Shanghai Newmed Medical Co., Ltd. 上海紐脈醫療科技股份有限公司 (The “Company”) (A Joint Stock Company Incorporated in the People’S Republic of China with Limited Liability)

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 Shanghai NewMed Medical Co., Ltd. 上海紐脈醫療科技股份有限公司 (the “Company”) (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 the Company, its sponsors, advisers or member 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 supplemental, revised or replacement pages on the Exchange’s website does not give rise to any obligation of the Company, its sponsors, 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 supplemental, revised or replacement pages may or may not be replicated in full or in part in the actual final listing document;

(d) this document 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, sponsors, advisers or members of its underwriting syndicate 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.

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 the Company’s prospectus 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 THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT IMPORTANT

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

Shanghai NewMed Medical Co., Ltd. 上海紐脈醫療科技股份有限公司 (A joint stock company incorporated in the People’s Republic of China with limited liability)

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Number of [REDACTED] under : [REDACTED] H Shares (subject to the [REDACTED] the [REDACTED]) Number of [REDACTED] : [REDACTED] H Shares (subject to reallocation) Number of [REDACTED] : [REDACTED] H Shares (subject to reallocation and the [REDACTED]) Maximum [REDACTED] : HK$[REDACTED] per H Share, plus brokerage of 1.0%, SFC transaction levy of 0.0027% and Hong Kong Stock Exchange trading fee of 0.005% (payable in full on [REDACTED] in Hong Kong dollars and subject to refund) Nominal value : RMB1.00 per H Share [REDACTED]

Joint Sponsors, [REDACTED]

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 the section headed “Appendix VII – Documents Delivered to the Registrar of Companies and Available for Inspection” in 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 (Chapter 32 of the Laws of Hong Kong). The Securities and Futures Commission of Hong Kong and the Registrar of Companies in Hong Kong take no responsibility as to the contents of this document or any other documents referred to above.

The [REDACTED] is expected to be determined by agreement between [the [REDACTED]] (on behalf of the [REDACTED]) and our Company on the [REDACTED]. The [REDACTED] is expected to be on or around [REDACTED] (Hong Kong time) and, in any event, not later than [REDACTED] (Hong Kong time). The [REDACTED] will not be more than HK$[REDACTED] per [REDACTED] and is currently expected to be not less than HK$[REDACTED] per [REDACTED] unless otherwise announced. If, for any reason, the [REDACTED] is not agreed by [REDACTED] (Hong Kong time) between [the [REDACTED]] (on behalf of the [REDACTED]) and our Company, the [REDACTED] will not proceed and will lapse.

The [the [REDACTED]], on behalf of the [REDACTED], may, where considered appropriate and with the consent of our Company, reduce the number of [REDACTED] and/or the indicative [REDACTED] below that is stated in this document (being HK$[REDACTED] per [REDACTED] to HK$[REDACTED] per [REDACTED]) at any time prior to the morning of the last day for lodging applications under the [REDACTED]. In such case, notices of the reduction in the number of [REDACTED] and/or the indicative [REDACTED] will be published on the website of our Company at www.newmed.cn and on the website of the Hong Kong Stock Exchange at www.hkexnews.hk as soon as practicable following the decision to make such reduction, and in any event not later than the morning of the last day for lodging applications under the [REDACTED]. For further details, please refer to the sections headed “Structure of the [REDACTED]” and “How to Apply for [REDACTED]” in this document.

We are incorporated, and a substantial majority of our businesses are located, in the PRC. Potential investors should be aware of the differences in the legal, economic and financial systems between the PRC and Hong Kong and the fact that there are different risk factors relating to investment 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 the H Shares. Such differences and risk factors are set out in the sections headed “Risk Factors”, “Regulatory Overview” and “Appendix V – Summary of Articles of Association” in this document.

The obligations of the [REDACTED] under the [REDACTED] are subject to termination by the [REDACTED] (on behalf of the [REDACTED]) if certain events occur prior to 8:00 a.m. on the [REDACTED]. Please refer to the section headed “[REDACTED]” in this document.

The [REDACTED] have not been and will not be registered under the U.S. Securities Act or any state securities law in the United States and may not be offered, sold, pledged or transferred within the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and in accordance with any applicable U.S. state securities laws. The [REDACTED] may be offered and sold only (a) in the United States to “Qualified Institutional Buyer” in reliance on Rule 144A or another exemption from, or in a transaction not subject to, registration under the U.S. Securities Act and (b) outside the United States in offshore transactions in reliance on Regulation S under the U.S. Securities Act.

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IMPORTANT NOTICE TO PROSPECTIVE INVESTORS

This document is issued by us solely in connection with the [REDACTED] and the [REDACTED] and does not constitute an offer to sell or a solicitation of an offer 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 making, and does not constitute, an offer or invitation in any other jurisdiction or in any other circumstances. No action has been taken to permit a [REDACTED] of the [REDACTED] in any jurisdiction other than Hong Kong and no action has been taken to permit the distribution of this document in any jurisdiction other than Hong Kong. The distribution of this document for purposes of a [REDACTED] and the [REDACTED] and sale 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 to make your investment decision. The [REDACTED] is made solely on the basis of the information contained and the representations made in this document. 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 contained nor made in this document must not be relied on by you as having been authorized by us, the [REDACTED], the [REDACTED], the [REDACTED], the [REDACTED], the [REDACTED], any of our or their respective directors, officers, employees, agents, or representatives of any of them or any other parties involved in the [REDACTED].

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Expected Timetable ...... iii

Contents ...... vii

Summary ...... 1

Definitions ...... 19

Glossary of Technical Terms ...... 32

Forward-Looking Statements ...... 41

Risk Factors ...... 43

Waivers from Strict Compliance with Listing Rules and Exemption From Strict Compliance with the Companies (Winding Up and Miscellaneous Provisions) Ordinance ...... 109

Information about this Document and the [REDACTED]...... 115

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Directors, Supervisors and Parties Involved in the [REDACTED]...... 121

Corporate Information ...... 126

Industry Overview ...... 128

Regulatory Overview ...... 151

History, Development and Corporate Structure ...... 173

Business ...... 204

Directors, Supervisors and Senior Management ...... 293

Relationship with Our Controlling Shareholder ...... 313

Substantial Shareholders ...... 316

Share Capital ...... 320

Financial Information ...... 323

Future Plans and Use of [REDACTED]...... 357

[REDACTED]...... 360

Structure of the [REDACTED]...... 373

How to Apply for [REDACTED]...... 385

Appendix I Accountants’ Report ...... I-1

Appendix II Unaudited Pro Forma Financial Information ...... II-1

Appendix III Taxation and Foreign Exchange ...... III-1

Appendix IV Summary of Principal Legal and Regulatory Provisions ...... IV-1

Appendix V Summary of Articles of Association ...... V-1

Appendix VI Statutory and General Information...... VI-1

Appendix VII Documents Delivered to the Registrar of Companies and Available for Inspection ...... VII-1

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This summary aims to give you an overview of the information contained in this document and is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial information appearing elsewhere in this document. As this is a summary, it does not contain all the information that may be important to you and we urge you to read the entire document carefully before making your investment decision.

There are risks associated with any investment. Some of the particular risks in investing in the [REDACTED] are set out in the section headed “Risk Factors” in this document. You should read that section carefully before you decide to invest in the [REDACTED]. In particular, we are a biotechnology company seeking a [REDACTED] on the [REDACTED] the [REDACTED] 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.

OVERVIEW

We are a leading technology-driven, innovative heart valve device company in China at the forefront of the fast-growing, high-potential market of structural heart disease treatment. With our extensive experience and in-depth technological expertise in all aspects related to structural heart disease, and through years of passionate commitment to, and tenacious efforts at, technological innovation, we have put together a comprehensive portfolio of transcatheter replacement and repair product candidates for the treatment of all four valves in the human heart, as well as accessories for interventional cardiac procedures. As of the Latest Practicable Date, our Core Product, Prizvalve® was in confirmatory clinical trial. The National Medical Products Administration (“NMPA”) of China has recognized three of our product candidates, namely Mi-thos®, Prizvalve®, and Valveclip-MTM, as innovative medical devices that are qualified for an expedited special review (“Special Review”), which would prioritize the qualified innovative medical device over other product candidates without such qualification at the NMPA, and which is expected to accelerate the review and approval process of the qualified innovative medical device, more than any other transcatheter heart valve device company, both in terms of the number of products and in terms of the number of product categories, according to Frost & Sullivan. We aim to commercialize those three product candidates among the first batches of domestic products in their respective product classes.

Applying our strong in-house R&D capabilities, we have built up a sizable patent portfolio to protect our wide-ranging proprietary technologies, which encompass all major aspects of the development and manufacture of transcatheter heart valve devices. Also through our R&D efforts, we have become one of a few companies in China with both balloon- expandable (“BE”) and self-expanding (“SE”) technologies, according to Frost & Sullivan. Our extensive, yet close-knit expert and institution networks have helped us, and will continue to help us, stay ahead of technological progress and up-to-date on latest developments in technology. In anticipation of forthcoming product launches, we have been expanding our manufacture capacity, which is self-reliant and cost-effective. Led by our accomplished and capable management, and supported by our esteemed investors, we are hopeful and optimistic about maintaining our lead in the market, bringing innovative products to market, and improving the lives of countless patients with structural heart disease.

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According to Frost & Sullivan, structural heart disease, including its largest subcategory – valvular heart disease, is common and becoming ever more prevalent around the world, and in China in particular. However, according to Frost & Sullivan, interventional valvular procedures, which are widely considered to be highly effective treatments of valvular heart disease, are still very far from saturating the market in China, and so are the transcatheter heart valve devices used in those procedures. That problem affects a large, underserved patient population, but presents a tremendous commercial opportunity for those qualified and prepared to act on it.

To take up that commercial opportunity and, more importantly, to minister to the unmet clinical needs of structural heart disease patients, we are developing a comprehensive set of pipeline products that target all four human heart valves:

Transcatheter Mitral Valve Intervention Product Candidates Transcatheter Pulmonary ® Valve Intervention Product Mi-thos (TA TMVR) Candidate

Prizvalve-PTM TM (TPVR) Mi-thos Pro (TF TMVR)

Valveclip-MTM (TMVr)

Transcatheter Tricuspid Valve Intervention Product Candidates Transcatheter Aortic Valve Intervention Product TM Valveclip-T (TTVr) Candidates

Prizvalve® I (BE TAVR) Prizvalve-TTM (TTVR) Prizvalve® II (BE TAVR)

Accessory Product Starr-ATM (TAVR) Candidates

• Product candidates for the mitral valve. Mi-thos® is our transapical transcatheter mitral valve replacement (“TMVR”) product candidate, and Valveclip-MTM is our transfemoral transcatheter mitral valve repair (“TMVr”) product candidate. We are the only domestic company with both TMVR and TMVr product candidates in clinical trials, according to Frost & Sullivan. The NMPA has recognized them both as innovative medical devices qualified for Special Review. According to Frost and Sullivan, Mi-thos® is the first TMVR product to enter first-in-man (“FIM”) clinical trial in China. We aim to commercialize it as the first innovative TMVR product to receive marketing approval in China. We have also been developing a transfemoral TMVR product candidate, namely Mi-thos ProTM. As of the Latest Practicable Date, Valveclip-MTM was in FIM clinical trial, and we aim to make it one of the first domestic innovative TMVr products to receive marketing approval in China.

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• Product candidates for the aortic valve. Prizvalve®, our BE transfemoral transcatheter aortic valve replacement (“TAVR”) product candidate, has been recognized as an innovative device qualified for Special Review. We aim to make it the first domestic BE TAVR product approved for marketing in China. Its characteristic BE technology affords it numerous advantages over its SE counterparts in treating aortic stenosis (“AS”). Additionally, we are developing a second-generation TAVR product candidate with improved prosthetic valves and delivery system, as well as a third-generation TAVR product candidate for aortic regurgitation (“AR”).

• Product candidates for the tricuspid valve. Valveclip-TTM is our transfemoral transcatheter tricuspid valve repair (“TTVr”) product candidate. As of the Latest Practicable Date, Valveclip-TTM had completed type test. Additionally, applying the same BE platform technology as in Prizvalve®, we are developing a transfemoral transcatheter tricuspid valve replacement (“TTVR”) product candidate Prizvalve- TTM.

• Product candidate for the pulmonary valve. Applying the same BE platform technology as in Prizvalve®, we are developing Prizvalve-PTM, our BE transfemoral transcatheter pulmonary valve replacement (“TPVR”) product candidate. As of the Latest Practicable Date, Prizvalve-PTM was at the preclinical stage.

• Accessory product candidates. In addition to our valve replacement and repair devices, we have a number of accessories in our pipeline for interventional heart valve procedures. Those include our valvuloplasty balloon catheter, expandable introducer sheath, suture-mediated closure device, cerebral embolic protection (“CEP”) device, atrial septal puncture device, flex catheter, and guide wire.

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Treatment Animal Study/ Commercial Expected Product Indication Early Design Clinical Registration Upcoming Milestones Registration Route Type Test Rights Submission Initiation of Mi-thos® TMVR valve MR Transapical Ongoing FIM clinical trial Global confirmatory clinical 2024 trial by 2022 Q2 Mitral Valve Initiation of Valveclip-M ™ TMVr clip MR Transfemoral Ongoing FIM clinical trial Global confirmatory clinical 2023 Products trial by 2022 Q1 Completion of animal Mi-thos Pro™ TMVR valve MR Transfemoral Design stage Global study and type test by 2025 2022 Q3 Completion of Prizvalve® TAVR valve AS Transfemoral Ongoing confirmatory clinical trial Global confirmatory clinical 2023 (balloon-expandable) implantation by end of 2021 Aortic Valve ® Initiation of type test by Prizvalve II TAVR valve AS Transfemoral Design stage Global 2024 Products (optimized valve and delivery system) 2022 Q1

Initiation of type test by ™ AR Transfemoral Design stage Global 2024 Starr-A TAVR valve 2022 Q1

Initiation of clinical trial SUMMARY ™ TR Transfemoral Type test completed Global 2024 Valveclip-T TTVr clip by 2022 Q1 Tricuspid Valve Products Initiation of animal –4– Prizvalve-T™ TTVR valve TR Transfemoral Design stage Global study and type test by 2025 2022 Q1

Pulmonary Valve Completion of type test Prizvalve-P™ TPVR valve PS and PR Transfemoral Design stage Global 2025 Products by 2022 Q1

Registration submission For valvuloplasty Transfemoral Type test completed Global 2021 Q4 Valvuloplasty balloon catheter by 2021 Q4

For percutaneous invasion of artery Exempted from Completion of type test and establishment of channel guiding Transfemoral Ongoing type test clinical trial Global 2022 Q2 Expandable introducer sheath by 2021 Q4 catheter into vessel requirement

Initiation of type test by Interventional accessory devices N/A Design stage Global 2023 Suture-mediated closure system 2022 Q1

Cerebral embolic protection Cerebral embolism prevention during Initiation of type test by Accessory Products Transfemoral Design stage Global 2025 (CEP) device TAVI 2022 Q3 Exempted from For atrial septal puncture in Initiation of type test by Transfemoral Design stage clinical trial Global 2022 Q4 Atrial septal puncture device interventional surgery 2022 Q2 requirement Exempted from Initiation of type test by Interventional accessory devices Transfemoral Design stage clinical trial Global 2022 Q4 Flex catheter 2022 Q2 requirement Exempted from To guide the catheter inside the heart Initiation of type test by Transfemoral Design stage clinical trial Global 2022 Q4 Guide wire and blood vessels 2022 Q2 requirement Notes: All the above status are clinical and registration progress in China. All the above products are Class III medical devices and self-developed by our Company

Core Product Recognized as innovative medical devices qualified for Special Review. dical Device Exempted from Clinical Key Product Among our product candidates, these devices are exempted from clinical trial requirements in accordance with the Catalogue of Me Trials (《免於進行臨床試驗醫療器械目錄》) promulgated by the NMPA, as amended. THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT SUMMARY

OUR COMPETITIVE STRENGTHS

We believe the following strengths have contributed to our success and differentiated us from our competitors:

• A leading Chinese provider of innovative heart valve devices with a comprehensive product portfolio, focusing on the high-growth, high-potential structural heart disease market

• Innovative TMVR, TMVr, TAVR, and TTVr systems resulting from our proprietary transcatheter heart valve treatment technologies

• Our complete proprietary technology platform and strong in-house R&D capabilities, propelling our constant product innovations

• Well-preparedness for rapid commercial penetration based on extensive expert network and forward-looking manufacture plans

• A visionary and strategically insightful management dedicated to R&D and commercialization and backed by top-tier investors

OUR STRATEGIES

Our mission is to improve patients’ lives through innovation (創新造福生命). To that end, we will pursue the strategies below:

• Expedite the development and commercialization of product candidates

• Maintain and extend our technological lead

• Improve quality and cost-efficiency by increased self-reliance in manufacture

• Foster academic ties and assemble a professional team, for better commercialization

• Expand the NewMed Jidian Innovation Center (“Jidian”), our new hub of early exploratory R&D

• Strengthen international cooperation and lay the groundwork for strategic expansion overseas

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OUR PRODUCT CANDIDATES

Mi-thos® – Our key Product Candidate

Mi-thos® is our transapical TMVR product candidate and one of our key product candidates. It is designed for the minimally invasive treatment of mitral regurgitation patients for whom surgery is high-risk or undesirable. Mi-thos® is delivered through the transthoracic transapical access pathway. Its prosthetic valve is implanted at the annulus of the dysfunctional native mitral valve, and serves as a functional replacement of the dysfunctional native mitral valve. As of the Latest Practicable Date, we held 24 material issued patents and filed patent applications directed at Mi-thos®. The NMPA has recognized it as an innovative device qualified for Special Review in November 2020, which would prioritize Mi-thos® over other product candidates without such qualification at the NMPA, and which is expected to accelerate the review and approval process of Mi-thos®. According to Frost & Sullivan, Mi-thos® is the first TMVR product to enter FIM clinical trial in China.

Despite the prevalence of mitral regurgitation, as of the Latest Practicable Date, according to Frost & Sullivan, there was no TMVR approved for commercialization in China, leaving the field wide open for Mi-thos®’s entry. Mi-thos® is the first innovative TMVR product candidate to enter FIM clinical trial in China, according to Frost & Sullivan, and we aim to make it the first innovative TMVR product to receive marketing approval in China. We believe, once approved for marketing in China, Mi-thos® will quickly capture the underserved Chinese market for interventional treatment of mitral regurgitation, and penetrate hospitals all over China.

Valveclip-MTM – Our key Product Candidate

Valveclip-MTM, our proprietary transfemoral TMVr product candidate, adopts the most well-validated and widely used edge-to-edge repair technique to provide a minimally invasive treatment for mitral regurgitation patients for whom surgery is high-risk or undesirable. Valveclip-MTM is delivered through the transfemoral access pathway. It works by clipping together free edges of the anterior leaflet and the posterior leaflet of the mitral valve to reduce mitral regurgitation. As of the Latest Practicable Date, we held 27 material issued patents and filed patent applications directed at Valveclip-MTM. The NMPA has recognized it as an innovative device qualified for Special Review. According to Frost & Sullivan, as of the Latest Practicable Date, Valveclip-MTM was one of the first domestic innovative transfemoral TMVr product candidates to enter clinical trial.

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Despite the prevalence of mitral regurgitation, TMVr procedures for mitral regurgitation remain uncommon in China. According to Frost & Sullivan, as of the Latest Practicable Date, Abbott’s MitraClip® was the only TMVr product approved for marketing in China. We aim to make Valveclip-MTM one of the first domestic innovative TMVr products to receive marketing approval in China.

Prizvalve® – Our Core Product

Prizvalve® is our BE transfemoral TAVR product candidate and our Core Product. It is designed for the treatment of severe aortic stenosis patients for whom surgery is high-risk or undesirable. Prizvalve® is delivered through the transfemoral access pathway, and embodies our BE technology. Its prosthetic valve is implanted at the annulus of the dysfunctional native aortic valve, and serves as a functional replacement of the native aortic valve. As of the Latest Practicable Date, we held 31 material issued patents and filed patent applications directed at Prizvalve®. Prizvalve® is a class-III medical device under the classification criteria of the NMPA. The NMPA has recognized it as an innovative device qualified for Special Review. As of the Latest Practicable Date, Prizvalve® had completed its FIM clinical trial, and was already in confirmatory clinical trial. The FIM clinical trial forms a key part of the registration application required by the NMPA.

Despite the prevalence of aortic stenosis and the known advantages of BE TAVR device over SE TAVR device, as of the Latest Practicable Date, according to Frost & Sullivan, no domestic BE TAVR device had been commercialized in China. We aim to make Prizvalve® the first domestic BE TAVR product approved for marketing in China.

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Valveclip-TTM – Our key Product Candidate

Valveclip-TTM, our proprietary transfemoral TTVr product candidate, provides a minimally invasive treatment for tricuspid regurgitation patients for whom surgery is high risk or undesirable. Valveclip-TTM is delivered through the transfemoral access pathway. It works by clipping together free edges of the leaflets of the tricuspid valve to reduce tricuspid regurgitation. As of the Latest Practicable Date, Valveclip-TTM had completed type test. We aim to obtain regulatory approval for its clinical trial in the first quarter of 2022. We plan to continue the development of Valveclip-TTM as a part of our tricuspid valve product offerings, to broaden our product portfolio and optimize our business structure.

Tricuspid regurgitation is becoming more prevalent in China. According to Frost & Sullivan, in 2020, 9.2 million patients in China suffered from tricuspid regurgitation, and that figure is expected to climb to 10.6 million in 2030.

Despite the prevalence of tricuspid regurgitation, TTVr procedures for tricuspid regurgitation remain practically unavailable in China. According to Frost & Sullivan, as of the Latest Practicable Date, no TTVr product had been approved for commercialization in China, leaving a vast amount of clinical needs unmet and presenting a huge commercial opportunity. As of the Latest Practicable Date, only one TTVr product candidate was in clinical trial in China.

INTELLECTUAL PROPERTY

We have built a comprehensive intellectual property portfolio in China and overseas to protect our technologies, inventions and know-how and ensure our future success with commercializing our products. As of the Latest Practicable Date, we owned (i) 83 issued patents in China, (ii) two issued patents in the U.S., (iii) one patent granted by European Patent Office, (iv) one patent registered in Hong Kong, and (v) 98 pending patent applications, including 87 Chinese patent applications, eight active PCT patent applications and three patent applications in Hong Kong relating to certain of our product candidates and technologies.

RESEARCH AND DEVELOPMENT

Our R&D team focuses on developing a proprietary technology platform for interventional heart valve treatments, which includes a full spectrum of proprietary technologies necessary for all aspects of the development and production of transcatheter valvular devices. We have assembled a comprehensive portfolio of transcatheter replacement and repair product candidates for the treatment of all four valves in the human heart, as well as accessories for interventional cardiac procedures. As of the Latest Practicable Date, our product pipeline included 16 product candidates. The NMPA has recognized three of our product candidates as innovative medical devices that are qualified for Special Review. As of the Latest Practicable Date, our R&D team consisted of 86 members with a wealth of knowledge and experience in medical device product development and manufacture techniques.

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In 2019, 2020 and the four months ended April 30, 2021, we incurred research and development expenses of RMB30.9 million, RMB72.0 million and RMB96.5 million, respectively. Our research and development expenses directly attributable to the Core Product amounted to RMB9.9 million, RMB29.0 million and RMB13.9 million, respectively, in 2019, 2020 and the four months ended April 30, 2021. We intend to expand and improve our product portfolio by strengthening our research and development of new products, expanding our product pipeline and improving our existing product candidates.

MANUFACTURING

Currently, our in-house production is limited to producing, assembling and testing sample products under development for the purpose of clinical trials, design verification and validation, and product development. As of the Latest Practicable Date, we had 54 supply chain and manufacturing personnel. We plan the production primarily based on the number of subjects enrolled in, and the progress of, related clinical trials, the verification and validation plans, and the product development schedule. To prepare for the launch of our product candidates, we have begun to increase our manufacture capacity. As of the Latest Practicable Date, we occupied over 7,600 square meters of R&D, office, and manufacturing floor space in Shanghai and Chengdu, which housed offices, R&D laboratories, physical, chemical, and microbiological testing facilities, as well as a class 10,000 cleanroom production facility compliant with GMP requirements.

OUR CUSTOMERS AND SUPPLIERS

During the Track Record Period and up to the Latest Practicable Date, we had no commercialized product and therefore had no customer.

During the Track Record Period, our suppliers mainly included suppliers of raw materials for the production of sample products under development for the purpose of clinical trials, property rental service, preclinical study and clinical trial services, R&D and manufacturing equipment, and construction and renovation services. In 2019, 2020 and the four months ended April 30, 2021, purchases from our five largest suppliers amounted to RMB7.1 million, RMB23.4 million and RMB14.1 million, respectively, representing 43.9%, 38.5% and 41.5% of our total purchases for the same periods, respectively; purchases from our largest supplier amounted to RMB1.8 million, RMB5.2 million and RMB5.2 million, respectively, representing 11.3%, 8.5% and 15.2% of our total purchases for the same periods, respectively.

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SUMMARY HISTORICAL FINANCIAL INFORMATION

This summary of key financial information set forth below has been derived from, and should be read in conjunction with, our consolidated audited financial statements, including the accompanying notes, set forth in the Accountants’ Report set out in Appendix I to this document, as well as the information set forth in the section headed “Financial Information.”

Summary Consolidated Statements of Profit or Loss and Other Comprehensive Income

We currently have no product approved for commercial sale and have not generated any revenue from product sales. We have never been profitable and have incurred losses during the Track Record Period. For the years ended December 31, 2019 and 2020, and the four months ended April 30, 2021, we had total comprehensive loss of RMB30.7 million, RMB115.0 million and RMB185.5 million, respectively. Our losses substantially resulted from research and development expenses, administrative expenses and finance costs. For more details, please refer to the paragraphs headed “Financial Information – Description of Selected Components of Consolidated Statements of Profit or Loss and Other Comprehensive Income – Research and Development Expenses”, “Financial Information – Description of Selected Components of Statements of Profit or Loss and Other Comprehensive Income – Administrative Expenses” and “Financial Information – Description of Selected Components of Statements of Profit or Loss and Other Comprehensive Income – Finance Costs” in this document.

The following table summarizes our consolidated statements of profit or loss and other comprehensive income for the periods indicated:

Year Ended December 31, Four Months Ended April 30, 2019 2020 2020 2021 RMB’000 RMB’000 RMB’000 RMB’000 (unaudited)

Other net gain/(loss) 3,385 (2,168) 1,453 40 Research and development expenses (30,904) (72,038) (15,733) (96,497) Administrative expenses (2,766) (14,551) (3,632) (77,978) Loss from operations (30,285) (88,757) (17,912) (174,435) Finance costs (446) (26,277) (4,907) (11,016)

Loss before taxation (30,731) (115,034) (22,819) (185,451) Income tax ––––

Loss for the year/period (30,731) (115,034) (22,819) (185,451)

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Summary Consolidated Statements of Financial Position

The following table sets forth selected information from our consolidated statements of financial position as of the dates indicated:

As of December 31, As of April 30, 2019 2020 2021 RMB’000 RMB’000 RMB’000

Total non-current assets 32,172 63,190 73,540 Total current assets 17,585 96,627 660,105

Total assets 49,757 159,817 733,645

Total non-current liabilities 15,705 388,389 1,244,343 Total current liabilities 12,777 22,146 32,417 Net current assets 4,808 74,481 627,688 Total liabilities 28,482 410,535 1,276,760 Net assets/(liabilities) 21,275 (250,718) (543,115)

Paid-in capital 4,762 6,015 7,389 Reserves 16,513 (256,733) (550,504)

Total equity/(deficit) 21,275 (250,718) (543,115)

We recorded net liabilities of RMB543.1 million as of April 30, 2021, compared to net liabilities of RMB250.7 million as of December 31, 2020, mainly attributable to an increase in value of our financial instruments issued to investors of RMB858.3 million due to our issuance of preferred rights to investors, partially offset by: (i) an increase in cash and cash equivalents of RMB441.7 million as a result of the receipt of proceeds from our issuance of shares to our investors; and (ii) an increase in financial assets at FVTPL of RMB118.1 million as a result of the purchase of more bank-issued wealth management products and structured deposits.

We recorded net liabilities of RMB250.7 million as of December 31, 2020, compared to net assets of RMB21.3 million as of December 31, 2019, mainly attributable to an increase in value of our financial instruments issued to investors of RMB368.0 million due to our issuance of preferred rights to investors, partially offset by an increase in cash and cash equivalents of RMB77.5 million as a result of the receipt of proceeds from our issuance of shares to certain investors.

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Summary Consolidated Statements of Cash Flows

Our primary uses of cash relate to the research and development of our product candidates and capital expenditures. During the Track Record Period, we primarily funded our working capital requirements through capital contributions from our shareholders, private equity financing and other borrowings. We monitor and maintain a level of cash and cash equivalents deemed adequate to finance our operations and mitigate the effects of fluctuations in cash flows. Our net cash used in operating activities was RMB29.7 million, RMB70.3 million, and RMB42.2 million for the years ended December 31, 2019 and 2020, and for the four months ended April 30, 2021, respectively. As our business develops and expands, we expect to generate net cash from our operating activities, through the sales of our future commercialized products. Going forward, we believe our liquidity requirements will be satisfied by using funds from our net [REDACTED] from the [REDACTED]. As of April 30, 2021, we had cash and cash equivalents of RMB519.4 million.

The following table sets forth information regarding our cash flows as of the dates indicated:

Year Ended December 31, Fourth Months Ended April 30, 2019 2020 2020 2021 RMB’000 RMB’000 RMB’000 RMB’000 (unaudited)

Cash outflow from operating activities before movements in working capital (27,586) (68,927) (14,464) (36,319) Changes in working capital (2,108) (1,344) (3,608) (5,863)

Net cash flows used in operating activities (29,694) (70,271) (18,072) (42,182) Net cash flows generated from/(used in) investing activities 28,261 (21,232) (431) (129,917) Net cash flows generated from financing activities 1,543 171,115 178,735 614,812

Net increase in cash and cash equivalents 110 79,612 160,232 442,713 Cash and cash equivalents at beginning of the year/period 97 207 207 77,718 Effect of foreign exchange rate changes – (2,101) 916 (998)

Cash and cash equivalents at end of the year/period 207 77,718 161,355 519,433

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The Directors are of the opinion that, taking into account the financial resources available to our Group, including cash and cash equivalents, internally generated funds and the estimated net [REDACTED] from the [REDACTED], we have sufficient working capital to cover at least 125% of our costs and expenses, including research and development expenses, administrative expenses, and other 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; (ii) capital expenditures; and (iii) lease payments. Assuming that the average cash burn rate going forward of approximately 4.1 times the level in 2020, we estimate that our cash and cash equivalents as of April 30, 2021 will be able to maintain our financial viability for approximately [REDACTED] without net [REDACTED] from the [REDACTED] or, if we also take into account the estimated net [REDACTED] (based on the low end of the indicative [REDACTED] being HK$[REDACTED] per [REDACTED] and assuming the [REDACTED] is not exercised) from the [REDACTED], for at least [REDACTED]. Our Directors and our management team will continue to monitor our working capital, cash flows, and our business development status.

KEY FINANCIAL RATIO

The following table sets forth the components of our key financial ratio as of the dates indicated:

As of As of December 31, April 30, 2019 2020 2021

Current ratio(1) 1.4 4.4 20.4

Note:

(1) Current ratio represents current assets divided by current liabilities as of the same date.

SUMMARY OF MATERIAL RISK FACTORS

We believe that there are certain risks involved in our operations, many of which are beyond our control. These risks are set out in “Risk Factors” in this document. Some of the major risks we face include:

• Our future growth depends substantially on the successful development of our product candidates. If we are unable to successfully complete clinical development, obtain regulatory approval and commercialize our product candidates, or experience significant delays in doing so, our business may be adversely affected.

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• We have incurred net losses since our inception, and expect to continue to incur net losses for the foreseeable future. As a result, you may lose substantially all your investments in us given the high risks involved in the medical device business.

• If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or do not otherwise produce positive results in a timely manner or at all, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.

• We have limited experience in commercialization of products. If we are unable to build or maintain sufficient sales and marketing capabilities, either by ourselves or through third parties, we may not be able to successfully create or increase market awareness of our future products or sell our future products, which will materially affect our ability to generate product sales revenue.

• We may be unable to develop and commercialize our product candidates as anticipated if the third parties with which we contract for clinical trials do not perform in an acceptable manner or if these third parties do not successfully carry out their contractual duties or meet expected deadlines.

• We may not be able to develop products that are competitive in the market, or in a timely manner or at all. We may face intense competition in the medical device and the relatively mature heart valve device markets, which may result in others discovering, developing or commercializing competing products before or more successfully than we do, or respond and adapt to the market changes more quickly and effectively.

• If we are unable to obtain and maintain patent protection for our product candidates through intellectual property rights, or if the scope of such intellectual property rights obtained is not sufficiently broad, third parties may compete directly against us.

• We may not identify relevant third-party patents or may incorrectly interpret the relevance, scope or expiration of a third-party patent, which might adversely affect our ability to develop and market our product candidates or any future product candidates.

• Our business, results of operations and financial position could be adversely affected by the ongoing COVID-19 pandemic.

You should read the entire section headed “Risk Factors” in this document before you decide to invest in the [REDACTED].

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RECENT DEVELOPMENTS

Mi-thos® was implanted in the first human subject in its FIM clinical trial in August 2021.

Valveclip-MTM was registered for clinical trial with the NMPA in June 2021.

We finished implanting Prizvalve® in FIM trial subjects in May 2021. In June 2021, we completed the FIM clinical trial of Prizvalve® In July 2021, Prizvalve® was implanted in the first human subject in its confirmatory clinical trial.

Valveclip-TTM completed type test in May 2021.

Our Directors confirm that up to the date of this document, save as disclosed in this document, there had been no material adverse change in our financial, operational or prospects since April 30, 2021, being the end of the period reported on as set out in the Accountant’s Report in Appendix I to this document.

OUTBREAK OF COVID-19

The outbreak of a novel strain of coronavirus causing coronavirus disease 2019 (COVID-19) has materially and adversely affected the global economy. As of the Latest Practicable Date, the spread of COVID-19 continued to affect China.

The outbreak of COVID-19 has not caused any material and adverse impact on our business, financial condition and results of operations. We have employed various measures to mitigate any impact the COVID-19 outbreak may have on our ongoing clinical trials in China, including providing alternative methods for safety and efficacy assessment, continuing patient visit through remote access, and engaging necessary communications with our investigators to identify and address any issues that may arise. Due to the enhanced containment policies implemented by the PRC government, the COVID-19 outbreak has been largely controlled in China and the travel restrictions have been gradually relaxed. As of the Latest Practicable Date, we had resumed the normal patient enrollment and data entry for our clinical trials in China. Based on the foregoing, we currently expect that our ongoing clinical trials will not be significantly affected by the outbreak of COVID-19. We expect the situation to continue to be improved with the sustained implementation of containment policies in response to the COVID-19 outbreak, and we may adjust our current clinical development plan covering multiple jurisdictions to the extent necessary depending on the status of the COVID-19 outbreak worldwide. Currently, we do not expect the COVID-19 outbreak to have any material long-term impact on data quality of our clinical trials or our overall clinical development plans.

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SHAREHOLDERS INFORMATION

As of the Latest Practicable Date, Dr. Yu is able to exercise approximately 39.57% voting rights in our Company through (i) 118,844,004 Shares directly held by him; and (ii) 142,307,848 Shares held by NewMed Enterprise Management and certain ESOP Platforms (namely Jiaxing Fengtao, Jiaxing Yongqi and Anji NewMed). Immediately upon completion of the [REDACTED] (assuming the [REDACTED] is not exercised), Dr. Yu will be entitled to exercise approximately [REDACTED]% voting rights in our Company. Therefore, Dr. Yu is considered as the Controlling Shareholder of our Company under the Listing Rules. For further details, please refer to the section headed “Relationship with Our Controlling Shareholder”.

Throughout the development of our Company, we have entered into several rounds of financing and entered into agreements with our Pre-[REDACTED] Investors. All existing Shareholders (including the Pre-[REDACTED] Investors) shall not dispose of any of the Shares held by them within the 12 months following the [REDACTED] as required under the applicable PRC law. For further details regarding the key terms of these agreements and the lock-up arrangements, please refer to the paragraphs headed “History, Development and Corporate Structure – Principal Terms of the Pre-[REDACTED] Investments”.

DIVIDENDS

No dividend have been declared or paid by entities comprising our Group. We currently expect to retain all future earnings for use in operation and expansion of our business, and do not have any dividend policy to declare or pay any dividends in the foreseeable future. The declaration and payment of any dividends in the future will be determined by our board of directors and subject to our Articles of Association and the PRC Company Law, and will depend on a number of factors, including the successful commercialization of our products as well as our earnings, capital requirements, overall financial condition and contractual restrictions. No dividend shall be declared or payable except out of our profits and reserves lawfully available for distribution. As confirmed by our PRC Legal Adviser, according to the PRC law, any future net profit that we make will have to be first applied to make up for our historically accumulated losses, after which we will be obliged to allocate 10% of our net profit to our statutory common reserve fund until such fund has reached more than 50% of our registered capital. We will therefore only be able to declare dividends after (i) all our historically accumulated losses have been made up for; and (ii) we have allocated sufficient net profit to our statutory common reserve fund as described above.

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THE [REDACTED]

This document is published in connection with the [REDACTED] as part of the [REDACTED]. The [REDACTED] comprises (subject to adjustment and the [REDACTED]):

(a) the [REDACTED]of[REDACTED] H Shares (subject to adjustment) for [REDACTED] by the public in Hong Kong as described in the section headed “Structure of the [REDACTED] – The [REDACTED]”; and

(b) the [REDACTED]of[REDACTED] H Shares (subject to adjustment and the [REDACTED]) outside the United States (including to professional and institutional investors within Hong Kong) in offshore transactions in reliance on Regulation S and in the United States only to QIBs in reliance on Rule 144A or any other available exemption from registration under the U.S. Securities Act as described in the section headed “Structure of the [REDACTED] – The [REDACTED]” below.

[REDACTED] STATISTICS

All statistics in the following table are based on the assumptions that the [REDACTED] has been completed and [REDACTED] are issued pursuant to the [REDACTED].

Based on an Based on an [REDACTED] of [REDACTED] of HK$[REDACTED] HK$[REDACTED]

Market capitalization of our Shares(1) HK$[REDACTED] HK$[REDACTED] million million Unaudited pro forma adjusted net tangible asset HK$[REDACTED] HK$[REDACTED] per Share(2)

Notes:

(1) The calculation of market capitalization is based on [REDACTED] Shares expected to be in issue immediately upon completion of the [REDACTED] assuming the [REDACTED] is not exercised.

(2) The unaudited pro forma adjusted consolidated net tangible assets attributable to equity shareholders of the Company per Share is calculated after making the adjustments referred to in Appendix II to this document, and on the basis that [REDACTED] Shares are expected to be in issue immediately upon completion of the [REDACTED] (taking into account of the effect of the Capitalization Issue as set forth in Note 25(a) of Appendix I to this document), without taking into account of the Shares (i) issued to Jiaxing Yongqi in July 2021 and related effect of the Capitalization Issue; and (ii) may be issued upon exercise of the [REDACTED].

USE OF [REDACTED]

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[REDACTED] range stated in this Document. If the [REDACTED] is set at HK$[REDACTED] per Share, which is the high end of the indicative [REDACTED] range, the net [REDACTED] from the [REDACTED] will increase by HK$[REDACTED] million. If the [REDACTED] is set at HK$[REDACTED] per Share, which is the low end of the indicative [REDACTED], the net [REDACTED] from the [REDACTED] will decrease by HK$[REDACTED] million.

Assuming an [REDACTED] at the mid-point of the indicative [REDACTED], we currently intend to apply these net [REDACTED] for the following purposes:

(1) [34.5]%, or HK$[REDACTED] million, will be allocated to the research and development, clinical trials, registration filings, and commercialization of our key product candidates, including Mi-thos®, Valveclip-MTM, and Valveclip-TTM;

(2) [37.0]%, or HK$[REDACTED] million, will be allocated to the research and development, clinical trials, registration filings, manufacturing and commercialization of our Core Product, namely Prizvalve®;

(3) [11.0]%, or HK$[REDACTED] million, will be allocated to the research and development, clinical trials, registration filings, and commercialization of other product candidates in our pipeline;

(4) [7.8]%, or HK$[REDACTED] million, will be allocated to the expansion of our manufacturing capacities; and

(5) [9.7]%, or HK$[REDACTED] million, will be used for our working capital and general corporate purposes.

For more details, please refer to the section headed “Future Plans and Use of [REDACTED]” in this document.

[REDACTED]

[REDACTED] represent professional fees, [REDACTED] commissions and other fees incurred in connection with the [REDACTED]. We estimate that [REDACTED]of approximately RMB[REDACTED] million (HK$[REDACTED] million), assuming the [REDACTED] is not exercised and based on the [REDACTED] of HK$[REDACTED] per [REDACTED], being the mid-point of the [REDACTED], will be incurred by our Company, approximately RMB[REDACTED] million (HK$[REDACTED] million) of which is expected to be charged to our consolidated statements of profit or loss, and approximately RMB[REDACTED] million (HK$[REDACTED] million) of which is expected to be capitalized. No such [REDACTED] were recognized and charged to our consolidated statements of profit or loss during the Track Record Period. The [REDACTED] above are the latest practicable estimate for reference only, and the actual amount may differ from this estimate.

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In this document, unless the context otherwise requires, the following terms and expressions shall have the meanings set out below.

“affiliate(s)” with respect to any specified person, any other person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified person

“Anji NewMed” Anji NewMed Enterprise Management Partnership (Limited Partnership) (安吉紐脈企業管理合夥企業(有限合夥)), a limited partnership established under the laws of the PRC on November 29, 2019 and one of the ESOP Platforms

“Anji Tongxin” Anji Tongxin Technology Partnership (Limited Partnership) (安吉同鑫科技合夥企業(有限合夥)), a limited partnership established under the laws of the PRC on March 28, 2019 and one of the ESOP Platforms

“Articles” or “Articles of the articles of association of our Company adopted on Association” July 21, 2021 with effect upon [REDACTED] (as amended from time to time), a summary of which is set out in Appendix V to this document

“associate(s)” has the meaning ascribed thereto under the Listing Rules

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

“Business Day” a day on which banks in Hong Kong are generally open for normal business to the public and which is not a Saturday, Sunday or public holiday in Hong Kong

“CAGR” compound annual growth rate

“CCASS” the Central Clearing and Settlement System established and operated by HKSCC

“CCASS Clearing Participant” a person admitted to participate in CCASS as a direct clearing participant or a general clearing participant

“CCASS Custodian Participant” a person admitted to participate in CCASS as a custodian participant

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“CCASS E[REDACTED]” the application for the [REDACTED] to be issued in the name of HKSCC Nominees and deposited directly into CCASS to be credited to your or a designated CCASS Participant’s stock account through causing HKSCC Nominees to apply on your behalf, including by (i) instructing your broker or custodian who is a CCASS Clearing Participant or a CCASS Custodian Participant to give electronic application instructions via CCASS terminals to apply for the [REDACTED] on your behalf, or (ii) if you are an existing CCASS Investor Participant, giving electronic application instructions through the CCASS Internet System (https://ip.ccass.com)or through the CCASS Phone System (using the procedures in HKSCC’s “An Operating Guide for Investor Participants” in effect from time to time). HKSCC can also input electronic application instructions for CCASS Investor Participants through HKSCC’s Customer Service Centre by completing an input request

“CCASS Investor Participant” a person admitted to participate in CCASS as an investor participant who may be an individual, joint individuals or a corporation

“CCASS Operational Procedures” the Operational Procedures of HKSCC in relation to CCASS, containing the practices, procedures and administrative requirements relating to operations and functions of CCASS, as from time to time in force

“CCASS Participant” a CCASS Clearing Participant, a CCASS Custodian Participant or a CCASS Investor Participant

“Chengdu NewMed” Chengdu NewMed Biotechnology Co., Ltd. (成都紐脈生物科技有限公司), a limited liability company incorporated in the PRC on September 27, 2020 and is one of our subsidiaries

“China” or “the PRC” the People’s Republic of China excluding, for the purposes of this document, Hong Kong, the Macau Special Administrative Region of the People’s Republic of China and Taiwan

“close associate(s)” has the meaning ascribed thereto under the Listing Rules

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“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”, “our Company”, or Shanghai NewMed Medical Co., Ltd. (上海紐脈醫療科技 “NewMed Medical” 股份有限公司), a joint stock company with limited liability incorporated in the PRC, the predecessor of which was Shanghai NewMed Medical Company Limited (上海紐脈醫療科技有限公司), a limited liability company established in the PRC on March 31, 2015, and if the context requires, includes its predecessor

“connected person(s)” has the meaning ascribed thereto under the Listing Rules

“Controlling Shareholder” has the meaning ascribed to it under the Listing Rules and unless the context otherwise requires, refers to Dr. Yu, for further details of which, please refer to the section headed “Relationship with our Controlling Shareholder”

“core connected person(s)” has the meaning ascribed thereto under the Listing Rules

“Core Product” has the meaning ascribed to it in Chapter 18A of the Listing Rules and in this context, refers to our Core Product Prizvalve®

“CSRC” China Securities Regulatory Commission (中國證券監督管理委員會)

“Director(s)” the director(s) of our Company

“Domestic Share(s)” ordinary share(s) in the share capital of our Company, with a nominal value of RMB1.00 each, which is/are subscribed for and paid up in Renminbi and are currently not listed or traded on any stock exchange

“Dr. Yu” Dr. Yu Qifeng (虞奇峰), our founder, an executive Director, the chairman of our Board and our Controlling Shareholder upon [REDACTED]

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“EIT” enterprise income tax

“EIT Law” the PRC Enterprise Income Tax Law (《中華人民共和國企業所得稅法》)

“Employee Incentive Scheme” the employee incentive scheme of our Company which was last amended on March 12, 2021, a summary of the principal terms of which is set forth in the paragraph headed “Further Information About Our Directors, Supervisors and Substantial Shareholders – 5. Employee Incentive Scheme” in Appendix VI to this document

“ESOP Platforms” Anji NewMed, Jiaxing Fengtao, Jiaxing Yongqi, Jiaxing Qianqi, Anji Tongxin and Jiaxing Heting

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

“Frost & Sullivan” Frost & Sullivan (Beijing) Inc., Shanghai Branch Co., an independent market research and consulting company

“Frost & Sullivan Report” the industry report commissioned by our Company and independently prepared by Frost & Sullivan, summary of which is set forth in the section headed “Industry Overview” in this document

“General Rules of CCASS” General Rules of CCASS published by the Stock Exchange and as amended from time to time

[REDACTED]

“Group”, “our Group”, “our”, the Company and all of its subsidiaries, or any one of “we”, or “us” them as the context may require

“Guiding Principles” the Guidelines for Clinical Trials of Transcatheter Aortic Valve Implantation (《經導管植入式人工主動脈瓣膜臨床試驗指導原則》)

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

[REDACTED]

“HKSCC” the Hong Kong Securities Clearing Company Limited, a wholly owned subsidiary of Hong Kong Exchanges and Clearing Limited

“HKFRS” Hong Kong Financial Reporting Standard

“HKSCC Nominees” HKSCC Nominees Limited, a wholly owned subsidiary of the HKSCC

“Hong Kong” or “HK” the Hong Kong Special Administrative Region of the PRC

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

[REDACTED]

“Hong Kong Stock Exchange” The Stock Exchange of Hong Kong Limited, a wholly or “Stock Exchange” owned subsidiary of Hong Kong Exchanges and Clearing Limited

[REDACTED]

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[REDACTED]

“IIT Law” the Individual Income Tax Law of the PRC (《中華人民共和國個人所得稅法》)

“Independent Third Party(ies)” any person(s) or entity(ies) who is not a connected person of the Company within the meaning of the Listing Rules

[REDACTED]

“Jiaxing Fengtao” Jiaxing Fengtao Enterprise Management Partnership (Limited Partnership) (嘉興峰滔企業管理合夥企業(有限合夥)), a limited partnership established under the laws of the PRC on December 10, 2020 and one of the ESOP Platforms

–24– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT DEFINITIONS

“Jiaxing Heting” Jiaxing Heting Enterprise Management Partnership (Limited Partnership) (嘉興荷町企業管理合夥企業(有限合夥)), a limited partnership established under the laws of the PRC on July 23, 2021 and one of the ESOP Platforms

“Jiaxing Qianqi” Jiaxing Qianqi Enterprise Management Partnership (Limited Partnership) (嘉興仟騎企業管理合夥企業(有限合夥)), a limited partnership established under the laws of the PRC on July 15, 2021 and one of the ESOP Platforms

“Jiaxing Yongqi” Jiaxing Yongqi Enterprise Management Partnership (Limited Partnership) (嘉興用奇企業管理合夥企業(有限合夥)), a limited partnership established under the laws of the PRC on January 13, 2021 and one of the ESOP Platforms

[REDACTED]

“Joint Sponsors” the joint sponsors of the [REDACTED] of the H Shares on the Hong Kong Stock Exchange as named in “Directors, Supervisors and Parties Involved in the [REDACTED]”

“Latest Practicable Date” August 16, 2021, being the latest practicable date for the purpose of ascertaining certain information contained in this document prior to its publication

[REDACTED]

“Listing Committee” the listing committee of the Hong Kong Stock Exchange

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[REDACTED]

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

“Main Board” the stock market (excluding the option market) operated by the Hong Kong Stock Exchange which is independent from and operated in parallel with the Growth Enterprise Market of the Hong Kong 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 amended, supplemented or otherwise modified from time to time, for inclusion in the articles of association of companies incorporated in the PRC to be listed overseas (including Hong Kong), which were promulgated by the former Securities Commission of the State Council (國務院證券委員會) and the former State Commission for Restructuring the Economic Systems (國家經濟體制改革委員會) on August 27, 1994

“MOF” Ministry of Finance of the PRC (中華人民共和國財政部)

“MOFCOM” Ministry of Commerce of the PRC (中華人民共和國商務部)

“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)

“NewMed Enterprise Shanghai NewMed Enterprise Management Consulting Management” Partnership (Limited Partnership) (上海紐脈企業管理諮詢合夥企業(有限合夥)), a limited partnership established under the laws of the PRC on January 4, 2017

“NewMed Taiwei” Shanghai NewMed Taiwei Medical Co., Ltd. (上海紐脈太惟醫療科技有限公司), a limited liability company incorporated in the PRC on December 12, 2016 and is one of our subsidiaries

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“NIPA” the National Intellectual Property Administration of the PRC (中華人民共和國國家知識產權局)

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

“NPC” the National People’s Congress of the PRC (中華人民共和國全國人民代表大會)

“OAP III” OAP III (HK) Limited, a limited company incorporated in Hong Kong and one of our Pre-[REDACTED] Investors

[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 People’s Republic of China (《中華人民共和國公司法》)

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“PRC Government” the central government of the PRC and all governmental subdivisions (including provincial, municipal and other regional or local government entities) and instrumentalities thereof or, where the context requires, any of them

“PRC Legal Adviser” Jingtian & Gongcheng

“Pre-[REDACTED] the investment(s) in our Company undertaken by the Investment(s)” Pre-[REDACTED] Investors pursuant to the respective equity transfer agreement(s) and/or capital increase agreement(s), details of which are set out in the section headed “History, Development and Corporate Structure” in this document

“Pre-[REDACTED] Investor(s)” the investor(s) who acquired interest in our Company pursuant to the respective equity transfer agreement(s) and capital increase agreement(s), details of which are set out in the section headed “History, Development and Corporate Structure” in this document

“Qualified Institutional Buyers” qualified institutional buyers within the meaning of or “QIBs” Rule 144A under the U.S. Securities Act

“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 (中華人民共和國外匯管理局)

“SAMR” the State Administration for Market Regulation (國家市場監督管理總局)

“SCU” Sichuan University

“SCU Agreement” The collaboration agreement dated March 12, 2021 entered into by and between Chengdu NewMed and SCU

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

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“Securities Law” the Securities Law of the PRC (《中華人民共和國證券法》), as amended, supplemented or otherwise modified from time to time

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

“Shanghai Chenlu” Shanghai Chenlu Medical Technology Co., Ltd (上海琛璐醫療科技有限公司), a limited liability company established in the PRC on November 29, 2016, which is owned as to 70% by Dr. Yu and 30% by Ms. Li LI (李莉) who is an employee of our Company and the spouse of Dr. Yu

“Shanghai Shanchi” Shanghai Shanchi Enterprise Management Center (Limited Partnership) (上海善池企業管理中心(有限合夥)), a limited partnership established under the laws of the PRC on December 5, 2016

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

“Shareholder(s)” holder(s) of the Share(s)

“Sophisticated Investor(s)” has the meaning ascribed to it under Guidance Letter HKEx-GL92-18 issued by the Hong Kong Stock Exchange

“Special Regulations” the 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及上市的特別規定》), promulgated by the State Council on August 4, 1994, as amended from time to time

“Springleaf Investments” Springleaf Investments Pte. Ltd., a limited company incorporated in Singapore and one of our Pre-[REDACTED] Investors

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

[REDACTED]

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

“subsidiary(ies)” has the meaning ascribed thereto under the Listing Rules

“substantial shareholder(s)” has the meaning ascribed thereto under the Listing Rules

“Supervisor(s)” member(s) of our Supervisory Committee

“Supervisory Committee” the supervisory committee of our Company

“Takeovers Code” the Code on Takeovers and Mergers and Share Buybacks published by the SFC (as amended, supplemented or otherwise modified from time to time)

“Track Record Period” the two financial years ended December 31, 2019 and 2020 and the four months ended April 30, 2021

[REDACTED]

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

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

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

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[REDACTED]

“Zhangke Lingyi Fengtao” Jiaxing Zhangke Lingyi Fengtao Venture Capital Partnership (Limited Partnership) (嘉興張科領弋峰濤創業投資合夥企業(有限合夥)), a limited partnership established under the laws of the PRC on November 2, 2020 and a Pre-[REDACTED] Investor of our Company

“ZJ Leading VC” Shanghai Zhangjiang Leading Initiating Venture Capital (Limited Partner) (上海張科領弋升帆創業投資中心(有限合夥)), a limited partnership established under the laws of the PRC on November 17, 2015 and a Pre-[REDACTED] Investor of our Company

For ease of reference, the names of PRC laws and regulations, governmental authorities, institutions, nature persons or other entities (including our subsidiaries) have been included in this document in both the Chinese and English languages and in the event of any inconsistency, the Chinese versions shall prevail.

–31– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT GLOSSARY OF TECHNICAL TERMS

This glossary contains definitions of certain technical terms used in this document in connection with us and our business. These may not correspond to standard industry definitions, and may not be comparable to similarly terms adopted by other companies.

