Beijing Advaccine Biotechnology Co., Ltd. 北京艾棣維欣生物技術股份公司 (A Joint Stock Company Incorporated in the People’S Republic of China with Limited Liability)

Home , 2021 in China, George Siber, Heheng, Vaccine storage, Zhang Wenhong

The Stock Exchange of Hong Kong Limited and the Securities and Futures Commission take no responsibility for the contents of this Application Proof, 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 Application Proof.

Application Proof of

Beijing Advaccine Biotechnology Co., Ltd. 北京艾棣維欣生物技術股份公司 (A joint stock company incorporated in the People’s Republic of China with limited liability)

WARNING

The publication of this Application Proof is required by The Stock Exchange of Hong Kong Limited (the “Exchange”) and the Securities and Futures Commission (the “Commission”) solely for the purpose of providing information to the public in Hong Kong. This Application Proof is in draft form. The information contained in it is incomplete and is subject to change which can be material. By viewing this document, you acknowledge, accept and agree with Beijing Advaccine Biotechnology Co., Ltd. (北京艾棣維欣生物技術股份公司) (the “Company”), its sponsor, advisers or members of the underwriting syndicate that: (a) this document is only for the purpose of providing information about the Company to the public in Hong Kong and not for any other purposes. No investment decision should be based on the information contained in this document;

(b) the publication of this document or any supplemental, revised or replacement pages on the Exchange’s website does not give rise to any obligation of the Company, its sponsor, advisers or members of the underwriting syndicate to proceed with an offering in Hong Kong or any other jurisdiction. There is no assurance that the Company will proceed with the offering;

(c) the contents of this document or any supplemental, revised or replacement pages may or may not be replicated in full or in part in the actual final listing document;

(d) the Application Proof is not the final listing document and may be updated or revised by the Company from time to time in accordance with the Rules Governing the Listing of Securities on the Exchange;

(e) this document does not constitute a prospectus, offering circular, notice, circular, brochure or advertisement offering to sell any securities to the public in any jurisdiction, nor is it an invitation to the public to make offers to subscribe for or purchase any securities, nor is it calculated to invite offers by the public to subscribe for or purchase any securities;

(f) this document must not be regarded as an inducement to subscribe for or purchase any securities, and no such inducement is intended;

(g) neither the Company nor any of its affiliates, advisers or underwriters is offering, or is soliciting offers to buy, any securities in any jurisdiction through the publication of this document;

(h) no application for the securities mentioned in this document should be made by any person nor would such application be accepted;

(i) the Company has not and will not register the securities referred to in this document under the United States Securities Act of 1933, as amended, or any state securities laws of the United States;

(j) as there may be legal restrictions on the distribution of this document or dissemination of any information contained in this document, you agree to inform yourself about and observe any such restrictions applicable to you; and (k) the application to which this document relates has not been approved for listing and the Exchange and the Commission may accept, return or reject the application for the subject public offering and/or listing. THIS APPLICATION PROOF IS NOT FOR PUBLICATION OR DISTRIBUTION TO PERSONS IN THE UNITED STATES. ANY SECURITIES REFERRED TO HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES WITHOUT REGISTRATION THEREUNDER OR PURSUANT TO AN AVAILABLE EXEMPTION THEREFROM. NO PUBLIC OFFERING OF THE SECURITIES WILL BE MADE IN THE UNITED STATES. NEITHER THIS APPLICATION PROOF NOR ANY INFORMATION CONTAINED HEREIN CONSTITUTES AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES IN THE UNITED STATES OR IN ANY OTHER JURISDICTIONS WHERE SUCH OFFER OR SALE IS NOT PERMITTED. THIS APPLICATION PROOF IS NOT BEING MADE AVAILABLE IN, AND MAY NOT BE DISTRIBUTED OR SENT TO ANY JURISDICTION WHERE SUCH DISTRIBUTION OR DELIVERY IS NOT PERMITTED. No offer or invitation will be made to the public in Hong Kong until after a prospectus of the Company has been registered with the Registrar of Companies in Hong Kong in accordance with the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong). If an offer or an invitation is made to the public in Hong Kong in due course, prospective investors are reminded to make their investment decisions solely based on a prospectus of the Company registered with the Registrar of Companies in Hong Kong, copies of which will be distributed to the public during the offer period. THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT IMPORTANT

If you are in any doubt about any of the contents of this document, you should obtain independent professional advice.

Beijing Advaccine Biotechnology Co., Ltd. 北京艾棣維欣生物技術股份公司 (a joint stock company incorporated in the People’s Republic of China with limited liability) [REDACTED] Number of [REDACTED] in the : [REDACTED] H Shares (subject to the [REDACTED] [REDACTED]) Number of [REDACTED] : [REDACTED] H Shares (subject to adjustment) Number of [REDACTED] : [REDACTED] H Shares (subject to adjustment and the [REDACTED]) Maximum [REDACTED] : HK$[REDACTED] per H Share, plus brokerage of 1%, Stock Exchange trading fee of 0.005% and SFC transaction levy of 0.0027% (payable in full on application in Hong Kong Dollars and subject to refund) Nominal Value : RMB1.00 per H Share [REDACTED] : [REDACTED]

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Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this document, 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 document. A copy of this document, having attached thereto the documents specified in “Appendix VIII—Documents Delivered to the Registrar of Companies and Available for Inspection” to this document, has been registered by the Registrar of Companies in Hong Kong as required by section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance of Hong Kong (Chapter 32 of the Laws of Hong Kong). The Securities and Futures Commission and the Registrar of Companies in Hong Kong take no responsibility for the contents of this document or any other document referred to above. The [REDACTED] is expected to be fixed by agreement between the [REDACTED] (on behalf of the [REDACTED]) and us on the [REDACTED]. The [REDACTED] is expected to be on or about [REDACTED] and, in any event, not later than [REDACTED]. The [REDACTED] will be not more than HK$[REDACTED] and is currently expected to be not less than HK$[REDACTED]. Applicants for [REDACTED] are required to pay, on [REDACTED], the maximum [REDACTED] of HK$[REDACTED] for each [REDACTED] together with brokerage of 1%, SFC transaction levy of 0.0027% and Stock Exchange trading fee of 0.005%, subject to refund if the [REDACTED] should be lower than HK$[REDACTED]. If, for any reason, the [REDACTED] (on behalf of the [REDACTED]) and us are unable to reach an agreement on the [REDACTED], the [REDACTED] will not proceed and will lapse. The [REDACTED] (on behalf of the [REDACTED], and with our consent) may reduce the number of [REDACTED] and/or the indicative [REDACTED] range that stated in this document at any time prior to the morning of the last day for lodging [REDACTED] under the [REDACTED]. In such a case, a notice of the reduction in the number of [REDACTED] and/or the indicative [REDACTED] range will be published in the [●] (in English) and [●] (in Chinese) as well as our website [http://www.advaccine.com/] not later than the morning of the last day for lodging [REDACTED] under the [REDACTED]. Further details are set forth in the sections entitled “[REDACTED]” in this document. If [REDACTED] for [REDACTED] have been submitted prior to the day which is the last day for lodging [REDACTED] under the [REDACTED], then such [REDACTED] can be subsequently withdrawn if the number of [REDACTED] and/or the indicative [REDACTED] range is so reduced. We are incorporated, and substantially all of our businesses are located, in the PRC. Potential investors should be aware of the differences in legal, economic and financial systems between the PRC and Hong Kong and that there are different risk factors relating to investments in PRC-incorporated companies. Potential investors should also be aware that the regulatory framework in the PRC is different from the regulatory framework in Hong Kong and should take into consideration the different market nature of our H Share. Such differences and risk factors are set out in “Risk Factors,” “Appendix V—Summary of Principal Legal and Regulatory Provisions” and “Appendix VI—Summary of the Articles of Association” to this document. Prior to making an investment decision, prospective investors should consider carefully all the information set forth in this document, including but not limited to the risk factors set forth in the section headed “Risk Factors” in this document. The obligations of the [REDACTED] under the [REDACTED]to[REDACTED] for, and to procure applicants for the [REDACTED] for, the [REDACTED], are subject to termination by the [REDACTED] (on behalf of the [REDACTED]) if certain grounds arise prior to 8:00 a.m. on the day that [REDACTED] in the H Shares commences on the Stock Exchange. Such grounds are set out in the section entitled “[REDACTED]” in this document. It is important that you refer to that section for further details. The [REDACTED] have not been and will not be registered under the U.S. Securities Act or any state securities laws of the United States and may not be offered, sold, pledged or transferred within the United States or to, or for the account or benefit of U.S. persons, except in transactions exempt from, or not subject to, the registration requirements of the Securities Act. The [REDACTED] are being [REDACTED] and sold (i) solely to QIBs as defined in Rule 144A pursuant to an exemption from registration under the Securities Act and (ii) outside the United States in offshore transactions in reliance on Regulation S to investors.

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IMPORTANT NOTICE TO [REDACTED]

This document is issued by us solely in connection with the [REDACTED] and does not constitute an [REDACTED] to sell or a solicitation of an [REDACTED] to buy any security other than the [REDACTED] offered by this document pursuant to the [REDACTED]. This document may not be used for the purpose of, and does not constitute, an [REDACTED] or a solicitation of an [REDACTED] to [REDACTED] or [REDACTED], any security in any other jurisdiction or in any other circumstances. No action has been taken to permit a [REDACTED] of the [REDACTED] or the distribution of this document in any jurisdiction other than Hong Kong. The distribution of this document and the [REDACTED] and [REDACTED] of the [REDACTED] in other jurisdictions are subject to restrictions and may not be made except as permitted under the applicable securities laws of such jurisdictions pursuant to registration with or authorization by the relevant securities regulatory authorities or an exemption therefrom.

You should rely only on the information contained in this document and the [REDACTED] to make your [REDACTED] decision. We have not authorized anyone to provide you with information that is different from what is contained in this document. Any information or representation not made in this document must not be relied on by you as having been authorized by us, the [REDACTED], [REDACTED], [REDACTED] and [REDACTED], any of the [REDACTED], any of our or their respective directors, officers or representatives, or any other person or party involved in the [REDACTED].

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IMPORTANT ...... i

EXPECTED TIMETABLE...... iii

CONTENTS ...... vi

SUMMARY ...... 1

DEFINITIONS ...... 13

GLOSSARY OF TECHNICAL TERMS ...... 25

FORWARD-LOOKING STATEMENTS ...... 34

RISK FACTORS ...... 36

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WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES AND THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE ...... 86

INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED]...... 95

DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE [REDACTED]...... 101

CORPORATE INFORMATION ...... 105

INDUSTRY OVERVIEW ...... 107

REGULATORY OVERVIEW ...... 117

HISTORY AND CORPORATE STRUCTURE ...... 136

BUSINESS ...... 158

DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT ...... 226

SHARE CAPITAL ...... 246

SUBSTANTIAL SHAREHOLDERS...... 249

FINANCIAL INFORMATION...... 252

FUTURE PLANS AND USE OF [REDACTED]...... 302

[REDACTED]...... 304

STRUCTURE OF THE [REDACTED]...... 317

HOW TO APPLY FOR [REDACTED] ...... 328

APPENDIX I – ACCOUNTANT’S REPORT ...... I-1

APPENDIX II – UNAUDITED PRO FORMA FINANCIAL INFORMATION ...... II-1

APPENDIX III – PROPERTY VALUATION REPORT ...... III-1

APPENDIX IV – TAXATION AND FOREIGN EXCHANGE ...... IV-1

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APPENDIX V – SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS...... V-1

APPENDIX VI – SUMMARY OF THE ARTICLES OF ASSOCIATION ...... VI-1

APPENDIX VII – STATUTORY AND GENERAL INFORMATION ..... VII-1

APPENDIX VIII – DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES AND AVAILABLE FOR INSPECTION ...... VIII-1

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This summary aims to give you an overview of the information contained in this document. As this is a summary, it does not contain all the information that may be important to you. You should read this document in its entirety before you decided to invest in the [REDACTED]. There are risks associated with any investment. Some of the particular risks in investing in the [REDACTED] are set out in “Risk Factors” of this document. You should read that section carefully before you decide to invest in the [REDACTED]. In particular, we are a biotechnology company seeking to [REDACTED] on the Main Board of the Stock Exchange under Chapter 18A of the Listing Rules on the basis that we are unable to meet the requirements under Rule 8.05(1), (2) or (3) of the Listing Rules. There are unique challenges, risks and uncertainties associated with [REDACTED] in companies such as ours. Your investment decision should be made in light of these considerations.

OVERVIEW

We are an innovative vaccine company with a high-value prophylactic and therapeutic vaccine pipeline driven by in-house developed technology platforms. To date, our pipeline consists of potential first-in-class key assets developed to address diseases caused by SARS-CoV-2, respiratory syncytial virus (RSV) and hepatitis B virus (HBV), which are diseases with huge unmet medical needs. We are also developing vaccine candidates in preclinical stage covering viral-related oncology, as well as neoantigen-based therapeutic vaccines and tumor-associated antigen therapeutic vaccines. The following table summarizes our vaccine pipeline as of the Latest Practicable Date:

Vaccine Commercial Product Type Target Rights Discovery Pre-Clinical Phase I Phase II Phase III

DNA COVID-19 Greater China pGX9501 Prophylactic China Vaccine Vaccine US: Phase II/III (Inovio) RSV ADV110 Subunit Prophylactic Global Australia Vaccine Vaccine

Subunit HBV ADV311 Therapeutic Global Vaccine Vaccine MCV ADV510 Subunit Therapeutic Global Vaccine Vaccine

DNA TAA ADV520 Vaccine Cancer Vaccine Global

DNA Personalized ADV610 Vaccine Cancer Vaccine Global

: Our Core Product.

As of the Latest Practicable Date, we were developing six vaccine candidates for six disease areas, including one Core Product, pGX9501, in phase II clinical stage, one key vaccine candidate, ADV110, in phase II clinical stage, one key vaccine candidate, ADV 311, in preclinical stage, and three preclinical stage vaccine candidates. Our Core Product is a vaccine candidate for COVID-19. Other than pGX9501 that we co-developed with Inovio, all of our vaccine candidates are self-developed. We are developing ADV311 based on proof-of-concept technology we obtained from Fudan University.

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Our Vaccine Pipeline

pGX9501 COVID-19 vaccine candidate. We are expected to be one of the first group of companies to launch a COVID-19 vaccine based on innovative vaccine technologies in China. As of the Latest Practicable Date, our pGX9501 candidate was the first and only clinical-stage DNA-based COVID-19 vaccine candidate in China. It is widely recognized that safe and effective vaccines are essential to control the COVID-19 pandemic, which has had a devastating social and economic impact in China and globally and caused over 100 thousand infections and over 4.8 thousand deaths in China alone as of the Latest Practicable Date. According to the F&S Report, based on efficacy data and the dosing regimens of currently approved vaccines in China, it is estimated that at least 99.4% of the PRC population, or 1.4 billion individuals, will need to be vaccinated in order to control the pandemic, translating to a total of approximately 2.8 billion doses needed assuming that the approved COVID-19 vaccines would confer life-long immunity. Based on clinical trials and pre-clinical studies, we believe that our pGX9501 has potentially favorable immunogenicity, a better safety and tolerability profile, an advanced manufacturing process and strong stability, differentiating it from other COVID-19 vaccines approved and in development. We commenced phase II clinical trial in December 2020 and expect to commence a phase III clinical trial for pGX9501 in the second quarter of 2021 and file a biologics license application (BLA) or emergency use authorization (EUA) application to the National Medical Products Administration of the PRC (國家藥品監督管理局) (the “NMPA”) in the second half of 2021.

ADV110 RSV vaccine candidate. We are developing ADV110, a potential first-in-class protein subunit RSV vaccine candidate with a novel adjuvant, designed to protect children aged 6 months to 5 years old and the elderly over 65 years old. Lower respiratory track illness, or LRTI, for which RSV is a major cause. 96% children under 5 years old are infected by RSV and there are no available vaccines against RSV globally. To date, our ADV110 is the only clinical-stage RSV vaccine candidate designed and developed by Chinese companies and one of the most clinically-advanced globally. We are also the first in clinical stage to use a novel adjuvant that acts as an immunomodulator in RSV vaccines, potentially expanding the use of adjuvants beyond its traditional role of enhancing immunogenic response in vaccines. We have commenced our phase II clinical trial in Australia in April 2021 and expect to complete our phase II clinical trial in 2023.

ADV311 HBV vaccine candidate. Our ADV311 is a preclinical-stage therapeutic vaccine that is a potential functional cure. In China, there were 72.6 million HBV-infected patients in 2019. Diagnosis rate of hepatitis B in China was only 22.0% in 2019, representing approximately 15.9 million patients, and treatment rate for hepatitis B in 2019 was only 24.6% among diagnosed patients, representing approximately 3.9 million patients. According to the Prevention and Treatment Guidelines for Hepatitis B, the proportion of HBV patients that develop primary liver cancer or liver cirrhosis in China is approximately 80% and 60%, respectively. Currently available treatments are not functional cures, and it is generally agreed by scientists that immunotherapeutic treatments are needed to control liver cancer risks. In investigator-initiated clinical trials of an MOA-equivalent version of our ADV311, the HBsAg (hepatitis B surface antigen, which is a surface antigen of the HBV) negative conversion rate, a strong indicator of a functional cure for HBV, in our vaccine treatment group was 15.4%, which is higher than other treatment groups in CHB patients. Other clinical-stage HBV therapeutic vaccines have not recorded such high functional cure statistics. We expect to submit investigational new drug (IND) application to the NMPA in 2022.

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In addition, we are developing three preclinical-stage vaccine candidates, namely (i) ADV510, an oncoviral antigen-based therapeutic vaccine candidate against MCC tumor; (ii) ADV520, a tumor associated antigen (TAA) based therapeutic vaccine candidate against tumor; and (iii) ADV610, a neoantigen-based therapeutic vaccine candidate against mutated tumors.

We believe our ability to rapidly design and develop innovative vaccines and advance our pipeline is supported by our technology platforms, robust manufacturing know-how, processes and facilities, which will enable us to continue to develop new and innovative vaccine candidates addressing white space markets in China and globally. We have three technology platforms focused on areas which we believe are the most innovative and promising for vaccine development, namely, DNA vaccines, protein subunit vaccines and novel adjuvants. We expect to complete stage I of our GMP-standard manufacturing facilities at our Suzhou manufacturing base in the second quarter of 2021, the designed annual manufacturing capacity of which will be 20 million doses, enabling us to be commercial-ready for the anticipated launch of our COVID-19 vaccine.

INTELLECTUAL PROPERTY

We have developed a significant portfolio of intellectual property rights to protect our technologies and products. As of the Latest Practicable Date, we had registered 23 patents, 16 trademarks and three domain names in China, and had registered one patent in the United States, two patents in Europe, and two trademarks in Hong Kong. As of the same date, we had filed 13 patent applications in China, two patent applications in the United States and four patent applications in other jurisdictions and international organization, including Japan and WIPO. See “Business—Intellectual Property.” Our Directors confirm that we were not involved in any proceedings in respect of, and we had not received notice of any claims of infringement of, any intellectual property rights that might be threatened or pending as claimant or respondent during the Track Record Period and up to the Latest Practicable Date. There are certain risks relating to our intellectual property rights, including among other things: (i) we could be unsuccessful in obtaining or maintaining adequate intellectual property protection for one or more of our vaccine candidates; (ii) issued patents covering one or more of our vaccine candidates could be found invalid or unenforceable; and (iii) unfavorable outcomes in intellectual property litigation could limit our research and development activities and/or our ability to commercialize our vaccine candidates. See “Risk Factors—Risks Relating to Our Intellectual Property Rights” for details.

COMPETITIVE STRENGTHS AND BUSINESS STRATEGIES

We believe that the following are our competitive strengths and investment highlights: (i) innovative prophylactic and therapeutic vaccine pipeline with high-value potential first-in-class key assets driven by in-house technology platforms; (ii) phase II, first and only clinical-stage DNA-based COVID-19 vaccine candidate in China addressing significant unmet needs; (iii) clinical-stage potential first-in-class novel adjuvanted, protein subunit vaccine candidate for RSV globally with huge market potential; (iv) promising HBV therapeutic vaccine candidate; (v) comprehensive and innovative technology platforms that drive our development of next-generation vaccines; (vi) commercial-ready manufacturing facilities and an advanced manufacturing process; and (vii) visionary senior management team with profound vaccine development experience, supported by a scientific advisory board. We intend to implement the following business strategies: (i) continue to advance our vaccine pipeline;

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(ii) enhance our R&D capabilities; (iii) expand our manufacturing capabilities and team; (iv) build our commercialization strategy and sales network; and (v) pursue in-licensing, investment and acquisition opportunities.

COMPETITIVE LANDSCAPE

pGX9501 in the Greater China Region. According to the F&S Report, as of the Latest Practicable Date, three inactivated viral vaccines, one viral vector vaccine and one protein subunit vaccine were conditionally approved or granted EUA in China. As of the same date, there were ten COVID-19 vaccines in clinical development across different vaccine platforms in China, including seven in phase II or phase III clinical stage.

ADV110 Globally. There are no available vaccines against RSV globally. As of the Latest Practicable Date, there were only seven RSV vaccine candidates globally, three of which were in phase III clinical stage and four of which were in phase II clinical stage. As of the Latest Practicable Date, there was still no RSV vaccine under clinical development in China.

For details and competitive landscapes for our other vaccine candidates, see “Industry Overview.”

COLLABORATION AND TECHNOLOGY TRANSFER ARRANGEMENT

Collaboration with Inovio

In December 2020, we entered into a collaboration and license agreement, or the Inovio Collaboration and License Agreement, with Inovio for COVID-19 DNA vaccine candidate pGX9501/INO-4800 (the “Vaccine”). Under the Inovio Collaboration and License Agreement, Inovio has granted us an exclusive license to develop, manufacture and have manufactured, distribute, market, promote, sell, have sold, offer for sale, import, label, package and otherwise commercialize the Vaccine product in the Greater China region for all prophylactic and therapeutic use in humans. We will be solely responsible for the development of the Vaccine in Greater China region, including all non-clinical and clinical studies and collection of CMC Information, at our own cost and expense, as necessary to obtain the regulatory approval for the Vaccine in the Greater China region. Upon mutual agreement between the parties, Inovio will expand our license to allow us to conduct phase III clinical trial in regions out of the Greater China region. Inovio will use commercially reasonable efforts to develop and obtain regulatory approval for the Vaccine in the United States and will provide all reasonable assistance and cooperation to assist and support our research and development of the Vaccine. Inovio will supply our clinical requirements of the Vaccine and applicable device for clinical use in the Greater China region. See “Business—Collaboration and Technology Transfer Agreement—Collaboration with Inovio.”

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Technology Transfer from Fudan University

In September 2018, we entered into a technology transfer agreement with Fudan University, or the Fudan Technology Transfer Agreement. Under the Fudan Technology Transfer Agreement, Fudan University agreed to transfer all its rights relating to a series of HBV therapeutic vaccine technology, which consists of three proof-of-concept patent applications, to us, and prior to the completion of such transfer, grand us global exclusive license. See “Business—Collaboration and Technology Transfer Agreement—Technology Transfer from Fudan University.”

RESEARCH AND DEVELOPMENT

Our R&D capacities are supported by our in-house R&D team, led by heads of our functional departments, all of which with years of experience in biotech and pharmaceutical industry. Our in-house R&D team is supported by our scientific advisory board, which consists of world-class renowned experts in vaccine field. We organize consultation meetings with our scientific advisory board regularly to adjust and optimize our R&D strategies. During the Track Record Period, we outsourced certain testing, formulation and evaluation activities relating to research and development to third-party contract research organizations (CROs) and academic institutions. We also engage CROs to manage, conduct and support our clinical trial for our COVID-19 vaccine. See “Business—Research and Development” for details.

MANUFACTURING

COMMERCIALIZATION

During the Track Record Period and as of the Latest Practicable Date, we did not have a commercialization team. In anticipation of the launch of our vaccine candidates, we plan to build and expand our commercialization team. We plan to develop and build our commercialization strategy ahead of the launch of our advanced-stage vaccine candidates. We plan to handle most of the commercialization of our vaccine products in China in-house. See “Business—Commercialization” for details.

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CUSTOMERS AND SUPPLIERS

During the Track Record Period, we recorded no revenue from our vaccine pipeline, and only had limited revenue from four customers, which mainly consist of sales royalties received by Si’ao and sales of adjuvants. During the Track Record Period, our major suppliers primarily consisted of (i) suppliers of raw materials and consumables for our vaccine development; (ii) suppliers of equipment and devices for our manufacturing facility; and (iii) CROs, who provide third-party contracting services for research and development. In 2019 and 2020, purchases from our five largest suppliers accounted for 54.3% and 60.6% of our total purchases, respectively. Purchases from our largest supplier for the same periods accounted for 33.2% and 31.4% of our total purchases for the same periods, respectively. As of the Latest Practicable Date, none of our Directors, their associates or any shareholders which, to the knowledge of our Directors, owned more than 5% of the issued share capital of the Company as of the Latest Practicable Date, had any interest in any of our five largest suppliers during the Track Record Period.

RISK FACTORS

We are a biotechnology company seeking to [REDACTED] on the Main Board of the Stock Exchange under Chapter 18A of the Listing Rules. There are unique challenges, risks and uncertainties associated with [REDACTED] in companies such as ours, including the following: (i) we have incurred net losses since our inception, and we anticipate that we will continue to incur net losses for the foreseeable future and may never become profitable. As a result, you may lose substantially all of your [REDACTED] in us if our business fails; (ii) if we fail to successfully complete the development of, obtain the necessary regulatory approvals for, and commercialize our vaccine candidates on time, or at all, our results of operations, financial condition and prospects may be adversely affected; (iii) vaccine development involves a lengthy and expensive process with uncertain outcomes; (iv) results of earlier clinical trials may not be predictive of results of later-stage clinical trials; and (v) our vaccine candidates may cause AEs or have other properties that could delay or prevent their regulatory approval, limit their commercial profile or result in significant post-approval negative consequences. See “Risk Factors” of this document for details of our risk factors, which you should read carefully and in full before you decide to [REDACTED]inthe[REDACTED].

SUBSTANTIAL SHAREHOLDERS

Ms. Yu, our Executive Director and general manager, directly owns approximately 21.70% equity interest of our Company. In addition, she is also entitled to exercise the voting rights of the Shares held by Advaccine Investment and Dr. Ma. In totality of the above, as of the Latest Practicable Date, Ms. Yu was entitled to exercise the voting rights attaching to approximately 33.36% of our total issued share capital. Please refer to “Substantial Shareholders” for further details. Immediately upon completion of the [REDACTED], assuming that the [REDACTED] is not exercised, Ms. Yu will be entitled to exercise the voting rights attaching to approximately [REDACTED] of our total issued share capital. Accordingly, there will be no Controlling Shareholders upon [REDACTED].

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PRE-[REDACTED] INVESTORS

The Company underwent five rounds of Pre-[REDACTED] Investments since its establishment. Our major Pre-[REDACTED] Investors include Sophisticated Investors, such as private equity funds, venture capital funds and investment companies. For details of our Pre-[REDACTED] Investments and our Pre-[REDACTED] Investors, please see “History and Corporate Structure—Pre-[REDACTED] Investments.”

INCENTIVE SCHEME

In order to reward and incentivize our talents and employees for their contribution or potential contribution to our Group, Advaccine Investment was established as a limited partnership in the PRC on October 17, 2017 as a domestic shareholding platform. As of the Latest Practicable Date, Advaccine Investment was owned by Ms. Yu, Dr. Ma and Ms. Zhou LU (陸洲), our Supervisor, as to 68.60%, 22.87% and 8.54%, respectively. Ms. Yu serves as the general partner of Advaccine Investment. For the years ended December 31, 2018, 2019 and 2020, the Group has granted a total of four tranches of RSUs to eight grantees of the Company. As of the Latest Practicable Date, the aggregate number of underlying Shares pursuant to the RSUs available to be granted under the Incentive Plan is 689,500, representing approximately [REDACTED] of the total issued Shares of the Company immediately following the [REDACTED] (assuming that the [REDACTED] is not exercised). See “Appendix VII—Statutory and General Information” for details of our incentive scheme.

SUMMARY OF KEY FINANCIAL INFORMATION

Summary of Consolidated Statements of Profit or Loss and Other Comprehensive Income

For the year ended December 31, 2019 2020 (RMB’000)

Revenue 8 308 Cost of sales –* –* Gross profit 8 308 Loss from operations (17,785) (71,202) Loss before taxation (18,860) (88,790) Loss for the year (18,860) (88,790)

* The balance represents an amount less than RMB500.

We have not been profitable and incurred a net loss in each period comprising the Track Record Period. Our net losses during the Track Record Period were mainly attributable to research and development expenses in relation to R&D of our vaccine candidates, as well as general and administrative expenses including share-based compensation expenses and professional service fees in relation to our daily operation.

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Summary of Consolidated Statements of Financial Position

As of December 31, 2019 2020 (RMB’000)

Total non-current assets 4,792 494,593 Total current assets 2,021 238,861 Total assets 6,813 733,454 Total current liabilities 7,972 121,993 Net current (liabilities)/assets (5,951) 116,868 Total non-current liabilities 119 80,812 Net (liabilities)/assets (1,278) 530,649

While we had net operating cash outflows and net losses during the Track Record Period, we believe our liquidity requirements will be satisfied by using funds from a combination of our cash and cash equivalents, unutilized loan facilities and net proceeds from the [REDACTED]. As of December 31, 2020, we had cash and cash equivalents of RMB206.4 million. In March 2021, we conducted Round V Investment and received RMB432.0 million of investment. In addition, as of the Latest Practicable Date, we had unutilized loan facilities of RMB41.0 million. Taking into account the above, together with the estimated [REDACTED] from the [REDACTED], the Directors are of the opinion that, we have sufficient working capital to cover at least 125% of our costs, including research and development expenses, business development and marketing expenses, and administrative and operating costs, for at least the next 12 months from the date of this document.

Our cash burn rate refers to our average monthly (i) net cash used in operating activities, which includes research and development expenses; and (ii) capital expenditures. Assuming that the average cash burn rate going forward of 1.3 times the level in 2020 (which is primarily based on the difference between the average monthly burn rate in 2020 and the prospective burn rate based on the average monthly net cash used in operating activities and capital expenditure in 2021 and 2022), we estimate that our cash and cash equivalents as of December 31, 2020 will be able to maintain our financial viability for 22 months or, if we also take into account [REDACTED] of the estimated [REDACTED] (based on the low end of the indicative [REDACTED]) from the [REDACTED], which will be used for our working capital and general corporate purposes, 33 months. Our Directors and our management team will continue to monitor our working capital, cash flows, and our business development status.

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Summary of Consolidated Statements of Cash Flows

For the year ended December 31, 2019 2020 (RMB’000)

Operating cash flows before movements in working capital (15,699) (50,106) Total movements in working capital 2,728 11,862 Net cash used in operating activities (12,994) (37,946) Net cash used in investing activities (1,492) (48,485) Net cash generated from financing activities 5,647 292,380 Net (decrease)/increase in cash and cash equivalents (8,839) 205,949 Cash and cash equivalents at beginning of year 9,380 467 Exchange (losses)/gain on cash and cash equivalents (74) 9 Cash and cash equivalents at the end of year 467 206,425

Key Financial Ratios

Our current ratio increased from 0.3 as of December 31, 2019 to 2.0 as of December 31, 2020, mainly due to our significantly increased current assets. The increase was primarily in relation to an increase in our cash and cash equivalents due to our several rounds of equity financing in 2020.

OUR ACQUISITION OF SUZHOU SI’AO

On September 30, 2020, our Company completed the acquisition of 100% equity interest of Suzhou Si’ao. Its results of operations have been consolidated into ours since then. We acquired Suzhou Si’ao with the purpose of obtaining its nearly-completed manufacturing facility, which we would be able to leverage as our Suzhou manufacturing base for production of our vaccine candidates, with very limited investments required for subsequent construction, alterations and improvements. The consolidated financial statements and the accompanying notes of Suzhou Si’ao for the year ended December 31, 2019 and the nine months ended September 30, 2020 are set forth in Appendix I to this document. See “History and Corporate Structure—Major Shareholding Changes of Our Company—Acquisition of Suzhou Si’ao.”

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[REDACTED]

DIVIDENDS

No dividend was paid or declared by the Company during the Track Record Period. The determination of whether to pay a dividend and in which amount is based on factors the Board may deem relevant. Any dividend distribution will also be subject to the approval of the Shareholders in the Shareholder’s meeting. Under the PRC law and the Articles of Association, the general reserve requires annual appropriations of 10% of after-tax profits at each year-end until the balance reaches 50% of the relevant PRC entity’s registered capital. In view of our accumulated losses, as advised by our PRC Legal Advisors, according to the relevant PRC laws and regulations and the Articles of Association, we shall not declare or pay dividend until the accumulated losses are covered by our after-tax profits and sufficient statutory common reserve are drawn in accordance with the relevant laws and regulations.

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FUTURE PLANS AND USE OF [REDACTED]

We estimate that we will receive [REDACTED] from the [REDACTED]of approximately HK$[REDACTED] million, after deducting [REDACTED], fees and estimated expenses payable by us in connection with the [REDACTED], and assuming an [REDACTED] of HK$[REDACTED] per Share, which is the mid-point of the indicative [REDACTED] range stated in this document. We intend to apply these [REDACTED] for the following purposes, subject to changes in light of our evolving business needs and changing market conditions: (i) approximately [REDACTED], or HK$[REDACTED] million, will be allocated to the research and development, manufacturing and commercialization of our Core Product, namely, our pGX9501 over the next five years; (ii) approximately [REDACTED], or HK$[REDACTED] million, will be allocated to the research and development of our other products in our vaccine pipeline; (iii) approximately [REDACTED], or HK$[REDACTED] million, will be allocated to potential in-licensing, investment and acquisition opportunities; (iv) approximately [REDACTED], or HK$[REDACTED] million, will be used for our working capital and general corporate purposes. See “Future Plans and Use of [REDACTED].”

[REDACTED] EXPENSES

[REDACTED] expenses to be borne by us are estimated to be approximately RMB[REDACTED] million (including [REDACTED], assuming an [REDACTED]of HK$[REDACTED] per H Share, which is the mid-point of the indicative [REDACTED] range stated in this document and assuming that the [REDACTED] is not exercised), of which approximately RMB[REDACTED] million is expected to be charged to our consolidated statements of profit or loss and other comprehensive income, and approximately RMB[REDACTED] million is expected to be accounted for as a deduction from equity upon the [REDACTED]. The [REDACTED] expenses above are the latest practicable estimate for reference only, and the actual amount may differ from this estimate. Our [REDACTED] expenses as a percentage of gross [REDACTED]is[REDACTED], assuming an [REDACTED] of HK$[REDACTED] per H Share, which is the mid-point of the indicative [REDACTED] range stated in this document and assuming that the [REDACTED]isnot exercised. Our Directors do not expect such [REDACTED] expenses to have a material adverse impact on our results of operations for the year ending December 31, 2021.

PROPERTY VALUATION

The Property Valuation Report from JLL, an independent property valuer, set out in Appendix III to this document, sets out details of the properties we owned and occupied as of January 31, 2021. JLL is of the opinion that the total market value of our properties as of January 31, 2021 was RMB130.4 million. See “Appendix III—Property Valuation Report” to this document.

RECENT DEVELOPMENTS

Since the end of the Track Record Period, we have continuously developed our business, we have continued the clinical development of and will seek regulatory approval for our product candidates.

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Impact of the COVID-19 Outbreak

Since late 2019 and early 2020, COVID-19 quickly spread globally. The WHO declared the COVID-19 outbreak as a global pandemic on March 11, 2020. Significant rises in COVID-19 cases have been reported since then, causing governments around the world to implement unprecedented measures such as city lockdowns, travel restrictions, quarantines and business shutdowns. We have employed various measures to mitigate any impact the COVID-19 outbreak may have on our operations in China or the development of our vaccine products, including offering personal protection equipment such as masks to our employees, regularly check the body temperature of our employees and closely monitoring their health conditions. We have not experienced any material disruption since the outbreak of the COVID-19 pandemic for our clinical activities, such as patient recruitment, clinical trials and pre-clinical research and development. Although the COVID-19 outbreak has caused some delays in subject enrollment in our ongoing clinical trials of ADV110 in Australia, the COVID-19 pandemic has not had a material impact on our overall clinical activities and development timeline. As of the Latest Practicable Date, the outbreak of COVID-19 had not caused any delay of our ongoing clinical trials. We have employed various measures to mitigate any impact of the COVID-19 pandemic on our ongoing clinical trials and subject participation, including preparing for remote monitoring, preparing contingency plan with clinical site as well as home visit for subjects to collect safety information.

Our Directors believe that, based on information available as of the Latest Practicable Date, the outbreak of COVID-19 would not result in a material disruption to our business operations or have any material impact on our clinical trial progress and expected IND/NDA submission timeline, because (i) none of our offices are located in regions under lockdown; (ii) our operations have not experienced any material disruption since the outbreak of the COVID-19 pandemic; and (iii) most of our employees do not reside in regions under lockdown. We cannot guarantee that the outbreak of COVID-19 will not further escalate or have a material adverse effect on our business operations. Please also see “Risk Factors—Risks Relating to Our Operations—Our operations and business plans may be adversely affected by the COVID-19 pandemic.”

Round V Investment

In March 2021, our Company entered into certain capital increase agreements, pursuant to which the round V investors agreed to subscribe the increased registered capital of our Company of RMB3,456,000 at a total consideration of RMB432,000,000. The consideration was determined based on arm’s length negotiation between the parties taking into account the Company’s research and development progress and pipeline candidates, management team, future prospects and strategic needs. See “History and Corporate Structure.”

NO MATERIAL ADVERSE CHANGE

Our Directors confirm that, save as disclosed above, as far as they are aware, there had been no material adverse change in our financial, trading position or prospects since December 31, 2020, being the date our consolidated financial statements as set out in “Appendix I—Accountant’s Report” of this document, up to the Latest Practicable Date.

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In this document, unless the context otherwise requires, the following terms shall have the meanings set out below. Certain other terms are explained in the section headed “Glossary of Technical Terms” in this document.

“Accountant’s Report” the accountant’s report for the years ended December 31, 2019 and 2020 from PricewaterhouseCoopers, the text of which is set out in Appendix I to this document;

“Advaccine Investment” Suzhou Advaccine Investment Center (Limited Partnership) (蘇州艾棣投資中心(有限合夥)), a limited partnership established in the PRC on October 17, 2017 and a domestic shareholding platform of our Group;

“Articles of Association” or the articles of association of the Company adopted on “Articles” March 21, 2021, which will become effective upon the [REDACTED], as amended from time to time, a summary of which is set out in Appendix V to this document;

“associates” has the meaning ascribed to it under the Listing Rules;

“AUD” or “A$” Australian dollars, the lawful currency of Australia;

“Board” or “Board of Directors” the board of Directors of our Company;

“Business Day” or “business any day (other than a Saturday, Sunday or public holiday day” in Hong Kong and any day on which tropical cyclone warning no. 8 or above or a black rainstorm warning signal is hoisted in Hong Kong) on which banks in Hong Kong are generally open for normal banking business;

“CAGR” compound annual growth rate;

[REDACTED]

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[REDACTED]

“CDE” the Center for Drug Evaluation of NMPA (國家藥品監督管理局藥品審評中心), a division of the NMPA mainly responsible for review and approval of IND and NDA;

“China” or the “PRC” the People’s Republic of China, but for the purpose of this document and for geographical reference only and except where the context requires, references in this document to “China” and the “PRC” do not include Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan;

“close associate(s)” has the meaning ascribed to it under the Listing Rules;

“Companies Ordinance” the Companies Ordinance (Chapter 622 of the laws of Hong Kong), as amended, supplemented or otherwise modified from time to time;

“Companies (Winding Up and the Companies (Winding Up and Miscellaneous Miscellaneous Provisions) Provisions) Ordinance (Chapter 32 of the laws of Hong Ordinance” Kong), as amended, supplemented or otherwise modified from time to time;

“Company” or “our Company” Beijing Advaccine Biotechnology Co., Ltd. (北京艾棣維欣生物技術股份公司), a limited liability company established in the PRC on April 8, 2009 and converted into a joint stock company with limited liability on December 31, 2020;

“Company Law” or “PRC the Company Law of the People’s Republic of China (中 Company Law” 華人民共和國公司法), as amended, supplemented or otherwise modified from time to time;

“connected person(s)” has the meaning ascribed to it under the Listing Rules;

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“Controlling Shareholder(s)” has the meaning ascribed to it under the Listing Rules;

“core connected person(s)” has the meaning ascribed to it under the Listing Rules;

“Core Product” has the meaning ascribed to it in Chapter 18A of the Listing Rules; for the purpose of this document, our Core Product refers to pGX9501;

“CSRC” China Securities Regulatory Commission (中國證券監督管理委員會), a regulatory body responsible for the supervision and regulation of the PRC national securities markets;

“Director(s)” or “our Directors” the director(s) of our Company;

“Domestic Share(s)” ordinary shares in the share capital of our Company, with a nominal value of RMB1.00 each, which are subscribed for and paid up in Renminbi by domestic investors;

“Dr. Ma” Ji MA (馬紀), our Supervisor and the mother of Mr. Lunan ZHANG (張璐楠), our Executive Director;

“Dr. Wang” Bin WANG (王賓), the founder, chairman of the Board, Executive Director and Chief Scientist of the Company;

“EIT Law” the Enterprise Income Tax Law of the PRC (中華人民共和國企業所得稅法), as amended, supplemented or otherwise modified from time to time;

“EMA” European Medicines Agency;

“EU” European Union;

“Extreme Conditions” extreme conditions caused by a super typhoon as announced by the government of Hong Kong

“FDA” the United States Food and Drug Administration;

“Foreign Share(s)” ordinary shares in the share capital of our Company, with a nominal value of RMB1.00 each, which are subscribed for in a currency other than Renminbi;

“Frost & Sullivan” Frost & Sullivan (Beijing) Inc., Shanghai Branch Co., our industry consultant, which is an Independent Third Party;

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“Fudan University” a major public university in Shanghai, China;

“F&S Report” an independent market research report commissioned by us and prepared by Frost & Sullivan for the purpose of this document;

[REDACTED]

“Greater China” the PRC, Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan;

[REDACTED]

“Group”, “the Group”, “our our Company and all of our subsidiaries or, where the Group”, “we” or “us” context so requires, in respect of the period before our Company became the holding company of its present subsidiaries, the businesses operated by such subsidiaries or their predecessors (as the case may be);

“H Share(s)” each, to be [REDACTED] for and traded in Hong Kong dollars overseas listed foreign shares in our ordinary share capital with a nominal value of RMB1.00 and [REDACTED] on the Stock Exchange;

[REDACTED]

“HK$” or “Hong Kong dollars” Hong Kong dollars and cents respectively, the lawful “HK dollars” or “cents” currency of Hong Kong;

[REDACTED]

“Hong Kong” the Hong Kong Special Administrative Region of the PRC;

[REDACTED]

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[REDACTED]

“IASB” International Accounting Standards Board;

“IFRS” the International Financial Reporting Standards, which as collective term includes all applicable individual International Financial Reporting Standards, International Accounting Standards and Interpretations issued by the IASB;

“Independent Third Party(ies)” an individual or a company which, to the best of our Directors’ knowledge, information and belief, having made all reasonable enquiries, is not a connected person of the Company within the meaning of the Listing Rules;

“Inovio” Inovio Pharmaceuticals, Inc., a biotech company incorporated and existing under the laws of Delaware, the United States, whose shares are listed on the Nasdaq Stock Market (ticker symbol:INO);

[REDACTED]

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[REDACTED]

“JLL” Jones Lang LaSalle Corporate Appraisal and Advisory Limited, the independent property valuer commissioned by us to conduct property valuation on the properties of our Group;

“Latest Practicable Date” April 19, 2021, being the latest practicable date for the purpose of ascertaining certain information in this document prior to its publication;

[REDACTED]

“Listing Committee” the Listing Committee of the Stock Exchange;

[REDACTED]

“Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, as amended, supplemented or otherwise modified from time to time;

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“Main Board” the stock exchange (excluding the option market) operated by the Stock Exchange, which is independent from and operated in parallel with the Growth Enterprise Market of the Stock Exchange;

“Mandatory Provisions” the Mandatory Provisions for Articles of Association of Companies to be Listed Overseas (到境外上市公司章程必備條款), as promulgated by the State Council Securities Commission and the State Restructuring Commission on August 27, 1994 and became effective on the same date, as the same may be amended and supplemented or otherwise modified from time to time;

“MOFCOM” Ministry of Commerce of the PRC (中華人民共和國商務部) or its predecessor, the Ministry of Foreign Trade and Economic Cooperation of the PRC (中華人民共和國對外貿易經濟合作部);

“Ms. Yu” Qingling YU (俞慶齡), an Executive Director and general manager of the Company;

“NDRC” the National Development and Reform Commission of the PRC (中華人民共和國國家發展和改革委員會);

“NMPA” the National Medical Products Administration of the PRC (國家藥品監督管理局) and its predecessor, the China Food and Drug Administration (國家食品藥品監督管理總局);

[REDACTED]

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[REDACTED]

“PBOC” the People’s Bank of China (中國人民銀行), the central bank of the PRC;

“PRC Company Law” the Company Law of the PRC (中華人民共和國公司法), as amended and adopted by the Standing Committee of the Tenth National People’s Congress on October 27, 2005 and effective on January 1, 2006, as amended, supplemented or otherwise modified from time to time;

“PRC Legal Advisors” Zhong Lun Law Firm, our legal advisor as to PRC laws;

“PRC Securities Law” the Securities Law of the PRC (中華人民共和國證券法), as enacted by the 6th meeting of the 9th Standing Committee of the NPC on December 29, 1998 and became effective on July 1, 1999, as amended, supplemented or otherwise modified from time to time;

“Pre-[REDACTED] Investments” the pre-[REDACTED] investments in our Company undertaken by the Pre-[REDACTED] Investors, details of which are set out in “History and Corporate Structure”;

“Pre-[REDACTED] Investor(s)” the investors of Pre-[REDACTED] Investments;

[REDACTED]

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[REDACTED]

“QIBs” a qualified institutional buyer within the meaning of Rule 144A;

“Regulation S” Regulation S under the U.S. Securities Act;

“RMB” or “Renminbi” Renminbi, the lawful currency of the PRC;

“Rule 144A” Rule 144A under the U.S. Securities Act;

“SAFE” the State Administration of Foreign Exchange of the PRC (中華人民共和國國家外匯管理局);

“SAIC” the State Administration for Industry and Commerce of the PRC (中華人民共和國國家工商行政管理總局);

“SAT” the State Administration of Taxation of the PRC (中華人民共和國國家稅務總局);

“Securities and Futures the Securities and Futures Ordinance (Chapter 571 of the Ordinance” or “SFO” Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time;

“SFC” the Securities and Futures Commission of Hong Kong;

“Share(s)” shares in the share capital of our Company, with a nominal value of RMB1.00 each, comprising our Domestic Shares and our H Shares;

“Shareholders” holders of our Shares;

[REDACTED]

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[REDACTED]

“Special Regulations” Special Regulations of the State Council on the Overseas Offering and Listing of Shares by Joint Stock Limited Companies (國務院關於股份有限公司境外募集股份上市的特別規定), promulgated by the State Council on August 4, 1994;

[REDACTED]

“State Council” State Council of the PRC (中華人民共和國國務院);

“Stock Exchange” the Stock Exchange of Hong Kong Limited;

“subsidiary(ies)” has the meaning ascribed thereto in section 15 of the Companies Ordinance;

“substantial shareholder(s)” has the meaning ascribed to it under the Listing Rules;

“Supervisor(s)” supervisor(s) of our Company;

“Supervisory Board” the board of Supervisors of our Company;

“Suzhou Advaccine” Advaccine (Suzhou) Biopharmaceutical Co., Ltd. (艾棣維欣(蘇州)生物製藥有限公司), a limited liability company established in the PRC on February 17, 2017 and our wholly-owned subsidiary;

“Suzhou Si’ao” Si’ao Biotechnology (Suzhou) Co., Ltd. (斯澳生物科技 (蘇州)有限公司), a limited liability company established in the PRC on August 8, 2012 and our wholly-owned subsidiary;

“Suzhou Si’ao Acquisition” the acquisition of 100% equity interest of Suzhou Si’ao at a total consideration of RMB350,237,700 in September 2020;

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“Takeovers Code” the Codes on Takeovers and Mergers and Share Buy- backs issued by the SFC, as amended, supplemented or otherwise modified from time to time;

“TGA” the Therapeutic Goods Administration, the Department of Health of Australian Government;

“Track Record Period” the period comprising the years ended December 31, 2019 and 2020;

[REDACTED]

“United States” or “U.S.” the United States of America, its territories, its possessions and all areas subject to its jurisdiction;

“Unlisted Foreign Shares” ordinary shares issued by our company with a nominal value of RMB1.00 each and are held by foreign investors and not listed on any stock exchange;

“U.S. dollars”, “US$” or “USD” United States dollars, the lawful currency of the United States;

“U.S. Securities Act” the United States Securities Act of 1933, as amended and supplemented or otherwise modified from time to time, and the rules and regulations promulgated thereunder;

“VAT” Value Added Tax;

“Voting Agreement” the agreement dated September 1, 2020 entered into between Ms. Yu and Dr. Ma regarding certain agreements for the voting rights of the Company, details of which are set out in “History and Corporate Structure—Voting Agreement”;

[REDACTED]

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[REDACTED]

“WIPO” World Intellectual Property Organization;

Certain amounts and percentage figures included in this document have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures preceding them.

For ease of reference, the names of the PRC laws and regulations, governmental authorities, institutions, natural persons or other entities (including certain of our subsidiaries) have been included in the document in both the Chinese and English languages and in the event of any inconsistency, the Chinese versions shall prevail. English translations of official Chinese names are for identification purpose only.

For the purpose of this document, references to “provinces” of China include provinces, municipalities under direct administration of the central government and provincial-level, autonomous regions.

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In this document, unless the context otherwise requires, explanations and definitions of certain terms used in this document in connection with our Group and our business shall have the meanings set out below. The terms and their meanings may not correspond to standard industry meaning or usage of these terms.

“ACE2” angiotensin-converting enzyme 2, a secreted protein catalyzes angiotensin II into the vasodilator angiotensin 1-7;

“adenovirus” a DNA virus originally identified in human adenoid tissue, causing infections of the respiratory system, conjunctiva, and gastrointestinal tract;

“adjuvant” a substance added to a vaccine as immune potentiators or modulators;

“AE” adverse events, any untoward medical occurrences in a patient or clinical investigation subject administered a drug or other pharmaceutical product during clinical trials and which do not necessarily have a causal relationship with the treatment;

“aLRTI” acute lower respiratory tract infection;

“anti-RSV antibodies” anti-respiratory syncytial virus antibodies, a group of immunoglobulin that recognize respiratory syncytial virus;

“antibodies” an immunoglobulin present on the surface of B lymphocytes, secreted in response to stimulation, that specifically binds to the antigen;

“antigen” substances that can be recognized by the immunoglobulin receptor of B cells, or by the T cell receptor when complexed with major histocompatibility complex;

“APC(s)” antigen presenting cells, able to process and present the antigen;

“B cell” a type of white blood cell that differs from other lymphocytes like T-cells by the presence of the BCR on the B-cell’s outer surface. Also known as B-lymphocytes;

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“BAL” bronchoalveolar lavage, a diagnostic method where a bronchoscope is passed through the mouth or nose into an appropriate airway in the lungs and a certain amount of liquid is injected to obtain cells and other components from bronchial and alveolar space;

“BALB/c Mouse” an albino, laboratory-bred strain of the house mouse from which a number of common substrains are derived;

“BCR” B-cell receptor, a specialized receptor protein that allows a B-cell to bind to specific antigens;

“BLA” Biologics License Application;

“CD11b+ Ly6Chi” a subpopulation of monocytes;

“CD3+” a protein complex and T cell co-receptor that is involved in activating both the cytotoxic T cell and T helper cells;

“CDC” Center for Disease Control and Prevention;

“CDMO(s)” Contract Development and Manufacturing Organization, which is a pharmaceutical company that develops and manufactures drugs for other pharmaceutical companies on a contractual basis;

“CHB” chronic hepatitis B;

“CHO” Chinese hamsters ovary cell;

“CI” confidence interval, the interpretation of clinical trial data, which is usually set as 95% for clinical trials;

“COVID-19” coronavirus disease, an infectious disease caused by the most recently discovered coronavirus (severe acute respiratory syndrome coronavirus 2), first reported in December 2019;

“CRO” contract research organization, a company that provides support to pharmaceutical companies by providing a range of professional research services on a contract basis;

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“CTA” Clinical Trial Application, the PRC equivalent of investigational new drug application;

“DC” dendritic cell, a ‘tree-like’ or dendritic shapes cells which can present antigen;

“dLN(s)” draining lymph node(s), which lie(s) immediately at the downstream of inflammation or lesion site;

“DNA vaccines” deoxyribonucleic acid vaccines;

“E. coli” Escherichia coli, a kind of gram-negative bacterium that is widely used in genetic engineering research and application;

“EBV” Epstein-Barr virus, a member of the herpes virus family;

“ELISA” enzyme-linked immunosorbent assay;

“EP” electroporation, the use of an electrical pulse to introduce genetic material into cells;

“EPI” Expanded Programme on Immunization;

“EPT(s)” endpoint titer(s);

“EUA” Emergency Use Authorization;

“functional cure” sustained immunological control of HBV infection with no detectable serum HBsAg;

“GCP” Good Clinical Practice;

“GLP” Good Laboratory Practice;

“GM-CSF” granulocyte macrophage colony-stimulating factor, a monomeric glycoprotein secreted by macrophages, T cells, mast cells, natural killer cells, endothelial cells and fibroblasts that can regulate the proliferation and differentiation of granulocytes, and promote the proliferation and differentiation of antigen presenting cells;

“GMP” Good Manufacturing Practices;

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“GMT” geometric mean titer, the average antibody titer for a group of subjects calculated by multiplying all values and taking the nth root of this number, where n is the number of subjects with available data;

“HBcAg” hepatitis B core antigen, a hepatitis B viral protein;

“HBeAg” hepatitis B e-antigen, a hepatitis B viral protein and an indicator of active viral replication;

“HBsAg” hepatitis B surface antigen, a surface antigen of the HBV;

“HBsAg negative conversion a strong indicator of a functional cure for HBV; rate”

“HBV” hepatitis B virus;

“HCC” hepatocellular carcinoma, the most common type of liver cancer;

“Hepatitis B” hepatitis B, an infectious disease caused by the HBV that affects the liver;

“HPV” human papillomavirus, a DNA virus;

“HREC” Human Research Ethics Committee, an entity evaluating the ethical acceptability of clinical trials in Australia in accordance with the requirements of the National Health and Medical Research Council of Australia;

“IC50” half maximal inhibition concentration, a measure of the potency of a substance in inhibiting a specific biological or biochemical function;

“ID” intradermal injection, a shallow or superficial injection of a substance into the dermis, which is located between the epidermis and the hypodermis;

“IFN-␣” interferon-alpha, the cytokines produced during the early innate immune response to many viruses;

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“IgG(s)” immunoglobulin G(s), the most common type of antibody found in blood and other body fluids, and protects against bacterial and viral infections. IgG molecules are created by plasma cells and each IgG has two antigen binding sites;

“IL-10” interleukin 10, a potent anti-inflammatory cytokine that plays a crucial, and often essential, role in preventing inflammatory and autoimmune pathologies;

“IM” intramuscular, an intramuscular medication is given by needle into the muscle;

“immunogenicity” the capability of being immunogenic;

“in vitro” Latin for “within the glass”, a study or experiment which is done in the laboratory within the confines of a test tube or laboratory dish;

“in vivo” Latin for “within the living”, studies in which the effects of various biological or chemical substances are tested on whole, living organisms including animals, humans and plants, as opposed to a partial or dead organism, or those done in vitro;

“inactivated virus vaccine” a vaccine consisting of virus particles, bacteria, or other pathogens that have been grown in culture and then killed to destroy disease producing capacity;

“IND” Investigational New Drug, also known as clinical trial application in China or clinical trial notification in Australia;

“live-attenuated vaccines” a vaccine created by reducing the virulence of a pathogen, but still keeping it viable;

“LRTI” lower respiratory tract infection is caused by virus, bacteria, mycoplasma, chlamydia, legionella and other microorganisms, including acute tracheitis, bronchitis, chronic bronchitis, pneumonia and bronchiectasis;

“MCC” Merkel cell carcinoma, a kind of rare and aggressive skin cancer with high mortality rate;

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“MCV” Merkel cell polyomavirus, a novel human polyomavirus discovered in 2008 from Merkel cell carcinoma;

“MHC” major histocompatibility complex, group of genes that code for proteins found on the surfaces of cells that help the immune system recognize foreign substances. MHC proteins are found in all higher vertebrates. In human beings the complex is also called the human leukocyte antigen system;

“MOA” mechanism of action, the specific biochemical interaction through which a drug substance produces its pharmacological effect. A mechanism of action usually includes mention of the specific molecular targets to which the drug binds, such as an enzyme or receptor;

“mRNA” messenger ribonucleic acid or messenger RNA, a single- stranded molecule of RNA that corresponds to the genetic sequence of a gene, and is read by a ribosome in the process of synthesizing a protein;

“mRNA vaccines” messenger ribonucleic acid vaccines, a type of vaccine that contains RNA which, when introduced into a tissue, acts as mRNA to cause the cells to build the foreign protein and stimulate an adaptive immune response, which teaches the body how to identify and destroy the corresponding pathogen or cancer cells;

“na antiviral” nucleoside analog antiviral, nucleosides which contain a nucleic acid analogue and a sugar, which are used as antiviral;

“ND50” neutralization dose 50;

“NDA” New Drug Application;

“Neo-antigen” newly formed antigens that have not been previously recognized by the immune system;

“NRDL” PRC National Reimbursement Drug List (國家醫保藥品目錄);

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“PBS” phosphate buffered saline, a kind of water-based salt solution containing disodium hydrogen phosphate, sodium chloride and, in some formulations, potassium chloride and potassium dihydrogen phosphate which is commonly used in biological research;

“pDNA” plasmid DNA, a circular, double-stranded DNA molecule that is distinct from a cell’s chromosomal DNA;

“pre-S1 protein” or “pre-S2 the capsid, or shell protein, of Hepatitis B virus protein” consisting of HBsAg, pre-S1 and pre-S2 proteins. Studies show that pre-S1 protein has to do with the transport and secretion of HBsAg, and that pre-S2 protein may mediate the adhesion of HBV to human hepatocytes;

“PRNT” plaque reduction neutralization test, a biological method used to quantify the titer of neutralizing antibody for a virus;

“protein subunit vaccines” composed of at least one type of antigen that can be produced in heterologous expression systems, presents one or more protein antigens to the immune system without introducing the whole pathogen particles;

“RBD” receptor binding domain, a protein domain which binds to a specific receptor;

“RLU” relative light unit;

“RSV” respiratory syncytial virus, a single-stranded RNA virus;

“RSV A” respiratory syncytial virus A;

“RSV B” respiratory syncytial virus B;

“RSV G protein” respiratory syncytial virus G protein, a protein produced by RSV;

“S-2P” a design of two proline mutations for the prefusion stabilization of coronavirus S proteins;

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“SAE(s)” serious AE(s), any untoward medical occurrence in human drug trials that at any dose: results in death; is life-threatening; requires inpatient hospitalization or causes prolongation of existing hospitalization; results in persistent or significant disability/incapacity; may have caused a congenital anomaly/birth defect, or requires intervention to prevent permanent impairment or damage;

“SARS-CoV-2” severe acute respiratory syndrome coronavirus 2, the strain of coronavirus that causes COVID-19;

“subunit vaccines” vaccines that present one or more antigens to the immune system without introducing pathogen particles, whole or otherwise, examples of subunit vaccines include protein subunit vaccines and virus-like particles (VLPs);

“T cell” cells that originate in the thymus, mature in the periphery, become activated in the spleen/nodes if their T-cell receptors bind to an antigen presented by an MHC molecule and they receive additional costimulation signals driving them to acquire killing (mainly CD8+ T cells) or supporting (mainly CD4+ T cells) functions;

“TCR” T cell receptor, a molecule found on the surface of T cells responsible for recognising antigen;

“TEAE(s)” treatment-emergent adverse event(s), adverse events not present prior to medical treatment, or an already present event that worsens either in intensity or frequency following the treatment;

“Th1 cell” T helper type 1 cell, a lineage of CD4+ T cell that promotes cell-mediated immune responses;

“Th2 cell” T helper type 2 cell, stimulates humoral immune response;

“Treg cells” regulatory T cells, that are a specialized subpopulation of T-cells which have a role in regulating or suppressing other cells in the immune system. Tregs control the immune response to antigens and help prevent autoimmune disease;

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“Tumor-Associated Antigen tumor associated antigen that is relatively restricted to (TAA)” tumor cells whereas tumor associated antigens are usually protein molecules that are highly expressed in tumor cells;

“VED” or “VAED” vaccine enhanced disease or vaccine-associated enhanced disease, when an individual who has received a vaccine develops a more severe presentation of that disease when subsequently exposed to that virus, compared with when infection occurs without prior vaccination;

“viral vector vaccines” an virus agent that contains or carries modified genetic material (such as recombinant DNA) and can be used to introduce exogenous genes into an organism to generate the immune response against certain pathogen;

“virion” a complete virus particle that consists of an RNA or DNA core with a protein coat sometimes with external envelopes and that is the extracellular infectious form of a virus;

“WHO” World Health Organization.

–33– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT FORWARD-LOOKING STATEMENTS

This document contains certain forward-looking statements and information relating to us and our subsidiaries that are based on the beliefs of our management as well as assumptions made by and information currently available to our management. When used in this document, the words “aim,” “anticipate,” “believe,” “could,” “estimate,” “expect,” “going forward,” “intend,” “may,” “might,” “ought to,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “will,” “would” and the negative of these words and other similar expressions, as they relate to us or our management, are intended to identify forward-looking statements. Such statements reflect the current views of our management with respect to future events, operations, liquidity and capital resources, some of which may not materialize or may change. These statements are subject to certain risks, uncertainties and assumptions, including the risk factors as described in this document. You are strongly cautioned that reliance on any forward-looking statements involves known and unknown risks and uncertainties. The risks and uncertainties facing us which could affect the accuracy of forward-looking statements include, but are not limited to, the following:

• the timing of initiation and completion, and the progress of our pre-clinical studies and clinical trials;

• the timing and likelihood of regulatory filings and approvals, such as CTA, IND, BLA and NDA;

• our ability to advance our vaccine candidates into vaccine products, and the successful completion of clinical trials;

• the receipt and timing of any milestone payments in relation to collaboration and license agreements;

• the commercialization strategies and pricing policy of our vaccine candidates;

• the market opportunities of our vaccine candidates;

• estimates of our costs, expenses, future revenues, capital expenditures and our needs for additional financing;

• our ability to attract and retain senior management and key employees;

• our operations and business prospects;

• future developments, trends, conditions and competitive landscape in the industry and markets in which we operate;

• our strategies, plans, objectives and goals and our ability to successfully implement these strategies, plans, objectives and goals;

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• our ability to continue to maintain our market position in the global and China’s vaccine industry;

• our ability to identify and integrate suitable acquisition targets;

• changes to regulatory and operating conditions in the industry and markets in which we operate; and

• the amount and nature of, and potential for, future development of our business;

Subject to the requirements of applicable laws, rules and regulations, we do not have any and undertake no obligation to update or otherwise revise the forward-looking statements in this document, whether as a result of new information, future events or otherwise. As a result of these and other risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this document might not occur in the way we expect or at all. Accordingly, the forward-looking statements are not a guarantee of future performance and you should not place undue reliance on any forward-looking information. Moreover, the inclusion of forward-looking statements should not be regarded as representations by us that our plans and objectives will be achieved or realized. All forward-looking statements in this document are qualified by reference to the cautionary statements in this section.

In this document, statements of or references to our intentions or those of the Directors are made as of the date of this document. Any such information may change in light of future developments.

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You should carefully consider all of the information in this document, including the risks and uncertainties described below, before making an [REDACTED] in our Shares. Our business, financial condition and results of operations could be materially and adversely affected by any of these risks and uncertainties. The [REDACTED] of our Shares could decline due to any of these risks, and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us, or not expressed or implied below, or that we deem immaterial, could also harm our business, financial condition and results of operations.

RISKS RELATING TO OUR FINANCIAL POSITION AND PROSPECTS

We have incurred net losses since our inception, and we anticipate that we will continue to incur net losses for the foreseeable future and may never become profitable. As a result, you may lose substantially all of your [REDACTED] in us if our business fails.

We are a clinical-stage biopharmaceutical company founded in 2009. Our operations to date have primarily focused on the vaccine development, as well as preclinical studies and clinical trials of our vaccine candidates. As of the Latest Practicable Date, we had not yet successfully advanced any vaccine candidates to commercial sale and had generated no revenue from sales of vaccines. We have incurred significant expenses related to the research and development of our vaccine candidates. For the years ended December 31, 2019 and 2020, our research and development expenses amounted to RMB12.0 million and RMB57.7 million, respectively. In addition, we also incurred other expenses related to our operations, including administrative expenses. As a result, we incurred net losses of RMB19.0 million and RMB88.8 million for the years ended December 31, 2019 and 2020, respectively. We may continue to incur significant expenses and operating losses for the foreseeable future.

Our ability to generate significant revenue in the next several years will depend primarily on the successful regulatory approval, manufacture, marketing and commercialization of our vaccine candidates, which is subject to significant uncertainty. Therefore, we cannot guarantee that we are able to generate substantial revenue for the foreseeable future. We have devoted most of our financial resources to research and development, including our preclinical studies and clinical research and development activities. To date, we have financed our operations primarily through equity financing. The amount of our future net losses will depend, in part, on our ability to obtain funding through equity or debt financings, strategic collaborations or additional grants. Even if we successfully obtain regulatory approval for certain vaccine candidate, our future revenue will depend upon the size of any target markets in which our vaccine candidate have received approval, our ability to achieve sufficient market acceptance as well as other factors.

We anticipate that our expenses will increase significantly considering the following factors:

• initiate preclinical, clinical or other studies for new vaccine candidates;

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• continue to advance the preclinical studies and clinical trials of our current vaccine pipeline;

• seek regulatory approvals for our vaccine candidates that successfully complete clinical trials;

• develop our commercialization team to commercialize any vaccine candidates for which we may obtain marketing approval;

• acquire or in-license other vaccine candidates and technologies;

• make royalty, milestone or other payments under any in-license or collaboration agreements;

• maintain, protect and expand our intellectual property portfolio;

• attract and retain skilled personnel;

• create additional infrastructure to support our operations as a public company;

• enhance our vaccine candidates development and planned future manufacturing and commercialization efforts; and

• increase administrative expenses to support our financing activities and business expansion.

Our ability to become and remain profitable depends on whether we can generate revenue from our vaccine candidates, we may not become profitable and may need to obtain additional funding to continue our operations. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce our operations. Our failure to become and remain profitable would decrease the value of our Company and could impair our ability to raise capital, expand our business or continue our operations. As a result, you may lose substantially all of your [REDACTED] in us if our business fails.

If we fail to successfully complete the development of, obtain the necessary regulatory approvals for, and commercialize our vaccine candidates on time, or at all, our results of operations, financial condition and prospects may be adversely affected.

Our ability to generate revenue and become profitable in the future depends upon our ability to successfully complete the development of, obtain the necessary regulatory approvals for, and commercialize our vaccine candidates. We cannot commercialize vaccine candidates without obtaining regulatory approval from the relevant regulatory authorities, including the NMPA. The time required to obtain approval from the relevant regulatory authorities is unpredictable but typically takes years following the commencement of preclinical studies and

–37– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities. In addition, approval policies, regulations or the type and amount of clinical data necessary to gain approval may change during the course of a vaccine candidate’s clinical development and may vary among jurisdictions. Moreover, changes in regulatory requirements and guidance during our clinical trials may occur, which may result in necessary changes to clinical trial protocols, which could increase our costs, delay the timeline for or reduce the likelihood of regulatory approval for our vaccine candidates. As of the Latest Practicable Date, we were developing six vaccine candidates for six disease areas, including one Core Product in phase II clinical stage, one key vaccine candidate in phase II clinical stage, one key vaccine candidate in preclinical stage, and three preclinical-stage vaccine candidates. As of the same date, we had not received NDA approval for any of our vaccine candidates, and it is possible that none of our existing vaccine candidates or any vaccine candidates we may discover, in-license or acquire and seek to develop in the future will ever obtain such approval. We have invested a significant portion of our efforts and financial resources in the development of our existing vaccine candidates, and we expect to continue to incur substantial and increasing expenditures through the projected commercialization of these vaccine candidates. None of these vaccine candidates have been approved for marketing in China or any other jurisdictions and may never receive such approval. Our ability to achieve revenue and profitability is dependent on our ability to complete the development of our vaccine candidates, obtain necessary regulatory approvals, and have our vaccines manufactured and successfully marketed.

The success of these vaccine candidates will depend on several factors, including but not limited to:

• successful completion of preclinical studies and successful enrollment in, and completion of, clinical trials;

• receipt of regulatory approvals from the relevant regulatory authorities, including the NMPA and other applicable regulatory authorities for planned clinical trials;

• relying on third parties to conduct our clinical trials safely and efficiently;

• obtaining and maintaining patent, trade secret and other intellectual property protection and regulatory exclusivity;

• protecting our rights in our intellectual property;

• not infringing, misappropriating or violating the patent, trade secrets or other intellectual property rights of third parties;

• hiring sufficient capable personnel to oversee all development and regulatory activities and the continuous validity of the licenses;

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• competitive advantages of our vaccine candidates and vaccines; and

• continued acceptable safety profile for our vaccine candidates following regulatory approval, if and when received.

Moreover, because we have limited financial and managerial resources, we focus our vaccine pipeline on research and development programs and vaccine candidates that we possess profound knowledge over. As a result, we may forego or delay pursuit of opportunities with other vaccine candidates or for other indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial vaccines or profitable market opportunities. Our spending on current and future research and development programs and vaccine candidates for specific indications may not yield any commercially viable vaccine products. If we do not accurately evaluate the commercial potential or target market for a particular vaccine candidate, we may relinquish valuable rights to that vaccine candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights.

We had cash outflow from operating activities during the Track Record Period and may continue to experience net operating cash outflow for the foreseeable future.

We had net cash used in operating activities of RMB13.0 million and RMB37.9 million for the years ended December 31, 2019 and 2020, respectively. We cannot assure you that we will be able to generate cash flows from operating activities in the foreseeable future. Our liquidity and financial condition may be materially and adversely affected by negative net cash flows. In addition, our existing cash and cash equivalents may not be sufficient to enable us to complete all development or commercially launch all of our current vaccine pipeline for the anticipated characteristics and to invest in additional programs. Accordingly, we may require further funding through public or private offerings, debt financing, collaborations and licensing arrangements or other sources. If we resort to other financing activities to generate additional cash, we will incur financing costs and we cannot guarantee that the financing may be available when we need them on terms that are favorable to us, or at all. Our ability to raise funds will also depend on financial, economic and market conditions and other factors, many of which are beyond our control. If adequate funds are not available to us on a timely manner, we may have to delay, limit, reduce or terminate preclinical studies, clinical trials or other research and development activities or the commercialization of one or more of our pipeline vaccine candidates, which in turn will adversely affect our business prospects.

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We had net current liabilities and net liabilities during the Track Record Period and may need to obtain substantial additional financing to fund our operations.

We had net current liabilities of RMB6.0 million and net liabilities of RMB1.3 million as of December 31, 2019, primarily due to a borrowing from a third party, as well as trade payables in relation to our research and development. Although with the cash available to us at the moment, and taking into consideration of the [REDACTED] from the [REDACTED], we currently do not anticipate liquidity difficulty in near future, we cannot guarantee that we will not face such difficulty again, as our business operation has been and may continue to rely on external financings. If the financial resources available to us after the [REDACTED] are insufficient to satisfy our cash requirements, we may seek additional funding through equity offerings, debt financings or other arrangements. However, we may not be able to achieve equity financings, or achieve equity on terms acceptable to us. Alternatively, indebtedness from banks or related parties, may require that we devote our financial resources to service such debt rather than funding our operating activities and investments in research and development, which constrains our capital flexibility and may in turn adversely affect our vaccine development timetable. It may also be a challenge for us to service our interest and principal repayments in a timely manner or at all, which could trigger cross-defaults with other debt, as applicable, further limiting our ability to obtain further debt financing. Given our historical reliance on external financing, such developments could have a material adverse effect on our business, financial condition and results of operations.

RISKS RELATING TO DEVELOPMENT, CLINICAL TRIALS AND REGULATORY APPROVAL OF OUR VACCINE CANDIDATES

Vaccine development involves a lengthy and expensive process with uncertain outcomes.

Clinical trials must be taken out before obtaining regulatory approvals for the sale of our vaccine candidates, while its outcomes are inherently uncertain. The process of clinical trials are complex which are difficult to design and implement, thus conducting clinical trials involves a lengthy and expensive process with uncertain outcomes. Failure can occur at any time during the clinical development process. Therefore, the outcome from preclinical testing or early-stage clinical trials nor the successful interim clinical trial results are indicative in nature and may not imply the positive conclusion of later-stage clinical trials. Vaccine candidates in later stages of clinical trials may still fail to show the desired outcomes in safety and efficacy despite having progressed through early-stage clinical trials and despite the level of scientific rigor in the study or design and adequacy of execution.

We may experience numerous unexpected events during, or as a result of clinical trials that could delay or prevent our ability to receive regulatory approval or commercialize our vaccine candidates, including:

• regulators may not authorize us or our investigators to commence or conduct a clinical trial at a prospective trial site;

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• clinical trials of our vaccine candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon vaccine development programs;

• the number of subjects required our vaccine candidates clinical trials may be larger, enrollment may be insufficient or slower and the subjects may drop out at a higher rate than we anticipate;

• our CROs may fail to comply with the applicable regulatory requirements or meet their contractual obligations in a timely manner, or at all;

• in cases of the participants lack of clinical response or expose to unacceptable health risks, we may have to suspend or terminate clinical trials;

• regulators may require our investigators or us to suspend or terminate clinical research for various reasons, particularly in cases of non-compliance with certain regulatory requirements, for example, the phase III segment of the clinical trial of INO-4800 in U.S. remains on partial clinical hold until Inovio satisfactorily resolves the FDA’s remaining questions related to the CELLECTRA® 2000 device that will be used to deliver INO-4800 directly into the skin, see “Business—Our Vaccine Pipeline—pGX9501—Phase II COVID-19 Vaccine Candidate—Summary of Selected Clinical Trials—Ongoing Phase II/III Clinical Trial (NCT04642638) in the United States by Inovio” for details. We expect to commence a phase III clinical trial for pGX9501 in the second quarter of 2021 and file a BLA or EUA application to the NMPA in the second half of 2021;

• the cost of clinical trials for our vaccine candidates may be greater than we anticipate;

• the supply and quality of materials necessary for the clinical trials may be insufficient or inadequate; and

• our vaccine candidates may cause AEs, undesirable side effects or other unexpected characteristics, our investigators or us subsequently have to suspend or terminate the clinical trials.

If we are required to conduct additional clinical trials or other testing of our vaccine candidates beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our vaccine candidates or other testing, if the results of these trials or tests are not positive or are only modestly positive or if they raise safety concerns, we may:

• be delayed in obtaining regulatory approval for our vaccine candidates;

• unable to obtain regulatory approval at all;

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• obtain approval for limited indications that are not as broad as intended;

• have the vaccine removed from the market after obtaining regulatory approval; or

• be subject to additional post-marketing study requirements.

Delays in conducting clinical trials or postponement in obtaining approvals may result in increases in our vaccine development costs. We cannot guarantee the clinical trials will be able to commence as planned, amended or completed according to the preset schedule, or at all. Significant delays in clinical trials will narrow the time frame in which our ability to retain the exclusive right to commercialize our vaccine candidates. Alternatively, this may allow our competitors to market similar products in advance subsequently impair our ability to commercialize our vaccine candidates which may harm our business and results of operations.

Our vaccine candidates could fail to receive regulatory approval from the NMPA or other applicable regulatory authorities for many reasons, including:

• disagreement with the design or implementation of our clinical trials;

• disagreement on the specifications and standards of new vaccines;

• failure to demonstrate that a vaccine candidate is safe, effective and potent for its proposed indications;

• failure of clinical trial results to meet the level of statistical significance required for approval;

• failure to demonstrate the clinical and other benefits of a vaccine candidate outweigh its safety risks;

• disagreement with our interpretation of data from preclinical studies or clinical trials;

• the insufficiency of data collected from clinical trials of our vaccine candidates to support the filing of an NDA or other applicable submissions or obtaining regulatory approval;

• the relevant regulatory authorities’ finding of deficiencies related to the manufacturing processes or facilities; and

• changes in approval policies or regulations that render our preclinical and clinical data insufficient for approval.

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The NMPA or other applicable regulatory authorities may require more information, including additional preclinical or clinical data, to support the approval application, which may delay or prevent us in obtaining the regulatory approvals in time and subsequently impact on our commercialization plans, or in more extreme cases, we may decide to dismiss the development program. Though we were to obtain approvals, regulatory authorities may only grant approval for fewer or more limited indications for vaccine candidates compare to our requests, or subject to the performance of costly post-marketing clinical trials, or may approve with a label that is not desirable for the successful commercialization of that vaccine candidate. In addition, if any of our vaccine candidates produce undesirable side effects or safety issues, the NMPA or other applicable regulatory authorities may require the establishment of risk evaluation and mitigation measures that may restrict distribution of our vaccines and impose burdensome implementation requirements on us. Any of the foregoing scenarios could materially harm the commercial prospects of our vaccine candidates.

Results of earlier clinical trials may not be predictive of results of later-stage clinical trials.

The results of preclinical studies and early clinical trials of our vaccine candidates may not be predictive of the results of later-stage clinical trials, especially when all of our vaccine candidates are in preliminary preclinical or clinical stages. Vaccine candidates in later stages of clinical trials may fail to show the desired safety and efficacy results despite having progressed through preclinical studies and initial clinical trials. Future clinical trial results may not be favorable for various reasons.

In some cases, there can be significant variability in safety and/or efficacy results between different trials of the same vaccine candidate due to numerous factors, including changes in trial procedures in protocols and differences in the size or type of the subjects, such as genetic and biological differences. As vaccine candidates are developed through preclinical to early-to late-stage clinical trials towards approval and commercialization, it is usual that various aspects of the development program, such as manufacturing and formulation progress, are amended throughout the process object to optimize trial procedures and results. However, these amendments still associate with risks that may never achieve the intended outcome. Results may differ from earlier trials due to the more clinical trial sites and additional countries involved. These changes could lead our planned clinical trials or other future clinical trials being less predictable where our vaccine candidates may perform differently. This subsequently could delay our clinical trials, postpone our approval schedule and/or even jeopardize our ability to commence commercialization of our vaccine candidates.

Our vaccine candidates may cause AEs or have other properties that could delay or prevent their regulatory approval, limit their commercial profile or result in significant post-approval negative consequences.

AEs caused by our vaccine candidates could lead us or regulatory authorities to interrupt, delay or halt clinical trials and may result in a more restrictive label or the delay or even result in the denial of regulatory approval by the NMPA or other applicable regulatory authorities.

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Results of our clinical trials could reveal unacceptable extreme serious prevalent of AEs. In such an event, our clinical trials could be suspended or terminated and the NMPA or other applicable regulatory authorities could order us to cease further development of, or deny approval of, our vaccine candidates for any or all targeted indications. AEs related to our vaccine candidates could negatively affect the proposed subjects recruitment or the possibility of the enrolled subjects to complete the trial, and even more serious case could result in potential product liability claims. Any of these occurrences may harm our reputation, business, financial condition and prospects significantly.

Additionally, if one or more of our vaccine candidates receive regulatory approval, and we or others later identify undesirable side effects caused by such vaccines, a number of potential serious negative consequences could result, including:

• we may suspend commercialization of the vaccine;

• regulatory authorities may withdraw approvals of the vaccine;

• regulatory authorities may require additional warnings on the label;

• we may be required to develop risk evaluation and mitigation measures for the vaccine, or if risk evaluation and mitigation measures are already in place, to incorporate additional requirements under the risk evaluation and mitigation measures;

• we may be required to conduct post-market studies;

• we could be sued and held liable for harm caused to subjects; and

• our reputation may suffer.

Any of these events could prevent us from achieving or maintaining market acceptance of the particular vaccine candidate, and could significantly harm our business, results of operations and prospects.

If we encounter difficulties enrolling subjects in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected.

The timely completion of clinical trials in accordance with their protocols depends, to a certain extent, on a number of factors, particularly, our ability to enroll a sufficient number of subjects who remain in the trial until its conclusion. We may experience difficulties in subjects enrollment in our clinical trials for a variety of reasons, including:

• the infection rates of targeted infectious diseases and population at risks of infection;

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• the size of the study population required for analysis of the trial’s primary endpoints;

• design and eligibility criteria for the clinical trial in question;

• our ability to recruit clinical trial investigators with the appropriate competencies and experience;

• the age of subjects which may require parental consent;

• our ability to obtain and maintain subject consents;

• the risk that subjects enrolled in clinical trials will not complete a clinical trial; and

• the availability of approved vaccines that are non-inferior even superior to our vaccine candidates.

In addition, our clinical trials may compete with our competitors’ clinical trials for vaccine candidates that are in the same preventive areas as our vaccine candidates. Such competition will reduce the number and types of subjects available to us, as some subjects might opt to enroll in a trial being conducted by our competitors instead of ours. Even if we are able to enroll a sufficient number of subjects in our clinical trials, delays in subject enrollment may result in increased costs or may affect the timing or outcome of the planned clinical trials, which could prevent completion of these trials and adversely affect our ability to advance the development of our vaccine candidates.

We may not be able to identify, discover or in-license new and suitable vaccine candidates.

After our vaccine candidates get approved, they will be subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage, advertising, promotion, sampling, record-keeping, conduct of post-marketing studies, and submission of safety, efficacy, and other post-market information in China or other applicable jurisdictions.

Manufacturers and manufacturers’ facilities are required to comply with extensive NMPA requirements, including ensuring that quality control and manufacturing procedures conform to GMP regulations. As such, we are subject to continuous review and inspections to evaluate the compliance with GMP and adherence to commitments made in any NDA, other marketing application, and previous responses to inspection observations. Accordingly, we must continue to expend time, money and effort in all areas of regulatory compliance, including manufacturing, production and quality control.

The NMPA or other applicable regulatory authorities may withdraw the approval if we violate certain regulatory requirements or standards or if issues arise after the vaccine product reaches the market. Later discovery of previous unknown problems with our vaccine candidates, including AEs of unexpected severity or frequency, issues during the manufacturing processes, failure to comply with relevant regulatory requirements, may result

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• restrictions on the commercialization or manufacturing of our vaccines, withdrawal of the vaccine from the market, or voluntary or mandatory product recalls;

• fines, untitled or warning letters, or holds on clinical trials;

• refusal by the NMPA or other applicable regulatory authorities to approve pending applications or supplements to approved applications filed by us or suspension or revocation of license approvals;

• product seizure or detention, or refusal to permit the import or export of our vaccine candidates; and

• injunctions or the imposition of civil or criminal penalties.

We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action. If we are reluctant or unable to adapt to changes in the existing requirements or adopting new requirements or policies, or if we are unable to maintain regulatory compliance, we may lose any regulatory approval that we may have obtained subsequently unable to achieve or sustain profitability.

In addition, if we were able to obtain conditional approval of any of our vaccine candidates, the NMPA or other applicable regulatory authorities may require us to conduct a confirmatory study and additional safety studies to verify the potential clinical benefit. The results from the confirmatory study may not support the clinical benefit, which would result in the approval being withdrawn. While operating under conditional approval, we are subject to certain restrictions till obtaining the regular approval.

The availability of alternative vaccines or treatment technologies may adversely affect our sales.

Medical technologies are evolving and new vaccines or treatment technologies for diseases that our vaccines target may emerge. If these competing new vaccines or technologies are perceived by the purchasers to be significantly more effective than our vaccines, market demand for our vaccines may decline. The occurrence of any of the foregoing could materially and adversely affect our business, financial condition and results of operations.

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RISKS RELATING TO OUR INTELLECTUAL PROPERTY RIGHTS

We could be unsuccessful in obtaining or maintaining adequate intellectual property protection for one or more of our vaccine candidates.

Our success depends largely on our ability to protect our proprietary technology and vaccine candidates from competition by obtaining, maintaining, defending and enforcing our intellectual property rights, including patent rights. As of Latest Practicable Date, we had registered 23 patents, 16 trademarks and three domain names in China, and had registered one patent in the United States, two patents in Europe, and two trademarks in Hong Kong. We are in the process of transferring eight patents and four trademarks relating to veterinary vaccine products of Suzhou Si’Ao to a subsidiary of Kexiang Hi-tech. As of the same date, we had filed 13 patent applications in China, two patent applications in the United States and four patent applications in other jurisdictions and international organization, including Japan and WIPO. We have not registered patents or filed applications of patents in other jurisdictions, as a result we do not enjoy patent protection in these jurisdictions. For further information on our patent portfolio, see “Business—Intellectual Property.”

We seek to protect the vaccine candidates and technology that we consider commercially important by filing patent applications in China, United States and other countries, relying on trade secrets or pharmaceutical regulatory protection or employing a combination of these methods. We cannot guarantee that our competitors will not develop and seek patent protection for the same or related technologies and processes that prevent us from using such technologies and processes or producing our vaccine products. Even if we decide to seek patent protection, we cannot be certain that patents will be issued or granted with respect to our patent applications that are currently pending, or that issued or granted patents will not later be found to be invalid and/or unenforceable, be interpreted in a manner that does not adequately protect our vaccine candidates, or otherwise provide us with any competitive advantage. Moreover, the patent applications in respect of patents licensed under our in-license arrangements may not be issued or granted, and as a result, we may not be able to have adequate protection with respect to such patents. The patent position of vaccine companies is generally uncertain because it involves complex legal and factual considerations. Patent applications we had applied may not be granted in the end.

It is also possible that we will fail to identify patentable aspects of our research and development output in time to obtain patent protection. Although we enter into non-disclosure and confidentiality agreements with parties who have access to confidential or patentable aspects of our research and development output, such as our employees, corporate collaborators, outside scientific collaborators, contract manufacturers, consultants, advisors and other third parties, any of these parties may breach such agreements and disclose such output before a patent application is filed, thereby jeopardizing our ability to obtain patent protection. In addition, publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the U.S. and other jurisdictions are typically not published until 18 months after filing, or in some cases, not at all. Therefore, we cannot be certain that we were the first to make the inventions claimed in our patents or pending patent applications, or that we were the first to file for patent protection of such inventions. Furthermore, both China and U.S. have adopted the “first-to-file” system under which whoever

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As such, we do not know the degree of future protection that we will have on our vaccines and technology, if any, and a failure to obtain adequate intellectual property protection with respect to our vaccine candidates could have a material adverse impact on our business.

Issued patents covering one or more of our vaccine candidates could be found invalid or unenforceable.

Despite measures we take to obtain and maintain patent and other intellectual property rights with respect to our vaccine candidates, our intellectual property rights could be challenged or invalidated. For example, if we were to initiate legal proceedings against a third party to enforce a patent covering one of our vaccine candidates, the defendant could counterclaim that our patent is invalid and/or unenforceable. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, for example, lack of novelty, creativity, practicality, obviousness or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO, the State Intellectual Property Office of China, or the applicable foreign counterpart, or made a misleading statement, during prosecution. Moreover, our patent may become invalid if we do not pay patent annual fees in accordance with relevant requirements.

Although we believe that we have conducted our patent prosecution in accordance with a duty of candor and in good faith, the outcome following legal assertions of invalidity and unenforceability during patent litigation is unpredictable. If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on a vaccine candidate. Even if a defendant does not prevail on a legal assertion of invalidity and/or unenforceability, our patent claims may be construed in a manner that would limit our ability to enforce such claims against the defendant and others. Even if we establish infringement, the court may decide not to grant an injunction against further infringing activity and instead award only monetary damages, which may not be an adequate remedy. In addition, if the breadth or strength of protection provided by our patents is threatened, it could dissuade companies from collaborating with us to license, develop, or commercialize our current or future vaccine candidates. Any loss of patent protection could have a material adverse impact on one or more of our vaccine candidates and our business.

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Enforcing our intellectual property rights against third parties may also cause such third parties to file other counterclaims against us, which could be costly to defend and could require us to pay substantial damages, cease the sale of certain vaccines or enter into a license agreement and pay royalties (which may not be possible on commercially reasonable terms or at all). Any efforts to enforce our intellectual property rights are also likely to be costly.

Claims that our vaccine candidates or the sale or use of our future vaccine products infringe the patents or other intellectual property rights of third parties, or challenges over ownership of our patents or other intellectual properties, could result in costly litigation or could require substantial time and money to resolve, even if litigation is avoided.

Our commercial success depends upon our ability to develop, manufacture and commercialize our vaccine candidates without infringing the intellectual property rights of others. We cannot guarantee that our vaccine candidates do not and will not infringe third-party patents or other intellectual property rights in the future. The ownership of our patents or other intellectual property rights may be challenged in the future by former employees, former employers of employees, part-time employers of employees, partners or other third parties. In addition, we (including our former and current employees) may be alleged in third party infringement of patents or misappropriation of trade secrets, or violation of intellectual property rights, notwithstanding with respect to research, usage or manufacture of the compounds we (including our former and current employees) have developed or are developing by ourselves. Such allegation may result in litigation against us or other parties we have agreed to indemnify, which litigation could be based on either existing intellectual property or intellectual property that arises in the future.

It is also possible that we fail to identify relevant patents or patent applications held by third parties that cover our vaccine candidates. Publication of discoveries in the scientific or patent literature often lags behind actual discoveries. Therefore, we cannot assure you that we will be the first to invent, or the first to file patent applications for our vaccine candidates or the respective uses. Further, we are uncertain that our vaccine candidates will not infringe patents that are currently issued or that being issued in the future. In the event that a third party has also filed a patent application covering one of our vaccine candidates or a similar invention, our patent application may be regarded as competing applications and may not be approved in the end.

Additionally, pending patent applications which have been published can, subject to certain limitations, be later amended in a manner that could intrude our vaccine products or their uses. In order to avoid or settle potential claims with respect to any patent or other intellectual property rights of third parties, we may choose or be required to seek a license from a third party and be required to pay license fees or royalties or both, which could be substantial. These licenses may not be available on acceptable terms, or at all. Even if we were able to obtain a license, the rights may be nonexclusive, which could result in our competitors gaining access to the same intellectual property. Ultimately, we could be prevented from commercializing a vaccine candidate, or be forced, by court order or otherwise, to cease some

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Defending against claims of patent infringement, misappropriation of trade secrets or other violations of intellectual property rights could be costly and time consuming, regardless of the outcome. Thus, even if we were to ultimately prevail, or to settle at an early stage, such litigation could burden us with substantial unanticipated.

Unfavorable outcomes in intellectual property litigation could limit our research and development activities and/or our ability to commercialize our vaccine candidates.

If third parties successfully assert their intellectual property rights against us, we might be restricted from using certain aspects of our technology, or barred from developing and commercializing our vaccine candidates. Prohibitions against using certain technologies, or prohibitions against commercializing our vaccine candidates, could be imposed by a court or by a settlement agreement between us and a plaintiff. In addition, if we are unsuccessful in defending against allegations that we have infringed, misappropriated or otherwise violated patent or other intellectual property rights of others, we may be forced to pay substantial damage awards to the plaintiff. There is inevitable uncertainty in any litigation, including intellectual property litigation. There can be no assurance that we would prevail in any intellectual property litigation, even if the case against us is weak or flawed. If litigation leads to an outcome unfavorable to us, we may be required to obtain a license from the intellectual property owner in order to continue our research and development programs or to commercialize any resulting product. It is possible that the necessary license will not be available to us on commercially acceptable terms, or at all. This may not be technically or commercially feasible, may render our vaccine products less competitive, or may delay or prevent the launch of our vaccine products to the market. Any of the foregoing could limit our research and development activities, our ability to commercialize one or more vaccine candidates, or both.

Most of our competitors are larger than we are and have substantially greater resources. They are, therefore, likely to be able to sustain the costs of complex intellectual property litigation longer than we could. In addition, the uncertainties associated with litigation could have a material adverse effect on our ability to raise the funds necessary to conduct our clinical trials, continue our internal research programs, in-license needed technology, or enter into strategic partnerships that would help us bring our vaccine candidates to market.

In addition, any future intellectual property litigation, interference or other administrative proceedings will result in additional expense and distraction of our personnel. An adverse outcome in such litigation or proceedings may expose us or any future strategic partners to loss of our proprietary position, expose us to significant liabilities, or require us to seek licenses that may not be available on commercially acceptable terms, if at all, each of which could have a material adverse effect on our business.

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Intellectual property litigation may lead to unfavorable publicity that harms our reputation and causes the market price of our ordinary shares to decline.

During the course of intellectual property litigations, there could be public announcements of the results of hearings, rulings on motions and other interim proceedings in the litigation. If the securities analysts or our potential investors regard these announcements as negative, the perceived value of our vaccines, programs or intellectual property could be diminished. Accordingly, the market price of our Shares may decline. Such announcements could also harm our reputation or the market for our vaccine candidates, which could have a material adverse effect on our business.

Confidentiality agreements with employees and third parties or confidentiality provisions in agreements may not prevent unauthorized disclosure of trade secrets and other proprietary information.

We rely on employee and third-party confidentiality agreements, confidentiality provisions in collaboration agreements and Company’s confidentiality measures to safeguard our intellectual property, such as trade secrets, know-how and other proprietary information. In the course of our research and development activities and our business activities, we often rely on confidentiality measures, confidentiality provisions in collaboration agreements or confidentiality agreements to protect our proprietary information. Such confidentiality agreements or confidentiality provisions in collaboration agreements are used, particularly with, parties that have access to the proprietary information, such as our employees, corporate collaborators, outside scientific collaborators, sponsored researchers, consultants, advisors and other third parties. We take steps to protect our proprietary information, and our confidentiality agreements and service invention ownership confirmations are carefully drafted to protect our proprietary interests. Nevertheless, there can be no guarantee that an employee or a third party will not make an unauthorized disclosure of our proprietary confidential information or breach such confidentiality agreement, regardless intentionally or inadvertently. It is likely that a competitor will make use of such information, and that our competitive position will be compromised, in spite of any legal action we might take against persons making such unauthorized disclosures. In addition, to the extent that our employees, consultants or contractors use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.

Trade secrets are difficult to protect. Although we use reasonable efforts to protect our trade secrets, our employees, consultants, contractors or business partners might intentionally or inadvertently disclose our trade secret information to competitors or our trade secrets may otherwise be misappropriated. Enforcing a claim that a third party illegally obtained and is using any of our trade secrets is expensive and time consuming, and the outcome is unpredictable.

We sometimes engage individuals or research institutions to conduct research relevant to our business. The ability of these individuals or research institutions to publish or otherwise publicly disclose data and other information generated during the course of their research is

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Intellectual property rights do not necessarily protect us from all potential threats to our competitive advantage.

The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect our business, or permit us to maintain our competitive advantage. The following examples are illustrative:

• others may be able to make compounds that are similar to our vaccine candidates or utilize similar technology that are not covered by the claims of the patents that we own or have exclusively licensed;

• we or any future collaborations might not have been the first to make the inventions covered by the issued patents or pending patent applications that we own or may in the future;

• we might not have been the first to file patent applications covering certain of our inventions;

• others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights;

• it is possible that our pending patent applications will not lead to issued patents;

• others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing, misappropriating or otherwise violating our intellectual property rights;

• issued patents that we own or have exclusively licensed may not provide us with any competitive advantages, or may be held invalid or unenforceable, as a result of legal challenges by our competitors;

• we may obtain patents for certain technologies many years before we receive NDA approval for vaccines leveraging such technologies, and because patents have a limited life, which may begin to run prior to the commercial sale of the related vaccines, the commercial value of our patents may be limited;

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• our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive vaccines for commercialization in our major markets;

• we may fail to develop additional proprietary technologies that are patentable;

• we may fail to apply for or obtain adequate intellectual property protection in all the jurisdictions in which we operate; and

• the patents of others may have an adverse effect on our business, for example by preventing us from commercializing one or more of our vaccine candidates for one or more indications.

Any of the abovementioned events occur, we may regard these as threats to our competitive advantages and subsequently could have a material adverse effect on our business.

RISKS RELATING TO MANUFACTURING AND COMMERCIALIZATION OF OUR VACCINE AND VACCINE CANDIDATES

The recession or eradication of the diseases that our vaccines target may adversely affect our sales.

We have devoted significant resources to the research and development of vaccines against pandemic threats, for example, pGX9501 in preventing COVID-19. And we will continue to devote resources to the development of vaccines to address emerging pandemic threats. However, a pandemic may have receded before we realize any return on our investment in the research and development of our vaccines. Moreover, diseases that our vaccines target may be eradicated, which would diminish the market demand of our vaccines. In addition, outbreaks of infectious diseases may cause related government agencies or vaccinees to significantly increase their purchases of vaccines against the pandemic diseases and reduce purchases of other vaccines in a short period. Changes of the procurement plans could adversely affect sales of our vaccine products.

We may face substantial competition in the market for vaccines. The availability of alternative vaccines or treatment technologies may adversely affect our sales.

The vaccine market is intensively competitive with rapid changes. Large multi-national and domestic pharmaceutical biotechnology companies have commercialized or are commercializing or pursuing the development of vaccines that target diseases as we do. For example, pGX9501 faces competition from a number of multi-national pharmaceutical companies, vaccine manufacturers, academic institutions and other organizations currently have commercialized COVID-19 vaccines or programs to develop COVID-19 vaccine candidates. In addition, certain of our vaccine candidates have competing candidates at similar or later stages of development. We may not be able to successfully compete with any of these competitors.

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Many of our competitors have substantially greater commercial infrastructure and better financial, technical and personnel resources than we have, as well as vaccine candidates in later stage of clinical development. Though, we may successfully develop and obtain approval by the NMPA or other applicable regulatory authorities, our vaccine candidates may subject to competitions in respect of safeness and effectiveness, the timing and scope of the regulatory approvals, the availability and cost of supply, marketing and sales capabilities, patent position and other factors. Our competitors may succeed in commercializing the competing vaccines prior to us, they may take this opportunity to gain certain level of market acceptance for the same markets that we are targeting at. In particular, competition with international vaccine companies could potentially increase as overseas clinical data are now accepted in applications for drug registration in China pursuant to policy reforms by the NMPA. Our competitive position could be harmed if we are not “first-to-market” with respect to any of our vaccine candidates since it may be more difficult to successfully market that vaccine candidate. In addition, any new product that competes with an approved product must demonstrate compelling advantages in efficacy, convenience, safety and tolerability in order to overcome price competition and to be commercially successful. Disruptive technologies and medical breakthroughs may compete with our vaccine candidates or render our vaccine candidates obsolete or noncompetitive.

The market opportunities for our vaccine candidates may be smaller than we anticipate, which could render some vaccine candidates ultimately unprofitable even if commercialized.

We estimate the incidence and prevalence of target vaccinee populations for particular diseases based on various third-party sources, such as scientific literature, surveys of clinics, patient foundations or market research, as well as internally generated analysis, and we use such estimates in making decisions regarding our vaccine development strategy, including determining on which candidates to focus our resources for preclinical or clinical trials. These estimates may be inaccurate or based on imprecise data. The total addressable market opportunity will depend on, among other things, acceptance of the vaccine by the medical community and vaccinee access, vaccine pricing and reimbursement.

The number of vaccinees in the addressable markets may turn out to be lower than expected, vaccinees may not be amenable to treatment with our vaccines, or new vaccinees may become increasingly difficult to identify or access. Furthermore, new studies may change the estimated incidence or prevalence of the diseases that our vaccine candidates target, and the number of addressable vaccinees for our vaccine candidates in any case may turn out to be lower than expected. In such cases, even if we obtain significant market share for our vaccine candidates, because the potential target populations are small, we may never achieve profitability without obtaining regulatory approval for additional indications. Any of the above unfavorable developments could have a material adverse effect on our business, financial condition and results of operations.

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Our future approved vaccine candidates may fail to achieve the degree of market acceptance by physicians, vaccinees, third-party payers and others in the medical community necessary for commercial success.

Even with the requisite approvals from the NMPA or other applicable regulatory authorities, the commercial success of our vaccine candidates will depend, in part, on the acceptance of our vaccine candidates by physicians, vaccinees, third-party payers, and others in the vaccine or disease prevention industry. Any vaccine that we commercialize may fail to gain acceptance from physicians, vaccinees, third-party payers, and such potential users may prefer other vaccines. If these commercialized vaccine candidates do not achieve an adequate level of acceptance, we may not generate significant revenue and may not become profitable. The degree of market acceptance of our vaccine candidates, if approved for commercial sale, will depend on several factors, including:

• the clinical indications for which our vaccine candidates are approved;

• the efficacy and safety of such vaccine and vaccine candidates as demonstrated in clinical trials;

• the opinion of the physicians, hospitals and vaccinees considering our vaccines and vaccine candidates as safe and effective;

• the potential and perceived advantages of our vaccine and vaccine candidates over other vaccines;

• the cost advantage of vaccines related to alternative products;

• the willingness of the public to purchase private market vaccines;

• the availability of vaccines and level of convenience of dosing schedule and dosage form, as compared with competing vaccines;

• the willingness and ability of local government entities to purchase our vaccine products;

• the target population’s perception of the desirability of new vaccines;

• the prevalence and severity of any side effects;

• product labelling or product insert requirements of the NMPA or other regulatory authorities, including any limitations or warnings contained in a product’s approved;

• the strength of marketing and distribution support;

• the timing of market introduction of competing products;

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• publicity concerning our vaccine products or competing products; and

• the effectiveness of our sales and marketing efforts.

Even if a potential product displays a favorable efficacy and safety profile in preclinical studies and clinical trials, market acceptance of the product will not be fully revealed until after it is launched. In addition, because our vaccine candidates are intended to prevent infectious diseases, demand for our vaccine candidates in any given year may be impacted by the relative severity and prevalence of such diseases and the effectiveness of existing vaccines, if any, in providing immunity. Even when infectious diseases become quite prevalent and severe in a given year, demands for our vaccine candidates may still not increase because our vaccine candidates are being strategically stockpiled, and the competitors’ products may be more readily available.

Even if our vaccines achieve market acceptance, we may not be able to maintain that market acceptance over time if new vaccine candidates are introduced that are more favourably received than our vaccines, are more cost effective or render our vaccines obsolete.

Even if we are able to commercialize any approved vaccine candidates, the vaccine may become subject to national or other third-party reimbursement practices or unfavorable pricing regulations, which could harm our business.

The regulations that govern regulatory approvals, pricing and reimbursement scheme for vaccine products vary widely from country to country. For example, the prices that we intend to charge for our vaccine may also subject to approval in many countries outside of China. As a result, we might obtain regulatory approval for a vaccine in a particular country but still subject to price regulations that delay our commercial launch of the vaccine and negatively impacts our revenue. Our ability to commercialize any approved vaccine candidates successfully will also depend in part on the extent to which reimbursement for these vaccines where the related treatments will be available from government health administration authorities, private health insurers and other organizations. A primary trend in the global healthcare industry is cost containment. Government authorities and these third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications.

Increasingly, third-party payors are requiring that companies provide them with predetermined discounts from list prices and are challenging the prices charged for medical products. We cannot be sure that reimbursement will be available for any approved vaccine candidate that we commercialize and, if reimbursement is available, what the level of reimbursement will be. Reimbursement may impact the demand for, or the price of, any approved vaccine candidate that we commercialize. Obtaining or maintaining reimbursement for approved vaccine candidates may be particularly difficult. If reimbursement is not available or is available only to limited levels, we may not be able to successfully commercialize any vaccine candidate that we in-license or successfully develop.

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There may be significant delays in obtaining reimbursement for approved vaccine candidates, and coverage may be more limited than the purposes for which the vaccine candidates are approved by the NMPA or other comparable regulatory authorities. Moreover, eligibility for reimbursement does not imply that any vaccine will be paid for in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution. Payment rates may vary according to the use of the vaccine and the clinical setting in which it is used, may be based on payments allowed for lower-cost vaccines that are already reimbursed, and may be incorporated into existing payments for other services. Net prices for vaccines may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future weakening of laws that presently restrict imports of vaccines from countries where they may be sold at lower prices than in the United States. Our inability to promptly obtain coverage and profitable payment rates from both government- funded and private payors for any future approved vaccine candidates and any new vaccines that we develop could have a material adverse effect on our business, our operating results, and our overall financial condition.

We intend to seek approval to market our vaccine candidates in China and other jurisdictions. In China, the pricing of our vaccines may be subject to governmental control, which can take considerable time to be commercialized even after obtaining regulatory approval. Market acceptance and sales of any of our future approved vaccine candidates will depend significantly on the availability of adequate coverage and reimbursement from third-party payors for vaccines, and may be affected by existing and future health care reform measures.

We have limited experience in launching and marketing vaccine candidates. If we are unable to maintain sufficient marketing and sales capabilities, we may not be able to generate revenues from sales of our vaccine candidates.

Our operations to date have been largely focused on developing our vaccine candidates, including undertaking preclinical studies and conducting clinical trials. Although members of our management have years of experience relating to marketing and commercialization, we have not yet demonstrated our ability to manufacture vaccines at a commercial scale, or arrange for a third party to do so on our behalf, or conduct sales, marketing and distribution activities necessary for successful commercialization for our vaccine candidates. Our ability to successfully commercialize our vaccine candidates may involve inherent risk. We may spend substantially more time and capital resources than companies with experience in launching and marketing vaccine candidates. We will have to compete with other pharmaceutical and vaccine companies to recruit, hire, train and retain marketing and sales personnel. During the Track Record Period and as of the Latest Practicable Date, we did not have a commercialization team. As of the Latest Practicable Date, we were in the process of building our commercialization team in anticipation of the launch of our vaccine candidates. However, there can be no assurance that we will be able to maintain adequate marketing and sales capabilities to support our future approved vaccine products. As a result, we may not be able to generate revenue from sales of our vaccine candidates.

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We currently have only one manufacturing base under construction. If we experience delays in the completion of construction of our manufacturing facilities or fail to manage the manufacturing capacity properly, our business, financial condition and results of operations may be adversely affected.

We expect to complete stage I of our GMP-standard manufacturing facilities at our Suzhou manufacturing base in the second quarter of 2021, the designed annual manufacturing capacity of which will be 20 million doses, enabling us to be commercial-ready for the anticipated launch of our COVID-19 vaccine. Subject to regulatory approvals from relevant authorities, we plan to commence the construction of stage II of our manufacturing facility in 2021 at our existing manufacturing base in Suzhou, and we intend to further expand to a total of 100 million doses in order to meet the anticipated demand for our vaccine products. Our designed manufacturing capacity may be limited subject to the construction plans. Moreover, our manufacturing facilities expansion efforts may not be successful. Natural disasters or other unanticipated catastrophic events, including power interruptions, water shortage, storms, fires, earthquakes, terrorist attacks and wars, as well as changes in governmental planning for the land underlying these facilities, could significantly impair the ability of us to complete the construction of our manufacturing facilities in a timely manner. In addition, we are required to comply with applicable GMP and other regulatory requirements, including regulatory standards with respect to environmental protection, manufacturing process or product quality and safety, as well as corresponding maintenance, recordkeeping and documentation standards. Our manufacturing facilities must be approved by governmental authorities before we may use them to commercially manufacture products and are subject to inspection by regulatory agencies. If we fail to comply with applicable regulatory requirements at any stage, we may be subject to sanctions which could be severe, including but not limited to:

• monetary penalties;

• product recalls or seizure;

• injunctions;

• refusal of regulatory agencies to review pending manufacturing approval applications or supplements to approval applications;

• total or partial suspension of production;

• confiscation of products;

• withdrawals, revocation or non-renewal of approvals, license or permits previously issued; and

• criminal prosecution.

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Moreover, we may fail to manage the normal manufacturing capacity properly. The normal manufacturing capacity is calculated based on the designed manufacturing capacity of our manufacturing facilities, after taking into account any reduction in capacity caused by, among other factors, suspension of manufacturing for renewal of GMP certification, maintenance or expansion. The normal manufacturing capacity for a product directly determines the maximum amount of vaccine products that could be produced in a given period and the volume of finished products that will be available for sale in subsequent periods. Proper management of the normal manufacturing capacity, and in particular, minimizing the time for renewing GMP certification, and maintaining sufficient GMP certified back-up capacity in preparation for suspension of manufacturing caused by planned or unexpected events, is critical to maintaining a steady supply of products and a stable growth in our revenues. In addition, if the normal manufacturing capacity is substantially lower than the designed manufacturing capacity, idle manufacturing costs may increase significantly, and as a result, materially and adversely affect our revenues and profitability.

If we encounter problems in manufacturing our vaccine candidates or our manufacturing capabilities are unable to meet market demand, our business could suffer.

The manufacture of vaccines is a highly exacting and complex process due to the strict regulatory requirements. Issues may arise during the manufacturing process for various reasons, these may include but not limited to:

• equipment malfunction;

• failure to follow specific protocols or procedures;

• quality issues regarding to raw materials or products necessary for the clinical trials;

• delays in re-construction of our manufacturing facility, including changes in manufacturing production sites and limits to manufacturing capacity due to regulatory requirements;

• changes in the types of vaccine products manufactured;

• physical limitations that may prevent continuous supply;

• human-made or natural disasters; and

• environmental factors.

