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

Aug 13, 2021

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杭州 啓 明醫療器械股份有限公司

Venus Medtech (Hangzhou) Inc.

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

(Stock Code: 2500)

VOLUNTARY ANNOUNCEMENT POTENTIAL ACQUISITION

This announcement is made by Venus Medtech (Hangzhou) Inc. (the “ Company ”, together with its subsidiaries, the “ Group ”) on a voluntary basis to inform the shareholders of the Company and potential investors of the latest updates of the business development of the Group.

POTENTIAL ACQUISITION

The board (the “ Board ”) of directors (the “ Directors ”) of the Company is pleased to announce that the Company proposes to acquire the shares of Hangzhou Nuocheng Medical Technology Co., Ltd. ( 杭 州諾誠醫療科技有限公司 ) (“ Nuocheng Medical ”) to obtain its Liwen RF[®] ablation system for the treatment of hypertrophic cardiomyopathy (“ HCM ”) (the “ Potential Acquisition ”). The Potential Acquisition will significantly enhance the innovation of the Company’s product pipeline, bring into play the commercial synergistic effect in the field of structural heart disease diagnosis and treatment, and therefore consolidate the Company’s competitive advantages.

As of the date of this announcement, the parties have not entered into agreement(s) of any form in relation to the Potential Acquisition.

INFORMATION ABOUT NUOCHENG MEDICAL

Nuocheng Medical is incorporated in China with limited liability in 2017. It is an innovative medical device research and development enterprise incubated by Dinova Healthcare Group. Dinova Healthcare Group currently has several innovative members engaged in the technologies for treatment of heart, lung and brain diseases, with a remarkable leading position in various niche treatment fields. Based on the long-term strategic partnership between the Company and Dinova Healthcare Group, both parties will conduct in-depth cooperation and integration in the field of structural heart disease.

To the best knowledge, information and belief of the Directors having made all reasonable enquiries, Nuocheng Medical and its beneficial owner are independent from the Company and its connected persons.

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REASONS FOR AND BENEFITS OF THE POTENTIAL ACQUISITION

HCM is the leading cause of sudden cardiac death among young people and athletes, and is also one of the major causes of heart failure. According to the statistics of the National Center for Cardiovascular Diseases, the incidence of cardiac death is approximately 41.8 per 100,000 people, and there are about 1 million sudden cardiac deaths in China every year, the trend of which is on the rise year by year. As few minutes are left for rescue of sudden cardiac death cases, effective treatment of HCM is of great significance to prevent sudden cardiac death.

HCM is a common hereditary cardiovascular disease, with a prevalence rate of approximately 0.2%, of which around 40% to 60% are caused by gene mutation of myocardial sarcomere, suggesting that it is difficult to significantly reduce incidence in future through existing treatment methods. In addition, due to the limitation of current detection and imaging technology, the prevalence of HCM is apparently underestimated, which is an important reason for the high incidence of sudden cardiac death. The huge number of patients has made HCM an urgent public medical burden worldwide.

Conventional treatment of HCM usually includes medical treatment, surgery and alcohol chemical ablation. Medical treatment can only partially relieve the obstruction of ventricular outflow tract without attenuating the hypertrophy myocardium, and the heart function will continue to deteriorate. As for surgery, patients will suffer great trauma caused by thoracotomy and probable complications such as left bundle branch block. In the case of alcohol chemical ablation treatment, there will be insufficient ablation caused by contact limitation, and the risk of massive myocardial infarction caused by alcohol overflow. Therefore, the development of innovative medical instruments is in urgent need in clinic operations.

In recent years, mavacamten is the product in HCM treatment field that has attracted most attention. On October 5, 2020, Bristol-Myers Squibb (BMS) announced that it would acquire MyoKardia for US$13.1 billion in cash at a premium of 60%, in order to obtain its new drug candidate, mavacamten, an allosteric inhibitor of myocardial myosin, which can be used for the treatment of obstructive HCM. The clinical results so far show that although mavacamten has reached the primary and secondary clinical endpoints, it fails to reduce the ventricular septal thickness.

The Liwen RF[®] ablation system is jointly developed by the team led by Professor Liu Liwen, director of HCM diagnosis and treatment center in Xijing Hospital of Air Force Medical University, and Nuocheng Medical. It adopts the international novel operation treatment (“ Liwen Procedure”) to conduct minimally invasive diagnosis and treatment under the guidance of ultrasound. Such method can not only dehydrate and necrotize hypertrophic myocardial cells, but also block the blood supply of hypertrophic myocardial tissue, thus achieving long-term prognosis.

The exploratory study enrolled 144 patients on Liwen RF[®] ablation system and the comparative test with traditional surgical gold standard surgery show that the success rate of Liwen RF[®] ablation system is as high as 88%, and there is no death case one year after operation. The clinical manifestation, cardiac function and quality of life of patients are significantly improved, and it is obviously superior to septal myectomy surgery and alcohol septal ablation, which effectively proves its safety and efficacy and the advancement of instrument performance.

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Compared with other treatment methods, Liwen Procedure boasts the technical advantages of less trauma, precise positioning, unrestricted by target blood vessels, significant reduction of ventricular septal thickness, mitigation of conduction system damage and other complications, which is expected to benefit HCM patients all over the world. At present, the product has progressed to multi-center clinical research in China, and schedules to apply for and conduct clinical trials in the United States first.

The Board believes that the Potential Acquisition will form synergy with the Company’s existing product portfolio, and further extend its international innovative business layout, which will be another significant progress made by the Company in transforming into a comprehensive platform for structural heart disease treatment following the cooperative development of renal artery denervation (RDN). The Liwen Procedure creates an intracardiac catheter path, which provides an innovative solution to the perivalvular leakage problems caused in TAVR, TMVR and TTVR operations. The Company will develop the perivalvular leakage treatment technology based on the Liwen Procedure, in a bid to upgrade the entire valve product pipeline.

If the transactions contemplated under the Potential Acquisition materialise, the Company will make further announcement(s) in accordance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited as and when appropriate. Shareholders and potential investors of the Company are reminded to exercise caution while dealing in the shares of the Company.

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

Hangzhou, August 13, 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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