“all-cause mortality” all of the deaths that occur in a population, regardless of the cause, which is measured in clinical trials and used as an indicator of the safety or hazard of an intervention

“annuloplasty” a procedure to tighten or reinforce the ring (annulus) around a valve in the heart

“aortic annulus” a fibrous ring at the aortic orifice to the front and right of the atrioventricular aortic valve

“aortic regurgitation” or “AR” a medical condition where the aortic valve is not able to close completely, causing a backflow of blood from the aorta into the left ventricle during diastole

“aortic stenosis” or “AS” the narrowing of the aortic valve that obstructs blood flow from the left ventricle to the ascending aorta during systole

“aortic valve” a valve in the human heart between the left ventricle and the aorta

“atrial septum” or “interatrial the wall between the left and right atria of the heart septum” or “atrial septal”

“atrioventricular block” a partial or complete interruption or delay of impulse transmission from the atria to ventricles, which will give rise to slow heart rate

“BE” balloon-expandable

“BP” bovine pericardium

“cardiology” a branch of medicine that deals with the disorders of the heart as well as some parts of the circulatory system. The field includes medical diagnosis and treatment of congenital heart defects, coronary artery diseases, heart failure, valvular heart diseases and electrophysiology

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“CE”, or “CE Mark”, or “CE Conformite Europeenne, an administrative marking that certification” indicates conformity with health, safety, and environmental protection standards for products sold within the European Economic Area (EEA)

“CEP” cerebral embolic protection

“complication” an unfavorable evolution of a disease, health condition or medical treatment

“confirmatory clinical trial” a controlled clinical trial of a medical device product designed to demonstrate statistically significant clinical efficacy and safety of such product as used in human patients (in conjunction with the performance of a therapeutic procedure), for regulatory approval of such product

“COR” class of recommendation, part of the guideline recommendation system applied by the American College of Cardiology (ACC) and the American Heart Association (AHA), reflecting the magnitude of benefit over risk and corresponds to the strength of the recommendation

“CRO” contract research organization, a company that provides support to the pharmaceutical, biotechnology, and medical device industries in the form of research services outsourced on a contractual basis

“DSA” digital subtraction angiography, a fluoroscopic technique used extensively in interventional radiology for visualizing blood vessels

“EHS” environmental, health and safety

“ejection fraction” a measurement of blood that is pumped out by the left ventricle of the heart and is expressed in percentage

“endocarditis” an inflammatory disease caused by the direct invasion of the inner lining of the heart (the endocardium) by pathogenic microorganisms

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“ethics committee” a committee composed of medical, pharmacy and other background personnel whose responsibility is to ensure that the rights and safety of subjects are protected by independently reviewing, consenting to, and following up on the review of trial protocols and related documents, and obtaining and documenting the methods and materials used for informed consent of subjects. The composition and all activities of this committee should not be interfered with or influenced by the organization and conduct of clinical trials

“EuroPCR” the official annual meeting of the European Association of Percutaneous Cardiovascular Interventions (EAPCI)

“FDA” the United States Food and Drug Administration, a federal agency of the Department of Health and Human Services

“FIM clinical trial” or “FIM first-in-man clinical trial, also known as feasibility study” clinical trial, a step in the development of a new medical device or therapy or in testing an existing product for a new indication, in which the product is used in a small number of human patients who are carefully monitored. It is typically conducted after bench testing and/or preclinical animal testing have demonstrated expected safety of the investigational product

“Fr” the abbreviation of French scale or French gauge system

“FTR” functional tricuspid regurgitation, a common etiology of tricuspid regurgitation resulting from geometrical distortion of the normal spatial relationships of the tricuspid leaflets, annulus, chords, papillary muscles, and right ventricular (RV) walls

“GDMT” guideline directed medical therapy

“GFA” gross floor area

“GMP” good manufacturing practices, the aspect of quality assurance that ensures that medical products are consistently produced and controlled to the quality standards appropriate to their intended use and as required by the product specification

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“heart disease” or “cardiovascular a collection of diseases and conditions that describes disease” heart abnormalities, including coronary heart disease, arrhythmia, heart failure and structural heart disease

“heart failure” or “HF” sometimes known as congestive heart failure describing, the condition in which the heart’s ability to pump blood is below the normal levels

“KOLs” acronym for Key Opinion Leaders; refers to renowned physicians that influence their peers’ medical practice

“LOE” level of evidence, part of the guideline recommendation system applied by the American College of Cardiology (ACC) and the American Heart Association (AHA), denoting the confidence in or certainty of the evidence supporting the recommendation, based on the type, size, quality, and consistency of pertinent research findings

“LV” left ventricular

“LVEF” left ventricular ejection fraction, the central measure of left ventricular systolic function, the fraction of chamber volume ejected in systole (stroke volume) in relation to the volume of the blood in the ventricle at the end of diastole (end-diastolic volume)

“LVESD” left ventricular end-systolic diameter, a marker of left ventricular function in patients with organic mitral regurgitation

“MACCE” major adverse cardiovascular and cerebrovascular events

“mitral regurgitation” or “MR” a condition where the mitral valve is not able to close completely, causing a backflow of blood from the left ventricle into the left atrium during ventricular systole

“mitral stenosis” or “MS” the thickening and stiffening of the mitral valve leaflets and the narrowing of their opening obstructing the flow of blood from the left atrium to the left ventricle

“mitral valve” the valve that lets blood flow from one chamber of the heart, the left atrium, to another called the left ventricle

“mmHg” millimeter of mercury, a unit of measure for pressure

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“MP35N” a grade of age-hardenable nickel-cobalt base alloy that has a unique combination of properties, including ultra- high strength, toughness, ductility and outstanding corrosion resistance

“MPG” mean pressure gradient

“nitinol” nickel titanium, a metal alloy of nickel and titanium, where the two elements are present in roughly equal atomic percentages

“NYHA classification” a rating system developed by the New York Heart Association. It provides a simple way of classifying the extent of heart failure, and classifies patients into four categories from Class I to Class IV (except for cases where no NYHA class is listed or can be determined) during physical activity in ascending order of severity of symptoms and/or limitations

“orifice area” the area of the orifice of heart valves, which is one of the measures for evaluating the severity of heart valve stenosis

“paravalvular leak” a complication associated with the implantation of a prosthetic heart valve using a surgical or transcatheter approach; it refers to blood flowing through a channel between the structure of the implanted valve and cardiac tissue as a result of a lack of appropriate sealing

“PAV” peak aortic velocity

“PCI” percutaneous coronary intervention, a procedure used to treat narrowing of the coronary arteries of the heart found in coronary artery disease

“PCT” Patent Cooperation Treaty

“permanent pacemaker a common procedure where a pacemaker (which is an implantation” electronic device that prevents one’s heart from beating too slowly) is inserted just under the skin in the chest with wires attached to the heart

“PET” polyethylene terephthalate

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“PI” principal investigators

“PP” porcine pericardium

“prosthetic aortic valve” the artificial valve of our TAVR product candidates

“prosthetic mitral valve” The artificial valve of our TMVR product candidates

“pulmonary regurgitation” or a medical condition where the pulmonary valve is not “PR” able to close completely, causing a backflow of blood from the pulmonary artery into the right ventricle during diastole

“pulmonary stenosis” or “PS” the narrowing of the pulmonary valve that obstructs blood flow from the right ventricle to the pulmonary artery during systole

“pulmonary valve” a valve in the human heart between the right ventricle and the pulmonary artery

“regurgitation” reverse flow of blood caused by insufficient valve closure due to functional or organic diseases of the heart valve

“rheumatic fever” an inflammatory disease that can develop when strep throat or scarlet fever is not properly treated

“RV” right ventricular

“SAVR” surgical aortic valve replacement, a treatment of severe aortic stenosis through open-chest surgery

“SE” self-expanding

“SMO” site management organization, an organization that provides clinical trial related services to medical device companies having adequate infrastructure and staff to meet the requirements of the clinical trial protocol

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“Special Review” the special procedures to the examination and approval for innovative medical devices, according to which medical devices meet certain requirements are applicable to special procedures, under the Special Review Qualification for Innovative Medical Devices (《創新醫療器械特別審查程序》) promulgated by the NMPA in November 2018

“SPVR” surgical pulmonary valve replacement

“sq.m.” square meter, a unit of area

“standard operating procedures” a set of step-by-step instructions compiled by an organization to help workers carry out routine operations, which aim to achieve efficiency, quality output and uniformity of performance, while reducing miscommunication and failure to comply with industry regulations

“structural heart disease” any structural abnormalities of the heart and any diseases related to the structure of heart and great vessels, except for coronary artery diseases and cardiac electrical diseases. Structural heart diseases in a narrow definition refer to the pathophysiological changes of the heart caused by structural changes of the heart, including valvular heart diseases, congenital heart diseases and cardiomyopathy, among others

“TA” transapical

“TAVR” transcatheter aortic valve replacement, a catheter-based technique to implant a new aortic valve in a minimally invasive procedure that does not involve open-chest surgery

“TEE” trans-esophageal echocardiography, an essential ultrasonographic technique for rapid bedside tomographic evaluation of the cardiovascular system

“TEER” transcatheter edge-to-edge repair

“TF” transfemoral

“TMV” transcatheter mitral valve

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“TMV therapy” or “TMV a transcatheter therapeutic for patients at high surgical treatment” or “TMV risk with severe symptomatic MR; such treatment method procedure” includes both TMVr and TMVR

“TMVr” transcatheter mitral valve repair, a catheter-based technique to repair the mitral valve in an interventional procedure that does not involve open-chest surgery

“TMVR” transcatheter mitral valve replacement, a catheter-based technique to implant a new mitral valve in an interventional procedure that does not involve open-chest surgery

“ToF” Tetralogy of Fallot, a birth defect that affects normal blood flow through the heart. It happens when a baby’s heart does not form correctly as the baby grows and develops in the mother’s womb during pregnancy

“TPVR” transcatheter pulmonary valve replacement

“transapical” an access approach used in interventional procedures such as TMVr, with the apical as the entry point of the repair device

“transatrial approach” intervention procedures performed through the atrium

“transcatheter tricuspid valve a minimally invasive treatment for severe, symptomatic intervention” or “TTVI” or tricuspid regurgitation patients who are unfit for surgery; “TTV therapy” such treatment method includes both TTVR and TTVr

“tricuspid regurgitation” or “TR” a disorder in which the tricuspid valve is not able to close completely, causing blood to flow backward from the right lower ventricle to the right upper atrium during systole

“tricuspid stenosis” or “TS” a narrowing of the tricuspid valve opening that restricts blood flow between the upper (atrium) and lower (ventricle) part of the right side of the heart

“tricuspid valve” the valve on the right dorsal side of the mammalian heart, between the right atrium and the right ventricle, the function of which is to prevent backflow of blood from the right ventricle into the right atriums

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“TTV” transcatheter tricuspid valve

“TTVr” transcatheter tricuspid valve repair, a catheter-based technique to repair the tricuspid valve in an interventional procedure that does not involve open-chest surgery

“TTVR” transcatheter tricuspid valve replacement, a catheter- based technique to implant a new tricuspid valve in an interventional procedure that does not involve open-chest surgery

“valvular heart disease” the failure or dysfunction of one or more of the four heart valves, where the valves become too narrow and hardened to open fully, or are unable to close completely

“VSD” ventricular septal defect, a birth defect of the heart in which there is a hole in the wall (septum) that separates the two lower chambers (ventricles) of the heart

–40– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT 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 relating to our plans, objectives, beliefs, expectations, predictions and intentions, which are not historical facts and may not represent our overall performance for the periods of time to which such statements relate. 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 other 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, uncertainties and other factors facing our Company which could affect the accuracy of forward-looking statements include, but are not limited to, the following:

• our business strategies and plans to achieve these strategies;

• our ability to complete the development and obtain the relevant requisite regulatory approvals of our heart valve devices;

• our ability to commercialize our approved heart valve devices in a timely manner;

• our future debt levels and capital needs;

• changes to the political and regulatory environment in the industry and markets in which we operate;

• our expectations with respect to our ability to acquire and maintain regulatory licenses or permits;

• changes in competitive conditions and our ability to compete under these conditions;

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

• general economic, political and business conditions in the markets in which we operate;

• effects of the global financial markets and economic crisis;

• our financial conditions and performance;

• our dividend policy; and

• change or volatility in interest rates, foreign exchange rates, equity prices, volumes, operations, margins, risk management and overall market trends.

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

In some cases, we use the words “aim,” “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “going forward,” “intend,” “ought to,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “will,” “would” and similar expressions to identify forward-looking statements. In particular, we use these forward-looking statements in the sections headed “Business” and “Financial Information” in this document in relation to future events, our future financial, business or other performance and development, the future development of our industry and the future development of the general economy of our key markets.

The forward-looking statements are based on our current plans and estimates and speak only as of the date they were made. We undertake no obligation to update or revise any forward-looking statements in light of new information, future events or otherwise. Forward- looking statements involve inherent risks and uncertainties and are subject to assumptions, some of which are beyond our control. We caution you that a number of important factors could cause actual outcomes to differ, or to differ materially, from those expressed in any forward-looking statements.

Our Directors confirm that the forward-looking statements are made after reasonable care and due consideration. Nonetheless, due to the 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, you should not place undue reliance on any forward-looking statements in this document. All forward-looking statements contained in this document are qualified by reference to this cautionary statement.

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An investment in our Shares involves significant risks. You should carefully consider all of the information in this document, including the risks and uncertainties described below, as well as our financial statements and the related notes, and the “Financial Information” section, before deciding to invest in our Shares. The following is a description of what we consider to be our material risks. Any of the following risks could have a material adverse effect on our business, financial condition, results of operations and growth prospects. In any such an event, the market price of our Shares could decline, and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations.

These factors are contingencies that may or may not occur, and we are not in a position to express a view on the likelihood of any such contingency occurring. The information given is as of the Latest Practicable Date unless otherwise stated, will not be updated after the date hereof, and is subject to the cautionary statements in the section headed “Forward-Looking Statements” in this document.

We believe there are certain risks and uncertainties involved in our operations, some of which are beyond our control. We have categorized these risks and uncertainties into: (i) key risks relating to our business, business operations, intellectual property rights and financial prospects; (ii) risks relating to our financial position and need for additional capital; (iii) risks relating to our product candidates, comprising (a) risks relating to the development of our product candidates; (b) risks relating to commercialization of our product candidates; (c) risks relating to manufacture and supply of our product candidates; (d) risks relating to extensive government regulations; (e) risks relating to our intellectual property rights and (f) risks relating to our reliance on third parties; (iv) risks relating to our operations; (v) risks relating to doing business in China; and (vi) risks relating to the [REDACTED].

Additional risks and uncertainties that are presently not known to us or not expressed or implied below or that we currently deem immaterial could also harm our business, financial condition and operating results. You should consider our business and prospects in light of the challenges we face, including those discussed in this section.

KEY RISKS RELATING TO OUR BUSINESS, BUSINESS OPERATIONS, INTELLECTUAL PROPERTY RIGHTS AND FINANCIAL PROSPECTS

Our future growth depends substantially on the successful development of our product candidates. If we are unable to successfully complete clinical development, obtain regulatory approval and commercialize our product candidates, or experience significant delays in doing so, our business may be adversely affected.

Our ability to generate revenue and become profitable in the future substantially depends on the successful development of, the ability to obtain the requisite regulatory approvals for, and the successful commercialization of our pipeline products in a timely manner. As of the Latest Practicable Date, we had developed 16 product candidates in various development stages, including nine valve products and seven accessory products. Clinical development

–43– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS involves lengthy and expensive process with uncertain outcomes. A failure of one or more of our clinical trials can occur at any stage of testing and clinical trials or procedures may experience significant setbacks even after earlier trials have shown promising results. In addition, there can be significant variability in safety and/or efficacy results between different trials of the same product candidate due to numerous factors, including changes in trial procedures set forth in protocols, differences in the size and type of the patient populations and the rate of dropout among clinical trial participants. We have invested significant efforts and financial resources in the development of our pipeline products. We expect to continue to incur substantial and increasing expenditures through the projected commercialization of pipeline products.

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 successfully commercialize our pipeline products, including but not limited to:

• regulators, institutional review boards, or ethics committees may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site in a timely manner;

• clinical trials of our pipeline products may have undesirable side effects, produce negative or inconclusive results, or other unexpected characteristics, and we may decide, or regulators may require us, to conduct additional clinical trials, suspend or terminate the product development programs;

• the initial or interim results of clinical trials may not be predictive of the final clinical trial results and may be subject to adjustments;

• the number of patients required for clinical trials of our pipeline products may be larger than anticipated;

• the patient enrollment may be insufficient or slower than anticipated, or patients may drop out at a higher rate than anticipated;

• we may be unable to reach agreements on acceptable terms with prospective CROs, SMOs and hospitals as trial centers, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs, SMOs and hospitals as trial centers;

• our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all;

• we might have to suspend, delay or terminate clinical trials of our pipeline products for various reasons, including a finding of lack of clinical response or other unexpected characteristics, a finding that participants are being exposed to unacceptable health risks or reasons outside of our control, such as occurrences of epidemics like the outbreak of COVID-19;

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• regulators or ethics committees may require that we or our investigators suspend or terminate clinical research or not rely on the results of clinical research for various reasons, including non-compliance with regulatory requirements;

• the cost of clinical trials of our pipeline products may be greater than anticipated; and

• the supply or quality of our pipeline products for use in a clinical trial or other materials necessary to conduct clinical trials of our pipeline products may be insufficient or inadequate.

If we are unable to conduct additional clinical trials or other testing of our pipeline products beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our pipeline products or other testing or 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 subject to additional requirements and various risks. For details, please refer to the paragraphs headed “ – Key Risks Relating to Our Business, Business Operations, Intellectual Property Rights and Financial Prospects – If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or do not otherwise produce positive results in a timely manner or at all, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.” in this section.

Whether we can generate profit from our operating activities largely depends on the successful commercialization of our pipeline products. The success of our pipeline products will depend on several factors, including but not limited to:

• receipt of regulatory approvals from the NMPA and other regulatory authorities for our pipeline products;

• establishing sufficient commercial-scale manufacturing capabilities, either by expanding our current manufacturing facility or making arrangements with third- party manufacturers;

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

• ensuring we do not infringe, misappropriate or otherwise violate the patent, trade secret or other intellectual property rights of third parties;

• successful launch of our pipeline products, if and when approved;

• successfully maintain an effective distribution channel for our products;

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• obtaining favorable governmental and private medical reimbursement or reimbursement from other third-party payers for our products, if and when approved;

• competition with other structural heart disease medical devices treating structural heart diseases; and

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

Moreover, our spending on current and future research and development programs and pipeline products for structural heart diseases treatment may not yield any commercially viable products. If we do not accurately evaluate the commercial potential or target market for a particular pipeline product, we may relinquish valuable rights to that pipeline product through collaboration, licensing or other royalty arrangements in which case it would have been more advantageous for us to retain sole development and commercialization rights. Any of such events could materially and adversely affect our business, financial condition and operating results.

We have incurred net losses since our inception, and expect to continue to incur net losses for the foreseeable future. As a result, you may lose substantially all your investments in us given the high risks involved in the medical device business.

We are a development-stage heart valve device company. Investment in medical device development is highly speculative because it entails substantial upfront capital expenditures and significant risks that a product candidate may fail to complete clinical trials, gain regulatory approval or become commercially viable. As a result, you may lose substantially all of your investments in our Company given the nature of the heart valve device industry. We have incurred significant expenses related to the research and development of our product candidates in the past. For the years ended December 31, 2019 and 2020 and the four months ended April 30, 2021, our research and development expenses amounted to RMB30.9 million, RMB72.0 million and RMB96.5 million, respectively. In addition, we incurred administrative expenses associated with our operations. As a result, we have incurred net losses amounted to RMB30.7 million, RMB115.0 million and RMB185.5 million for the years ended December 31, 2019 and 2020 and the four months ended April 30, 2021, respectively.

We may continue to incur net losses in the foreseeable future, and such net losses may even increase as we continue to conduct preclinical and clinical trials for our product candidates, seek regulatory approvals for our product candidates, manufacture our product candidates for clinical trials and for commercial sale, commercialize our approved products, attract and retain qualified personnel, maintain, protect and expand our intellectual property portfolio, and comply with laws, regulations and rules applicable to our business and our status as a public company in Hong Kong, among others. The size of our future net losses will depend, in part, on the number, scope and complexity of our product development programs

–46– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS and the associated costs of those programs, the cost of commercializing any approved products, our ability to generate revenues and the timing and amount of milestones and other payments we make or receive with arrangements with third parties.

Typically, it takes many years to develop a new medical device from the time it is initially designed to when it is available for commercial sale. To become and remain profitable, we must be successful in a series of challenging activities, including completing the clinical trials for our product candidates, obtaining regulatory approvals from the NMPA and other competent regulatory bodies, and commercializing our approved products to achieve market acceptance. As a result, we are unable to predict when, or whether, we will be able to achieve or maintain profitability. In addition, we may encounter unforeseen difficulties, complications, delays, expenses and other unknown situations, all of which may result in our failure in some or all of our development efforts. For example, if the clinical trial results of our product candidates are not satisfactory, we may be unable to successfully launch our product candidates as expected. Even if we do succeed in all of the above endeavors, we may not be able to generate revenues that are significant or sufficient enough to achieve profitability. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. Our failure to become and remain profitable may impact investors’ perception of the potential value of our Group and could impair our ability to maintain and enhance our research and development efforts, continue our operations, raise capital or expand our business. You may lose all or part of your investment due to any of these risks.

If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or do not otherwise produce positive results in a timely manner or at all, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.

Before obtaining regulatory approval for the sale of our product candidates, we must conduct extensive clinical trials to demonstrate the safety and efficacy of our product candidates in humans. During the clinical trial process, failure can occur at any time. The results of preclinical studies and feasibility clinical trial of our product candidates may not be predictive of the results of confirmatory clinical trial. Product candidates in confirmatory clinical trials may fail to show the desired safety and efficacy traits despite having progressed through preclinical studies and/or feasibility clinical trials. Clinical trials or procedures may experience significant setbacks even after earlier trials have shown promising results. In some instances, there can be significant variability in safety and/or efficacy results between different trials of the same product candidate due to numerous factors, including changes in trial procedures set forth in protocols, differences in the physical conditions of the patient populations and the rate of dropout among clinical trial participants. Clinical trials of our product candidates may produce negative or inconclusive results. Even if our future clinical trial results show favorable efficacy, not all patients may benefit. Our product candidates may not suit the conditions of certain patients, and severe adverse events and complications may occur for some patients after the treatment procedure. If we decide or are required by regulators to conduct additional clinical trials or other testing of our product candidates beyond those that we currently contemplate or abandon our product development programs, or if we are unable to successfully complete clinical trials of our product candidates or other testing, or if the results of these trials or tests are not positive or are only modestly positive or if they raise

–47– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS safety concerns, we may (i) be subject to substantial liabilities, (ii) be delayed in or even prevented from obtaining regulatory approval for our product candidates, (iii) obtain approval for indications that are not as broad as intended, (iv) have the product removed from the market after obtaining regulatory approval, (v) be subject to additional post-marketing testing requirements, (vi) be subject to restrictions on how the product is distributed or used; or (vii) be unable to obtain reimbursement for use of the product. Any of such events could materially and adversely affect our ability to commercialize the subject products and generate revenue.

We have limited experience in commercialization of products. If we are unable to build or maintain sufficient sales and marketing capabilities, either by ourselves or through third parties, we may not be able to successfully create or increase market awareness of our future products or sell our future products, which will materially affect our ability to generate product sales revenue.

We have relatively limited experience in launching and commercializing our product candidates. In addition, we have limited experience in building a marketing team, conducting a comprehensive market analysis, or managing distributors and sales force for our product candidates. As a result, our ability to successfully market our future approved products may involve more inherent risks, taking longer and costing more than it would if we were a company with sufficient experience launching such products and product candidates.

The success of our sales and marketing efforts also depends on our ability to attract, motivate and retain qualified and professional sales and marketing team who has, among other things, sufficient expertise in the structural heart disease medical device market and is able to communicate effectively with medical professionals. We have to compete with other medical device and pharmaceutical companies to recruit, hire, train and retain marketing and sales personnel.

Collaborative arrangements are also one option for us to market our future approved products. However, there can be no assurance that we will be able to establish or maintain such collaborative arrangements, or if we are able to do so, that they will have effective sales forces. Any revenue we receive will depend on the efforts of such third parties. We would have limited control over the marketing and sales efforts of such third parties, and our revenue from product sales may be lower than if we had commercialized our future approved products ourselves. We also face competition in our search for third parties to assist us with the sales and marketing efforts for our future approved products. We cannot assure you that we will be able to develop and successfully maintain our in-house sales and commercial distribution capabilities or establish or maintain relationships with physicians, hospitals and other third parties to successfully commercialize our future approved products. As a result, our revenue and profitability could be materially and adversely affected.

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We may be unable to develop and commercialize our product candidates as anticipated if the third parties with which we contract for preclinical and clinical trials do not perform in an acceptable manner or if these third parties do not successfully carry out their contractual duties or meet expected deadlines.

We rely on third parties, including clinical trial institutions, public hospitals, CROs and SMOs, to assist us in designing, implementing and monitoring our preclinical and clinical trials. We rely on these parties for execution of our preclinical studies and clinical trials, and control only certain aspects of their activities. If any of these parties terminates its agreements with us, we may not be able to enter into arrangements with alternative third parties on commercially reasonable terms in a timely manner, or at all, and the development of the product candidates covered by those agreements could be substantially delayed. In addition, we are responsible for ensuring that each of our studies is conducted in accordance with the applicable protocols, legal and regulatory requirements and scientific standards, and our reliance on these third parties does not relieve us of our regulatory responsibilities. However, these third parties may not successfully carry out their contractual obligations, meet expected deadlines or follow regulatory requirements, including clinical and manufacturing guidelines and protocols. Moreover, if any of these parties fail to perform their obligations under our agreements with them in the manner specified in those agreements, the NMPA and/or other comparable regulatory authorities may not accept the data generated by those studies or relevant regulatory authorities may require us to perform additional clinical trials before approving our marketing applications, which would increase the cost of and the development time for the relevant product candidate. If any of the preclinical studies or clinical trials of our product candidates is affected by any of the above-mentioned reasons, we will be unable to meet our anticipated development or commercialization timelines, which would have a material adverse effect on our business and prospects.

We may not be able to develop products that are competitive in the market, or in a timely manner or at all. We may face intense competition in the medical device and the relatively mature heart valve device markets, which may result in others discovering, developing or commercializing competing products before or more successfully than we do, or respond and adapt to the market changes more quickly and effectively.

The market for structural heart disease treatment solution is characterized by technological changes, frequent new product introductions, and evolving industry standards. The development and commercialization of new products is highly competitive. We face competition, tendering and pricing pressure in the medical device and the relatively mature heart valve device markets from major medical device companies worldwide. A number of companies in the global market currently market and sell heart valve medical device or are pursuing the development of such products for which we are commercializing our products or developing our product candidates. Our product candidates could become technologically obsolete or more susceptible to competition without timely introduction of new and improved technologies. We expect the heart valve device market to evolve towards newer and more advanced products, some of which we do not currently produce. Our success therefore depends on our ability to accurately anticipate industry trends and continuously identify, develop and market new and advanced products satisfying our customer’s demand in a timely manner. Because product designs can change with market conditions and hospitals’ and physicians’ preferences, identifying and developing new products in a timely manner can be difficult. Our

–49– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS research and development efforts may not lead to new products that will be commercially successful. Even if we develop new or improved products, we may encounter delays in obtaining regulatory clearance, restrictions imposed on approved indications, entrenched patterns of clinical practice, uncertainty over third-party reimbursement, or other factors. In addition, it takes much time and efforts for the new product to gain acceptance after we launch it in the market. We may not be able to successfully market our new products or our end customers may not be receptive to our new products.

The success of our new product offerings will depend on several factors, including our ability to (i) properly identify and anticipate industry trends and market demand; (ii) complete product development process successfully in a timely manner; (iii) optimize our procurement and manufacturing processes to predict and control costs; (iv) manufacture and deliver new products in a timely manner; (v) minimize the time and costs required to obtain required regulatory approvals; (vi) efficiently and cost-effectively build up our marketing platform and distribution channels; (vii) price our products at both competitive and commercially justifiable levels; (viii) increase end-customer awareness and acceptance of our new products; and (ix) compete effectively with other medical device developers, manufacturers and marketers. If there is insufficient demand for our new products once they are introduced to the market, our business, financial condition, results of operations and prospects could be materially adversely affected.

If we are unable to obtain and maintain patent protection for our product candidates through intellectual property rights, or if the scope of such intellectual property rights obtained is not sufficiently broad, third parties may compete directly against us.

Our success depends in a large part on our ability to protect our proprietary technology, products and product candidates from competition by obtaining, maintaining and enforcing our intellectual property rights, including patent rights. We seek to protect the technology, products and product candidates that we consider commercially important by filing patent applications in the PRC, Hong Kong and other regions, relying on trade secrets or medical regulatory protection or employing a combination of these methods. This process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. We may also fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. As a result, we may not be able to prevent competitors from developing and commercializing competitive products in all such fields and territories.

Patents may be invalidated and patent applications may not be granted for a number of reasons, including known or unknown prior deficiencies in the patent application or the lack of novelty of the underlying invention or technology. We may also 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 our employees, consultants, contractors and other third parties who have access to confidential or patentable aspects of our research and development output, any of these parties may breach such agreements and disclose such output before a patent application is filed, jeopardizing our ability to seek patent protection. In addition, publications of discoveries in the scientific or patent literature often lag behind the actual discoveries. For instance, in China and other jurisdictions, patent applications for inventions are typically not published until 18 months after filing, or in some cases, not at

–50– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS all. Under the Patent Law of the PRC (《中華人民共和國專利法》) (the “Patent Law”) promulgated by the Standing Committee of the National People’s Congress, as amended, patent applications for inventions are generally maintained in confidence until their publication at the end of 18 months from the filing date. 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, the PRC has adopted the “first-to-file” system under which whoever first files a patent application will be awarded the patent if all other patentability requirements are met. Under the first-to-file system, even after reasonable investigation we may be unable to determine with certainty whether any of our product candidates, processes, technologies, inventions, improvement and other related matters have infringed upon the intellectual property rights of others, because such third party may have filed a patent application without our knowledge while we are still developing that product, and the term of patent protection starts from the date the patent was filed, instead of the date it was issued. Therefore, the validity of issued patents, patentability of pending patent applications and applicability of any of them to our programs may be lower in priority than third-party patents issued on a later date if the application for such patents was filed prior to ours and the technologies underlying such patents are the same or substantially similar to ours. We may also be involved in claims and disputes of intellectual property infringement in other jurisdictions. In addition, under PRC patent law, any organization or individual that applies for a patent in a foreign country for an invention or utility model accomplished in China is required to report to the NIPA, for confidentiality examination. Otherwise, if an application is later filed in China, the patent right will not be granted.

The coverage claimed in a patent application can be significantly reduced before the patent is issued, and its scope can be reinterpreted after issuance. Even if patent applications we license or own currently or in the future are to be issued as patents, they may not be issued in a form that will provide us with any meaningful protection, prevent competitors or other third parties from competing with us, or otherwise provide us with any competitive advantage. In addition, the patent position of medical device companies generally is highly uncertain, involves complex legal and factual questions, and has been the subject of much litigation in recent years. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain.

The issuance of a patent is not conclusive as to its inventorship, ownership, scope, validity or enforceability, and our patents may be challenged in the courts or patent offices in the PRC or other countries. We may be subject to a third-party pre-issuance submission of prior art to the NIPA, or other related intellectual property offices, or become involved in post-grant proceedings such as opposition, derivation, revocation and re-examination, or inter partes review, or interference proceedings or similar proceedings in foreign jurisdictions challenging our patent rights or the patent rights of others. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology, products or product candidates and compete directly with us without payment to us, or result in our inability to manufacture or commercialize products and product candidates without infringing, misappropriating or otherwise violating third-party patent rights. Moreover, we may have to participate in invalidation proceedings before the NIPA, or courts in China to determine patentability of

–51– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS invention or in post-grant challenge proceedings, such as oppositions in a foreign patent office, that challenge the priority of our invention or other features of patentability of our patents and patent applications. Such challenges may result in loss of patent rights, loss of exclusivity, or in patent claims being narrowed, invalidated, or held unenforceable, which could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology, products and product candidates. Such proceedings also may result in substantial costs and require significant time from our scientists, experts and management, even if the eventual outcome is favorable to us. Consequently, we do not know whether any of our technologies, products or product candidates will be protectable or remain protected by valid and enforceable patents. Our competitors or other third parties may be able to circumvent our patents by developing similar or alternative technologies or products in a non-infringing manner.

Furthermore, although various extensions may be available, the life of a patent and the protection it affords is limited. We may face competition for any approved product candidates even if we successfully obtain patent protection once the patent life has expired for the product. The issued patents and pending patent applications, if issued, for our product candidates are expected to expire on various dates as described in the paragraphs headed “Business – Intellectual Property” in this document. Certain of our patents and patent applications may have expired, lapsed, been withdrawn, been deemed withdrawn or been rejected, which may expose us to the risk of insufficient patent right protection. Upon the expiration of our issued patents or patents that may issue from our pending patent applications, we will not be able to assert such patent rights against potential competitors and our business and results of operations may be adversely affected.

Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such product candidates might expire before or shortly after such product candidates are commercialized. As a result, our patents and patent applications may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. Moreover, some of our patents and patent applications may in the future be co-owned with third parties. If we are unable to obtain an exclusive license to any such third-party co-owners’ interest in such patents or patent applications, such co-owners may be able to license their rights to other third parties, including our competitors, and our competitors could market competing products and technology. In addition, we may need the cooperation of any such co-owners of our patents in order to enforce such patents against third parties, and such cooperation may not be provided to us. Any of the foregoing could have a material adverse effect on our competitive position, business, financial conditions, results of operations and prospects.

We may not identify relevant third-party patents or may incorrectly interpret the relevance, scope or expiration of a third-party patent, which might adversely affect our ability to develop and market our product candidates or any future product candidates.

We cannot guarantee that any of our patent searches or analyses, including the identification of relevant patents, the scope of patent claims or the expiration of relevant patents, are complete or thorough, nor can we be certain that we have identified each and every third-party patent and pending application that is or may be relevant to the commercialization of our product candidates or any future product candidates. Patent applications in China and

–52– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS elsewhere are not published until approximately 18 months after the earliest filing for which priority is claimed, with such earliest filing date being commonly referred to as the priority date. Therefore, patent applications covering our product candidates or any future product candidates could have been filed by others without our knowledge. Additionally, pending patent applications that have been published can, subject to certain limitations, be later amended in a manner that could cover our product candidates or any future product candidates, the use thereof, provided such pending patent applications result in issued patents, our ability to develop and market our product candidates or any future product candidates can be adversely affected in jurisdictions where such patents are issued.

The scope of a patent claim is determined by an interpretation of the law, the written disclosure in a patent and the patent’s prosecution history. The accuracy of our interpretation of the relevance, the scope or the expiration date of a patent or a pending application may negatively impact our ability to market our product candidates, if approved. If we fail to identify and correctly interpret relevant patents, we may be subject to infringement claims. If we fail in any such dispute, in addition to being forced to pay damages, we may be forced to redesign our products, and temporarily or permanently prohibited from commercializing our products in disputes. Any of these events, even if we were ultimately to prevail, could require us to divert substantial financial and management resources that we would otherwise be able to devote to our business.

Our business, results of operations and financial position could be adversely affected by the ongoing COVID-19 pandemic.

Our business operation has been, and may continue to be, negatively affected by the COVID-19 outbreak. For example, many hospitals in China allocated significant resources to contain COVID-19, and patients suffering from other diseases generally avoided going to hospitals in order to avoid infection. As a result, the development progress of our product candidates was delayed due to our inability to enroll a sufficient number of patients for clinical trials in a timely manner. Please refer to the paragraphs headed “Summary – Outbreak of COVID-19” and “Financial Information – Impact of the Covid-19 Outbreak” in this document for a detailed discussion of the relevant impact on us.

While many of the restrictions on movements within China have been relaxed, there is great uncertainty around the future of the COVID-19 outbreak and how it will impact our operations. In particular, we cannot accurately forecast the potential impact of additional outbreaks as government restrictions are relaxed, further shelter-in-place or other government restrictions implemented in response to such outbreaks, or the impact on the ability of our suppliers and other business partners to remain in business as a result of the ongoing pandemic or such additional outbreaks. With the uncertainties surrounding the COVID-19 outbreak, the threat to our business disruption and the related financial impact remains. In addition, during the Track Record Period, we purchased raw materials for our product candidates from certain overseas suppliers. Although we did not encounter insufficient supply of raw materials during the Track Record Period, we may run into delayed delivery or shortage of raw materials as a result of COVID-19.

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RISKS RELATING TO OUR FINANCIAL POSITION AND NEED FOR ADDITIONAL CAPITAL

We had net cash outflows from our operating activities during the Track Record Period and we will need to obtain additional financing to fund our operations.

Since our inception, we have invested a significant portion of our financial resources in the development of our product candidates. For the years ended December 31, 2019 and 2020 and the four months ended April 30, 2021, we had net cash outflows from our operating activities of RMB29.7 million, RMB70.3 million and RMB42.2 million, respectively. Whether we can generate profit from our operating activities largely depends on the successful commercialization of our future product candidates, and we cannot assure you that we will be able to generate positive cash flows in the future.

We expect to continue to spend substantial amounts of capital on conducting research and development activities, advancing the clinical development of our product candidates and commercializing our products upon approval. However, our existing capital resources may not be sufficient for us to complete all of our planned development and commercialization of our current product candidates for the anticipated indications and to initiate and conduct additional product development programs. Accordingly, we will need further funding through public or private offerings, debt financing and/or other sources. We cannot assure you that we will be able to secure sufficient financial resources to support our operations. Our future funding requirements will depend on many factors, including:

• the progress, timing, scope, costs and outcome of our clinical trials, including the ability to timely enroll patients in our planned and potential future clinical trials and the completion of clinical trials;

• the outcome, timing and cost of regulatory approvals of our product candidates;

• the cost of filing, prosecuting, defending and enforcing any patent claims, trade secret and other intellectual property rights;

• the cost and timing of development and completion of commercial-scale manufacturing activities;

• sales and marketing costs associated with our existing or future product candidates, including the cost of building up and expanding our sales and marketing team;

• cash requirements of any future acquisitions and/or the development of other product candidates;

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• the terms and timing of any potential future collaborations, licensing or other arrangements that we may establish; and/or

• our headcount growth and associated costs.

We cannot assure you that we will have sufficient funds to support our operations. Even if we resort to other financing activities, we may not be able to obtain the financing on terms acceptable to us, or at all, including financing costs and other commercial terms. If we are unable to raise capital when needed or on acceptable terms, we would be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts, which may materially and adversely affect our continued business operations.

We had a net liabilities position as of December 31, 2020 and April 30, 2021, which may adversely affect our liquidity. We cannot assure you that we will not experience net liabilities in the future, which could expose us to liquidity risks.

As of December 31, 2020 and April 30, 2021, we had net liabilities of RMB250.7 million and RMB543.1 million, primarily attributable to the financial instruments issued to investors that we recorded as non-current liabilities. During the Track Record Period, our financial instruments issued to investors represented certain preferred rights we issued to investors. As we were subject to the redemption rights of the investors upon occurrence of certain contingent events, we recognized such financial liabilities that were initially measured at the highest present value of those redemption amounts which could be payable upon occurrence of certain specific contingent event, by reclassifying them from equity. Our balance of financial instruments issued to investors amounted to nil, RMB368.0 million and RMB1,226.2 million as of December 31, 2019 and 2020 and April 30, 2021, respectively. We cannot guarantee that we will not incur net liabilities in the future. If we are to record net liabilities again, it will affect our liquidity, as well as our ability to raise funds, obtain bank loans, pay debts when they become due and declare and pay dividends.

We have received preferential treatment by the local government, including government grants and subsidies for our R&D activities and preferential tax rate, however, we may not guarantee the continuity of such preferential treatment in the future.

We have historically received government grants in the form of various subsidies and incentives from national and local government authorities for our industrial development, including grants issued by the Ministry of Science and Technology of the PRC for the National Key Research and Development Plan (國家重點研發計劃) in the 13th Five-Year Plan of the PRC. For the years ended December 31, 2019 and 2020 and the four months ended April 30, 2021, we recognized government grants of RMB1.9 million, RMB4.2 million and RMB0.8 million, respectively. However, we cannot assure that we will continue receiving them in the future. Our eligibility for government grants depends 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

–55– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS historically received government grants may be changed or 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. If we cannot successfully apply for the government grants in the future, may be adversely affected our financial condition, results of operations, cash flows and prospects.

In December 2019, we were recognized as a High and New Technology Enterprise and, accordingly, are entitled to a preferential income tax rate of 15% instead of the standard enterprise income tax rate of 25% from 2019 to 2021. Such preferential tax treatment will be subject to renewal by the relevant authorities upon the end of the entitlement period. Certain of our subsidies are also entitled to preferential income tax rate. For details, please refer to the paragraphs headed “Financial Information – Description of Selected Components of Statements of Profit or Loss and Other Comprehensive Income – Income Tax Expenses” in this document. The policies regarding the preferential tax treatment are subject to review, renewal, change and termination. The government agencies may decide to reduce, eliminate or cancel our preferential tax treatment at any time. Therefore, we cannot assure you of the continued availability of such preferential tax treatment which we currently enjoy. The discontinuation, reduction or delay of the preferential tax treatment could adversely affect our financial condition and results of operations.

Past and future employee incentives may have a material and adverse effect on our financial performance, and may cause shareholding dilution to our existing Shareholders.

We adopted the Employee Incentive Scheme for the benefit of our employees (including directors) as remuneration for their services provided to us to incentivize and reward the eligible persons who have contributed to the success of our Company. For details, please refer to the paragraphs headed “History, Development and Corporate Structure – Employee Incentive Platforms” in this document. For the years ended December 31, 2019 and 2020 and the four months ended April 30, 2021, we incurred share-based compensations of nil, RMB11.6 million and RMB133.8 million, respectively. To further incentivize our employees to contribute to us, we may adopt other employee incentive plans and incur additional share-based payments thereunder in the future. Issuance of additional Shares with respect to such share-based compensations may dilute the shareholding percentage of our existing Shareholders. Share-based payment expenses incurred with respect to such employee incentives may also increase our operating expenses and therefore have a material and adverse effect on our financial performance.

Raising additional capital may cause dilution to our Shareholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.

We may seek additional funding through equity offerings, debt financings and/or other sources. If we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a holder of our Shares. The incurrence of additional indebtedness or the issuance of certain equity securities could result in increased

–56– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS fixed payment obligations and could also result in certain additional restrictive covenants, such as limitations on our ability to incur additional debt or issue additional equity, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. In addition, issuance of additional equity securities, or the possibility of such issuance, may cause the market price of our Shares to decline. In the event that we enter into collaborations or licensing arrangements in order to raise capital, we may be required to accept unfavorable terms, including relinquishing or licensing to a third party on unfavorable terms our rights to technologies or product candidates that we otherwise would seek to develop or commercialize ourselves or potentially reserve for future potential arrangements when we might be able to achieve more favorable terms.

We are exposed to risks in connection with the wealth management products and structured deposits we purchased.

As part of our treasury management, we invest in certain wealth management products and structured deposits to better utilize excess cash when our cash sufficiently covers our ordinary course of business. We recorded financial assets at fair value through profit or loss, mainly including wealth management products and structured deposits, with their ending balance amounted to RMB11.8 million, RMB7.2 million and RMB125.3 million as of December 31, 2019 and 2020 and April 30, 2021, respectively. Pursuant to the Guidance on Regulating Financial Institution’s Asset Management Business (《關於規範金融機構資產管理業務的指導意見》) promulgated by the People’s Bank of China, the China Banking and Insurance Regulatory Commission, the China Security Regulatory Commission and the State Administration of Foreign Exchange on April 27, 2018, financial institutions selling wealth management products shall not guarantee the principals and/or returns of such products. As a result, the returns of our investments on the wealth management products and structured deposits were not guaranteed. We measured these financial assets at fair value through profit or loss, and we are exposed to credit risks in relation to these financial assets, which may adversely affect their fair value. Net changes in their fair value are recorded in profit or loss, and therefore directly affect our results of operations. We have implemented a series of internal control policies and rules setting forth overall principles as well as detailed approval process of our investment activities. We adopt a prudent approach in selecting wealth management products and structured deposits. We may continue to invest in wealth management products and structured deposits in the future when we believe that we have surplus cash on-hand and the potential investment returns are attractive. For more details, please refer to the paragraphs headed “Financial Information – Discussion of Certain Selected Items from the Consolidated Statements of Financial Position – Current Assets and Liabilities – Financial Assets at FVTPL” in this document. However, there can be no assurance that our internal management and investment strategy will be effective and adequate with respect to our purchased wealth management products and structured deposits. We cannot guarantee that we will not experience losses with respect to such investments in the future or that such losses or other potentially negative consequences due to such investments will not have material adverse effects on our business, results of operations and prospects.

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RISKS RELATING TO OUR PRODUCT CANDIDATES

Risks Relating to the Development of Our Product Candidates

The initial or interim results of clinical trials may not be predictive of the final clinical trial results and may be subject to adjustments.

With respect to our Core Product, namely, Prizvalve®, we have entered into the confirmatory clinical trial in cooperation with hospitals as of the Latest Practicable Date. Some of the data and results of clinical trials may not be exactly the same with the raw data observed from the clinical trials, because as set forth in the protocols of the clinical trials and in line with industry practice, the data generated from certain patients may be excluded. In addition, some of such data and results of clinical trials are subject to physicians’ subjective judgment and interpretation, examples of which include whether certain adverse events occurred to the trial subjects during the follow-up period were cardiogenic or not. As a result, when preparing the final report of such confirmatory clinical trial, it is possible that the hospitals or other medical institutions participating in the confirmatory clinical trial may need to make additional adjustments to the clinical data depending on their judgements, and may make other necessary adjustments following the relevant rules promulgated by the NMPA or other regulatory authorities. We cannot assure you that the interim clinical trial results disclosed in this document will be the same as those in the final clinical trial report. Besides our Core Product, our other product candidates or potential product candidates may face the similar risk with respect to the initial or interim results of clinical trials. As such, you are cautioned not to place undue reliance on the interim data presented herein.

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

According to a catalogue issued by the NMPA, medical devices are classified into three different categories, Class I, Class II and Class III, depending on the degree of risk associated with each medical device and the extent of control needed to ensure safety and effectiveness. All of our product candidates are classified as Class III medical devices. To obtain product registrations for medical devices of Class III in China, we need to conduct, at our own expense, adequate and well-controlled clinical trials to demonstrate the safety and efficacy of our product candidates (except for those exempted from clinical trial requirements in accordance with applicable laws and regulations).

Clinical testing is expensive and can take multiple years to complete, and its outcome is inherently uncertain. There can be no assurance that these trials or procedures will be completed in a timely or cost-effective manner or result in a commercially viable product or expanded indication. We may experience numerous unexpected events before and during the clinical trials that could delay or prevent us from obtaining regulatory approval or commercializing our product candidates. For details of such events, please refer to the paragraphs headed “– The regulatory approval processes are lengthy, expensive and inherently

–58– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS unpredictable. If we are not able to obtain, or experience delays in obtaining, required regulatory approvals, we will not be able to commercialize our product candidates, and our ability to generate revenue will be materially impaired” in this document.

Any delays in completing our clinical trials will increase our costs, slow down our product candidate development and approval process, and jeopardize our ability to commercialize our approved products and generate related revenues. Any of these occurrences may adversely affect our business, financial condition and prospects to a significant extent.

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

The timely completion of clinical trials in line with their protocols depends on, among other things, our ability to enroll a sufficient number of patients who remain in the trial until its conclusion. We may experience difficulties or delays in patient enrollment in our clinical trials for a variety of reasons, including the size and nature of the patient population, the patient eligibility criteria defined in the protocol, the accessibility of trial sites for the patients, our ability to recruit clinical trial site investigators with sufficient competence and relevant experience, and the patients’ perceptions as to the potential advantages and side effects of the product candidates being studied in relation to other available products, product candidates or therapies.

Other clinical trials for product candidates that are in the same therapeutic areas as our product candidates will likely compete with our trials, which will reduce the number and types of patients available to us, because some patients who might have opted to enroll in our trials may instead opt to enroll in a trial being conducted by one of our competitors. Because the number of qualified clinical investigators and clinical trial sites is limited, we expect to conduct some of our clinical trials at the same clinical trial sites that some of our competitors use, which will reduce the number of patients who are available for our clinical trials at such clinical trial sites. Even if we are able to enroll a sufficient number of patients in our clinical trials, delays in patient enrollment may result in increased costs or may affect the timing or outcome of the projected clinical trials. If we experience delays in the completion of, or even termination of, any clinical trial of our product candidates, our ability to obtain requisite regulatory approvals and then commercialize our products will be materially and adversely affected.

We may fail to adopt new technologies, introduce new product candidates, or adapt our products or services to changing customers’ requirements or emerging industry standards, and our efforts to invest in the development of new technologies and potential product candidates may be unsuccessful or ineffective.

In order to maintain our competitiveness, we must keep pace with new technologies and methodologies and continue to explore new product candidates. We must continue to invest significant amounts of human and capital resources to develop or acquire technologies that will allow us to enhance the scope and quality of our clinical trials as well as the exploration of new

–59– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS products. Although technical innovations often require substantial time and investment before we can determine their commercial viability, we intend to continuously enhance our technical capabilities in research and development. We cannot assure you that we will be capable of identifying new technological opportunities, enhancing or adapting to new technologies and methodologies, developing and bringing new or enhanced products to market, obtaining sufficient intellectual property protection for such new or enhanced products, obtaining the necessary regulatory approvals in a timely and cost-effective manner, or achieving market acceptance if such products are launched. Any failure to do so could harm our business and prospects.

Our employees, collaborators, service providers, independent contractors, principal investigators, consultants, vendors and CROs may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could result in delay or failure to develop our product candidates.

We are exposed to the risk that our employees, collaborators, service providers, independent contractors, principal investigators, consultants, vendors and CROs may engage in fraudulent or other illegal activity with respect to our business. Misconduct by these individuals and institutions could include intentional, reckless and/or negligent conduct or unauthorized activity that violates the regulations of the NMPA and other competent regulatory authorities, including those laws requiring the reporting of true, complete and accurate information and data to such regulatory authorities, or data privacy, security, fraud and abuse and other healthcare laws and regulations in the PRC and other relevant jurisdictions.

Misconduct by these parties and individuals could involve the creation of fraudulent data in our preclinical studies or clinical trials. Their improper activities could also involve individually identifiable information, including, without limitation, the improper use of information obtained in the course of clinical trials, or illegal misappropriation of medical devices.

We may not be able to identify and deter employees’ and third parties’ misconduct, and the precautions we take to detect and prevent these activities may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could severely delay our research and development programs, or result in failure to obtain regulatory approval for our product candidates. The regulatory authorities may also impose civil, criminal and administrative penalties, damages and monetary fines on us, which could materially and adversely affect our reputation and business operation.

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Risks Relating to the Commercialization of Our Product Candidates

If physicians and hospitals are not receptive to our product candidates, our results of operations may be negatively affected.

Physicians and hospitals play important roles in recommending and deciding what products to be used. They not only provide professional advice but also offer help throughout the entire therapeutic procedures from candidate screening, operation assistance to follow-up visit post operations. We will endeavor to convince them as to the distinctive characteristics, advantages, safety and cost effectiveness of our product candidates as compared to our competitors’ products, and train physicians and hospitals in the proper application of our product candidates. If our product candidates (upon commercialization) are not widely accepted by physicians and hospitals, we may not be able to effectively market our product candidates upon commercialization.

To become proficient in the use of some of our product candidates, physicians will have to complete a learning process, which may take a longer time than we expected. If physicians are not properly trained, they may misuse or ineffectively use our product candidates, which may also result in unsatisfactory patient treatment outcomes, patient injury, negative publicity or lawsuits against us, any of which could in turn have a material adverse effect on our reputation, business, financial condition, results of operations and prospects. Encouraging physicians to dedicate their time and energy necessary for adequate training is challenging. If we are unable to successfully leverage these efforts, our ability to sell our future approved products through our cooperation with physicians and hospitals may be adversely affected. Furthermore, we also rely on trained physicians to advocate the benefits of our products in the marketplace following their completion of training. If we are not able to enhance our product awareness and receive recognition from these physicians, other physicians and hospitals may not be inclined to use our products, and our results of operations may be adversely affected.

Failure to achieve broad market acceptance could have a material adverse impact on our business and results of operations.

The commercial success of our product candidates depends upon the degree of market acceptance they can achieve, particularly among hospitals and physicians. For example, as a treatment recently developed and introduced to the market, interventional medical device may fail to receive broad acceptance from patients or physicians as anticipated. As an alternative treatment method, patients may opt for traditional surgical treatment over interventional medical device, given its established market acceptance, comparatively lower price and coverage by governmental and private medical insurance. If any of our future approved products fail to gain sufficient market acceptance by physicians, patients, third-party payors or others in the industry, the sales of our future approved products will be adversely affected, and we may fail to effectively market our product candidates upon commercialization. Physicians, patients and third-party payors may prefer other novel products to ours. If our product

–61– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS candidates do not achieve an adequate level of acceptance, we may not be able to generate significant product sales revenues and to achieve profitability. The degree of market acceptance of our product candidates, if approved for commercial sale, will depend on a number of factors, including:

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

• physicians, hospitals, diseases treatment centers and patients considering our product candidates (upon commercialization) as a safe and effective treatment;

• the potential and perceived advantages and disadvantages of our product candidates (upon commercialization) and relevant treatments compared to alternative products and treatments;

• the prevalence and severity of any adverse effects or complications;

• product labeling or product insert requirements of regulatory authorities;

• limitations or warnings contained in the labeling or product insert requirements approved by regulatory authorities;

• the timing of market introduction of our product candidates (upon commercialization) as well as competitive products;

• the cost of treatment in relation to alternative treatments;

• the availability of adequate coverage, reimbursement and pricing by third-party payors and government authorities;

• the willingness of patients to pay out-of-pocket in the absence of coverage and reimbursement by third-party payors and government authorities; and/or

• the effectiveness of our sales and marketing efforts.

If any product candidates that we commercialize fail to achieve market acceptance among physicians, patients, hospitals, diseases treatment centers or others in the industry or if we fail to maintain good relationships with them, we will not be able to generate significant revenue. Even if our product candidates achieve market acceptance, we may not be able to maintain that market acceptance over time if new products or technologies introduced are more favorably received and more cost effective than our products, which may render our products obsolete.

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Even if we are able to commercialize any of our product candidates, our further pricing strategy and downward change of our products may have a material adverse effect on our business and results of operations.

In line with market practice, we expect to price our product candidates (upon commercialization) by taking into consideration a variety of factors, including pricing guidance and centralized procurement policies set by the government authorities, bargaining power and preferences of hospitals, prices of similar products offered by our competitors, our operating costs and the continuous upgrades of existing products, among others, and some of which are beyond our control:

If the PRC government issues pricing guidance for our product candidates (upon commercialization), it may negatively affect the price at which we can sell our products and therefore have a material adverse effect on our business and results of operations. We may also face downward pricing pressure if our products are included in the medical insurance reimbursement list, even if such inclusion in the medical insurance reimbursement list is expected to increase the sales volume of our products.

Hospitals may gain more bargaining power depending on the availability of alternative products, demands of patients and the preferences of physicians. If certain hospitals seek to lower retail prices of our product candidates (upon commercialization), our future profitability may be adversely affected.

Furthermore, along with our increasing efforts to promote our product candidates, as well as our competitors’ continuous development of similar product candidates, awareness of these products is expected to increase. More competing products may become available, which will offer alternatives for hospitals and patients to choose.

In addition, with the development of technologies and increasing competition in the industry, we may experience reduced pricing from our product candidates (upon commercialization), particularly along with the launch of new products that can replace or further improve the safety and efficacy profile of our product candidates (upon commercialization), while the manufacturing and material costs may remain constant or increase. If we are unable to successfully introduce more advanced and/or more profitable new products to the market, or if we fail to effectively control our operating and manufacturing costs, our business, financial condition and results of operations could be materially and adversely affected.

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Even if we are able to commercialize any of our product candidates, our sales may be affected by the level of medical insurance reimbursement patients receive for using our products.

The availability of governmental and private health insurance in China for treatments using our products will influence our ability to sell our products. China has a complex medical insurance system that is currently undergoing reform. The governmental insurance coverage or reimbursement level in China for new procedures such as renal denervation procedures and the medical devices used in such procedures is subject to significant uncertainty and varies from region to region, as local government approvals for such coverage must be obtained in each geographic region. In addition, the PRC government may change, reduce or eliminate the governmental insurance coverage then available for treatments using our products. Please refer to the paragraphs headed “Regulatory Overview – Regulations Relating to Medical Devices – National Medical Insurance Program” in this document for more details. We cannot assure you that our product candidates (upon commercialization) will be included in the medical insurance reimbursement list at all times or at all. To the extent that our products are not included in the medical insurance reimbursement list or if any such insurance schemes are changed or canceled which result in any removal of our products from medical insurance catalogue, patients may choose, and hospitals may recommend alternative treatment methods, which would reduce demand for our products, and our sales may be adversely impacted or not able to achieve our expected levels, which may lead to a material and adverse effect on our business, results of operations and financial condition.

In addition, insurance companies in China tend to reimburse patients for a higher percentage of the product cost if they use a medical device manufactured by a Chinese domestic company as opposed to an imported device. We cannot guarantee that insurance companies will continue to adopt this favorable policy in the future.

Moreover, we may need to lower the prices of our products in order to have them included in the medical insurance reimbursement list, while such price cut and reimbursement may not necessarily cause our sales to increase and our results of operations may be adversely affected.

There is no guarantee that we will effectively manage and succeed in expanding and deepening hospital penetration.

To penetrate into China’s structural heart disease medical device market and enhance our brand recognition among hospitals, we engage and establish collaboration with leading principal investigators, KOLs, physicians and hospitals in China. We regularly meet with KOLs to discuss our product candidates, conduct product demonstrations and provide training. Furthermore, we host meetings for key participants in our industry with respect to our research and development efforts and product pipeline. We have also taken an active role in sponsoring key industry conferences. Despite these efforts, however, we may still not be able to expand and deepen our hospital penetration effectively and diversely, and our sales volume and business prospects could therefore be materially and adversely affected.

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The success of our hospital penetration strategy also depends on our ability to attract, motivate and retain qualified and professional employees who have, among other things, the sufficient expertise in the structural heart disease medical device markets and are able to communicate effectively with medical professionals. We may be however unable to attract, motivate and retain a sufficient number of qualified sales personnel to support our hospital penetration strategy.

Risks Relating to Manufacture and Supply of Our Product Candidates

The manufacture of our product candidates is a highly exacting and complex process and subject to strict quality controls. Our business could suffer if our product candidates are not produced in compliance with all the applicable quality standards.