If problems arise during the manufacturing of certain batch of product, it may have to be discarded and subsequently we may incur additional expenses and experience product shortage. This could, among other things, lead to increased costs, damage to customer relationships, intense time spent for the causes. And further depends on the causes, similar losses may associate with other batches or products. If problems are not discovered before the products being released to the market, significant amount of recall or product liability costs may also be incurred.

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We deal with potentially harmful biological materials and other hazardous materials that may cause environmental contamination or injury to others.

Our research and development programs, clinical trials and manufacturing operations involve the controlled use of potentially harmful biological materials and other hazardous materials. In particular, the risk of accidental contamination to the environment or injury to our employees or others from the use, manufacture, storage, handling or disposal of these materials may not be completely eliminated. In the event of contamination or injury, we could be held liable for any resulting damages, which could exceed our resources or any applicable insurance coverage they may have. Furthermore, governmental agencies could initiate investigations against us, which may result in fines, sanctions, revocations of operating permits, suspension of their operations, closure of our facilities or other penalties. Our reputation may be harmed as well. Furthermore, laws, rules or regulations regarding handling of harmful biological materials and other hazardous materials, or more stringent environmental regulations that may be adopted in the future, may mandate additional protective and other measures against potential contamination or injury caused by these materials, compliance with which could be costly, and our profitability could be materially reduced as a result.

Vaccine products are susceptible to contamination.

Vaccine manufacturing usually requires cultivation steps, including growth of the appropriate organism and the use of substances of animal origin, which makes it easy to introduce a contaminant and to amplify low levels of contamination. In addition, manufacturing operations based on the sharing of equipment and facilities is common. Moreover, other activities such as diagnosis and research are frequently linked to manufacture and this may result in opportunities for cross-contamination. Our future commercialization activities for our pGX9501 are expected to be focused on the Greater China region. Our future commercialization activities for our RSV vaccine candidate are expected to be focused on both the domestic and global markets. Any improper actions during the long-distance transportation, storage and delivery services may result in contamination of our vaccine products.

Contamination of our vaccine products could cause customers or other third parties with whom we conduct business to lose confidence in the reliability of our manufacturing procedures, which could adversely affect our sales and profits. In addition, contaminated products that are unknowingly distributed could result in harm on vaccinees, threaten the reputation of our vaccine products and expose us to product liability claims, criminal charges and administrative sanctions.

Any failure to perform proper quality control and quality assurance would have a material adverse effect on our business and financial results.

Manufacturing of vaccine products for commercial sale are subject to applicable laws, regulations and GMP requirements. These regulations and laws govern the manufacturing processes and procedures, such as record keeping, operating and implementing the quality management systems to control and assure the quality of investigational products and products approved for sale. We adopt stringent quality control standards at every stage of our manufacturing process not only to fulfil the legal requirements but to ensure a high quality

–60– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS output. Apart, we perform extensive tests throughout the manufacturing processes to ensure the safety and effectiveness of our vaccine products. We may, however, detect instances in which an unreleased product was produced without adherence to our manufacturing procedures or the raw material used in our manufacturing process was not collected to store in accordance with the GMP standards or other regulations, resulting in a determination that the implicated products should be destroyed. In addition, if we fail to comply with relevant quality control requirements under any laws or GMP, we could experience disruptions in manufacturing of our vaccine products, which could delay or prevent further sales of such products, and may result in material adverse effect on our business and financial results.

Quality issues may also arise during the large volume manufacturing process. If we are unable to maintain the consistent and high quality manufacturing of our vaccine products during large-volume manufacturing, the sales of our vaccines may be unencouraged and interrupted. These could have a material adverse effect on our business and financial results.

Undetected errors or defects in our manufacturing could harm our reputation or expose us to product liability claims.

We face an inherent risk of product liability caused by our vaccines. Any such product liability claims may include allegations of defects in manufacturing, defects in design, insufficient or improper labelling, inadequate or misleading disclosures of side effects or dangers inherent in the product, negligence, strict liability and a breach of warranties. If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or subject to limitations for commercializing of our vaccine candidates. Even successful defense would require significant financial resources and management attention. Risks associated with third parties that we oblige to indemnify could also incur liabilities. Regardless the merits or outcomes, liability claims may result in:

• withdrawal of clinical trial participants;

• substantial monetary awards to trial subjects;

• a diversion of management’s time and our resources;

• decreased demand for our vaccine candidates or any resulting products;

• injury to our reputation;

• product recalls, withdrawals or labeling, marketing or promotional restrictions;

• costs to defend the related litigation;

• loss of revenue;

• the inability to commercialize our vaccine candidates; and

• a decline in our Share price.

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Once our vaccine candidates obtain approvals, we are required to maintain liability insurance to cover product liability claims in accordance with the relevant laws and regulations. Any product liability insurance for clinical trials, when obtained, may be prohibitively expensive, or may not fully cover our potential liabilities. Our inability to obtain and retain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization of vaccine candidates we develop. Even we maintain such insurance, any claim that may be brought against us could result in a court judgment or settlement in an amount that is not covered, in whole or in part, by our insurance or that is in excess of the limits of our insurance coverage. Our insurance policies also have various exclusions, and we may be subject to a product liability claim for which we have no coverage. We will have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts.

Failure to establish a complete and effective network of cold-chain logistics providers may cause great risk of damage to our vaccine products and our reputation and business would suffer.

Vaccines are sensitive biological products. Some vaccines are sensitive to freezing, some to heat and others to light. To maintain quality and potency, vaccines must be stored in good conditions through cold-chain logistics providers. In order to maintain a reliable vaccine cold chain at manufacture level before delivery to our customers, we are required to, among others, establish a complete and effective network of cold-chain logistics providers to store vaccines and diluents within the approved temperature range at all sites, pack and transport vaccines to and from outreach sites according to recommended procedures, and perform regular oversight and monitor on the delivery process to our customers. If we or third parties we cooperated with fail to do so, our vaccine products may be exposed to inappropriate temperatures or other improper storage conditions and subject to potency diminishment or even potency loss. In this case, all the vaccine products are subject to quality damage and may need to be destroyed. As a result, our reputation and business would suffer.

If we fail to obtain regulatory approval in any targeted jurisdictions outside of China, we will not be able to market our vaccine products in those jurisdictions.

We are subject to the laws and regulations in relation to obtaining regulatory approval in China. See “—Vaccine development involves a lengthy and expensive process with uncertain outcomes” and “—Risks Relating to Our Financial Position and Prospects—If we fail to successfully complete the development of, obtain the necessary regulatory approvals for, and commercialize our vaccine candidates on time, or at all, our results of operations, financial condition and prospects may be adversely affected” for details. In addition, we intend to market certain of our vaccine candidates, if approved, in jurisdictions outside of China. This will require separate regulatory approvals in each market and compliance with numerous and varying regulatory requirements. The approval procedures vary among regions and countries which may involve requirements for additional testings, and the time required to obtain approval may differ from that required to obtain NMPA approval.

In addition, in many countries outside China, the prices that we intend to charge for our vaccines may also subject to approval. Approval by the NMPA does not ensure approval by regulatory authorities in other countries or other jurisdictions. Similarly, approval by one

–62– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS foreign regulatory authority does not imply the approval by regulatory authorities in other foreign countries or by the NMPA. The foreign regulatory approval process may include all of the risks associated with obtaining NMPA approval. We may not obtain foreign regulatory approvals on a timely basis, if at all. We may not be able to file for regulatory approvals and may not receive necessary approvals to commercialize our vaccines in any market.

RISKS RELATING TO OUR DEPENDENCE ON THIRD PARTIES

We have entered into collaboration and licence arrangements in relation to the development of our vaccine candidates, and may continue to seek strategic partnerships and collaborations or enter into additional collaboration arrangements in the future, which may fail to produce anticipated benefits and adversely affect our business.

We have been co-developing pGX9501 with Inovio since January 2020 and are developing ADV311 based on proof-of-concept technology we obtained from Fudan University. See “Business— Collaboration and Technology Transfer Arrangement.” We have benefited from such arrangement, and we may continue to seek strategic alliances or enter into additional licensing arrangements. Any of these relationships may require us to incur non-recurring and other charges, increase our near and long-term expenditures, issue securities that dilute our existing shareholders, or disrupt our management and business. In addition, we face significant competition in seeking appropriate strategic partners and the negotiation process is time-consuming and complex. Collaborations involving our vaccine candidates are subject to numerous risks, which may include the following:

• collaborators have significant discretion in determining the efforts and resources that they will apply to a collaboration;

• collaborators could independently develop, or develop with third parties, vaccines that compete directly or indirectly with our vaccine candidates;

• collaborators may not properly maintain or defend our intellectual property rights or may use our intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential liability;

• disputes may arise between us and a collaborator that cause the delay or termination of the research, development or commercialization of our vaccine candidates, or that result in costly litigation or arbitration that diverts management attention and resources;

• collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable vaccine candidates; and

• collaborators may own or co-own intellectual property covering our vaccines that results from our collaborating with them, and in such cases, we would not have the exclusive right to commercialize such intellectual property.

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As a result, if we enter into collaboration agreements and strategic partnerships or in-license our vaccine, we may not be able to realize the benefit of such transactions if we are unable to successfully integrate them with our existing operations and company culture, which could delay our timelines or otherwise adversely affect our business. We also cannot assure you that, following a strategic transaction or license, we will achieve the revenue or specific net income that justifies such transaction. If we are unable to reach agreements with suitable collaborators on a timely basis, on acceptable terms, or at all, we may have to curtail the development of a vaccine candidate, reduce or delay its development program or one or more of our other development programs, delay its potential commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense. If we elect to fund and undertake development or commercialization activities on our own, we may need to obtain additional expertise and additional capital, which may not be available to us on acceptable terms or at all. If we fail to enter into collaborations and do not have sufficient funds or expertise to undertake the necessary development and commercialization activities, we may not be able to further develop our vaccine candidates or bring them to market and generate revenue, which would harm our business prospects, financial condition and results of operations.

We rely on third parties to conduct certain aspects of our preclinical and clinical studies. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to obtain regulatory approval for our vaccine candidates and our business could be substantially harmed.

As is common practice in our industry, we have engaged and plan to continue to engage third-party CROs to monitor and manage data for our completed and ongoing preclinical and clinical programs. We rely on these parties for execution of our clinical trials in certain respects, and do not control all aspects of their activities. We also engaged third-party CDMOs and manufacturers to produce vaccine samples for our clinical trials. Outsourcing these functions involves the risk that third parties may not perform to our standards, may not produce results in a timely manner or may fail to perform at all. In addition, the use of third-party service providers requires us to disclose our proprietary information to these parties, which could increase the risk that this information will be misappropriated.

The staff of CROs, CDMOs and manufacturers engaged by us are not our employees and we cannot control whether or not they devote sufficient time, resources and oversight to our ongoing clinical programs. If we are unable to maintain or enter into agreements with these third parties on acceptable terms, or if any such engagement is terminated, we may be unable to conduct clinical trials in the manner that we anticipate. If these third parties fail to meet expected deadlines, timely transfer to us any regulatory information, adhere to protocols or act in accordance with regulatory requirements or our agreements with them, or if they otherwise perform in a sub-standard manner or in a way that compromises the quality or accuracy of their activities or the data they obtain, the clinical trials of our vaccine candidates may be compromised, delayed, prolonged, suspended or terminated, or our data may be rejected by the NMPA or other applicable regulatory authorities.

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Nevertheless, we are responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol and legal, regulatory and scientific standards, such as GCP, GLP, GMP and human and animal testing regulations, each of which may be applicable and enforced by the NMPA or other applicable regulatory authorities for vaccine candidates in development. Regulatory authorities enforce these requirements through periodic inspections of trial sponsors, investigators and clinical trial sites, and the fact that we rely on CROs, CDMOs and manufacturers to conduct our trials does not relieve us of our regulatory responsibilities. If we or any of our CROs, CDMOs and manufacturers fail to comply with applicable GCP requirements, the clinical data generated in the clinical trials may be deemed unreliable and the NMPA or other applicable regulatory authorities may require us to perform additional clinical trials before approving our marketing applications. We cannot assure you that such regulatory authority will determine that any of our clinical trials comply with all of their requirements, which in turn may require us to repeat such trials, which would delay the regulatory approval process. If CROs, CDMOs and manufacturers do not successfully carry out their contractual duties or obligations or meet expected deadlines, if the quality or accuracy of the clinical data CROs obtain is compromised due to their failure to adhere to our clinical protocols, the regulatory requirements or for other reasons, or if the quantity and quality of the vaccine samples provided by CDMOs and manufacturers fail to meet our clinical trials demand, our clinical trials may be extended, delayed or terminated and we may not be able to obtain regulatory approval for or successfully commercialize our vaccine candidates. Any of the above could result in a material adverse effect on our business, financial condition and results of operations.

Our business depends on the use of raw materials, and a decrease in the supply, or an increase in the cost of these raw materials could materially and adversely affect our business, financial condition and results of operation.

We expect to commence pilot production in the second quarter of 2021 and are expected to produce vaccine samples for our phase III clinical trial and bridging trials for pGX9501 in the second quarter of 2021 in our manufacturing facilities in Suzhou. We expect to complete stage I of our manufacturing facilities at our Suzhou manufacturing base by the second quarter of 2021, which will enable us to be commercial-ready for the anticipated launch of our COVID-19 vaccine. See “Business—Manufacturing” for details. Although the majority of raw materials will be used for producing vaccine samples at the early stage, our manufacturing facilities will also be used for manufacturing our vaccine candidates in the foreseeable future. As a result, our business will depend on the use of raw materials. In order to manufacture our vaccine candidates, we must obtain sufficient quantities of high-quality raw materials at commercially acceptable prices and in a timely manner. Most of our raw materials are widely available, and we procure most of our key raw materials from numerous suppliers in China. Certain key raw materials, such as filter, membrane chromatography, hollow fiber ultrafiltration and chromatography media, are available from a limited number of suppliers in China and overseas. If those third party suppliers were to cease or interrupt or otherwise fail to supply the materials or products to us for any reasons, including regulatory requirements or actions, adverse financial developments, and/or unexpected increased demand, labor shortage. Although we have implemented quality inspection procedures on such materials before they are used in our manufacturing processes, it is possible that we may not be able to substitute the raw

–65– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS materials or devices from similar suppliers in a timely manner with reasonable terms and conditions if the supplies are not in compliance with our quality standards or result in contamination or being recalled during the process of manufacture, formulation or even marketed in the future. Such events will adversely affect our ability to satisfy the demand for our vaccine products upon approval, which could materially and adversely affect our vaccine product sales and operating results in the future.

Moreover, we expect our demand for such materials to increase as we expand our business scale and start to commercialize our vaccine candidates, and we cannot guarantee that current suppliers have the capacity to meet our demand. We also require our suppliers to maintain high quality standards, we cannot guarantee that we will be able to secure sufficient quantities of raw materials at high quality standards, nor detect all quality issues in the supplies we use. We cannot assure you that these third parties will be able to maintain and renew all licenses, permits and approvals necessary for their operations or comply with all applicable laws and regulations. Failure to do so by them may lead to interruption in their business operations, which in turn may result in shortage of the vaccine substance supplied to us. If we are unable to do so and the quality of our vaccine products suffer as a result, we may have to delay clinical trials and regulatory filings, recall our vaccine products, be subject to product liability claims, fail to comply with continuing regulatory requirements and incur significant costs to rectify such issue, which may have a material and adverse effect on our business, financial condition and results of operations.

RISKS RELATING TO OUR OPERATIONS

We may be unable to attract and retain senior management and retain key scientific and manufacturing employees.

Our success depends in part on our continued ability to attract, retain and motivate highly qualified management, clinical and scientific personnel. We are highly dependent upon our founder, Executive Directors and senior management, as well as other key R&D and manufacturing employees. The loss of services of any of these individuals or one or more of our other members of senior management could delay or prevent the successful development of our vaccine candidates.

Although we have not historically experienced unique difficulties attracting and retaining qualified employees, we could experience such problems in the future for various reasons. Competition for qualified employees in our industry is intense and the pool of qualified candidates is limited. We may not be able to retain the services of our senior management or key scientific personnel, or attract and retain experienced senior management or key scientific personnel in the future. If one or more of our senior management or other key scientific personnel are unable or unwilling to continue in their present positions or joins a competitor or forms a competing company, we may not be able to replace them in a timely manner or at all, and our vaccine development progress may be disrupted as a result, which will have a material and adverse effect on our business and results of operations. In addition, we will need to hire additional employees as we expand our commercialization and manufacturing teams. We may not be able to attract and retain qualified employees on acceptable terms.

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We may encounter difficulties in managing our growth and expanding our operations successfully.

Our success will depend upon our ability to expand our development, regulatory, manufacturing, marketing and sales capabilities or contract with third parties to provide these capabilities for us. As our operations expand, we expect that we will need to manage additional relationships with various strategic partners, suppliers and other third parties. Future growth will impose additional responsibilities on members of management. Our ability to commercialize our vaccine candidates and our future financial performance will depend heavy on whether we are able to manage the future growth effectively. Therefore, hiring, training and integrating additional management, administrative and sale and marketing personnel is crucial in further ensuring the effective clinical trials developments in future. We may not be able to accomplish these tasks, and our failure to accomplish any of them could prevent us from successfully growing our company.

If we fail to successfully integrate our recently acquired subsidiary or any future targets into our own operations, our post-acquisition performance and business prospects may be adversely affected.

We completed our acquisition of Suzhou Si’ao in 2020. However, we may not be able to fulfill the contemplated purposes of the acquisition. These synergies are inherently uncertain, and are subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and are beyond our control. If we achieve the expected benefits, they may not be achieved within the anticipated time frame. Also, the synergies from our acquisition of Suzhou Si’ao may be offset by costs incurred in the acquisition, increases in other expenses, operating losses or problems in the business unrelated to our collaboration. As a result, there can be no assurance that these synergies will be achieved.

Additionally, Suzhou Si’ao may not provide us with the manufacturing infrastructure we had anticipated, or they may be subject to unforeseen liabilities. We may be unable to successfully increase the efficiencies of the acquired businesses in the manner we contemplated or devote more resources and management attention than desirable to the integration and management of the acquired businesses. Hence, there can be no guarantee that we will be able to enhance our post acquisition performance or grow our business through our recent or future acquisitions.

We may be subject to product liability lawsuits.

We face an inherent risk of product liability caused by our vaccines. Any such product liability claims may include allegations of defects in manufacturing, defects in design, improper, insufficient or improper labelling of products, insufficient or misleading disclosures of side effects or dangers inherent in the product, negligence, strict liability and a breach of warranties. If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit commercialization of our vaccine candidates.

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Even successful defense would require significant financial and management resources. There is also risk that third parties we have agreed to indemnify could incur liability. Regardless of the merits or eventual outcome, liability claims may result in:

• decreased demand for our vaccine candidates or any resulting products;

• injury to our reputation;

• withdrawal of clinical trial participants;

• costs to defend the related litigation;

• a diversion of management’s time and our resources;

• substantial monetary awards to trial subjects;

• product recalls, withdrawals or labeling, marketing or promotional restrictions;

• loss of revenue;

• the inability to commercialize our vaccine candidates; and

• a decline in our Share price.

If we are unable to defend ourselves against such claims in the PRC, among other things, we may be subject to civil liability for AEs or other losses caused by our vaccine products and to criminal liability and the revocation of our business licenses if our vaccine products are found to be defective. In addition, we may be required to recall the relevant products, suspend sales or cease sales. Even if we are able to successfully defend ourselves against any such product liability claims, doing so may require significant financial resources and the time and attention of our management.

Any product liability insurance for clinical trials, when obtained, may be prohibitively expensive, or may not fully cover our potential liabilities. Our inability to obtain and retain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization of vaccine candidates we develop. Although we maintain such insurance, any claim that may be brought against us could result in a court judgment or settlement in an amount that is not covered, in whole or in part, by our insurance or that is in excess of the limits of our insurance coverage. Our insurance policies also have various exclusions, and we may be subject to a product liability claim for which we have no coverage. We will have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts.

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We may be involved in claims, disputes, litigation, arbitration or other legal proceedings in the ordinary course of business.

From time to time, we may be involved in claims, disputes and legal proceedings in our ordinary course of business. These may concern issues relating to, among others, product liability, environmental matters, breach of contract, employment or labor disputes and infringement of intellectual property rights. As of the Latest Practicable Date, we were not involved in any litigations and legal proceedings that may materially affect our research and development of our vaccine candidates, business and results of operations. Any claims, disputes or legal proceedings initiated by us or brought against us, with or without merit, may result in substantial costs and diversion of resources, and if we are unsuccessful, could materially harm our reputation. Furthermore, claims, disputes or legal proceedings against us may be due to defective supplies sold to us by our suppliers, who may not be able to indemnify us in a timely manner, or at all, for any costs that we incur as a result of such claims, disputes and legal proceedings.

Because some of our vaccines are intended to prevent diseases of major public health concerns, we are at risk of governmental actions detrimental to our business.

In response to a pandemic or the perceived risk of a pandemic, governments in China and other countries may take actions to protect their citizens that could affect our ability to control the manufacturing and export of pandemic vaccines or otherwise impose burdensome regulations on our business. This is more likely to happen particularly under the current threats of the global pandemic COVID-19 and we are dedicated to develop our pGX9501 vaccine candidate with our partner.

As a result of the emergency situations in many countries, there is a heightened risk that our COVID-19 vaccine, namely pGX9501, may be subject to adverse governmental actions in certain countries, including intellectual property expropriation, compulsory licenses, strict price controls or other actions. Additionally, we may need to, or we may be required by governmental or non-governmental authorities to, set aside specific quantities of doses of pGX9501 for designated purposes or geographic areas. We are likely to face challenges related to the allocation of supply of pGX9501, particularly with respect to geographic distribution. Thus, even if pGX9501 is approved, such governmental actions may limit our ability to recoup our current and future expenses.

Furthermore, public sentiment regarding commercialization of a COVID-19 vaccine may limit or negate our ability to generate revenue from sales of pGX9501. Given that COVID-19 has been designated as a pandemic and represents an urgent public health crisis, we are likely to face significant public attention and scrutiny over any future business models and pricing decisions with respect to pGX9501. If we are unable to successfully manage these risks, we could face significant reputational harm, which could negatively affect the price of our ordinary shares.

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We are subject to the risks of doing business globally.

Because we intend to do business outside of China, our business is subject to risks associated with doing business globally. Accordingly, our business, financial condition, results of operations and prospects could be materially adversely affected due to a variety of factors, including: changes in a specific country’s or region’s political and cultural climate or economic condition; unexpected changes in or failure to comply with laws and regulatory requirements in local jurisdictions; differences between national and local practice with respect to laws and regulatory requirements in a specific jurisdiction; difficulty of effective enforcement of contractual provisions in certain jurisdictions; concerns of local governments and regulators on our research and trial sites and on the relevant management arrangements; inadequate intellectual property protection in certain countries; enforcement of anti-corruption and anti-bribery laws, such as the FCPA; trade-protection measures, import or export licensing requirements such as Export Administration Regulations promulgated by the United States Department of Commerce and fines, penalties or suspension or revocation of export privileges; the effects of applicable local tax regimes, royalties and other payment obligations owed to local governments, and potentially adverse tax consequences; and significant adverse changes in local currency exchange rates.

We may be subject to natural disasters, acts of war or terrorism or other factors beyond our control.

Natural disasters, acts of war or terrorism or other factors beyond our control may adversely affect the economy, infrastructure and livelihood of the people in the regions where we conduct our business. Our operations may be under the threat of floods, earthquakes, sandstorms, snowstorms, fire or drought, power, water or fuel shortages, failures, malfunction and breakdown of information management systems, unexpected maintenance or technical problems, or are susceptible to potential wars or terrorist attacks. Serious natural disasters may result in loss of lives, injury, destruction of assets and disruption of our business and operations. Acts of war or terrorism may also injure our employees, cause loss of lives, disrupt our business network and destroy our markets. Any of these factors and other factors beyond our control could have an adverse effect on the overall business sentiment and environment, cause uncertainties in the regions where we conduct business, cause our business to suffer in ways that we cannot predict and materially and adversely impact our business, financial conditions and results of operations.

We may be restricted from transferring our scientific data abroad.

In March 2018, the General Office of the State Council promulgated the Measures for the Management of Scientific Data (《科學數據管理辦法》) (the “Scientific Data Measures”), which provides a broad definition of scientific data and relevant rules for the management of scientific data. According to the Scientific Data Measures, enterprises in China must seek governmental approval before any scientific data involving a state secret may be transferred abroad or to foreign parties. Further, any researcher conducting research funded at least in part by the Chinese government is required to submit relevant scientific data for management by the entity to which such researcher is affiliated before such data may be published in any foreign academic journal.

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If and to the extent our research and development of vaccine candidates will be subject to the Scientific Data Measures and any relevant laws as required by the relevant government authorities, we cannot assure you that we can always obtain relevant approvals for sending scientific data (such as the results of our preclinical studies or clinical trials conducted within China) abroad. If we are unable to obtain necessary approvals in a timely manner, or at all, our research and development of vaccine candidates may be hindered, which may materially and adversely affect our business, results of operations, financial conditions and prospects. If the relevant government authorities consider the transmission of our scientific data to be in violation of the requirements under the Scientific Data Measures, we may be subject to fines and other administrative penalties imposed by those government authorities.

Any of our future approved vaccine candidates will be subject to ongoing or additional regulatory obligations and continued regulatory review, which may result in significant additional expense, and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our vaccine candidates.

If the NMPA or a comparable regulatory authority approves any of our vaccine candidates, the manufacturing processes, labeling, packaging, distribution, AE reporting, storage, advertising, promotion and recordkeeping for the vaccine will be subject to extensive and ongoing regulatory requirements on pharmacovigilance. These requirements include submissions of safety and other post-marketing information and reports, registration, random quality control testing, adherence to any CMC, variations, continued compliance with current GMPs, and GCPs and potential post-approval studies for the purposes of license renewal.

As a general rule, manufacturers and manufacturers’ facilities are required to comply with extensive NMPA and comparable regulatory authority requirements in other relevant jurisdictions ensuring that quality control and manufacturing procedures conform to GMP regulations. As such, we will be subject to continual review and inspections to assess compliance with GMP and adherence to commitments made in any NDA, other marketing application, and previous responses to any inspection observations if we were to build manufacturing facilities in the future. Accordingly, we and others with whom we work must continue to expend time, money and effort in all areas of regulatory compliance, including manufacturing, production and quality control.

Any approvals that we receive for our vaccine candidates may be subject to limitations on the approved indication which may result in potential costly post-marketing tests or surveillance and impact on the commercial viability of a vaccine candidate. The NMPA or a comparable regulatory authority may also require a risk evaluation mitigation strategy program as a condition of approval of our vaccine candidates or following approval. In addition, if the NMPA or a comparable regulatory authority approves our vaccine candidates, we will have to comply with requirements, including, for example, submissions of safety and other post- marketing information and reports, registration, as well as continued compliance with GMP and GCP for any clinical trials that we conduct post-approval. Given the stringent regulatory requirements and active enforcement imposed by the NMPA and other regulatory authorities, our abilities on how we manufacture and market our vaccine products may remain limited, as compliance with such requirements likely involves our substantial resources, which could materially impair our ability to generate revenue.

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We have limited insurance coverage, and any claims beyond our insurance coverage may result in our incurring substantial costs and a diversion of resources.

We maintain insurance policies that are required under PRC laws and administrative regulations as well as based on our assessment of our operational needs and industry practice. In line with industry practice in the PRC, we have elected not to maintain certain types of insurances, such as business interruption insurance or key man liability insurance. However, we cannot assure you that our insurance coverage is sufficient to cover all of our risk exposure and prevent us from any loss, or that we will be able to successfully claim our losses under our current insurance policies on a timely basis, or at all. If we incur any loss that is not covered by our insurance policies, or if the compensated amount is significantly less than our actual loss, our business, financial condition and results of operations could be materially and adversely affected. Any liability or damage to, or caused by, our facilities or our personnel beyond our insurance coverage may result in our incurring substantial costs and a diversion of resources. See “Business—Insurance” for details of our insurance policies.

Counterfeits of our vaccine products and illegal vaccines could negatively affect our sales and our reputation and expose us to liability claims.

Certain vaccines distributed or sold may be manufactured without proper licenses or approvals, or are fraudulently mislabeled with respect to their content or manufacturers. These products are generally referred to as counterfeit vaccine products. The counterfeit vaccine product control and enforcement system, particularly in developing markets such as the PRC, may be inadequate to discourage or eliminate the manufacturing and sale of counterfeit vaccine products imitating our vaccine products. Since counterfeit vaccine products in many cases have very similar appearances compared with the authentic vaccine products but are generally sold at lower prices, counterfeits of our vaccine products can quickly erode our sales volume of the relevant products. Moreover, counterfeit products may or may not have the same composition as our vaccine products do, which may make them less effective than our vaccine products, entirely ineffective or more likely to cause severe adverse side effects. This could expose us to negative publicity, reputational damage, fines and other administrative penalties, and may even result in litigation against us. The existence and prevalence of counterfeit vaccine products, products of inferior quality and other unqualified products in recent years from time to time may reinforce the negative image in general of all pharmaceutical products manufactured in China among consumers, and may harm the reputation of companies like us. In addition, there may be vaccine illegally imported into the PRC market, often at a lower price. These vaccines may compete against and lower demand for vaccines legally manufactured and sold in China. As a result of these factors, the continued proliferation of counterfeit vaccine products and illegal vaccines in the market could affect our sales and reputation and expose us to liability claims.

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We benefit from certain preferential financial and tax incentives, the expiration of or changes to which could adversely affect our profitability.

We currently benefit from government grants in support of our research and development activities. We also benefit from certain preferential tax treatments, as well as tax concessions in relation to our research and development expenses. We cannot assure you that these preferential tax and financial and tax incentives will continue to be available to us in the future, or that these incentives will not be changed, as a result of changes in government policy, administrative decisions or otherwise, in which case our financial condition and results of operations may be adversely affected. During the Track Record Period, we recognized government grants of RMB0.5 million and RMB17.4 million as other income for the years ended December 31, 2019 and 2020, respectively. These government grants were generally in support of our vaccine research and development. Our eligibility for government grants is dependent on a variety of factors, including the assessment of our improvement on existing technologies, relevant government policies, the availability of funding at different granting authorities and the research and development progress made by other peer companies. In addition, the policies according to which we historically received government grants may be halted by the relevant government entities at their sole discretion. There is no assurance that we will continue to receive such government grants or receive similar level of government grants, or at all, in the future.

The vaccine industry in the PRC in still under development, and any material unwanted events connected with vaccination safety and efficacy may erode public confidence in vaccine products and have an adverse effect on our business and financial conditions.

China’s vaccine market is a developing market and expect to be driven by, among others, increasing availability of innovation vaccines and fast-growing needs of preventative vaccines in response to pandemic, such as COVID-19. China continues to demand more safe and high-quality vaccines that can provide effective protection on vaccinated population. Any material AEs reflecting vaccination safety and efficacy issues, such as serious vaccine quality issues, recalls or temporary suspension, failure in supply chain management or cold chain logistics, counterfeit or other inferior products, may possibly diminish the public confidence in vaccine products and subsequently have a negative impact on vaccine developers, manufacturers and disease control authorities. For example, in 2016, vaccine sales accidents were reported in Shandong province due to failure to comply with cold chain regulations and distribution policies, which adversely impacted public confidence in immunizations and slowed the market growth pace that year. In July 2018, a drug manufacturer in Jilin province was reported to use expired materials and falsified inspection records and production dates for rabies vaccinations, and produced ineffective DTP vaccines. More recently in January 2019, approximately 150 infants were injected with expired vaccine in Huai’an, Jiangsu province, which caused severe side effects due to the negligence of the managers from local Disease Control Center. Moreover, defects in packaging of a COVID-19 vaccine have been reported recently in Hong Kong. These reports have eroded public confidence in domestic vaccines and the reputation of domestic vaccine manufacturers.

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Our operations and business plans may be adversely affected by the COVID-19 pandemic.

The global outbreak of COVID-19, the disease caused by a novel strain of coronavirus, could materially and adversely affect our business and operations. The outbreak has resulted in governments implementing numerous measures to contain COVID-19, such as travel bans and restrictions, quarantines, shelter-in-place, temporary shutdown of factories, business limitations, or total lock-down orders. These containment measures are subject to change and may be further tightened. This outbreak has affected our normal office work in the first quarter of 2020, causing restrictions on employee travels and a significant portion of our employees working from home, which resulted in lower work efficiency and productivity, and the disruption to our business operations and clinical trials.

The outbreak of COVID-19 and the resulting government measures may adversely impact our planned and ongoing clinical trials and development. Clinical site initiation, including recruiting clinical site investigators and clinical site staff, and patient enrollment may be delayed due to prioritization of hospital resources toward the COVID-19 pandemic. The diversion of healthcare resources away from the conduct of clinical trials to focus on pandemic concerns, including the attention of physicians serving as our clinical trial investigators and hospitals serving as our clinical trial sites, or other staff supporting the conduct of our clinical trials may significantly disrupt our research activities. Hospitals have also had reduced patient flow in general during the outbreak period. As a result, the expected timeline for data readouts of our clinical trials and potential submission and filings will likely be negatively impacted, which would adversely affect and delay our ability to obtain certain regulatory approvals, increase our operating expenses and have a material adverse effect on our financial condition.

Furthermore, we could face the interruption of key clinical activities such as trial site data monitoring, which may impact the integrity of clinical data. Similarly, our ability to recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19, may be impeded, which would also materially and adversely impact our clinical trial operations, such as our phase III clinical trial of pGX9501 in China. As a result of disruptions caused by the COVID-19 pandemic, we may require additional capital to continue our research activities, which we may be unable to secure on favorable terms, if at all. In addition, we believe that our business partners, such as our licensing partners, CROs or suppliers, have also experienced and may continue to experience similar or more severe disruptions to their business operations. Although the COVID-19 outbreak has calmed down in China, and we have not experienced materially adverse impact uptill now, we cannot assure you there will not be another new outbreak of COVID-19 in China. Any disruption to the business operations of us and our business partners could materially and adversely affect the development of our vaccine candidates, our business, financial condition and results of operations. In addition, calm down of COVID-19 may affect the sales of our pGX9501, if it is successfully commercialized.

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It is normal for vaccine manufacturers including us to conduct research and development process on animals, for example, pharmacology studies have been performed in mice, rabbits and rhesus macaque monkeys to investigate the immunological response to ADV110 and protective efficacy from RSV challenge following immunization. We cannot guarantee that there would not be social backlash on inhumane animal testing practices in vaccine development, which may negatively impact the public perception of our industry. Any future negative publicity may lead to a slowdown of the overall development and harm the reputation of the PRC vaccine industry, and in turn reduce the demand of our vaccine products and cause adverse effect on our business and financial results. In addition, we cannot assure you that there will be no future negative publicity in the PRC vaccine industry related to vaccine safety and efficacy, which may continue have a material adverse impact on our business and financial conditions.

If we fail to comply with environmental, health and safety laws and regulations, we could be subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business.

We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Our operations may involve the use of hazardous and flammable materials, including chemicals. Our operations may also produce hazardous waste products. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use of hazardous materials or disposal of hazardous materials by third parties or us, we could be held liable for any resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties.

We may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair our research, development or manufacturing efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions. See “—Risks Relating to Manufacturing and Commercialization of Our Vaccine and Vaccine Candidates—We currently have only one manufacturing base under construction. If we experience delays in the completion of construction of our manufacturing facilities or fail to manage the manufacturing capacity properly, our business, financial condition and results of operations may be adversely affected” for details.

Although we maintain injury insurance for all employees as required by applicable laws and regulations to cover costs and expenses incurred due to work-related injuries to our employees, and we purchase accident insurance for employees exposed to higher risks to injuries, such insurances may not provide adequate coverage against potential liabilities. We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of hazardous or radioactive materials. See “Business—Insurance” and “Business—Social, Health, Work Safety and Environmental Matters” for details.

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We could be adversely affected by violations of anti-bribery laws.

We are subject to anti-bribery laws in China which prohibits companies and their intermediaries from making payments to government officials for the purpose of obtaining or retaining business or securing any other improper advantage. Although we have policies and procedures designed to ensure that we, our employees and our agents comply with anti-bribery laws, there is no assurance that such policies or procedures will prevent our agents, employees and intermediaries from engaging in bribery activities we acquire. Failure to comply with anti-bribery laws could disrupt our business and lead to severe criminal and civil penalties, including imprisonment, criminal and civil fines, loss of our export licenses, suspension of our ability to do business with the government authorities. Other remedial measures could include further changes or enhancements to our procedures, policies, and controls and potential personnel changes and/or disciplinary actions, any of which could have a material adverse effect on our business, financial condition, results of operations and liquidity. We could also be adversely affected by any allegation that we violated such laws.

Any failure to comply with applicable laws and regulations and industry standards or obtain various licenses and permits or any change to the applicable laws and regulations could harm our reputation and business, results of operations and prospects.

A number of governmental agencies or industry regulatory bodies in China impose strict rules, regulations and industry standards governing pharmaceutical and biotechnology research and development activities, which apply to us. In addition, we are also subject to laws and regulations with respect to our overall operations. We may be unable to comply with such laws and regulations as they continue to change and evolve, or due to differences in national, provincial or local laws and regulations, or their implementation or enforcement. See “Regulatory Overview” for a discussion of the regulatory requirements that are applicable to our current and planned business activities in China. Our failure to comply with such regulations could result in the termination of ongoing research, administrative penalties imposed by regulatory bodies or the disqualification of data for submission to regulatory authorities. These could harm our reputation, prospects for future work and operating results.

Our reputation is important to our business success. Negative publicity may adversely affect our reputation and business prospect.

Our ability to maintain our reputation depends on a number of factors, some of which are out of our control. We may face negative publicity, claims, disputes and allegations, which may have a material and adverse impact on our reputation, even if untrue or inaccurate. Moreover, any negative publicity, claims, disputes and allegations involving, any conduct of, and any matters affecting the reputation of, other parties, including our Directors, Shareholders, senior management, employees and entities that share the “Advaccine” name, could have a material and adverse impact on our business and reputation. For example, we held 19.6% equity interest of an animal vaccine company, Suzhou Advaccine Animal Pharmaceutical Co., Ltd. (蘇州艾棣維欣動物藥品有限公司)(“Advaccine Animal Pharmaceutical”), which engages in research and development of pet vaccines and shares the “Advaccine” name with us. Since we do not

–76– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS have full control over the business and operations of Advaccine Animal Pharmaceutical, we cannot assure you that it has been, or will be, involved in any negative publicity, claims, disputes and allegations. As such, we may also be subject to reputation risks in relation to any negative publicity, claims, disputes and allegations against Advaccine Animal Pharmaceutical. We may be required to spend significant time and incur substantial costs to respond and protect our reputation, and we cannot assure you that we will be able to do so within a reasonable period of time, or at all, in which case our business, results of operations, financial condition and prospects may be materially and adversely affected.

Our property valuation is based on certain assumptions which, by their nature, are subjective and uncertain and may materially differ from actual results.

Valuations of our properties as of January 31, 2021 prepared by JLL, an independent property valuer, are set forth in the Property Valuation Report set out as Appendix III to this document. The valuations are made based on assumptions which, by their nature, are subjective and uncertain and may differ from actual results. In addition, unforeseeable changes in general and local economic conditions or other factors beyond our control may affect the value of our properties. As a result, the valuation of our properties may differ materially from the price we could receive in an actual sale of the properties in the market and should not be taken as their actual realizable value or an estimation of their realizable value.

RISKS RELATING TO DOING BUSINESS IN CHINA

The pharmaceutical industry in China is highly regulated and such regulations are subject to change which may affect approval and commercialization of our vaccine candidates.

We conduct all of our operations in China. The pharmaceutical industry in China is subject to comprehensive government regulation and supervision, encompassing the approval, registration, manufacturing, packaging, licensing and marketing of vaccines. See “Regulatory Overview” for a discussion of the regulatory requirements that are applicable to our current and planned business activities in China. In recent years, the regulatory framework in China regarding the pharmaceutical industry has undergone significant changes, and we expect that it will continue to undergo significant changes. Any such changes or amendments may result in increased compliance costs on our business or delays in preventing the successful development or commercialization of our vaccine candidates in China and subsequently reduce the benefits we believe are available to us from developing and manufacturing vaccines in China. PRC authorities have become increasingly vigilant in enforcing laws in the vaccine industry and any failure by us or our collaborators or partners to maintain compliance with applicable laws and regulations or obtain and maintain required licenses and permits may result in the suspension or termination of our business activities in China. We believe our strategy and approach are aligned with the PRC government’s regulatory policies, but we cannot ensure that our strategy and approach will continue to be aligned.

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China’s economic, political and social conditions, government policies may continue to affect our business.

A substantial amount of our businesses, assets, operations and revenues are located in or derived from our operations in China and, as a result, our business, financial condition and results of operations are affected to a large extent by economic, political and legal developments in China. The PRC economy differs from the economies of developed countries in many respects, including the extent of government involvement, investment control, level of economic development, growth rate, control of foreign exchange and allocation of resources. It is still an on-going process for China to transit into a market oriented economy by implementing several economic and social reform measure since the 1970s. Although the PRC government has also implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and the establishment of improved corporate governance in business enterprises, A substantial portion of productive assets in China, however, is still owned by the PRC government. Some of these measures benefit the overall PRC economy, but may materially and adversely affect us.

The legal protections available to you under the PRC legal system may be limited.

We are incorporated under the laws of the PRC. The PRC legal system is based on written statutes. Prior court decisions may be adduced for reference but have limited precedential value. Since the late 1970s, the PRC government has promulgated laws and regulations dealing with such economic matters as the issuance and trading of securities, shareholders’ rights, foreign investment, corporate organization and governance, commerce, taxation and trade, with a view towards developing a comprehensive system of commercial law. However, as these laws and regulations are relatively new, the effect of these laws and regulations on the rights and obligations of the parties involved may involve uncertainty. As a result, the legal protections available to you under the PRC legal system may be limited.

Our operations in the PRC are subject to PRC regulations governing PRC companies. These regulations contain provisions that are required to be included in the articles of association of PRC companies and are intended to regulate the internal affairs of these companies. The PRC Company Law and regulations, in general, and the provisions for the protection of Shareholders’ rights and access to information, in particular, may be considered less developed than those applicable to companies incorporated in Hong Kong, the United States and other developed countries or regions. In addition, PRC laws, rules and regulations applicable to companies listed overseas do not distinguish between minority and controlling shareholders in terms of their rights and protections. As such, our minority shareholders may not have the same protections afforded to them by companies incorporated under the laws of the United States and certain other jurisdictions.

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The relationships between China and other countries may affect our business operations.

During the Track Record Period, we procured certain of our raw materials overseas. In addition, we have engaged certain third parties for clinical trials and commercial collaboration in foreign countries and regions. Our business is therefore subject to constantly changing international economic, regulatory, social and political conditions, and local conditions in those foreign countries and regions. Tensions and political concerns between China and the relevant foreign countries or regions may adversely affect our business, financial condition, results of operations, cash flows and prospects. China’s political relationships with those foreign countries and regions may affect the prospects of our relationship with third parties, such as customers, suppliers, and global partners.

There can be no assurance that our existing or potential service providers or collaboration partners will not alter their perception of us or their preferences as a result of adverse changes to the state of political relationships between China and the relevant foreign countries or regions. Any tensions and political concerns between China and the relevant foreign countries or regions may cause a decline in the demand for our services and adversely affect our business, financial condition, results of operations, cash flows and prospects. Furthermore, in the event that China and/or the U.S. impose import tariffs, trade restrictions or other trade barriers affecting the importation of raw materials, we may not be able to obtain a steady supply of necessary components or raw materials, at competitive prices, and our business and operations may be materially and adversely affected.

We are subject to PRC governmental controls on currency conversion, and the fluctuation of the Renminbi exchange rate may materially and adversely affect our business and our ability to pay dividends to holders of H shares.

We expect that a substantial majority of our revenue will be denominated in Renminbi, which is currently not a fully freely convertible currency. A portion of our revenues may be converted into other currencies in order to meet our foreign currency obligations. For example, we need to obtain foreign currency to make payments of declared dividends, if any, on our H Shares. Under China’s existing laws and regulations on foreign exchange, following the completion of the [REDACTED], we will be able to make dividend payments in foreign currencies by complying with certain procedural requirements and without prior approval from SAFE. However, the PRC government may, at its discretion, take measures to restrict access to foreign currencies for capital account and current account transactions under certain circumstances in the future. As a result, we may not be able to pay dividends in foreign currencies to holders of our H Shares.

The value of the Renminbi against the U.S. dollar and other currencies fluctuates from time to time and is affected by a number of factors, such as changes in China’s and international political and economic conditions and the fiscal and foreign exchange policies prescribed by the PRC government. From 1994 until July 2005, the conversion of the Renminbi into foreign currencies in the PRC, including the Hong Kong dollar and U.S. dollar, had been based on fixed rates set by the PBOC. On July 21, 2005, the PRC government changed its

–79– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS decade-old policy of pegging the value of the Renminbi to the U.S. dollar where the Renminbi is permitted to fluctuate in a regulated band that is based on reference to a basket of currencies determined by the PBOC. On June 19, 2010, the PBOC announced that it intends to further reform the Renminbi exchange rate regime by enhancing the flexibility of the Renminbi exchange rate. Following this announcement, the Renminbi had appreciated from approximately RMB6.83 per U.S. dollar to RMB6.12 per U.S. dollar as of June 15, 2015. On August 11, 2015, PBOC further enlarged the floating band for trading prices in the interbank spot exchange market of Renminbi against the U.S. dollar to 2.0% around the closing price in the previous trading session, and the Renminbi depreciated against the U.S. dollar by approximately 1.9% as compared to August 10, 2015, and further depreciated nearly 1.6% on the next day. On November 30, 2015, the Executive Board of the International Monetary Fund completed the regular five-year review of the basket of currencies that make up the special drawing rights and decided that with effect from October 1, 2016, the Renminbi is determined to be a freely useable currency and will be included in the special drawing rights basket as a fifth currency. With the development of foreign exchange market and progress towards interest rate liberalization and Renminbi internationalization, the PRC government may in the future announce further reforms to the exchange rate system, and we cannot assure you that the Renminbi will not appreciate or depreciate significantly in value against the Hong Kong dollar or the U.S. dollar in the future.

The [REDACTED] from the [REDACTED] will be received in Hong Kong dollars. As a result, any appreciation of the Renminbi against the U.S. dollar, the Hong Kong dollar or any other foreign currencies may result in the decrease in the value of our [REDACTED] from the [REDACTED]. Conversely, any depreciation of the Renminbi may adversely affect the value of, and any dividends payable on, our H Shares in foreign currency. In addition, there are limited instruments available for us to reduce our foreign currency risk exposure at reasonable costs. Any of these factors could materially and adversely affect our business, financial condition, results of operations and prospects, and could reduce the value of, and dividends payable on, our H Shares in foreign currency terms.

Holders of H Shares may be subject to PRC taxations.

Under the applicable PRC tax laws, both the dividends we pay to non-PRC resident individual holders of H shares (“non-resident individual holders”), and gains realized through the sale or transfer by other means of H shares by such shareholders, are subject to PRC individual income tax at a rate of 20%, unless reduced by the applicable tax treaties or arrangements.

Under applicable PRC tax laws, the dividends we pay to, and gains realised through the sale or transfer by other means of H shares by, non-PRC resident enterprise holders of H shares (“non-resident enterprise holders”) are both subject to PRC enterprise income tax at a rate of 10%, unless reduced by applicable tax treaties or arrangements. Pursuant to the Arrangements between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Incomes (《內地和香港特別行政區關於對所得避免雙重徵稅和防止偷漏稅的安排》) dated

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August 21, 2006, any non-resident enterprise registered in Hong Kong that holds directly at least 25% of the shares of our Company shall pay Enterprise Income Tax for the dividends declared and paid by us at a tax rate of 5%.

Pursuant to the Circular on Questions Concerning Tax on the Profits Earned by Foreign Invested Enterprises, Foreign Enterprises and Individual Foreigners from the Transfer of Shares (Equity Interests) and on Dividend Income (《關於外商投資企業、外國企業和外籍個人取得股票(股權)轉讓收益和股息所得稅收問題的通知》) issued by the State Administration of Taxation, non-resident individual holders were temporarily exempted from PRC individual income tax for the dividends or bonuses paid by issuers of H shares. However, such circular was repealed by the Announcement on the List of Fully or Partially Invalid and Repealed Tax Regulatory Documents (《關於公布全文失效廢止、部分條款失效廢止的稅收規範性文件目錄的公告》) dated January 4, 2011.

For non-resident individual holders, gains realized through the transfer of properties are normally subject to PRC individual income tax at a rate of 20%. However, according to the Circular of the Ministry of Finance and the State Administration of Taxation on Issues Concerning Individual Income Tax Policies (《財政部、國家稅務總局關於個人所得稅若干政策問題的通知》), income received by individual foreigners from dividends and bonuses of a foreign-invested enterprise are exempt from individual income tax for the time being. According to the Circular Declaring that Individual Income Tax Continues to Be Exempted over Individual Income from Transfer of Shares issued by the MOF and the SAT (《關於個人轉讓股票所得繼續暫免徵收個人所得稅的通知》) effective as of March 30, 1998, income from individuals’ transfer of stocks of listed companies continued to be temporarily exempted from individual income tax. On February 3, 2013, the State Council approved and promulgated the Notice of Suggestions to Deepen the Reform of System of Income Distribution (《國務院轉批發展改革委等部門關於深化收入分配制度改革若干意見的通知》). On February 8, 2013, the General Office of the State Council promulgated the Circular Concerning Allocation of Key Works to Deepen the Reform of System of Income Distribution (《國務院辦公廳關於深化收入分配制度改革重點工作分工的通知》). According to these two documents, the PRC government is planning to cancel foreign individuals’ tax exemption for dividends obtained from foreign-invested enterprises, and the Ministry of Finance and the State Administration of Taxation should be responsible for making and implementing details of such plan. However, relevant implementation rules or regulations have not been promulgated by the Ministry of Finance and the State Taxation Administration.

Considering these uncertainties, non-resident holders of our H Shares should be aware that they may be obligated to pay PRC income tax on the dividends and gains realized through sales or transfers of the H Shares. Please refer to Appendix IV to this document.

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You may experience difficulties in effecting service of legal process or enforcing foreign judgments against us and our management.

We are a company incorporated under the laws of the PRC with limited liability, and a substantial amount of our assets are located in the PRC. In addition, a majority of our Directors, Supervisors and all of our senior management personnel reside within the PRC, and substantially all their assets are located within the PRC. As a result, it may not be possible to effect service of process within the United States or elsewhere outside the PRC upon us or most of our Directors, Supervisors and senior management personnel. Furthermore, the PRC does not have treaties providing for the reciprocal enforcement of judgments of courts with the United States, the United Kingdom, Japan or many other countries. In addition, Hong Kong has no arrangement for the reciprocal enforcement of judgments with the United States. As a result, recognition and enforcement in the PRC or Hong Kong of judgments of a court obtained in the United States and any of the other jurisdictions mentioned above may be difficult or impossible.

On July 14, 2006, the Supreme People’s Court of the PRC and the government of the Hong Kong Special Administrative Region entered into the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by Courts of the Mainland and the Hong Kong Special Administration Region Pursuant to Choice of Court Agreements between Parties Concerned (《關於內地與香港特別行政區法院相互認可和執行當事人協議管轄的民商事案件判決的安排》) (the “2006 Arrangement”). Under the 2006 Arrangement, where any designated PRC court or any designated Hong Kong court has made an enforceable final judgment requiring payment of money in a civil or commercial case pursuant to a choice of court agreement in writing, any party concerned may apply to the relevant PRC court or Hong Kong court for recognition and enforcement of the judgment. It is not possible to enforce a judgment rendered by a Hong Kong court in the PRC if the parties in dispute have not agreed to enter into a choice of court agreement in writing. In addition, the 2006 Arrangement has expressly provided for “enforceable final judgement,” “specific legal relationship” and “written form.” A final judgement that does not comply with the 2006 Arrangement may not be recognized and enforced in a PRC court.

On January 18, 2019, the Supreme People’s Court of the PRC and the government of the Hong Kong Special Administrative Region entered into the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and of the Hong Kong Special Administrative Region (《關於內地與香港特別行政區法院相互認可和執行民商事案件判決的安排》) (the “2019 Arrangement”). Under the 2019 Arrangement, any party concerned may apply to the relevant PRC court or Hong Kong court for recognition and enforcement of the effective judgments in civil and commercial cases subject to the conditions set forth in the 2019 Arrangement. Although the 2019 Arrangement has been signed, it remains unclear when it will come into effect and the outcome and effectiveness of any action brought under the 2019 Arrangement may still be uncertain. We cannot assure you that an effective judgment that complies with the 2019 Arrangement can be recognized and enforced in a PRC court.

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RISKS RELATING TO THE [REDACTED]

An active [REDACTED] for our H Shares may not develop.

Prior to the [REDACTED], there was no public market for our H Shares. We cannot assure you that a public market for our H Shares with adequate liquidity will develop and be sustained following the completion of [REDACTED]. In addition, the [REDACTED]ofour H Shares may not be indicative of the market price of our H Shares following the completion of the [REDACTED]. If an active public market for our H Shares does not develop following the completion of the [REDACTED], the [REDACTED] of our H Shares could be materially and adversely affected.

The [REDACTED] of our H Shares may be volatile, which could result in substantial losses for [REDACTED] who purchase our H Shares in the [REDACTED]. In addition, the [REDACTED] of our Shares will be affected following announcements and data releases regarding vaccine related to us.

The [REDACTED] of our H Shares may be highly volatile. Several factors, some of which are beyond our control, such as variations in our revenue, earnings and cash flow, strategic alliances or acquisitions, the addition or departure of key personnel, litigation, the removal of the restrictions on H share transactions or volatility in [REDACTED] and changes in the demand for our vaccines after approval, could cause large and sudden changes to the [REDACTED] at which our H Shares will trade. In addition, we cannot predict public reaction or the impact on the [REDACTED] of our H Shares once further announcements regarding developments from our on-going clinical trial are announced. For example, given the attention being paid to the COVID-19 pandemic and the public scrutiny of COVID-19 development announcements and data releases to date, the [REDACTED] of our H Shares will be affected following announcements and data releases regarding vaccines related to us, as a result, the [REDACTED] of our H Shares may be particularly volatile during this time. Furthermore, the Stock Exchange and other securities markets have, from time to time, experienced significant price and trading volume volatility that are not related to the operating performance of any particular company. This volatility may also materially and adversely affect the [REDACTED] of our H Shares.

Since there will be a gap of several days between [REDACTED] and [REDACTED] of our H Shares, holders of our H Shares are subject to the risk that the [REDACTED] of our H Shares could fall during the period before [REDACTED] of our H Shares begins.

The [REDACTED] of our H Shares is expected to be determined on the [REDACTED]. However, our H Shares will not commence [REDACTED] on the Stock Exchange until they are delivered, which is expected to be several business days after the pricing date. As a result, [REDACTED] may not be able to sell or deal in our H Shares during that period. Accordingly, holders of our H Shares are subject to the risk that the [REDACTED] of our H Shares could fall before [REDACTED] begins as a result of adverse market conditions or other adverse developments, that could occur between the time of sale and the time [REDACTED] begins.

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A future significant increase or perceived significant increase in the supply of our H Shares in public markets could cause the [REDACTED] of our H Shares to decrease significantly, and/or dilute shareholdings of holders of H Shares.

The [REDACTED] of our H Shares could decline as a result of future sales of a substantial number of our H Shares or other securities relating to our H Shares in the public market, or the issuance of new shares or other securities, or the perception that such sales or issuances may occur. Future sales, or anticipated sales, of substantial amounts of our securities, including any future offerings, could also materially and adversely affect our ability to raise capital at a specific time and on terms favorable to us. In addition, our Shareholders may experience dilution in their holdings if we issue more securities in the future. New shares or shares-linked securities issued by us may also confer rights and privileges that take priority over those conferred by the H Shares.

Payment of dividends is subject to restrictions under the PRC law and there is no assurance whether and when we will pay dividends.

No dividend has been paid or declared by the Company during the Track Record Period. Under the applicable PRC laws, the payment of dividends may be subject to certain limitations. The calculation of our profit under applicable accounting standards differs in certain respects from the calculation under IFRS. As a result, we may not be able to pay a dividend in a given year even if we were profitable as determined under IFRS. Our Board may declare dividends in the future after taking into account our results of operations, financial condition, cash requirements and availability and other factors as it may deem relevant at such time. Any declaration and payment as well as the amount of dividends will be subject to our constitutional documents and the PRC laws and regulations and requires approval at our shareholders’ meeting. No dividend shall be declared or payable except out of our profits and reserves lawfully available for distribution.

Certain statistics contained in this document are derived from third-party reports and publicly available official sources and they may not be reliable.

Certain statistics contained in this document relating to China, the PRC economy and the industry in which we operate have been derived from various official government publications or other third-party reports. We have taken reasonable care in the reproduction or extraction of the official government publications or other third-party reports for the purpose of disclosure in this document, however, we cannot guarantee the quality or reliability of such source materials. They have not been prepared or independently verified by us, the [REDACTED]or any of their respective affiliates or advisers and, therefore, we make no representation as to the accuracy of such statistics, which may not be consistent with other information compiled within or outside the PRC. Due to possibly flawed or ineffective collection methods or discrepancies between published information and market practice, such statistics in this document may be inaccurate or may not be comparable to statistics produced with respect to other economies. Further, there is no assurance that they are stated or compiled on the same basis or with the same degree of accuracy as the case may be in other jurisdictions. In all cases, [REDACTED] should give consideration as to how much weight or importance they should attach to or place on such facts.

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[REDACTED] should read the entire document carefully and should not consider any particular statements in this document or in published media reports without carefully considering the risks and other information contained in this document.

Prior to the publication of this document, there has been coverage in the media regarding us and the [REDACTED], which contained among other things, certain financial information, projections, valuations and other forward-looking information about us and the [REDACTED]. We have not authorized the disclosure of any such information in the press or media and do not accept any responsibility for the accuracy or completeness of such media coverage or forward-looking statements. We make no representation as to the appropriateness, accuracy, completeness or reliability of any information disseminated in the media. We disclaim any information in the media to the extent that such information is inconsistent or conflicts with the information contained in this document. Accordingly, prospective [REDACTED] are cautioned to make their [REDACTED] decisions on the basis of the information contained in this document only and should not rely on any other information.

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In preparation for the [REDACTED], we have sought the following waivers from strict compliance with the relevant provisions of the Listing Rules and exemption from compliance with the Companies (Winding up and Miscellaneous Provisions) Ordinance.

MANAGEMENT PRESENCE IN HONG KONG

Pursuant to Rules 8.12 and 19A.15 of the Listing Rules, an issuer must have sufficient management presence in Hong Kong. This normally means that at least two of its executive directors must be ordinarily resident in Hong Kong. Since our headquarters and all of our business operations are principally located, managed and conducted in the PRC, our Company does not, and for the foreseeable future, will not, have Executive Directors who are ordinarily resident in Hong Kong for the purpose of satisfying the requirements under Rules 8.12 and 19A.15 of the Listing Rules.

We do not have sufficient management presence in Hong Kong for the purposes of satisfying the requirements under Rules 8.12 and 19A.15 of the Listing Rules. Our Company considers that the Group’s management is best able to attend to its functions by being based in the PRC. Our Directors consider that the appointment of Executive Directors who will be ordinarily resident in Hong Kong would not be beneficial to, or appropriate for, the Group and therefore would not be in the best interests of our Company and the Shareholders as a whole. Accordingly, we have applied to the Stock Exchange for, and the Stock Exchange [has granted], a waiver from strict compliance with the requirements under Rules 8.12 and 19A.15 of the Listing Rules. We have made the following arrangements to maintain an effective channel of communication between the Stock Exchange and us:

(a) we have appointed two authorized representatives (the “Authorized Representatives”) pursuant to Rule 3.05 of the Listing Rules, who will act as our principal channel of communication with the Stock Exchange. The Authorized Representatives appointed are Mr. Lunan ZHANG (張璐楠)(“Mr. Zhang”), an Executive Director, and Ms. Wai Ching AU (區慧晶)(“Ms. Au”), our Joint Company Secretary, to be the principal communication channel at all times between the Stock Exchange and us. Each of the Authorized Representatives will be available to meet with the Stock Exchange in Hong Kong within a reasonable time frame upon the request of the Stock Exchange and will be readily contactable by telephone, facsimile and email;

(b) as and when the Stock Exchange wishes to contact our Directors on any matters, each of the Authorized Representatives has the means to contact all of our Directors (including the Independent Non-executive Directors) promptly at all times;

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(c) although our Executive Directors and Non-executive Directors are not ordinary residents in Hong Kong, each of our Directors possesses or can apply for valid travel documents to visit Hong Kong and is able to meet with the Stock Exchange within a reasonable period of time, when required;

(d) we have appointed Somerley Capital Limited as our compliance advisor (the “Compliance Advisor”), pursuant to Rule 3A.19 of the Listing Rules, who will have access at all times to the Authorized Representatives, our Directors and senior management, and will act as an additional channel of communication between the Stock Exchange and us for the period commencing from the [REDACTED]tothe date on which our Company complies with Rule 13.46 of the Listing Rules in respect of its financial results for the first full financial year commencing after the [REDACTED]. Pursuant to Rule 19A.05(2) of the Listing Rules, we shall ensure that the Compliance Advisor will have access at all times to the Authorized Representatives, our Directors and other officers and shall procure that such persons will promptly provide such information and assistance as the Compliance Advisor may need or may reasonably request in connection with the performance of the Compliance Advisor’s duties as set forth in Chapter 3A and Rule 19A.06 of the Listing Rules. We shall ensure that there are adequate and efficient means of communication among our Company, the Authorized Representatives, our Directors, and other officers and the Compliance Adviser and will keep the Compliance Advisor fully informed of all communications and dealings between us and the Stock Exchange;

(e) we have provided the Stock Exchange with the contact details of each Director and at least two of the Compliance Advisor’s officers who will act as the Compliance Advisor’s contact persons between the Stock Change and our Company (including his or her mobile phone number, office phone number and e-mail address), pursuant to Rule 19A.06(4) of the Listing Rules; and

(f) we will also retain legal advisors to advise on on-going compliance requirements as well as other issues arising under the Listing Rules and other applicable laws and regulations of Hong Kong after [REDACTED].

Our Company will inform the Stock Exchange as soon as practicable in respect of any change of the Authorized Representatives, the Directors and/or the Compliance Advisor in accordance with the Listing Rules.

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JOINT COMPANY SECRETARIES

Pursuant to Rules 3.28 and 8.17 of the Listing Rules, the company secretary must be an individual who, by virtue of his academic or professional qualifications or relevant experience, is, in the opinion of the Stock Exchange, capable of discharging the functions of the company secretary. The Stock Exchange considers the following academic or professional qualifications to be acceptable:

(a) a member of The Hong Kong Institute of Chartered Secretaries;

(b) a solicitor or barrister as defined in the Legal Practitioners Ordinance (Chapter 159 of the Laws of Hong Kong); and

(c) a certified public accountant as defined in the Professional Accountants Ordinance (Chapter 50 of the Laws of Hong Kong).

Note 2 to Rule 3.28 of the Listing Rules further sets out the factors that the Stock Exchange will consider in assessing an individual’s “relevant experience”:

(a) length of employment with the issuer and other listed companies and the roles he played;

(b) familiarity with the Listing Rules and other relevant law and regulations including the SFO, Companies Ordinance, Companies (Winding Up and Miscellaneous Provisions) Ordinance and the Takeovers Code;

(c) relevant training taken and/or to be taken in addition to the minimum requirement of taking not less than 15 hours of relevant professional training in each financial year under Rule 3.29 of the Listing Rules; and

(d) professional qualifications in other jurisdictions.

Our Company considers that while it is important for the company secretary to be familiar with the relevant securities regulation in Hong Kong, he/she also needs to have experience relevant to our Company’s operations, nexus to the Board and close working relationship with the management of our Company in order to perform the function of a company secretary and to take the necessary actions in the most effective and efficient manner. It is for the benefit of our Company to appoint a person who is familiar with our Company’s business and affairs as the company secretary.

We have appointed Ms. Jianqun PENG (彭建群)(“Ms. Peng”) and Ms. Au as our joint company secretaries. Ms. Peng is currently our chief financial officer. Her biographical information is set out in “Directors, Supervisors and Senior Management” in the document. However, given Ms. Peng does not possess a qualification stipulated in Rule 3.28 of the Listing

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Rules, she is not able to solely fulfill the requirements as a company secretary of a listed issuer stipulated under Rules 3.28 and 8.17 of the Listing Rules. In order to provide support to Ms. Peng, we have appointed Ms. Au, an associate member of both the Hong Kong Institute of Chartered Secretaries and the Chartered Governance Institute in the United Kingdom (formerly known as the Institute of Chartered Secretaries and Administrators), who meets the requirements under Rules 3.28 and 8.17 of the Listing Rules, as a joint company secretary to provide assistance to Ms. Peng, for a three-year period from the [REDACTED] so as to enable her to acquire the relevant experience (as required under note 2 to Rule 3.28 of the Listing Rules) to duly discharge her duties.

Accordingly, we have applied to the Stock Exchange for, and the Stock Exchange [has granted], a waiver from strict compliance with the requirements under Rules 3.28 and 8.17 of the Listing Rules in relation to the appointment of Ms. Peng as our joint company secretary on the conditions that: (i) Ms. Au is appointed as a joint company secretary to assist Ms. Peng in discharging her functions as a company secretary and in gaining the relevant experience under Rule 3.28 of the Listing Rules; the waiver will be revoked immediately if Ms. Au, during the three-year period, ceases to provide assistance to Ms. Peng as the joint company secretary; and (ii) the waiver can be revoked if there are material breaches of the Listing Rules by our Company. We expect that Ms. Peng will acquire the qualifications or relevant experience required under Rule 3.28 of the Listing Rules prior to the end of the three-year period after the Listing. We will liaise with the Stock Exchange before the end of the three-year period to enable it to assess whether Ms. Peng, having had the benefit of Ms. Au’s assistance for three years and has acquired relevant experience within the meaning of Rule 3.28 of the Listing Rules so that a further waiver will not be necessary.

See “Directors, Supervisors and Senior Management” of this document for further information regarding the qualifications and experience of Ms. Peng and Ms. Au.

EXEMPTION FROM COMPLIANCE WITH SECTION 342(1) OF THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE AND PARAGRAPH 27 OF PART I AND PARAGRAPH 31 OF PART II OF THE THIRD SCHEDULE TO THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE

According to section 342(1) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance, the prospectus shall include an accountant’s report which contains the matters specified in the Third Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance.

According to paragraph 27 of Part I of the Third Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance, the Company is required to include in the prospectus a statement as to the gross trading income or sales turnover (as the case may be) of the

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Company during each of the three financial years immediately preceding the issue of the prospectus as well as an explanation of the method used for the computation of such income or turnover and a reasonable breakdown of the more important trading activities.

According to paragraph 31 of Part II of the Third Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance, the Company is required to include in the prospectus a report prepared by the Company’s auditor with respect to profits and losses of the Company in respect of each of the three financial years immediately preceding the issue of the prospectus and the assets and liabilities of the Company at the last date to which the financial statements were prepared.

According to section 342A(1) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance, the SFC may issue, subject to such conditions (if any) as the SFC thinks fit, a certificate of exemption from compliance with the relevant requirements under the Companies (Winding Up and Miscellaneous Provisions) Ordinance if, having regard to the circumstances, the SFC considers that the exemption will not prejudice the interests of the investing public and compliance with any or all of such requirements would be irrelevant or unduly burdensome, or is otherwise unnecessary or inappropriate.

According to Rule 4.04(1) of the Listing Rules, the accountant’s report contained in the prospectus must include, inter alia, the results of the Company in respect of each of the three financial years immediately preceding the issue of the Prospectus or such shorter period as may be acceptable to the Stock Exchange.

According to Rule 18A.06 of the Listing Rules, an eligible biotech company shall comply with Rule 4.04 modified so that references to “three financial years” or “three years” in that Rule shall instead reference to “two financial years” or “two years”, as the case may be.

Accordingly, we have applied to the SFC for, and the SFC [has granted], a certificate of exemption from strict compliance with the requirements under section 342(1) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance and paragraph 27 of Part I and paragraph 31 of Part II of the Third Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance[, on the conditions that the particulars of the exemption are set forth in this document and this document will be issued on or before [●],] on the following grounds:

(a) our Company is an innovative vaccine company with a high-value prophylactic and therapeutic vaccine pipeline driven by in-house developed technology platforms and falls within the scope of biotech company as defined under Chapter 18A of the Listing Rules;

(b) the Accountant’s Report for each of the two years ended December 31, 2019 and 2020 has been prepared and is set out in Appendix I to this document in accordance with Rule 18A.06 of the Listing Rules;

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(c) notwithstanding that the financial results of our Company set out in this document are only for two years ended December 31, 2019 and 2020 in accordance with Chapter 18A of the Listing Rules, other information required to be disclosed under the Listing Rules and requirements under the Companies (Winding up and Miscellaneous Provisions) Ordinance has been adequately disclosed in this document pursuant to the relevant requirements;

(d) furthermore, as Chapter 18A of the Listing Rules provides that track record period for biotech companies in terms of financial disclosure is two years, strict compliance with the requirements of section 342(1) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance and paragraph 27 of Part I and paragraph 31 of Part II of the Third Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance would be unduly burdensome for our Company as this would require additional work to be performed by our Company and the reporting accountants; and

(e) the Accountant’s Report covering the two years ended December 31, 2019 and 2020 together with other disclosure in this document, has already provided potential [REDACTED] with adequate and reasonably up-to-date information in the circumstances to form a view on the track record of our Company; and all information which is necessary for the [REDACTED] public to make an informed assessment of the business, assets and liabilities, financial position, management and prospects has been included in this document. Therefore, the exemption would not prejudice the interests of the [REDACTED] public.

WAIVER IN RELATION TO PRO FORMA FINANCIAL INFORMATION

Rule 4.29 of the Listing Rules provides that where an issuer includes pro forma financial information in any document (whether or not such disclosure of pro forma financial information is required under the Listing Rules), that information must comply with Rules 4.29(1) to (6) of the Listing Rules and a report in the terms of Rule 4.29(7) of the Listing Rules must be included in the relevant document. Rule 4.29(6)(b) of the Listing Rules further requires that any adjustments which are made to the information referred to in Rule 4.29(5) of the Listing Rules in relation to any pro forma statement must be directly attributable to the transaction concerned (i.e. the [REDACTED] and the [REDACTED]) and not relating to future events or decisions.

We have prepared an unaudited pro forma consolidated statement of comprehensive income of Suzhou Si’ao and its subsidiary (“Si’ao Group”) and the Group (collectively, the “Enlarged Group”) for the year ended December 31, 2020 for the purpose of illustrating the effect of Suzhou Si’ao Acquisition as if it had taken place on January 1, 2020 (the “Suzhou Si’ao Pro Forma”). As part of the [REDACTED], we intend to [REDACTED] the [REDACTED]inthe[REDACTED], including [REDACTED] to QIBs in the United States in reliance on Rule 144A or any other available exemption from the U.S. Securities Act. Consistent with disclosure practices and investor expectations for a Rule 144A [REDACTED],

–91– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES AND THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE the disclosure in this document is expected to be generally consistent with the disclosure standards of the U.S. Securities and Exchange Commission (the “SEC”). In particular, §210.11-01(a)(1) of Regulation S-X (“Rule 11-01(a)(1)”) requires a company offering securities to include in its offering document pro forma financial statements if a “significant business combination has occurred” in the most recent fiscal year for which a balance sheet is disclosed. The Suzhou Si’ao Acquisition is considered as a “significant business combination” during the most recent fiscal year ended December 31, 2020 under Rule 11-01(a)(1) and disclosure pursuant to the requirements set out in Rule 11-02(c)(2) in a Rule 144A [REDACTED] would be consistent with investor expectations. Therefore, the pro forma financial statements of the Enlarged Group for the year ended December 31, 2020 are included in this document reflecting the Suzhou Si’ao Acquisition as if it had taken place on January 1, 2020 on a pro forma basis.

Hence, the inclusion of the Suzhou Si’ao Pro Forma in this document is for the purpose of conforming with the disclosure standards of the SEC. In addition, the Suzhou Si’ao Pro Forma presented in this document is in compliance with Rule 4.29 of the Listing Rules except for Rules 4.29(1) and 4.29(6)(b). It is also considered that such presentation, on the one hand, would achieve the objectives of the requirements under Rule 4.05A of the Listing Rules and on the other hand, the Suzhou Si’ao Pro Forma together with other financial information of Suzhou Si’ao in this document would enable investors to have a fuller picture of the overall financial performance of our Group as enlarged by the Suzhou Si’ao Acquisition.

The Suzhou Si’ao Acquisition is not the subject of this document. Therefore, we have applied to the Stock Exchange for, and the Stock Exchange [has granted], a waiver from strict compliance with Rules 4.29(1) and 4.29(b) of the Listing Rules for the inclusion of the Suzhou Si’ao Pro Forma in this document on the following grounds and conditions:

(a) The Suzhou Si’ao Acquisition is not the subject of this document and the adjustments for the effects of the Suzhou Si’ao Acquisition made to the financial information set out in the Suzhou Si’ao Pro Forma is not directly attributable to the transaction concerned (i.e. the [REDACTED] and the [REDACTED]) but for the reasons set out in above;

(b) The Suzhou Si’ao Pro Forma was prepared based on (i) the audited consolidated statements of comprehensive income of the Group for the year ended December 31, 2020 as set out in “Appendix I—Accountant’s Report” to this document; and (ii) the audited consolidated statements of comprehensive income of Si’ao Group for the nine months ended September 30, 2020 as set out in “Appendix I—Accountant’s Report” to this document, after making pro forma adjustments as explained in the notes to section (B) of Appendix II to this document. PricewaterhouseCoopers (“PwC”), being our Company’s reporting accountant, has performed procedures in relation to the Suzhou Si’ao Pro Forma in accordance with Hong Kong Standard on Assurance Engagement 3420 “Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”), the Accounting Guideline 7 “Preparation of Pro Forma Financial Information for

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Inclusion in Investment Circulars” issued by the HKICPA. In the opinion of PwC, the Suzhou Si’ao Pro Forma has been properly compiled by the Directors on the basis stated, such basis is consistent with the accounting policies of the Group, and the adjustments are appropriate for the purposes of the unaudited pro forma consolidated statement of comprehensive income of the Enlarged Group as disclosed on pages II-3 to II-5 to this document. Please refer to section (C) of Appendix II to this document for further details;

(c) The Sole Sponsor, having considered Rule 4.29 of the Listing Rules and after reviewing the procedures performed by PwC, and participating in discussions with PwC and the Company, are of the view that the presentation of the Suzhou Si’ao Pro Forma is fair and reasonable;

(d) We believe that the Suzhou Si’ao Pro Forma is material information for investors. By illustrating the scope of the change in the financial position and results of operations of our Group, the Suzhou Si’ao Pro Forma, together with the historical financial statements of our Group and Suzhou Si’ao, provides investors with information relevant to the continuing impact of the Suzhou Si’ao Acquisition by showing how the transaction might have affected the Company’s historical financial statements for the most recent financial year. In addition, we believe that the Suzhou Si’ao Pro Forma is not misleading in any material respect because it illustrates only the isolated and objectively measurable effects of the Suzhou Si’ao Acquisition on the basis of historical data while excluding effects that rely on highly judgmental estimates of how historical practices and operating decisions may or may not have changed as a result of the Suzhou Si’ao Acquisition; and

(e) the reporting accountant, PwC, have reported on the Suzhou Si’ao Pro Forma in accordance with Hong Kong Standard on Assurance Engagement 3420 “Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus”.

Accordingly, we have applied for, and the Stock Exchange [has granted] us, a waiver from strict compliance with Rules 4.29(1) and 4.29(6)(b) of the Listing Rules.

[REDACTED]

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[REDACTED]

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[REDACTED]

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[REDACTED]

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[REDACTED]

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[REDACTED]

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[REDACTED]

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[REDACTED]

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DIRECTORS

Name Address Nationality

Executive Directors

Bin WANG (王賓) No. 159, Lane 1198, Gulou Road Chinese Songjiang District Shanghai PRC

Qingling YU (俞慶齡) No. 159, Lane 1198, Gulou Road Chinese Songjiang District Shanghai PRC

Lunan ZHANG (張璐楠) No. 1, Mintian Road Chinese Futian District Shenzhen Guangdong Province PRC

Non-executive Directors

Zhiyun YU (喻志雲) Building 5 Chinese 801 Wuding Road Jing’an District Shanghai PRC

Xueqin WU (吳薛琴) Building 111, Donggao New Village, Chinese Rucheng Town Rugao City Jiangsu Province PRC

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Independent Non-executive Directors

Guanchun DAI (戴冠春) Building 1101, Longwan Villa Chinese Houshayu Town Shunyi District Beijing PRC

Guohao JIN (金國豪) No. 25, Lane 410, Yima Road Chinese Jiading District Shanghai PRC

Wenwei TU (涂文偉) 9/F, Block 1 Chinese Tam Towers, 25 Sha Wan Drive (Hong Kong) Pokfulam Hong Kong

SUPERVISORS

Name Address Nationality

Xiaoyan LIU (劉曉雁) Building 7, Lane 300, Yanzhong Chinese Road Pudong New Area Shanghai PRC

Ji MA (馬紀) No. 1, Mintian Road Chinese Futian District Shenzhen Guangdong Province PRC

Zhou LU (陸洲) Tianyu Renjia Phase II Chinese Gusu District Suzhou Jiangsu Province PRC

For further information regarding our Directors and Supervisors, please refer to the section headed “Directors, Supervisors and Senior Management”.

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PARTIES INVOLVED IN THE [REDACTED]

Sole Sponsor, [REDACTED] China International Capital Corporation Hong Kong Securities Limited 29/F, One International Finance Centre 1 Harbour View Street Central Hong Kong

Legal Advisors to the Company as to Hong Kong and U.S. laws: Kirkland & Ellis 26/F, Gloucester Tower The Landmark, 15 Queen’s Road Central Central Hong Kong

as to PRC law: Zhong Lun Law Firm 23-31/F, South Tower, CP Center 20 Jin He East Avenue Chaoyang District Beijing PRC

Legal Advisors to the Sole Sponsor, as to Hong Kong and U.S. laws: [REDACTED] Clifford Chance 27/F, Jardine House 1 Connaught Place Hong Kong

as to PRC law: Commerce & Finance Law Offices 6/F, NCI Tower A12 Jianguomenwai Avenue Chaoyang District Beijing PRC

Auditor and Reporting Accountant PricewaterhouseCoopers Certified Public Accountants and Registered Public Interest Entity Auditor 22/F, Prince’s Building Central Hong Kong

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Industry Consultant Frost & Sullivan (Beijing) Inc., Shanghai Branch Co. 2504, Wheelock Square 1717 West Nanjing Road Jingan District Shanghai PRC

[REDACTED]

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Registered Office Room B210, Level 2, Zone B 5 Kaituo Road Haidian District Beijing PRC

Headquarter and Principal Place of No. 18 Qingqiu Road Business in the PRC Suzhou Industrial Park Jiangsu Province PRC

Principal Place of Business in Hong Kong 40/F, Dah Sing Financial Centre No. 248 Queen’s Road East Wanchai Hong Kong

Company’s Website [http://www.advaccine.com/] (Information contained in this website does not form part of this Document)

Joint Company Secretaries Ms. Jianqun PENG (彭建群) Building 6, Rongyu Garden Xinghu Road Suzhou Industrial Park Jiangsu Province PRC

Ms. Wai Ching AU (區慧晶) Associate member of the Hong Kong Institute of Chartered Secretaries and the Chartered Governance Institute 40/F, Dah Sing Financial Centre 248 Queen’s Road East Wanchai Hong Kong

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Authorized Representatives Mr. Lunan ZHANG (張璐楠) No. 1, Mintian Road Futian District Shenzhen Guangdong Province PRC

Ms. Wai Ching AU (區慧晶) 40/F, Dah Sing Financial Centre 248 Queen’s Road East Wanchai Hong Kong

Audit Committee Mr. Guohao JIN (金國豪) (Chairman) Mr. Guanchun DAI (戴冠春) Ms. Xueqin WU (吳薛琴)

Nomination Committee Dr. Bin WANG (王賓) (Chairman) Mr. Guohao JIN (金國豪) Mr. Guanchun DAI (戴冠春)

Remuneration Committee Mr. Guanchun DAI (戴冠春) (Chairman) Mr. Guohao JIN (金國豪) Ms. Qingling YU (俞慶齡)

[REDACTED]

Compliance Advisor Somerley Capital Limited 20/F, China Building 29 Queen’s Road Central Central Hong Kong

Principal Banks [●]

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The information and statistics set out in this section and other sections of this document were extracted from different official government publications, available sources from public market research and other sources from independent suppliers. In addition, we engaged Frost & Sullivan to prepare the F&S Report, an independent market research report, in connection with the [REDACTED]. We believe that the sources of the information in this section and other sections of this document are appropriate sources for such information, and we have taken reasonable care in extracting and reproducing such information. We have no reason to believe that such information is false or misleading in any material respect or that any fact has been omitted that would render such information false or misleading in any material respect. The information from official and non-official sources has not been independently verified by us, the Sole Sponsor, the [REDACTED], the [REDACTED], the [REDACTED], any of the [REDACTED], any of their respective directors and advisers, or any other persons or parties involved in the [REDACTED] (except for Frost & Sullivan), and no representation is given as to its accuracy. Accordingly, the information from official and non-official sources contained herein may not be accurate and should not be unduly relied upon. We confirm that, after making reasonable enquiries, there is no adverse change in the market information since the date of the Frost & Sullivan Report that would qualify, contradict or have an impact on the information in this section in any material respect.

OVERVIEW OF VACCINES

Vaccine is a biological preparation that provides active acquired immunity against a particular disease. A vaccine typically contains one or several antigens from, or similar to, a disease-causing microorganism and improves immunity to a particular disease upon administration by inducing specific immune responses. The science of vaccinology has rapidly developed with advances in immunology, microbiology and genomics, including the development of innovative platforms and vaccine delivery systems (e.g. DNA vaccines), as well as adjuvants to boost the efficacy of vaccines. Vaccines can be generally divided into two types, prophylactic vaccines and therapeutic vaccines. Prophylactic vaccines are used to immunize healthy individuals against infectious diseases by introducing antigens into human body to induce the immune system to create immune responses to prevent diseases. Therapeutic vaccines are used to stimulate the immune system of patients to fight against various diseases, including chronic infections, cancers and autoimmune diseases. Currently, vaccine development platforms can generally be categorized into (i) traditional technologies, or traditional vaccine development technology that rely on the whole pathogen without defined antigen, including inactivated vaccines and live-attenuated vaccines, and (ii) innovative technologies, or innovative vaccine development technology that rely on genetic engineering to produce well-defined target antigen, including protein subunit vaccines, viral vector vaccines, DNA vaccines and mRNA vaccines. Traditional technology based vaccines have been on the market for decades while innovative technology based vaccines are relatively young. Traditional whole-pathogen vaccines often contain unspecified impurities that can cause side effects and cannot be developed for all pathogens. In contrast, innovative genetically- engineered vaccines allow better antigen variety and design, which help elicit the desired immune response and ensure safety. The following table sets forth a comparison of the two major vaccine development platforms.

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Traditional Technologies Innovative Technologies (whole-pathogen) (genetically-engineered antigen)

Inactivated Live-attenuated Protein Viral vector DNA mRNA virus virus subunit

Genetic material Genetically- Composition/main Laboratory- encoding viral DNA encoding RNA encoding engineered viral antigen Killed virus weakened virus protein enclosed viral protein viral protein protein in a harmless virus Good stability; Strong immune Broad immunity; Strong response Stable; short low manufacture response and Better safety; short Strengths and life-long development cost; short life-long stable development protection cycle development protection cycle cycle

Source: NIAID, F&S Report

Global Vaccine Market

As an important component of the global pharmaceutical market, size of the global vaccine market was US$37.2 billion in 2019 with a share of 2.8% in terms of sales revenue. Global vaccine market grew from US$27.6 billion in 2015 to US$37.2 billion in 2019, representing a CAGR of 7.8%. The market size is expected to reach US$126.8 billion in 2030 at a CAGR of 11.8% from 2019.

Global Vaccine Market* China Vaccine Market

USD Billion RMB Billion Period CAGR Period CAGR 2015-2019 7.8% 2015-2019 16.2% 10.4% 150 2019-2030E 18.1% 2019-2030E 11.8% 6.1% 10.1% 10.3% 5.9% 9.7% 5.7% 9.3% 5.4% 8.8%

120 5.1% 8.1% 4.7% 7.3% 4.3% 3.9% 6.4%

90 3.5% 5.4% 126.8 3.1% 117.4 333.3 108.7 4.3% 309.0 2.8% 99.7 286.5 60 2.5% 2.5% 2.6% 90.6 261.0 2.4% 2.3% 80.9 3.3% 235.7 71.3 3.0% 208.9 62.0 2.4% 180.1 53.0 2.2% 152.1 2.0% 125.5 30 44.5 37.2 36.5 99.1 27.6 27.5 27.7 31.8 74.4 46.5 53.5 29.3 27.1 31.2

0 2015 2016 201820172019 2020E2021E 2022E 2023E2024E 2025E 2026E2027E 2028E 2029E 2030E 2015 2016 201820172019 2020E2021E 2022E 2023E2024E 2025E 2026E2027E 2028E 2029E 2030E Global Vaccine Market Percentage of Global Pharmaceutical Market China Vaccine Market Percentage of China Pharmaceutical Market

* Based on ex-factory prices. * Based on ex-factory prices. Source: F&S Report Source: NICPBP, F&S Report

China Vaccine Market

China vaccine market has grown rapidly in recent years. The size of China vaccine market in terms of sales revenue grew from RMB29.3 billion in 2015 to RMB53.5 billion in 2019, representing a CAGR of 16.2%. The market size is expected to reach RMB333.3 billion in 2030 at a CAGR of 18.1% from 2019.

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Market Drivers and Trends

• Stricter regulations issued on domestic vaccines. Recent years have witnessed the stricter vaccine regulation in China. For example, the latest Vaccine Administration Law of PRC (《中華人民共和國疫苗管理法》) requires vaccine marketing license holders to purchase compulsory vaccine liability insurance. In addition, regulatory authority in China is expected to implement electronic traceability rules for vaccines, and establish a national collaborative platform to reduce the illegal behaviors.

• Increasing health awareness and affordability for Class II Vaccines. With the rapid economic development in China, health awareness is continuously growing among the society. Simultaneously, people’s affordability for Class II vaccines is rising. As a result, willingness for Class II vaccines is rapidly increasing.

• Polyvalent and combination vaccines and innovative vaccines are the main trend. Chinese government is supporting the development of polyvalent vaccines and combination vaccines. Polyvalent vaccines and combination vaccines have mostly been produced by global companies in China. With the large unmet need, domestic companies are putting large efforts to develop polyvalent vaccines and combination vaccines. In addition, innovative vaccines are being vigorously developed, especially after the COVID-19 outbreak.

• Domestic developed vaccines to enter the global market. Chinese government is encouraging vaccine developers and manufacturers to produce and export vaccines. Currently, four domestic vaccines have passed WHO pre-certification, and over 20 domestic vaccines are applying for WHO pre-certification.

Entry Barriers

• Technical innovation barriers. Technology is the key competitiveness of vaccine development and plays a decisive role in their development. On one hand, independent researches and development of new vaccine products are time-consuming, and bear large investment and high failure risk. On the other hand, uncertainties also lie in subsequent industrialization processes. Therefore, vaccine companies which lack technologies are not able to survive in the market.

• Policy and industry regulatory barriers. The Chinese government has formulated a series of laws and regulations over vaccine industry, from industry access restrictions to product licensing, marketing, and vaccination norms. The development, production, sales and import of vaccines are all subject to strict supervision in China. Especially, vaccine manufacturing permit is difficult to obtain. Only a few companies in China have obtained vaccine manufacturing permit.

• Capital barriers. Vaccine industry is a capital-intensive industry. Large amounts of capital is required in each step, from R&D to manufacturing and commercialization. The R&D of vaccines is time-consuming and bears high uncertainties, thus requiring strong capital strength; the manufacture of vaccines requires large investment in plants and equipment; the commercialization of vaccines also requires large investment in logistics and transportation equipment, such as cold chain transport equipment.

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COVID-19 VACCINE MARKET

Overview of COVID-19

COVID-19 is an infectious disease caused by a coronavirus named SARS-CoV-2, that can potentially lead to severe pneumonia, hypoxemia, respiratory failure, acute respiratory distress syndrome, sepsis, septic shock, cardiac injury and multiple organ failure. COVID-19 spreads primarily from person to person through respiratory droplets when an infected person coughs, sneezes or talks. Symptoms of COVID-19 may include fever, dry cough, dyspnea, fatigue, myalgia and anorexia. Since late 2019 and early 2020, COVID-19 quickly spread globally. The WHO declared the COVID-19 outbreak as a global pandemic on March 11, 2020. The COVID-19 pandemic has had a devastating social and economic impact in China and globally. The COVID-19 pandemic had a huge negative impact on the global public health, finance, economy, politics and social stability. The World Bank reports that global GDP contracted 4.3% as a result of COVID-19. Even by 2022, global GDP is forecast to be 4.4% below pre-pandemic projections. The World Bank also predicts that even if GDP returns to its pre-pandemic level in 2021, it is still expected to be about 2% below its pre-pandemic projections by 2022. With the incidence of COVID-19 cases still surging worldwide, the world is in dire need for control over the pandemic. Currently, the only approved treatment in US is remdesivir, a nucleotide analog used for treating hospitalized COVID-19 patients. In addition, certain neutralizing antibodies are approved only under emergency use (“EUA”). According to F&S Report, current treatment is ineffective and toxic in a proportion of patients, meaning that most COVID-19 patients, including those in the outpatient setting, do not have a standard course of treatment. Main indications, including mortality, initiation of ventilation and hospitalization duration, have not demonstrated clear reductions by remdesivir. The WHO has issued recently a conditional recommendation against the use of remdesivir in hospitalized patients, regardless of disease severity, as there is currently no evidence that remdesivir improves survival and other outcomes in these patients. Although social-distancing and other transmission-mitigation strategies implemented in most countries have temporarily prevented most citizens from being infected, these strategies have paradoxically left them without immunity to SARS-CoV-2 and thus susceptible to additional waves of infection. In addition, healthcare institutions have been over-extended and resources are being diverted away from other non-COVID-19 care, increasing unmet medical needs unrelated to COVID-19. It is widely recognized that development of safe and effective vaccines is essential to control the pandemic. As vaccines are expected to be the most effective ways to control the pandemic in the long term, the market demand for COVID-19 vaccines is high. To achieve herd immunity in China through use of COVID-19 vaccines, according to the F&S Report, based on available efficacy data and two-dose vaccine regimen of approved COVID-19 vaccines in China, it is estimated that at least 99.4% of the Chinese population, or 1.4 billion individuals, will need to be vaccinated in order to control the pandemic, translating to a total of approximately 2.8 billion doses needed assuming that the approved COVID-19 vaccines would confer life-long immunity. While a few vaccines have been conditionally approved or granted EUA in China since late 2020 and a number of vaccine candidates have entered late-stage trials, there will continue to be a significant gap between supply and demand in the short term.

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Competitive Landscape

According to the F&S Report, as of the Latest Practicable Date, three inactivated viral vaccines, one viral vector vaccine and one subunit vaccine were conditionally approved or granted EUA in China. As of the same date, there were ten COVID-19 vaccines in clinical development across different vaccine platforms in China, including seven in phase II or phase III clinical stage.

Approved COVID-19 Vaccines in the U.S., EU and China

Company and Announced Platform Vaccine candidate Protective efficacy FDA/EMA status China status collaborators price(1)

Moderna COVID-19 Moderna/NIAID $25-$37 94% EUA granted by FDA No announced progress Vaccine and EMA mRNA Pfizer-BioNTech BioNTech/Pfizer/ In Phase II trial, under COVID-19 $19.5 95% EUA granted by FDA Fosun Pharma and EMA license with Fosun Vaccine Pharma Janssen COVID-19 EUA granted by FDA Janssen (JNJ) $10 66.90% No announced progress Vaccine(2) and EMA AstraZeneca/ Vaxzevria $2.15-$5.25 82% EUA granted by EMA No announced progress University of Oxford Viral vector CanSino/Institute of Biotechnology, Conditionally approved Convidicea Academy of Military N/A 65.70% Not authorized by NMPA Medical Sciences, PLA of China Anhui Zhifei/Institute of Subunit RBD-Dimer Microbiology, Chinese N/A N/A Not authorized EUA granted by NMPA Academy of Sciences 50.65% (Brazil study); Conditionally approved CoronaVac Sinovac $30 Not authorized 91.25% (Turkey study) by NMPA

Beijing Institute of Conditionally approved BBIBP-CorV Biological $30 79.30% Not authorized Inactivated virus by NMPA Products, Sinopharm Wuhan Institute of Conditionally approved WIBP-CorV Biological $30 72.51% Not authorized by NMPA Products, Sinopharm

Notes:

(1) Based on public available price of government procurement.

(2) The FDA announced a recommendation of a pause in the use of Janssen COVID-19 Vaccine on April 13, 2021 while it investigated a rare and severe type of blood clot associated with the vaccine.

Source: WHO, F&S Report

COVID-19 Vaccines under Development in the U.S., EU and China (Phase III or II)

Platform Vaccine candidate Company and collaborators Phase China status

DNA pGX9501 (INO-4800) Our Group/Inovio II/III China launch expected

CVnCoV Vaccine CureVac III NA

Yunnan Walvax Biotechnology/ Academy of Military Sciences, mRNA ARCoV III China launch expected PLA of China/ Suzhou Abogen Biosciences

ARCT-021 Arcturus II NA

Gam-COVID-Vac Gamaleya Research Institute of III NA Epidemiology and Microbiology, Health Ministry of the Russian Federation

GRAd-COV2 ReiThera II/III NA Viral vector Beijing Wantai DelNS1-2019-nCoV-RBD-OPT1 Biological Pharmacy II China launch expected

NVX-CoV2373 Novavax III NA

SCB-2019 Clover Biopharmaceuticals II/III China launch expected

CoVLP Medicago II/III NA

Subunit VAT00002 Sanofi Pasteur/GSK II NA

Jiangsu Province Centers for Recombinant COVID-19 Disease Control and II China launch expected Vaccine (Sf9 cells) Prevention/ West China Hospital

Inactivated SARS-CoV-2 Chinese Academy of III China launch expected Vaccine (Vero cell) Medical Sciences Inactivated virus Inactivated SARS-CoV-2 Beijing Minhai Biotechnology II China launch expected Vaccine (Vero cell)

Note: Only candidates currently in or beyond Phase II are listed.

Source: WHO, F&S Report

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The competitive landscape of COVID-19 vaccines is also characterized by the complexity of both their logistics and storage requirements and manufacture process. Among different types of COVID-19 vaccines, the logistics and storage requirements of mRNA COVID-19 vaccines are the strictest, while those of DNA COVID-19 vaccines are most friendly. Complexity of manufacture process, manufacturing capacity and stability are also critical to the competitiveness of COVID-19 vaccines, among other things. DNA COVID-19 vaccines are characterized by short development cycle, high stability, simple manufacture process, high manufacturing capacity, low development and manufacture cost and good immunogenicity, in comparison with other competitors.

DNA vaccines mRNA vaccines Protein subunit vaccines Viral vector vaccines Short Short Long Relatively short Cycle of Once antigen is designed, Can be designed and Development cycle is Development cycle is development samples can be prepared prepared relatively quickly. lengthened by its longer lengthened by its longer and tested quickly. manufacture process. manufacture process. Stable Unstable Relatively stable Relatively stable Stability & Inherent stability of DNA Single-stranded structure Protein vaccines are Viral vector vaccines are shelf life provides basis for long makes mRNA highly relatively stable as shown usually based on DNA, shelf life. unstable, lowers shelf life. by those on the market. which is stable. Simple Relatively simple Long Long Manufacture DNA preparation is simpler mRNA needs to be Requires fermentation and Requires fermentation and process compared to mRNA/protein; synthesized from DNA in multiple purification steps. multiple purifications steps. requires fewer purifications. several reaction steps. Low High Medium Medium Cost of Short development cycle High costs for enzymes Technology is mature but Manufacture technology is development & and simple process make and lipids; challenges in cost is increased by mature but process is manufacture for low cost. formulation scale-up. lengthy process. lengthy.

Can activate both cell- Can activate both cell- Requires adjuvant to Some populations have Immunogenicity mediated and humoral mediated and humoral strengthen immune pre-existing immunity immune response. immune response. response. against viral vectors.

Source: F&S Report

Market Drivers and Trends

• Demand for COVID-19 vaccines. Although the COVID-19 outbreak is generally under control in China, new indigenous cases were reported from time to time across regions in China. Moreover, the virus is prone to mutations and there have been patients infected with mutated viruses. Virus mutations will require new and effective vaccines, such as DNA vaccines, which can react faster to virus mutations. Vaccines have been widely recognized by experts to be the key to controlling the pandemic. As COVID-19 mutations have been observed, there is a potential huge need for COVID-19 vaccines able to address virus mutation problems.

• Increasing government support for COVID-19 vaccines. To expedite the vaccine development process, many countries, including China, have implemented faster approval processes to shorten the development period from the usual 10-15 years to 2-3 years or even less. For example, accordingly to relevant regulations regarding research and development of COVID-19 vaccines in China promulgated by NMPA, in light of the current public health emergency, applicants are encouraged to submit preclinical data for IND approval on a rolling basis and will receive immediate feedback from the NMPA.

RSV VACCINE MARKET

Overview of RSV

RSV is a leading cause of acute viral LRTI, according to the Centers for Disease Control and Prevention. RSV can spread when an infected person coughs or sneezes. The symptoms of RSV infection include nasal congestion, runny nose, cough, fever, sore throat and headache. In severe cases, it can develop into pneumonia and bronchitis. The pathogenesis of RSV infection is complex and involves a combination of pathogenic factors, airway epithelial cell-associated

–112– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT INDUSTRY OVERVIEW factors, immune system responses, neurological responses, host factors and environmental factors. The virus causes infection at all ages, especially in children under 5 years old, the elderly above 65 years old and immunocompromised adults. 96% children under 5 years of age are infected by RSV. Globally, the total population of children below 5 years of age is around 680.6 million and that of elderly over 65 years of age is around 709 million in 2019. In China, the total population of children below 5 years of age is around 83 million and that of elderly over 65 years of age is around 176 million. In 2017, the WHO estimated that RSV caused around 33 million serious respiratory infections, most of which were LRTIs (including ALRTI), every year. This results in more than 3 million hospitalizations and nearly 60,000 deaths in children under 5 years of age every year. Nearly half of these hospitalizations and deaths are in children under 6 months of age. Globally, RSV infection accounts for approximately 22.0% of all cases of ALRTI. In China, RSV infection accounts for approximately 18.7% of all cases of ALRTI. However, there is no drug with high efficacy for the treatment of RSV in China or globally. Existing therapies include general and pharmacological treatments, but there is currently insufficient evidence to confirm their effectiveness in the treatment of RSV infection. In 2019, the economic burden of RSV was approximately US$4.2 billion globally. In parallel, measures of prevention of RSV are also limited. Prophylactic antibodies have been developed against RSV. However, their use is restricted to a small group of infants considered at high risk of severe RSV disease. As a result, there are large unmet needs for RSV prevention.

Competitive Landscape

Global

Despite the concerted efforts over the years, an effective vaccine against RSV has remained elusive. Progress on a vaccine for RSV came to a halt for long after an investigational vaccine failed in 1966. An inactivated RSV vaccine, which was being tested in the U.S., not only failed to protect children, but many infants experienced worse symptoms than usual, requiring hospitalization. As of the Latest Practicable Date, there were only seven RSV vaccine candidates in phase II or later clinical trials globally, three of which were in phase III clinical stage and four of which were in phase II clinical stage.

RSV Vaccines under Development Globally (Phase II or III)

Target Platform Candidates Sponsor Antigens Phase Population

ADV110 Our Group Pediatric/Elderly G II

RSVpreF Pfizer Elderly/Maternal Prefusion F III Subunit RSVPreF3 GSK Elderly Prefusion F III (GSK3844766A)

GSK RSV F GSK Maternal F III (GSK3888550A)

Ad26.RSV.preF Janssen Pediatric/Elderly Prefusion F II

Viral vector ChAd155-RSV GSK Pediatric F, N, M2-1 II (GSK3389245A)

F, G (A and B MVA-BN RSV Bavarian Nordic Elderly II subtypes), N, M2

Note: Only candidates currently in or beyond Phase II are listed.

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PRC

As of the Latest Practicable Date other than the Company, there was no RSV vaccine under clinical development by a PRC company.

Market Drivers and Trends

• Unmet demand for RSV treatment. Currently, there is no cure for RSV, and treatment is generally aimed at managing symptoms. Although palivizumab, a prophylactic monoclonal antibody for RSV, has been on the market for nearly two decades, there are no approved vaccines for the prevention of RSV infections. As a result, there is an unmet demand for safe and efficient vaccines for prevention of RSV.

• Vaccination has become the main method to prevent infectious diseases. RSV is the major cause of LRTIs in infants and elderly population worldwide. The highest disease incidence of RSV is in children under five years old and elderly aged over 65, so vaccines for those two populations may offer the best method of protection from RSV disease.

• Increasing government expenditure for and policy support of RSV vaccine. In 2019, the world’s population reached 7.7 billion. The total population of children age under five years old and elderly over 65 accounted for, respectively, 8.8% and 9.2% of the world’s population. With the aging population, the proportion of the elderly is expected to increase. Due to the large addressable populations, the RSV vaccine inventions have strong government support.

HBV THERAPEUTIC VACCINE MARKET

Introduction to HBV

Hepatitis B is a widespread and infectious liver disease caused by HBV, commonly transmitted through mother-to-child transmission, or through horizontal transmission, especially from an infected child to an uninfected child during the first 5 years of life. The clinical symptoms of hepatitis B include loss of appetite, liver pain, and weakness. Most adults infected with HBV can self-healing but children infected with HBV could easily develop into chronic hepatitis, which could later leads to cirrhosis, liver failure and liver cell carcinoma. Patients with HBV present with a high level of disease burden, including social stigma, labor loss, and heavy economic burden. Hepatitis B can cause complications such as cirrhosis, liver failure and liver cancer. According to the Prevention and Treatment Guidelines for Hepatitis B (2015 Revision) (《慢性乙型肝炎防治指南(2015更新版)》), the proportion of patients with primary liver cancer or liver cirrhosis caused by HBV around the world is 45% and 30%, respectively. In China, the proportion of patients with primary liver cancer or cirrhosis caused by HBV is 80% and 60%, respectively. It is estimated that the total healthcare cost of HBV related chronic infection, liver cirrhosis and liver cancer is about RMB80.0 billion to RMB120.0 billion per year in China.

In China, there were 72.6 million HBV-infected patients in 2019, and hepatitis B had only a diagnose rate of 22.0%. Diagnosis rate of hepatitis B has historically been low due to the lack of awareness and effective treatment for the disease, especially in remote area. As a result of the lack of breakthrough therapies against HBV, only approximately 3.9 million patients within this large patient pool were treated in 2019, representing a treatment rate of 24.6% among diagnosed patients. Studies (Yang HI et al N. Eng. J. Med 2002) show that the presence of both HBeAg and HBsAg leads to an approximate 10% chance of liver cancer. Presence of only HBsAg lowers the chance of liver cancer and the lack of both antigens translates to almost no chance of liver cancer. There are long-term standard of care treatments for HBV (antiviral treatment with use of HBV drugs), but none of them are a functional cure—sustained immunological control of HBV infection with no detectable serum HBsAg. It is generally

–114– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT INDUSTRY OVERVIEW agreed by scientists that immunotherapeutic treatments are needed in addition to anti-viral treatments. Therefore, the demand for HBV vaccine is vast as most of HBV patients need a functional cure to lower their liver cancer risk.

Competitive Landscape

In China, HBV antiviral drugs are mainly divided into two categories: nucleoside analogue and interferon, both of which are unable to achieve functional care of HBV. The main obstacle to treating chronic HBV is the dysfunctional anti-HBV immune response, characterized by the lack of anti-HBs antibodies and exhaustion of cytotoxic T cells. Therefore, a coordinated activation of humoral and cellular immunity is necessary for functional cure of HBV. Therapeutic vaccines based on HBsAg can produce anti-HBs antibodies and decrease viral load in HBeAg-positive patients. Antiviral therapies such as nucleoside analogs are able to restore T cell responsiveness in CHB patients. Therefore, combination therapy with antiviral treatment and therapeutic vaccination can potentially achieve a prolonged control of viral replication, thus achieving functional cure.

The importance of the immune system in HBV treatment is illustrated by the fact that recovery from HBV infection is associated with restoration of HBV-specific immune response. It was also found that both the adaptive and innate immune responses are involved in clearance of HBV. Although therapeutic HBV vaccines have not been marketed to date, a number of experimental vaccines show promise in animal models or clinic studies.

HBV Therapeutic Vaccines under HBV Therapeutic Vaccines under Development Development in China Globally

Vaccine Name Company Phase Platform Vaccine Name Company Phase Platform Center for Genetic T101 (TG1050) Tasly Biopharma II Viral vector NASVAC Engineering and III Protein Biotechnology, Cuba BRII-179 (VBI-2601) Brii Biosciences Ib/IIa Protein GS-4774 GlobeImmune II Protein TVAX-008 Nanjing Grand Theravac I Protein TG1050 Transgene II Viral vector

Source: CDE, Clinicaltrials.gov, F&S Report CVI-HBV-002 CHA Vaccine II Protein

HepTcell (FP-02.2) Altimmune II Protein

VBI Vaccines/ VBI-2601 (BRII-179) II Protein Brii Biosciences

INO-1800 (T101) Inovio I DNA

JNJ-64300535 JNJ I DNA

GSK3528869 GSK I Protein VTP-300 Vaccitech I Viral vector (ChAdOx1-HBV)

Source: CDE, Clinicaltrials.gov, F&S Report

Market Drivers and Trends

• Increasing diagnosis and treatment rate. China has the largest HBV patient pool in the world, but the current diagnosis and treatment rate of HBV is relatively low. For example, HBV treatment rate in China was 24.6% in 2019, however, in the United States, the HBV treatment rate was 30.7%. With the increase in health care spending in China in the last several years, it will lead to a significant improvement of primary medical institution’s diagnosis ability and increase of diagnosis rate of HBV patients in rural area. As a result, the HBV treatment rate in China is estimated to reach 42.3% in 2030, which can further drive the growth of HBV vaccine market.

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• Ability and willingness to pay for treatment in China. There has been significant unmet medical needs for HBV patients in China. With continuous economic growth in China, it is anticipated that patient’s willingness to pay for HBV treatments will increase. Furthermore, there is a vast market if a treatment can provide functional cure, which will free HBV patients from taking anti-HBV drugs and significantly lower liver cirrhosis and liver cancer risk.

• Increasing government expenditure for and policy support of functional cure treatment. At present, all hepatitis B antiviral drugs in China, including nucleoside analogues, interferon and recombinant cytokine gene-derived protein, have entered the national health insurance catalog since 2019. Considering the huge HBV patient pool in China, innovative HBV drugs are likely to enter NRDL after the regulatory approval from the NMPA. Therefore, it is anticipated that if a functional cure treatment is approved, it is more likely to receive government support in a large scale. In addition, PRC government has initiated “China Clinical Cure for Chronic Hepatitis B (Everest) Project” in 2018 and “Reducing the Incidence of Liver Cancer in Hepatitis B Patients (Oasis) Project” in 2020 to help hepatitis B patients through treatments.

• Limitations of currently available long-term treatments. Nucleostide analogues are generally safe and relatively free of major side effects, however, nephrotoxicity and bone toxicity may occur in a small yet non-negligible proportion of patients.

• Increasing availability of new therapeutic treatments. Several novel agents through viral and host targets approaches are under investigations towards functional cure of HBV. In addition, there are a number of agents purported to improve host immune response against HBV. Some of them are innate immune enhancers, including toll-like receptor agonists and therapeutic vaccines.

SOURCE OF INFORMATION

In connection with the [REDACTED], we have commissioned Frost & Sullivan, an Independent Third Party, to conduct a detailed analysis and to prepare an industry report on the global and PRC vaccine markets. The F&S Report has been prepared by Frost & Sullivan independent from our influence. We have agreed to pay Frost & Sullivan a fee of RMB700,000 for the preparation of the F&S Report which we consider is in line with the market rates. Except as otherwise noted, all data and forecasts in this section are derived from the F&S Report. Our Directors confirm that, after taking reasonable care, there is no adverse change in the market information since the date of the F&S Report which may qualify, contradict or have an impact on the information disclosed in this section. Frost & Sullivan prepared its report based on its in-house database, Independent Third Party reports and publicly available data from reputable industry organizations. To prepare the F&S Report, Frost & Sullivan also conducted analysis on projected figures based on historical data, macroeconomic data and specific industry related drivers, and reviewed annual reports of listed companies in the global and PRC vaccine markets. In compiling and preparing the F&S Report, Frost & Sullivan has adopted the following assumptions: (i) the social, economic and political environments of the PRC will remain stable during the forecast period, which will ensure a sustainable and steady development of the PRC healthcare industry; (ii) the PRC healthcare market will grow as expected due to rising healthcare demand and supply; and (iii) the PRC government will continue to support healthcare reform.

