summarized below:

Date December 7, 2021 (the “ Effective Date ”) Parties Venus HK (as the Lender) The Company (as the guarantor) Cardiovalve (as the Borrower) The Target Company Principal amount US$23,000,000 Interest rate A fixed rate per annum equal to 3%, which shall start accruing on the Convertible Loan as of April 1, 2022 Advance date No later than January 3, 2022 Maturity date December 9, 2024 Voluntary prepayment The Borrower shall have the option to prepay all or part of the Convertible Loan provided that the Borrower (i) provides written notice to the Lender of its election to prepay the Convertible Loan at least two business days prior to such prepayment, and (ii) pays, on the date of the prepayment all accrued and unpaid interest with respect to such part of the Convertible Loan through the date the prepayment is made; plus all unpaid principal with respect to such part of the Convertible Loan; provided, that, at any time after twelve months following the Effective Date, the Borrower shall have the option to prepay all or part of the Convertible Loan by exercising the Conversion Option (as defined below) in lieu of repaying such part of the Convertible Loan in the form of cash, and concurrently with the consummation of such exercise of the Conversion Option, the Lender shall execute and deliver to the Target Company a joinder to the Target Company’s shareholders’ agreement, if any.

Conversion on maturity On the Maturity Date, the Borrower, in its sole discretion, may elect to either (a) repay all or part of the outstanding principal amount of the Convertible Loan and all accrued but unpaid interest thereon in cash, or (b) repay all or part of the outstanding principal amount of Convertible Loan and all accrued but unpaid interest thereon, by converting such amounts into preferred shares of the Target Company ranking pari passu in economic respects with the then outstanding senior convertible preferred shares of the Target Company at a US$250,000,000 fully-diluted pre-money valuation of the Target Company (the “ Conversion Option ”).

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Guarantee of the Company

The Company has agreed to irrevocably and unconditionally guarantee, and be jointly and severally liable for, all obligations of Venus HK under the Convertible Loan Agreement. The Company has agreed that its obligations under the Convertible Loan Agreement are as principal and not merely as surety.

CHANGES IN THE SHAREHOLDING STRUCTURE OF THE TARGET COMPANY

In the event that the Closing of the Share Purchase occurs, the shareholding structure of the Target Company as at the date of this announcement and immediately after the Closing of the Share Purchase on a fully-diluted and as-converted basis (assuming there is no change in the issued share capital of the Target Company before the Closing) is as follows:

Name of shareholder of			Immediately after the Closing	Immediately after the Closing
the Target Company	As at the date of this announcement		of the Share Purchase
		Approximate %		Approximate %
	No. of shares	of total issued	No. of shares	of total issued
	of the Target	shares of the	of the Target	shares of the
	Company	Target Company	Company	Target Company
Lawrence C. Best	2,192,039	14.2%	0	0%
OXO Capital Valve
Ventures, LLC	2,154,651	13.9%	0	0%
NGN Biomed
Opportunity II, LP.	2,847,134	18.4%	0	0%
IFA(1)	2,260,469	14.6%	0	0%
Peregrine(2)	1,395,926	9.0%	0	0%
Gross family(3)	1,382,776	8.9%	0	0%
ESOP(4)	1,219,374	7.9%	0	0%
Keystone	799,443	5.2%	799,443	5.2%
IncentiveⅡManagement Ltd.	460,758	3.0%	0	0%
Insight Capital Ltd	185,246	1.2%	0	0%
Gil HaCohen	151,175	1.0%	0	0%
Marco Papa	150,102	1.0%	0	0%
KSA ParnersⅢLLC	78,070	0.5%	0	0%
Pertec Management Ltd.	57,258	0.4%	0	0%
Lawrence Silverstein	45,461	0.3%	0	0%
Prof. Eberhard Grube	36,074	0.2%	0	0%
Prof. Antonio Colombo	17,783	0.1%	0	0%
Johan Brigham	15,565	0.1%	0	0%
Maxim Karalnik	2,400	0%	0	0%
Dikla Lanzanio	147	0%	0	0%
The Purchaser	0	0%	14,652,408	94.8%
Total	15,451,851	100%	15,451,851	100%