Quality is extremely important due to the serious and costly consequences of a product failure. Because of the nature of our product candidates, the manufacturing process is highly complex and subject to strict quality controls. We have established a quality control and assurance system and adopted standardized operating procedures in order to prevent quality issues with respect to our product candidates and operation processes. For further details of our quality control and assurance system, please refer to the paragraphs headed “Business – Quality Control” in this document.

Despite our quality control and assurance system and procedures, we cannot eliminate the risk of product defects or failure. Problems can arise during the manufacturing process for a number of reasons, including equipment malfunction, failure to follow protocols and procedures, defects or other issues in raw material, or human error. Furthermore, if contaminants are discovered in our product candidates or in our manufacturing facilities, we may need to close our manufacturing facilities for an extended period of time to investigate and remedy the contamination. In addition, stability failures and other issues relating to the manufacture of our product candidates could occur in the future. Although closely managed, disruptions can also occur during the implementation of new equipment and systems to replace aging equipment, as well as during production line transfers and expansions. As we commence commercialization of our products, we may face unanticipated surges in market demands which could strain our production capacity and adversely affect our manufacturing quality.

Failure of our product candidates to meet the requirements of the NMPA or other competent regulatory authorities or our internal quality standard could result in patient injury or death, product recalls, safety alerts or withdrawals, license revocation or regulatory fines, product liabilities claims or other negative effects that could seriously harm our reputation, business and results of operations.

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We may be exposed to potential product liability claims, and our insurance coverage may be inadequate to protect us from all the liabilities we may incur.

Our current product candidates are classified as Class III medical devices. Such classifications represent a high risk to the human body and requires a high level of supervision to ensure safety and efficacy. We may be subject to product liability claims if our product candidates have quality issues, including latent defects that can only be identified at a later stage. Complex medical devices, such as our Core Product and key product candidates, are easily broken or damaged if physicians do not use them properly. Component failures, manufacturing errors or design defects could result in danger or injuries to patients. Any serious failures or defects could subject us to product liabilities. The occurrence of any product liability claim against us arising from our product candidates may damage our brand name and may have a material adverse effect on our business, results of operations and prospects.

Since we have not commercialized any of our product candidates, we have not purchased product liability insurance and we may be unable to acquire such insurance at a reasonable cost or in an amount adequate to satisfy any liability that may arise. We face an inherent risk of product liability as a result of the clinical testing and any future commercialization of our product candidates in China and globally. For example, we may be sued if our product candidates are perceived to cause injury or are found to be otherwise unsuitable during clinical testing and manufacturing. Any such product liability claims may include allegations of defects in design, defects in manufacturing, a failure to warn of dangers inherent in the medical device product, negligence or strict liability. Further, we cannot ensure that physicians will follow our instructions on the proper usage of our product candidates accurately. If our product candidates are used incorrectly by physicians, injury may result, which could give rise to product liability claims against us. If we cannot successfully defend ourselves against, obtain indemnification from our collaborators for product liability claims, or acquire sufficient product liability insurance at an acceptable cost, we may incur substantial liabilities or be required to limit commercialization of our product candidates.

If we fail to establish our commercial manufacturing capacity after we launch our future approved products, or if our manufacture capacity fails to meet the market demand, our business prospects could be materially harmed.

We have constructed and kept developing our factories in Shanghai and Chengdu in preparation for future product commercialization. However, we cannot assure you that we have established sufficient manufacturing capacity for our product candidates. In addition, our in-house production is limited to producing, assembling and testing sample products under development for the purpose of clinical trials and product registration. With the potential launches of our product candidates in the near future and further product launches expected from our pipeline, we intend to expand and utilize in-house manufacturing capabilities as business need arises. Companies manufacturing medical devices in China are required to obtain permits and licenses issued by various government authorities, including but not limited to the medical device production permit (醫療器械生產許可證) and the medical device operation permit (醫療器械經營許可證) if such manufacturing companies store and sell medical devices

–66– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS in places other than their domiciles and the places of production of medical devices. Such permits, licenses and certificates are subject to periodic reviews and renewals by the relevant government authorities, and the standards of such reviews and renewals may change from time to time. There can be no assurance that the relevant authorities will approve our applications or our subcontractors’ applications in the future. Any failure by us and our subcontractors to obtain, maintain or renew the necessary permits, licenses and certificates could disrupt our business, which in turn may have a material adverse effect on our business and operating results.

Other than the risks relating to application of requisite licenses and permits, we could also face other risks in implementing our commercial manufacturing plan, including construction delays, failure to adopt new manufacturing techniques, implement effective quality control, recruit a sufficient number of qualified staff to support the increase in production capacity, or engage qualified subcontractors with sufficient manufacturing capacity in a cost-effective manner and on terms acceptable to us. Given the complexity of our product candidates, competition for qualified manufacturing staff is intense. New manufacturing staff are generally required to undergo months of training before they can commence work on our production lines. In addition, in the event of any significant increase in market demand, we may not be able to find sufficient external subcontractors to help produce our products, and even if we could engage third parties to produce a portion of our products, we would be exposed to the risks that the third parties may not manufacture products meeting our specifications or in sufficient volumes to meet market demand. Therefore, we cannot assure you that we will be able to establish or increase our commercial manufacturing capacity, develop advanced manufacturing techniques, process controls in the manner we contemplate, recruit a sufficient number of qualified manufacturing staff, or engage qualified subcontractors with sufficient production capacity, or at all. In the event of any aforementioned failure, we may not be able to capture the expected growth in demand for our products, which could materially and adversely affect our business prospects. Moreover, our plans to establish and increase our commercial manufacturing capacity require significant capital investment, and the actual costs of our commercial manufacturing plan may exceed our original estimates, which could materially and adversely affect the realization of expected return on our expenditures.

We rely on a limited number of suppliers for our key raw materials, and may not be able to secure a stable supply of qualified raw materials at all times or at all.

We rely on a limited number of third-party suppliers to supply key raw materials used in the research, development and manufacturing of our product candidates for reasons of quality assurance, cost effectiveness, availability, or constraints resulting from regulatory requirements. For the years ended December 31, 2019 and 2020 and the four months ended April 30, 2021, our five largest suppliers accounted for 43.9%, 38.5% and 41.5% for our total purchase for the respective period. We cannot assure you that we will be able to secure a stable supply of qualified raw materials at all times going forward, even though we believe we have built up stable relationships with our existing suppliers. We cannot assure you that we will be able to identify an alternative qualified supplier in a timely manner or at all, in the event any of our existing suppliers terminate their contracts with us or are no longer qualified.

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Some of suppliers are located outside China, therefore trade or regulatory embargoes imposed by governments could result in delays or shortages of our raw materials. If we are forced to purchase raw materials from domestic suppliers whose prices are higher than those offered by foreign suppliers, our costs will increase and our business could be harmed. In addition, currently we procured some of our key materials with high standard requirements, such as bovine pericardium, primarily from overseas suppliers. If we failed to import sufficient bovine pericardium in a timely manner at reasonable price, our business will be hampered. Furthermore, general economic conditions could also adversely affect the financial viability of our suppliers, resulting in their inability to provide materials and components used in the manufacture of our products. In addition, due to the rigorous regulations and requirements of the NMPA and/or comparable regulatory authorities regarding the manufacture of our products (including the need for approval of any change in supply arrangements), we may have difficulty establishing additional or replacement sources in a timely manner or at all if the need arises. Any change in suppliers could require significant effort or investment in circumstances where the items supplied are integral to product performance or incorporate unique technology, and the loss of existing supply contracts could have a material adverse effect on us.

An increase in the market price of our key raw materials and components may adversely affect our financial position.

Our production processes require substantial amounts of raw materials and components, some of which may be susceptible to fluctuations in price and availability. Significant fluctuations in raw material and component prices and availability will have a direct and negative impact on our financial position. During the Track Record Period, our raw materials and components were generally available and sufficient to meet our demands, and their price from our suppliers was generally stable. However, we cannot assure you that such situation will continue in the future. The prices of our raw materials may be affected by a number of factors, including market supply and demand, the PRC or international environmental and regulatory requirements, natural disasters such as fires, outbreak of epidemics or diseases such as COVID-19 and the PRC and global economic conditions. A significant increase in the costs of raw materials may increase our costs and negatively affect our financial position and, more generally, our business, financial conditions, results of operation and prospects.

In addition, as we rely on certain overseas suppliers for some of our key raw materials and components, any changes on the tariff policies, trade restrictions or barriers may adversely affect our business. For example, as we imported a key raw material for manufacture of our product, bovine pericardium, any price fluctuation, delay or shortage of which may negatively affect our manufacture of products, and, more generally, our business, financial conditions, results of operation and prospects.

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We mainly rely on our manufacture base and production facilities in Shanghai as well as in Chengdu where our facilities are under construction, for manufacturing of our product candidates; any disruptions to the operation of our production facilities could materially adversely affect our business, financial condition and results of operations.

Currently our in-house production is limited to producing, assembling and testing sample products under development for the purpose of clinical trials and product registration. Our production facilities are located on our manufacture base in Shanghai and Chengdu, and our factories in Chengdu are currently under construction. Please refer to the paragraphs headed “Business – Land and Properties” in this document for more details. The operation of our production facilities may be substantially interrupted due to a number of factors, many of which are outside of our control, including but not limited to fires, floods, earthquakes, power outages, fuel shortages, health epidemic, mechanical breakdowns, termination of lease contracts by lessor, loss of licenses, certifications and permits, changes in governmental planning for the land underlying these facilities, and regulatory changes.

If the operation of our production facilities is substantially disrupted, we may not be able to replace the equipment at such facilities, or use a different facility to continue production in a timely and cost-effective manner. As a result, we may fail to complete the clinical trials for our product candidates in line with our expected timeline, and our business and operation results could be materially adversely affected.

We may face damage to, destruction of or interruption of production at our facilities, which could interrupt our development plans, and our business prospects could be materially and adversely affected.

Our facilities may be harmed or rendered inoperable by physical damage from fire, floods, earthquakes, typhoons, tornadoes, power loss, telecommunications failures, break-ins, and similar force majeure. We have purchased insurance for our assets. However, our insurance coverage may not reimburse us, or may not be sufficient to reimburse us, for any expenses or losses we may suffer. We may be unable to meet our requirements for our product candidates if there were a catastrophic event or failure of our manufacturing facilities or processes. Any interruption in manufacturing operations at our manufacturing facilities could result in our inability to satisfy the demands of our clinical trials or commercialization. There can be no assurance that our existing manufacturing facilities will produce products in sufficient volumes in the event of any significant change in market demand. In such event, we may have to engage third parties to produce a portion of such products. Consequently, we are exposed to the risks of increased pricing for our sub-contracted production and that the third parties may not manufacture products meeting our specifications or in sufficient volumes to meet market demand. As a result, our sales volumes and margins for the relevant products could be materially and adversely affected.

Advances in manufacturing techniques may render our facilities and equipment inadequate or obsolete, and therefore we may also need to develop advanced manufacturing techniques and process controls in order to fully utilize our facilities. If we are unable to do so, or if the process to do so is delayed, or if the cost of this scale up is not economically feasible for us or we cannot find a third-party supplier, we may not be able to supply our products in a sufficient quantity to meet future demand, which would limit our development and commercialization activities and our opportunities for growth.

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Risks Relating to Extensive Government Regulations

The research, development and commercialization of our product candidates are heavily regulated in all material aspects.

We intend to focus our activities in the major market of China, and may explore market opportunities overseas when appropriate. All jurisdictions in which we conduct or will conduct our research, development and commercialization activities regulate these activities in great depth and details. These geopolitical areas all have comprehensive regulation on medical devices, and in doing so they employ broadly similar regulatory strategies, including regulation of product development, approval, manufacturing, sales and marketing and distribution of medical devices. However, there are differences in the regulatory regimes in different regions, which make regulatory compliance more complex and costly for companies like us that plan to operate in each of these regions.

The process of obtaining regulatory approvals and compliance with appropriate laws and regulations require substantial time and financial resources. Failure to comply with the applicable requirements at any time during the product development process, approval process, or after approval, may subject an applicant to administrative or judicial sanctions. These sanctions could include a regulator’s refusal to approve pending applications, withdrawal of an approval, license revocation, a clinical hold, voluntary or mandatory product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties. The failure to comply with these regulations could have a material adverse effect on our business, financial condition and prospects.

The regulatory approval processes are lengthy, expensive and inherently unpredictable. If we are not able to obtain, or experience delays in obtaining, required regulatory approvals, we will not be able to commercialize our product candidates, and our ability to generate revenue will be materially impaired.

We currently intend to market a substantial portion of our product candidates in China in the foreseeable future. We are required to obtain the NMPA’s or its local counterpart’s approval before we can market our product candidates in China. As the PRC government has been tightening the regulatory control over the medical device industry in recent years, the regulatory approval process tends to take longer to complete than before. Significant effort, expense and time are required to bring our product candidates to market in compliance with the regulatory process, and we cannot assure you that any of our product candidates will be approved for sale.

Before obtaining regulatory approvals for the commercial sale of any product candidates for a target indication, we must demonstrate in preclinical studies and well-controlled clinical trials, that the product candidate is safe and effective for use for that target indication and that the manufacturing facilities, processes and controls are adequate. We are also required to report any serious or potentially serious incidents involving our product candidates to the NMPA or

–70– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS the local counterparts. When we submit a filing application to the NMPA, the NMPA will decide whether to accept or reject the submission for filing. We cannot be certain that any submissions will be accepted for filing and review by the NMPA. The NMPA may also slow down, suspend or cease review of our applications and any of these could prolong the registration process of our product candidates. Even if regulatory approval or clearance of our product candidates is granted, the approval or clearance could limit the uses for which our product candidates may be labeled and promoted, which may in turn limit the market for our product candidates.

Furthermore, results of the regulatory approval process are unpredictable. We could fail to receive regulatory approval for product candidates for many reasons, including: (i) failure to begin or complete clinical trials; (ii) failure to demonstrate that a product candidate is safe and effective; (iii) failure to deliver clinical trial results to meet the level of statistical significance required for approval; (iv) data integrity issues related to our clinical trials; (v) government authority’s disagreement with our interpretation of data from preclinical studies or clinical trials; (vi) changes in approval policies or regulations that render our preclinical and clinical data insufficient for approval or require us to amend our clinical trial protocols; (vii) regulatory requests for additional analyses, reports, data, nonclinical studies and clinical trials, or questions regarding interpretations of data and results and the emergence of new information regarding our product candidates or other products; (viii) failure to conduct a clinical trial in accordance with regulatory requirements or our clinical trial protocols; (ix) clinical sites, investigators or other participants in our clinical trials deviating from a trial protocol, failing to conduct the trial in accordance with regulatory requirements, or dropping out of a trial; and/or (x) rejection by the relevant authorities to approve pending applications or supplements to approved applications filed by us or suspension, revocation or withdrawal of approvals.

We are also required to obtain various governmental approvals in the relevant jurisdictions if we determine to sell our product candidates in international markets. Regulatory authorities outside of China also have requirements for approval of medical devices for commercial sale with which we must comply prior to marketing in those areas. Foreign regulations may vary from jurisdiction to jurisdiction and may be different from PRC regulations and NMPA requirements, and therefore could delay or prevent the introduction of our product candidates in those areas. Approval processes vary among jurisdictions and can involve additional product testing and validation and additional administrative review periods, and obtaining regulatory approval in one jurisdiction does not mean that regulatory approval will be obtained in any other jurisdiction. Additional time, efforts and expenses may be required to bring our product candidates to international markets in compliance with different regulatory processes.

The process to obtain regulatory approval for medical device product candidates is long, complex and costly both inside and outside China. Even if our product candidates were to successfully obtain approval from the regulatory authorities, any approval might significantly limit the approved indications for use, or require that precautions, contraindications or warnings be included on the product labeling, or require expensive and time-consuming post-approval clinical trials or surveillance as conditions of approval. Following an approval

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Undesirable adverse events related to our product candidates could interrupt, delay or halt clinical trials, delay or prevent regulatory approval, limit the commercial profile of an approved production label, or result in significant negative consequences following any regulatory approval such as regulatory disciplines and other liabilities.

Some of our product candidates are still considered as emerging and relatively novel therapeutics in China. For example, our Core Product, Prizvalve® aims to become the first domestic BE TAVR product approved for marketing in China. For our key products, we aim to make Mi-thos® the first innovative TMVR product to receive marketing approval in China, and make Valveclip-MTM one of the first domestic innovative TMVr products to receive marketing approval in China. Undesirable side effects caused by our product candidates could (i) cause us or regulatory authorities to interrupt, delay or halt clinical trials; (ii) affect patient recruitment or the ability of enrolled patients to complete the trial; (iii) adversely impact our ability to obtain regulatory approval in China and other jurisdictions resulting in a more restrictive label on our product candidates, and/or (iv) subject us to substantial damages and liabilities. By nature, clinical trials only assess a sample of the potential patient population. Side effects may only be uncovered when a significantly larger number of patients is exposed to the products. If undesirable side effects caused by our product candidates are identified after we receive regulatory approval for such product candidates, a number of potentially significant negative consequences could follow, including, among others:

• the relevant products may be recalled, withdrawn or seized;

• regulatory authorities may withdraw or limit their approval of our product candidates;

• we may be required to change the way our products are developed, conduct additional clinical trials, change the labeling or add additional warnings on the labeling of such products;

• we may be required to develop risk evaluation and mitigation measures for the products, 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 subject to regulatory investigations and government enforcement actions;

• we may be required to suspend marketing or remove relevant products from the marketplace;

• a severe decrease in the demand for, and sales of, the relevant products;

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• we could be sued and held liable for injury caused to individuals using our products; and

• our reputation, business and prospects may suffer.

Any of these events could prevent us from achieving or maintaining market acceptance of the particular products, and could harm our reputation, business, financial condition and prospects significantly.

Our future approved products will be subject to ongoing regulatory obligations and continued regulatory review even if we receive regulatory approval for our product candidates, 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 product candidates including withdrawal of approvals of our future approved products.

Our future approved products will be subject to ongoing or additional regulatory requirements with respect to manufacturing, labeling, packaging, storage, advertising, promotion, sampling, record-keeping, conduct of post-market studies, submission of safety, efficacy, and other post-market information, and other requirements of regulatory authorities in China and other jurisdictions where the product candidates are approved. As such, we will be subject to continual review and inspections by the regulators in order to assess our compliance with applicable laws and requirements and adherence to commitments we made in any application materials with the NMPA or other authorities.

Any approvals that we receive for our product candidates may be subject to other conditions which may require potentially costly post-marketing testing and surveillance to monitor the safety and efficacy of our product candidates. Such limitations and conditions could adversely affect the commercial potential of our future approved products.

The NMPA or comparable regulatory authorities may seek to withdraw marketing approval if we fail to maintain compliance with these ongoing or additional regulatory requirements or if problems occur after the product reaches the market. Later discovery of previously unknown problems with our product candidates or with our manufacturing processes may result in revisions to the approved labeling or requirements to add new safety information; imposition of post-market studies or clinical studies to assess new safety risks; or imposition of distribution restrictions or other restrictions. Other potential consequences include, among other things:

• restrictions on the marketing or manufacturing of our products, withdrawal of the product from the market, or voluntary or mandatory product recalls;

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

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

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• product seizure or detention, or refusal to permit the import or export of our products and pipeline products; and/or

• injunction or the imposition of civil or criminal penalties.

The NMPA and other regulatory authorities strictly regulate the marketing, labeling, advertising and promotion of products placed on the market. Products may be promoted only for their approved indications and for use in accordance with the provisions of the approved label. The NMPA and other regulatory authorities actively enforce the laws and regulations prohibiting the promotion of off-label uses, and any person or entity that is found to have improperly promoted off-label uses may be subject to significant liability. The policies of the NMPA and other regulatory authorities may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates. We cannot predict the likelihood, nature or extent of governmental policies or regulations that may arise from future legislation or administrative actions in China or abroad, where the regulatory environment is constantly evolving. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are unable to maintain regulatory compliance, we may lose any regulatory approval that we have obtained and we may not achieve or sustain profitability.

We are subject to stringent privacy laws, information security policies and contractual obligations related to data privacy and security, and we may be exposed to risks related to our management of the medical data of subjects enrolled in our clinical trials and other personal or sensitive information.

We routinely receive, collect, generate, store, process, transmit and maintain medical data, treatment records and other personal details of the subjects enrolled in our clinical trials, along with other personal or sensitive information. As such, we are subject to the relevant local, national and international data protection and privacy laws, directives regulations and standards that apply to the collection, use, retention, protection, disclosure, transfer and other processing of personal data in the various jurisdictions in which we operate and conduct our clinical trials, as well as contractual obligations. These data protection and privacy law regimes continue to evolve and may result in ever-increasing public scrutiny and escalating levels of enforcement and sanctions and increased costs of compliance. Failure to comply with any of these laws could result in enforcement action against us, including fines, imprisonment of company officers and public censure, claims for damages by customers and other affected individuals, damage to our reputation and loss of goodwill, any of which could have a material adverse effect on our business, financial condition, results of operations or prospects.

Data protection and privacy laws and regulations generally require clinical trial sponsors and operators and their personnel to protect the privacy of their enrolled subjects and prohibit unauthorized disclosure of personal information. If such institutions or personnel divulge the subjects’ private or medical records without their consent, they will be held liable for damage caused thereby. The personal information of patients or subjects for our clinical trials is highly sensitive and we are subject to strict requirements under the applicable privacy protect regulations in the relevant jurisdictions. Whilst we have adopted security policies and measures

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Complying with all applicable laws, regulations, standards and obligations relating to data privacy, security, and transfers may cause us to incur substantial operational costs or require us to modify our data processing practices and processes. Non-compliance could result in proceedings against us by data protection authorities, governmental entities or others, including class action privacy litigation in certain jurisdictions, which would subject us to significant fines, penalties, judgments and negative publicity. In addition, if our practices are not consistent or viewed as not consistent with legal and regulatory requirements, including changes in laws, regulations and standards or new interpretations or applications of existing laws, regulations and standards, we may become subject to audits, inquiries, whistleblower complaints, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions and reputational damage. Any of the foregoing could have a material adverse effect on our competitive position, business, financial conditions, results of operations and prospects.

If we or parties on whom we rely fail to maintain or renew the necessary permits, licenses and certificates required for the development and production of our product candidates, our ability to conduct our business could be materially impaired.

We are required to obtain, maintain and renew various permits, licenses and certificates to develop, produce, promote and sell our products, including but not limited to the Filing for Clinical Trials of Medical Device (醫療器械臨床試驗備案表), the Registration Certificate for Medical Device (醫療器械註冊證) and the Medical Device Production License (醫療器械生產許可證). For details, please refer to the paragraphs headed “Regulatory Overview – Regulations Relating to Medical Devices.” Furthermore, third parties, such as research institutions, distributors and suppliers on whom we may rely to develop, produce, promote, sell and distribute our products, may be subject to similar requirements. We and third parties on whom we rely may be also subject to regular inspections, examinations, inquiries or audits by regulatory authorities, and an adverse outcome of such inspections, examinations, inquiries or

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Changes in regulatory requirements and guidance may adversely affect our business and we may need to amend clinical trial protocols submitted to applicable regulatory authorities to reflect these changes.

In China and some other jurisdictions, a number of legislative, regulatory and guidance changes and proposed changes regarding the healthcare industry could prevent or delay regulatory approval of our product candidates, affect our manufacturing costs and raw material costs, restrict or regulate post-approval activities and affect our ability to profitably sell any of product candidates for which we obtain regulatory approval. In recent years, there have been and will likely continue to be efforts to enact administrative or legislative changes to healthcare laws and policies, including measures which may result in more rigorous coverage criteria and downward pressure on the price that we receive for any approved product. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to commercialize our future approved products, generate revenue and attain profitability.

Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for medical devices. We cannot be sure whether additional legislative changes will be enacted, or whether NMPA regulations, guidance or interpretations will be changed, or what the impact of such changes on the regulatory approvals of our product candidates, if any, may be. For example, Regulations on the Supervision and Administration of Medical Devices (《醫療器械監督管理條例》) was recently amended on February 9, 2021 and came into effect on June 1, 2021. The Administrative Measures for the Registration of Medical Devices (《醫療器械註冊管理辦法》), the Measures for the Supervision and Administration of Medical Device Production (《醫療器械生產監督管理辦法》) and the Measures for the Supervision and Administration of Medical Devices Operation (《醫療器械經營監督管理辦法》) will be amended accordingly, with the respective revised draft amendments having been published on the website of the Ministry of Justice for public comments on March 26, 2021. The requirements of clinical trial, sales and regulation will thereby be changed. The impact of these more specific requirements and whether it will adversely affect the registration of our product candidates with the NMPA is yet to be observed.

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Since 2007, China started to adopt a centralized procurement regime in an effort to regulate prices of medical devices through group procurement at the provincial level. On July 19, 2019, the General Office of the State Council issued the Notice on Printing and Distributing the Reform Plan for the Management of High-value Medical Consumables (《關於印發<治理高值醫用耗材改革方案>的通知》) (the “2019 Reform Plan”), which proposed to explore the classification of high-value medical consumables in accordance with the principles of volume-based procurement, volume-price linkage, and promotion of market competition, and to conduct centralized procurement. If our products are included in the regime of high-value medical consumables in the future, we may not be successful in the public tender processes for centralized procurement, and lower bidding prices of our competitors and volume-based discounts and/or lower ex-factory prices offered by our competitors may undermine our market position and in turn adversely impact our sales performance, which could result in a material and adverse effect on our business, financial condition and results of operations. In addition, the 2019 Reform Plan encourages local governments to adopt the “Two Invoice System” on a case-by-case basis in order to reduce the circulation of high-value medical consumables and promote the transparency of purchase and sales. Please refer to the paragraphs headed “Regulatory Overview – Regulations Relating to Medical Devices – Two Invoice System” in this document for more details.

Risks Relating to Our Intellectual Property Rights

We may become involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time consuming and unsuccessful and may delay us from developing or commercializing our product candidates.

Competitors may infringe our patent rights or misappropriate or otherwise violate our intellectual property rights. To counter infringement or unauthorized use, litigation may be necessary in the future to enforce or defend our intellectual property rights, to protect our trade secrets or to determine the validity and scope of our own intellectual property rights or the proprietary rights of others. This can be expensive and time-consuming. Any claims that we assert against perceived infringers could also provoke these parties to assert counterclaims against us alleging that we infringe their intellectual property rights. Many of our current and potential competitors have the ability to dedicate substantially greater resources to enforce and/or defend their intellectual property rights than we can. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon or misappropriating our intellectual property. An adverse result in any litigation proceeding could put our patents, as well as any patents that may be issued in the future from our pending patent applications, at risk of being invalidated, held unenforceable or interpreted narrowly. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, some of our confidential information could be compromised by disclosure during this type of litigation.

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Defendant counterclaims alleging invalidity or unenforceability are commonplace. A third party can assert invalidity or unenforceability of a patent on numerous grounds. Third parties may also raise similar claims before administrative bodies in China or abroad, even outside the context of litigation. Such proceedings could result in revocation or amendment to our patents in such a way that they no longer cover and protect our product candidates. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to the validity of our patents, for example, we, our patent counsel, and the patent examiners could be unaware of invalidating prior art during prosecution. 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 our product candidates. Such a loss of patent protection could have a material adverse impact on our business.

Third parties may initiate legal proceedings alleging that we are infringing, misappropriating or otherwise violating their intellectual property rights, and the outcome of such legal proceedings would be uncertain. Such proceedings could be costly and time-consuming to defend, and could prevent us from developing or commercializing our product candidates, or delay the development or commercialization process.

The medical device industry is litigious with respect to patents and other intellectual property rights. Companies operating in our industry routinely seek patent protection for their product designs, and many of our principal competitors have large patent portfolios. Companies in the medical device industry have used intellectual property litigation to gain a competitive advantage. Whether a product infringes a patent involves an analysis of complex legal and factual issues, the determination of which is often uncertain. We may be unaware of third-party patents or patent applications, and given the dynamic area in which we operate, additional patents are likely to be issued that relate to aspects of our business. We face the risk of claims that we have infringed on third parties’ intellectual property rights in the countries where we operate, principally China. For example, we may not enter into any written agreement with certain inventors of certain patents granted to us. In addition, we have employees who previously worked for one or more of our competitors. There can be no assurance that such employees have not used, or will not use in the future, their previous employers’ proprietary know-how or trade secrets in their work for us, which could result in litigation against us. Prior to developing major new products, we evaluate existing intellectual property rights. However, our competitors may also have filed for patent protection which is not as yet a matter of public knowledge or claim trademark rights that have not been revealed through our searches of relevant public records. Our efforts to identify and avoid infringing on third parties’ intellectual property rights may not always be successful. Third parties may assert that we are using technology in violation of their patent or other proprietary rights. Any claims of patent or other intellectual property infringement, even those without merit, could:

• be expensive and time consuming to defend;

• result in us being required to pay significant damages to third parties;

• cause us to cease making or selling products that incorporate the challenged intellectual property;

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• require us to redesign, reengineer or rebrand our product candidates, if feasible;

• require us to enter into royalty or licensing agreements in order to obtain the right to use a third party’s intellectual property, which agreements may not be available on terms acceptable to us or at all;

• divert the attention of our management;

• result in hospitals and physicians terminating, deferring or limiting their purchase of the affected products until resolution of the litigation;

• reduce the resources available for our development activities or any future sales, marketing or distribution activities; or

• result in securities analysts or investors perceive these results to be negative, which could have a substantial adverse effect on the market price of our Shares.

In addition, new patents obtained by our competitors could threaten a product’s continued life in the market even after it has already been introduced.

We may be subject to claims challenging the inventorship or ownership of our patents and other intellectual property.

We may be subject to claims that former employees, collaborators or other third parties have an interest in our patents, trade secrets, or other intellectual property as an inventor or co-inventor. For example, we may have inventorship disputes arise from conflicting obligations of employees, consultants or others who are involved in developing our product candidates. Litigation may be necessary to defend against these and other claims challenging inventorship or our ownership of our patents, trade secrets or other intellectual property.

Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for noncompliance with these requirements.

Periodic maintenance fees on any issued patent are due to be paid to the NIPA and other foreign patent agencies in several stages over the lifetime of the patent. The NIPA and various foreign national or international patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Noncompliance events that could result in abandonment or lapse of patent rights include, but are not limited to, failure to timely file national and regional stage patent applications based on our international patent application, failure to respond to official actions within prescribed time limits, non-payment of

–79– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS fees and failure to properly legalize and submit formal documents. If we fail to maintain the patents and patent applications covering our product candidates, our competitors might be able to enter the market earlier than anticipated, which would have an adverse effect on our business.

Changes in patent law could diminish the value of patents in general, thereby impairing our ability to protect our product candidates.

Depending on decisions by the NPC and the NIPA, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future. There could be similar changes in the laws of other jurisdictions that may impact the value of our patent rights or our other intellectual property rights. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents once obtained, if any.

If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed. We may be subject to claims that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.

In addition to our issued patent and pending patent applications, we rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain our competitive position and to protect our product candidates. We seek to protect these trade secrets, in part, by entering into non-disclosure and confidentiality agreements or include such undertakings in the agreement with parties that have access to them, such as our employees, corporate collaborators, principal investigators and KOLs, contract manufacturers, consultants, advisers and other third parties. We also enter into employment agreements or consulting agreements with our employees and consultants that include undertakings regarding assignment of inventions and discoveries. However, non-disclosure agreements with employees, consultants, contractors and other parties may not adequately prevent disclosures of our trade secrets and other proprietary information. Any of these parties may breach such agreements and disclose our proprietary information, and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret can be difficult, expensive and time-consuming, and the outcome is unpredictable. If any of our trade secrets were lawfully obtained or independently developed by a competitor, we would have no right to prevent them from using that technology or information to compete with us and our competitive position would be harmed.

Furthermore, some of our employees, including our senior management, were previously employed at other medical device companies, including our competitors or potential competitors. Some of these employees may have executed proprietary rights, non-disclosure and non-competition agreements in connection with such previous employment. Although we try to ensure that our employees do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or these employees have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such employee’s former employer. We are not aware of any material threatened or pending

–80– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS claims related to these matters or concerning the agreements with our senior management, but in the future litigation may be necessary to defend against such claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management.

In addition, while we typically require our employees, consultants and contractors involved in our research and development activities to execute agreements assigning all intellectual property rights to us, we may be unsuccessful in enforcing such an agreement with each party who in fact develops intellectual property that we regard as our own, which may result in claims by or against us related to the ownership of such intellectual property. If we fail in prosecuting or defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights. Even if we are successful in prosecuting or defending against such claims, litigation could result in substantial costs and be a distraction to our management and scientific personnel.

If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.

We expect to rely on trademarks and trade names as one means to distinguish any of our product candidates that are approved for marketing from the products of our competitors. We currently hold issued trademark registrations and have trademark applications pending, any of which may be the subject of a governmental or third-party objection, which could prevent the registration or maintenance of the same. If we are unsuccessful in obtaining trademark protection for our primary brands, we may be required to change our brand names, which could materially adversely affect our business. Moreover, as our products mature, our reliance on our trademarks to differentiate us from our competitors will increase, and as a result, if we are unable to prevent third parties from adopting, registering or using trademarks and trade dress that infringe, dilute or otherwise violate our trademark rights, or engaging in conduct that constitutes unfair competition, defamation or other violation of our rights, our business could be materially adversely affected.

Our trademarks or trade names may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks. We may not be able to protect our rights to these trademarks and trade names, which we need to build name recognition among potential partners or customers in our markets of interest. At times, competitors or other third parties may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion. In addition, there could be potential trade name or trademark infringement claims brought by owners of other registered trademarks or trademarks that incorporate variations of our registered or unregistered trademarks or trade names. Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and our business may be adversely affected. Our efforts to enforce or protect our proprietary rights related to

–81– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS trademarks, trade secrets, domain names, copyrights or other intellectual property may be ineffective and could result in substantial costs and diversion of resources and could adversely affect our business, financial condition, results of operations and prospects.

Risks Relating to Our Reliance on Third Parties

If the third parties with which we contract for preclinical research and clinical trials do not perform in an acceptable manner, or if we suffer setbacks in these preclinical studies or clinical trials, we may be unable to develop and commercialize our product candidates as anticipated.

We rely on third parties, including leading academic institutions, public hospitals and CROs, to assist us in designing, implementing and monitoring our preclinical research and conducting clinical trials. As of the Latest Practicable Date, we worked with a number of CROs and hospitals. If any of these parties terminates its agreements with us, the development of the product candidates covered by those agreements could be substantially delayed or terminated. In addition, these third parties may not successfully carry out their contractual obligations, meet expected deadlines or follow regulatory requirements, including clinical, laboratory and manufacturing guidelines. Our reliance on these third parties may result in delays in completing, or in failing to complete, these studies if they fail to perform in accordance with the contractual arrangements. Furthermore, if any of these parties fail to perform their obligations under our agreements with them in the manner specified in those agreements, the NMPA, and/or other comparable regulatory authorities may not accept the data generated by those studies, which would increase the cost of and the development time for the relevant product candidate. If any of the preclinical studies or clinical trials of our product candidates is affected by any of the above-mentioned reasons, we will be unable to meet our anticipated development or commercialization timelines, which would have a material adverse effect on our business and prospects.

We rely upon strong relationships with certain key physicians and leading hospitals in the clinical development and marketing of our products.

The clinical development, marketing and sales of our products require us to maintain close relationships with physicians upon whom we rely to provide considerable knowledge and experience. These physicians may assist us as researchers, marketing consultants, trainers for structural heart disease treatment procedures, inventors, and as public speakers. If we fail to develop or maintain strong relationships with these professionals or to continue to receive their advice and input, the development and marketing of our products could suffer, which could have a material adverse effect on our business, financial condition, and results of operations.

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We have entered into collaborations, and may establish or seek collaborations or strategic alliances or enter into licensing arrangements in the future, and we may not realize the benefits of such collaborations, alliances or licensing arrangements.

We have entered into collaborations to facilitate research and development of our product candidates, and may from time to time establish or seek strategic alliances, form joint ventures or collaborations, or enter into licensing arrangements with third parties that we believe will complement or augment our research and development and commercialization efforts with respect to our product candidates and any future product candidates that we may develop.

We face significant competition in seeking appropriate strategic partners and the negotiation process for the collaboration, alliances or licensing arrangements can be time- consuming and complex. Moreover, we may not be successful in our efforts to establish a strategic partnership or other alternative arrangements for our product candidates because they may be deemed to be at too early in development stage for collaborative effort and third parties may not view our product candidates as having the requisite potential to demonstrate safety and efficacy or commercial viability. If and when we collaborate with a third party for development and commercialization of a product candidate, we can expect to relinquish some or all of the control over the future success of that product candidate to the third party. For any product candidates that we may seek to in-license from third parties, we may face significant competition from other medical device companies with greater resources or capabilities than us, and any agreement that we do enter may not result in the anticipated benefits.

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

• collaborators may not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs based on clinical trial results, or change their strategic focus due to the acquisition of competitive products, availability of funding, or other external factors, such as a business combination that diverts resources or creates competing priorities;

• collaborators may delay clinical trials, provide insufficient funding for a clinical trial, stop a clinical trial, abandon a product candidate, repeat or conduct new clinical trials, or require a new design of a product candidate for clinical testing;

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

• a collaborator with marketing and distribution rights to one or more products may not commit sufficient resources to their marketing and distribution;

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• 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 product 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 product candidates;

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

• collaborators may fail to comply with certain regulatory requirements and be subject to risk of sanction measures or other restrictions, which would expose us to relevant risks.

As a result, we may not be able to realize the benefit of current or future collaborations, strategic partnerships or the license of our third-party products if we are unable to successfully integrate such products with our existing operations and company culture, which could delay our timelines or otherwise adversely affect our business. We also cannot be certain 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 product 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 product candidates or bring them to market and generate product sales revenue, which would harm our business prospects, financial condition and results of operations.

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We rely on a limited number of suppliers. A significant interruption in the operations of our suppliers could potentially affect our operations and any material misconduct or disputes against our suppliers could potentially harm our business and reputation.

During the Track Record Period, our suppliers mainly included suppliers of raw materials for the production of sample products under development for the purpose of clinical trials. In 2019, 2020 and the four months ended April 30, 2021, purchases from our five largest suppliers amounted to RMB7.1 million, RMB23.4 million and RMB14.1 million, respectively, representing 43.9%, 38.5% and 41.5% of our total purchases for the same periods, respectively; purchases from our largest supplier amounted to RMB1.8 million, RMB5.2 million and RMB5.2 million, respectively, representing 11.3%, 8.5% and 15.2% of our total purchases for the same periods, respectively. We imported certain of our raw materials from overseas suppliers. As a result, trade or regulatory embargoes imposed by foreign countries or China could also result in delays or shortages that could harm our business. Moreover, general economic conditions could also adversely affect the financial viability of our suppliers, resulting in their inability to provide materials and services used in our operations. In addition, suppliers may fail to supply products that meet our quality standards. If we are unable to identify alternative materials or suppliers and secure approval for their use in a timely manner, our business, operations and the development product candidates could be harmed. Any change in suppliers could require significant effort or investment in circumstances where the items supplied are integral to product performance or incorporate unique technology, and the loss of any existing supply contract could have a material adverse effect on us. A significant interruption in the operations of our suppliers could potentially affect our operations and any material misconduct or disputes against our suppliers could potentially harm our business and reputation.

RISKS RELATING TO OUR OPERATIONS

Our future success depends on our ability to retain key executives and to attract, hire, retain and motivate other qualified and highly skilled personnel.

We are dependent on Dr. YU Qifeng, our founder, Chairperson of the Board and CEO, Mr. Tao QIN, our co-founder, executive director and chief operating officer, and other management members to help us successfully set and implement our business strategies. We do not maintain key person insurance for our management members. If any of them leaves us for any reason including starting their own business that competes with our business, our business, results of operations and prospects may be materially and adversely affected.

The success of our business also relies on our ability to attract, hire, retain and motivate qualified scientific, technical, clinical, manufacturing, and sales and marketing personnel, as well as other consultants and advisers, including scientific and clinical advisers, who assist us in formulating our development and commercialization strategies. Although we have entered into employment agreements and consulting agreements with each of our executives,

–85– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS employees, consultants and advisers, they may terminate their agreements with us at any time. The loss of the services of any of them could impede the achievement of our research, development and commercialization objectives.

Furthermore, searching for qualified executive officers, key employees and consultants may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to successfully develop, gain regulatory approval of and commercialize products. Competition to hire from this limited pool is intense, and we may face difficulties for hiring and retaining talents and highly skilled personnel from time to time as our competitors may offer more attractive salary package, higher positions and better training opportunities to such talents. Therefore, we may be unable to hire, train, retain or motivate these key personnel or consultants on acceptable terms given the competition among numerous medical device companies for similar personnel. We also experience competition for the hiring of research and development and clinical personnel from universities, research institutions, government entities and other organizations. As a result, we may incur additional expenses and take significant time to recruit and train new personnel, which could severely disrupt our business and growth. For example, our internal training for manufacturing personnel can last for up to three to six months depending on the position and the experience of the particular recruit, in which case there can be a lag between the time we initiate recruiting for such personnel and their commencement of work. This lag could potentially interfere with our progress for research and development of our product candidates. In addition, our consultants and advisers may be engaged by our competitors and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us. If we are unable to continue to attract and retain high quality personnel, our ability to pursue our growth strategy will be limited.

We have a limited operating history, which may make it difficult to evaluate our current business and predict our future performance.

We are a development-stage medical device company with a relatively short operating history. Specifically, our operations during the Track Record Period and up to date have primarily been focused on the preclinical studies and clinical trials of our product candidates, and we have not obtained required regulatory approval for product registration for any of our product candidates for now. As we had no commercialized products during the Track Record Period, our experience in the manufacturing, product registration, and sales and marketing in relation to our product candidates is limited, and it may be difficult for you to evaluate our combined business, results of operations and prospects.

As a result of our limited operating history, and particularly in light of the rapidly evolving nature of our industry, it may make it difficult to evaluate our current business and reliably predict our future performance. Our historical results may not provide a meaningful basis for evaluating our business, financial condition, results of operation and future prospects, and we may encounter unforeseen expenses, difficulties, complications, delays and other

–86– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS known and unknown factors, and may not be able to achieve promising results in future periods. If we cannot address these risks and overcome these difficulties successfully, our business and prospects will suffer.

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

As we seek to advance our product candidates through clinical trials and commercialization, we plan to continue to expand our development, manufacturing, marketing and sales capabilities. Particularly, our growth strategies include (i) expedite the development and commercialization of product candidates; (ii) maintain and extend our technological lead; (iii) improve quality and cost-efficiency by increased self-reliance in manufacture; (iv) foster academic ties and assemble a professional team for better commercialization; (v) expand the NewMed Jidian Innovation Center, our new hub of early exploratory R&D; and (vi) strengthen international cooperation and lay the groundwork for strategic expansion overseas. Please refer to the paragraphs headed “Business – Our Strategies” in this document for more details. The success of our growth strategy will depend on, among other things, our ability to continue to innovate and develop advanced technologies in the highly competitive medical device market in China, maintain our efficient operating model, attract and retain skilled personnel who have the specialized skills needed to design, develop and manufacture medical devices, obtain and maintain regulatory approvals and effectively market our products using our network of distributors and our own sales and marketing team. However, we have limited operational, administrative and financial resources, which may be inadequate to sustain the growth we seek to achieve. In particular, in order to implement our growth strategy, we will need to increase our investment in, among other things, our research and development, manufacturing facilities, marketing and other areas of operations. If we are unable to manage our growth and expansion effectively, our business may be adversely affected.

Acquisitions or strategic partnerships may increase our capital requirements, dilute our Shareholders, cause us to incur debt or assume contingent liabilities, and subject us to other risks; or if we fail to successfully integrate any future targets into our own operations, our post-acquisition performance and business prospects may be adversely affected.

To enhance our growth, we may acquire businesses, products, technologies or know-how or enter into strategic partnerships that we believe would benefit us in terms of product development, technology advancement or distribution network, among others. Any potential acquisition or strategic partnership may entail numerous risks, including:

• increased operating expenses, including research and development expenses due to an increased number of product candidates, administrative expenses as well as selling and distribution expenses, which result in an increased cash requirements;

• the assumption of additional indebtedness or contingents;

• the issuance of our equity securities;

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• assimilation of operations, intellectual property and products of an acquired company, including difficulties associated with integrating new personnel;

• the diversion of our management’s attention from our existing product programs and initiatives in pursuing such a strategic merger or acquisition;

• retention of key employees, the loss of key personnel, and uncertainties in our ability to maintain key business relationships;

• risks and uncertainties associated with the other party to such a transaction, including the prospects of that party and their existing products and product candidates and regulatory approvals;

• our inability to generate revenue from acquired technology and/or products sufficient to meet our objectives in undertaking the acquisition or even to offset the associated acquisition and maintenance costs; and/or

• deficiencies in internal controls, data adequacy and integrity, product quality and regulatory compliance, and product liabilities in the acquired business we discover after such acquisition, which may subject us to penalties, lawsuits or other liabilities.

Further, any difficulties in the integration of acquired businesses, product or technologies or unexpected penalties, lawsuits or liabilities in connection with such businesses, product or technologies could have a material adverse effect on our reputation, business, financial condition and results of operation. In addition, if we undertake acquisitions, we may issue dilutive securities, assume or incur debt obligations, incur large one-time expenses and acquire intangible assets that could result in significant future amortization expense.

During our Track Record Period, we did not acquire or integrate any targets into our operations. Going forward, we may seek appropriate acquisition opportunity to further expand our business. However, we may fail to achieve the expected synergies with our existing operations and to fulfill the contemplated purposes of such acquisition. Synergies from acquisition activities are inherently uncertain, and are subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and may be beyond our control. Also, the synergies from acquisitions may be offset by costs incurred in the acquisition, increases in other expenses, operating losses or other problems in the business. As a result, there can be no assurance that these synergies will be achieved.

If we fail to maintain effective internal controls, we may not be able to accurately report our financial results or prevent fraud, and our business, financial condition, results of operation and reputation could be materially and adversely affected.

We will become a public company upon completion of the [REDACTED], and our internal controls will be essential to the integrity of our business and financial results. Our public reporting obligations are expected to place a strain on our management, operational and

–88– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS financial resources and systems in the foreseeable future. In order to address our internal controls issues and to generally enhance our internal controls and compliance environment, we have taken various measures to improve our internal controls and procedures including establishing a compliance program, adopting new policies, and providing extensive and ongoing training on our controls, procedures and policies to our employees. In addition, in preparation for the [REDACTED], we have implemented other measures to further enhance our internal controls, and plan to take steps to further improve our internal controls. If we encounter difficulties in improving our internal controls and management information systems, we may incur additional costs and management time in meeting our improvement goals. We cannot assure you that the measures taken to improve our internal controls will be effective. If we fail to maintain effective internal controls in the future, our business, financial condition, results of operation and reputation may be materially and adversely affected.

If we become subject to litigation, legal or contractual disputes, governmental investigations or administrative proceedings, our management’s attention may be diverted and we may incur substantial costs and liabilities.

We may from time to time become subject to various litigation, legal or contractual disputes, investigations or administrative proceedings arising in the ordinary course of our business, including but not limited to various disputes with or claims from our suppliers, customers (after commercialization of our product candidates), contractors, business partners and other third parties that we engage for our business operations. On-going or threatened litigation, legal or contractual disputes, investigations or administrative proceedings may divert our management’s attention and consume their time and our other resources. 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 product candidates, business and results of operations. In addition, any similar claims, disputes or legal proceedings involving us or our employees may result in damages or liabilities, as well as legal and other costs and may cause a distraction to our management. Furthermore, any litigation, legal or contractual disputes, investigations or administrative proceedings which are initially not of material importance may escalate and become important to us, due to a variety of factors, such as the facts and circumstances of the cases, the likelihood of loss, the monetary amount at stake and the parties involved. If any verdict or award is rendered against us or if we settle with any third parties, we could be required to pay significant monetary damages, assume other liabilities and even to suspend or terminate the related business projects. In addition, negative publicity arising from litigation, legal or contractual disputes, investigations or administrative proceedings may damage our reputation and adversely affect the image of our brands and products. Consequently, our business, financial condition and results of operations may be materially and adversely affected.

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We may be subject, directly or indirectly, to applicable anti-kickback, false claims laws, physician payment transparency laws, fraud and abuse laws or similar healthcare and security laws and regulations in China and other jurisdictions, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings.

Healthcare providers, physicians and others play a primary role in the recommendation and prescription of any products for which we obtain regulatory approval. Our operations are subject to various applicable anti-kickback, false claims laws, physician payment transparency laws, fraud and abuse laws or similar healthcare and security laws and regulations in China, including, without limitation, criminal law of the PRC, Regulations on the Supervision and Administration of Medical Devices (《醫療器械監督管理條例》) and the Administrative Measures for the Registration of Medical Devices (《醫療器械註冊管理辦法》). These laws may impact, among other things, our proposed sales, marketing and education programs. Violations of fraud and abuse laws may be punishable by criminal and/or civil sanctions, including penalties, fines and/or exclusion or suspension from governmental healthcare programs and debarment from contracting with the PRC government.

Law enforcement authorities are increasingly focused on enforcing these laws, and some of our practices may be challenged under these laws. Efforts to ensure that our business arrangements with third parties comply with applicable healthcare laws and regulations will involve substantial costs. Governmental authorities could conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of civil, criminal and administrative penalties, damages, disgorgement, monetary fines, possible exclusion from participation in governmental healthcare programs, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations, any of which could adversely affect our ability to operate our business and our results of operations. In addition, we are subject to equivalents of each of the healthcare laws described above in other jurisdictions, among others, some of which may be broader in scope and may apply to healthcare services reimbursed by any source, not just governmental payors, including private insurers. There are ambiguities as to what is required to comply with these requirements, and if we fail to comply with an applicable law requirement, we could be subject to penalties.

If any of the physicians or other providers or entities with whom we do business are found to be not in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs, which may also adversely affect our business.

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If we fail to comply with applicable anti-bribery laws, our reputation may be harmed and we could be subject to penalties and significant expenses that have a material adverse effect on our business, financial condition and results of operations. We may be unable to detect, deter and prevent all instances of fraud or other misconduct committed by our employees or other third parties.

If we fail to comply with applicable anti-bribery laws, our reputation may be harmed and we could be subject to penalties and significant expenses that have a material adverse effect on our business, financial condition and results of operations. We are subject to the anti-bribery laws of various jurisdictions, particularly in China, that generally 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, denial of government reimbursement for our products and/or exclusion from participation in government healthcare programs. 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 violate such laws.

We may be exposed to fraud, bribery or other misconduct committed by our employees or third parties that could subject us to financial losses and sanctions imposed by governmental authorities, which may adversely affect our reputation. During the Track Record Period and up to the Latest Practicable Date, we were not aware of any instances of fraud, bribery, and other misconduct involving employees and other third parties that had any material and adverse impact on our business and results of operations. However, we cannot assure you that there will not be any such instances in future. Although we consider our internal control policies and procedures to be adequate, we may be unable to prevent, detect or deter all such instances of misconduct. Any such misconduct committed against our interests, which may include past acts that have gone undetected or future acts, may have a material adverse effect on our business and results of operations.

Changes in U.S. and international policies, particularly with regard to China, may have an influence on our cooperation with our suppliers and collaborators, which may adversely impact our business and operating results.

Any tensions and political concerns between China and the relevant foreign countries or regions may have an influence on our cooperation with our suppliers and collaborators, which may adversely affect our business, financial condition, results of operations, cash flows and prospects. The U.S. government has recently made statements and taken certain actions that may lead to potential changes to the U.S. and international policies with regard to China. It is unknown whether and to what extent other new laws or regulations will be adopted, or the effect that any such actions would have on us, our cooperation with our suppliers and collaborators. For example, due to the uncertainties of such potential policy changes, our

–91– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS suppliers and collaborators may fail to comply with certain regulatory requirements and be subject to risks of sanction measures or other restrictions, which could expose us to relevant risks. Furthermore, while we have not started commercialization of any of our product candidates, any unfavorable international government policies, such as capital controls or tariffs, may affect the demand for and the competitive position of our future approved products, and import of raw materials in relation to our product candidates. If any new legislation and/or regulations are implemented, or in particular, if the U.S. government takes retaliatory actions due to the recent U.S.-China tension, such changes could have an adverse effect on our business, financial condition and results of operations.

If we or our business partners fail to comply with environmental, health and safety laws and regulations, we could become 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 involve the use of hazardous and flammable chemical materials and special equipment. Our operations also produce hazardous waste. We have entered into hazardous waste disposal agreements with third parties for the disposal of these materials and wastes. 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, we could be held liable for any resulting damages, and any liability could exceed our resources. We could also incur significant costs associated with civil or criminal fines and penalties.

Although we maintain insurance policies that cover losses arising from accidents and natural calamities in respect of our machinery, equipment, inventory and other fixed assets in our research and manufacturing facilities, this insurance may not provide adequate coverage against potential liabilities resulting from the use of or exposure to hazardous materials. We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage, use or disposal of biological or hazardous materials.

In addition, we may be required to incur substantial costs 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 production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.

If we or our business partners fail to protect patient data and privacy, our reputation will be damaged and we might be subject to fines or other regulatory punishments.

During the process of clinical trials, we need to collect and store a large quantity of patients’ personal data and information, which require us and our third-party vendors such as clinical trial institutions, hospitals, CROs and SMOs to maintain an effective control system to protect such personal data and information. The personal information of patients or subjects for our clinical trials is highly sensitive and we are subject to strict requirements under the applicable privacy protect regulations in the relevant jurisdictions. Whilst we have adopted

–92– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS security policies and measures to protect our proprietary data and patients’ privacy, misappropriation, misuse, leakage, falsification or intentional or accidental release or loss of personal data might not be avoided due to human error, employee misconduct or system breakdown. We also cooperate with third parties including principal investigators, hospitals, CROs and SMOs for our clinical trials. Any leakage or abuse of patient data by our third-party partners may be perceived by the patients as a result of our failure. Any failure or perceived failure by us to prevent information security breaches or to comply with privacy policies or privacy-related legal obligations, or any compromise of information security that results in the unauthorized release or transfer of personally identifiable information or other patient data, could cause our customers to lose trust in us and could expose us to legal claims. Whilst we have made efforts to ensure our compliance with the applicable privacy regulations in the relevant jurisdictions, we may not be capable of adjusting our internal policies in a timely manner and any failure to comply with applicable regulations could also result in regulatory enforcement actions against us.

Our internal computer systems may fail or suffer security breaches.

Despite the implementation of security measures, our internal computer systems are vulnerable to damage from computer viruses and unauthorized access. Although to our knowledge we have not experienced any material system failure or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations.

In the ordinary course of our business, we collect and store sensitive data, including, among other things, legally protected patient health information, personally identifiable information about our employees, intellectual property, and proprietary business information. We manage and maintain our applications and data utilizing on-site systems and outsourced vendors. These applications and data encompass a wide variety of business critical information including research and development information, commercial information and business and financial information. Because information systems, networks and other technologies are critical to many of our operating activities, shutdowns or service disruptions at our Company or vendors that provide information systems, networks, or other services to us pose increasing risks. Such disruptions may be caused by events such as computer hacking, phishing attacks, ransomware, dissemination of computer viruses, worms and other destructive or disruptive software, denial of service attacks and other malicious activity, as well as power outages, natural disasters (including extreme weather), terrorist attacks or other similar events. Such events could have an adverse impact on us and our business, including loss of data and damage to equipment and data. In addition, system redundancy may be ineffective or inadequate, and our disaster recovery planning may not be sufficient to cover all eventualities. Significant events could result in a disruption of our operations, damage to our reputation or a loss of revenues. In addition, we may not have adequate insurance coverage to compensate for any losses associated with such events.

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We could be subject to risks caused by misappropriation, misuse, leakage, falsification or intentional or accidental release or loss of information maintained in the information systems and networks of our Company and our vendors, including personal information of our employees and patients, and company and vendor confidential data. In addition, outside parties may attempt to penetrate our systems or those of our vendors or fraudulently induce our personnel or the personnel of our vendors to disclose sensitive information in order to gain access to our data and/or systems. Like other companies, we may experience threats to our data and systems, including malicious codes and viruses, phishing, and other cyber-attacks. The number and complexity of these threats may continue to increase over time. If a material breach of our information technology systems or those of our vendors occurs, the market perception of the effectiveness of our security measures could be harmed and our reputation and credibility could be damaged. We could be required to expend significant amounts of money and other resources to repair or replace information systems or networks. In addition, we could be subject to regulatory actions and/or claims made by individuals and groups in private litigation involving privacy issues related to data collection and use practices and other data privacy laws and regulations, including claims for misuse or inappropriate disclosure of data, as well as unfair or deceptive practices. Although we develop and maintain systems and controls designed to prevent these events from occurring, and we have a process to identify and mitigate threats, the development and maintenance of these systems, controls and processes is costly and requires ongoing monitoring and updating as technologies change and efforts to overcome security measures become increasingly sophisticated. Moreover, despite our efforts, the possibility of these events occurring cannot be eliminated entirely.

Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.

Our operations, and those of our third-party research institution collaborators, suppliers and other business partners, could be subject to natural or man-made disasters, health epidemic, or business interruptions, for which we are predominantly self-insured. The occurrence of any of these business disruptions could seriously harm our and our partners’ operations and financial condition and increase our and their costs and expenses. Furthermore, our ability to obtain supplies of raw materials for producing our product candidates could be disrupted if the operations of these suppliers are affected by a man-made or natural disaster, health epidemic, or other business interruption. Damage or extended periods of interruption to our administration, development, research or manufacturing facilities due to fire, natural disaster, health epidemic, power loss, communications failure, unauthorized entry or other events could cause us to cease or delay development or commercialization of some or all of our product candidates.

For example, the ongoing COVID-19 pandemic and additional outbreaks in China could significantly affect our industry and cause temporary suspension of projects and shortage of labor and raw materials, which would severely disrupt our progress on research and development of our product candidates and have a material adverse effect on our business, financial condition and results of operations. Our operations could also be disrupted if any of our employees or employees of our suppliers and other business partners were suspected of contracting or contracted COVID-19, since this could require us and our suppliers and other business partners to quarantine some or all of these employees and disinfect facilities used for operations.

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Although we maintain insurance policies that cover losses arising from accidents and natural disasters in respect of our machinery, equipment, inventories and other fixed assets in our research and manufacturing facilities, our insurance might not cover all losses under such circumstances and our business may be seriously harmed by such delays and interruption.

We have limited insurance coverage which may not adequately cover all the risks and hazards associated with our operations.

We operate in the medical device industry, which involves numerous operating risks and occupational hazards. We maintain certain insurance policies as of the Latest Practicable Date. For example, we maintain clinical trial insurance policies that cover losses arising from injuries and deaths of trial subjects as a result of using our medical devices or related products and property insurance policies that cover losses arising from accidents and natural calamities in respect of our machinery, equipment, inventories and other fixed assets in our research and manufacturing facilities. We do not maintain product liability insurance policies as we have not commercialized any of our product candidates at this stage. For more details of our insurance policies, please refer to the paragraphs headed “Business – Insurance” in this document. We cannot assure you that the existing insurance coverage is sufficient to compensate for actual losses suffered or incurred. To the extent that such losses or payments are not insured or the insured amount is not adequate, our business, results of operations and financial condition may be materially and adversely affected by such losses and associated liabilities. For the specific risks of inadequate insurance coverage in the event of product liability claims, please refer to the paragraphs headed “– Risks Relating to Manufacture and Supply of Our Product Candidates – We may be exposed to potential product liability claims, and our insurance coverage may be inadequate to protect us from all the liabilities we may incur” in this section.

Our business significantly depends on our reputation and, once any of our product candidates are commercialized, customer perception of us and any negative publicity on us, our Shareholders, Directors, Supervisors, officers, employees, KOLs, suppliers, or other parties we cooperate with, or related to our industry, may materially adversely affect our business, financial condition and results of operations.

Our reputation and, after commercialization of our product candidates, customer perception of our brand are critical to our business. Maintaining and enhancing our reputation and recognition depend primarily on the safety and efficacy of our future approved products, as well as continued promotion efforts. Our promotion efforts may be expensive and ineffective. In addition, our reputation and customer perception of our Company could suffer in events that:

• our future approved products fail to gain acceptance by patients, doctors and hospitals;

• our future approved products are defective or malfunction;

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• lawsuits or regulatory investigations are instituted against us or relating to our future approved products or industry;

• we provide poor or ineffective customer service; or

• we are subject to product liability claims.

If we are unable to maintain and further enhance our reputation and recognition, our ability to attract and retain customers may be impeded and our business prospects may be materially adversely affected. Any negative incident or negative publicity concerning us, our Shareholders, Directors, Supervisors, officers, employees, KOLs, suppliers, or other parties we cooperate with, regardless of its veracity, could harm our image and diminish the trust from our future customers and the market, which could in turn result in decreased sales of our product candidates after commercialization and materially and adversely affect our business. As a result, we may be required to spend significant time and incur substantial costs in response to allegations and negative publicity, and may not be able to diffuse them to the satisfaction of our investors and customers.

We are subject to risks associated with leasing space.

We lease our offices, factories and laboratories in China, nine lease agreements with a total of over 7,600 sq.m. Under the Measures for Administration of Lease of Commodity Properties (《商品房屋租賃管理辦法》), which was promulgated by the Ministry of Housing and Urban-Rural Development of the PRC on December 1, 2010 and became effective on February 1, 2011, both lessors and lessees are required to file the lease agreements for registration and obtain property leasing filing certificates for their leases. However, as of the Latest Practicable Date, we had not completed the filing for eight of our lease agreements. We may be required by relevant government authorities to file these lease agreements for registration within a time limit, and may be subject to a fine for non-registration exceeding such time limit, which may range from RMB1,000 to RMB10,000 for each lease agreement.

In addition, as our leases expire, we may fail to negotiate renewals, either on commercially acceptable terms or at all, which could require us to close such offices, factories and laboratories. Our inability to enter into new leases or renew existing leases on terms acceptable to us could materially adversely affect our business, results of operations and financial condition.

RISKS RELATING TO DOING BUSINESS IN CHINA

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

We conduct substantially all of our operations in China. The medical device industry in China is subject to comprehensive government regulation and supervision, encompassing the approval, registration, manufacturing, packaging, licensing and marketing of new devices. In

–96– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS recent years, the regulatory framework in China regarding the medical device 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 cause delays in or prevent the successful development or commercialization of our product candidates in China and reduce the benefits we believe are available to us from developing and manufacturing medical devices in China.

Changes in the political and economic policies of the PRC government may materially and adversely affect our business, financial condition and results of operations and may result in our inability to sustain our growth and expansion strategies.

We are headquartered in Shanghai, China and have extensive operations in China, our business, results of operations, financial condition and prospects may be influenced to a significant degree by economic, political, legal and social conditions in China. China’s economy differs from the economies of developed countries in many respects, including with respect to the amount of government involvement, level of development, growth rate, and control of foreign exchange and allocation of resources.

While the PRC economy has experienced significant growth over the past decades, growth has been uneven across different regions and among various economic sectors of China. The PRC government has implemented various measures to encourage economic development and guide the allocation of resources. Some of these measures may benefit the overall PRC economy, but may have a negative effect on us. For example, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations that are currently applicable to us. In addition, in the past the PRC government implemented certain measures, including interest rate increases, to control the pace of economic growth. These measures may cause decreased economic activity in China, which may adversely affect our business and results of operation. More generally, if the business environment in China deteriorates from the perspective of domestic or international investment, our business in China may also be adversely affected.

There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations.

The majority of our operations are conducted in China, and are governed by PRC laws, rules and regulations. The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions may be cited for reference but have limited precedential value. Since 1979, the PRC government began to promulgate a comprehensive system of laws, rules and regulations governing economic matters in general. The overall effect of legislation over the past three decades has significantly enhanced the protections afforded to various forms of foreign investment in China. However, China has not developed a fully integrated legal system, and recently enacted laws, rules and regulations may not sufficiently cover all aspects of economic activities in China or may be subject to significant degrees of interpretation by PRC regulatory agencies. In particular, because these laws, rules and regulations are relatively new and often give the relevant regulator significant

–97– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS discretion in how to enforce them, and because of the limited number of published decisions and the non-binding nature of such decisions, the interpretation and enforcement of these laws, rules and regulations involve uncertainties and can be inconsistent and unpredictable. In addition, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all, and which may have a retroactive effect. As a result, we may not be aware of our violation of these policies and rules until after the occurrence of the violation.

Additionally, the reform of the medical device approval system in 2017 may face implementation challenges. The timing and full impact of such reforms is uncertain and could prevent us from commercializing our pipeline products in a timely manner. In addition, any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention. Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems. These uncertainties may impede our ability to enforce the contracts we have entered into and could materially and adversely affect our business, financial condition and results of operations.

Fluctuations in exchange rates of the Renminbi could result in foreign currency exchange losses.

The [REDACTED] from the [REDACTED] will be received in HKD. As a result, any appreciation of RMB against USD, HKD or any other foreign currencies may result in the decrease in the value of our [REDACTED] from the [REDACTED]. The exchange rate of RMB against HKD is affected by, among other things, the policies of the PRC Government and changes in China’s and international political and economic conditions, as well as supply and demand in the local market. It is difficult to predict how market forces or government policies may impact the exchange rate between RMB, USD, HKD or other currencies in the future. There remains significant international pressure on the PRC Government to adopt a more flexible currency policy, which, together with domestic policy considerations, could result in a significant appreciation of RMB against USD, HKD or other foreign currencies.

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 Shares in foreign currency terms.

You may experience difficulties in effecting service of legal process and enforcing judgments against us and our management based on Hong Kong or other foreign laws.

We are incorporated under the laws of the PRC with limited liability, and majority of our assets are located in the PRC. In addition, a majority of our Directors and Supervisors and all of our senior management personnel reside within the PRC, and substantially all their assets

–98– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS 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 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 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 “Arrangement”). Under the 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 under 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. A choice of court agreement in writing is defined as any agreement in writing entered into between parties after the effective date of the Arrangement in which a Hong Kong court or a PRC court is expressly selected as the court having sole jurisdiction for the dispute. Therefore, 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 Arrangement has expressly provided for “enforceable final judgement,” “specific legal relationship” and “written form.” A final judgement that does not comply with the 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, 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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Gains on the sales of Shares and dividends on the Shares may be subject to PRC income taxes.

Under the applicable PRC tax laws, both the dividends we pay to non-PRC resident individual holders of shares (“non-resident individual holders”), and gains realized through the sale or transfer by other means of 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 realized through the sale or transfer by other means of shares by, non-PRC resident enterprise holders of 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 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 STA, non-resident individual holders were temporarily exempted from PRC individual income tax for the dividends or bonuses paid by issuers of shares. However, such circular was repealed by the Announcement on the List of Fully or Partially Invalid and Repealed Tax Regulatory Documents (《關於公佈全文失效廢止、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 Taxation Administration of the PRC 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 (《關於個人轉讓股票所得繼續暫免徵收個人所得稅的通知》) issued by the MOF and the STA and 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

– 100 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS government is planning to cancel foreign individuals’ tax exemption for dividends obtained from foreign-invested enterprises, and the MOF and the STA should be responsible for making and implementing details of such plan. However, relevant implementation rules or regulations have not been promulgated by the MOF and the STA.

Any failure to comply with PRC regulations regarding our employee equity incentive plans or the mandatory social insurance may subject the PRC plan participants or us to fines and other legal or administrative sanctions.

Our directors, executive officers and other employees who are PRC residents have participated in our employee equity incentive plans. We also face regulatory uncertainties that could restrict our ability to adopt additional equity incentive plans for our directors and employees under PRC law.

According to the Social Insurance Law of the PRC implemented on December 29, 2018 and other applicable PRC regulations, any employer operating in China must open social insurance registration accounts and contribute social insurance premium for its employees. Any failure to make timely and adequate contribution of social insurance premium for its employees may trigger an order of correction from competent authority requiring the employer to make up the full contribution of such overdue social insurance premium within a specified period of time, and the competent authority may further impose fines or penalties. During the Track Record Period, we have made timely and adequate contribution of social insurance premium and housing provident funds for employees, and we have not received any order of correction or any fines or penalties from the competent authority. However, we cannot assure you that we may not involve in any issues relating to the social insurance in the future.

Governmental control of currency conversion, and restrictions on the remittance of Renminbi into and out of the PRC, may limit our ability to utilize our future revenue effectively and adversely affect the value of your investment.

Our accounts were denominated in Renminbi during the Track Record Period. Renminbi is currently not a fully freely convertible currency. A portion of our future revenue 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 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, in the future, 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. As a result, we may not be able to pay dividends in foreign currencies to holders of our Shares.

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Our operations are subject to and may be affected by changes in PRC tax laws and regulations.

We are subject to periodic examinations on fulfillment of our tax obligation under the PRC tax laws and regulations by PRC tax authorities. Although we believe that in the past we had acted in compliance with the requirements under the relevant PRC tax laws and regulations in all material aspects and had established effective internal control measures in relation to accounting regularities, we cannot assure you that future examinations by PRC tax authorities would not result in fines, other penalties or actions that could adversely affect our business, financial condition and results of operations, as well as our reputation. Furthermore, the PRC government from time to time adjusts or changes its tax laws and regulations. For example, under the Individual Income Tax Law of the PRC (《中華人民共和國個人所得稅法》), or IIT Law, which was last amended on June 30, 2011 and came into effect on September 1, 2011, foreign nationals which have domiciles in the PRC, or have no domicile in China but have resided in the PRC for one year or more, would be subject to PRC individual income tax at progressive rate on their income gained within or outside the PRC. The Standing Committee of NPC has approved the amendment of the IIT Law, which took effect on January 1, 2019. Under the amended IIT law, foreign nationals have no domicile in China but have resided in the PRC for a total of 183 days or more in a tax year, would be subject to PRC individual income tax on their income gained within or outside the PRC. Should such rule be strictly enforced, our ability to attract and retain highly skilled foreign scientists and research technicians to work in China may be materially affected, which may in turn have a material adverse effect on our business, financial condition, results of operations, cash flows and prospects. Further adjustments or changes to PRC tax laws are regulations, together with any uncertainty resulting therefrom, could also have an adverse effect on our business, financial condition and results of operations.

We may be restricted from transferring our scientific data abroad.

On March 17, 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》), or 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. Given the term state secret is not clearly defined, if and to the extent any data collected or generated in connection with our services will be subject to the Scientific Data Measures and any subsequent 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 or to our foreign partners in China. If we are unable to obtain necessary approvals in a timely manner, or at all, our business, results of operations, financial conditions and prospects may be materially and adversely affected. If the relevant government authorities

– 102 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS 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.

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

During the Track Record Period, we purchased raw materials for our product candidates from certain overseas suppliers. In the event that China and/or the countries from which we import raw materials impose import tariffs, trade restrictions or other trade barriers affecting the importation of such components or 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 also might plan to commercialize some of our products in certain foreign jurisdictions. Our business is therefore subject to constantly changing international economic, regulatory, social and political conditions, and local conditions in foreign countries and regions.

Furthermore, there can be no assurance that our existing or potential suppliers, 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. Particularly, trade tension between the U.S. and China could place pressure on the economic growth in China as well as the rest of the world. The U.S. administration under former President Donald Trump has advocated for and taken steps toward restricting trade in certain goods, particularly from China. While the two nations have reached a phase one trade agreement in January 2020, the progress of future trade talks between China and the U.S. are subject to uncertainties, and there can be no assurance as to whether the U.S. will maintain or reduce tariffs, or impose additional tariffs on Chinese products in the near future. Trade tension between China and the U.S. may intensify and the U.S. may adopt even more drastic measures in the future. China has retaliated and may further retaliate in response to new trade policies, treaties and tariffs implemented by the U.S. Any further escalation in trade or other tensions between the U.S. and China or news and rumors of any escalation, could introduce uncertainties to China’s economy and the global economy which in turn could affect activity levels on our research and development. Foreign policies of the U.S. tend to be followed by certain other countries, and those countries may adopt similar policies in their relationships with China and the Chinese companies.

In addition, those policies and measures directed at China and Chinese companies adopted by the U.S. government could have effect of discouraging U.S. persons from working for Chinese companies, which could hinder our ability to hire and retain qualified personnel for our business.

– 103 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS

RISKS RELATING TO THE [REDACTED]

No public market currently exists for our Shares, and an active trading market for our [REDACTED] may not develop and the market price for our Shares may decline or became volatile.

No public market currently exists for our Shares. The initial [REDACTED] for our [REDACTED] to the public will be the result of negotiations between our Company and the [REDACTED] (on behalf of the [REDACTED]), and the [REDACTED] may differ significantly from the market price of the [REDACTED] following the [REDACTED]. We have applied to the [REDACTED] for the [REDACTED] of, and permission to [REDACTED] in, the [REDACTED].A[REDACTED] on the Hong Kong Stock Exchange, however, does not guarantee that an active and liquid trading market for our [REDACTED] will develop, or if it does develop, that it will be sustained following the [REDACTED], or that the market price of the [REDACTED] will rise following the [REDACTED].

The price and trading volume of our Shares may be volatile, which could lead to substantial losses to investors.

The price and trading volume of our Shares may be subject to significant volatility in response to various factors beyond our control, including the general market conditions of the securities in Hong Kong and elsewhere in the world. In particular, the business and performance and the market price of the shares of other companies engaging in similar business may affect the price and trading volume of our Shares. In addition to market and industry factors, the price and trading volume of our Shares may be highly volatile for specific business reasons, such as the results of clinical trials of our product candidates, the results of our applications for approval of our product candidates, regulatory developments affecting our industry, healthcare, health insurance and other related matters, fluctuations in our revenue, earnings, cash flows, investments and expenditures, relationships with our suppliers, movements or activities of key personnel, or actions taken by competitors. Moreover, shares of other companies listed on the Hong Kong Stock Exchange with significant operations and assets in China have experienced price volatility in the past, and our Shares may be subject to changes in price not directly related to our performance.

You will incur immediate and significant dilution and raising additional capital may cause further dilution or restrict our operation.

The [REDACTED]ofthe[REDACTED] is higher than the net tangible asset value per Share immediately prior to the [REDACTED]. Therefore, purchasers of the [REDACTED]in the [REDACTED] will experience an immediate dilution in pro forma consolidated net tangible asset value. There can be no assurance that if we were to immediately liquidate after the [REDACTED], any assets will be distributed to Shareholders after the creditors’ claims. If we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a shareholder. Debt financing and preferred equity financing, if available, may involve agreements that include covenants

– 104 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, limitations on our ability to acquire or license intellectual property rights or declaring dividends, or other operating restrictions.

There will be a time gap between pricing and trading of our Shares, and the price of our Shares when trading begins could be lower than the [REDACTED].

The [REDACTED] of our Shares sold in the [REDACTED] is expected to be determined on the [REDACTED]. However, the [REDACTED] will not commence [REDACTED]onthe Stock Exchange until they are delivered, which is expected to be five Business Days after the [REDACTED]. As a result, investors may not be able to sell or otherwise deal in the [REDACTED] before the commencement of [REDACTED]. Accordingly, holders of our [REDACTED] are subject to the risk that the price of the [REDACTED] when trading begins could be lower than the [REDACTED] as a result of adverse market conditions or other adverse developments that may occur between the time of sale and the time trading begins.

Future sales or perceived sales of a substantial number of our Shares in the [REDACTED] following the [REDACTED] could materially and adversely affect the price of our Shares and our ability to raise additional capital in the future, and may result in dilution of your shareholding.

Prior to the [REDACTED], there has not been a public market for our Shares. Future sales or perceived sales by our existing Shareholders of our Shares after the [REDACTED] could result in a significant decrease in the prevailing market price of our Shares. Only a limited number of the Shares currently outstanding will be available for sale or issuance immediately after the [REDACTED] due to contractual and regulatory restrictions on disposal and new issuance. Nevertheless, after these restrictions lapse or if they are waived, future sales of significant amounts of our [REDACTED]inthe[REDACTED] or the perception that these sales may occur could significantly decrease the prevailing market price of our Shares and our ability to raise equity capital in the future.

The possible conversion of Unlisted Shares into H Shares could increase the supply of H Shares in the market and may negatively impact the market price of our H Shares.

Our Unlisted Shares are currently not listed or traded on any stock exchange. The holders of our Unlisted 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 [REDACTED] of such converted Shares on the Hong Kong Stock Exchange will also require the approval of the Hong Kong Stock Exchange. For details, please refer to the paragraphs

– 105 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS headed “Share Capital – Conversion of Our Unlisted Shares into H Shares” in this document. The conversion of our Unlisted Shares will increase the number of H Shares available on the market. As a result, it may negatively affect the trading price of our H Shares due to the increased supply in the market.

As the [REDACTED] of our [REDACTED] is higher than our net tangible book value per share, purchasers of our Shares in the [REDACTED] may experience immediate dilution upon such purchases. Purchasers of Shares may also experience further dilution in shareholdings if we issue additional Shares in the future.

The [REDACTED]ofthe[REDACTED] is higher than the net tangible asset value per Share immediately prior to the [REDACTED]. Therefore, purchasers of the [REDACTED]in the [REDACTED] will experience an immediate dilution in pro forma net tangible asset value, and our existing Shareholders will receive an increase in the pro forma adjusted consolidated net tangible assets per Share of their Shares. In order to expand our business, we may consider offering and issuing additional Shares in the future. Purchasers of the [REDACTED] may experience dilution in the net tangible asset value per share of their Shares if we issue additional Shares in the future at a price that is lower than the net tangible asset value per Share at that time.

We cannot assure you that we will declare and distribute any amount of dividends in the future.

There can be no assurance that we will declare and pay dividends because the declaration, payment and amount of dividends are subject to the discretion of our Directors, depending on, among other considerations, our operations, earnings, cash flows and financial position, operating and capital expenditure requirements, our strategic plans and prospects for business development, our constitutional documents and applicable law. For more details on our dividend policy, please refer to the paragraphs headed “Financial Information – Dividends” in this document.

We cannot make fundamental changes to our business without the consent of the Stock Exchange.

On April 30, 2018, the Hong Kong Stock Exchange adopted rules under Chapter 18A of its Rules Governing the Listing of Securities on the Stock Exchange. Under these rules, without the prior consent of the Stock Exchange, we will not be able to effect any acquisition, disposal or other transaction or arrangement or a series of acquisitions, disposals or other transactions or arrangements, which would result in a fundamental change in our principal business activities as set forth in this document. As a result, we may be unable to take advantage of certain strategic transactions that we might otherwise choose to pursue in the absence of Chapter 18A. Were any of our competitors that are not listed on the Stock Exchange to take advantage of such opportunities in our place, we may be placed at a competitive disadvantage, which could have a material adverse effect on our business, financial condition and results of operations.

– 106 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS

Our Controlling Shareholder has significant influence over our Company and his interests may not be aligned with the interest of our other shareholders.

Immediately following the [REDACTED] (assuming the [REDACTED]isnot exercised), our Controlling Shareholder will be entitled to exercise approximately [REDACTED]% voting rights in our Company. Our Controlling Shareholder will, through his voting power at the Shareholder’s meetings and his delegates on the Board, have significant influence over our business and affairs, including decisions in respect of mergers or other business combinations, acquisition or disposition of assets, issuance of additional shares or other equity securities, timing and amount of dividend payments, and our management. Our Controlling Shareholder may not act in the best interests of our minority Shareholders. In addition, without the consent of our Controlling Shareholder, we could be prevented from entering into transactions that could be beneficial to us. This concentration of ownership may also discourage, delay or prevent a change in control of our Company, which could deprive our Shareholders of an opportunity to receive a premium for the Shares as part of a sale of our Company and may significantly reduce the price of our Shares.

We have significant discretion as to how we will use the net [REDACTED] of the [REDACTED], and you may not necessarily agree with how we use them.

Our management may spend the net [REDACTED] from the [REDACTED] in ways with which you may not agree or which do not yield a favorable return to our shareholders. We plan to use the net [REDACTED] from the [REDACTED] to continue the research and development activities of our product candidates to commercialization, strengthen our research and development capabilities, and to expand our product portfolio, among others. For details, please refer to the paragraphs headed “Future Plans and Use of [REDACTED] – Use of [REDACTED]” in this document.

However, our management will have discretion as to the actual application of our net [REDACTED]. You are entrusting your funds to our management, whose judgment you must depend on, for the specific uses we will make of the net [REDACTED] from this [REDACTED].

Facts, forecasts and statistics in this document relating to the structural heart diseases market may not be fully reliable.

Facts, forecasts and statistics in this document relating to the structural heart diseases market in and outside China are obtained from various sources that we believe are reliable, including official government publications as well as a report prepared by Frost & Sullivan that we commissioned. However, we cannot guarantee the quality or reliability of these sources. Neither we, the Joint Sponsors, the [REDACTED], the [REDACTED], the [REDACTED], the [REDACTED] nor our or their respective affiliates or advisers have verified the facts, forecasts and statistics nor ascertained the underlying economic assumptions relied upon in those facts, forecasts and statistics obtained from these sources. Due to possibly flawed or ineffective collection methods or discrepancies between published information and factual information and other problems, the industry statistics in this document may be inaccurate and

– 107 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS you should not place undue reliance on it. We make no representation as to the accuracy of such facts, forecasts and statistics obtained from various sources. Moreover, these facts, forecasts and statistics involve risk and uncertainties and are subject to change based on various factors and should not be unduly relied upon.

You should read the entire document carefully, and we strongly caution you not to place any reliance on any information contained in press articles or other media regarding us or the [REDACTED].

You should rely solely upon the information contained in this document, the [REDACTED] and any formal announcements made by us in Hong Kong in making your investment decision regarding our Shares. We do not accept any responsibility for the accuracy or completeness of any information reported by the press or other media, nor the fairness or appropriateness of any forecasts, views or opinions expressed by the press or other media regarding our Shares, the [REDACTED] or us. We make no representation as to the appropriateness, accuracy, completeness or reliability of any such data or publication. Accordingly, prospective investors should not rely on any such information, reports or publications in making their decisions as to whether to invest in our [REDACTED]. By applying to purchase our Shares in the [REDACTED], you will be deemed to have agreed that you will not rely on any information other than that contained in this document and the [REDACTED].

– 108 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT WAIVERS FROM STRICT COMPLIANCE WITH LISTING RULES AND EXEMPTION FROM STRICT COMPLIANCE WITH THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE

In preparation for the [REDACTED], our Company has sought and has been granted the following waivers from strict compliance with the relevant provisions of the Listing Rules and the following exemption from compliance with the Companies (Winding Up and Miscellaneous Provisions) Ordinance:

WAIVER IN RESPECT OF MANAGEMENT PRESENCE IN HONG KONG

Pursuant to Rules 8.12 and 19A.15 of the Listing Rules, we must have a sufficient management presence in Hong Kong. This normally means that at least two of our executive Directors must be ordinarily resident in Hong Kong.

Our headquarters and most of our business operations are based, managed and conducted in the PRC. As our executive Directors play very important roles in our business operation, it is in our best interest for them to be based in the places where our Group has significant operations. We consider it practicably difficult and commercially unreasonable for us to arrange for two executive Directors to be ordinarily reside in Hong Kong, either by means of relocation of our executive Directors to Hong Kong or appointment additional executive Directors. Therefore, we do not have, and in the foreseeable future will not have, sufficient management presence in Hong Kong for the purpose of satisfying the requirements under Rules 8.12 and 19A.15 of the Listing Rules.

Accordingly, we have applied to the Hong Kong Stock Exchange for, and the Hong Kong Stock Exchange [has granted] us, a waiver from strict compliance with the requirements under Rules 8.12 and 19A.15 of the Listing Rules, provided that our Company implements the following arrangements:

(a) We have appointed Dr. Yu and Mr. Ming King CHIU (“Mr. Chiu”) as our authorized representatives pursuant to Rules 3.05 and 19A.07 of the Listing Rules. The authorized representatives will act as our Company’s principal channel of communication with the Hong Kong Stock Exchange. The authorized representatives will be readily contactable by phone, facsimile and email to promptly deal with enquiries from the Hong Kong Stock Exchange, and will also be available to meet with the Hong Kong Stock Exchange to discuss any matter within a reasonable period of time upon request of the Hong Kong Stock Exchange;

(b) When the Hong Kong Stock Exchange wishes to contact our Directors on any matter, each of the authorized representatives will have all necessary means to contact all of our Directors (including our independent non-executive Directors) promptly at all times. Our Company will also inform the Hong Kong Stock Exchange promptly in respect of any changes in the authorized representatives. We have provided the Hong Kong Stock Exchange with the contact details (i.e. mobile phone number, office phone number and email address) of all Directors to facilitate communication with the Hong Kong Stock Exchange;

– 109 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT WAIVERS FROM STRICT COMPLIANCE WITH LISTING RULES AND EXEMPTION FROM STRICT COMPLIANCE WITH THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE

(c) All Directors who do not ordinarily reside in Hong Kong possess or can apply for valid travel documents to visit Hong Kong and can meet with the Hong Kong Stock Exchange within a reasonable period upon the request of the Hong Kong Stock Exchange;

(d) We have appointed Somerley Capital Limited as our compliance adviser upon the [REDACTED] pursuant to Rule 3A.19 of the Listing Rules for a period commencing on the [REDACTED] and ending 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]. Our compliance adviser, who will act as the additional channel of communication with the Hong Kong Stock Exchange when the authorized representatives are not available, will have access at all times to our authorized representatives, our Directors and our senior management as prescribed by Rule 19A.05(2) of the Listing Rules; and

(e) Meetings between the Hong Kong Stock Exchange and our Directors can be arranged through our authorized representatives or our compliance adviser, or directly with our Directors within a reasonable time frame.

WAIVER IN RESPECT OF APPOINTMENT OF JOINT COMPANY SECRETARY

Pursuant to Rules 3.28 and 8.17 of the Listing Rules, we must appoint a company secretary who, by virtue of his/her academic or professional qualifications or relevant experience, is, in the opinion of the Hong Kong Stock Exchange, capable of discharging the functions of the company secretary. Note 1 to Rule 3.28 of the Listing Rules provides that the Hong Kong 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 provides that the Hong Kong Stock Exchange considers the following factors in assessing the “relevant experience” of the individual:

(a) length of employment with the issuer and other issuers and the roles he/she played;

–110– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT WAIVERS FROM STRICT COMPLIANCE WITH LISTING RULES AND EXEMPTION FROM STRICT COMPLIANCE WITH THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE

(b) familiarity with the Listing Rules and other relevant laws and regulations including the SFO, the Companies Ordinance, the 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 under Rule 3.29 of the Listing Rules; and

(d) professional qualifications in other jurisdictions.

Pursuant to HKEx-GL108-20, the Stock Exchange will consider a waiver application by an issuer in relation to Rules 3.28 and 8.17 of the Listing Rules based on the specific facts and circumstances. Factors that will be considered by the Stock Exchange include:

(a) whether the issuer has principal business activities primarily outside Hong Kong;

(b) whether the issuer was able to demonstrate the need to appoint a person who does not have the Acceptable Qualification (as defined under HKEx-GL108-20) nor Relevant Experience (as defined under HKEx-GL108-20) as a company secretary; and

Further, pursuant to HKEx-GL108-20, such waiver, if granted, will be for a fixed period of time (the “Waiver Period”) and on the following conditions:

(a) the proposed company secretary must be assisted by a person who possesses the qualifications or experience as required under Rule 3.28 of the Listing Rules and is appointed as a joint company secretary throughout the Waiver Period; and

(b) the waiver can be revoked if there are material breaches of the Listing Rules by the issuer.

Our Company has appointed Mr. Xiaoxu JIANG (“Mr. Jiang”), our chief financial officer, as one of our joint company secretaries. He has extensive experience in board and corporate management matters but presently does not possess any of the qualifications under Rules 3.28 and 8.17 of the Listing Rules, and may not be able to solely fulfill the requirements of the Listing Rules. Therefore, we have appointed Mr. Chiu, a fellow member of The Chartered Governance Institute in United Kingdom and the Hong Kong Institute of Chartered Secretaries, who fully meets the requirements stipulated under Rules 3.28 and 8.17 of the Listing Rules to act as the other joint company secretary and to provide assistance to Mr. Jiang for an initial period of three years from the [REDACTED] to enable Mr. Jiang to acquire the “relevant experience” under Note 2 to Rule 3.28 of the Listing Rules so as to fully comply with the requirements set forth under Rules 3.28 and 8.17 of the Listing Rules.

– 111 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT WAIVERS FROM STRICT COMPLIANCE WITH LISTING RULES AND EXEMPTION FROM STRICT COMPLIANCE WITH THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE

Given Mr. Chiu’s professional qualification and experience, he will be able to explain to both Mr. Jiang and us the relevant requirements under the Listing Rules and other applicable Hong Kong laws and regulations. Mr. Chiu will also assist Mr. Jiang in organizing Board meetings and Shareholders’ meetings of our Company as well as other matters of our Company which are incidental to the duties of a company secretary. Mr. Chiu is expected to work closely with Mr. Jiang and will maintain regular contact with Mr. Jiang, the Directors and the senior management of our Company. In addition, Mr. Jiang will comply with the annual professional training requirement under Rule 3.29 of the Listing Rules to enhance his knowledge of the Listing Rules during the three-year period from the [REDACTED]. He will also be assisted by our compliance adviser and our legal advisers as to the Hong Kong laws on matters in relation to our ongoing compliance with the Listing Rules and the applicable laws and regulations.

Since Mr. Jiang does not possess the formal qualifications required of a company secretary under Rule 3.28 of the Listing Rules, we have applied to the Hong Kong Stock Exchange for, and the Hong Kong Stock Exchange [has granted], a waiver from strict compliance with the requirements under Rules 3.28 and 8.17 of the Listing Rules such that Mr. Jiang may be appointed as a joint company secretary of our Company. The waiver is valid for an initial period of three years from the [REDACTED] on the conditions that (a) Mr. Jiang must be assisted by Mr. Chiu who possesses the qualifications and experience required under Rule 3.28 of the Listing Rules; and (b) the waiver will be revoked immediately if and when Mr. Chiu ceases to provide assistance to Mr. Jiang as a joint company secretary or if there are material breaches of the Listing Rules by our Company.

Before the expiration of the initial three-year period, the qualifications of Mr. Jiang will be re-evaluated to determine whether the requirements as stipulated in Rules 3.28 and 8.17 of the Listing Rules can be satisfied and whether the need for ongoing assistance will continue. We will liaise with the Hong Kong Stock Exchange to enable it to assess whether Mr. Jiang, having benefited from the assistance of Mr. Chiu for the preceding three years, will have acquired the skills necessary to carry out the duties of a company secretary and the relevant experience within the meaning of Note 2 to Rule 3.28 of the Listing Rules so that a further waiver will not be necessary.

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

Section 342(1)(b) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance requires all prospectuses to include matters specified in Part I of the Third Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance and set out the reports specified in Part II of the Third Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance.

–112– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT WAIVERS FROM STRICT COMPLIANCE WITH LISTING RULES AND EXEMPTION FROM STRICT COMPLIANCE WITH THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE

Paragraph 27 of Part I of the Third Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance requires a company to include in its prospectus a statement as to the gross trading income or sales turnover (as the case may be) of the company during each of the three financial years immediately preceding the issue of the prospectus, including an explanation of the method used for the computation of such income or turnover and a reasonable breakdown between the more important trading activities.

Paragraph 31 of Part II of the Third Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance further requires a company to include in its prospectus a report by the auditors of the company with respect to (i) the profits and losses of the company for each of three financial years immediately preceding the issue of the prospectus and (ii) the assets and liabilities of the company of each of the three financial years immediately preceding the issue of the prospectus.

Section 342A(1) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance provides that the SFC may issue, subject to such conditions (if any) as the SFC thinks fit, a certificate of exemption from the 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 interest of the investing public and compliance with any or all of such requirements would be irrelevant or unduly burdensome, or would otherwise be unnecessary or inappropriate.

Rule 4.04(1) of the Listing Rules requires that the consolidated results of the issuer and its subsidiaries in respect of each of the three financial years immediately preceding the issue of the listing document be included in the accountants’ report to this document.

Rule 18A.03(3) of the Listing Rules requires that a biotech company must have been in operation in its current line of business for at least two financial years prior to listing under substantially the same management. Rule 18A.06 of the Listing Rules requires that a biotech company must comply with Rule 4.04 of the Listing Rules modified so that references to “three financial years” or “three years” in Rule 4.04 shall instead be references to “two financial years” or “two years”, as the case may be. Further, pursuant to Rule 8.06 of the Listing Rules, the latest financial period reported on by the reporting accountants for a new applicant must not have ended more than six months from the date of the listing document.

In compliance with the abovementioned requirements under the Listing Rules, the accountant’s report of our Company set out in Appendix I to this Document is prepared to cover the two financial years ended December 31, 2019 and 2020 and the four months ended April 30, 2021.

As such, the Joint Sponsors have applied, on behalf of our Company, to the SFC for a certificate of exemption from strict compliance with section 342(1)(b) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance in relation to the requirements of

–113– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT WAIVERS FROM STRICT COMPLIANCE WITH LISTING RULES AND EXEMPTION FROM STRICT COMPLIANCE WITH THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE paragraph 27 of Part I and paragraph 31 of Part II of the Third Schedule to of the Companies (Winding Up and Miscellaneous Provisions) Ordinance regarding the inclusion of the accountants’ report covering the full three financial years immediately preceding the issue of this document on the following grounds:

(a) our Company is primarily engaged in the research and development, application and commercialization of biotech products, and falls within the scope of biotech company as defined under Chapter 18A of the Listing Rules. Our Company will fulfill the additional conditions for [REDACTED] required under Chapter 18A of the Listing Rules;

(b) given that our Company is only required to disclose its financial results for each of the two financial years ended December 31, 2019 and 2020 and the four months ended April 30, 2021 in accordance with Chapter 18A of the Listing Rules and preparation of the financial results for the year ended December 31, 2018 would require additional work to be performed by our Company and our auditors, strict compliance with section 342(1)(b) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance in relation to the requirements of paragraph 27 of Part I and paragraph 31 of Part II of the Third Schedule would be unduly burdensome for our Company;

(c) notwithstanding that the financial results set out in this document are only for the two financial years ended December 31, 2019 and 2020 and the four months ended April 30, 2021 in accordance with Chapter 18A of the Listing Rules, other information required to be disclosed under the Listing Rules and the Companies (Winding Up and Miscellaneous Provisions) Ordinance has been adequately disclosed in this document pursuant to the relevant requirements;

(d) the Accountants’ Report covering the two financial years ended December 31, 2019 and 2020 and the four months ended April 30, 2021 (as set out in Appendix I to this document), together with other disclosures in this document, has already provided adequate and reasonable up-to-date information in the circumstances for the potential investors to make an informed assessment of the business, assets and liabilities, financial position, management and prospects and to form a view on the track record of our Company. Therefore, the exemption would not prejudice the interest of the investing public.

The SFC [has granted] a certificate of exemption under section 342A of the Companies (Winding Up and Miscellaneous Provisions) Ordinance exempting our Company from strict compliance with section 342(1)(b) in relation to paragraph 27 of Part I and paragraph 31 of Part II of the Third Schedule the Companies (Winding Up and Miscellaneous Provisions) Ordinance on the condition that particulars of the exemption are set out in this document and that this document will be issued on or before [REDACTED].

–114– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED]

[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

Dr. Qifeng YU (虞奇峰) No. 58 Lane 959 Chinese Xiukang Road, Pudong New Area Shanghai, PRC

Mr. Tao QIN (秦濤) No. 301B, Lane 228 Chinese Xiewei Road, Qingpu District Shanghai, PRC

Ms. Xiayan YANG (楊夏燕) Room 302, No. 12 Lane 88 Chinese Ruijian Road, Zhoupu Town Pudong New Area Shanghai, PRC

Non-executive Directors

Dr. David Guowei WANG 34 Green Lane, Weston American (王國瑋) MA 02493 United States

Mr. Jie ZHANG (張捷) Room 502, Unit 3, Building 9 Chinese No. 300 Shuidian Road Hongkou District Shanghai, PRC

Mr. Kai LIU (劉愷) Room 2B, Building 4 Chinese No. 48, Lane 610, Yan’an West Road Changning District Shanghai, PRC

Independent non-executive Directors

Dr. Jiangnan CAI (蔡江南) Room 1101, No. 1 Lane 1000 American Yinggang East Road, Qingpu District Shanghai, PRC

Mr. Fengmao HUA (華風茂) Flat A, 55/F, Tower II Chinese 23 Tai Hang Drive, The Legend Jardine’s Lookout Hong Kong

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Dr. Yufeng ZHENG (鄭玉峰) No. 9-4-502 Zone 3 Chinese Xiaojiahe Faulty Residential Area Peking University Haidian District Beijing, PRC

SUPERVISORS

Mr. Xuyang XIE (解旭陽) Room 902, No. 2 Lane 5291 Chinese Yanggao North Road Pudong New Area Shanghai, PRC

Ms. Xiulan CHENG (程秀蘭) No. 501, No. 1 Lane 39 Chinese Xiangnan Road Pudong New Area Shanghai, PRC

Mr. Xiaoyong YU (于曉勇) Room 502, No. 4 Lane 439 Chinese Huanlong Road Pudong New Area Shanghai, PRC

For details with respect to our Directors and Supervisors, please refer to the section headed “Directors, Supervisors and Senior Management” in this document.

PARTIES INVOLVED IN THE [REDACTED]

Joint Sponsors Morgan Stanley Asia Limited 46th Floor, International Commerce Centre 1 Austin Road West Kowloon Hong Kong

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

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[REDACTED]

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[REDACTED]

Legal Advisers to the Company As to Hong Kong and U.S. laws:

O’Melveny & Myers 31/F, AIA Central 1 Connaught Road Central Hong Kong

As to PRC law:

Jingtian & Gongcheng 34/F, Tower 3 China Central Place 77 Jiangguo Road Chaoyang District Beijing PRC

Legal Advisers to the Joint Sponsors As to Hong Kong and U.S. laws: and [REDACTED] Paul Hastings 22/F, Bank of China Tower 1 Garden Road Central Hong Kong

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As to PRC law:

Commerce & Finance Law Offices 12-14th Floor, China World Office 2 No. 1 Jianguomenwai Avenue Beijing PRC

Auditors and Reporting Accountants KPMG Certified Public Accountants 8th Floor Prince’s Building 10 Chater Road Central Hong Kong

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

[REDACTED]

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Registered Office Room 301, No. 23 Lane 908 Ziping Road, Zhoupu Town Pudong New Area Shanghai, PRC

Headquarters and Principal Place of Building 6, Lane 500 Business in the PRC Furonghua Road Pudong New Area Shanghai, PRC

Principal Place of Business Room 1901, 19/F, Lee Garden One in Hong Kong 33 Hysan Avenue Causeway Bay Hong Kong

Company Website www.newmed.cn (Information contained on this website does not form part of this document)

Joint Company Secretaries Xiaoxu JIANG (蔣小旭) Flat 3C Pine Mansion Taikoo Shing Hong Kong

Ming King CHIU (趙明璟) FCG FCS(PE) Room 1901, 19/F, Lee Garden One 33 Hysan Avenue Causeway Bay Hong Kong

Authorized Representatives Qifeng YU (虞奇峰) No. 58 Lane 959 Xiukang Road, Pudong New Area Shanghai, PRC

Ming King CHIU (趙明璟) Room 1901, 19/F, Lee Garden One 33 Hysan Avenue Causeway Bay Hong Kong

Audit Committee Fengmao HUA (華風茂)(Chairman) Jiangnan CAI (蔡江南) Yufeng ZHENG (鄭玉峰)

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Remuneration Committee Jiangnan CAI (蔡江南)(Chairman) Fengmao HUA (華風茂) Tao QIN (秦濤)

Nomination Committee Qifeng YU (虞奇峰)(Chairman) Yufeng ZHENG (鄭玉峰) Jiangnan CAI (蔡江南)

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

[REDACTED]

Principal Banks China Construction Bank, Shanghai Zhangjiang Branch No. 220, Keyuan Road Pudong New Area Shanghai, PRC

China Merchants Bank, Shanghai Zhangjiang Branch Building 2, German Center No. 88, Keyuan Road Pudong New Area Shanghai, PRC

Bank of China, Shanghai Nanhui Branch No. 1727, Kangshen Road Zhoupu Town Pudong New Area Shanghai, PRC

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Certain information and statistics set out in this section have been extracted from various official government publications, market data providers and an Independent Third Party source, Frost & Sullivan. The report (the “Frost & Sullivan Report”) prepared by Frost & Sullivan in July 2021 and cited in this document was commissioned by us. We believe that the sources of this information are appropriate sources for such information and have taken reasonable care in extracting and reproducing such information. We have no reason to believe that such information is false or misleading or that any fact has been omitted that would render such information false or misleading. However, the information has not been independently verified by our Company, the [REDACTED], [REDACTED], [REDACTED], [REDACTED], [REDACTED], any of their respective directors, employees, agents or advisers or any other person or party involved in the [REDACTED] (except for Frost & Sullivan), and no representation is given as to its accuracy. Certain information and statistics contained herein may not be consistent with other information and statistics compiled within or outside China. As such, investors are cautioned not to place any undue reliance on the information, including statistics and estimates, set forth in this section or similar information included elsewhere in this document. For a discussion of the risks relating to our industry, please refer to the section headed “Risk Factors” in this document.

OVERVIEW OF VALVULAR HEART DISEASES MARKET

Structural heart disease refers to the pathophysiological changes of the heart caused by anatomical abnormalities changes in the heart structure, including congenital heart disease, valvular disease and others. Valvular heart disease is characterized by damage to or defects in one or more of the four heart valves, namely, aortic valve, mitral valve, tricuspid valve, and pulmonary valve. For each of these valves, the aortic valve governs blood flow between the heart and the aorta, and thereby the blood vessels to the rest of the body; the mitral and tricuspid valves control the flow of blood between the atria and the ventricles; and the pulmonary valve controls the flow of blood from the heart to the lungs. Normal and functioning valves ensure proper blood flow, but valvular heart diseases cause the valves to become too narrow and hardened (stenosis) to open fully, or unable to close completely (regurgitation). The following diagram shows different types of valvular heart diseases.

Major Diseases 1 • Mitral Stenosis Mitral Valve • Mitral Regurgitation 2 2 • Aortic Stenosis Aortic Valve • Aortic Regurgitation Valvular Heart Disease Type 3 1 • Tricuspid Stenosis Tricuspid Valve 4 • Tricuspid Regurgitation

4 • Pulmonic Stenosis Pulmonary Valve • Pulmonic Regurgitation 3

Source: Literature review, Frost & Sullivan Report

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Treatment of Valvular Heart Disease

According to Frost & Sullivan, in 2020, over 20 million patients suffered from valvular heart diseases in China. Surgical thoracotomy has long been the main treatment for valvular heart disease. Recently, interventional cardiovascular therapy, such as transcatheter heart valve therapy, has become a promising clinical option given its less invasiveness and faster recovery features.

Three major approaches for treatment of valvular heart disease include medication, surgery and interventional therapy. Medication mainly aims to alleviate the patient’s symptoms by prescribing varied medicines in accordance with certain patients’ symptoms. Surgery mainly aim to fundamentally rectify the structural defects of the heart valves.

Currently, interventional therapy is advancing rapidly and is considered as a safe and minimal invasive treatment suitable for elderly patients with high surgical risks, poor health and other complications. With technology development, indications for interventional therapy are broadening. Unlike conventional surgeries which usually cause large surgical incision in order to treat diseased vessels, resulting in higher risks of operative infection and complications, slower recovery rate and larger dose of anesthesia, interventional therapy provides less invasive treatment with fewer post-operative complication, faster recovery period and shorter hospital stay.

Transcatheter Balloon-Expandable Valves and Self-Expanding Valves

Transcatheter heart valves can be broadly classified into balloon-expandable and self-expanding devices. Each device type has different expansion modes, stent frames, and leaflet characteristics, which could translate into differences in complication rates and long-term clinical performance.

Balloon-expandable valves are made of bioprosthetic tissue valve leaflets mounted on a cobalt-chromium or stainless-steel stent. Prior to delivery, aortic balloon valvuloplasty may need to be performed. The balloon of the delivery catheter with the valve crimped on is then rapidly inflated and deflated, expanding and releasing the valve. The newly functioning valve is passively secured to the underlying native leaflets and to the aortic annulus as a result of this delivery. Balloon-expandable valves have the following features: (i) steerable flex catheter enabling angle adjustment of the valve-containing catheter to make the valve better fit the complex anatomy of the implant position; and (ii) relatively short stent frame height supporting the balloon expansion technique.

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Self-expanding valves are mainly made of bioprosthetic tissue sutured into a wire frame of nitinol, a nickel-titanium alloy that exhibits what is known as a martensitic transformation, which allows it to undergo a reversible, solid state transformation. When the self-expanding valve is deployed in the warmer temperature of the body, it self-expands and regains its original configuration that fits onto the native anatomy at the target site in the heart. Self-expanding valves have the following features: (i) newer-generation self-expanding valves achieving accurate valve positioning through their retrievability feature, which enables valve repositioning; and (ii) relatively long stent frame height providing more contact points with the native valvular structure during valve deployment.

Competitive Landscape for Interventional Therapy Market for Valvular Heart Disease in China

Recently, interventional therapy has become a promising clinical option for treatment of valvular heart diseases given its feature of less invasiveness and faster recovery. In particular, driven by China’s favorable policy encouraging innovative medical devices, a growing number of medical device companies have joined the competition of research and development of transcatheter heart valve repair and replacement products in China. The table below illustrates the major domestic participants with approved or clinical-stage products in the valvular heart disease treatment market in China.

TMV TTV TAVR TPVR TMVr TMVR TTVr TTVR

NewMed Medical ƾƾƾ Venus Medtech ƾ ƾ Microport CardioFlow ƾ Peijia Medical ƾ Jiecheng Medical ƾ Hanyu Medical ƾ Valgen Medtech ƾ MitrAssist

Jenscare Scientific ƾ HuiHe Healthcare

Med-Zenith ƾ Balance Medical

KingstronBio ƾ Lepu Scientech

Silara Medtech ƾ Shenqi Medical KOKA Lifesciences

ƾ Received Special Review Qualification NMPA Approval Clinical Stage Preclinical

Source: Public Information, Frost & Sullivan Report

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Current State and Unmet Needs of Interventional Therapy in China

The penetration rates of existing therapies are relatively low in China, notwithstanding a large number of patients are eligible for transcatheter heart valve therapy, representing promising market potential of interventional therapy. The unmet clinical needs mainly include the following aspects:

• Insufficient Technological Readiness for Complicated Clinical Scenarios. A large number of patients suffering from valvular heart diseases in China are faced with varied causes of diseases, which not only brings huge potential market opportunity, but also poses a higher challenge to the existing therapy technology.

• Limited Application and Therapy Options in Certain Patient Groups. Transcatheter heart valve therapy options are limited for certain patient groups, such as patients with pure native aortic regurgitation.

• Inadequate Medical Expertise and Resources for Transcatheter Heart Valve Therapy. There is a shortage of qualified doctors in China for transcatheter heart valve therapy. Furthermore, transcatheter heart valve procedures have higher requirements for hospital qualifications and facility equipment.

OVERVIEW OF MITRAL VALVE DISEASES AND ITS TREATMENT MARKET

Mitral Regurgitation

Mitral regurgitation refers to a backflow of blood caused by failure of the mitral valve to close tightly. Based on the course of disease, mitral regurgitation can be divided into acute or chronic mitral regurgitation. Given its etiology, mitral regurgitation can be classified into primary or secondary mitral regurgitation. Mitral regurgitation occurs mostly in elderly people over 65 years old. Patients with mild mitral regurgitation may not display any symptoms. Moderate to severe mitral regurgitation can cause increased left atrial blood flow and blood pressure, which may cause pulmonary hypertension, pulmonary edema, atrial fibrillation, heart failure, and even death. The degree of mitral regurgitation is often determined by ultrasound exam, where the amount of regurgitant jet within the left atrium is directly proportional to the severity of valve regurgitation.

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The prevalence of moderate to severe mitral regurgitation in China had reached 10.8 million in 2020 from 9.8 million in 2016, with a CAGR of 2.5% from 2016 to 2020. This number is estimated to reach 12.1 million in 2025 and 13.2 million in 2030, with a CAGR of 2.3% from 2020 to 2025 and 1.8% from 2025 to 2030. The chart below shows the historical and forecasted China prevalence of moderate to severe mitral regurgitation:

China Prevalence of Moderate to Severe Mitral Regurgitation, 2016-2030E

Period CAGR 2016-2020 2.5% 2020-2025E 2.3% 2025E-2030E 1.8%

Million 13.0 13.2 12.5 12.8 11.9 12.1 12.3 11.4 11.7 10.8 11.1 10.3 10.6 9.8 10.0

20162017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E

Source: Literature Review, Frost & Sullivan Report

Mitral Regurgitation Treatments

The surgical treatment of mitral regurgitation includes traditional thoracotomy (open- heart surgery) and interventional treatment, which can be further divided into mitral valve repair and mitral valve replacement.

MR Treatment

MR Interventional MR Surgical Treatment Treatment

Transcatheter Mitral Valve Transcatheter Mitral Valve Surgical MR Repair Surgical MR Replacement Repair (TMVr) Replacement (TMVR)

Source: Literature Review, Frost & Sullivan Report

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Comparison Between Transapical Access and Transfemoral Access

The main access pathways for transcatheter mitral valve (“TMV”) treatment include transapical and transfemoral pathways. both of which can apply to transcatheter mitral valve replacement (“TMVR”) and transcatheter mitral valve repair (“TMVr”). A comparison between the two pathways is shown in the table below:

Transapical Access Transfemoral Access

• The short distance between device entry point and the mitral valve makes the delivery system easy to be coaxial with the • Less invasive, less traumatic, and better tolerated by patients; native valve. The position and angle of the device can be suitable for patients with poor cardiac function, many directly controlled, with more direct mechanical transmission complications, and who have undergone surgical operations. Feature Feature and convenient operation. • During the operation, DSA is required for real-time image guidance; patients and doctors need to bear certain X-ray Use ultrasound for image guidance; does not require the use • radiation. of DSA, avoiding X-ray exposure of patients and doctors. • Relatively long operation time. • Shorter operation time. • Complicated surgical procedures; higher technical • Short learning curve; and the procedure is easy for doctors requirements for the surgeon and longer learning curve. to master.

Source: Literature Review, Frost & Sullivan Report

Current State and Unmet Needs of TMV Therapy in China

Due to the high heterogeneity of the disease in patients with mitral valve disease, transcatheter access is affected by the individual. With challenges like team cooperation, difficulty in valve replacement, and the current status of treatment, mitral regurgitation interventional therapy still has room for improvement in terms of treatment technology, operating device, and team cooperation, leading to ample market opportunities in the future. The unmet clinical needs mainly include: (i) single device insufficient for complicated case as mitral regurgitation caused by different etiology requires separate treatment; (ii) personalized evaluation and treatment needed in the case where the patient’s condition (e.g. vascular stenosis) requires an alternative approach; (iii) high level of teamwork and experience required of qualified doctors in China; and (iv) limited option of devices in China as there is only one marketed device suitable for TMVr.

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TMV Procedure Volume and Penetration Rate in China

The TMV procedure volume in China is estimated to increase from 300 in 2021 to 10,900 in 2025 with a CAGR of 157.1%. The amount of TMV procedures will continue to rise and is estimated to reach 45,900 in 2030 with a CAGR of 33.2% from 2025 to 2030. The penetration rate of TMV procedures in China is expected to increase from 0.0% in 2021 to 0.8% in 2025 and will continue to rise and is estimated to reach 2.9% in 2030. The chart below shows the procedure volume and penetration rate of TMV procedures in China:

TMV Procedure Volume and Penetration Rate in China, 2016-2030E

2.87%

2.49% Period CAGR 2.19% 45.9 2021E-2025E 157.1% 2025E-2030E 33.2% 39.8 1.71%

32.9 Thousand 1.19% 25.6 0.78% 17.9 0.41% 0.16% 10.9 0.00% 0.00% 0.00% 0.00% 0.00% 0.02% 0.06% 5.7 2.3 0.0 0.0 0.0 0.0 0.0 0.3 0.8 2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E

TMV Procedure Volume in China TMV procedure volume as a % of TMV eligible patients in China

Source: Literature Review, Expert Interview, Frost & Sullivan Report

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TMV Intervention Market in China

The TMV intervention market in China is expected to increase from RMB52.5 million in 2021 to RMB1,861.2 million in 2025 with a CAGR of 144.0% from 2021 to 2025, and the TMV intervention market is expected to reach RMB7,578.8 million in 2030 with a CAGR of 32.4% from 2025 to 2030. The chart below shows the historical and forecasted China market size of TMV interventions:

China Market Size of TMV Intervention, 2016-2030E

Period CAGR

2021E-2025E 144.0% 2025E-2030E 32.4% 7,578.8

6,597.5

Million RMB 5,460.8

4,255.3

3,018.2

1,861.2

977.8 421.4 0.0 0.0 0.0 0.0 0.0 52.5 157.5

2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E

Source: Literature Review, Expert Interview, Frost & Sullivan Report

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TMV Intervention Market Competitive Landscape in China

As of the Latest Practicable Date, there was only one approved TMVr product in China, namely Abbott’s MitraClip®, and nine TMV devices in clinical trials, including three for replacement and six for repair, according to Frost & Sullivan. The table below summarizes the current competitive landscape of China clinical-staged TMV products as of the Latest Practicable Date:

Intended Use Company Product Technique Access Route Clinical Phase

NewMed Medical Mi-thos® TMVR Transapical FIM

® Replacement MitrAssist MitraFix TMVR Transapical FIM TMVR Balance Medical RenatoTM Transapical FIM (valve-in-valve) Confirmatory Hanyu Medical ValveClamp Edge-to-edge repair Transapical Clinical Trial Confirmatory MitralStitch® Mainly chordal implantation Transapical Clinical Trial Valgen Medtech DragonFlyTM Edge-to-edge repair Transfemoral FIM Repair NewMed Medical Valveclip-MTM Edge-to-edge repair Transfemoral FIM

Shenqi Medical QilinTM System Edge-to-edge repair Transfemoral FIM

KOKA Lifesciences LIFECLIP® Edge-to-edge repair Transapical FIM

Source: Public Information, Frost & Sullivan Report

Growth Drivers and Future Trends of China TMV Therapy Market

The growth drivers of China mitral regurgitation interventional therapy market mainly comprise:

• Increasing TMV Procedure Demand. Currently, mitral regurgitation is the most common mitral valve disease in China. 50% of mitral regurgitation patients are not eligible for traditional surgery due to age, impaired heart function and numerous complications.