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PRC LAWS AND REGULATIONS

As a foreign-invested enterprise engaged in the R&D, production and sales of vaccine, our business operation in the PRC is subject to extensive supervision and regulation of Chinese government. This section sets out: (i) the introductions of the Chinese governmental agencies with jurisdiction over our operation; and (ii) the overview of the laws, regulations and policies we must comply with.

Regulatory Authorities

NMPA and Its Evaluation Center

NMPA is the department in charge of the pharmaceutical industry of China. It is responsible for drawing up the laws and regulations related to pharmaceuticals and medical devices, making policy planning, formulating departmental regulations, organising the development and issuance of pharmaceutical and medical device standards, classification and management systems, such as national formulary, and supervising the implementation.

CDE is the technical evaluation unit for drug registration with NMPA. It is mainly responsible for conducting technical evaluation on the drugs applying for registration and verifying the relevant drug registrations.

NHC

The National Health Commission (formerly known as the National Health and Family Planning Commission), (the “NHC”), is primary national regulator for public health and family planning management. It is primarily responsible for drafting national health policies, supervising and regulating public health, healthcare services, and health emergency systems, coordinating the reform of medical and health system, organising the formulation of national drug policies and national essential medicine system, launching an early warning mechanism for the monitoring of the use and clinical comprehensive evaluation of medicine as well as the drug shortage, giving suggestions on the pricing policy of national essential medicine, and regulating the operation of medical institutions and practicing of medical personnel.

NIFDC

The National Institutes for Food and Drug Control (the “NIFDC”) is a public institution directly subordinate to NMPA and the statutory authority and supreme technical arbitration institution for inspecting the quality of pharmaceuticals and biological products. It is responsible for the approval and registration inspection, import inspection, supervision and inspection, safety evaluation of drugs, biological products, medical devices, foods, dietary supplements, cosmetics, laboratory animals and package materials and the batch release of biological products, the research, distribution and management of the national drug and medical device reference materials and bacterial and viral strains for production verification, as well as the relevant technical research.

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Chinese CDC

Under the leadership of National Health Commission, Chinese Center for Disease Control and Prevention (the “CDC”) exerts its function in technical guidance and support of public health. Focusing on the key tasks of national disease prevention and control, China CDC studies on the strategies and measures for disease prevention and control, organizing and implementing the work plan for various kinds of disease prevention and control. It takes care of management of public health services, including food safety, occupational safety, health related product safety, radiological health, environmental health, as well as women and children’s health. China CDC forcefully carries out operational researches, and enhances technical instruction, training and quality controls in national disease prevention and control, as well as in public health service and plays the leading role nationwide in disease prevention and control, health emergency response and capacity building of public health information.

MOFCOM

Ministry of Commerce (the “MOFCOM”) is responsible for guiding and managing the foreign investment absorption in the country, drawing up the laws and regulations related to foreign investment, formulating the relevant rules, policies and reform schemes, organising the implementation, supervising and inspecting the implementation status; participating in the formulation and joint issuance of Special Management Measures for the Access of Foreign Investment (Negative List) (《外商投資准入特別管理措施(負面清單)》) and Encouraging Foreign Investment Industries Catalogue (《鼓勵外商投資產業目錄》); managing and guiding the foreign investment review, approval and filing works.

Regulatory Provisions

Laws and Regulations Related to Drugs

Drug Administration Law of the People’s Republic of China (the “Drug Administration Law”) (《中華人民共和國藥品管理法》) and Regulations of Implementation of the Drug Administration Law (《中華人民共和國藥品管理法實施條例》) provided legal framework for the establishment of drug manufacturing enterprises and drug trading enterprises as well as the drug administration. Law of the People’s Republic of China on the Prevention and Treatment of Infectious Diseases (《中華人民共和國傳染病防治法》) established a planned vaccination system for the country. Vaccine Administration Law of the People’s Republic of China (《中華人民共和國疫苗管理法》) (the “Vaccine Administration Law”) had specific provisions on the development, production, circulation and vaccination of vaccines as well as supervision and administration.

The Drug Administration Law as promulgated by the Standing Committee of the National People’s Congress (the “SCNPC”) in 1984, which was subsequently amended and implemented in 2001, 2013, 2015 and 2019, and the Implementing Regulations of the Drug Administration Law as promulgated by the State Council in 2002 (amended in 2016 and 2019) have currently laid down the legal framework for the establishment of pharmaceutical manufacturing

–118– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT REGULATORY OVERVIEW enterprises and pharmaceutical trading enterprises and for the administration of pharmaceutical products including the development and manufacturing of new drugs and medicinal preparations by medical institutions. According to the Drug Administration Law, drugs referred to in this Law shall mean substances used for prevention, treatment and diagnosis of human diseases and purposeful regulation of human physiology, for which indication, usage and dosage are stipulated, including traditional Chinese medicine, chemical medicine and biological products etc. The Drug Administration Law also regulates the packaging, pricing and advertising of pharmaceutical products in the PRC.

Law of the People’s Republic of China on the Prevention and Treatment of Infectious Diseases was passed by the 6th session of the SCNPC on February 21, 1989. It was revised several times afterward, and the latest version came into effect on June 29, 2013. It classified infectious diseases into classes A, B and C. Infectious diseases of class B include but not limited to epidemic cerebrospinal meningitis, pertussis, diphtheria, viral hepatitis and poliomyelitis. Law of the People’s Republic of China on the Prevention and Treatment of Infectious Diseases established the planned vaccination system of the country and implemented the vaccination certificate system for children. The vaccinations under the state immunization program are free of charge. According to No. 1 Announcement promulgated by NHC on January 20, 2020, pneumonia caused by COVID-19 was classified as infectious diseases of Class B and should be prevented and controlled as Class A infectious disease.

Vaccine Administration Law was passed by the SCNPC on June 29, 2019 and came into effect on December 1, 2019. According to the Vaccine Administration Law, “vaccines” refer to the preventive biological products used for human immunization in order to prevent and control the occurrence and prevalence of diseases, including vaccines under the immunization program and vaccines not under the immunization program.

On January 15, 2017, the General Office of State Council issued Opinions on Further Enhancing Administration of Circulation and Vaccination of Vaccines (Guo Ban Fa [2017] No. 5) (《關於進一步加強疫苗流通和預防接種管理工作的意見》(國辦發[2017]5號), so as to, on one hand, promote the independent R&D and quality improvement of vaccines, support the R&D and industrialization of new vaccines (especially the polyvalent vaccines), enhance the construction of industry and technology innovation strategic alliances and support the qualified vaccine R&D projects through the national scientific and technological programs (special programs, funds, etc.) and key and special scientific research projects, and on the other hand, enhance vaccine circulation process management, including regulating the collective purchase of vaccines, enhancing the vaccine cold chain distribution management and vaccine tracing management.

Clinical Trial

According to the Measures for Administration of Drug Registration (《藥品註冊管理辦法》) (the “Registration Measures”) issued by the China Food and Drug Administration (the “CFDA”) on February 28, 2005 and latest amended by the SAMR on January 22, 2020, which became effective on July 1, 2020, clinical trials shall be conducted when applying for new drug

–119– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT REGULATORY OVERVIEW application. Drug clinical trials include phase I clinical trial, phase II clinical trial, phase III clinical trial and phase IV clinical trial. Based on the characteristics of drugs and research objectives, the research contents shall include clinical pharmacology research, exploratory clinical trial, confirmatory clinical trial and post-marketing research clinical. Drug clinical trials shall be conducted by drug clinical trial organisations which satisfy the corresponding criteria and for which filing is completed pursuant to the provisions. Therein, vaccine clinical trials shall be implemented or organised by tier 3 medical institutions or disease prevention and control institutions of provincial level or above which satisfy the criteria stipulated by the NMPA and the NHC.

Where a drug clinical trial is approved, the sponsor shall, prior to conducting subsequent phases of the drug clinical trial, formulate the corresponding protocol of the drug clinical trial, carry out after review and approval by the Ethics Committee, and submit the corresponding protocol of the drug clinical trial and supporting materials on the CDE website.

According to the Registration Measures, after the completion of the pharmaceutical, pharmacological and toxicological research of the drug clinical trial, the applicant may submit relevant research materials to CDE for applying for the approval to conduct the drug clinical trial. The CDE will organise pharmaceutical, medical and other technicians to review the application and to decide whether to approve the drug clinical trial within 60 working days of the date of acceptance of the application. Once the decision is made, the result will be notified to the applicant through the website of the CDE and if no notice of decision is issued within the aforementioned time limit, the application of clinical trial shall be deemed as approval. The Registration Measures further requires that the applicant shall, prior to conducting the drug clinical trial, register the information of the drug clinical trial plan, etc. on the Drug Clinical Trial Information Platform. During the drug clinical trials, the applicant shall update registration information continuously, and register the information of the outcome of the drug clinical trial upon completion. The applicant shall be responsible for the authenticity of the drug clinical trial information published on the platform.

According to the Opinions on Deepening the Reform on Examination and Approval System and Encouraging the Innovation of Drugs and Medical Devices (《關於深化審評審批制度改革鼓勵藥品醫療器械創新的意見》) formulated by the General Office of the Central Committee of the Communist Party of China and the General Office of State Council on October 8, 2017, the overseas clinical trial data is accepted. The clinical trial data obtained from overseas multi-centers can be used to apply for registration in China if they meet the relevant requirements for the registration of drugs and medical devices in China. For the drugs and medical devices first applies to market in China, the applicant should provide clinical trial data on whether there are ethnic differences.

On July 6, 2018, NMPA promulgated the Technical Guidelines on Accepting Overseas Clinical Trial Data (《接受藥品境外臨床試驗數據的技術指導原則》), according to which the applicant shall ensure the authenticity, completeness, accuracy and traceability of overseas clinical trial data.

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The NMPA and NHC jointly issued Good Clinical Practice of Pharmaceutical Products (《藥物臨床試驗質量管理規範》) (the “GCP”) on April 23, 2020, to optimize clinical trials. According to the GCP, the quality management standard of drug clinical trials is the standard regulation of the whole process of clinical trials, including protocol design, organisation, implementation, monitoring, auditing, recording, analysis, summarization and reporting. The preparation of investigational drugs shall conform to the relevant requirements for good manufacturing practice of drugs for clinical trials. The use of the investigational drug shall conform to the protocol. A protocol usually includes the basic information, research background materials, purposes of the trial, trial design, methods of implementation (methods, contents, and steps), etc. On May 22, 2017, CFDA issued the Announcement of the Opinions on Handling Issues Related to Verification of Drug Clinical Trial Data (《關於藥物臨床試驗數據核查有關問題處理意見的公告》), according to which, if the clinical trial data is incomplete, ill-formed and insufficient to prove the safety and efficacy of the drug, the registration application of the drug will be rejected.

Approval or Filing of Human Genetic Resources

The Interim Administrative Measures on Human Genetic Resources (《人類遺傳資源管理暫行辦法》), promulgated by the Ministry of Science and Technology and the MOH in June 1998, aimed at protecting and fair utilizing human genetic resources in the PRC. The Ministry of Science and Technology promulgated the Service Guide for Administrative Licensing Items concerning Examination and Approval of Sampling, Collecting, Trading or Exporting Human Genetic Resources, or Taking Such Resources out of the PRC (《人類遺傳資源採集、收集、買賣、出口、出境審批行政許可事項服務指南》) in July 2015, according to which, the sampling, collection or research activities of human genetic resources by a foreign-invested sponsor fall within the scope of international cooperation, and the cooperating organization of China shall apply for approval of the China Human Genetic Resources Management Office through the online system. The Regulations of the PRC on the Administration of Human Genetic Resources (《中華人民共和國人類遺傳資源管理條例》), promulgated by the State Council in May 2019 and came into effect in July 2019, further stipulates that in order to obtain marketing authorization for relevant drugs and medical devices in China, no approval is required in international clinical trial cooperation using China’s human genetic resources at clinical institutions without export of human genetic resource materials. However, the type, quantity and usage of the human genetic resource to be used shall be filed with the administrative department of science and technology under the State Council before clinical trials. The Bo-security Law of the PRC (《中華人民共和國生物安全法》) promulgated by the SCNPC on October 17, 2020, which came into effect on April 15, 2021. The bio-security Law of the PRC reaffirms that the State shall have sovereignty over the human genetic resources and biological resources of China and also provides the regulatory requirements set out in the Administrative Regulations on Human Genetic Resources of the PRC.

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Drug Registration

New Drug Registration

Pursuant to the Registration Measures, upon completion of clinical trials, the applicant may apply to the NMPA for approval of NDA and the NMPA then determines whether to approve the application according to applicable laws and regulations. Applicants must obtain a new drug manufacture approval before they can manufacture the drug and sell it in the PRC market.

• An applicant shall upon completion of pharmacy, pharmacology and toxicology and clinical trial of drugs, etc. to support registration of drug marketing, determination of quality standards, verification of commercial scale manufacturing process, and preparation to undergo examination and inspection for drug registration, submit an application for drug marketing authorisation, and submit the relevant research materials in accordance with the requirements for declaration materials. Upon form examination of the declaration materials, the application shall be accepted if it satisfies the requirements.

• Upon acceptance of an application for drug registration, the CDE shall conduct preliminary examination within 40 working days from acceptance of the application; where there is a need to conduct examination of manufacturing premises for drug registration, it shall notify the Center for Food and Drug Inspection of the NMPA (the “CFDI”) to organise examination, provide the relevant materials required for examination, and simultaneously notify the applicant as well as the drug administrative authorities of the province, autonomous region or centrally- administered municipality where the applicant or the manufacturing enterprise is located.

• Upon completion of the relevant pharmacy research to support marketing of the drug, determination of quality standards, and verification of commercial scale manufacturing process, the applicant may, prior to acceptance of the application for drug registration, apply to the NIFDC or the drug administrative authorities of the province, autonomous region or centrally-administered municipality for drug registration inspection.

• For application for registration of China-manufactured drug, where an applicant applies for drug registration inspection prior to acceptance of the application for drug registration, it shall apply to the relevant drug administrative authorities of the province, autonomous region or centrally-administered municipality for random sampling, the drug administrative authorities of the province, autonomous region or centrally-administered municipality shall organise random sampling and seal up the samples; the applicant shall deliver the list of random samples, the samples, materials required for the inspection and standard substances to the corresponding pharmaceutical inspection agency. For an application for registration of the

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overseas-manufactured drug, where an applicant applies for drug registration inspection prior to acceptance of the application for drug registration, it shall request for random sampling pursuant to the provisions, and deliver the samples, materials required for inspection and standard substances etc. to the NIFDC.

• Where the application is cleared by the comprehensive review, the drug shall be approved for marketing and a drug registration certificate shall be issued. Where the application is not cleared by the comprehensive review, a decision on non-approval shall be made. The drug registration certificate shall state the approval document number for the drug, the holder, information of the manufacturing enterprise, etc. A drug registration certificate for non-prescription drugs shall also state the non- prescription drug category.

Pursuant to the Registration Measures, drug registration is regulated according to the classification into Chinese medicine, chemical medicine and biological products, biological products shall be submitted as the process of NDA. The Registration Category of Biological Products and the Data Requirements for Declaration (《生物製品註冊分類及申報資料要求》), issued by NMPA on June 29, 2020, and took effect from July 1, 2020, which replaced the former category of therapeutic biological products and stipulated that the therapeutic biological products should be classified into 3 Categories, and Category I refers to therapeutic biological products that have not been marketed anywhere in the world. Category II refers to improved new therapeutic biological products and Category III refers to therapeutic biological products that have been marketed in China or abroad. This Registration also stipulates the specific data requirements for registration of therapeutic biological products.

Special Examination and Approval Procedure

At the time of a threat of public health emergency as well as upon occurrence of a public health emergency, the NMPA may decide pursuant to the law to implement special examination and approval for urgently needed drug required for the prevention and treatment in the public health emergency. For drug registration applications subject to special examination and approval, the NMPA shall, in accordance with the principles of “unified command, early intervention, speed and efficiency, scientific examination and approval”, organise, expedite and simultaneously conduct acceptance, review, examination, inspection of the application for drug registration. The scenarios, procedures, timeframe, requirements of special examination and approval shall comply with the provision on special examination and approval for drug.

Conditionally approve and emergently use of vaccine

With respect to a vaccine urgently needed for responding to a major public health emergency or any other vaccines urgently as determined by the competent health department under the State Council, if the benefits outweigh the risks upon assessment, NMPA may conditionally approve the vaccine registration application. For the drug which is granted conditional approval, the holder shall adopt the corresponding risk management measures following marketing of the drug, and complete the clinical trial of drugs and the relevant research within the stipulated period in accordance with the requirements, and declare via a supplementary application. Where further research requirements proposed at the time of

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Drug Re-registration

The validity period of a drug registration certificate shall be five years, and the holder of the drug registration certificate shall ensure the safety, effectiveness and quality control of the marketed drug at all times during the validity period of the certificate, and apply for re-registration of drug six months before expiry of the validity period. Upon acceptance of an application for re-registration of drug, the drug administrative authorities of the province, autonomous region or centrally-administered municipality or the CDE shall examine post- marketing evaluation of the holder and adverse reaction monitoring for the drug, carry out the relevant work in accordance with the drug approval document and the requirements of the drug administrative authorities, as well as changes in the information stated in the drug approval document etc.; where the application complies with the provisions, re-registration shall be processed, and a notice on approval of re-registration of drug shall be issued. Where the application does not comply with the provisions, re-registration shall not be processed, and a request shall be submitted to the NMPA to cancel the drug registration certificate.

Drug Marketing Authorisation Holder Mechanism

The Drug Administration Law enacted the Marketing Authorisation Holder Mechanism. In accordance with the PRC Drug Administration Law, the holder of a drug registration certificate shall be the Marketing Authorisation Holder. The Marketing Authorisation Holders may by themselves manufacture and sell drugs or engage pharmaceutical manufacturing enterprise to manufacture drugs and/or pharmaceutical distribution enterprise to sell drugs.

The Marketing Authorisation Holders shall be responsible for non-clinical research, clinical trials, manufacturing and business operation, post-marketing research, adverse reaction monitoring and reporting and handling. According to the Vaccine Administration Law, a vaccine marketing authorisation holder shall establish a complete production quality management system, continuously strengthen the deviation management, and adopt information means to faithfully record all the data formed in the production and inspection process, so as to ensure that the whole production process always meets the statutory requirements. Marketing Authorisation Holders may not engage a pharmaceutical manufacturing enterprise to produce blood products, narcotic drugs, psychotropic drugs, toxic drugs for medical use, and pharmaceutical precursor chemical, except as otherwise stipulated by the drug regulatory department under the State Council.

Where the Marketing Authorisation Holder is an overseas enterprise, its designated domestic enterprise shall perform the obligations of the Marketing Authorisation Holder and jointly assume the responsibilities with the holder.

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Drug Manufacturing

According to the Drug Administration Law and the Implementing Regulations of the Drug Administration Law, a drug manufacturing enterprise is required to obtain a drug manufacturing license from the relevant provincial drug administration authority of the PRC. The grant of such license is subject to an inspection of the manufacturing facilities, and an inspection to determine whether the sanitary condition, quality assurance systems, management structure and equipment meet the required standards. According to the Administrative Measures on Supervision of Pharmaceutical Manufacturing, promulgated in August 2004 and amended in November 2017 and January 2020, respectively, the drug manufacturing license is valid for five years and shall be renewed at least six months prior to its expiration date upon a re-examination by the relevant authority. In addition, the name, legal representative, registered address and unified social credit code specified in the drug manufacturing certificate shall be identical to that set forth in the business license as approved and issued by the industrial and commercial administrative department. According to such measures, to the extent that the Marketing Authorisation Holder does not manufacture the drug but through contract manufacturing organisation, the Marketing Authorisation Holder shall apply for drug manufacturing license with the provincial counterpart of the NMPA, subject itself to inspections and other regulatory oversight by the agency.

According to the Vaccine Administration Law, whoever engages in vaccine production activities shall, in addition to meeting the conditions for engaging in drug production activities as prescribed in the Drug Administration Law, also meet the following conditions:

• Having moderate scale and sufficient capacity reserves;

• Having systems, facilities and equipment for ensuring bio-safety; and

• Meeting the needs of disease prevention and control.

A vaccine marketing authorisation holder shall have the capacity for production of vaccines. If it is really necessary to entrust the production of vaccines in excess of its capacity, the vaccine marketing authorisation holder shall obtain the approval of the drug administrative department under the State Council. Where it accepts the entrustment to produce vaccines, it shall abide by the provisions of the Vaccine Administration Law and the relevant provisions of the State, so as to guarantee the quality of vaccines.

According to Good Manufacturing Practice for Drugs (《藥品生產質量管理規範》) promulgated by the MOH on January 17, 2011, the provisions are basic requirements for manufacturing and quality management of drugs. Special requirements for sterile products, biologics and blood products, etc., or the manufacturing and quality management activities, shall be separately enacted as annexes by the SFDA. Subsequently, in February 2011, the SFDA issued five annexes with detailed requirements for the manufacturing of sterile drugs, APIs, biologics, blood products and traditional Chinese medicine. On April 23, 2020, the NMPA revised the annexes of biologics, which took effect from July 1, 2020.

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Sales of Vaccines and Biological Products

According to the Measures for Administration of Batch Release of Biological Products (《生物製品批簽發管理辦法》) which issued on December 13, 2002, revised by SAMR on December 11, 2020 and came into effect on March 1, 2021, and the Vaccine Administration Law, the vaccine products with marketing approval shall be subject to document review, onsite verification and sample inspection by the designated drug control institution and pass the biological product batch release approval before the marketing and sales of each batch of products. The products that fail to pass the batch release approval shall not be marketed and sold. A vaccine urgently needed for preventing and controlling epidemic situation of infectious diseases or responding to emergencies may be exempted from the batch release upon approval of the drug administrative department under the State Council.

The competent health department under the State Council shall, in concert with the finance department under the State Council and other departments, organise centralized bidding or unified negotiation to form and publish the bid-winning price or transaction price of vaccines under the state immunization program, and all provinces, autonomous regions and municipalities directly under the Central Government shall implement centralized procurement. The procurement of vaccines under other immunization program and vaccines not under the immunization program other than those under the state immunization program shall be organised by provinces, autonomous regions and municipalities directly under the Central Government through provincial public resources trading platforms.

Storage and Transportation of Vaccines

The vaccine marketing authorisation holder and disease prevention and control institution that distribute vaccines themselves shall have the conditions for cold chain storage and transport of vaccines or may entrust eligible vaccine distribution entities to distribute vaccines.

The disease prevention and control institution may, when distributing vaccines not under the immunization program, charge storage and transport fees. The specific measures shall be formulated by the finance department under the State Council jointly with the competent price department under the State Council, while the charging rates shall be formulated by the competent price department of the people’s government of the province, autonomous region, or municipality directly under the Central Government jointly with the finance department.

The disease prevention and control institutions, the inoculation entities, the vaccine marketing authorisation holders and the vaccine distribution entities shall abide by the administrative rules on storage and transport of vaccines, so as to guarantee the quality of vaccines. The whole process of storage and transport of vaccines shall be subject to the prescribed temperature. The cold chain storage and transport shall meet the relevant requirements, and the temperature shall be regularly monitored and recorded. The administrative rules on storage and transport of vaccines shall be jointly formulated by the drug administrative department under the State Council and the competent health department under the State Council. A vaccine marketing authorisation holder shall, in accordance with the provisions, set up true, accurate and complete sales records, and preserve them for inspection for at least five years after expiry of the validity of the vaccines.

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Long Term Efficacy and Safety of Vaccines and Biological Products

On March 20, 2003, the CFDA promulgated the Notice on Issuing Nine Technical Guidelines (《關於印發<預防用以病毒為載體的活疫苗製劑的技術指導原則>等9個技術指導原則的通知》), including the Technical Guidelines on Preclinical Study of Preventive DNA Vaccines (《預防用DNA疫苗臨床前研究技術指導原則》), the Technical Guidelines on the Quality Control of Recombinant DNA Products (《人用重組DNA製品質量控制技術指導原則》), the Technical Guidelines on Gene Therapy and the Quality Control of Preparation. (《人基因治療研究和製劑質量控制技術指導原則》. On October 14, 2005, the CFDA promulgated the Notice on Issuing Six Technical Guidelines (《關於印發<預防用疫苗臨床前研究技術指導原則>等6個技術指導原則的通知》), including the Technical Guidelines on Preclinical Study of Preventive Vaccines (《預防用疫苗臨床前研究技術指導原則》), which is revised on April 12, 2010, the Technical Guidelines on the Management on the Change of Production Process of Biological Products (《生物製品生產工藝過程變更管理技術指導原則》), the Technical Guidelines on the Preclinical and Clinical Studies of Combined Vaccines (《聯合疫苗臨床前和臨床研究技術指導原則》), the Technical Guidelines on the Production and Quality Control of Polypeptide Vaccines (《多肽疫苗生產及質控技術指導原則》), the Technical Guidelines on the Quality Control and Clinical Research of Combined Vaccines (《結合疫苗質量控制和臨床研究技術指導原則》), the Guiding Principles on the Grading Standard for Adverse Reactions in Clinical Trials of Preventive Vaccines (《預防用疫苗臨床試驗不良反應分級標準指導原則》), which is revised on December 26, 2019. These Guidelines specify the requirements on preclinical research, change of production process, quality control in clinical stages of vaccine to ensure its safety and efficacy.

On August 14, 2020, the CDE promulgated the Notice on Issuing Five Technical Guidelines for the Research and Development of COVID-19 Prophylactic Vaccines (for Trial Implementation) (《關於發布<新型冠狀病毒預防用疫苗研發技術指導原則(試行)>等5個指導原則的通知》), including the Technical Guidelines on research of COVID-19 Prophylactic Vaccines (for Trial Implementation) (《新型冠狀病毒預防用疫苗研發技術指導原則(試行)》)、the Technical Guidelines on Pharmaceutical Research of COVID-19 Prophylactic mRNA Vaccines (for Trial Implementation) (《新型冠狀病毒預防用mRNA疫苗藥學研究技術指導原則(試行)》)、the Technical Note for Non-clinical Validation Studies and Assessment of COVID-19 Prophylactic Vaccines (for Trial Implementation) (《新型冠狀病毒預防用疫苗非臨床有效性研究與評價技術要點(試行)》)、 the Technical Guidelines on Clinical Research of COVID-19 Prophylactic Vaccines (for Trial Implementation) (《新型冠狀病毒預防用疫苗臨床研究技術指導原則(試行)》)、the Technical Guidelines on Clinical Assessment of COVID-19 Prophylactic Vaccines (for Trial Implementation) (《新型冠狀病毒預防用疫苗臨床評價指導原則(試行)》). These guidelines provide guidance, and referable technical standards for the clinical research and development of China’s COVID-19 vaccines.

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Administration of Vaccines after Marketing

The vaccine marketing authorisation holder shall establish and improve the quality management system for the whole life cycle of a vaccine, formulate and implement the risk management plan after the vaccine is marketed, carry out studies after the vaccine is marketed, and further confirm the safety, effectiveness and quality controllability of the vaccine. With respect to a vaccine for which the requirements for further study are put forward when the application for registration of the vaccine is approved, the vaccine marketing authorisation holder shall complete the study within the prescribed time limit. If it fails to complete the study within the time limit or is unable to prove that the benefits outweigh the risks, the drug administrative department under the State Council shall deal with the matter in accordance with the law up to cancelation of its drug registration certificate.

The vaccine marketing authorisation holder shall continuously update the instructions and labels based on the research conducted after the vaccine is marketed and Adverse Events Following Immunization and shall apply for approval or filing in accordance with the provisions. The drug administrative department under the State Council shall, in a timely manner, disclose the updated contents of the vaccine instructions and labels on its website.

Laws And Regulations Relating To Medical Devices

Classification, Registration and Filing of Medical Devices

The Regulations on the Supervision and Administration of Medical Devices (《醫療器械監督管理條例》) is revised by the State council on December 21, 2020 and will take effect on June 1, 2021. According to the current Regulations on the Supervision and Administration of Medical Devices amended by the State Council and came into effect on May 4, 2017, the CFDA (now known as NMPA) is in charge of the national supervision and administration of medical devices.

In the PRC, medical devices have been classified into three categories based on the degree of risk. Class I medical devices shall refer to those devices with low degree of risk and whose safety and effectiveness can be ensured through routine administration. Class II medical devices shall refer to those devices with medium degree of risk and whose safety and effectiveness shall be strictly controlled and administered. Class III medical devices shall refer to those devices with high degree of risk and whose safety and effectiveness must be strictly controlled and administered with special measures.

According to the Administrative Measures for the Registration of Medical Devices (《醫療器械註冊管理辦法》) promulgated by CFDA on July 30, 2014 and came into effect on October 1, 2014, for the filings of the domestic Class I medical devices, the parties undergoing the filings of medical devices shall submit the filing materials to the local branches at the prefectural city level of the NMPA. In case of any amendment to matters stated in the filings, such amendment shall be filed with the original filing department. The Class II and Class III medical devices shall be subject to the product registration administration.

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Regulations Related to Foreign Investment

Since January 1, 2020, the Foreign Investment Law of the People’s Republic of China (《中華人民共和國外商投資法》) (the “Foreign Investment Law”) promulgated by the National People’s Congress has come into effect. The Law of the People’s Republic of China on Sino-Foreign Equity Joint Ventures and the Law of the People’s Republic of China on Wholly Foreign-Owned and Law of the People’s Republic of China on Sino-Foreign Cooperative Joint Ventures abolished at the same time. Since then, the Foreign Investment Law has become the basic law regulating foreign-invested enterprises wholly or partially invested by foreign investors. While the organisation form, institutional framework and standard of conduct of foreign-invested enterprises shall be subject to the provisions of the Company Law of the PRC and other laws. The PRC government will implement the management system of pre-entry national treatment and the Negative List for foreign investment abolished the original approval and filing administration system for the establishment and change of foreign-invested enterprises. Pre-entry national treatment refers to the treatment accorded to foreign investors and their investments at the stage of investment entry which is no less favorable than the treatment accorded to domestic investors and their investments. Negative List refers to a special administrative measure for the entry of foreign investment in specific sectors as imposed by the PRC. The PRC accords national treatment to foreign investment outside of the Negative List. The current Negative List is the Special Management Measures (the “Negative List”) for the Access of Foreign Investment (2020 Revision) (《外商投資准入特別管理措施(負面清單)(2020年版)》) issued by the NDRC and the MOFCOM on June 23, 2020, and came into effect on July, 23, 2020 which lists the special management measures for foreign investment access for industries regulated by the Negative List, such as equity requirements and senior management requirements.

While strengthening investment promotion and protection, the Foreign Investment Law further regulates foreign investment management and proposes the establishment of a foreign investment information reporting system that replaces the original foreign investment enterprise approval and filing system of the Ministry of Commerce. The foreign investment information reporting is subject to the Foreign Investment Information Reporting Method (《外商投資信息報告辦法》) jointly developed by the Ministry of Commerce (the “MOF”) and the State Administration for Market Regulation (the “SAMR”), which came into effect on January 1, 2020. According to the Foreign Investment Information Reporting Method, foreign investors who directly or indirectly carry out investment activities in China shall submit investment information to the competent commercial department through the enterprise registration system and the National Enterprise Credit Information Publicity System and the reporting methods include initial reports, change reports, cancellation reports, and annual reports.

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Intellectual Property

Patent

The Patent Law of the People’s Republic of China (《中華人民共和國專利法》) (the “Patent Law”) is revised by the SCNPC on October 17, 2020 and will take effect on June 1, 2021. According to the current Patent Law, revised on December 27, 2008 and taking effect on October 1, 2009, when the invention or utility model patent is granted, unless otherwise stipulated in the Patent Law, without the approval of the patent owner, no entity or person shall implement the relevant patent, that is, manufacture, use, offer to sell, sell or import the patented products for business purpose, or use the patented method and use, offer to sell, sell or import the products directly obtained with the patented method. Implementing the patent without the approval of the patent owner constitutes the infringement of patent rights. Any dispute in connection with this shall be resolved by the relevant parties through negotiation. If the relevant parties refuse to negotiate or the negotiation fails, the patent owner or the relevant stakeholders may file a lawsuit in the people’s court or turn to the patent administration authorities for handling.

Trademark

According to the Trademark Law of the People’s Republic of China (《中華人民共和國商標法》) revised by the SCNPC on April 23, 2019 and taking effect on November 1, 2019 (the “Trademark Law”), the registered trademark has a validity period of 10 years starting from the registration date. The trademark registrant enjoys the exclusive right to use the trademark. Any dispute in connection with the activities the infringe the exclusive right to use a registered trademark set out in Article 57 of the Trademark Law shall be resolved by the relevant parties through negotiation. If the relevant parties refuse to negotiate or the negotiation fails, the trademark registrant or the relevant stakeholders may file a lawsuit in the people’s court or turn to the industrial and commercial administrative department for handling.

Labor and Social Security

According to the Labor Law of the People’s Republic of China (《中華人民共和國勞動法》) taking effect on January 1, 1995 and revised on December 29, 2018 and the Labor Contract Law of the People’s Republic of China (《中華人民共和國勞動合同法》) taking effect on January 1, 2008 and revised on December 28, 2012, a labor contract shall be signed when the employer establishes labor relationship with the worker. The labor contracts shall be signed in written. When agreement is reached after negotiation, labor contracts, including fixed term labor contract, open term labor contract or labor contract based on the completion of work, shall be signed, and the salary shall be no less than the local minimum wage standard. The employer and the worker shall each fully perform its/his obligations in accordance with the labor contract.

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According to Social Insurance Law of the People’s Republic of China (《中華人民共和國社會保險法》) issued by the SCNPC on October 28, 2010 and implemented on July 1, 2011 and revised on December 29, 2018, the employers shall sign labor contracts with the employees and maintain the social insurance of the employees according to law, including basic pension insurance, basic medical insurance, work-related injury insurance, unemployment insurance and birth insurance. According to Provisional Regulations on Collection and Payment of Social Insurance Premiums (《社會保險費徵繳暫行條例》), Regulations on Work-related Injury Insurance (《工傷保險條例》), Regulations on Unemployment Insurance (《失業保險條例》) and Provisional Measures on Birth Insurance of Employees (《企業職工生育保險試行辦法》), enterprises must provide employees with social insurance, including basic pension insurance, unemployment insurance, birth insurance, work-related injury insurance and basic medical insurance. The enterprises shall go through the social insurance registration procedures at the local social insurance agencies and pay and withhold the relevant social insurance premiums for or on behalf of the employees. Social Insurance Law of the People’s Republic of China (《中華人民共和國社會保險法》) issued by covers the basic pension insurance, unemployment insurance, birth insurance, work-related injury insurance and basic medical insurance and sets out in detail the obligations and liabilities of the employers according to the relevant social insurance laws and regulations.

According to Regulations on Management of Housing Provident Fund (《住房公積金管理條例》) issued by the State Council on April 3, 1999 and revised and implemented on March 24, 2019, the enterprises shall fully pay the housing provident fund contribution for the employees on time, with the contribution ratio no less than 5% of the average monthly salary of the relevant employee in the previous year. The housing provident fund contribution paid by the employees and the employers shall be owned by the employees.

Foreign Exchange

The Regulations on Foreign Exchange Control of the PRC (《中華人民共和國外匯管理條例》) (the “Regulations on Foreign Exchange Control”) issued by the State Council on January 29, 1996 and implemented on April 1, 1996, which was revised on January 14, 1997 and August 5, 2008 respectively, is the key foreign exchange control regulation in force, applicable to the foreign exchange income and payment and foreign exchange operation activities of the domestic institutions and domestic individuals in China and the foreign exchange payment and collection and foreign exchange operation activities of the overseas institutions and overseas individuals in China. According to the Regulations on Foreign Exchange Control, the domestic institutions and domestic individuals are permitted to retain the foreign exchange. They are no longer subject to forced sale or settlement of foreign exchange, and their foreign exchange income may be repatriated to China or deposited overseas. For the current account foreign exchange income of the domestic enterprise, the enterprise may retain or sell to the financial institution engaged in foreign exchange settlement and sale business at its discretion according to the needs. For the current account foreign exchange payment of the domestic enterprise, the enterprise may pay with its own foreign exchange if it has valid documents or purchase foreign exchange from the financial institution engaged in foreign exchange settlement and sale business to make payment according to the needs.

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According to the Decision of the State Council on Canceling and Adjusting A Batch of Items Requiring Administrative Approval (《國務院關於取消和調整一批行政審批項目等事項的決定》) issued by the State Council on October 23, 2014, SAFE and its branches canceled the review and approval on the foreign exchange settlement for the repatriation of funds raised abroad under the overseas listed foreign capital stock account. In addition, according to the Notice on Relevant Issue Concerning the Administration of Foreign Exchange for Overseas Listing (《關於境外上市外匯管理有關問題的通知》) issued by the SAFE on December 26, 2014, the domestic companies shall register the overseas listed with the foreign exchange control bureau located at its registered address in 15 working days after the completion of the overseas listing and issuance. The funds raised by the domestic companies through overseas listing may be repatriated to China or deposited overseas, provided that the intended use of the fund shall be consistent with the contents of the prospectus and other public disclosure documents. According to the Notice of SAFE on Reforming and Standardizing Capital Account Foreign Exchange Settlement Administration Policies (《國家外匯管理局關於改革和規範資本項目結匯管理政策的通知》) issued by SAFE on June 9, 2016, it has been specified clearly in the relevant policies that, for the capital account foreign exchange income subject to voluntary foreign exchange settlement (including the repatriation of the proceeds from overseas listing), the domestic institutions may conduct the foreign exchange settlement at the banks according to their operation needs. The proportion of the capital account foreign exchange income subject to voluntary foreign exchange settlement was tentatively set as 100%, provided that SAFE may adjust the aforesaid proportion according to the international payment balance status in good time.

On October 23, 2019, the SAFE released the Circular on Further Promoting Cross-border Trade and Investment Facilitation (《國家外匯管理局關於進一步促進跨境貿易投資便利化的通知》) (the “Circular 28”) which was implemented on the same date (except for Article 8.2, which became effective on January 1, 2020). Under Circular 28, besides foreign-invested enterprises engaged in investment business, non-investment foreign-invested enterprises are also permitted to make domestic equity investments with their capital funds under the condition that the Negative List 2019 are not violated and the relevant domestic investment projects are true and compliant.

According to the Circular on Optimizing Administration of Foreign Exchange to Support the Development of Foreign-related Business (《國家外匯管理局關於優化外匯管理支持涉外業務發展的通知》) issued by the SAFE on April 10, 2020, eligible enterprises are allowed to make domestic payments by using their capital, foreign credits and the income under capital accounts of overseas listing, without the need to provide the evidential materials concerning authenticity of such capital for banks in advance, provided that their utilized capital shall be authentic and in line with provisions, and conform to the prevailing administrative regulations on the use of income under capital accounts. The concerned bank shall conduct spot checks in accordance with the relevant requirements.

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Tax

Enterprise Income Tax

According to the Corporate Income Tax Law of the People’s Republic of China (《中華人民共和國企業所得稅法》), which was promulgated on March 16, 2007, came into effect on January 1, 2008 and amended by the SCNPC on February 24, 2017 and December 29, 2018, and Implementation Regulations for the Corporate Income Tax Law of the People’s Republic of China (《中華人民共和國企業所得稅法實施條例》), which was promulgated by the State Council on December 6, 2007 and came into effect on January 1, 2008, and amended by the State Council on April 23, 2019 and came into effect on the same date, all the domestic enterprises in China (including foreign-invested enterprises) shall be subject to enterprise income tax at the uniform tax rate of 25%, except for the high-tech enterprises provided by the state, which will be subject to enterprise income tax at the reduced rate of 15%, or the qualified small low-profit enterprises, which will enjoy the reduced enterprise income tax rate of 20%.

Value-added Tax

The Provisional Regulations on Value-added Tax of the People’s Republic of China (《中華人民共和國增值稅暫行條例》), which was promulgated on December 13, 1993, came into effect on January 1, 1994, and last amended on November 19, 2017, and the Detailed Implementing Rules of the Provisional Regulations on Value-added Tax of the People’s Republic of China (《中華人民共和國增值稅暫行條例實施細則》), which was promulgated on December 25, 1993 and came into effective on the same date, and was amended on December 15, 2008 and October 28, 2011, came into effect on November 1, 2011 set out that all taxpayers selling goods or providing processing, repairing or replacement services, sales of services, intangible assets and immovable assets and importing goods in China shall pay a value-added tax. A tax rate of 17% shall be levied on general taxpayers selling goods and services, leasing of tangible movable assets or importing goods whereas the applicable rate for the export of goods by taxpayers shall be nil, unless otherwise stipulated. According to the Notice of the Ministry of Finance and the SAT on Adjusting Value added Tax Rates (《財政部、國家稅務總局關於調整增值稅稅率的通知》) issued on April 4, 2018 and became effective on May 1, 2018, the deduction rates of 17% and 11% applicable to the taxpayers who have VAT taxable sales activities or imported goods are adjusted to 16% and 10%, respectively. According to the Notice of the Ministry of Finance, the SAT and the General Administration of Customs on Relevant Policies for Deepening Value Added Tax Reform (《關於深化增值稅改革有關政策的公告》) issued on March 20, 2019 and became effective on April 1, 2019, the VAT rate was reduced to 13% and 9%, respectively.

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AUSTRALIA LAWS AND REGULATIONS

Clinical Trials

Overview

There are two alternative pathways relating to the regulation of clinical trials with respect to unapproved therapeutic goods. The Clinical Trial Notification scheme, or CTN, and the Clinical Trial Approval scheme, or CTA. The majority of trials conducted in Australia obtain regulatory approvals via the CTN.

While the choice between the two schemes is a matter for the sponsor of the clinical trial (“Sponsor”), the relevant HREC must approve the scheme being used. The sponsor of a clinical trial must be an Australian entity.

HREC approval will generally depend on whether it has access to appropriate scientific and technical expertise in order to assess the safety of the product. The HREC is responsible for assessing the scientific validity of the trial design, the balance of risk versus harm of the therapeutic good(s) and the overall ethical acceptability of the trial.

Regardless of the scheme used the clinical trial must be undertaken in accordance with the:

• ICH Guidelines for GCP as annotated by the TGA;

• National Statement on Ethical Conduct in Human Research; and

• procedural protocol as approved by the HREC responsible for monitoring the conduct of the trial.

Trials under the CTN process are not required to provide information to the TGA in relation to the product or trial outcomes other than are required by the CTN notification form, which requires identification of the Sponsor, the type of trial (and trial details), details of the trial site, and details of the product being studied (including among others, indication, formulation and route of administration). The TGA can request further information. HREC approval is required before any clinical trial can commence. The Sponsor is also required to notify the TGA of the completion of the clinical trial and the reason for completion.

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Clinical Trial Agreements and Indemnities

While there is no statutorily mandated form of clinical trial agreement or the indemnities required to be given by a Sponsor, standard forms for such agreements and indemnities are published by the peak bodies for pharmaceutical manufacturers (Medicines Australia) and medical devices manufacturers (Medical Technology Association of Australia).

HRECs usually require that agreements are in this standard form and that the standard form of indemnity is provided. This requires the Sponsor indemnify the institution undertaking the clinical trial for all claims made by participants and any children of the participants relating to the administration or use of the product being studied. There are limited exceptions from the indemnity including negligent or wrongful acts of the institution or investigators. States and territories may impose additional requirements. For example, Tasmania requires specific confidentiality provisions.

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OVERVIEW

We are an innovative vaccine company with a high-value prophylactic and therapeutic vaccine pipeline driven by in-house developed technology platforms. The history of our Group can be traced back to April 2009, when our Company was founded by Dr. Wang in Beijing as a limited liability company. For details of the background and experience of Dr. Wang, please refer to the section headed “Directors, Supervisors and Senior Management” in this document.

On December 20, 2020, the promoters of the Company entered into a promoters’ agreement, pursuant to which, the promoters of the Company agreed to convert the Company into a joint stock limited liability company with a registered capital of RMB25,920,000. The conversion was completed on December 31, 2020.

KEY MILESTONES

The following table sets forth the key milestones of our business and corporate development:

Year Key milestones and achievements

October 2016 We completed the pilot test for ADV110.

February 2017 We established our principal operating subsidiary, Suzhou Advaccine.

March 2017 We completed the Round I Investment (as defined below) and raised approximately RMB20 million.

July 2018 We initiated the Phase I clinical trial of ADV110 in Australia.

November 2019 We successfully completed the Phase I clinical trial of ADV110.

January 2020 We entered into a memorandum of understanding with Inovio relating to the initiation of co-development of pGX9501/INO-4800 against COVID-19.

February 2020 We completed the Round II Investment (as defined below) and raised approximately RMB40 million.

June 2020 We completed the Round III Investment (as defined below) and raised approximately RMB42 million.

July 2020 We obtained the umbrella approval for initiation of Phase I/II clinical trials of pGX9501 from the NMPA.

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Year Key milestones and achievements

September 2020 We initiated the Phase I clinical trial of pGX9501 and also received the approval for the commencement of Phase II clinical trial of ADV110 in Australia.

We acquired Suzhou Si’ao with a manufacturing center of over 18,000 square meters.

November 2020 We received an approval letter from the Ethics Committee of Jiangsu Provincial Center for Disease Control and Prevention (江蘇省疾病預防控制中心倫理審查委員會) for the commencement of Phase II clinical trial of pGX9501.

We completed the Round IV Investment (as defined below) and raised approximately RMB220 million.

December 2020 We commenced the Phase II clinical trial of pGX9501 and successfully completed the enrollment as well as the first dosing of all planned trial subjects.

We entered into the collaboration agreement with Inovio relating to joint development, manufacturing and commercialization of pGX9501/INO-4800.

Our Company was converted into a joint stock company.

Suzhou Advaccine was accredited as a “High- and New- Technology Enterprise”.

March 2021 We completed the Round V Investment (as defined below) and raised approximately RMB432 million.

MAJOR SHAREHOLDING CHANGES OF OUR COMPANY

Early Years

Our Company was established in the PRC as a limited liability company on April 8, 2009 with an initial registered capital of RMB500,000. Upon its establishment, our Company was wholly owned by Dr. Wang and his family member(s). With its ongoing development, the Company’s registered capital was increased to RMB10,000,000 by August 2015. In July 2016, as a reward and repayment for the capital support provided by Dr. Ma at our early development stage, 25% equity interest of our Company was transferred to Dr. Ma, upon completion of which, our Company was owned as to 75% by Ms. Yu and 25% by Dr. Ma. Dr. Ma is our Supervisor and the mother of Mr. Lunan ZHANG (張璐楠), one of our Executive Directors.

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Since its establishment, our Company has undertaken a series of capital increases to raise funds for our business development and to bring in new shareholders to our Company. The major shareholding changes of our Company are set out below:

Round I Investment

On December 23, 2016, our Company, Ms. Yu, Dr. Ma and Dr. Wang entered into a capital increase agreement with Shenzhen Dachen Chuanglian Equity Investment Fund Partnership (Limited Partnership) (深圳市達晨創聯股權投資基金合夥企業(有限合夥)) (“Dachen Chuanglian”), Jiaxing Stars Xuanyuan Investment Partnership (Limited Partnership) (嘉興星空軒轅投資合夥企業(有限合夥)) (“Stars Xuanyuan”), Nanjing Heheng Investment Center (Limited Partnership) (南京和恒投資中心(有限合夥)) (“Heheng Investment”) and Shenzhen Taiji Investment Enterprise (Limited Partnership) (深圳泰極投資企業(有限合夥)) (“Taiji Investment”, together with Dachen Chuanglian, Stars Xuanyuan, Heheng Investment, collectively, the “Round I Investors”), pursuant to which the Round I Investors agreed to subscribe the increased registered capital of our Company of RMB2,500,000 at a total consideration of RMB20,000,000 (the “Round I Investment”). The consideration was determined based on arm’s length negotiation between the parties taking into account the Company’s research and development progress, pipeline candidates, management team, future prospects and strategic needs. The following table sets forth details of the Round I Investment:

Date by which the Registered capital consideration was No. Name of investors subscribed Consideration fully settled

1. Dachen Chuanglian RMB1,250,000 RMB10,000,000 December 30, 2016 2. Stars Xuanyuan RMB625,000 RMB5,000,000 April 27, 2017 3. Heheng Investment RMB375,000 RMB3,000,000 December 29, 2016 4. Taiji Investment RMB250,000 RMB2,000,000 January 3, 2017

Upon completion of the Round I Investment in April 2017, the registered capital of our Company was increased to RMB12,500,000 and our Company was owned as to 60% by Ms. Yu, 20% by Dr. Ma, 10% by Dachen Chuanglian, 5% by Stars Xuanyuan, 3% by Heheng Investment and 2% by Taiji Investment, respectively. For further details, please see “—Pre-[REDACTED] Investments.”

Establishment of Domestic Shareholding Platform

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On October 23, 2017, Advaccine Investment entered into transfer agreements with Ms. Yu and Dr. Ma, respectively, pursuant to which Ms. Yu and Dr. Ma agreed to transfer to Advaccine Investment the share capital of RMB1,125,000 and RMB375,000, representing 9% and 3% of the then registered capital of the Company, at a consideration of RMB1,125,000 and RMB375,000, respectively.

Upon completion of the aforesaid equity transfers in January 2018, our Company was owned as to 51.00% by Ms. Yu, 17.00% by Dr. Ma, 12.00% by Advaccine Investment, 10.00% by Dachen Chuanglian, 5.00% by Stars Xuanyuan, 3.00% by Heheng Investment and 2.00% by Taiji Investment, respectively.

As of the Latest Practicable Date, Advaccine Investment was owned by Ms. Yu, Dr. Ma and Ms. Zhou LU (陸洲), our Supervisor, as to 68.60%, 22.87% and 8.54%, respectively. Ms. Yu serves as the general partner of Advaccine Investment and is entitled to exercise the voting rights attaching to Shares owned by Advaccine Investment. See “Appendix VII—Statutory and General Information” for details of our incentive scheme.

Round II Investment

On December 30, 2019, our Company, together with the then shareholders, entered into a capital increase agreement with Small Median Size Enterprises Development Fund (Shenzhen Limited Partnership) (中小企業發展基金(深圳有限合夥)) (“SMED”), Shanghai Lianzhi Venture Investment Management Center (Limited Partnership) (上海聯知創業投資管理中心 (有限合夥)) (“Shanghai Lianzhi”), Suzhou Hi-tech Fengqiao Emerging Industries Investment Co., Ltd. (蘇州高新楓橋新興產業投資有限公司)(“Fengqiao Investment”) and Chengdu Deshang Kuayue Equity Investment Fund Center (Limited Partnership) (成都德商跨越股權投資基金中心(有限合夥)) (“Deshang Kuayue”, together with SMED, Shanghai Lianzhi and Fengqiao Investment, collectively, the “Round II Investors”), pursuant to which the Round II Investors agreed to subscribe the increased registered capital of our Company of RMB2,500,000 at a total consideration of RMB40,000,000 (the “Round II Investment”). The consideration was determined based on arm’s length negotiation between the parties taking into account the Company’s research and development progress, pipeline candidates, management team, future prospects and strategic needs. The following table sets forth details of the Round II Investment:

Date by which the Registered capital consideration was No. Name of investors subscribed Consideration fully settled

1. SMED RMB1,250,000 RMB20,000,000 April 1, 2020 2. Shanghai Lianzhi RMB312,500 RMB5,000,000 March 9, 2020 3. Fengqiao Investment RMB562,500 RMB9,000,000 March 3, 2020 4. Deshang Kuayue RMB375,000 RMB6,000,000 March 13, 2020

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Upon completion of the Round II Investment in April 2020, the registered capital of our Company was increased to RMB15,000,000 and our Company was owned as to approximately 42.50% by Ms. Yu, 14.17% by Dr. Ma, 10% by Advaccine Investment, 8.33% by Dachen Chuanglian, 8.33% by SMED, 4.17% by Stars Xuanyuan, 3.75% Fengqiao Investment, 2.50% by Heheng Investment, 2.50% by Deshang Kuayue, 2.08% by Shanghai Lianzhi and 1.67% by Taiji Investment, respectively. For further details, please see “—Pre-[REDACTED] Investments”.

Round III Investment

On March 9, 2020, our Company, together with the then shareholders, entered into a capital increase agreement with Penyao Environmental Protection Co., Ltd. (鵬鷂環保股份有限公司)(“Penyao”) and Tianjin Ringpu Bio-Technology Co., Ltd. (天津瑞普生物技術股份有限公司)(“Ringpu”), pursuant to which Penyao and Ringpu agreed to subscribe RMB1,285,714 and RMB514,286 of our registered capital at the consideration of RMB30 million and RMB12 million, respectively (the “Round III Investment”). As a result, our registered capital was increased to RMB16,800,000. The considerations were determined based on arm’s length negotiation between the parties taking into account the Company’s research and development progress, pipeline candidates, management team, future prospects and strategic needs. The following table sets forth details of the Round III Investment:

Registered Date by which capital the consideration No. Name of investor subscribed Consideration was fully settled

1. Ringpu RMB514,286 RMB12,000,000 March 13, 2020 2. Penyao RMB1,285,714 RMB30,000,000 July 24, 2020

On June 2, 2020, Stars Xuanyuan transferred its capital contribution of RMB625,000, representing approximately 3.84% of the then equity interest in the Company, to its affiliate, Jiaxing Stars Xingxin Equity investment Partnership (Limited Partnership) (嘉興星空星欣股權投資合夥企業(有限合夥)) (“Stars Xingxin”).

Upon completion of the Round III Investment and the above equity transfer between Stars Xuanyuan and Stars Xingxin, the registered capital of our Company was increased to RMB16,800,000 and our Company was owned as to approximately 37.95% by Ms. Yu, 12.65% by Dr. Ma, 8.93% by Advaccine Investment, 7.65% by Penyao, 7.44% by Dachen Chuanglian, 7.44% by SMED, 3.72% by Stars Xingxin, 3.35% by Fengqiao investment, 3.06% by Ringpu, 2.23% by Heheng Investment, 2.23% by Deshang Kuayue, 1.86% by Shanghai Lianzhi and 1.49% by Taiji Investment, respectively. For further details, please see “—Pre-[REDACTED] Investments.”

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Acquisition of Suzhou Si’ao

In September 2020, our Company acquired 100% equity interest of Suzhou Si’ao at a total consideration of RMB350,237,700. The consideration of the Suzhou Si’ao Acquisition was determined after arm’s length negotiations between our Company and Suzhou Siao’s shareholders, with reference to the valuation of shareholders’ equity of Suzhou Si’ao as of June 30, 2020 and was settled by subscription of RMB5,600,000 increased registered capital of our Company, representing 25% of our total enlarged registered capital, by the then shareholders’ of Suzhou Si’ao. Details are set forth below:

Names of the then shareholders of Suzhou Registered capital No. Si’ao subscribed Consideration

1. Kexiang Hi-tech RMB2,878,400 (representing RMB180,022,177.8 Development Co., approximately 12.85% (representing 51.40% Ltd. (科翔高新技術發 equity interest of the equity interest of 展有限公司) Company upon completion Suzhou Si’ao) (“Kexiang Hi-tech”) of the capital increase)

2. Hangzhou Chuangqian RMB1,120,000 (representing RMB70,047,540 Investment approximately 5.00% (representing 20.00% Partnership (Limited equity interest of the equity interest of Partnership) Company upon completion Suzhou Si’ao) (杭州創乾投資合夥企 of the capital increase) 業(有限合夥)) (“Hangzhou Chuangqian”)

3. Suzhou Kexin Biotech RMB840,000 (representing RMB52,535,655 Partnership (Limited approximately 3.75% (representing 15.00% Partnership) (蘇州科 equity interest of the equity interest of 欣生物技術合夥企業 Company upon completion Suzhou Si’ao) (有限合夥)) (“Kexin of the capital increase) Biotech”)

4. Jiaxing Dingyue RMB215,387 (representing RMB13,470,842.4174 Investment approximately 0.96% (representing Partnership (Limited equity interest of the approximately 3.85% Partnership) (嘉興鼎 Company upon completion equity interest of 越投資合夥企業(有限 of the capital increase) Suzhou Si’ao) 合夥)) (“Dingyue Investment”)

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Names of the then shareholders of Suzhou Registered capital No. Si’ao subscribed Consideration

5. Jianlun ZHAO (趙劍侖) RMB172,306 (representing RMB10,776,463.79 (“Mr. Zhao”) approximately 0.77% (representing equity interest of the approximately 3.08% Company upon completion equity interest of of the capital increase) Suzhou Si’ao)

6. Hangzhou Darui Xiading RMB172,306 (representing RMB10,776,463.79 I Investment approximately 0.77% (representing Management equity interest of the approximately 3.08% Partnership (Limited Company upon completion equity interest of Partnership) (杭州達 of the capital increase) Suzhou Si’ao) 瑞夏鼎壹投資管理合夥企業(有限合夥)) (“Darui Xiading”)

7. Beijing Xinshunshi RMB112,000 (representing RMB7,004,754 Technology 0.50% equity interest of (representing 2.00% Development Co., the Company upon equity interest of Ltd. (北京鑫順世科技 completion of the capital Suzhou Si’ao) 發展有限公司) increase) (“Xinshunshi”)

8. Advaccine Investment RMB89,600 (representing RMB5,603,803.2 0.40% equity interest of (representing 1.60% the Company upon equity interest of completion of the capital Suzhou Si’ao) increase)

Upon completion of the Suzhou Si’ao Acquisition in September 2020, the registered capital of our Company was increased to RMB22,400,000 and our Company was owned as to approximately 28.46% by Ms. Yu, 12.85% by Kexiang Hi-tech, 9.49% by Dr. Ma, 7.10% by Advaccine Investment, 5.74% by Penyao, 5.58% by Dachen Chuanglian, 5.58% by SMED, 5.00% by Hangzhou Chuangqian, 3.75% by Kexin Biotech, 2.79% by Stars Xingxin, 2.51% Fengqiao Investment, 2.30% by Ringpu, 1.67% by Heheng Investment, 1.67% Deshang Kuayue, 1.40% by Shanghai Lianzhi, 1.12% by Tianji Investment, 0.96% by Dingyue Investment, 0.77% by Mr. Zhao, 0.77% by Darui Xiading and 0.50% by Xinshunshi, respectively.

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Round IV Investment

In September 2020, our Company and Ms. Yu entered into the following capital increase agreements with certain investors and our registered capital was increased to RMB25,920,000 (the “Round IV Investment”). The consideration was determined based on arm’s length negotiation between the parties taking into account the Company’s research and development progress, pipeline candidates, management team, future prospects and strategic needs. The following table sets forth details of the Round IV Investment:

Date by Date of the which the capital increase Registered consideration No. agreement Name of investor capital subscribed Consideration was fully settled

1. September 18, Shenzhen Jenna RMB1,600,000 RMB100,000,000 November 18, 2020 Medical Technology 2020 Partnership (Limited Partnership) (深圳琴納醫藥科技合夥企業 (有限合夥)) (“Jenna”)

2. September 21, Shenzhen Zhongtian RMB528,000 RMB33,000,000 October 30, 2020 and Huijin Investment 2020 supplemented Center (Limited on September Partnership) (深圳中 29, 2020 天匯金投資中心(有限合夥)) (“Zhongtian Huijin”)

3. September 24, Hangzhou Chuangqian RMB640,000 RMB40,000,000 November 24, 2020 and 2020 supplemented on November 19, 2020

4. September 24, Stars Xuanyuan RMB80,000 RMB5,000,000 September 29, 2020 2020

5. September 24, Shanghai Lianzhi RMB80,000 RMB5,000,000 September 30, 2020 2020

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Date by Date of the which the capital increase Registered consideration No. agreement Name of investor capital subscribed Consideration was fully settled

6. September 25, Chengdu Tianfu RMB320,000 RMB20,000,000 October 30, 2020 Sanjiang Huawen 2020 Technology Investment Center (Limited Partnership) (成都天府三江驊文科技投資中心(有限合夥)) (“Sanjiang Huawen”)

7. September 25, Pengrui Jinghua RMB192,000 RMB12,000,000 September 28, 2020 (Shenzhen) 2020 Consulting (Limited Partnership) (鵬瑞菁華(深圳)諮詢合夥企業(有限合夥)) (“Pengrui Jinghua”)

8. September 25, Nanjing Zhixing RMB80,000 RMB5,000,000 October 19, 2020 Investment 2020 Management Partnership (Limited Partnership) (南京志行投資管理合夥企業 (有限合夥)) (“Zhixing Investment”)

Total: RMB3,520,000 RMB220,000,000

On November 18, 2020, Jiaxing Stars Kairui Equity Investment Partnership (Limited Partnership) (嘉興星空開睿股權投資合夥企業(有限合夥)) (“Stars Kairui”) and Advaccine Investment entered into a transfer agreement, pursuant to which Advaccine Investment agreed to transfer approximately 1.29% equity interest of our Company (representing RMB288,000 of the then registered capital of our Company) to Stars Kairui at a consideration of RMB18,000,000. Further details of the Round IV Investment are set out in the section headed “—Pre-[REDACTED] Investments”.

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Upon completion of the Round IV Investment, the shareholding structure of our Company was as follows:

Registered/ Share capital of Approximate No. Name of shareholders our Company shareholding (%)

1. Ms. Yu RMB6,375,000 24.59 2. Kexiang Hi-tech RMB2,878,400 11.10 3. Dr. Ma RMB2,125,000 8.20 4. Hangzhou Chuangqian RMB1,760,000 6.79 5. Jenna RMB1,600,000 6.17 6. Advaccine Investment RMB1,301,600 5.02 7. Penyao RMB1,285,714 4.96 8. Dachen Chuanglian RMB1,250,000 4.82 9. SMED RMB1,250,000 4.82 10. Kexin Biotech RMB840,000 3.24 11. Stars Xingxin RMB625,000 2.41 12. Fengqiao Investment RMB562,500 2.17 13. Zhongtian Huijin RMB528,000 2.04 14. Ringpu RMB514,286 1.98 15. Shanghai Lianzhi RMB392,500 1.51 16. Heheng Investment RMB375,000 1.45 17. Deshang Kuayue RMB375,000 1.45 18. Sanjiang Huawen RMB320,000 1.23 19. Stars Kairui RMB288,000 1.11 20. Taiji Investment RMB250,000 0.96 21. Dingyue Investment RMB215,387 0.83 22. Pengrui Jinghua RMB192,000 0.74 23. Mr. Zhao RMB172,306 0.66 24. Darui Xiading RMB172,306 0.66 25. Xinshunshi RMB112,000 0.43 26. Zhixing Investment RMB80,000 0.31 27. Stars Xuanyuan RMB80,000 0.31

Total RMB25,920,000 100

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Conversion into a Joint Stock Limited Liability Company

On December 20, 2020, our Board passed resolutions approving, among other things, the conversion of our Company from a limited liability company into a joint stock limited liability company with our Chinese name changed accordingly. Pursuant to the promoters’ agreement dated December 20, 2020 entered into by all the then Shareholders, all promoters approved the conversion of the net assets value of our Company as of November 30, 2020 into 25,920,000 Shares. On the same date, our Company convened our inaugural meeting and our first general meeting, and passed related resolutions approving, among other things, the conversion into a joint stock limited liability company and the updated articles of association. Upon the completion of the conversion, the registered capital of our Company was RMB25,920,000 divided into 25,920,000 Shares with a nominal value of RMB1.00 each, which were subscribed by all the then Shareholders in proportion to their respective equity interest in our Company before the conversion. The conversion was completed on December 31, 2020.

Round V Investment

In March 2021, our Company and Ms. Yu entered into the following capital increase agreements with Matrix Partners China VI, L.P. (“Matrix VI”), Matrix Partners China VI-A, L.P. (“Matrix VI-A”), Hangzhou Chuangqian, Jiaxing Stars Yuheng Equity Investment Partnership (Limited Partnership) (嘉興星空玉衡投資合夥企業(有限合夥)) (“Stars Yuheng”), Hangzhou Ruizhao Investment Management Partnership (Limited Partnership) (杭州睿照投資管理合夥企業(有限合夥)) (“Ruizhao Investment”), Mr. Zhao, Jiaxing Tianfu Huasheng Equity Investment Partnership (嘉興天府驊勝股權投資合夥企業(有限合夥)) (“Tianfu Huasheng”), Pingtan Comprehensive Experimental Zone Watson Huijia Equity Investment Partnership (Limited Partnership) (平潭綜合實驗區沃生慧嘉股權投資合夥企業(有限合夥)) (“Watson Huijia”), Goldstream Healthcare Focus Fund SP (“Goldstream”) and United Strength Fortune Limited (“United Strength”, together with Matrix VI, Matrix VI-A, Mr. Zhao, Goldstream, Chuangqian Investment, Stars Yuheng, Ruizhao Investment, Tianfu Huasheng and Watson Huijia, collectively, the “Round V Investors”), respectively, pursuant to which the Round V Investors agreed to subscribe the increased registered capital of our Company of RMB3,456,000 at a total consideration of RMB432,000,000 (the “Round V Investment”). The consideration was determined based on arm’s length negotiation between the parties taking into account the Company’s research and development progress and pipeline candidates, management team, future prospects and strategic needs. The following table sets forth details of the Round V Investment:

Date of the Registered Date by which the capital increase Name of capital consideration was No. agreement investors subscribed Consideration fully settled

1. March 1, 2021 Mr. Zhao RMB80,000 RMB10,000,000 March 5,2021 2. March 1, 2021 Ruizhao RMB160,000 RMB20,000,000 March 4, 2021 Investment 3. March 1, 2021 Watson Huijia RMB80,000 RMB10,000,000 March 4, 2021 4. March 2, 2021 Stars Yuheng RMB256,000 RMB32,000,000 March 8, 2021 March 5, 2021 5. March 3, 2021 Matrix VI RMB1,443,680 RMB180,460,000 March 15, 2021 6. March 3, 2021 Matrix VI-A RMB156,320 RMB19,540,000 March 16,2021

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Date of the Registered Date by which the capital increase Name of capital consideration was No. agreement investors subscribed Consideration fully settled

7. March 3, 2021 Hangzhou RMB160,000 RMB20,000,000 March 8, 2021 Chuangqian 8. March 3, 2021 Tianfu Huasheng RMB160,000 RMB20,000,000 March 5, 2021 9. March 3, 2021 Goldstream RMB52,000 RMB6,500,000 March 11, 2021 10. March 3, 2021 United Strength RMB908,000 RMB113,500,000 March 11, 2021

Upon completion of the Round V Investment in March 2021, the shareholding structure of our Company was as follows:

Registered/ Share capital of Approximate No. Name of shareholders our Company shareholding (%)

1. Ms. Yu RMB6,375,000 21.70 2. Kexiang Hi-tech RMB2,878,400 9.80 3. Dr. Ma RMB2,125,000 7.23 4. Hangzhou Chuangqian RMB1,920,000 6.54 5. Jenna RMB1,600,000 5.45 6. Matrix VI RMB1,443,680 4.91 7. Advaccine Investment RMB1,301,600 4.43 8. Penyao RMB1,285,714 4.38 9. Dachen Chuanglian RMB1,250,000 4.26 10. SMED RMB1,250,000 4.26 11. United Strength RMB908,000 3.09 12. Kexin Biotech RMB840,000 2.86 13. Stars Xingxin RMB625,000 2.13 14. Fengqiao Investment RMB562,500 1.91 15. Zhongtian Huijin RMB528,000 1.80 16. Ringpu RMB514,286 1.75 17. Shanghai Lianzhi RMB392,500 1.34 18. Nanjing Heheng RMB375,000 1.28 19. Deshang Kuayue RMB375,000 1.28 20. Sanjiang Huawen RMB320,000 1.09 21. Stars Kairui RMB288,000 0.98 22. Stars Yuheng RMB256,000 0.87 23. Mr. Zhao RMB252,306 0.86 24. Taiji Investment RMB250,000 0.85 25. Dingyue Investment RMB215,388 0.73 26. Pengrui Jinghua RMB192,000 0.65 27. Darui Xiading RMB172,306 0.59

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Registered/ Share capital of Approximate No. Name of shareholders our Company shareholding (%)

28. Ruizhao Investment RMB160,000 0.54 29. Tianfu Huasheng RMB160,000 0.54 30. Matrix VI-A RMB156,320 0.53 31. Xinshunshi RMB112,000 0.38 32. Stars Xuanyuan RMB80,000 0.27 33. Zhixing Investment RMB80,000 0.27 34. Watson Huijia RMB80,000 0.27 35. Goldstream RMB52,000 0.18

Total RMB29,376,000 100

Our PRC Legal Advisors have confirmed that the above mentioned equity transfers, capital increase and joint-stock conversion have been properly and legally completed in all material aspects and all requisite regulatory approvals have been obtained in accordance with the applicable PRC laws and regulations.

SUBSIDIARIES OF OUR COMPANY

Suzhou Advaccine

Suzhou Advaccine was established in the PRC on February 17, 2017 as a wholly-owned and principal operating subsidiary of our Company for research and development. Upon its establishment, the initial registered capital of Suzhou Advaccine was RMB10,000,000, which was fully paid up by our Company in cash. In March 2020, the registered capital of Suzhou Advaccine was increased to RMB30,000,000 and fully paid up in cash. The registered capital of Suzhou Advaccine was further increased to RMB60,000,000 in October 2020 and was paid up in cash. In January 2021, the registered capital of Suzhou Advaccine was further increased to RMB100,000,000 and fully paid up in cash.

Suzhou Si’ao

Suzhou Si’ao was established in the PRC on August 8, 2012 by the then shareholders of Suzhou Si’ao. In September 2020, our Company acquired 100% equity interest of Suzhou Si’ao for a total consideration of RMB350,237,700 from the then shareholders of Suzhou Si’ao. Upon completion of the Suzhou Si’ao Acquisition on September 30, 2020, Suzhou Si’ao became a wholly-owned subsidiary of our Company. Our PRC Legal Advisors confirmed that the Suzhou Si’ao Acquisition has been properly and legally completed in accordance with applicable PRC laws and regulations. Suzhou Si’ao is acquired for manufacturing our in-house

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Advaccine (Shenzhen) Biotechnology Co., Ltd. (艾棣維欣(深圳)生物科技有限公司) (“Shenzhen Advaccine”)

Shenzhen Advaccine was established as a limited liability company in PRC on January 25, 2021 with a registered capital of RMB10,000,000. Since its establishment, Shenzhen Advaccine has been wholly owned by Suzhou Advaccine.

Advanced Vaccine Laboratories Pty Ltd (“AVL”)

AVL was incorporated as a proprietary company in Australia on July 18, 2017 with a registered capital of A$10,000. Since its incorporation, AVL has been wholly owned by the Company. AVL is established to conduct the clinical trials of ADV110 in Australia.

Advaccine Clinical Research Pty Ltd (“ACR”)

ACR was incorporated as a proprietary company in Australia on June 18, 2020 with a registered capital of A$10,000. Since its incorporation, ACR has been wholly owned by Suzhou Advaccine. ACR is principally engaged in conducting the clinical trials of ADV110 in Australia.

VOTING AGREEMENT

On September 1, 2020, Dr. Ma and Ms. Yu entered into the Voting Agreement, pursuant to which Dr. Ma agreed to grant Ms. Yu, as her true and lawful attorney, a voting proxy over all Shares held by her and Ms. Yu shall have the right to vote the Shares held by Dr. Ma, in her sole discretion, on all matters submitted to a meeting of Shareholders or on written resolutions to be voted on by Shareholders except for matters in respect of which Ms. Yu or Dr. Ma is required to abstain from voting pursuant to the Listing Rules or any other applicable laws and rules. The Voting Agreement is effective from the date of the agreement and will terminate automatically (i) after two years from the date of the agreement, or (ii) upon Dr. Ma ceasing to hold any of the Shares as contemplated under the agreement, whichever is earlier.

RELATIONSHIP WITH DR. WANG AND MS. YU

During the Track Record Period and up to the Latest Practicable Date, Ms. Yu had at all times controlled the voting rights attaching to more than 30% of the Shares of the Company through her direct equity ownership and the corporation controlled by her as well as the arrangement under the Voting Agreement. Dr. Wang is the spouse of Ms. Yu. Immediately upon completion of the [REDACTED], assuming that the [REDACTED] is not exercised, Ms. Yu will be entitled to exercise the voting rights attaching to approximately [REDACTED]% of our total issued share capital. Accordingly, there will be no Controlling Shareholders upon the [REDACTED].

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Management Independence

We have maintained independent management over the Group during the Track Record Period. We have the capabilities and personnel to operate all essential administrative functions, including but not limited to financial and accounting, human resources, business management and research and development on a stand-alone basis. We have also established the mechanism of conflict of interest, which ensures that Dr. Wang and Ms. Yu shall abstain from voting for transactions in which Dr. Wang or Ms. Yu is or will be deemed to have material interests. Our Independent Non-executive Directors are also appointed to advise on matters relating to, among others, any potential conflict of interests arising out of any transactions, and to provide an unbiased view to promote the interests of the Company and its Shareholders as a whole.

Financial Independence

Our Group has an independent financial system and the Board makes financial decisions according to our own business needs. We have established an independent finance department as well as implemented sound and independent audit, accounting and financial management systems. No bank accounts were or are shared with Dr. Wang, Ms. Yu or their close associates and the Company is able to open accounts with banks independently. We also have adequate internal resources and a credit profile to support our daily operations. As of the Latest Practicable Date, there were no outstanding loans or guarantees provided by, or granted to, Dr. Wang, Ms. Yu or their respective close associates. Therefore, our Directors are satisfied that we are financially independent from Dr. Wang and Ms. Yu.

Operational Independence

We have obtained all material licences, permits, approvals and certificates and completed all regulatory filings for conducting our business in the jurisdictions where we operate. We have access to suppliers independent of Dr. Wang and Ms. Yu. We have our own accounting and financial department, human resources and administration department, internal control department and technology department (including research and development function) which have been in operation and are expected to continue to operate. We have also established a set of internal control procedures and adopted corporate governance practices to facilitate the effective operation of our business.

Based on the above, the Directors are of the view that we are capable of carrying on our business independently of, and do not place undue reliance on Dr. Wang and Ms. Yu and their close associates after the [REDACTED].

MAJOR ACQUISITIONS, DISPOSALS AND MERGERS

During the Track Record Period and until the Latest Practicable Date, save for the Si’ao Acquisition, we did not conduct any other major acquisitions, disposals and mergers.

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PRE-[REDACTED] INVESTMENTS Summary of Details We have received several rounds of Pre-[REDACTED] Investments since our establishment. The following table sets forth a summary of details of the Pre-[REDACTED] Investments: Round I Round II Round III Round IV Round V Investment Investment Investment Investment Investment

Amount of registered capital RMB2,500,000 RMB2,500,000 RMB1,800,000 RMB3,520,000 RMB3,456,000 increased Number of Shares subscribed 2,500,000 2,500,000 1,800,000 3,520,000 3,456,000 Amount of consideration paid RMB20,000,000 RMB40,000,000 RMB42,000,000 RMB220,000,000 RMB432,000,000 Post-money valuation of RMB100,000,000 RMB240,000,000 RMB392,000,000 RMB1,620,000,000(1) RMB3,672,000,000(2) our Company Date of the investment December 23, 2016 December 30, 2019 March 9, 2020 September 18, 2020 March 1, 2021 agreement(s) July 6, 2020 September 21, 2020 March 2, 2021 September 24, 2020 March 3, 2021 September 25, 2020 March 5, 2021 September 29, 2020 November 18, 2020 November 19, 2020 Date of payment of April 27, 2017 April 1, 2020 July 24, 2020 November 24, 2020 March 16, 2021 full consideration Cost per Share paid under the RMB8.00 RMB16.00 RMB23.33 RMB62.50 RMB125.00 pre-[REDACTED] investment Discount to the [REDACTED](3) Approximately Approximately Approximately Approximately Approximately [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] Use of proceeds and whether they The proceeds raised from Round I Investment, Round II Investment, Round III Investment and 76% of Round IV Investment have been fully utilized have been fully used for our Company’s research and development clinical trials, daily operations and working capital. As of the Latest Practicable Date, the proceeds from Round V Investment had not been utilized. Lock-up The Pre-[REDACTED] Investors are subject to a lock up period of 12 months following the [REDACTED] according to the PRC Company Law. Strategic benefits of the At the time of the Pre-[REDACTED] Investments, our Directors were of the view that (i) our Company would benefit from Pre-[REDACTED] Investors the additional capital provided by the Pre-[REDACTED] Investors for our research and development, construction of brought to our Company production facilities as well as daily operations and their knowledge and experience and (ii) the Pre-[REDACTED] Investments demonstrated the Pre-[REDACTED] Investors’ confidence in the research and development capacities and prospects of our Group.

Notes: (1) The valuation of our Company increased significantly from the Round III Investment to the Round IV Investment, primarily because we received an umbrella approval from the NMPA for the initiation and conduct of Phase I and II clinical trials of pGX9501 in July 2020 and we acquired Suzhou Si’ao in September 2020. (2) The valuation of our Company increased significantly from Round IV Investment to Round V Investment is primarily because we successfully initiated Phase II clinical trials of pGX9501 as well as the first dosing of all planned trial subjects. Calculated on the basis of an [REDACTED] of HK$[REDACTED], being the mid-point of the indicative [REDACTED] range, and assuming that the [REDACTED] is not exercised, the valuation of the Company upon the [REDACTED] will be HK$[REDACTED] million. The increase of valuation of the Company from Round V Investment to the [REDACTED] is due to (i) the post-money valuation of the Company upon the completion of Round V Investment; (ii) the advancement in our drug candidates and our business growth; (iii) the premium attached to the Shares as they become freely tradeable when our Company becomes [REDACTED]; and (iv) the expected capital raising during the [REDACTED].

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(3) The discount is calculated based on the [REDACTED] of HK$[REDACTED], being the mid-point of the indicative [REDACTED] range.

The considerations of the Pre-[REDACTED] Investments were determined primarily based on an arm’s length negotiation among the relevant parties taking into account of our Company’s management team, research and development capabilities, future prospects and strategic needs. Please refer to the section headed “—Group Structure upon [REDACTED]” for the shareholding in our Company held by the Pre-[REDACTED] Investors immediately after completion of the [REDACTED].

Special Rights of the Pre-[REDACTED] Investors

The Pre-[REDACTED] Investors were granted certain special rights, including and among others, (i) the right to receive financial statements and other information of our Company and inspect facilities, records and books of our Company, (ii) the redemption right in certain circumstances, (iii) the anti-dilution right, (iv) the rights of first refusal in certain circumstances, (v) the pre-emptive right to purchase up to a pro rata share of any new shares which our Company may propose to issue and (vi) certain liquidation and dividend preferences attached to the Pre-[REDACTED] Investors. All the special rights have been terminated or are expected to be terminated upon the official acceptance of the filing of the [REDACTED] and will be resume automatically if the [REDACTED] is rejected, lapsed, or withdrawn by our Company.

Information of the Pre-[REDACTED] Investors

Our Pre-[REDACTED] Investors include certain Sophisticated Investors, such as dedicated healthcare funds and biotech funds as well as established funds with a focus on investments in the healthcare sector. Each of the Pre-[REDACTED] investors is an Independent Third Party and the background information of our major Pre-[REDACTED] Investors is set out below.

1. Matrix Partners China (經緯中國)

Each of Matrix VI and Matrix VI-A (collectively referred to as the “Matrix Partners”) is an exempted limited partnership organized and existing under the laws of the Cayman Islands. Matrix Partners are venture capital funds with a primary purpose of making investments in the PRC, mainly focusing on investment of companies in the advanced technology, mobile internet, healthcare and consumer sectors. The general partner of both Matrix VI and Matrix VI-A is Matrix China Management VI, L.P., whose general partner is Matrix China VI GP GP, Ltd., a Sophisticated Investor.

Upon completion of the [REDACTED] (assuming the [REDACTED] is not exercised), Matrix VI and Matrix VI-A will hold approximately [REDACTED]% and [REDACTED]% of our Shares, respectively.

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2. Dachen Chuanglian

Dachen Chuanglian is a limited partnership established in the PRC on November 17, 2016. It is principally engaged in equity investment business and managed by Shenzhen Dachen Caizhi Venture Investment Management Co., Ltd. (深圳市達晨財智創業投資管理有限公司)(“Dachen Caizhi”) as its general partner. Dachen Caizhi is a Sophisticated Investor managing 23 funds and has more than RMB30 billion assets under management. The limited partners of Dachen Chuanglian are Independent Third Parties. In addition to their investment in our Company, Dachen Caizhi also invested in, among others, CanSino Biologics Inc. (stock code: 6185), Aier Eye Hospital Group Co., Ltd (愛爾眼科醫院集團股份有限公司) (SZ: 300015) and Transcenta Holding (創勝集團). Upon completion of the [REDACTED] (assuming the [REDACTED] is not exercised), Dachen Chuanglian will hold approximately [REDACTED] of our Shares.

3. SMED

SMED is a limited partnership established with a fund size of RMB6 billion in the PRC and is principally engaged in private equity investment. SMED is managed by Shenzhen Guozhong Venture Capital Management Co., Ltd. (深圳國中創業投資管理有限公司) (“Shenzhen Guozhong”) as its general partner, a Sophisticated Investor, which is in turn directly owned as to 49% by Shenzhen Capital Group Co., Ltd. (深圳市創新投資集團有限公司). The portfolio companies of SMED includes RemeGen Co., Ltd. (stock code: 9995), Suzhou Zelgen Biopharmaceuticals Co., Ltd. (蘇州澤璟生物製藥股份有限公司) (SH: 688266) and Shenzhen Mindray Bio-Medical Electronics Co., Ltd. (深圳邁瑞生物醫療電子股份有限公司) (SZ: 300760), etc. Upon completion of the [REDACTED] (assuming the [REDACTED] is not exercised), SMED will hold approximately [REDACTED] of our Shares.

4. Hony Capital (弘毅投資)

United Strength is a limited liability company incorporated in British Virgin Islands on October 27, 2020, which is wholly owned by Expand Ocean Two Limited (“Expand Ocean”), an Independent Third Party. Goldstream, a segregated portfolio of Goldstream Capital Segregated Portfolio Company, is a limited liability company incorporated in the Cayman Islands on January 10, 2018, owned and managed by Goldstream Capital Management Limited (“Goldstream Capital”). Expand Ocean and Goldstream Capital are both entities under Hony Capital.

Hony Capital is a Sophisticated Investor focusing on opportunities in China, specializing in private equity, real estate, mutual fund, hedge fund and venture capital investment. Its total assets under management currently reach US$13 billion, and its portfolio companies include CSPC Pharmaceutical Group Limited (stock code: 1093), Simcere Pharmaceutical Group Limited (stock code: 2096), Consun Pharmaceutical Group Limited (stock code: 1681), I-Mab Biopharma (NASDAQ: IMAB), EpimAb Biotherapeutics, etc.

Upon completion of the [REDACTED] (assuming the [REDACTED] is not exercised), United Strength and Goldstream will hold approximately [REDACTED]% and [REDACTED]% of our Shares, respectively.

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5. Kexiang Hi-tech

Kexiang Hi-tech is a limited liability company established in the PRC and wholly-owned by Nantong Huaze Investment Co., Ltd. (南通華澤投資有限公司)(“Nantong Huaze”). Nantong Huaze is mainly engaged in investment management. Upon the completion of the [REDACTED], (assuming the [REDACTED] is not exercised), Kexiang Hi-tech will hold approximately [REDACTED]% of our Shares.

6. Hangzhou Chuangqian

Hangzhou Chuangqian, a venture capital investment fund, is a limited partnership established in the PRC on November 2, 2016. Hangzhou Chuanqian is managed by Hangzhou Maiqisi Investment Partnership (Limited Partnership) (杭州麥奇思投資合夥企業(有限合夥)) (“Maiqisi”), as its general partner. Besides having invested in our Company, Hangzhou Chuangqian has also invested in Chengdu Gimi Technology Co., Ltd. (成都極米科技股份有限公司), shares of which are listed on the Sci-Tech innovation board of Shanghai Stock Exchange (SH: 688696), Chemclin Diagnostics Technology Co., Ltd. (科美診斷技術股份有限公司), shares of which are listed on the Sci-Tech innovation board of Shanghai Stock Exchange (SH: 688468), etc. Upon completion of the [REDACTED] (assuming the [REDACTED]isnot exercised), Hangzhou Chuangqian will hold approximately [REDACTED] of our Shares.

7. Jenna

Jenna is a limited partnership established in the PRC and principally engaged in equity investment in pharmaceuticals and biotech industries. Jenna is managed by an Independent Third Party as its general partner. Upon completion of the [REDACTED] (assuming the [REDACTED] is not exercised), Jenna will hold approximately [REDACTED] of our Shares.

8. Penyao

Penyao was established as a limited liability company in the PRC and converted into a joint stock company on January 21, 2013, shares of which are listed on the ChiNext Market of Shenzhen Stock Exchange (SZ: 300664). Penyao is controlled by Yixing Penyao Investment Co., Ltd. (宜興鵬鷂投資有限公司), an investment management company, as to 30.31%. Upon completion of the [REDACTED] (assuming the [REDACTED] is not exercised), Penyao will hold approximately [REDACTED] of our Shares.

9. Stars Capital

Each of Stars Xuanyuan, Stars Xingxin, Stars Yuheng and Stars Kairui is a limited partnership established in the PRC and is principally engaged in equity investment and/or investment consulting businesses.

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Each of Stars Xuanyuan, Stars Xingxin and Stars Yuheng is managed by Jiaxing Stars Capital Investment Management Co., Ltd. (嘉興星空投資管理有限公司) as their general partner, which is in turn wholly owned and controlled by Guangyao Stars Capital Investment Management Co., Ltd. (成都光耀星空股權投資管理有限公司)(“Stars Capital”). Stars Kairui is directly managed by Star Capital as its general partner.

Upon completion of the [REDACTED] (assuming the [REDACTED] is not exercised), Stars Xuanyuan, Stars Xingxin, Stars Yuheng and Stars Kairui will hold approximately [REDACTED], [REDACTED], [REDACTED] and [REDACTED] of our Shares, respectively.

Public Float

[REDACTED], [REDACTED], [REDACTED] and [REDACTED] Unlisted Foreign Shares held by Matrix VI, Matrix VI-A, United Strength and Goldstream, respectively, will all be counted towards the public float for the purpose of Rule 8.08 of the Listing Rules after conversion into H Shares following the completion of the [REDACTED]. Other Shares held by our existing Shareholders will not be considered as part of the public float as the Shares are Domestic Shares which will not be converted into H Shares or [REDACTED] following the completion of the [REDACTED][, subject to the approval of [REDACTED]]. Assuming the [REDACTED] are allotted and issued to public shareholders, over 25% of our Company’s total issued Shares with a market capitalization of substantially over HK$375 million will be held by the public upon completion of the [REDACTED] in accordance with Rules 8.08(1)(a) and 18A.07 of the Listing Rules.

Compliance with Interim Guidance and Guidance Letters

Based on the documents provided by the Company with respect to the Pre-[REDACTED] Investments, the Sole Sponsor confirms that the Pre-[REDACTED] Investments are in compliance with the Guidance Letter HKEx-GL29-12 issued in January 2012 and updated in March 2017 by the Stock Exchange and the Guidance Letter HKEx-GL43-12 issued in October 2012 and updated in July 2013 and March 2017 by the Stock Exchange.

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The chart below sets out the shareholding structure of our Company immediately before the completion of the [REDACTED]:

Advaccine Kexiang Hangzhou Dachen Other Pre-IPO (1) (1) Matrix Stars Hony Ms. Yu Dr. Ma Jenna Penyao SMED (5) Investment Hi-tech Chuangqian Partners(2)(5) Chuanglian Capital(3) Capital(4) Investors ITR N OPRT STRUCTURE CORPORATE AND HISTORY

21.70% 7.23% 4.43% 9.8% 6.54% 5.45% 5.44% 4.38% 4.26% 4.26% 4.25% 3.27% 18.99%

Company (PRC)

100% 100% 100%

Suzhou Si’ao AV L

5 – 156 – Suzhou Advaccine (PRC) (PRC) (Australia)

100% 100%

Shenzhen Advaccine ACR (PRC) (Australia)

Notes:

(1) Ms. Yu and Dr. Ma entered into the Voting Agreement on September 1, 2020, pursuant to which Dr. Ma granted a voting proxy over all Shares held by her to Ms. Yu. See “Voting Agreement” in this section for details. (2) Includes 4.91% of our Shares held by Matrix VI and 0.53% by Matrix VI-A. (3) Includes 2.13% of our Shares held by Stars Xingxin, 0.98% by Stars Kairui, 0.87% by Stars Yuheng and 0.27% by Stars Xuanyuan. (4) Includes 3.09% of our Shares held by United Strength and 0.18% by Goldstream. (5) Other Pre-[REDACTED] Investors include Kexin Biotech (2.86%), Fengqiao Investment (1.91%), Zhongtian Huijin (1.80%), Ringpu (1.75%), Shanghai Lianzhi (1.34%), Nanjing Heheng (1.28%), Deshang Kuayue (1.28%), Sanjiang Huawen (1.09%), Mr. Zhao (0.86%), Taiji Investment (0.85%), Dingyue Investment (0.73%), Pengrui Jinghua (0.65%), Darui Xiading (0.59%), Tianfu Huasheng (0.54%), Ruizhao Investment (0.54%), Xinshunshi (0.38%), Watson Huijia (0.27%) and Zhixing Investment (0.27%). See “Pre-[REDACTED] Investments” in this section for details of the aforesaid Pre-[REDACTED] Investors. GROUP STRUCTURE UPON [REDACTED] BE MUST DOCUMENT INFORMATION THIS THE OF AND COVER CHANGE THE TO ON “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE FORM, WITH CONJUNCTION DRAFT IN IN READ IS DOCUMENT THIS The chart below sets out the shareholding structure of our Company immediately after the completion of the [REDACTED] (assuming the [REDACTED] is not exercised):

Advaccine Kexiang Matrix Dachen Stars Other Pre-IPO Public (1) (1) Hangzhou Hony Ms. Yu Dr. Ma Jenna (2)(5) Penyao SMED (3) (5) Investment Hi-tech Chuangqian Partners Chuanglian Capital Capital(4) Investors Shareholders ITR N OPRT STRUCTURE CORPORATE AND HISTORY [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED][REDACTED][REDACTED] [REDACTED] [REDACTED]

Company (PRC)

100% 100% 100%

Suzhou Si’ao Suzhou Advaccine AV L (PRC) (PRC) (Australia) 5 – 157 –

100% 100%

Shenzhen Advaccine ACR (PRC) (Australia)

Notes:

(2) Includes [REDACTED] of our Shares held by Matrix VI and [REDACTED] by Matrix VI-A.

(3) Includes [REDACTED] of our Shares held by Stars Xingxin, [REDACTED] by Stars Kairui, [REDACTED] by Stars Yuheng and [REDACTED] by Stars Xuanyuan.

(4) Includes [REDACTED] of our Shares held by United Strength and [REDACTED] by Goldstream.

(5) Other Pre-[REDACTED] Investors include Kexin Biotech ([REDACTED]), Fengqiao Investment ([REDACTED]), Zhongtian Huijin ([REDACTED]), Ringpu ([REDACTED]), Shanghai Lianzhi ([REDACTED]), Nanjing Heheng ([REDACTED]), Deshang Kuayue ([REDACTED]), Sanjiang Huawen ([REDACTED]), Mr. Zhao ([REDACTED]), Taiji Investment ([REDACTED]), Dingyue Investment ([REDACTED]), Pengrui Jinghua ([REDACTED]), Darui Xiading ([REDACTED]), Tianfu Huasheng ([REDACTED]), Ruizhao Investment ([REDACTED]), Xinshunshi ([REDACTED]), Watson Huijia ([REDACTED]) and Zhixing Investment ([REDACTED]). See “Pre-[REDACTED] Investments” in this section for details of the aforesaid Pre-[REDACTED] Investors. THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT BUSINESS

OVERVIEW

We are an innovative vaccine company with a high-value prophylactic and therapeutic vaccine pipeline driven by in-house developed technology platforms. To date, our pipeline consists of potential first-in-class key assets developed to address diseases caused by SARS-CoV-2, RSV and HBV, which are diseases with huge unmet medical needs. We are also developing vaccine candidates in preclinical stage covering viral-related oncology, as well as neoantigen-based therapeutic vaccines and tumor-associated antigen therapeutic vaccines.

pGX9501 COVID-19 vaccine candidate. We are expected to be one of the first group of companies to launch a COVID-19 vaccine based on innovative vaccine technologies in China. As of the Latest Practicable Date, our pGX9501 candidate was the first and only clinical-stage DNA-based COVID-19 vaccine candidate in China. It is widely recognized that safe and effective vaccines are essential to control the COVID-19 pandemic, which has had a devastating social and economic impact in China and globally and caused over 100 thousand infections and over 4.8 thousand deaths in China alone as of the Latest Practicable Date. According to the F&S Report, based on efficacy data and the dosing regimens of currently approved vaccines in China, it is estimated that at least 99.4% of the PRC population, or 1.4 billion individuals, will need to be vaccinated in order to control the pandemic, translating to a total of approximately 2.8 billion doses needed assuming that the approved COVID-19 vaccines would confer life-long immunity. Based on clinical trials and pre-clinical studies, we believe that our pGX9501 has potentially favorable immunogenicity, a better safety and tolerability profile, an advanced manufacturing process and strong stability, differentiating it from other COVID-19 vaccines approved and in development. We commenced phase II clinical trial in December 2020 and expect to commence a phase III clinical trial for pGX9501 in the second quarter of 2021 and file a BLA or EUA application to the NMPA in the second half of 2021.

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ADV311 HBV vaccine candidate. Our ADV311 is a preclinical-stage therapeutic vaccine that is a potential functional cure. In China, there were 72.6 million HBV-infected patients in 2019. Diagnosis rate of hepatitis B in China was only 22.0% in 2019, representing approximately 15.9 million patients, and treatment rate for hepatitis B in 2019 was only 24.6% among diagnosed patients, representing approximately 3.9 million patients. According to the Prevention and Treatment Guidelines for Hepatitis B, the proportion of HBV patients that develop primary liver cancer or liver cirrhosis in China is approximately 80% and 60%, respectively. Currently available treatments are not functional cures, and it is generally agreed by scientists that immunotherapeutic treatments are needed to control liver cancer risks. In investigator-initiated clinical trials of an MOA-equivalent version of our ADV311, the HBsAg negative conversion rate in our vaccine treatment group was 15.4%, which is higher than other treatment groups in CHB patients. Other clinical-stage HBV therapeutic vaccines have not recorded such high functional cure statistics. We expect to submit IND application to the NMPA in 2022.

COMPETITIVE STRENGTHS

Innovative prophylactic and therapeutic vaccine pipeline with high-value potential first-in-class key assets driven by in-house technology platforms

We are an innovative vaccine company with a high-value prophylactic and therapeutic vaccine pipeline driven by in-house developed technology platforms. Our potential first-in- class key assets are developed to address diseases with huge unmet medical needs. To date, our pipeline consists of three key vaccine candidates targeting diseases caused by SARS-CoV-2, RSV and HBV. We are also developing vaccine candidates in preclinical stage for viral-related oncology, as well as neoantigen-based therapeutic vaccines and tumor-associated antigen therapeutic vaccines.

• pGX9501 COVID-19 vaccine candidate. The COVID-19 pandemic that swept across the globe since the end of 2019 was an unforeseen event that has had a huge worldwide impact. We are expected to be one of the first group of companies to launch a COVID-19 vaccine based on innovative vaccine technologies in China. Our pGX9501 is the first and only clinical-stage DNA-based COVID-19 vaccine

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candidate in China as of the Latest Practicable Date. Leveraging our DNA vaccine development platform, we were able to obtain IND approval from the NMPA within just six months of project initiation.

• ADV110 RSV vaccine candidate. RSV is a leading cause of LRTI in infants and children and in the elderly and immunocompromised adults. RSV remains a serious global public health threat. While there have been attempts to develop an RSV vaccine over the past few decades, no effective vaccine against RSV is currently available globally. Leveraging our protein subunit vaccine and adjuvant platforms, we have developed an RSV vaccine candidate that is the only clinical-stage candidate designed and developed by Chinese companies and one of the most clinically-advanced globally. Our ADV110 has demonstrated promising safety, tolerability and immunogenicity in phase I clinical trial and pre-clinical studies and effectively suppressing VED present in previous RSV vaccines and vaccine candidates. We have commenced our phase II clinical trial in Australia in April 2021.

• Therapeutic vaccines. We are also dedicated to develop therapeutic vaccines targeting diseases with high unmet needs, such as our HBV therapeutic vaccine candidate. We are also developing a number of high potential vaccine candidates covering viral-oncology, as well as vaccine candidates based on innovative development technologies, such as neoantigen-based therapeutic vaccines and tumor-associated antigen therapeutic vaccines.

We believe our technology platforms have been crucial to our ability to develop our innovative vaccine pipeline, and will enable us to continue to develop new and innovative vaccine candidates addressing white space markets in China and globally. We will also continue to explore and develop innovative technologies in-house or in collaboration with partners, with a view of covering major vaccine development platforms that we believe will have strong synergies with our existing platforms and that enable us to develop high value candidates with technological flexibility.

Phase II, first and only clinical-stage DNA-based COVID-19 vaccine candidate in China addressing significant unmet needs

The COVID-19 pandemic has had a devastating social and economic impact in China and globally, with over 100 thousand confirmed infections and over 4.8 thousand deaths in China alone as of the Latest Practicable Date. It is widely recognized that safe and effective vaccines are essential to control the pandemic. According to the F&S Report, based on efficacy data and two-dose vaccine regimen of currently approved vaccine in China, it is estimated that at least 99.4% of the PRC population, or 1.4 billion individuals, will need to be vaccinated in order to achieve herd immunity to control the pandemic within China, translating to a total of approximately 2.8 billion doses needed assuming that the approved COVID-19 vaccines would confer life-long immunity. In addition, it is expected that COVID-19 vaccines will also be

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We are expected to be one of the first group of companies to launch a COVID-19 vaccine based on innovative vaccine technologies in China. As of the Latest Practicable Date, our pGX9501 candidate was the first and only clinical-stage DNA-based COVID-19 vaccine candidate in China. According to the F&S Report, as of the Latest Practicable Date, three inactivated virus vaccines, one viral vector vaccine and one protein subunit vaccine were conditionally approved or granted EUA in China. As of the same date, there were also ten COVID-19 vaccines in clinical development across different vaccine platforms in China, including seven in phase II or phase III clinical stage.

Compared with these vaccines and vaccine candidates, our pGX9501 has the following competitive advantages:

• Fewer safety and tolerability concerns. In US phase I clinical trial, our pGX9501 was safe and well-tolerated in all 40 participants. Most TEAEs were classified as Grade 1 (lowest) AEs and were local injection site reactions with short durations. Only six treatment related Grade 1 (lowest) AEs were observed in US phase I clinical trial, demonstrating a potentially better safety and tolerability profile compared to other competitors.

• Favorable immunogenicity. In the preliminary report of the US phase I clinical trial, the pGX9501 demonstrated strong immunogenicity with a balanced humoral and cellular immune responses with all evaluable participants displaying either or both antibody or T cell responses following two doses of pGX9501. Our phase I clinical trial in China utilized the same batch of pGX9501 and adopted a similar clinical trial design as Inovio’s US phase I trial. We expect pGX9501 to achieve a comparable immunogenicity profile in clinical trials in China.

• Favorable manufacturing process ensuring stable supply. pGX9501 utilizes E. coli as a host for plasmid production, which is easier and cheaper to produce, more stable and easy to control the production process, in comparison with many major vaccine development platforms. In addition, our manufacturing process has shown consistency across DNA vaccine candidates developed in the past, with the potential to circumvent the complexities of conventional vaccine production based on cell culture systems, which are generally utilized in many major vaccine development platforms, enabling a more responsive and stable supply during both outbreak settings and routine immunization.

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• Strong stability for vaccine storage and distribution. The stability profile of a vaccine plays directly to its ability to be deployed and stockpiled in an efficient and executable manner, especially during a pandemic. As pDNA is naturally stable, pGX9501 can be stored and delivered efficiently and effectively across a much broader temperature range to remote regions without ultra-cold chain logistics and storage. This enables pGX9501 to be more suitable and cost-effective for longer- term storage and for distribution across China, especially to regions with less developed infrastructure, as well as for long-term stockpiling. We would also be able to leverage existing cold chain distribution networks nationwide.

Clinical-stage potential first-in-class novel adjuvanted, protein subunit vaccine candidate for RSV globally with huge market potential

RSV is a leading cause of acute viral LRTI worldwide. The virus causes infection at all ages, especially in children under 5 years old, the elderly above 65 years old and immunocompromised adults. 96% children under 5 years of age are infected by RSV. Globally, the total population of children below 5 years of age is around 680.6 million and that of elderly over 65 years of age is around 709 million. In China, the total population of children below 5 years of age is around 83 million and that of elderly over 65 years of age is around 176 million. In 2017, the WHO estimated that RSV caused around 33 million serious respiratory infections, most of which were LRTIs (including ALRTI), every year. The burden of RSV on the global economy is US$4.2 billion per year, according to the F&S Report.

There are no available vaccines against RSV globally. The development of RSV vaccines was hindered for many years due to safety and tolerability concerns as healthy infants experienced VED after administration of the first RSV vaccine candidate. As of the Latest Practicable Date, there were seven RSV vaccine candidates globally in phase II or later clinical stage, including our ADV110.

We are developing ADV110, a potential first-in-class protein subunit RSV vaccine candidate with a novel adjuvant, designed to protect children aged 6 months to 5 years old and the elderly over 65 years old. To date, our ADV110 is the only clinical-stage RSV vaccine candidate designed and developed by Chinese companies and one of the most clinically- advanced globally. We are also the first in clinical stage to use a novel adjuvant that acts as an immunomodulator in RSV vaccines, potentially expanding the use of adjuvants beyond its traditional role of enhancing immunogenic response in vaccines.

Our competitive advantage over other clinical-stage RSV vaccine candidates globally are:

• Favorable humoral immune responses. Our ADV110 targets the RSV G protein, a major glycoprotein on the surface of the RSV virion that controls the initial phase of infection, which ensures that ADV110 prevents the infection at an earlier stage and targets variant strains of RSV. Our non-glycosylated RSV G protein-based vaccine can induce B cells to produce neutralizing antibodies against RSV infection,

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as demonstrated in pre-clinical studies. Our phase I clinical trial showed over 90% antibody response in groups administered with a low dose of ADV110, and 100% of antibody response in groups administered with a high dose of ADV110.

• Innovative immunomodulator adjuvant to control VED. We have developed an innovative immunomodulator adjuvant, AE011, which, if used at trace amounts together with the protein antigen, such as the RSV G protein, can induce Treg cells to down-regulate overreactive T cell responses that cause enhanced respiratory disease, which is crucial in overcoming VED found in certain previously failed RSV vaccine investigations. It can modulate T cell differentiation via antigen presentation process to become Treg cells rather than traditional Th1 or Th2 cells, to control VED by suppressing overreactive T cells in the lungs. This enables our ADV110 not only induce a high level of neutralizing anti-RSV antibodies but also control VED that was frequently observed in other failed vaccines.

• Safety and tolerability. Our ADV110 was safe and well-tolerated for both low and high dose levels and for both single and repeat doses. In phase I clinical trial, no SAEs were experienced by any of the participants at any time during the trial. Moreover, there were no severe or life-threatening TEAEs, and the majority of TEAEs recorded were mild. The frequency of TEAEs and drug-related TEAEs did not increase with vaccine dose level and frequency.

Promising HBV therapeutic vaccine candidate

Hepatitis B is a widespread and infectious liver disease caused by HBV. In China, there are an estimated 72.6 million HBV-infected patients in 2019. Diagnosis rate of hepatitis B in China has historically been low due to the lack of awareness and effective treatments, especially in remote areas, at 22.0% in 2019, representing approximately 15.9 million patients, and treatment rate for hepatitis B in 2019 was only 24.6% among diagnosed patients, representing approximately 3.9 million patients. According to the Prevention and Treatment Guidelines for Hepatitis B, the proportion of HBV patients that develop primary liver cancer or liver cirrhosis in China is approximately 80% and 60%, respectively, significantly higher than the rest of the world. The total healthcare cost of HBV related chronic infection, liver cirrhosis and liver cancer is about RMB80 billion to RMB120 billion per year in China.

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Studies show that high incidence of both HBeAg and HBsAg antigens circulating in the blood of HBV-infected patients contributes to a higher risk of cirrhosis and liver cancer. While long-term and continued use of available antiviral treatments can help patients become HBeAg-negative, such treatments are not functional cures as HBeAg-negative, HBsAg- positive patients may relapse and continue to have a risk for liver cancer. It is generally agreed by scientists that immunotherapeutic treatments are needed in addition to long-term antiviral treatments to achieve both HBsAg and HBeAg seroconversion and control liver cancer risks. As of the Latest Practicable Date, there were no approved HBV therapeutic vaccines in China. As of the same date, there were three HBV therapeutic vaccine candidates in China and ten outside China in clinical stage.

Our ADV311 HBV vaccine is a therapeutic vaccine candidate that is a potential functional cure for CHB patients. In investigator-initiated clinical trials of a MOA-equivalent version of our ADV311, the HBsAg negative conversion rate in our vaccine treatment group was 15.4%, higher than other treatment groups in CHB patients. Other clinical-stage HBV therapeutic vaccines have not recorded such high functional cure statistics. We expect to submit IND application to the NMPA in 2022.

Comprehensive and innovative technology platforms that drive our development of next-generation vaccines

We have a comprehensive and innovative technology platform portfolio, which demonstrates our R&D capabilities and drives our continued development of next-generation vaccines. Currently, our technology platforms are focused on three areas which we believe are the most innovative and promising for vaccine development, namely, DNA vaccines, protein subunit vaccines and adjuvants.

• DNA vaccine platform. Leveraging our DNA vaccine platform, we are the first and only vaccine company with a DNA-based COVID-19 vaccine candidate in clinical stage in China. We believe our DNA vaccine platform has the following competitive advantages:

• Sequence design optimization. We have developed an in-house proprietary protocol to develop, design and optimize DNA sequences for vaccine development, providing a standardized and scalable platform for the continued development of DNA vaccine products. We believe our optimization design improves DNA expression, translating to a better immunogenicity in our vaccine products. This is demonstrated by our COVID-19 vaccine candidate, which had exhibited a balanced humoral and cellular immune responses in clinical trials.

• High purity DNA production. We have developed strong CMC processes to ensure the production of DNA vaccine with world class quality, purity and yield. The purity of supercoiled pDNA we manufactured can reach more than 97% compared to FDA standards of 85%. In addition, through next-generation

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processes and testing technologies, such as streamline lysis-neutralization processing, we are able to achieve high recovery rates for plasmid production and ensure the high quality of our vaccine products.

• Strong immunoresponse. Studies have shown that DNA vaccines have the ability to stimulate both B cells and T cells, which generally translates to a strong immune response. We believe this enables our DNA vaccine products to have a key competitive advantage over many other vaccine technologies and enjoy strong demand as they address market needs more effectively.

• Protein subunit vaccine platform. Our protein subunit vaccine platform has the following key advantages:

• Profound understanding of proteins in different viruses. Through our years of knowledge and experience build-up in protein design and identification, particularly in combination with adjuvants, we have developed a profound understanding of protein structure and profiles in different viruses. This has enabled us to better develop vaccine products that target or utilize specific proteins and that are used in combination with adjuvants to enhance immunogenicity.

• High expression. We have developed an E. coli-based expression system, which enables high expression of proteins, and in turn translates to better immunogenicity of our vaccine candidates. Moreover, using E. coli as host is more cost-effective compared to cell culture systems used by many major vaccine development platforms.

• High purity and efficient scale-up process. Our protein subunit vaccine manufacturing process includes innovative extraction and purification technologies that ensures a high purity level for certain difficult-to-produce proteins. Moreover, our protein subunit vaccine manufacturing process is streamlined and robust, which is suitable for efficient scale-up for commercial production.

• Adjuvants. Traditionally, adjuvants are used in conjunction with vaccines to help the host’s immune system to recognize the pathogen and amplify the magnitude of immunoresponse against the pathogen. We have learned that most adjuvants have ability to enhance their influences to induce naive T cells to become Th1 or Th2 cells, and some can also induce naive T cells to become Treg cells. We have developed innovative adjuvants that not only enhance CD8+ cytotoxic T cell functions, as demonstrated by our HBV therapeutic vaccine candidate, but also can act as immunomodulators to induce Treg cells to control overreactive T cells, as demonstrated in our RSV vaccine candidate, potentially resolving long-standing

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difficulties in RSV vaccine development. We believe our powerful adjuvant development platform will enable us to continue to develop effective adjuvants to support our vaccine products. Details of our adjuvant development platform are set out below:

• Screening and selection platforms of adjuvants in vitro and in vivo. Leveraging our deep understanding of immunological regulation and years of experience in adjuvant development, we have developed significant know-how in screening and selecting adjuvant candidates with a high potential for success in in vitro and in vivo studies. Our adjuvant platform primarily includes three key technologies, namely, adjuvant in vitro screening system, cell-guided adjuvant screening and adjuvancity animal test. By applying these technologies in sequence, we are able to screen, analyze and evaluate potential adjuvants for particular purposes with speed and accuracy.

• Advanced formulation. We have extensive experience in formulation development for adjuvants, which we believe is critical for the success of adjuvants in combination with vaccines. Our formulation development process guarantees a higher level of manufacturing and commercial success.

Commercial-ready manufacturing facilities and an advanced manufacturing process

We expect to complete stage I of our manufacturing facilities at our Suzhou manufacturing base in the second quarter of 2021, which will enable us to be commercial-ready for the anticipated launch of our COVID-19 vaccine. We believe that our readily-available, GMP-standard manufacturing facilities and advanced manufacturing process are key to our success:

• Commercial-ready capacity. After the acquisition of Si’Ao, we are preparing stage I of our manufacturing facilities for the production of our vaccines and expect to commence pilot production in the second quarter of 2021. The designed annual manufacturing capacity of our manufacturing facilities will be 20 million doses, ready for commercial ramp up when our vaccines are approved. We are also further expanding our manufacturing capacity with the construction of stage II manufacturing facilities. See “—Business Strategies” for details.