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Notes:

(1) Such shares include shares held by IFA PE FUND II US, LP and IFA PE FUND II, L.P. (collectively, “ IFA ”)..
(2) Such shares include shares held by PEREGRINE VC INVESTMENTS II (ISRAEL) L.P., PEREGRINE VC INVESTMENTS II (US INVESTORS), L.P., PEREGRINE VC INVESTMENTS II (OTHER INVESTORS), L.P., PEREGRINE VENTURES MANAGEMENT LTD., PEREGRINE VC INVESTMENTS IV (IL) LIMITED PARTNERSHIP, PEREGRINE VC INVESTMENTS IV (US INVESTORS), L.P. and PEREGRINE VC INVESTMENTS IV (OTHER INVESTORS), L.P. (collectively, “ Peregrine ”)..
(3) Such shares include shares held by Amir Gross and Yosef Gross.
(4) Such options represent underlying share incentives granted to certain employees of the Target Company and none of such employees is interested in more than 3% of underlying shares held by ESOP. Upon Closing, such options will be canceled in exchange of ordinary shares pursuant to the Share Purchase Agreement.

INFORMATION OF THE TARGET COMPANY AND CARDIOVALVE

The Target Company is a private company incorporated under the laws of Israel in 2016, mainly engaged in medical device R&D activities.

Based on the audited consolidated financial statements of the Target Company, the financial information of the Target Company for the years ended December 31, 2019 and December 31, 2020 are set out as follows:

	For the	For the
	year Ended	year Ended
	December 31,	December 31,
	2019	2020
	(audited)	(audited)
	(USD’000)	(USD’000)
(Loss) before taxation	(12,262)	(16,518)
(Loss) after taxation	(12,303)	(16,561)

As of September 30, 2021, based on the unaudited consolidated financial statements of the Target Company, the Target Company had consolidated total assets of approximately US$7 million and negative net assets of approximately US$36 million. Based on the Share Purchase Agreement and the Convertible Loan Agreement, the valuation of the Target Company is approximately US$250 million.

For the information of the shareholders of the Target Company, please refer to the section headed “Changes in the Shareholding Structure of the Target Company” above.

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Cardiovalve is a private company incorporated under the laws of Israel in 2010 and headquartered in Israel. As of the date of this announcement, Cardiovalve is (i) approximately 95.96% held by the Target Company and a non wholly-owned subsidiary of the Target Company, and (ii) approximately 4.05% held by three independent third parties (namely Gil HaCohen, Marco Papa and Yosef Gross (the “ Cardiovalve Minority Shareholders ”) each as to approximately 1.35%). Prior to the Closing, the 4.05% interests referred to in (ii) above will be transferred to the Target Company, such that Cardiovalve will become a wholly-owned subsidiary of the Target Company prior to the Closing.

With 40 employees, Cardiovalve operates from 1,700 sq. ft. facilities with inhouse manufacturing and clean rooms, and is the holder of over 200 patents and patent applications. Its independently-developed Cardiovalve System (the “ Cardiovalve System ”) is a transcatheter interventional replacement product for patients suffering from mitral or tricuspid regurgitation. Compared with products of the same kind, its transfemoral approach significantly improves the safety of treatment and its 55mm annuli is suitable for about 95% of the patient population. Its unique short frame design lowers the risk of LVOT obstruction. Cardiovalve has applied for over 215 patents, of which 83 have been granted. The Cardiovalve System offers a self-developed mitral and tricuspid replacement valve delivered via a transcatheter approach, intended to reduce the mortality and morbidity associated with surgical treatment options for both mitral and tricuspid valve regurgitation indications. The Cardiovalve system is currently enrolling patients in several multi-center studies for both mitral valve replacement and tricuspid valve replacement in the US and in Europe. Initial clinical results are promising. Its treatment of mitral regurgitation has entered clinical trials in Europe and is currently in an early feasibility study in the U.S.. Well-noted international cardiovascular centers such as the Piedmont Heart Institute (US), IRCCS Policlinico San Donato (Italy), Universitaet Mainz (Germany), Heart-Center University Clinic Bonn (UKB) (Germany), University Heart Center Lübeck Medical Clinic II (Germany), etc. were involved in its clinical trials. Furthermore, its device for the treatment of tricuspid regurgitation received ‘Breakthrough Device Designation’ by the FDA in January 2020 and entered an early feasibility study. Cardiovalve is also the first privately held company to receive FDA’s early feasibility study (EFS) approval for both TR and MR indications. Cardiovalve will become an indirect wholly-owned subsidiary of the Target Company prior to the Closing, and the Closing is conditional upon such event, as stated above.