• Continuous Promotion of TMV Therapy. As transcatheter heart valve therapy becomes a hot topic, relevant conferences promote discussion and communication of cutting-edge advancements in the field.

• Favorable Policy Environment. Innovative medical device has made an enormous contribution to public health. Guidelines of Plan for Development of the Pharmaceutical Industry (《醫藥工業發展規劃指南》) was issued to encourage multi-linked innovative medical device R&D and commercialization. Moreover, policies such as “Special Review Qualification for Innovative Medical Devices” (《創新醫療器械特別審查程序》) will sustain the further development of the China TMV market as the review and approval process will be expedited for qualified products.

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The future trends of China mitral regurgitation interventional therapy market are as follows:

• More and More Innovative TMV Products Receiving Approval in China. Currently in the China TMV market, seven domestic companies have products that are in the clinical trial phase, covering both TMVr and TMVR products. In the future, as more products progress to and complete clinical trials and more companies join the competitive landscape, more and more innovative TMVr and TMVR products will be approved and marketed in China.

• Gradually Fulfilling Unmet Clinical Needs due to Enhanced TMV Penetration Rate. In 2019, only 4,200 surgeries for mitral regurgitation were conducted in China and this number lags far behind the actual number of eligible patients. Invasiveness and high risk of traditional surgery are the main reasons for low surgery penetration rate and nearly 50% patients with severe mitral regurgitation patients are at high risk for surgery. In the future, due to the advantages of TMV such as less invasiveness, the procedure volume is expected to experience rapid growth and unmet clinical needs among severe mitral regurgitation patients is expected to be fulfilled gradually due to enhanced TMV penetration rate.

• Great Market Potential for Domestic TMV Brands. At present, there is only one TMVr product approved in China. With the clinical studies for domestic TMV devices ongoing and preliminary outcomes promising, more domestic products are likely to be approved in the near future.

OVERVIEW OF AORTIC VALVE DISEASES AND ITS TREATMENT MARKET

Aortic Stenosis

Aortic stenosis is the narrowing of the aortic valve, obstructing blood flow from the left ventricle to the ascending aorta during systole, resulting in decrease in cardiac output. A patient may remain asymptomatic for a long period of time when aortic stenosis is mild to moderate, and then suffer from dyspnea (typically exertional), angina pectoris, dizziness and syncope.

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Prevalence of Aortic Stenosis in China

The prevalence of aortic stenosis in China had reached 4.4 million in 2020, with a CAGR of 2.0% from 2016 to 2020. The total number of patients is estimated to reach 4.9 million in 2025 and 5.2 million in 2030 with a CAGR of 2.2% from 2020 to 2025 and a CAGR of 1.4% from 2025 to 2030. The chart below shows the prevalence of aortic stenosis in China:

China Prevalence of Aortic Stenosis, 2016-2030E

Period CAGR

2016-2020 2.0% 2020-2025E 2.2% 2025E-2030E 1.4%

5.2 5.2 Million 5.0 5.0 4.8 4.9 4.9 4.6 4.7 4.4 4.5 4.2 4.3 4.0 4.1

2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E

Note: Aortic stenosis includes congenital aortic stenosis, rheumatic aortic stenosis and degenerative aortic stenosis, etc.

Source: Literature Review, Frost & Sullivan Report

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Aortic Regurgitation

Aortic regurgitation is a valvular heart disease characterized by incomplete closure of the aortic valve, leading to the reflux of blood from the aorta into the left ventricle during diastole. There are two types of aortic regurgitation:(i) acute aortic regurgitation, which is caused by infectious endocarditis, chest trauma, iatrogenic complications or aortic dissection; and (ii) chronic aortic regurgitation, which is caused by primary valvular defect or aortic dilation. Patients with acute regurgitation may suffer from sudden and severe dyspnea, pulmonary edema, or rapid cardiac decompensation, while patients with chronic aortic regurgitation may be asymptomatic for decades and then suffer from palpitations, high pulse pressure and left heart failure.

Prevalence of Aortic Regurgitation in China

The prevalence of China aortic regurgitation has reached 3.9 million in 2020, with a CAGR of 1.3% from 2016 to 2020. The number is estimated to reach 4.4 million in 2025 and 4.6 million in 2030, with a CAGR of 2.4% from 2020 to 2025 and a CAGR of 1.0% from 2025 to 2030. The chart below shows the prevalence of aortic regurgitation in China:

China Prevalence of Aortic Regurgitation, 2016-2030E

Period CAGR

2016-2020 1.3% 2020-2025E 2.4% 2025E-2030E 1.0%

Million 4.6 4.6 4.6 4.6 4.3 4.4 4.4 4.1 4.2 3.9 3.9 4.0 3.8 3.7 3.7

2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E

Source: Literature Review, Frost & Sullivan Report

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Treatment for Aortic Valve Diseases

There are mainly two treatment approaches, surgical aortic valve replacement (“SAVR”) and transcatheter aortic valve replacement (“TAVR”). SAVR refers to an open-heart surgery which needs cardiac arrest and cardiopulmonary bypass. Later introduced as a new revolutionary procedure, TAVR is a globally advanced cardiovascular interventional techniques by implantation of a prosthetic valve through a catheter path to treat aortic stenosis or aortic regurgitation. TAVR has the advantages of minimal invasiveness and shorter postoperative recovery period, and it’s suitable for patients with severe conditions who cannot tolerate SAVR. Nowadays, TAVR has become an alternative approach for those patients who are elder and at high surgical risk.

Comparison Between Balloon-Expandable Valves and Self-Expanding Valves in TAVR

TAVR can be broadly classified into balloon-expandable and self-expanding devices. The techniques common to both balloon-expandable valves and self-expanding valves include the stent crimping technology and the stent fixation technology. Balloon-expandable valves’ unique techniques include the large balloon manufacturing technology and the deflectable flex catheter manufacturing technology, while self-expanding valves’ unique technique is the shape-memory alloy processing technology.

According to the clinical outcomes from an international collaboration CENTER-trial published in 2019, the potential advantages of using balloon-expandable valves include lower incidence of stroke and lower rate of permanent pacemaker implantation. The chart below sets forth the clinical outcomes of this study:

Comparison of balloon-expandable vs. self-expanding valves in the propensity matched population

BEV (n = 4096) SEV (n = 4096) P value *

During hospital admission

Mortality 150 (4.3%) 206 (5.7%) 0.009

Stroke 56 (1.5%) 89 (2.3%) 0.008

Myocardial infarction 24 (0.6%) 27 (0.7%) 0.72

Permanent pacemaker implantation 270 (7.8%) 753 (20.3%) <0.001

At 30 days

Mortality 184 (5.3%) 237 (6.2%) 0.10

Stroke 65 (1.9%) 98 (2.6%) 0.03

*Note: For each patient with a BE-valve, a corresponding comparison patient with SE-valve was selected (1:1 ratio) on the basis of the nearest propensity score using the one-to-one nearest neighbor method (with a caliper of 0.2 of the standard deviation of the propensity score on the logit scale) and no replacement.

**Note: A statistically significant test result (P Յ 0.05) means that there is significant difference between the results of BEV and SEV.

Source: Literature Review, Frost & Sullivan Report

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According to the clinical outcomes of a comparison from the FRANCE-TAVR Registry published in 2020, the potential clinical advantages of using of balloon-expandable valves include lower risk of paravalvular regurgitation, lower rate of permanent pacemaker implantation and lower 2-year follow-up mortality. The chart below sets forth the clinical outcomes of this study:

Comparison of balloon-expandable vs. self-expanding valves in the propensity matched population*

BEV (n = 3910) SEV (n = 3910) P value **

In-hospital

≥ Moderate PVR*** 326 (8.3) 606 (15.5) <0.0001

Stroke 70 (1.8) 96 (2.5) 0.058

Permanent pacemaker implantation 431 (11.0) 871 (22.3) <0.0001

Follow-up 2-year

Follow-up all-cause mortality 801 (26.6%) 899 (29.8%) 0.002

Follow-up cardiovascular mortality 612 (20.9%) 675 (23.3%) 0.001

*Note: THV=transcatheter heart valve. Patients treated with SE-THV were matched 1:1 to patients treated with BE-THV according to date of procedure and propensity score using the greedy nearest neighbor matching algorithm according to a caliper width of 0.2 SD of logit of propensity score and using the procedural date, which should be within 3 months of each other.

**Note: A statistically significant test result (P Յ 0.05) means that there is significant difference between the results of BEV and SEV.

***PVR: paravalvular regurgitation

Source: Literature Review, Frost & Sullivan Report

In 2020, Edwards Lifesciences (as representative of balloon-expandable valve company) and Medtronic (as representative of self-expanding valve company) took almost 90% of the total global market shares in terms of sales revenue. The aggregate sales revenue of balloon-expandable TAVR products from Edwards Lifesciences has reached over USD 15 billion, almost twice as much as that of self-expanding TAVR products from Medtronic.

Valve-in-Valve Transcatheter Aortic Valve Replacement

Traditionally, the golden standard for the management of failed biological prosthesis has been redo SAVR. More recently, the less invasive approach with valve-in-valve TAVR has emerged as an option for the treatment of a previously failed aortic biological prosthesis.

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According to Frost & Sullivan, the clinical outcomes of a recent study suggest that valve-in-valve TAVR’s potential advantages over redo-SAVR include shorter length of hospital stay and lower rate of permanent pacemaker implantation. The chart below sets forth the clinical outcomes:

Unmatched Clinical Outcomes of Valve-in-Valve TAVR and redo-SAVR

Valve-in-Valve TAVR Redo-SAVR Indicators P value* (n = 214) (n = 344)

Early Outcomes

Length of Stay (days) 5.00 (3.00 to 12.00) 10.00 (7.00 to 16.00) <0.001

Permanent Pacemaker Implantation 9 (4.2%) 38 (11.0%) 0.008

All-cause Readmission 30 days 18 (8.4%) 35 (10.2%) 0.59

Late Outcomes at 5 yrs

Late Survival 70.3% (62.3% to 79.4%) 75.6% (70.6% to 80.8%) 0.78

Cumulative Incidence of Late Readmission 74.1% (65.4% to 82.7%) 53.1% (47.2% to 58.9%) <0.001

*Note: A statistically significant test result (PՅ0.05) means that there is significant difference between the results of Valve-in-Valve TAVR and redo-SAVR

**ARD = absolute risk difference; CI = confidence interval Source: Literature Review, Frost & Sullivan Report

In addition, a systematic review and meta-analysis was conducted to compare the outcomes of balloon-expandable valves and self-expanding valves in transcatheter valve-in- valve for aortic bioprosthesis dysfunction, and the clinical outcomes suggest balloon- expandable valve’s potential advantage over self-expanding valve include lower rate of major vascular complication and lower rates of permanent pacemaker implantation. The chart below sets forth the clinical outcomes:

Comparison of balloon-expandable vs. self-expanding valves in the propensity matched population

Indicators BEV (n = 2,269) SEV (n = 1,671) P value*

30-day Clinical Outcomes

Any-cause death 19/727** (3.6%) 33/788 (5.5%) 0.117

Stroke 14/497 (3.3%) 11/492 (3.5%) 0.907

Major vascular complication 27/662 (4.7%) 48/639 (8.7%) 0.012

Permanent pacemaker implantation 25/818 (3.8%) 86/788 (12.0%) <0.001

1-year Clinical Outcomes

Any-cause death 90/649 (15.6%) 60/502 (13.3%) 0.505

Stroke 16/392 (4.3%) 7/245 (4.6%) 0.937

*Note: A statistically significant test result (PՅ0.05) means that there is significant difference between the results of Valve-in-Valve TAVR SEV and BEV **Note: The indicators disclosed by the 27 studies are different, and hence the total number stated here for each indicator is different. Source: Literature Review, Frost & Sullivan Report

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Valve-in-valve TAVR is recommended in patients with high or prohibitive surgical risk. The accumulative number of Valve-in-valve TAVR procedure is more than 5,500 cases globally. Currently, there have been three products from Medtronic and Edwards Lifesciences approved by FDA and CE for Valve-in-valve TAVR. With more products being approved, higher class of recommendation and larger patient pool, there will be more clinical application cases.

TAVR Procedure Volume and Penetration Rate in China

The TAVR procedure volume in China has increased from 200 in 2017 to 3,600 in 2020 at a CAGR of 173.9%, and is expected to increase from 3,600 in 2020 to 42,000 in 2025 and 109,400 in 2030 at a CAGR of 63.3% from 2020 to 2025 and a CAGR of 21.1% from 2025 to 2030. The penetration rate of TAVR procedures in China has increased from 0.0% in 2017 to 0.5% in 2020, and is expected to further increase to 4.5% in 2025 and 10.2% in 2030. The chart below shows the procedure volume and penetration rate of TAVR procedures in China:

TAVR Procedure Volume and Penetration Rate in China, 2017-2030E

Period CAGR 10.18% 2017-2020 173.9% 2020-2025E 63.3% 8.80% 109.4 2025E-2030E 21.1% 7.60% 92.8 6.45% 78.1 Thousand 5.41% 4.46% 64.9 3.58% 52.2 2.68% 42.0 1.80% 1.07% 32.5 0.32% 0.46% 23.6 0.02% 0.13% 15.2 8.8 3.6 0.2 1.0 2.4

2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E TAVR procedures in China TAVR procedures as % of TAVR eligible patients in China

Note: Procedure only includes surgeries with commercial TAVR products

Source: Literature Review, Expert Interview, Frost & Sullivan Report

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TAVR Product Market in China

The TAVR market in China reached RMB555.8 million in 2020 with a CAGR of 138.0% from 2017 to 2020, and the TAVR market is expected to increase to RMB5,055.7 million in 2025 and RMB11,490.5 million in 2030 with a CAGR of 55.5% from 2020 to 2025 and 17.8% from 2025 to 2030. The chart below shows the historical and forecasted TAVR Product market in China:

China Market Size of TAVR Products, 2016-2030E

Period CAGR

2017-2020 138.0% 2020-2025E 55.5% 11,490.5 2025E-2030E 17.8% 9,954.8

8,579.6 Million RMB 7,324.0

6,069.3 5,055.7 4,060.8 3,059.3 2,148.9 1,183.9 392.0 555.8 0.0 41.2 196.6

2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E

Source: Literature Review, Expert Interview, Frost & Sullivan Report

TAVR Market Competitive Landscape in China

As of the Latest Practicable Date, there had been seven products from one international company and four domestic players that received NMPA approval in China, among which there was no domestic balloon-expandable valve product but only the SAPIEN 3 from Edwards Lifesciences. The competitive landscape of major marketed TAVR products in China is shown in the table below:

NMPA Expanding Pericardium Access Approved NMPA Price Company Product Retrievability Certificate Approval Mechanism Material Route Indication Expiration (RMB/valve)

TaurusOne® 2021 SE BP TF X AS 2026 NA Peijia Medical TaurusElite® 2021 SE BP TF √ AS 2026 NA

VenusA-Valve® 2017 SE PP TF X AS 2022 ~248,000 Venus Medtech VenusA-Plus® 2020 SE PP TF √ AS 2022 NA

Microport CardioFlow VitaFlow® 2019 SE BP TF X AS 2024 ~196,000

Jiecheng Medical J-Valve® 2017 SE PP TA X AS/AR 2022 ~260,000

Edwards Lifesciences SAPIEN 3 2020 BE BP TF/TA X AS 2025 ~298,000

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Note: VenusA-Valve and VenusA-Plus share the same NMPA registration certificate. Therefore, the NMPA certificate expiration dates are the same.

SE=self-expanding; BE=balloon-expandable; BP=bovine pericardium; PP=porcine pericardium; TF=transfemoral; TA=transapical; AS=aortic stenosis; AR=aortic regurgitation

Source: NMPA, Literature review, Public Information, Frost & Sullivan Report

The China market for TAVR products is on the rise with products from multiple domestic companies already in the phase of confirmatory trial. The table below summarizes the current competitive landscape of China clinical-staged TAVR products as of the Latest Practicable Date:

Expanding Pericardium Company Product Clinical Phase Indication Access Route Mechanism Material

NewMed Medical Prizvalve® Confirmatory Clinical Trial AS TF BE BP

Microport CardioFlow VitaFlow® II Confirmatory Clinical Trial AS TF SE BP Severe AR/ Jenscare Scientific Ken-Valve® Confirmatory Clinical Trial TA SE BP combined with AS Silara Medtech Silara®-Valve Confirmatory Clinical Trial AS TF SE BP

RenatusTM FIM AS TF BE BP Balance Medical AS RenatoTM FIM TF BE BP (valve-in-valve) KingstronBio ProStyle FIM AS TF SE BP

Lepu Scientech SinoCrownTM FIM AS TF SE BP

Medtronic EvolutTM Pro FIM AS TF SE PP

Source: Public Information, Frost & Sullivan Report

Growth Drivers and Future Trends of China TAVR Market

The growth drivers of China TAVR market mainly comprise:

• Unmet Clinical Needs. The prevalence of aortic valve disease increases with the age. Given China’s large population base, the number of high-risk aortic stenosis patients in China is huge. For elderly patients with comorbidities, traditional SAVR has a higher risk, and postoperative recovery is quite slow, so it is difficult to get effective treatment for these patients. The emergence of TAVR, provides a new choice for such patients, as an effective solution, the application of TAVR has been performed with an increasing number since the product launch of transcatheter aortic valve.

• Increase in Qualified TAVR Practitioners. As a relatively new and highly refined operation, TAVR has high requirements for surgical equipment, medical expertise and technical operation. The consensus of Chinese experts on TAVR (《經導管主動脈瓣置換術中國專家共識》) has been released to promote the development of TAVR in China, which provides a reference for technical training and talent

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cultivation. So far, more than 175 hospitals in China have carried out more than 7,000 TAVR operations, and the growth rate is accelerating, which will effectively promote the growth of TAVR market.

• Application Expansion to Intermediate and Low Risk Patients. Advantages of TAVR include minimally invasive, fast post-operative recovery and no significant difference in early and mid-term mortality from SAVR. In 2019, FDA approved TAVR in severe aortic stenosis patients at low-risk for surgery. Although the current expert consensus in China only include patients age 70 or above with severe aortic stenosis at low surgical risk as relative TAVR indication, it is likely that future treatment guideline in China will be more in line with global standard. As the application of TAVR expands to include intermediate and low risk groups in China, the number of addressable patients for TAVR will increase, which brings opportunities for TAVR manufacturers and fuels the growth of China TAVR market.

The future trends of China TAVR market are as follows:

• More Products Tailored to Chinese Patients. Compared with patients in the U.S., there are more patients in China with bicuspid aortic valve and carotid artery stenosis, which not only creates the potential TAVR market opportunity, but also poses a higher challenge to the existing TAVR technology. In the future, the design and R&D of TAVR in China will focus on solving these practical clinical difficulties with more products tailored to the Chinese patient population.

• Technology Upgrade to Reduce TAVR Complications. Identifying and treating complications is a critical step in the development of TAVR. Common complications can lead to increased postoperative mortality and readmission rates. Along with the development of new cerebral embolic protection devices and the design of smaller sheath and anti-valve leakage function, the complications of TAVR will be effectively reduced, and the safety of TAVR procedures will be further improved.

• Increasing Investment in Research and Development. Advancement in technology is expected to be a key element in future competition. Companies with an established research and development platform are expected to achieve breakthrough in a cost-effective manner. Meanwhile, first-movers will also invest in candidate pipeline and robust commercialization network to maintain their advantages.

• Platform Strategy. Successful medical device companies generally have a platform strategy supported by a sustainable cycle of commercialized products that generate ongoing cash flow to support the research and development of innovative product candidates and product iterations.

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OVERVIEW OF TRICUSPID VALVE DISEASES AND ITS TREATMENT MARKET

Tricuspid Regurgitation

Tricuspid regurgitation is incomplete closure of the tricuspid valve causing blood flow from the right ventricle to the right atrium during systole. The most common cause is dilation of the right ventricle. Tricuspid regurgitation usually doesn’t cause visible signs or symptoms until the condition is severe, but some patients experience neck pulsations due to elevated jugular pressures. Symptoms of severe TR include declining exercise capacity, abdominal bloating, shortness of breath, peripheral edema, ascites, hepatic congestion, abnormal heart rhythms (atrial fibrillation or atrial flutter), and can suddenly induce severe heart failure.

Tricuspid regurgitation is mainly classified as primary or secondary. Primary tricuspid regurgitation accounts for approximately 10% to 20% of all tricuspid regurgitation, and deformation of the tricuspid leaflets and/or tendons due to rheumatic fever is the most common cause of primary tricuspid regurgitation. Secondary tricuspid regurgitation, also known as functional TR, accounts for approximately 80% to 90% of all tricuspid regurgitation.

The prevalence of tricuspid regurgitation in China had reached 9.2 million in 2020, with a CAGR of 1.7% from 2016 to 2020. The CAGR will maintain at a steady level and the number of patients affected by tricuspid regurgitation is estimated to reach 9.9 million in 2025 and 10.6 million in 2030 with a CAGR of 1.5% from 2020 to 2025 and 1.3% from 2025 to 2030. The chart below shows the historical and forecasted China prevalence of tricuspid regurgitation:

Prevalence of Tricuspid Regurgitation in China, 2016-3030E

Period CAGR

2016-2020 1.7% 2020-2025E 1.5% 2025E-2030E 1.3%

Million 10.4 10.6 10.1 10.2 9.8 9.9 10.0 9.5 9.6 9.2 9.3 8.9 9.1 8.6 8.8

2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E

Source: Literature Review, Frost & Sullivan Report

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Tricuspid Valve Disease Treatment

Treatment for tricuspid valve diseases includes medication, surgery, and interventional therapy. Transcatheter tricuspid valve intervention (“TTVI”) refers to globally advanced cardiovascular interventional techniques by implantation of a prosthetic valve through a transcatheter path to treat tricuspid valve diseases. TTVI includes transcatheter tricuspid valve replacement (“TTVR”) and transcatheter tricuspid valve repair (“TTVr”). It has emerged in recent years as an alternative for the treatment of moderate to severe tricuspid regurgitation and shows a lower in-hospital mortality rate and postoperative complications than surgeries. There are many reasons for patients not being able to receive traditional surgical procedures, such as patients having a history of heart diseases or aging and medical condition concerns. Due to the high mortality rate of surgical approaches and postoperative complications, only a small proportion of patients are willing to accept surgeries.

Current State and Unmet Needs of TTV Therapy in China

The unmet clinical needs of TTV therapy mainly include: (i) increasing population of eligible patients; (ii) progressing after valve surgery as about 50% to 75% of patients who had a previous aortic or mitral valve repair surgery for functional mitral regurgitation exhibit significant tricuspid regurgitation during follow-up; and (iii) high risks associated with traditional surgery evidenced by high one-year mortality rate in patients with severe regurgitation. The five-year mortality rate after diagnosis is 47.8%.

TTV Market Competitive Landscape in China

As of the Latest Practicable Date, in China, no TTV products had come into commercialization and there were three TTV products at their clinical trial stages, including one TTVR product developed by Jenscare Scientific at the stage of confirmatory clinical trial, one TTVR product development by Beijing Balance Medical Technology Co., Ltd at the FIM stage and one TTVr product developed by Huihe Healthcare at the FIM stage.

OVERVIEW OF PULMONARY VALVE DISEASES AND ITS TREATMENT MARKET

Tetralogy of Fallot

Unlike other valvular diseases, the addressable patients for transcatheter pulmonary valve therapy mainly come from a kind of congenital disease named Tetralogy of Fallot (“ToF”). ToF is a heart defect that features the following four problems without certain conclusion of disease causes: (i) ventricular septal defect, a hole between the lower chambers of the heart; (ii) pulmonary stenosis, an obstruction from the heart to the lungs; (iii) overriding aorta, the aorta that lies over the hole in the lower chambers; and (iv) right ventricular hypertrophy, the muscle surrounding the lower right chamber becomes overly thickened. ToF results in low oxygenation of blood due to the mixing of oxygenated and deoxygenated blood in the left ventricle via the ventricular septal defect and preferential flow of the mixed blood from both ventricles through the aorta because of the obstruction to flow through the pulmonary valve.

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The prevalence of ToF in China had reached 86,500 in 2020, with a CAGR of 2.7% from 2016 to 2020. Due to the loosened child policy in China and increasing of congenital heart disease incidence rate, the prevalence is estimated to reach 97,700 patients in 2025 and 108,900 patients in 2030 with a CAGR of 2.5% from 2020 to 2025 and a CAGR of 2.2% from 2025 to 2030.

Prevalence of ToF in China, 2016-2030E

Period CAGR

2016-2020 2.7% 2020-2025E 2.5% 2025E-2030E 2.2%

Thousand 108.9 104.4 106.7 99.9 102.2 95.4 97.7 90.9 93.1 86.5 88.7 82.1 84.3 77.8 80.0

2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E

Source: Literature Review, Frost & Sullivan Report

Pulmonary Valve Disease Treatment

Main treatments for ToF comprise corrective surgeries and pulmonary valve replacement. In China, corrective surgeries are more widely adopted as more than 85% of ToF patients in China are treated with transannular patch method, a common procedure for ToF patients in developing countries. For pulmonary valve replacement, the current standard treatment is open-chest surgery, which is known as SPVR, with the limitation of large trauma, slow recovery and high risk due to the secondary open-chest operation. Another type of pulmonary valve replacement is transcatheter pulmonary valve replacement, or TPVR, with the advantage of lower risk and minimal trauma.

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THE FROST & SULLIVAN REPORT

In connection with the [REDACTED], we commissioned Frost & Sullivan, an Independent Third Party, to prepare a report on global and China’s transcatheter valve therapy and heart failure treatment markets. We have agreed to pay a total of RMB1.2 million in fees for the preparation of the Frost & Sullivan Report. Frost & Sullivan is a market research and consulting company that provides market research on a variety of industries including healthcare. In preparing the report, Frost & Sullivan collected and reviewed publicly available data such as government-derived information, annual reports and industry association statistics, as well as market data collected by conducting interviews with key industry experts and leading industry participants. Frost & Sullivan has exercised due care in collecting and reviewing the information so collected.

Except as otherwise noted, all data and forecasts in this section come from the Frost & Sullivan Report. Our Directors confirm that, to the best of their knowledge, after taking reasonable care, there has been no adverse change in market information since the date of the Frost & Sullivan Report which may qualify, contradict or impact the information disclosed in this section.

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REGULATION OVERVIEW

We are subject to a variety of PRC laws, rules and regulations affecting many aspects of our business. This section summarizes the principal PRC laws, regulations and rules that we believe are relevant to our business and operations.

Regulations Relating to Medical Devices

Major Regulatory Authorities of Medical Devices

According to the Regulations on the Supervision and Administration of Medical Devices (《醫療器械監督管理條例》) (the “Medical Device Regulations”) which was issued by the State Council in 2000 and recently amended on February 9, 2021 and came into effect on June 1, 2021, the drug regulatory department under the State Council shall be responsible for the supervision and administration of medical devices nationwide. The relevant departments under the State Council shall be responsible for the supervision and administration relating to medical devices within the scope of their respective duties. We are now principally subject to the supervision of the National Medical Products Administration (國家藥品監督管理總局) and its local counterparts. The National Medical Products Administration was established in accordance with the Institutional Reform Program of the State Council (《國務院機構改革方案》) promulgated by the National People’s Congress (the “NPC”) in March 2018, and the predecessor of the National Medical Products Administration is the China Food and Drug Administration (國家食品藥品監督管理總局) (the “CFDA”, together with the National Medical Products Administration, hereinafter collectively, the “NMPA”). The NMPA is a newly established regulatory authority responsible for registration and supervision of pharmaceutical products, cosmetics and medical devices under the supervision of the SAMR, a newly established institution for supervising and administrating the market in China.

The National Health Commission of the PRC, formerly known by the names the Ministry of Health and National Health and Family Planning Commission (hereinafter collectively, the “NHC”), is China’s primary healthcare regulatory agency. It is responsible for overseeing the operation of medical institutions, some of which also serve as clinical trial sites.

Classification of Medical Devices

The Medical Device Regulations regulate entities that engage in the R&D, production, operation, utilization, supervision and administration of medical devices in the PRC. Medical devices are classified according to their risk levels. Class I medical devices are medical devices with low risks, and the safety and effectiveness of which can be ensured through routine administration. Class II medical devices are medical devices with moderate risks, which are strictly controlled and administered to ensure their safety and effectiveness. Class III medical devices are medical devices with relatively high risks, which are strictly controlled and administered through special measures to ensure their safety and effectiveness. The evaluation of the risk levels of medical devices takes into consideration the medical devices’ objectives, structural features, methods of use and other factors. Registration certificates are required for

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Class II and Class III medical devices. The classification of specific medical devices is stipulated in the Medical Device Classification Catalog (《醫療器械分類目錄》), which was issued by the NMPA on August 31, 2017 and became executive on August 1, 2018.

The Administrative Measures for the Registration of Medical Devices (《醫療器械註冊管理辦法》) (the “Medical Devices Registration Measures”), as promulgated by the NMPA and took effect on October 1, 2014, provide that Class I medical devices are subject to record-filing, while Class II and Class III medical devices are subject to registration. Furthermore, in order to further standardize the registration and filing of medical devices and ensure the safety, effectiveness and controllable quality of medical devices, the Administrative Measures for the Registration of Medical Devices Revised Draft Amendments for Public Comments (《醫療器械註冊管理辦法(修訂草案徵求意見稿)》) promulgated by the NMPA on March 26, 2021.

Clinical Trials of Medical Devices

According to the Medical Devices Registration Measures, clinical trials are not required for the recordation of Class I medical devices, but are required for the registration of Class II and Class III medical devices. However, medical devices may be exempt from clinical trials under any of the following circumstances:

• the medical devices have clear and definite working mechanisms, finalized designs and mature manufacturing techniques, the marketed medical devices of the same category have been put into clinical application for years with no record of severe adverse event, and their general purposes remain unchanged;

• the safety and effectiveness of such medical devices can be proved through non-clinical evaluation;

• the safety and effectiveness of such medical devices can be proved through the analysis and evaluation of the data obtained from the clinical trials or clinical application of medical devices of the same category.

The catalog of medical devices exempt from clinical trials shall be established, adjusted and published by the NMPA. Pursuant to the Notice of the Newly Revised Catalog of Medical Devices Exempted from Clinical Trials (《關於公布新修訂免於進行臨床試驗醫療器械目錄的通告》) issued by the NMPA on September 28, 2018 and the Notice of New and Revised Catalog of Medical Devices Exempted from Clinical Trials (《關於公布新增和修訂的免於進行臨床試驗醫療器械目錄的通告》) promulgated by the NMPA on December 13, 2019 and the Notice of the Catalog of Medical Devices Exempted from Clinical Trials (Rivised in the second batch) (《關於發布免於進行臨床試驗醫療器械目錄(第二批修訂)的通告》) promulgated by the NMPA on January 14, 2021, medical device products that are not included in the exemption catalog shall go through clinical trials before registration.

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Clinical trials for those medical device products that are not included in the exemption catalog shall be conducted in accordance with the Norms on the Quality Management for the Clinical Trials of Medical Devices (《醫療器械臨床試驗質量管理規範》) (the “Clinical Trial Norm”), which was jointly issued by the NMPA and the NHC on March 1, 2016. The Clinical Trial Norm includes full procedures of clinical trial of medical devices, including, among others, the protocol design, conduct, monitoring, verification, inspection, data collection, recording, analysis and conclusion and reporting procedure of a clinical trial. Prior to commencement of a clinical trial, the applicant must complete the pre-clinical research of the medical device, including product design and quality test, animal testing and risk analysis, the results of which should support the clinical trial. The clinical trial must be conducted in two or more clinical trial organizations that are qualified to do such trails. Prior to commencement of a clinical trial, approval by the ethics committees of the relevant clinical trial organization should be obtained and the applicant, the clinical trial organization and the researchers must enter into agreements in writing in respect of trial design, trial quality control, allocation of responsibilities during the trial, trial-related fees borne by the applicant and the principles of responses to emergencies that may occur during the trial.

As for certain Class III medical devices which present a relatively high risk to the human subjects, clinical trials must be pre-approved by the NMPA prior to commencement. An index of such Class III medical devices (the Index of Class III Medical Devices subject to Clinical Trial Approval,《需進行臨床試驗審批的第三類醫療器械目錄》) is maintained and from time to time adjusted and published by the NMPA. Class III medical devices that are not involved in the Index shall complete recordation procedures with the medical products administration of provinces, autonomous regions and municipalities directly under the central government of the PRC prior to commencement of a clinical trial.

On January 4, 2018, the NMPA issued the Guidelines for Clinical Trial Design of Medical Devices (《醫療器械臨床試驗設計指導原則》), with effect at the same date. The guidelines provide guidance for the design of a clinical trial in terms of setting the purpose of the trial, basic type of trial design, subjects, evaluation indicators, etc. Controlled clinical trials using marketed devices that are recognized for efficacy/safety or standard treatments can be conducted with a superiority test, an equivalence test, or a non-inferiority test, depending on the purpose of the trial. The objective of the non-inferiority test is to confirm that the difference in efficacy/safety of the test device is less than the predetermined threshold of non-inferiority, meaning that the difference is within the clinically acceptable range. The non-inferiority test generally includes, among others, test design, determination of non-inferiority threshold, determination of subjects, statistical analysis.

Guidelines for Clinical Trials of Transcatheter Aortic Valve Implantation

Pursuant to the Guidelines for Clinical Trials of Transcatheter Aortic Valve Implantation (《經導管植入式人工主動脈瓣膜臨床試驗指導原則》), promulgated by the NMPA on February 25, 2019, clinical trials of Transcatheter Aortic Valve Implantation are divided into feasibility trials and confirmatory trials, and for new products for the first clinical application, feasibility trials shall be completed before confirmatory trials being carried out.

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Special Procedures for Examination and Approval of Innovative Medical Devices

In October 2017, the General Office of the CPC Central Committee and the General Office of the State Council jointly issued the Opinions on Deepening the Reform of the Evaluation and Approval Systems and Encouraging Innovation on 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》), according to which the R&D of innovative medical devices is encouraged. Innovative medical devices supported by major national science or technology projects and key national R&D plans or for which the National Clinical Medicine Research Center (國家臨床醫學研究中心) conducts clinical trials and which the Center’s administrative department accredits shall be evaluated and approved in priority.

The Special Review Qualification for Innovative Medical Devices (《創新醫療器械特別審查程序》) promulgated by the NMPA in November 2018 stipulate the special procedures to the examination and approval for innovative medical devices, according to which, medical devices which meet below requirements are applicable to special procedures:

• the applicant, through its leading technological innovation activities, has legally owned core technology invention patents in China over its products, or obtained invention patents in China or the right to use them through patent transfers in accordance with the law, and the application time for special procedures is within 5 years from the authorization announcement date of such core technology invention patent; or the patent application of core technology invention has been published by the Patent Administration Department of the State Council and a search report is issued by the Patent Search and Consultation Center of the State Intellectual Property Office, indicating that the core technology solution of the product is novel and creative;

• the applicant has completed the preliminary research of the product and has a basic finalized product, and the research process is true and under control, and the research data is complete and traceable;

• the main working principle or mechanism of the product is domestic initiative, and the function or safety of the product is fundamentally improved compared with similar products, and the relevant technology is at the international leading level, and the product has significant clinical application value.

The Center for Medical Device Evaluation of the NMPA (國家藥品監督管理局醫療器械技術審評中心) shall give priority to the innovative medical devices in their technical review upon receiving the registration application, after which the NMPA shall give priority to the product in their administrative approval.

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Registration Testing of Medical Devices

According to the Medical Devices Registration Measures, a medical device to be registered into Class II and Class III shall be subject to registration testing. Medical device testing institutions shall conduct registration testing on the relevant products according to the technical requirements for such products. Medical device testing institutions shall have the relevant qualifications for medical device testing approved by the NMPA, conduct testing within their scope of business, and pre-evaluate the technical requirements submitted by the applicants.

Utilization of Human Genetic Resources

On May 28, 2019, the State Council promulgated the Administrative Regulations on Human Genetic Resources of the PRC (《中華人民共和國人類遺傳資源管理條例》) which came into effect on July 1, 2019. In accordance with the provisions therein, the State shall support the rational utilization of human genetic resources to carry out scientific research, develop the bio-medical industry, improve diagnosis and treatment technologies, enhance the bio-safety guarantee capability of the country, and enhance the level of people’s health guarantee. The international cooperation in scientific research carried out by utilization of China’s human genetic resources shall meet several conditions stipulated in the provisions, and the two cooperative parties shall jointly submit an application, which shall be approved by the administrative department of science and technology under the State Council. Where clinical institutions, in order to obtain the marketing licenses of relevant drugs and medical devices in China, makes use of China’s human genetic resources to carry out international cooperation in clinical trials by utilization of China’s human genetic resources by the clinical institutions, not involving the exit of human genetic resource materials, approval is not needed. However, the two parties shall, before conducting clinical trials, submit the types, quantities and uses of the human genetic resources to be used to the administrative department of science and technology under the State Council for filing.

Management of Scientific Data

On March 17, 2018, the General Office of the State Council promulgated the Circular on Issuing the Measures for the Management of Scientific Data (《國務院辦公廳關於印發<科學數據管理辦法>的通知》), which came into effect on the same day. All entities and individuals shall abide by the relevant national laws and regulations as well as departmental rules in relation to collecting, producing, using and managing scientific data, and may not use scientific data to engage in any activity that endangers the national security, social public interests and others’ legitimate rights and interests. Moreover, legal entities shall establish a storage system for scientific data, and be equipped with necessary facilities for data storage, management, service and security, to guarantee the completeness and security of scientific data. And legal entities shall conduct hierarchical classification for scientific data, specify the security classification and security deadline, opening conditions, opening objects and review

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Production of Medical Devices

The NMPA issued the Measures for the Supervision and Administration of Medical Device Production (《醫療器械生產監督管理辦法》) on July 30, 2014 and further amended on November 17, 2017. In order to engage in medical device production, the applicant shall have production premise, environmental conditions, production equipment and professional technicians commensurate with the medical devices produced by it, and it shall have qualified inspectors and the inspection equipment, management rules and after-sales service capability. Furthermore, in order to further strengthen the supervision and management of medical devices production, standardize medical device production activities and ensure the safety and effectiveness of medical devices, the Measures for the Supervision and Administration of Medical Device Production Revised Draft Amendments for Public Comments (《醫療器械生產監督管理辦法(修訂草案徵求意見稿)》) promulgated by the NMPA on March 26, 2021.

To establish an enterprise producing Class I medical devices, the applicant shall undergo the formalities for the recordation of Class I medical devices at the local drug administration at the level of a districted city, while the applicant shall file an application for production licensing with the local drug administration of the province, autonomous region, or municipality directly under the central government of the PRC for the production of Class II or Class III medical devices. A Medical Device Production License (醫療器械生產許可證) shall be valid for five years and may be renewed pursuant to the relevant regulations.

The Good Manufacturing Practice Rules for Medical Devices (《醫療器械生產質量管理規範》), as promulgated by the NMPA on December 29, 2014 and effective on March 1, 2015, provide basic principles for quality control systems for medical devices manufacturing, and these rules are applicable to the entire process of design and development, production, sales and post-sale services of medical devices.

Pursuant to The Notice of Four Guidelines including On-site Inspection Guidelines for the Standards on Production and Quality Management of Medical Devices (《關於印發<醫療器械生產質量管理規範現場檢查指導原則>等4個指導原則的通知》) promulgated by the NMPA on September 25, 2015 and came into effect on September 25, 2015, during the course of on-site verification of the registration of medical devices and on-site inspection of production permit (including changing production permit), the inspection team shall, in accordance with the guidelines, issue recommended conclusions for on-site inspections, which shall be divided into “Passed,” “Failed” or “Reassessment after rectification.” During the supervision and inspection, if it is found that the requirements of the key items or ordinary items that may have direct impact on product quality are not satisfied, the enterprise shall suspend production and go through rectification. If it is found that the requirements of the ordinary items are not

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Operation of Medical Devices

Pursuant to the Measures for the Supervision and Administration of Medical Devices Operation (《醫療器械經營監督管理辦法》) promulgated by the NMPA on July 30, 2014 and amended on November 17, 2017, licensing or recordation is not required for business activities involving Class I medical devices, while recordation administration shall apply to business activities involving Class II medical devices, and licensing administration shall apply to business activities involving Class III medical devices. An enterprise engaging in the operation of medical devices shall have business premises and storage conditions suitable for the operation scale and scope, and shall have a quality control department or personnel suitable for the medical devices it operates. Also, a quality control system compatible with the medical devices it operates is required, and an enterprise engaging in business activities involving Class III medical devices shall also have a qualified computer information management system. Moreover, in order to further strengthen the operation supervision and management of medical devices, standardize the business activities of medical devices and ensure the safety and effectiveness of medical devices, the Measures for the Supervision and Administration of Medical Devices Operation Revised Draft Amendments for Public Comments (《醫療器械經營監督管理辦法(修訂草案徵求意見稿)》) promulgated by the NMPA on March 26, 2021.

An enterprise engaged in the operation of Class II medical devices shall file with the municipal level drug supervision and administration department and provide proofing materials for satisfying the relevant conditions of engaging in the operation of medical devices, while enterprises engaged in the operation of Class III medical devices shall apply for an operation permit to the municipal level drug supervision and administration department and provide proofing materials for satisfying the relevant conditions of engaging in the operation of such medical devices. An operation permit is valid for five years and may be renewed pursuant to the relevant regulations.

The medical devices manufacturers engaged in the business activities in their residence or production address do not need to apply for operation permit or records.

Two Invoice System

On December 26, 2016, eight government departments including the NMPA issued the Notice on Opinions on the Implementation of the “Two Invoice System” in Drug Procurement by Public Medical Institutions (for Trial Implementation) (《關於在公立醫療機構藥品採購中推行兩票制的實施意見(試行)的通知》) (the “Notice”). According to the Notice, the “Two Invoice System” refers to issuing invoice at the time from a pharmaceutical manufacturer to a circulating enterprise, and issuing invoice again at the time from a circulating enterprise to a medical institution.

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On March 5, 2018, six government departments including the NHC of the PRC issued the Notice on Consolidating the Achievements of Canceling Drug Markups and Deepening Comprehensive Reforms in Public Hospitals (《關於鞏固破除以藥補醫成果持續深化公立醫院綜合改革的通知》), which stipulates the implementation of the centralized purchase of high value medical consumables, and that the “Two Invoice System” in relation to high-value medical consumables shall be gradually implemented.

On July 19, 2019, the General Office of the State Council issued the Notice on Printing and Distributing the Reform Plan for the Management of High-value Medical Consumables (《關於印發<治理高值醫用耗材改革方案>的通知》), according to which, high-value medical consumables refer to the medical consumables that are directly used for human bodies, and are strictly required for safety, and are in great clinical demand and priced relatively high, and can impose heavy burdens on patients for affording them. Local governments are encouraged to adopt the “Two Invoice System” combined with actual situation in order to reduce the circulation of high-value medical consumables and promote the transparency of purchase and sales.

Some provinces including but not limited to Ningxia Province, Hainan Province, Liaoning Province, Sichuan Province, Guangdong Province, Hunan Province, Guizhou Province, Gansu Province, Jiangxi Province, Heilongjiang Province, Fujian Province, Shaanxi Province and Anhui Province, have implemented the “Two Invoice System” in the field of medical consumables. On November 15 2017, five local government departments of Anhui Province including the Food and Drug Administration of Anhui Province (安徽省食品藥品監督管理局) issued the Opinions on Implementation of the “Two Invoice System” in Medical Consumables Procurement by Public Medical Institutions in Anhui Province (for Trial Implementation) (《安徽省公立醫療機構醫用耗材採購“兩票制”實施意見(試行)》), pursuant to which the Class II or above public medical institutions shall begin to implement the “Two Invoice System” in the procurement of medical consumables from December 1, 2017. On July 23, 2018, Fujian Provincial Medical Security Management Committee Office (福建省醫療保障管理委員會辦公室) issued the Notice on the Sharing of Transparent Procurement Results of Medical Devices (Medical Consumables) across the Province (《關於開展醫療器械(醫用耗材) 陽光採購結果全省共享工作的通知》), which stipulates medical consumables procurement strictly implements the “Two Invoice System” and encourages the implementation of the “One Invoice System.” On July 23, 2018, eight local government departments of Shaanxi Province including Deepen Medical and Healthcare System Reform Leading Group Office of Shaanxi Province (陝西省深化醫藥衛生體制改革領導小組辦公室) issued the Notice on Further Promoting the “Two Invoice System” on Medicines and Medical Consumables (《關於進一步推進藥品和醫用耗材“兩票制”的通知》), which stipulates that on the basis of the full implementation of the “Two Invoice System” of medical consumables in the urban public medical institutions, the primary medical and healthcare institutions of the county and below the county shall begin to implement the “Two Invoice System” in the procurement of medical consumables from August 1, 2018.

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Pursuant to the Reply of the NHSA to Recommendation No.1209 of the Second Session of the 13th National People’s Congress (《國家醫療保障局對十三屆全國人大二次會議第1209 號建議的答覆》) issued by NHSA on July 23, 2019, “two-invoice system” for high-value consumables needs to be further discussed given the huge differences between high-value consumables and pharmaceuticals and the complexity of clinical use and after-sales service.

National Medical Insurance Program

Pursuant to the Notice of Opinion on the Diagnosis and Treatment Management, Scope and Payment Standards of Medical Service Facilities Covered by the National Urban Employees Basic Medical Insurance Scheme (《關於印發<城鎮職工基本醫療保險診療項目管理、醫療服務設施範圍和支付標準意見>的通知》) promulgated on June 30, 1990, part of the fees of diagnostic and treatment devices and diagnostic tests would be paid through the basic medical insurance scheme. Detailed reimbursement coverage and rate are subject to provincial local policies. Pursuant to the Decision on the Establishment of the Urban Employee Basic Medical Insurance Program (《關於建立城鎮職工基本醫療保險制度的決定》) issued by the State Council on December 14, 1998, all employers in urban cities are required to enroll their employees in the Urban Employee Basic Medical Insurance Program and the insurance premium is jointly contributed by the employers and employees. Moreover, Opinions on the Establishment of the New Rural Cooperative Medical System (《關於建立新型農村合作醫療制度意見的通知》) issued by the General Office of the State Council on January 16, 2003, China has introduced a new rural cooperative medical system in certain areas to provide medical insurance for rural residents, and has since then been extended to the whole country.

The State Council promulgated the Guiding Opinions of the State Council about the Pilot Urban Resident Basic Medical Insurance (《國務院關於開展城鎮居民基本醫療保險試點的指導意見》) on July 10, 2007, under which urban residents of the pilot district, rather than urban employees, may voluntarily join Urban Resident Basic Medical Insurance. Furthermore, the Opinions on Integrating the Basic Medical Insurance Systems for Urban and Rural Residents (《國務院關於整合城鄉居民基本醫療保險制度的意見》) promulgated on January 3, 2016, all employees and residents in rural and urban areas would be involved in medical insurance program.

According to Circular on issuing the Reform Plan for the Management of High-value Medical Consumables (《國務院辦公廳關於印發<治理高值醫用耗材改革方案>的通知》), the State plans to establish a basic medical insurance access system for high-value medical consumables and implement catalog management of high-value medical consumables, and to improve dynamic catalog adjustment and timely supplement necessary new technological products. Moreover, the State plans to make policies on payment by medical insurance through, among others, scientifically formulating the standards for payment by medical insurance for high-value medical consumables and establishing a dynamic adjustment mechanism.

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Advertisement of Medical Devices

The SAMR promulgated the Interim Measures for the Administration of the Examination and Administration of Drugs, Medical Devices, Health Foods, and Formula Foods for Special Medical Purposes (《藥品、醫療器械、保健食品、特殊醫學用途配方食品廣告審查管理暫行辦法》) on December 24, 2019, which came into effect from March 1, 2020 and replaced the Measures for the Examination of Medical Devices Advertisements (《醫療器械廣告審查辦法》). According to such interim measures and the Medical Device Regulations, the medical device advertisements shall be examined and approved by the drug supervision and administration departments of the people’s governments of the provinces, autonomous regions or municipalities directly under the central government of the PRC where the medical device production enterprises or agents of import medical devices are located, and obtain the approval documents for medical device advertisements. The advertisement publishers who publish the medical device advertisements shall verify beforehand the approval documents for the advertisements and the authenticity thereof, and may not publish the medical device advertisements which have not obtained approval documents, whose approval documents have not been verified to be authentic, or whose contents are inconsistent with those of the approval documents. Moreover, the content of the medical device advertisements shall be based on the registration certificate or the recordation proof. Medical device advertisement involving the name, scope of application, mechanism of action, or structure and composition of the medical device must not exceed the scope of registration certificate or the recordation proof.

Regulations Relating to Importation and Exportation of Goods

According to the Administrative Provisions on the Registration of Customs Declaration Entities of the PRC (《中華人民共和國海關報關單位註冊登記管理規定》), which is promulgated by the General Administration of Customs of the PRC on March 13, 2014, latest amended on May 29, 2018 and came into effect on July 1,2018. Import and export of goods shall be declared by the consignor or consignee itself, or by a customs declaration enterprise entrusted by the consignor or consignee and duly registered with the customs authority. Consignors and consignees of imported and exported goods shall go through customs declaration entity registration formalities with the competent customs departments in accordance with the applicable provisions.

The Measures for the Supervision and Administration of Medical Device Production stipulate that the manufacturer of the medical devices for export shall ensure that the medical devices it produces meet the requirements of the importing country (region) and shall file the product information with the local municipal food and drug supervision and administration department. Pursuant to the Administrative Provisions on the Export and Sales Certificate of Medical Device Products (《醫療器械產品出口銷售證明管理規定》) promulgated by the NMPA, which took effect on September 1, 2015, where the registration certificate and the production permit certificate for medical device products have been obtained or the filing for medical device products and the production filing have been completed in the PRC, the NMPA may issue the Export and Sales Certificate for Medical Device Products (醫療器械產品出口銷售證明) to the relevant production enterprise.

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Regulations Relating to Production Safety and Product Liability

Pursuant to the Production Safety Law of the PRC (《中華人民共和國安全生產法》) amended on August 31, 2014 and came into effect on December 1, 2014, an enterprise shall (i) provide production safety conditions as stipulated in this law and other relevant laws, administrative regulations, national and industry standards, (ii) establish a comprehensive production safety accountability system and production safety rules, and (iii) develop production safety standards to ensure production safety. Any entity that fails to provide required production safety conditions is prohibited from engaging in production activities. The Production Safety Law of the PRC was last amended on June 10, 2021 and will come into effect on September 1, 2021.

The person-in-charge of an enterprise shall be fully responsible for the safety of production of the enterprise. Personnel who is responsible for managing production safety shall inspect the safety of production regularly based on the characteristics of production of the enterprise and shall deal with any safety issue identified during the inspection in a timely manner. Any unsolved issue shall be reported to the person-in-charge in a timely manner and the person-in-charge shall solve such issue immediately. The inspection and measures taken shall be duly recorded. Enterprises and institutions shall provide their employees with training on production safety and shall truthfully inform their employees of any potential risks in relation to the workplace and duties, preventive measures and emergency measures. In addition, an enterprise shall provide its employees with protective equipment that meet the national or industry standards and supervise and train them to use such equipment.

Pursuant to the Product Quality Law (《中華人民共和國產品質量法》) promulgated on February 22, 1993 and latest amended on December 29, 2018 by the Standing Committee of NPC (the “SCNPC”), Seller shall be responsible for the repair, replacement or return of the product sold if (1) the product sold does not possess the properties for use that it should possess, and no prior and clear indication is given of such a situation; (2) the product sold does not conform to the applied product standard as carried on the product or its packaging; or (3) the product sold does not conform to the quality indicated by such means as a product description or physical sample. If a consumer incurs losses as a result of purchased product, the seller shall compensate for such losses.

On May 28, 2020, the Civil Code of the PRC (《中華人民共和國民法典》) was adopted by the third session of the 13th National People’s Congress of the PRC (the “NPC”), which became effective on January 1, 2021, according to which a manufacturer or a commercial seller is subject to liability for harm to persons or property caused by the product defects. The injured patient may seek compensation from the manufacturer or the commercial seller. Where the patient seeks compensation from the commercial seller, the commercial seller have the right to make a claim against the liable manufacturer after it has made compensation.

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The Law of the PRC on the Protection of the Rights and Interests of Consumers (《中華人民共和國消費者權益保護法》) was promulgated on October 31, 1993 and was amended on August 27, 2009 and October 25, 2013 to protect consumers’ rights when they purchase or use goods and accept services. All business operators must comply with this law when they manufacture or sell goods and/or provide services to customers. Under the amendments made on October 25, 2013, all business operators must pay high attention to protecting customers’ privacy and must strictly keep confidential any consumer information they obtain during their business operations. In addition, in extreme situations, pharmaceutical product manufacturers and operators may be subject to criminal liability if their goods or services lead to the death or injuries of customers or other third parties.

Pursuant to the Administrative Measures for Medical Device Recalls (《醫療器械召回管理辦法》), which was promulgated by the NMPA on January 25, 2017 and came into effect on May 1, 2017, in light of the severity harm, recalls of medical device are divided into three classes, namely: (i) Class I recall, where the circumstances leading to the recall may cause or have caused serious harm to health; (ii) Class II recall, where the circumstances leading to the recall may cause or have already caused temporary or reversible harm to health; or (iii) Class III recall, where the circumstances leading to the recall are not likely to cause harm but a recall is necessary. Medical device manufacturers shall determine the recall class based on the situation and properly design and implement the recall plan based on the recall class and the sale and use of the medical devices. In the case of Class I recall, the recall announcement shall be published on website of the NMPA and major media of central government. In the case of Class II and Class III recalls, the recall announcement shall be published on the website of the provincial level of food and drug administrative authority.

Regulations Relating to Foreign Investment

Foreign Investment

Investment activities in the PRC by foreign investors were principally governed by the Catalog of Industries for Guiding Foreign Investment (《外商投資產業指導目錄》) (the “Catalog”), which was issued and amended from time to time by the MOFCOM and the NDRC. The latest effective Catalog came into effect on July 28, 2017 and was partially abolished by The Special Administrative Measures (Negative List) for Access of Foreign Investment (2020 version) (《外商投資准入特別管理措施(負面清單)(2020年版)》) (the “Negative List”), and Catalog of Industries for Encouraging Foreign Investment (《鼓勵外商投資產業目錄(2020年版)》) (the “Encouraging List”). Industries listed in Catalog are divided into three categories: “encouraged”, “restricted” and “prohibited”. The Negative List, which came into effect on July 23, 2020, sets out special administrative measures in respect of the access of foreign investments in a centralized manner, and the Encouraging List which came into effect on January 27, 2021, sets out the encouraged industries for foreign investment.

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Foreign-Invested Enterprises

On December 29, 1993, the SCNPC issued the PRC Company Law (《中華人民共和國公司法》) (the “Company Law”), which was lasted amended on October 26, 2018. The Company Law regulates the establishment, operation and management of corporate entities in China and classifies companies into limited liability companies and limited companies by shares. A foreign-invested company is also subject to the PRC Company Law unless otherwise provided by the foreign investment laws.

According to the Foreign Investment Law of the PRC (《中華人民共和國外商投資法》) promulgated by the SCNPC on March 15, 2019 and came into effect as of January 1, 2020, the state shall implement the management systems of pre-establishment national treatment and negative list for foreign investment, and shall give national treatment to foreign investment beyond the negative list. Simultaneously, Sino-foreign Equity Joint Ventures of the PRC (《中華人民共和國中外合資經營企業法》), the Wholly Foreign-owned Enterprises Law of the PRC (《中華人民共和國外資企業法》) and Sino-foreign Cooperative Joint Ventures of the PRC (《中華人民共和國中外合作經營企業法》) have been repealed since January 1, 2020.