• Advanced manufacturing process. We have developed and applied for certain patent applications for our manufacturing process, for DNA vaccines, including our pGX9501, including the design and equipment and devices used. The proprietary manufacturing technologies we hold and our E. coli cell culture media, which is the host for plasmid production, enables the manufacturing process to be more streamlined, scalable, cost-effective, stable and easy to control, in comparison with many major vaccine development platforms.

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• GMP standard. Our stage I manufacturing facilities are one of the few in China designed to meet GMP standards of China, the United States and the WHO, demonstrating our capabilities in manufacturing and quality control.

• Vaccine manufacturing permit. We have submitted an application for vaccine manufacturing permit. Once approved, we will be one of the few private companies in China that holds a vaccine manufacturing permit, according to the F&S Report. The regulatory requirement for such permit is extremely high and subject to strong government scrutiny considering the importance and technical expertise required of vaccine manufacturing, which we believe form an entry barrier for potential competitors.

Visionary senior management team with profound vaccine development experience, supported by a scientific advisory board

Our strategic direction and scientific endeavors are led by our founder, Dr. Wang. His vision for our business and growth is implemented by a dedicated team of senior management with profound vaccine development experience. Dr. Wang has over 30 years of experience in the research and development of vaccines, has served as the director of the national engineering lab of therapeutic vaccines and having served as distinguished professor of the prestigious Fudan University in China. Dr. Wang is a prolific scientist with over 150 peer-reviewed articles published in the field of vaccines and immunology, and serves as a board member for a number of international peer-reviewed journals and an executive member of various international and domestic scientific societies, such as China Society of Biotechnology and the International Society of DNA vaccines. In addition to Dr. Wang, our senior management team also comprises a dedicated group of industry veterans with complementary skill sets encompassing research and development, intellectual property management, manufacturing, finance and corporate governance.

Our business is supported by a scientific advisory board comprising three industry veterans, who provide guidance on our scientific and research direction. George Siber, MD, the former executive vice president and CSO of Pfizer Inc., has led the development of global blockbuster vaccines such as Prevnar. Dr. David Weiner, a world-renowned immunologist and expert in DNA vaccines, is the director of the Vaccine Center of the Wistar Institute. Dr. Ruan Li served as the former director of National Institute of Virology of the CDC in China.

BUSINESS STRATEGIES

Continue to advance our vaccine pipeline

We plan to continue to advance our vaccine pipeline as follows:

• pGX9501 COVID-19 vaccine. We expect to commence a phase III clinical trial for pGX9501 in the second quarter of 2021 in China, we plan to file a BLA or EUA application to the NMPA in the second half of 2021. We plan to expand our ongoing clinical trials or initiate additional clinical trials for pGX9501 in subpopulations of

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COVID-19 vaccine addressable populations. Furthermore, as various mutations have been observed, we also plan to initial new clinical trials to evaluate the safety and immunogenicity of our pGX9501 against SARS-CoV-2 variants.

• ADV110 RSV vaccine. We have commenced our phase II clinical trial in Australia in April 2021 and expect to complete our phase II clinical trial in 2023. We expect to commence a global phase III clinical trial for our RSV vaccine candidate in 2023.

• ADV311 HBV therapeutic vaccine. We are conducting non-clinical studies for our HBV therapeutic vaccine, and expect to submit IND application to the NMPA in 2022.

• Others. We will continue to advance research and development of a MCC therapeutic vaccine candidate, which has passed proof-of-concept stage. We will also continue research and development of other earlier-stage innovative vaccines.

Enhance our R&D capabilities

We plan to continue to enhance our research and development capabilities by continuing to focus on innovative vaccine technologies and disease areas of interest, building an R&D center with expanded capacities and growing our R&D team with highly talented and experienced team members.

• R&D focus. Our focus on research and development will continue to be on developing innovative vaccine and adjuvant technologies and products to enhance our product pipeline, as well as developing products targeting disease areas of interest.

• Vaccine products and technologies.

• Nucleic acid-based vaccine technologies. We plan to develop new technologies relating to antigen design, sequence optimization and special vector design and development to enhance our nucleic acid-based vaccines.

• Protein-based vaccine technology. We also plan to develop technologies relating to structure design, expression platform development and special formulation for our protein-based vaccine pipeline.

• Vaccine delivery system and device. We plan to develop systems and devices to be applied to our vaccine products, including an EP device to optimize EP, a microneedle device, a powerjet delivery system, as well as encapsulation formulation technology.

• Adjuvants. We plan to develop more and innovative adjuvants for vaccines. In particular, our focus is on adjuvants that manipulate immunoregulation or immunoresponse towards Th1 and Th2 or Treg cells.

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• Disease areas.

• We plan to focus our pipeline development on virus infections, particularly, emergent and re-emergent infectious diseases. Specifically, we will initially focus on diseases such as SARS-CoV-2 mutations and various highly pathogenic influenzas.

• We plan to adopt a three-pronged focus on tumor and cancer vaccine development, including (i) viral-infection induced cancers, e.g. HBV, HPV, MCV; (ii) tumor-associated antigens, focusing primarily on various solid tumors, specific indications for which we will determine in due course depending on clinical resources; and (iii) neoantigens for personalized medicine or treatments.

• We plan to develop vaccines targeting autoimmune diseases. We have commenced research on targeted antigens for asthma, such as pollen and dust mites, and for food allergies, such as glutenin and peanut.

• R&D center. In the next one to two years, we plan to build a new R&D center. We expect our new R&D center to support our research and development endeavors in the future and will include research laboratories, drug development laboratories for development of CMC and product formulation, and pilot production facilities.

• R&D team. We plan to expand our R&D team to approximately 100 or more in the next one to two years. We will mainly focus on recruiting team members with academic backgrounds or working experience in immunology, pharmacology, molecular biology and process development. As we expand our team, we plan to recruit a mix of experienced personnel that have worked with large pharmaceutical, biotechnology or CRO companies or those with extensive industry experience, as well as fresh PhD and master degree graduates.

Expand our manufacturing capabilities and team

In order to meet the anticipated demand for our vaccine products, we intend to expand our annual manufacturing capacity from 20 million doses currently to a total of 100 million doses. We plan to commence the construction of stage II of our manufacturing facility in 2021 at our existing manufacturing base in Suzhou, which we expect to have a GFA of 18,000 square meters. Our manufacturing facility is designed to meet GMP standards of China and the United States, and WHO pre-qualification. We have submitted the vaccine manufacturing permit application of our manufacturing facility. Depending on demand for our vaccines, we will consider to expand our manufacturing capabilities to a new site in due course.

Over the next few years, we plan to expand our production and quality control team to over 100 members. We plan to primarily recruit team members with GMP or industrial production experience, as well as quality control and assurance experience.

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Build our commercialization strategy and sales network

We plan to develop and build our commercialization strategy ahead of the launch of our advanced-stage vaccine candidates. We plan to handle most of the commercialization of our vaccine products in China in-house. We expect that our COVID-19 vaccine will likely be sold and distributed through government centralized procurement schemes. We intend to commence commercialization preparations after we commence phase III clinical trial for this vaccine candidate. For our RSV vaccine candidate and other candidates, we will gradually commence patient and physician education efforts and build our sales network in China. We will also build up a small team of sales and marketing personnel primarily to handle centralized procurement matters for our COVID-19 vaccine, as well as sales of our other products. We plan to seek local partners for the global commercialization of our vaccine candidates. We may consider to negotiate commercial rights for other regions outside the Greater China region and for bulk vaccine supply outside the Greater China region for pGX9501 with Inovio. For our RSV vaccine and other pipeline candidates, we may out-license our product to partners in major overseas vaccine markets such as the United States, the EU and Australia. Pursue in-licensing, investment and acquisition opportunities

We plan to pursue in-licensing and investment and acquisition opportunities to supplement our product and technology portfolio. We primarily will seek to in-license late-stage vaccine candidates that have innovative technologies and that can build synergies with our existing portfolio. We may also consider to invest in or acquire biotechnology companies with innovative technologies that complement and supplement our technology platforms and potentially enhance our vaccine pipeline. We currently do not have any specific targets or targets under negotiation. OUR VACCINE PIPELINE

We are an innovative vaccine company with a high-value prophylactic and therapeutic vaccine pipeline driven by in-house developed technology platforms. As of the Latest Practicable Date, we were developing six vaccine candidates for six disease areas, including one Core Product pGX9501, in phase II clinical stage, one key vaccine candidate, ADV110, in phase II clinical stage, one key vaccine candidate, ADV 311, in preclinical stage, and three preclinical stage vaccine candidates. Our Core Product is a vaccine candidate for COVID-19. Other than pGX9501 that we co-developed with Inovio, all of our vaccine candidates are self-developed. We are developing ADV311 based on proof-of-concept technology we obtained from Fudan University. The following table summarizes our vaccine pipeline as of the Latest Practicable Date:

Vaccine Commercial Product Type Target Rights Discovery Pre-Clinical Phase I Phase II Phase III

DNA COVID-19 Greater China pGX9501 Prophylactic China Vaccine Vaccine US: Phase II/III (Inovio) RSV ADV110 Subunit Prophylactic Global Australia Vaccine Vaccine

Subunit HBV ADV311 Therapeutic Global Vaccine Vaccine MCV ADV510 Subunit Therapeutic Global Vaccine Vaccine

DNA TAA ADV520 Vaccine Cancer Vaccine Global

DNA Personalized ADV610 Vaccine Cancer Vaccine Global

: Our Core Product.

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Since late 2019, the COVID-19 pandemic had a devastating social and economic impact in China and globally, with over 100 thousand confirmed infections and over 4.8 thousand deaths in China alone as of the Latest Practicable Date. Effective and safe vaccines are critical to controlling the COVID-19 pandemic. As of the Latest Practicable Date, three inactivated COVID-19 vaccines, one viral vector COVID-19 vaccine and one protein subunit COVID-19 vaccine have been conditionally approved or granted EUA in China, according to the F&S Report. According to the same source, based on efficacy data and dosing regimens of currently approved vaccines in China, it is estimated that at least 99.4% of the PRC population, or 1.4 billion individuals, will need to be vaccinated in order to control the pandemic, translating to a total of approximately 2.8 billion doses needed assuming that the approved COVID-19 vaccines would confer life-long immunity. As of the Latest Practicable Date, our pGX9501 candidate was the first and only clinical-stage DNA-based COVID-19 vaccine candidate in China.

pGX9501, our Core Product, is a DNA vaccine candidate targeting against SARS-CoV-2, a novel coronavirus causing the COVID-19 pandemic. We have been co-developing pGX9501 with Inovio since January 2020 and have been collaborating with Inovio in conducting preclinical studies, early-stage clinical trials and other development activities. We further entered into an exclusive license agreement with Inovio, under which Inovio has granted us an exclusive license to develop, manufacture and commercialize pGX9501 in the Greater China region. See “—Collaboration and Technology Transfer Arrangement—Collaboration with Inovio.” Inovio has completed phase I clinical trials and has ongoing phase II/III clinical trial of the vaccine candidate in the United States. We have completed phase I clinical trial and have completed dosing in phase II clinical trials in China. Our available data from the phase I clinical trials demonstrated our pGX9501 vaccine candidate to have good safety, tolerability and immunogenicity profile. We expect to commence phase III clinical trial in the second quarter of 2021, and file a BLA or EUA application to the NMPA in the second half of 2021.

Mechanism of Action

The Spike protein is a major surface antigen of SARS-CoV-2. pGX9501 is a DNA-based vaccine candidate that encodes a synthesized full-length Spike protein sequence matching multiple wild-type SARS-CoV-2 sequences with more than 99.9% amino acid sequence identity. After vaccination, the plasmid pGX9501 can be transcribed into mRNA and further translated into encoded proteins that activate immune system to generate immune responses.

pGX9501 is able to induce both CD8+ T cell and CD4+ T cell responses via antigen presentations inside of APCs through MHC-I and II molecules, respectively. Activated CD8+ T cells recognize infected cells and destroy infected cells directly. Activated CD4+ T cells orchestrate host immunity to attack the invasion by secreting different types of cytokines to direct and strengthen the activity of other immune cells. Activities of other immune cells include antigen destruction by natural killer cells, antigen-specific CD8+ T cells, and antibody producing by B cells. Because CD8+ T cells recognized viral epitopes that are more conserved and less variable, the ability to induce CD8+ T cell responses, which are generally lacking following the administration of inactivated virus or subunit vaccines, enable cross-strain responses, which is critical when viral mutation occurs. Cross-strain responses enable broader spectrum protections in comparison with antibody responses that are targeted to neutralizing variable protein sequences of virus, and therefore are likely to be required for a highly effective COVID-19 vaccine. The initial infection of SARS-CoV-2 is initiated by interaction between the

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Spike protein of the SARS-CoV-2 and ACE2 receptors at the respiratory tract. pGX9501 is able to block such interaction and neutralize the SARS-CoV-2 infection, by activating B cells to produce neutralizing antibodies that outcompete ACE2 receptors to bind with the SARS-CoV-2 Spike protein. The following graph illustrates the two types of responses stimulated by pGX9501:

Market Opportunities of COVID-19 Vaccines and Competition

The COVID-19 pandemic has had a devastating social and economic impact in China and globally, with over 100 thousand confirmed infections and over 4.8 thousands deaths in China alone as of the Latest Practicable Date. According to the World Bank, compared to 2019, global GDP contracted 4.3% in 2020 as a result of the COVID-19 pandemic. It is expected that global GDP to be 4.4% below pre-pandemic projections by 2022. It is expected that GDP in China to return to pre-pandemic levels by 2021, it is still expected to be about 2% below its pre-pandemic projections by 2022. Although social-distancing and other transmission- mitigation strategies implemented in most countries have temporarily prevented most citizens from being infected, these strategies have left them without immunity to SARS-CoV-2 and thus susceptible to additional waves of infection. In addition, healthcare institutions have been over-extended and resources are being diverted away from other non-COVID-19 care, increasing unmet medical needs unrelated to COVID-19.

It is widely recognized that development of safe and effective vaccines is essential to control the pandemic. According to the F&S Report, based on efficacy data and dosing regimens of currently approved COVID-19 vaccine in China, it is estimated that at least 99.4% of the PRC population, or 1.4 billion individuals, will need to be vaccinated in order to achieve herd immunity to control the pandemic within China, translating to a total of approximately 2.8 billion doses needed assuming currently approved COVID-19 vaccine would confer life-long immunity. In addition, it is expected that COVID-19 vaccines also be acquired by governments for stockpiling, as well as potentially being in demand in the future for booster immunity and against virus mutations, which indicates a huge market need for COVID-19 vaccines.

Although a few vaccines have been conditionally approved or granted EUA in China since late 2020 and a number of vaccine candidates have entered late-stage clinical trials, it is expected that there will continue to be a significant gap between supply and demand and there will be increasing demand for vaccines with better safety and efficacy.

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Currently there are five major types of vaccine platforms used to develop COVID-19 vaccines globally, comprising nucleic acid-based (including both mRNA and DNA), live attenuated virus, inactivated virus, viral vector and subunit. According to the F&S Report, as of the Latest Practicable Date, five vaccines were conditionally approved or granted EUA in China, including three inactivated viral vaccines, one viral vector vaccine and one subunit vaccine. The following table illustrates the details of vaccine products conditionally approved or granted EUA in China as of the Latest Practicable Date:

Company and Protective efficacy in Platform Vaccine candidate collaborators phase III trial CanSino/Institute of Biotechnology, Academy Viral vector Convidicea 65.70% of Military Medical Sciences, PLA of China Anhui Zhifei/Institute of Subunit RBD-Dimer Microbiology, Chinese N/A Academy of Sciences 50.65% (Brazil study); CoronaVac Sinovac 91.25% (Turkey study) Beijing Institute of BBIBP-CorV Biological 79.30% Inactivated virus Products, Sinopharm Wuhan Institute of WIBP-CorV Biological 72.51% Products, Sinopharm

As of the same date, there were ten COVID-19 vaccine candidates in clinical development across different vaccine platforms in China, including seven in phase II or phase III clinical stage. As of the Latest Practicable Date, pGX9501 was the first and only clinical-stage DNA-based COVID-19 vaccine candidate in China. It is also expected to be one of the first group of companies to launch a COVID-19 vaccine based on innovative vaccine technologies in China. The following tables illustrate the details of vaccine pipeline under phase II or later stages in China as of the Latest Practicable Date:

Company and Platform Vaccine candidate Phase collaborators

DNA pGX9501 (INO-4800) Our Group/Inovio II

Yunnan Walvax Biotechnology/ Academy of Military Science, ARCoV III PLA of China/ mRNA Suzhou Abogen Biosciences

Pfizer-BioNTech BioNTech/Pfizer/ II COVID-19 Vaccine Fosun Pharma

DelNS1-2019-nCoV- Beijing Wantai Biological Viral vector II RBD-OPT1 Pharmacy

Recombinant Jiangsu Province Centers for Subunit COVID-19 Vaccine Disease Control and Prevention/ II (Sf9 cells) West China Hospital

Inactivated SARS-CoV-2 Chinese Academy of III Vaccine (Vero cell) Medical Sciences

Inactivated virus Inactivated SARS-CoV-2 Beijing Minhai II Vaccine (Vero cell) Biotechnology

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Advantages of pGX9501

DNA vaccines based on the coding antigen are non-infectious in nature as it is prepared through in-vitro synthesis, microbial fermentation and purification. In addition, such vaccines can be efficiently delivered into host cells for protein translation and post-translational modifications. These advantages differentiate nucleic acid vaccines from other vaccine platforms in terms of safety, efficacy and issues of anti-vector immunity. See “Industry Overview—COVID-19 Vaccine Market.”

pGX9501 was designed and constructed synthetically by deriving consensus genes encoding SARS-CoV-2 full length spike sequences across multiple clads and optimizing the DNA insert into a eukaryotic expressing vector at the genetic level to allow high expression in human cells. For infectious pathogens with genetic diversity, such as the SARS-CoV-2, the goal is to enhance the magnitude and breadth of immune responses by increasing the cumulative cross-stain coverage of potential T-cell epitopes relative to a sequence from a single strain. In effect, the design strategy of pGX9501 may allow it to induce cellular and humoral immune responses against diverse COVID-19 strains. Although the design could provide broader spectrum protections against some SARS-CoV-2 mutations, dramatic changes in serological level post-vaccination risks reduction of protective level. When such dramatic changes occurs, a new construct of COVID-19 vaccine should be designed and produced. Leveraging our experience and know-how in developing DNA vaccines, a new DNA vaccine can be designed, constructed, tested and produced within two months, which gives the DNA vaccine approach a competitive edge over other COVID-19 vaccine development platforms.

Compared with currently approved vaccines which have conducted clinical trials in China as of the Latest Practicable Date, our pGX9501 has the following advantages:

• Fewer safety and tolerability concerns. In US phase I clinical trial, pGX9501/INO- 4800 was safe and well-tolerated in all 40 participants. Most TEAEs classified as Grade 1 (lowest) AEs and were mostly local injection site reactions with short duration. Only six treatment related Grade 1 (lowest) AEs were observed in US phase I clinical trial, demonstrating a potentially better safety and tolerability profile compared to other competitors. The most common Grade 1 (lowest) systemic symptoms with pGX9501 include pain and redness at the injection site. The following table sets forth a non head-to-head comparison of safety data between our pGX9501 and currently approved COVID-19 vaccines that have conducted clinical trials in China:

– 174 – Safety profile BE MUST DOCUMENT INFORMATION THIS THE OF AND COVER CHANGE THE TO ON “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE FORM, WITH CONJUNCTION DRAFT IN IN READ IS DOCUMENT THIS GradeՆ2or ՆModerate Major AE Vaccine Clinical study used SampleTreatment-related AE at any grade treatment-related AE symptoms Vaccine name Developer Development status platform Dosing regimenfor safety comparisonsize pGX9501 Our Group/Inovio Phase II in China, DNA 2 doses (1 or 2 Phase I, US 39 Nausea, erythema, pain ՆModerate: None Injection site (INO-4800) Phase II/III in US mg), 28 days (NCT04336410) pain, apart erythema ՆModerate: Fever, Pain at the Pfizer- Pfizer/BioNTech/FosunEUA granted by FDA, mRNA 2 doses (30 µg Phase I/II, US 45 Fever, fatigue, headache, fatigue, headache, injection BioNTech Pharma phase II in China each), 21 days (NCT04368728) chills, diarrhea, muscle pain, site, fatigue apart joint pain chills, diarrhea, COVID-19 muscle pain, joint and headache Vaccine pain ՆGrade 2: Induration, Pain at the Phase I/II, China 192 Pain in injection site, swelling, BBIBP-CorV Beijing Institute of Conditionally approvedInactivated 2 doses (2, 4, or swelling, injection Biological by NMPA virus 8 µg), 28 days (ChiCTR2000032459) itch fever, fatigue, mucocutaneous site, fever Products, apart inappetence nausea, abnormalities Sinopharm constipation, mucocutaneous abnormalities, headache, vomiting, and itch Injection site Conditionally approvedInactivated 3 doses (2.5, 5, Phase I, China 96 Injection site: pain and All adverse reactions WIBP-CorV Wuhan Institute of were mild (grade 1 pain and by NMPA virus or 10 µg), (ChiCTR2000031809) swelling. BUSINESS Biological or 2) fever Products, 28 days apart Systemic: fatigue, fever, and 7 – 175 – Sinopharm nausea Safety profile BE MUST DOCUMENT INFORMATION THIS THE OF AND COVER CHANGE THE TO ON “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE FORM, WITH CONJUNCTION DRAFT IN IN READ IS DOCUMENT THIS GradeՆ2or ՆModerate Major AE Vaccine Clinical study used SampleTreatment-related AE at any grade treatment-related AE symptoms Vaccine name Developer Development status platform Dosing regimenfor safety comparisonsize Conditionally approvedViral vector 1 dose of 5×10 Grade 3: fever, fatigue,Pain at the Convidicea CanSino/Institute of by NMPA 10 Phase I, China 108 Injection site: pain, induration,headache, and injection Biotechnology, 11 muscle pain, joint site, fever, Academy of 1×10 and (NCT04313127) redness, swelling, itch, and 11 pain, dyspnoea fatigue, Military Medical 1·5×10 viral muscular weakness. headache, Sciences, PLA of particles Systemic: fever, fatigue, and muscle China headache, muscle pain, pain vomiting, diarrhoea, throat pain, cough, nausea, functional GI disorder, appetite impaired, dizziness, mucosal abnormality, pruritus ՆGrade 3: injection Local: injection RBD-Dimer Anhui Zhifei/InstituteEUA granted by Protein 3 doses (25 or Phase I, China 50 Local: injection site pain, site pain, redness, site pain, of Microbiology, NMPA subunit 50µg), 30 days (NCT04445194) swelling, induration, and swelling redness, and Chinese Academy apart redness, rush, and itch. itch. of Sciences Systemic: fatigue, weakness, Systemic: impaired appetite, nausea, cough, fever, muscle pain, cough, fever, and headache and headache BUSINESS Ն Injection-site

7 – 176 – Phase I, China 114 Injection-site pain, fatigue, Grade 2: acute CoronaVac Sinovac Conditionally approvedInactivated 2 doses (3 or 6 pain, fatigue, by NMPA virus µg per 0.5 (NCT04352608) diarrhoea, fever, hypersensitivity with mL), 14 or 28 hypersensitivity manifestation of days apart urticaria THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT BUSINESS

• Favorable immunogenicity. In the US phase I clinical trial, pGX9501 demonstrated strong immunogenicity with a balanced humoral and cellular immune responses. All evaluable participants displayed a balanced antibody or T cell response or both responses following two doses of pGX9501. Based on published early immunogenicity analyses of the first cohort of 40 participants in the 18-50 years age group, pGX9501 was immunogenic in all vaccinated subjects, effectively generating humoral (displaying neutralizing antibodies) and/or cellular responses (both CD4+ and CD8+ T cells) in early stages. Humoral responses measured by binding or neutralizing antibodies were observed in 95% of the participants in each dose group. Cellular immune responses were observed in 74% and 100% of 1.0 mg and 2.0 mg dose groups, respectively. We expect pGX9501 to achieve a comparable immunogenicity profile in clinical trials in China. The following table sets forth the non head-to-head comparison between pGX9501 and currently approved COVID-19 vaccines that have conducted clinical trials in China:

Clinical trial used for Vaccine immunogenicity Neutralizing antibody response T cell response Vaccine name Developer platform comparison Seroconversion rate GMT CD4+ T cell response CD8+ T cell response pGX9501 Our Group/ DNA Phase I, US By week 6, 95% For neutralizing In the flow cytometric In the flow cytometric (INO-4800) Inovio (NCT04336410); (36/38) of the antibody, 78% assays, both the 1.0 assays, both the 1.0 Phase I, China participants (14/18) and 84% mg and 2.0 mg Dose mg and 2.0 mg Dose seroconverted based (16/19) generated a Groups showed Groups showed on their responses by response with increases in cytokine increases in cytokine generating binding corresponding production, especially production, especially (ELISA) and/or geometric mean titers in the 2.0 mg group. in the 2.0 mg group. neutralizing of 102.3 [95% CI In the 2.0 mg dose In the 2.0 mg dose antibodies (PRNT (37.4, 280.3)] and group, the median group, the median IC50). 63.5 [95% CI (39.6, change from baseline change from baseline 101.8)], in the to Week 6 in CD4+ T to Week 6 in CD8+ T respective groups. cells producing cells producing TNF-␣ was 0.02 with IFN-␥, TNF-␣ and/or a 95% CI of (0.01 to IL-2 (Any Response) 0.09); the change was was 0.11 with a 95% also significantly CI of (−0.02, 0.23); increased (P = the change was 0.0020) significantly increased (P = 0.0181)

Pfizer-BioNTech BioNTech/Pfizer/ mRNA Phase I/II, US The vaccine elicited Geometric mean Seven days after Vaccine-induced COVID-19 Fosun Pharma (NCT04368728) strong antibody neutralizing titres the boost with S-specific CD8+ T Vaccine responses. 21 days reached 1.9–4.6-fold BNT162b2 at any of cell responses were after the priming that of a panel of the doses, robustly detected in 34 of 37 dose, geometric mean COVID-19 expanded SARS- vaccinated concentrations convalescent human CoV-2 S-specific participants (91.9%). (GMCs) of S1- sera. CD4+ T cells were De novo S -specific binding IgG had detectable in all 37 CD8+ T cell increased in all dose participants. In 34 of responses were cohorts, with S1- these participants, induced in 33 binding IgG GMCs in comparison to pre- participants, these the range of 49-1,161 vaccination PBMCs were either directed U/mL and evidence was possible. Thirty against both (22 of a dose level- of the 34 subjects participants), or one dependent response (88.2%) had de novo of the S pools (S only between the 1 (not existent at pool 1 in ten µg and 10 µg dose baseline) CD4+ T participants, and S levels. cell responses against pool 2 in two both S pool 1 and S participants), pool 2 of SARS- indicating a CoV-2. preponderance of a poly-epitopic response including non-RBD S-specific T cells.

BBIBP-CorV Beijing Institute of Inactivated Phase I/II, China More than 75% of Two-dose immunisation Not reported Not reported Biological virus (ChiCTR2000032459) vaccine recipients in with 4 µg vaccine on Products, the group aged 18–59 days 0 and 21 or Sinopharm years seroconverted days 0 and 28 after the first vaccine achieved higher dose (day 14). The neutralising antibody remaining vaccine titres than the single recipients 8 µg dose or 4 µg seroconverted on day dose on days 0 and 28. For the group 14. aged 60 years and older, the seroconversion rate ofthe4µgand8µg dose recipients reached 100% on day 28, and the 2 µg group was 100% seroconverted by day 42.

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WIBP-CorV Wuhan Institute of Inactivated Phase I, China Seroconversion was In the phase 1 trial, the Not reported Note reported Biological virus (ChiCTR2000031809) noted in all GMT of neutralizing Products, participants (100%) antibody at day 14 Sinopharm receiving vaccines in after the third the low- and high- injection was 316 dose groups in phase (95% CI, 218-457) in 1, 23 of 24 the low-dose group, participants (95.8%) 206 (95% CI, in the medium-dose 123-343) in the group in phase 1. medium-dose group, and 297 (95% CI, 208-424) in the high- dose group.

Convidicea CanSino/Institute of Viral vector Phase I, China Neutralizing antibodies Neutralizing antibody Specific T-cell response peaked at day 14 post- Biotechnology, (NCT04313127) against live SARS- titer with a GMT of vaccination. High proportions of participants Academy of CoV-2 were all 34.0 (95% CI with positive T-cell responses were noted across Military Medical negative at day 0, 22.6–50.1) was noted the all dose groups post-vaccination. The Sciences, PLA of and increased in the high dose activation of both CD4+ T cells and CD8+ T China moderately at day 14, group, which was cells was observed in vaccine recipients, peaking at 28 days significantly higher particularly for antigen-specific CD4+ T cells post-vaccination. compared with 16.2 and CD8+ T cells. (10.4–25.2) in the middle dose group and 14.5 (9.6–21.8) in the low dose group at day 28.

RBD-Dimer Anhui Zhifei/ Protein Phase I, China At day 30 after the first At day 7 after the third Not reported Note reported Institute of subunit (NCT04445194) immunisation, dose, the SARS-CoV- Microbiology, seroconversion rates 2-neutralising GMTs Chinese Academy were 61% (11 of 18 were 14.0 (95% CI of Sciences participants) in the 8.0–24.6) in the 25 25 µg group and 79% µg group and 11.4 (15 of 19 (6.6–19.8) in the 50 participants) in the µg group at day 30 50 µg group, and after the second dose, increased to 100% in and increased to 94.5 both groups (15 of 15 (49.3–181.3) in the participants in the 25 25 µg group and µg group and 18 of 117·8 (64.6–214.9) in 18 in the 50 µg the 50 µg group at group) at day 30 day 7 after the third after the second and dose. third immunisations.

CoronaVac Sinovac Inactivated Phase I/II, China The seroconversion For GMT, it was 5.6 T-cell responses Not included in the virus (NCT04352608) rates of neutralizing [95% CI 3.6–8.7] in measured by ELISpot study design, because antibodies were 11 the 3 µg group versus were low in inactivated vaccines (46%) of 24 7.7 [5.2–11.5] in the participants who were are not thought to participants in the 6 µg group versus 2.0 given vaccine, which induce CD8 T-cell 3 µg group versus [2.0–2.0] in the provided no clear responses. 12 (50%) of 24 placebo group at 14 evidence that the participants in the 6 days after the second vaccine induced µg group versus none dose, 5.4 [3.6–8.1] in T-cell responses. of 24 participants in the 3 µg group versus the placebo group at 15.2 [11.2–20.7] in 14 days after the the 6 µg group versus second dose, and six 2.0 [2.0–2.0] in the (25%) participants in placebo group at 28 the 3 µg group versus days after the second 20 (83%) in the 6 µg dose in the days 0 group versus none in and 14 vaccination the placebo group at cohort; 16.0 28 days after the [10.4–24.7] in the 3 second dose in the µg group versus 25.9 days 0 and 14 [14.6–46.1] in the 6 vaccination cohort; µg group versus 2.0 and 19 (79%) of [2.0–2.0] in the 24 participants in the placebo group at 14 3 µg group versus days after the second 20 (83%) of 24 in the dose, and 19.0 6 µg group versus [13.2–27.4] in the 3 none of 23 in the µg group versus 29.6 placebo group at [17.9–48.9] in the 6 14 days after the µg group versus 2.2 second dose, and [1.8–2.8] in the 20 (83%) in the 3 µg placebo group at 28 group versus days after the second 19 (79%) in the 6 µg dose in the days 0 group versus one and 28 vaccination (4%) in the placebo cohort. group at 28 days after the second dose in the days 0 and 28 vaccination cohort.

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• Strong stability for vaccine storage and distribution. The stability profile of a vaccine plays directly to its ability to be deployed and stockpiled in an efficient and executable manner, especially during a pandemic. As pDNA is naturally stable, pGX9501 can be stored and delivered efficiently and effectively across a much broader temperature range to remote regions without ultra-cold chain logistics and storage. This enables pGX9501 to be more suitable and cost-effective for longer- term storage and for distribution across China, especially to regions with less developed infrastructure, as well as for long-term stockpiling. The following table sets forth a comparison of storage and logistics requirement for our pGX9501 and currently approved vaccines that have conducted clinical trials in China as of the Latest Practicable Date:

Vaccine Cold chain Vaccine name Developer platform Development status Storage temperature requirement pGX9501 Our Group/Inovio DNA Phase II in China At least 4.5 years at Normal cold chain (INO-4800) Phase II/III in US 2–8 °C, one year in required (2-8 °C) room temperature and one month at 37 °C*

Pfizer-BioNTech Pfizer/ mRNA EUA granted by FDA, 6 months at ultra-cold Ultra-cold chain COVID-19 BioNTech/Fosun Phase II in China temperature; 5 days required (-80 °C) Vaccine Pharma at 2-8 °C

BBIBP-CorV Beijing Institute of Inactivated Conditionally 2–8 °C for 2 years Normal cold chain Biological Products, virus approved by NMPA required (2-8 °C) Sinopharm

WIBP-CorV Wuhan Institute of Inactivated Conditionally 2–8 °C for 2 years Normal cold chain Biological Products, virus approved by NMPA required (2-8 °C) Sinopharm

Convidicea CanSino/Institute of Viral vector Conditionally 2-8 °C Normal cold chain Biotechnology, approved by NMPA required (2-8 °C) Academy of Military Medical Sciences, PLA of China

RBD-Dimer Anhui Zhifei/Institute Protein EUA granted by 2-8 °C Normal cold chain of Microbiology, subunit NMPA required (2-8 °C) Chinese Academy of Sciences CoronaVac Sinovac Inactivated Conditionally 2-8 °C for 3 years Normal cold chain virus approved by NMPA required (2-8 °C)

* The storage time at different temperatures are for reference only.

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Summary of Selected Clinical Trials

Phase I Clinical Trial (NCT04336410) in the United States by Inovio

Overview. The phase I clinical trial of INO-4800 in the United States is an open-label trial to evaluate the safety, tolerability and immunogenicity of INO-4800 administered by ID followed by EP using the CELLECTRA® 2000 device in healthy adult volunteers, including elderly subjects aged 65 years and older.

Trial design. This trial was designed as a phase I, open-label, multi-center trial. INO-4800 was evaluated in subjects aged 18-50 years (60 subjects), 51-64 years (30 subjects) and 65 years and older (30 subjects), receiving either a 0.5 mg, 1.0 mg, and 2.0 mg of INO-4800 administered by ID injection followed by EP using the CELLECTRA® 2000 device on Day 0 and Week 4. Each subject would receive first dose of INO-4800 on day 0, and the second dose on day 28, followed by a 52-week follow-up period. The primary endpoints include administration (injection) site reactions, systemic AEs, AE of special interests (“AESIs”), antibody titers, and cellular immune response, from day 1 to week 52. Safety endpoints included systemic and local administration site reactions up to eight weeks after first dose. Immunology endpoints include antigen-specific binding antibody titers, neutralization titers and antigen-specific IFN-␥ cellular immune responses after two doses of vaccine.

Trial status. This trial was initiated in April 2020 and with phase II enabling data available in September 2020. A total of 120 healthy volunteers have been enrolled under the current design with 40 subjects in each dose cohort. Subject follow-up is ongoing in this trial. 117 subjects completed both doses. One subject in the 2.0 mg group discontinued trial participation prior to receiving the second dose due to lack of transportation to the clinical sites, and such discontinuation was unrelated to the study or the dosing. Two subjects in the 0.5 mg group, including one in the 18-50 years age group and the other in the 65 years and older age group, discontinued treatment prior to receiving a second dose due to pre-existing hypertension that is exclusionary under the eligibility criteria; their hypertension was controlled at study entry and have remained controlled during study follow-up. There have been no discontinuations of treatment or study participation due to AEs.

Safety and tolerability results. INO-4800 was generally safe and well-tolerated with primarily Grade 1 (mild) injection site reactions without any reports of related serious AEs in all participants in three age groups, namely aged 18-50 years, 51-64 years, and 65 years and older. Based on published clinical data from the first cohort of 40 participants from the 18-50 years aged group, only six treatment related Grade 1 (lowest) AEs were reported, most of which were local injection site reactions including injection site pain and redness. No SAEs nor AESIs were reported. Furthermore, AEs did not increase in frequency nor severity with increasing dosing level, increasing age and second dose vaccinations when compared to first dose vaccinations.

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Immunogenicity results. The clinical immunogenicity profile of INO-4800 is characterized by its ability to induce neutralizing antibodies, binding antibodies, and cellular immune responses. Based on published clinical data from the first cohort of 40 participants from the 18-50 years aged group, INO-4800 was immunogenic in all vaccinated subjects, effectively generating an immune response of humoral (including neutralizing antibodies) and/or cellular immune responses (both CD4 and CD8 T cells). A total of 38 subjects were included in the immunogenicity analyses of the first cohort. In addition to the discontinuation of one subject in the 2.0 mg group, one subject in the 1.0 mg group was excluded from the analyses because of a prior COVID-19 infection history. Based on the published clinical data, all 38 (100%) evaluable participants displaying either or both antibody or T cell responses following two doses of INO-4800, INO-4800 generated balanced humoral and cellular immune responses. Humoral responses measured by binding or neutralizing antibodies were observed in 95% of the participants in each dose group. The 1.0 mg and 2.0 mg dose groups both demonstrated seroconversion in 95% of subjects, respectively, with 78% demonstrating neutralizing antibodies in the 1.0 mg dose group and 84% demonstrating neutralizing antibodies in the 2.0 mg dose group. Cellular (T cell) response were observed to multiple regions of the spike protein, including the RBD region. 74% had measurable cellular responses at the 1.0 mg dose group and 100% of the subjects in the 2.0 mg dose group demonstrated cellular responses.

Our Phase I Clinical Trial (ChiCTR2000038152) in China

Overview. The phase I clinical trial in China is a single-center, randomized, double-blind, placebo-control, dose-finding clinical trial to evaluate the safety, tolerability and immunogenicity of pGX9501 administered by ID followed by EP using the CELLECTRA® 2000 device in healthy adults aged 18 to 59 years in China.

Trial design. After a two-week subject screening period, 45 subjects were enrolled and randomized into 0.5 mg, 1.0 mg and 2.0 mg dose cohorts at a ratio of 1:1:1 with 12 subjects receiving pGX9501 and three subjects receiving placebo in each cohort. Each subject would receive first dose of pGX9501 on day 0 and the second dose on day 28, followed by a one-year follow-up period. Enrollment and dosing would proceed sequentially from 0.5 mg dose cohort. Once the first three sentinel subjects in 0.5 mg dose cohort complete the Week 1 visit after their first dose, the safety and tolerability data would be reviewed by the Data Safety Monitoring Board (DSMB). Further enrollment into this cohort and other cohorts would be paused during this DSMB review. If DSMB determines there are no safety concerns for stopping the enrollment, enrollment would be opened for the remaining subjects in this cohort, of which nine subjects would receive pGX9501 and three subjects would receive placebo, also three sentinel subjects from the next dose cohort will be enrolled in parallel to the 12 subjects in the current cohort. For each cohort, if no AEs trigger the stopping rules, the subjects would receive their second dose on day 28. The primary objective of this trial is to evaluate the safety and tolerability of pGX9501 in healthy subjects aged 18 to 59 years. The secondary objective is to evaluate the humoral response of pGX9501 in healthy subjects aged 18 to 59 years. The exploratory objective is to (i) evaluate the cellular immune response of pGX9501 in healthy subjects aged 18 to 59 years; (ii) explore the relationship between the metabolites of intestinal and oral microflora with the levels of humoral and cellular immune responses; (iii) explore the change of peripheral blood mononuclear cells (PBMCs) during immunization; and (iv) describe the changes of B cell receptor (BCR) and TCR repertoire during vaccine immunization. The principal investigators of this trial are Ms. Jing ZHANG and Mr. Wenhong ZHANG of Huashan Hospital Affiliated to Fudan University.

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Trial status. This trial was initiated in September 2020 and was completed in November 2020 as all primary endpoints have been reached. As of the Latest Practicable Date, all 45 subjects have completed their 30-day follow-up visits after the second dose.

Safety and tolerability results. The phase I clinical trial showed that pGX9501 was generally safe and well-tolerated in all 45 participants through 28-day follow-up after 1st dose and 30-day follow-up after 2nd dose, with most TEAEs classified as Grade 1 (lowest) AEs and were mostly local injection site reactions with short duration. Only Grade 1 (lowest) and Grade 2 systemic AEs were observed in our phase I clinical trial.

Ongoing Phase II Clinical Trial (ChiCTR2000040146) in China

Overview. The phase II clinical trial in China is a randomized, double-blinded, placebo-control, dose-finding clinical trial to evaluate the safety and immunogenicity of pGX9501 at different dose levels administered by ID followed by EP using the CELLECTRA® 2000 device in healthy adults and elderly volunteers.

Trial design. The phase II clinical trial of pGX9501 in China enrolled both 18-59 years old healthy adults and older adults aged 60-85 years old with the primary endpoints of evaluating safety and immunogenicity within the Chinese population. The planned sample size is 640 subjects. The dosing regimen involves two dose levels at 0 and 28 days with either 1.0 mg or 2.0 mg and the same as the phase II segment of phase II/III clinical trial in U.S. Four cohorts were scheduled, including two cohorts of healthy adults (18-59 years old) and two cohorts of older adults (60-85 years old) at each dose level. Subjects in both dose levels enrolled in parallel with sentinel design in the elderly subjects group.

The primary objectives of this trial are to evaluate the safety, tolerability and humoral immune responses of pGX9501 at different dose levels in all subjects. The secondary objective is to evaluate the duration of humoral response of pGX9501 at different doses in healthy subjects at different ages. The exploratory objective is to evaluate the cellular immune response of pGX9501 at different doses in healthy subjects. The principal investigator of this trial is Mr. Fengcai ZHU of Jiangsu Provincial Center for Disease Control and Prevention.

Trial status. This trial was initiated in December 2020. As of the Latest Practicable Date, we completed dosing and the 30-day follow-up after the second dose for all planned subjects, except those that voluntarily withdrew due to unrelated SAE or personal reasons.

Ongoing Phase II/III Clinical Trial (NCT04642638) in the United States by Inovio

Overview. The phase II/III clinical trial of INO-4800 in the United States is a randomized, placebo-controlled, multi-center trial to evaluate the safety, immunogenicity and efficacy of INO-4800 administered by ID followed by EP using CELLECTRA® 2000 device in participants with high risk of exposure to SARS-CoV-2.

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Trial design. The phase II segment of the trial is designed to evaluate immunogenicity and safety of INO-4800 in two-dose regimens, 1.0 mg or 2.0 mg, across three age groups, namely subjects aged 18-50 years, 51-64 years and 65 years and older. Safety and immunogenicity information from the phase II segment will be used to determine the dose level for the phase III efficacy segment of the study.

Trial status. This trial was initiated in November 2020 and is currently ongoing. As of the Latest Practicable Date, Inovio had recruited a total of 400 subjects to the phase II segment of this trial as planned. The phase III segment of this trial remains on partial clinical hold until Inovio satisfactorily resolves the FDA’s remaining questions related to the CELLECTRA® 2000 device that will be used to deliver INO-4800 directly into the skin. CELLECTRA® is a smart device developed by Inovio, uses EP that creates transient pores on cells in the injection site to allow more efficient intake of DNA vaccine. The safety and efficacy of CELLECTRA® as a delivery platform for a DNA vaccine or immunization via an IM or intradermal route were established in an open label study in healthy volunteers. Inovio is actively working to address the FDA’s questions and plan to respond in May 2021, after which the FDA will have up to 30 days to notify Inovio of its decision as to whether its phase III clinical trial may proceed. Our Directors are of the view that as our clinical trials of pGX9501 in China are independent to the clinical trials conducted by Inovio in US, we do not expect the status of Inovio’s clinical trials in the US to affect our ongoing phase II or later clinical trials in China. See “Risk Factors—Risks Relating to Development, Clinical Trials and Regulatory Approval of Our Vaccine Candidates—Vaccine development involves a lengthy and expensive process with uncertain outcomes.”

Material Communication and Next Steps

The NMPA granted an umbrella IND for phase I and phase II trial to pGX9501 in July 2020. Based on the umbrella approval and the preliminary data obtained from phase I clinical trial in the U.S. and China, we have consulted with the CDE of the NMPA and the CDE had not expressed objection to the initiation of phase II clinical trials of pGX9501. In November 2020, we received an approval letter for commencement of phase II clinical trial from the Ethics Committee of Jiangsu Provincial Center for Disease Control and Prevention. We commenced phase II clinical trial in December 2020 and expect to commence phase III clinical trial for pGX9501 in the second quarter of 2021 and file a BLA or EUA application with the NMPA in the second half of 2021.

WE MAY NOT BE ABLE TO ULTIMATELY DEVELOP AND MARKET pGX9501 SUCCESSFULLY

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ADV110–Phase II RSV Vaccine Candidate

RSV is a leading cause of acute viral lower respiratory track illness, or LRTI, in infants and children and in the elderly and immunocompromised adults worldwide. 96% children under 5 years old are infected by RSV. However, there are no available vaccine against RSV globally. ADV110, also known as BARS13 in certain clinical trials, is a potential first-in-class protein subunit vaccine we self-developed with a novel adjuvant, designed to protect children from 6 months to 5 years old and the elderly above 65 years old from LRTI, for which RSV is a major cause. Our ADV110 has demonstrated promising immunogenicity and was safe and well-tolerated in phase I clinical trial and pre-clinical studies. We have commenced our phase II clinical trial in Australia in April 2021 and expect to complete our phase II clinical trial in 2023.

Mechanism of Action

ADV110 is a protein subunit RSV vaccine comprising two active components in an optimized ratio, namely (i) a purified RSV G protein subunit, which functions as the immunogenic component, and (ii) AE011, an adjuvant we developed, when using cyclosporine A used at a trace amount, AE011 can function as an immunomodulator and the diluent to reconstitute the RSV G protein. Our ADV110 induces high level of antigen specific Treg cells mainly in lung lymph nodes, BAL and the lung where inflamed T cells being suppressed. ADV110 can also induce high level of anti-G protein specific antibodies and neutralizing antibodies against RSV infection, which in turn to reduce viral loads in lungs. The following diagram illustrates the MOA of ADV110.

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T lymphocytes are thought to play a critical role in the control of VED. Treg cells are considered as a critical factor to control the pathology of VED in RSV infection. Previous studies showed that inactivated RSV vaccination expelled Treg cells away from lung and made pulmonary tissue prone to inflammation, resulting in severe lung injury upon RSV infection. However, Treg cells induced by ADV110 produce locally in the lung a large amount of IL-10 in response upon the RSV infection and suppressing antigen-primed T cell activation and proliferation. Treg cells induced by ADV110 can also migrate from lymph nodes to lung through the CCL17/22-CCR4 axis of chemotaxis due to high levels of CCR4 on its surface expressed by Treg cells.

• RSV G glycoprotein. RSV G protein is a major glycoprotein on the surface of the RSV virion that controls the initial phase of infection, which ensures ADV110 prevents the RSV infection at the earlier stage and targets variant strains of RSV. RSV G protein is also a major vaccine target that induces B cells to produce neutralizing antibodies against RSV.

There are two subtypes of RSV, RSV A and B, and they differ primarily in the sequence of the G protein. Neutralizing/binding antibodies to RSV G protein are protective but may require both GA and GB proteins to achieve broad coverage. Antibodies to the chemokine (CX3C) motif reduces severity of RSV-mediated disease and also protects from ERD. Preclinical studies conducted by FDA have shown that non-glycosylated RSV G protein has less differential sera-type than that of the glycosylated form, and could provide a strong protection against both GA and GB (doi:10.1128/JVI.00133-15).

ADV110, as a non-glycosylated RSV G protein-based vaccine candidate, can (i) induces Treg cell to down-regulate overreactive and enhanced respiratory disease caused by T cell responses, which is the key to overcome the problem of VED, founded in other types of RSV vaccine; and (ii) induces B cells to produce neutralizing antibodies against RSV. We chose the non-glycosylated form of RSV G protein due to its potentially better immunogenicity compared to the glycosylated form. Preclinical studies conducted by FDA (doi:10.1128/JVI.00133-15 and doi:10.1038/srep42428) have shown that in animal RSV A and RSV B challenge studies, E. coli-produced non-glycosylated RSV G protein-based vaccine can stimulate cross-reactive neutralizing antibodies against both homologous RSV A and heterologous RSV B virion with high protective immunity and without lung pathology, and reduced lung viral load to undetectable levels, indicating non- glycosylated G protein could be developed as a stand-alone RSV vaccine, while RSV A recombinant glycosylated G protein produced in mammalian cells cannot generate cross-reactive antibody responses, provided poor protection and enhanced lung pathology, implicating the risks of VED observed in certain previously failed RSV vaccine investigations. Therefore, the bacterially produced non-glycosylated G protein holds promise as an economical approach to a vaccine against RSV.

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• AE011. An adjuvant we developed when used as immunosuppressant, AE011, can inhibit calcineurin (a T cell activator) by inhibiting the activity of T cell. We discovered that it could modulate T cell differentiation via antigen presentation process to become Treg cells rather than traditional Th1 or Th2 cells, and to control VED by suppress overreactive T cells in lung. As Tregs play an important role in control of VED, ADV110 is developed using a combination of the RSV G protein with AE011 to induce functional Tregs and neutralizing antibodies against RSV. Our preclinical study shows that in vivo, ADV110 not only induced a high level of neutralizing antibodies to reduce viral titers but also suppressed the lung inflammation typically associated with the occurrence of VED following vaccination with inactivated RSV vaccine. Therefore, ADV110 presents a novel approach to RSV vaccine development that, from preclinical studies, is anticipated to be safe and effective in the target populations (children and the elderly).

Market Opportunities of RSV Vaccines and Competition

RSV is a leading cause of acute viral LRTI worldwide. The virus causes infection at all ages, especially in children under 5 years old, the elderly above 65 years old and immunocompromised adults. 96% children under 5 years old are infected with RSV. Globally, the total population of children below 5 years of age is around 680 million and that of elderly over 65 years of age is around 709 million. In China, the total population of children below 5 years of age is around 83 million and that of elderly over 65 years of age is around 176 million. In 2017, the WHO estimated that RSV caused around 33 million serious respiratory infections, most of which were LRTIs (including ALRTI), every year. The burden of RSV on the global economy is US$4.2 billion per year, according to the F&S Report.

There are no available vaccines against RSV globally. The development of RSV vaccines was hindered for many years due to safety concerns as healthy infants experienced VED after administration of an inactivated RSV vaccine candidate in the 1960s. However, on natural exposure to RSV, some naive infants experienced VED, of which 80% required hospitalization and two died. Older children who had likely been primed by a previous RSV infection did not experience VED. After this failed candidate, the potential of VED became a fundamental concern in the development of RSV vaccines in seronegative children. In recent years, there has been an explosion of immunization strategies for RSV moving through the drug discovery pipeline. As of the Latest Practicable Date, there were seven RSV vaccine candidates globally in phase II or later clinical stage, including our ADV110. Our ADV110 is the only clinical-stage RSV vaccine candidate designed and developed by Chinese companies and one of the most clinically-advanced globally. We are also the first in clinical stage to use a novel adjuvant that acts as an immunomodulator in RSV vaccines, potentially expanding the use of adjuvants beyond its traditional role of enhancing immunogenic response in vaccines.

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Target Vaccine candidate Developer Vaccine platform Viral target population Clinical stage

RSVpreF Pfizer Protein subunit Prefusion F Maternal, elderly Phase III protein (Ն65)

RSVPreF3 GSK Protein subunit Prefusion F Elderly (Ն65) Phase III (GSK3844766A) protein

GSK RSV F GSK Protein subunit F protein Maternal Phase III (GSK3888550A)

ADV110 Our Group Protein subunit G protein Pediatric (Յ5), Phase II elderly (Ն65)

ChAd155-RSV GSK Viral vector based F, N, M2-1 Pediatric (Յ5) Phase II (GSK3389245A) proteins

Ad26.RSV.preF Janssen Viral vector based Prefusion F Pediatric (Յ5), Phase II protein elderly (Ն65)

MVA-BN RSV Bavarian Nordic Viral vector based F, G (A and B Elderly (Ն65) Phase II subtypes), N, M2 proteins

Advantages of ADV110

Compare with the other phase II or phase III clinical-stage RSV vaccine candidates as of the Latest Practicable Date, our ADV110 has the following advantages:

• Favorable humoral immune responses. Our ADV110 targets the RSV G protein, a major glycoprotein on the surface of the RSV that controls the initial phase of infection, which ensures that ADV110 prevents the infection at an earlier stage and targets variant strains of RSV. Our non-glycosylated RSV G protein-based vaccine can induce B cells to produce neutralizing antibodies against RSV, as demonstrated in pre-clinical studies. Our phase I clinical trial demonstrated immune responses after full vaccination in the majority of subjects.

• Innovative immunomodulator adjuvant to control VED. We have developed an innovative immunomodulator adjuvant, AE011, which, if used at trace amounts together with the protein antigen, such as the RSV G protein, can induce Treg cells to down-regulate overreactive T cell responses that cause enhanced respiratory disease, which is crucial in overcoming VED found in certain previously failed RSV vaccine investigations. It can modulate T cell differentiation via antigen presentation process to become Treg cells rather than traditional Th1 or Th2 cells, to control VED by suppressing overreactive T cells in the lungs. This enables our ADV110 not only induce a high level of neutralizing antibodies but also control VED that was frequently observed in other failed vaccines.

– 187 – • Safety and tolerability. Our ADV110 was safe and well-tolerated for both low and high dose levels and for both single and repeat doses. BE MUST DOCUMENT INFORMATION THIS THE OF AND COVER CHANGE THE TO ON “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE FORM, WITH CONJUNCTION DRAFT IN IN READ IS DOCUMENT THIS In phase I clinical trial, no SAEs were experienced by any of the participants at any time during the trial. Moreover, there were no severe or life-threatening TEAEs, and the majority of TEAEs recorded were mild. The frequency of TEAEs and drug-related TEAEs did not increase with vaccine dose level and frequency. The following table sets forth a non-head-to-head comparison of phase I clinical safety

results of ADV110 and other phase II or phase III clinical-stage RSV candidates: Not reported

Safety profile High levels of RSVPreF3 IgG antibodies Clinical study Vaccine-related used for safety (geometric mean antibody concentrations SAEThe adjuvanted ImmunogenicityNot reported VED findings comparison Sample size DosingThe regimen most frequently reported Vaccine-relatedwere 8.4–13.5 TEAE for the 18-40 year old candidate vaccineMostvaccinees, subjects and showed 7.2–12.8 immune fold-higher response in thein Vaccine candidate Developer AEs were pain at injection has been well 60–80-year-old vaccinees) and RSV-A site, fatigue and headache terms of binding antibody ELISA after GSK3844766A GSK Phase1055, I/II, (18-80 US,Two Belgium, doses (30, 60 or 120 µg; tolerated withvaccination.neutralising no antibodies 100% of subjects (geometric in high mean dose antibody titers were 7.5–13.7 in the 18–40 (NCT03814590) Years) unadjuvanted, adjuvanted with safety concernscohort showed immunoresponse. No SAEs were year old vaccinees, and 5.6–9.9 fold-higher AS01E or adjuvanted with identified. in 60–80-year-old vaccinees) were induced AS01B) administered experienced by in all vaccinated groups. intramuscularly at DaysMajority 1 and of the TEAEsany of the participants in 61 in the deltoid regionrecorded of the were classified as arm. the study. No RSVpreF Pfizer Phase III, global N/A*mild. N/A*TEAEs were N/A* N/A* N/A* N/A* classified as 60, (18 to 4560 eligible subjects aged 18 to BUSINESS ADV110 Our Group Phase I, Australia severe or life- years) 45 (inclusive) years oldFatigue were was the most threatening.

8 – 188 – (ACTRN1 enrolled and randomized in a 2618000948291) frequently reported 4:1 ratio (ADV110 versussolicited systemic adverse placebo) across four cohortsreaction, and it was most (15 subjects/cohort) to receivefrequently reported as one of low-dose treatmentsevere. (one/two times vaccination), high-dose treatment (one/two times vaccination) or placebo.

* Public data not available. HSDCMN SI RF OM NOPEEADSBETT HNEADTEIFRAINMS BE MUST DOCUMENT INFORMATION THIS THE OF AND COVER CHANGE THE TO ON “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE FORM, WITH CONJUNCTION DRAFT IN IN READ IS DOCUMENT THIS Safety profile Not reported MVA-BN-RSV induced IFN- Clinical study Vaccine-relatedModerate but consistent humoral␥ responses used for safety No SAEs or AEs of -secreting T cells without SAEAfter the Immunogenicity first vaccination, GMTs for RSV-A2 VED findings No serious AEswere observed against A and B RSV comparison Sample size Dosing regimenspecial Vaccine-related interest TEAE inducing IL-4-secreting T Injection site: erythema, neutralizationsubtypes (up to increased approximately from baseline 2-fold (432 Vaccine candidate Developer were relatedreported. to cells. This Th1 type-biased forincreases LD and in 512 the highfor HD dose vaccine) groups). to day 29 Injection site: erythema,vaccination. immune response limits the MVA-BN RSVPhase Bavarian I, US 63, (18-65 63 participants were allocatedinduration, to 3 pain, pruritus, (1,031 for LD and 1,617 for HD). Pre-F- swelling/indurationswelling; General reaction: and risk of enhanced disease. Nordic (NCT02419391) years) groups: adult (18–49 years) low specific antibody GMTs and median pain/tenderness;body temperature Systemic: (1 × 107 TCID50) or high (1 × frequencies of F-specific interferon fatigue,increased, headache, chills, fatigue, myalgia, ␥ 108 TCID50) dose and older -secreting T cells also increased Ad26.RSV.preF Janssen Phase72,I, (60Ն USA years) 72 participants receivedarthralgia,headache, 1 or 2 myalgia, chills, nausea nausea. adult (50–65 years) high dose. substantially from baseline. (NCT02926430) intramuscular injectionsand of low- fever. dose (LD; 5 × 1,010 vector particles) or high-dose (HD; 1 × 1,011 vector particles) Ad26.RSV.preF vaccine or placebo, with approximately 12 months between doses and 2-year follow-up for safety and immunogenicity outcomes. BUSINESS 8 – 189 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT BUSINESS

• Manufacturing. Our ADV110 uses E. coli as production host, which produces naturally non-glycosylated G proteins which are effective against both RSV A and B subtypes. Our pGX9501 also uses E. coli for production. We also believe using E. coli generally translates to a cost-effective and scalable manufacturing process compared to other vaccine manufacturing processes using CHO or used by adenovirus vaccines. E. coli has the advantage of unparalleled fast growth on simple and inexpensive media due to short doubling time. High density cultures can be easily achieved using E. coli and the cost of fermentation materials and recovery materials for E. coli to produce proteins is low.

Summary of Clinical Trials

Phase I Clinical Trial in Australia

Overview. The phase I clinical trial of ADV110 in Australia was a first-in-human, single-center, randomized, double-blind, placebo-control, dose-escalation study to evaluate safety, reactogenicity and immunogenicity of ADV110 when administered intramuscularly (IM) to healthy adult volunteers.

Trial design. The study was conducted in a single center in Australia. A total of 60 eligible subjects aged 18 to 45 (inclusive) years old were enrolled and randomized in a 4:1 ratio (ADV110 versus placebo) across four cohorts (15 subjects/cohort) to receive one of the low-dose treatment (one/two times vaccination), high-dose treatment (one/two times vaccination) or placebo. Dose escalation was undertaken following one of two vaccination regimens across the four cohorts:

Number of Vaccination Step Cohort Treatment Participants Schedule

I 1 ADV110 low dosea 12 Day 0 Placebob 3

Safety Monitoring Committee Review of Cohort 1 safety data to trigger Step IId: II 2 ADV110 low dosea 12 Day 0 and Day 30 Placebob 3 3 ADV110 high dosec 12 Day 0 Placebob 3

Safety Monitoring Committee Review of Cohort 3 safety data to trigger Step IIId: III 4 ADV110 high dosec 12 Day 0 and Day 30 Placebob 3

(a) ADV110 low dose (one dose of 9.2 µg RSV-G protein/10 µg AE011 by IM injection to the deltoid region of one arm, and one dose of placebo by IM injection to the deltoid region of the other arm, given sequentially);

(b) Placebo (IM injection of saline/mannitol administered to the deltoid region of each arm, one injection of saline/mannitol per arm, given sequentially);

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(c) ADV110 high dose (IM injection of 9.2 µg RSV-G protein/10 µg AE011 administered to the deltoid region of each arm, one injection of 9.2 µg RSV-G protein/10 µg AE011 per arm, given sequentially). The high dose was twice the strength of the low dose; and

(d) If no safety holding criteria were met, initiation of both Cohort 2 and Cohort 3 (Step II; after review of Cohort 1 data) and Cohort 4 (Step III; after review of Cohort 3 data) could be triggered for enrollment, at the discretion of the Safety Monitoring Committee (SMC).

The primary objective of this trial was to evaluate the safety and immunogenicity of ADV110 when administered IM to healthy adult participants. The secondary objective was to evaluate the humoral response, in terms of IgG antibody titers to ADV110. The exploratory objective was to further investigate the humoral response and cell-mediated immunity (CMI) induced by two dose levels and vaccination regimens of ADV110 in healthy adult participants aged 18 to 45 years.

Trial status. The enrollment for this trial was initiated in October 2018 and the trial was completed in November 2019. A total of 60 subjects were enrolled, including three early withdrawals/discontinuation.

Safety and tolerability results. The phase I clinical trial showed that ADV110 was safe and well-tolerated at both low dose and high dose levels for both single dose and repeat doses. No SAEs were experienced by any of the participants in the study. No TEAEs were classified as severe or life-threatening. Majority of the TEAEs recorded were classified as mild. One TEAE of moderate asthma exacerbation reported by a placebo participant in cohort 2 led to the discontinuation of study drug. Overall, more participants experienced TEAEs during the 30-day follow up period after each vaccination than within the 30-minute window after each vaccination, regardless of treatment (active or placebo). Overall, the majority of solicited systemic adverse reactions were classified as mild, some reactions were classified as moderate, and 9 reactions were classified as severe. No solicited systemic adverse reactions were life-threatening. Fatigue was the most frequently reported solicited systemic adverse reaction, and it was the most frequently reported as severe. The majority of solicited systemic adverse reactions occurred for the first time in participants within 4 days following each injection.

Immunogenicity results. All participants enrolled in this trial were seropositive at baseline, showing a detectable level of anti-RSV-G IgGs in their blood before study drug administration. Over 90% antibody response showed in groups administered with a low dose of ADV110 and 100% of antibody response showed in groups administered with a high dose of ADV110. In sensitive populations, the percentage change from baseline in Cohorts 2 and 4 post-administration of ADV110 (at both low and high dose) was significantly improved, at Day 30 and Day 60, indicating a statistically significant change from baseline in anti RSV-G IgG ELISA absorbance values using plasma at 1:2000 dilution. There were no differences at either Day 30 or Day 60 (cohorts 2 and 4 only) within any of the placebo groups.

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Ongoing phase II Clinical Trial in Australia

Overview. The phase II clinical trial of ADV110 is a two-center, randomized, double- blind, placebo-controlled and dose-ranging study in healthy adults aged 60 to 80 years old to evaluate safety and immunogenicity.

Trial design. The study will be conducted in two centers in Australia with CMAX Clinical Research Pty Ltd as the coordinating site. A total of 120 volunteers aged 60 to 80 years (inclusive) will be enrolled in this study, and will be divided into 3 groups of 40 people per cohort. The vaccine will be administered by IM injection to the deltoid region of the arm. Cohort 1 (low repeat dose) includes one dose of 10 micrograms of the vaccine on one arm and one dose of placebo on the other arm given sequentially on Day 1 and 29. Cohort 2 (high repeat dose) includes one dose of 10 micrograms of the vaccine on each arm given sequentially on Day 1 and 29. Cohort 3 (high repeat multiple dose) includes one dose of 10 micrograms of vaccine to each arm sequentially on Day 1, 29 and 57. The primary objective of this trial is to evaluate the incidence and severity of vaccine-related AEs. The secondary objective is to evaluate the humoral response of ADV110.

Trial status. We have commenced our phase II clinical trial in Australia in April 2021 and expect to dose the first subject in the second quarter of 2021.

Preclinical Studies

Toxicity Studies

The toxicology studies include a single dose study in mice, a repeat dose study in cynomolgus monkeys and an anaphylaxis study in guinea pigs. All toxicology studies were performed in compliance with GLP. The animal doses used in toxicology studies were equal (or greater) to the full human dose proposed for the clinical trial, without scaling for body weight or surface area as recommended by relevant guidance of the WHO.

In the single dose toxicity study, ADV110 were administered via subcutaneous injection in ICR mice. No abnormal clinical observations were noted in any animals throughout the study. The study concluded that the maximal tolerance dose of ADV110 was considered to be 1 dose per subject following single dose administration via subcutaneous injection to ICR mice at 1 dose per subject. The dose in this study is 3,000 folds of the projected clinical dosage, assuming that a person body weight is 60 kg and a mouse is 20g.

In the repeat dose study, ADV110 was administered via IM injection in cynomolgus monkeys with a 4-week recovery period. No observed adverse effect level was 5 doses per animal and the dose of no observed adverse effect level in this study is 75 folds of clinical usage.

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Pharmacology Studies

Pharmacology studies have been performed in mice, rabbits and rhesus macaque monkeys to investigate the immunological response to ADV110 and protective efficacy from RSV challenge following immunization. Investigational emphasis has been placed on the potential of ADV110 to cause VED, which is characterized by the proliferation and infiltration of T cells into the lung causing inflammation and damaging lung tissue upon RSV challenge after vaccination that was observed during previous trials using the different inactivated RSV or RSV surface antigens.

Immunogenicity Studies

In animal studies to determine the immunogenicity of ADV110, all animals were immunized subcutaneously twice with a two-week interval between vaccinations, except studies specifically indicated with different routes for immunizations. Control groups consisted of inactivated RSV, RSV-G protein alone, AE011 alone, and PBS. Anti-G IgG and RSV neutralizing antibody titers were measured at day 28 as markers of the immune response. Typically, at day 28, PMBCs were isolated and T cell proliferation (CD3+ and CD4+ T cells) was measured in vitro with RSV antigen stimulated PMBCs.

In all animal species tested, ADV110-vaccinated animals showed significantly higher anti-G IgG and RSV neutralizing antibody titers when compared with PBS and RSV-G protein alone control groups. Investigations in BABL/c mice demonstrate that ADV110 immunized animals have high levels of Treg cells in BAL fluid and dLNs of the lung and spleen. These cells (or related or soluble factors in BAL fluid), were shown to be protective against lung inflammation and lung tissue damage following RSV infection. Moreover, there was more than a two-fold increase in the anti-inflammatory cytokine IL-10 in Treg cells from the spleen and dLNs measured in ADV110 immunized animals when compared to other groups.

Material Communications and Next Steps

In July 2018, we initiated a phase I first-in-human, randomized, double-blinded, placebo-controlled and dose-escalation trial of ADV110 in Australia under the authorization of the TGA and corresponding with the HREC. We received the approval from the HREC for the phase II clinical trial in September 2020 and have commenced our phase II clinical trial in Australia in April 2021. We expect our phase II clinical trial to be completed in 2023.

WE MAY NOT BE ABLE TO ULTIMATELY DEVELOP AND MARKET ADV110 SUCCESSFULLY

ADV311—Preclinical HBV Therapeutic Vaccine Candidate

Our ADV311 is a preclinical-stage therapeutic HBV vaccine that is a potential functional cure for CHB patients. We are developing ADV311 based on proof-of-concept technology we obtained from Fudan University. In China, there were 72.6 million HBV-infected patients in 2019. Diagnosis rate of hepatitis B in China was 22.0% in 2019, representing approximately 15.9 million patients, and treatment rate for hepatitis B in 2019 was only 24.6% among diagnosed patients, representing approximately 3.9 million patients. Currently available treatments are not functional cures, and it is generally agreed by scientists that immunotherapeutic treatments are needed in addition to long-term antiviral treatments to achieve both HBsAg and HBeAg seroconversion and to control liver cancer risks. We expect to submit IND application to the NMPA in 2022.

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Mechanism of Action

HBV is a double-stranded DNA virus. HBV consists of partially double-stranded DNA with an inner nucleocapsid of the HBcAg, and an outer lipoprotein envelope containing the HBsAg and pre-S1 and pre-S2 proteins. The HBsAg protein is produced in excess amounts, resulting in HBsAg-particles that circulate in the blood of infected persons. The hepatitis B e protein (HBeAg) is not a part of the virus particle but can be detected in the serum of patients with active HBV replication. Positive HBsAg is a marker for infection with HBV and for high viral replication. Positive HBsAg can also be detected in the initial phase of acute HBV infection. Previous studies showed that high incidence of both HBeAg and HBsAg contribute to higher risk of cirrhosis and liver cancer. Furthermore, both HBeAg and HBsAg also contribute to the immunological tolerance underlies viral persistence during chronic HBV infection against host immunity. By the same token, the effectiveness of immunotherapeutic vaccine is linked to break the immune tolerance. Therefore, HBeAg seronegative, and particularly HBsAg seronegative, is potentially a functional cure and has become a desired clinical goal.

ADV311 is a combination therapy that consisted a recombinant PreS1/S protein derived from Large HBsAg formulated with CA02, our adjuvant system consisting of GM-CSF, IFN-␣ and aluminium adjuvant:

• Recombinant PreS1/S protein. Although HBsAg is a clinically validated immunogen for prophylactic vaccines, it may not suitable for therapeutic applications due to its lacks of important T cell epitopes. By fusing the preS1 sequence with S protein together, the pre-S1/S antigen could achieve broad spectrum immunity, particularly the CD8 T cell function towards not only the S antigen region, but expanded to the preS1/S regions.

• GM-CSF. GM-CSF plays an essential role in the proliferation, differentiation, and survival of myeloid lineage cells. Due to its pleiotropic effects on different cell lineages, GM-CSF is known to be a potential vaccine adjuvant to elicit immune responses, however, it may induce or suppress immune responses depending on different doses and regimens. In our proof-of-concept studies, in order to achieve enhanced immune responses, we administered GM-CSF once per day for three days prior to vaccination with protein subunit HBV vaccine in mice. We found that immune tolerance were overcome and the levels of induced anti-HBsAg antibodies were significantly higher in animals following the three-day pre-treatment before vaccination compared with one-day or two-day pre-treatment protocols. In addition, cell-mediated immune responses, including delayed-type hypersensitivity, T-cell proliferation, interferon-␥ production, and cytotoxic T lymphocytes, were dramatically enhanced in the three-day GM-CSF pre-treated group. Moreover, the three-day pre-treatments with GM-CSF prior to vaccination could significantly eliminate positive HBsAG hepatocytes, suggesting beneficial therapeutic effects. An investigator-initiated clinical study (ChiCTR-TRC-13003254) was conducted to study increase HBsAg clearance rate in HBeAg positive CHB patients with therapy based on below proof-of-concept studies to treat 720 chronic HBV infected patients. The study demonstrated that a 15.4% HBsAg negative conversion rate was achieved during one year with 6 treatments.

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• IFN-␣. IFN-␣ is the first substance licensed for CHB therapy. It can accelerate dendric cell maturation and promote co-stimulation factor expression and pro- inflammatory cytokine secretion in the presence of GM-CSF. Studies have shown that GM-CSF and IFN-␣ can act together as an effective vaccine adjuvant for antitumor and antiviral immunity in both mouse models and human diseases. An immunotherapeutic vaccine candidate, consisted of IFN-␣, GM-CSF, and recombinant HBsAg formulated in CA02 adjuvant system as CA02 + HBsAg was tested in a mouse model using recombinant adeno-associated virus 8 (AAV8)- 1.3HBV infection. We observed that CA02 + HBsAg candidate administered into animals induced a robust antigen-specific immune response with a 100% seroconversion of HBeAg and HBsAg along with a significant reduction of viral DNA in sera and elimination of HBcAg-positive hepatocytes in this infected model. Further study revealed that the significant therapeutic effects were initiated by activation of Ly6Chi CCR2+ monocytes that are essential in recruitment and induction of CD11b+CD11c+ DC. The therapeutic effect of the CA02 + HBsAg candidate administrations arose by breaking the HBV-induced immunotolerance. This resulted in the recruitment and conversion of monocytes into moDC and these generated the robust responses include HBsAg-specific T cell proliferation, cytolytic CD8+ T cell activity and B cell production of anti-HBsAg antibodies. This novel regimen thus provides a simple yet highly effective therapeutic treatment for CHB that has long been desired by the field. The following diagram illustrates the MOA of ADV311.

CA02+HBsAg

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Market Opportunities of HBV Vaccines and Competition

Hepatitis B is a widespread and infectious liver disease caused by HBV, commonly transmitted from mother to child, or through horizontal transmission, especially from an infected child to an uninfected child during the first 5 years of life. The clinical symptoms of hepatitis B include loss of appetite, liver pain, and weakness. Most adults infected with HBV can self-heal but children infected with HBV could easily develop chronic hepatitis, which could later lead to cirrhosis, liver failure and liver cell carcinoma.

Patients with HBV present with a high level of disease burden, including social stigma, labor loss, and heavy economic burden. Hepatitis B can cause complications such as cirrhosis, liver failure and liver cancer. According to the Prevention and Treatment Guidelines for Hepatitis B, the proportion of patients with primary liver cancer or liver cirrhosis caused by HBV around the world is 45% and 30%, respectively. In China, the proportion of patients with primary liver cancer or cirrhosis caused by HBV is 80% and 60%, respectively. It is estimated that the total healthcare cost of HBV related chronic infection, liver cirrhosis and liver cancer is about RMB80 billion to RMB120 billion per year in China.

In China, there are an estimated 72.6 million HBV-infected patients in 2019, and hepatitis B had a diagnosis rate of 22.0% among the estimated 15.9 million HBV-diagnosed patients. Diagnosis rate of hepatitis B has historically been low due to the lack of awareness and effective treatment for the disease, especially in remote areas. As a result of the lack of breakthrough therapies against HBV, only approximately 3.9 million patients within this large patient pool were treated in 2019, representing a treatment rate of 24.6% among diagnosed patients.

Previous studies have shown that the presence of both HBeAg and HBsAg leads to an approximate 10% chance of liver cirrhosis or liver cancer. Presence of only HBsAg lowers the chance of liver cancer and the lack of both antigens translates to almost no chance of liver cancer.

There are long-term standard of care treatments for HBV, but none of them are a functional cure. According to the F&S Report, functional cure refers to sustained immunological control of HBV infection in the absence of HBV therapies and shows seronegative for HBsAg with or without sero-positive for HBsAb. It is generally agreed by scientists that immunotherapeutic treatments are needed in addition to long-term treatments. Therefore, the demand for HBV vaccine is vast as most of HBV patients need functional cure to lower their liver cancer risk. However, as of the Latest Practicable Date, there were no approved HBV therapeutic vaccines in China. As of the same date, there were three HBV therapeutic vaccine candidates in China and ten outside China in clinical stage.

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Proof-of-Concept Studies

HBsAg Sero-clearance and Humoral Response in Mice

Studies (doi:10.1038/cmi.2015.64; doi:10.1080/21645515.2017.1344797) demonstrated that employing three-day pretreatment of GM-CSF prior to a HBV vaccine vaccination could induce CD11b+ Ly6Chi monocyte-derived DCs more effectively and lead to robust antigen- specific immune responses not only in mice, but more importantly in those HBV and AAV8-1.3HBV-infected animal models, with both serum levels of HBeAg and HBsAg were 100% cleared along with a 95% reduction of HBV-positive hepatocytes, which were apparently associated with the presence of large number of infiltrating CD8+ T cells in the livers.

Investigator-initiated Clinical Study in CHB Patients

Due to such potent strategy and easy to adopt for clinical tests, such protocol was used in an investigator-initiated clinical study (ChiCTR-TRC-13003254) to study increase HBsAg clearance rate in HBeAg positive CHB patients with new antiviral/immunomodulatory therapy to treat 720 chronic HBV infected patients. The objectives of the study is to create anti-virus/immunotherapy new strategy for improving HBsAg seroconversion rate in patients with HBeAg-positive CHB, and to achieve HBsAg seroconversion rate of more than 5%. The study is a parallel study and involved drugs including IFN-␣ 2b, the the original nucleoside (acid) class of antiviral (NA) (including lamivudine, adefovir dipivoxil, entecavir), adefovir dipivoxil, giantcolony-stimulating factor (GM-CSF) and HBV Vaccine. The study demonstrated that after one year six treatments in combined with the standard antiviral or/with ␣-interferon treatments, the HBsAg seroclearance was achieved at as high as 15.4% in those previously treated CHB patients, and 9.2% in naive CHB patients.

New drug formulation achieved comparable immune response

Source: Oncotarget 2018, 9(76): 34213–34228

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However, the protocol of this study was complex for potential commercial use in humans as a therapeutic intervention for CHB. Therefore, to make a clinical protocol into a new drug, the study screened and selected additional components that aimed to accelerate dendric cell maturation in compensating the 3-days pretreatment with GM-CSF. One of such formulations consisting of CA02 and HBsAg administered into animals induced a robust antigen-specific immune response. This immune response is comparable to that of three-days pretreatment with GM-CSF followed by rHBVvac. Furthermore, this formulation induces 100% seroconversion of HBeAg and HBsAg along with a significant reduction of viral DNA in sera and elimination of HBcAg-positive hepatocytes in the AAV8-1.3HBV-infected mouse model.

Material Communications and Next Steps

We expect to submit IND application to the NMPA in 2022.

WE MAY NOT BE ABLE TO ULTIMATELY DEVELOP AND MARKET ADV311 SUCCESSFULLY

Preclinical-stage Vaccine Candidates

ADV510

ADV510 is an oncoviral antigen-based therapeutic vaccine candidate we developing against MCC tumor. MCC is a rare but aggressive skin cancer with high mortality rate while MCV has been linked as the causative agent of MCC. Several immunotherapies with antibodies target immune checkpoint PD-L1 or PD-1 have been developed for MCC clinic treatments and achieved overall response rate at 33%, but with low rate of five-year overall survival and high risk of recurrence owing to immune compromise. As of the Latest Practicable Date, no therapeutic vaccine against MCV has been developed.

From our literature review, we found that a prognosis of MCC is highly associated with high level of antibodies against MCV major capsid protein VP1, suggesting that anti-VP1 immune response is essential against MCC growth. Aiming to develop a therapeutic vaccine strategy, we chose the VP1 as the target antigen and formulated with several novel adjuvants. Using home-made tumorigenic CMS5-VP1 animal tumor model, we were able to demonstrate a near 100% of anti-tumor growth after immunized these tumor bearing animals with such therapeutic vaccine. This potent antitumor effect is mainly mediated by both VP1-specific CD4 and CD8 T cell responses against the growth of VP1-expressed tumors. We believe that the VP1 formulated with novel adjuvants as an immunotherapy vaccine represents a potential approach for clinical treatment of aggressive skin MCV-related MCC in human.

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ADV520

ADV520 is a tumor associated antigen (TAA) based therapeutic vaccine candidate we are developing against tumor. TAAs are tumor-specific antigens and presented on the surface of, or inside tumor cells, which can be presented via HLA and recognized by host immune system, thereby activating specific T cells and inducing anti-tumor immune responses to reject tumor growth. ADV520 utilizes a tumor associated antigen gene, which we internally coded as GN011, in combination of our proprietary novel adjuvant system that aims to decrease tumor microenvironment suppression with the concurrently energetic host anti-tumor immunity. The GN011 target was identified and characterized as having tumor-specific and mitosis phase- dependent expression in various types of cancers, including gastric cancer, melanoma and liver cancer. It is generally believed that GN011 is a fetal protein, highly expressed at fetal stages and quickly shut down after birth, but undergoes reactivation at tumor stages. Therefore, the GN011 target may be a novel candidate for cancer vaccines. We are developing ADV520 based on GN011 target, utilizing our DNA vaccine and novel adjuvant technologies. We believe that our ADV520 therapeutic vaccine candidate could potentially overcome previous problems and generate potent and rejective immune responses against a broad scope of tumors in patients.

ADV610

ADV610 is a neoantigen-based therapeutic vaccine candidate we are developing against mutated tumors. Cancer neoantigens are mutated antigens in the cancer cell during its progression, particularly more often if chemo- or immune- mediated therapies are applied to a patient. Neoantigens are thought to be robust immunotherapy targets due to their high frequency in cancers and their high potential for immunogenicity due to lack of expression in normal somatic tissues. Neoantigens are specifically recognized by the immune system, but out-performed by rate of mutations. Importantly, neoantigens are highly specific to each patient. Therefore, rapidly sequencing and analyzing mutated antigens is the key to developing an effective neoantigen-based therapeutic vaccine against tumors. We are developing ADV610 utilizing our DNA vaccine technology platform and our established in-house protocol for quick sequence designing and optimizing. We also plan to use adjuvants to further boost the efficacy of ADV610.

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OUR TECHNOLOGY PLATFORMS

• DNA vaccine platform. We believe our DNA vaccine platform has the following features:

• Sequence design optimization. We have developed an in-house proprietary protocol to develop, design and optimize DNA sequences for vaccine development, providing a standardized and scalable platform for the continued development of DNA vaccine products. We endeavor to optimize sequence design to improve antigen expression, translating to a better immunogenicity in our vaccine candidates. This is demonstrated by our COVID-19 vaccine candidate, which had exhibited a balanced humoral and cellular immune responses in clinical trials.

• High purity DNA production. We have developed strong CMC processes to ensure our production of DNA vaccine with world class quality, purity and yield. The purity of supercoiled pDNA we manufactured can reach more than 97% compared to FDA standards of 85%. In addition, through next generation processes and testing technologies, such as streamline lysis-neutralization processing and high recovery rate of plasmid production, we are able to achieve high recovery rates for plasmid production and ensure the high quality of our vaccine products, with multiple tests and six checkpoints over the entire manufacturing process.

• Protein subunit vaccine platform. Our protein subunit vaccine platform has the following features:

• Profound understanding of proteins in different viruses. Through our years of knowledge and experience in protein design and identification, particularly in combination with adjuvants, we have developed a profound understanding of protein structure and profiles in different viruses. This has enabled us to effectively develop vaccine products that target or utilize specific proteins. This also enable us to better develop vaccine products that are used in combination with adjuvants to enhance immunogenicity.

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• High expression. We have developed E. coli-based expression system, which enables high expression of proteins, which in turn translates to better immunogenicity of our vaccine candidates. Moreover, using E. coli as host is more cost-effective compared to cell culture systems used by many major vaccine development platforms.

• High purity and efficient scale-up process. Our protein subunit vaccine manufacturing process includes innovative extraction and purification technologies that ensures a high purity level for certain difficult-to-product proteins. Moreover, our protein subunit vaccine manufacturing process is streamline and robust, which is suitable for efficient scale-up for commercial production.

• Adjuvants. Traditionally, adjuvants are used in conjunction with vaccines to help the host’s immune system to recognize the pathogen and amplify the magnitude of immunoresponse against the pathogen. We have learned that immune responses enhanced by adjuvant is mainly through its influence on APC during antigen presentation process. During this process, adjuvant molecules up-regulate the expression of co-stimulating molecule and cytokine productions. These two effects will greatly influence the T cell activation and differentiation. Most adjuvants have ability to enhance their influences to induce naive T cells into Th1 or Th2 cells, and some can also induce naive T cell into Treg cells.

We have developed innovative adjuvants that not only enhance CD8+ cytotoxic T functions, as demonstrated by our HBV therapeutic vaccine candidate, but also can act as immunomodulators to induce Treg cells to control overreactive T cells, as demonstrated by our RSV vaccine candidate, potentially resolving long-standing difficulties in RSV vaccine development. Our powerful adjuvant development platform enables us to continue to develop effective adjuvants to support our vaccine products. Details of our adjuvant development platform are set out below:

• Screening and selection platforms of adjuvants in vitro and in vivo. Leveraging our deep understanding immunological regulation and years of experience in adjuvant development, we have developed significant know-how in screening and selecting adjuvant candidates with a high potential for success in in vitro and in vivo studies. Our adjuvant platform primarily includes three key technologies, namely, adjuvant in vitro screening system, cell-guided adjuvant screening and adjuvancity animal test. Through these technologies, we are able to quickly screen, analyze, evaluate potential adjuvants for particularly purpose. A candidate adjuvant will be tested first in the adjuvant in vitro screening system to see any potential of use since its immune-profiling characterized, followed by cell guided adjuvant screening analysis, finally, used the animal to evaluate if its toxicity, tolerability and immune response met by its suitability.

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Platform I – Adjuvant in vitro screening system

Platform II – Cell-guided adjuvant screening

Platform III – Adjuvancity animal test

• Selection and application to different indications. Our deep knowledge in the design of adjuvants and mechanisms of action of disease areas of interests enables us to accurately identify and select effective adjuvants for different vaccine products and disease areas.

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• Advanced formulation. We have extensive experience in formulation development for adjuvants, which we believe is critical for the success of adjuvants in combination with vaccines. Our formulation development process is initiated in the early stages of adjuvant candidate selection, which we believe guarantees a higher level of manufacturing and commercial success.

COLLABORATION AND TECHNOLOGY TRANSFER ARRANGEMENT

Collaboration with Inovio

In December 2020, we entered into a collaboration and license agreement, or the Inovio Collaboration and License Agreement, with Inovio for COVID-19 DNA vaccine candidate pGX9501/INO-4800 (the “Vaccine”). Inovio is a listed biotechnology company (NASDAQ:INO) with a focus on bringing to market DNA medicines to treat and protect people from infectious diseases and cancer. Under the Inovio Collaboration and License Agreement, Inovio has granted us an exclusive license to develop, manufacture and have manufactured, distribute, market, promote, sell, have sold, offer for sale, import, label, package and otherwise commercialize the Vaccine product in the Greater China region for all prophylactic and therapeutic use in humans. With Inovio’s prior written consent, we have the right to grant sublicense to a third party.

Under the Inovio Collaboration and License Agreement, we will license our plasmid manufacturing process for use with the Vaccine and other Inovio pipeline product candidates to Inovio with the right to sublicense to Inovio’s manufacturing partners. Additionally, we will provide our clinical data to Inovio in support of its global regulatory filings of the Vaccine and Inovio will provide its the Vaccine clinical data for us to incorporate into our marketing applications in the Greater China region.

Under the Inovio Collaboration and License Agreement, Inovio is entitled to receive a one-time upfront payment of US$3.0 million and an aggregate of US$108.0 million upon the achievement of specified development and sales-based milestones for the Vaccine in the Greater China region. Inovio is also entitled to receive a royalty equal to a high single-digit percentage of annual net sales in each region within the Greater China region during the royalty term.

Under the Inovio Collaboration and License Agreement, we will be solely responsible for the development of the Vaccine in Greater China region, including all non-clinical and clinical studies and collection of CMC Information, at our own cost and expense, as necessary to obtain the regulatory approval for the Vaccine in the Greater China region. Upon mutual agreement between the parties, Inovio will expand our license to allow us to conduct phase III clinical trial in regions out of the Greater China region. Inovio will use commercially reasonable efforts to develop and obtain regulatory approval for the Vaccine in the United States and will provide all reasonable assistance and cooperation to assist and support our research and development of the Vaccine. In the event that Inovio has not initiated the planned phase III segment of its ongoing clinical trial of the Vaccine in the United States within one year after entering into the Inovio Collaboration and License Agreement, we may elect to conduct a phase III clinical trial outside of Greater China at our own cost and expense for the purposes of obtaining regulatory

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Under the Inovio Collaboration and License Agreement, Inovio will solely own all data generated by Inovio and we will solely own all data generated by us in the development of the Vaccine in the Greater China region. Each party grants the other party exclusive license to use product materials generated and owned by such party, solely to the extent reasonable necessary for the regulatory registration of the co-developed Vaccine in the other party’s respective territory. Inovio and we will jointly owned any inventions generated, developed, conceived or reduced to practice invention jointly.

The Inovio Collaboration and License Agreement remains in full force and effect on a region-by-region basis until the expiration of the royalty term. Royalties will be payable on a product-by-product and region-by-region basis from first commercial sale of each product in a region in our territory and continuing until the later of: (i) ten years from the date of first commercial sale of such product in such region, and (ii) expiration of the last valid claim of an Inovio Licensed Patent Covering such product in such region. This agreement may be terminated upon party’s material breach of the agreement or bankruptcy.

Technology Transfer from Fudan University

In September 2018, we entered into a technology transfer agreement with Fudan University, or the Fudan Technology Transfer Agreement. Fudan University is a major public university in Shanghai, China. Under the Fudan Technology Transfer Agreement, Fudan University agreed to transfer all its rights relating to a series of HBV therapeutic vaccine technology, which consists of three proof-of-concept patent applications (together “the Technology”), to us, and prior to the completion of such transfer, grand us global exclusive license. Fudan University is entitled to continue to utilize HBV therapeutic vaccine technology for non-manufacturing and non-commercialization purposes, such as for research and education purpose.

Under the Fudan Technology Transfer Agreement, prior to the completion of the technology transfer, Fudan University granted us a global exclusive license of the Technology to manufacture, use, sell, offer for sale, import, export and improve products leveraging the Technology, or use the Technology, or use, sell, offer for sale, import, export and improve products directly derived from the Technology.

Under the Fudan Technology Transfer Agreement, Fudan University is entitled to an acquisition fee, which include license fee and transfer fee. Fudan University is also entitled to receive a sales royalty from sales of products developed based on the Technology.

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Under the Fudan Technology Transfer Agreement, improvement on the Technology will be owned by the party who made such improvement, and the other party is entitled to preferential license rights to such improvement. In case the improvement is made by Fudan University, we are entitled to apply for and obtain global patent rights of the improvement at our own costs.

RESEARCH AND DEVELOPMENT

We believe that our continued research and development is the key driver of our business growth and competitiveness. For the years ended December 31, 2019 and 2020, our total research and development expenses amounted to RMB12.0 million and RMB57.7 million, respectively. During the Track Record Period, we had not capitalized any research and development expenses.

Our In-house R&D Team

Our R&D capacities are supported by our in-house R&D team, led by heads of our functional departments, all of which with years of experience in biotech and pharmaceutical industry. Heads of our functional departments, namely, Dr. Gan ZHAO, Vice President in charge of scientific discovery, has been involved in vaccine development for more than 15 years and participated in the in-house development of our vaccine pipeline since 2015; Dr. Bing-yu CHIANG, Director of Research & Development; Dr. Tsung-sheng WU, Director of process development; Ms. Hong QIN, Vice President in charge of project management; Mr. Cheng XIN, Director of Clinical Development, has been involved in vaccine development for more than five years and participated in the in-house development of our pGX9501 and ADV110 since 2020 and 2018, respectively; Dr. Yu-ping HO, Director of Regulatory Affairs; Ms. Yingying LI, Senior Manager of Quality Management; Ms. Aihua DONG, Vice President in charge of public affairs, has been involved in vaccine development for more than five years and participated in the in-house development of our vaccine pipeline since 2015. See “Directors, Supervisors and Senior Management—Senior Management.”

Our R&D team consisted of 46 members as of the Latest Practicable Date, including seven Ph.D. degree holders and more than 34 master’s degree and bachelor’s degree holders across biology, medicine, pharmacology, chemistry and other related areas. Our in-house R&D team is further divided into the following functional departments; (i) our scientific discovery department, which is responsible for early discovery of scientific projects and drugs for concept proof; (ii) our research & development department, which is responsible for preclinical product or program initiation; (iii) our process development department, which is responsible for the development of process, test and formulation and technological transfer; (iv) our project management department, which is responsible for managing preclinical and clinical program; (v) our regulatory affairs department, which is responsible for preparing and organizing results of researches and studies into a qualified document for IND application; (vi) our clinical development department, which is responsible for managing clinical-stage programs including designing clinical strategy and conducting clinical trial; (vii) our quality management

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Our Scientific Advisory Board

Our in-house R&D team is supported by our scientific advisory board, which consists of world-class renowned experts in vaccine field. We organize consultation meetings with our scientific advisory board regularly to adjust and optimize our R&D strategies. Details of our scientific advisory board members are set out below.

• George R. Siber, MD, our scientific advisor, served as the former executive vice president and chief science officer of Pfizer Inc. (formerly known as Wyeth Ltd.). He has led the development of more than ten drug and vaccine products, including the Prevnar® 7 vaccine and Prevnar 13® vaccine. Dr. Siber is currently served as an adjunct professor of Johns Hopkins University.

• Dr. David B. Weiner, our scientific advisor, is a world-renowned leader in immunology as well as gene vaccines and immunotherapy. Dr. Weiner is also known as the father of DNA vaccines. Dr. Weiner has served as the former president of the International Society for Vaccines and has served as director of the Vaccine Center of the Wistar Institute.

• Dr. Li RUAN, our scientific advisor, has served as the former director of National Institute of Virology of the CDC in China. Dr. Ruan is also a member of editorial board of the Chinese Journal of Virology.

Outsourced Research and Development Activities

During the Track Record Period, we outsourced certain testing, formulation and evaluation activities relating to research and development to third-party CROs and academic institutions. We also engage CROs to manage, conduct and support our clinical trial for our COVID-19 vaccine. We select CROs based on various factors including professional qualifications, research experience, industry reputation, adequacy of clinical trial equipment and data management capability. Our clinical development department closely supervises and monitors the performance of CROs to ensure they conduct clinical trials in accordance with our protocols and GCP requirement.

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Our R&D Process

Our research and development process primarily focuses on the following areas:

• Scientific discovery. Our scientific discovery department is dedicated to developing vaccine candidates and immunotherapies. Each disease had different characteristics, so each vaccine or immunotherapy will have its our development path. After identifying a potential development path, our scientific discovery department conducts laboratory research to test the idea for a vaccine candidate or immunotherapy.

• Pre-clinical research and development. Before a vaccine candidate or immunotherapy can be tested in humans, our research & development department will perform additional laboratory research and testing in animals to obtain information about how the vaccine works and the likelihood that it will be safe and efficacious on humans. During pre-clinical development, the pharmacological effect of a potential vaccine candidate or immunotherapy will be evaluated and a potential vaccine candidate will be checked to ensure any purification has not altered its identity and that it stimulates the appropriate immune response. The effects of adding any adjuvant system will also be evaluated during pre-clinical development.

• Process development. Our process development generally involves development of the process, test, formulation and test the stability in preclinical stage to ensure that the vaccine candidates or drug candidates can be scalable, stable and controllable. During this development stage, robust bioprocess with critical parameters and quality related tests will be set up, for smooth transfer into pilot scale production. Formulation development will evaluate and ensure the safety of vaccine candidates or drug candidates in animals and ensure the vaccine candidates or drug candidates we developed are stable for market use at refrigeration temperatures.

• Regulatory filing. After confirming the preclinical product development, our regulatory affairs department will organize all the scientific evidence, pharmacological and safety studies into a qualified file for an IND application for our vaccine and drug candidates. This step generally takes extensive communications with relevant regulatory authorities for months from filing of an application to obtain the IND approval to commence our clinical trial.

• Clinical affairs. Before IND filing, our clinical development department will include a clinical strategy and clinical protocol in the IND file. After we obtain an IND approval, our clinical development department will conduct clinical trials. We engage external experts as primary investigators of our clinical trials. The clinical development department normally manages the medical- related and operation- related issues during the clinical development process, including enrollment management, follow up and drop out, safety issue handling, quality compliments and audit. Our clinical development department is also responsible for the selection

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of trial sites. We select trial sites based on multiple factors, including suitability of onsite facilities, availability of qualified staff and availability of research subjects. As of the Latest Practicable Date, we have entered into agreements with numerous hospitals and principal investigators located in China and Australia that can support our clinical trials of different indications at different stages. We believe the size and geographic diversity of these facilities will provide us with a significant advantage in implementing large-scale clinical trials and will also enable us to conduct multiple clinical trials concurrently. With the support of our partner hospitals, we are capable of recruiting participants from specific populations for studies that would otherwise be difficult to fulfill enrollment.

• Quality management. Our quality management department ensures that our research and development and manufacturing processes consistently conform to GLP/GMP standards. Our stringent product quality control starts from the research and development stage until the storage of finished vaccine products. We have established detailed quality control procedures guiding our internal production and external purchase of raw materials, machineries and devices used in our research studies and clinical trials.

• Project management. Our project management department oversees and controls the comprehensive process of our preclinical development, IND filing and clinical trials. They are responsible for overseeing the timeline and budget. In general, our project management department subsequently manage the study in accordance with the clinical plan and the timeline.

• Intellectual property. Our public affairs department mainly responsible for obtaining and maintaining patents, know-how, trade secrets and other intellectual property protection and regulatory exclusivity for our vaccine candidates. Moreover, they are responsible for ensuring our registered intellectual properties are not infringed by others.

Research Facilities

We have a research and development center with a gross floor area of approximately 2,500 square meters. Our research and development center is equipped with research, process development and analytical laboratories, pre-clinical facilities and a GMP-like pilot manufacture suite, with advanced equipment and instrument, including fermentation tanks, equipment for extraction, purification and concentration, characterization and separation biological large molecules, as well as equipment allowing us to work under sterile and GMP complied conditions. Our research and development center also maintains a biosafety Level 2 laboratory facility.

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MANUFACTURING

Our Manufacturing Team

As of the Latest Practicable Date, we had a manufacturing team of 40 employees, which is led by Dr. Dan LIU, who has more than 15 years of experience in manufacturing biological products, including vaccine products. Our manufacturing team is further categorized into various departments based on our manufacturing process, including production management, solution production, preparation production, quality assurance, quality control, validation, procurement and logistic, and engineering and equipment department.

CDMO

During the Track Record Period, we engaged third-party CDMOs and manufacturers to produce vaccine samples for our clinical trials. For example, we engaged CDMOs in China to manufacture of clinical trial samples for our ADV110 vaccine candidate. We have adopted procedures to ensure that the facilities and production qualifications of our CDMOs are in compliance with the relevant regulatory requirements. We select a limited number of industry-leading third-party CDMOs based on their qualification, relevant expertise, manufacturing capacity, track record and the contract terms.

Key terms of our agreements with CDMOs are summarized as follows:

• Services. Our CDMOs mainly provide the following services: (i) development of stock solution; (ii) development and manufacture of lyophilized preparation and water injection preparation according to our technological requirements; (iii) bulk sample production; and (iv) test samples according to our standards.

• Term. Our CDMO agreement for clinical trial samples mainly range from one to six months. It varies in accordance with the designed length of the clinical trial. There are also requirements to perform the required services within the prescribed time limit.

• Payments. Payment to CDMOs is generally in installments based on project progress.

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• Intellectual Properties. We typically own all intellectual property rights arising from the development of clinical trial samples.

• Risk Allocation. We share the risks for losses caused by technical difficulties with our CDMOs during the development and manufacturing of our clinical trial samples.

Manufacturing Facility

In order to develop our manufacturing capacity, we acquired Suzhou Si’ao in 2020. See “History and Corporate Structure—Major Shareholding Changes of Our Company—Acquisition of Suzhou Si’ao.” After the acquisition, we owned a commercial-scale manufacturing facility located in Suzhou with a total gross floor area of approximately 18,000 square meters. We are expected to commence pilot production in our stage I manufacturing facilities in the second quarter of 2021. Our stage I manufacturing facility is designed, constructed and operated to meet GMP standards. We are currently in the process of upgrading the equipment and devices. Our manufacturing facility has a designed annual manufacturing capacity of approximately 20 million doses, which we intend to further expand to a total of 100 million doses in order to meet the anticipated demand for our vaccine products. Subject to regulatory approvals from relevant authorities, we plan to commence the construction of stage II of our manufacturing facility in 2021 at our existing manufacturing base in Suzhou.

Our manufacturing facility is equipped with brand-new equipment and instrument. Our production equipment includes fermentation system, disc centrifuge, ultrafiltration system, chromatographic system, formulation system, and auto-packaging and filling machinery. Many of our major manufacturing equipment are manufactured by leading international and domestic brands such as GEMU, Labom and Siemens. For the years ended December 31, 2019 and 2020, our capital expenditures for manufacturing machinery and equipment amounted to RMB3.5 million and RMB18.4 million, respectively. As of the Latest Practicable Date, we owned all the equipment used in our production processes, including laboratory equipment and instruments.

Manufacturing Process

We have developed and applied for certain patent applications for our manufacturing process and for DNA vaccines, including our pGX9501. These technologies relate to process design and the equipment or devices used in the manufacturing process. The proprietary manufacturing technologies we hold and our E. coli cell culture media enable our manufacturing process to be more cost-effective and easily scaled-up.

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We apply GMP standards to our DNA vaccine manufacturing process, which mainly include pDNA amplification, pDNA isolation, pDNA purification and concentration. The purified pDNA then undergoes formulation and filling to become finished products. The following diagram summarizes the key steps in our manufacturing process of our DNA vaccine, including our COVID-19 vaccine.

Working cell bank pDNA amplification Inoculation and fermentation

Cell Lysis/Neutralization pDNA isolation

Liquid-solid separation

Anion exchange chromatography pDNA purification

Hydrophobic interaction chromatography

pDNA Ultrafiltration/Diafiltration concentration

Aseptic filtration drug substance Drug substance

Formulation and filling drug product Finished product

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The following is a brief description of the key steps in our manufacturing process.

• pDNA amplification. Plasmid carrying target genes are amplified in large quantities using the E.coli culture media in this stage. Raw materials will be placed in the receiving area of the warehouse until obtaining clearance from our quality assurance department. After obtaining clearance, raw materials are then transferred to the qualified material area of the warehouse. The fermenter is equipped with an automated feed-back control system, including control systems for temperature, pH, dissolved oxygen, medium levels and air and pressure flow rates. To manufacture clinical samples and future commercial products, master cell bank (MCB) and working cell bank (WCB) have been established following GMP guidelines with precautions to ensure stability and prevent contamination. Bacteria from a WCB’s vial will be inoculated, grown and fermented under optimal conditions to maximize cell growth. Upon the establishment of maximum cell growth, the broth will be cooled and pumped to the centrifuge in order to obtain cellular material as cell paste, or slurry.

• pDNA isolation, purification and concentration. After obtaining the E. coli cell slurry that contains pDNA and other cell organelles, the pDNA is isolated in the isolation and purification process, which include steps of cell lysis, neutralization, liquid-solid separation, anion exchange chromatography and hydrophobic interaction chromatography. This step enables us to obtain highly purified pDNA samples, which will be used in the preparation of the final formulated vaccine product.

• Release of drug substance. Release criteria mainly includes tests for visual appearance, plasmid concentration and purity, percentage of supercoiled pDNA, residual DNA, RNA and proteins of the host cell. If the testing and inspection results meet quality requirements, the drug substance can be released.

• Formulation and filling. We formulate the substance with the approved formula, and fill the solution into vials, followed by light inspection and exterior packaging.

• Testing and release of finished products. Each batch of the finished products are inspected according to national and international pharmacopoeias. The tests mainly include physical appearance, identification, plasmid concentration and purity, percentage of supercoiled pDNA, sterility, endotoxin, filling volume, osmolarity, in vivo bioactivity and abnormal toxicity test. If the testing and inspection results meet the quality standard, the finished products can be released.

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QUALITY MANAGEMENT

As of the Latest Practicable Date, we had 13 employees responsible for quality control, quality assurance and validation management. We have a quality control laboratory with a total gross floor area of 1,100 square meters. We have established a quality management system with reference to the regulations, standards, guidelines and requirements such as the GMP and the ICH Q10 standards. Our quality management system covers quality system, laboratory control, production management, raw material admission, facilities and equipment, packaging and labelling. We provide trainings to relevant employees to ensure that they are able to correctly and effectively implement our quality management system. Our quality assurance team is primarily responsible for managing the implementation of our quality system, on-site monitoring, inspection and risk management.

COMMERCIALIZATION

Commercialization Strategies for Our Vaccine Pipeline

Strategies for Our pGX9501

Our future commercialization activities for our pGX9501 are expected to be focused on the Greater China region. We expect that our pGX9501 will likely be sold and distributed through government centralized procurement schemes. We intend to commence commercialization preparations after we commence phase III clinical trial for this vaccine candidate. We will build up a small team of sales and marketing personnel primarily to handle centralized procurement matters for our COVID-19 vaccine.

Upon obtaining the BLA or EUA approval from the NMPA, we aim to gradually launch to all regions of China. In addition, our pGX9501 is suitable and cost-effective for long-term storage and for distribution to regions with less-developed infrastructure. We also plan to develop our cold-chain logistic network and collaborate with local cold-chain logistic providers to ensure that our future vaccine deliveries will meet the temperature requirement and other regulatory requirements. We may consider to negotiate commercial rights for other regions outside the Greater China region and for bulk vaccine supply outside the Greater China region for pGX9501 with Inovio.

Strategies for Our RSV Vaccine Candidate and Other Candidates

Our future commercialization activities for our RSV vaccine candidate are expected to be focused on both the domestic and global markets. We will gradually commence patient and physician education efforts and build our sales network in China for our RSV vaccine candidate and other candidates. We plan to seek local partners for the global commercialization of our vaccine candidates.

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Pricing Policy

We will determine the prices of our vaccine products based on a number of factors, including product quality, competitive market position and affordability. Our pGX9501 vaccine candidate is expected to participate in government centralized procurement schemes and compete in the public market, therefore it is expected to be priced based on existing COVID-19 vaccines that are already in the Class I vaccine market, our costs of manufacturing, and price quotations of competing products in the bidding process. Our RSV vaccine candidate is like to focus on the Class II vaccine market in China, the pricing of which will be determined based on factors including our costs of manufacturing, price quotations of competing products in the bidding process, our vaccine technology advantages, product quality market trends, and changes in the levels of supply and demand.

CUSTOMERS

To the best of our knowledge, our customers during the Track Record Period is Independent Third Parties. None of our Directors, their respective associates or any shareholder who, to the knowledge of our Directors, owned more than 5% of our issued share capital as of the Latest Practicable Date, has any interest in such customers during the Track Record Period.

SUPPLIERS AND PROCUREMENT

Our Suppliers

During the Track Record Period, our major suppliers primarily consisted of (i) suppliers of raw materials and consumables for our vaccine development; (ii) suppliers of equipment and devices for our manufacturing facility; and (iii) CROs, who provide third-party contracting services for research and development. We maintain a list of qualified suppliers and review their qualifications on an annual basis by taking into consideration their qualifications, production facilities, production quality, prices, business scale, market share, reputation and after-sales service quality. Suppliers that failed to pass our annual review will not be included in the list of qualified suppliers. We select our suppliers by considering their qualifications, compliance with relevant regulations and industry standards, production facilities, production quality, prices, business scale, market share, reputation and after-sales service quality. Our procurement department is responsible for making procurement plans, placing orders with suppliers and managing suppliers. Upon delivery, we require our suppliers to provide us with inspection reports on various respects of the raw materials. Our research and development department and quality control department are also involved in the procurement process and participate in raw material quality control. Our quality control department and quality assurance department are responsible for developing quality requirements for raw materials we purchased. Our quality control department is responsible for manage quality of our supplies.

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To mitigate the risks of product quality, detailed investigation on suppliers’ qualification and product quality were conducted before our purchases, receiving inspection of raw and auxiliary materials upon delivery were conducted by third-party inspectors, and receiving inspection of equipment and devices upon delivery were conducted by third-party inspectors or manufacturers.

We have maintained stable business relationships with our major suppliers for approximately one to five years. During the Track Record Period, we did not experience any material disputes with suppliers, difficulties in the procurement of raw materials, interruptions in our operations due to a shortage or delay of raw materials or significant fluctuations in raw material prices. See “Risk Factors—Risks Relating to Our Dependence on Third Parties—Our business depends on the use of raw materials, and a decrease in the supply, or an increase in the cost of these raw materials could materially and adversely affect our business, financial condition and results of operation.”

The following table sets forth details of our five largest suppliers during the Track Record Period.

Length Purchase % of total Credit of business Suppliers amount purchases terms relationship Supplier background (RMB’000) (Months) (Years)

For the year ended December 31, 2020 Supplier F 46,823 31.4% 1-3 1 A listed pharmaceutical company which also provides CRO services Supplier G 17,196 11.5% 1-3 4 A private company that engages in providing cleaning services Supplier H 16,501 11.1% 1-3 5 A private company that engages in providing construction services Supplier I 5,304 3.6% 1-3 1 A private company that engages in providing CRO services Supplier J 4,480 3.0% 1-3 0.5 A public institution that engages in performing clinical tests

Total 90,304 60.6%

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Length Purchase % of total Credit of business Suppliers amount purchases terms relationship Supplier background (RMB’000) (Months) (Years)

For the year ended December 31, 2019 Supplier A 3,595 33.2% 1-3 3 A private company that engages in providing CRO services Supplier B 771 7.1% 1-3 5 A private company that engages in distribution of laboratory equipment Supplier C 538 5.0% 1-3 6 A private company that provides office rentals Supplier D 492 4.5% 1-3 3 A private company that engages in distribution of R&D materials Supplier E 491 4.5% 1-3 2 A law firm

Total 5,887 54.3%

As of the Latest Practicable Date, none of our Directors, their associates or any shareholders which, to the knowledge of our Directors, owned more than 5% of the issued share capital of the Company, had any interest in any of our five largest suppliers during the Track Record Period.

We generally procure raw materials based on our vaccine development plan and the needs of our clinical trials. During the Track Record Period, we did not experience any shortage or delays in the supply of raw materials. Lead times for raw materials vary and depend on the specific supplier and the availability and demand for the raw materials. Our raw materials for our vaccine candidates primarily include chemical materials and packaging materials. Most of our raw materials are widely available, and we procure most of our key raw materials from numerous suppliers in China. To monitor the quality of supplies, we implement a standardized operating system by setting out the procedures and guidelines on the procurement of raw materials, quality control inspection, warehousing, testing and storage.