INFORMATION OF THE TARGET COMPANY SELLING SHAREHOLDERS

Lawrence C. Best is an independent third party and the chairman of the Target Company’s board of directors.

OXO Capital Valve Ventures, LLC is an investment firm focused on life sciences and therapeutic medical device companies. Its ultimate beneficial owner is Lawrence C. Best.

NGN Biomed Opportunity II, LP. is a venture capital firm dedicated to healthcare investing. Its ultimate beneficial owner is Kenneth S. Abramowitz, who is an independent third party.

IFA is an investment fund. Its general partner is IFA PE GP, LLC, of which Sacha Lainovic is the managing member, who is an independent third party.

Peregrine is an Israeli venture capital fund, which invests in early stage high-tech companies with a strong emphasis on life sciences, digital health and information technology. Its ultimate beneficial owners are Eyal Lifschitz and Boaz Lifschitz, who are independent third parties.

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Amir Gross and Yosef Gross are independent third parties.

Incentive Ⅱ Management Ltd. is held in trust for Peregrine, whose ultimate beneficial owners are Eyal Lifschitz and Boaz Lifschitz, who are independent third parties.

Insight Capital Ltd. is a company engaged in venture capital investments. Leon Recanti, an independent third party, is the ultimate beneficial owner and director of Insight Capital Ltd.

Gil HaCohen is an independent third party.

Marco Papa is an independent third party.

KSA Parners Ⅲ LLC is an investment partnership for four individuals which are independent third parties. Kenneth Abramowitz is its general partner.

Pertec Management Ltd. is a British Virgin Islands corporation engaged in investment management, whose ultimate beneficial owner is Mark Robin Freed, who is an independent third party.

Lawrence Silverstein, Prof. Eberhard Grube, Prof. Antonio Colombo, Johan Brigham, Maxim Karalnik and Dikla Lanzanio are independent third parties.

INFORMATION OF THE SELLING SHAREHOLDERS’ REPRESENTATIVE

The Selling Shareholders’ Representative is a newly formed entity formed to act as the Selling Shareholder Representative. It is Delaware limited liability company which is wholly-owned by OXO Capital Valve Ventures LLC and its ultimate beneficial owner is Lawrence C. Best.

INFORMATION OF THE COMPANY, VENUS HK, THE PURCHASER AND KEYSTONE

The Company is a global high-end innovative medical device manufacturer committed to developing and commercializing high-quality medical devices that benefit patients. Founded in 2009, the Company has built a global R&D system and established a platform integrating R&D, clinical development, manufacturing and commercialization.

Venus HK is a company incorporated in Hong Kong and a wholly-owned subsidiary of the Company. It is an investment holding company.

The Purchaser is a private company incorporated under the laws of Israel and wholly-owned by Venus HK, which is in turn wholly owned by the Company. It is a structural heart medical device company that develops and manufactures total package solutions for structural heart procedures.

Keystone is an indirect wholly-owned subsidiary of the Company. It is engaged in investments in the medical device industry in Israel by the Company.

– 13 –

REASONS FOR AND BENEFITS OF THE SHARE PURCHASE

The Directors are of the view that the Share Purchase will create synergy with the Company’s existing product layout and will further consolidate the Company’s leading position in the field of structural heart disease in China and globally. This is in line with the long-term vision of the Company to innovate and commercialize globally. The Company believes that the Cardiovalve system will promote innovation in Venus and provide more innovative treatments for doctors and patients worldwide.