In December 2019, the State Council promulgated the Regulations on Implementing the Foreign Investment Law of the PRC (《中華人民共和國外商投資法實施條例》), which came into effect in January 2020. After the Regulations on Implementing the Foreign Investment Law of the PRC came into effect, the Regulation on Implementing the Sino-Foreign Equity Joint Venture of the PRC (《中華人民共和國中外合資經營企業法實施條例》), Provisional Regulations on the Duration of Sino-Foreign Equity Joint Venture (《中外合資經營企業合營期限暫行規定》), the Regulations on Implementing the Wholly Foreign-owned Enterprise Law of the PRC (《中華人民共和國外資企業法實施細則》) and the Regulations on Implementing the Sino-foreign Cooperative Joint Venture of the PRC (《中華人民共和國中外合作經營企業法實施細則》) have been repealed simultaneously.

On December 30, 2019, the MOFCOM and the SAMR issued the Measures for the Reporting of Foreign Investment Information (《外商投資信息報告辦法》), which came into effect on January 1, 2020 and replaced the Interim Measures for the Recordation Administration of the Incorporation and Change of Foreign-Invested Enterprises (《外商投資企業設立及變更備案管理暫行辦法》), for carrying out investment activities directly or indirectly in PRC, the foreign investors or foreign-invested enterprises shall submit investment information to the commerce authorities pursuant to these measures.

Regulations Relating to Environmental Protection

Environment Protection

The Environmental Protection Law of the PRC (《中華人民共和國環境保護法》) (the “Environmental Protection Law”), which was promulgated by the SCNPC on December 26, 1989, came into effect on the same day and last amended on April 24, 2014, outlines the authorities and duties of various environmental protection regulatory agencies. The Ministry of

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Ecology and Environment (former Ministry of Environmental Protection) is authorized to issue national standards for environmental quality and emissions, and to monitor the environmental protection scheme of the PRC. Meanwhile, local environment protection authorities may formulate local standards which are more rigorous than the national standards, in which case, the concerned enterprises must comply with both the national standards and the local standards.

Environmental Impact Appraisal

According to the Administration Rules on Environmental Protection of Construction Projects (《建設項目環境保護管理條例》), which was promulgated by the State Council on November 29, 1998, amended on July 16, 2017 and became effective on October 1, 2017, depending on the impact of the construction project on the environment, an construction employer shall submit an environmental impact report or an environmental impact statement, or file a registration form. As to a construction project, for which an environmental impact report or the environmental impact statement is required, the construction employer shall, before the commencement of construction, submit the environmental impact report or the environmental impact statement to the relevant authority at the environmental protection administrative department for approval. If the environmental impact assessment documents of the construction project have not been examined or approved upon examination by the approval authority in accordance with the law, the construction employer shall not commence the construction.

According to the Environmental Impact Appraisal Law of PRC (《中華人民共和國環境影響評價法》) (the “Environmental Impact Appraisal Law”), which was promulgated by the SCNPC on October 28, 2002, amended on July 2, 2016 and December 29, 2018, for any construction projects that have an impact on the environment, an entity is required to produce either a report, or a statement, or a registration form of such environmental impacts depending on the seriousness of effect that may be exerted on the environment.

Completion Acceptance

The Interim Method for Completion Acceptance of Environmental Protection for Construction Projects (《建設項目竣工環境保護驗收暫行辦法》) was promulgated and implemented by the former Ministry of Environmental Protection (current Ministry of Ecology and Environment) on November 20, 2017. This method specifies the procedures and standards for construction units to carry out environmental protection acceptance after the construction of such projects is completed.

Urban Drainage and Sewage Treatment

The Regulation on Urban Drainage and Sewage Treatment (《城鎮排水與污水處理條例》) was promulgated on October 2, 2013 and became effective on January 1, 2014. And the Measures for the Administration of Permits for the Discharge of Urban Sewage into the Drainage Network (《城鎮污水排入排水管網許可管理辦法》) was promulgated on January 22, 2015 and came into force on March 1, 2015. According to the above regulation, Enterprises

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Regulations Relating to Employment and Social Welfare

Employment

The major PRC laws and regulations that govern employment relationship are the Labor Law of the PRC (《中華人民共和國勞動法》) (the “Labor Law”) (issued by the SCNPC on July 5, 1994, came into effect on January 1, 1995 and revised on August 27, 2009 and December 29, 2018), the Labor Contract Law of the PRC (《中華人民共和國勞動合同法》) (the “Labor Contract Law”) (promulgated by the SCNPC on June 29, 2007 and became effective on January 1, 2008, and then amended on December 28, 2012 and became effective on July 1, 2013) and the Implementation Rules of the Labor Contract Law of the PRC (《中華人民共和國勞動合同法實施條例》), or the Implementation Rules of the Labor Contract Law (issued by the State Council on September 18, 2008 and came into effect on the same day). According to the aforementioned laws and regulations, labor contracts shall be executed in written form if labor relationships are to be or have been established between employers and employees. The laws and regulations above impose stringent requirements on the employers in relation to entering into fixed-term employment contracts, hiring of temporary employees and dismissal of employees. As prescribed under the laws and regulations, employers shall ensure its employees have the right to rest and the right to receive wages no lower than the local minimum wages, and the wages shall be paid to employees in a timely manner. Employers must establish and improve their system for labor safety and sanitation that strictly abide by state standards and provide relevant education to its employees. Violations of the Labor Contract Law and the Labor Law may result in the imposition of fines and other administrative liabilities and/or incur criminal liabilities in the case of serious violations.

Social Insurance

According to the Social Insurance Law of PRC (《中華人民共和國社會保險法》), which issued by the SCNPC on October 28, 2010 and came into effect on July 1, 2011 and was newly revised on December 29, 2018, enterprises and institutions in the PRC shall provide their employees with welfare schemes covering pension insurance, unemployment insurance, maternity insurance, occupational injury insurance, medical insurance and other welfare plans. These payments are made to local administrative authorities and if employers fail to contribute, they may be ordered to make up within a prescribed time limit and may be liable for a late payment fee equal to 0.05% of the outstanding contribution amount for each day of delay.

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Meanwhile, the Interim Regulation on the Collection and Payment of Social Insurance Premiums (《社會保險費徵繳暫行條例》) (issued by the State Council on January 22, 1999 and came into effect on the same day and was recently revised on March 24, 2019) prescribes the details concerning the social securities.

Housing Provident Fund

According to the Regulation Concerning the Administration of Housing Provident Fund (《住房公積金管理條例》), implemented since April 3, 1999 and amended on March 24, 2002 and March 24, 2019, any entity fails to make payment of housing provident fund within the time limit or has shortfall in payment of housing provident fund will be ordered to make the payment or make up the shortfall within the prescribed time limit, otherwise, the housing provident management center is entitled to apply for compulsory enforcement with the People’s Court.

Regulations Relating to Intellectual Properties

Patents

According to the Patent Law of the PRC (《中華人民共和國專利法》), promulgated by the SCNPC on March 12, 1984 and revised in September 1992 and August 2000, amended on December 27, 2008 and became effective on October 1, 2009 and further amended on October 17, 2020 which became effective on June 1, 2021 and the Implementing Rules of the Patent Law of the PRC (《中華人民共和國專利法實施細則》), promulgated by the China Patent Bureau Council on January 19, 1985, and last amended on January 9, 2010 and effective from February 1, 2010, there are three types of patents in the PRC invention patents, utility model patents and design patents. The protection period of a patent right for invention patents shall be 20 years, the protection period of a patent right for utility model patents shall be 10 years, and the protection period of design patent right is 15 years, both commencing from the filing date.

On October 17, 2020, the SCNPC issued the Patent Law of the PRC (Revised in 2020) (《中華人民共和國專利法(2020年修正)》) (the “2020 Patent Law”), which came into effect on June 1, 2021. Compared with the Patent Law of the PRC (Revised in 2008), changes in the 2020 Patent Law mainly include: (i) clarifying the incentive mechanism for inventor or designer relating to service inventions; (ii) extending the duration of design patent; (iii) establishing a new system of “open licensing” (開放許可); (iv) strengthening the joint liability of internet service providers for network patent infringement; (v) improving the distribution of burden of proof in patent infringement cases; (vi) increasing the compensation for patent infringement; and (vii) patent term adjustment to compensate delays of the NIPA in the review of patent applications.

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Trademarks

Pursuant to the Trademark Law of the PRC (《中華人民共和國商標法》) which was promulgated on August 23, 1982 and last amended on April 23, 2019 and came into effect on November 1, 2019, the Implementation Regulations of the Trademark Law of PRC (《中華人民共和國商標法實施條例》) which was issued on August 3, 2002, amended on April 29, 2014 and came into effect on May 1, 2014, the Trademark Office under the State Administration for Industry and Commerce of the PRC (the “Trademark Office”) shall handle trademark registrations and grant a term of ten years to registered trademarks, which may be renewed for additional ten year period upon request from the trademark owner. The Trademark Law of the PRC has adopted a “first-to-file” principle with respect to trademark registration. Where an application for trademark for which application for registration has been made is identical or similar to another trademark which has already been registered or is under preliminary examination and approval for use on the same kind of or similar commodities or services, the application for registration of such trademark may be rejected. Any person applying for the registration of a trademark may not prejudice the existing right of others, nor may any person register in advance a trademark that has already been used by another party and has already gained a “sufficient degree of reputation” through such party’s use. A trademark registrant may, by entering into a trademark licensing contract, license another party to use its registered trademark. Where another party is licensed to use a registered trademark, the licenser shall report the license to the Trademark Office for recordation, and the Trademark Office shall publish it. An unrecorded license may not be used as a defense against a third party in good faith.

Domain Names

Pursuant to the Administrative Measures for Internet Domain Names (《互聯網域名管理辦法》) promulgated by the Ministry of Industry and Information Technology on August 24, 2017 and came into effect on November 1, 2017, the establishment of any domain name root server and institution for operating domain name root servers, managing the registration of domain name and providing registration services in relation to domain name within the territory of China shall be subject to the approval of the Ministry of Industry and Information Technology or provincial, autonomous regional and municipal communications administration. The registration of domain name shall follow the principle of “first apply first register.” The Notice of the Ministry of Industry and Information Technology on Regulating the Use of Domain Names in Internet Information Services (《工業和信息化部關於規範互聯網信息服務使用域名的通知》) promulgated by the Ministry of Industry and Information Technology on November 27, 2017 and coming into effect on January 1, 2018 specifies the obligation of anti-terrorism and maintaining network security of internet information service providers.

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Regulations Relating to Lease Properties

On December 1, 2010, the Ministry of Housing and Urban-Rural Development promulgated the Measures for Administration of Lease of Commodity Properties (《商品房屋租賃管理辦法》), which came into effect on February 1, 2011. The house leasing parties shall go through the house leasing registration with the competent construction (real estate) department of the people’s government of the municipality directly under the Central Government, city or county where the house is leased within 30 days after the house leasing contract is concluded. Where the lease record filing is not made, the competent construction (real estate) departments of the people’s governments of the municipalities directly under the Central Government, cities and counties shall order the lease record filing to make corrections within a prescribed time limit. Where the party fails to make corrections within the prescribed time limit, a fine of not less than RMB1,000 but not more than RMB10,000 shall be imposed.

Regulations Relating to Foreign Exchange

On January 29, 1996, the State Council promulgated the Administrative Regulations on Foreign Exchange of the PRC (《中華人民共和國外匯管理條例》) which became effective on April 1, 1996 and was amended on January 14, 1997 and August 5, 2008. Foreign exchange payments under current account items shall, pursuant to the administrative provisions of the foreign exchange control department of the State Council on payments of foreign currencies and purchase of foreign currencies, be made using self-owned foreign currency or foreign currency purchased from financial institutions engaging in conversion and sale of foreign currencies by presenting the valid document. Domestic entities and domestic individuals making overseas direct investments or engaging in issuance and trading of overseas securities and derivatives shall process registration formalities pursuant to the provisions of the foreign exchange control department of the State Council.

On November 19, 2012, the SAFE issued the Circular of Further Improving and Adjusting Foreign Exchange Administration Policies on Foreign Direct Investment (《國家外匯管理局關於進一步改進和調整直接投資外匯管理政策的通知》), (the “SAFE Circular 59”), which came into effect on December 17, 2012 and was revised on May 4, 2015, October 10, 2018 and partially abolished on December 30, 2019. The SAFE Circular 59 aims to simplify the foreign exchange procedure and promote the facilitation of investment and trade. According to the SAFE Circular 59, the opening of various special purpose foreign exchange accounts, such as pre-establishment expenses accounts, foreign exchange capital accounts and guarantee accounts, the reinvestment of RMB proceeds derived by foreign investors in the PRC, and remittance of foreign exchange profits and dividends by a foreign-invested enterprise to its foreign shareholders no longer require the approval or verification of SAFE, as well multiple capital accounts for the same entity may be opened in different provinces. Later, the SAFE promulgated the Circular on Further Simplifying and Improving Foreign Exchange Administration Policies in Respect of Direct Investment (《關於進一步簡化和改進直接投資外匯管理政策的通知》) in February 2015, which was partially abolished in December 2019 and

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On May 10, 2013, the SAFE issued the Administrative Provisions on Foreign Exchange in Domestic Direct Investment by Foreign Investors (《外國投資者境內直接投資外匯管理規定》) (the “SAFE Circular 21”), which became effective on May 13, 2013, amended on October 10, 2018 and partially abolished on December 30, 2019. The SAFE Circular 21 specifies that the administration by SAFE or its local branches over direct investment by foreign investors in the PRC must be conducted by way of registration and banks must process foreign exchange business relating to the direct investment in the PRC based on the registration information provided by SAFE and its branches.

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 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 document and other public disclosure documents.

According to the Notice of the State Administration of Foreign Exchange on Reforming the Management Mode of Foreign Exchange Capital Settlement of Foreign Investment Enterprises (《國家外匯管理局關於改革外商投資企業外匯資本金結匯管理方式的通知》) (the “SAFE Circular 19”) promulgated on March 30, 2015, coming effective on June 1, 2015 and partially abolished on December 30, 2019, foreign-invested enterprises could settle their foreign exchange capital on a discretionary basis according to the actual needs of their business operations. Whilst, foreign-invested enterprises are prohibited to use the foreign exchange capital settled in RMB (a) for any expenditures beyond the business scope of the foreign- invested enterprises or forbidden by laws and regulations; (b) for direct or indirect securities investment; (c) to provide entrusted loans (unless permitted in the business scope), repay loans between enterprises (including advances by third parties) or repay RMB bank loans that have been on-lent to a third party; and (d) to purchase real estates not for self-use purposes (save for real estate enterprises).

On June 9, 2016, SAFE issued the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account (《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》) (the “SAFE Circular 16”), which came into effect on the same day. The SAFE Circular 16 provides that discretionary foreign exchange settlement applies to foreign exchange capital, foreign debt offering proceeds and remitted foreign listing proceeds, and the corresponding RMB capital converted from foreign exchange may be used to extend loans to related parties or repay inter-company loans (including advances by third parties). However, there remain substantial uncertainties with respect to SAFE Circular 16’s interpretation and implementation in practice.

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On October 23, 2019, SAFE promulgated the Notice on Further Facilitating Cross-Board Trade and Investment (《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》), which became effective on the same date (except for Article 8.2, which became effective on January 1, 2020). The notice canceled restrictions on domestic equity investments made with capital funds by non-investing foreign-funded enterprises. In addition, restrictions on the use of funds for foreign exchange settlement of domestic accounts for the realization of assets have been removed and restrictions on the use and foreign exchange settlement of foreign investors’ security deposits have been relaxed. Eligible enterprises in the pilot area are also allowed to use revenues under capital accounts, such as capital funds, foreign debts and overseas listing revenues for domestic payments without providing materials to the bank in advance for authenticity verification on an item by item basis, while the use of funds should be true, in compliance with applicable rules and conforming to the current capital revenue management regulations.

Regulations Relating to Taxation

Enterprise Income Tax (“EIT”)

Pursuant to the Enterprise Income Tax Law (《中華人民共和國企業所得稅法》) amended by the SCNPC and coming into effect on December 29, 2018 and the Implementation Rules of the EIT Law (《中華人民共和國企業所得稅法實施條例》) amended by the State Council and coming into effect on April 23, 2019, a domestic enterprise which is established within the PRC in accordance with the laws or established in accordance with any laws of foreign country (region) but with an actual management entity within the PRC shall be regarded as a resident enterprise. A resident enterprise shall be subject to an EIT of 25% of any income generated within or outside the PRC. A preferential EIT rate shall be applicable to any key industry or project which is supported or encouraged by the State. High and new technology enterprises which are supported by the State may enjoy a reduced EIT rate of 15%.

Value-Added Tax

The major PRC law and regulation governing value-added tax are the Interim Regulations on Value-added Tax of the PRC (《中華人民共和國增值稅暫行條例》) (issued on December 13, 1993 by the State Council, came into effect on January 1, 1994, and revised on November 10, 2008, February 6, 2016 and November 19, 2017), as well as the Implementation Rules for the Interim Regulations on Value-Added Tax of the PRC (《中華人民共和國增值稅暫行條例實施細則》) (issued on December 25, 1993 by the Ministry of Finance, the “MOF”, came into effect on the same day and revised on December 15, 2008 and October 28, 2011), any entities and individuals engaged in the sale of goods, supply of processing, repair and replacement services, and import of goods within the territory of the PRC are taxpayers of VAT and shall pay the VAT in accordance with the law and regulation. The rate of Value-added tax (the “VAT”) for sale of goods is 17% unless otherwise specified, such as the rate of VAT for sale of transportation is 11%. With the VAT reforms in the PRC, the rate of VAT has been changed several times. The MOF and the STA issued the Notice of on Adjusting VAT Rates (《關於調整增值稅稅率的通知》) on April 4, 2018 to adjust the tax rates of 17% and 11% applicable to

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Regulations Relating to the H Share Full Circulation

“Full circulation” means listing and circulating on the Stock Exchange of the domestic unlisted shares of an H-share listed company (“H-share listed company”), including unlisted domestic shares held by domestic shareholders prior to overseas listing, unlisted domestic shares additionally issued after overseas listing, and unlisted shares held by foreign shareholders. On November 14, 2019, CSRC announced the Guidelines for the “Full Circulation” Program for Domestic Unlisted Shares of H-share Listed Companies (Announcement of the CSRC [2019] No. 22) (《H股公司境內未上市股份申請“全流通”業務指引》(中國證券監督管理委員會公告[2019]22號)) (“Guidelines for the “Full Circulation”).

According to the Guidelines for the “Full Circulation”, shareholders of domestic unlisted shares may determine by themselves through consultation the amount and proportion of shares, for which an application will be filed for circulation, provided that the requirements laid down in the relevant laws and regulations and set out in the policies for state-owned asset administration, foreign investment and industry regulation are met, and the corresponding H-share listed company may be entrusted to file the said application for “full circulation”. To file an application for “full circulation”, an H-share listed company shall file the application with the CSRC according to the administrative licensing procedures necessary for the “examination and approval of public issuance and listing (including additional issuance) of shares overseas by a joint stock company”. After the application for “full circulation” has been approved by the CSRC, an H-share listed company shall submit a report on the relevant situation to the CSRC within 15 days after the registration with the China Securities Depository and Clearing Corporation Limited (the “CSDC”) of the shares related to the application has been completed.

On December 31, 2019, CSDC and Shenzhen Stock Exchange (the “SZSE”) jointly announced the Measures for Implementation of H-share “Full Circulation” Business (《H股“全流通”業務實施細則》) (the “Measures for Implementation”). The businesses of cross-border transfer registration, maintenance of deposit and holding details, transaction entrustment and instruction transmission, settlement, management of settlement participants, services of nominal holders, etc. in relation to the H-share “full circulation business”, are subject to the Measures for Implementation.

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In order to fully promote the reform of H-shares “full circulation” and clarify the business arrangement and procedures for the relevant shares’ registration, custody, settlement and delivery, CSDC has promulgated the Circular on Issuing the Guide to the Program for Full Circulation of H-shares (《關於發佈H股“全流通”業務指南>的通知》) in February 2020, which specified the business preparation, account arrangement, cross-boarder share transfer registration and overseas centralized custody, etc. In February 2020, CSDC (Hong Kong) also promulgated the Guide to the Program for Full Circulation of H-shares (《中國證券登記結算 (香港)有限公司H股“全流通”業務指南》) to specify the relevant escrow, custody, agent service of CSDC (Hong Kong), arrangement for settlement and delivery and other relevant matters.

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OVERVIEW

We are a leading technology-driven, innovative heart valve device company in China at the forefront of the fast-growing, high-potential market of structural heart disease treatment. Our Group was founded by Dr. Yu (the chairman of our Board, executive Director and chief executive officer) and Mr. Tao QIN (our executive Director and chief operating officer) in March 2015. For the details of the background and industry experience of Dr. Yu and Mr. Tao QIN, please refer to the section headed “Directors, Supervisors and Senior Management” in this document.

BUSINESS DEVELOPMENT MILESTONES

The following table summarizes the key milestones in our business development:

Year Milestone

2015 We were established as a limited liability company under the name of Shanghai NewMed Medical Company Limited (上海紐脈醫療科技有限公司)

We completed the Angel Investment

2016 We completed the Series Pre-A Financing

We participated in the Ministry of Science and Technology of the PRC for the China National Key R&D Program during the 13th Five-Year Plan Period (“十三五”國家重點研發計劃)

We were awarded the third place in the biomedicine group of China Innovation & Entrepreneurship Competition (中國創新創業大賽)

2018 We completed the Series A Financing and the Series A+ Financing

2019 The first humanitarian treatment using Mi-thos® was completed

2020 We completed the Series B Financing and the Series B+ Financing

Chengdu NewMed, our wholly-owned subsidiary, was established

We were awarded the 3rd Prize of the 3rd China Medical Devices Design & Entrepreneurship Competition, 2020 (2020年第三屆中國醫療器械創新創業大賽三等獎)

Mi-thos® and Prizvalve® were approved by the NMPA for their clinical trials

The NMPA recognized Mi-thos® as an innovative medical device qualified for Special Review

The first humanitarian treatment using Prizvalve® was completed

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Year Milestone

2021 We completed the FIM clinical trial and commenced the confirmatory clinical trial for Prizvalve®

We completed the Series C Financing

Valveclip-MTM was approved by the NMPA for its clinical trial

We were converted into a joint stock limited company under the laws of the PRC

The NMPA recognized Prizvalve® as an innovative medical device qualified for Special Review

The NMPA recognized Valveclip-MTM as an innovative medical device qualified for Special Review

OUR BRANCH COMPANY AND SUBSIDIARIES

Our Company is principally engaged in the research and development of heart valve. As of the Latest Practicable Date, we have one branch company in Beijing and two wholly-owned subsidiaries. Our branch company in Beijing was established on September 15, 2020 to facilitate our communication and product registration with the NMPA. Details of our two wholly-owned subsidiaries are set forth below:

Date and place Registered Principal business Subsidiary of incorporation capital activities

NewMed Taiwei December 12, RMB3,000,000 Research and 2016; PRC development of manufacturing and testing equipment for transcatheter heart valve devices Chengdu NewMed September 27, RMB20,000,000 Research, development 2020; PRC and manufacturing of bovine pericardium and accessory productsnote

Note: As of the Latest Practicable Date, Chengdu NewMed has not commenced any business activities.

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ESTABLISHMENT AND DEVELOPMENT OF OUR COMPANY

(1) Establishment of Our Company

On March 31, 2015, our Company was established as a limited liability company under the laws of the PRC, with an initial registered capital of RMB3,000,000. The shareholding structure of our Company upon establishment is set forth in the table below:

Corresponding Registered equity interest capital in our Shareholders subscribed for Company (RMB) (%)

Dr. Yu 2,378,200 79.27 Mr. Jie ZHANG(note) 388,600 12.95 Mr. Tao QIN 233,200 7.77

Total 3,000,000 100

Note: Mr. Jie ZHANG is our non-executive Director and an early-round financial investor. For the details of the background and industry experience of Mr. Zhang, please refer to the section headed “Directors, Supervisors and Senior Management” in this document.

(2) Pre-[REDACTED] Investments and Major Shareholding Changes of Our Company Before Conversion into Joint Stock Limited Company

(a) Angel Investment

Pursuant to an equity transfer agreement entered into between Dr. Yu and Beijing Zenomed Scientific Co., Ltd (北京誠諾美迪科技有限公司)(“Beijing Zenomed”) dated July 1, 2015, Dr. Yu agreed to transfer registered capital in our Company of RMB279,800 to Beijing Zenomed at nil consideration given that such registered capital had not been paid up at the time of the transfer. In connection with the equity transfer, Beijing Zenomed agreed to invest RMB1,800,000 in our Company, among which RMB279,800 was recorded as registered capital (representing approximately 9.33% of the registered capital) with the remaining funds allocated to capital reserve (the “Angel Investment”).

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Upon completion of the equity transfer on July 14, 2015, the shareholding structure of our Company was as follows:

Corresponding Registered equity interest capital in our Shareholders subscribed for Company (RMB) (%)

Dr. Yu 2,098,400 69.95 Mr. Jie ZHANG 388,600 12.95 Beijing Zenomed(note) 279,800 9.33 Mr. Tao QIN 233,200 7.77

Total 3,000,000 100

Note: For further information on Beijing Zenomed, a Pre-[REDACTED] Investor of our Company, please refer to the paragraph headed “Principal Terms of the Pre-[REDACTED] Investments – (5) Information about our Pre-[REDACTED] Investors” in this section.

(b) Series Pre-A Financing

Pursuant to the shareholders’ resolutions dated January 29, 2016, the registered capital of our Company increased from RMB3,000,000 to RMB3,896,100, and ZJ Leading VC agreed to invest RMB25,000,000 in our Company, among which RMB896,100 was recorded as registered capital (representing approximately 23.00% of the registered capital upon completion of the capital increase) with the remaining funds allocated to capital reserve (“Series Pre-A Financing”).

Upon completion of the capital increase on March 23, 2016, the shareholding structure of our Company was as follows:

Corresponding equity interest in our Company Registered (upon completion capital of the capital Shareholders subscribed for increase) (RMB) (%)

Dr. Yu 2,098,400 53.86 ZJ Leading VC(note) 896,100 23.00 Mr. Jie ZHANG 388,600 9.97 Beijing Zenomed 279,800 7.18 Mr. Tao QIN 233,200 5.99

Total 3,896,100 100

Note: For further information on ZJ Leading VC, a Pre-[REDACTED] Investor of our Company, please refer to the paragraph headed “Principal Terms of the Pre-[REDACTED] Investments – (5) Information about our Pre-[REDACTED] Investors” in this section.

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On March 15, 2017, the following parties entered into equity transfer agreements, respectively, pursuant to which the following transfers of equity interest in our Company were agreed:

Registered Corresponding capital equity interest Transferor Transferee transferred in our Company Consideration (RMB) (%) (RMB)

Mr. Jie Shanghai Shanchi(1) 388,600 9.97 2,500,000 ZHANG Dr. Yu NewMed Enterprise 701,300 18.00 1.00(3) Management(2) Mr. Tao QIN NewMed Enterprise 233,200 5.99 1.00(4) Management(2)

Notes:

(1) Shanghai Shanchi is a limited partnership established in the PRC and is ultimately controlled by Mr. Jie ZHANG, our non-executive Director.

(2) NewMed Enterprise Management, which was established as a limited partnership under the laws of the PRC on January 4, 2017, is an entity through which certain of our senior management and ESOP Platforms hold the Shares. The general partner of NewMed Enterprise Management is Shanghai Chenlu, which is responsible for the management of NewMed Enterprise Management. Shanghai Chenlu is a limited liability company established in the PRC on November 29, 2016, which is owned as to 70% by Dr. Yu and 30% by Ms. Li LI (李莉) (an employee of our Company and the spouse of Dr. Yu).

(3) The registered capital of RMB701,300 transferred from Dr. Yu to NewMed Enterprise Management had not been paid up at the time of the transfer. Such registered capital was fully paid up in cash by NewMed Enterprise Management on December 30, 2019.

(4) For the registered capital of RMB233,200 transferred from Mr. Tao QIN to NewMed Enterprise Management, RMB47,000 had been paid up by Mr. Qin and RMB186,200 had not been paid up at the time of the transfer. Such registered capital was fully paid up in cash by NewMed Enterprise Management on December 12, 2019.

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Upon completion of the above equity transfers on May 10, 2017, the shareholding structure of our Company was as follows:

Corresponding Registered equity interest capital in our Shareholders subscribed for Company (RMB) (%)

Dr. Yu 1,397,100 35.86 NewMed Enterprise Management 934,500 23.99 ZJ Leading VC 896,100 23.00 Shanghai Shanchi 388,600 9.97 Beijing Zenomed 279,800 7.18

Total 3,896,100 100

(d) Series A Financing

Pursuant to the shareholders’ resolutions dated March 10, 2018, the registered capital of our Company increased from RMB3,896,100 to RMB4,390,900, and (i) Jiangsu Jiequan Lize Healthcare Industry Venture Capital Fund (Limited Partnership) (江蘇疌泉醴澤健康產業創業投資基金(有限合夥)) (“Jiequan Lize”) agreed to invest RMB30,000,000 in our Company, among which RMB371,100 was recorded as registered capital (representing approximately 8.45% of the registered capital upon completion of the capital increase) with the remaining funds allocated to capital reserve; and (ii) Suzhou Taihao Growth Venture Capital Partnership (Limited Partnership) (蘇州太浩成長創業投資合夥企業(有限合夥)) (“Suzhou Taihao”) agreed to invest RMB10,000,000 in our Company, among which RMB123,700 was recorded as registered capital (representing approximately 2.82% of the registered capital upon completion of the capital increase) with the remaining funds allocated to capital reserve (“Series A Financing”).

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Upon completion of the capital increase on April 20, 2018, the shareholding structure of our Company was as follows:

Corresponding equity interest in our Company Registered (upon completion capital of the capital Shareholders subscribed for increase) (RMB) (%)

Dr. Yu 1,397,100 31.82 NewMed Enterprise Management 934,500 21.28 ZJ Leading VC 896,100 20.41 Shanghai Shanchi 388,600 8.85 Jiequan Lize(note) 371,100 8.45 Beijing Zenomed 279,800 6.37 Suzhou Taihao(note) 123,700 2.82

Total 4,390,900 100

Note: For further information on Jiequan Lize and Suzhou Taihao, each a Pre-[REDACTED] Investor of our Company, please refer to the paragraph headed “Principal Terms of the Pre-[REDACTED] Investments – (5) Information about our Pre-[REDACTED] Investors” in this section.

(e) Series A+ Financing

Pursuant to an equity transfer agreement entered into between ZJ Leading VC and Beijing Industry Integration Venture Capital Fund Center (Limited Partnership) (北京市產融合創投資基金中心(有限合夥)) (“Chanrong Hechuang”) dated June 1, 2018, ZJ Leading VC agreed to transfer registered capital in our Company of RMB98,900 (representing approximately 2.08% of the registered capital upon completion of the capital increase as described below) to Chanrong Hechuang at a consideration of RMB8,000,000. Further, pursuant to the shareholders’ resolutions dated June 1, 2018, the registered capital of our Company increased from RMB4,390,900 to RMB4,762,000, and Chengdu Boyuan Jiayu Venture Capital Partnership (Limited Partnership) (成都博遠嘉昱創業投資合夥企業(有限合夥)) (“Chengdu Boyuan”) agreed to invest RMB30,000,000 in our Company, among which RMB371,100 was recorded as registered capital (representing approximately 7.79% of the registered capital upon completion of the capital increase) with the remaining funds allocated to capital reserve (together with the aforementioned transfer, “Series A+ Financing”).

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Upon completion of the equity transfer and the capital increase transfer on July 17, 2018, the shareholding structure of our Company was as follows:

Corresponding equity interest in our Company (upon completion Registered of the equity capital transfer and the Shareholders subscribed for capital increase) (RMB) (%)

Dr. Yu 1,397,100 29.34 NewMed Enterprise Management 934,500 19.62 ZJ Leading VC 797,200 16.74 Shanghai Shanchi 388,600 8.16 Jiequan Lize 371,100 7.79 Chengdu Boyuan(note) 371,100 7.79 Beijing Zenomed 279,800 5.88 Suzhou Taihao 123,700 2.60 Chanrong Hechuang(note) 98,900 2.08

Total 4,762,000 100

Note: For further information on Chengdu Boyuan and Chanrong Hechuang, each a Pre-[REDACTED] Investor of our Company, please refer to the paragraph headed “Principal Terms of the Pre-[REDACTED] Investments – (5) Information about our Pre-[REDACTED] Investors” in this section.

(f) Capital Increase Subscribed by Anji NewMed and Series B Financing

Pursuant to the shareholders’ resolutions dated January 15, 2020, the registered capital of our Company increased from RMB4,762,000 to RMB5,792,300, and (i) Anji NewMed agreed to subscribe for the increased registered capital of RMB250,600 of our Company (representing approximately 4.33% of the registered capital upon completion of the capital increase) at a consideration of RMB250,600; and (ii) OAP III agreed to invest USD20,022,574.18 (equivalent to RMB140,000,000) in our Company, among which RMB779,700 was recorded as registered capital (representing approximately 13.46% of the registered capital upon completion of the capital increase) with the remaining funds allocated to capital reserve (“Series B Financing”).

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Upon completion of the capital increase on February 11, 2020, the shareholding structure of our Company was as follows:

Corresponding equity interest in our Company Registered (upon completion capital of the capital Shareholders subscribed for increase) (RMB) (%)

Dr. Yu 1,397,100 24.12 NewMed Enterprise Management 934,500 16.13 ZJ Leading VC 797,200 13.76 OAP III(1) 779,700 13.46 Shanghai Shanchi 388,600 6.71 Jiequan Lize 371,100 6.41 Chengdu Boyuan 371,100 6.41 Beijing Zenomed 279,800 4.83 Anji NewMed(2) 250,600 4.33 Suzhou Taihao 123,700 2.14 Chanrong Hechuang 98,900 1.71

Total 5,792,300 100

Notes:

(1) For further information on OAP III, a Pre-[REDACTED] Investor of our Company, please refer to the paragraph headed “Principal Terms of the Pre-[REDACTED] Investments – (5) Information about our Pre-[REDACTED] Investors” in this section.

(2) Anji NewMed was established as a limited partnership under the laws of the PRC on November 29, 2019 and is one of our ESOP Platforms. For the details on Anji NewMed, please refer to the paragraph headed “Employee Incentive Platforms – (5) Anji NewMed” in this section.

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(g) Series B+ Financing

Pursuant to the shareholders’ resolutions dated February 26, 2020, the registered capital of our Company increased from RMB5,792,300 to RMB6,015,100, and LAV Newmed Limited (“LAV Newmed”) agreed to invest USD5,670,864.00 (equivalent to RMB40,000,000) in our Company, among which RMB222,800 was recorded as registered capital (representing approximately 3.70% of the registered capital upon completion of the capital increase) with the remaining funds allocated to capital reserve (“LAV Newmed Subscription”). Further, on February 26, 2020, the following parties entered into an equity transfer agreement, pursuant to which the following transfers of equity interest in our Company (together with the LAV Newmed Subscription, “Series B+ Financing”) were agreed:

Corresponding equity interest in our Company Registered (upon completion capital of the capital Transferor Transferee transferred increase) Consideration (RMB) (%) (RMB)

NewMed Suzhou Likang Equity 111,400 1.85 20,000,000 Enterprise Investment Center (Limited Management Partnership) (蘇州禮康股權投資中心(有限合夥)) (“Suzhou Likang”) ZJ Leading VC Shenzhen Dachen Chuangtong 100,300 1.67 18,000,000 Equity Investment Enterprise (Limited Partnership) (深圳市達晨創通股權投資企業(有限合夥)) (“Dachen Chuangtong”) Beijing Zenomed Dachen Chuangtong 50,100 0.83 9,000,000 NewMed Dachen Chuangtong 39,000 0.65 7,000,000 Enterprise Management

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Upon completion of the capital increase and the equity transfers on March 31, 2020, the shareholding structure of our Company was as follows:

Corresponding equity interest in our Company (upon completion Registered of the capital capital increase and the Shareholders subscribed for equity transfers) (RMB) (%)

Dr. Yu 1,397,100 23.23 NewMed Enterprise Management 784,100 13.04 OAP III 779,700 12.96 ZJ Leading VC 696,900 11.59 Shanghai Shanchi 388,600 6.46 Jiequan Lize 371,100 6.17 Chengdu Boyuan 371,100 6.17 Anji NewMed 250,600 4.17 Beijing Zenomed 229,700 3.82 LAV Newmed(note) 222,800 3.70 Dachen Chuangtong(note) 189,400 3.15 Suzhou Taihao 123,700 2.06 Suzhou Likang(note) 111,400 1.85 Chanrong Hechuang 98,900 1.64

Total 6,015,100 100

Note: For further information on LAV Newmed, Suzhou Likang and Dachen Chuangtong, each a Pre-[REDACTED] Investor of our Company, please refer to the paragraph headed “Principal Terms of the Pre-[REDACTED] Investments – (5) Information about our Pre-[REDACTED] Investors” in this section.

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(h) Series C Financing and Capital Increase in April 2021

On March 12, 2021, the following parties entered into an equity transfer agreement, pursuant to which the following transfers of equity interest in our Company were agreed:

Corresponding equity interest in our Company Registered (upon completion capital of the capital transferred increase as Transferor Transferee (approximation) described below) Consideration (RMB) (%) (RMB)

ZJ Leading VC Suzhou Boyuan Mingcheng 79,900 1.08 50,000,000 Venture Capital Partnership (Limited Partnership) (蘇州博遠鳴誠創業投資合夥企業 (有限合夥)) (“Boyuan Mingcheng”)(note) NewMed Boyuan Mingcheng(note) 115,200 1.56 72,000,000 Enterprise Management Jiequan Lize Boyuan Mingcheng(note) 44,800 0.61 28,000,000 Jiequan Lize Suzhou Likang 21,300 0.29 13,330,000 Jiequan Lize Youyu Global Limited 93,900 1.27 58,670,000 (有魚環球有限公司) (“Youyu Global”)(note) Chengdu Boyuan Dachen Chuangtong 48,000 0.65 30,000,000

Note: For further information on Boyuan Mingcheng and Youyu Global, each a Pre-[REDACTED] Investor of our Company, please refer to the paragraph headed “Principal Terms of the Pre-[REDACTED] Investments – (5) Information about our Pre-[REDACTED] Investors” in this section.

Further, pursuant to the shareholders’ resolutions dated March 12, 2021, the registered capital of our Company increased from RMB6,015,100 to RMB7,389,300, and (i) Springleaf Investments, (ii) Zhangke Lingyi Fengtao, (iii) Shanghai CW ChuangVest Venture Capital Partnership (Limited Partnership) (上海成為創伴創業投資合夥企業(有限合夥)) (“CW ChuangVest”), (iv) Youyu Global, (v) OAP III, (vi) LAV Newmed, (vii) Chanrong Hechuang and (viii) Jiaxing Fengtao agreed to subscribe for the increased registered capital of RMB1,374,200 of our Company (representing approximately 18.60% of the registered capital upon completion of the capital increase) at a total consideration of RMB619,383,900 with the remaining funds allocated to capital reserve (the

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aforementioned subscriptions (save for the subscription by Jiaxing Fengtao) and the aforementioned transfers were collectively referred to as “Series C Financing”). The respective subscription amount and consideration paid by the relevant subscribers were as follows:

Corresponding equity interest in our Company Registered (upon completion capital of the equity subscribed for transfers and the Subscriber (approximation) capital increase) Consideration (RMB) (%)

Springleaf Investments(1) 559,900 7.58 RMB350,000,000 Zhangke Lingyi Fengtao(1) 105,600 1.43 RMB66,000,000 CW ChuangVest(1) 67,200 0.91 RMB42,000,000

USD6,372,869 (equivalent to Youyu Global 66,100 0.89 RMB41,330,000)

USD11,246,341.10 (equivalent to OAP III 116,800 1.58 RMB73,000,000)

USD4,128,291 (equivalent to LAV Newmed 42,700 0.58 RMB26,670,000) Chanrong Hechuang 32,000 0.43 RMB20,000,000 Jiaxing Fengtao(2) 383,900 5.20 RMB383,900

Notes:

(1) For further information on Springleaf Investments, Zhangke Lingyi Fengtao and CW ChuangVest, each a Pre-[REDACTED] Investor of our Company, please refer to the paragraph headed “Principal Terms of the Pre-[REDACTED] Investments – (5) Information about our Pre-[REDACTED] Investors” in this section.

(2) Jiaxing Fengtao was established as a limited partnership under the laws of the PRC on December 10, 2020 and is one of our ESOP Platforms. For the details on Jiaxing Fengtao, please refer to the paragraph headed “Employee Incentive Platforms – (2) Jiaxing Fengtao” in this section.

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Upon completion of the capital increase and the equity transfers on April 22, 2021, the shareholding structure of our Company was as follows:

Corresponding equity interest in our Company Registered (upon completion capital of the capital subscribed for increase and the Shareholders (approximation) equity transfers) (RMB) (%)

Dr. Yu 1,397,100 18.91 OAP III 896,500 12.13 NewMed Enterprise Management 668,900 9.05 ZJ Leading VC 617,000 8.35 Springleaf Investments 559,900 7.58 Shanghai Shanchi 388,600 5.26 Jiaxing Fengtao 383,900 5.20 Chengdu Boyuan 323,100 4.37 LAV Newmed 265,400 3.59 Anji NewMed 250,600 3.39 Boyuan Mingcheng 240,000 3.25 Dachen Chuangtong 237,400 3.21 Beijing Zenomed 229,700 3.11 Jiequan Lize 211,100 2.86 Youyu Global 160,000 2.17 Suzhou Likang 132,700 1.80 Chanrong Hechuang 130,900 1.77 Suzhou Taihao 123,700 1.67 Zhangke Lingyi Fengtao 105,600 1.43 CW ChuangVest 67,200 0.91

Total 7,389,300 100

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(3) Conversion into Joint Stock Limited Company and Major Shareholding Changes of Our Company After Conversion

(a) Conversion into Joint Stock Limited Company

Pursuant to shareholders’ resolutions dated June 28, 2021 and the promoters’ agreement dated June 28, 2021 entered into by all the then Shareholders, all promoters (being all the then Shareholders) agreed to convert our Company from a limited liability company into a joint stock limited company. Upon completion of the conversion, the share capital of our Company was RMB7,389,300 divided into 7,389,300 Shares with a nominal value of RMB1.0 each, which were subscribed by all the then Shareholders in proportion to their respective equity interests in our Company before the conversion. The conversion was completed on July 8, 2021 when our Company obtained a new business license and was renamed as Shanghai NewMed Medical Co., Ltd. (上海紐脈醫療科技股份有限公司).

(b) Capital Increase Subscribed by Jiaxing Yongqi

Pursuant to the shareholders’ resolutions dated July 8, 2021, the registered capital of our Company increased from RMB7,389,300 to RMB7,758,765, and Jiaxing Yongqi agreed to subscribe for the increased registered capital of RMB369,465 of our Company (representing approximately 4.77% of the registered capital upon completion of the capital increase) at a consideration of RMB369,465.

Jiaxing Yongqi was established as a limited partnership under the laws of the PRC on January 13, 2021 and is one of our ESOP Platforms. For the details on Jiaxing Yongqi, please refer to the paragraph headed “Employee Incentive Platforms – (3) Jiaxing Yongqi” in this section.

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Upon completion of the capital increase on July 9, 2021, the shareholding structure of our Company was as follows:

Corresponding equity interest in our Company (upon completion Number of of the capital Shareholders Shares increase) (%)

Dr. Yu 1,397,095 18.01 OAP III 896,522 11.55 NewMed Enterprise Management 668,930 8.62 ZJ Leading VC 616,955 7.95 Springleaf Investments 559,917 7.22 Shanghai Shanchi 388,603 5.01 Jiaxing Fengtao 383,941 4.95 Jiaxing Yongqi 369,465 4.77 Chengdu Boyuan 323,105 4.16 LAV Newmed 265,446 3.42 Anji NewMed 250,593 3.23 Boyuan Mingcheng 239,968 3.09 Dachen Chuangtong 237,359 3.06 Beijing Zenomed 229,674 2.96 Jiequan Lize 211,120 2.72 Youyu Global 159,978 2.06 Suzhou Likang 132,719 1.71 Chanrong Hechuang 130,894 1.69 Suzhou Taihao 123,704 1.59 Zhangke Lingyi Fengtao 105,586 1.36 CW ChuangVest 67,191 0.87

Total 7,758,765 100

Pursuant to the shareholders’ resolutions dated July 12, 2021, the registered capital of our Company increased from RMB7,758,765 to RMB660,000,000 by way of capitalization of the capital reserve of our Company of RMB652,241,235 on the basis of 850.650845 Shares for every 10 Shares, representing a total increase of 652,241,235 Shares based on the total number of 7,758,765 Shares immediately before the capitalization.

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Upon completion of the capitalization on July 13, 2021, the shareholding structure of our Company was as follows:

Corresponding equity interest Number of in our Shareholders Shares Company (%)

Dr. Yu 118,844,004 18.01 OAP III 76,262,720 11.55 NewMed Enterprise Management 56,902,587 8.62 ZJ Leading VC 52,481,329 7.95 Springleaf Investments 47,629,387 7.22 Shanghai Shanchi 33,056,547 5.01 Jiaxing Fengtao 32,659,974 4.95 Jiaxing Yongqi 31,428,572 4.77 Chengdu Boyuan 27,484,954 4.16 LAV Newmed 22,580,186 3.42 Anji NewMed 21,316,715 3.23 Boyuan Mingcheng 20,412,898 3.09 Dachen Chuangtong 20,190,963 3.06 Beijing Zenomed 19,537,238 2.96 Jiequan Lize 17,958,941 2.72 Youyu Global 13,608,542 2.06 Suzhou Likang 11,289,753 1.71 Chanrong Hechuang 11,134,509 1.69 Suzhou Taihao 10,522,891 1.59 Zhangke Lingyi Fengtao 8,981,682 1.36 CW ChuangVest 5,715,608 0.87

Total 660,000,000 100

VOTING ARRANGEMENT

On March 15, 2017, Dr. Yu, Shanghai Shanchi, Beijing Zenomed and NewMed Enterprise Management entered into a concert party agreement, pursuant to which the parties agreed to, among other things, (i) act in concert by aligning their votes and following Dr. Yu’s directions when exercising their voting rights at the shareholders’ meetings of our Group since the date of the agreement and (ii) enter into voting entrustment agreement(s) to entrust Dr. Yu to exercise all of their voting rights as shareholders of our Company upon Dr. Yu’s request. On March 25, 2017, each of Shanghai Shanchi, Beijing Zenomed and NewMed Enterprise Management entered into a voting entrustment agreement with Dr. Yu and entrusted its respective voting rights as a shareholder of our Company to Dr. Yu. By entrusting their voting power to Dr. Yu, they believe that the consistent leadership and management, supported with stronger control by Dr. Yu who has the relevant academic and industry background, will be beneficial to the overall strategic planning and decision-making process as well as the growth and development of our Group.

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On July 16, 2021, Dr. Yu, Shanghai Shanchi, Beijing Zenomed and NewMed Enterprise Management entered into termination agreements pursuant to which the voting arrangement under the above concert party agreement and voting entrustment agreements has been terminated. Since Shanghai Shanchi and Beijing Zenomed are minority shareholders, termination of the voting arrangements will ensure that each of them will be able to exercise its shareholder’s rights free of any restrictions, including to dispose of the Shares in the market to realize its investment return.

EMPLOYEE INCENTIVE PLATFORMS

In recognition of the contributions of our employees and to incentivize them to further promote our development, Anji NewMed, Jiaxing Fengtao, Jiaxing Yongqi, Jiaxing Qianqi, Anji Tongxin and Jiaxing Heting were established in the PRC as our employee incentive platforms.

(1) Anji NewMed

Anji NewMed was established as a limited partnership under the laws of the PRC on November 29, 2019. Shanghai Chenlu is the general partner of Anji NewMed and is responsible for the management of Anji NewMed. As of the Latest Practicable Date, Anji NewMed held approximately 3.23% equity interest in our Company.

(2) Jiaxing Fengtao

Jiaxing Fengtao was established as a limited partnership under the laws of the PRC on December 10, 2020. Shanghai Chenlu is the general partner of Jiaxing Fengtao and is responsible for the management of Jiaxing Fengtao. As of the Latest Practicable Date, Jiaxing Fengtao held approximately 4.95% equity interest in our Company.

(3) Jiaxing Yongqi

Jiaxing Yongqi was established as a limited partnership under the laws of the PRC on January 13, 2021. Shanghai Chenlu is the general partner of Jiaxing Yongqi and is responsible for the management of Jiaxing Yongqi. As of the Latest Practicable Date, Jiaxing Yongqi held approximately 4.77% equity interest in our Company.

(4) Jiaxing Qianqi

Jiaxing Qianqi was established as a limited partnership under the laws of the PRC on July 15, 2021. Shanghai Chenlu is the general partner of Jiaxing Qianqi and is responsible for the management of Jiaxing Qianqi. As of the Latest Practicable Date, Jiaxing Qianqi held approximately 2.99% equity interest in our Company through NewMed Enterprise Management.

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(5) Anji Tongxin

Anji Tongxin was established as a limited partnership under the laws of the PRC on March 28, 2019. Shanghai Chenlu is the general partner of Anji Tongxin and is responsible for the management of Anji Tongxin. As of the Latest Practicable Date, Anji Tongxin held approximately 1.36% equity interest in our Company through NewMed Enterprise Management.

(6) Jiaxing Heting

Jiaxing Heting was established as a limited partnership under the laws of the PRC on July 23, 2021. Shanghai Chenlu is the general partner of Jiaxing Heting and is responsible for the management of Jiaxing Heting. As of the Latest Practicable Date, Jiaxing Heting held approximately 0.18% equity interest in our Company through NewMed Enterprise Management.

For details of our ESOP Platforms, please refer to the paragraph headed “Further Information about Our Directors, Supervisors and Substantial Shareholders – 5. Employee Incentive Scheme” in Appendix VI to this document.

EMPLOYEE INCENTIVE SCHEME

We have adopted the Employee Incentive Scheme (as amended from time to time) which was last amended on March 12, 2021, the purposes of which were to set long-term incentives for the Directors, Supervisors, senior management and employees of our Group.

For details of the Employee Incentive Scheme, please refer to the paragraph headed “Further Information About Our Directors, Supervisors and Substantial Shareholders – 5. Employee Incentive Scheme” in Appendix VI to this document.

Save as disclosed above and in the paragraph headed “Further Information About Our Directors, Supervisors and Substantial Shareholders – 5. Employee Incentive Scheme” in Appendix VI to this document, as of the Latest Practicable Date, our Group does not have any outstanding share options, warrants, convertible debt securities or other convertible instruments, or similar rights convertible into our Shares.

PRINCIPAL TERMS OF THE PRE-[REDACTED] INVESTMENTS

(1) Overview

Between July 2015 and April 2021, our Company obtained several rounds of investments from the Pre-[REDACTED] Investors through subscriptions for increased registered capital of our Company and/or through transfers by the then shareholders of our Company. For further details, please refer to the paragraph headed “Establishment and Development of Our Company” in this section.

– 191 – (2) Principal terms of the Pre-[REDACTED] Investments DOCUMENT THIS OF COVER MUST THE INFORMATION ON THE “WARNING” THAT HEADED AND CHANGE SECTION TO THE SUBJECT WITH AND CONJUNCTION INCOMPLETE IN FORM, READ DRAFT BE IN IS DOCUMENT THIS

The following table summarizes the key terms of the Pre-[REDACTED] Investments: STRUCTURE CORPORATE AND DEVELOPMENT HISTORY,

Angel Series Pre-A Series A Investment Financing Financing Series A+ Financing Series B Financing Series B+ Financing Series C Financing

Amount of registered capital 279,800 896,100 494,800 470,000 (2) (4) (5) subscribed for/purchased 779,700 523,600 1,393,500 (RMB)

(2) (3) (4) (5) Amount of registered capital 5,792,300 6,015,100 7,389,300 after each round of 3,000,000 3,896,100 4,390,900 4,762,000 Pre- [REDACTEDInvestment] (RMB)

9 – 192 – (2) (4) (5) Amount of consideration paid RMB1.80RMB25 million RMB40 million RMB38(among millionRMB140 million (all of RMB94(among millionRMB871 million(among (1) (allmillion(all of which has (allwhich of which RMB30 has million has which has beenwhich invested RMB40 millionwhich has RMB619 million of which has been invested in beenbeen invested invested in in our in our Companybeen as invested in our has been invested in our been invested our Company as ourCompany Company as as registered registered capitalCompany and as registeredCompany as registered in our registered capital registeredcapital capital and capital reserve capital reserve)capital and capital reservecapital and capital reserve Company as and capital andand capital RMB8 million was and RMB54 million wasand RMB252 million was registered reserve) reserve)paid pursuant to the paid pursuant to the paid pursuant to the capital and equity transfer agreement) equity transfer agreement)equity transfer agreement) capital reserve)

Post-money valuation of our RMB19 million RMB109 million Company (approximation)

(6) (7) (8) (9) RMB355 millionRMB385 million RMB1,040 millionRMB1,080 million RMB4,619 million

Date of agreement July 1, 2015 February 1, 2016 March 10, 2018 June 1, 2018 December 31, 2019 February 26, 2020 March 12, 2021

Date of payment of full July 22, 2015 January 9, 2017 March 21, 2018 June 29, 2018 February 26, 2020 June 18, 2020 June 8, 2021 consideration ERA NCNUCINWT H ETO EDD“ANN”O H OE FTI DOCUMENT THIS OF COVER MUST THE INFORMATION ON THE “WARNING” THAT HEADED AND CHANGE SECTION TO THE SUBJECT WITH AND CONJUNCTION INCOMPLETE IN FORM, READ DRAFT BE IN IS DOCUMENT THIS Angel Series Pre-A Series A Investment Financing Financing Series A+ Financing Series B Financing Series B+ Financing Series C Financing

Cost per Share paid under STRUCTURE CORPORATE AND DEVELOPMENT HISTORY, the Pre- 0.08 0.33 0.95 0.95 2.11 2.11 7.35

[REDACTED] (10) Investment (RMB) Discount to the

[REDACTED[REDACTED] ][REDACTED][REDACTED][REDACTED][REDACTED][REDACTED][REDACTED] (10)(11) (approximation)

Basis of determination of the The valuation and considerations[REDACTED for eachInvestments round] of Pre- were determined based on arm’s length negotiation amongst[REDACTED theInvestors respective] and Pre- our Company after takingvaluation into considerationand consideration of the timing of the investments and the status of our business operations and product development advancement.

Lock-up Period All existing Shareholders (including the Pre- [REDACTEDInvestors)] shall not dispose of any of the Shares held by them within the[REDACTED 12 monthsas required following] under the the applicable PRC law.

Use of proceeds from the

Pre- – 193 – [REDACTEDfrom the] Pre-[REDACTEDInvestments] received by our Company have been utilized for principal business of our Group, including but not limited to research and development activities, and general working capital purposes. As of the Latest Practicable Date, approximately 36% of the net proceeds from the Pre- [REDACTEDInvestments] [REDACTEDInvestments] had been utilized.

Strategic benefits to our Company brought by the [REDACTEDInvestments,] our Directors were of the view that our Group could benefit from the additional[REDACTED fundsInvestors’ provided] by the Pre- Pre- investments in our Group and the knowledgeAt and the experience time of the of Pre-the Pre- [REDACTEDInvestors.]

[REDACTEDInvestors]

Notes:

(1) Pursuant to an equity transfer agreement entered into between Dr. Yu and Beijing Zenomed dated July 1, 2015, Dr. Yu agreed to transfer the registered capital in our Company of RMB279,800 to Beijing Zenomed at nil consideration given that such registered capital had not been paid up at the time of the transfer. In connection with the equity transfer, Beijing Zenomed agreed to invest RMB1,800,000 in our Company, among which RMB279,800 was recorded as registered capital with the remaining funds allocated to capital reserve.

(2) Among the RMB470,000 registered capital subscribed for/purchased, the register capital of RMB371,100 was subscribed for by Chengdu Boyuan and the register capital of RMB98,900 was transferred from ZJ Leading VC to Chanrong Hechuang pursuant to the equity transfer agreement. Among the total consideration of RMB38 million paid by the investors, RMB30 million was invested in our Company as registered capital and capital reserve and RMB8 million was paid to ZJ Leading VC pursuant to the equity transfer agreement. For further details, please refer to the paragraph headed “Establishment and Development of Our Company – (2) Pre-[REDACTED] Investments and Major Shareholding Changes of Our Company Before Conversion into Joint Stock Limited Company – (e) Series A+ Financing” in this section. (3) The registered capital of our Company increased from RMB4,762,000 to RMB5,792,300 as a result of the subscription of RMB779,700 by OAP III and the subscription of DOCUMENT THIS OF COVER MUST THE INFORMATION ON THE “WARNING” THAT HEADED AND CHANGE SECTION TO THE SUBJECT WITH AND CONJUNCTION INCOMPLETE IN FORM, READ DRAFT BE IN IS DOCUMENT THIS RMB250,600 by Anji NewMed, one of our ESOP Platforms. For further details, please refer to the paragraph headed “Establishment and Development of Our Company – (2)

Pre-[REDACTED] Investments and Major Shareholding Changes of Our Company Before Conversion into Joint Stock Limited Company – (f) Capital Increase Subscribed by STRUCTURE CORPORATE AND DEVELOPMENT HISTORY, Anji NewMed and Series B Financing” in this section.