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INVENTORY MANAGEMENT

We have a warehouse at our manufacturing facilities in Suzhou, including a cool warehouse and a five cold-storage warehouses. Our inventories mainly consist of raw materials for our vaccine development. As of December 31, 2019 and 2020, our inventories amounted to nil and RMB0.4 million, respectively. We usually place purchase orders based on our research and development plan and our clinical trial requirements. We have established an inventory management system that monitors each stage of the warehousing process and implement safety stock management and expiry date and retest date management for our key raw materials. Warehouse personnel are responsible for the inspection, storage and distribution of raw materials. Raw materials are separately stored in different areas of the warehouse according to their storage condition requirement, properties, usage and batch number.

COMPETITION

Vaccine markets in China and globally are intensely competitive and rapidly changing. We face potential competition from many difference entities, including large multi-national and domestic pharmaceutical and biotechnology companies that have commercialized or are commercializing or pursuing the development of vaccines that target diseases as we do. We compete primarily based on our vaccine pipeline, technology platforms and manufacturing facilities and process. Our key competitors vary by vaccine types. For further details of market opportunities and competition in respect of our vaccine pipeline, see “—Our Vaccine Pipeline.”

INTELLECTUAL PROPERTY

We recognize the importance of intellectual property rights to our business and are committed to the development and protection of our intellectual property rights. We actively seek patent protection for our vaccine candidates in China and certain major jurisdictions and file additional patent applications, when appropriate, to cover certain antigens, strains, proteins, formulation and production process. We have developed a significant portfolio of intellectual property rights to protect our technologies and products. As of the Latest Practicable Date, we had registered 23 patents, 16 trademarks and three domain names in China, and had registered one patent in the United States, two patents in Europe, and two trademarks in Hong Kong. We are in the process of transferring eight patents and four trademarks relating to veterinary vaccine products of Suzhou Si’Ao to a subsidiary of Kexiang Hi-tech. As of the same date, we had filed 13 patent applications in China, two patent applications in the United States and four patent applications in other jurisdictions and international organization, including Japan and WIPO. Our Directors confirm that we were not involved in any proceedings in respect of, and we had not received notice of any claims of infringement of, any intellectual property rights that might be threatened or pending as claimant or respondent during the Track Record Period and up to the Latest Practicable Date.

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The following table sets forth material patents and patent applications relating to our vaccine candidates as of the Latest Practicable Date.

Vaccine Candidates Patent Number Patent Name Owner/Applicant Jurisdiction Patent Status Valid Until pGX9501 CN202011120617.9 A bubble generating Advaccine (Suzhou) China Pending 2040/10/19 device for extracting Biopharmaceuticals plasmid DNA from Co., Ltd. bacteria CN202022333756.1 A bubble generating Advaccine (Suzhou) China Pending 2040/10/19 device for extracting Biopharmaceuticals plasmid DNA from Co., Ltd. bacteria CN202011119238.8 A method of extracting Advaccine (Suzhou) China Pending 2040/10/19 plasmid DNA from Biopharmaceuticals bacteria Co., Ltd. CN202011597679.9 Nucleotide sequence Advaccine (Suzhou) China Pending 2040/12/29 encoding coronavirus Biopharmaceuticals antigen and use Co., Ltd. thereof ADV110 CN201510082407.8 A respiratory syncytial Advaccine (Suzhou) China Patented 2035/2/15 virus vaccine, Biopharmaceuticals preparation method Co., Ltd. and application thereof US16985,736 Immune composition Advaccine (Suzhou) U.S. Pending 2040/8/5 comprising respiratory Biopharmaceuticals syncytial virus(RSV)G Co., Ltd. polypeptide PCTIB2020057414 Immune composition Advaccine (Suzhou) WIPO Pending N/A comprising respiratory Biopharmaceuticals syncytial virus(RSV)G Co., Ltd. polypeptide CN201911322663.4 Aqueous solution of Advaccine (Suzhou) China Pending 2039/12/20 insoluble medicine Biopharmaceuticals and preparation Co., Ltd. method thereof

ADV311 CN201810035029.1 Immunopotentiator, Fudan University* China Pending 2038/1/15 immunotherapeutic pharmaceutical composition and its preparation and use

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Vaccine Candidates Patent Number Patent Name Owner/Applicant Jurisdiction Patent Status Valid Until

EP2018768314 Immunopotentiator, Fudan University* Europe Pending 2038/1/24 immunotherapeutic pharmaceutical composition and its preparation and use US16491550 Immunopotentiator, Fudan University* U.S. Pending 2038/1/24 immunotherapeutic pharmaceutical composition and its preparation and use ADV510 CN202011276594.0 A new vaccine for Advaccine (Suzhou) China Pending 2040/11/16 preventing and Biopharmaceuticals treating Merkel cell Co., Ltd. carcinoma

* Under our technology transfer agreement with Fudan University, these patent applications will be transferred to us once granted. See “—Collaboration and Technology Transfer Arrangement—Technology Transfer from Fudan University.”

EMPLOYEES

As of the Latest Practicable Date, we had 116 full-time employees, all of whom were based in China. The following table sets forth the number of our employees by function as of the Latest Practicable Date.

Number of employees % of total

Research and development 46 39.7% Manufacturing 40 34.5% Administrative 9 7.8% Management 7 6.0% Finance 5 4.3% Others (EHS, legal and procurement) 9 7.8%

Total 116 100.0%

We plan to build our commercialization team and expand to about 20 employees in next one or two years. We also plan to expand our research and development team to more than 100 employees and manufacturing team to more than 100 employees in next one or two years. We recruit our personnel primarily through recruiting websites, recruiters and employee referral. We conduct new employee training, as well as professional and safety training programs for all employees in accordance with EHS policies and operating procedures.

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We enter into employment agreements with our employees to cover matters such as wages, benefits and grounds for termination. During the Track Record Period, we made contributions to social insurance and housing provident funds in compliance with applicable PRC laws and regulations in all material respects. We also enter into standard confidentiality, intellectual property assignment and non-competition agreements with our key management and research and development staff, which typically include a standard non-compete agreement that prohibits the employee from competing with us, directly or indirectly, during his or her employment and for two years after the termination of his or her employment. Employees also sign acknowledgments regarding service inventions and discoveries made during the course of his or her employment.

We have not established a labor union. During the Track Record Period, we did not experience any material labor disputes or strikes that may had a material and adverse effect on our business, financial condition or results of operations.

INSURANCE

We maintain insurance policies that are required under PRC laws and regulations as well as based on our assessment of our operational needs and industry practice. We maintain employer’s liability insurance to cover our costs arising from work-related employee injury or illness. In line with industry practices in China, we have elected not to maintain certain types of insurances, such as business interruption insurance or key man insurance. See “Risk Factors—Risks Relating to Our Operations—We have limited insurance coverage, and any claims beyond our insurance coverage may result in our incurring substantial costs and a diversion of resources.” Our Directors consider that our existing insurance coverage is sufficient for our present operations and in line with industry practices in China.

SOCIAL, HEALTH, WORK SAFETY AND ENVIRONMENTAL MATTERS

We are subject to environmental protection and occupational health and safety laws and regulations in China. However, as our manufacturing activities have been primarily limited to those for product registration purposes only during the Track Record Period, we did not incur material environmental protection expenses during such period. During the Track Record Period and as of the Latest Practicable Date, we complied with the relevant environmental and occupational health and safety laws and regulations in China and we did not have any incidents or complaints which had a material and adverse effect on our business, financial condition or results of operations during the same period.

In respect of social responsibilities, we have entered into employment contracts with our employees in accordance with the applicable PRC laws and regulations. We hire employees based on their merits and it is our corporate policy to offer equal opportunities to our employees regardless of gender, age, race, religion or any other social or personal characteristics.

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We strive to operate our facilities in a manner that protects the environment and the health and safety of our employees and communities. We have implemented company-wide environmental, health and safety, or EHS policies and operating procedures relating to waste treatment, process safety management, worker health and safety requirements, accident prevention and accident reporting and emergency planning and response. To further ensure our compliance with applicable environmental protection and health and safety laws and regulations, we (i) have established various guidelines governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes to ensure such guidelines are strictly enforced for the disposal of laboratory materials and wastes; (ii) inspect our equipment and facilities regularly to identify and eliminate safety hazards; (iii) provide regular safety awareness training to our employees; (iv) keep health records for all employees and conduct health examinations before, during and after their time at the company; and (v) conduct regular fire safety inspections, maintenance of fire-fighting equipment and regular emergency drills. In particular, we have established and implemented guidelines in accordance with relevant PRC laws and regulations on the storage, management, handling and use of viruses and bacteria. These guidelines include those related to the recording and inspection of batches of viruses and bacteria, a multi-department approval process to obtain viruses and bacteria from our inventory, as well as the safe disposal of viruses and bacteria. Our employees with specified responsibilities, including handling certain equipment and conducting animal research, are required to hold relevant qualifications, as well as wearing proper safety gear when working. We conduct safety inspections of our manufacturing facility regularly.

Our EHS function is responsible for monitoring and enforcing the compliance of our operations with environment, health and safety laws and regulations. This responsibility is executed through formulation and implementation of EHS policies and procedures, EHS audits and incident response planning. We have not had any significant workplace accidents in the history of our Company.

PROPERTIES

The Property Valuation Report from JLL, an independent property valuer, set out in Appendix III of this document, set out details of the properties we owned and occupied as of January 31, 2021. JLL valued these property interests at an amount of RMB130.4 million as of January 31, 2021. Except for the property interests set forth in the property valuation report from JLL, no single property interest that forms part of our non-property activities had a carrying amount representing 15% or more of our total assets as of January 31, 2021.

We are headquartered in Suzhou. As of the Latest Practicable Date, we owned land use rights to one parcel of land in Suzhou with an area of 16,597.9 square meters and ownership rights of the construction on the land with a total gross floor area of 18,954.8 square meters, both of which were pledged as collateral in favor of Bank of China, Suzhou Industrial Park Branch and Bank of Ningbo, Suzhou Branch for bank loan at a maximum amount of RMB80.0 million with the security term from December 2017 to December 2022. We also leased eight

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Gross Location Use Floor Area Lease Term (Square meter)

Room 14427-14429, Staff dormitory N/A May 2020 to April District 14, 2021 Guanyuan Shequ, 150 Yangpu Road, Suzhou Industrial Park Unit 511, 512 and 513, B1 Floor, R&D and offices 667 July 2020 to Suzhou Biomedicine Industrial June 2023 Park Phase I, 218 Xinghu Road, Suzhou Industrial Park Unit 411, B1 Floor, R&D and offices 162 March 2020 to Suzhou Biomedicine Industrial March 2023 Park Phase I, 218 Xinghu Road, Suzhou Industrial Park Unit 308, B1 Floor, R&D and offices 189 July 2019 to Suzhou Biomedicine Industrial June 2022 Park Phase I, 218 Xinghu Road, Suzhou Industrial Park Room B210, 2/F, Area B, R&D and offices 144 September 2020 to Zhongguancun Biomedical August 2021 Park, 5 Shangdi Kaituo Road, Haidian District, Beijing Room 805, Building 13, Staff dormitory 97 March 2021 to 215 Hezhong Street, Suzhou March 2022 Industrial Park Room 1201, Building 2, Offices 80 April 2021 to April 109 Software Street, Yuhuatai 2022 District, Nanjing 1215J, Yingfeng Center, Other (The property is 6 January 2021 to No. 19 Haitian Second Road, leased for use as the January 2022 Binhai Community, office address of Yuehai Street, Shenzhen Advaccine) Nanshan District, Shenzhen

Pursuant to the applicable PRC laws and regulations, property lease contracts must be registered with the local branch of the Ministry of Housing and Urban-Rural Development of the PRC. As of the Latest Practicable Date, we had registered only four of our leased properties. Our PRC Legal Advisors have advised us that the lack of registration of the lease contracts will not affect the validity of the lease agreements under PRC laws, and have also

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AWARDS AND RECOGNITION

The following table sets out a summary of the major awards and recognition we have received.

Year Award or recognition Issuing authority

2020 High- and New-Technology Department of Science and Enterprise Technology of Jiangsu Province (江蘇省科技廳), Department of Finance of Jiangsu Province (江蘇省財政廳), Jiangsu Provincial Tax Service of State Taxation Administration (國家稅務總局江蘇省稅務局)

2020 Jiangsu Private Scientific and Jiangsu Private Science Technological Enterprise &Technology Enterprise (江蘇省民營科技企業) Association (江蘇省民營科技企業協會)

2019 Jiangsu Technology SME Suzhou Science and Certificate (江蘇省科技型中 Technology Bureau (蘇州市小企業) 科學技術局)

2019 Members of China Vaccine China Association for Vaccine Industry Association (中國疫 (中國疫苗行業協會) 苗行業協會會員單位)

2018 Most potential technology Pharmaceutics Professional innovative biotech Committee of Chinese enterprises (最具成長力科技 Pharmaceutical Association 創新型醫藥企業) (中國藥學會藥物製劑專業委員會中國醫藥工業信息中心)

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LICENSES, PERMITS AND APPROVALS

As a PRC-based company engaged in developing, manufacturing and commercialization of vaccine products, we are subject to regular inspections, examinations and audits, and are required to maintain or renew the necessary permits, licenses and certifications for our business. Our PRC Legal Advisors have advised us that, as of the Latest Practicable Date, we had obtained all requisite licenses, approvals and permits from, and completed registrations with the relevant government authorities that are material for our current business operations in the PRC pursuant to the relevant laws and regulations or the requirements of the competent authority.

LEGAL PROCEEDING AND COMPLIANCE

We may be involved in legal proceedings in the ordinary course of business from time to time. During the Track Record Period, neither we nor any of our Directors were involved in any litigation, arbitration or administrative proceedings which could have a material adverse impact on our business, financial condition or results of operations. As of the Latest Practicable Date, we were not aware of any pending or threatened litigation, arbitration or administrative proceedings against us or our Directors which would have a material and adverse impact on our business, financial condition or results of operations.

As advised by our PRC Legal Advisors, during the Track Record Period and as of the Latest Practicable Date, there were no pending or threatened litigation, arbitration or administrative proceedings against us or our Directors which would have a material and adverse impact on our business, financial condition or results of operations and there were no breaches or violations of applicable PRC laws and regulations that would have a material and adverse impact on our business, financial condition or results of operation taken as a whole.

RISK MANAGEMENT AND INTERNAL CONTROL

We are subject to various risks during our operations, see “Risk Factors—Risks Relating to Our Operations.” We have established a consolidated risk management system and relevant policies and procedures which we consider suitable for our business operations. Our policies and procedures are aimed at managing and monitoring our business performance.

To monitor the continuous implementation of risk management policies and corporate governance measures after the [REDACTED], we have adopted or will continue to adopt, among other things, the following risk management measures:

• establish an audit committee to review and supervise our financial reporting process and internal control system. Our audit committee consists of three members: Mr. Guohao JIN, the chairman of the committee, Mr. Guanchun DAI and Ms. Xueqin WU. For the qualifications and experiences of these members, see “Directors, Supervisors and Senior Management;”

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• adopt various policies to ensure the compliance with the Listing Rules, including but not limited to policies in respect of risk management, connected transactions and information disclosure;

• provide regular anti-corruption and anti-bribery compliance training for senior management and employees in order to enhance their knowledge of and compliance of applicable laws and regulations; and

• arrange our Directors and senior management to attend training seminars on Listing Rules requirements and the responsibilities as directors of a Hong Kong-listed company.

Internal Control

Our Board is responsible for establishing our internal control system and reviewing its effectiveness. In preparation for the [REDACTED], The Group engaged an independent third-party consultant (the “Internal Control Consultant”) to perform a review over selected areas of our internal controls over financial reporting in January 2021 (the “Internal Control Review”). The scope of the Internal Control Review performed by the Internal Control Consultant was agreed between us, the Sole Sponsor and the Internal Control Consultant. The selected areas of our internal controls over financial reporting that were reviewed by the Internal Control Consultant included entity-level controls and business process level controls, including sales accounts receivable and collection, procurement accounts payable and payment, inventory management, including logistics, production and costing, human resources and payroll management, fixed assets management, intangible assets, cash and treasury management, expense management, insurance management, financial reporting and disclosure controls, tax management, general controls of information technology, intellectual property management, R&D management and project management.

The Internal Control Consultant conducted follow-up reviews in February and March 2021 (the “Follow-up Review”) to review the status of the management actions taken by the Group to address the findings of the Internal Control Review. The Internal Control Consultant did not have any further recommendation in the Follow-up Review except for some of the Group’s policies were published in early February 2021.

The Internal Control Review and the Follow-up Review performed constitute a Long Form Report engagement pursuant to the relevant technical bulletin AATB1 issued by the Hong Kong Institute of Certified Public Accountants.

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DIRECTORS

The Board has eight Directors, which consists of three Executive Directors, two Non-executive Directors and three Independent Non-executive Directors. The Board is responsible and has general authority for the management and operation of our Company. The following table sets out information of our Directors:

Relationship with Directors, Date of Date of Supervisors joining appointment Key and senior Name Age our Group as a Director Position responsibilities management

Bin WANG 63 April 8, 2009 April 8, 2009 Executive Leading our Spouse of Ms. Yu (王賓) Director, research and Chairman of development the Board and activities and Chief Scientist overseeing our strategic development

Qingling YU 55 April 8, 2009 April 8, 2009 Executive Overseeing our Spouse of (俞慶齡) Director and overall business Dr. Wang President management and operations

Lunan ZHANG 33 February 8, February 8, Executive Overseeing our Son of Dr. Ma (張璐楠) 2017 2017 Director and Group’s Secretary to corporate the Board strategies, financing activities, internal control and corporate governance

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Relationship with Directors, Date of Date of Supervisors joining appointment Key and senior Name Age our Group as a Director Position responsibilities management

Zhiyun YU 42 September 17, September 17, Non-executive Providing None (喻志雲) 2020 2020 Director guidance on corporate strategy to our Board

Xueqin WU 48 September 17, September 17, Non-executive Providing None (吳薛琴) 2020 2020 Director guidance on governance to our Board

Guanchun DAI 44 March 21, [March 21, Independent Supervising and None (戴冠春) 2021 2021, Non-executive providing effective Director independent from [●], judgement to 2021] the Board

Guohao JIN 32 March 21, [March 21, Independent Supervising and None (金國豪) 2021 2021, Non-executive providing effective Director independent from [●], judgement to 2021] the Board

Wenwei TU 54 March 21, [March 21, Independent Supervising and None (涂文偉) 2021 2021, Non-executive providing effective Director independent from [●], judgement to 2021] the Board

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Executive Directors

Dr. Bin WANG (王賓), aged 63, is the founder of our Group and has been serving as the Chief Scientist of our Company since its establishment. He was appointed as our Director and the Chairman of the Board on December 20, 2020 and re-designated as an Executive Director on March 21, 2021. Dr. Wang leads our research and development and oversees our strategic development.

Dr. Wang has over 30 years of experience in the research and development of vaccine. Dr. Wang has been a distinguished professor at Fudan University Shanghai Medical College (復旦大學上海醫學院) since December 2010. From March 2003 to November 2011, he was a distinguished professor at the College of Biological Sciences, China Agricultural University (中國農業大學生物學院). From January 2001 to December 2002, he was a professor at the College of Life Science and Technology, Xinjiang University (新疆大學生命科學與技術學院). During the period from 1992 to 1998, he was an instructor and then assistant professor at Perelman School of Medicine at the University of Pennsylvania in the United States.

Dr. Wang obtained his bachelor’s degree in biology from Shandong University (山東大學) in the PRC in July 1982 and doctoral degree in developmental biology from the University of Cincinnati School of Medicine in the U.S. in March 1991. From October 1989 to October 1992, Dr. Wang conducted postdoctoral research in immunology at the Wistar Institute in the U.S. He performed the world’s first DNA vaccine clinical trial at the University of Pennsylvania School of Medicine in 1994.

Dr. Wang has published over 150 peer-reviewed articles in relation to vaccine and immunology and he also serves as editorial board members for several international journals, such as Chinese Journal of Microbiology and Immunology (中華微生物學與免疫學雜誌), Emerging Microbes & Infections and Human Vaccines & Immunotherapeutic. Dr. Wang also serves as executive member in industry associations and scientific societies, including the counsel member of China Society of Biotechnology (中國生物工程學會), the chairman of the Vaccine Industry Association Nucleic Acid Vaccine Branch (中國疫苗行業協會核酸疫苗分會).

Ms. Qingling YU (俞慶齡), aged 55, is our Executive Director, President and Legal Representative. She has been serving as a Director of our Group since April 2009. Ms. Yu is primarily responsible for our overall business management and operations.

Ms. Yu has approximately 20 years of experience in enterprises management and administration. From January 2000 to January 2007, she was an executive director and the legal representative of Beijing Millennium Technologies Co., Ltd. (北京千年美能科技有限責任公司), where she was responsible for its business management and daily operation.

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Ms. Yu obtained her diploma in aviation medical from Military Medical College of the Chinese People’s Liberation Army Air Force Medical College (中國人民解放軍空軍醫學專科學校軍醫專業大學) in April 1989 and her bachelor’s degree in business economic management from Beijing Commodity Economy College (北京商品經濟學院) in the PRC in July 1999. Ms. Yu graduated from the University of International Business and Economics (對外經濟貿易大學) in the PRC in corporate management in November 2001.

Mr. Lunan ZHANG (張璐楠), aged 33, has been our Director since February 2017 and re-designated as our Executive Director in 2021. He was also appointed as the Secretary to the Board in April 2021. He is primarily responsible for overseeing our Group’s corporate strategy, financing activities, internal control and corporate governance.

Mr. Zhang has extensive exposure to the investment and financial industry with approximately 10 years of experience. Mr. Zhang has been the executive director at UBS Securities Co., Ltd. (瑞銀證券有限責任公司) from March 2018 to April 2021, where he was primarily responsible for China structured solutions of investment bank. From December 2016 to April 2018, Mr. Zhang served as general manager of the financial derivatives department at Jiuzhou Securities Co., Ltd. (九州證券股份有限公司), primarily responsible for the sales and trading of financial derivatives. From June 2015 to December 2016, Mr. Zhang served as chief investment officer at Shenwan Hongyuan Securities Co., Ltd. (申萬宏源證券有限公司), primarily responsible for securities investment and proprietary trading business. From July 2011 to June 2015, he served as a securities analyst at Guosen Securities Co., Ltd. (國信證券股份有限公司), primarily responsible for securities analysis and quantitative research. He has been an independent director of Yidao Biotech (Suzhou) Co., Ltd. (怡道生物科技(蘇州)有限公司), a biopharmaceutical company principally engaged in the research and development of vaccines, since June 2018, where he served as primarily responsible for providing independent judgement to its board.

Mr. Zhang obtained his bachelor’s degree in finance from Tongji University (同濟大學) in the PRC in July 2011. Mr. Zhang is currently pursuing an executive master degree of business administration from Tsinghua University (清華大學) in the PRC.

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Non-executive Directors

Dr. Zhiyun YU (喻志雲), aged 42, has been our Director since September 2020 and was re-designated as a Non-executive Director on March 17, 2021. Dr. Yu is primarily responsible for providing guidance on corporate strategy to our Board.

Since March 22, 2016, he has been a director of Peijia Medical Limited (“Peijia”), an interventional procedural medical device manufacturer, shares of which are listed on the Stock Exchange (stock code: 9996), where he is primarily responsible for providing overall guidance on the business and strategic development of Peijia. Dr. Yu also holds several directorship positions in the subsidiaries of Peijia. Dr. Yu has served at Matrix Partners China and is currently a managing director, where he is responsible for investment in the healthcare industry. Prior to that, Dr. Yu served as vice president at the Beijing Representative Office of Fidelity Growth Partners China, deputy general manager at the Northeastern Office of Shenzhen Capital Group, and an associate at the New York Office of McKinsey & Company, successively.

Dr. Yu obtained his bachelor’s degree of science in applied chemistry from Peking University (北京大學) in the PRC in July 1999. He subsequently obtained his doctoral degree of chemistry from Columbia University in the U.S. in October 2004 and his master’s degree of business administration from Dartmouth College in the U.S. in June 2009.

Ms. Xueqin WU (吳薛琴), aged 48, has been our Director since September 2020 and was re-designated as our Non-executive Director on March 17, 2021. Ms. Wu is primarily responsible for providing guidance on corporate governance to our Board.

Since February 2017, she has been the managing director of administration of ZhongRu Construction Group Co., Ltd. (中如建工集團有限公司). From June 2010 to January 2017, Ms. Wu was the managing director of administration of Rugao Hongtai Real Estate Pty., Ltd. (如皋市宏泰房地產開發有限公司), a company principally engaged in the real estate development business.

Ms. Wu obtained her bachelor’s degree in law from Nanjing Normal University (南京師範大學) in the PRC in July 2004.

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Independent non-executive Directors

Mr. Guanchun DAI (戴冠春), aged 44, was appointed as our Independent Non-executive Director on March 21, 2021 with effect from [●], 2021. He is responsible for supervising and providing independent judgement to the Board.

Mr. Dai has extensive experience in securities law and capital market, cross-border merges and acquisitions, real estate, infrastructure and mineral resources investment. Mr. Dai served as a partner at Jingtian & Gongcheng (北京競天公誠律師事務所) since January 2011, specializing in merge and acquisition, capital markets and private equity investment. He was a partner at Zhong Lun Law Firm (北京市中倫律師事務所) from March 2008 to December 2010. From August 2005 to May 2006, he worked as an associate at Jones Day. From May 2006 to February 2008, he was an associate at Morrison & Foerster LLP. He worked at Jingtian & Gongcheng (北京競天公誠律師事務所) from January 1999 to July 2005.

Mr. Dai was awarded by Chambers and Partners as an outstanding lawyer in corporate and M&A field in December 2020. In September 2020, he was recognized as a well-known lawyer in the capital markets and merger and acquisition by the IFLR1000, a guide to the world’s leading financial law firms.

Mr. Dai obtained his bachelor’s degree from Peking University Law School in the PRC in July 1998 and his master’s degree from University of Virginia School of Law in the U.S. in May 2003. He obtained the legal professional qualification certificate conferred by the Ministry of Justice of the PRC in 1999 and was qualified as a lawyer in New York in 2004.

Mr. Guohao JIN (金國豪), aged 32, was appointed as our Independent Non-executive Director on March 21, 2021 with effect from [●], 2021. He is responsible for supervising and providing independent judgment to the Board.

He has over 10 years of experience in auditing, accounting and taxation. Since April 2020, Mr. Jin has been serving at assets custody department of Industrial Securities Co., Ltd. (興業證券) (SHA: 601377), mainly responsible for funds accounting and management. From September 2013 to April 2020, he worked at the department of global trade services at DBS Bank (China) Limited (星展銀行(中國)有限公司), primarily responsible for financial management and analysis. From July 2010 to September 2013, Mr. Jin served at the Bank of China (中國銀行) (stock code: 3988) Shanghai Pudong Branch, where he was mainly responsible for corporate customer management.

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Mr. Jin has been a certified public accountant conferred by the Chinese Institute of Certified Public Accountants since March 2020 and obtained the legal professional qualification certificate conferred by the Ministry of Justice of the PRC in January 2021. He also obtained the securities practice certificate conferred by Securities Association of China and the fund practice certificate conferred by Asset Management Association of China.

Mr. Jin obtained his bachelor’s degree in economics from Tongji University (同濟大學) in July 2010.

Dr. Wenwei TU (涂文偉), aged 54, was appointed as our Independent Non-executive Director on March 21, 2021 with effect from [●], 2021. He is responsible for supervising and providing independent judgement to the Board. Dr. Tu is an internationally renowned immunologist in the field of pediatric immunology.

Dr. Tu has served as a professor in the department of paediatrics & adolescent medicine, Li Ka Shing Faculty of Medicine at The University of Hong Kong (the “HKU”) since June 2015. Dr. Tu also held various positions, such as the assistant dean of the Li Ka Shing Faculty of Medicine since October 2011 and an associate professor since June 2009 at the department of paediatrics & adolescent medicine since joining HKU. He was a postdoctoral researcher fellow in the department of pediatrics at the Stanford University School of Medicine in the United States. He served as a research scientist at the department of pediatrics, Stanford University School of Medicine from 2002 to 2006. From July 1992 to June 1996, Dr. Tu worked as a lecturer and attending doctor at the department of paediatrics of Children’s Hospital, Chongqing Medical University (重慶醫科大學附屬兒童醫院).

Dr. Tu was recognized as the Changjiang scholar chair professor in pediatrics by the Ministry of Education of the PRC in April 2016. In addition, he was awarded with the second prize of Science and Technology Progress (科技進步二等獎) by the Ministry of Education of the PRC and the government of Chongqing in February 2004 and April 2003, respectively.

Dr. Tu obtained his bachelor’s and master’s degrees in medicine sciences from Chongqing Medical University (重慶醫科大學) in the PRC in July 1989 and December 1992, respectively. He obtained his doctoral degree from HKU in December 1999.

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SUPERVISORS

The board of Supervisors comprises three Supervisors. The following table sets out certain information of our Supervisors:

Relationship Date of with Directors, Date of appointment Supervisors joining as a Key and senior Name Age our Group Supervisor Position responsibilities management

Xiaoyan LIU 37 March 31, September 17, Supervisor Overseeing our None (劉曉雁) 2020 2020 Company’s operations and financial situation and public relations and investor relations

Ji MA (馬紀) 59 March 21, March 21, Supervisor Overseeing our Mother of Mr. 2021 2021 Company’s Lunan ZHANG operations and financial situation

Zhou LU 49 August 8, December 20, Supervisor Overseeing our None (陸洲) 2012 2020 Company’s operations and financial situation and the environment, health and safety management

Dr. Xiaoyan LIU (劉曉雁), aged 37, has been our Supervisor since September 2020 and is primarily responsible for overseeing our Company’s operations and financial conditions. Dr. Liu has been the strategic director of the Company since March 2020, where she is primarily responsible for the public relations and investor relations.

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Prior to joining our Group, Dr. Liu served as the business development director and the secretary to the board of Immunophage Biotech Co., Ltd. (南京艾美斐生物醫藥科技有限公司), where she was primarily responsible for the investor relations and business development. She was a medical manager at Havas China from February 2018 to December 2018. From January 2015 to January 2018, she served as a medical manager at McCANN Health China, where she was primarily responsible for medical strategies, healthcare professional and key opinion leader engagement, as well as medical communication. From July 2013 to September 2014, she was a project manager of Covance Pharmaceutical R&D (Beijing) Co., Ltd. (科文斯醫藥研發 (北京)有限公司) Shanghai Branch and primarily responsible for managing clinical trial projects of the central laboratory.

Dr. Liu obtained her bachelor’s degree in biotechnology from Huazhong University of Science and Technology (華中科技大學) in the PRC in June 2006 and her doctoral degree in molecular and cellular biochemistry from University of Kentucky in the U.S. in August 2012. Dr. Liu obtained the certificate of Project Management Professional in September 2014 from Project Management Institute.

Dr.JiMA(馬紀), aged 59, was appointed as our Supervisor on March 21, 2021 and is primarily responsible for overseeing our Company’s operations and financial conditions.

Prior to joining our Group, Dr. Ma worked at Xinjiang University (新疆大學) from October 1988 to January 2017 and served as a professor since October 2006, primarily responsible for teaching and research in molecular biology and biostatistics.

Dr. Ma obtained her bachelor’s degree from Xinjiang University (新疆大學) in July 1983 and her master’s degree from Lanzhou University (蘭州大學) in June 1986. Dr. Ma obtained her doctoral degree from Xinjiang University (新疆大學) in December 2008.

Ms. Zhou LU (陸洲), aged 49, was appointed as our Supervisor on December 20, 2020 and is primarily responsible for overseeing our Company’s operations and financial conditions.

Since September 2020, Ms. Lu has served as the deputy general manager and director of environment, health and safety (“EHS”) of Suzhou Si’ao, where she is primarily responsible for the EHS management. From August 2012 to August 2020, Ms. Lu was the executive deputy general manager of Suzhou Si’ao and primarily responsible for the human resources, administrative management and project management. From May 2001 to July 2012, she served as a financial manager at Ding Mao Wood Industry (Suzhou) Co., Ltd. (頂貿木業(蘇州)有限公司).

Ms. Lu obtained her bachelor’s degree of Soochow University (蘇州大學) in organic chemistry in June 1992.

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SENIOR MANAGEMENT

Our senior management is responsible for the daily management of our business. The table below shows certain information of the senior management of our Group:

Relationship Date of with Directors, Date of appointment Supervisors joining as senior Key and senior Name Age our Group management Position responsibilities management

Qingling YU 55 April 8, 2009 April 8, 2009 Executive Overseeing our Spouse of (俞慶齡) Director and overall business Dr. Wang General management Manager and operations

Lunan 33 February 8, April 9, 2021 Executive Overseeing our Son of Dr. Ma ZHANG 2017 Director and corporate (張璐楠) Secretary to strategies, the Board financing activities, internal control and corporate governance

Gan ZHAO 41 April 1, 2015 April 1, 2015 Vice President Responsible for None (趙幹) our research and development

Aihua DONG 54 November 2, November 2, Vice President Responsible for None (董愛華) 2015 2015 our intellectual property management and regulatory affairs

Dan LIU 47 July 13, 2020 July 13, 2020 Vice President Responsible None (劉丹) for our production system and manufacturing

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Relationship Date of with Directors, Date of appointment Supervisors joining as senior Key and senior Name Age our Group management Position responsibilities management

Hong QIN 54 March 29, March 29, Vice President Responsible for None 2021 2021 our project management

Jianqun PENG 36 April 13, 2020 December 20, Chief Financial Responsible for None (彭建群) 2020 Officer and our finance and Joint accounting Company Secretary

Ms. Qingling YU (俞慶齡), aged 55, is our Executive Director, President and Legal Representative. For further details, see “—Directors—Executive Directors” of this section.

Mr. Lunan ZHANG (張璐楠), aged 33, is our Executive Director and Secretary to the Board. For further details, see “—Directors—Executive Directors” of this section.

Dr. Gan ZHAO (趙幹), aged 41, joined our Company in April 2015 as Vice President. Dr. Zhao is primarily responsible for the research and development of our vaccine candidates and the management of related technology platforms.

Dr. Zhao has approximately 20 years of experience in the research and development of biopharmaceuticals including DNA vaccines. Before joining our Group, from April 2014 to May 2015, he worked at GenScript Biotech Corporation (金斯瑞生物科技有限公司), share of which are listed on the Stock Exchange (stock code: 1548), where he was primarily responsible for the evaluation, design and pipeline research and development of biologics projects. From October 2011 and September 2013, he conducted the immunology research at National Cancer Institute of National Institutes of Health in the United States. From September 2009 to September 2011, he worked at the FDA, where he was primarily responsible for evaluation of biopharmaceuticals.

Dr. Zhao obtained his bachelor’s degree in biotechnology in July 2002 and his master’s degree in zoology in June 2005 from Xinjiang University (新疆大學) in the PRC. He obtained his doctoral degree in microbiology from China Agricultural University (中國農業大學)inthe PRC in June 2009.

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Ms. Aihua DONG (董愛華), aged 54, joined our Company in November 2015 and has been the Vice President of our Group since March 2018. Ms. Dong is responsible for our intellectual property management and regulatory affairs.

She has approximately 35 years of experience in pharmaceutical and biologics research and development, new drugs application and registration. Prior to joining our Group, from August 1986 to November 2015, she held various positions in North China Pharmaceutical Group Co., Ltd. (華北製藥集團有限責任公司)(“NCPC”), shares of which are listed on the Shanghai Stock Exchange (stock code: 600812), including the deputy general manager of North China Pharmaceutical Group New Drug Research and Development Co., Ltd. (華北製藥集團新藥研究開發有限責任公司)(“NCPC R&D”), a subsidiary of NCPC, from December 2009 to April 2014, the head of the technology development department of NCPC R&D from April 2004 to December 2009, the director of the biotechnology drug laboratory of NCPC R&D from December 2000 to March 2004, and the medical information researcher and pharmaceutical researcher from August 1986 to December 2000.

Ms. Dong obtained her bachelor’s degree in biochemistry from East China University of Science and Technology (華東理工大學) (previously known as East China Institute of Chemical Technology (華東化工學院)) in the PRC in July 1986.

Dr. Dan LIU (劉丹), aged 47, joined our Group in July 2020 and has been the Vice President of our Group since July 2020. Dr. Liu is responsible for manufacturing of our vaccine candidates.

Dr. Liu has 16 years of experience in manufacturing of biopharmaceutical products. Prior to joining our Group, from May 2018 to July 2020, she was the production director of Wuxi Shengji Pharmaceutical Technology Co., Ltd. (無錫生基醫藥科技有限公司), a subsidiary of Wuxi AppTec Co., Ltd. (無錫藥明康德新藥開發股份有限公司), the shares of which are dual listed on the Shanghai Stock Exchange (stock code: 603259) and the Stock Exchange (stock code: 2359), primarily responsible for managing the production of viral vectors. From February 2017 to May 2018, she was the deputy general manager of An’hui Weiming Biopharmaceuticals Co., Ltd. (安徽未名生物醫藥有限公司), primarily responsible for the industrialization of cytokine products. From March 2016 to February 2017, she was the production director of Jieke (Tianjin) Biopharmaceuticals Co., Ltd. (傑科(天津)生物醫藥有限公司), primarily responsible for the industrialization of biosimilars. She held the position as the production director of Wuhu Kangwei Biotech Co., Ltd. (蕪湖康衛生物科技有限公司) from September 2010 to March 2016, where she was responsible for the transfer and industrialization of vaccine technology. She worked at the Institute of Changchun Biological Products (長春生物製品研究所) (the “ICBP”) from July 2004 to April 2010, where she was primarily responsible for commercial production of vaccines.

Dr. Liu was recognized as the “Expert of the Consultation Expert Group for Decision Making on COVID-19 Prevention and Control of Suzhou” (蘇州市新冠肺炎疫情防控決策諮詢專家組專家) in October 2020 by Suzhou COVID-19 Prevention and Control Headquarter (蘇州市新型冠狀病毒感染的肺炎疫情防控指揮部).

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Dr. Liu obtained her bachelor’s degree in pharmacy from Shenyang Pharmaceutical University (瀋陽藥科大學) in the PRC in July 1997 and her master’s degree in medical immunology from the ICBP in July 2000. Dr. Liu graduated from Jilin University (吉林大學) in the PRC with a doctoral degree in medical immunology in June 2004. Dr. Liu obtained the licensed pharmacist certificate conferred by the CFDA and Ministry of Human Resources and Social Security of the PRC in January 2016.

Ms. Hong QIN, aged 54, was appointed as our Vice President in March 2021. She is primarily responsible for project management.

Ms. Qin has extensive experience of corporate management and strategic operations in the biopharmaceutical industry. Prior to joining our Group, Ms. Qin served as the chief operation officer of Teddy Clinical Research Laboratory (Shanghai) Limited from May 2017 to March 2021, where she was primarily responsible for providing technical consultation in establishing and setting up technology platforms for assaying clinical trial samples. From October 2015 to April 2017, Ms. Qin served as vice president of operations in Ark Biosciences Inc., where she was primarily in charge of company project and portfolio management. Ms. Qin worked for Shanghai Invitrogen Biotechnology Co., Ltd. (上海英駿生物技術有限公司) from May 2012 to June 2015, where she served as a senior manager in charge of the management of production and manufacturing. From June 2011 to April 2012, she served as the head of department of global strategy and partnering in Shanghai Zerun Biotechnology Co., Ltd. (上海澤潤生物科技有限公司), primarily responsible for setting and executing strategies for business development, outsourcing, collaboration and project management. Ms. Qin has served at Promega (Shanghai) Biological Products Ltd. (上海普洛麥格生物產品有限公司) from July 2008 to March 2010, where she was primarily responsible for production and quality control and served as operation director from March 2010 to April 2011. From February 2005 to September 2008, Ms. Qin was the research biochemist in Merck & Co. (stock code: NYSE: MRK) mainly responsible for the development of vaccines and biologics formulations and formulation processes for clinical development.

Ms. Qin obtained her bachelor’s degree majoring in biology from Nanjing Normal University (南京師範大學) in the PRC in June 1988 and her master’s degree majoring in science from Texas Tech University in the U.S. in December 1994.

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Ms. Jianqun PENG (彭建群), aged 36, was appointed as our Chief Financial Officer on December 20, 2020 and joint company secretary on March 17, 2021. She has also been the senior finance manager of the Group since April 2020. She is primarily responsible for finance and accounting of our Group.

Ms. Peng has over ten years of experience in accounting and finance. Prior to joining our Group, she served as the finance manager of Suzhou Dehua Ecological Technology Co., Ltd. (蘇州德華生態環境科技股份有限公司), shares of which are listed on the National Equities Exchange and Quotations (stock code: 838582), from September 2018 to June 2019. From August 2008 to August 2018, she was the head of finance at Santen Pharmaceutical (China) Co., Ltd. (參天製藥(中國)有限公司).

Ms. Peng graduated from Nanchang University (南昌大學) (majored in economic management) in the PRC in December 2006 and the intermediate accountant qualification certificate from the Ministry of Finance of the PRC in September 2015.

JOINT COMPANY SECRETARIES

Ms. Jianqun PENG (彭建群), our Chief Financial Officer, was appointed as our Joint Company Secretary on March 17, 2021. For further details, see “—Senior Management” of this section.

Ms. Wai Ching AU (區慧晶), was appointed as our Joint Company Secretary on March 17, 2021. Ms. Au joined SWCS Corporate Services Group (Hong Kong) Limited, a corporate service provider, in January 2016, and currently serves as the assistant manager in corporate services. She is currently the company secretary of China Bright Culture Group, a Main Board listed company in Hong Kong (stock code: 1859).

Ms. Au has been an associate member of both the Hong Kong Institute of Chartered Secretaries and the Chartered Governance Institute (formerly known as the Institute of Chartered Secretaries and Administrators) since December 2016.

Ms. Au obtained her bachelor’s degree in business administration in July 2012 and her master’s degree in professional accounting and corporate governance in July 2016 from the City University of Hong Kong.

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INTERESTS OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT

Save as disclosed above, none of our Directors, Supervisors or senior management members has been a director of any public company the securities of which are listed on any securities market in Hong Kong or overseas in the three years immediately preceding the date of this document.

Save as disclosed above, to the best of the knowledge, information and belief of our Directors having made all reasonable enquiries, as of the Latest Practicable Date, there was no other matter with respect to the appointment of our Directors and Supervisors that needs to be brought to the attention of the Shareholders and there was no information relating to our Directors and Supervisors that is required to be disclosed pursuant to Rules 13.51(2)(h) to (v) of the Listing Rules.

Save as disclosed above, as of the Latest Practicable Date, none of our Directors, Supervisors or senior management is related to other Directors, Supervisors or senior management of our Company.

Save as otherwise disclosed, as of the Latest Practicable Date, none of our Directors and Supervisors held any interest in the securities within the meaning of Part XV of the SFO.

KEY TERMS OF EMPLOYMENT CONTRACTS

Our Company normally enters into employment contracts, confidentiality, intellectual property and non-competition agreements with our key management and technical staff (other than Directors and Supervisors). The term of the employment contracts with the key management and technical staff is usually [three] years. Below sets forth the key terms of these contracts we enter into with our senior management and other key personnel.

Confidentiality

Scope of confidential information

Confidential information includes, except for public information, all information the employee possesses or is aware of that is relevant to the Company and/or its affiliates during his terms of service, including but not limited to (i) technical information, such as product composition, formula, compounds, manufacturing process, equipment, models, sizes, computer programs and the research and development projects; (ii) business information, such as business strategies and approaches, promotion strategies, business development plans, clients’ information, financial information, research data or future development plans; and (iii) any information that the clients and business partners of the Company or its affiliates consider confidential and bear confidentiality obligations to, or any information that the employee may obtain or otherwise acquire during his terms of service.

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Confidential obligation

The employee shall (i) use the confidential information solely for the purpose of completing the work assigned by the Company; (ii) shall not, unless for the purpose of his work in the Company or otherwise stipulated by applicable PRC laws and regulations, disclose, disseminate, announce, publish, share, transfer, exchange, copy, reproduce or otherwise disclose by any means any aspect of confidential information to any entity or person whatsoever without the Company’s prior written consent; and (iii) disclose the continuous confidentiality obligation to the current and future employers.

Duration of the confidentiality obligation

The employee bears the confidentiality obligation during the term of his service and thereafter, until such confidential information is no longer confidential.

Proprietary Rights

The Company is exclusively entitled to any form of inventions, discoveries, ideas, designs, improvements, copyrightable works, trade secrets and relevant intellectual property rights (collectively, the “Inventions”) as well as rights and interests herein, no matter whether such Invention is produced solely by the employee or jointly with third parties during the terms of his service in the Company.

The employee is entitled to the Invention if (i) such Invention is produced in his spare time; (ii) no equipment, supplies, facilities, services or any form of trade secrets of the Company is used during the invention; (iii) the Invention does not directly relate to the Company’s business or is irrelevant to the Company’s actual business, research and development; and (iv) the Invention is not for the purpose of performing the employee’s duties of work for the Company.

Non-competition

During the course of his engagement and within 24 months from the employee’s departure, the employee shall not, among others, directly or indirectly, (i) incorporate, operate, or engage, in any entity that has direct or indirect competing relationships with the Company; (ii) provide services, supports or any form of advice to such entity; (iii) holds positions in such entity; or (iv) engage in any business that competes with or is similar with that of the Company. Within 24 months from the employee’s departure, the employee shall not engage in any work or research that he participated during the terms of his service in the Company.

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COMPETITION

Each of our Directors confirms that as of the Latest Practicable Date, he/she did not have any interest in a business which competes or is likely to compete, directly or indirectly, with our business and requires disclosure under Rule 8.10 of the Listing Rules.

From time to time our Non-executive Directors may serve on the boards of both private and public companies within the broader healthcare and medical industries. However, as these Non-executive Directors are neither our substantial shareholders nor members of our executive management team, we believe that their interests in such companies as directors would not render us incapable of carrying on our business independently from the other companies in which they may hold directorships from time to time.

CORPORATE GOVERNANCE

In accordance with relevant PRC laws, regulations, the Articles and the corporate governance practice prescribed in Listing Rules, we have formed three board committees, namely, the audit committee of the Board (the “Audit Committee”), the remuneration committee of the Board (the “Remuneration Committee”) and the nomination committee of the Board (the “Nomination Committee”).

Audit Committee

We have established the Audit Committee with terms of reference in compliance with the relevant PRC laws and regulations and Rule 3.21 of the Listing Rules and paragraph C.3 of the Corporate Governance Code as set out in Appendix 14 to the Listing Rules. The Audit Committee consists of Mr. Guohao JIN, Mr. Guanchun DAI and Ms. Xueqin WU. The primary duties of the Audit Committee are to review and supervise the financial reporting process, risk management and internal control system of our Group. Mr. Guohao JIN, being the chairman of the Audit Committee, is appropriately qualified as required under Rules 3.10(2) and 3.21 of the Listing Rules.

Remuneration Committee

We have established the Remuneration Committee with terms of reference in compliance with the relevant PRC laws and regulations and paragraph B.1 of the Corporate Governance Code as set out in Appendix 14 to the Listing Rules. The Remuneration Committee consists of Mr. Guanchun DAI, Mr. Guohao JIN and Ms. Qingling YU with Mr. Dai being the chairman of the committee. The primary duties of the Remuneration Committee are to review and make recommendation to the Board regarding the terms of remuneration packages, bonuses and other compensation payable to our Directors and senior management.

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Nomination Committee

We have established the Nomination Committee with terms of reference in compliance with the relevant PRC laws and regulations and paragraph A.5 of the Corporate Governance Code as set out in Appendix 14 to the Listing Rules. The Nomination Committee consists of Dr. Bin WANG, Mr. Guohao JIN and Mr. Guanchun DAI with Dr. Wang being the chairman of the committee. The primary duties of the Nomination Committee are to make recommendation to the Board regarding the appointment of Director and senior management.

REMUNERATION OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT

Our Directors and Supervisors receive compensation from our Company in the form of salaries, housing allowance and contributions to a retirement benefit scheme.

The remuneration (including fees, salaries, housing allowance and contributions to a retirement benefit scheme and other allowance and benefits in kind) paid to our Directors for the years ended December 31, 2019 and 2020 were approximately RMB0.7 million and RMB1.1 million, respectively.

The remuneration (including fees, salaries, housing allowance and contributions to a retirement benefit scheme and other allowance and benefits in kind) paid to our Supervisors for the years ended December 31, 2019 and 2020 were nil and RMB1.5 million, respectively.

It is estimated that under the current arrangements in force, the aggregate remuneration payable to our Directors and Supervisors for the year ending December 31, 2021 will be approximately RMB4.9 million and nil, respectively.

For the years ended December 31, 2019 and 2020, the aggregate amount of remuneration paid to the five highest paid individuals of our Group, including one Director, were approximately RMB2.9 million and RMB4.1 million, respectively.

During the Track Record Period, no remuneration was paid by us to, or receivable by, our Directors, Supervisors or the five highest paid individuals as an inducement to join or upon joining our Company as a compensation for loss of office in respect of the years ended December 31, 2019 and 2020.

Our Board will review and determine the remuneration and compensation packages of our Directors, Supervisors and senior management and will, following the [REDACTED], receive recommendation from the Remuneration Committee which will take into account salaries paid by comparable companies, time commitment and responsibilities of our Directors and Supervisors and performance of our Group.

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Save as disclosed above, no other payments had been made, or are payable, by any member of our Group to our Directors and Supervisors during the Track Record Period. For additional information on our Directors and Supervisors’ remuneration during the Track Record Period as well as information on the highest paid individuals, please refer to Notes [31] and [34] in the Accountant’s Report set out in Appendix I to this document.

For the details of the RSUs that we granted to our Directors, see the section headed “Appendix VII—Statutory and General Information—A. Further Information about Our Company—5. Incentive Plan” in this document.

BOARD DIVERSITY POLICY

The Board has adopted a board diversity policy (the “Board Diversity Policy”) in order to enhance the effectiveness of our Board and to maintain high standard of corporate governance. The Board Diversity Policy sets out the criteria in selecting candidates to our Board, including but not limited to gender, age, cultural and educational background and professional experience. The ultimate decision will be based on merit and contribution that the selected candidates will bring to the Board.

Our Directors have a balanced mixed of knowledge and skills, including but not limited to overall management and strategic development, finance and accounting and risk management, as well as relevant professional experiences. The Board satisfies with the Board Diversity Policy.

The Nomination Committee is responsible for compliance with relevant codes governing board diversity under the Corporate Governance Code. After the [REDACTED], the Nomination Committee will review the Board Diversity Policy from time to time to ensure its continued effectiveness and we will disclose in our corporate governance report about the implementation of the Board Diversity Policy annually.

CORPORATE GOVERNANCE CODE

We aim to achieve high standards of corporate governance which are crucial to our development and safeguard the interests of the Shareholders. To accomplish this, we expect to comply with the Corporate Governance Code after the [REDACTED].

COMPLIANCE ADVISOR

We have appointed Somerley Capital Limited as our compliance advisor (the “Compliance Advisor”) pursuant to Rule 3A.19 of the Listing Rules. Our Compliance Advisor will provide us with guidance and advice as to compliance with the Listing Rules and applicable Hong Kong laws. Pursuant to Rule 3A.23 of the Listing Rules, our Compliance Advisor will advise our Company in certain circumstances including: (a) before the publication of any regulatory announcement, circular, or financial report; (b) where a transaction, which might be a notifiable or connected transaction, is contemplated, including share issues and

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Meanwhile, pursuant to Rule 19A.06(3) of the Listing Rules, the Compliance Advisor shall inform us on a timely basis of any amendment or supplement to the Listing Rules issued by the Stock Exchange from time to time and any new or amended law, regulation or code in Hong Kong applicable to the Company. The Compliance Advisor shall also provide advice to us on the continuing requirements under the Listing Rules and applicable laws and regulations.

The term of appointment of our Compliance Advisor shall commence on the Listing Date and is expected to end on the date on which we comply with Rule 13.46 of the Listing Rules in respect of our financial results for the first full financial year commencing after the [REDACTED].

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SHARE CAPITAL

As of the Latest Practicable Date, our Company’s registered capital was RMB29,376,000, divided into 26,816,000 Domestic Shares and 2,560,000 Unlisted Foreign Shares with a nominal value of RMB1.00 each.

Immediately following completion of the [REDACTED], assuming the [REDACTED]is not exercised, the share capital of our Company will be as follows:

Approximate percentage to Number total share Description of Shares of Shares capital

Domestic Shares [REDACTED][REDACTED] H Shares converted from Unlisted Foreign Shares(1) [REDACTED][REDACTED] H Shares issued under the Global Offering [REDACTED][REDACTED]

Total [REDACTED] 100.0%

Immediately following completion of the [REDACTED], assuming the [REDACTED]is fully exercised, the share capital of our Company will be as follows:

Approximate percentage to Number total share Description of Shares of Shares capital

Domestic Shares [REDACTED][REDACTED] H Shares converted from Unlisted Foreign Shares(1) [REDACTED][REDACTED] H Shares issued under the [REDACTED][REDACTED][REDACTED]

Total [REDACTED] 100.0%

Note:

(1) Following the completion of the [REDACTED] and according to the approvals issued by the [REDACTED]on[●], 2021, [REDACTED], [REDACTED], [REDACTED] and [REDACTED] Unlisted Foreign Shares held by Matrix VI, Matrix VI-A, United Strength and Goldstream, respectively, will be converted into H Shares on a one-to-one basis and [REDACTED] on the Stock Exchange for [REDACTED].

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SHARE CLASSES

Upon completion of the [REDACTED], we will have two classes of Shares: H Shares as one class and Domestic Shares as another class. Domestic Shares and H Shares are all ordinary Shares in the share capital of our Company. However, apart from certain qualified domestic institutional investors in the PRC, the qualified PRC investors under the Shanghai— Hong Kong Stock Connect or the Shenzhen—Hong Kong Stock Connect and other persons who are entitled to hold our H Shares pursuant to relevant PRC laws and regulations or upon approvals of any competent authorities, H Shares generally cannot be subscribed for by or traded between legal or natural persons of the PRC.

The differences between the two classes of Shares and provisions on class rights, the dispatch of notices and financial reports to Shareholders, registration of Shares on different registers of Shareholders, the method of share transfer and appointment of dividend receiving agents are set out in the Articles of Association and summarized in “Appendix VI—Summary of the Articles of Association” in this document. The rights conferred on any class of Shareholders may not be varied or abrogated unless approved by a special resolution of the general meeting of Shareholders and by the holders of Shares of that class at a separate meeting. The circumstances which shall be deemed to be a variation or abrogation of the rights of a class are listed in “Appendix VI—Summary of the Articles of Association” in this document.

Except for the differences above, Domestic Shares and H Shares will however rank pari passu with each other in all other respects and, in particular, will rank equally for all dividends or distributions declared, paid or made after the date of this document. All dividends in respect of H Shares are to be paid by us in Hong Kong dollars or in the form of H Shares.

CONVERSION OF OUR UNLISTED SHARES INTO H SHARES

Our Domestic Shares and Unlisted Foreign Shares are not listed or traded on any stock exchange. The holders of our Domestic Shares and Unlisted Foreign Shares may convert their Shares into H Shares provided such conversion shall have gone through any requisite internal approval process and complied with the regulations prescribed by the securities regulatory authorities of the State Council and the regulations, requirements and procedures prescribed by the overseas stock exchange(s) and have been approved by the securities regulatory authorities of the State Council, including the CSRC. The listing of such converted Shares on the Stock Exchange will also require the approval of the Stock Exchange.

Based on the procedures for the conversion of our Domestic Shares and Unlisted Foreign Shares into H Shares as disclosed in this section, we can apply for the listing of all or any portion of our Domestic Shares and Unlisted Foreign Shares on the Stock Exchange as H Shares in advance of any proposed conversion to ensure that the conversion process can be completed promptly upon notice to the Stock Exchange and delivery of Shares for entry on the H Share register. As any listing of additional Shares after our initial listing on the Stock Exchange is ordinarily considered by the Stock Exchange to be a purely administrative matter, it will not require such prior application for listing at the time of our initial listing in Hong Kong.

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No class Shareholder voting is required for the listing and trading of the converted Shares on the Stock Exchange. Any application for listing of the converted Shares on the Stock Exchange after our initial listing is subject to prior notification by way of announcement to inform Shareholders and the public of such proposed conversion.

After all the requisite approvals have been obtained, the following procedures will need to be completed: the relevant Domestic Shares and Unlisted Foreign Shares will be withdrawn from the Share register and we will re-register such Shares on our [REDACTED] maintained in Hong Kong and instruct the [REDACTED] to issue H Share certificates. Registration on our [REDACTED] will be on the condition that (a) our [REDACTED] lodges with the Stock Exchange a letter confirming the proper entry of the relevant H Shares on the H Share register of members and the due dispatch of H Share certificates and (b) the admission of the H Shares to trade on the Stock Exchange will comply with the Listing Rules and the General Rules of CCASS and the CCASS Operational Procedures in force from time to time. Until the converted Shares are re-registered on our [REDACTED], such Shares would not be listed as H Shares.

So far as we are aware, save as disclosed in this document, none of our Shareholders currently proposes to convert any of their Domestic Shares and Unlisted Foreign Shares into H Shares.

TRANSFER OF SHARES ISSUED PRIOR TO THE [REDACTED]

The PRC Company Law provides that in relation to the public share offering of a company, the shares of the company which have been issued prior to the offering shall not be transferred within one year from the date of the listing. Accordingly, Shares issued by our Company prior to the [REDACTED] shall be subject to this statutory restriction and shall not be transferred for a period of one year from the [REDACTED].

REGISTRATION OF SHARES NOT LISTED ON AN OVERSEAS STOCK EXCHANGE

According to the Notice of Centralized Registration and Deposit of Non-overseas Listed Shares of Companies Listed on an Overseas Stock Exchange (《關於境外上市公司非境外上市股份集中登記存管有關事宜的通知》) issued by the CSRC, our Company is required to register and deposit our Shares that are not listed on the overseas stock exchange with the China Securities Depository and Clearing Corporation Limited within 15 Business Days upon the [REDACTED] and provide a written report to the CSRC regarding the centralized registration and deposit of our Shares that are not listed on the overseas stock exchange as well as the [REDACTED] and [REDACTED] of our H Shares.

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So far as is known to our Directors, as of the Latest Practicable Date and immediately prior to and following the completion of the [REDACTED] (assuming the [REDACTED]is not exercised), the following persons have interests and/or short positions in the Shares or underlying Shares which fall to be disclosed pursuant to the provisions of Divisions 2 and 3 of Part XV of the SFO:

Shares held as of the Latest Practicable Date Shares held as of the and immediately upon the completion of the Latest Practicable Date [REDACTED] and immediately prior to the (assuming [REDACTED] is not [REDACTED] exercised) Approximate percentage of Approximate Approximate interest in the percentage of percentage of relevant class of Name of Nature of Class of interest in our interest in our Shares of our Shareholder interest Shares Number Company Number Company Company (approximately) (approximately) (approximately)

Dr. Wang Interest of Domestic 9,801,600 33.36% 9,801,600 [REDACTED][REDACTED] (王賓)(1)(2) spouse Shares

Ms. Yu(2) Beneficial owner Domestic 6,375,000 21.70% 6,375,000 [REDACTED][REDACTED] Shares

Interest of a Domestic 2,125,000 7.23% 2,125,000 [REDACTED] [REDACTED] party to an Shares agreement

Interest in Domestic 1,301,600 4.43% 1,301,600 [REDACTED][REDACTED] controlled Shares corporation

Dr. Ma Beneficial owner Domestic 2,125,000 7.23% 2,125,000 [REDACTED][REDACTED] Shares

Zhijun HUANG Interest in Domestic 2,878,400 9.80% 2,878,400 [REDACTED][REDACTED] (黃志軍) controlled Shares (“Mr. corporation Huang”)(3)

Daolan SUN Interest in Domestic 2,878,400 9.80% 2,878,400 [REDACTED][REDACTED] (孫道蘭) controlled Shares (“Ms. Sun”)(3) corporation

Nantong Huaze Interest in Domestic 2,878,400 9.80% 2,878,400 [REDACTED][REDACTED] Investment Co., controlled Shares Ltd. (南通華澤 corporation 投資有限公司) (“Nantong Huaze”)(3)

Kexiang Beneficial owner Domestic 2,878,400 9.80% 2,878,400 [REDACTED][REDACTED] Hi-tech(3) Shares

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Lingye ZUO Interest in Domestic 1,920,000 6.54% 1,920,000 [REDACTED][REDACTED] (左淩燁) controlled Shares (“Mr. Zuo”)(4) corporation

Shanghai Interest in Domestic 1,920,000 6.54% 1,920,000 [REDACTED][REDACTED] Jingzhuo controlled Shares Investment corporation Management Co., Ltd. (上海旌卓投資管理有限公司) (“Shanghai Jingzhuo”)(4)

Hangzhou Beneficial owner Domestic 1,920,000 6.54% 1,920,000 [REDACTED][REDACTED] Chuangqian(4) Shares

Xiaofeng WEN Interest in Domestic 1,600,000 5.45% 1,600,000 [REDACTED][REDACTED] (溫曉峰) controlled Shares (“Mr. Wen”)(5) corporation

Jenna(5) Beneficial owner Domestic 1,600,000 5.45% 1,600,000 [REDACTED][REDACTED] Shares

Matrix China VI Interest in Unlisted 1,600,000 5.45% 1,600,000 [REDACTED][REDACTED] GP GP, Ltd.(6) controlled Foreign corporation Shares

Timothy Allan Interest in Unlisted 1,600,000 5.45% 1,600,000 [REDACTED][REDACTED] BARROWS(6) controlled Foreign corporation Shares

Notes:

(1) Dr. Wang is the spouse of Ms. Yu. Therefore, Dr. Wang is deemed to be interested in the Shares in which Ms. Yu is interested under the SFO.

(2) Ms. Yu directly owns 6,375,000 Domestic Shares. In addition to her direct shareholding in our Company, pursuant to the Voting Agreement dated September 1, 2020 entered into by and between Ms. Yu and Dr. Ma, Ms. Yu has the right to vote over all Shares held by Dr. Ma. Ms. Yu is the general partner of Advaccine Investment and holds approximately 68.60% interest in Advaccine Investment. As such, Ms. Yu is deemed to be interested in the Shares owned by Dr. Ma and Advaccine Investment under the SFO. See “History and Corporate Structure” for further information of the Voting Agreement and Advaccine Investment.

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(3) Kexiang Hi-tech, a limited liability company established in the PRC, owns 2,878,400 Domestic Shares. Kexiang Hi-tech is a wholly-owned subsidiary of Nantong Huaze, which is in turn owned as to [60]% by Mr. Huang and [40]% by Ms. Sun. As such, each of Nantong Huaze, Mr. Huang and Ms. Sun is deemed to be interested in the Shares owned by Kexiang Hi-tech under the SFO.

(4) Hangzhou Chuangqian, a limited partnership established in the PRC, owns 1,920,000 Domestic Shares and is managed by Shanghai Jingzhuo. As of the Latest Practicable Date, Shanghai Jingzhuo was owned by Mr. Zuo as to 90% and as such Mr. Zuo is deemed to be interested in the Shares owned by Hangzhou Chuangqian under the SFO.

(5) Jenna, a limited partnership established in the PRC, owns 1,600,000 Domestic Shares. Jenna is managed and controlled by Mr. Wen as its general partner who also owned 90% equity interest of Jenna as of the Latest Practicable Date. Therefore, Mr. Wen is deemed to be interested in Shares owned by Jenna under the SFO.

(6) Each of Matrix VI and Matrix VI-A is managed by Matrix China VI GP GP, Ltd., as its general partner, and ultimately controlled by Timothy Allan BARROWS, an Independent Third Party individual. Therefore, Matrix China VI GP GP, Ltd. and Timothy Allan BARROWS are deemed to be interested in the Shares in which Matrix VI and Matrix VI-A are interested in under the SFO, respectively.

Save as disclosed above, our Directors are not aware of any person will, immediately prior to and following the completion of the [REDACTED] (assuming the [REDACTED]is not exercised), have interests or short positions in any Shares or underlying Shares, which would fall to be disclosed to us under the provisions of Divisions 2 and 3 of Part XV of the SFO.

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You should read the following discussion and analysis in conjunction with our audited consolidated financial statements included in “Appendix I—Accountant’s Report” to this document, together with the accompanying notes. Our consolidated financial information has been prepared in accordance with IFRS, which may differ in material aspects from generally accepted accounting principles in other jurisdictions. You should read the entire Accountant’s Report and not merely rely on the information contained in this section.

The following discussion and analysis contain forward-looking statements that reflect the current views with respect to future events and financial performance. These statements are based on assumptions and analyses made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we believe are appropriate under the circumstances. However, whether the actual outcome and developments will meet our expectations and predictions depends on a number of risks and uncertainties over which we do not have control. For details, see “Forward-looking Statements” and “Risk Factors.”

OVERVIEW

We are an innovative vaccine company with a high-value prophylactic and therapeutic vaccine pipeline driven by in-house developed technology platforms. To date, our pipeline consists of potential first-in-class key assets developed to address SARS-CoV-2, RSV and HBV, which are diseases with huge unmet medical needs. We are also developing vaccine candidates in preclinical stage covering viral-related oncology, as well as neoantigen-based therapeutic vaccines and tumor-associated antigen therapeutic vaccines.

During the Track Record Period, we generated limited revenue from sales royalties received by Suzhou Si’ao from the co-developer of a Suzhou Si’ao’s veterinary product and sales of adjuvants produced in our laboratory. We have not been profitable and have incurred net losses in each period comprising the Track Record Period.

OUR ACQUISITION OF SUZHOU SI’AO

On September 30, 2020, our Company completed the acquisition of 100% equity interest of Suzhou Si’ao (the “Acquisition”). Its results of operations have been consolidated into ours since then.

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During the year ended December 31, 2019 and the nine months ended September 30, 2020, Suzhou Si’ao mainly generated revenue through royalties from the co-developer of a Suzhou Si’ao’s veterinary product. Before the Acquisition, its main operations include research and development of human and veterinary vaccines. We acquired Suzhou Si’ao with the purpose of obtaining its nearly-completed manufacturing facility, which we would be able to leverage as our Suzhou manufacturing base for production of our vaccine candidates, with very limited investments required for subsequent construction, alterations and improvements. Suzhou Si’ao’s research and development of three vaccine candidates were capitalized as our intangible assets after the Acquisition, which includes RMB274.9 million of in-progress research and development. See “—Description of Certain Consolidated Statement of Financial Position Item—Intangible Assets.” We plan to prioritize our R&D capacity to our product pipeline while also continuing the research and development of Suzhou Si’ao’s human vaccine candidates. In January 2021, we made the strategic decision to dispose of certain of Suzhou Si’ao’s veterinary product projects to a subsidiary of Kexiang Hi-tech Development Co., Ltd. (科翔高新技術發展有限公司)(“Kexiang Hi-tech”). See “—No Material Adverse Change.” The consolidated financial statements and the accompanying notes of Suzhou Si’ao for the year ended December 31, 2019 and the nine months ended September 30, 2020 are set forth in Appendix I to this document.

See “History and Corporate Structure—Major Shareholding Changes of Our Company— Acquisition of Suzhou Si’ao” and note 32 to the Accountant’s Report in Appendix I to this document.

KEY FACTORS AFFECTING OUR RESULTS OF OPERATIONS

We believe that the most significant factors affecting our results of operations, financial condition and cash flow include the following:

Our ability to successfully develop and commercialize our Core Product

Our results of operations will depend to a significant extent on the successful commercial sales of NMPA-approved products, especially our clinical-stage Core Product, pGX9501. We have completed phase I clinical trial and have completed dosing in phase II clinical trials in China. Our available data from the phase I clinical trials demonstrated pGX9501 vaccine candidate to have good safety, tolerability and immunogenicity profile. We expect to commence phase III clinical trial in the second quarter of 2021, and file a BLA or EUA application to the NMPA in the second half of 2021. However, our pGX9501 expects intensive competition if successfully commercialized as there are various COVID-19 vaccines already commercialized in China, while there are also a number of other COVID-19 vaccines in late-stage clinical trials in China. Our future results of operations and financial performance will depend on our ability to successfully develop and commercialize pGX9501.

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Development and registration approval progress of other vaccine candidates in our vaccine pipeline

The continued advancement of our product portfolio through clinical trials and the regulatory approval process towards commercialization is crucial to our sustained business growth. As of the Latest Practicable Date, apart from our Core Product, we had five other vaccine candidates under development. We have commenced our phase II clinical trial of ADV110 in Australia in April 2021 and expect to complete our phase II clinical trial of ADV110 in 2023. We also plan to successively launch clinical trials for our pre-clinical vaccine candidates. However, we cannot predict when our vaccine candidates will be commercialized, or will be commercialized at all. Our results of operations in the coming years will be affected by the timing of clinical trials, regulatory approval and commercial launch of these products.

Our Operating Expenses

Our operating expenses during the Track Record Period primarily consisted of research and development expenses and general and administrative expenses, details of which are set out below.

• Research and development expenses. Our research and development expenses primarily consisted of third-party contracting costs, staff costs, consumable expenses, share-based compensation expenses (through granting RSUs) and depreciation expenses during the Track Record Period. Research and development is critical to the sustainable growth of our business and we have focused on the research and development of our vaccine products by devoting significant resources on research and development activities. Research and development expenses have been and are expected to continue to be a major component of our operating expenses.

• General and administrative expenses. Our general and administrative expenses primarily consisted of share-based compensation expenses (through granting of RSUs), professional service fees, staff costs, consumable expenses, travel and conference expenses and depreciation and amortization expenses during the Track Record Period.

We expect our operating expense to evolve as we develop and expand our business. As we gradually obtain regulatory approvals and commence commercial sales of our product portfolio, and as we continue to develop new products and technologies, we expect to incur additional costs in relation to our research and development, raw materials procurement, production and sales and marketing, among other things. Moreover, to support our business growth, we also expect to expand our headcount, particularly for our research and development and commercialization teams, and incur higher staff costs as a result.

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Fair Value of our Intangible Assets

We held significant intangible assets after the Acquisition, which represented ongoing research and development projects. Such projects were capitalized as intangible assets at the Acquisition according to the fair value estimated by an independent appraiser. Impairment test are required to be conducted on intangible assets not yet ready for use. Results of such test are in relation to our management’s expectations of timing of commercialization, market penetration rate and success rate of commercialization, which involves key assumptions of material uncertainties. See note 17 of the Accountant’s Report set out in Appendix I to this document. In addition, we cannot foresee whether our business strategies will be in line with such expectation. In the event that we carry out different business strategies, we cannot assure we will be able to sell these intangible assets at a price higher than its costs. We may have to sell them at a price significantly lower than their costs. Alternatively, these intangible assets may experience large impairment. In such case, our results of operation will be materially and adversely affected.

Funding for Our Operations

During the Track Record Period, we devoted substantially all of our resources on the development of vaccines. We funded our operations primarily through equity financings and bank borrowings. Going forward, we expect to fund our product development in part with revenue generated from our sale of products. Our ability to commercialize our vaccine products and generate revenue may have an impact on our cash flow plan.

BASIS OF PREPARATION AND PRESENTATION

The Company was incorporated in PRC as a limited liability company in April 2009 and was converted into a joint stock company with limited liability in December 2020. See “History and Corporate Structure.” Our consolidated financial information has been prepared in accordance with prepared in accordance with all applicable IFRSs, which has been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities at fair value through profit or loss (“FVTPL”) FVTPL which are carried at fair value. The preparation of our consolidated financial information in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise judgment in the process of applying the accounting policies. Areas involving higher degree of judgment or of higher complexity, and areas where assumptions and estimates are significant to the preparation of our consolidated financial information are set out in note 4 to the Accountant’s Report in Appendix I to this document.

SIGNIFICANT ACCOUNTING POLICIES AND CRITICAL JUDGMENTS AND ESTIMATES

The preparation of financial statements in conformity with IFRSs requires our management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that we

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We believe the following accounting policies are most critical to our business operations and to an understanding of our financial condition and results of operations, and reflect the more significant judgments and estimates used in the preparation of our consolidated financial statements. Our most critical accounting policies and estimates are summarized below. See notes 2 and 4 to the Accountant’s Report set out in Appendix I of this document for a detailed description of our significant accounting policies, estimates, assumptions and judgments which are important for understanding our financial condition and results of operations.

Significant Accounting Policies

Research and Development Costs

We incur significant costs and efforts on research and development activities, which include expenditures on vaccine. Research expenditures are charged to the profit or loss as an expense in the period the expenditures are incurred. Development costs are recognized as assets if they can be directly attributable to a newly developed vaccine product and all the following can be demonstrated: (i) the technical feasibility of completing the development project so that it will be available for use or sale, (ii) our intention to complete the development project to use or sell it, (iii) our ability to use or sell the development project, (iv) how the development project will generate probable future economic benefits for us, (v) our availability of adequate technical, financial and other resources to complete the development and to use or sell the development project, and (vi) the ability to measure reliably the expenditures attributable to the development project.

The cost of an internally generated intangible asset is the sum of the expenditures incurred from the date the asset meets the recognition criteria above to the date when it is available for use. The costs capitalized in connection with the intangible asset include costs of materials and services used or consumed, employee costs incurred in the creation of the asset and an appropriate portion of relevant overheads. We generally consider capitalization criteria for internally generated intangible assets is met when obtaining regulatory approval of vaccine license.

Capitalized development expenditures are amortized using the straight-line method over the life of the related vaccine products. Amortization shall begin when the asset is available for use. Subsequent to initial recognition, internally generated intangible assets are reported as cost less accumulated amortization and accumulated impairment losses (if any).

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Development expenditures not satisfying the above criteria are recognized in the profit or loss as incurred and development expenditures previously recognized as an expense are not recognized as an asset in a subsequent period.

Business combinations not under common control

We apply the acquisition method to account for business combinations not under common control. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by us. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement and fair value of any pre-existing equity interest in the subsidiary. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.

We recognize any non-controlling interest in the acquiree on an acquisition-by- acquisition basis. Non-controlling interests in the acquiree that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation are measured at either fair value or the present ownership interests’ proportionate share in the recognized amounts of the acquiree’s identifiable net assets. All other components of non-controlling interests are measured at their acquisition date fair value, unless another measurement basis is required by IFRS.

Acquisition-related costs are expensed as incurred.

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognized in profit or loss.

Any contingent consideration to be transferred by us is recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognized in profit or loss. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired are recorded as goodwill. If those amounts are less than the fair value of the net assets of the business acquired in the case of a bargain purchase, the difference is recognized directly in the profit or loss.

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Intra-group transactions, balances and unrealized gains on transactions between group companies are eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. When necessary, amounts reported by subsidiaries have been adjusted to conform with our accounting policies.

Share-based Payments

We operate an equity-settled share-based compensation plan, under which we receive service from our employees in exchange for the equity instruments of the Group. During the Track Record Period, we granted equity-settled RSU to certain employees. The fair value of the employee service received in exchange for the grant of RSUs is recognized as an expense on the consolidated financial statements. The total amount to be expensed is determined by reference to the fair value of the equity instruments granted: (i) including any market performance conditions (such as the entity’s share price), (ii) excluding the impact of any service and non-market performance vesting conditions (such as profitability, sales growth targets and remaining an employee of the entity over a specified time period), and (iii) including the impact of any non-vesting conditions (such as the requirement for employees to save or hold shares for a specific period of time).

Non-market performance and service conditions are included in assumptions about the number of equity instruments that are expected to vest. The total expense is recognized over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied.

At the end of each reporting period, we revise our estimates of the number of RSUs that are expected to vest based on the non-market vesting performance and service conditions. We recognize the impact of the revision to original estimates, if any, in the consolidated statements of comprehensive loss, with a corresponding adjustment to equity.

Adoption of IFRS 9, IFRS 15 and IFRS 16

Our historical financial information has been prepared based on the underlying financial statements, in which IFRS 9, “Financial instruments,” or IFRS 9, and IFRS 15, “Revenue from contracts with customers,” or IFRS 15, and IFRS 16, “Leases,” or IFRS 16, have been applied consistently throughout the Track Record Period.

Critical Estimates and Judgments

Development expenditures

Development expenditures incurred on research and development activities, including conducting preclinical studies and clinical trials and activities related to regulatory filings for our vaccine candidates, are capitalized as intangible assets only when meet the capitalization criteria. Expenditures that do not meet these capitalization principle are recognized as research and development expenses. During the Track Record Period, our research and development expenditures incurred did not meet these capitalization principle for any products and were expensed as incurred.

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Impairment testing of intangible assets not ready for use

Intangible assets not available for use are not subject to amortization and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. We obtained know-how and IPR&D through separate acquisition or business combination to continue research and development work and commercialize the products, which are classified as intangible assets not available for use.

An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash- generating units).

The calculation of the fair value less costs of disposal is based on management’s cash flow forecast and discount rate of these intangible assets less incremental costs for disposing of the asset.

Estimation of fair value of financial instruments

The financial instruments issued by the Company, including ordinary shares and preferred shares, are not traded in an active market, and the respective fair values are determined using valuation techniques. The discounted cash flow method was used to determine the total equity value of the Company and the option pricing model was adopted to determine the fair value of the ordinary shares and preferred shares. Key assumptions, such as discount rate, terminal growth rate, risk-free interest rate and volatility are set forth in note 30 to the Accountant’s Report. Any changes in key assumptions used in the valuation model will have impacts on the fair values.

Useful lives and residual values of property, plant and equipment

Our management determines the estimated useful lives, residual values and consequently related depreciation expense for its property, plant and equipment.

The estimated useful lives are determined by reference to the expected lifespan of the assets, our business model and its asset management policy. The estimated useful lives could change significantly as a result of certain factors. Management will increase the depreciation expense where useful lives are less than previously estimated lives, or it will write down technically obsolete or non-strategic assets that have been abandoned or sold.

The estimated residual values are determined based on all relevant factors (including but not limited to by reference to the industry practice and estimated scrap values).

The depreciation expense will change where the useful lives or residual values of the assets are different from the previous estimates.

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DESCRIPTION OF CERTAIN CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME ITEMS

The following table sets forth a summary of our consolidated statement of profit or loss and other comprehensive income for the periods indicated. Our historical results presented below are not necessarily indicative of the results that may be expected for any future period.

For the year ended December 31, 2019 2020 (RMB’000)

Revenue 8 308 Cost of sales –* –*

Gross profit 8 308 Other income 505 17,443 General and administrative expenses (6,154) (28,856) Research and development expenses (12,015) (57,733) Other losses – net (129) (2,364)

Loss from operations (17,785) (71,202) Finance costs – net (30) (16,335) Share of net loss of an associate (1,045) (1,253)

Loss before taxation (18,860) (88,790) Income tax expense – –

Loss for the year (18,860) (88,790)

Loss attributable to Owners of the parent (18,860) (88,790) Non-controlling interests – –

Other comprehensive loss Item that may be reclassified to profit or loss Currency translation differences (86) (65)

Total comprehensive loss for the year (18,946) (88,855)

Total comprehensive loss for the year attributable to Owners of the parent (18,946) (88,855) Non-controlling interests – –

* The balance represents an amount less than RMB500.

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Revenue

During the Track Record Period, we generated limited revenue from (i) sales royalties received by Suzhou Si’ao from the co-developer of a Suzhou Si’ao’s veterinary vaccine product, research and development of which by Suzhou Si’ao was completed before the Acquisition, and (ii) sales of adjuvants produced in our laboratory. The following table sets forth a breakdown of our revenue for the period indicated.

For the year ended December 31, 2019 2020 (RMB’000, except percentages)

Royalties – – 297 96.4% Adjuvant sales 8 100.0% 11 3.6%

Total 8 100.0% 308 100.0%

Cost of Sales

We generated very limited cost of sales, being raw materials used for the production of adjuvants, during the Track Record Period, as (i) the research and development project costs of the veterinary vaccine product was expensed as Suzhou Si’ao’s research and development expenses when incurred; and (ii) other than raw material costs, costs relating to our adjuvants for sale produced in our laboratory during our research and development were expensed as our research and development expenses.

Other Income

Our other income consists of government grants, which primarily consist of one-off government grants we received from local governments in support of our research and development activities. We recorded other income of RMB0.5 million and RMB17.4 million for the years ended December 31, 2019 and 2020. Some of the government grants we have obtained are not recognized as other income yet as these grants stipulate future obligations to be fulfilled by us. See “—Description of Certain Consolidated Statement of Financial Position Items—Other Non-current Liabilities.”

General and Administrative Expenses

Our general and administrative expenses consist of (i) share-based compensation expenses primarily in relation to the grant of equity interest to eligible administration personnel under the Incentive Plan, see “Appendix VII—Statutory and General Information—A. Further Information about Our Company—5. Incentive Plan”, as well as grant of redemption rights to certain Pre-[REDACTED] Investors in 2020, (ii) staff costs, which primarily include wages, bonuses and benefits for our administrative personnel, (iii) professional service fees in relation to our daily operation, (iv) consumable expenses, representing consumables used for administrative purposes, (v) travel and conference expenses, (vi) depreciation and amortization expenses, which primarily include depreciation of

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For the year ended December 31, 2019 2020 (RMB’000, except percentages)

Share-based compensation expenses 32 0.5% 13,602 47.1% Staff costs 2,620 42.6% 5,888 20.4% Professional service fees 713 11.6% 4,115 14.3% Consumable expenses 1 – 2,377 8.2% Travel and conference expenses 438 7.1% 701 2.4% Depreciation and amortization expenses 106 1.7% 345 1.2% Others 2,244 36.5% 1,828 6.4%

Total 6,154 100.0% 28,856 100.0%

Research and Development Expenses

Our research and development expenses consist of (i) third-party contracting costs, primarily including payments to CROs in relation to pGX9501 and ADV110, (ii) staff costs, which includes wages, bonuses and benefits for our in-house research and development personnel, (iii) consumable expenses, (iv) share-based compensation expenses in relation to the grant of equity interest to eligible research and development personnel under the Incentive Plan, see “Appendix VII—Statutory and General Information—A. Further Information about Our Company—5. Incentive Plan”, (v) depreciation expenses primarily in relation to our laboratory devices and instruments, and (vi) others, which primarily include travel and conference expenses, utility expenses and office expenses. The following table sets forth the breakdown of our research and development expenses for the periods indicated.

For the year ended December 31, 2019 2020 (RMB’000, except percentages)

Third-party contracting costs 4,427 36.8% 41,955 72.7% Staff costs 5,321 44.3% 9,910 17.2% Consumable expenses 1,034 8.6% 2,500 4.3% Share-based compensation expenses 135 1.1% 466 0.8% Depreciation expenses 957 8.0% 1,342 2.3% Others 141 1.2% 1,560 2.7%

Total 12,015 100.0% 57,733 100.0%

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Other Losses, Net

Our net other losses primarily consist of (i) fair value change of a financial instrument, as we granted to Penyao, one of our Round III Investors, the subscription right of our ordinary shares in March 2020 at the beginning of our Round III Investment, and Penyao exercised such right in July 2020 during the end of our our Round III Investment, as a result, the amount of fair value increase of our ordinary shares from March 2020 to July 2020 was recorded as our settlement loss of the subscription right in July 2020, (ii) gain or losses on disposals of property, plant and equipment, (iii) net fair value gains on financial assets at FVTPL – wealth management products, representing investment gains from wealth management products we purchased by using our idle cash, and (iv) net foreign exchange gains or losses on operating activities, representing net foreign exchange gains or losses in connection with bank balance and cash denominated in U.S. dollars (intended for our operation) and Australian dollar (intended for our research and development in Australia). The following table sets forth the breakdown of our net other losses for the periods indicated.

For the year ended December 31, 2019 2020 (RMB’000)

Fair value change of a financial instrument – (3,450) Gains/(Losses) on disposals of property, plant and equipment 1 (1,102) Net fair value gains on financial assets at FVTPL – wealth management products – 1,021 Net foreign exchange (losses)/gains on operating activities (117) 599 Gains on disposal of a subsidiary – 575 Others (13) (7)

Total (129) (2,364)

Finance Costs, Net

Our net financial costs consist of (i) financial costs of preferred shares, representing financial costs in relation to preferred shares we issued, which were fully canceled in the end of 2020, (ii) interest expenses on amounts due to a related party, representing interest we paid on loans from a related party, Kexiang Hi-tech, see “—Related Party Transactions,” (iii) interest income on bank deposits, (iv) interest expenses on bank loans, and (v) interest expenses on lease liabilities. The following table sets forth the breakdown of our net finance costs for the periods indicated.

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For the year ended December 31, 2019 2020 (RMB’000)

Financial costs of preferred shares – 15,625 Interest expenses on amounts due to a related party – 991 Interest income on bank deposits (1) (478) Interest expenses on bank loans 12 273 Less: borrowing costs capitalized in property, plant and equipment – (93) Interest expenses on lease liabilities 19 17

Total 30 16,335

Share of Net Loss of an Associate

Our share of net loss of an associate represents our share of net loss relating to our 19.6% equity interest investment in an animal vaccine company. We recorded share of net loss of an associate of RMB1.0 million and RMB1.3 million for the years ended December 31, 2019 and 2020, respectively, due to the net loss of the animal vaccine company in 2019 and 2020. See “—Description of Certain Consolidated Statement of Financial Position Items —Investments Accounted for Using the Equity Method.”

Taxation

China

Our subsidiaries which operate in mainland China are subject to corporate income tax at a rate of 25% on the taxable income in 2019 and 2020, except for Suzhou Advaccine, which was recognized by competent local tax authorities as High-technological Enterprise (高新技術企業), and enjoyed a preferential corporate income tax rate of 15% from 2020 to 2022.

Australia

Advanced Vaccine Laboratories Pty Ltd and Advaccine Clinical Research Pty Ltd were incorporated in Australia and are subject to Australian profits tax at the rate of 27.5%. Since these companies did not have assessable profits during the Track Record Period, no Australian profits tax has been provided.

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RESULTS OF OPERATIONS

Year ended December 31, 2020 Compared to Year ended December 31, 2019

Revenue

We generated limited revenue of RMB8,000 from sales of adjuvants for the year ended December 31, 2019. We generated revenue of RMB0.3 million for the year ended December 31, 2020, primarily from sales royalties received by Suzhou Si’ao from the co-developer of a Suzhou Si’ao’s veterinary vaccine product.

Cost of Sales

We generated very limited cost of sales during the Track Record Period, being raw materials used for the production of adjuvants, in 2019 and 2020.

Other Income

Our other income increased significantly from RMB0.5 million for the year ended December 31, 2019 to RMB17.4 million for the year ended December 31, 2020, which was primarily due to a RMB16.9 million increase in government grants mainly because we received governments grants in relation to research and development of COVID-19 vaccine in 2020.

Other Losses, Net

We recorded net other losses of RMB0.1 million for the year ended December 31, 2019, while we recorded net other losses of RMB2.4 million for the year ended December 31, 2020 primarily due to loss on disposal of financial instruments issued to investors, as we granted to Penyao, one of our Round III Investors, the subscription right of our ordinary shares in March 2020 at the beginning of our Round III Investment, and Penyao exercised such right in July 2020 during the end of our Round III Investment, as a result, the amount of fair value increase of our ordinary shares from March 2020 to July 2020 was recorded as our settlement loss of the subscription right in July 2020.

General and Administrative Expenses

Our general and administrative expenses increased significantly from RMB6.2 million to RMB28.9 million, which was primarily due to (i) a RMB13.6 million increase in share-based compensation expenses primarily because we granted certain Pre-[REDACTED] Investors redemption rights in 2020, and (ii) a RMB3.4 million increase in professional service fees in relation to our daily operation.

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Research and Development Expenses

Our research and development expenses increased significantly from RMB12.0 million for the year ended December 31, 2019 to RMB57.7 million for the year ended December 31, 2020, which was primarily due to an increase of RMB37.5 million in third-party contracting costs in relation to preclinical studies and clinical trials of our pGX9501.

Finance Costs, Net

Our net finance costs increased significantly from RMB30,000 for the year ended December 31, 2019 to RMB16.3 million for the year ended December 31, 2020, which was primarily due to financial costs of preferred shares of RMB15.6 million, representing financial costs in relation to preferred shares we issued, which were fully canceled in the end of 2020.

Share of Net Loss of an Associate

We recorded share of net loss of our investment in a 19.6% equity in an animal vaccine company of RMB1.0 million for the year ended December 31, 2019 due to its net loss for 2019. We recorded share of net loss of our investment in the same company of RMB1.3 million for the year ended December 31, 2020 primarily due to its net loss for 2020. See “—Description of Certain Consolidated Statement of Financial Position Items—Investments Accounted for Using the Equity Method.”

Loss for the Period

As a result of the foregoing, our loss for the period significantly increased from RMB18.9 million for the year ended December 31, 2019 to RMB88.8 million for the year ended December 31, 2020.

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DESCRIPTION OF CERTAIN CONSOLIDATED STATEMENT OF FINANCIAL POSITION ITEMS

The following table sets forth a summary of our consolidated statement of financial position as of the dates indicated.

As of December 31, 2019 2020 (RMB’000)

Non-current assets Property, plant and equipment 3,759 167,814 Right-of-use assets 316 7,960 Intangible assets – 309,541 Investments accounted for using the equity method 37 557 Other non-current assets 680 8,721

Total non-current assets 4,792 494,593

Current assets Inventories – 422 Trade and other receivables 220 1,913 Other current assets 1,334 30,101 Cash and cash equivalents 467 206,425

Total current assets 2,021 238,861

Total assets 6,813 733,454

Current liabilities Trade and other payables 7,719 115,183 Bank loans – 6,628 Lease liabilities 225 182 Current income tax liabilities 28 –

Total current liabilities 7,972 121,993

Net current (liabilities)/assets (5,951) 116,868

Total assets less current liabilities (1,159) 611,461

Non-current liabilities Bank loans – 7,200 Lease liabilities 119 120 Deferred income tax liabilities – 68,820 Other non-current liabilities – 4,672

Total non-current liabilities 119 80,812

Net (liabilities)/assets (1,278) 530,649

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Property, Plant and Equipment

Our property, plant and equipment represent (i) construction-in-progress, primarily representing in-construction part of our Suzhou manufacturing base, including in-construction plant and manufacturing equipment, (ii) building, primarily representing offices of our Suzhou manufacturing base, (iii) laboratory instrument, representing research and development instruments, (iv) office and electronic equipment, and (v) motor vehicles. The following table sets forth the details of our property, plant and equipment as of the dates indicated.

As of December 31, 2019 2020 RMB’000

Construction-in-progress – 133,149 Building – 27,416 Laboratory instrument 3,506 6,606 Office and electronic equipment 253 424 Motor vehicles – 219

Total 3,759 167,814

Our property, plant and equipment increased significantly from RMB3.8 million as of December 31, 2019 to RMB167.8 million as of December 31, 2020 primarily due to an increase of RMB133.1 million in construction-in-progress and an increase of RMB27.4 million in buildings, both primarily due to the Acquisition.

Right-of-use Assets

Our right-of-use assets represent (i) land use rights, representing the land use right of our Suzhou manufacturing base with a term of 50 years, and (ii) leased properties, representing leases of our offices.

As of December 31, 2019 2020 RMB’000

Land use right – 7,658 Leased properties 316 302

Total 316 7,960

Our right-of-use assets increased significantly from RMB0.3 million as of December 31, 2019 to RMB8.0 million as of December 31, 2020 primarily due to an increase of RMB7.7 million in land use right obtained from the Acquisition.

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Intangible Assets

Our intangible assets primarily include (i) in-progress research and development, representing ongoing research and development of hepatitis vaccine, hand-foot-and-mouth disease vaccine and porcine circovirus disease vaccine we acquired as part of the Acquisition, which were capitalized according to the fair value estimated by an independent third-party appraiser; (ii) in-license, representing the license right of INO-4800 of US$5.0 million, the amount of upfront payment and first milestone payment, which was recognized as intangible assets of RMB32.6 million, and (iii) know-how, representing two drug certificates of veterinary disease test kits Suzhou Si’ao purchased after the Acquisition. The following table sets forth the details of our intangible assets as of the dates indicated.

As of December 31, 2019 2020 RMB’000

In-progress research and development – 274,925 In-license – 32,624 Know-how – 1,992

Total – 309,541

We are continuing to advance our research and development of the projects recorded as in-progress research and development as of December 31, 2020, which are not available for use. Intangible assets not yet available for use are required to be tested annually based on the recoverable amount of the cash-generating unit (“CGU”) to which the intangible asset is related. We conducted such test for our in-progress research and development as of December 31, 2020 and an independent valuation was performed by an independent appraiser, to determine the recoverable amount of the CGUs (each one of our in-progress research and development corresponds to a single CGU). We did not conduct such test for our license right of INO-4800 as its carrying value was renewed shortly before the end of the year of 2020.

We identified each intangible asset which is expected to generate revenue in the future, meaning we designated each intangible asset in relation to a product, as a single CGU, such as, in-progress research and development of hepatitis vaccine, as a CGU. The recoverable amount of each CGU was determined based upon the fair value less costs of disposal. The fair value was estimated using discounted cash flow approach.

In the estimation of fair value of our CGUs, our CGUs was identified as at level 3 fair value measurement hierarchy. The estimated revenue of each of the CGUs, or products, is based on our management’s expectations of timing of commercialization, market penetration rate and success rate of commercialization, which involves key assumptions of material uncertainties.

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For quantitative details of the test, see note 17 of the Accountant’s Report set out in Appendix I to this document. The result of the test suggests that no impairment should be recorded as of December 31, 2020. We will continuously monitor whether any signs of impairment of our intangible assets. We will also conduct impairment tests annually or in accordance with applicable IFRS rules.

In January 2021, we strategically decided to dispose of Suzhou Si’ao’s veterinary product projects, including in-progress research and development projects (including a porcine circovirus vaccine), veterinary product technologies (including two drug certificates for veterinary disease test kits) and related intellectual properties, to a subsidiary of Kexiang Hi-tech. As a result, we disposed the capitalized in-progress research and development of the porcine circovirus disease vaccine and the capitalized know-hows of two drug certificates of veterinary disease test kits. Such disposal did not generate any loss on disposal of assets.

Investments Accounted for Using the Equity Method

Our investments accounted for using the equity method represent our 19.6% equity interest in an animal vaccine company, Suzhou Advaccine Animal Pharmaceutical Co., Ltd. (蘇州艾棣維欣動物藥品有限公司)(“Advaccine Animal Pharmaceutical”), which engages in research and development of pet vaccines. Advaccine Animal Pharmaceutical was incorporated in August 2018 by Dr. Hsien-Jue CHU, a world-class expert in R&D of animal vaccines, Ms. Yu and us. We invested in Advaccine Animal Pharmaceutical as we believe pet vaccines possess huge market opportunities. Advaccine Animal Pharmaceutical conducts R&D on attenuated vaccines, inactivated vaccines, new adjuvants and other fields. Currently all of its vaccine candidates are still in early-stage research and development. We invested RMB1.5 million in Advaccine Animal Pharmaceutical in 2018.

Our investments accounted for using the equity method increased from RMB37,000 as of December 31, 2019 to RMB0.6 million as of December 31, 2020 primarily because Advaccine Animal Pharmaceutical conducted equity financing in 2020 and thus received capital injection from new shareholders.

Inventories

Our RMB0.4 million of inventories as of December 31, 2020 consist of raw materials purchased for production of clinical samples of our pGX9501 candidate, which will be used in its phase III clinical trial in China. We had no inventories as of December 31, 2019.

As of the Latest Practicable Date, RMB56,000, or 13.3% of our inventories as of December 31, 2020 had been subsequently settled.

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Trade and Other Receivables

Our trade and other receivables and other current assets primarily represent (i) trade receivables, representing receivables of our royalty revenue, (ii) other receivables, mainly representing a deposit to a government authority in relation to the land use right of our Suzhou manufacturing base of Suzhou Si’ao, which is expected to be fully returned to us by 2021. The following table sets forth the details of our trade and other receivables as of the dates indicated.

As of December 31, 2019 2020 RMB’000

Trade receivables – 616

Other receivables 220 1,297

Total 220 1,913

Our trade and other receivables increased from RMB0.2 million as of December 31, 2019 to RMB1.9 million as of December 31, 2020, primarily attributable to an increase of RMB1.1 million in other receivables due to a deposit to a government authority in relation to Suzhou Si’ao acquisition of land use right of our Suzhou manufacturing base.

The following table sets forth an aging analysis of our trade receivables presented based on the invoice date as of the dates indicated.

As of December 31, 2019 2020 RMB’000

Within 30 days – 300 31 days to 90 days – 316

Total – 616

As of Latest Practicable Date, all of our trade receivables as of December 31, 2020 had been subsequently settled.

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Other Current Assets

Our other current assets primarily represent (i) value-added tax recoverable, (ii) prepaid [REDACTED], (iii) prepayments to suppliers for procurement of research materials and services, and (iv) others, which are mainly prepaid rent. The following table sets forth the details of our other current assets as of the dates indicated.

As of December 31, 2019 2020 RMB’000

Value-added tax recoverable 1,167 12,751 [REDACTED] – deferred –[REDACTED] – prepaid –[REDACTED] Prepayments to suppliers for purchase of research materials and services 159 6,598 Others 8 435

Total 1,334 30,101

Our other current assets increased from RMB1.3 million as of December 31, 2019 to RMB30.1 million as of December 31, 2020, primarily attributable to (i) an increase of RMB11.6 million in value-added tax recoverable primarily in relation to Suzhou Si’ao’s construction in progress after the Acquisition; (ii) an increase of RMB10.3 million in [REDACTED] in anticipation of our proposed [REDACTED]; and (iii) an increase of RMB6.4 million in prepayments to suppliers for procurement of research materials and services primarily due to the prepayments to CROs in relation to the phase II clinical trial of our pGX9501.

Trade and Other Payables

Our trade and other payables primarily represent (i) trade payables, primarily representing payables for CRO services, (ii) amount due to related parties, representing Suzhou Si’ao’s loans due to Kexiang Hi-tech, see “—Related Party Transactions,” (iii) payables for purchases of intangible assets, representing payables for the upfront payment and first milestone payment to Inovio, (iv) payables for property, plant and equipment, representing payables in relation to the construction of our Suzhou manufacturing base, (v) payables for professional services, primarily in relation to our [REDACTED], (vi) salary and staff welfare payables, (vii) payables for VAT and other taxes, and (viii) interest-free borrowing from a third party to fund our operation, which was fully settled in 2020. The following table sets forth the details of our trade and other payables as of the date indicated.

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As of December 31, 2019 2020 RMB’000

Trade payables 2,211 22,402

Other payables Amounts due to related parties 79 38,788 Payables for purchases of intangible assets – 32,624 Payables for purchases of property, plant and equipment 119 9,113 Payables for professional services – 8,915 Salary and staff welfare payables 329 2,708 Payables for other taxes 39 279 Borrowing from a third party 4,400 – Others 542 354

Total trade and other payables 7,719 115,183

Our trade and other payables increased from RMB7.7 million as of December 31, 2019 to RMB115.2 million as of December 31, 2020, primarily due to (i) an increase of RMB38.7 million in amount due to related parties, as a result of consolidation of loans of Suzhou Si’ao after the Acquisition, (ii) an increase of RMB32.6 million in payables for purchases of intangible assets as a US$5.0 million (or RMB32.6 million) of upfront payment and first milestone payment under our collaboration agreement with Inovio was accrued in 2020, (iii) an increase of RMB20.2 million in trade payables primarily because we increased procurement of CRO services in relation to pGX9501; (iv) an increase of RMB9.0 million in payables for property, plant and equipment, primarily in relation to the construction of our Suzhou manufacturing base, and (v) an increase of RMB8.9 million in payables for professional services, as we engaged professional parties for our financings in 2020, partially offset by a decrease of RMB4.4 million in borrowing from third party as we repaid the borrowing in 2020.

The following table sets forth an aging analysis of our trade payables presented based on the invoice dates as of the dates indicated.

As of December 31, 2019 2020 RMB’000

Within 30 days 2,211 22,402

Total 2,211 22,402

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The carrying amounts of our trade and other payables are denominated in the following currencies for the period indicated.

As of December 31, 2019 2020 RMB’000

RMB 6,970 68,582 USD – 46,601 AUD 749 –

Total 7,719 115,183

As of the Latest Practicable Date, RMB18.5 million, or 82.7% of our trade payables as of December 31, 2020 had been subsequently settled.

Lease Liabilities

As of December 31, 2019 and December 31, 2020, we recorded lease liabilities of RMB0.3 million and RMB0.3 million, respectively. Our lease liabilities are in relation to our leases of certain offices. We recognize a lease liability with respect to our leases, except for short term leases and leases of low value assets. For short-term leases and leases of low value assets, we generally recognize the lease payments as operating expenses on a systematic basis over the terms of the leases. The lease liability is initially measured at present value that are not paid at the commencement date of the lease and subsequently adjusted by interest accretion and lease payments.

Deferred Income Tax Liabilities

As of December 31, 2020, we recorded deferred income tax liabilities of RMB68.8 million, which are in relation to intangible assets appraisal arising from the Acquisition.

Other Non-current Liabilities

As of December 31, 2020, we recorded other non-current liabilities of RMB4.7 million, primarily representing government grants we obtained for research and development of pGX9501, which stipulate future obligations to be fulfilled by us.

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LIQUIDITY AND CAPITAL RESOURCES

Net Current Assets

As of As of December 31, February 28, 2019 2020 2021 (RMB’000) (Unaudited)

Current assets Inventories – 422 2,401 Trade and other receivables 220 1,913 11,373 Other current assets 1,334 30,101 28,781 Cash and cash equivalents 467 206,425 218,106

Total current assets 2,021 238,861 260,661

Current liabilities Trade and other payables 7,719 115,183 61,875 Bank loans – 6,628 106,950 Lease liabilities 225 182 183 Current income tax liabilities 28 – –

Total current liabilities 7,972 121,993 169,008

Net current (liabilities)/assets (5,951) 116,868 91,653

We recorded net current liabilities of RMB6.0 million as of December 31, 2019, while we recorded net current assets of RMB116.9 million as of December 31, 2020, primarily due to an increase of RMB206.0 million in cash and cash equivalents as a result of equity financing in 2020 including Round II Investment, Round III Investment and Round IV Investment, which was partially offset by an increase of RMB107.5 million in trade and other payables primarily because our trade payables increased as a result of the advancement of our research and development, especially that of our pGX9501. Our net current assets decreased to RMB91.7 million as of February 28, 2021 primarily because we obtained two bank loans amounting to RMB100.0 million in January 2021 and we paid part of our payables in the beginning of 2021.

Working Capital

Our primary uses of cash during the Track Record Period were to fund our research and development, clinical trials, purchase of property, plant and equipment and other recurring expenses. During the Track Record Period and up to the Latest Practicable Date, we primarily funded our working capital requirement from equity financings and bank loans. We monitor our uses of cash and cash flows on a regular basis and strive to maintain an optimum liquidity that can meet our working capital needs.

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While we had net operating cash outflows and net losses during the Track Record Period, we believe our liquidity requirements will be satisfied by using funds from a combination of our cash and cash equivalents, unutilized loan facilities and [REDACTED] from the [REDACTED]. As of December 31, 2020, we had cash and cash equivalents of RMB206.4 million. In March 2021, we conducted Round V Investment and received RMB432.0 million of investment. In addition, as of the Latest Practicable Date, we had unutilized loan facilities of RMB41.0 million. Taking into account the above, together with the estimated [REDACTED] from the [REDACTED], the Directors are of the opinion that, we have sufficient working capital to cover at least 125% of our costs, including research and development expenses, business development and marketing expenses, and administrative and operating costs, for at least the next 12 months from the date of this document.

Cash Operating Costs

The following table provides information regarding our cash operating costs for the periods indicated:

For the year ended December 31, 2019 2020 RMB’000

R&D costs R&D costs for core product Clinical trial expenses – 18,170 Staff costs – 4,258 Agency and consulting fees – 333 Raw material costs – 1,997 Upfront and milestone payments – 3,648 Others – 1,653

Subtotal – 30,059

R&D costs for other product candidates Clinical trial expenses 3,634 3,652 Staff costs 4,302 2,900 Agency and consulting fees 1 1,172 Raw material costs 868 808 Upfront and milestone payments – 5 Others 90 135

Subtotal 8,895 8,671

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For the year ended December 31, 2019 2020 RMB’000

Workforce employment 2,231 3,304 Product marketing –– Direct Production Costs –– Non-income taxes, royalties and other government charges 13 48 Contingency allowance –– Any other significant costs ––

Cash Flows

The following table sets forth a summary of our consolidated cash flow statements for the periods indicated:

For the year ended December 31, 2019 2020 RMB’000

Loss before income tax (18,860) (88,790) Adjustments for non-cash expenses 3,161 38,684

Operating cash flows before movements in working capital (15,699) (50,106) Total movements in working capital 2,728 11,862

Cash used in operations (12,971) (38,244) Interest received 1 478 Interest paid (12) (152) Income taxes paid (12) (28)

Net cash used in operating activities (12,994) (37,946) Net cash used in investing activities (1,492) (48,485) Net cash generated from financing activities 5,647 292,380

Net (decrease)/increase in cash and cash equivalents (8,839) 205,949 Cash and cash equivalents at beginning of year 9,380 467 Exchange (losses)/gain on cash and cash equivalents (74) 9

Cash and cash equivalents at the end of year 467 206,425

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Operating Activities

In 2020, our net cash used in operating activities was RMB37.9 million, primarily attributable to loss before tax from operations of RMB88.8 million, as adjusted by non-cash items, which primarily include share-based compensation expense of RMB15.9 million and financial costs of preferred shares of RMB15.6 million. The amount was further adjusted by changes in working capital, which primarily include (i) an increase of RMB28.8 million in trade and other payables primarily due to trade payables in relation to our research and development of pGX9501, and (ii) an increase of RMB16.6 million in trade and other receivables mainly as a result of a deposit to a government authority in relation to the land use right of our Suzhou manufacturing base of Suzhou Si’ao.

In 2019, our net cash used in operating activities was RMB13.0 million, primarily attributable to loss before tax from operations of RMB18.9 million, as adjusted by non-cash items, which primarily include (i) share of loss from associates of RMB1.0 million as a result of Advaccine Animal Pharmaceutical’s net loss in 2019, and (ii) share-based compensation expense of RMB1.0 million. The amount was further adjusted by changes in working capital, which primarily include (i) an increase of RMB2.1 million in trade and other payables, and (ii) a decrease of RMB0.6 million in trade and other receivables.

Investing Activities

In 2020, our net cash used in investing activities was RMB48.5 million, primarily attributable to (i) purchase of property, plant and equipment of RMB47.7 million, primarily representing investments in our Suzhou manufacturing base, and (ii) purchase of intangible assets of RMB2.0 million, representing Suzhou Si’ao’s payment in relation to its two drug certificates of veterinary disease test kits.

In 2019, our net cash used in investing activities was RMB1.5 million, primarily attributable to purchase of property, plant and equipment of RMB1.5 million, primarily representing purchase of research and development instruments.

Financing Activities

In 2020, our net cash generated from financing activities was RMB292.4 million, primarily attributable to cash injection from shareholders of RMB308.4 million, representing proceeds from equity financing in 2020 including Round II Investment, Round III Investment and Round IV Investment.

In 2019, our net cash generated from financing activities was RMB5.6 million, primarily attributable to proceeds of loan from a third party of RMB4.4 million, representing borrowing from a third party with no interest.

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INDEBTEDNESS

The following table sets forth the components of our indebtedness as of the date indicated.

As of As of December 31, February 28, 2019 2020 2021 RMB’000 (unaudited)

Current Bank loans – secured and guaranteed – 6,628 106,950 Borrowings from a related party – 32,680 23,709 Borrowing from a third party 4,400 – – Lease liabilities 225 182 183

Non-current Bank loans – secured and guaranteed – 7,200 7,200 Lease liabilities 119 120 96

Total 4,744 46,810 138,138

Bank Loans

As a result of the Acquisition in 2020, we bore a syndicated bank loan of Suzhou Si’ao of RMB17.1 million upon Acquisition. Suzhou Si’Ao pledged land use right amounting to RMB8.0 million, construction in progress amounting to RMB14.5 million; meanwhile, Mrs. Chen Hongying, spouse of Suzhou Si’ao’s former legal representative and general manager, was the guarantor for this loan for the period from March 2019 to December 2022. We will guarantee this loan as well, if required by the two banks.

As of December 31, 2020, we had current outstanding amount under this bank loan of RMB6.6 million, with an interest rate of 5.7% per annum; and non-current outstanding amount under this bank loan of RMB7.2 million, with an interest rate of 5.7% per annum.

As of February 28, 2021, being the latest practicable date for determining our indebtedness, we had current outstanding amount under this bank loan of RMB6.6 million, with an interest rate of 5.7% per annum, and non-current outstanding amount under this bank loan of RMB7.2 million with an interest rate of 5.7% per annum. As of the same date, we had two other bank loans amounting to RMB100.0 million which we obtained in January 2021, both with term of one year and interest rate of 1.85% per annum. We obtained these two bank loans as we were given preferential loans by government as support to our COVID-19 vaccine R&D.

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Our Directors confirm that we have not defaulted in the repayment of the bank loans and other borrowings during the Track Record Period. Our Directors have confirmed that, as of the Latest Practicable Date, there was no material covenant on any of our outstanding debt and there was no breach of any covenants during the Track Record Period and up to the Latest Practicable Date.

