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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

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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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