REASONS FOR AND BENEFITS OF THE CONVERTIBLE LOAN

The Directors are of the view that the provision of the Convertible Loan helped induce the Target Company into entering the Share Purchase Agreement, and to cause the Share Purchase and the other transactions thereunder to be consummated.

Given (i) the above reasons for and the benefits of the Share Purchase and subscription of Convertible Loan, and (ii) the factors considered in determining the Consideration for the Share Purchase as set out in the sub-paragraphs headed “Consideration”, the Directors are of the view that the terms of the Share Purchase Agreement and the Convertible Loan Agreement are on normal commercial terms and fair and reasonable, and the Share Purchase and the subscription of Convertible Loan are in the interests of the Company and its Shareholders as a whole.

SOURCE OF FUNDING FOR THE SHARE PURCHASE AND THE CONVERTIBLE LOAN

The Company intends to finance the Share Purchase and the Convertible Loan by its own financial resources other than proceeds from the listing of the H Shares on the Main Board of The Stock Exchange of Hong Kong Limited in December 2019, and the placings of the H Shares in September 2020 and January 2021 respectively

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratio(s) in respect of the Share Purchase and the subscription of Convertible Loan, when aggregated, is more than 5% but less than 25%, the entering into of the Share Purchase Agreement and Convertible Loan Agreement constitute a discloseable transaction on the part of the Company under Chapter 14 of the Listing Rules and is subject to the notification and announcement requirements but exempt from the Shareholders’ approval requirement under Chapter 14 of the Listing Rules.

Shareholders and potential investors should note that the Share Purchase is subject to the satisfaction of certain conditions precedent and accordingly, the Share Purchase may or may not proceed. Shareholders and potential investors are reminded to exercise caution when dealing the Shares and other securities of the Company.

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DEFINITIONS

In this announcement, the following expressions shall, unless the context requires otherwise, have the following meanings:

“Aggregate Closing	the total aggregate closing consideration for the Share Purchase
Consideration”
“Board”	the board of directors of the Company
“Cardiovalve” or	Cardiovalve Ltd. (formerly known as Mitraltech Ltd.), a private company
“Borrower”	incorporated under the laws of Israel, which (i) is, as of the date of this
	announcement, approximately 95.96% held by the Target Company and
	a non wholly-owned subsidiary of the Target Company, and (ii) will,
	prior to the Closing, become a wholly-owned subsidiary of the Target
	Company
“Cardiovalve MV Device”	has the meaning given to such term in the Share Purchase Agreement,
	and refers to any transcatheter mitral valve replacement system derived,
	in whole or in part, from a system designed (including in diagram form)
	by the Target Company or any of its subsidiaries
“Cardiovalve System”	the Cardiovalve System independent developed by Cardiovalve
“Cardiovalve TV Device”	has the meaning given to such term in the Share Purchase Agreement,
	and refers to any tricuspid valve replacement system derived, in whole
	or in part, from a system designed (including in diagram form) by the
	Target Company or any of its subsidiaries
“CE Mark”	has the meaning given to such term in the Share Purchase Agreement,
	and refers to the “CE” marking required under applicable Laws for the
	importation, promotion, pricing, marketing and/or sale of a product in the
	European Economic Area
“Change in Control”	has the meaning given to such term in the Share Purchase Agreement,
	and refers to any change in control event of the Target Company and/or
	the Company as described in the Share Purchase Agreement
“Closing”	the closing of the Share Purchase in accordance with the terms and
	conditions of the Share Purchase Agreement
“Company”	Venus Medtech (Hangzhou) Inc., a joint stock company incorporated
	in the PRC with limited liability, whose H shares are listed on the Main
	Board of the Stock Exchange

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“Company Material has the meaning given to such term in the Share Purchase Agreement, Adverse Effect” and refers to a material adverse effect affecting the Company as defined in the Share Purchase Agreement “Consideration” the Aggregate Closing Consideration and the Earn-Out Consideration