Save as disclosed in the document, as of the same date, we did not have any other loan capital issued and outstanding or agreed to be issued, bank overdrafts, borrowings and other similar indebtedness, liabilities under acceptance or acceptance credits, debentures, mortgages, charges, hire purchase commitments, guarantees or other material contingent liabilities.

CAPITAL EXPENDITURE

Our capital expenditure during the Track Record Period primarily related to additions to construction in progress, in-license, know-how, laboratory instrument, motor vehicle and office and electronic equipment. We funded our capital expenditure requirements during the Track Record Period mainly from equity financings and bank loans. The following table sets forth the details of our capital expenditure for the period indicated.

For the year ended December 31, 2019 2020 RMB’000

Construction in progress 287 25,019 In-license – 32,624 Know-how – 2,000 Laboratory Instrument 1,492 3,445 Motor vehicle – 10 Office and electronic equipment 22 394

Total 1,801 63,492

We expect that our capital expenditure in 2021 will be over RMB100.0 million, primarily related to construction of our Suzhou manufacturing base and license right of INO-4800. We plan to finance such expenditure primarily with [REDACTED] from our existing cash, [REDACTED] from the [REDACTED], and bank borrowings.

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CONTRACTUAL COMMITMENTS

Lease Commitments

As of December 31, 2019 and 2020, we had several leases of offices and equipment under irrevocable lease contracts, with lease term less than one year and of low value, which were exempted from recognition of right-of-use assets permitted under IFRS 16. The future aggregate minimum lease payment for these exempted contracts as of December 31, 2019 and 2020 are as follows:

As of December 31, 2019 2020 RMB’000

No later than one year 168 222

Total 168 222

Capital Expenditure Commitments

Our contracted capital expenditure as of December 31, 2019 and 2020 but not yet incurred are as follows:

As of December 31, 2019 2020 RMB’000

In-license – 137,023 Property, plant and equipment – 11,072

Total – 148,095

Our contracted capital expenditure of in-license represents our in-license of INO-4800, and our contracted capital expenditure of property, plant and equipment which is primarily in relation to the construction of our Suzhou manufacturing base.

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CRO Contract Commitments

Our contracted CRO contract commitments as of December 31, 2019 and 2020 but not yet incurred are as follows:

As of December 31, 2019 2020 RMB’000

CRO contract 9,295 38,165

Total 9,295 38,165

Our contracted CRO contract commitments is in relation to the research and development of our vaccine candidates.

CONTINGENT LIABILITIES

As of December 31, 2019 and 2020, we did not have any contingent liabilities. We confirm that there had been no material changes or arrangements to our contingent liabilities as of the Latest Practicable Date.

RELATED PARTY TRANSACTIONS

During the Track Record Period, we entered into the following material related party transactions.

For the year ended December 31, 2019 2020 RMB’000

Purchase of construction services Zhongru Construction Group Co., Ltd. – 16,501

Loan received from related parties Lunan ZHANG 100 –

Loan repayment from related parties Lunan ZHANG (100) –

Interest expenses Kexiang Hi-tech Development Co., Ltd. – 991

Total – 17,492

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We purchased construction service from Zhongru Construction Group Co., Ltd. and incurred an amount of RMB16.5 million from the date of the Acquisition to the end of 2020 for our Suzhou manufacturing base, which was recognized as addition to our construction-in- progress.

We received a loan of RMB100,000 from Mr. Lunan ZHANG, our Executive Director, in 2019 and repaid the loan in the same year. In addition, we had a borrowing due to another related party, Kexiang Hi-tech. Kexiang Hi-tech was the controlling shareholder of Suzhou Si’ao before the Acquisition and provided loans to Suzhou Si’ao from time to time before the Acquisition. Loans provided before 2019 bear no interest, while loans provided afterwards bear annual interest of 12%. During the Acquisition, we reached into agreement with Kexiang Hi-tech that we would repay Kexiang Hi-tech the outstanding loans at the total due amount of principal and interest as of September 3, 2020, bearing annual interest of 12% going forward. After the Acquisition, Kexiang High-tech became our related party, thus the loans constituted our amounts due to related parties as of December 31, 2020. We will repay this loan before [REDACTED].

The following table sets forth outstanding balances with related parties as of the dates indicated.

As of December 31, 2019 2020 RMB’000

Amounts due to related parties Kexiang Hi-tech Development Co., Ltd. – 32,680 Zhongru Construction Group Co., Ltd – 6,108 Qingling YU 57 – Lunan ZHANG 22 –

Total 79 38,788

It is the view of our Directors that the related party transactions discussed above and set out in Note 33 of the Accountant’s Report set out in Appendix I to this document were conducted in the ordinary and usual course of business and on normal commercial terms between the relevant parties.

KEY FINANCIAL RATIOS

The following table set forth our key financial ratios as of the dates or for the periods indicated:

As of December 31, 2019 2020

Current ratio(1) 0.3 2.0

Note:

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

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OFF-BALANCE SHEET COMMITMENTS AND ARRANGEMENTS

As at the Latest Practicable Date, except as disclosed in this document, we had no material off-balance sheet arrangements.

MARKET AND OTHER FINANCIAL RISKS

We are exposed to a variety of market risks and other financial risks, including foreign exchange risk, cash flow and fair value interest rate risk, credit risk and liquidity risk as set out below. Our overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on our financial performance. For further details, including relevant sensitivity analysis, see note 3 in the Accountant’s Report set out in Appendix I of this document.

Market Risk

Foreign Exchange Risk

Foreign exchange risk arises when future commercial transactions or recognized assets and liabilities are denominated in a currency that is not the respective group entities’ functional currency. We mainly operate in the PRC with most of the transactions denominated and settled in RMB. We also have certain bank deposits and trade and other payables which are denominated in currencies other than RMB. We currently do not have a foreign currency hedging policy, but our management monitors foreign exchange exposure and will consider hedging significant foreign currency exposure should the need arise. For details and quantitative analysis of our foreign exchange risk at the end of each period during the Track Record Period, see note 3.1(a)-(i) to the Accountant’s Report set out in Appendix I to this document.

Cash flow and fair value interest rate risk

Our income and operating cash flows are substantially independent of changes in market interest rates. We have no significant interest-bearing assets and liabilities, except for lease liabilities, cash and cash equivalents and bank loans. Balances carried at floating rates expose us to cash flow interest rate risk whereas balances carried at fixed rates expose us to fair value interest rate risk.

Our interest rate risk mainly arises from bank loans and borrowings from a related party. Borrowings from a related party at fixed rate expose us to fair value interest rate risk. Bank loans obtained at floating rates expose us to cash flow interest rate risk. As of December 31, 2019 and 2020, our bank loans were bank loans carried at floating rates, which exposed us to cash flow interest rate risk.

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We do not anticipate significant impact to interest-bearing assets resulted from the changes in interest rates as the interest rates of bank deposits are not expected to change significantly.

Credit Risk

We are exposed to credit risk in relation to our trade and other receivables, cash and cash equivalents and financial assets at fair value through profit or loss. The carrying amounts of trade and other receivables, cash and cash equivalents and financial assets at fair value through profit or loss represent our maximum exposure to credit risk in relation to financial assets.

We expect that there is no significant credit risk associated with cash and cash equivalents and financial assets at fair value through profit or loss since they are substantially deposited at state-controlled banks and other medium or large-sized listed banks. Our management does not expect that there will be any significant losses from non-performance by these counterparties.

We account for credit losses, if any, using an expected credit losses model which utilizes assumptions and estimates regarding expected future credit losses. We apply simplified approach to provide for expected credit losses prescribed by IFRS 9, which permits the use of the lifetime expected loss provision for all trade receivables. We expect that trade receivables are exposed to negligible credit risk. Our management has assessed that, during the Track Record Period, other receivables had not had a significant increase in credit risk since initial recognition. Thus, a 12-month expected credit loss approach that results from possible default event within 12 months of each reporting date is adopted by our management. We do not expect any losses from non-performance by the counterparties of other receivables and no loss allowance provision for other receivables was recognized.

As of December 31, 2019 and 2020, other receivables mainly comprise deposits to lessors in respect of our leased properties. We expect that there is no significant credit risk associated with other receivables since the counterparties have no history of default. Accordingly, the expected credit loss of other receivables was considered immaterial.

Liquidity Risk

Prudent liquidity risk management requires maintaining sufficient cash and cash equivalents, as well as the ability to apply for credit facilities if necessary. We finance our working capital requirements through issue of new shares, borrowings and government grants. Our management monitors rolling forecasts of our liquidity reserve on the basis of expected cash flows. For details and quantitative analysis of our liquidity risk at the end of each period during the Track Record Period, see note 3(c) to the Accountant’s Report set out in Appendix I to this document.

DISTRIBUTABLE RESERVES

As of December 31, 2020, we did not have any reserves available for distribution to our Shareholders.

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DIVIDENDS

[REDACTED]

[REDACTED] to be borne by us are estimated to be approximately RMB[REDACTED] million (including [REDACTED], assuming an [REDACTED] of HK$[REDACTED] per H Share, which is the mid-point of the indicative [REDACTED] range stated in this document and assuming that the [REDACTED] is not exercised), of which approximately RMB[REDACTED] million is expected to be charged to our consolidated statements of profit or loss and other comprehensive income, and approximately RMB[REDACTED] million is expected to be accounted for as a deduction from equity upon the [REDACTED]. The [REDACTED] above are the latest practicable estimate for reference only, and the actual amount may differ from this estimate. Our [REDACTED] as a percentage of gross [REDACTED]is[REDACTED], assuming an [REDACTED] of HK$[REDACTED] per H Share, which is the mid-point of the indicative [REDACTED] range stated in this document and assuming that the [REDACTED] is not exercised. Our Directors do not expect such [REDACTED] to have a material adverse impact on our results of operations for the year ending December 31, 2021.

PROPERTY VALUATION

JLL, an independent property valuer, has valued our property interests as of January 31, 2021. Particulars of our property interests are set out in “Appendix III—Property Valuation Report” to this document. The table below sets out the reconciliation between the net book value of our property as of December 31, 2020 as extracted from the Accountant’s Report set out in Appendix I to this document and the market value of our property as of January 31, 2021 as extracted from the Property Valuation Report set out in Appendix III to this document.

(RMB in thousands)

Net book value of our property as of December 31, 2020 as set out in Appendix I to this document 128,077 Additional capital expenditures 1,800 Valuation surplus 523 Market value of the property as of January 31, 2021 as set out in Appendix III to this document 130,400

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UNAUDITED PRO FORMA STATEMENT OF ADJUSTED NET TANGIBLE ASSETS

The following unaudited pro forma statement of adjusted net tangible assets of the Group prepared in accordance with Rule 4.29 of the Listing Rules is to illustrate the effect of the [REDACTED] on the net tangible assets of the Group attributable to equity shareholders of the Company as of December 31, 2020 as if the [REDACTED] had taken place on that date.

The unaudited pro forma statement of adjusted net tangible assets of the Group has been prepared for illustrative purposes only and, because of its hypothetical nature, it may not provide a true picture of the net tangible assets attributable to equity shareholders of the Company had the [REDACTED] been completed as of December 31, 2020 or at any future date.

[REDACTED]

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NO MATERIAL ADVERSE CHANGE

As part of the Acquisition negotiations, in January 2021, we made the strategic decision to dispose Suzhou Si’ao’s veterinary product projects, to a subsidiary of Kexiang Hi-tech Development Co., Ltd. (科翔高新技術發展有限公司)(“Kexiang Hi-tech”) in January 2021. Such disposal did not generate any loss to us.

In March 2021, our Company and Ms. Yu entered into the following capital increase agreement with Matrix Partners China, Hangzhou Chuangqian, Jiaxing Stars Yuheng Equity investment Partnership (Limited Partnership) (嘉興星空玉衡投資合夥企業(有限合夥)), Hangzhou Ruizhao Investment Management Partnership (Limited Partnership) (杭州睿照投資管理合夥企業(有限合夥)), Mr. Zhao, Jiaxing Tianfu Huasheng Equity Investment Partnership (嘉興天府驊勝股權投資合夥企業(有限合夥)), Pingtan Comprehensive Experimental Zone Watson Huijia Equity Investment Partnership (Limited Partnership) (平潭綜合實驗區沃生慧嘉股權投資合夥企業(有限合夥)), Goldstream Healthcare Focus Fund SP and United Strength Fortune Limited, respectively, pursuant to which the round V investors agreed to subscribe the increased registered capital of our Company of RMB3,456,000 at a total consideration of RMB432,000,000. The consideration was determined based on arm’s length negotiation between the parties taking into account the Company’s research and development progress and pipeline candidates, management team, future prospects and strategic needs. See “History and Corporate Structure.”

We cannot foresee when the COVID-19 pandemic will become completely under control or whether COVID-19 will have a material and adverse impact on our business going forward. See “Risk Factors—Risks Relating to Manufacturing and Commercialization of Our Vaccine and Vaccine Candidates—Our operations and business plans may be adversely affected by the COVID-19 pandemic.” We are continually monitoring the COVID-19 situation as well as various regulatory and administrative measures adopted by local governments to prevent and control the pandemic. We will continue to evaluate the impact of this pandemic on us and adjust our precautionary measures according to the latest developments.

DISCLOSURE REQUIRED UNDER THE LISTING RULES

Our Directors have confirmed that, as of the Latest Practicable Date, they were not aware of any circumstance that would give rise to a disclosure requirement under Rules 13.13 to 13.19 of the Listing Rules.

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FINANCIAL INFORMATION OF SUZHOU SI’AO

Description of Certain Consolidated Statements of Profit or Loss and Other Comprehensive Income Items

The table below sets forth the consolidated statements of profit or loss of Suzhou Si’ao for the periods indicated derived from the consolidated statements of profit or loss of Suzhou Si’ao set out in the Accountant’s Report included in Appendix I to this document:

For the year For the nine ended months ended December 31, September 30, 2019 2020 (RMB’000)

Revenue 718 860 Cost of sales – –

Gross profit 718 860 Other income 407 41 General and administrative expenses (8,709) (7,093) Research and development expenses (2,104) (1,126) Net impairment losses on financial assets (4,425) (4,425) Other gains/(losses) – net 19 (31)

Operating loss (14,094) (11,774) Finance costs – net (122) (1,137)

Loss before taxation (14,216) (12,911) Income tax expense – –

Loss for the year/period (14,216) (12,911)

Loss attributable to Owners of the parent (14,216) (12,911) Non-controlling interests – –

Other comprehensive loss for the year/period ––

Total comprehensive loss for the year/period (14,216) (12,911)

Total comprehensive loss for the year/period attributable to Owners of the parent (14,216) (12,911) Non-controlling interests – –

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Revenue

Suzhou Si’ao’s revenue consists of sales royalties received from the co-developer of a veterinary product. The following table sets forth a breakdown of Suzhou Si’ao’s revenue for the period indicated.

For the year ended For the nine months December 31, ended September 30, 2019 2020 (RMB’000, except for percentages)

Royalties 718 100.0% 860 100.0%

Total 718 100.0% 860 100.0%

Suzhou Si’ao recorded RMB0.7 million of revenue in 2019 and recorded RMB0.9 million of revenue for the nine months ended September 30, 2020. Such increase was due to the increase of sales royalties.

Cost of Sales

For the year ended December 31, 2019 and the nine months ended September 30, 2020, Suzhou Si’ao had no cost of sales, as the research and development cost of veterinary vaccine was expensed as Suzhou Si’ao’s research and development expenses when incurred.

Other Income

Suzhou Si’ao’s other income consists of government grants, primarily representing one-off government grants received as incentive for its research and development activities. Suzhou Si’ao recorded RMB0.4 million of other income in 2019 and recorded RMB41,000 of other income for the nine months ended September 30, 2020.

General and Administrative Expenses

Suzhou Si’ao’s general and administrative expenses consist of (i) staff costs, which primarily include wages, bonuses and benefits for our administrative personnel, (ii) provision for impairment of intangible asset of a veterinary vaccine project as Suzhou Si’ao stopped the project, (iii) repair and maintenance fee, (iv) energy and utilities, (v) depreciation and amortization expenses, (vi) professional service fees and (vii) others, primarily including travel and conference expenses and taxes. The following table sets forth a breakdown of Suzhou Si’ao’s general and administrative expenses for the period indicated.

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For the year ended For the nine months December 31, ended September 30, 2019 2020 (RMB’000, except for percentages)

Staff costs 4,165 47.8% 4,503 63.5% Repair and maintenance fee 695 8.0% 905 12.8% Energy and utilities 338 3.9% 541 7.6% Depreciation and amortization expenses 669 7.7% 464 6.5% Professional service fees 15 0.2% 327 4.6% Provision for impairment of intangible asset 1,900 21.8% – – Others 927 10.6% 353 5.0%

Total 8,709 100.0% 7,093 100.0%

Suzhou Si’ao recorded general and administrative expenses of RMB8.7 million and RMB7.1 million for the year ended December 31, 2019 and for the nine months ended September 30, 2020, respectively. Such increase was primarily due to increase of staff costs mainly as a result of increase of administrative staffs.

Research and Development Expenses

Suzhou Si’ao’s research and development expenses consist of (i) staff costs, which includes wages, bonuses and benefits for our in-house research and development personnel, (ii) depreciation expenses, (iii) professional service fees, and (iv) others, primarily including repair and maintenance expenses. The following table sets forth a breakdown of Suzhou Si’ao’s research and development costs for the period indicated.

For the year ended For the nine months December 31, ended September 30, 2019 2020 (RMB’000, except for percentages)

Staff costs 1,422 67.6% 778 69.1% Depreciation expenses 535 25.4% 348 30.9% Professional service fees 102 4.8% – – Others 45 2.2% – –

Total 2,104 100.0% 1,126 100.0%

Suzhou Si’ao recorded research and development costs of RMB2.1 million and RMB1.1 million for the year ended December 31, 2019 and for the nine months ended September 30, 2020, respectively. Such decrease was due to Suzhou Si’ao reduced its research and development team and activities in 2020 in anticipation of the Acquisition.

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Net Impairment Losses on Financial Assets

Suzhou Si’ao’s net impairment losses on financial assets consist of impairment losses accrued on an advance to a supplier in relation to the construction of our Suzhou manufacturing base. Suzhou Si’ao recorded RMB4.4 million of net impairment losses on financial assets in 2019 and recorded RMB4.4 million of net impairment losses on financial assets for the nine months ended September 30, 2020, as half of the advance was written off in 2019 while the other half was written off in 2020, while Suzhou Si’ao anticipated low probability of collecting the advance.

Other Gains/(losses) – Net

Suzhou Si’ao’s net other gains primarily consist of losses on disposal of property, plant and equipment and other gains in relation to its operation. Suzhou Si’ao recorded RMB19,000 of net other gains in 2019. Suzhou Si’ao recorded RMB31,000 of net other losses in 2020.

Finance Costs – Net

Suzhou Si’ao’s finance costs primarily consist of (i) interest on amounts due to a related party, representing interest of Suzhou Si’ao’s loans from a related party, Kexiang Hi-tech, see “—Related Party Transactions,” (ii) interest expenses on bank loans, representing interest expenses on a syndicated loan from two banks, (iii) interest income on bank deposits, and (iv) interest expenses on lease liabilities. The following table sets forth a breakdown of Suzhou Si’ao’s net finance costs for the period indicated.

For the year For the nine ended months ended December 31, September 30, 2019 2020 (RMB’000)

Interest expenses on amounts due to a related party 127 1,112 Interest expenses on bank loans 117 781 Less: borrowing costs capitalized in property, plant and equipment (117) (754) Interest income on bank deposits (5) (2) Interest expenses on lease liabilities 1 – Other (1) –

Total 122 1,137

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Suzhou Si’ao recorded RMB0.1 million of finance costs in 2019 and recorded RMB1.1 million of finance costs for the nine months ended September 30, 2020. Such increase was primarily due to a RMB1.0 million increase in interest on amounts due to a related party as the amount due to Kexiang Hi-tech increased in 2020. See “—Related Party Transactions.”

Taxation

Suzhou Si’ao was subject to corporate income tax at a rate of 25% on the taxable income in 2019 and 2020.

Description of Certain Consolidated Statement of Financial Position Items

The following table sets forth Suzhou Si’ao’s financial position for the periods indicated:

As of As of December 31, September 30, 2019 2020 (RMB’000)

Non-current assets Property, plant and equipment 133,298 137,649 Right-of-use assets 7,470 7,347 Other non-current prepayments 2,639 5,152 Total non-current assets 143,407 150,148

Current assets Trade and other receivables 5,509 1,886 Other current assets 10,296 10,689 Cash and cash equivalents 413 225

Total current assets 16,218 12,800

Total assets 159,625 162,948

Non-current liabilities Bank loans (13,800) (10,500)

Total non-current liabilities (13,800) (10,500)

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As of As of December 31, September 30, 2019 2020 (RMB’000)

Current liabilities Trade and other payables (52,532) (70,066) Bank loans (4,600) (6,600)

Total current liabilities (57,132) (76,666)

Total liabilities (70,932) (87,166)

Property, Plant and Equipment

Suzhou Si’ao’s property, plant and equipment consist of (i) construction-in-progress, primarily representing in-construction part of our Suzhou manufacturing base, including in-construction plant and manufacturing equipment, (ii) building, primarily representing offices of our Suzhou manufacturing base, (iii) laboratory instrument, representing research and development instruments, (iv) motor vehicles, and (v) office and electronic equipment. The following table sets forth the details of Suzhou Si’ao’s property, plant and equipment as of the dates indicated.

As of As of December 31, September 30, 2019 2020 (RMB’000)

Construction-in-progress 123,520 128,393 Building 8,506 8,281 Laboratory instrument 916 706 Motor vehicles 309 218 Office and electronic equipment 47 51

Total 133,298 137,649

Suzhou Si’ao’s property, plant and equipment increased from RMB133.3 million as of December 31, 2019 to RMB137.6 million as of September 30, 2020 primarily due to an increase of RMB4.9 million in construction-in-progress as a result of the construction of our Suzhou manufacturing base.

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Intangible Assets

Suzhou Si’ao’s intangible assets consist of know-how, representing a veterinary vaccine project, which was fully impaired in 2019 as Suzhou Si’ao stopped the project.

Right-of-use Assets

Suzhou Si’ao’s right-of-use assets consist of land use right, representing the land use right of our Suzhou manufacturing base with an original use right of 50 years.

As of As of December 31, September 30, 2019 2020 (RMB’000)

Land use right 7,470 7,347

Total 7,470 7,347

Trade and Other Receivables

Suzhou Si’ao’s trade and other receivables primarily represent (i) trade receivable, representing receivables of its royalty revenue, and (ii) other receivables from third parties, primarily representing an advance in relation to the construction of the Manufacturing Plant, and a deposit to a government authority in relation to Suzhou Si’ao acquisition of land use right of the Manufacturing Plan. The following table sets forth the details of our trade and other receivables as of the dates indicated.

As of As of December 31, September 30, 2019 2020 (RMB’000)

Trade receivables from third parties – 316

Other receivables from third parties 9,934 10,420 Less: allowance for impairment (4,425) (8,850) 5,509 1,570

Total 5,509 1,886

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Suzhou Si’ao’s trade and other receivables decreased from RMB5.5 million as of December 31, 2019 to RMB1.9 million as of September 30, 2020 primarily due to impairment losses accrued on an advance to a supplier in relation to the construction of the Manufacturing Plant.

The following table sets forth an aging analysis, based on the invoice date as of the dates indicated.

As of As of December 31, September 30, 2019 2020 (RMB’000)

Within one year – 316

Total – 316

Other Current Assets

Suzhou Si’ao’s other current assets primarily represent (i) value-added tax recoverable, (ii) prepayments to suppliers, which mainly represent prepayments we paid to suppliers in relation to the construction of the Manufacturing Plant, and (iii) others, which were mainly prepaid utilities. The following table sets forth the details of our trade and other receivables as of the dates indicated.

As of As of December 31, September 30, 2019 2020 (RMB’000)

Value-added tax 10,125 10,300 Prepayments to suppliers – 166 Others 171 223

Total 10,296 10,689

Suzhou Si’ao’s other current assets remained stable at RMB10.3 million as of December 31, 2019 and RMB10.7 million as of September 30, 2020.

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Trade and Other Payables

Suzhou Si’ao’s trade and other payables primarily represent (i) payables for property, plant and equipment, in relation to the construction of the Manufacturing Plant, (ii) Payables due to related parties, primarily representing Suzhou Si’ao’s loans due to Kexiang Hi-tech, see “—Related Party Transactions,” and (iii) others. The following table sets forth the details of Suzhou Si’ao’s trade and other payables as of the date indicated.

As of As of December 31, September 30, 2019 2020 (RMB’000)

Trade payables ––

Other payables Payables for property, plant and equipment 23,067 23,390 Amounts due to related parties 29,441 46,461 Others 24 215

Total 52,532 70,066

Suzhou Si’ao’s trade and other payables increased from RMB52.5 million as of December 31, 2019 to RMB70.1 million as of September 30, 2020 primarily due to an increase of RMB17.0 million in amount due to related parties. See “—Related Party Transactions”.

Bank Loans

Suzhou Si’ao’s bank loans represent a syndicated loan from two banks. See “—Indebtedness—Bank Loans.” The following table sets forth the details of Suzhou Si’ao’s bank loans as of the date indicated.

As of As of December 31, September 30, 2019 2020 (RMB’000)

Non-current Bank loans—secured and guaranteed 13,800 10,500

Current Bank loans—secured and guaranteed 4,600 6,600

Total 18,400 17,100

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Description of Consolidated Statements of Cash Flows

The following table sets forth Suzhou Si’ao’s cash flows for the periods indicated:

For the year For the nine ended months ended December 31, September 30, 2019 2020 (RMB’000)

Loss before income tax (14,216) (12,911) Adjustments for non-cash expenses 7,657 6,405

Operating cash flows before movements in working capital (6,559) (6,506) Total movements in working capital 1,209 5,948

Cash used in operations (5,350) (558) Interest received 5 2 Interest paid – (27)

Net cash used in operating activities (5,345) (583) Net cash used in investing activities (5,913) (8,805) Net cash generated from financing activities 1,550 9,200

Net decrease in cash and cash equivalents (9,708) (188) Cash and cash equivalents at beginning of year 10,121 413

Cash and cash equivalents at the end of year 413 225

Net Cash Used in Operating Activities

For the nine months ended September 30, 2020, Suzhou Si’ao’s net cash used in operating activities was RMB0.6 million, primarily attributable to its loss before tax of RMB12.9 million, as adjusted by non-cash items, which primarily include provisions for impairment of trade and other receivables of RMB4.4 million. The amount was further adjusted by changes in working capital, which primarily include an increase of RMB6.8 million in trade and other payables.

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In 2019, Suzhou Si’ao’s net cash used in operating activities was RMB5.4 million, primarily attributable to its loss before tax of RMB14.2 million, as adjusted by non-cash items, which primarily include provisions for impairment of trade and other receivables of RMB4.4 million. The amount was further adjusted by changes in working capital, which primarily include an increase of RMB1.0 million in trade and other payables.

Net Cash Used in Investing Activities

For the nine months ended September 30, 2020, Suzhou Si’ao’s net cash used in investing activities was RMB8.8 million, primarily attributable to purchase of property, plant and equipment of RMB8.8 million mainly in relation to the construction of the Manufacturing Plant.

In 2019, Suzhou Si’ao’s net cash used in investing activities was RMB6.0 million, primarily attributable to (i) purchase of property, plant and equipment of RMB4.0 million mainly in relation to the construction of the Manufacturing Plant, and (ii) purchase of intangible assets of RMB2.0 million.

Net Cash Generated from Financing Activities

For the nine months ended September 30, 2020, Suzhou Si’ao’s net cash used in financing activities was RMB9.2 million, primarily attributable cash flows generated from financing activities of RMB10.5 million representing loans from Kexiang Hi-tech, and partially offset by repayment of borrowing of RMB1.3 million.

In 2019, Suzhou Si’ao’s net cash used in financing activities was RMB1.6 million, primarily attributable to primarily attributable cash flows generated from financing activities of RMB4.2 million representing loans from Kexiang Hi-tech, and partially offset by repayment of borrowing of RMB2.6 million.

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

The following table presents the unaudited pro forma consolidated financial information of Suzhou Si’ao and its subsidiary (“Si’ao Group”) and the Group (collectively, the “Enlarged Group”) for the year ended December 31, 2020 as if we had obtained the control of Suzhou Si’ao on January 1, 2020. For further details, see Appendix II to this document.

The Group Pro Forma Adjustments Enlarged Group RMB’000 RMB’000 RMB’000 RMB’000 Note 1 Note 2 Note 3

Revenue 308 860 – 1,168 Cost of sales –* – – –*

Gross profit 308 860 – 1,168

Other income 17,443 41 – 17,484 General and administrative expenses (28,856) (7,093) (6) (35,955) Research and development costs (57,733) (1,126) – (58,859) Net impairment losses on financial assets – (4,425) – (4,425) Other losses – net (2,364) (31) – (2,395)

Operating loss (71,202) (11,774) (6) (82,982) Finance costs – net (16,335) (1,137) – (17,472) Share of net loss of a associate (1,253) – – (1,253)

Loss before income tax (88,790) (12,911) (6) (101,707) Income tax expense ––11

Loss for the year (88,790) (12,911) (5) (101,706)

Other comprehensive loss –––– Item that may be reclassified to profit or loss Currency translation differences (65) – – (65)

Other comprehensive loss for the year, net of tax (65) – – (65)

Total comprehensive loss for the year (88,855) (12,911) (5) (101,771)

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The Group Pro Forma Adjustments Enlarged Group RMB’000 RMB’000 RMB’000 RMB’000 Note 1 Note 2 Note 3

Total comprehensive loss is attributable to: – Owner of the Company (88,855) (12,911) (5) (101,771) – Non-controlling interests ––––

(88,855) (12,911) (5) (101,771)

Notes:

* amount less than RMB500.

1. The financial information of the Group is extracted from the audited consolidated statement of comprehensive income of the Group for the year ended December 31, 2020 as set out in the Accountant’s Report of the Group included in Appendix I to this document.

2. The financial information of the Si’ao Group is extracted from the audited consolidated statement of comprehensive income of the Si’ao Group for the nine months ended September 30, 2020 as set out in the Accountant’s Report of the Group included in Appendix I to this document.

3. Upon the completion of the acquisition of 100% equity interest in Suzhou Si’ao, Suzhou Si’ao became a directly held wholly-owned subsidiary of the Company, and the identifiable assets and liabilities of the Si’ao Group are accounted for using the acquisition method.

For the purpose of preparing the unaudited pro forma financial information, the Directors have estimated the fair values of the identifiable assets and liabilities of the Si’ao Group as of January 1, 2020 based on a valuation report dated December 18, 2020 prepared by an independent valuer in respect of the purchase price allocation of the target acquisition occurred at September 30, 2020. The newly identified assets, including intangible assets of RMB275 million and land use right of RMB0.3 million. The Directors consider that the fair value of identifiable assets acquired and liabilities assumed as of January 1, 2020 approximates their fair values as of September 30, 2020. Accordingly, no separate valuation report as of January 1, 2020 was prepared.

The pro forma adjustment on general and administrative expenses represents the amortization, on a straight-line basis, of the land use right of RMB0.3 million, which have the estimated remaining useful lives of approximately 45 years. This pro forma adjustment is expected to have a continuing effect of the Enlarged Group’s consolidated statement of comprehensive income. Since the newly identified intangible assets of RMB275 million are not yet available for use, no pro forma adjustment of amortisation is made.

The pro forma adjustment on income tax represents the amortization of the deferred income tax liabilities arising from temporary difference on the aforementioned newly identified land use right for the year ended December 31, 2020. This pro forma adjustment is expected to have a continuing effect on the Enlarged Group’s consolidated statement of comprehensive income.

4. No adjustments have been made to the unaudited pro forma consolidated statement of comprehensive income to reflect any trading results or other transactions of the Enlarged Group entered into subsequent to December 31, 2020.

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FUTURE PLANS AND PROSPECTS

See “Business—Business Strategies” for a detailed description of our future plans.

USE OF [REDACTED]

Assuming an [REDACTED] at the mid-point of the indicative [REDACTED] range, we currently intend to apply these [REDACTED] for the following purposes:

• approximately [REDACTED], or HK$[REDACTED] million, will be allocated to the research and development, manufacturing and commercialization of our Core Product, namely, our pGX9501, over the next five years, as follows:

• approximately [REDACTED], or HK$[REDACTED] million, will be used to fund the research and development activities, including ongoing clinical trials, further clinical studies and registration filings of our COVID-19 vaccine. We plan to continue the phase II and III clinical trials of our COVID-19 vaccine. We plan to expand our ongoing clinical trials or initiate additional clinical trials for pGX9501 in subpopulations of COVID-19 vaccine addressable populations. Furthermore, as various mutations have been observed, we also plan to initial new clinical trials to evaluate the safety and immunogenicity of our pGX9501 against SARS-CoV-2 variants; and

• approximately [REDACTED], or HK$[REDACTED] million, will be used to (i) expand our current manufacturing capacity to a total of 100 million doses by establishing new production lines, purchasing new machineries and raw materials, upgrading our production management system, recruiting talents and providing training to production and quality control workers; and (ii) prepare for commercialization, including recruiting commercialization personnel, engaging local business partners, increasing public awareness, developing logistics network, and providing devices and training for vaccine administration;

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• approximately [REDACTED], or HK$[REDACTED] million, will be allocated to the research and development of other products in our vaccine pipeline, including (i) ongoing and further clinical studies and registration filings of our RSV vaccine, including its phase II and III clinical trials; (ii) the IND preparation and application and subsequent clinical trials of our HBV vaccine; (iii) the pre-clinical studies, clinical trials and registration fillings of our other vaccine candidates; (iv) the improvement of our overall research and development capabilities, the development and enhancement of our vaccine technologies and platforms; (v) expansion of our R&D team, and (vi) construction of our new R&D center and acquisition of equipment and machinery.

• approximately [REDACTED], or HK$[REDACTED] million, will be allocated to potential in-licensing, investment and acquisition opportunities. For details, see “Business—Business Strategies—Pursue in-licensing, investment and acquisition opportunities.” We currently do not have any specific targets or targets under negotiation; and

• approximately [REDACTED], or HK$[REDACTED] million, will be used for our working capital and general corporate purposes.

The above allocation of the [REDACTED] from the [REDACTED] will be adjusted on a pro rata basis in the event that the [REDACTED] is fixed at a higher or lower level compared to the mid-point of the indicative [REDACTED] range stated in this document. If the [REDACTED] is exercised in full, the [REDACTED] that we will receive will be approximately HK$[REDACTED] million, assuming an [REDACTED]of HK$[REDACTED] per Share (being the mid-point of the indicative [REDACTED] range). In the event that the [REDACTED] is exercised in full, we intent to apply the additional [REDACTED] to the above purposes in the proportions stated above.

To the extent that the [REDACTED] are not immediately applied to the above purposes and to the extent permitted by the relevant law and regulations, so long as it is deemed to be in the best interests of the Company, we may hold such funds in short-term deposits with licensed banks or authorized financial institutions in Hong Kong. We will make an appropriate announcement if there is any change to the above proposed use of [REDACTED].

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The following is the text of a report set out on pages [I-1 to I-[●]], received from the Company’s reporting accountant, PricewaterhouseCoopers, Certified Public Accountants, Hong Kong, for the purpose of incorporation in this document. It is prepared and addressed to the directors of the Company and to the Sole Sponsor pursuant to the requirements of HKSIR 200 Accountant’s Reports on Historical Financial Information in Investment Circulars issued by the Hong Kong Institute of Certified Public Accountants.

[Letterhead of PricewaterhouseCoopers] [Draft]

ACCOUNTANT’S REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE DIRECTORS OF BEIJING ADVACCINE BIOTECHNOLOGY CO., LTD. AND CHINA INTERNATIONAL CAPITAL CORPORATION HONG KONG SECURITIES LIMITED

Introduction

We report on the historical financial information of Beijing Advaccine Biotechnology Co., Ltd. (the “Company”) and its subsidiaries (together, the “Group”) set out on pages [I-[●] to I-[●]], which comprises the consolidated statements of financial position as at 31 December 2019 and 2020, the company statements of financial position as at 31 December 2019 and 2020, and the consolidated statements of comprehensive income, the consolidated statements of changes in equity and the consolidated statements of cash flows for each of the periods then ended (the “Track Record Period”) and a summary of significant accounting policies and other explanatory information (together, the “Historical Financial Information”). The Historical Financial Information set out on pages [I-[●]toI-[●]] forms an integral part of this report, which has been prepared for inclusion in the document of the Company dated [document date] (the “Document”) in connection with the initial listing of shares of the Company on the Main Board of The Stock Exchange of Hong Kong Limited.

Directors’ responsibility for the Historical Financial Information

The directors of the Company are responsible for the preparation of Historical Financial Information that gives a true and fair view in accordance with the basis of preparation set out in Note 2.1 to the Historical Financial Information, and for such internal control as the directors determine is necessary to enable the preparation of Historical Financial Information that is free from material misstatement, whether due to fraud or error.

Reporting accountant’s responsibility

Our responsibility is to express an opinion on the Historical Financial Information and to report our opinion to you. We conducted our work in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 200, Accountant’s Reports on Historical Financial Information in Investment Circulars issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). This standard requires that we comply with ethical standards and plan and perform our work to obtain reasonable assurance about whether the Historical Financial Information is free from material misstatement.

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Our work involved performing procedures to obtain evidence about the amounts and disclosures in the Historical Financial Information. The procedures selected depend on the reporting accountant’s judgement, including the assessment of risks of material misstatement of the Historical Financial Information, whether due to fraud or error. In making those risk assessments, the reporting accountant considers internal control relevant to the entity’s preparation of Historical Financial Information that gives a true and fair view in accordance with the basis of preparation set out in Note 2.1 to the Historical Financial Information in order to design procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Our work also included evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the Historical Financial Information.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion

In our opinion the Historical Financial Information gives, for the purposes of the accountant’s report, a true and fair view of the financial position of the Company as at 31 December 2019 and 2020 and the consolidated financial position of the Group as at 31 December 2019 and 2020, and of its consolidated financial performance and its consolidated cash flows for the Track Record Period in accordance with the basis of preparation set out in Note 2.1 to the Historical Financial Information.

Report on matters under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and the Companies (Winding Up and Miscellaneous Provisions) Ordinance

Adjustments

In preparing the Historical Financial Information, no adjustment to the Underlying Financial Statements as defined on page [I-[●]] have been made.

Dividends

We refer to Note 14 to the Historical Financial Information which states that no dividends have been paid by the Company in respect of the Track Record Period.

[PricewaterhouseCoopers] Certified Public Accountants Hong Kong [Date]

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I HISTORICAL FINANCIAL INFORMATION

Preparation of Historical Financial Information

Set out below is the Historical Financial Information which forms an integral part of this accountant’s report.

The consolidated financial statements of the Group for the Track Record Period, on which the Historical Financial Information is based, were audited by PricewaterhouseCoopers Zhong Tian LLP in accordance with International Standards on Auditing (“ISAs”) issued by the International Auditing and Assurance Standards Board (“IAASB”) (“Underlying Financial Statements”).

The Historical Financial Information is presented in Renminbi (“RMB”) and all values are rounded to the nearest thousand (RMB’000) except when otherwise indicated.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Year ended 31 December Note 2019 2020 RMB’000 RMB’000

Revenue 5 8 308 Cost of sales 7 –* –*

Gross profit 8 308 Other income 6 505 17,443 General and administrative expenses 7 (6,154) (28,856) Research and development expenses 7 (12,015) (57,733) Other losses – net 8 (129) (2,364)

Operating loss (17,785) (71,202) Finance costs – net 9 (30) (16,335) Share of net loss of an associate 12 (1,045) (1,253)

Loss before income tax (18,860) (88,790) Income tax expense 11 ––

Loss for the year attributable to the equity holders of the Company (18,860) (88,790)

Other comprehensive loss Item that may be reclassified to profit or loss Currency translation differences (86) (65)

Other comprehensive loss for the year, net of tax (86) (65)

Total comprehensive loss for the year attributable to the equity holders of the Company (18,946) (88,855)

Loss per share for the year and attributable to the equity holders of the Company – Basic and diluted loss per share (RMB) 13 (4.19) (10.02)

* The balance represents an amount less than RMB500.

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CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As at 31 December Note 2019 2020 RMB’000 RMB’000 Assets Non-current assets Property, plant and equipment 15 3,759 167,814 Right-of-use assets 16 316 7,960 Intangible assets 17 – 309,541 Investments accounted for using the equity method 12 37 557 Other non-current assets 18 680 8,721

4,792 494,593

Current assets Inventories – 422 Trade and other receivables 20 220 1,913 Other current assets 21 1,334 30,101 Cash and cash equivalents 22 467 206,425

2,021 238,861

Total assets 6,813 733,454

Liabilities Non-current liabilities Bank loans 23 – 7,200 Lease liabilities 24 119 120 Deferred income tax liabilities 27 – 68,820 Other non-current liabilities 25 – 4,672

119 80,812

Current liabilities Trade and other payables 26 7,719 115,183 Bank loans 23 – 6,628 Lease liabilities 24 225 182 Current income tax payables 28 –

7,972 121,993

Total liabilities 8,091 202,805

Equity Equity attributable to the equity holders of the Company Paid-in capital 29 6,100 – Share capital 29 – 25,920 Capital reserve 30 19,214 – Share premium 30 – 575,175 Other reserves 30 (60) 118 Accumulated losses 30 (26,532) (70,564)

Total equity (1,278) 530,649

Total equity and liabilities 6,813 733,454

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STATEMENTS OF FINANCIAL POSITION OF THE COMPANY

As at 31 December Note 2019 2020 RMB’000 RMB’000

Assets Non-current assets Investments in subsidiaries 36 10,050 402,682 Property, plant and equipment 1,866 10 Investments accounted for using the equity method 12 37 557

11,953 403,249

Current assets Trade and other receivables 20 5,274 7,515 Other current assets 21 667 11,384 Cash and cash equivalents 22 24 186,137

5,965 205,036

Total assets 17,918 608,285

Liabilities Current liabilities Other payables 26 195 9,194 Current income tax payables 28 –

Total liabilities 223 9,194

Equity Equity attributable to the equity holders of the Company Paid-in capital 29 6,100 – Share capital 29 – 25,920 Capital reserve 30 17,500 – Share premium 30 – 575,175 Accumulated losses 30 (5,905) (2,004)

Total equity 17,695 599,091

Total equity and liabilities 17,918 608,285

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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Attributable to owners of the Group Paid-in Capital Share Share Other Accumulated Note capital reserve capital premium reserves losses Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Balance at 1 January 2019 4,500 18,190 – – 26 (7,672) 15,044

Loss for the year –––––(18,860) (18,860) Other Comprehensive loss Currency translation differences 30 ––––(86) – (86)

Total other comprehensive loss ––––(86) – (86)

Total comprehensive loss ––––(86) (18,860) (18,946)

Transactions with owners Capital injection from an equity holder 29 1,600–––– –1,600 Share based payment expense 30 – 1,024––– –1,024

Transactions with owners 1,600 1,024––– –2,624

Balance at 31 December 2019 6,100 19,214 – – (60) (26,532) (1,278)

Balance at 1 January 2020 6,100 19,214 – – (60) (26,532) (1,278)

Loss for the year –––––(88,790) (88,790) Other Comprehensive loss Currency translation differences 30 ––––(65) – (65)

Total other comprehensive loss ––––(65) – (65)

Total comprehensive loss ––––(65) (88,790) (88,855)

Transactions with owners Share of changes in equity under the equity method 12 – 1,773––– –1,773 Share based payment expense 30 – 2,076 – – 232 – 2,308 Issuance of shares 29, 30 12,120 216,950––– –229,070 Excess of expected redemption amount over the fair value of the preferred shares issued as a consideration of the Si’Ao Acquisition 30 – (13,794) – – – – (13,794) Grant of additional redemption rights to certain existing ordinary shareholders 30 – 13,570––– –13,570 Redesignation of ordinary shares to financial liabilities at amortised cost as a result of additional redemption rights 29, 30 (4,300) (70,558) – – – – (74,858) Transfer from financial liabilities at amortised cost due to cancellation of redemption rights of all preferred shares 29, 30 12,000 450,713––– –462,713 Conversion into a joint stock company 29, 30 (25,920) (619,944) 25,920 575,175 11 44,758 –

Transactions with owners (6,100) (19,214) 25,920 575,175 243 44,758 620,782

Balance at 31 December 2020 – – 25,920 575,175 118 (70,564) 530,649

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CONSOLIDATED STATEMENTS OF CASH FLOWS

Year ended 31 December Note 2019 2020 RMB’000 RMB’000

Cash flows from operating activities Cash used in operations 31(a) (12,971) (38,244) Interest received 1 478 Interest paid (12) (152) Income taxes paid (12) (28)

Net cash used in operating activities (12,994) (37,946)

Cash flows from investing activities Purchase of property, plant and equipment (1,510) (47,743) Proceeds from disposal of property, plant and equipment 18 12 Purchases of financial assets at fair value through profit or loss 8 – (488,400) Proceeds from settlement of financial assets at fair value through profit or loss 8 – 489,421 Purchase of intangible assets – (2,000) Proceeds from acquisition of a subsidiary, net of cash acquired 32(a) – 225

Net cash used in investing activities (1,492) (48,485)

Cash flows from financing activities Payment of lease liabilities 31(d) (353) (333) Proceeds of bank loans 31(d) 370 – Repayments of bank loans 31(d) (370) (3,300) Proceeds of loan from a related party 33(b) 100 – Repayments of loan from a related party 33(b) (100) – Proceeds of loan from a third party 31(d) 4,400 – Repayments of loan from a third party 31(d) – (4,400) Cash injection from shareholders 1,600 308,400 Payment for financing expense on issuance of preferred shares – (6,585) Payment for [REDACTED] – (1,402)

Net cash generated from financing activities 5,647 292,380

Net (decrease)/increase in cash and cash equivalents (8,839) 205,949 Cash and cash equivalents at the beginning of the year 9,380 467 Exchange (losses)/gains on cash and cash equivalents (74) 9

Cash and cash equivalents at the end of the year 22 467 206,425

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II NOTES TO THE HISTORICAL FINANCIAL INFORMATION

1 GENERAL INFORMATION

1.1 General information

Beijing Advaccine Biotechnology Co., Ltd., a limited liability company incorporated in the PRC on 8 April 2009 and was converted into a joint stock company with limited liability on 31 December 2020. The address of its registered office is Room B210, Level 2, Zone B, 5 Kaituo Road, Haidian District, Beijing, PRC.

The Company and its subsidiaries (collectively, “the Group”) are principally engaged in research and development of vaccine.

1.2 Investment in subsidiaries

As at the date of this report, the Company had direct and indirect interests in the following subsidiaries:

Percentage of equity attributable to the Company Place of registration/ As of incorporation and Issued and paid up the date place of operations and Kind of capital or registered As of of this Name date of incorporation legal entity capital 31 December report Principal activities 2019 2020

Directly held: Advaccine (Suzhou) The PRC Limited liability 60,000,000 Ordinary 100% 100% 100% Vaccine research and Biopharmaceutical Co., 17 February company shares of RMB1 each development Ltd.* 2017 RMB60,000,000 (the “Advaccine Suzhou”) (a)

Si’Ao Biotechnology The PRC Limited liability 100,000,000 Ordinary – 100% 100% Vaccine research and (Suzhou) Co., Ltd.* 8 August 2012 company shares of RMB1 each development (the “Si’Ao”) (b) RMB100,000,000

Advanced Vaccine Australia Limited liability 10,000 100% 100% 100% Vaccine research and Laboratories 18 July 2017 company Ordinary shares development Pty Ltd. (c) AUD10,000

Advaccine Clinical Australia Limited liability 10,000 – 100% 100% Vaccine research and Research Pty Ltd. (d) 18 June 2020 company Ordinary shares development AUD10,000

Shanghai Yuyue The PRC Limited liability 5,000,000 Ordinary 100% – – Research and Biotechnology 6 January 2015 company shares of RMB1 each development up to Co., Ltd.* (e) RMB5,000,000 May 2019 and became inactive afterwards

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Notes:

(a) The statutory financial statements of the subsidiary for the year ended 31 December 2019 and 31 December 2020 were audited by Suzhou Dong Heng Certified Public Accountants Partnership (蘇州東恒會計師事務所), certified public accountants registered in the PRC.

(b) The statutory financial statements of the subsidiary for the year ended 31 December 2019 were audited by Suzhou Rui Ya Certified Public Accountants Partnership (蘇州瑞亞會計師事務所有限公司), certified public accountants registered in the PRC. As of the date of this report, the audited statutory financial statements of this company for the year ended 31 December 2020 have not been issued yet.

(c) The statutory financial statements of the subsidiary for the year ended 30 June 2019 were audited by ML Tax Solution Pty Ltd., certified public accountants registered in Australia. As of the date of this report, the audited statutory financial statements of this company for the year ended 30 June 2020 have not been issued yet.

(d) As of the date of this report, the audited statutory financial statements of this subsidiary for the year ended 30 June 2020 have not been issued yet.

(e) No audited financial statements have been prepared for this subsidiary for the Track Record Period, as this entity was not subject to any statutory audit requirements under the relevant rules and regulations in its jurisdiction of incorporation. The entity was deregistered on 6 July 2020 (Note 8).

* The English names of the subsidiaries are translation made by management of the Company as they do not have official English names.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of the Historical Financial Information are set out below. These policies have been consistently applied during the Track Record Period, unless otherwise stated.

2.1 Basis of preparation

The Historical Financial Information has been prepared in accordance with International Financial Reporting Standards (“IFRSs”). The Historical Financial Information has been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities at fair value through profit or loss which are carried at fair value. The preparation of Historical Financial Information in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise judgment in the process of applying the accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the Historical Financial Information are disclosed in Note 4.

(a) The Group has applied all of the standards, amendments or interpretation that are effective on 1 January 2020 throughout the Track Record Period including IFRS 9, IFRS 15 and IFRS 16.

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(b) New standards and interpretations not yet adopted

A number of new standards and amendments to existing standards and interpretations that are relevant to the Group have been issued but are not yet effective for the Track Record Period and have not been early adopted by the Group. These new standards and amendments are set out below:

Effective for accounting periods beginning on Standards Key requirements or after

IAS 39, IFRS 4, IFRS 7, Interest Rate Benchmark Reform – Phase 2 1 January 2021 IFRS 9 and IFRS 16 (amendments) IFRS 3, IAS 16 and Narrow-scope amendments (amendments) 1 January 2022 IAS 37 Amendments to IAS 1 Classification of liabilities as current or non- 1 January 2023 current Amendments to IAS 16 Property, Plant and Equipment: Proceeds before 1 January 2022 intended use Amendments to IFRS 3 Reference to the Conceptual Framework 1 January 2022 Amendments to IAS 37 Onerous Contracts – Cost of Fulfilling a 1 January 2022 Contract Annual Improvements Annual improvements to IFRSs 2018-2020 1 January 2022 Project (amendments) IFRS 17 Insurance Contracts 1 January 2023 Amendments to IAS 1 Disclosure of Accounting Policies 1 January 2023 and IFRS Practice Statement 2 Amendments to IAS 8 Definition of Accounting Estimates 1 January 2023 IFRS 10 and IAS 28 Sale or Contribution of Assets between an A date to be Investor and its Associate or Joint Venture determined by (amendments) the IASB

The Group has already commenced an assessment of the impact of these new or revised standards and amendments, certain of which are relevant to the Group’s operations. According to the preliminary assessment made by the directors, no significant impact on the financial performance and positions of the Group is expected when they become effective.

2.2 Principles of consolidation and equity accounting

(a) Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The acquisition method of accounting is used to account for business combinations by the group (refer to note 2.3).

Intercompany transactions, balances and unrealised gains on transactions between entities within the Group are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset.

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(b) Associates

Associates are all entities over which the group has significant influence but not control or joint control. This is generally the case where the group holds between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting, after initially being recognised at cost.

Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses of the investee in profit or loss, and the Group’s share of movements in other comprehensive income of the investee in other comprehensive income. Dividends received or receivable from associates are recognised as a reduction in the carrying amount of the investment.

The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of associate and its carrying value and recognises the amount adjacent to ‘share of profit/(loss) of an associate’ in the income statement.

2.3 Business combinations

(a) Business combinations under common control

The Group has applied merger accounting to account for the purchase of entities or businesses ultimately controlled by the same party or parties both before and after the business combination, as if the combination had been occurred from the date when the combining entities or businesses first came under the control of the controlling party or parties. The combined entity recognises the assets, liabilities and equity of the combining entities or businesses at the carrying amounts in the consolidated financial statements of the controlling party or parties prior to the common control combination. These carrying amounts are referred to below as existing book values from the controlling parties’ perspective. There is no recognition of any additional goodwill or excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over cost at the time of the common control combination to the extent of the continuation of the controlling party or parties’ interests.

(b) Business combinations not under common control

The Group applies the acquisition method to account for business combinations not under common control. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement and fair value of any pre-existing equity interest in the subsidiary. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.

The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis. Non-controlling interests in the acquiree that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation are measured at either fair value or the present ownership interests’ proportionate share in the recognised amounts of the acquiree’s identifiable net assets. All other components of non-controlling interests are measured at their acquisition date fair value, unless another measurement basis is required by IFRS.

Acquisition-related costs are expensed as incurred.

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in profit or loss. Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted for within equity.

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The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net assets of the business acquired in the case of a bargain purchase, the difference is recognised directly in the profit or loss.

Intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. When necessary, amounts reported by subsidiaries have been adjusted to conform with the Group’s accounting policies.

When the Group ceases to have control, any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

2.4 Separate financial statements

Investments in subsidiaries are accounted for at cost less impairment. Cost includes direct attributable costs of investment. The results of subsidiaries are accounted for by the Company on the basis of dividend received and receivable.

Impairment testing of the investments in subsidiaries is required upon receiving a dividend from these investments if the dividend exceeds the total comprehensive income of the subsidiary in the period the dividend is declared or if the carrying amount of the investment in the separate financial statements exceeds the carrying amount in the consolidated financial statements of the investee’s net assets including goodwill.

Investments in associates are accounted for using the equity method of accounting, after initially being recognised at cost.

2.5 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the executive directors that make strategic decisions.

During the Track Record Period, the Group has been focusing on research and development of vaccine. Accordingly, the management considers that the Group is operated and managed as a single operating segment and hence no segment information is presented.

2.6 Foreign currency translation

(a) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in RMB, which is the Company’s functional and the Group’s presentation currency.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of profit or loss, except when deferred in other comprehensive income as qualifying cash flow hedges and qualifying net investment hedges.

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Foreign exchange gains and losses that relate to cash and cash equivalents and borrowings are presented in the consolidated statements of comprehensive income within “finance costs—net”.

The results and financial position of all the group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

(ii) income and expenses for each statement of profit or loss are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and

(iii) all resulting currency translation differences are recognised in other comprehensive income.

2.7 Property, plant and equipment

Property, plant and equipment include buildings, laboratory instrument, motor vehicles, office and electronic equipment, construction in progress and are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to the consolidated statements of comprehensive income during the financial period in which they are incurred.

Depreciation on property, plant and equipment is calculated using the straight-line method to allocate their costs to their residual values over their estimated useful lives, as follows:

– Buildings 30 years – Laboratory Instrument 5 years – Motor vehicles 5 years – Office and electronic equipment 3-5 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (Note 2.9).

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the consolidated statements of comprehensive income.

Construction-in-progress represents properties under construction and is stated at cost less impairment. This includes cost of construction, plant and equipment and other direct costs. Construction-in-progress is not depreciated until such time as the assets are completed and are ready for operational use.

2.8 Intangible assets

(a) Software

Acquired software is capitalised on the basis of the cost incurred to acquire and bring to use the specific software. These costs are amortized over the estimated useful life of 2 years. The Group should assess whether there is any indication that software is impaired at each financial year end.

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Software is amortized over the estimated useful lives of the individual software. The useful lives of individual software were assessed with consideration of the contractual term, the current functionality equipped by the software, using plan and operation needs of the software.

(b) Research and development

The Group incurs significant costs and efforts on research and development activities, which include expenditures on vaccine. Research expenditures are charged to the profit or loss as an expense in the period the expenditures are incurred. Development costs are recognised as assets if they can be directly attributable to a newly developed vaccine product and all the following can be demonstrated:

(i) the technical feasibility of completing the development project so that it will be available for use or sale;

(ii) the Group’s intention to complete the development project to use or sell it;

(iii) the Group’s ability to use or sell the development project;

(iv) how the development project will generate probable future economic benefits for the Group;

(v) the Group’s availability of adequate technical, financial and other resources to complete the development and to use or sell the development project; and

(vi) the ability to measure reliably the expenditures attributable to the development project.

The cost of an internally generated intangible asset is the sum of the expenditures incurred from the date the asset meets the recognition criteria above to the date when it is available for use. The costs capitalised in connection with the intangible asset include costs of materials and services used or consumed, employee costs incurred in the creation of the asset and an appropriate portion of relevant overheads. The Group generally considers capitalisation criteria for internally generated intangible assets is met when obtaining regulatory approval of vaccine license.

Capitalised development expenditures are amortised using the straight-line method over the life of the related vaccine products. Amortisation shall begin when the asset is available for use. Subsequent to initial recognition, internally generated intangible assets are reported as cost less accumulated amortisation and accumulated impairment losses (if any).

Development expenditures not satisfying the above criteria are recognized in the profit or loss as incurred and development expenditures previously recognised as an expense are not recognised as an asset in a subsequent period.

Intangible assets acquired separately are measured on initial recognition at cost.

Certain intangible assets are for license of intellectual properties in development, with non-refundable upfront payment, milestone payment and royalty payment. Upfront payment is capitalized when paid. The milestone payment is capitalised as intangible assets when incurred, unless the payment is for outsourced research and development work which would follow the capitalisation policy in Note 2.8 (b). Royalty payment would be accrued for in line with the underlying sales and recognised as cost of sales. However, if the intangible asset is acquired in a business combination, it is measured at fair value at initial recognition.

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IPR&D acquired is subsequently stated at cost less any impairment losses.

For research or development expenditures which are related to an IPR&D project acquired separately or in a business combination and incurred after the acquisition of that project, they shall be accounted for in accordance with the capitalisation policy in Note 2.8 (b).

The intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are subsequently amortized when available for use and over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at each financial year end. Intangible assets with indefinite useful lives or not available for use will not be amortised but tested for impairment annually either individually or at the cash-generating unit level. The impairment test would compare the recoverable amount of the in-licenses and IPR&D asset to its carrying value. The useful life of an intangible asset with an indefinite life is reviewed annually to determine whether the indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is accounted for on a prospective basis.

In-licenses and IPR&D with finite useful life are amortised using the straight-line basis over the commercial lives of the underlying products, commencing from the date when the products are put into commercial production.

2.9 Impairment of non-financial assets

Intangible assets of indefinite useful lives or not available for use are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-financial assets including right-of-use assets and property, plant and equipment and other intangible assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at each financial year end.

2.10 Financial assets

(a) Classification

The Group classifies its financial assets in the following measurement categories:

(i) those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and

(ii) those to be measured at amortised cost.

The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income.

(b) Recognition and derecognition

Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.

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At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.

(i) Debt instruments

Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Group classifies its debt instruments:

Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in other income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss. Impairment losses are presented as separate line item in the consolidated statements of comprehensive income.

Fair value through profit or loss: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a debt investment that is subsequently measured at FVPL is recognised in profit or loss.

(ii) Equity instruments

The Group subsequently measures all equity investments at fair value. Where the Group’s management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognised in profit or loss as other income when the group’s right to receive payments is established.

Changes in the fair value of financial assets at FVPL are recognised in other gains/(losses) in the statement of profit or loss as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.

(iii) Impairment of financial assets

The Group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

For trade receivables, the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables.

2.11 Inventories

Inventories are stated at the lower of cost and net realizable value. Costs are assigned to individual items of inventory on the basis of weighted average costs. Costs of purchased inventory are determined after deducting discounts. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

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2.12 Trade and other receivables

Trade receivables are amounts due from customers for products and service performed in the ordinary course of business. If collection of trade and other receivables is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components, when they are recognised at fair value. The Group holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method. For impairment of trade receivables, refer to Note 2.10(c) and Note 3.1(b).

2.13 Cash and cash equivalents

For the purpose of presentation in the consolidated statements of cash flow, cash and cash equivalents include cash on hand, demand deposits held at banks, and other short-term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

2.14 Trade and other payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade and other payables are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

2.15 Share capital

Ordinary shares are classified as equity. Mandatorily redeemable preferred shares are classified as liabilities based on the respective contract terms (note 29).

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

2.16 Government grants

Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions.

Government grants relating to costs are deferred and recognised in the profit or loss over the period necessary to match them with the costs that they are intended to compensate.

Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to profit or loss on a straight-line basis over the expected lives of the related assets. Note 6 provides further information on how the Group accounts for government grants.

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2.17 Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period.

2.18 Borrowing costs

General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

2.19 Current and deferred income tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in the consolidated statements of comprehensive income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

(a) Current income tax

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions, where appropriate, on the basis of amounts expected to be paid to the tax authorities.

(b) Deferred income tax

Inside basis differences

Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Also, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit nor loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Outside basis differences

Deferred income tax liabilities are provided on taxable temporary differences arising from investments in subsidiaries, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiaries only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be utilised.

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Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

2.20 Employee benefits

(a) Short-term obligations

Liabilities for wages and salaries, including non-monetary benefits and accumulating sick leave that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.

(b) Pension obligations

Full-time employees in the PRC are covered by various government-sponsored defined contribution pension plans under which the employees are entitled to a monthly pension based on certain formulas. The relevant government agencies are responsible for the pension liability to these retired employees. The Group contributes on a monthly basis to these pension plans. Under these plans, the Group has no further payment obligation for post-retirement benefits beyond the contributions made. Contributions to these plans are expensed as incurred and contributions paid to the defined-contribution pension plans for an employee are not available to reduce the Group’s future obligations to such defined-contribution pension plans even if the employee leaves.

Employees in the PRC are entitled to participate in various government-supervised housing funds, medical insurance and other employee social insurance plans. The Group contributes on a monthly basis to these funds based on certain percentages of the salaries of the employees, subject to certain ceiling. The Group’s liability in respect of these funds is limited to the contributions payable.

(d) Bonus plan

The expected cost of bonus is recognized as a liability when the Group has a present legal or constructive obligation for payment of bonus as a result of services rendered by employees and a reliable estimate of the obligation can be made. Liabilities for bonus plans are expected to be settled within 12 months and are measured at the amounts expected to be paid when they are settled.

(e) Employee leave entitlement

Employee entitlement to annual leave are recognized when they have accrued to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the end of the reporting period. Employee entitlement to sick leave and maternity leave is not recognized until the time of leave.

2.21 Share-based payments

The Group operates an equity-settled share-based compensation plan, under which the Group receives service from its employees in exchange for the equity instruments of the Group. As disclosed in Note 30, during the Track Record Period, the Company granted equity-settled restricted shares units (“RSUs”) to certain employees. The fair value of the employee service received in exchange for the grant of RSUs is recognized as an expense on the consolidated financial statements. The total amount to be expensed is determined by reference to the fair value of the equity instruments granted:

(i) including any market performance conditions (e.g. the entity’s share price),

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(ii) excluding the impact of any service and non-market performance vesting conditions (e.g. profitability, sales growth targets and remaining an employee of the entity over a specified time period), and

(iii) including the impact of any non-vesting conditions (e.g. the requirement for employees to save or hold shares for a specific period of time).

Non-market performance and service conditions are included in assumptions about the number of equity instruments that are expected to vest. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied.

At the end of each reporting period, the Group revises its estimates of the number of RSUs that are expected to vest based on the non-market vesting performance and service conditions. It recognizes the impact of the revision to original estimates, if any, in the consolidated statements of comprehensive loss, with a corresponding adjustment to equity.

In addition, in some circumstances employees may provide services in advance of the grant date and therefore the grant date fair value is estimated for the purposes of recognizing the expense during the period between service commencement date and grant date.

Where there is any modification of terms and conditions which increases the fair value of the equity instruments granted, the Group includes the incremental fair value granted in the measurement of the amount recognized for the services received over the remainder of the vesting period. The incremental fair value is the difference between the fair value of the modified equity instrument and that of the original equity instrument, both estimated as at the date of the modification. An expense based on the incremental fair value is recognized over the period from the modification date to the date when the modified equity instruments vest in addition to any amount in respect of the original instrument, which should continue to be recognized over the remainder of the original vesting period.

Equity-settled share-based payments to parties other than employees are measured at the fair value of the goods or services received or, if the fair value of the goods or services received cannot be reliably measured, at the fair value of the equity instruments granted. The fair value is measured at the date the Group obtains the goods or receives the services.

If the identifiable consideration received by the Group is less than the fair value of the equity instruments granted, the difference, being the unidentifiable goods or services received is charged to the combined statement of comprehensive income at the grant date.

(a) Share-based payment transaction among group entities

The grant by the Company of options over its equity instruments to the employees of subsidiaries in the Group is treated as a capital contribution. The fair value of employee services received, measured by reference to the grant date fair value, is recognized over the vesting period as an increase to investment in subsidiaries undertakings, with a corresponding credit to equity in separate financial statements of the Company.

2.22 Revenue recognition

(a) Revenue from license granted

The Group derives revenue from royalty on net sales of vaccine products. The Group provides the right to use its intellectual properties (“IP”), which has received regulatory and marketing approval, to a customer. The sales-based royalty will only be recognised for when actual sales are made.

(b) Sales of goods

The Group sells certain vaccine products to third parties. Sales are recognised when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location where the risks of obsolescence and loss have been transferred to the client, and either the client has accepted the products in accordance with the sales contract, or the Group has objective evidence that all criteria for acceptance have been satisfied. The price is normally fixed and with no sales discount or volume rebate. Goods return are very rare. Costs related to sales of goods are included in “cost of revenue”.

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2.23 Interest income

Interest income from financial assets at FVPL is included in the net fair value gains/(losses) on these assets.

Interest income on financial assets at amortised cost calculated using the effective interest method is recognised in the consolidated statements of comprehensive income.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for financial assets that subsequently become credit-impaired. For credit-impaired financial assets the effective interest rate is applied to the net carrying amount of the financial asset (after deduction of the loss allowance).

2.24 Preferred shares

Preferred shares, which are mandatorily redeemable on a specific date, are classified as liabilities. The financial liability is initially recognised by the present value of the redemption amount. Subsequently, the financial liability is measured at amortised cost.

2.25 Leases and right-of-use assets

The Group leases properties for operation and leases land for the production of new vaccines. The consideration paid for lease are treated as right-of-use assets, which are stated at cost less accumulative amortisation and accumulated impairment losses, if any. Land use right is amortised over the lease period of 50 years using straight-line method.

Leases are recognised as right-of-use assets and the corresponding liabilities at the date of which the respective leased assets is available for use by the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payment:

(i) fixed payments (including in-substance fixed payments), less any lease incentives receivable;

(ii) variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the commencement date;

(iii) amounts expected to be payable by the lessee under residual value guarantees;

(iv) the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and

(v) payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Group, the lessee’s incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.

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Right-of-use assets are measured at cost comprising the following:

• the amount of the initial measurement of lease liability

• any lease payments made at or before the commencement date less any lease incentives received

• any initial direct costs, and

• restoration costs

Right-of-use assets are generally depreciated over the lease term on a straight-line basis. Right-of-use assets are subject to impairment (Note 2.9).

Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of less than 12 months. Low-value assets comprise small items of machinery.

3 FINANCIAL RISK MANAGEMENT

3.1 Financial risk factors

The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, cash flow and fair value interest rate risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance.

(a) Market risk

(i) Foreign exchange risk

Foreign exchange risk arises when future commercial transactions or recognised assets and liabilities are denominated in a currency that is not the respective group entities’ functional currency. The Group mainly operates in the PRC with most of the transactions denominated and settled in RMB. However, the Group has also certain bank deposits and trade and other payables which are denominated in currencies other than RMB (majority in United States dollars (“USD”)) and details of which have been set out in Notes 22 and 26. The Group currently does not have a foreign currency hedging policy. However, management of the Group monitors foreign exchange exposure and will consider hedging significant foreign currency exposure should the need arise.

The Group’s exposure to foreign currency risk at 31 December 2019 was insignificant as each of the group entities did not hold significant assets and liabilities denominated in a currency other than its functional currency. The Group’s exposure to foreign currency risk at 31 December 2020 mainly comes from trade and other payable in USD.

If USD had strengthened/weakened by 5% against RMB with all other variables held constant, net loss would have been approximately RMB277 lower/higher as at 31 December 2019, as a result of net foreign exchange gains/losses on translation of net monetary assets denominated in US dollars. If US dollars had strengthened/weakened by 5% against RMB with all other variables held constant, net loss would have been approximately RMB2,329,708 higher/lower as at 31 December 2020, as a result of net foreign exchange losses/gains on translation of net monetary liabilities denominated in US dollars.

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(ii) Cash flow and fair value interest rate risk

The Group’s income and operating cash flows are substantially independent of changes in market interest rates. The Group has no significant interest-bearing assets and liabilities, except for lease liabilities (Note 24), cash and cash equivalents (Note 22), bank loans (Note 23) and loans from a related party (Note 26). Those carried at floating rates expose the Group to cash flow interest rate risk whereas those carried at fixed rates expose the Group to fair value interest rate risk.

The Group’s interest rate risk mainly arises from borrowings. Loans from a related party obtained at fixed rate expose the Group to fair value interest rate risk. Bank loans obtained at floating rates expose the Group to cash flow interest rate risk. As at 31 December 2020, the Group’s bank loans were borrowings that carried at floating rates, which exposed the Group to cash flow interest rate risk.

As at 31 December 2020, the Group had RMB13,828,000 loan at floating rate, if interest rates had been 0.5% higher/lower with all other variables held constant, post-tax loss for the year ended December 31, 2020 would have been RMB39,330 higher/lower, mainly as a result of changes in interest expense on floating rate borrowings. There are no floating rate borrowings as at 31 December 2019.

Management does not anticipate significant impact to interest-bearing assets resulted from the changes in interest rates, because the interest rates of bank deposits are not expected to change significantly.

(b) Credit risk

The Group is exposed to credit risk in relation to its trade and other receivables, cash and cash equivalents and financial assets at fair value through profit or loss. The carrying amounts of trade and other receivables, cash and cash equivalents and financial assets at fair value through profit or loss represent its maximum exposure to credit risk in relation to financial assets.

The Group expects that there is no significant credit risk associated with cash and cash equivalents and financial assets at fair value through profit or loss since they are substantially deposited at state-controlled banks and other medium or large-sized listed banks. Management does not expect that there will be any significant losses from non-performance by these counterparties.

The Group accounts for credit losses, if any, using an expected credit losses model which utilizes assumptions and estimates regarding expected future credit losses. The Group applies the simplified approach to provide for expected credit losses prescribed by IFRS 9, which permits the use of the lifetime expected loss provision for all trade receivables. The Group expects that trade receivables are exposed to negligible credit risk.

Management has assessed that during the Track Record Period, other receivables have not had a significant increase in credit risk since initial recognition. Thus, a 12-month expected credit loss approach that results from possible default event within 12 months of each reporting date is adopted by management. The Group does not expect any losses from non-performance by the counterparties of other receivables and no loss allowance provision for other receivables was recognised.

As at 31 December 2019 and 2020, other receivables mainly comprise deposits to lessors in respect of the Group’s leased properties. The Group expects that there is no significant credit risk associated with other receivables since the counterparties have no history of default. Accordingly, the expected credit loss of other receivables was considered immaterial.

Prudent liquidity risk management includes maintaining sufficient cash and cash equivalents, the ability to apply for credit facilities if necessary. The Group finances its working capital requirements through issue of new shares, borrowings and government grants.

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Management monitors rolling forecasts of the Group’s liquidity reserve on the basis of expected cash flows.

The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances, as the impact of discounting is not significant.

Less than Between 1 Between 2 1 year and 2 years and 5 years Total RMB’000 RMB’000 RMB’000 RMB’000

At 31 December 2020 Bank loans 6,628 7,200 – 13,828 Interests payments on bank loans 787 728 – 1,515 Trade and other payables due to third parties 73,408 – – 73,408 Trade and other payables due to related parties 38,788 – – 38,788 Lease liabilities 235 82 41 358

At 31 December 2019 Trade and other payables due to third parties 7,272 – – 7,272 Trade and other payables due to related parties 79 – – 79 Lease liabilities 192 111 12 315

3.2 Capital risk management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for equity holders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to equity holders, return capital to equity holders, issue new shares or sell assets to reduce debt.

Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including bank loans, loans from shareholder) less cash and cash equivalents and restricted cash. Total capital is calculated as “total equity”, as shown in the consolidated balance sheet, plus net debt. As at 31 December 2019 and 31 December 2020, cash and cash equivalents is more than total borrowings of the Group, therefore, the gearing ratio is not applicable.

3.3 Fair value estimation

(a) This section explains the judgements and estimates made in determining the fair values of the financial instruments that are recognised and measured at fair value in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Group has classified its financial instruments into the three levels prescribed under the accounting standards:

Level 1: The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and equity securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the group is the current bid price.

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Level 2: The fair values of financial instruments that are not traded in an active market are determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

The Group’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.

(b) Valuation techniques used to determine fair values

Specific valuation techniques used to value financial instruments include the use of quoted market prices or dealer quotes for similar instruments or discounted cash flow analysis. The Group did not have any financial assets or liabilities measured at fair value on a recurring basis during the Track Record Period, with the exception of the Group’s wealth management products, which are measured at fair value through profit or loss and which constitute Level 3 measurements under the fair value hierarchy. The Group’s wealth management products are valued based on cash flow discounted using the expected return based on management judgment and estimates.

As at 31 December 2019 and 2020, the Group had no assets and liabilities measured at fair value.

4 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

(a) Development expenditures

Development expenditures incurred on the Group’s research and development activities, including conducting preclinical studies and clinical trials and activities related to regulatory filings for the Group’s vaccine candidates, are capitalised as intangible assets only when meet the capitalisation criteria set out in Note 2.8 (b) are met. Expenditures that do not meet these capitalisation principle are recognised as research and development expenses. During the Track Record Period, the Group’s research and development expenditures incurred did not meet these capitalisation principles for any products and were expensed as incurred.

(b) Impairment testing of intangible assets not available for use

Intangible assets not available for use are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. The Group obtained Know-how and IPR&D through separate acquisition or business combination to continue research and development work and commercialise the products, which are classified as intangible assets not available for use.

An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).

The calculation of the fair value less costs of disposal is based on management’s cash flow forecast and discount rate of these intangible assets less incremental costs for disposing of the asset.

For detail of the impairment testing, refer to Note 17.

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The financial instruments issued by the Company including ordinary shares and preferred shares are not traded in an active market and the respective fair values are determined using valuation techniques. The discounted cash flow method was used to determine the total equity value of the Company and the option pricing model was adopted to determine the fair value of the ordinary shares and preferred shares. Key assumptions, such as discount rate, terminal growth rate, risk-free interest rate and volatility are disclosed in Note 30. Any changes in key assumptions used in the option pricing model will have impacts on the fair values.

(d) Useful lives and residual values of property, plant and equipment

Management determines the estimated useful lives, residual values and consequently related depreciation expense for its property, plant and equipment.

The estimated useful lives are determined by reference to the expected lifespan of the assets, the Group’s business model and its asset management policy. The estimated useful lives could change significantly as a result of certain factors. Management will increase the depreciation expense where useful lives are less than previously estimated lives, or it will write down technically obsolete or non-strategic assets that have been abandoned or sold.

The estimated residual values are determined based on all relevant factors (including but not limited to by reference to the industry practice and estimated scrap values).

The depreciation expense will change where the useful lives or residual values of the assets are different from the previous estimates.

5 REVENUE

Year ended 31 December 2019 2020 RMB’000 RMB’000

Royalties – 297 Adjuvant sales 8 11

8 308

During the year ended 31 December 2019 and 2020, the Group recognised its revenue from contract with customers at point in time in accordance with the accounting policies as set forth in Note 2.22.

6 OTHER INCOME

Year ended 31 December 2019 2020 RMB’000 RMB’000

Government grants (a) 505 17,443

(a) The government grants related to subsidies received to compensate the expenses of the Group’s research and development and the purchase of property, plant and equipment for the Group’s research and development activities. Some of the grants related to income have future related costs expected to be incurred and require the Group to comply with conditions attached to the grants and obtain the government acknowledgement on the compliance of these conditions. These grants related to subsidies were recognised in profit or loss when related costs were incurred and the Group received government acknowledge of compliance. Grants related to the purchase of property, plant, and equipment are included in non-current liabilities as deferred income and are credited to profit or loss on a straight-line basis over the expected lives of the related assets.

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7 EXPENSES BY NATURE

Year ended 31 December 2019 2020 RMB’000 RMB’000

Outsourced research and development costs 4,427 41,165 Employee benefit expenses (Note 10) 7,941 15,798 Raw materials and consumables used 1,035 4,877 Energy and utilities expenses 112 874 Depreciation of property, plant and equipment (Note 15) 748 1,348 Depreciation of right-of-use assets (Note 16) 313 331 Amortisation of intangible assets (Note 17) 28 Share-based compensation expenses – non-employee (a) 167 14,068 Professional services 648 4,757 Auditors’ remuneration – audit services 65 148 Travelling and meeting expenses 500 1,054 Repair and maintenance fee 327 911 Office expenditures 164 329 Land use tax, stamp duties and other taxes 13 249 Others 1,707 672

Total research and development costs, and administrative expenses 18,169 86,589

(a) Share-based compensation expenses – non-employee for the year ended December 31, 2020 included:

Pursuant to the Suzhou Si’Ao Acquisition agreement, the Angel investors and the Series A plus investors were entitled to the same preferential rights with Series A investors (the “Modification”). The fair value differences between ordinary shares and preferred shares as of 30 September 2020 caused by the Modification amounting to approximately RMB13,570,000 were charged to the statements of comprehensive income of the Group for the year ended 31 December 2020 (Note 30 (d)(ii)).

Other share-based compensation comprised payments amounting to approximately RMB498,000 to independent consultants and/or other parties other than employees.

8 OTHER LOSSES—NET

Year ended 31 December 2019 2020 RMB’000 RMB’000

Fair value change of a financial instrument (Note 30(c)) – (3,450) Gains/(Losses) on disposal of property, plant and equipment 1 (1,102) Net fair value gain on financial assets at fair value through profit or loss – wealth management products (a) – 1,021 Net foreign exchange (losses)/gains on operating activities (117) 599 Gains on disposal of a subsidiary (Note 1.2(e)) – 575 Others (13) (7)

(129) (2,364)

(a) Financial assets measured at fair value through profit or loss comprise the investments in wealth management products purchased from banks in the PRC.

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9 FINANCE COSTS—NET

Year ended 31 December 2019 2020 RMB’000 RMB’000

Interest income on bank deposits (1) (478) Interest expenses on amounts due to a related party (Note 33) – 991 Interest expenses on lease liabilities 19 17 Interest expenses on bank loans 12 273 Less: borrowing costs capitalised in property, plant and Equipment (a) – (93) Financial costs of preferred shares (Note 30(f)) – 15,625

Finance costs – net 30 16,335

(a) The capitalisation rate used to determine the amount of borrowing costs is 5.7% for the year ended 31 December 2020.

10 EMPLOYEE BENEFIT EXPENSES (INCLUDING DIRECTORS’ REMUNERATION)

Year ended 31 December 2019 2020 RMB’000 RMB’000

Salaries, wages and bonuses 6,005 12,686 Contributions to pension plans (a) 448 72 Housing funds, medical insurance and other social insurance (b) 441 652 Share-based compensation expenses for employees 857 1,810 Other welfare for employees 190 578

7,941 15,798

(a) As stipulated by rules and regulations in the PRC, the Group contributes to state-sponsored retirement schemes for its employees in the PRC. The Group’s employees make monthly contributions to the schemes at certain percentages of the relevant income (comprising wages, salaries, allowances and bonus, and subject to maximum caps), subject to certain ceiling and has no further obligations for the actual payment of post-retirement benefits beyond the contributions. The state-sponsored retirement schemes are responsible for the entire post-retirement benefit obligations payable to the retired employees.

(b) Employees of the Group in the PRC are entitled to participate in various government-supervised housing funds, medical insurance and other employee social insurance plan. The Group contributes on a monthly basis to these funds based on certain percentages of the salaries of the employees, subject to certain ceiling. The Group’s liability in respect of these funds is limited to the contributions payable in each year.

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For the years ended 31 December 2019 and 2020, the five individuals whose emoluments were the highest in the Group include 1 director, whose emoluments are reflected in the analysis presented in Note 35. The emoluments payable to the remaining individuals were as follows:

Year ended 31 December 2019 2020 RMB’000 RMB’000

Salaries and fee 1,619 1,954 Bonuses 203 608 Housing funds, medical insurance and other social insurance 174 97 Share-based compensation 857 1,471

2,853 4,130

The number of four highest paid non-director individuals during the Track Record Period fell within the following emolument bands are as follows:

Year ended 31 December 2019 2020

Emolument bands Nil to HKD500,000 1 – HKD500,001 – HKD1,000,000 3 3 HKD1,500,001 – HKD2,000,000 – 1

11 INCOME TAX EXPENSE

(a) Income tax expense

The Group is subject to income tax on an entity basis on profits arising in or derived from the jurisdictions in which members of the Group are domiciled and operate.

Australia

Advanced Vaccine Laboratories Pty Ltd. and Advaccine Clinical Research Pty Ltd. were incorporated in Australia and are subject to Australian profits tax at the rate of 27.5%. Since these companies did not have assessable profits during the Track Record Period, no Australian profits tax has been provided.

Mainland China

Pursuant to the Corporate Income Tax Law of the PRC and the respective regulations (the “CIT Law”), the subsidiaries which operate in Mainland China are subject to CIT at a rate of 25% on the taxable income in 2019 and 2020, except for certain subsidiary that enjoy tax exemption or a preferential income tax rate as approved by relevant tax authorities. Advaccine Suzhou was approved by relevant local tax authorities as the High-technological Enterprise, and enjoyed a preferential CIT rate of 15% from 2020 to 2022.

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The income tax on the Group’s losses before income tax differs from the theoretical amount that would arise using the enacted tax rate in the PRC applicable to the Group as follows:

Year ended 31 December 2019 2020 RMB’000 RMB’000

Loss before income tax (18,860) (88,790)

Tax calculated at statutory tax rates applicable to each group entity (4,803) (22,390) Effect of preferential tax rate of a subsidiary – 8,775 Income not subject to taxation – (662) Expenses not deductible for income tax purposes 468 3,776 Additional deduction of research and development expenditures (1,240) (10,561) Tax losses not recognised as deferred tax assets 5,575 21,062

Income tax expense – –

(b) Tax losses carried forward

The tax losses of subsidiaries in Mainland China that are not recognised as deferred tax assets will expire within five years (ten years for High and New Technology Enterprise and Small and Medium-sized Technology Enterprise) from the respective reporting dates and are analysed as follows:

Year ended 31 December 2019 2020 RMB’000 RMB’000

Expire year 2024 6,420 6,420 2025 – 23,285 2027 1,135 3,435 2028 8,232 22,139 2029 11,947 25,448 2030 – 73,688

27,734 154,415

As at 31 December 2019 and 2020, the tax losses of subsidiaries in Australia amounting to RMB3,575,000 and RMB3,863,000 are not recognised as deferred tax assets and can be carried forward indefinitely.

12 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

As at 31 December 2019 2020 RMB’000 RMB’000

Share of net assets, unlisted 37 557

At 1 January 1,082 37 Share of loss for the year (1,045) (1,253) Share of changes in equity under equity method (Note 30) – 1,773

End of the year 37 557

The Company has an associate principally engaged in animal vaccine’s research and development, which is still at early stage of development.

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13 LOSS PER SHARE

(a) Basic loss per share

Basic loss per share is calculated by dividing the loss attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the Track Record Period.

Year ended 31 December 2019 2020 RMB’000 RMB’000

Loss for the year (18,860) (88,790) Weighted average number of ordinary shares in issue (i) 4,504 8,865

Basic loss per share (in RMB) (4.19) (10.02)

(i) The weighted average number of ordinary shares in issue before the conversion into a joint stock company was determined assuming the paid-in capital had been fully converted into share capital at the same conversion ratio of 1:1 adopted upon the transformation into joint stock company in November 2020.

(b) Diluted loss per share

Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. For the years ended December 2019 and 2020, the Company had two categories of potential ordinary shares: preferred shares (Note 28) and the granted RSUs (Note 30). As the Group incurred losses for the years ended 2019 and 2020, the potential ordinary shares were not included in the calculation of diluted loss per share as their inclusion would be anti-dilutive. Accordingly, diluted loss per share for the years ended 31 December 2019 and 2020 are the same as basic loss per share of the respective years.

14 DIVIDEND

No dividend has been paid or declared by the Company or companies comprising the Group during the Track Record Period.

15 PROPERTY, PLANT AND EQUIPMENT

Office and Laboratory Motor electronic Construction Buildings Instrument vehicles equipment in progress Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

At 1 January 2019 Cost – 2,264 – 503 653 3,420 Accumulated depreciation – (503) – (194) – (697)

Net book amount – 1,761 – 309 653 2,723

Year ended 31 December 2019 Opening net book amount – 1,761 – 309 653 2,723 Additions – 1,492 – 22 287 1,801 Transfer – 940 – – (940) – Disposals – (1) – (16) – (17) Depreciation charge (Note 7) – (686) – (62) – (748)

Closing net book amount – 3,506 – 253 – 3,759

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Office and Laboratory Motor electronic Construction Buildings Instrument vehicles equipment in progress Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

At 31 December 2019 Cost – 4,585 – 476 – 5,061 Accumulated depreciation – (1,079) – (223) – (1,302)

Net book amount – 3,506 – 253 – 3,759

Year ended 31 December 2020 Opening net book amount – 3,506 – 253 – 3,759 Additions – 3,445 10 394 25,019 28,868 Acquisition of a subsidiary (Note 32) 8,281 706 218 51 128,393 137,649 Transfer 19,176 – – – (19,176) – Disposals – (27) – – (1,087) (1,114) Depreciation charge (Note 7) (41) (1,024) (9) (274) – (1,348)

Closing net book amount 27,416 6,606 219 424 133,149 167,814

At 31 December 2020 Cost 27,457 8,700 228 923 133,149 170,457 Accumulated depreciation (41) (2,094) (9) (499) – (2,643)

Net book amount 27,416 6,606 219 424 133,149 167,814

Depreciation of property, plant and equipment has been charged to the consolidated statements of comprehensive income is as follows:

Year ended 31 December 2019 2020 RMB’000 RMB’000

Research and development expenses 720 1,135 General and administrative expenses 28 213

748 1,348

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16 RIGHT-OF-USE ASSETS

Leased properties Land use right Total RMB’000 RMB’000 RMB’000

At 1 January 2019 Cost 804 – 804 Accumulated depreciation (406) – (406)

Net book amount 398 – 398

Year ended 31 December 2019 Opening net book amount 398 – 398 Additions 231 – 231 Depreciation charge (Note 7) (313) – (313)

Closing net book amount 316 – 316

At 31 December 2019 Cost 1,034 – 1,034 Accumulated depreciation (718) – (718)

Net book amount 316 – 316

Year ended 31 December 2020 Opening net book amount 316 – 316 Additions 274 – 274 Acquisition of a subsidiary (Note 32) – 7,701 7,701 Depreciation charge (Note 7) (288) (43) (331)

Closing net book amount 302 7,658 7,960

At 31 December 2020 Cost 1,308 7,701 9,009 Accumulated depreciation (1,006) (43) (1,049)

Net book amount 302 7,658 7,960

Depreciation of right-of-use assets has been charged to the consolidated statements of comprehensive income as follows:

Year ended 31 December 2019 2020 RMB’000 RMB’000

Research and development expenses 236 173 General and administrative expenses 77 158

313 331

Land use right represents the land use right granted by the PRC government authority on the use of land within the pre-approved lease period. The original lease terms of the land use right of the Group held in the PRC are 50 years up to 11 June 2065. As at 31 December 2020, the land use right was pledged for the Group’s bank loans amounting to RMB13,828,000 (Note 23) (2019:nil).

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17 INTANGIBLE ASSETS

Software In-license IPR&D Know-how Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

At 1 January 2019 Cost 6–––6 Accumulated amortisation (4) – – – (4)

Net book amount 2–––2

Year ended 31 December 2019 Opening net book amount 2–––2 Amortisation charge (Note 7) (2) – – – (2)

Closing net book amount –––––

At 31 December 2019 Cost 6–––6 Accumulated amortisation (6) – – – (6)

Net book amount –––––

Year ended 31 December 2020 Opening net book amount ––––– Acquisition of a subsidiary ((a) and Note 32) – – 274,925 – 274,925 Additions (b) – 32,624 – 2,000 34,624 Amortisation charge (Note 7) – – – (8) (8)

Closing net book amount – 32,624 274,925 1,992 309,541

At 31 December 2020 Cost 6 32,624 274,925 2,000 309,555 Accumulated amortisation (6) – – (8) (14)

Net book amount – 32,624 274,925 1,992 309,541

Amortisation of intangible assets has been charged to the consolidated statements of comprehensive income as follows:

Year ended 31 December 2019 2020 RMB’000 RMB’000

General and administrative expenses 2 8

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During the Track Record Period, the Group’s development expenditures incurred did not meet the capitalisation principles for any products and were expensed as incurred.

(a) The IPR&D, hepatitis vaccine and hand-foot-and-mouth disease vaccine amounting to approximately RMB197,516,000 and RMB67,446,000 respectively, was acquired as a result of the business combination of Si’Ao (Note 32).

The intangible asset is not available for use and the Group is continuing research and development work, there was no impairment as at 31 December 2020.

(i) Hepatitis vaccine

Intangible assets not yet available for use are tested annually based on the recoverable amount of the cash-generating unit (“CGU”) to which the intangible asset is related. The appropriate cash-generating unit (“CGU”) is at the product level. The recoverable amount of each CGU was determined based upon the fair value less costs of disposal. The fair value was estimated using the discounted cash flow approach. The fair value measurement hierarchy of hepatitis vaccine was level 3. The estimated revenue of hepatitis vaccine is based on management’s expectations of timing of commercialisation, market penetration rate and success rate of commercialisation.

Based on the research and development process and experience of the approval process, management estimates that hepatitis vaccine will be able to generate revenue from 2029 to 2036, the growth rate of which will be climbing in the first four years, and stable in the last four years.

The percentage of costs and operating expenses to revenue is the percentages over the revenue forecast period from 2029 to 2036. It is based on the current margin levels of comparable companies, with adjustments made to reflect the expected future price rises in labour and relevant equipment. The market penetration rate was used based on the expected selling conditions considering the features of marketing and technology development. The discount rate used is post-tax and reflects specific risks relating to the relevant products. The success rate of commercialisation was determined based on practices of pharmaceutical industries, development of technologies and related regulations from administrations.

An independent valuation was performed by an independent appraiser, to determine the recoverable amount of the CGU.

The key assumptions used for fair value calculation as at 31 December 2020 are as follows:

As at 31 December 2020

Post-tax discount rate 17.7% Revenue growth rate for the climbing period 41.8%~248.4% Revenue growth rate for the stable period 4% Market penetration rate 5.0%~30.0% Success rate of commercialisation 39.9% Percentage of costs and operating expenses 52.1%~70.7% Recoverable amount of CGU (in RMB’000) 202,126

Based on the result of impairment assessment, there was no impairment as at 31 December 2020.

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The recoverable amount of the CGU of hepatitis vaccine is estimated to exceed the carrying amount of the CGU as at 31 December 2020 by RMB4,610,000. The recoverable amount of hepatitis vaccine would equal its carrying amount if each of the key assumptions were to change as follows, with all other variables held constant.

As at 31 December 2020

Post-tax discount rate 0.9% Market penetration rate -1.5% Success rate of commercialisation -1.5% Percentage of costs and operating expenses 1.2%

(ii) Hand-foot-and-mouth disease vaccine

Based on the research and development process and experience of the approval process, management estimates that hand-foot-and-mouth disease vaccine will be able to generate revenue from 2029 to 2036, the growth rate of which will be climbing in the first four years, and stable in the last four years.

The percentage of costs and operating expenses to revenue is the percentages over the revenue forecast period from 2029 to 2036. It is based on the current margin levels of comparable companies, with adjustments made to reflect the expected future price rises in labour and relevant equipment. The market penetration rate was used based on the expected sellings conditions considering the features of marketing and technology development. The discount rate used is post-tax and reflects specific risks relating to the relevant products. The success rate of commercialisation was determined based on practices of pharmaceutical industries, development of technologies and related regulations from administrations.

An independent valuation was performed by an independent appraiser, to determine the recoverable amount of the CGU.

The key assumptions used for fair value calculation as at 31 December 2020 are as follows:

As at 31 December 2020

Post-tax discount rate 17.7% Revenue growth rate for the climbing period 23.4%~231.1% Revenue growth rate for the stable period 3.1%~7.2% Market penetration rate 5.0%~30.5% Success rate of commercialisation 39.9% Percentage of costs and operating expenses 50.9%~65.5% Recoverable amount of CGU (in RMB’000) 69,513

Based on the result of impairment assessment, there was no impairment as at 31 December 2020.

The recoverable amount of the CGU of hand-foot-and-mouth disease vaccine is estimated to exceed the carrying amount of the CGU as at 31 December 2020 by RMB2,067,000. The recoverable amount of hand-foot- and-mouth disease vaccine would equal its carrying amount if each of the key assumptions were to change as follows, with all other variables held constant.

As at 31 December 2020

Post-tax discount rate 1.1% Market penetration rate -1.9% Success rate of commercialisation -1.9% Percentage of costs and operating expenses 1.5%

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(b) On 31 December 2020, the Group entered into an agreement with a biotechnology company for obtaining an exclusive license for development, manufacture and commercialization in the Greater China region. Pursuant to the agreement entered, Advaccine Suzhou made an initial USD3,000,000 one-time, non-refundable and non-creditable upfront payment for the transfer of know-how and USD2,000,000 for the achievement of milestone event.

The intangible asset is used for the Group to continue research and development work, there was no impairment as at 31 December 2020.

18 OTHER NON-CURRENT ASSETS

As at 31 December 2019 2020 RMB’000 RMB’000

Prepayments for purchases of property, plant and equipment – 8,041 Prepayments for purchases of intangible asset 680 680

680 8,721

19 FINANCIAL INSTRUMENT BY CATEGORY

The Group

As at 31 December 2019 2020 RMB’000 RMB’000

Assets Financial assets at amortized costs: – Trade and other receivables 220 1,913 – Cash and cash equivalents 467 206,425

Total 687 208,338

Liabilities Financial liabilities at amortized cost – Trade payables 2,211 22,402 – Other payables due to related parties (Note 33) 79 38,788 – Other payables 5,061 51,006 – bank loans – 13,828 Lease liabilities at amortized cost-current 225 182 Lease liabilities at amortized cost-non-current 119 120

Total 7,695 126,326

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The Company

As at 31 December 2019 2020 RMB’000 RMB’000

Assets Financial assets at amortized costs: – Trade and other receivables 5,274 7,515 – Cash and cash equivalents 24 186,137

Total 5,298 193,652

Liabilities Financial liabilities at amortized cost – Other payables due to related parties 81 – – Other payables 114 8,974

Total 195 8,974

20 TRADE AND OTHER RECEIVABLES

The Group

As at 31 December 2019 2020 RMB’000 RMB’000

Trade receivables from third parties – 616 Other receivables from third parties 220 1,297

220 1,913

As at 31 December 2019 and 2020, the carrying amounts of trade receivables and other receivables were denominated in RMB and approximated their fair values.

The maximum exposure to credit risk at the reporting date is the carrying value of trade receivables mentioned above.

As at 31 December 2019 and 2020, the aging analysis of the trade receivables based on invoice date is as follows:

As at 31 December 2019 2020 RMB’000 RMB’000

Within 30 days – 300 31 days to 90 days – 316

– 616

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The Company

As at 31 December 2019 2020 RMB’000 RMB’000

Other receivables from third parties 98 105 Amounts due from subsidiaries 5,176 7,410

5,274 7,515

As at 31 December 2019 and 2020, the carrying amounts of other receivables were denominated in RMB and approximated their fair values.

The Group and the Company apply the simplified approach to provide for expected credit losses prescribed by IFRS 9, which permits the use of the lifetime expected loss provision for all trade receivables. The Group and the Company consider the credit risk characteristics and the days past due to measure the expected credit loss.

21 OTHER CURRENT ASSETS

The Group

As at 31 December 2019 2020 RMB’000 RMB’000

Prepayments to suppliers for purchases of research materials and professional services 159 6,598 [REDACTED] – deferred –[REDACTED] – prepaid –[REDACTED] Value-added tax recoverable 1,167 [REDACTED] Others 8[REDACTED]

1,334 [REDACTED]

As at 31 December 2019 and 2020, the carrying amounts of other current assets were denominated in RMB and approximated their fair values.

The Company

As at 31 December 2019 2020 RMB’000 RMB’000

Prepayments to suppliers for purchases of research materials and professional services – 233 [REDACTED] – deferred –[REDACTED] – prepaid –[REDACTED] Value-added tax recoverable 666 [REDACTED] Others 1[REDACTED]

667 [REDACTED]

As at 31 December 2019 and 2020, the carrying amounts of other current assets were denominated in RMB and approximated their fair values.

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22 CASH AND CASH EQUIVALENTS

The Group

As at 31 December 2019 2020 RMB’000 RMB’000

Cash at bank and on hand 467 206,425

Cash and bank balances denominated in: – RMB 332 205,780 – USD 67 – AUD 129 638

467 206,425

The Company

As at 31 December 2019 2020 RMB’000 RMB’000

Cash at bank and on hand 24 186,137

As at 31 December 2019 and 2020, cash and cash equivalents of the Company were mainly denominated in RMB.

23 BANK LOANS

As at 31 December 2019 2020 RMB’000 RMB’000

Non-current bank loans: – Secured and guaranteed (a) – 7,200

Total non-current bank loans – 7,200

Current bank loans: – Secured and guaranteed (a) – 6,628

Total current bank loans – 6,628

Total – 13,828

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The maturity date is as follows:

As at 31 December 2019 2020 RMB’000 RMB’000

Less than 1 year – 6,628 1-2 years – 7,200

Total – 13,828

As at 31 December 2020, the carrying amounts of bank loans were denominated in RMB, and approximated their fair value.

(a) Bank loans were secured by the pledge of land use right amounting to RMB7,701,000 and construction in progress amounting to RMB14,526,900 and guaranteed by Mrs. Chen Hongying, spouse of Si’Ao’s former legal representative and general manager.

Bank loans of RMB6,628,000 and RMB7,200,000 will be repayable in 2021 and 2022 and bear annual interest rate of 5.7%.

Si’Ao has complied with the financial covenants of its borrowing facilities during the 2020 reporting period.

24 LEASE LIABILITIES

As at 31 December 2019 2020 RMB’000 RMB’000

Minimum lease payments due – Within 1 year 235 192 – Between 1 and 2 years 82 111 – Between 2 and 5 years 41 12

Less: future finance charges (14) (13)

Present value of lease liabilities 344 302

Portion classified as current liabilities 225 182 Portion classified as non-current liabilities 119 120

– Within 1 year 225 182 – Between 1 and 2 years 79 108 – Between 2 and 5 years 40 12

344 302

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The following table sets forth the discount rate of our lease liabilities as the dates indicated:

As at 31 December 2019 2020 %%

Lease liabilities 4.75 4.75

The Group leases various properties and land use right for operation and these liabilities were measured at net present value of the lease payments during the lease terms that are not yet paid.

The statement of comprehensive income shows the following amounts relating to leases:

Year ended 31 December 2019 2020 RMB’000 RMB’000

Depreciation charge of right-of-use assets Leased properties 313 288 Land use right – 43

313 331

Interest expense (included in finance costs) 19 17 Expense relating to short-term leases (included in administrative expenses) 322 303 Expense relating to leases of low-value assets (included in administrative expenses) – 6

The total cash outflow for leases for the years ended 31 December 2019 and 2020 were approximately RMB695,000 and RMB642,000, respectively.

Information about right-of-use assets is set out in Note 16.

25 OTHER NON-CURRENT LIABILITIES

As at 31 December 2019 2020 RMB’000 RMB’000

Government grants – 4,672

(a) Government grants refers to subsidies received for compensating the Group’s future expenses and for purchase of property, plant and equipment for research and development activities.

The amount of government grants that credited to the statement of comprehensive income is disclosed in Note 6.

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26 TRADE AND OTHER PAYABLES

The Group

As at 31 December 2019 2020 RMB’000 RMB’000

Trade payables (a) 2,211 22,402 Salary and staff welfare payables 329 2,708 Payables for purchases of property, plant and equipment 119 9,113 Payables for purchases of intangible assets (Note 17 (b)) – 32,624 Other tax payables 39 279 Payables for professional services – 8,915 Amounts due to related parties (Note 33(c)) 79 38,788 Borrowing from a third party 4,400 – Others 542 354

7,719 115,183

As at 31 December 2019 and 2020, all trade and other payables of the Group were non-interest bearing, except for the amounts due to a related party, Kexiang Hi-tech Development Co., Ltd., and their fair value approximated their carrying amounts due to their short maturities.

(a) As at 31 December 2019 and 2020, the ageing analysis of trade payables based on invoice date are as follows:

As at 31 December 2019 2020 RMB’000 RMB’000

– Within 30 days 2,211 22,402

The carrying amounts of the Group’s trade and other payables are denominated in the following currencies:

As at 31 December 2019 2020 RMB’000 RMB’000

RMB 6,970 68,582 USD – 46,601 AUD 749 –

7,719 115,183

The Company

As at 31 December 2019 2020 RMB’000 RMB’000

Salary and staff welfare payables – 61 Payables for professional services – 8,915 Other tax payables – 159 Amounts due to related parties 81 – Others 114 59

195 9,194

As at 31 December 2019 and 2020, all trade and other payables of the Group were non-interest bearing and their fair value approximated their carrying amounts due to their short maturities.

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The carrying amounts of the Company’s trade and other payables are denominated in the following currencies:

As at 31 December 2019 2020 RMB’000 RMB’000

RMB 195 9,194

27 DEFERRED INCOME TAX LIABILITIES

As at 31 December 2019 2020 RMB’000 RMB’000

The balance comprises temporary differences attributable to: Intangible assets appraisal arising from a business combination (Note 32) – 68,820

As at 31 December 2019 2020 RMB’000 RMB’000

Deferred tax liabilities: To be recovered after 12 months – 68,820

Information about the recognition of deferred income tax liabilities arising from a business combination is set out in Note 32.

28 OTHER FINANCIAL LIABILITIES AT AMORTISED COST—GROUP AND COMPANY

As at 31 December 2019 2020 RMB’000 RMB’000

Preferred shares issued to investors – –

The movements of preferred shares for the years ended 31 December 2019 and 2020 are set out below:

RMB’000

At 1 January 2019 and 2020 – Issuance: – Series A (a) 40,000 – Series B (b) 220,000 – Business combination (Note 30 (d)(i)) 118,815 Transfer from ordinary shares as a result of additional redemption rights (Note 30 (d)(ii)) 74,858 Accumulated interest (Note 30 (f)) 9,040 Transfer to ordinary shares due to cancellation of redemption rights of all preferred shares (Note 30 (f)) (462,713)

At 31 December 2020 –

(a) In December 2019, the Series A investors agreed to subscribe for 2,500,000 Series A preferred shares of Company, by way of capital injection for an aggregate amount of RMB40,000,000 at RMB16 per preferred share, which was subscribed in January and February 2020.

(b) Between September and November 2020, eight investors entered into a subscription agreement with the Company, and subscribed for 3,520,000 Series B preferred shares of the Company for an aggregate amount of RMB220,000,000.

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The key terms of the Preferred Shares are summarized as follows:

(i) Liquidation preferences

In the event of any liquidation, dissolution or winding up of the Company, either voluntarily or involuntarily, the preferred shareholders shall be entitled to receive the liquidation preference amount, prior and in preference to any distribution of any of the assets or surplus funds of the Company to the holders of ordinary shares. The liquidation preference amount per share is calculated as follows:

The liquidation amount = Preferred stock price * (1+10%)N

N: The total days from the delivery date to the actual payment date of the settlement/365 days

If the value of the remaining assets of the Company is less than aggregate liquidation preference amount payable to the holders of Preferred Shares, then the remaining assets of the Company shall be distributed pro rata amongst the holders of all outstanding Preferred Shares. After distributing or paying in full the liquidation preference amount to all of the preferred shareholders, the remaining assets of the Company available for distribution to members, if any, shall be distributed to the holders of ordinary shares and the preferred shareholders on a pro rata basis, based on the number of ordinary shares then held by each shareholder on an as converted basis.

A liquidation event means (i) any liquidation, dissolution or winding up, either voluntarily or involuntarily, of the Company and (ii) any transaction involving (a) any sale, disposition, lease or conveyance by the Company of all or substantially all of its assets (including the sale or exclusive licensing of all or substantially all the intellectual property assets of the Company); or (b) any merger or consolidation of the Company with or into any other corporation or corporations or other entity or entities or any other corporate reorganization after which the holders of the Company’s voting shares prior to such transaction own or control less than a Majority (means more than 50% of votes of each class of shares or more than 50% of votes of the Directors) of the outstanding voting shares of the surviving corporation or other entity on account of shares held by them prior to the transaction.

(ii) Redemption right

The holders of Preferred Shares have the right to require the Company to redeem the Preferred Shares when the following events happen:

(1) The Company failed to complete qualified IPO on or prior to 30 June, 2024.

(2) The controlling shareholders of the Company and/or ultimate controlling shareholders has material integrity issues.

(3) The controlling shareholders of the Company and/or ultimate controlling shareholders has materially breached applicable laws.

The Redemption amount = A * P * (1+10%)N + B

A: the shares of redemption P: Preferred Share unit price

N: The total days from the delivery date to the actual payment date of the redemption/365 days

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29 PAID-IN CAPITAL AND SHARE CAPITAL—GROUP AND COMPANY

Numbers of ordinary Paid-in capital shares Share capital RMB’000 RMB’000

Issued and fully paid: At 1 January 2019 4,500 – –

Capital injection from the founder 1,600 – –

As at 31 December 2019 6,100 – –

As at 1 January 2020 6,100 – –

Issuance of shares – the founder and another shareholder of the Company 6,400 – – – Series A Plus (Note 30 (c)) 1,800 – – – Business combination (Note 30 (d)(i)) 3,920 – – Redesignation of ordinary shares to financial liabilities at amortised cost as a result of additional redemption rights (Note 30 (d)(ii)) (4,300) – – Transfer from financial liabilities at amortised cost due to cancellation of redemption rights of all preferred shares (Note 30 (f)) 12,000 – – Conversion into a joint stock company (a) (25,920) 25,920,000 25,920

As at 31 December 2020 – 25,920,000 25,920

(a) In December 2020, the Company was converted into a joint stock company with limited liability under the Company Law of the PRC. The net assets of the Company as of the conversion date, amounting to RMB601,095,000, were converted into 25,920,000 ordinary shares at RMB1.00 each. The excess of net assets converted over nominal value of the ordinary shares was credited to the Company’s share premium.

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30 RESERVES

The Group

Capital Share Other Accumulated reserve Premium reserve losses Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

At 1 January 2019 18,190 – 26 (7,672) 10,544

Loss for the year – – – (18,860) (18,860) Share based payment expense (a) 1,024 – – – 1,024 Currency translation differences – – (86) – (86)

At 31 December 2019 19,214 – (60) (26,532) (7,378)

Loss for the year – – – (88,790) (88,790)

Share of changes in equity under the equity method (Note 12) 1,773 – – – 1,773 Share based payment expense (a) 2,076 – 232 – 2,308 Currency translation differences – – (65) – (65) Issuance of shares – Series A Plus (c) 43,650 – – – 43,650 – Business combination (d)(i) 173,300 – – – 173,300 Excess of expected redemption amount over the fair value of the preferred shares issued as a consideration of the Si’Ao Acquisition (as defined below) (d)(i) (13,794) – – – (13,794) Grant of additional redemption rights to certain existing ordinary shareholders (d)(ii) 13,570 – – – 13,570 Redesignation of ordinary shares to financial liabilities at amortised cost as a result of additional redemption rights (d)(ii) (70,558) – – – (70,558) Transfer from financial liabilities at amortised cost due to cancellation of redemption rights of all preferred shares (f) 450,713 – – – 450,713 Conversion into a joint stock company (Note 29 (a)) (619,944) 575,175 11 44,758 –

At 31 December 2020 – 575,175 118 (70,564) 504,729

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(a) Share based payment reserve

The founder, Ms. Yu Qingling and Ms. Ma Ji, another shareholder of the Company, agreed to transfer certain of their equity interest in the Company to the employee incentive platform, which will be further granted to the talents and employees for their contribution to the Group. Under this scheme, the R&D team of Advaccine Suzhou are entitled to Restricted Stock Units (the “RSUs”). The exercise price of an RSU is RMB1 per share. The award of RSUs shall vest upon both the satisfaction of the time-based vesting requirement and the occurrence of a Liquidity Event (the earlier of an IPO or a change in control event). RSUs may be exercised at any time from the date of vesting to the date of expiry. RSUs are for entitlements in shares of the Company.

Year ended 31 December 2019 2020 RMB’000 RMB’000

Balance at the beginning of the year 690 1,714 Credited during the year 1,024 2,308

Balance at end of the year 1,714 4,022

Shown below are the details of RSUs granted under the scheme.

Number of RSUs 2019 2020

As at 1 January 362,500 412,500 Granted during the year 50,000 110,000 Exercised during the year – – Forfeited during the year – –

Balance at end of the year 412,500 522,500

Vested and exercisable at 31 December – 312,500

No RSU expired during the years covered by the above tables.