(4) Among the RMB523,600 registered capital subscribed for/purchased, the register capital of RMB222,800 was subscribed for by LAV Newmed and the registered capital of RMB300,800 was transferred from certain then existing shareholders to Suzhou Likang and Dachen Chuangtong pursuant to the equity transfer agreement. Among the total consideration of RMB94 million paid by the investors, RMB40 million was invested in our Company as registered capital and capital reserve and RMB54 million was paid to certain then existing shareholders pursuant to the equity transfer agreement. For further details, please refer to the paragraph headed “Establishment and Development of Our Company – (2) Pre-[REDACTED] Investments and Major Shareholding Changes of Our Company Before Conversion into Joint Stock Limited Company – (g) Series B+ Financing” in this section.

(5) Among the RMB1,393,500 registered capital subscribed for/purchased, the register capital of RMB990,300 was subscribed for by Springleaf Investments, Zhangke Lingyi Fengtao, CW ChuangVest, Youyu Global, OAP III, LAV Newmed and Chanrong Hechuang and the registered capital of RMB403,200 was transferred from certain then existing shareholders to Boyuan Mingcheng, Suzhou Likang, Youyu Global and Dachen Chuangtong pursuant to the equity transfer agreement. Among the total consideration of RMB871 million, RMB619 million was invested in our Company as registered capital and capital reserve and RMB252 million was paid pursuant to the equity transfer agreements. For further details, please refer to the paragraph headed “Establishment and Development of Our Company – (2) Pre-[REDACTED] Investments and Major Shareholding Changes of Our Company Before Conversion into Joint Stock Limited Company – (h) Series C Financing and Capital Increase in April 2021” in this section. 9 – 194 –

(6) The increase in valuation from the Angel Investment to Series Pre-A Financing was mainly due to the advancement in the research and development progress of Mi-thos® and our anti-calcification technology.

(7) The increase in valuation from Series Pre-A Financing to Series A Financing was mainly due to the completion of the animal study in respect of Mi-thos® and the expansion of our management team (including the joining of Dr. Xiantao WEN (溫賢濤)).

(8) The increase in valuation from Series A+ Financing to Series B Financing was mainly because the first humanitarian treatment using Mi-thos® was completed and we commenced the animal study in respect of Prizvalve® .

(9) The increase in valuation from Series B+ Financing to Series C Financing was mainly because (i) Mi-thos® and Prizvalve® were approved by the NMPA for clinical trials, (ii) Mi-thos® was recognized as an innovative medical device qualified for Special Review, (iii) the animal study of Valveclip-MTM was completed, (iv) the first humanitarian treatment using Prizvalve® was completed, and (v) we started the FIM clinical trial of Prizvalve® .

(10) Adjusted to reflect capitalization of the Company’s capital reserve completed on July 9, 2021.

(11) Calculated based on the assumption that the [REDACTED]is[REDACTED] per Share (being the mid-point of the indicative [REDACTED]of[REDACTED]to [REDACTED]). THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE

(3) Rights of the Pre-[REDACTED] Investors

Save for Beijing Zenomed, the Pre-[REDACTED] Investors were granted customary special rights, including but not limited to the right to nominate directors, anti-dilution rights, liquidation rights, divestment rights and information rights. All special rights ceased to be effective upon submission of the application for CSRC’s administrative approval in respect of the [REDACTED] on August 4, 2021.

(4) Joint Sponsors’ Confirmation

On the bases that (i) the consideration for the Pre-[REDACTED] Investments was irrevocably settled more than 28 clear days before the date of our first submission of the [REDACTED] application to the [REDACTED]; and (ii) the special rights granted to the Pre-[REDACTED] Investors shall cease to be effective and be discontinued upon submission of the application for CSRC’s administrative approval in respect of the [REDACTED]on August 4, 2021, the [REDACTED] confirm that the Pre-[REDACTED] Investments are in compliance with the Interim Guidance on Pre-[REDACTED] Investments issued by the [REDACTED] on October 13, 2010 and as updated in March 2017 and the Guidance Letter HKEx-GL43-12 issued by the Stock Exchange in October 2012 and as updated in July 2013 and March 2017. The Guidance Letter HKEx-GL44-12 issued by the [REDACTED]in October 2012 and as updated in March 2017 is not applicable to the Pre-[REDACTED] Investments as no convertible instrument was issued.

(5) Information about our Pre-[REDACTED] Investors

Our Pre-[REDACTED] Investors include Sophisticated Investors, namely OAP III and Springleaf Investments, both of which have made meaningful investment in our Company at least six months before the [REDACTED]. The background information on our Pre-[REDACTED] Investors which made meaningful investment in our Company is set out below. To the best knowledge of our Directors, the decision of each Pre-[REDACTED] Investor in investing into our Company was made based on their own assessment of our Company taking into account our leading position in the interventional medical device industry in developing vascular interventional medical devices. To the best knowledge of our Directors, save as disclosed below and in the paragraph headed “Capitalization of our Company” in this section below, each of our Pre-[REDACTED] Investors is an Independent Third Party and none of these Pre-[REDACTED] Investors has any relationship with any other Pre-[REDACTED] Investors.

(a) OAP III: OAP III is a limited company incorporated in Hong Kong and is principally engaged in investment management business in Asia. It is a wholly-owned subsidiary of OrbiMed Asia Partners III, L.P., an Asia-focused private equity fund operated by OrbiMed Advisors III Limited (“OrbiMed”). OrbiMed and its affiliates (collectively, “OrbiMed Group”) manage public and private company investments of over US$19 billion worldwide. Over the past 20 years, the investment scope of OrbiMed Group includes biopharmaceuticals, medical devices, diagnostics and healthcare services in the healthcare industry and its invested companies range from early-stage private companies to large multinational corporations globally, such as Amoy Diagnostics Co., Ltd (廈門艾德生物醫藥科技

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股份有限公司) (stock code: 300685 (SZSE)), AK Medical Holdings Limited (stock code: 1789 (SEHK)), Zai Lab Limited (stock code: 9688 (SEHK) and stock symbol: ZLAB (NASDAQ)), EC Healthcare (stock code: 2138 (SEHK)), Gracell Biotechnologies Inc. (stock symbol: GRCL (NASDAQ)), Terns Pharmaceuticals, Inc. (stock symbol: TERN (NASDAQ)) and Zylox-Tonbridge Medical Technology Co., Ltd. (stock code: 2190 (SEHK)). OAP III is a dedicated healthcare and biotech fund and thus a Sophisticated Investor. To the best knowledge of the Directors, OAP III is an Independent Third Party and other than Dr. David Guowei WANG, a non-executive Director who was nominated by OAP III to our Board, OAP III does not have any past or present relationships with our Company, our subsidiaries, the other shareholders of our Company, our Directors, Supervisors, senior management or their respective associates. For the details of Dr. Wang’s working experience in OrbiMed Group, please refer to the section headed “Directors, Supervisors and Senior Management” in this document.

(b) Springleaf Investments: Springleaf Investments is a limited company incorporated in Singapore and is indirectly wholly owned by Temasek Holdings (Private) Ltd (“Temasek”). Incorporated in 1974, Temasek is an investment company with a net portfolio of 381 billion Singapore dollars (RMB1.86 trillion) as at March 31, 2021. As a provider of catalytic capital, it seeks to enable solutions to key global challenges. It deploys financial capital to stimulate innovation and growth, develops human capital to uplift capabilities and enhance potential, enables natural capital and fosters sustainable solutions for the climate and a better living environment, and seeds social capital to transform lives for a more inclusive and resilient world. Headquartered in Singapore, it has 13 offices in nine countries around the world. Its investment in the life sciences sector includes Wuxi AppTec Co., Ltd. (stock code: 2359 (SEHK) and stock code: 603259 (SSE)), Celltrion, Inc. (stock code: 068270 (KRX)), Thermo Fisher Scientific Inc. (stock symbol: TMO (NYSE)), Aerogen Ltd., Dr. Agarwal’s Health Care Limited, Hangzhou Tigermed Consulting Co., Ltd. (stock code: 3347 (SEHK) and stock code: 300347 (SZSE)), Orchard Therapeutics plc (stock symbol: ORTX (NASDAQ)) and Surgery Partners, Inc. (stock symbol: SGRY (NASDAQ)).

(c) Beijing Zenomed: Beijing Zenomed is a limited liability company incorporated in the PRC and its sole shareholder is Ms. Xi REN (任希).

(d) Boyuan Mingcheng and Chengdu Boyuan: Boyuan Mingcheng is a limited partnership established in the PRC and is managed by its general partner, Borui Yuye (Shanghai) Equity Investment Management Co., Ltd. (博睿瑜業(上海)股權投資管理有限公司). Chengdu Boyuan is a limited partnership established in the PRC and is managed by its general partner, Ningbo Meishan Bonded Port Area Borui Jiatian Equity Investment Management Partnership (Limited Partnership) (寧波梅山保稅港區博睿嘉天股權投資管理合夥企業(有限合夥)). Both the aforementioned general partners are ultimately controlled by Ms. Ruwei ZHI (支汝葦).

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(e) LAV Newmed: LAV Newmed is a limited company incorporated in the British Virgin Islands. It is wholly owned by LAV Biosciences Fund V, L.P., an exempted limited partnership fund established in the Cayman Islands, which is ultimately controlled by Dr. Yi SHI (施毅). The entities above are investment arms of Lilly Asia Ventures, a leading Asia-based life science investment firm with portfolios covering all major sectors of the biomedical and healthcare industry including biopharmaceuticals, medical devices, diagnostics and healthcare services.

(f) Dachen Chuangtong: Dachen Chuangtong is a limited partnership established in the PRC and is managed by its general partner, Shenzhen Dachen Caizhi Venture Capital Management Co., Ltd. (深圳市達晨財智創業投資管理有限公司), which is ultimately controlled by Hunan TV and Broadcast Intermediary Co., Ltd. (湖南電廣傳媒股份有限公司), a company listed on the Shenzhen Stock Exchange (stock code: 000917).

(g) Jiequan Lize: Jiequan Lize is a limited partnership established in the PRC and is managed by its general partner, Jiangsu Lize Investment Management Co., Ltd. (江蘇醴澤投資管理有限公司), which is ultimately controlled by Mr. Yong ZHU (朱勇).

(h) Youyu Global: Youyu Global is a limited company incorporated in Hong Kong and is a wholly-owned subsidiary of Yunfeng Financial Group Limited, which is listed on the Hong Kong Stock Exchange (stock code: 376).

(i) Suzhou Likang: Suzhou Likang is a limited partnership established in the PRC and is managed by its general partner, Shanghai Liyi Investment Management Partnership (Limited Partnership) (上海禮貽投資管理合夥企業(有限合夥)), which is ultimately controlled by Mr. Fei CHEN (陳飛).

(j) Chanrong Hechuang: Chanrong Hechuang is a limited partnership established in the PRC and is managed by its general partner, Beijing Junzi Youchuang Fund Management Co., Ltd. (北京君紫優創基金管理有限公司), which is ultimately controlled by Ms. Jun QIN (秦君).

(k) Suzhou Taihao: Suzhou Taihao is a limited partnership established in the PRC and is managed by its general partner, Suzhou Taihao Venture Capital Management Partnership (Limited Partnership) (蘇州太浩創業投資管理合夥企業(普通合夥)), which is ultimately controlled by Mr. Gang YU (余鋼).

(l) ZJ Leading VC and Zhangke Lingyi Fengtao: Each of ZJ Leading VC and Zhangke Lingyi Fengtao is a limited partnership established in the PRC and is managed by its respective general partner, Shanghai Zhangke Lingyi Enterprise Management Center (Limited Partnership) (上海張科領醫企業管理中心(有限合夥)) and Jiaxing Linghe Equity Investment Partnership (Limited Partnership) (嘉興領和股權投資合夥企業(有限合夥)). Both the aforementioned general partners are ultimately controlled by Mr. Xiaoyong YU who is our Supervisor.

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(m) CW ChuangVest: CW ChuangVest is a limited partnership established in the PRC and is managed by its general partner, Shanghai Chuangban Enterprise Management Center (Limited Partnership) (上海創伴企業管理中心(有限合夥)), which is ultimately controlled by Mr. Yihao LU (陸怡皓).

PUBLIC FLOAT

As Dr. Yu is our executive Director and therefore, a core connected person of our Company, the 118,844,004 shares directly held by Dr. Yu, representing approximately 18.01% of our total issued share capital as of the Latest Practicable Date, or approximately [REDACTED]% of our total issued share capital upon [REDACTED] (assuming the [REDACTED] is not exercised), or approximately [REDACTED]% of our total issued share capital upon exercise of the [REDACTED] in full, will not be counted towards public float for the purpose of Rule 8.08 of the Listing Rules after the [REDACTED].

The 142,307,848 Shares held by NewMed Enterprise Management and certain ESOP Platforms (being Jiaxing Fengtao, Jiaxing Yongqi and Anji NewMed), representing approximately 21.56% of our total issued share capital as of the Latest Practicable Date, or approximately [REDACTED]% of our total issued share capital upon [REDACTED] (assuming the [REDACTED] is not exercised), or approximately [REDACTED]% of our total issued share capital upon exercise of the [REDACTED] in full, are Unlisted Shares which will be converted into H Shares and listed upon completion of the [REDACTED]. As NewMed Enterprise Management and the aforementioned ESOP Platforms are managed by their general partner, Shanghai Chenlu, which in turn is owned as to 70% by Dr. Yu, an executive Director of our Company, NewMed Enterprise Management and the aforementioned ESOP Platforms are close associates of Dr. Yu and therefore, core connected persons of our Company. As a result, the H Shares held by NewMed Enterprise Management and the aforementioned ESOP Platforms will not be counted towards the public float for the purpose of Rule 8.08 of the Listing Rules after the [REDACTED].

As Shanghai Shanchi is ultimately controlled by Mr. Jie ZHANG (a non-executive Director of our Company), Shanghai Shanchi is a close associate of Mr. Zhang and therefore, a core connected person of our Company. As a result, the 33,056,547 Shares held by Shanghai Shanchi, representing approximately 5.01% of our total issued share capital of the Latest Practicable Date, or approximately [REDACTED]% of our total issued share capital upon [REDACTED] (assuming the [REDACTED] Option is not exercised), or approximately [REDACTED]% of our total issued share capital upon exercise of the [REDACTED] in full, will not be counted towards the public float for the purpose of Rule 8.08 of the Listing Rules after the [REDACTED].

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Each of (i) Shanghai Zhangke Lingyi Enterprise Management Center (Limited Partnership) (上海張科領醫企業管理中心(有限合夥)) which is the general partner of ZJ Leading VC and (ii) Jiaxing Linghe Equity Investment Partnership (Limited Partnership) (嘉興領和股權投資合夥企業(有限合夥)) which is the general partner of Zhangke Lingyi Fengtao is ultimately controlled by Mr. Xiaoyong YU who is our Supervisor. Therefore, each of ZJ Leading VC and Zhangke Lingyi Fengtao is a close associate of Mr. Yu and therefore, a core connected person of our Company. As a result, the 61,463,011 Shares held by ZJ Leading VC and Zhangke Lingyi Fengtao, representing approximately 9.31% of our total issued share capital as of the Latest Practicable Date, or approximately [REDACTED]% of our total issued share capital upon [REDACTED] (assuming the [REDACTED] is not exercised), or approximately [REDACTED]% of our total issued share capital upon exercise of the [REDACTED] in full, will not be counted towards the public float for the purpose of Rule 8.08 of the Listing Rules after the [REDACTED].

The 304,328,590 Shares held by OAP III, Springleaf Investments, Chengdu Boyuan, LAV Newmed, Boyuan Mingcheng, Dachen Chuangtong, Jiequan Lize, Youyu Global, Suzhou Likang, Chanrong Hechuang, Suzhou Taihao, CW ChuangVest and Beijing Zenomed, representing approximately 46.11% of our total issued share capital as of the Latest Practicable Date, or approximately [REDACTED]% of our total issued share capital upon [REDACTED] (assuming the [REDACTED] is not exercised), or approximately [REDACTED]% of our total issued share capital upon exercise of the [REDACTED] in full, are Unlisted Shares which will be converted into H Shares and listed following the completion of the [REDACTED]. As these entities will not be core connected persons of our Company upon [REDACTED], are not accustomed to take instructions from core connected persons of our Company in relation to the acquisition, disposal, voting or other disposition of their Shares, and their acquisition of Shares were not financed directly or indirectly by core connected persons of our Company, the H Shares held by them will be counted towards the public float for the purpose of Rule 8.08 of the Listing Rules after the [REDACTED]. Therefore, over 25% of our Company’s total issued Shares with a market capitalization of more than 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, respectively.

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CAPITALIZATION OF OUR COMPANY

The table below is a summary of the capitalization of our Company as of the date of this document and the [REDACTED] (assuming the [REDACTED] is not exercised):

Ownership percentage Ownership as of the percentage Number of date of this as of the Shareholders Shares document [REDACTED] (%) (%)

Dr. Yu(1) 118,844,004 18.01 [REDACTED] OAP III(2) 76,262,720 11.55 [REDACTED] NewMed Enterprise Management(2) 56,902,587 8.62 [REDACTED] ZJ Leading VC(3) 52,481,329 7.95 [REDACTED] Springleaf Investments(2) 47,629,387 7.22 [REDACTED] Shanghai Shanchi(4) 33,056,547 5.01 [REDACTED] Jiaxing Fengtao(2) 32,659,974 4.95 [REDACTED] Jiaxing Yongqi(2) 31,428,572 4.77 [REDACTED] Chengdu Boyuan(2) 27,484,954 4.16 [REDACTED] LAV Newmed(2) 22,580,186 3.42 [REDACTED] Anji NewMed(2) 21,316,715 3.23 [REDACTED] Boyuan Mingcheng(2) 20,412,898 3.09 [REDACTED] Dachen Chuangtong(2) 20,190,963 3.06 [REDACTED] Beijing Zenomed(2) 19,537,238 2.96 [REDACTED] Jiequan Lize(2) 17,958,941 2.72 [REDACTED] Youyu Global(2) 13,608,542 2.06 [REDACTED] Suzhou Likang(2) 11,289,753 1.71 [REDACTED] Chanrong Hechuang(2) 11,134,509 1.69 [REDACTED] Suzhou Taihao(2) 10,522,891 1.59 [REDACTED] Zhangke Lingyi Fengtao(2) 8,981,682 1.36 [REDACTED] CW ChuangVest(2) 5,715,608 0.87 [REDACTED] Investors taking part in the [REDACTED] [REDACTED] – [REDACTED]

Total [REDACTED] 100.00 100.00

Notes:

(1) Among the 118,844,004 Domestic Shares held by Dr. Yu, 59,422,002 Shares will be converted to H Shares upon [REDACTED] and 59,422,002 Shares will remain as Domestic Shares upon [REDACTED].

(2) The Shares held by these Shareholders are Unlisted Shares which will be converted to H Shares upon [REDACTED].

(3) The Shares held by ZJ Leading VC are Domestic Shares and will remain as Domestic Shares upon [REDACTED].

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(4) Among the 33,056,547 Domestic Shares held by Shanghai Shanchi, 16,528,273 Shares will be converted to H Shares upon [REDACTED] and 16,528,274 Shares will remain as Domestic Shares upon [REDACTED].

CORPORATE STRUCTURE IMMEDIATELY BEFORE COMPLETION OF THE [REDACTED]

The chart below sets out the shareholding structure of our Company immediately before completion of the [REDACTED]:

NewMed Springleaf Jiaxing Chengdu Anji Dachen Jiequan Suzhou Suzhou CW (A) Enterprise Dr. Yu Investments(4)(A) Fengtao(6)(A) Boyuan(8)(A) NewMed(10)(A) Chuangtong(11)(A) Lize(13)(A) Likang(15)(A) Taihao(17)(A) ChuangVest(18)(A) Management(2)(A)

Zhangke ZJ Leading Shanghai Jiaxing LAV Boyuan Beijing Youyu Chanrong (1)(A) Lingyi OAP III VC(3)(A) Shanchi(5)(A) Yongqi(7)(A) Newmed(9)(A) Mingcheng(8)(A) Zenomed(12)(A) Global(14)(A) Hechuang(16)(A) Fengtao(3)(A)

18.01% 11.55% 8.62% 7.95% 7.22% 5.01% 4.95% 4.77% 4.16% 3.42% 3.23% 3.09% 3.06% 2.96% 2.72% 2.06% 1.71% 1.69% 1.59% 1.36% 0.87%

Our Company (PRC)

100% 100% NewMed Chengdu Taiwei NewMed (PRC) (PRC)

Notes:

(1) OAP III, a limited company incorporated in Hong Kong, is our Pre-[REDACTED] Investor and Sophisticated Investor. OrbiMed Advisors III Limited indirectly controls OAP III. Each of OAP III and OrbiMed Advisors III Limited is an Independent Third Party.

(2) NewMed Enterprise Management, which is a limited partnership established in the PRC, is an entity through which certain of our senior management and ESOP Platforms hold the Shares. Shanghai Chenlu, a limited liability company incorporated in the PRC, is the general partner of NewMed Enterprise Management and is responsible for the management of NewMed Enterprise Management. Shanghai Chenlu is owned as to 70% by Dr. Yu and 30% by Ms. Li LI (李莉) who is an employee of our Company and the spouse of Dr. Yu.

(3) Each of ZJ Leading VC and Zhangke Lingyi Fengtao is a limited partnership established in the PRC and is our Pre-[REDACTED] Investor. Each of them is managed by its respective general partner, Shanghai Zhangke Lingyi Enterprise Management Center (Limited Partnership) (上海張科領醫企業管理中心(有限合夥)) and Jiaxing Linghe Equity Investment Partnership (Limited Partnership) (嘉興領和股權投資合夥企業(有限合夥)). Both of the aforementioned general partners are ultimately controlled by Mr. Xiaoyong YU who is our Supervisor.

(4) Springleaf Investments, a limited company incorporated in Singapore, is our Pre-[REDACTED] Investor and Sophisticated Investor. Springleaf Investments is ultimately wholly owned by Temasek Holdings (Private) Ltd. Each of Springleaf Investments and Temasek Holdings (Private) Ltd is an Independent Third Party.

(5) Shanghai Shanchi is a limited partnership established in the PRC. The general partner of Shanghai Shanchi is Shanghai Pujian Jikang Zhongchuang Space Management Co., Ltd (上海普健濟康眾創空間管理有限公司), which is owned as to 85% by Mr. Jie ZHANG.

(6) Jiaxing Fengtao is a limited partnership established in the PRC and is one of our ESOP Platforms. Shanghai Chenlu is the general partner of Jiaxing Fengtao and is responsible for the management of Jiaxing Fengtao. Shanghai Chenlu is owned as to 70% by Dr. Yu and 30% by Ms. Li LI (李莉) who is an employee of our Company and the spouse of Dr. Yu.

(7) Jiaxing Yongqi is a limited partnership established in the PRC and is one of our ESOP Platforms. Shanghai Chenlu is the general partner of Jiaxing Yongqi and is responsible for the management of Jiaxing Yongqi. Shanghai Chenlu is owned as to 70% by Dr. Yu and 30% by Ms. Li LI (李莉) who is an employee of our Company and the spouse of Dr. Yu.

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(8) Each of Chengdu Boyuan and Boyuan Mingcheng is a limited partnership established in the PRC and is our Pre-[REDACTED] Investor. Each of them is managed by its respective general partner, Ningbo Meishan Bonded Port Area Borui Jiatian Equity Investment Management Partnership (Limited Partnership) (寧波梅山保稅港區博睿嘉天股權投資管理合夥企業(有限合夥)) and Borui Yuye (Shanghai) Equity Investment Management Co., Ltd. (博睿瑜業(上海)股權投資管理有限公司). Both of the aforementioned general partners are ultimately controlled by Ms. Ruwei ZHI (支汝葦). Each of Chengdu Boyuan, Boyuan Mingcheng and Ms. Ruwei ZHI is an Independent Third Party.

(9) LAV Newmed, a limited company incorporated in the British Virgin Islands, is our Pre-[REDACTED] Investor. It is wholly owned by LAV Biosciences Fund V, L.P., an exempted limited partnership fund established in the Cayman Islands, which is ultimately controlled by Dr. Yi SHI (施毅). Each of LAV Newmed and Dr. Yi SHI is an Independent Third Party.

(10) Anji NewMed is a limited partnership established in the PRC and is one of our ESOP Platforms. Shanghai Chenlu is the general partner of Anji NewMed and is responsible for the management of Anji NewMed. Shanghai Chenlu is owned as to 70% by Dr. Yu and 30% by Ms. Li LI (李莉) who is an employee of our Company and the spouse of Dr. Yu.

(11) Dachen Chuangtong, a limited partnership established in the PRC, is our Pre-[REDACTED] Investor. It is managed by its general partner, Shenzhen Dachen Caizhi Venture Capital Management Co., Ltd. (深圳市達晨財智創業投資管理有限公司), which is ultimately controlled by Hunan TV and Broadcast Intermediary Co., Ltd. (湖南電廣傳媒股份有限公司), a company listed on the Shenzhen Stock Exchange (stock code: 000917). Each of Dachen Chuangtong and Hunan TV and Broadcast Intermediary Co., Ltd. is an Independent Third Party.

(12) Beijing Zenomed, a limited liability company incorporated in the PRC, is our Pre-[REDACTED] Investor. It is wholly owned by Ms. Xi REN (任希). Each of Beijing Zenomed and Ms. Xi REN is an Independent Third Party.

(13) Jiequan Lize, a limited partnership established in the PRC, is our Pre-[REDACTED] Investor. It is managed by its general partner, Jiangsu Lize Investment Management Co., Ltd. (江蘇醴澤投資管理有限公司), which is ultimately controlled by Mr. Yong ZHU (朱勇). Each of Jiequan Lize and Mr. Yong ZHU is an Independent Third Party.

(14) Youyu Global, a limited company incorporated in Hong Kong, is our Pre-[REDACTED] Investor. It is a wholly-owned subsidiary of Yunfeng Financial Group Limited. Each of Youyu Global and Yunfeng Financial Group Limited is an Independent Third Party.

(15) Suzhou Likang, a limited partnership established in the PRC, is our Pre-[REDACTED] Investor. It is managed by its general partner, Shanghai Liyi Investment Management Partnership (Limited Partnership) (上海禮貽投資管理合夥企業(有限合夥)), which is ultimately controlled by Mr. Fei CHEN (陳飛). Each of Suzhou Likang and Mr. Fei CHEN is an Independent Third Party.

(16) Chanrong Hechuang, a limited partnership established in the PRC, is our Pre-[REDACTED] Investor. It is managed by its general partner, Beijing Junzi Youchuang Fund Management Co., Ltd. (北京君紫優創基金管理有限公司) which is ultimately controlled by Ms. Jun QIN (秦君). Each of Chanrong Hechuang and Ms. Jun QIN is an Independent Third Party.

(17) Suzhou Taihao, a limited partnership established in the PRC, is our Pre-[REDACTED] Investor. It is managed by its general partner, Suzhou Taihao Venture Capital Management Partnership (Limited Partnership) (蘇州太浩創業投資管理合夥企業(普通合夥)), which is ultimately controlled by Mr. Gang YU (余鋼). Each of Suzhou Taihao and Mr. Gang YU is an Independent Third Party.

(18) CW ChuangVest, a limited partnership established in the PRC, is our Pre-[REDACTED] Investor. It is managed by its general partner, Shanghai Chuangban Enterprise Management Center (Limited Partnership) (上海創伴企業管理中心(有限合夥)), which is ultimately controlled by Mr. Yihao LU (陸怡皓). Each of CW ChuangVest and Mr. Yihao LU is an Independent Third Party.

Remark:

(A) The Shares held by these Shareholders are [REDACTED].

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CORPORATE STRUCTURE IMMEDIATELY FOLLOWING COMPLETION OF THE [REDACTED]

The chart below sets out the shareholding structure of our Company immediately following completion of the [REDACTED] (assuming the [REDACTED] is not exercised):

NewMed Springleaf Jiaxing Chengdu Anji Dachen Jiequan Suzhou Suzhou CW (A) Enterprise Dr. Yu Investments(4)(B) Fengtao(6)(B) Boyuan(8)(B) NewMed(10)(B) Chuangtong(11)(B) Lize(13)(B) Likang(15)(B) Taihao(17)(B) ChuangVest(18)(B) Management(2)(B)

Zhangke Shanghai Jiaxing LAV Boyuan Beijing Youyu Chanrong Public (1)(B) (3)(C) Lingyi OAP III ZJ Leading VC Shanchi(5)(D) Yongqi(7)(B) Newmed(9)(B) Mingcheng(8)(B) Zenomed(12)(B) Global(14)(B) Hechuang(16)(B) Shareholders(B) Fengtao(3)(B)

[REDACTED][REDACTED][REDACTED][REDACTED][REDACTED][REDACTED][REDACTED][REDACTED][REDACTED][REDACTED] [REDACTED][REDACTED][REDACTED][REDACTED][REDACTED][REDACTED][REDACTED][REDACTED][REDACTED][REDACTED] [REDACTED][REDACTED]

Our Company (PRC)

100% 100% NewMed Chengdu Taiwei NewMed (PRC) (PRC)

Note: Please refer to notes 1 to 18 in the paragraph headed “Corporate Structure Immediately Before Completion of the [REDACTED]” in this section.

Remarks:

(A) Dr. Yu holds 59,422,002 Domestic Shares (representing approximately [REDACTED]% of our issued share capital) and 59,422,002 H Shares (representing approximately [REDACTED]% of our issued share capital).

(B) The Shares held by these Shareholders are H Shares.

(D) Shanghai Shanchi holds 16,528,274 Domestic Shares (representing approximately [REDACTED]% of our issued share capital) and 16,528,273 H Shares (representing approximately [REDACTED]% of our issued share capital).

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OVERVIEW

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Transcatheter Mitral Valve Intervention Product Candidates

Transcatheter Pulmonary Mi-thos® (TA TMVR) Valve Intervention Product Candidate Prizvalve-PTM (TPVR) Mi-thos ProTM (TF TMVR)

Valveclip-MTM (TMVr)

Transcatheter Tricuspid Valve Intervention Product Candidates Transcatheter Aortic Valve Intervention Product Valveclip-TTM (TTVr) Candidates

Prizvalve® I (BE TAVR) Prizvalve -TTM (TTVR) Prizvalve® II (BE TAVR)

Starr-ATM (TAVR) Accessory Product Candidates

• Product candidates for the aortic valve. Prizvalve®, our BE transfemoral transcatheter aortic valve replacement (“TAVR”) product candidate, has been recognized as an innovative device qualified for Special Review. We aim to make it the first domestic BE TAVR product approved for marketing in China. Its characteristic BE technology affords it numerous advantages over its SE counterparts in treating aortic stenosis. Additionally, we are developing a second- generation TAVR product candidate with improved prosthetic valves and delivery system, as well as a third-generation TAVR product candidate for aortic regurgitation.

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– 206 – The chart below summarizes the development progress of each product candidate up to the Latest Practicable Date: DOCUMENT THIS OF COVER MUST THE INFORMATION ON THE “WARNING” THAT HEADED AND CHANGE SECTION TO THE SUBJECT WITH AND CONJUNCTION INCOMPLETE IN FORM, READ DRAFT BE IN IS DOCUMENT THIS

Initiation of type test by ™ AR Transfemoral Design stage Global 2024 Starr-A TAVR valve 2022 Q1

Initiation of clinical trial ™ TR Transfemoral Type test completed Global 2024 BUSINESS Valveclip-T TTVr clip by 2022 Q1 Tricuspid Valve

0 – 207 – Products Initiation of animal Prizvalve-T™ TTVR valve TR Transfemoral Design stage Global study and type test by 2025 2022 Q1

Pulmonary Valve Completion of type test Prizvalve-P™ TPVR valve PS and PR Transfemoral Design stage Global 2025 Products by 2022 Q1

Registration submission For valvuloplasty Transfemoral Type test completed Global 2021 Q4 Valvuloplasty balloon catheter by 2021 Q4

Initiation of type test by Interventional accessory devices N/A Design stage Global 2023 Suture-mediated closure system 2022 Q1

OUR COMPETITIVE STRENGTHS

We believe the following strengths have contributed to our success and differentiated us from our competitors:

A Leading Chinese Provider of Innovative Heart Valve Devices With a Comprehensive Product Portfolio, Focusing on the High-Growth, High-Potential Structural Heart Disease Market

The structural heart disease market, which is our area of specialization, is tremendous in scale and experiencing rapid growth. That is particularly true in China, where the incidence of structural heart disease is high. Valvular heart disease is the most common type of structural heart disease. Specifically, according to Frost & Sullivan, valvular heart disease may occur at each of the four heart valves, namely the mitral, aortic, tricuspid, and pulmonary valves. According to Frost & Sullivan, more than 20 million patients are currently suffering from valvular heart diseases in China. Compared to pharmacological and surgical approaches, which are currently more conventional and common in China, heart valve interventions rectify the underlying structural conditions without the use of highly invasive surgical equipment or large incisions, and have been demonstrated to be highly effective treatment of valvular heart disease, according to Frost & Sullivan.

Despite the large and growing population of Chinese valvular heart disease patients, only a small fraction of them have benefited from interventional treatments. For example, according to Frost & Sullivan, although as many as about 793,000 patients in China were eligible for TAVR in 2020, merely about 3,600 such procedures were performed in China that year, representing a penetration rate as low as 0.46%. Similarly, the penetration rates for transcatheter mitral valve (“TMV”) and transcatheter tricuspid valve intervention (“TTVI”) procedures were nearly 0% in 2020. This lack of effective and accessible interventional treatments of valvular heart disease in China presents massive opportunities for eligible market participants. By Frost & Sullivan’s rough estimation, from 2020 to 2030, the annual Chinese market size will grow from RMB555.8 million to RMB11.5 billion for TAVR treatment (representing a CAGR of 55.5% between 2020 and 2025 and of 17.8% between 2025 and 2030), and from nil to RMB7.6 billion for TMV treatment (representing a CAGR of 144.0% between 2021 and 2025 and 32.4% between 2025 and 2030). In short, there is tremendous untapped market potential in China for heart valve interventions.

Through our commitment to the development of heart valve interventions, we have built one of the most comprehensive and innovative portfolios of product candidates in China of transcatheter heart valve devices. Our portfolio encompasses mitral valve replacement and repair, aortic valve replacement, tricuspid valve replacement and repair, pulmonary valve replacement, as well as accessories such as valvuloplasty balloon catheter, expandable introducer sheath, and suture-mediated closure device, etc. The NMPA has recognized three of our product candidates, namely Mi-thos®, Valveclip-MTM, and Prizvalve®, as innovative medical devices qualified for Special Review, making us the company with the highest number

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• Mitral valve. As of the Latest Practicable Date, according to Frost & Sullivan, Mi-thos®, our transapical TMVR product candidate, was the first innovative TMVR product candidate to enter clinical trial, and we aim to make it the first innovative TMVR product to receive marketing approval in China. We have also been developing a transfemoral TMVR product candidate Mi-thos ProTM. As for our transfemoral TMVr product candidate Valveclip-MTM, as of the Latest Practicable Date, it was one of the first innovative transfemoral TMVr product candidates to enter clinical trial and, therefore, we aim to make it one of the first domestic innovative TMVr products to receive marketing approval in China.

• Aortic valve. Prizvalve®, our BE transfemoral TAVR product candidate, completed its FIM clinical trial in June 2021, and is in confirmatory clinical trial. We aim to make it the first domestic BE TAVR product approved for marketing in China.

• Tricuspid valve. It is technically difficult and challenging to develop transfemoral TTVr clips. Applying our existing technical expertise accumulated in the development of our TMVr product candidate, we are developing Valveclip-TTM, our transfemoral TTVr product candidate. As of the Latest Practicable Date, Valveclip- TTM had completed type test, and we aim to obtain the approval for its clinical trial by the first quarter of 2022. Additionally, applying the same BE platform technology as in Prizvalve®, we are developing a transfemoral TTVR product candidate Prizvalve-TTM.

• Pulmonary valve. Mature BE products have been used in Europe and the U.S. in the transfemoral treatment of the pulmonary valve. Applying the same BE platform technology as in Prizvalve®, we are developing Prizvalve-PTM. As of the Latest Practicable Date, Prizvalve-PTM was at the preclinical stage.

Innovative TMVR, TMVr, TAVR, and TTVr Systems Resulting From our Proprietary Transcatheter Heart Valve Treatment Technologies

We have independently developed an advanced technology platform for interventional heart valve treatments, which includes a full spectrum of proprietary technologies necessary for all aspects of the development and production of transcatheter valvular devices. In particular, we independently overcame the formidable technical barriers surrounding the globally prevailing BE technology, and mastered that technology. Thus, according to Frost & Sullivan, we became one of a few companies in China with both BE and SE technologies and capable of efficiently providing multiple innovative treatments in response to evolving clinical and market demands.

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TMVR System

Mi-thos®, our transapical TMVR product candidate, is designed for mitral regurgitation. The NMPA recognized it as an innovative device qualified for Special Review. According to Frost & Sullivan, it is the first innovative TMVR product candidate to enter FIM clinical trial in China, and we aim to make it the first innovative TMVR product to receive marketing approval in China. Mi-thos® has numerous advantages, including, but not limited to, the following:

• Mi-thos® boasts inner and outer dual stents, wherein the outer stent, with its multiple rows of protruding barbs, securely anchors the prosthetic valve.

• Its conformable outer stent with D-shaped cross-section conforms to the native mitral annulus.

• Its shorter length and the tapered ventricular section of the outer stent minimize the risk of left ventricular outflow tract obstruction.

• Its unique delivery system allows controlled multi-staged release and precise maneuvering, and allows retraction and redeployment of the prosthetic valve during the procedure.

Additionally, we are developing Mi-thos ProTM, a transfemoral TMVR product candidate for mitral regurgitation. We plan to push through our pipeline a tiered portfolio of TMVR products.

TMVr and TTVr Systems

Valveclip-MTM, our transfemoral TMVr clip, is designed for mitral regurgitation. The NMPA recognized Valveclip-MTM as an innovative device qualified for Special Review. We aim to launch it among the first domestic innovative TMVr products to receive marketing approval in China. Valveclip-MTM has numerous advantages, including, but not limited to, the following:

• Valveclip-MTM takes the transfemoral access pathway, which is less invasive than the transapical pathway.

• Its main body is laser-cut and processed from a single piece of nitinol tube, and can, therefore, be manufactured reliably with high efficiency and enhanced mechanical performance.

• Its broad clip arms with two rows of barbs reduce stress on the native leaflets, thus improving long-term fatigue performance.

• The delivery system is directly maneuverable in three planes, which optimizes leaflet capture and reduces operation time.

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Besides Valveclip-MTM, we are also developing Valveclip-TTM, our transfemoral TTVr clip, which embodies technologies similar to Valveclip-MTM, and is, therefore, similar in its features and advantages.

TAVR System

Prizvalve®, our BE transfemoral TAVR product candidate, is designed primarily for aortic stenosis. The NMPA has recognized it as an innovative device qualified for Special Review. According to Frost & Sullivan, Prizvalve® was the first domestic TAVR system to enter clinical trial in China with BE technology. According to Frost & Sullivan, as of the Latest Practicable Date, all domestic TAVR products marketed in China featured SE technology. We aim to make it the first domestic BE TAVR product to receive marketing approval in China. Yet, globally, under a near duopoly (i.e. a combined market share of almost 90% by sales revenue) of the principal BE TAVR manufacturer Edwards Lifesciences and the principal SE TAVR manufacturer Medtronic, the aggregate sales revenue of the former’s BE TAVR product has reached almost twice as much as that of the latter’s SE TAVR product, according to Frost & Sullivan.

The globally prevailing BE technology is embodied in Prizvalve®. According to Frost & Sullivan, BE valves in general have numerous advantages, including, but not limited to, the following:

• Peer-reviewed large-scale analyses of clinical studies indicate that BE transcatheter aortic valves can lead to superior patient outcomes over SE counterparts, including lower rates of in-hospital mortality, stroke, and permanent pacemaker implantation.

• BE aortic valve’s short stent design reduces the obstruction of coronary arteries, leaving room for future percutaneous coronary interventions.

Those advantages common to BE valves may be reasonably expected in Prizvalve®,by virtue of its adoption of BE technology. In addition, Prizvalve® has numerous product-specific features, including, but not limited to, the following:

• It features an inner and outer sealing skirt, which is designed to effectively prevent paravalvular leak.

• Its unique stent structure and better balancing of mechanical performance entail better radial force support.

• Its steerable delivery catheter is designed for fine adjustment through the aortic arch and the annulus.

In 11 human subjects in FIM clinical trial, Prizvalve® considerably improved postoperative valvular function, and sufficiently proved its safety and efficacy.

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Having mastered BE technology and developed BE product candidates, we plan to further expand the target indications of our existing BE prosthetic valve product candidates, and to offer more innovative clinical solutions. For example, we have successfully used Prizvalve® in human subjects in mitral valve-in-ring procedures, as well as aortic, mitral, and tricuspid valve-in-valve procedures, and achieved outstanding therapeutic performance by applying this new technology in 27 humanitarian cases as of the Latest Practicable Date. We believe the technology will effectively fill tremendous unmet needs in the valve-in-valve and valve-in-ring markets. On top of that, we have been further developing transfemoral TMVR, TTVR, and TPVR product candidates, which will gradually add up to a multi-tiered mitral, aortic, tricuspid, and pulmonary prosthetic valve product portfolio.

Our Complete Proprietary Technology Platform and Strong In-House R&D Capabilities, Propelling Our Constant Product Innovations

We have developed a complete set of proprietary technology platforms covering all aspects necessary for the development and production of transcatheter valve systems. Those R&D technology platforms are interdependent on, complementary to, and synergistic with, each other. We have applied our technological expertise to our BE and SE prosthetic valve stents, repair clips, and other product candidates. Our technology platforms will continue to drive the following diverse product innovations throughout all our product lines of transcatheter valve systems:

• Medical metal materials. We have mastered the material processing techniques for both cobalt-chromium alloy used in BE products and nitinol alloy used in SE products. We have acquired key pieces of technology crucial to the research, development, and design of all types of stents, as well as their complete processing techniques and production processes, including laser cutting, heat treatment, sandblasting, and polishing. Our inspection and testing capabilities, as well as our R&D, production, and testing equipment, are in compliance with industry and national standards.

• Medical polymer materials. Medical polymer materials are used in the delivery systems of transcatheter valve devices. We have mastered key technologies associated with, among others, polymer catheter design, structural design of the steerable handle, and the complete production process. We have developed an evaluation and testing protocol for delivery catheters.

• Biological tissue. Bovine pericardium is a key raw material for our prosthetic replacement valve product candidates. Its durability is determined by key factors such as the anti-calcification treatment and immunogenicity-removing treatment. To date, bioprosthetic heart valve-manufacturing companies in and out of China are still devoting great amounts of effort to overcoming the major technological challenges associated with those treatments. Our R&D and manufacture capabilities, which are in compliance with industry standards, cover every step of prosthetic valve manufacturing, including raw bovine pericardium sourcing and processing, leaflet

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design, tailoring of processed bovine pericardium, and the eventual suturing of tailored bovine pericardium. Specifically, our tissue engineering technique produces excellent anti-calcification and immunogen removal performances, and it is central to our prosthetic valve technology.

• Large balloon technology. Large balloon is a core piece of technology necessary for our BE product candidates. It requires the full set of R&D and production techniques of balloon structural design, balloon stretching, forming, folding, and shaping. We have acquired the R&D, manufacture, and testing capabilities for balloons of all sizes.

Our core R&D team has global perspectives and rich industry experience. We have a strong and talented technology team, which as of the Latest Practicable Date consisted of 86 members with a wealth of knowledge and experience in medical device product development and manufacture. That rich experience spans many fields of expertise, including polymer materials, mechanics, and processing techniques. The principal R&D personnel all come from strong R&D backgrounds, and served previously in renowned domestic and multinational medical device companies.

Our founder, chairman of our Board, executive Director and chief executive officer, Dr. Qifeng YU, has over 16 years of experience in the research and development of medical apparatuses and over ten years of R&D experience with heart valves. He led the development of many prosthetic valves. He has been awarded the title of National Technology Innovation and Entrepreneurship Talent.

We hold independent intellectual property rights to the product candidates we develop. The development of prosthetic valves is technologically challenging and presents formidable technological barriers. We have always dedicated ourselves to the R&D of prosthetic heart valve devices. As of the Latest Practicable Date, we had filed over 170 invention and utility model patent applications in China, of which 81 were invention patent filings. For protection in foreign jurisdictions of our in-house R&D achievements, as of the Latest Practicable Date, we owned eight Patent Cooperation Treaty (“PCT”) applications for our product candidates.

Well-Preparedness for Rapid Commercial Penetration Based on Extensive Expert Network and Forward-Looking Manufacture Plans

As part of our effort to continuously boost our commercialization capabilities, we have set up technology innovation joint laboratories with several universities and research institutions, including West China Hospital of Sichuan University. We integrate strengths and resources from various research institutions, universities, and hospitals in and out of China, to foster partnership between industry, academia, scientists, and clinicians. We have put together an expert consultant group headed by academicians of the Chinese Academy of Engineering and foreign academicians of the U.S. National Academy of Engineering. We maintain steady

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With an eye toward commercialization, we participate in the formulation of industry standards and engage in academic outreach. Specifically, in terms of formulating standards, we were the only corporation among all institutional drafters of the industry standard titled Cardiovascular Implants – Cardiac Valve Repair Devices and Delivery System. In terms of academic outreach, we participate actively in industry academic conferences and networking events hosted by various industry associations and academic societies, where we promote our business and brand recognition. Further, we collaborate in-depth with the Chinese Society for Biomaterials and the Chinese Society of Biomedical Engineering in the field of basic engineering. In the future, we plan to redouble our academic outreach efforts and build up our commercialization capabilities.

We have started out on our forward-looking manufacture plan. As of the Latest Practicable Date, we occupied over 7,600 square meters of R&D laboratories, office, and manufacturing floor space in Shanghai and Chengdu, which housed offices, R&D laboratories, physical, chemical, and microbiological testing facilities, as well as class 10,000 cleanroom production facilities compliant with good manufacturing practices (“GMP”). Specifically, our facility in Chengdu is primarily intended to process key raw materials, such as bovine pericardium. As of the Latest Practicable Date, our annual production capacity was 3,000 sets for each of our Core Product and key product candidates, along with matching capacities for bovine pericardium, balloons, and other components and accessories. We aim to eventually develop fully independent production capabilities, reduce production costs, and improve operational efficiency.

A Visionary and Strategically Insightful Management Dedicated to R&D and Commercialization and Backed by Top-Tier Investors

We are led by a visionary and strategically insightful management that is experienced in holding senior leadership positions in world-leading medical device companies. Our management, with its global outlook, is dedicated to the R&D and commercialization of our products.

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Our co-founder, executive Director, and chief operating officer, Mr. Tao QIN, has more than 26 years of experience in the clinical cardiology field, including over 14 years of experience as a physician and over six years of clinical trial experience. Mr. Tao QIN earned his master’s degree in internal medicine and his bachelor’s degree in clinical medicine from the Fourth Military Medical University.

Our vice president of quality control and registration, Dr. Xiantao WEN, has over 12 years of experience in the medical device industry, including over seven years of experience as an inspection engineer. Dr. Xiantao WEN earned her bachelor’s degree in applied chemistry from Sichuan Normal University, her master’s degree and Ph.D. degree in biomedical engineering from Sichuan University.

Our vice president of project management and business development, Ms. Xiayan YANG, has more than 15 years of experience in product development and quality control in the biotechnology industry. She was formerly employed by a world renowned medical device company, where she acquired global perspectives. Ms. Xiayan YANG earned her bachelor’s degree in environment engineering from Suzhou College of Science and Technology and her master’s degree in environment engineering from Donghua University.

Our chief financial officer, Mr. Xiaoxu JIANG, has over 15 years of experience in financial management and investment. Mr. Xiaoxu JIANG earned his master’s degree in business administration from Columbia Business School in the U.S., and his bachelor’s and master’s degrees in medicine from West China University of Medical Sciences.

Members of our core senior management have, on average, over 17 years of experience in the field of medical device, or other professional or managerial experience in multinational corporations. Our talent pool encompasses all professions, including R&D, quality control, registration, clinical trials, human resources, and finance. Our management is, and will continue to be, the reliable backbone behind our continued innovations in R&D and future rapid commercialization.

Since we started our company, we have received investments from industry-leading investors with deep knowledge of the medical sector, including such top-tier investors as OrbiMed, Temasek, Lilly Asia Ventures and Yunfeng Financial.

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OUR STRATEGIES

Our mission is to improve patients’ lives through innovation (創新造福生命). To that end, we will pursue the strategies below.

Expedite the Development and Commercialization of Product Candidates

As of the Latest Practicable Date, we had built long-term academic and clinical cooperative relationships with renowned hospitals, PIs, and KOLs in the field of structural heart disease. In the future, we plan to continue to expand our clinical network by persistent academic research and clinical collaborations, and progress our product candidates through clinical trials by relying on our highly experienced in-house clinical trial team and our partner contract research organizations.

In the near future, we aim to advance our following Core Product and key product candidates to the milestone events outlined below:

• Mi-thos® transapical TMVR system. In October 2020, Mi-thos® was approved for clinical trial. We plan to complete its FIM clinical trial by the first quarter of 2022, finish the subject enrollment for its confirmatory clinical trial in 2023, and apply for its marketing approval in China in 2024.

• Valveclip-MTM transfemoral TMVr system. In June 2021, Valveclip-MTM was approved for clinical trial. We plan to complete its FIM clinical trial by the end of 2021, finish the subject enrollment for its confirmatory clinical trial in 2022, and apply for its marketing approval in China in 2023.

• Prizvalve® transfemoral TAVR system. In December 2020, Prizvalve® was approved for clinical trial. Its FIM clinical trial was completed in June 2021. We plan to finish its confirmatory clinical implantation by the end of 2021, and apply for its marketing approval in China in 2023.

• Valveclip-TTM transfemoral TTVr system. We aim to obtain approval for the clinical trial of Valveclip-TTM in the first quarter of 2022. We plan to finish the subject enrollment for its confirmatory clinical trial in 2023, and apply for its marketing approval in China in 2024.

We plan to prepare for commercialization through China’s hospital system, while taking into account the size and geographic distribution of the clinical need for interventional procedures. By carefully handholding clinicians through the learning curve related to our products, we plan to spread knowledge of, raise awareness of, and boost confidence in, our products, thus ensuring the future commercial success of our products.

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Maintain and Extend our Technological Lead

We plan to continue to focus on structural heart disease and further advance the technologies that underlie our product candidates. Through extensive collaborative relationships with numerous renowned PIs, KOLs, hospitals, and research institutions both domestic and foreign, we plan to stay up-to-date on technical breakthroughs in the field of structural heart disease, stay ahead of technological iterations, and maintain our standard- bearer status in the industry. We also stand a great chance to promptly discover any emerging clinical need through our on-going collaborations with frontline clinicians and top KOLs in the field. Additionally, we plan to align ourselves with national innovation strategies and contribute to the development of national industry.

Recognizing the central role of the R&D team in any technological competition, we plan to continue to recruit, train, and retain R&D personnel with complementary professional backgrounds. Recruitment will target top candidates in fields such as medicine, biology, material science, and engineering. We plan to keep up the competence, loyalty, and morale of our R&D personnel with on-the-job training, open career development paths, and strong incentive schemes.

To buttress our leading position in the field of structural heart disease, we are also open to the idea of technology acquisition through licensing, equity, or asset transactions. As of the Latest Practicable Date, we had not identified, nor started negotiations with, any acquisition target or licensing partner.

Improve Quality and Cost-Efficiency by Increased Self-Reliance in Manufacture

Having met ISO 13485:2016 and other quality standards and requirements, we plan to further raise the bar for quality control by participating in, and spearheading, the formulation and revisions of industry standards, thus leaving a lasting mark in the industry.

We plan to press on with the construction of our manufacture facility until reaching an annual production capacity of 20,000 sets for each of our Core Product and key product candidates. We expect the increased capacity to improve operational efficiency and to generate economy of scale. We aim to refine our techniques and procedures for processing bovine pericardium, a key raw material, thereby achieving efficiency improvement. We expect the improved cost-efficiency in manufacturing to contribute eventually to our commercialization strategy, which centers on flexible pricing and aims at making innovative medical devices accessible to domestic patients.

Foster Academic Ties and Assemble a Professional Team, for Better Commercialization

We plan to put together a market entry task force with rich industry experience to support rapid penetration into hospitals following the marketing approval for our products, and get our products listed in provincial medical insurance catalogs wherever possible.

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We also plan to put together an academic outreach team with both academic credentials and industry experience. That team will be instrumental in further fostering and expanding our long-term collaborative relationships with top hospitals and KOLs in the field of structural heart disease in China, participating actively in large academic conferences and other events, such as EuroPCR and China Interventional Therapeutics, and raising our profile and brand awareness among Chinese interventional cardiologists. That team is also expected to promote the adoption of our products in clinical settings, reinforce the routine use of our products by clinicians, and ultimately increase market penetration.

Additionally, we plan to develop a sales network. We expect our marketing strategy to be flexible, and to make use of the unique and cutting-edge nature of our products and the resultant, yet-unassailable dominance of the supply chain downstream.

Expand the NewMed Jidian Innovation Center (“Jidian”), our new hub of Early Exploratory R&D

We envisage an innovation center which hosts and coordinates interdisciplinary research into applied and basic technologies, and which serves as the epicenter of the most disruptive and cutting-edge technological breakthroughs. To realize that vision, Jidian is intended to streamline our process from ideas to products, by facilitating the discovery and initial filtering of clinical requirements, the conception and design of inventions, and the realization of prototypes and initial feasibility testing.

By partnering up industry, academia, researchers, and clinicians at Jidian, we intend to bring together industry experts both domestic and foreign, boost our in-house R&D capabilities by leaps and bounds, integrate external R&D resources, take full advantage of opportunities to innovate in-house and externally, and bring more innovative products to market more rapidly, thereby serving as a fountain of innovation for the whole industry. Jidian is aimed at consolidating the inventive prowess and R&D resources of universities, research institutions, hospitals, and our Company, and leading the initial product development of any technological breakthrough or fruit of clinical-industrial collaboration. We plan to nurture top-rate talents at Jidian, thus infusing fresh new blood into our industry for sustained growth. Jidian is expected to make world-leading technology accessible to businesses, and enhance our clout in the industry.

Strengthen International Cooperation and lay the Groundwork for Strategic Expansion Overseas

Through international academic communications, and maximizing existing channels of communication and collaboration with global medical device companies, research institutions, and hospitals, we plan to build a multi-jurisdictional patent portfolio and expand our global footprint by international technology transfers and other means, paving the way for our product candidates’ future clinical trials and registrations overseas.

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We plan to continue to participate in international heart valve conferences and other academic activities, promote our products and brand worldwide, and lay the foundation for future expansions into markets overseas.

OUR PRODUCT CANDIDATES

We are independently developing nine transcatheter heart valve product candidates targeting all four human heart valves, together with their device accessories. As of the Latest Practicable Date, our pipeline included:

• One BE transfemoral TAVR product candidate in confirmatory clinical trial, namely our Core Product Prizvalve®,

• Two mitral valve product candidates in FIM clinical trials, namely our Mi-thos® transapical TMVR product candidate and our Valveclip-MTM transfemoral TMVr product candidate, both being our key product candidates,

• One transfemoral TTVr product candidate that had completed type tests, namely Valveclip-TTM, which is our third key product candidate,

• Five valve device candidates at the design stage, namely Mi-thos ProTM transfemoral TMVR, Prizvalve-PTM TPVR, Prizvalve-TTM BE transfemoral TTVR, Prizvalve® II TAVR, and Starr-ATM TAVR product candidates, and

• Several accessory product candidates, including (i) one accessory product candidate that had completed type tests, namely our valvuloplasty balloon catheter, (ii) one accessory candidate in type test, namely our expandable introducer sheath, and (iii) several accessory candidates at the design stage, including our suture-mediated closure device, CEP device, atrial septal puncture device, flex catheter, and guide wire product candidates.

Our product candidates are subject to approval by relevant authorities, such as the NMPA and/or its local counterparts before commercialization in China and other relevant jurisdictions. For details, please refer to the paragraphs headed “Regulatory Overview – Regulations Relating to Medical Devices” in this document. As of the Latest Practicable Date, we had not received any material comments or concerns raised by the relevant regulatory authorities with respect to our product candidates, and we believe we will be able to obtain relevant regulatory approval and commercialize our product candidates as planned.