“connected person(s)” has the meaning ascribed to it under the Listing Rules
“Convertible Loan” the convertible loan in the principal amount of US$23,000,000 given by the Lender in favour of the Borrower and guaranteed by the Company pursuant to the terms and conditions of the Convertible Loan Agreement
“Convertible Loan the Unsecured Convertible Loan Agreement dated December 7, 2021 Agreement” entered into among the Company, the Lender, the Target Company and the Borrower
“Director(s)” the director(s) of the Company “Effective Date” has the meaning given to such term in the Convertible Loan Agreement, and refers to December 7, 2021
“FDA” the United States Food and Drug Administration and any successor entity “FDA Approval” has the meaning given to such term in the Share Purchase Agreement, and refers to approval from the FDA for the importation, promotion, pricing, marketing and/or sale of a product in the United States, including any approval or clearance by the FDA of an FDA application
“Group” the Company and its subsidiaries “Hong Kong” Hong Kong Special Administrative Region of the PRC
“independent third party(ies)” Party(ies) who are not connected person(s) of the Company within the meaning of the Listing Rules, so far as the Directors are aware after having made reasonable enquiries
“Keystone” Keystone Heart LTD, a wholly owned subsidiary of the Company which as of the date of this announcement, owns 799,433 Series C Preferred Shares of the Target Company

– 16 –

“Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

“NMPA” the China National Medical Products Administration or any successor entity “NMPA Approval” has the meaning given to such term in the Share Purchase Agreement, and refers to approval from the China National Medical Products Administration or any successor entity for the importation, promotion, pricing, marketing and/or sale of a product in mainland China “Participating Holder(s)” has the meaning given to such term in the Share Purchase Agreement, and refers to persons other than any affiliates of the Company or the Purchaser (including Keystone) who, immediately prior to the Closing, were holders of the share capital of the Target Company or options of the Company and whose interests therein, as a result of the Share Purchase, are converted into a right to receive a portion of the Consideration pursuant to the Share Purchase Agreement

“PRC” the People’s Republic of China “Purchaser” Athena Medtech Holding Ltd, a private company incorporated under the laws of Israel and wholly-owned by Venus HK, which is in turn wholly-owned by the Company “Company-Owned Equity” the 799,443 Series C Preferred Shares that the Company currently indirectly holds through its wholly-owned subsidiary, Keystone “R&D” Research and Development “RMB” Renminbi, the lawful currency of the PRC “Selling Shareholders’ MTH Shareholder Representative LLC, a Delaware limited liability Representative” company “Series C Preferred Shares” the Series C preferred shares of the Target Company “Share Purchase” the purchase of all of the issued and outstanding shares of the Target Company (other than the Company-Owned Equity) by the Purchaser from the Target Company Selling Shareholders, pursuant to the terms and conditions of the Share Purchase Agreement

– 17 –

“Share Purchase Agreement”

the Share Purchase Agreement, dated as of December 7, 2021, entered into among the Company, the Purchaser, the Target Company, the Target Company Selling Shareholders and the Selling Shareholders’ Representative

“Stock Exchange”

the Stock Exchange of Hong Kong Limited

“Target Company” or Mitraltech Holdings Ltd., a private company incorporated under the laws “Mitraltech” of Israel

“Target Company Selling Shareholders”

the existing shareholders of the Target Company, other than Keystone

“US$” or “USD” United States dollar(s), the lawful currency of the United States

“Venus HK” or “Lender” Venus Medtech (Hong Kong) Limited, a company incorporated in Hong Kong and a wholly-owned subsidiary of the Company

By order of the Board Venus Medtech (Hangzhou) Inc. Min Frank Zeng Chairman

Hangzhou, People’s Republic of China, December 8, 2021

As at the date of this announcement, the executive Directors are Mr. Min Frank Zeng, Mr. Zhenjun Zi and Mr. Lim Hou-Sen (Lin Haosheng); the non-executive Director is Ms. Nisa Bernice Wing-Yu Leung; and the independent non-executive Directors are Mr. Ting Yuk Anthony Wu, Mr. Wan Yee Joseph Lau and Mr. Chi Wai Suen.

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AI assistant

Venus Medtech (Hangzhou) Inc. M&A Activity 2021

50630_rns_2021-12-07_0e7e580f-a5c7-4ab1-a4f0-16fbd98586aa.pdf

杭州啓明醫療器械股份有限公司