RSUs RSUs Exercise As at 31 December As at 31 December Grant Date Expiry date Price 2019 2020

20 March 2018 N/A RMB1 312,500 312,500 30 April 2018 30 April 2025 RMB1 50,000 50,000 30 April 2019 N/A RMB1 50,000 50,000 1 March 2020 N/A RMB1 – 110,000

Total 412,500 522,500

31 December 2019 31 December 2020

Discount rate 17% 15% Terminal growth rate 3% 3% Risk-free interest rate 2.8% – Volatility 75.6% –

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(b) In December 2016, the Series Angel investors agreed to subscribe for 2,500,000 ordinary shares of the Company, by way of capital injection for an aggregate amount of RMB20,000,000.

(c) In March 2020, the Company issued a total number of 1,286,000 ordinary shares to the Series A plus investors for an aggregate consideration of RMB30,000,000 at RMB23.33 per ordinary share. Pursuant to the same March capital increase agreement, the Series A plus investors were granted the right to subscribe further ordinary shares at the same issue price per share as that of March 2020. In July 2020, the Series A plus investors subscribed a further 514,000 ordinary shares. Fair value of such financial instrument (i.e. right to subscribe) of approximately RMB3,450,000 was charged into the consolidated statements of comprehensive income and resulted an increase in capital reserve of RMB3,450,000 for the year ended 31 December 2020. Upon completion of these Series A plus investment, share capital and capital reserve of the Company increased by RMB1,800,000 and RMB43,650,000 respectively.

(d) (i) In September 2020, the Company acquired 100% control of Si’Ao at a consideration of approximately RMB282,241,000 by issuance of 3,920,000 ordinary shares and 1,680,000 preferred shares (Series A) of the Company (the “Si’Ao Acquisition”). Issuance of 3,920,000 ordinary shares resulted increases in paid-in capital and capital reserve of RMB3,920,000 and RMB173,300,000 respectively.

1,680,000 preferred shares were accounted for as financial liabilities at amortised cost, which is measured at expected redemption amount. Differences between the fair value of the preferred shares issued as the consideration of Si’Ao Acquisition and the present value of the expected redemption amount of such preferred shares as of the acquisition date of approximately RMB13,794,000 were charged into capital reserve for the year ended December 31, 2020.

Type Number of shares Consideration

Ordinary shares 3,920,000 177,220,000 Preferred shares 1,680,000 105,021,000

5,600,000 282,241,000

(ii) Pursuant to the Si’Ao Acquisition agreement, the Angel investors and the Series A plus investors were entitled to the same preferential rights with Series A investors (the “Modification”), namely the redemption right as further detailed in Note 28. The fair value differences between ordinary shares and preferred shares as of 30 September 2020 caused by the Modification amounting to approximately RMB13,570,000 (Note 7(a)) were charged into the statements of comprehensive income of the Group and resulted an increase in capital reserve of the same amount for the year ended 31 December 2020.

Valuation process of the Group for Series A Preferred Shares

The fair value of the above preferred shares issued to investors were determined based on valuation performed by an independent professionally qualified valuer.

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Valuation techniques for Series A Preferred Shares

Key valuation assumptions used to determine the fair value of Preferred Shares as at 30 September 2020 are as follows:

The Group has used the discounted cash flow method to determine the underlying share value of the Company and adopted equity allocation model to determine the fair value of the Preferred Shares as of the dates of issuance and at the end of each reporting period.

30 September 2020

Discount rate 15.00% Terminal growth rate 3.00% Risk-free interest rate 3.00% Volatility 79.30%

Considering the additional preferential rights granted to the Angel investors and the Series A plus investors, the Angel investment equity interest and Series A plus equity interest, defined as Series A preferred shares, were redesignated to financial liabilities measured at amortised cost, which was recognised at the present value of the expected redemption amount, representing the historical investment amount of RMB65,450,000 plus accumulated interest of RMB9,408,000 to 30 September 2020. The redesignation resulted in the decreases of paid-in capital of RMB4,300,000, capital reserve of RMB70,558,000 and an increase of financial liabilities at amortised cost of RMB74,858,000.

(e) After the issuance of Series B preferred shares, the following table sets out the number of preferred shares issued by the Company as at November 30, 2020 and the consideration paid by the investors. Series A and Series B Preferred Shares (collectively the “Preferred Shares”) as at November 30, 2020

Carrying Carrying amount as at amount as at Number of the date of November 30, Type shares issuance 2020 (f)

Series A 8,480,000 233,673,000 239,876,000 Series B 3,520,000 220,000,000 222,837,000

12,000,000 453,673,000 462,713,000

(f) Such preferred shares were measured at the present value of expected redemption amount, the change in carrying amount is charged in finance cost. Issuance cost of approximately RMB6,585,000 and accumulated interest of RMB9,040,000 over the period of the preferred shares were charged into the consolidated statements of comprehensive income for the year ended 31 December 2020 (Note 9).

In November 2020, pursuant to the agreement entered into among the equity owners and Series A and B preferred shares holders, all the preferential rights granted to the preferred shares holders were canceled, the carrying amount of the preferred shares of RMB462,713,000 was reclassified to paid-in capital of RMB12,000,000 and capital reserve of RMB450,713,000.

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Reserve – The Company

Capital Share Accumulated reserve premium losses Total RMB’000 RMB’000 RMB’000 RMB’000

At 1 January 2019 17,500 – 1,589 19,089 Loss for the year – – (7,494) (7,494)

At 31 December 2019 17,500 – (5,905) 11,595

Loss for the year – – (37,078) (37,078) Share of changes in equity under the equity method (Note 12) 1,773 – – 1,773 Issuance of shares – Series A Plus (c) 43,650 – – 43,650 – Business combination (d) 173,300 – – 173,300 Excess of expected redemption amount over the fair value of the preferred shares issued as a consideration of the Si’Ao Acquisition (as defined below) (d)(i) (13,794) – – (13,794) Grant of additional redemption rights to certain existing ordinary shareholders (d)(ii) 13,570 – – 13,570 Redesignation of ordinary shares to financial liabilities at amortised cost as a result of additional redemption rights (d)(ii) (70,558) – – (70,558) Transfer from financial liabilities at amortised cost due to cancellation of redemption rights of all preferred shares (f) 450,713 – – 450,713 Conversion into a joint stock company (Note 29(a)) (616,154) 575,175 40,979 –

At 31 December 2020 – 575,175 (2,004) 573,171

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31 NOTE TO THE CONSOLIDATED STATEMENTS OF CASH FLOWS

(a) Reconciliation of loss before income tax to cash used in operations

Year ended 31 December 2019 2020 RMB’000 RMB’000

Loss before income tax (18,860) (88,790) Adjustments for: Amortisation of intangible assets (Note 17) 28 Depreciation of property, plant and equipment (Note 15) 748 1,348 Depreciation of right-of-use assets (Note 16) 313 331 Share-based compensation expense (Note 7 and Note 10) 1,024 15,878 (Gains)/Losses on disposal of property, plant and equipment – net (Note 8) (1) 1,102 Fair value change of a financial instrument (Note 30 (c)) – 3,450 Net fair value gains on financial assets at fair value through profit or loss (Note 8) – (1,021) Financial costs of preferred shares (Note 9) – 15,625 Share of loss from associates (Note 12) 1,045 1,253 Interest expenses (Note 9) 31 1,188 Interest income (Note 9) (1) (478)

(15,699) (50,106) Changes in working capital: – Inventories – (422) – Trade and other receivables 629 (16,550) – Trade and other payables 2,099 28,834

Cash used in operations (12,971) (38,244)

(b) Major non-cash transactions

During the Track Record Period, the principal non-cash transactions are the issuance of 5,600,000 shares with a par value of RMB1 each to the equity holders of Si’Ao to acquire 100% equity interests in Si’Ao (Note 32).

This section sets out an analysis of net debt and the movements in net debt for each of the periods presented.

2019 2020 RMB’000 RMB’000

Cash and cash equivalents 467 206,425 Borrowings – (13,828) Lease liabilities (344) (302)

Net debt 123 192,295

Cash and liquid investments 467 206,425 Gross debt – fixed interest rates (344) (302) Gross debt – variable interest rates – (13,828)

Net debt 123 192,295

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(d) Reconciliation of liabilities from financing activities

Lease Other liabilities Bank loans payables Total RMB’000 RMB’000 RMB’000 RMB’000

At 1 January 2019 447 – – 447 Financing cash flows in – 370 4,500 4,870 Financing cash flows out (353) (370) (100) (823) Interest expenses 19 – – 19 Addition of right of use asset (Note 16) 231 – – 231

At 31 December 2019 344 – 4,400 4,744 Financing cash flows out (333) (3,300) (4,400) (8,033) Interest expenses 17 28 991 1,036 Addition of right of use asset (Note 16) 274 – – 274 Acquisition of Si’Ao (Note 32) – 17,100 31,689 48,789

At 31 December 2020 302 13,828 32,680 46,810

32 BUSINESS COMBINATIONS

On 30 September 2020, the Group acquired 100% equity interests in Si’Ao from third parties at a consideration of approximately RMB282,241,000 to be settled by issuance of 5,600,000 ordinary and preferred shares of the Company.

Details of the purchase consideration, the fair value of net identifiable assets acquired are as follows:

30 September 2020 RMB’000

Purchase consideration: − Fair value of ordinary shares and preferred shares to be issued 282,241

The assets and liabilities recognised as a result of the acquisition are as follows:

30 September 2020 RMB’000

Cash and cash equivalents 225 Property, plant and equipment (Note 15) 137,649 Other non-current assets 5,152 Intangible assets (Note 17) 274,925 Right-of-use assets (Note 16) 7,701 Trade and other receivables 1,886 Other current assets 10,689 Bank loans (17,100) Deferred income tax liabilities (Note 27) (68,820) Trade and other payables (70,066)

Net identifiable assets acquired 282,241

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(a) Revenue and profit contribution

The acquired business contributed net loss of approximately RMB8,071,000 to the Group for the period from 1 October 2020 to 31 December 2020.

30 September 2020 RMB’000

Inflow of cash to acquire business, net of cash acquired – cash and cash equivalents in subsidiary acquired 225

Net cash inflow on acquisition 225

If the acquisition had occurred on 1 January 2020, consolidated comprehensive loss for the year ended 31 December 2020 would have been approximately RMB101,771,000. These amounts have been calculated using the subsidiary’s results and adjusting them for:

• differences in the accounting policies between the Group and the subsidiary, and

• the additional amortisation that would have been charged assuming the fair value adjustments to land use right had applied from 1 January 2020, together with the consequential tax effects.

33 RELATED PARTY TRANSACTIONS

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control, common significant influence or joint control.

The equity holders, members of key management and their close family members of the Group are also considered as related parties. In the opinion of the directors of the Company, the related party transactions were carried out in the normal course of business and at terms negotiated between the Group and the respective related parties.

(a) Name and relationship with related parties are set out below:

Name of related party Relationship

Ms Yu Qingling One of the equity holders of the Company Mr Zhang Lunan One of the equity holders of the Company Kexiang Hi-tech Development Co., Ltd. One of the equity holders of the Company Zhongru Construction Group Co., Ltd. Controlled by the ultimate beneficial owner of Kexiang Hi-tech Development Co., Ltd.

Save as disclosed elsewhere in this report, the following is a summary of the significant transactions carried out between the Group and its related parties in the ordinary course of business during the Track Record Period.

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(b) Transactions

Year ended 31 December 2019 2020 RMB’000 RMB’000

Receipt of construction services Zhongru Construction Group Co., Ltd. (i) – 16,501

Loan received from a related party Zhang Lunan 100 –

Loan repayment to a related party Zhang Lunan (100) –

Interest expenses Kexiang Hi-tech Development Co., Ltd. – 991

Reimbursed expenses Yu Qingling 57 – Zhang Lunan 22 –

79 –

(i) Si’Ao received construction services from Zhongru Construction Group Co., Ltd. for construction and renovation projects in for the period after the Group’s acquisition of its equity interests and up to 31 December 2020.

The related party balances as at 31 December 2019 and 2020, are shown below:

As at 31 December 2019 2020 RMB’000 RMB’000

Other payables due to Kexiang Hi-tech Development Co., Ltd. (i) – 32,680 Zhongru Construction Group Co., Ltd. – 6,108 Yu Qingling 57 – Zhang Lunan 22 –

79 38,788

As at 31 December 2019 and 2020, all balances with related parties of the Group were non-interest bearing and non-trade in nature, except for the borrowings from Kexiang Hi-tech Development Co., Ltd., and their fair values approximated their carrying amounts due to their short maturities.

(i) As at 31 December 2020, the unsecured loan from Kexiang Hi-tech Development Co., Ltd. carried interest at 12% per annum. Such non-trade payables due to Kexiang Hi-tech Development Co., Ltd. will be settled prior to the [REDACTED].

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(d) Key management compensation:

Key management includes directors and senior management (including vice presidents and chief financial officer). The compensation paid or payable to key management for employee services is shown below:

Year ended 31 December 2019 2020 RMB’000 RMB’000

Salaries, wages and bonuses 625 1,496 Contributions to pension plans 162 437 Housing funds, medical insurance and other social insurance 32 67 Share-based compensation 512 512

1,331 2,512

34 COMMITMENTS

(a) Lease commitments (exclude the right-of-use assets and lease liabilities)

As at 31 December 2019 and 2020, the Group leases some office and equipment under irrevocable lease contracts with lease term less than one year and leases of low value that have been exempted from recognition of right-of-use assets permitted under IFRS 16. The future aggregate minimum lease payment under irrevocable lease contracts for these exempted contracts are as follows:

As at 31 December 2019 2020 RMB’000 RMB’000

No later than 1 year 168 222

(b) Capital expenditure commitments

Capital expenditure contracted for as at 31 December 2019 and 2020 but not yet incurred by the Group are as follows:

As at 31 December 2019 2020 RMB’000 RMB’000

Property, plant and equipment – 11,072 Intangible assets – In-license (i) – 137,023

– 148,095

(i) Pursuant to the agreement that the Group entered into as described in the Note 17 (b), the Group committed to make future payments for In-license, which will be subject to the achievement of certain milestone events of the Group’s and the counterparty’s R&D activities.

The Group contracted third party to conduct research and development at each balance sheet date, but not yet incurred are as follows:

As at 31 December 2019 2020 RMB’000 RMB’000

CRO contract 9,295 38,165

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35 EMOLUMENTS OF DIRECTORS

(a) Details of emoluments in respect of the directors, supervisors and president of the Company

The emoluments in respect of each of the directors paid/payable by the Group for the year ended 31 December 2020 are as follows:

Basic salaries Social and Share-based security Fee allowances Bonus compensation costs Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Directors Ms Yu Qingling (iii) – 335 54 – 12 401 Mr Zhang Lunan (iii) ––– ––– Mr Wang Bin (iv) ––– ––– Ms Wu Xueqin (v) ––– ––– Mr Yu Zhiyun (v) ––– ––– Mr Liu Xi (vi) ––– ––– Mr Jiang Chao (vi) ––– ––– Mr Hua Chao (vi) ––– ––– Ms Dong Aihua (vii) – 370 64 256 1 691

Supervisors Ms Li Li (viii) ––– ––– Ms Liu Xiaoyan (ix) – 362 110 – 37 509 Mr Sui Cheng (x) – 269 40 413 34 756 Ms Lu Zhou (x) – 75 150 – 9 234

– 1,411 418 669 93 2,591

The emoluments in respect of each of the directors paid/payable by the Group for the year ended 31 December 2019 are as follows:

Basic salaries Social and Share-based security Fee allowances Bonus compensation costs Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Directors Ms Yu Qingling (iii) – 62 54 – 24 140 Mr Zhang Lunan (iii) ––– ––– Mr Liu Xi (vi) ––– ––– Mr Jiang Chao (vi) ––– ––– Ms Dong Aihua (vii) – 324 54 256 – 634

Supervisor Ms Li Li (viii) ––– –––

– 386 108 256 24 774

(i) Salary paid to a director is generally an emolument paid in respect of that person’s other services in connection with the management of the affairs of the Company or its subsidiaries undertakings.

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(ii) Bonus are determined based on the financial performance of the Group and the performance of each individual.

(iii) Ms. Yu Qingling has been serving as a Director of the Group since April 2009. Mr. Zhang Lunan has been serving as a director of the Group since February 2017 and did not receive any emolument during the Track Record Period.

(iv) Mr. Wang Bin was appointed as a director of the Group and the chairman of the board on 20 December 2020 and did not receive any emolument during the Track Record Period.

(v) Ms. Wu Xueqin, and Mr. Yu Zhiyun were appointed as directors of the Group on 17 September 2020, and they did not receive any emolument during the Track Record Period.

(vi) Mr. Jiang Chao was appointed as a director of the Group on 30 December 2019. Mr. Hua Chao was appointed as a director of the Group on 6 July 2020. Mr. Liu Xi and above directors did not receive any emolument during the Track Record Period and retired on 19 November 2020.

(vii) Ms. Dong Aihua was appointed as a director of the Group on 30 December 2019 and retired on 20 December 2020.

(viii) Ms. Li Li did not receive any emolument during the Track Record Period and retired on 20 December 2020.

(ix) Ms. Liu Xiaoyan was appointed as a supervisor of the Group on 17 September 2020.

(x) Mr. Sui Cheng and Ms. Lu Zhou were appointed as supervisors of the Group on 20 December 2020.

(b) Directors’ termination benefits

None of the directors received or will receive any termination benefits during the Track Record Period.

The Group did not pay consideration to any third parties for making available directors’ services during the Track Record Period.

(d) Information about loans, quasi-loans and other dealings in favour of directors, controlled bodies corporate by and connected entities with such directors

No loans, quasi-loans and other dealings were made available in favour of directors, bodies corporate controlled by and entities connected with directors subsisted at the end of the year or at any time during the Track Record Period.

(e) Inducement or waiver of emoluments

No directors received emoluments from the Group as inducement to join or upon joining the Group or as compensation for loss of office for the Track Record Period. No directors waived or had agreed to waive any emoluments for the Track Record Period.

(f) Directors’ material interests in transactions, arrangements or contracts

No significant transactions, arrangements and contracts in relation to the Group’s business to which the Company was a party and in which a director of the Company had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the Track Record Period.

36 INVESTMENT IN SUBSIDIARIES—COMPANY

Year ended 31 December 2019 2020 RMB’000 RMB’000

Unlisted equity investments, at cost 10,050 402,682

Particulars of the Company’s subsidiaries are set out in Note 1.2.

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37 SUBSEQUENT EVENT

(a) In March 2021, new investors injected capital of approximately RMB432 million for the subscription of 3,456,000 ordinary shares of the Company.

(b) At the extraordinary general meeting of the Company held on March 21, 2021, among other things, the following resolutions were passed by the shareholders of the Company:

(i) the issue by the Company of H Shares of nominal value of RMB1.00 each and such H Shares be [REDACTED] on the Hong Kong Stock Exchange;

(ii) the number of H Shares to be issued before the exercise of the [REDACTED] shall not exceed [REDACTED] H Shares, representing approximately [REDACTED] of the enlarged share capital of the Company upon completion of the [REDACTED] (assuming the [REDACTED]is not exercised) and granting the [REDACTED] the [REDACTED] of no more than [REDACTED] of the above number of H Shares to be issued pursuant to this resolution;

(iii) authorization of the Board and its authorized persons to handle all matters relating to, among other things, the [REDACTED], the [REDACTED] and [REDACTED] of the H Shares; and

(iv) subject to the completion of the [REDACTED], the Articles of Association effective on the [REDACTED] has been adopted, and the Board has been authorized to amend the Articles of Association in accordance with relevant laws and regulations and upon the request from the Hong Kong Stock Exchange and relevant PRC regulatory authorities.

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III ADDITIONAL FINANCIAL INFORMATION OF SI’AO BIOTECHNOLOGY (SUZHOU) CO., LTD. FOR THE PRE-ACQUISITION PERIOD

As described in Note 32 to the section II “Notes to the Historical Financial Information”, the Group acquired 100% of the equity interests in Si’Ao was acquired by the Group on 30 September 2020. The following is the consolidated financial information of Si’Ao and its subsidiary (“Si’Ao Group”) for the year ended 31 December 2019 and the nine months ended 30 September 2020, which is prepared by adopting the Group’s accounting policies for the Track Record Period:

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Nine months Year ended ended 31 December 30 September Note 2019 2020 RMB’000 RMB’000

Revenue 1 718 860 Cost of sales 3 ––

Gross profit 718 860 Other income 2 407 41 General and administrative expenses 3 (8,709) (7,093) Research and development expenses 3 (2,104) (1,126) Net impairment losses on financial assets (4,425) (4,425) Other gains/(losses) – net 4 19 (31)

Operating loss (14,094) (11,774) Finance costs – net 5 (122) (1,137)

Loss before income tax (14,216) (12,911) Income tax expense 6 ––

Loss and total comprehensive loss for the year/period attributable to the equity holders of Si’Ao Group (14,216) (12,911)

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CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As at As at 31 December 30 September Note 2019 2020 RMB’000 RMB’000

Assets Non-current assets Property, plant and equipment 7 133,298 137,649 Intangible assets 9 –– Right-of-use assets 8 7,470 7,347 Other non-current assets 10 2,639 5,152

143,407 150,148

Current assets Trade and other receivables 12 5,509 1,886 Other current assets 13 10,296 10,689 Cash and cash equivalents 14 413 225

16,218 12,800

Total assets 159,625 162,948

Liabilities Non-current liabilities Bank loans 15 13,800 10,500

13,800 10,500

Current liabilities Trade and other payables 16 52,532 70,066 Bank loans 15 4,600 6,600

57,132 76,666

Total liabilities 70,932 87,166

Equity Equity attributable to the equity holders of Si’Ao Group Paid-in capital 17 47,000 47,000 Capital reserve 18 57,500 57,500 Accumulated losses 18 (15,807) (28,718)

Total equity 88,693 75,782

Total equity and liabilities 159,625 162,948

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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Paid-in Capital Accumulated capital reserve losses Total RMB’000 RMB’000 RMB’000 RMB’000

Balance at 1 January 2019 47,000 57,500 (1,591) 102,909

Loss and total comprehensive loss for the year 18 – – (14,216) (14,216)

Balance at 31 December 2019 47,000 57,500 (15,807) 88,693

Balance at 1 January 2020 47,000 57,500 (15,807) 88,693

Loss and total comprehensive loss for the period 18 – – (12,911) (12,911)

Balance at 30 September 2020 47,000 57,500 (28,718) 75,782

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CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine months Year ended ended 31 December 30 September Note 2019 2020 RMB’000 RMB’000

Cash flows from operating activities Cash used in operations 19 (5,350) (558) Interest received 5 2 Interest paid – (27)

Net cash used in operating activities (5,345) (583)

Cash flows from investing activities Purchase of property, plant and equipment (3,913) (8,774) Purchase of intangible assets (2,000) – Loss on disposal of a subsidiary – (31)

Net cash used in investing activities (5,913) (8,805)

Cash flows from financing activities Payment of lease liabilities (50) – Repayments of bank loans (2,600) (1,300) Proceeds of loan from a related party 4,200 10,500

Net cash generated from financing activities 1,550 9,200

Net decrease in cash and cash equivalents (9,708) (188) Cash and cash equivalents at the beginning of the year/period 10,121 413

Cash and cash equivalents at the end of the year/period 413 225

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1 REVENUE

Nine months Year ended ended 31 December 30 September 2019 2020 RMB’000 RMB’000

Royalties – Third parties 718 860

During the year ended 31 December 2019 and 30 September 2020, Si’Ao Group recognised its revenue from contract with customers at point in time in accordance with the accounting policies as set forth in Note 2.22 to the section II “Notes to the Historical Financial Information”.

2 OTHER INCOME

Nine months Year ended ended 31 December 30 September 2019 2020 RMB’000 RMB’000

Government grants 407 41

The government grants received to compensate for the expenses of Si’Ao group’s operating activities. These grants and subsidies were recognised in profit or loss when related costs are subsequently incurred and Si’Ao group obtained government acknowledge of compliance.

3 EXPENSES BY NATURE

Nine months Year ended ended 31 December 30 September 2019 2020 RMB’000 RMB’000

Employee benefit expenses 5,587 5,281 Raw materials and consumables used 31 1 Energy and utilities 338 541 Depreciation of property, plant and equipment (Note 7) 893 689 Depreciation of right-of-use assets (Note 8) 211 123 Amortisation of intangible assets (Note 9) 100 – Provision for impairment of intangible asset (Note 9) 1,900 – Travelling and meeting expenses 219 26 Professional services 102 320 Auditors’ remuneration 15 7 Repair and maintenance fee 737 905 Real estate tax, stamp duties and other taxes 79 95 Operating lease rentals 74 37 Office expenditures 26 6 Others 501 188

Total cost of sales, research and development costs, distribution and marketing costs, and administrative expenses 10,813 8,219

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4 OTHER GAINS/(LOSSES) – NET

Nine months Year ended ended 31 December 30 September 2019 2020 RMB’000 RMB’000

Losses on disposal of property, plant and equipment (6) – Others 25 (31)

19 (31)

5 FINANCE COSTS – NET

Nine months Year ended ended 31 December 30 September 2019 2020 RMB’000 RMB’000

Interest income on bank deposits (5) (2) Interest expenses on amounts due to a related party 127 1,112 Interest expenses on bank loans 117 781 Less: borrowing costs capitalized in property, plant and equipment (a) (117) (754)

122 1,137

Interest expenses on lease liabilities 1 – Other (1) –

Finance costs – net 122 1,137

(a) The capitalisation rates used to determine the amount of borrowing costs are 5.7% and 5.7% respectively, for the years ended 31 December 2019 and 30 September 2020.

6 INCOME TAX EXPENSE

(i) Income tax expense

Pursuant to the CIT Law, Si’Ao Group is subject to CIT at a rate of 25% on the taxable income in 2019 and 2020.

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The income tax on the losses before income tax of Si’Ao Group differs from the theoretical amount that would arise using the enacted tax rate in the PRC as follows:

Nine months Year ended ended 31 December 30 September 2019 2020 RMB’000 RMB’000

Loss before income tax (14,216) (12,911)

Tax calculated at the applicable tax rate of 25% (3,554) (3,228) Expenses not deductible for income tax purposes 498 1 Super deduction in respect of research and development expenditures (319) (211) Tax losses not recognised as deferred tax assets 3,375 3,438

Income tax expense – –

7 PROPERTY, PLANT AND EQUIPMENT

Office and Laboratory Motor electronic Construction Buildings Instrument vehicles equipment in progress Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

At 1 January 2019 Cost – 3,006 1,189 83 84,047 88,325 Accumulated depreciation – (1,555) (714) (18) – (2,287)

Net book amount – 1,451 475 65 84,047 86,038

Year ended 31 December 2019 Opening net book amount – 1,451 475 65 84,047 86,038 Additions – – – 11 48,148 48,159 Internal transfer 8,675 – – – (8,675) – Disposals – – – (6) – (6) Depreciation charge (Note 3) (169) (535) (166) (23) – (893)

Closing net book amount 8,506 916 309 47 123,520 133,298

At 31 December 2019 Cost 8,675 3,006 1,189 86 123,520 136,476 Accumulated depreciation (169) (2,090) (880) (39) – (3,178)

Net book amount 8,506 916 309 47 123,520 133,298

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Office and Laboratory Motor electronic Construction Buildings Instrument vehicles equipment in progress Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

At 1 January 2020 Cost 8,675 3,006 1,189 86 123,520 136,476 Accumulated depreciation (169) (2,090) (880) (39) – (3,178)

Net book amount 8,506 916 309 47 123,520 133,298

Period ended 30 September 2020 Opening net book amount 8,506 916 309 47 123,520 133,298 Additions – 154 – 13 4,873 5,040 Depreciation charge (Note 3) (225) (364) (91) (9) – (689)

Closing net book amount 8,281 706 218 51 128,393 137,649

At 30 September 2020 Cost 8,675 3,160 1,189 99 128,393 141,516 Accumulated depreciation (394) (2,454) (971) (48) – (3,867)

Net book amount 8,281 706 218 51 128,393 137,649

Depreciation of property, plant and equipment has been charged to the statements of comprehensive income as follows:

Nine months Year ended ended 31 December 30 September 2019 2020 RMB’000 RMB’000

Research and development expenses 535 348 General and administrative expenses 358 341

893 689

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8 RIGHT-OF-USE ASSETS

Leased properties Land use right Total RMB’000 RMB’000 RMB’000

At 1 January 2019 Cost 281 8,209 8,490 Accumulated depreciation (234) (575) (809)

Net book amount 47 7,634 7,681

Year ended 31 December 2019 Opening net book amount 47 7,634 7,681 Depreciation charge (Note 3) (47) (164) (211)

Closing net book amount – 7,470 7,470

At 31 December 2019 Cost – 8,209 8,209 Accumulated depreciation – (739) (739)

Net book amount – 7,470 7,470

At 1 January 2020 Cost – 8,209 8,209 Accumulated depreciation – (739) (739)

Net book amount – 7,470 7,470

Period ended 30 September 2020 Opening net book amount – 7,470 7,470 Depreciation charge (Note 3) – (123) (123)

Closing net book amount – 7,347 7,347

At 30 September 2020 Cost – 8,209 8,209 Accumulated depreciation – (862) (862)

Net book amount – 7,347 7,347

Depreciation of right-of-use assets has been charged to the statements of comprehensive income as follows:

Nine months Year ended ended 31 December 30 September 2019 2020 RMB’000 RMB’000

General and administrative expenses 211 123

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Land use right represents the land use right granted by the PRC government authority on the use of land within the pre-approved lease period. The original lease terms of the land use right of Si’Ao group held in the PRC are 50 years up to 11 June 2065. As at 31 December 2019, the land use right was pledged for the Si’Ao group’s bank loans amounting to RMB18,400,000 (As at 30 September 2020:17,100,000) (Note 15).

9 INTANGIBLE ASSETS

Know-how Total RMB’000 RMB’000

At 1 January 2019 Cost –– Accumulated amortisation – –

Net book amount ––

Year ended 31 December 2019 Opening net book amount – – Additions 2,000 2,000 Amortisation charge (Note 3) (100) (100) Impairment charge (Note 3) (1,900) (1,900)

Closing net book amount ––

At 31 December 2019 Cost 2,000 2,000 Accumulated amortisation and impairment (2,000) (2,000)

Net book amount ––

At 1 January 2020 Cost 2,000 2,000 Accumulated amortisation and impairment (2,000) (2,000)

––

Period ended 30 September 2020 Opening net book amount – – Additions ––

Closing net book amount ––

At 30 September 2020 Cost 2,000 2,000 Accumulated amortisation and impairment (2,000) (2,000)

Net book amount ––

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Amortisation of intangible assets has been charged to the statements of comprehensive income as follows:

Nine months Year ended ended 31 December 30 September 2019 2020 RMB’000 RMB’000

Administrative expenses 100 –

During the Track Record Period, Si’Ao group’s development expenditures incurred did not meet the capitalisation principles for any products and were expensed as incurred.

10 OTHER NON-CURRENT ASSETS

As at As at 31 December 30 September 2019 2020 RMB’000 RMB’000

Prepayments for property, plant and equipment 2,039 4,552 Others 600 600

2,639 5,152

11 FINANCIAL INSTRUMENT BY CATEGORY

As at As at 31 December 30 September 2019 2020 RMB’000 RMB’000

Assets Financial assets at amortized costs: – Trade and other receivables 5,509 1,886 – Cash and cash equivalents 413 225

Total 5,922 2,111

Liabilities Financial liabilities at amortized cost: – Other payables due to related parties 29,441 46,461 – Other payables 23,091 23,605 – bank loans 18,400 17,100

Total 70,932 87,166

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12 TRADE AND OTHER RECEIVABLES

As at As at 31 December 30 September 2019 2020 RMB’000 RMB’000

Trade receivables from a third party – 316 Other receivables from third parties 9,934 10,420 Less: allowance for impairment (4,425) (8,850)

5,509 1,886

As at 31 December 2019 and 30 September 2020, the carrying amounts of trade and other receivables were denominated in RMB and approximated their fair values.

As at 31 December 2019 and 30 September 2020, the aging analysis of the trade receivables based on invoice date is as follows:

As at As at 31 December 30 September 2019 2020 RMB’000 RMB’000

– Within 1 year – 316

Si’Ao group applies the simplified approach to provide for expected credit losses prescribed by IFRS 9, which permits the use of the lifetime expected loss provision for all trade receivables. Si’Ao group considers the credit risk characteristics and the days past due to measure the expected credit loss.

13 OTHER CURRENT ASSETS

As at As at 31 December 30 September 2019 2020 RMB’000 RMB’000

Prepayments to suppliers – 166 Value-added tax recoverable 10,125 10,300 Others 171 223

10,296 10,689

As at 31 December 2019 and 30 September 2020, the carrying amounts of other current assets were denominated in RMB and approximated their fair values.

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14 CASH AND CASH EQUIVALENTS

As at As at 31 December 30 September 2019 2020 RMB’000 RMB’000

Cash at bank and on hand 413 225

Cash and bank balances denominated in: – RMB 413 225

413 225

15 BANK LOANS

As at As at 31 December 30 September 2019 2020 RMB’000 RMB’000

Non-current bank loans: – Secured and guaranteed (a) 13,800 10,500

Total non-current bank loans 13,800 10,500

Current bank loans: – Secured and guaranteed (a) 4,600 6,600

Total current bank loans 4,600 6,600

Total 18,400 17,100

(a) Bank loans were secured by the pledge of land use right amounting to RMB7,347,000 (31 December 2019: RMB7,470,000) and construction in progress amounting to RMB14,526,900 and guaranteed by Mrs. Chen Hongying, spouse of Si’Ao group’s former legal representative and general manager.

Bank loans of RMB6,600,000 and RMB10,500,000 will be repayable in 2021 and 2022 and bear annual interest rate of 5.7% (2019: 5.7%).

Si’Ao group has complied with the financial covenants of its borrowing facilities during the 2020 reporting period.

The maturity date is as follows:

As at As at 31 December 30 September 2019 2020 RMB’000 RMB’000

Less than 1 year 4,600 6,600 1-2 years 13,800 10,500

Total 18,400 17,100

The carrying amounts of bank loans were denominated in RMB.

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16 TRADE AND OTHER PAYABLES

As at As at 31 December 30 September 2019 2020 RMB’000 RMB’000

Payables for purchases of property, plant and equipment 23,067 23,390 Amounts due to related parties 29,441 46,461 Others 24 215

52,532 70,066

As at 31 December 2019 and 30 September 2020, all trade and other payables of Si’Ao group were non-interest bearing, except for the borrowings of approximately RMB31,689,000 from Kexiang Hi-tech Development Co., Ltd., and their fair value approximated their carrying amounts due to their short maturities.

All trade payables of Si’Ao group were denominated in RMB.

17 PAID-IN CAPITAL

Paid-in capital RMB’000

Issued and fully paid: At 1 January 2019,31 December 2019 and 30 September 2020 47,000

18 RESERVES

Accumulated Capital reserve losses Total RMB’000 RMB’000 RMB’000

At 1 January 2019 57,500 (1,591) 55,909 Loss for the year – (14,216) (14,216) At 31 December 2019 57,500 (15,807) 41,693

At 1 January 2020 57,500 (15,807) 41,693 Loss for the period – (12,911) (12,911)

At 30 September 2020 57,500 (28,718) 28,782

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19 NOTE TO THE STATEMENTS OF CASH FLOWS

(a) Reconciliation of loss before income tax to cash used in operations

Nine months Year ended ended 31 December 30 September 2019 2020 RMB’000 RMB’000

Loss before income tax (14,216) (12,911) Adjustments for: Amortisation of intangible assets (Note 3) 100 – Depreciation of property, plant and equipment (Note 3) 893 689 Depreciation of right-of-use assets (Note 3) 211 123 Losses on disposal of investment in a subsidiary – 31 Losses on disposal of property, plant and equipment (Note 4) 6– Provisions for impairment of intangible asset (Note 3) 1,900 – Provisions for impairment of trade and other receivables 4,425 4,425 Interest income (Note 5) (5) (2) Interest expense (Note 5) 127 1,139

(6,559) (6,506) Changes in working capital: – Trade and other receivables 198 (802) – Trade and other payables 1,011 6,750 – Inventories – –

Cash used in operations (5,350) (558)

IV SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the Company or any of the companies now comprising the Group in respect of any period subsequent to 31 December 2020 and up to the date of this report. No dividend or distribution has been declared or made by the Company or any of the companies now comprising the Group in respect of any period subsequent to 31 December 2020.

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The information sets out in this Appendix does not form part of the Accountant’s Report from PricewaterhouseCoopers, Certified Public Accountants, Hong Kong, the reporting accountant of the Company, as set out in Appendix I to this document, and is included herein for information only. The unaudited pro forma financial information should be read in conjunction with the section headed “Financial Information” in this document and the “Accountant’s Report” set out in Appendix I to this document.

The unaudited pro forma adjusted consolidated net tangible assets prepared in accordance with paragraph 29 of Chapter 4 of the Listing Rules is set out below, for illustration purpose only, to provide prospective investors with further financial information on how the [REDACTED] might have affected the financial position of the Group after completion of the [REDACTED].

The unaudited pro forma consolidated statement of comprehensive income is prepared, for illustration purpose only, to provide prospective [REDACTED] with further financial information on how the Acquisition which took place on 30 September 2020 might have affected the performance of the Group for the year ended 31 December 2020 as if the Acquisition had taken place on 1 January 2020.

The accompanying unaudited pro forma financial information of the Group is based on currently available information along with a number of assumptions, estimates and uncertainties. As a result of these assumptions, estimates and uncertainties, the accompanying unaudited pro forma financial information of the Group has been prepared for illustrative purpose only and because of its hypothetical nature, it does not purport to describe the actual results or the actual financial position of the Group that would have been attained had the [REDACTED] or the acquisition taken effect at the dates indicated herein.

[REDACTED]

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[REDACTED]

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(B) UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME OF THE ENLARGED GROUP

The following is an illustrative unaudited pro forma consolidated statement of comprehensive income of the Group and Si’ao Biotechnology (Suzhou) Co., Ltd. (“Suzhou Si’ao”) and its subsidiary (collectively, the “Suzhou Si’ao Group”) (together with the Group, hereinafter referred to as the “Enlarged Group”) for the year ended 31 December 2020 which have been prepared on the basis of the notes set out below for the purpose of illustrating the effect of the Acquisition as if they had taken place on 1 January 2020. The unaudited pro forma consolidated statement of comprehensive income has been prepared under accounting policies consistent with those of the Group as set out in the accountant’s report of the Group set out in Appendix I to the document.

The unaudited pro forma consolidated statement of comprehensive income is in compliance with Rule 4.29 of the Listing Rules, except for Rule 4.29(1) and (6)(b). Accordingly, the Group have applied for, and the Stock Exchange [has granted] the Group, a waiver from strict compliance with Rule 4.29 of the Listing Rules.

The unaudited pro forma consolidated statement of comprehensive income has been prepared by the Directors, based on their estimations and assumptions, in accordance with Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” (the “AG 7”) issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”) for illustrative purposes only, and because of its hypothetical nature, it may not give a true picture of the financial performance of the Enlarged Group for the year ended 31 December 2020 or for any future period.

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UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME OF THE ENLARGED GROUP FOR THE YEAR ENDED 31 DECEMBER 2020

Enlarged The Group Pro Forma adjustments Group RMB’000 RMB’000 RMB’000 RMB’000 Note 1 Note 2 Note 3

Revenue 308 860 – 1,168 Cost of sales –* – – –*

Gross profit 308 860 – 1,168

Operating loss (71,202) (11,774) (6) (82,982)

Finance costs – net (16,335) (1,137) – (17,472) Share of net loss of a associate (1,253) – – (1,253)

Loss before income tax (88,790) (12,911) (6) (101,707) Income tax expense ––11

Loss for the year (88,790) (12,911) (5) (101,706)

Other comprehensive loss –––– Item that may be reclassified to profit or loss currency translation differences (65) – – (65)

Other comprehensive loss for the year, net of tax (65) – – (65)

Total comprehensive loss for the year (88,855) (12,911) (5) (101,771)

Total comprehensive loss is attributable to: – Owner of the Company (88,855) (12,911) (5) (101,771) – Non-controlling interests ––––

(88,855) (12,911) (5) (101,771)

* amount less than RMB500.

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(1) The financial information of the Group is extracted from the audited consolidated statement of comprehensive income of the Group for the year ended 31 December 2020 as set out in the Accountant’s Report of the Group included in Appendix I to this Document.

(2) The financial information of the Suzhou Si’ao Group is extracted from the audited consolidated statement of comprehensive income of the Suzhou Si’ao Group for the nine months ended 30 September 2020 as set out in the Accountant’s Report of the Group included in Appendix I to this Document.

(3) Upon the completion of the acquisition of 100% equity interest in Suzhou Si’ao, Suzhou Si’ao became a wholly owned subsidiary of the Group, and the identifiable assets and liabilities of the Suzhou Si’ao have been accounted for by the Group under business combination as set out in the Accountant’s Report.

For the purpose of preparing the unaudited pro forma financial information, the Directors have estimated the fair values of the identifiable assets and liabilities of the Suzhou Si’ao as at 1 January 2020 based on a valuation report dated 18 December 2020 prepared by an independent valuer (the “Valuation Report”) in respect of the purchase price allocation of the Acquisition occurred at 30 September 2020. The newly identifiable assets include intangible assets of RMB275 million and land use right of RMB0.3 million and the newly identified liabilities include deferred income tax liabilities of RMB69 million. The Directors consider that the fair value of these two identifiable assets acquired as at 1 January 2020 approximates their fair values as at 30 September 2020. On the other hand, the Directors consider that the carrying values of other identifiable assets acquired and liabilities assumed approximate their respective fair values as at 1 January 2020. Accordingly, no separate valuation report as at 1 January 2020 was prepared.

The pro forma adjustment on general and administrative expenses represents the amortization, on a straight-line basis, of the land use right of RMB0.3 million, with the estimated remaining useful lives of approximately 45 years. Since the newly identified intangible assets of RMB275 million are not yet available for use, no pro forma adjustment of amortisation is made.

(4) No adjustments have been made to the unaudited pro forma consolidated statement of comprehensive income to reflect any trading results or other transactions of the Enlarged Group entered into subsequent to 31 December 2020.

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[REDACTED]

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[REDACTED]

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[REDACTED]

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[REDACTED]

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The following is the text of a letter and valuation certificate prepared for the purpose of incorporation in this document received from Jones Lang LaSalle Corporate Appraisal and Advisory Limited, an independent valuer, in connection with its valuation as at 31 January 2021 of the property held by Beijing Advaccine Biotechnology Co., Ltd.

Jones Lang LaSalle Corporate Appraisal and Advisory Limited 7th Floor, One Taikoo Place 979 King’s Road, Hong Kong tel +852 2846 5000 fax +852 2169 6001 Company Licence No.: C-030171

[Date]

The Board of Directors Beijing Advaccine Biotechnology Co., Ltd. Unit B210, Level 2, B Region No. 5 Kaituo Road Haidian District Beijing City The People’s Republic of China

Dear Sirs,

In accordance with your instructions to value the property held by Beijing Advaccine Biotechnology Co., Ltd. (the “Company”) and its subsidiaries (hereinafter together referred to as the “Group”) in the People’s Republic of China (the “PRC”), we confirm that we have carried out inspections, made relevant enquiries and searches and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market value of the property interest as at 31 January 2021 (the “valuation date”).

Our valuation is carried out on a market value basis. Market value is defined as “the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion”.

Due to the nature of the buildings and structures of the property and the particular location in which they are situated, there are unlikely to be relevant market comparable sales readily available. The property interest has therefore been valued by the Cost Approach with reference to its depreciated replacement cost.

Depreciated replacement cost is defined as “the current cost of replacing an asset with its modern equivalent asset less deductions for physical deterioration and all relevant forms of obsolescence and optimization.” It is based on an estimate of the market value for the existing use of the land, plus the current cost of replacement of the improvements, less deductions for physical deterioration and all relevant forms of obsolescence and optimization. In arriving at

– III-1 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX III PROPERTY VALUATION REPORT the value of the land portion, reference has been made to the sales evidence as available in the locality have been considered. The depreciated replacement cost of the property interest is subject to adequate potential profitability of the concerned business. In our valuation it applies to the whole of the complex or development as a unique interest, and no piecemeal transaction of the complex or development is assumed.

Our valuation has been made on the assumption that the seller sells the property interest in the market without the benefit of a deferred term contract, leaseback, joint venture, management agreement or any similar arrangement, which could serve to affect the value of the property interest.

No allowance has been made in our report for any charge, mortgage or amount owing on any of the property interest valued nor for any expense or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the property is free from encumbrances, restrictions and outgoings of an onerous nature, which could affect its value.

In valuing the property interest, we have complied with all requirements contained in Chapter 5 and Practice Note 12 of the Rules Governing the Listing of Securities issued by the Stock Exchange of Hong Kong Limited; the RICS Valuation – Global Standards published by the Royal Institution of Chartered Surveyors; the HKIS Valuation Standards published by the Hong Kong Institute of Surveyors, and the International Valuation Standards issued by the International Valuation Standards Council.

We have relied to a very considerable extent on the information given by the Group and have accepted advice given to us on such matters as tenure, planning approvals, statutory notices, easements, particulars of occupancy, lettings, and all other relevant matters.

We have been shown copies of various title documents including State-owned Land Use Rights Certificate, Certificate of Real Estate Ownership and other official plans relating to the property interest and have made relevant enquiries. Where possible, we have examined the original documents to verify the existing title to the property interest in the PRC and any material encumbrance that might be attached to the property interest or any tenancy amendment. We have relied considerably on the advice given by the Company’s PRC legal advisers – Zhong Lun Law Firm, concerning the validity of the property interest in the PRC.

We have not carried out detailed measurements to verify the correctness of the areas in respect of the property but have assumed that the areas shown on the title documents and official site plans handed to us are correct. All documents and contracts have been used as reference only and all dimensions, measurements and areas are approximations. No on-site measurement has been taken.

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We have inspected the exterior and, where possible, the interior of the property. However, we have not carried out investigation to determine the suitability of the ground conditions and services for any development thereon. Our valuation has been prepared on the assumption that these aspects are satisfactory and that no unexpected cost and delay will be incurred during construction. Moreover, no structural survey has been made, but in the course of our inspection, we did not note any serious defect. We are not, however, able to report whether the property is free of rot, infestation or any other structural defect. No tests were carried out on any of the services.

On-site inspection of the property was carried out on 22 March 2021 by Ms. Shengqiao Hu who has obtained master degree with a specialization in Property Studies and has 3 years’ experience in the valuation of properties in the PRC.

We have had no reason to doubt the truth and accuracy of the information provided to us by the Group. We have also sought confirmation from the Group that no material factors have been omitted from the information supplied. We consider that we have been provided with sufficient information to arrive an informed view, and we have no reason to suspect that any material information has been withheld.

We are instructed to provide our opinion of value as per the valuation date only. It is based on economic, market and other conditions as they exist on, and information made available to us as of, the valuation date and we assume no obligation to update or otherwise revise these materials for events in the time since then. In particular, the outbreak of the Novel Coronavirus (COVID-19) since declared Global Pandemic on 11 March 2020 has caused much disruption to economic activities around the world. As of the report date, China’s economy is experiencing gradual recovery and it is anticipated that disruption to business activities will steadily reduce. We also note that market activity and market sentiment in this particular market sector remain stable. However, we remain cautious due to uncertainty for the pace of global economic recovery in the midst of the outbreak which may have future impact on the real estate market. Therefore, we recommend that you keep the valuation of the property under frequent review.

Unless otherwise stated, all monetary figures stated in this report are in Renminbi (RMB).

Our valuation certificate is attached below for your attention.

Yours faithfully, For and on behalf of Jones Lang LaSalle Corporate Appraisal and Advisory Limited

Eddie T. W. Yiu MRICS MHKIS RPS (GP) Senior Director

Note: Eddie T.W. Yiu is a Chartered Surveyor who has 27 years’ experience in the valuation of properties in Hong Kong and the PRC as well as relevant experience in the Asia-Pacific region.

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VALUATION CERTIFICATE

Property interest held and occupied by the Group in the PRC

Market value in Particulars of existing state as at Property Description and tenure occupancy 31 January 2021 RMB

A parcel of land, 5 The property comprises a parcel of As at the valuation date, [130,400,000] buildings and various land with a site area of portions of the property structures located at approximately 16,597.89 sq.m. and were occupied by the the eastern side of 5 buildings (known as Building A1 Group for research & Qingqiu Road and the to A5) and various ancillary development, production, northern side of structures erected thereon which storage and office Gangtian Road were completed in November 2020. purpose, whilst the Suzhou Industrial The 5 buildings have a total gross remaining portion was Park Suzhou City floor area of approximately under renovation. Jiangsu Province 18,954.82 sq.m., which are The PRC industrial buildings for research & development, production, storage and office use.

The structures mainly include car parking sheds, pool, landscaped facilities and roads.

The land use rights of the property have been granted for a term with the expiry date on 11 June 2065 for industrial use.

Notes:

1. Pursuant to a State-owned Land Use Rights Certificate – Su (2016) Su Zhou Gong Ye Yuan Qu Bu Dong Chan Quan Di No. 0000131, the land use rights of the property with a site area of approximately 16,597.89 sq.m. have been granted to Si Ao Biotechnology (Suzhou) Co., LTD (“Si Ao”, a 100%-owned subsidiary of the Company) for a term with the expiry date on 11 June 2065 for industrial use.

2. Pursuant to a Certificate of Real Estate Ownership – Su (2021) Su Zhou Industrial Park Bu Dong Chang Quan Di No. 0000035, 5 buildings of the property with a total gross floor area of approximately 18,954.82 sq.m. are owned by Si Ao for industrial use.

3. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following:

a) The property was mortgaged; and

b) Si Ao is legally and validly in possession of the property. Si Ao has the rights to occupy, use, lease, transfer or otherwise dispose of the property and upon consent from the mortgagee to transfer, lease, re-mortgage or otherwise dispose of the land use rights and building ownership rights of the mortgaged portion of the property.

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4. As the property is the major asset held by the Group, we are of the view that the property is a material property. Details of the material property

a) General description of location of : The property is located at the eastern side of Qingqiu Road the property and the northern side of Gangtian Road, Suzhou Industrial Park, Suzhou City, Jiangsu Province, the PRC. It is surrounded by Industrial Zones, Jinpu Park and Ruixiang Business Plaza. The property is close to Weisheng Road and East Middle Circle Road, enjoying convenient accessibility and is well served by public transportation, such as bus route No.116 and No. 1072. Suzhou Yuanqu Railway Station and South Kunshan Railway Station are about half an hour driving distance away from the property.

b) Details of encumbrances, liens, : Pursuant to a Mortgage Contract – 2017 Yuan Zhong Di Bao pledges, mortgages against the Zi No. 030, the land use rights of the property with a site area property of approximately 16,597.89 sq.m. and the ownership rights of the property on the land are subject to a mortgage as a security in favour of Bank of China, Suzhou Industrial Park Branch and Bank of Ningbo, Suzhou Branch for bank loan at a maximum amount of RMB80,000,000 with the security term from 5 December 2017 to 4 December 2022.

c) Environmental Issue : As advised by the Group, the property is expected to be passed the environmental protection inspection acceptance in May 2021.

d) Details of investigations, notices, : Nil. pending litigation, breaches of law or title defects

e) Future plans for construction, : As advised by the Group, the renovation work of the renovation, improvement or property is scheduled to be completed in April 2021. The development of the property and total investment of the property (including construction cost estimated associated costs and infrastructure equipment cost) is estimated to be approximately [RMB123,300,000].

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PRC TAXATION

Taxation on Dividends

Individual Investors

In accordance with the Individual Income Tax Law of the People’s Republic of China (《中華人民共和國個人所得稅法》) (hereinafter referred to as “IIT Law”) issued by the Fifth Session of the Standing Committee of the NPC on September 10, 1980, amended on August 31, 2018 and came into effect on January 1, 2019, and the Regulations for the Implementation of the Individual Income Tax Law of the People’s Republic of China (《中華人民共和國個人所得稅法實施條例》) amended by the State Council on December 18, 2018 and came into effect on January 1, 2019, dividends paid by Chinese companies to individual investors shall generally be subject to withholding tax at a rate of 20%. Meanwhile, according to the Notice on Issues concerning the Implementation of Differential Individual Income Tax Policies on Dividends and Bonuses of Listed Companies (《關於上市公司股息紅利差別化個人所得稅政策有關問題的通知》) (Cai Shui [2015] No. 101) issued by the MOF on September 7, 2015, where an individual acquires the stocks of a listed company from public offering of the company or from the stock market, if the stock holding period is more than one year, the dividend incomes shall be exempted from personal income tax. Where an individual acquires the stocks of a listed company from public offering of the company or from the stock market, if the stock holding period is one month or less, the income from dividends shall be included into the taxable incomes in full amount; if the stock holding period is more than one month and up to one year, 50% of the dividend income shall be included into the taxable incomes. The individual income tax rate on the aforesaid income is imposed at the uniform rate of 20%. In practice, the withholding rate on non-resident individuals’ dividends may be lower than 20% in certain circumstances, as described in “Risk Factors—We are a PRC enterprise and we are subject to PRC tax on our global income, and the dividends payable to investors and gains on the sale of our Shares by our investors are subject to PRC tax. Under the EIT Law of the PRC, our offshore subsidiaries may therefore be subject to PRC income tax on their worldwide taxable income.”

Pursuant to the Arrangement between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion Regarding Income Tax (《內地和香港特別行政區關於對所得避免雙重徵稅和防止偷漏稅的安排》) signed on August 21, 2006, the PRC government may impose tax on dividends paid to a Hong Kong resident (including natural person and legal entity) by a PRC company, but such tax shall not exceed 10% of the total amount of the dividends payable. If a Hong Kong resident directly holds 25% or more of the equity interest in a PRC company, then the amount of such shall not exceed 5% of the total dividends payable by the PRC company. The Fifth Protocol of the Arrangement between the Mainland of China and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and the Prevention of Fiscal Evasion issued by the SAT (《國家稅務總局關於<內地和香港特別行政區關於對所得避免雙重徵稅和防止偷漏稅的安排>第五議定書》) effective on December 6, 2019 states that such provisions shall not apply to arrangements or transactions made for the primary purpose of gaining such tax benefit.

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Enterprise Investors

In accordance with the Law of the PRC on Enterprise Income Tax (《中華人民共和國企業所得稅法》) (hereinafter referred to as “EIT Law”) amended and came into effect on December 29, 2018, and the Implementation Regulations for the Enterprise Income Tax Law of the PRC (《中華人民共和國企業所得稅法實施條例》) amended and came into effect on April 23, 2019, a non-resident enterprise is generally subject to a 10% EIT on PRC-sourced income, including dividends received from a PRC resident enterprise whose shares are issued and listed in Hong Kong, if such non-resident enterprise does not have an establishment or premises in the PRC or has an establishment or premises in the PRC but the PRC-sourced income is not connected with such establishment or premises in the PRC. The aforesaid income tax must be withheld at source, with the payer of the income being the withholding agent. Such withholding tax may be reduced or eliminated under an applicable treaty for the avoidance of double taxation.

The Notice of the SAT on the Issues Concerning Withholding Enterprise Income Tax on the Dividends Payable by PRC Resident Enterprises to Overseas Non-PRC Resident Enterprise H Share Holders (《國家稅務總局關於中國居民企業向境外H股非居民企業股東派發股息代扣代繳企業所得稅有關問題的通知》) issued by the SAT and effective on November 6, 2008, further clarified that a PRC resident enterprise must withhold EIT at a rate of 10% on dividends paid to non-PRC resident enterprise H Shareholders which are derived out of profit generated after January 1, 2008. The Reply of the SAT on Imposition of Enterprise Income Tax on B-share and Other Dividends of Non-resident Enterprises (《國家稅務總局關於非居民企業取得B股等股票股息徵收企業所得稅問題的批覆》) issued by the SAT on July 24, 2009 further provides that any PRC-resident enterprise that is listed on overseas stock exchanges must withhold EIT at a rate of 10% on dividends that it distributes to non-PRC resident enterprise shareholders. Such tax rates may be further modified pursuant to the tax treaty or agreement that China has concluded with a relevant jurisdiction, where applicable.

Pursuant to the Arrangement between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion Regrading Income Tax (《內地和香港特別行政區關於對所得避免雙重徵稅和防止偷漏稅的安排》) signed on August 21, 2006, the PRC government may impose tax on dividends paid to a Hong Kong resident (including natural person and legal entity) by a PRC company, but such tax shall not exceed 10% of the total amount of the dividends payable. If a Hong Kong resident directly holds 25% or more of equity interest in a PRC company, such tax shall not exceed 5% of the total amount of dividends payable by that PRC company. The Fifth Protocol of the Arrangement between the Mainland of China and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and the Prevention of Fiscal Evasion issued by the SAT (《國家稅務總局關於<內地和香港特別行政區關於對所得避免雙重徵稅和防止偷漏稅的安排>第五議定書》) effective on December 6, 2019 states that such provisions shall not apply to arrangements or transactions made for the primary purpose of gaining such tax benefit.

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Tax Treaties

Non-PRC resident investors residing in countries which have entered into treaties for the avoidance of double taxation with the PRC or residing in Hong Kong or Macau SAR may be entitled to preferential tax rates on dividends received by such investors from the PRC company. The PRC has entered into arrangements for the avoidance of double taxation with Hong Kong and Macau SAR, respectively, and has entered into treaties for the avoidance of double taxation with certain other countries, including but not limited to Australia, Canada, France, Germany, Japan, Malaysia, Netherlands, Singapore, the United Kingdom and the United States. A non-PRC resident enterprise which is entitled to a preferential tax rate under a relevant income tax treaty or arrangement may apply to the PRC tax authorities for a refund of the difference between the amount of tax withheld and tax computed based on the treaty rate.

Taxation on Gains from Share Transfer

Individual Investors

In accordance with the IIT Law and its implementation rules, individuals are subject to individual income tax at the rate of 20% on gains realized on the sale of equity interests in PRC resident enterprises. Under the Circular of the MOF and SAT on Declaring that Individual Income Tax Continues to Be Exempted over Individual Income Tax from Transfer of Shares (《財政部、國家稅務總局關於個人轉讓股票所得繼續暫免徵收個人所得稅的通知》) (Cai Shui Zi [1998] No. 61) (hereinafter referred to as “No. 61 Circular”) issued by the MOF and SAT on March 20, 1998, from January 1, 1997, gains of individuals from the transfer of shares of listed companies continue to be exempted from individual income tax. According to Announcement about the Catalogue of Preferential Individual Income Tax Policies with Continued Effect (《財政部、國家稅務總局關於繼續有效的個人所得稅優惠政策目錄的公告》) (MOF and SAT Announcement [2018] No. 177) issued by the MOF and SAT on December 29, 2018, the No. 61 Circular will continue to be effective.

Enterprise Investors

In accordance with the EIT Law and its implementation rules, a non-PRC resident enterprise is generally subject to EIT at the rate of 10% with respect to PRC-sourced income, including gains derived from the disposition of shares in a PRC resident enterprise, if it does not have an establishment or premises in the PRC or has an establishment or premises in the PRC but the PRC-sourced income is not actually connected with such establishment or premises in the PRC. Such tax may be reduced or eliminated under applicable tax treaties or arrangements.

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Taxation Policy of Shanghai—Hong Kong Stock Connect

On October 31, 2014, the MOF, the SAT and the CSRC jointly issued the Circular on the Relevant Taxation Policy regarding the Pilot Program that Links the Stock Markets in Shanghai and Hong Kong (《關於滬港股票市場交易互聯互通機制試點有關稅收政策的通知》) (Cai Shui [2014] No. 81) (hereinafter referred to as “Shanghai—Hong Kong Stock Connect Taxation Policy”). Pursuant to the “Shanghai—Hong Kong Stock Connect Taxation Policy,” enterprise income tax (“EIT”) will be levied according to law on transfer spread income (included in total income derived from investment by mainland enterprise incomes in stocks listed on the Hong Kong Stock Exchange through Shanghai—Hong Kong Stock Connect. Under the Announcement on Continued Implementation of Individual Income Tax Policies Relating to Shanghai—Hong Kong Stock Connect and Shenzhen—Hong Kong Stock Connect and Mainland and Hong Kong Mutual Recognition of Funds (《關於繼續執行滬港、深港股票市場交易互聯互通機制和內地與香港基金互認有關個人所得稅政策的公告》) (MOF Announcement [2019] No. 93) came into effect on December 5, 2019, from December 5, 2019 to December 31, 2022, gains on price difference from transfer of shares derived by mainland individual investors through investment into shares listed on the Hong Kong Stock Exchange via the Shanghai—Hong Kong Stock Connect shall be exempted from individual income tax. For dividends and bonus obtained by mainland individual investors investing in H shares listed on the Hong Kong Stock Exchange through Shanghai—Hong Kong Stock Connect, the H-share companies shall apply to China Securities Depository and Clearing Co., Ltd. (hereinafter referred to as CSDCC) for provision by CSDCC to the H-share companies register of mainland individual investors, and the H-share companies shall withhold individual income tax at the rate of 20%.

EIT will be levied according to law on dividend and bonus income (included in total income) obtained by mainland enterprise incomes from investing in stocks listed on the Hong Kong Stock Exchange through Shanghai—Hong Kong Stock Connect. In particular, EIT will be exempted according to law for dividend and bonus income obtained by mainland resident enterprises which hold H shares for at least 12 consecutive months. For dividend and bonus income obtained by mainland enterprise incomes, the H-share companies will not withhold dividend and bonus income tax for mainland enterprise incomes. The tax payable shall be declared and paid by the enterprises themselves.

Taxation Policy of Shenzhen—Hong Kong Stock Connect

On November 5, 2016, the MOF, the SAT and the CSRC jointly issued the Circular on the Relevant Taxation Policy regarding the Pilot Program that Links the Stock Markets in Shenzhen and Hong Kong (《關於深港股票市場交易互聯互通機制試點有關稅收政策的通知》) (Cai Shui [2016] No. 127), (hereinafter referred to as “Shenzhen—Hong Kong Stock Connect Taxation Policy”). Pursuant to the “Shenzhen—Hong Kong Stock Connect Taxation Policy,” EIT will be levied according to law on price difference (included in total income) derived from investment by mainland enterprise incomes in stocks listed on the Hong Kong Stock Exchange through Shenzhen—Hong Kong Stock Connect. Under the Announcement on Continued Implementation of Individual Income Tax Policies Relating to Shanghai—Hong

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Kong Stock Connect and Shenzhen—Hong Kong Stock Connect and Mainland and Hong Kong Mutual Recognition of Funds (《關於繼續執行滬港、深港股票市場交易互聯互通機制和內地與香港基金互認有關個人所得稅政策的公告》) (MOF Announcement [2019] No. 93) came into effect on December 5, 2019, personal income tax will be temporarily exempted for transfer spread income derived from investment by mainland individual investors in stocks listed on the Hong Kong Stock Exchange through Shenzhen—Hong Kong Stock Connect from from December 5, 2019 to December 31, 2022. For dividends and bonus income obtained by mainland individual investors investing in H shares listed on the Hong Kong Stock Exchange through Shenzhen—Hong Kong Stock Connect, the H-share companies shall apply to CSDCC for provision by CSDCC to the H-share companies register of mainland individual investors, and personal income tax shall be withheld by CSDCC at the tax rate of 20%.

EIT will be levied according to law on dividend and bonus income (included in total income) obtained by mainland enterprise incomes from investing in stocks listed on the Hong Kong Stock Exchange through Shenzhen—Hong Kong Stock Connect. In particular, EIT will be exempted according to law for dividend and bonus income obtained by mainland resident enterprises which hold H shares for at least 12 consecutive months. For dividend and bonus income obtained by mainland enterprise incomes, the H-share companies will not withhold dividend and bonus income tax for mainland enterprise incomes. The tax payable shall be declared and paid by the enterprises themselves.

PRC Stamp Duty

Under the Provisional Regulations of the PRC Concerning Stamp Duty (《中華人民共和國印花稅暫行條例》) amended on January 8, 2011 and the Rules for Implementation of Provisional Regulations of the PRC Concerning Stamp Duty (《中華人民共和國印花稅暫行條例施行細則》) came into effect on October 1, 1988, PRC stamp duty is imposed on documents that are legally binding in the PRC and governed by the PRC laws. Therefore, PRC stamp duty does not apply to acquisitions or dispositions of H shares outside PRC.

Estate Duty

The PRC currently has not imposed any estate duty.

MAJOR TAXATION OF THE COMPANY IN THE PRC

EIT

Under the EIT Law, the EIT rate in the PRC is 25% and is in line with the rate applicable to foreign investment enterprises and foreign enterprises.

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Value-added Tax

Pursuant to the Interim Regulations on Value-added Tax (《增值稅暫行條例》) amended and came into effect on November 19, 2017, all organizations and individuals engaged in sales of goods, provision of processing, repairs and replacement services, or importation of goods within the territory of the PRC are subject to value-added tax (“VAT”). For taxpayers selling or importing goods, except as otherwise provided in the above regulations, the general tax rate shall be 17%.

Pursuant to the Notice of Comprehensive Roll-out of the Pilot Collection of Value Added Tax in lieu of Business Tax from Ministry of Finance and State Administration of Taxation (《財政部、國家稅務總局關於全面推開營業稅改徵增值稅試點的通知》) (Cai Shui [2016] No. 36) promulgated by MOF and SAT on March 23, 2016 and came into effect on May 1, 2016, upon approval of the State Council, the pilot program of the collection of VAT in lieu of business tax shall be promoted nationwide in a comprehensive manner starting from May 1, 2016, and all business tax payers engaged in sectors such as construction, real estate, finance or lifestyle services shall be included in the scope of the pilot program, where payment of VAT shall be made instead of business tax. Pursuant to the Measures for the Implementation of Pilot Reform for Transition from Business Tax to Value-added tax (《營業稅改徵增值稅試點實施辦法》) issued and came into effect at the same time with the aforementioned notices, the tax rates applied to taxpayers for selling services, intangible assets or real estates shall be 17%, 11%, 6% and zero, respectively.

Pursuant to Notice on Adjusting Value-added Tax Rates issued by the MOF and SAT (《關於調整增值稅稅率的通知》) (Cai Shui [2018] No. 32) promulgated on April 4, 2018 and came into effect on May 1, 2018, for taxpayer engaging in taxable sales or import of goods, the previously applicable VAT rates of 17% and 11% shall be adjusted to 16% and 10%, respectively.

Pursuant to Announcement on Policies for Deepening the VAT Reform issued by the MOF and SAT and General Administration of Customs (《關於深化增值稅改革有關政策的公告》) promulgated on March 20, 2019 and came into effect on April 1, 2019, for taxpayer engaging in taxable sales or import of goods, the previously applicable VAT rates of 16% and 10% shall be adjusted to 13% and 9%, respectively.

FOREIGN EXCHANGE CONTROL OF THE PRC

The lawful currency of the PRC is the Renminbi, which is currently subject to foreign exchange control and is not freely convertible into foreign exchange. The SAFE under the PBOC is responsible for administration of all matters relating to foreign exchange, including the enforcement of foreign exchange control regulations.

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In accordance with the Notice of the State Council on Further Reforming the Foreign Exchange Management System (《關於進一步改革外匯管理體制的通知》) (Guo Fa [1993] No. 89 (abolished)) issued by the State Council, since January 1, 1994, the conditional convertibility of Renminbi in current account items and the unified exchange rate has been implemented, and the official Renminbi exchange rate and the market rate for Renminbi have been unified. The former dual exchange rate system for Renminbi had been abolished and a unitary and managed floating rate based on market demand and supply was introduced. The PBOC set and published daily the medium price of Renminbi against the U.S. dollar and the exchange rates of Renminbi against other major currencies in reference to the changes in the international foreign exchange markets, which was permitted to float to a certain extent in foreign exchange transactions.

On January 29, 1996, the State Council promulgated new Regulations of the PRC for Foreign Exchange Control (《中華人民共和國外匯管理條例》) (hereinafter referred to as the “Foreign Exchange Control Regulations”) which became effective on April 1, 1996. The Foreign Exchange Control Regulations classifies all international payments and transfers into current account items and capital account items. Most of the current account items are no longer subject to SAFE’s approval, while capital account items still are. The Foreign Exchange Control Regulations were subsequently amended on January 14, 1997 and August 5, 2008. The latest amendment to the Foreign Exchange Control Regulations clearly states that the State will not impose any restriction on international current account payments and transfers.

On June 20, 1996, the PBOC promulgated the Regulations for the Administration of Settlement, Sale and Payment of Foreign Exchange (《結匯、售匯及付匯管理規定》)(YinFa [1996] No. 210) (hereinafter referred to as the “Settlement Regulations”) which became effective on July 1, 1996. The Settlement Regulations abolished the remaining restrictions on convertibility of foreign exchange under current account items, while retaining the existing restrictions on foreign exchange transactions under capital account items.

According to the Announcement on Improving the Reform of the Renminbi (《關於完善人民幣匯率形成機制改革的公告》) (PBOC Announcement [2005] No. 16), issued by the PBOC on July 21, 2005, the PRC began to implement a managed floating exchange rate system in which the exchange rate would be determined based on market supply and demand and adjusted with reference to a basket of currencies. The Renminbi exchange rate was no longer pegged to the U.S. dollar. The PBOC would publish the closing price of the Renminbi against foreign currencies such as the U.S. dollar in the inter-bank foreign exchange market after the closing of the market on each business day, which would be used as the central parity for Renminbi transactions on the following business day.

Starting from January 4, 2016, the PBOC introduced over-the-counter transactions into the inter-bank spot foreign exchange market for the purpose of improving the formation mechanism of the central parity of Renminbi exchange rates, and the practice of matching was kept at the same time. In addition, the PBOC introduced the market-maker rule to provide liquidity to the foreign exchange market. On July 1, 2014, the PBOC further improved the market-oriented formation mechanism of the RMB exchange rate by authorizing the China

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Foreign Exchange Trade System to make inquiries with the market makers before the inter-bank foreign exchange market opens every day for their offered quotations which are used as samples to calculate the central parity of the RMB against the USD, and announce it at 9:15 a.m. on each business day.

On August 5, 2008, the State Council promulgated the revised Regulations of the PRC for Foreign Exchange Control (《中華人民共和國外匯管理條例》) (hereinafter referred to as the “Revised Foreign Exchange Control Regulations”), which have made substantial changes to the foreign exchange supervision system of the PRC. First, the Revised Foreign Exchange Control Regulations have adopted an approach of balancing the inflow and outflow of funds. Foreign exchange income received overseas can be repatriated or deposited overseas, and foreign exchange and foreign exchange settlement funds under the capital account are required to be used only for purposes as approved by the competent authorities and foreign exchange administrative authorities. Second, the Revised Foreign Exchange Control Regulations have improved the mechanism for determining the RMB exchange rate based on market supply and demand. Third, the Revised Foreign Exchange Control Regulations have enhanced the monitoring of cross-border foreign currency fund flows. In the event that revenues and costs in connection with international transactions suffer or may suffer a material misbalance, or the national economy encounters or may encounter a severe crisis, the State may adopt necessary safeguard or control measures. Fourth, the Revised Foreign Exchange Control Regulations have enhanced the supervision and administration of foreign exchange transactions and grant extensive authorities to the SAFE to enhance its supervisory and administrative powers.

Pursuant to the relevant State rules and regulations, all of the foreign exchange revenue of the PRC enterprises from the current account transactions may be retained or sold to financial institutions operating a foreign exchange sale or settlement business. Foreign exchange income from loans granted by overseas entities or from the issuance of bonds and shares is not required to be sold to, but may be deposited in foreign exchange accounts at, designated foreign exchange banks.

PRC enterprises (including foreign investment enterprises) which need foreign exchange for transactions relating to current account items may, without the approval of the SAFE, effect exchange and payment from their foreign exchange accounts or at the designated foreign exchange banks, on the strength of valid receipts and proof. Foreign investment enterprises which need foreign exchange for the distribution of profits to their shareholders and PRC enterprises which, in accordance with regulations, are required to pay dividends to their shareholders in foreign exchange may, on the strength of resolutions of the board of directors or the shareholders’ meeting approving the distribution of profits, effect exchange and payment from their foreign exchange accounts or convert and pay dividends at the designated foreign exchange banks.

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The Decisions of the State Council on Matters including Canceling and Adjusting a Batch of Administrative Approval Items (《國務院關於取消和調整一批行政審批項目等事項的決定》) (Guo Fa [2014] No. 50) promulgated on October 23, 2014 has canceled the approval requirement of the SAFE and it branches for the remittance and settlement of the proceeds raised from the overseas listing of the foreign shares into RMB domestic accounts.

Pursuant to the Notice on Issues Concerning the Foreign Exchange Administration of Overseas Listing (《關於境外上市外匯管理有關問題的通知》) (Hui Fa [2014] No. 54) issued by the SAFE on December 26, 2014, a domestic issuer shall, within 15 business days from completion of its initial public offering overseas, register the overseas listing with the SAFE’s local branch at the place of its incorporation. The proceeds from an overseas listing of a domestic issuer may be remitted to a domestic account or deposited overseas, and the use of the proceeds shall be consistent with the content of the [REDACTED] and other disclosure documents.

Pursuant to the Circular on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts (《關於改革和規範資本項目結匯管理政策的通知》) (Hui Fa [2016] No. 16) promulgated by the SAFE on June 9, 2016, discretionary settlement of foreign exchange capital income can be settled at the banks based on the actual operating needs of the domestic companies. The proportion of discretionary settlement of foreign exchange capital income for domestic companies is temporarily set at 100%. The SAFE may timely adjust the above proportion in based on international balance of payments.

On October 23, 2019, the SAFE released the Circular on Further Promoting Cross-border Trade and Investment Facilitation (《國家外匯管理局關於進一步促進跨境貿易投資便利化的通知》) (Hui Fa [2019] No. 28) which was implemented on the same date (except for Article 8.2, which became effective on January 1, 2020). Under this circular, On the basis that investing foreign-funded enterprises (including foreign-funded companies, foreign-funded venture capital enterprises and foreign-funded equity investment enterprises) may make domestic equity investments with their capital funds in accordance with laws and regulations, non-investing foreign-funded enterprises are permitted to legally make domestic equity investments with their capital funds under the premise that the existing special administrative measures (negative list) for foreign investment access are not violated and domestic investment projects are true and compliant.

Pursuant to the Circular on Optimizing Administration of Foreign Exchange to Support the Development of Foreign-related Business (《國家外匯管理局關於優化外匯管理支持涉外業務發展的通知》) (Hui Fa [2020] No. 8) issued by the SAFE on April 10, 2020, eligible enterprises are allowed to use receipts under the capital accounts such as capital funds, external debts and overseas listings for domestic payment without providing banks with authenticity certification materials on a transaction-by-transaction basis in advance, under the premise that funds are used in a truthful and compliant manner and comply with the existing provisions on the administration of use of receipts under capital accounts. Handling banks shall, under the principle of prudential business development, manage and control the relevant business risks, and conduct ex post random inspection of the facilitation of receipts and payments under capital accounts according to the relevant requirements.

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THE PRC LEGAL SYSTEM

The PRC legal system is composed of the constitution, laws, administrative regulations, local regulations, separate rules, rules and regulations of departments of the State Council, rules and regulations of local governments, autonomy regulations and separate rules of autonomous regions and international treaties of which the PRC government is a signatory. Court judgments do not constitute binding precedents, although they may be used for the purpose of judicial reference and guidance.

Pursuant to The PRC Constitution (《中華人民共和國憲法》) (hereinafter referred to as “Constitution”) and the Legislation Law of the PRC (《中華人民共和國立法法》) (hereinafter referred to as “Legislation Law”), the NPC and the Standing Committee of the NPC are empowered to exercise the legislative power of the State. The NPC has the power to formulate and amend the basic laws governing criminal and civil matters, State institutions and other matters. The Standing Committee of the NPC is empowered to formulate and amend laws other than those required by to be enacted by the NPC and to supplement and amend any parts of laws enacted by the NPC during its adjournment, provided that such supplements and amendments shall not be in conflict with the principles of such laws.

The State Council is the highest administrative organs of the state, and enacts administrative regulations under the Constitution and laws.

People’s congresses of provinces, autonomous regions and municipalities directly under the central government and their respective standing committees may formulate local regulations based on the specific circumstances and requirements of the local administrations, provided that such local regulations shall not be in conflict with the constitution, laws, and administrative regulations.

The ministries, commissions, PBOC, National Audit Office and institutions with administrative functions supervisory committee the State Council may formulate rules and regulations within the jurisdiction of their respective departments based on the laws and the administrative regulations, decisions and rulings of the State Council. Provisions of departmental rules and regulations shall be formulated for the purpose of the enforcement of the laws and administrative regulations, decisions and rulings of the State Council.

People’s congresses of larger cities and their respective standing committees may enact local regulations based on the specific circumstances and actual needs which shall come into effect upon approval from the respective standing committees of the people’s congresses of the provinces and autonomous regions, provided that such local regulations shall not be in conflict with the constitution, laws, and administrative regulations.

People’s congresses of autonomous regions may enact autonomy regulations and separate rules in the light of the political, economic and cultural characteristics of the local nationalities, which shall come into effect upon approval from the Standing Committee of the NPC.

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Adaptations of provisions of laws and administrative regulations may be introduced to the autonomy regulations and separate rules so long as they do not contravene the basic principles of the laws or administrative regulations, and no adaptations shall be made to the specific provisions on national autonomous areas in the constitutions, national region autonomy law and other relevant laws and administrative regulations.

People’s governments of provinces, autonomous regions and municipalities directly under the central government and larger cities may formulate rules according to laws, administrative regulations and relevant local regulations.

The Constitution, enacted by the NPC, is basis of the PRC legal system and has supreme legal authority, and no laws, administrative regulations, local regulations, autonomous regulations or separate regulations may contravene the Constitution. The significance of laws is greater than that of administrative regulations, local regulations, and rules. The significance of administrative regulations is greater than that of local regulations and rules. The significance of local regulations is greater than that of the rules of the local governments at or below the corresponding level. The significance of the rules enacted by the people’s governments of the provinces or autonomous regions is greater than that of the rules enacted by the people’s governments of the comparatively larger cities within the administrative areas of the provinces and the autonomous regions.

The NPC has the power to alter or annul any inappropriate laws enacted by its Standing Committee, and to annul any autonomous regulations or separate regulations which have been approved by its Standing Committee but which contravene the Constitution or the Legislation Law. The Standing Committee of the NPC has the power to annul any local regulation that contravenes the Constitution, laws or administrative regulations, and to annul any autonomous regulation or separate regulations which has been approved by the standing committees of the NPC of the relevant provinces, autonomous regions or municipalities directly under the central government, but which contravene the Constitution and the Legislation Law. The State Council has the power to alter or annul any inappropriate ministerial rules and rules of local governments. The people’s congress of provinces, autonomous regions or municipalities directly under the central government have the power to alter or annul any inappropriate local regulations enacted or approved by their respective standing committees. The people’s governments of provinces and autonomous regions have the power to alter or annul any inappropriate rules enacted by the people’s governments at the lower level.

According to the Constitution, the authority of the interpretation of laws shall be vested to the Standing Committee of the NPC. According to the Decision of the Standing Committee of the NPC Regarding the Strengthening of Interpretation of Laws (《全國人民代表大會常務委員會關於加強法律解釋工作的決議》) passed on June 10, 1981, interpretation on the application of laws and decrees in court trails and the procuratorial work of the procuratorates shall be given by the Supreme People’s Court and the Supreme People’s Procuratorate, respectively. Interpretation of the laws and decrees unrelated to trials and procuratorial work shall be given by the State Council and the competent ministries and commissions. In the case

–V-2– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX V SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS that clarification or additional provisions shall be made for the local regulations, the standing committees of the people’s congresses of provinces, autonomous regions and municipalities directly under the central government which enacted such regulations shall give the interpretation or formulate the additional provisions. Interpretation on the application of local regulations shall be given by the competent departments under the people’s government of the respective provinces, autonomous regions and municipalities directly under the central government.

PRC JUDICIAL SYSTEM

Under the Constitution and the Law of the PRC of Organization of the People’s Courts (《中華人民共和國人民法院組織法》) which was enacted on July 1, 1979 and last amended on October 26, 2018 and took effect on January 1, 2019, the judicial system in PRC is made up of the Supreme People’s Court, the local people’s courts, military courts and other special people’s courts.

The local people’s courts are comprised of the basic people’s courts, the intermediate people’s courts and the higher people’s courts. The basic people’s courts may be organized into civil, criminal, and economic tribunals. The intermediate people’s courts may be organized into divisions similar to those of the basic people’s courts, and may be further organized into other special divisions. The people’s courts at lower levels are subject to supervision of the people’s courts at higher levels. The Supreme People’s Court is the highest judicial organ of the PRC and it has the power to supervise the administration of justice by the local people’s courts at all levels and all special people’s courts. The people’s procuratorates also have the right to exercise legal supervision over the trial activities of people’s courts at same or lower levels.

The people’s courts adopt a “second instance as final” appellate system in the trail of the cases. A party to the case concerned may appeal against the judgment and ruling of the first instance by the local people’s courts to the people’s courts at the next higher level in accordance with the legal procedures. The people’s procuratorates may appeal to the people’s court at the next higher level in accordance with the legal procedures. In the absence of any appeal by any parties to the case concerned or any appeal by the people’s procuratorates within the stipulated period, the judgment and ruling of the first instance by the local people’s courts shall be final and legally binding. Judgments and rulings of the second instance of the intermediate people’s courts, the higher people’s courts and Supreme People’s Court and the judgments and rulings of the first instance of the Supreme People’s Court shall be the final judgments and rulings. If, however, the Supreme People’s Court or a people’s court at a higher level finds an error in a judgment which has been given in any people’s court at a lower level, or the presiding judge of a people’s court finds an error in a judgment which has been given in the court over which he presides, the case may then be retried according to the judicial supervision procedures. The death penalty shall be reported to the Supreme People’s Court for approval unless it is otherwise adjudged by the Supreme People’s Court.

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The Civil Procedure Law of the PRC (《中華人民共和國民事訴訟法》) (hereinafter referred to as “PRC Civil Procedure Law”), which was adopted on April 9, 1991 and last amended on June 27, 2017 and became effective on July 1, 2017, sets forth the criteria for instituting a civil case, the jurisdiction of the people’s courts, the procedures to be followed for conducting a civil action and the procedures for enforcement of a civil judgment or order. All parties to a civil action conducted within the PRC must comply with the PRC Civil Procedure Law. Generally, a civil case is initially heard by a local court of the municipality or province in which the defendant resides. The parties to a contract may, by an express agreement, select a competent court where civil actions may be brought, provided that the competent court has jurisdiction over either the plaintiff’s or the defendant’s place of residence, the place of execution or performance of the contract, the object of the action or locations which have substantial connections with the dispute. However, such selection cannot violate the stipulations of hierarchical jurisdiction and exclusive jurisdiction in any case.

A foreign individual or enterprise generally has the same litigation rights and obligations as a citizen or legal person of the PRC. If a foreign country’s judicial system limits the litigation rights of PRC citizens and enterprises, the PRC courts may impose the same limitations to the citizens and enterprises of that foreign country within the PRC. If any party to a civil action refuses to comply with a judgment or order made by a people’s court or an award granted by an arbitration panel in the PRC, the other party may apply to the people’s court to request for enforcement of the judgment, order or award. There are time limits imposed on the right to apply for such enforcement and the time limit is two years. If a person fails to satisfy a judgment made by the court within the stipulated time, the court will, upon application by either party, mandatorily enforce the judgment.

A party seeking to enforce a judgment or order of a people’s court against a party who is not located within the PRC and does not own any property in the PRC, may apply to a foreign court with proper jurisdiction for recognition and enforcement of the judgment or order. In the case of an application or request for recognition and enforcement of a legally effective judgment or order of a foreign court, the people’s court shall, after having examined it in accordance with the international treaties entered into or acceded to by the PRC or with the principle of reciprocity and having arrived at the conclusion that it does not contravene the primary principles of the laws of the PRC nor violates its sovereignty, security or social and public interests, recognize the validity of the judgment or order, and, if required, issue a writ of enforcement and enforce it in accordance with the relevant regulations. If the application or request contravenes the primary principles of the laws of the PRC or violates its sovereignty, security or social and public interests, the people’s court shall not recognize and enforce it.

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THE COMPANY LAW, SPECIAL REGULATIONS AND MANDATORY PROVISIONS OF PRC

The PRC Company Law (《中華人民共和國公司法》) which was promulgated on December 29, 1993 by the Standing Committee of the NPC, last amended and came into effect on October 26, 2018 regulates the organization and operation of companies and protects the legitimate rights and interests of companies, shareholders and creditors. The amendment to the PRC Company Law in 2013 has canceled the restriction on the minimum registered capital and replaced the registered paid-up share capital system by the registered subscribed capital system.

The Special Regulations of the State Council on the Overseas Offering and the Listing of Shares by Joint Stock Limited Companies (《國務院關於股份有限公司境外募集股份及上市的特別規定》) (the “Special Regulations”) were passed at the 22nd Standing Committee Meeting of the State Council on 4 July 1994 and promulgated and implemented on 4 August 1994. On 17 October 2019, Official Reply of the State Council on Adjusting the Provisions Governing Matters Including the Application of the Notice Period for the Convening of Shareholders’ General Meetings by Companies Listed Overseas (《國務院關於調整適用在境外上市公司召開股東大會通知期限等事項規定的批覆》) were approved by State Council to amend the provisions of Articles 20 through 22 of the Special Regulations. The Special Regulations include provisions in respect of the overseas share offering and listing of joint stock limited companies. The Mandatory Provisions for the Articles of Association of Companies to be Listed Overseas (《到境外上市公司章程必備條款》) (the “Mandatory Provision”) jointly promulgated by the former Securities Commission of the State Council and the former State Restructuring Commission on 27 August 1994 prescribe that the provisions should be incorporated in the articles of association of joint stock limited companies to be listed overseas stock exchanges. Accordingly, the Mandatory Provisions have been incorporated in the Articles of Association, a summary of which is set out in Appendix [●]—“Summary of Articles of Association” of this document. References to a “company” made in this Appendix are to a joint stock limited company established under the PRC Company Law with H shares to be issued.

Main provisions in PRC Company Law, Special Regulations and Mandatory Provisions are summarized as follows:

General

A “joint stock limited company (“company”)” refers to a corporate legal person established in China under the PRC Company Law with independent legal person properties and entitlements to such legal person properties. The liability of the company is limited to the total amount of all assets it owns and the liability of its shareholders is limited to the extent of the shares they subscribe for.

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Incorporation

A company may be incorporated by promotion or subscription. A company may be incorporated by two to 200 promoters, but at least half of the promoters must reside in the PRC. Companies incorporated by promotion are companies with the registered capital entirely subscribed for by the promoters. Where companies are incorporated by subscription, the promoters are required to subscribe for not less than 35% of the total number of shares of a company unless otherwise stipulated by laws and regulations, and the remaining shares can be offered to the public or specific persons, unless otherwise required by law.

For a company incorporated by promotion, the registered capital has to be the total capital subscribed for by all promoters as registered with the company registration authority. It shall not raise capital from others before the promoters fully pay the capital subscribed by them; for companies established by public subscription, the registered capital is the amount of total paid-up capital as registered with the company registration authority.

The promoters shall convene an inaugural meeting within thirty (30) days after the issued shares have been fully paid up, and shall fifteen (15) days before the meeting notify all subscribers or make a public announcement of the date of the inaugural meeting.

The inaugural meeting may be convened only with the presence of shareholders holding shares representing more than 50% of the total issued shares of the company. At the inaugural meeting, matters including the adoption of draft articles of association proposed by the promoter(s) and the election of the board of directors and the supervisory committee of the company will be dealt with. All resolutions of the meeting require the approval of subscribers with more than half of the voting rights present at the meeting.

Within thirty (30) days after the conclusion of the inaugural meeting, the board of directors shall apply to the company registration authority for registration of the establishment of the company. The company is formally established and has the status of a legal person after the approval for registration has been given and a business license has been issued.

Where after the incorporation of a company, a promoter fails to pay in full the subscription moneys in accordance with the provisions of the company’s articles of association, he shall pay them in full; and the other promoters shall bear joint and several liability. Where it is discovered that the actual evaluation of the non-currency property used as capital contributions for the incorporation of the company is obviously less than the evaluation prescribed by the company’ articles of association, the promoters making such contributions shall make up the difference; and the other promoters shall bear joint and several liability.

The promoters of a company shall bear the following liabilities:

Where the company cannot be incorporated, they shall bear the joint and several liability for all the debts and expenses incurred in the act of incorporation;

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Where the company cannot be incorporated, they shall bear the joint and several liability for refunding the subscription moneys paid by the subscribers, plus their bank deposit interest calculated for the same period of time; and

Where the interests of the company are impaired due to the fault committed by the promoters in the process of the incorporation of the company, they shall bear the liability to pay compensation to the company.

Share Capital

The promoters may make capital contribution in currencies, or non-monetary assets such as in kind or intellectual property rights or land use rights which can be appraised with monetary value and transferred lawfully, except for assets which are prohibited from being contributed as capital by the laws or administrative regulations. If a capital contribution is made in non-monetary assets, a valuation of the assets contributed must be carried out in accordance with the laws or administrative regulations on valuation without any over-valuation or under-valuation.

Shares shall be issued in a fair and equitable manner. The same class of shares must carry equal rights. Shares of the same class issued at the same time must be issued on the same conditions and at the same price. The same price per share shall be paid by any subscriber, an entity or an individual, and shall be equal to or greater than the nominal value of the share and shall not be less than the nominal value.

A company must obtain the approval of the CSRC to offer its shares to the overseas public. The Special Regulations and the Mandatory Provisions provide that shares issued to foreign investors (including investors in Hong Kong Special Administration Region, Macau Special Administration Region and Taiwan Special Administration Region) and listed overseas (“Overseas Listed Foreign Shares”) shall be in registered form, denominated in Renminbi and subscribed for in foreign currency. Shares issued to foreign investors and investors in Hong Kong, Macau and Taiwan and listed in Hong Kong are designated as H shares, and those shares issued to investors in the PRC, except the regions above, are designated as domestic shares. Under the Special Regulations, upon approval of the CSRC, a company may agree, in the underwriting agreement in respect of an issue of H shares, to reserve not more than 15% of the aggregate number of overseas listed foreign invested shares proposed to be issued in addition to the number of underwritten shares provided that the total shares to be issued shall not exceed the total number of shares proposed to be issued. The shares reserved shall be part of the shares proposed to be issued.

Under the PRC Company Law, a company issuing registered share certificates shall maintain a shareholder registry which sets forth the following matters: (i) the name and domicile of each shareholder; (ii) the number of shares held by each shareholder; (iii) the serial numbers of shares held by each shareholder; and (iv) the date on which each shareholder acquired the shares.

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Increase in Share Capital

According to the PRC Company Law, if a company proposes to issue new shares, resolutions shall be passed at general meeting in accordance with the articles of association to determine the class, amount and issue price of the new shares.

Save for the above-mentioned shareholder approval requirement, for a public offering of new shares, the PRC Securities Law (《中華人民共和國證券法》) (hereinafter referred to as “Securities Law”) provides that the company shall: (i) the company has a proper and well-functioning organisation structure; (ii) the company is a going concern; (iii) the auditor has issued non-qualified audit reports for the company’s financial accounting documents for the past three years; (iv) the company and its controlling shareholder(s), actual controlling party do not have criminal record during the past three years for corruption, bribery, encroachment of assets, misappropriation of assets or disruption of socialist market economy order; (v) other criteria stipulated by the securities regulatory authority of the State Council approved by the State Council.

Offering of new shares by listed companies shall satisfy the criteria stipulated by the securities regulatory authorities of the State Council; detailed administrative measures shall be formulated by the securities regulatory authorities of the State Council.

After payment in full for the new shares issued, a company must change its registration with the company registration authority and issue a public notice accordingly.

Reduction of Share Capital

A company may reduce its registered capital in accordance with the following procedures prescribed by the PRC Company Law:

(i) the company shall prepare a balance sheet and an inventory of the assets;

(ii) the reduction of registered capital must be approved by shareholders in general meeting;

(iii) the company shall inform its creditors of the reduction in registered capital within ten (10) days and publish an announcement of the reduction in the newspaper within thirty (30) days after the resolution approving the reduction has been passed;

(iv) the creditors of the company may within the statutory prescribed time limit require the company to pay its debts or provide guarantees covering the debts; The creditors shall, within thirty (30) days from the date they receive the written notice, or within forty five (45) days from the date the announcement is made in the case of those who have not received such written notice, have the right to claim full repayment of their debts or provision of a corresponding guarantee from the company; and

(v) the company must apply to the company registration authority for registration of the reduction in registered capital.

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Repurchase of Shares

A company may not repurchase its own shares other than for the purpose of:

(i) reducing the registered capital of the company; or

(ii) merging with another company holding shares of this company; or

(iii) granting the shares for employee share ownership plans or as share incentives; or

(iv) purchasing the company’s own shares upon request of its shareholders who vote against the resolution regarding the merger or division of the company in a general meeting;

(v) applying the shares for the conversion of the corporate bonds issued by a listed company and convertible into shares;

(vi) maintaining the corporate value and protecting the shareholders’ interests of a listed company as necessary.

Repurchase of its own shares by a company under the circumstances specified in Subparagraph (i), (ii) of the preceding paragraph shall be subject to resolution adopted by the shareholders’ general meeting; repurchase of its own shares by a company under the circumstances specified in Subparagraph (iii), (v) or (vi) shall be subject to a resolution at a board meeting attended by more than two-thirds of the directors in accordance with the provisions of the articles of association or the authorization of a general meeting.

Where a company repurchases the shares of the Company pursuant to subparagraph (i) of the first paragraph, such shares shall be canceled within 10 days from the date of repurchases; where the shares are repurchased pursuant to subparagraphs (ii), (iv), such shares shall be transferred or canceled within six months; and where the shares are repurchased pursuant to Subparagraphs (iii), (v), (vi), the aggregate number of the Company’s shares held by a company shall not exceed 10% of the total issued shares of the Company, and shall be transferred or canceled within three years.

A company shall not accept its own shares as the subject matter of a mortgage.

Transfer of Shares

Shares may be transferred in accordance with the relevant laws and regulations.

According the PRC Company Law, a shareholder may effect a transfer of his shares on a stock exchange established in accordance with laws or by any other means as required by the State Council. Registered shares may be transferred after the shareholders endorse the back of the share certificates or in any other manner specified by the laws or administrative regulations.

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Following the transfer, the company shall enter the names and addresses of the transferees into its share register. No changes of registration in the share register described above shall be effected during a period of 20 days prior to convening a shareholders’ general meeting or 5 days prior to the record date for the purpose of determining entitlements to dividend distributions, subject to any otherwise stipulated legal provisions on the registration of changes in the share register of listed companies. The transfer of bearer share certificates shall become effective upon the delivery of the certificates to the transferee by the shareholder. The Mandatory Provision provides that changes due to share transfer should not be made to shareholder registry within 30 days before a shareholders’ general meeting or within 5 days before the record date for the purpose of determining entitlements to dividend distributions.

According to the PRC Company Law, shares held by promoters may not be transferred within one year of the establishment of the company. Shares of the company issued prior to the public issue of shares may not be transferred within one year of the date of the company’s listing on a stock exchange. Directors, supervisors and the senior management of a company shall declare to the company their shareholdings in it and any changes in such shareholdings. During their terms of office, they may transfer no more than 25% of the total number of shares they hold in the company every year. They shall not transfer the shares they hold within one year of the date of the company’s listing on a stock exchange, nor within six months after they leave their positions in the company. The articles of association may set out other restrictive provisions in respect of the transfer of shares in the company held by its directors, supervisors and the senior management.

Shareholders

Under the PRC Company Law, the rights of shareholders include the rights:

(i) to petition the people’s court to revoke any resolution passed at a shareholders’ general meeting or a meeting of board of directors that has not been convened in compliance with the laws, administrative regulations or the articles of association or whose voting has been conducted in an invalid manner, or any resolution the contents of which is in violation of the articles of association, provided that such petition shall be submitted within 60 days of the passing of such resolution;

(ii) to transfer the shares of the shareholders according to the applicable laws and regulations and the articles of association;

(iii) to attend or appoint a proxy to attend shareholders’ general meetings and to exercise the voting rights;

(iv) to inspect the articles of association, shareholder register, counterfoil of company debentures, minutes of shareholders’ general meetings, board resolutions, resolutions of the supervisory board and financial and accounting reports and to make suggestions or inquiries in respect of the company’s operations;

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(v) to receive dividends in respect of the number of shares held;

(vi) to receive residual properties of the company in proportion to their shareholdings upon the liquidation of the company; and

(vii) any other shareholders’ rights provided for in laws, administrative regulations, regulatory documents and the articles of association.

The obligations of shareholders include the obligation to abide by the company’s articles of association, to pay the subscription monies in respect of the shares subscribed for, to be liable for the company’s debts and liabilities to the extent of the amount of subscription monies agreed to be paid in respect of the shares taken up by them and any other shareholder obligation specified in laws, administrative regulations, regulatory documents and the articles of association.

Shareholders’ General Meetings

The general meeting is the organ of authority of the company, which exercises its powers in accordance with the PRC Company Law. The general meeting may exercise its powers:

(i) to decide on the company’s operational objectives and investment plans;

(ii) to elect and remove the directors and supervisors (not being representative(s) of employees) and to decide on the matters relating to the remuneration of directors and supervisors;

(iii) to review and approve the reports of the board of directors;

(iv) to review and approve the reports of the supervisory board or supervisors;

(v) to review and approve the company’s annual financial budgets and final accounts;

(vi) to review and approve the company’s profit distribution proposals and loss recovery proposals;

(vii) to decide on any increase or reduction of the company’s registered capital;

(viii) to decide on the issue of corporate bonds;

(ix) to decide on merger, division, dissolution and liquidation of the company or change of its corporate form;

(x) to amend the company’s articles of association; and

(xi) to exercise any other authority stipulated in the articles of association.

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A shareholders’ general meeting is required to be held once every year. An extraordinary general meeting is required to be held within two months of the occurrence of any of the following:

(i) the number of directors is less than the number stipulated by the laws or less than two-thirds of the number specified in the articles of association;

(ii) the outstanding losses of the company amounted to one-third of the company’s total paid-in share capital;

(iii) shareholders individually or in aggregate holding 10% or more of the company’s shares request that an extraordinary general meeting is convened;

(iv) the board deems necessary;

(v) the supervisory board so requests; or

(vi) any other circumstances as provided for in the articles of association.

A shareholders’ general meeting shall be convened by the board of directors, and presided over by the chairman of the board of directors. In the event that the chairman is incapable of performing or is not performing his duties, the meeting shall be presided over by the vice chairman. In the event that the vice chairman is incapable of performing or is not performing his duties, a director nominated by half or more of the directors shall preside over the meeting. Where the board of directors is incapable of performing or is not performing its duties to convene the general meeting, the supervisory board shall convene and preside over such meeting in a timely manner. If the supervisory board fails to convene and preside over such meeting, shareholders individually or in aggregate holding 10% or more of the company’s shares for 90 days or more consecutively may unilaterally convene and preside over such meeting.

In accordance with the PRC Company Law, a notice of the general meeting stating the date and venue of the meeting and the matters to be considered at the meeting shall be given to all shareholders 20 days before the meeting. A notice of extraordinary general meeting shall be given to all shareholders 15 days prior to the meeting. For the issuance of bearer share certificates, the time and venue of and matters to be considered at the meeting shall be announced 30 days before the meeting.

Under the PRC Company Law, a single shareholder who holds, or several shareholders who jointly hold, three percent or more of the shares of the company may submit an interim proposal in writing to the board of directors ten days before the general meeting is held. The board of directors shall, within two days upon receipt of the proposal, notify the other

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The general meeting shall not make resolutions on matters that are not clearly listed in the notices given to the shareholders.

If holders of bearer stocks attend a general meeting, they shall have their stocks kept at the company from five days before the meeting is held till the conclusion of the meeting.

Shareholders present at a shareholders’ general meeting have one vote for each share they hold, save that shares held by the company are not entitled to any voting rights. Resolutions of the general meeting must be passed by more than half of the voting rights held by shareholders present at the meeting, with the exception of matters relating to merger, division or dissolution of the company, increase or reduction of registered share capital, change of corporate form or amendments to the articles of association, which in each case must be passed by at least two-thirds of the voting rights held by the shareholders present at the meeting. Where the PRC Company Law and the articles of association provide that the transfer or acquisition of significant assets or the provision of external guarantees by the company must be approved by way of resolution of the general meeting, the directors shall convene a shareholders’ general meeting promptly to vote on such matters. An accumulative voting system may be adopted for the election of directors and supervisors at the general meeting pursuant to the provisions of the articles of association or a resolution of the general meeting. Under the accumulative voting system, each share shall be entitled to the number of votes equivalent to the number of directors or supervisors to be elected at the general meeting, and shareholders may consolidate their votes for one or more directors or supervisors when casting a vote.

Minutes shall be prepared in respect of matters considered at the general meeting and the shareholders attending the meeting shall endorse such minutes by signature. The minutes shall be kept together with the shareholders’ attendance register and the proxy forms.

According to the Mandatory Provisions, the increase or reduction of share capital, the issuance of shares of any class, warrants or other similar securities and bonds, the division, merger, dissolution and liquidation of the company, the amendments to the articles of association and any other matters, which, as resolved by way of an ordinary resolution of the general meeting, may have a material impact on the company and require adoption by way of a special resolution, must be approved through special resolutions by no less than two-thirds of the voting rights held by shareholders present at the meeting.

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The Mandatory Provisions require a special resolution to be passed at the general meeting and the approval of the affected class shareholders at a class meeting to be held in the event of a variation or derogation of the class rights of a shareholder class. For this purpose, holders of domestic shares and H Shares are deemed to be shareholders of different classes.

Board

A company shall have a board, which shall consist of 5 to 19 members. Members of the board may include staff representatives, who shall be democratically elected by the company’s staff at a staff representative assembly, general staff meeting or otherwise. The term of a director shall be stipulated in the articles of association, provided that no term of office shall last for more than three years. A director may serve consecutive terms if re-elected. A director shall continue to perform his/her duties as a director in accordance with the laws, administrative regulations and the articles of association until a duly reelected director takes office, if re-election is not conducted in a timely manner upon the expiry of his/her term of office or if the resignation of directors results in the number of directors being less than the quorum.

Under the PRC Company Law, the board of directors may exercise its powers:

(i) to convene shareholders’ general meetings and report on its work to the shareholders’ general meetings;

(ii) to implement the resolutions passed by the shareholders at the shareholders’ general meetings;

(iii) to decide on the company’s operational plans and investment proposals;

(iv) to formulate proposal for the company’s annual financial budgets and final accounts;

(v) to formulate the company’s profit distribution proposals and loss recovery proposals;

(vi) to formulate proposals for the increase or reduction of the company’s registered capital and the issue of corporate bonds;

(vii) to formulate proposals for the merger, division or dissolution of the company or change of corporate form;

(viii) to decide on the setup of the company’s internal management organs;

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(ix) to appoint or dismiss the company’s general manager and decide on his/her remuneration and, based on the general manager’s recommendation, to appoint or dismiss any deputy general manager and financial officer of the company and to decide on their remunerations;

(x) to formulate the company’s basic management system; and

(xi) to exercise any other authority stipulated in the articles of association.

Meetings of the board of directors shall be convened at least twice each year. Notices of meeting shall be given to all directors and supervisors 10 days before the meeting. Interim board meetings may be proposed to be convened by shareholders representing more than 10% of the voting rights, more than one-third of the directors or the supervisory board. The chairman shall convene the meeting within 10 days of receiving such proposal, and preside over the meeting. The board may otherwise determine the means and the period of notice for convening an interim board meeting. Meetings of the board of directors shall be held only if more than half of the directors are present. Resolutions of the board shall be passed by more than half of all directors. Each director shall have one vote for a resolution to be approved by the board. Directors shall attend board meetings in person. If a director is unable to attend for any reason, he/she may appoint another director to attend the meeting on his/her behalf by a written power of attorney specifying the scope of authorization that his/her representative has. Resolutions of the board meetings shall be approved by simple majority of all members of the board.

If a resolution of the board of directors violates the laws, administrative regulations or the articles of association or resolutions of the general meeting, and as a result of which the company sustains serious losses, the directors participating in the resolution are liable to compensate the company. However, if it can be proved that a director expressly objected to the resolution when the resolution was voted on, and that such objection was recorded in the minutes of the meeting, such director shall be relieved from that liability.

Under the PRC Company Law, the following person may not serve as a director in a company:

(i) a person who is unable or has limited ability to undertake any civil liabilities;

(ii) a person who has been convicted of an offense of corruption, bribery, embezzlement, misappropriation of property or destruction of the socialist economic order, or who has been deprived of his political rights due to his/her crimes, in each case where less than five years have elapsed since the date of completion of the sentence;

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(iii) a person who has been a former director, factory manager or manager of a company or an enterprise that has entered into in solvent liquidation and who was personally liable for the insolvency of such company or enterprise, where less than three years have elapsed since the date of the completion of the bankruptcy and liquidation of the company or enterprise;

(iv) a person who has been a legal representative of a company or an enterprise that has had its business license revoked due to violations of the law or has been ordered to close down by law and the person was personally responsible, where less than three years have elapsed since the date of such revocation; and

(v) a person who is liable for a relatively large amount of debts that are overdue.

Where a company elects or appoints a director to which any of the above circumstances applies, such election or appointment shall be null and void. A director to which any of the above circumstances applies during his/her term of office shall be released of his/her duties by the company.

Other circumstances under which a person is disqualified from acting as a director of a company as set out in the Mandatory Provisions.

The board shall appoint a chairman and may appoint a vice chairman.

The chairman and the vice chairman shall be elected with approval of more than half of all the directors. The chairman shall convene and preside over board meetings and review the implementation of board resolutions. The vice chairman shall assist the chairman to perform his/her duties. Where the chairman is incapable of performing or is not performing his/her duties, the duties shall be performed by the vice chairman. Where the vice chairman is incapable of performing or is not performing his/her duties, a director nominated by more than half of the directors shall perform his/her duties.

Supervisory Board

A company shall have a supervisory board composed of not less than three members. The supervisory board consists of representatives of the shareholders and an appropriate proportion of representatives of the company’s staff. The actual proportion shall be determined in the articles of association, provided that the proportion of representatives of the company’s staff shall not be less than one-third. Representatives of the company’s staff at the supervisory board shall be democratically elected by the company’s staff at the staff representative assembly, general staff meeting or otherwise. The supervisory board shall appoint a chairman and may appoint a vice chairman. The chairman and the vice chairman of the supervisory board shall be elected by more than half of the supervisors.

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According to the Reply of the Overseas Listing Department of the CSRC and the Production System Department of the State Commission for Restructuring the Economic System on Opinions Concerning the Supplement and Amendment to Articles of Association by Companies to be Listed in Hong Kong (《中國證監會海外上市部、國家體改委生產體制司關於到香港上市公司對公司章程作補充修改的意見的函》), the chairman of the supervisory board shall be appointed by more than two-thirds of the supervisors.

The chairman of the supervisory board shall convene and preside over supervisory board meetings. Where the chairman of the supervisory board is incapable of performing or is not performing his/her duties, the vice chairman of the supervisory board shall convene and preside over supervisory board meetings. Where the vice chairman of the supervisory board is incapable of performing or is not performing his/her duties, a supervisor nominated by more than half of the supervisors shall convene and preside over supervisory board meetings. Directors and senior management shall not act concurrently as supervisors.

Each term of office of a supervisor is three years and he/she may serve consecutive terms if reelected. A supervisor shall continue to perform his/her duties as a supervisor in accordance with the laws, administrative regulations and the articles of association until a duly re-elected supervisor takes office, if re-election is not conducted in a timely manner upon the expiry of his/her term of office or if the resignation of supervisors results in the number of supervisors being less than the quorum.

The supervisory board may exercise its powers:

(i) to review the company’s financial position;

(ii) to supervise the directors and senior management in their performance of their duties and to propose the removal of directors and senior management who have violated any laws, regulations, the articles of association or shareholders’ resolutions;

(iii) when the acts of a director or senior management personnel are detrimental to the company’s interests, to require the director and senior management to correct these acts;

(iv) to propose the convening of extraordinary shareholders’ general meetings and to convene and preside over shareholders’ general meetings when the board fails to perform the duty of convening and presiding over shareholders’ general meetings under the PRC Company Law;

(v) to submit proposals to the shareholders’ general meetings;

(vi) to bring actions against directors and senior management pursuant to the relevant provisions of the PRC Company Law; and

(vii) to exercise any other authority stipulated in the articles of association.

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Supervisors may be present at board meetings and make inquiries or proposals in respect of the resolutions of the board. The supervisory board may investigate any irregularities identified in the operation of the company and, when necessary, may engage an accounting firm to assist its work at the cost of the company.

The circumstances under which a person is disqualified from acting as a director of a company as set out in the Mandatory Provisions shall also apply to the qualification of supervisory.

Manager and Senior Management

A company shall have a general manager who shall be appointed or removed by the board of directors. The general manager, who reports to the board of directors, may exercise his/her powers:

(i) to manage the production, operation and administration of the company and arrange for the implementation of the resolutions of the board of directors;

(ii) to arrange for the implementation of the company’s annual business plans and investment proposals;

(iii) to formulate proposals for the establishment of the company’s internal management organs;

(iv) to formulate the fundamental management system of the company;

(v) to formulate the company’s specific rules and regulations;

(vi) to recommend the appointment or dismissal of any deputy manager and any financial officer of the company;

(vii) to appoint or dismiss management personnel (other than those required to be appointed or dismissed by the board of directors); and

(viii) to exercise any other authority granted by the board of directors.

Other provisions in the articles of association on the general manager’s powers shall also be complied with. The general manager shall be present at meetings of the board of directors. However, the general manager shall have no voting rights at meetings of the board of directors unless he/she concurrently serves as a director.

According to the PRC Company Law, senior management refers to the general manager, deputy manager, financial officer, secretary to the board of a listed company and other personnel as stipulated in the articles of association.

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Duties of Directors, Supervisors, General Managers and Other Senior Management

Directors, supervisors, the general manager, the deputy manager and senior management are required under the PRC Company Law to comply with the relevant laws, regulations and the articles of association, and carry out their duties in good faith and with due diligence.

Directors, supervisors, senior management are prohibited from accepting bribes or other unlawful income and from misappropriating the company’s property. Directors and senior management are prohibited from:

(i) misappropriating company funds;

(ii) depositing company funds into accounts under their own names or the names of other individuals;

(iii) loaning company funds to others or providing guarantees in favour of others supported by company’s property in violation of the articles of association or without approval of the general meeting or the board of directors;

(iv) entering into contracts or transactions with the company in violation of the articles of association or without approval of the general meeting or the board of directors;

(v) using their position to procure business opportunities for themselves or others that should have otherwise been available to the company or operating businesses similar to that of the company for their own benefits or on behalf of others without approval of the general meeting;

(vi) accepting commissions paid by a third party for transactions conducted with the company;

(vii) unauthorized divulgence of confidential information of the company; and

(viii) other acts in violation of their duty of loyalty to the company.

Income generated by directors or senior management in violation of aforementioned shall be returned to the company.

A director, supervisor or senior management who contravenes any law, regulation or the company’s articles of association in the performance of his/her duties resulting in any loss to the company shall be liable to the company for compensation.

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Where a director, supervisor or senior management is required to attend a shareholders’ general meeting, such director, supervisor or senior management shall attend the meeting and answer the inquiries from shareholders. Directors and senior management shall furnish all true information and data to the supervisory board, or if a limited liability company has no supervisory board, supervisors, without impeding the discharge of duties by the supervisory board or supervisors.

Finance and Accounting

A company shall establish its own financial and accounting systems according to the laws, administrative regulations and the regulations of the competent financial departments of the State Council. At the end of each financial year, a company shall prepare a financial report which shall be audited by an accounting firm in accordance with the laws. The financial and accounting reports shall be prepared in accordance with the laws, administrative regulations and the regulations of the financial departments of the State Council.

The company’s financial reports shall be made available for shareholders’ inspection at the company 20 days before the convening of an annual general meeting. A joint stock limited company that makes public stock offerings shall publish its financial reports.

When distributing each year’s profits after taxation, the company shall set aside 10% of its profits after taxation for the company’s statutory common reserve fund until the fund has reached 50% or more of the company’s registered capital. When the company’s statutory common reserve fund is not sufficient to make up for the company’s losses for the previous years, the current year’s profits shall first be used to make good the losses before any allocation is set aside for the statutory common reserve fund. After the company has made allocations to the statutory common reserve fund from its profits after taxation, it may, upon passing a resolution at a shareholders’ general meeting, make further allocations from its profits after taxation to the discretionary common reserve fund. After the company has made good its losses and made allocations to its discretionary common reserve fund, the remaining profits after taxation shall be distributed in proportion to the number of shares held by the shareholders, except for those which are not distributed in a proportionate manner as provided by the articles of association.

Profits distributed to shareholders by a resolution of a shareholders’ general meeting or the board of directors before losses have been made good and allocations have been made to the statutory common reserve fund in violation of the requirements described above must be returned to the company. The company shall not be entitled to any distribution of profits in respect of shares held by it.

The premium over the nominal value of the shares of the company on issue and other income as required by competent governmental department to be treated as the capital reserve fund shall be accounted for as the capital reserve fund. The common reserve fund of a company shall be applied to make good the company’s losses, expand its business operations or increase its capital. The capital reserve fund, however, shall not be used to make good the company’s losses. Upon the transfer of the statutory common reserve fund into capital, the balance of the fund shall not be less than 25% of the registered capital of the company before such transfer.

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The company shall have no accounting books other than the statutory books. The company’s assets shall not be deposited in any account opened under the name of any individual.

Appointment and Retirement of Auditors

Pursuant to the PRC Company Law, the appointment or dismissal of an accounting firm responsible for the company’s auditing shall be determined by shareholders at a shareholders’ general meeting or the board of directors in accordance with the articles of association. The accounting firm should be allowed to make representations when the general meeting or the board of directors conduct a vote on the dismissal of the accounting firm on their respective meetings. The company should provide true and complete accounting evidence, accounting books, financial and accounting reports and other accounting information to the engaged accounting firm without any refusal or withholding or falsification of information.

The Special Regulations require a company to engage an independent qualified accounting firm to audit the company’s annual reports and to review and check other financial reports of the company. The accounting firm’s term of office shall commence from the end of the shareholders’ annual general meeting to the end of the next shareholders’ annual general meeting. The appointment, removal and expiry of appointment of accounting firm by our Company shall be reported to the CSRC.

Profit Distribution

According to the PRC Company Law, a company shall not distribute profits before losses are covered and the statutory common reserve fund is provided. The Special Regulations require that any dividend and other distribution to H shareholders shall be declared and calculated in RMB and paid in foreign currency. Under the Mandatory Provisions, a company shall make foreign currency payments to shareholders through receiving agents.

Amendments to the Articles of Association

Pursuant to PRC Company Law, the resolution of a shareholders’ general meeting regarding any amendment to a company’s articles of association requires affirmative votes by at least two-thirds of the votes held by shareholders attending the meeting. Pursuant to the Mandatory Provisions, the company may amend its articles of association according to the laws, administrative regulations and the articles of association. The amendment to articles of association involving content of the Mandatory Provisions will only be effective upon approval of the department in charge of company examination and approval and the securities regulatory department authorized by the State Council, while the amendment to articles of association involving matters of company registration shall be registered with the relevant authority in accordance with applicable laws.

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Dissolution and Liquidation

A company shall be dissolved for any of the following reasons:

(i) the term of its operation set out in the articles of association has expired or other events of dissolution specified in the articles of association have occurred;

(ii) the shareholders have resolved at a shareholders’ general meeting to dissolve the company;

(iii) the company is dissolved by reason of its merger or division;

(iv) the business license of the company is revoked or the company is ordered to close down or to be dissolved in accordance with the laws; or

(v) the company is dissolved by a people’s court in response to the request of shareholders holding shares that represent more than 10% of the voting rights of all shareholders of the company, on the grounds that the operation and management of the company has suffered serious difficulties that cannot be resolved through other means, rendering on-going existence of the company a cause for significant losses to the shareholders.

In the event of paragraph (i) above, the company may carry on its existence by amending its articles of association. The amendments to the articles of association in accordance with the provisions described above shall require the approval of more than two-thirds of voting rights of shareholders attending a shareholders’ general meeting.

Where the company is dissolved under the circumstances set forth in paragraph (i), (ii), (iv) or (v) above, it should establish a liquidation committee within 15 days of the date on which the dissolution matter occurs. The liquidation committee shall be composed of directors or any other person determined by a shareholders’ general meeting. If a liquidation committee is not established within the prescribed period, the company’s creditors may file an application with a people’s court, requesting that the court appoint relevant personnel to form a liquidation committee to conduct the liquidation. The people’s court should accept such application and form a liquidation committee to conduct liquidation in a timely manner.

The liquidation committee may exercise following powers during the liquidation:

(i) to dispose of the company’s assets and to prepare a balance sheet and an inventory of assets;

(ii) to notify the company’s creditors or publish announcements;

(iii) to deal with any outstanding business related to the liquidation;

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(iv) to pay any overdue tax together with any tax arising during the liquidation process;

(v) to settle the company’s financial claims and liabilities;

(vi) to handle the company’s remaining assets after its debts have been paid off; and

(vii) to represent the company in any civil procedures.

The liquidation committee shall notify the company’s creditors within 10 days of its establishment, and publish an announcement in newspapers within 60 days.

A creditor shall lodge his claim with the liquidation committee within 30 days of receipt of the notification or within 45 days of the date of the announcement if he has not received any notification. A creditor shall, in making his claim, state all matters relevant to his creditor’s rights and furnish relevant evidence. The liquidation committee shall register such creditor’s rights. The liquidation committee shall not make any settlement to creditors during the period of the claim.

Upon disposal of the company’s property and preparation of the required balance sheet and inventory of assets, the liquidation committee shall draw up a liquidation plan and submit this plan to a shareholders’ general meeting or a people’s court for endorsement. The remaining assets of the company, after payment of liquidation expenses, employee wages, social insurance expenses and statutory compensation, outstanding taxes and the company’s debts, shall be distributed to shareholders in proportion to shares held by them. The company shall continue to exist during the liquidation period, although it cannot engage in operating activities that are not related to the liquidation. The company’s property shall not be distributed to shareholders before settlements are made in accordance with the requirements described above.

Upon liquidation of the company’s property and preparation of the required balance sheet and inventory of assets, if the liquidation committee becomes aware that the company does not have sufficient assets to meet its liabilities, it must apply to a people’s court for a declaration of bankruptcy in accordance with the laws. Following such declaration by the people’s court, the liquidation committee shall hand over the administration of the liquidation to the people’s court.

Upon completion of the liquidation, the liquidation committee shall submit a liquidation report to the shareholders’ general meeting or a people’s court for confirmation of its completion. Following such confirmation, the report shall be submitted to the company registration authority to cancel the company’s registration, and an announcement of its termination shall be published. Members of the liquidation committee are required to perform their duties in good faith and in compliance with relevant laws. Members of the liquidation committee shall be prohibited from abusing their authority in accepting bribes or other

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Liquidation of a company declared bankrupt according to laws shall be processed in accordance with the laws on corporate bankruptcy.

Overseas Listing

The shares of a company shall only be listed overseas after obtaining approval from the CSRC, and the listing must be arranged in accordance with procedures specified by the State Council.

Pursuant to The Special Regulations, a company may issue shares to overseas investors and list its shares overseas upon approval from the CSRC. Subject to approval by the CSRC of the company’s plans to issue overseas-listed foreign invested shares and domestic shares the board of directors of the company may make arrangement to implement such plans for such two kinds of shares to be issued respectively, within fifteen (15) months from the date of approval by the CSRC.

Loss of Share Certificates

If the share certificate(s) in registered form is either stolen, lost or destroyed, a shareholder may, in accordance with the public notice procedures set out in the PRC Civil Procedure Law, apply to a people’s court for a declaration that such certificate(s) will no longer be valid. After such declaration has been obtained, the shareholder may apply to the company for the issue of a replacement certificate(s).

A separate procedure regarding the loss of share certificates and H share certificates of the overseas listed foreign invested shareholders of the PRC is provided for in the Mandatory Provisions, details of which are set out in the articles of association.

Merger and Division

A merger agreement shall be signed by merging companies and the involved companies shall prepare their respective balance sheets and inventory of assets. The companies shall within 10 days of the date of passing the resolution approving the merger notify their respective creditors and publicly announce the merger within 30 days. A creditor may, within 30 days of receipt of the notification, or within 45 days of the date of the announcement if he has not received the notification, demand the company to settle any outstanding debts or provide relevant guarantees. In case of a merger, the credits and debts of the merging parties shall be assumed by the surviving or the new company.

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In case of a division, the company’s assets shall be divided and a balance sheet and an inventory of assets shall be prepared. When a resolution regarding the company’s division is approved, the company should notify all its creditor within 10 days of the date of passing such resolution and publicly announce the division in newspapers within 30 days. Unless an agreement in writing is reached with creditors in respect of the settlement of debts, the liabilities of the company which have accrued prior to such division shall be jointly borne by the separated companies.

Changes in the registration of the companies as a result of the merger or division shall, if so required, be registered with the relevant administration authority for industry and commerce.

In accordance with the laws, cancelation of a company shall be registered when a company is dissolved and incorporation of a company shall be registered when a new company is incorporated.

SECURITIES LAW AND REGULATIONS

The PRC has promulgated a number of regulations that relate to the issuance and trading of our shares and disclosure of information. In October 1992, the State Council established the Securities Committee and the CSRC. The Securities Committee is responsible for coordinating the drafting of securities regulations, formulating securities-related policies, planning the development of securities markets, directing, coordinating and supervising all securities- related institutions in the PRC and administering the CSRC. The CSRC is the regulatory arm of the Securities Committee and is responsible for the drafting of regulatory provisions governing securities markets, supervising securities companies, regulating public offerings of securities by PRC companies in the PRC or overseas, regulating the trading of securities, compiling securities-related statistics and undertaking relevant research and analysis. On 29 March 1998, the State Council consolidated the aforementioned two departments and reformed the CSRC.

On 22 April 1993, the Provisional Regulations Concerning the Issuance and Trading of Shares (《股票發行與交易管理暫行條例》) were promulgated by the State Council to govern the application and approval procedures for public offerings of equity securities, trading in equity securities, the acquisition of listed companies, deposit, clearing and transfer of listed equity securities, as well as the disclosure of information, investigation, penalties and dispute resolutions with respect to a listed company.

On 25 December 1995, the State Council promulgated the Regulations of the State Council Concerning Domestic Listed Foreign Shares of regulations Joint Stock Limited Companies (《國務院關於股份有限公司境內上市外資股的規定》). These regulations principally govern the issuance, subscription, trading and declaration of dividends and other distributions of domestic listed foreign shares and disclosure of information of joint stock limited companies having domestic listed foreign shares.

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The Securities Law of the People’s Republic of China (the “PRC Securities Law”) took effect on 1 July 1999 and was revised as at 28 August 2004, 27 October 2005, 29 June 2013, 31 August 2014 and 28 December 2019 respectively. It was the first national securities law in the PRC, and is divided into 14 chapters and 226 articles regulating, among other matters, the issuance and trading of securities, takeovers of listed companies, securities exchanges, securities companies and the duties and responsibilities of the State Council’s securities regulatory authorities. The PRC Securities Law comprehensively regulates activities in the PRC securities market. Article 224 of the PRC Securities Law provides that domestic enterprises issuing securities overseas directly or indirectly or listing their securities overseas shall comply with the relevant provisions of the State Council. Currently, the issuance and trading of foreign issued securities (including H shares) are principally governed by the rules and regulations promulgated by the State Council and the CSRC.

On 14 November 2019, CSRC promulgated the Notice of CSRC on the Guidance of H-share Companies Applying for “Full Circulation” Business of Unlisted Shares in China ([2019] No. 22), which came into effect on the same day. This provision is to regulate the listing and circulation (hereinafter referred to as “Full Circulation”) of unlisted domestic shares of domestic joint-stock limited companies (hereinafter referred to as H-share Companies) listed on the stock exchange of Hong Kong (including unlisted domestic capital stock held by domestic shareholders before overseas listing, unlisted domestic capital stock issued in China after overseas listing and unlisted shares held by foreign shareholders) to the Hong Kong Stock Exchange. Of which the H-share Companies applied for “Full Circulation” shall put forward the application to CSRC in accordance to the administrative licensing procedure of Examination and Approval of Overseas Public Offering and Listing (Including Additional Issuance) of Joint-Stock Limited Companies. H-share companies may put forward the application of “Full Circulation” separately or simultaneously when applying for overseas refinancing. Unlisted domestic joint-stock limited companies may put forward the application of “Full Circulation” simultaneously when applying for overseas initial public offering and listing.

ARBITRATION AND ENFORCEMENT OF ARBITRAL AWARDS

The Arbitration Law of the PRC (《中華人民共和國仲裁法》) (the “PRC Arbitration Law”) was enacted by the Standing Committee of the NPC on 31 August 1994, which became effective on 1 September 1995 and was amended on 1 September 2017. It is applicable to economic disputes involving foreign parties where all parties have entered into a written agreement to resolve disputes by arbitration before an arbitration committee constituted in accordance with the PRC Arbitration Law. The PRC Arbitration Law provides that an arbitration committee may, before the promulgation of arbitration regulations by the PRC Arbitration Association, formulate interim arbitration rules in accordance with the PRC Arbitration Law and the PRC Civil Procedure Law. Where the parties have agreed to settle disputes by means of arbitration, a people’s court will refuse to handle a legal proceeding initiated by one of the parties at such people’s court, unless the arbitration agreement has lapsed.

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The Mandatory Provisions require an arbitration clause to be included in the articles of association of an issuer to the effect that whenever any disputes or claims arise from (i) the holders of overseas listed foreign shares and the company; (ii) the holders of overseas listed foreign shares and a holder of domestic shares; or (iii) the holders of overseas listed foreign shares and the company’s directors, supervisors or other management personnel, such parties shall be required to refer such dispute or claim to arbitration at either the CIETAC or the HKIAC. Disputes in respect of the definition of shareholder and disputes in relation to the company’s shareholder registry need not be resolved by arbitration. If the party seeking arbitration elects to arbitrate the dispute or claim at the HKIAC, then either party may apply to have such arbitration conducted in Shenzhen in accordance with the securities arbitration rules of the HKIAC.

Under the PRC Arbitration Law, an arbitral award shall be final and binding on the parties involved in the arbitration. If any party fails to comply with the award, the other party to the award may apply to a people’s court for its enforcement. A people’s court may refuse to enforce an arbitral award made by an arbitration commission if there is any procedural irregularity (including irregularity in the composition of the arbitration committee, or the making of an award on matters beyond the scope of the arbitration or the arbitration commission having no jurisdiction).

Any party seeking to enforce an arbitral award of a foreign affairs arbitration organ of the PRC against a party who or whose property is not located within the PRC may apply to a foreign court with jurisdiction over the case for enforcement of the award. Likewise, an arbitral award made by a foreign arbitration body may be recognised and enforced by a PRC court in accordance with the principle of reciprocity or any international convention concluded or acceded to by the PRC.

The PRC acceded to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”) adopted on 10 June 1958 pursuant to a resolution of the Standing Committee of the NPC passed on 2 December 1986. The New York Convention provides that all arbitral awards made in a state which is a party to the New York Convention shall be recognised and enforced by other parties thereto subject to their rights to refuse enforcement under certain circumstances, including where the enforcement of the arbitral award is against the public policy of that state. At the time of the PRC’s accession to the Convention, the Standing Committee of the NPC declared that (i) the PRC will only recognise and enforce foreign arbitral awards based on the principle of reciprocity; and (ii) the New York Convention will only be applied to disputes deemed under PRC law to be arising from contractual or non-contractual mercantile legal relations.

An arrangement for reciprocal enforcement of arbitral awards between Hong Kong and the PRC was made on 18 June 1999 and became effective on 1 February 2000. The arrangement allows awards made by PRC arbitral authorities to be enforced in Hong Kong and awards by Hong Kong arbitral authorities to be enforced in the PRC. If it is considered that the enforcement of awards by Hong Kong arbitral authorities is not in the public interest of China, the court of PRC may decline the enforcement of such awards.

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SUMMARY OF MATERIAL DIFFERENCES BETWEEN HONG KONG AND PRC COMPANY LAW

The Hong Kong laws applicable to a company incorporated in Hong Kong are based on the Companies Ordinance and is supplemented by common law and the rules of equity that are applicable to Hong Kong. As a joint stock limited company established in the PRC that is seeking a primary listing of shares on the Stock Exchange, we are governed by the PRC Company Law and all other rules and regulations promulgated pursuant to the PRC Company Law.

Set out below is a summary of certain material differences between Hong Kong company laws applicable to a company incorporated in Hong Kong and the PRC Company Law applicable to a joint stock limited company incorporated and existing under the PRC Company Law. This summary is, however, not intended to be an exhaustive comparison.

Corporate Existence

Under Hong Kong company laws, a company with share capital, is incorporated by the Registrar of Companies in Hong Kong which issues a certificate of incorporation to the company upon its incorporation and the company will acquire an independent corporate existence. A company may be incorporated as a public company or a private company. Pursuant to the Companies Ordinance, the articles of association of a private company incorporated in Hong Kong shall contain certain pre-emptive provisions. A public company’s articles of association do not contain such pre-emptive provisions.

Under the PRC Company Law, a joint stock limited company may be incorporated by promotion or public subscription.

Share Capital

Under the new Companies Ordinance, the concept of the nominal value (also known as par value) of shares of a Hong Kong company has been abolished, and the companies have increased flexibility to alter its share capital by (i) increasing its share capital; (ii) capitalizing its profits; (iii) allotting and issuing bonus shares with or without increasing its share capital; (iv) converting its shares into larger or smaller number of shares; and (v) canceling its shares. The concept of authorized capital no longer applies to a Hong Kong company formed on or after 3 March 2014 as well. Hence, the directors of a Hong Kong company may, with the prior approval of the shareholders, if required, cause the company to issue new shares. The PRC Company Law does not provide for authorized share capital. Our registered capital is the amount of our issued share capital. Any increase in our registered capital must be approved by our shareholders’ general meeting and the relevant PRC governmental and regulatory authorities.

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Under the PRC Securities Law, listing applications should meet the listing requirements under the listing rules of the stock exchanges. Hong Kong law does not prescribe any minimum capital requirements for companies incorporated in Hong Kong.

Under the PRC Company Law, the shares may be subscribed for in the form of money or non-monetary assets (other than assets not entitled to be used as capital contributions under relevant laws and administrative regulations). For non-monetary assets to be used as capital contributions, appraisals and asset verification must be carried out to ensure no overvaluation or under-valuation of the assets. There is no such restriction on a Hong Kong company under Hong Kong law.

Restrictions on Shareholding and Transfer of Shares

Generally, domestic shares, which are denominated and subscribed for in Renminbi, may only be subscribed for or traded by the State, PRC legal persons, natural persons and other investment institutions as permitted by laws and regulations. Overseas listed shares, which are denominated in Renminbi and subscribed for in a currency other than Renminbi, may only be subscribed for, and traded by, investors from Hong Kong, Macau SAR and Taiwan or any country and territory outside the PRC, or qualified domestic institutional investors. If the H shares are eligible securities under the Southbound Trading Link, they may also be subscribed for and traded by PRC investors in accordance with the rules and limits of Shanghai-Hong Kong Stock Connect or Shenzhen-Hong Kong Stock Connect.

Under the PRC Company Law, a promoter of a joint stock limited company is not allowed to transfer the shares it holds for a period of one year after the date of establishment of the company. Shares in issue prior to a public offering of the company cannot be transferred within one year from the listing date of the shares on a stock exchange. Shares in a joint stock limited liability company held by its directors, supervisors and senior management and transferred each year during their term of office shall not exceed 25% of the total shares held by them in that company, and the shares they held in that company cannot be transferred within one year from the listing date of the shares, and also cannot be transferred within half a year after the said personnel has left office. The articles of association may set out other restrictive requirements on the transfer of a company’s shares held by its directors, supervisors and senior management.

There are no restrictions on shareholdings and transfers of shares under Hong Kong law apart from (i) the restriction on the Company to issue additional Shares within six months, and (ii) 12-month lockup on Controlling Shareholders’ disposal of Shares, after the [REDACTED].

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Financial Assistance for Acquisition of Shares

The PRC Company Law does not prohibit or restrict a joint stock limited company or its subsidiaries from providing financial assistance for the purpose of an acquisition of its own or its holding company’s shares. However, the Mandatory Provisions contain certain restrictions on a company and its subsidiaries on providing such financial assistance similar to those under Hong Kong company law.

Notice of Shareholders’ Meetings

Under the PRC Company Law, notice of a shareholder’s annual general meeting must be given not less than twenty (20) days before the meeting, whereas notice of an extraordinary general meeting must be given not less than fifteen (15) days before the meeting. If a company issues bearer shares, notice of a shareholder’s general meeting must be given at least thirty (30) days prior to the meeting.

For a company incorporated in Hong Kong with limited liability, the minimum period of notice of a general meeting is fourteen (14) days. Further, where a meeting involves consideration of a resolution requiring special notice, the company must also give its shareholders notice of the resolution at least fourteen (14) days before the meeting. The notice period for the annual shareholders’ general meeting is twenty one (21) days.

Quorum for Shareholders’ Meetings

The PRC Company Law does not specify any quorum requirement for a shareholders’ general meeting, but the Special Regulations and the Mandatory Provisions provide that general meetings may only be convened when replies to the notice of that meeting have been received from shareholders whose shares represent at least 50% of the voting rights at least twenty (20) days before the proposed date of the meeting, or if that 50% level is not achieved, the company shall within five days notify its shareholders again by way of a public announcement and the shareholders’ general meeting may be held thereafter.

Under Hong Kong law, the quorum for a shareholders’ meeting is two members, unless the articles of association of a company specifies otherwise or the company has only one member, in which case the quorum is one.

Voting at Shareholders’ Meetings

Under the PRC Company Law, the passing of any resolution requires more than one-half of the affirmative votes held by our Shareholders present in person or by proxy at a shareholders’ meeting except in cases such as proposed amendments to our Articles of Association, increase or decrease of registered capital, merger, division, dissolution or transformation, which require two-thirds of the affirmative votes cast by shareholders present in person or by proxy at a shareholders’ general meeting.

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Under Hong Kong law, (i) an ordinary resolution is passed by a simple majority of affirmative votes cast by shareholders present in person, or by proxy, at a general meeting, and (ii) a special resolution is passed by not less than three-fourths of affirmative votes casted by shareholders present in person, or by proxy, at a general meeting.

Variation of Class Rights

The PRC Company Law makes no specific provision relating to variation of class rights. However, the PRC Company Law states that the State Council can promulgate requirements relating to other kinds of shares. The Mandatory Provisions contain detailed provisions relating to the circumstances which are deemed to be variations of class rights and the approval procedures required to be followed in respect thereof. These provisions have been incorporated in the Articles of Association, which are summarized in “Appendix V—Summary of Articles of Association.”

Under the Companies Ordinance, no rights attached to any class of shares can be varied except (i) with the passing of a special resolution by the shareholders of the relevant class at a separate meeting sanctioning the variation, (ii) with the written consent of shareholders representing at least three-fourths of the total voting rights of shareholders of the relevant class, or (iii) if there are provisions in the articles of association relating to the variation of those rights, then in accordance with those provisions.

Directors, Senior Management and Supervisors

The PRC Company Law, unlike Hong Kong company law, does not contain any requirements relating to the declaration of directors’ interests in material contracts, restrictions on directors’ authority in making major dispositions, restrictions on companies providing certain benefits to directors and guarantees in respect of directors’ liability and prohibitions against compensation for loss of office without shareholders’ approval. The Mandatory Provisions, however, contain certain restrictions on major disposals and specify the circumstances under which a director may receive compensation for loss of office.

Board of Supervisors

Under the PRC Company Law, a joint stock limited company’s directors and managers are subject to the supervision of a Board of Supervisors. There is no mandatory requirement for the establishment of a board of supervisors for a company incorporated in Hong Kong. The Mandatory Provisions provide that each supervisor owes a duty, in the exercise of his powers, to act in good faith and honestly in what he considers to be in the best interests of the company and to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

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Derivative Action by Minority Shareholders

Under Hong Kong company law, a shareholder may, with the leave of the Court, start a derivative action on behalf of a company for any misconduct committed by its directors against the company. For example, leave may be granted where the directors control a majority of votes at a general meeting, and could thereby prevent the company from suing the directors in its own name.

Pursuant to the PRC Company Law, in the event where the directors and senior management of a joint stock limited company violate laws, administrative regulations or its articles of association, resulting in losses to the company, the shareholders individually or jointly holding over 1% of the shares in the company for more than 180 consecutive days may request in writing the supervisory committee to initiate proceedings in the people’s court. In the event that the supervisory committee violates as such, the above said shareholders may send written request to the board of directors to initiate proceedings in the people’s court. Upon receipt of such written request from the shareholders, if the supervisory committee or the board of directors refuses to initiate such proceedings, or has not initiated proceedings within 30 days upon receipt of the request, or if under urgent situations, failure of initiating immediate proceedings may cause irremediable damages to the company, the above said shareholders shall, for the benefit of the company’s interests, have the right to initiate proceedings directly to the court in their own name.

The Mandatory Provisions provide further remedies against the directors, supervisors and senior management who breach their duties to the company. In addition, as a condition to the listing of shares on the Stock Exchange, each director and supervisor of a joint stock limited company is required to give an undertaking in favour of the company acting as agent for the shareholders. This allows minority shareholders to take action against directors and supervisors in default.

Minority Shareholder Protection

Under Hong Kong laws, a shareholder who complains that the affairs of a company incorporated in Hong Kong are conducted in a manner unfairly prejudicial to his interests may petition to the court to either wind up the company or make an appropriate order regulating the affairs of the company. In addition, on the application of a specified number of members, the Financial Secretary of Hong Kong may appoint inspectors who are given extensive statutory powers to investigate the affairs of a company incorporated in Hong Kong.

The PRC Company Law provides that any shareholders holding 10% or above of voting rights of all issued shares of a company may request a people’s court to dissolve the company to the extent that the operation or management of the company experiences any serious difficulties and its continuous existence would cause serious losses to them, and no other alternatives can resolve such difficulties.

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The Company, as required by the Mandatory Provisions, has adopted in its Articles of Association minority Shareholder protection provisions similar to (though not as comprehensive as) those available under the Hong Kong law. These provisions state that a controlling Shareholder may not exercise its voting rights in a manner prejudicial to the interests of other Shareholders, may not relieve a Director or Supervisor of his duty to act honestly in our best interests or may not approve the expropriation by a Director or Supervisor of our assets or the individual rights of other Shareholders.

Financial Disclosure

Under the PRC Company Law, a joint stock limited company is required to make available at the company for inspection by shareholders its financial report 20 days before its annual general meeting. In addition, a joint stock limited company of which the shares are publicly offered must publish its financial report. The Companies Ordinance requires a company incorporated in Hong Kong to send to every shareholder a copy of its financial statements, auditors’ report and directors’ report, which are to be presented before the company in its annual general meeting, not less than twenty one (21) days before such meeting.

According to the PRC laws, a company shall prepare its financial accounting reports as at the end of each accounting year, and submit the same to accounting firms for auditing as required by law. The Mandatory Provisions require that a company must, in addition to preparing financial statements according to the CAS, have its financial statements prepared and audited in accordance with international or Hong Kong accounting standards and its financial statements must also contain a statement of the financial effect of the material differences (if any) from the financial statements prepared in accordance with the CAS.

The Special Regulations require that there should not be any inconsistency between the information disclosed within and outside the PRC and that, to the extent that there are differences in the information disclosed in accordance with the relevant PRC and overseas laws, regulations and requirements of the relevant stock exchanges, such differences should also be disclosed simultaneously.

Information on Directors and Shareholders

The PRC Company Law gives shareholders the right to inspect the company’s articles of association, minutes of the general meetings and financial and accounting reports. Under the article of association, shareholders have the right to inspect and copy (at reasonable charges) certain information on shareholders and on directors which is similar to the rights of shareholders of Hong Kong companies under the Companies Ordinance.

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Receiving Agent

Under the PRC Company Law and Hong Kong law, dividends once declared are debts payable to shareholders. The limitation period for debt recovery action under Hong Kong laws is six years, while under the PRC law this limitation period is three years.

The Mandatory Provisions require the relevant company to appoint a receiving agent for shareholders who hold overseas listed foreign shares, and the receiving agent shall receive on behalf of such holders of shares dividends declared and other monies owed by the company in respect of its overseas listed foreign shares.

Corporate Reorganisation

Corporate reorganization involving a company incorporated in Hong Kong may be effected in a number of ways, such as a transfer of the whole or part of the business or property of the company in the course of voluntary winding up to another company pursuant to the Companies (Winding Up and Miscellaneous Provisions) Ordinance or a compromise or arrangement between the company and its creditors or between the company and its members pursuant to Section 673 and Division 2 of Part 13 of the Companies Ordinance, which requires the sanction of the court. In addition, subject to the shareholders’ approval, an intra-group wholly-owned subsidiary company may also be amalgamated horizontally or vertically under the Companies Ordinance.

Under the PRC Company Law, merger, division, dissolution or change to the status of a joint stock limited liability company has to be approved by shareholders in general meeting.

Special Withdrawal

Under the PRC Company Law, a joint stock limited liability company is required to make transfers equivalent to certain prescribed percentages of its after tax profit to the statutory common reserve fund. There are no corresponding provisions under Hong Kong law.

Dispute Arbitration

In Hong Kong, disputes between shareholders and a company or its directors, managers and other senior management may be resolved through the courts. The Mandatory Provisions provides that disputes between a holder of H shares and the Company, a holder of H shares and directors, supervisors, managers and other members of senior management of the Company or a holder of H shares and a holder of domestic listed shares, arising from the Articles of Association, the PRC Company Law or other relevant laws and administrative regulations which concerns the affairs of the Company should, with certain exceptions, be referred to arbitration at either the HKIAC or the CIETAC. Such arbitration is final and conclusive.

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Remedies of a Company

Under the PRC Company Law, if a director, supervisor or manager in carrying out his duties infringes any law, administrative regulation or the articles of association of a company, which results in damage to the company, that director, supervisor or manager should be responsible to the company for such damages.

The Hong Kong Listing Rules require listed companies’ articles of association to provide for remedies of the company similar to those available under Hong Kong law (including rescission of the relevant contract and recovery of profits from a director, supervisor or senior management).

Dividends

The company has the power in certain circumstances to withhold, and pay to the relevant tax authorities, any tax payable under PRC law on any dividends or other distributions payable to a shareholder.

Under Hong Kong laws, the limitation period for an action to recover a debt (including the recovery of dividends) is six years, whereas under PRC laws, the relevant limitation period is three years. The company must not exercise its powers to forfeit any unclaimed dividend in respect of shares until after the expiry of the applicable limitation period.

Fiduciary Duties

In Hong Kong, directors owe fiduciary duties to the company, including the duty not to act in conflict with the company’s interests. Furthermore, the Companies Ordinance has codified the directors’ statutory duty of care.

Under the Special Regulations, directors and supervisors are not permitted to engage in any activities which compete with or damage the interests of their company.

Closure of Register of Shareholders

The Companies Ordinance requires that the register of shareholders of a company must not generally be closed for the registration of transfers of shares for more than 30 days (extendable to 60 days in certain circumstances) in a year, whereas, as required by the PRC Company Law and the Mandatory Provisions, share transfers shall not be registered within 30 days before the date of a shareholders’ meeting or within five days before the base date set for the purpose of distribution of dividends.

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This Appendix contains a summary of the Articles of Association. As the information set out below is in summary form, it does not contain all of the information that may be important to potential [REDACTED]. A copy of the Articles of Association is available for inspection at the address specified in the section headed “Appendix [VII]—Documents Delivered to the Registrar of Companies and Available for Inspection.”

Shares and Registered Capital

The Company shall have ordinary shares at all times. The Company may create other classes of shares if necessary, upon approval by the examining and approving departments authorized by the State Council. Each share of the same class shall have the equal rights.

All the shares issued by the Company shall have a par value, which shall be RMB1 for each share.

The Company may issue shares to domestic investors and to overseas investors following approval from the competent securities authorities under the State Council. Upon the approval by the competent securities authorities under the State Council for the issue of overseas-listed foreign shares and domestic shares by the Company, the Board may make arrangement for the respective issue thereof within 15 months or within the valid period granted by the competent securities from the date of approval.

Increase, Reduction and Repurchase of Shares

Capital Increase

In accordance with the laws, regulations and these Articles of Association, the Company may, based on its operating and development needs and the special resolution of the general meeting, increase its capital by the following methods:

(i) Public offering;

(ii) Private offering;

(iii) Placing new shares to existing shareholders;

(iv) Allotting bonus issue to existing shareholders;

(v) Capitalizing its capital reserve;

(vi) Other methods permitted by laws or administrative statutes.

The Company’s increase in capital by issuing new shares shall be handled in accordance with the procedures provided for in relevant laws and administrative regulations after having been approved in accordance with these Articles of Association.

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Reduction of Capital

The Company may reduce its registered capital. The Company shall reduce its registered capital in accordance with the Company Law and other relevant regulations and the procedures stipulated in these Articles of Association.

In case of reduction of registered capital of the Company, a balance sheet and assets list shall be formulated.

The Company shall notify its creditors to reduce its registered capital and publish a public announcement in accordance with the Company Law, and pay its debts or provide a corresponding security for repayment as required by the creditors.

Repurchase of Shares

Under the following circumstances, the Company may repurchase its shares in accordance with the provisions of the relevant laws, administrative regulations, listing rules of stock exchange where its shares are listed and these Articles of Association:

(I) To reduce the registered capital of the Company;

(II) To merge with other companies that hold the shares of the Company;

(III) To use the shares for Employee Stock Ownership Plan or as equity incentive;

(IV) The shareholders disagreeing with the merger or separation resolution made by the general meeting ask the Company to acquire their shares;

(V) To use the shares in the conversion of the convertible corporate bonds issued by the listed company;

(VI) Necessary for the listed company to protect the company value and the shareholders’ equity;

(VII) Other circumstances permitted by laws, administrative statutes and relevant PRC regulatory authorities.

Unless the Company is in the course of liquidation, it shall comply with the following provisions in repurchasing its issued and outstanding shares:

(I) Where the Company repurchases its shares at par value, payment shall be made out of the book balance of distributable profits of the Company or out of proceeds of the issue of new shares for that purpose;

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(II) Where the Company repurchases its shares at a premium to their par value, payment up to the par value shall be made out of the book balance of distributable profits of the Company or out of the issuance of new shares made for that purpose. Payment of the portion in excess of the par value shall be effected as follows:

(i) If the shares repurchased were issued at their par value, payment shall be made out of the book balance of distributable profits;

(ii) If the shares repurchased were issued at a premium to their par value, payment shall be made out of the book balance of distributable profit or out of the issuance of new shares made for that purpose; provided that the amount paid out of the proceeds of the issue of new shares shall not exceed the total premium obtained at the time of issue of the old shares or the current amount of the Company’s premium account (or capital common reserve account) (including the premiums from the issuance of new shares) at the time of repurchase;

(III) The sums paid by the Company for the purposes set forth below shall be paid out of the Company’s distributable profits:

(i) Acquisition of the right to repurchase its own shares;

(ii) Modification of any contract for repurchasing its own shares;

(iii) Release from any of its obligations under any repurchase contract.

(IV) After the par value of the canceled shares has been deducted from the registered capital of the Company in accordance with relevant provisions, that portion of the amount deducted from the distributable profit for payment of the par value portion of the shares repurchased shall be transferred to the Company’s premium account (or capital common reserve account).

If the laws, administrative regulations and relevant rules of the securities regulatory authority where the Company’s shares are listed have other provisions on the financial treatment involved in the aforementioned share repurchase, such provisions shall prevail.

FINANCIAL ASSISTANCE FOR THE PURCHASE OF COMPANY SHARES

The Company or its subsidiaries shall not at any time and in any manner provide financial assistance to anyone purchasing or proposing to purchase the Company’s shares. The persons purchasing the shares of the Company include the persons becoming directly or indirectly liable as a result of the purchase of the shares.

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No financial assistance shall be provided at any time and in any manner by the Company and its subsidiaries to reduce the said obligor’s obligation or release the said obligor from the same.

The above restrictions shall not apply for the following circumstances:

(I) The provision of financial assistance by the Company in good faith for the benefit of the Company and the main purpose of the financial assistance is not to purchase shares in the Company, or the financial assistance is an incidental part of a master plan of the Company;

(II) The lawful distribution of the Company’s assets as dividends;

(III) The distribution of dividends in the form of shares;

(IV) A reduction of registered capital, a repurchase of shares, capital restructuring, etc. in accordance with these Articles of Association;

(V) The provision of loans by the Company within its scope of business and in the ordinary course of its business (provided that the net assets of the Company are not thereby reduced or that, to the extent that the assets are thereby reduced, the financial assistance was paid out of the Company’s distributable profits); and

(VI) Contributions made by the Company to the Employee Stock Ownership Plan (provided that the net assets of the Company are not thereby reduced or that, to the extent that the assets are thereby reduced, the financial assistance was paid out of the Company’s distributable profits).

SHARE CERTIFICATES AND REGISTER OF MEMBERS

Share Certificate

The share certificates of the Company shall be in registered form.

The share certificates of the Company shall contain items provided in the PRC Company Law and other items as required by any stock exchange on which the shares of the Company are listed.

Share certificates shall be signed by the legal representative. Where the stock exchange on which the Company’s shares are listed requires that the share certificates shall be signed by other senior officers, the share certificates shall also be signed by the relevant senior officers. Share certificates shall be affixed with the seal of the Company or with the seal in printed form. The affixing of the Company’s seal on share certificates shall be authorized by the Board. The signatures of the legal representative or any senior officers of the Company may be affixed to the share certificates by mechanical means.

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Under the conditions of the paperless issuance and trading of the Company’s shares, the provisions of the securities regulatory agency and the stock exchange where the Company’s shares are listed shall apply.

The Company shall keep a register of shareholders which shall contain the following particulars:

(I) The name (title), address (domicile), occupation or nature of each shareholder;

(II) The class and number of shares held by each shareholder;

(III) The amount paid or payable on the shares held by each shareholder;

(IV) The serial numbers of the shares held by each shareholder;

(V) The date on which each shareholder was registered as a shareholder; and

(VI) The date on which each shareholder ceased to be a shareholder.

The register of shareholders shall be sufficient evidence of the shareholders’ shareholding in Company, unless there is evidence to the contrary.

The Company may, in accordance with the understanding and agreement reached between the competent securities authorities under the State Council and the overseas securities regulatory agencies, keep the original register of shareholders of overseas listed foreign shares outside China and appoint overseas agencies to maintain such register. The original register of shareholders of overseas listed foreign shares listed in Hong Kong shall be maintained in Hong Kong.

Copies of the register of shareholders for overseas listed foreign shares shall be kept at the Company’s domicile. Appointed overseas agencies shall from time to time maintain the consistency of the original register of shareholders for overseas listed foreign shares and the copies thereof. In case of any inconsistency between the original and copies of the register of shareholders of overseas listed foreign shares, the original shall prevail.

The Company shall keep a complete register of shareholders. The register of shareholders shall include the following:

(I) Register of shareholders other than those provided in items (II) and (III) below kept at the Company’s legal address;

(II) Register of shareholders for overseas listed foreign shares kept at the place where the overseas stock exchange in which those shares are listed is located;

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(III) Register of shareholders maintained in other place(s) as the Board thinks fit for the purpose of listing the shares of the Company.

Different parts of the register of shareholders shall not overlap. The transfer of shares registered in a certain part of the register of shareholders shall not, during the continuance of the registration of such shares on that part of the register, be registered in any other part of the register.

Changes and corrections to each part of the register of shareholders shall be in accordance with the laws of the places where that part is kept.

When the Company convenes a general meeting, distributes dividends, is liquidated or engages in other acts requiring the recognition of equity, the Board shall decide that a certain date shall be the Record Date. The registered shareholders as of the Record Date shall be the shareholders of the Company.

Any person that challenges the register of shareholders and requests for his/her name to be entered into or removed from the register may apply to a competent court for correction of the register.

If the individual who has his/her name registered or requests to have his/her name registered on the register of shareholders loses his/her share certificate (i.e., the “Original Share Certificate”), he/she may apply to the Company for issuing a replacement share certificate representing the same shares (i.e., the “Related Shares”).

The Company is not liable to compensate for any losses incurred by any person as a result of the cancellation of the original share certificates or the issue of the replacement share certificates, unless such person is able to prove that there is fraud on the part of the Company.

RIGHTS AND OBLIGATIONS OF THE SHAREHOLDERS

The shareholders of the Company are those who lawfully hold the shares of the Company and have their names registered in the register of shareholders.

The shareholders shall enjoy the rights and assume the obligations according to the class and amount of the shares they hold. The shareholders holding the same class of shares shall enjoy the same rights and assume the same obligations.

Various classes of shareholders of the Company shall have equal rights in any distribution made in the form of dividends or otherwise.

When a legal person is a shareholder of the Company, it shall have its rights exercised by its legal representative or agent on its behalf.

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Shareholders of ordinary shares of the Company shall enjoy the following rights:

(I) To receive dividend and other forms of distribution of interest in proportion to their respective shareholdings;

(II) To request, convene, hold, participate or authorize proxies to attend general meeting, and to exercise voting rights in proportion to their respective shareholdings;

(III) To supervise the management of the business operations of the Company and to make recommendations and interrogations;

(IV) To transfer, bestow or pledge the shares they hold according to the laws, administrative regulations and these Articles of Association;

(V) To obtain relevant information in accordance with these Articles of Association, including:

1. A set of these Articles of Association upon payment of a fee covering the cost;

2. The rights to inspect and obtain photocopies of the following information upon payment of a reasonable charge:

(1) All parts of the register of shareholders;

(2) Personal information of the directors, supervisors, general manager and other senior officers of the Company, including:

(a) Current and previous name and alias;

(b) Main address (domicile);

(d) Full-time and all other part-time jobs and titles;

(e) Identity documents and relevant numbers.

(3) Status of the share capital of the Company;

(4) Reports showing the nominal value, the number, the maximum and minimum price paid in respect of each class of shares repurchased since the end of last fiscal year, and the aggregate amount paid by the Company for such shares;

(5) for shareholders only, copies of the minutes of meetings of shareholders;

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(6) The stubs of corporate bonds, resolutions of meetings of Board of Directors, resolutions of meetings of Supervisory Committee, financial and accounting reports of the Company;

(7) the corporation’s latest audited financial statements and the directors’, auditors’ and supervisors’ reports thereon;

(8) Special resolutions of the corporation;

(9) a copy of the latest annual return filed with the Administration for Industry and Commerce or other competent PRC authority.

The Company shall maintain the documents set out in items (1)(3)(4)(5)(7)(8)(9) and other applicable documents at the Company’s Hong Kong address for free inspection by the public and the shareholders of overseas listed foreign shares in accordance with the requirements of the Listing Rules.

(VI) The right to participate in the distribution of the Company’s remaining assets in proportion to their shareholdings upon termination of liquidation of the Company;

(VII) Request from shareholders who object to a resolution of a general meeting on merger or division of the Company for the Company to acquire their shares;

(VIII) The shareholders holding more than 3% of the shares of the Company separately or jointly have the right to raise temporary proposal and submit it to the convener of the shareholders’ general meeting in writing 10 days before the general meeting is held;

(IX) Any other rights prescribed by the laws, administrative regulations, departmental rules, normative documents, rules of the stock exchange where the Company’s shares are listed and these Articles of Association.

Shareholders of ordinary shares of the Company shall have the following obligations:

(I) To comply with the laws, administrative regulations, departmental rules, normative documents, rules of the stock exchange where the Company’s shares are listed and these Articles of Association;

(II) To pay capital contribution as per the shares subscribed for and the method of subscription;

(III) To be liable to the Company within the limits of the shares they hold;

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(IV) Not to withdraw capital contribution after the Company has been approved for registration, unless in the circumstances stipulated by the relevant laws and administrative regulations;

(V) Not to injure any of the interests of the company or of other shareholders by abusing the shareholder’s rights, or injure the interests of any creditor of the company by abusing the independent status of legal person or the shareholder’s limited liabilities. Where any of the shareholders of a company causes any loss to the company or to other shareholders by abusing the shareholder’s rights, it shall be liable for compensation.Where any of the shareholders of a company evades the payment of its debts by abusing the independent status of legal person or the shareholder’s limited liabilities, if it seriously injures the interests of any creditor, it shall bear several and joint liabilities for the debts of the company;

(VI) Any other obligations prescribed by the laws, administrative regulations, departmental rules, normative documents, rules of the stock exchange where the Company’s shares are listed and these Articles of Association.

Except for the conditions the share subscribers agree to at the time of subscription, shareholders do not assume any subsequently added responsibility for share capital unless otherwise specified.

RESTRICTION ON RIGHTS OF THE CONTROLLING SHAREHOLDERS

In addition to obligations imposed by laws, administrative regulations or required by the stock exchange on which shares of the Company are listed, a controlling shareholder shall not exercise his/her voting rights in a manner prejudicial to the interests of all or part of the shareholders:

(I) To relieve a director or supervisor of his/her duty to act in good faith in the best interest of the Company;

(II) To approve the expropriation by a director or supervisor (for the benefit of his/her own or of another person), in any manner, of the Company’s assets, including but not limited to, opportunities favorable to the Company;

(III) To approve the expropriation by a director or supervisor (for the benefit of his/her own or of another person) of the personal rights of other shareholders, including but not limited to, rights to distributions and voting rights, save and except for a corporate restructuring of the Company submitted to and approved by the general meeting of shareholders in accordance with these Articles of Association.

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GENERAL MEETING

General Rules for Convening a General Meeting

The general meeting is the source of authority of the Company and exercises its powers according to the laws. The general meeting shall exercise the following functions and powers:

(I) To decide the management policies and investment plans of the Company;

(II) To elect and replace directors assumed by non-representatives of the employees and to decide matters relating to the remuneration of directors;

(III) To elect and replace supervisors who are not employee representatives and to decide matters relating to the remuneration of supervisors;

(IV) To consider and approve reports of the Board;

(V) To consider and approve reports of the supervisory committee;

(VI) To consider and approve the Company’s annual financial budget and final accounts;

(VII) To consider and approve the Company’s profit distribution proposals and loss recovery proposals;

(VIII) To resolve on the increase or reduction of the Company’s registered capital;

(IX) To resolve on the issuance of corporate bonds or other securities and public listing plans;

(X) To resolve on matters such as merger, division, dissolution, liquidation or change of corporate form of the Company;

(XI) To amend these Articles of Association;

(XII) To resolve on the appointment, removal or non-renewal of the services of an accounting firm for the Company;

(XIII) To consider any proposals made by shareholders representing more than 3% (inclusive) of the voting rights of the Company;

(XIV) To consider the Company’s purchase, disposal or replacement of major assets within one year with an aggregate value exceeding 30% of the latest audited total assets of the Company;

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(XV) To resolve on matters relating to guarantee as stipulated under these Articles of Association;

(XVI) To consider and approve the equity incentive plan, except for equity incentive plan set by transfer of shares by shareholders;

(XVII) To consider and approve the change of the use of proceeds;

(XVIII) Any other matters that should be resolved by the general meeting according to the laws, administrative regulations, listing rules of the stock exchange where the Company’s shares are listed and these Articles of Association;

(XIX) The general meeting may authorize or entrust the Board to handle matters authorized or entrusted by it.

The aforesaid official powers of general meeting shall not be delegated to the board of director.

The general meetings shall be divided into the annual general meetings and the extraordinary general meetings. The annual general meeting shall be convened once a year, and shall be held within six months after the prior accounting year ends.

Extraordinary general meetings shall be held whenever necessary. The Board shall hold the extraordinary general meeting in 2 months upon the occurrence of the following events:

(I) The number of directors falls short of the number required by the Company Law or is less than two-thirds of the number required by these Articles of Association;

(II) The uncovered loss of the Company reaches one-third of the total paid-in share capital of the Company;

(III) Upon written request(s) by shareholder(s) individually or collectively holding more than 10% (inclusive of 10%) of the Company’s share;

(IV) As deemed necessary by the Board or proposed by the supervisory committee;

(V) As proposed by no less than two of the independent non-executive directors;

(VI) Any other circumstances required by the laws, administrative regulations, departmental rules, rules of the stock exchange where the Company’s shares are listed and these Articles of Association.

In case of paragraphs (III) (IV) (V), the meeting topics proposed by the convener shall be included into the agenda of the meeting.

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Proposals of General Meetings

When the Company holds a general meeting, the shareholders holding more than 3% (including 3%) of the total number of voting shares of the Company shall have the right to put forward new proposals or amendments to the Company in writing and submit them to the convener 10 days prior to the general meeting. The convener of the general meeting shall, within 2 days after receiving the proposal, send a supplementary notice or circular of the general meeting or publish an announcement in accordance with the relevant rules of the stock exchange where the Company’s shares are listed to notify other shareholders, and include in the agenda of the proposed meeting matters that fall within the terms of reference of the general meeting and submit them to the general meeting for consideration.

Save as specified above, the convener shall not change the proposal set out in the notice of general meeting or add any new proposal after the said notice is served.

Notices of General Meetings

To hold an annual general meeting, a written notice shall be given 20 business days before the date of the general meeting, so as to notify all the shareholders listed on the register of the matters to be considered at the meeting and the meeting date and place. To hold an extraordinary general meeting, a written notice shall be given 10 business days or 15 days (whichever is longer) before the date of the meeting, so as to notify all the shareholders listed on the register of the matters to be considered at the meeting and the meeting date and place. The shareholders intended to attend the general meeting shall deliver the written reply for attending the meeting to the Company within the period specified in the notice of general meeting.

For the shareholders of domestic shares, the notice of general meeting may be made in the form of announcement (including through the website of the Company), subject to the compliance with the laws, administrative regulations and the listing rules of the stock exchange where the Company’s shares are listed.

For the shareholders of H shares, the Company may also give notice of the general meeting by posting on the Company’s website and the website designated by Hong Kong Stock Exchange or by such other means as may be permitted under the Listing Rules and these Articles of Association, in lieu of personal delivery or prepaid mail delivery to shareholders of H shares, subject to the compliance with the laws, administrative regulations and the listing rules of the stock exchange where the Company’s shares are listed and the performance of the relevant procedures.

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Convening of General Meetings

Any shareholder entitled to attend the general meeting and vote has the right to appoint one or several persons (who is not necessary to be a shareholder) as his/her proxy to attend and vote on his/her behalf. A proxy is entitled to exercise the following rights pursuant to the appointment made by the appointing shareholder:

(I) The same right as the shareholder to speak at the general meeting;

(II) The right to vote by way of poll;

(III) Unless it is otherwise provide by the Listing Rules or other securities laws and regulations, the voting right shall be exercised by a show of hands or by voting. The voting right shall be exercised by voting when the proxy was appointed by more than one shareholder.

It shall be stated clearly in the power of attorney that the proxy can vote at his/her discretion when the shareholder does not give any instruction.

In addition to the above provisions, the said power of attorney shall also contain the following information:

(I) The name of the proxy;

(II) The number of shares represented by the proxy:

(III) Whether the proxy has voting right or not;

(IV) Whether the proxy has the voting right on a temporary proposal that may be included into the agenda of the general meeting;

(V) The specific instructions as to what vote to cast if the proxy has the right to vote;

(VI) The date of issuance and validity period;

(VII) If several persons act as proxies, the power of attorney shall indicate the number of shares represented by each proxy;

(VIII) Signature (or seal) of the principal. If the principal is a legal person, the power of attorney shall be stamped with the seal of the legal person.

The power of attorney for proxy voting shall be deposited at the domicile of the Company or such other places designated in the notice of the meeting 24 hours before the meeting at which the proxy is authorized to vote or 24 hours before the specified voting time.

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If the general meeting is convened by the Board, the board chairman shall be the chairman of the meeting. If the chairman is unable to attend the meeting for some reason, the vice-chairman shall convene the general meeting and act as the chairman of the meeting. If the vice-chairman is also unable to attend for some reasons, the chairman can assign one director to convene the general meeting and act as the chairman of the meeting; if the chairman of the meeting hasn’t been assigned, a director nominated by shareholders shall act as the chairman of the meeting.

At a general meeting convened by the supervisory committee, the chairman of the supervisory committee shall preside over the meeting. When the chairman of the supervisory committee is unable or fails to perform his or her duty, a supervisor jointly elected by more than half of the supervisors shall preside over the meeting.

If a general meeting is convened by the shareholders, the convener shall elect a representative to preside over the meeting. If the shareholders cannot elect the presider for any reason, the shareholder present and holding the largest number of shares with voting rights (including the proxy) shall serve as the presider of the meeting.

Voting and Resolutions of General Meeting

The resolutions of a general meeting are classified into ordinary resolutions and special resolutions. Ordinary resolutions of the general meeting shall be passed by more than half of the voting rights held by the shareholders (including proxies) present at the meeting. Special resolutions of the general meeting shall be passed by more than two-thirds of the voting rights held by the shareholders (including proxies) present at the meeting.

Shareholders (including proxies) shall exercise their voting rights by the number of voting shares they represent at the general meeting, and each share shall have one vote, but Company shares held by the Company have no voting right, and those shares are not included in the total number of voting shares present at the general meeting.

On a poll taken at a meeting, a shareholder (including his/her proxies) entitled to two or more votes does not need to cast all his/her votes in the same way.

In the event of a tie between for and against, either by show of hands or by poll, the chairman of the meeting is entitled to one additional vote.

The following matters shall be resolved by way of special resolution of the general meeting:

(I) Increase or reduction of the Company’s capital, issue of any type of shares, warrants and other similar types of securities;

(II) Issue of corporate bonds by the Company;

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(III) Division, merger, dissolution and liquidation of the Company;

(IV) Change of corporate form;

(V) Purchase, sale or replacement of material assets by the Company within one year, or a guarantee amount exceeding 30% of the audited total assets in the most recent period of the Company;

(VI) Amendment to these Articles of Association;

(VII) Other matters which are required by the laws, administrative regulations, listing rules of the stock exchange where the Company’s shares are listed or these Articles of Association, and matters which, according to an ordinary resolution of the general meeting, may have a significant impact on the Company and should require adoption by way of a special resolution.

Procedures for Voting by Class Shareholders

Shareholders who hold different classes of shares shall be class shareholders. Class shareholders shall enjoy rights and assume obligations in accordance with laws, administrative regulations and these Articles of Association.

If the Company intends to change or abrogate the rights of class shareholders, it may do so only after such change or abrogation has been approved by way of a special resolution at the general meeting and by a separate class meeting convened by the affected shareholders of that class in accordance with these Articles of Association.

The rights of shareholders of a certain class shall be deemed to have been changed or abrogate in the following circumstances:

(I) To increase or decrease the number of shares of such class, or to increase or decrease the number of shares of a class having voting rights, distribution rights or other privileges equal or superior to those of the shares of such class;

(II) To effect an exchange of all or part of the shares of such class into shares of another class, or to effect an exchange or create a right of exchange of all or part of the shares of another class into the shares of such class;

(III) To remove or reduce rights to accrued dividends or cumulative dividends attached to shares of such class;

(IV) To reduce or remove a dividend preference or property distribution preference during the liquidation of the Company attached to shares of such class;

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(V) To add, remove or reduce share conversion rights, options, voting rights, transfer rights, preemptive rights and rights to acquire securities of the Company attached to shares of such class;

(VI) To remove or reduce rights to receive amounts payable by the Company in a particular currency attached to shares of such class;

(VII) To create a new class of shares with voting rights, distribution rights or other privileges equal or superior to those of the shares of such class;

(VIII) To restrict or impose additional restrictions on the transfer of ownership of shares of such class;

(IX) To issue rights to subscribe for, or convert into, shares of such class or another class;

(X) To increase the rights and privileges of shares of another class;

(XI) To restructure the Company where the proposed restructuring will result in different classes of shareholders having to bear liability to different extents; and

(XII) To amend or abrogate the articles of this Chapter.

Shareholders of the affected class, whether or not originally having the right to vote at general meetings, shall have the right to vote at class meetings in respect of matters referred to in paragraphs (II) to (VIII) or (XI) to (XII) of Articles above, except that interested shareholders shall not have the right to vote at class meetings.

For the purposes of the preceding paragraph, the term “interested shareholders” shall have the following meanings:

(I) If the Company has made a repurchase offer to all shareholders in the same proportion or has repurchased its own shares through public trading on a stock exchange in accordance with Article 28 hereof, the controlling shareholders as defined in Article 57 hereof shall be the “interested shareholders”;

(II) If the Company has repurchased its own shares by agreement outside a stock exchange in accordance with Article 28 hereof, shareholders of shares in relation to such agreement shall be the “interested shareholders”;

(III) Under a restructuring proposal of the Company, shareholders who will bear liability in a proportion smaller than that of the liability borne by other shareholders of the same class, or shareholders who have an interest in a restructuring proposal of the Company that is different from the interest in such restructuring proposal of other shareholders of the same class shall be the “interested shareholders”.

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Resolutions of class meeting may be passed only by more than two-thirds of the voting rights of that class represented at the meeting in accordance with these Articles of Association.

If a class meeting is to be held by sending notice of the meeting, it shall be given only to the shareholders entitled to vote at the meeting.

The procedures according to which a class meeting is held shall, to the extent possible, be identical to the procedures according to which a general meeting is held. Provisions of these Articles of Association relevant to procedures for the holding of a general meeting shall be applicable to class meetings.

In addition to shareholders of other classes of shares, shareholders of domestic shares and overseas listed foreign shares shall be deemed to be shareholders of different classes.

The special voting procedures for approval by a class of shareholders shall not apply:

(I) Where, as approved by way of a special resolution of the general meeting, the Company issues, either separately or concurrently, domestic shares and overseas listed foreign shares every 12 months, and the number of the domestic shares and overseas listed foreign shares intended to be issued does not exceed 20% of the issued and outstanding shares of the respective class;

(II) Where the plan for issuance of domestic shares and overseas listed foreign shares upon the establishment of the Company is completed within 15 months after being approved by the securities regulatory authorities under the State Council or the validity period of the relevant approval document;

(III) Where, with the approval of the securities regulatory authorities under the State Council, the shareholders of domestic shares of the Company transfer the shares held by them to overseas investors and list them in the overseas stock exchanges.

DIRECTORS AND BOARD OF DIRECTORS

Directors

Directors shall be elected or replaced at the general meeting, with a term of office of three years. Upon expiration of the term, the directors may be re-elected and serve consecutive terms.

The general meeting may, subject to the provisions of the relevant laws and administrative regulations, remove by ordinary resolution any director assumed by non-representatives of the employees whose term of office has not yet expired (provided that claims under any contract shall not be affected by this).

Directors are not required to hold shares of the Company.

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Board of Directors

The Company set up a board of directors (the “Board”), which consists of 8 directors, among whom at least 1/3 are independent non-executive directors. The Board has 1 chairman and 1 vice chairman. The chairman and vice chairman shall be elected and dismissed by a majority of all the directors. The chairman and vice chairman shall serve a term of office of three years and may be re-elected.

The Board of Directors shall exercise the following functions and powers:

(I) Convene a general meeting and report to the general meeting on the work of the Board;

(II) Implement the resolutions of the general meeting;

(III) Decide on the business plan and investment scheme of the Company;

(IV) Formulate the annual financial budgets and final accounting plans of the Company;

(V) Formulate the profit distribution plan and loss recovery plan of the Company;

(VI) Formulate plans of increasing or decreasing the Company’s registered capital, and issuing corporate bonds or other securities, and listing plans;

(VII) Formulate plans for substantial acquisition and repurchase of shares;

(VIII) Formulate plans for merger, division, dissolution, and change of corporate form of the Company;

(IX) Decide on the outbound investment, acquisition and disposal of assets, asset mortgage, external guarantee, consigned financial management, connected transactions, etc. of the Company within the authority granted by the general meeting;

(X) Decide on the setup of the Company’s internal management structure;

(XI) Appointment or dismissal of the Company’s general manager and secretary to the Board and determine their remunerations; appointment or dismissal of the Company’s vice president, chief financial officer and other senior officers as nominated by the general manager, and decide on their remuneration and incentives and penalties;

(XII) Formulate the basic management system of the Company;

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(XIII) Formulate the amendment to these Articles of Association;

(XIV) Formulate the equity incentive plan of the Company;

(XV) Decide on the setup of the Company’s branches;

(XVI) Decide on the establishment of special committees of the Board and the appointment or removal of the heads of special committees;

(XVII) Propose to the general meeting the employment, renewal or dismissal of the accounting firms responsible for providing audits services for the Company;

(XVIII) Listen to the work report of the general manager of the Company and inspect general manager’s work performance;

(XIX) Manage the information disclosure of the Company;

(XX) Decide on other major matters and administrative affairs of the Company, except for the matters that shall be resolved by the general meeting of shareholders as stipulated in the Company Law and these Articles of Association, and to sign other important agreements;

(XXI) Exercise other powers granted by these Articles of Association or the general meeting;

(XXII) Other matters stipulated by Chinese laws and regulations.

When the Board makes resolutions on the aforesaid matters, save for the matters set out in paragraphs (VI), (VIII), (XIII) which require consent by more than two thirds of directors through voting, the remaining matters may be approved by more than half of directors through voting.

A board meeting shall not be held unless more than half of the directors are present. Each director shall have one vote. A resolution made by the board of directors must be approved by more than half of all the directors unless otherwise stipulated by laws, administrative regulations and these Articles of Association. In the event of a tie between for and against, the chairman is entitled to one additional vote.

Except the exceptions specified by the Hong Kong Stock Exchange Listing Rules or permitted by the Stock Exchange of Hong Kong, a director may not vote on any contract, transaction or arrangement in which he or she or any of his or her close associate (as defined in the Hong Kong Stock Exchange Listing Rules) has a material interest and which is to be approved by the board of directors or any other proposals related thereto. Additionally, he or she may not count in the quorum for the meeting.

Notice of meeting shall be deemed to have been served to any director who attends the meeting without raising any objection before or during the meeting that he/ she has not received the notice of meeting.

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SECRETARY OF THE BOARD

The Company shall have a Secretary to the Board. The Secretary to the Board shall be a senior officer of the Company.

The Secretary to the Board shall be a natural person with the necessary professional knowledge and experience.

The accountants of the accounting’ firm appointed by the Company or the managers of the controlling shareholder shall not act concurrently as the Secretary to the Board.

SUPERVISORY COMMITTEE

The Supervisory Committee shall be composed of three supervisors, one of whom shall be the chairman. The term of office of supervisor shall be three years and the supervisor may be re-elected and serve consecutive terms.

The Supervisory Committee shall be composed of two shareholder representatives and one employee representative supervisor. The shareholder representative supervisor shall be elected and dismissed by the general meeting, and the employee representative supervisor shall be elected or dismissed by the employees of the Company at the congress of workers and staff.

Directors, general manager, vice general manager and other senior officers of the Company shall not serve concurrently as supervisors.

The Supervisory Committee shall be accountable to the general meeting and exercise the following powers:

(I) To examine the Company’s financial affairs;

(II) To supervise the Company’s directors and senior officers to see whether they violate any laws, administrative regulations or these Articles of Associations when performing their duties and to propose on dismissal of the directors or senior officers in violation of laws, administrative regulations, these Articles of Associations or resolution passed in a general meeting;

(III) To urge the director or senior officer to make correction when the action of any director or senior officer is found to damage the interests of the Company;

(IV) To verify financial information such as financial reports, business reports, profit distribution plans, etc. that the Board intends to submit to the general meeting and, if in doubt, to appoint a registered accountant or practicing auditor in the name of the Company to assist in reviewing such information;

(V) To propose the convening of extraordinary general meetings and, in case the Board does not perform the obligations to convene and preside over the general meetings in accordance with Company Law, to convene and preside over the general meetings;

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(VI) To submit proposals to the general meetings;

(VII) To propose to convene extraordinary board meeting;

(VIII) To negotiate with Directors on behalf of the Company or initiate legal proceedings against Directors and senior officers in accordance with the relevant provisions of the Company Law;

(IX) Other powers prescribed by laws, administrative regulations and these Articles of Association.

Supervisors may attend Board meetings.

GENERAL MANAGER AND OTHER MEMBERS OF THE SENIOR MANAGEMENT

The Company shall have a general manager, who shall be employed or dismissed by the Board, and a number of other senior officers, who shall be nominated by the general manager and employed or dismissed by the Board. A director can serve as the general manager, vice general manager or any other senior officer concurrently.

The general manager shall be liable to the Board and exercise the following powers:

(I) Presiding over the production and operation management works of the Company, organizing the implementation of the resolution of Board;

(II) Arranging the implementation of the annual business plans (including the strategic development plan and any amendments thereto) and investment proposals of the Company;

(III) Preparing proposal for the internal management organization setting scheme of the Company;

(IV) Preparing proposal for the basic management system of the Company;

(V) Developing the specific rules of the Company;

(VI) Proposing to the Board the employment or dismissal of other senior officers;

(VII) Employing or dismissing the officers other than those whose employment or dismissal shall be decided by the Board;

(VIII) Other powers granted by this Articles of Association and the Board;

(IX) Other matters stipulated by this Articles of Association.

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FINANCIAL AND ACCOUNTING SYSTEMS

The Company shall formulate its own financial and accounting systems in accordance with the laws, administrative regulations and the relevant rules enacted by the state departments.

The Company shall, at the end of each fiscal year, prepare a financial report, which shall be audited by an accounting firm.

The Company shall publish its financial report twice a fiscal year, that is, its interim financial report shall be published within 60 days after the end of the first 6 months of the fiscal year and its annual financial report shall be published within 120 days after the end of the fiscal year.

The financial reports of the Company shall be made available for inspection at the Company by shareholders 20 days prior to an annual general meeting. Each shareholder of the Company shall have the right to obtain a copy of the financial reports referred to in this chapter.

The financial reports mentioned in the preceding paragraph include the Board’s report together with its balance sheet (including such documents as may be appended as required by Chinese laws or other laws and administrative regulations) and its profit and loss account or statement of income and expenditure, or, in the absence of any violation of relevant Chinese laws, a summary financial report approved by Hong Kong Stock Exchange.

The Company shall deliver the said reports to each shareholder of overseas listed foreign shares by prepaid mail at the recipient’s address shown in the register of shareholders no later than 21 days prior to the date of annual general meeting. The Company can release said reports in the form of announcement (including through the website of the Company), subject to the compliance with the laws, administrative regulations and the listing rules of the stock exchange where the Company’s shares are listed.

PROFIT DISTRIBUTIONS

When the Company distributes the after-tax profits of the current year, it shall allocate 10% of the profits into the statutory reserve fund. If the accumulated amount of the statutory reserve fund reaches 50% of the registered capital, the Company is released from the obligation of withholding statutory reserve fund.

Where the Company’s statutory reserve fund is insufficient to cover the previous year’s losses, the Company shall first use the profits of the current year to cover the losses before withholding the statutory reserve fund according to the provisions of the preceding paragraph.

After the Company withholds the statutory reserve fund from the after-tax profit, it may also withhold optional reserve fund from the after-tax profit upon the resolution of the general meeting.

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The remaining after-tax profits of the Company after making up the losses and withholding the reserve funds are profits available for distribution to shareholders, and may be distributed according to the proportion of shares held by the shareholders based on the resolution of the general meeting.

Where the general meeting, in violation of the provisions of the preceding paragraph, distributes the profits to the shareholders before the Company makes up the losses and withholds the statutory reserve fund, the shareholders must return the profits distributed in violation of the provisions to the Company.

The Company’s shares held by the Company shall not participate in the distribution of profits.

The Company shall appoint collection agents for shareholders of overseas listed foreign shares. The collection agents shall collect on behalf of the relevant shareholders the dividends distributed and other funds payable by the Company in respect of the overseas listed foreign shares, and hold such monies in their custody pending payment to the shareholders concerned.

The collection agents appointed by the Company shall meet the requirements of the laws of the place(s), or the relevant regulations of the securities exchange(s), where the shares of the Company are listed.

The collection agent appointed by the Company for shareholders of the overseas listed foreign shares listed on Hong Kong Stock Exchange shall be a trust company registered under the Trustee Ordinance of Hong Kong.

On the premise of abiding by the relevant Laws and regulations of China, the Company may exercise the right to confiscate the unclaimed dividends, but the right can only be exercised after the expiration of the applicable restriction period after the declaration of the relevant dividends.

The Company has the right to terminate the delivery of dividend warrants by post to a shareholder of the overseas listed foreign shares, subject to the provision that if the dividend warrants are not cashed, the right shall be exercised only after the dividend warrants have not been cashed for consecutively twice. Such power may be exercised after the first occasion on which such a warrant is returned undelivered.

The Company shall have the right to sell the shares of the shareholders of the overseas listed foreign shares that cannot be contacted in such manner as the Board deems appropriate, subject to the following conditions:

(I) During a period of 12 years, at least three dividends in respect of the shares in question have become payable by the Company and no dividend has been claimed during that period; and

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(II) On expiry of the 12 years, the Company gives notice of its intention to sell the shares by way of an announcement published in one or more the newspapers and notifies the stock exchange where such shares are listed of such intention.

DISSOLUTION AND LIQUIDATION OF THE COMPANY

The Company shall be dissolved if:

(I) Business term specified in these Articles of Association expires or other dissolution reasons as stipulated in these Articles of Association arise;

(II) The general meeting resolves to dissolve the Company;

(III) Dissolution is required due to merger or division of the Company;

(IV) The Company is revoked of business license, ordered to close or canceled according to law;

(V) When the company has serious difficulties in its business management and its subsistence will have material prejudice to the interests of the shareholders, where the company is unable to resolve the difficulties through any other means, the shareholders who hold an aggregate of over 10% of the whole voting rights can make a petition to the People’s Court to dissolve the Company; and the People’s Court dissolves the company accordingly.

Where the Company is to be dissolved pursuant to paragraphs (I), (II), (IV) or (V) of the preceding Article, it shall establish a liquidation committee within 15 days from the date of occurrence of causes for dissolution. The members of such liquidation committee shall be determined by the Board or general meeting. If the liquidation committee is not established within the prescribed period, the creditors can submit application to the People’s Court to appoint the relevant officers to establish the liquidation committee to carry out the liquidation.

If the Board decides that the Company shall be liquidated (except for liquidation as a result of the Company’s declaration of bankruptcy), the notice of the general meeting convened for such purpose shall include a statement to the effect that the Board has made full inquiry into the position of the Company and that the Board holds the opinion that the Company can repay its debts in full within 12 months after the commencement of liquidation. The functions and powers of the Board shall be terminated immediately after the general meeting has adopted a resolution to carry out the liquidation.

The liquidation committee shall take instructions from the general meeting, and make a report to the general meeting on the committee’s income and expenditure, the business of the Company and the progress of the liquidation not less than once a year. It shall make a final report to the general meeting when the liquidation is completed.

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The liquidation committee shall notify the creditors within a period of 10 days since the date of establishment, and publish announcements for at least 3 times in newspaper and other media for information disclosure within 60 days. Creditors shall, within 30 days since the date of receiving the notice, or for creditors who do not receive the notice, within 45 days since the date of the public announcement, report their creditors’ rights to the liquidation committee. When reporting creditors’ rights, the creditor shall provide an explanation of matters relevant to the creditor’s rights and provide the supporting evidence. The liquidation committee shall register the creditors’ rights.

After the liquidation committee has thoroughly examined the Company’s assets and prepared the balance sheets and a schedule of assets, it shall formulate a liquidation plan and submit such plan to the general meeting or relevant competent authorities for confirmation.

Payment of liabilities out of the Company’s property shall be made in the following sequence: liquidation expenses; wages owed to employees of the Company, labor insurance fees and statutory compensation; outstanding taxes; debts of the Company.

The Company’s assets remaining after full payment in accordance with the provisions of the preceding paragraph shall be distributed by the Company’s shareholders according to the class and proportion of their shareholdings.

During the liquidation period, the Company shall not carry out any business activities not related to liquidation. The property of the Company shall not be distributed to the shareholders until all liabilities have been paid off in accordance with the the provisions of preceding paragraph.

If the liquidation committee, having thoroughly examined the Company’s assets and prepared the balance sheets and a schedule of assets, discovers that the Company’s assets is insufficient to pay its debts in full, it shall immediately apply to the People’s Court for a declaration of bankruptcy. After the People’s Court has ruled for the Company to declare itself bankrupt, the Company’s liquidation committee shall refer the liquidation matters to the People’s Court.

Following the completion of liquidation, the liquidation committee shall formulate a liquidation report and submit to the general meeting or the relevant competent authorities for confirmation. The liquidation committee shall deliver the same to the company registry, apply for cancellation of the Company’s registration and publicly announce the Company’s termination.

Where a company is declared bankrupt according to law, it shall carry out a bankruptcy liquidation according to the legal provisions concerning bankruptcy liquidation.

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AMENDMENT TO THE ARTICLES OF ASSOCIATION

The Company may amend these Articles of Association in accordance with laws, administrative regulations and these Articles of Association.

Any amendment to the articles of association involving the contents of the Mandatory Provisions shall come into effect after being approved by the examination and approval department authorized by the and the competent securities authorities(if applicable) of the State Council. Where the Company’s registered items are involved, change registration shall be made according to law.

– VI-26 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX VII STATUTORY AND GENERAL INFORMATION

A. FURTHER INFORMATION ABOUT OUR COMPANY

1. Incorporation

Our Company was established as a limited liability company in the PRC on April 8, 2009 and converted into a joint stock company with limited liability on December 31, 2020.

As of the date of this document, our Company’s head office is located at No. 18 Qingqiu Road, Suzhou Industrial Park, Jiangsu Province, PRC. Our Company has established a principal place of business in Hong Kong at 40/F, Dah Sing Financial Centre, No. 248 Queen’s Road East, Wanchai, Hong Kong and has been registered as a non-Hong Kong company under Part 16 of the Companies Ordinance on March 22, 2021 with the Registrar of Companies in Hong Kong. Ms. Wai Ching AU has been appointed as the authorized representative of our Company for the acceptance of service of process in Hong Kong. The address for service of process is 40/F, Dah Sing Financial Centre, No. 248 Queen’s Road East, Wanchai, Hong Kong.

As our Company was established in the PRC, our corporate structure and Articles of Association are subject to the relevant laws and regulations of the PRC. A summary of the relevant provisions of our Articles of Association is set out in “Appendix VI—Summary of the Articles of Association.” A summary of certain relevant aspects of the laws and regulations of the PRC is set out in “Appendix V—Summary of Principal Legal and Regulatory Provisions.”

2. Changes in Share Capital of Our Company

Save as disclosed in the section headed “History and Corporate Structure”, there has been no alteration in the share capital of our Company since its incorporation.

3. Changes in Share Capital of our Subsidiary

Details of the subsidiaries of our Company are set out in “Appendix I—Accountant’s Report.”

Suzhou Advaccine

• On March 4, 2020, the registered capital of Suzhou Advaccine was increased from RMB10 million to RMB30 million.

• On October 30, 2020, the registered capital of Suzhou Advaccine was increased from RMB30 million to RMB60 million.

• On January 27, 2021, the registered capital of Suzhou Advaccine was increased from RMB60 million to RMB100 million.

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Suzhou Si’ao

• On November 26, 2020, the registered capital of Suzhou Si’ao was increased from RMB87.5 million to RMB100 million.

• On January 13, 2021, the registered capital of Suzhou Si’ao was increased from RMB100 million to RMB150 million.

Shenzhen Advaccine

• On January 25, 2021, Shenzhen Advaccine was established under the laws of the PRC with a registered capital of RMB10 million.

ACR

• On June 18, 2020, the registered capital of ACR was incorporated under the laws of Australia with a registered capital of A$10,000.

Save as disclosed above and in the section headed “History and Corporate Structure”, there has been no alteration in the share capital of the subsidiaries of our Company within two years immediately preceding the date of this document.

4. Written Resolutions Passed by Our Shareholders on March 21, 2021

At the extraordinary general meeting of our Company held on March 21, 2021, among other things, the following resolutions were passed by the Shareholders:

(a) the [REDACTED] by our Company of H Shares of nominal value of RMB1.00 each and such H Shares be [REDACTED] on the Hong Kong Stock Exchange;

(b) the number of H Shares to be issued before the exercise of the [REDACTED] shall not exceed [REDACTED] H Shares, representing [REDACTED] of the enlarged share capital of our Company upon completion of the [REDACTED] (assuming the [REDACTED] is not exercised) and granting the [REDACTED] the [REDACTED] of no more than [REDACTED] of the above number of H Shares to be issued pursuant to this resolution;

(c) authorization of the Board and its authorized persons to handle all matters relating to, among other things, the [REDACTED], the [REDACTED] and [REDACTED] of the H Shares; and

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(d) subject to the completion of the [REDACTED], the Articles of Association effective on the [REDACTED] has been adopted, and the Board has been authorized to amend the Articles of Association in accordance with relevant laws and regulations and upon the request from the Hong Kong Stock Exchange and relevant PRC regulatory authorities.

5. Incentive Plan

In order to reward and incentivize our core management, key staff and consultants for their contribution or potential contribution to our Group as well as to allow them to participate in the growth and profitability of our Group, we have granted several tranches of restricted stock units (the “RSUs”) (“the Incentive Plan”) and established Advaccine Investment as our domestic shareholding platform to implement the Incentive Plan. The terms of the Incentive Plan are not subject to the provisions of Chapter 17 of the Listing Rules as it does not involve the grant of options by the Company to subscribe for new Shares.

(a) Purposes

The purposes of the Incentive Plan are, among other:

(i) to attract outstanding talents to further promote the Company’s development in the biopharmaceutical industry; and

(ii) to motivate core management, key staff and consultants who have made significant contributions to the Group’s long-term growth as well as to allow them to participate in the growth and profitability of the Group.

(b) The Grant and Vesting of the RSU

Under the Incentive Plan and subject to the terms and conditions of equity incentive agreement entered into between Advaccine Investment and the grantee (if applicable), the RSUs will be granted for free to the grantee who has satisfied the requirements with respect to the length of service or performance targets as agreed in advance. For domestic grantees, upon the satisfaction of the vesting conditions, the vested RSUs will be settled by allocating partnership interest of Advaccine Investment to the grantee, who will then become a limited partner of Advaccine Investment and therefore be indirectly interested in the Company.

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The maximum number of Shares that may be granted under the Incentive Plan is 1,212,000. As of the Latest Practicable Date, the aggregate number of underlying Shares pursuant to the RSUs available to be granted under the Incentive Plan is 689,500, representing approximately [REDACTED] of the total issued Shares of the Company immediately following the completion of the [REDACTED] (without taking into account any Shares which may be issued upon the exercise of the [REDACTED]). Save as disclosed below, no RSU was granted to the Directors, Supervisors or senior management of the Company pursuant to the Incentive Plan.

For the years ended December 31, 2018, 2019 and 2020, the Group has granted a total of four tranches of RSUs to eight grantees of the Company, details of which are set forth below:

For the years ended December 31, 2018 2019 2020

Numbers of RSUs granted 312,500 50,000 50,000 110,000

Vesting schedule and 100% after 100% after April 30, 2021 20% on December 31, 20% on December 31, conditions December 31, 2020 2019; 2020; 20% on December 31, 20% on December 31, 2020; 2021; 30% on December 31, 30% on December 31, 2021; 2022; 30% on December 31, 30% on December 31, 2022 2023

The vesting of the RSU granted is The vesting of the RSUs granted is further further conditional upon the conditional upon (a) after December 31, 2023, occurrence of a liquidity event, or (b) before December 31, 2023 when the whichever is earlier, (a) an initial Company completes a listing or merge and public offering of the Shares, or acquisition or in any event where the change (b) a change in control, in either of control occurs. case (a) or (b) solely to the extent such event occurs within seven years of the grant date.

Consideration to be paid RMB1 per share (the cost of the initial share) at the time of vesting

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The following table shows the full details of the RSUs granted by our Company under the Incentive Plan to, on an individual basis, the Directors, senior management members and other connected person of the Group:

Approximate percentage of Number of shareholding underlying immediately Position Shares following the held within represented completion of the Name of grantees our Group by RSUs Date of grant [REDACTED](1)

Gan ZHAO (趙幹) Vice 100,000 March 20, 2018 [REDACTED] President Aihua DONG Vice 100,000 March 20, 2018 [REDACTED] (董愛華) President

* Note:

(1) The percentage does not take into account any Shares which may be issued upon the exercise of the [REDACTED].

Unless otherwise agreed in the respective equity incentive agreement, no grantee shall in any event transfer, sell, donate, charge, mortgage, encumber or dispose the RSUs or partnership interest (if applicable) granted to the grantee.

(d) Forfeiture

Any unvested RSU will be forfeited automatically in, among others, the following circumstances:

(i) where the grantee violates any applicable laws and regulations;

(ii) where the grantee does not, or refuses to, observe his/her obligations as the Company’s employee and fails to make ratifications;

(iii) where the grantee violates any agreements entered into with the Company, including but not limited to the labor contracts and his/her confidentiality obligations; and

(iv) where the grantee’s employment relationship with the Company is terminated for any reasons.

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B. FURTHER INFORMATION ABOUT OUR BUSINESS

1. Summary of Material Contracts

We have entered into the following contracts (not being contracts entered into in the ordinary course of business) within two years preceding the date of this document which are or may be material:

(a) the Advaccine capital increase and Si’ao reorganization agreement dated September 3, 2020 (the “Suzhou Si’ao Acquisition”), in relation to acquisition of 100% equity interest of Suzhou Si’ao for a total consideration of RMB350,237,700 and the subscription of RMB5,600,000 increased registered capital of our Company, entered into among our Company, Ms. Qingling YU (俞慶齡)(“Ms. Yu”), Dr. Ji MA (馬紀) (“Dr. Ma”), Suzhou Advaccine Investment Center (Limited Partnership) (蘇州艾棣投資中心(有限合夥)) (“Advaccine Investment”), Shenzhen Dachen Chuanglian Equity Investment Fund Partnership (Limited Partnership) (深圳市達晨創聯股權投資基金合夥企業(有限合夥)), Jiaxing Stars Xingxin Equity investment Partnership (Limited Partnership) (嘉興星空星欣股權投資合夥企業(有限合夥)), Nanjing Heheng Investment Center (Limited Partnership) (南京和恒投資中心(有限合夥)), Shenzhen Taiji Investment Enterprise (Limited Partnership) (深圳泰極投資企業(有限合夥)), Small Median Size Enterprises Development Fund (Shenzhen Limited Partnership) (中小企業發展基金(深圳有限合夥)), Shanghai Lianzhi Venture Investment Management Center (Limited Partnership) (上海聯知創業投資管理中心 (有限合夥)), Suzhou Hi-tech Fengqiao Emerging Industries Investment Co., Ltd. (蘇州高新楓橋新興產業投資有限公司), Chengdu Deshang Kuayue Equity Investment Fund Center (Limited Partnership) (成都德商跨越股權投資基金中心(有限合夥)), Penyao Environmental Protection Co., Ltd. (鵬鷂環保股份有限公司), Dr. Wang, Suzhou Si’ao, Kexiang Hi-tech Development Co., Ltd.(科翔高新技術發展有限公司), Hangzhou Chuangqian Investment Partnership (Limited Partnership) (杭州創乾投資合夥企業(有限合夥)), Suzhou Kexin Biotech Partnership (Limited Partnership) (蘇州科欣生物技術合夥企業(有限合夥)), Jiaxing Dingyue Investment Partnership (Limited Partnership) (嘉興鼎越投資合夥企業(有限合夥)), Zhao Jianlun (趙劍侖), Hangzhou Darui Xiading I Investment Management Partnership (Limited Partnership) (杭州達瑞夏鼎壹投資管理合夥企業(有限合夥)) and Beijing Xinshunshi Technology Development Co., Ltd. (北京鑫順世科技發展有限公司);

(b) the capital increase agreement dated September 18, 2020, in relation to the subscription of the increased registered capital of our Company of RMB1,600,000 at a total consideration of RMB100,000,000, entered into among our Company, Shenzhen Jenna Medical Technology Partnership (Limited Partnership) (深圳琴納醫藥科技合夥企業(有限合夥)) and Ms. Yu;

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(c) the capital increase agreement dated March 3, 2021, in relation to the subscription of the increased registered capital of our Company of RMB1,443,680 at a total consideration equivalent to RMB180,460,000 and RMB156,320 at a total consideration equivalent to RMB19,540,000, respectively, which was entered into among our Company, Matrix Partners China VI, L.P., Matrix Partners China VI-A, L.P. and Ms. Yu.

(d) the capital increase agreement dated March 3, 2021, in relation to the subscription of the increased registered capital of our Company of RMB52,000 at a total consideration equivalent to RMB6,500,000, entered into among our Company, Goldstream Healthcare Focus Fund SP and Ms. Yu.

(e) the capital increase agreement dated March 3, 2021, in relation to the subscription of the increased registered capital of our Company of RMB908,000 at a total consideration equivalent to RMB113,500,000, entered into among our Company, United Strength Fortune Limited and Ms. Yu.

(f) the [REDACTED].

2. Our Intellectual Property Rights

(a) Trademarks

As at the Latest Practicable Date, our Company has registered the following trademarks in the PRC, which we consider to be or may be material to our business:

Registration Place of No. Trademark number Registrant Class registration Expiry date

1 29590641 Our Company 35 China February 6, 2029

2 29589775 Our Company 35 China February 6, 2029

3 29608085 Our Company 10 China February 6, 2029

4 29595415 Our Company 44 China February 6, 2029

5 29596950 Our Company 44 China February 6, 2029

6 29600561 Our Company 5 China February 6, 2029

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Registration Place of No. Trademark number Registrant Class registration Expiry date

7 29598119 Our Company 5 China February 6, 2029

8 29608141 Our Company 42 China February 6, 2029

9 29602120 Our Company 42 China February 6, 2029

10 29594121 Our Company 10 China January 27, 2029

11 18120167 Si’ao 5 China November 27, 2026 12 18120095 Si’ao 5 China November 27, 2026

As of the Latest Practicable Date, our Company has registered the following trademarks in Hong Kong, which we consider to be or may be material to our business:

Registration Place of No. Trademark number Registrant Class registration Expiry date

1 305471848 Our Company 5, 10, Hong Kong December 7, 2030 16, 42

2 305471811 Our Company 5, 10, Hong Kong December 7, 2030 16, 42

As of the Latest Practicable Date, our Company has applied for the following trademarks in Hong Kong, which we consider to be or may be material to our business:

Registration Place of Date of No. Trademark number Registrant Class registration Application

1 305560290 Our Company 5,10,16,42 Hong Kong March 12, 2021

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(b) Patents

As of the Latest Practicable Date, we had 23 registered patents and 4 pending patent applications that are material to the Group.

Place of Date of No. Patent Patent Number Registrant Type registration registration

1 Pharmaceutical CN2016112036056 Suzhou Invention China December 25, composition for Advaccine 2020 treating and/or preventing type I diabetes and application thereof (一種治療和/或預防 I型糖尿病的藥物組合物及其應用)

2 A method for detecting CN2020101155946 Suzhou Invention China November 20, biological activity of Advaccine 2020 adjuvant (一種佐劑生物活性的檢測方法)

3 Respiratory syncytial CN201510082407.8 Suzhou Invention China August 6, virus vaccine, Advaccine 2019 preparation method and application thereof (一種呼吸道合胞體病毒疫苗及其製備方法與應用)

4 Combined facilitator, CN201180073866X Suzhou Invention China October 24, antigen and DNA Advaccine 2017 vaccine for preventing and treating autoimmune diseases (預防和治療自身免疫性疾病的聯合促進劑、抗原和DNA疫苗)

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Place of Date of No. Patent Patent Number Registrant Type registration registration

5 Pharmaceutical CN2012101081596 Suzhou Invention China September 29, composition for Advaccine 2017 treating and/or preventing type I diabetes and application thereof (治療和/或預防I型糖尿病的藥物組合物及其應用)

6 Combined antigen and CN201280069412X Suzhou Invention China August 25, DNA vaccine for Advaccine 2017 preventing and treating RSV infection (用於預防和治療呼吸道合胞病毒感染的聯合抗原和DNA疫苗)

7 Facilitator-DNA CN2011800747283 Suzhou Invention China August 24, combination vaccine Advaccine 2016 (促進劑-DNA組合疫苗)

8 Vaccine for prevention CN2012100303255 Suzhou Invention China February 24, and/or treatment of Advaccine 2016 respiratory syncytial virus infection (用於預防和/或治療呼吸道合胞病毒感染的疫苗)

9 Packaging box CN2020301573238 Suzhou Design China September 15, (nanoemulsion Advaccine 2020 immunoadjuvant) (包裝盒(納米乳免疫佐劑))

10 Bottle stickers CN2020301573223 Suzhou Design China September 15, (nanoemulsion Advaccine 2020 immunoadjuvant) (瓶貼(納米乳免疫佐劑))

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Place of Date of No. Patent Patent Number Registrant Type registration registration

11 A fusion expression CN2017103261967 Si’ao Invention China December 8, method of MS2 capsid 2020 protein and its application (一種MS2 衣殼蛋白融合表達方法及其應用)

12 Nucleic acid constructs CN201710180159X Si’ao Invention China April 7, 2020 and method for preparing Coxsackie virus A16-type virus- like particles (用於製備柯薩奇病毒A16型病毒樣顆粒的核酸構建體和方法)

13 Nucleic acid construct CN201510623237X Si’ao Invention China August 27, and method for 2019 preparing EV71 virus- like particles (用於製備EV71病毒樣顆粒的核酸構建體和方法)

14 A device used to deliver CN2017209507398 Si’ao Utility China December 25, DNA vaccines to the model 2018 skin and muscles (一種傳遞DNA疫苗到皮膚和肌肉用設備)

15 Automatic grease CN2015208064177 Si’ao Utility China March 2, coating device for model 2016 sealing protein crystallisation (用於蛋白質結晶板密封的自動塗脂裝置)

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Our key patents that have been applied for registration are as follows:

Application Place of Date of No. Patent Number Applicant Type application application

1 A bubble generating CN202011120617.9 Suzhou Invention China October 19, device for extracting Advaccine 2020 plasmid DNA from bacteria (用於提取細菌中質粒DNA的氣泡發生裝置)

2 A bubble generating CN202022333756.1 Suzhou Utility China October 19, device for extracting Advaccine model 2020 plasmid DNA from bacteria (用於提取細菌中質粒DNA的氣泡發生裝置)

3 A method of extracting CN202011119238.8 Suzhou Invention China October 19, plasmid DNA from Advaccine 2020 bacteria (一種從細菌中提取質粒DNA的方法)

4 Nucleotide sequence CN202011597679.9 Suzhou Invention China December 29, encoding coronavirus Advaccine 2020 antigen and use thereof (一種編碼新型冠狀病毒抗原的核苷酸序列及其應用)

5. Immune composition US16/985736 Suzhou Patent The United August 5, comprising respiratory Advaccine States 2020 syncytial virus (RSV)G polypeptide

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Application Place of Date of No. Patent Number Applicant Type application application

6. Aqueous solution of PCT/IB2020/057414 Suzhou Patent World August 5, insoluble medicine and Advaccine Intellectual 2020 preparation method Property thereof Organization

7. Aqueous solution of CN201911322663.4 Suzhou Patent China December 20, insoluble medicine and Advaccine 2019 preparation method thereof

8. A new vaccine for CN202011276594.0 Suzhou Patent China November 1, preventing and treating Advaccine 2020 Merkel cell carcinoma

As of the Latest Practicable Date, we had registered the following domain name which we consider to be material to our business:

Registered Date of No. Domain Name Owner registration Expiry Date

1. advaccine.com Our Company July 19, 2016 July 19, 2024

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C. FURTHER INFORMATION ABOUT OUR DIRECTORS AND SUPERVISORS

1. Disclosure of Interest of Directors, Supervisors and the Chief Executive

(i) Disclosure of Interests – Interests and short positions of the Directors, Supervisors and the chief executive in the Shares, underlying Shares or debentures of our Company and our associated corporations

Immediately following completion of the [REDACTED] (assuming the [REDACTED] is not exercised), the interests or short positions of our Directors, the Supervisors and the chief executive in the Shares, underlying Shares and debentures of our Company and its associated corporations, within the meaning of Part XV of the SFO, which will have to be notified to our Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which he/she is taken or deemed to have under such provisions of the SFO), or which will be required, pursuant to section 352 of the SFO, to be recorded in the register referred to therein, or which will be required to be notified to our Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules, will be as follows:

Approximate percentage of Approximate interest in the percentage of relevant class of Number and interest in Shares of Shareholder Position Nature of interest class of Shares our Company our Company

Dr. Wang(1) Executive Director, Interest of spouse 9,801,600 [REDACTED][REDACTED] chairman of the Domestic Board and chief Shares scientist

Ms. Yu(2) Executive Director Beneficial owner 6,375,000 [REDACTED][REDACTED] and general Domestic manager Shares Interest of a party 2,125,000 [REDACTED][REDACTED] to an agreement Domestic Shares Interest in 1,301,600 [REDACTED][REDACTED] controlled Domestic corporation Shares

Dr. Ma Supervisor Beneficial owner 2,125,000 [REDACTED][REDACTED] Domestic Shares

Notes:

(1) Dr. Wang is the spouse of Ms. Yu. Therefore, Dr. Wang is deemed to be interested in the Shares in which Ms. Yu is interested under the SFO.

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(2) Ms. Yu directly owns 6,375,000 Domestic Shares. In addition to her direct shareholding in our Company, pursuant to the Voting Agreement dated September 1, 2020 entered into by and between Ms. Yu and Dr. Ma, Ms. Yu as an attorney has the right to vote over all Shares held by Dr. Ma. Ms. Yu is the general partner of Advaccine Investment and holds approximately 68.60% interest in Advaccine Investment. As such, Ms. Yu is deemed to be interested in the Shares owned by Dr. Ma and Advaccine Investment under the SFO. See “History and Corporate Structure” for further information of the Voting Agreement and Advaccine Investment.

(ii) Particulars of Service Agreements

Pursuant to Rules 19A.54 and 19A.55 of the Listing Rules, our Company [has entered into] a service agreement with each of the Directors and Supervisors which contains provisions in relation to, among other things, compliance of relevant laws and regulations, observation of the Articles of Association and provisions on arbitration.

Each of the Directors and Supervisors has entered into a service agreement with our Company. The principal particulars of these service agreements are: (a) each of the agreements is for a term of three years following his/her respective appointment date; and (b) each of the agreements is subject to termination in accordance with their respective terms. The service agreements may be renewed in accordance with our Articles of Association and the applicable rules.

Save as disclosed above, our Company has not entered, and do not propose to enter, into any service contracts with any of the Directors or Supervisors in their respective capacities as Directors/Supervisors (other than contracts expiring or determinable by the employer within one year without the payment of compensation (other than statutory compensation).

(iii) Directors’ and Supervisors’ remuneration

For details of the Directors’ and Supervisors’ remuneration, see “Directors, Supervisors and Senior Management—Remuneration of Directors, Supervisors and Senior Management” of this document and Note [8] to the Accountant’s Report as set out in Appendix I to this document.

2. Interests of Substantial Shareholders

(a) For information on the persons who will, immediately following the completion of the [REDACTED], (without taking into account any Shares which may be sold and offered upon the exercise of the [REDACTED]), have or be deemed or taken to have an interest and/or short position in the Shares or the underlying Shares which would fall to be disclosed under the provisions of Division 2 and 3 of Part XV of the SFO, see “Substantial Shareholders” of this document.

(b) Save as set out above, as of the Latest Practicable Date, our Directors and Supervisors are not aware of any person who will, immediately following the completion of the [REDACTED] (without taking into accounts any Shares which may be sold and offered upon the exercise of the [REDACTED]), be interested, directly or indirectly, in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any member of our Group or had option in respect of such capital.

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3. Disclaimers

Save as disclosed in this document:

(a) none of the Directors, Supervisors or chief executive of our Company has any interest or short positions in the Shares, underlying Shares or debentures of our Company or any associated corporation (within the meaning of Part XV of the SFO) which will have to be notified to us and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which he is taken or deemed to have under such provisions of the SFO) or which will be required, pursuant to section 352 of the SFO, to be entered into the register referred to in that section, or which will be required to be notified to us and the Stock Exchange pursuant to the Model Code, in each case once our H Shares are listed;

(b) none of the Directors or Supervisors nor any of the parties listed in the paragraph headed “—D. Other Information—7. Qualification of Experts” of this appendix is interested in our Company’s promotion, or in any assets which have, within the two years immediately preceding the issue of this document, been acquired or disposed of by or leased to our Company, or are proposed to be acquired or disposed of by or leased to our Company;

(c) none of the Directors or Supervisors is a director or employee of a company which is expected to have an interest in the Shares falling to be disclosed to our Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO once the H Shares are [REDACTED] on the Stock Exchange; save as disclosed in this document, none of the Directors or Supervisors of our Company nor any of the parties listed in paragraph headed “—D. Other Information—7. Qualification of Experts” of this appendix is materially interested in any contract or arrangement subsisting at the date of this document which is significant in relation to our business;

(d) none of the parties listed in the paragraph headed “—D. Other Information—7. Qualification of Experts” of this appendix: (i) is interested legally or beneficially in any of the Shares of our Company or any shares in any of its subsidiaries; or (ii) has any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for the securities of our Company; and

(e) none of the Directors or Supervisors or the respective close associates or any Shareholders (who to the knowledge of our Directors and Supervisors owns more than 5% of our issued share capital) has any interest in our five largest suppliers or our five largest customers.

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D. OTHER INFORMATION

1. Estate Duty

We have been advised that [no] material liability for estate duty under PRC law is likely to fall upon the Company.

2. Litigation

During the Track Record Period and as of the Latest Practicable Date, our Company was not involved in any litigation, arbitration or administrative proceedings of material importance and, so far as we are aware, no litigation, arbitration or administrative proceedings of material importance are pending or threatened against us as of the Latest Practicable Date.

3. Sole Sponsor

The Sole Sponsor has made an application on behalf of the Company to the Listing Committee for [REDACTED] of, and permission to [REDACTED], the H Shares of the Company, including any additional [REDACTED] which may be issued pursuant to the exercise of the [REDACTED]. All necessary arrangements have been made enabling the H Shares to be admitted into [REDACTED].

China International Capital Corporation Hong Kong Securities Limited, being the Sole Sponsor, satisfies the independence criteria applicable to sponsors set out in Rule 3A.07 of the Listing Rules.

Our Company has entered into an engagement agreement with the Sole Sponsor, pursuant to which our Company agreed to pay USD[1,000,000] to the Sole Sponsor to act as the sponsor to our Company in the [REDACTED].

4. Compliance Adviser

Our Company have appointed Somerley Capital Limited as our Compliance Advisor in compliance with Rule 3A.19 of the Listing Rules.

5. Preliminary Expenses

We have not incurred any material preliminary expenses in relation to the incorporation of our Company.

6. Taxation of holder of H Shares

The sale, purchase and transfer of H Shares are subject to Hong Kong stamp duty if such sale, purchase and transfer are effected on the H Share register of members of our Company, including in circumstances where such transaction is effected on the Stock Exchange. The

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7. Qualification of Experts

The qualifications of the experts are as follows:

Name Qualification

China International Capital A licensed corporation to conduct Type 1 (dealing in Corporation Hong Kong securities), Type 4 (advising on securities), Type 5 Securities Limited (advising on futures contracts), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO

PricewaterhouseCoopers Certified Public Accountants under the Professional Accountants Ordinance (Chapter 50 of the Laws of Hong Kong)

Registered Public Interest Entity Auditor under the Financial Reporting Council Ordinance (Chapter 588 of the Laws of Hong Kong)

Zhong Lun Law Firm PRC legal advisors

Frost & Sullivan Industry Consultant

Jones Lang LaSalle Corporate the independent property valuer Appraisal and Advisory Limited

8. Consents of Experts

Each of the experts as referred to in the paragraph headed “—D. Other Information— 7. Qualification of Experts” in this appendix has given, and has not withdrawn their written consents to the issue of this document with the inclusion of their reports and/or letters and/or opinions and/or the references to their names included herein in the form and context in which they are respectively included.

None of the experts named above has any shareholding interests in our Company or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in our Company.

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9. Promoters

The promoters of our Company are all of the 27 then shareholders of our Company as of December 31, 2020 before our conversion into a joint stock limited liability company:

No. Name

1. Ms. Yu 2. Kexiang Hi-tech Development Co., Ltd. (科翔高新技術發展有限公司) 3. Dr. Ma 4. Hangzhou Chuangqian Investment Partnership (Limited Partnership) (杭州創乾投資合夥企業(有限合夥)) 5. Shenzhen Jenna Medical Technology Partnership (Limited Partnership) (深圳琴納醫藥科技合夥企業(有限合夥)) 6. Advaccine Investment 7. Penyao Environmental Protection Co., Ltd. (鵬鷂環保股份有限公司) 8. Shenzhen Dachen Chuanglian Equity Investment Fund Partnership (Limited Partnership) (深圳市達晨創聯股權投資基金合夥企業(有限合夥)) 9. Small Median Size Enterprises Development Fund (Shenzhen Limited Partnership) (中小企業發展基金(深圳有限合夥)) 10. Suzhou Kexin Biotech Partnership (Limited Partnership) (蘇州科欣生物技術合夥企業(有限合夥)) 11. Jiaxing Stars Xingxin Equity Investment Partnership (Limited Partnership) (嘉興星空星欣股權投資合夥企業(有限合夥)) 12. Suzhou Hi-tech Fengqiao Emerging Industries Investment Co., Ltd. (蘇州高新楓橋新興產業投資有限公司) 13. Shenzhen Zhongtian Huijin Investment Center (Limited Partnership) (深圳中天匯金投資中心(有限合夥)) 14. Tianjin Ringpu Bio-Technology Co., Ltd. (天津瑞普生物技術股份有限公司) 15. Shanghai Lianzhi Venture Investment Management Center (Limited Partnership) (上海聯知創業投資管理中心(有限合夥)) 16. Nanjing Heheng Investment Center (Limited Partnership) (南京和恒投資中心(有限合夥)) 17. Chengdu Deshang Kuayue Equity Investment Fund Center (Limited Partnership) (成都德商跨越股權投資基金中心(有限合夥)) 18. Chengdu Tianfu Sanjiang Huawen Technology Investment Center (Limited Partnership) (成都天府三江驊文科技投資中心(有限合夥)) 19. Jiaxing Stars Kairui Equity Investment Partnership (Limited Partnership) (嘉興星空開睿股權投資合夥企業(有限合夥)) 20. Shenzhen Taiji Investment Enterprise (Limited Partnership) (深圳泰極投資企業(有限合夥)) 21. Jiaxing Dingyue Investment Partnership (Limited Partnership) (嘉興鼎越投資合夥企業(有限合夥)) 22. Pengrui Jinghua (Shenzhen) Consulting (Limited Partnership) (鵬瑞菁華(深圳)諮詢合夥企業(有限合夥)) 23. Zhao Jianlun (趙劍侖)

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No. Name

24. Hangzhou Darui Xiading I Investment Management Partnership (Limited Partnership) (杭州達瑞夏鼎壹投資管理合夥企業(有限合夥)) 25. Beijing Xinshunshi Technology Development Co., Ltd. (北京鑫順世科技發展有限公司) 26. Nanjing Zhixing Investment Management Partnership (Limited Partnership) (南京志行投資管理合夥企業(有限合夥)) 27. Jiaxing Stars Xuanyuan Investment Partnership (Limited Partnership) (嘉興星空軒轅投資合夥企業(有限合夥))

Save as disclosed in this document, within the two years immediately preceding the date of this document, no cash, securities or other benefit has been paid, allotted or given nor are any proposed to be paid, allotted or given to the promoters named above in connection with the [REDACTED] and the related transactions described in this document.

10. No Material Adverse Change

The Directors confirm that there has been no material adverse change in our financial or trading position since December 31, 2020.

11. Miscellaneous

Save as disclosed in this document,

(a) within the two years preceding the date of this document, our Company has not issued nor agreed to issue any share or loan capital fully or partly paid either for cash or for a consideration other than cash;

(b) no Share or loan capital of our Company, if any, is under option or is agreed conditionally or unconditionally to be put under option;

(d) our Company has no outstanding convertible debt securities or debentures;

(e) there is no arrangement under which future dividends are waived or agreed to be waived;

(f) there has been no interruption in our business which may have or have had a significant effect on the financial position in the last 12 months; and

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(g) none of our Directors, Supervisors or experts referred to under the paragraph headed “—D. Other Information—7. Qualification of Experts” in this appendix has any direct or indirect interest in the promotion of our Company, or in any assets which have within the two years immediately preceding the date of this document been acquired or disposed of by or leased to our Company, or are proposed to be acquired or disposed of by or leased to our Company.

12. Bilingual document

The English language and Chinese language versions of this document are being published separately in reliance upon the exemption provided by section 4 of the Companies (Exemption of Companies and prospectuses from Compliance with Provisions) Notice (Chapter 32L of the Laws of Hong Kong).

13. Binding Effect

This document shall have the effect, if an application is made in pursuance hereof, of rendering all persons concerned bound by all the provisions (other than the penal provisions) of sections 44A and 44B of the Companies (Winding Up and Miscellaneous Provisions) Ordinance so far as applicable.

– VII-21 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX VIII DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES AND AVAILABLE FOR INSPECTION

DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES

The documents attached to the copy of this document delivered to the Registrar of Companies in Hong Kong for registration were:

(a) a copy of the [REDACTED];

(b) the written consents referred to in “Appendix VII—Statutory and General Information—D. Other Information—8. Consents of Experts”;

(c) a copy of each of the material contracts referred to in “Appendix VII—Statutory and General Information—B. Further Information about our Business—1. Summary of Material Contracts”.

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the Company’ s principal place of business in Hong Kong at [40/F, Dah Sing Financial Centre, No. 248 Queen’s Road East, Wanchai, Hong Kong] during normal business hours up to and including the date which is 14 days from the date of this document:

(a) the Memorandum and Articles of Association;

(b) the Accountant’s Report from PricewaterhouseCoopers for the years ended December 31, 2019 and 2020;

(d) the report on the unaudited pro forma financial information from PricewaterhouseCoopers, the text of which is set out in Appendix II to this document;

(e) the PRC legal opinions issued by Zhong Lun Law Firm, our PRC Legal Advisors, in respect of certain aspects of the Group and its property interests;

(f) the property valuation report issued by Jones Lang LaSalle Corporate Appraisal and Advisory Limited, the text of which is set out in Appendix III to this document;

(g) the material contracts referred to in “Appendix VII—Statutory and General Information—B. Further Information about our Business—1. Summary of Material Contracts”;

– VIII-1 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX VIII DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES AND AVAILABLE FOR INSPECTION

(h) the written consents referred to in “Appendix VII—Statutory and General Information—D. Other Information—8. Consents of Experts”;

(i) the service contracts and letters of appointment referred to in “Appendix VII—Statutory and General Information—C. Further Information about Our Directors and Supervisors—1. Disclosure of Interest of Directors, Supervisors and the Chief Executive”;

(j) the industry report prepared by Frost & Sullivan; and

(k) the PRC Company Law, the PRC Securities Law, the Mandatory Provisions and the Special Regulations together with their unofficial English translations.

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