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Technological Advantages

Before delving into the specific product candidates, the following technologies, features and components are worth highlighting, as they are shared among several of our product candidates and contribute to those product candidates’ competitive advantages.

BE, SE Technology and Medical Metal Materials

Transcatheter prosthetic valves can be broadly classified into BE and SE devices. Each device type has different expansion modes, stent frames, and leaflet characteristics, which could translate into differences in complication rates and long-term clinical performance. We have mastered both technologies.

Specifically, the BE valve is made of bioprosthetic tissue affixed to a cobalt-chromium or stainless-steel stent. Prior to the BE valve’s delivery, balloon valvuloplasty may need to be performed. The balloon with the attached valve is then rapidly inflated and deflated, expanding and releasing the valve. The newly functioning valve is passively secured to the underlying native leaflets and to the valve annulus as a result of this delivery.

In contrast, the SE valve is mainly made of bioprosthetic tissue affixed to a nitinol stent. Nitinol is capable of martensitic transformation, commonly known as “shape memory,” whereby it undergoes a reversible, solid state transformation. When the SE valve is deployed in the warmer temperature of the body, it self-expands and regains its original configuration that fits onto the native anatomy at the target site in the heart.

The following chart lists the respective features and advantages of transcatheter BE and SE valves according to Frost & Sullivan:

BE Valves SE Valves

Steerable flex catheter: BE valves achieve accurate Retrievability: Newer-generation SE valves achieve valve positioning through the delivery system, accurate valve positioning through their retrievability which includes a flex wheel and a flex catheter. feature, which enables valve repositioning. The degree Specifically, the delivery system enables angle of retrievability varies among different products, adjustment of the valve-containing catheter to better ranging from partial to full retrievability after valve Features fit the valve to the complex anatomy of the implant deployment. site. Relatively long stent frame: Long frame required for Relatively short stent frame: Long frame is more contact points with the native valvular structure unnecessary due to balloon expansion technique during deployment

Great controllability allowing for high precision of Supra-annular valve design enhances leaflet valve deployment coaptation

Lower risk of conduction disturbances Advantage for TMVR: Can be used in native mitral Advantages valve replacement as the stent frame can conform to Advantage for TAVR: easy coronary reaccess for the mitral valve annulus shape, and the long stent percutaneous coronary interventions frame serves as anchor for valve deployment

Advantage for TMVR: can be used in valve-in-valve mitral valve replacement due to short stent frame height*

*Note: Balloon-expandable valves may not be applicable to native mitral valve replacement

Source: Public Information, Frost & Sullivan

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Despite their respective advantages above, BE and SE technologies each presents significant technical challenges and barriers, according to Frost & Sullivan. On the one hand, SE technology presents the challenge of shape-memory alloy processing. On the other hand, BE technology presents challenges in terms of large balloon manufacturing and steerable flex catheter manufacturing. BE technology is yet to see widespread adoption in China. According to Frost & Sullivan, as of the Latest Practicable Date, all domestic TAVR products marketed in China featured SE technology. Yet globally, under a near duopoly (i.e. a combined market share of almost 90% by sales revenue) of the principal BE TAVR manufacturer Edwards Lifesciences and the principal SE TAVR manufacturer Medtronic, the aggregate sales revenue of the former’s BE TAVR products has reached almost twice as much as that of the latter’s SE TAVR products, according to Frost & Sullivan.

We independently overcame the formidable technical barriers surrounding both the globally prevailing BE technology and the China-mainstream SE technology, and have mastered both technologies. Thus, we became one of a few companies in China with both BE and SE technologies and capable of efficiently providing multiple innovative treatments in response to evolving clinical and market demands. Several product candidates currently in our pipeline feature BE technology, including our Core Product Prizvalve®, Prizvalve-TTM, Prizvalve-PTM, and accessories such as our valvuloplasty balloon catheter, while some of our other product candidates feature SE technology, including our key product candidates Mi-thos®, Valveclip-MTM, and Valveclip-TTM.

Additionally, to support our BE and SE products and to supplement our BE and SE technology capabilities, we have developed expertise in the corresponding metal processing techniques for both nitinol and cobalt-chromium alloys, as well as in our large balloon platform. For details of those technology platforms, please refer to the paragraphs headed “Our Platform – Research and Development – Research and Development Platforms” below in this section.

Bovine Pericardium and Anti-Calcification Treatment

Bovine pericardium is a key raw material for our production. It is used in all of our prosthetic replacement valve product candidates. We are one of the few companies in China with R&D and production capabilities that cover every step of bovine pericardium processing, including anti-calcification treatment, immunogenicity-removing treatment, leaflets design, cutting and suturing. We have achieved a high degree of self-reliance, efficiency, and cost-effectiveness in the supply and processing of this key raw material.

We choose bovine pericardium as our valve leaflet material over other alternatives, such as porcine pericardium, because, compared to porcine pericardium, bovine pericardium is thicker, provides a larger effective orifice area, and contains twice as much collagen. According to Frost & Sullivan, some existing clinical and non-clinical data on bioprosthetic aortic valve replacement has demonstrated that bovine pericardium has better hemodynamic performance and lower risks of complications than its porcine counterpart.

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Anti-calcification treatment applied to the valve is also one of the factors of valve durability, according to Frost & Sullivan. Calcification originating from the leaflet material can cause the leaflet to harden and gradually affect its normal function. In addition, immunogenicity of the leaflet material will trigger immune reactions, exacerbating its deterioration. To solve these issues, diverse anti-calcification and immunogenicity-removing strategies have been proposed and implemented. However, developing a satisfactory process that meets all requirements remains one of the major technological challenges to prosthetic valve companies in and out of China.

Such problems are not insurmountable to us, however. We have invented a series of novel technologies to eliminate immunogenicity and calcification-occurring sites. A piece of technology is developed for each specific process, such as decellularization, fixation, residual aldehyde group elimination and sterilization. To protect those technologies, we have filed for patents. Significantly, our treated leaflet material has presented excellent performances in anti-calcification and immunogenicity testing as expected. Given that calcification and immunogenicity have been demonstrated to be the major causes of prosthetic valve function deterioration, it is expected that prosthetic valves with anti-calcification and immunogenicity- removing treatment will be much more durable than similar products without such treatment. For details of our bovine pericardium platform, please refer to the paragraphs headed “Our Platform – Research and Development – Research and Development Platforms” below in this section.

Our Product Pipeline

Mi-thos® – Our key Product Candidate

Mi-thos® is our transapical TMVR product candidate and one of our key product candidates. It is designed for the minimally invasive treatment of mitral regurgitation patients for whom surgery is high-risk or undesirable. Mi-thos® is delivered through the transthoracic transapical access pathway. Its prosthetic valve is implanted at the annulus of the dysfunctional native mitral valve, and serves as a functional replacement of the dysfunctional native mitral valve. As of the Latest Practicable Date, we held 24 material issued patents and filed patent applications directed at Mi-thos®. The NMPA has recognized it as an innovative device qualified for Special Review in November 2020, which would prioritize Mi-thos® over other product candidates without such qualification at the NMPA, and which is expected to accelerate the review and approval process of Mi-thos®. According to Frost and Sullivan, Mi-thos® is the first TMVR product to enter FIM clinical trial in China.

Product Structure

The Mi-thos® transapical TMVR system consists of a transcatheter prosthetic mitral valve, a transcatheter mitral valve delivery system, a handheld crimper, and a valve loader. The handheld crimper and the valve loader work together to crimp the prosthetic mitral valve to a suitable diameter for loading into the delivery system and for its subsequent delivery to the target release position to replace the function of the dysfunctional native mitral valve. The figure below illustrates the Mi-thos® system.

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Prosthetic Mitral Valve

The prosthetic mitral valve comprises inner and outer SE nitinol stents, a sealing skirt, and three bovine pericardial leaflets. The key features of the prosthetic mitral valve of Mi-thos® are as follows:

• Dual Stents Structure. To solve major technical problems following prosthetic valve placement, such as valve fixation, the obstruction of the left ventricular outflow tract, and paravalvular leak, and to improve the hemodynamics and long-term fatigue performance of the prosthetic valve, the Mi-thos® valve follows our proprietary barbed dual stents design, in which the outer stent has a D-shaped cross-section. The D-shaped outer stent conforms to the complex and dynamic anatomy of the mitral valve. The rhombic mesh of the outer stent is compliant, more suited to the structure of the mitral valve, and capable of providing a better fit to the native annulus after valve release and fixation, thereby preventing compression of the left ventricular outflow tract, reducing the risk of resultant complications for the patient, and raising the success rate of the procedure. Multiple rows of barbs protruding from the outer stent facilitate better fixation to native mitral valve, while reducing the damage to the heart. The inner stent, to which the three bovine pericardium leaflets are sutured, takes a cylindrical shape for better hemodynamics and long-term fatigue performance. To minimize the risk of obstruction to the left ventricular outflow tract, which is adjacent to the mitral valve, we designed the prosthetic valve to have a shorter length and a tapered shape at the ventricular end.

• Sealing Skirt. The atrial end of the stents features an S-shaped structure, which renders the rim of the sealing skirt thereon highly compliant, and makes it conform to the bottom of the left atrium, thus reducing paravalvular leak. The sealing skirt is made of polyethylene terephthalate, and disposed in between the stents, which facilitates the endothelialization of the prosthetic valve. Additionally, three radiopaque markers are sutured inside the sealing skirt for positioning purposes during interventional procedure.

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• Self-Expanding Nitinol Memory Alloy Stents. The inner and outer dual nickel- titanium stents are laser-cut, heat- and surface-treated so that they are ready to be crimped into a smaller size. After the valve stents are released in the heart, they quickly self-expand into the memorized, predesigned shape, as they are warmed up to the body temperature. After deployment at the target location, the stents provide adequate radial-force support, conformability and durability.

• Bovine Pericardial Leaflets With Anti-Calcification and Immunogenicity-Removing Treatment. The prosthetic valve is made of bovine pericardium and receives anti-calcification and immunogenicity-removing treatment. For details, please refer to the paragraphs headed “Our Product Candidates – Technological Advantages – Bovine Pericardium and Anti-Calcification Treatment” above in this section.

• Multiple Size Options. We are developing eight models of prosthetic valves, each with a different valve size and stent length. Multiple size options fit varying mitral anatomies, allowing the selection of the ideal prosthetic valve for the patient.

The figure below illustrates the prosthetic mitral valve:

Inner and outer dual stents Bovine pericardium leaflets inner and outer SE nitinol dual stents with anti-calcification and immunogenicity-removing • Circular inner stent treatment for excellent anti- better hemodynamics and long-term calcification and long-term fatigue performance fatigue performances • D-shaped outer stent conformable outer stent conforms to the anatomy of mitral valve Sealing skirt conforms to the left atrium, Multiple rows of protruding barbs reduce perivalvular leakage better fixation onto native mitral valve

Specifications Radiopaque markers 8 sizes to treat varying three radiopaque markers for better mitral anatomies positioning during procedure

Delivery System

The delivery system consists primarily of a catheter and a handle. The catheter coaxially comprises an inner tube, an interlock component, and an outer tube. Subject to the control mechanisms of the handle, the outer tube can be pushed forward or backward, thus facilitating the deployment and release of the prosthetic valve. The key features of the delivery system are as follows:

• The delivery system is retrievable and repositionable, allowing multiple adjustments to find the optimal valve position. The delivery system is designed for the transapical approach. During the procedure, the clinician can easily adjust the release position and angle, or retrieve the valve before release if the valve position is not ideal. The delivery system allows controlled multi-staged release and precise maneuvering.

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• The control handle is at the proximal end of the delivery system and is used to deploy the prosthetic mitral valve when it reaches the target position. It allows two modes of catheter operation, i.e. slow motion by rotating a release adjustment wheel, or fast motion by linear push and pull, or a combination of the two. This gives more options to the clinician while releasing the valve, and renders the release procedure more straightforward and efficient. The ergonomically designed handle is user- friendly and allows precise maneuvering during the procedure.

• The distal end of the delivery system features a conical tip, which is designed for transapical puncture and has a soft tip to reduce damage to heart. Additionally, the distal end of the inner tube features a radiopaque ring for monitoring the valve’s release position during the procedure.

The figures below illustrate the delivery system:

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Operation Procedure

A left intercostal space is selected for puncture. The pericardium is incised to expose the apical area. Via transapical puncture, a guide wire is placed into the left atrium. Along the guide wire, the delivery system loaded with the prosthetic valve is delivered through the mitral valve into the left atrium, as shown in figure (a) below. As shown in figure (b) below, the atrial section of the prosthetic valve is released. As shown in figure (c) below, the D-shaped rim is aligned precisely to the mitral annulus, and fitted tightly on bottom of the left atrium. Thereafter, as shown in figure (d) below, the prosthetic valve is released, and the delivery system is withdrawn. Lastly, the incision at the apex is closed.

(a) (b)

Market Opportunity and Competition

Mitral regurgitation is becoming more prevalent in China. According to Frost & Sullivan, in 2020, 10.8 million patients in China suffered from moderate to severe mitral regurgitation, and about 1.3 million patients in China were eligible for TMV treatment. Those figures are expected to climb to 13.2 million and 1.6 million in 2030, according to Frost & Sullivan. Driven by the large and growth patient population and the advantages of TMV procedures, the market for TMV products in China is expected to grow from about 0 in 2020 to about RMB7.6 billion in 2030. For more details of the market size and growth drivers in China, please refer to the paragraphs headed “Industry Overview – Overview of Mitral Valve Diseases and Its Treatment Market – TMV Intervention Market in China” and “Growth Drivers and Future Trends of China TMV Therapy Market” in this document.

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Company Product Technique Access Route Clinical Phase

Our Company Mi-thos® TMVR Transapical FIM

MitrAssist MitraFix® TMVR Transapical FIM

Balance Medical RenatoTM TMVR (valve-in-valve) Transapical FIM

Source: Public Information, Frost & Sullivan analysis

Competitive Advantages

Compared to conventional surgical devices, Mi-thos® is less invasive to the patient in its implant procedure, and is more safe and reliable.

Among TMVR devices, Mi-thos® has the following advantages:

• Mi-thos® boasts inner and outer dual stents, wherein the outer stent, with its multiple rows of protruding barbs, securely anchors the prosthetic valve.

• Its conformable outer stent with D-shaped cross-section conforms to the native mitral annulus.

• Its contoured outer stent and skirt are designed for better fixation and sealing to reduce paravalvular leakage.

• Its shorter length and the tapered ventricular section of the outer stent minimize the risk of left ventricular outflow tract obstruction.

• Its cylindrical inner stent used for mounting the prosthetic leaflets achieves better hemodynamics and long-term fatigue performance.

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• Its unique delivery system allows controlled multi-staged release and precise maneuvering, and allows retraction and redeployment of the prosthetic valve during the procedure.

• We offer Mi-thos® with numerous valve size options to treat varying anatomies and to accommodate native valve annulus of different circumferences.

Summary of Preclinical Trial Results

We started a single-arm animal study of Mi-thos® in January 2017, and finished it in May 2018. The objectives were to evaluate the performance of our Mi-thos® system, including implantation operability, biocompatibility, inflammatory responses, tissue hyperplasia, and thrombosis, and to provide basis for subsequent clinical studies. TMVR procedures were successfully performed in 28 sheep, and 30 prosthetic valves were implanted.

In the animal study, Mi-thos® was shown to load prosthetic valves smoothly onto the delivery system, enable clear positioning inside the body, and allow smooth release. The delivery system was found to have good maneuverability during the procedures. No negative effect on coronary blood supply was observed. Of the 28 sheep, only one showed mitral regurgitation caused by calcification at 180 days after the procedures. All other sheep showed no or trace mitral regurgitation after TMVR procedure. The aorta remains intact and without any severe complication in all subjects, thus demonstrating the safety of Mi-thos®.

The longest study endpoint lasted until 180 days after the procedure. During that period, no conspicuous abnormalities were found in lab tests or in any of the major organs, the aorta, or the myocardium. The vast majority of the prosthetic valves remained fully functional, and demonstrated good safety. In conclusion, the animal study demonstrated that the safety of Mi-thos® sufficiently satisfies the preclinical study requirements.

Clinical Development Plan

In October 2020, Mi-thos® was approved for clinical trial, ahead of any other TMVR product in China. We comply with all relevant regulations in our communications with the NMPA. As of the Latest Practicable Date, the NMPA (and/or its local branches) had not raised any objection to the continued conduct of clinical trial. As of the Latest Practicable Date, Mi-thos® was in its FIM clinical trial. We plan to complete Mi-thos®’s FIM clinical trial in the first quarter of 2022, finish the subject enrollment for its confirmatory clinical trial in 2023. We plan to apply for its marketing approval in China in 2024, and we aim to make Mi-thos® the first innovative TMVR product to receive marketing approval in China.

WE MAY NOT ULTIMATELY BE ABLE TO SUCCESSFULLY DEVELOP OR MARKET MI-THOS®.

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Valveclip-MTM – Our key Product Candidate

Product Structure

The transcatheter mitral valve repair system Valveclip-MTM is a triaxial catheter system and comprises a steerable guide catheter, a clip, a clip delivery system, and a base. The clip is loaded onto the delivery system and delivered through the femoral vein to the target location. Valveclip-MTM is a catheter-based system that works by applying a clip at the site of mitral regurgitation, thereby performing an edge-to-edge reconstruction of the insufficient mitral valve while the heart is beating.

Clip

There are two sets of specifications for the clip, which have the same design. It is a nickel-titanium implantable device with two arms, covered by a sealing membrane. The sealing membrane is made of polyethylene terephthalate. The clip is preassembled at the tip of the clip delivery system. The clip has the following features:

• Nitinol Memory Alloy Stent. The clip is cut from a nickel-titanium tube and is heat- and surface-treated so that it is ready to be crimped into the delivery catheter. After deployment at the target location, it self-expands into its memorized, predesignated shape with adequate force support and durability. The clip has few components and a stable structure.

• Clip Structure. On the inner portion of the clip, there are two arms and a central spacer. The two arms can independently grasp leaflets and improve clamping efficiency. The central spacer fills the regurgitant orifice area. There are two movable grippers opposite each arm to secure the leaflets as they are captured by the closing arms. The grippers are designed to be broad, thus enabling more effective capture of the leaflets, reducing the stress on native leaflets, and improving the long-term fatigue performance. There are two rows of barbs on each gripper, which are designed to improve the grasping force and to prevent the clip from slipping after capturing the leaflets. The contoured and broad paddles of the clip and the

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central spacer maximize the leaflet coaptation after deployment, thus reducing central valve leakage. The clip-control wheel on the proximal side of the delivery system controls the elongation of the clip and facilitates safe subvalvular navigation.

• Sealing Membrane. A sealing membrane fully covers the clip, and contributes to sealing performance and endothelialization.

• Size Options. We are developing two models of clips, each with a different width. Different sizes fit different mitral anatomies, thus allowing the selection of the ideal clip for the patient.

The figure below illustrates the clip:

Stent Central spacer the memory alloy stent is cut fills the regurgitant orifice from a nickel-titanium tube area

Sealing membrane Control wire polyethylene terephthalate controls the opening and membrane covers the stent fully, closing of grippers and facilitates sealing and endothelialization Gripper broad grippers reduce stress Arm on the native leaflets, thus two arms can independently grasp improving long-term fatigue leaflet, which improves clamping performance efficiency

Contoured paddle Specifications contoured and broad paddles different sizes to treat maximize leaflet coaptation varying mitral anatomies

Steerable Guide Catheter

The steerable guide catheter consists of a 22 Fr steerable outer catheter, a steerable guide catheter handle, and a 17 Fr dilator. The steerable guide catheter is designed to establish a vascular access through the common femoral vein to the left atrium. It has the following features:

• The steerable guide catheter is delivered with the dilator. The dilator allows the introduction of the steerable guide catheter into the femoral vein and the left atrium (through the interatrial septum). The distal tip of the catheter can be steered by rotating the flex adjustment wheel, which facilitates the navigation to the left atrium of catheter. The outer tube of the catheter is coated with a hydrophilic surface, which effectively reduces resistance.

• The steerable guide catheter handle is at the proximal end of the guide catheter and comprises two major components: a flex adjustment wheel and a flex adjustment indicator panel. The flex adjustment wheel controls the deflection of the distal tip of the guide catheter. The indicator panel shows the deflection angle of the distal tip. The ergonomically designed handle is user-friendly and allows precise maneuvering during the procedure.

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The figure below illustrates the steerable guide catheter:

Clip Delivery System

The clip delivery system consists of an 18 Fr catheter, a 11 Fr catheter, a delivery control handle, a steerable control handle, and a clip loader. Once positioned through the steerable guide catheter, the clip delivery system is used to deliver the clip to the target location and allows for different spatial maneuvers to obtain proper positioning of the device between the mitral valve leaflets. Subject to its control mechanisms, the clip delivery system can perform the functions of opening the clip, grasping the leaflet, locking the clip, and releasing the clip. The clip delivery system has the following features:

• It boasts retrievability, steerability and a design that supports maneuvers in three planes, which optimizes leaflet capture. During the procedure, the clinician can easily adjust the position and angle of the clip, and retrieve it before release if the clip size is not ideal.

• The delivery control handle is on the proximal side of the delivery system, and it comprises three principal components: a grippers-control knob, which controls the opening and closing of the grippers, a clip release knob, which controls the detaching of the clip, and a clip-control wheel, which controls the elongation of the clip. The delivery control handle controls the opening, closing, locking, and releasing of the clip, and it is firmly lodged on the sterilized base.

• The steerable control handle is next to the delivery control handle and has two components: a flex adjustment wheel and a shark fin. It controls the medial-to- lateral and anterior-to-posterior steering of the catheter.

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The figure below illustrates the clip delivery system.

Base

The base is used to support the 22 Fr deliverer handle and the 18 Fr deliverer handle, making it more convenient for the clinician to operate the Valveclip-M™ system during the procedure.

Operation Procedure

Femoral venipuncture is performed. Through the puncture site, a guide wire is inserted into the femoral vein. Along the guide wire, the steerable guide catheter with a dilator is delivered to the right atrium and, following atrial septal puncture, to the left atrium, as shown in figure (a) below. The dilator is withdrawn. The clip delivery system is inserted into the steerable guide catheter and delivered to the left atrium, as shown in figure (b) below. By manipulating the delivery system, the clip is precisely positioned inside the left atrium, and enters the left ventricle vertically through the mitral valve. Subject to the control mechanisms of the handle in the delivery system, the clip can open and close to capture the leaflets, or independently capture a leaflet on either side, as shown in figures (c) and (d) below. Once it is secured firmly to the leaflets, the clip is released from the delivery system, and the delivery system is withdrawn, as shown in figure (e) below.

(a) (b)

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(e)

Market Opportunity and Competition

Mitral regurgitation is becoming more prevalent in China. According to Frost & Sullivan, in 2020, 10.8 million patients in China suffered from mitral regurgitation, and about 1.3 million patients in China were eligible for TMV treatment. Those figures are expected to climb to 13.2 million and 1.6 million in 2030, according to Frost & Sullivan. Driven by the large and growing patient population and the advantages of TMV procedures, the market for TMV products in China is expected to grow from about 0 in 2020 to RMB7.6 billion in 2030. For more details of the market size and growth drivers in China, please refer to the paragraphs headed “Industry Overview – Overview of Mitral Valve Diseases and Its Treatment Market – TMV Intervention Market in China” and “Growth Drivers and Future Trends of China TMV Therapy Market” in this document.

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Company Product Technique Access Route Clinical Phase

Our Company Valveclip-MTM Edge-to-edge repair Transfemoral FIM

Transfemoral & Abbott Laboratories MitraClip® Edge-to-edge repair NMPA Approved in 2020 Transseptal

Hanyu Medical ValveClamp Edge-to-edge repair Transapical Confirmatory Clinical Trial

MitralStitch® Mainly chordal implantation Transapical Confirmatory Clinical Trial Valgen Medtech DragonFlyTM Edge-to-edge repair Transfemoral FIM

Shenqi Medical QilinTM System Edge-to-edge repair Transfemoral FIM

KOKA Lifesciences LIFECLIP® Edge-to-edge repair Transapical FIM

Source: Public Information, Frost & Sullivan Report

Competitive Advantages

Valveclip-MTM has the following advantages:

• Valveclip-MTM takes the transfemoral access pathway, which is less invasive than the transapical pathway.

• Its main body is laser-cut and processed from a single piece of nitinol tube, and can, therefore, be manufactured reliably with high efficiency and enhanced mechanical performance.

• Its broad clip arms with two rows of barbs reduce stress on the native leaflets, thus improving long-term fatigue performance.

• The two arms of its clip can independently grasp leaflets, which improves clamping efficiency.

• The clip features a pair of contoured paddles which maximize leaflet coaptation, and a central spacer which fills the regurgitant orifice area.

• The clip elongation reduces the risk of entangling the chordae tendineae, which improves the safety of subvalvular maneuvering.

• The delivery system is directly maneuverable in three planes, which optimizes leaflet capture and reduces operation time.

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• We offer Valveclip-MTM with different sizes to treat varying anatomies.

Summary of Preclinical Trial Results

We started the animal study of Valveclip-MTM in April 2020, and finished it in October 2020. The objectives were to evaluate the delivery, implantation, release, and imaging characteristics of Valveclip-MTM, and to study its safety and efficacy. 24 pigs were used in the trial, six of which were assigned to the acute group in the first part of the trial, which explored the operational performances and safety of the system. The other 18 pigs were divided evenly into a four-week group, a 12-week group, and a 24-week group in the second part of the trial, which tested long-term efficacy and safety of Valveclip-MTM.

In this trial, all animals followed the study protocol and reached their respective study endpoints, with no premature death or major adverse event. Only trace or mild mitral regurgitation were observed in some of the animals post operation. We found no mitral regurgitation more severe than mild post operation or any other adverse event.

Lab results showed no abnormality in blood tests, except for transient abnormalities in coagulation immediately after the procedure, which was of no clinical significance. Ultrasound revealed clear double-orifice structure at the mitral valve as intended, and showed no abnormality in mitral valve velocity, pressure gradient or cardiac function evaluation. Angiography found no clip slippage, migration or mitral regurgitation more severe than mild, which indicated precise implantation. No device-related adverse event occurred. No abnormalities were observed in autopsies. In the dissected hearts of long-term follow-up animals, endothelial tissue structures were found attached to the clip, but no conspicuous thrombus, calcification focus, or vegetation was observed. Histopathological evaluation found only small amounts of inflammatory responses.

In conclusion, the animal study demonstrated the operability, maneuverability, and safety of Valveclip-MTM, and provided the basis for further clinical studies.

Clinical Development Plan

In June 2021, Valveclip-MTM was approved for clinical trial in China. We comply with all relevant regulations in our communications with the NMPA. As of the Latest Practicable Date, the NMPA (and/or its local branches) had not raised any objection to the continued conduct of clinical trial. As of the Latest Practicable Date, Valveclip-MTM was in FIM clinical trial. We plan to complete Valveclip-MTM’s FIM clinical trial by the end of 2021, finish the subject enrollment for its confirmatory clinical trial in 2022, and apply for its marketing approval in China in 2023. We aim to make Valveclip-MTM one of the first domestic innovative TMVr products to receive marketing approval in China.

WE MAY NOT ULTIMATELY BE ABLE TO SUCCESSFULLY DEVELOP OR MARKET VALVECLIP-MTM.

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Prizvalve® – Our Core Product

Product Structure

Prizvalve® consists of a transcatheter prosthetic aortic valve, a transcatheter aortic valve delivery system, a valve loader, a valvuloplasty balloon catheter, a crimper system, an expandable introducer sheath set, and a balloon inflation device. The crimper system crimps the prosthetic aortic valve to a suitable diameter for loading on the balloon of the delivery system. The crimped prosthetic valve is delivered to its target release position and expanded by inflating the balloon to replace the function of the patient’s dysfunctional native aortic valve.

Prosthetic Aortic Valve

The prosthetic valve consists of a cobalt-chromium alloy stent, inner and outer sealing skirt, and three bovine pericardial leaflets. It can be crimped onto the delivery system, and delivered to, and released at, the aortic annulus. It is intended to replace the function of the patient’s dysfunctional native valve. We provide the prosthetic valve in four different sizes to fit different anatomies. The prosthetic aortic valve has the following features:

• Balloon-Expandable Cobalt-Chromium Frame. The radiopaque cobalt-chromium alloy stent is laser-cut and surface-treated, which provides fatigue resistance and better radial force support. Once delivered to the target location in the heart, the stent is expanded by the inflating balloon. It is characterized by its precise deployment, which reduces the risk of atrioventricular block. Due to the unique stent design and better balancing of mechanical properties, the BE valve can expand into a more hemodynamically optimal shape. For details of our BE and cobalt-chromium technologies, please refer to the paragraphs headed “Our Product Candidates – Technological Advantages – BE, SE Technology and Medical Metal Materials” above in this section.

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• Unique Short Stent Design. Stents made of cobalt-chromium alloy can provide great radial support force, which alone is sufficient to anchor the stent to the native annulus. Consequently, cobalt-chromium stents can have a shorter design, whereas SE stents, in order to provide sufficient support force for anchoring at the native annulus, often need to have a longer design to reach, and anchor at, some other position, such as the aortic sinuses. The stent of Prizvalve® is designed to have a short length of 16 to 22 millimeters for different valve sizes, to reduce the risk of coronary artery obstruction, and to leave room for future percutaneous coronary intervention procedures. It has less metallic material, thus reducing embolic risk. The large cells on the outflow side preserve access to the coronary arteries. The small cells on the inflow side provide better radial force support. When being expanded, BE stents are prone to exhibit the “dogbone” effect, where the two ends of the released prosthetic valve are of greater diameters than the middle of the stent. This is hazardous to aortic tissues, as the bulging ends may have sharp edges. Further, because the midsection of the stent may have a diameter smaller than designed, the prosthetic valve may slip or even migrate. The Prizvalve®’s stent overcame this problem with a design where the thickness of the rods increases from the middle of the stent to the two ends.

• Inner and Outer Sealing Skirt. An inner and outer polyethylene terephthalate sealing skirt covers the inflow side of the prosthetic aortic valve, and it enhances paravalvular sealing. Additionally, the polyethylene terephthalate sealing skirt facilitates the endothelialization of the prosthetic valve.

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• Multiple Size Options. We are developing four models of prosthetic valves, each with a different valve size and stent length. Multiple size options fit varying aortic anatomies, allowing the selection of the ideal prosthetic valve for the patient.

The figure below illustrates the prosthetic valve:

Stent structure Bovine pericardium leaflets large cells on outflow side for with anti-calcification and coronary access immunogenicity-removing treatment for excellent anti-calcification and long-term fatigue performances BE stent cobalt-chromium alloy, better radial force support; precise Short stent deployment, which reduce 16 to 22 mm in length; risk of atrioventricular block reduces risk of coronary artery obstruction; less metallic material, which Sealing skirt reduces embolic risk inner and outer sealing skirt designed to effectively Specifications prevent paravalvular leak 4 sizes to treat varying anatomies

Delivery System

The delivery system is a steerable catheter used to deliver and release the prosthetic aortic valve to the target position. It comprises a nose-cone-tipped inner balloon catheter with a visible tip, on which the prosthetic valve is crimped, an outer steerable flex catheter, a control handle, and a valve loader. The delivery system has the following features:

• It is controllable, deflectable, and designed to precisely adjust the position and angle of the prosthetic valve. The outer steerable flex catheter can bend to navigate through the aortic arch and the native aortic valve, and to facilitate the optimal and controlled coaxial alignment of the prosthetic valve even in challenging anatomies. Such high precision in the positioning process eliminates the need for any retrievability function.

• The control handle is at the proximal end of the delivery system and is used to release the prosthetic aortic valve at the target position. The handle comprises a flex wheel for flexing the outer flex catheter as it navigates through the aortic arch and the native aortic valve, a flexion indicator showing the degree to which the outer flex catheter is flexed, a fine adjustment wheel for the fine adjustment of the prosthetic valve within the annulus during valve alignment without pushing or pulling on the entire delivery system, and a balloon lock knob to secure the inner balloon catheter to the outer flex catheter. The ergonomically designed handle is user-friendly and allows precise maneuvering during the procedure.

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• With the prosthetic valve crimped to a small diameter on the inner balloon catheter, the delivery system can be smoothly inserted into the 14 Fr or 16 Fr expandable introducer sheath using the valve loader and crimper system. The preassembled set-up eliminates the intravascular pushing and assembly of the prosthetic valve onto the balloon, thus simplifying the procedure.

• The balloon is at the distal end of the inner balloon catheter, on which the prosthetic valve is crimped. The balloon can be advanced or retracted by rotating the fine adjustment wheel during valve alignment. The balloon can be inflated to expand the prosthetic valve, thus releasing and deploying the prosthetic valve, and deflated to a small size to facilitate the smoothly retrieval of the delivery system. The balloon is made of a special high-strength medical polymer material, which gives the balloon its high puncture resistance and its extremely low compliance, thus effectively preventing the “dogbone” effect and reducing the risk of tearing the valve when expanding. The inner balloon catheter has radiopaque markers, which indicate the valve’s position and the working length of the balloon during procedure.

The figure below illustrates the delivery system.

Accessories

The valvuloplasty balloon catheter pre-dilates the native aortic valve before the prosthetic valve is implanted, and post-dilates the prosthetic valve after implantation.

The crimper system consists of a desktop crimper with two crimp stoppers and a handheld crimper. It is used to crimp the prosthetic valve onto the delivery system.

The expandable introducer sheath set consists of an expandable sheath and a dilator. It acts as a conduit through which the delivery system and the prosthetic valve gains vascular access.

The balloon inflation device is used to inflate and deflate the balloon of the delivery system and the balloon of the valvuloplasty balloon catheter.

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Operation Procedure

A femoral arterial puncture is performed. Through the puncture site, a guide wire is inserted through the femoral artery into the left ventricle, then the expandable introducer sheath is inserted into the femoral artery, thus establishing a femoral arterial access pathway. After the dilator of the expandable introducer sheath set is withdrawn, a balloon of suitable size is selected and used to pre-dilate the native valve, as shown in figure (a) below. The delivery system, together with the prosthetic valve crimped thereon beforehand, is inserted through the expandable sheath, and delivered along the guide wire to the aortic annulus, as shown in figure (b) below. After precise positioning, and under ventricular pacing, the balloon of the delivery system is inflated to release the prosthetic valve, as shown in figures (c) and (d) below.

(a) (b)

Subsequently, the delivery system is retrieved. The structure and function of the prosthetic valve is ascertained via angiography and echocardiography. The femoral artery is sutured.

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Market Opportunity and Competition

Aortic stenosis is becoming more prevalent in China. According to Frost & Sullivan, in 2020, 4.4 million patients in China suffered from aortic stenosis, and about 793,000 patients in China were eligible for TAVR. Those figures are expected to climb to 5.2 million and 1.1 million, respectively, in 2030, according to Frost & Sullivan. Driven by the aging population and the advantages of TAVR procedures, the market for TAVR products in China is expected to grow from RMB555.8 million in 2020 to RMB11.5 billion in 2030. For more details of the market size and growth drivers in China, please refer to the paragraphs headed “Industry Overview – Overview of Aortic Valve Diseases and Its Treatment Market – TAVR Product Market in China” in this document.

NMPA NMPA Expanding Pericardium Access Approved Price Retrievability Certificate Company Product Approval Mechanism Material Route (RMB/valve) Indication Expiration

TaurusOne® 2021 SE BP TF X AS 2026 NA Peijia Medical TaurusElite® 2021 SE BP TF √ AS 2026 NA

VenusA-Valve® 2017 SE PP TF X AS 2022 ~248,000 Venus Medtech VenusA-Plus® 2020 SE PP TF √ AS 2022 NA

Microport CardioFlow VitaFlow® 2019 SE BP TF X AS 2024 ~196,000

Jiecheng Medical J-Valve® 2017 SE PP TA X AS/AR 2022 ~260,000

Edwards Lifesciences SAPIEN 3 2020 BE BP TF/TA X AS 2025 ~298,000

Note: VenusA-Valve and VenusA-Plus share the same NMPA registration certificate. Therefore, the NMPA certificate expiration dates are the same. BP=bovine pericardium; PP=porcine pericardium; TF=transfemoral; TA=transapical

Source: Public Information, Frost & Sullivan analysis

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The table below lists the relevant TAVR product candidates in clinical trials in China:

Expanding Pericardium Company Product Clinical Phase Indication Access Route Mechanism Material

Our Company Prizvalve® Confirmatory Clinical Trial AS TF BE BP

Microport CardioFlow VitaFlow® II Confirmatory Clinical Trial AS TF SE BP

Severe AR/ Jenscare Scientific Ken-Valve® Confirmatory Clinical Trial TA SE BP combined with AS

Silara Medtech Silara®-Valve Confirmatory Clinical Trial AS TF SE BP

RenatusTM FIM AS TF BE BP Balance Medical AS RenatoTM TF BE BP FIM (valve-in-valve)

KingstronBio ProStyle FIM AS TF SE BP

Lepu Scientech SinoCrownTM FIM AS TF SE BP

Medtronic EvolutTM Pro FIM AS TF SE PP

Source: Public Information, Frost & Sullivan analysis

Competitive Advantages

As it embodies our BE technology, Prizvalve® shares all the advantages common to BE devices. For details of common BE advantages, please refer to the paragraphs headed “Our Product Candidates – Technological Advantages – BE, SE Technology and Medical Metal Materials” above in this section.

Specifically in the TAVR context, BE TAVR products also have the following advantages, according to Frost & Sullivan:

• Peer-reviewed large-scale analyses of clinical studies indicate that BE transcatheter aortic valves can lead to superior patient outcomes over SE counterparts, including:

o Lower in-hospital mortality,

o Lower follow-up all-cause mortality and cardiovascular mortality at two years post-procedure,

o Lower incidence of stroke,

o Lower rate of permanent pacemaker implantation, and

o Lower risk of paravalvular leak.

• BE aortic valves’ short stent design reduces the obstruction of coronary arteries, leaving room for future percutaneous coronary interventions.

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In addition to those BE advantages, Prizvalve® has the following product-specific advantages:

• It features an inner and outer sealing skirt, which is designed to effectively prevent paravalvular leak.

• Its unique stent structure and better balancing of mechanical performance entail better radial force support.

• Its steerable delivery catheter is designed for fine adjustment through the aortic arch and the annulus.

• Its delivery system features a balloon of a particular structure that stabilizes valve expansion.

Summary of Preclinical Trial Results

We started the animal study of Prizvalve® in March 2019, and finished it in June 2020. 17 pigs participated in the trial, including three in an acute group, three in a four-week group, three in a ten-week group, and eight in a 20-week group. All animals adhered to protocol, underwent TAVR procedures and follow-up evaluations, and reached their respective study endpoints.

The trial showed that Prizvalve® can be loaded smoothly, positioned clearly in the body, and released smoothly. It was also shown to have good maneuverability and operability, and be satisfactory to clinical operational requirements. After precise positioning and full release of the prosthetic valve, coronary blood supply remained unaffected, no or only trace regurgitation was observed immediately after the procedure, and mitral valve leaflets continued to move as normal. The aorta remained intact and showed no complication.

The longest study endpoint lasted until 20 weeks after the procedure. During that period, no conspicuous abnormalities were found in lab tests or in any of the major organs, the aorta, or the myocardium. The vast majority of the prosthetic valves remained fully functional, and pressure gradient across the aortic valve and aortic valve velocity maintained relatively low levels. No regurgitation or only trace regurgitation was observed, during the period up to the study endpoints. No conspicuous stenosis was observed. Except for a slight thickening of the prosthetic valves in a handful of animals, the leaflets of the majority of the implanted valves opened and closed normally, with no observable thrombus or calcification. In conclusion, the animal study validated the safety, performance, and feasibility of Prizvalve®.

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Summary of Clinical Trial Results

We started the FIM clinical trial of Prizvalve® in March 2021, and completed it in June 2021 on 11 human subjects. It was a single-arm, single-center exploratory FIM clinical trial. The purpose is to evaluate the safety and efficacy of Prizvalve® in treating severe aortic stenosis patients who are at high risk for conventional surgery. The primary clinical endpoint was device success rate immediately after procedure. The secondary endpoints included procedural success rate immediately after procedure, all-cause mortality at 30 days, and incidence of major adverse cardiovascular and cerebrovascular events (“MACCE”) at 30 days after procedure. As a FIM trial, this trial demonstrated the safety of Prizvalve® and its compliance with the requirements for initiating confirmatory large-scale clinical trial. The device success rate and the procedural success rate were both 100%. The trial results show that Prizvalve® can effectively improve the patient’s heart function.

The trial subjects were subject to certain enrollment criteria, including:

• Aged 70 years or above;

• Diagnosed with severe symptomatic aortic stenosis;

• Class II or above under NYHA classification;

• Life expectancy exceeding 12 months;

• Anatomically suitable for TAVR procedure;

• Either (i) found to be unfit for conventional surgery by at least two cardiac surgeons, or (ii) presented high risk for conventional surgery and refused conventional surgery after sufficient consultation with a surgeon.

The trial initially recruited twelve subjects, including one subject who was subsequently found to be more suited for other valve implantation. Among the remaining 11 subjects, some deviations from trial protocol occurred, which, upon thorough analyses, were deemed by the principal investigator to be irrelevant to any of the clinical endpoints and immaterial to any of the safety and efficacy evaluations in this FIM trial.

The baseline characteristics of the subjects are as follows:

(n=11)

Sex – Male 8 (72.7%) – Female 3 (27.3%) Age (years) 78.29 ± 6.50 Aortic stenosis classification – Mild 0 (0.0%) – Moderate 0 (0.0%) – Severe 11 (100.0%)

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(n=11)

NYHA classification –I 0 (0.0%) –II 2 (18.2%) – III 7 (63.6%) – IV 2 (18.2%) Aortic valve morphology – Tricuspid 7 (63.6%) – Bicuspid 4 (36.4%) – Monocuspid 0 (0.0%) Preoperative aortic MPG (mmHg) 54.00 ± 14.73 Preoperative PAV (m/s) 4.68 ± 0.65 Orifice area (cm2) 0.71 ± 0.15

Safety Indicators

The safety of Prizvalve® was measured at 30 days after the procedure by all-cause mortality and the incidence of MACCE. All-cause mortality includes both cardiovascular mortality and non-cardiovascular mortality, and “MACCE” is defined to include mortality, stroke, myocardial infarction, permanent pacemaker implantation, and aortic valve reoperation (interventional or surgical). The trial ascertained the safety of Prizvalve®, which forms the basis for further clinical trial. The table below summarizes the safety indicators:

30 days after procedure (n=11)

All-cause mortality 0 (0.0%) – Cardiovascular mortality 0 (0.0%) – Non-cardiovascular mortality 0 (0.0%) Stroke 0 (0.0%) Myocardial infarction 0 (0.0%) Permanent pacemaker implantation 4 (36.4%) Aortic valve reoperation 0 (0.0%)

At 30 days after the procedure, we observed no mortality, no stroke, no myocardial infarction, and no aortic valve reoperation. Four subjects received permanent pacemaker implantation within 30 days after the procedure. Their symptoms subsided following the permanent implantation of pacemakers. As a FIM trial, this trial demonstrated the safety of Prizvalve® and its compliance with the requirements for initiating confirmatory large-scale clinical trial.

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Efficacy Indicators

The efficacy of Prizvalve® was measured immediately after the operation by the device success rate and the procedural success rate.

The criteria for device success are as follows:

• The device enters the vascular access, and is delivered, released, and implanted successfully, and the delivery system is withdrawn successfully out of the body; and

• The implanted valve achieves the following intended therapeutic effects:

o The mean pressure gradient (“MPG”) across the aortic valve is less than 20 mmHg, or the mean peak aortic velocity (“PAV”) is less than 3 meters per second; and

o No severe prosthetic valve regurgitation or paravalvular leak.

The criteria for procedural success are as follows:

• Correct placement of one or two prosthetic valves at the proper anatomical location;

• No intraprocedural mortality and no immediate post-procedural mortality; and

• The procedure achieves its objectives without the occurrence of major complications such as coronary artery occlusion, ventricular septal perforation, mitral valve damage or failure, pericardial tamponade, operation termination, or open-heart surgery by cardiac surgeon.

We achieved 100% device success and 100% procedural success. The trial results show that Prizvalve® can effectively improve the patient’s heart function. The detailed results are as follows:

Cardiac Functions Under the NYHA Classification

Before discharge, 81.8% of the subjects were in class III, and 18.2% were in class IV. In contrast, at 30 days after the procedure, only 18.2% were in class III, and 81.8% of the subjects were in class II under the NYHA classification.

Before 30 Days After Discharge Procedure (n=11) (n=11)

NYHA Classification – I 0 (0.0%) 0 (0.0%) – II 0 (0.0%) 9 (81.8%) – III 9 (81.8%) 2 (18.2%) – IV 2 (18.2%) 0 (0.0%)

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Paravalvular Leak

All subjects met the criterion for device success of no severe paravalvular leak. In addition, all subjects showed either none, trace, or mild paravalvular leak before discharge and 30 days after procedure.

Before 30 Days After Discharge Procedure (n=11) (n=11)

Paravalvular Leak – None 4 (36.4%) 6 (54.5%) – Trace 4 (36.4%) 4 (36.4%) – Mild 3 (27.3%) 1 (9.1%) – Moderate 0 (0.0%) 0 (0.0%) – Severe 0 (0.0%) 0 (0.0%)

MPG Across the Aortic Valve, PAV, and Orifice Area

Before Procedure Before 30 Days After (Baseline) Discharge Procedure (n=11) (n=11) (n=11)

Aortic MPG (mmHg) 54.00 ± 14.73 9.00 ± 2.24 9.45 ± 5.07 PAV (m/s) 4.68 ± 0.65 2.03 ± 0.28 2.05 ± 0.42 Orifice area (cm2) 0.71 ± 0.15 1.76 ± 0.25 2.12 ± 0.75

The mean aortic MPG dropped from 54.00 mmHg before procedure to 9.00 mmHg before discharge and 9.45 mmHg at 30 days after the procedure.

Aortic MPG (mmHg) 60 54.00

9.00 9.45 10

0 Before Procedure Before Discharge 30 Days After Procedure (n=11) (n=11) (n=11)

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The mean PAV dropped from 4.68 meters per second before procedure to 2.03 meters per second before discharge and 2.05 meters per second at 30 days after the procedure.

PAV (m/s)

5.0 4.68

4.5

4.0

3.5

3.0

2.5 2.03 2.05 2.0

1.5

1.0 Before Procedure Before Discharge 30 Days After Procedure (n=11) (n=11) (n=11)

The mean orifice area increase from 0.71 square centimeter before procedure to 1.76 square centimeters before discharge and 2.12 square centimeters at 30 days after the procedure.

Orifice area (cm2) 2.3 2.12 2.1

1.9 1.76

1.7

1.5

1.3

1.1

0.9 0.71 0.7

0.5 Before Procedure Before Discharge 30 Days After Procedure (n=11) (n=11) (n=11)

Clinical Development Plan

In December 2020, Prizvalve® was approved for clinical trial. We comply with all relevant regulations in our communications with the NMPA. As of the Latest Practicable Date, the NMPA (and/or its local branches) had raised no objection to the continued conduct of

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Material Communications

In April 2021, the NMPA recognized Prizvalve® as an innovative medical device qualified for Special Review, which would prioritize Prizvalve® over other product candidates without such qualification, at the NMPA and which is expected to accelerate the review and approval process of Prizvalve®. The Shanghai branch of the NMPA approved the clinical trial of Prizvalve® in December 2020. Except for the above, we have not had any material regulatory communications with the NMPA regarding Prizvalve®, and we are not aware of any material concern raised by the NMPA regarding Prizvalve®. We have conducted and completed the FIM clinical trial, and initiated the confirmatory clinical trial, of Prizvalve® in compliance with NMPA’s requirements under the Guidelines for the Clinical Trials of Transcatheter Aortic Valve Implantation (《經導管植入式人工主動脈瓣膜臨床試驗指導原則》) (the “Guiding Principles”). According to the Guiding Principles, the clinical trial of TAVR product candidates must be divided into a FIM trial and a confirmatory trial. FIM clinical trial is a pre-requisite for initiating further pre-marketing confirmatory clinical studies of any novel TAVR product candidate, such as Prizvalve®, that has yet to be used clinically. While Prizvalve® is in confirmatory clinical trial after successfully completing its FIM trial pursuant to the Guiding Principles, we had not received from the NMPA any concerns regarding, or objections to, our clinical development plans as of the Latest Practicable Date.

WE MAY NOT ULTIMATELY BE ABLE TO SUCCESSFULLY DEVELOP OR MARKET PRIZVALVE®.

Valveclip-TTM – Our key Product Candidate

Product Structure

Valveclip-TTM is of the same product structure of Valveclip-MTM. For details, please refer to the paragraphs headed “Our Product Candidates – Our Product Pipeline – Valveclip-MTM – Our key Product Candidate – Product Structure” above in this section.

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Operation Procedure

Femoral venipuncture is performed. Through the puncture site, a guide wire is inserted into the femoral vein. Along the guide wire, the steerable guide catheter with a dilator is delivered to the right atrium. The dilator is withdrawn. The clip delivery system is inserted into the steerable guide catheter and delivered to the right atrium. By manipulating the delivery system, the clip is precisely positioned inside the right atrium, and enters the right ventricle vertically through the tricuspid valve. Subject to the control mechanisms of the handle in the delivery system, the clip can open and close to capture the leaflets, or independently capture a leaflet on either side. Once it is secured firmly to the leaflets, the clip is released from the delivery system, and the delivery system is withdrawn.

Market Opportunity and Competition

Competitive Advantages

Valveclip-TTM has the same competitive advantages as Valveclip-MTM. For details, please refer to the paragraphs headed “Our Product Candidates – Our Product Pipeline – Valveclip- MTM – Our key Product Candidate – Competitive Advantages” above in this section.

Clinical Development Plan

As of the Latest Practicable Date, Valveclip-TTM had completed type test. We aim to obtain the approval for its clinical trial in the first quarter of 2022. We will comply with all relevant regulations in our communications with the NMPA. As of the Latest Practicable Date, the NMPA (and/or its local branches) had not raised any objection to our plan for clinical trial. We plan to finish the subject enrollment for its confirmatory clinical trial in 2023, and apply for its marketing approval in China in 2024.

WE MAY NOT ULTIMATELY BE ABLE TO SUCCESSFULLY DEVELOP OR MARKET VALVECLIP-TTM.

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Other Product Candidates

Besides our Core Product and key product candidates, we are developing additional device product candidates for the interventional treatment of valvular heart disease, including the ones outlined below.

Mitral Valve Candidate

We are developing Mi-thos ProTM, a transfemoral TMVR product candidate for the treatment of mitral regurgitation. It features valve-in-ring technology.

Product Structure

Mi-thos ProTM consists of two subsystems, namely a transcatheter docking system and a transcatheter prosthetic valve. The docking ring is made mainly of shape-memory alloy, and has a shape designed for encircling the native mitral leaflets. The prosthetic valve is fully covered by a polyethylene terephthalate skirt which is conductive to endothelialization, and it comprises three symmetrical bovine pericardial leaflets, mounted on a stent. The bovine pericardial leaflets receive anti-calcification pretreatment.

Operation Procedure

Access is established via atrial septal puncture, which pierces through the atrial septum using a puncture needle, allowing the catheter to enter the left atrium from the right atrium. The docking ring loaded at the distal end of the delivery system is delivered through the transfemoral pathway, through the right atrium to the left atrium, and then through the afflicted mitral valve to the left ventricle. Once in place, the docking ring is pushed into contact with the leaflets of the mitral valve, and released. Thereafter, the steerable catheter is withdrawn. The valve delivery system with the crimped prosthetic valve is subsequently maneuvered along the same pathway to the docking ring holding the leaflets. Lastly, the prosthetic valve is released.

Development Plan

As of the Latest Practicable Date, we had not engaged in any material regulatory communications with the NMPA regarding our Mi-thos ProTM product candidate. As of the Latest Practicable Date, Mi-thos ProTM was at the design stage. We aim to initiate its FIM clinical trial in 2022 and apply for its marketing approval in 2025.

WE MAY NOT ULTIMATELY BE ABLE TO SUCCESSFULLY DEVELOP OR MARKET MI-THOS PROTM.

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Aortic Valve Candidates

We are developing a second generation of Prizvalve® TAVR device, which improves upon the first generation, and boasts a prosthetic valve and a delivery system that are further optimized for performance. Specifically, the prosthetic valve has better anti-calcification performance and greater durability. The delivery system of Prizvalve® II has even greater maneuverability, and can further reduce post-operative complications. Taking into account the severe calcification and the narrower transfemoral access pathway that are more common in the typical Chinese patient with aortic stenosis, Prizvalve® II is optimized in its design to address those problems particular to the target population. Therefore, we expect it to be more suited to patients with varying sizes of transfemoral access pathway, and especially to Chinese patients, and to achieve better therapeutic outcomes.

Further, we are developing Starr-ATM, which treats aortic regurgitation. It consists of a prosthetic valve and a delivery system. The prosthetic valve comprises a stent with U-shaped graspers encircling it, a sealing membrane, and bovine pericardial leaflets. The U-shaped graspers can effectively position and anchor the prosthetic valve by gripping the native leaflets, is designed to fit the anatomical structure of the aortic valve, and is fully retrievable and capable of redeployment. The delivery system is steerable and maneuverable through the aortic arch. Starr-ATM is suitable for aortic regurgitation patients with or without calcification at the aortic valve. Its short stent design minimizes obstruction of the coronary arteries.

Starr-ATM takes the transfemoral approach. Its delivery system bends around the aortic arch to reach the aortic valve, where the U-shaped graspers are deployed to grasp the native leaflets. The prosthetic valve is then released to replace the degenerated aortic valve.

As of the Latest Practicable Date, Prizvalve® II and Starr-ATM were both at the design stage. We aim to initiate their FIM clinical trials in 2022 and apply for their marketing approvals in China in 2024.

WE MAY NOT ULTIMATELY BE ABLE TO SUCCESSFULLY DEVELOP OR MARKET PRIZVALVE® II OR STARR-ATM TAVR VALVES.

Tricuspid Valve Candidate

We are developing Prizvalve-TTM, a BE transfemoral TTVR product candidate for the treatment of tricuspid regurgitation. As of the Latest Practicable Date, Prizvalve-TTM was at the design stage. We aim to initiate its animal study and type test in 2022 and apply for its marketing approval in China in 2025.

WE MAY NOT ULTIMATELY BE ABLE TO SUCCESSFULLY DEVELOP OR MARKET PRIZVALVE-TTM.

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Pulmonary Valve Candidate

We are developing Prizvalve-PTM, our BE transfemoral TPVR product candidate for the treatment of pulmonary stenosis and pulmonary regurgitation. It is similar to Prizvalve® in its structure, features, and operation procedure. As of the Latest Practicable Date, Prizvalve-PTM was at the design stage. We aim to complete its type test in 2022 and apply for its marketing approval in China in 2025.

WE MAY NOT ULTIMATELY BE ABLE TO SUCCESSFULLY DEVELOP OR MARKET PRIZVALVE-PTM.

Accessories

In addition to our heart valve replacement and repair product candidates, we have several transcatheter valvular device accessories in our pipeline, including the product candidates outlined below.

Valvuloplasty Balloon Catheter

We are developing a valvuloplasty balloon catheter product candidate for the pre-dilation and post-dilation of the aortic valve in TAVR procedures, as well as aortic valvuloplasty. The catheter is a transfemoral catheter with a conical tip and a balloon at the distant end of the catheter.

The catheter takes the transfemoral approach, and moves along the guide wire to reach the aortic valve. The balloon is pressurized to dilate the valve for a limited period of time, and is rapidly deflated thereafter. The balloon catheter plays an important role in pre-dilating the stenotic valve and post-dilating to better expand the implanted prosthetic valve in TAVR procedures. It employs a special high-strength medical polymer material that gives the balloon its high puncture resistance and its extremely low compliance. Additionally, the balloon catheter follows a coaxial design with better traceability, which better fulfills clinical needs.

Taking into consideration clinical pain points, such as the severe valve calcification and smaller body size common in Chinese patients, our balloon catheter has been improved to meet the practical clinical needs on the ground, and to solve issues associated with balloon catheter products, such as insufficient pressure resistance and lack of size options for clinical use. It has the following features and advantages:

• smooth passage through vascular lumens, allowing the balloon to smoothly navigate bends long blood vessels to reach the lesion site,

• high puncture resistance, which reduces the risk of calcification substances or metal stents piercing the balloon during procedure,

• extremely low compliance, which effectively prevents the “dog bone” effect, and reduces the risk of tearing the valve while dilating, and

• rapid dilation and deflation, enabled by the large tube lumen design, which reduces the time of blood flow obstruction, and allows the clinician to operate more quickly, thus reducing his or her time of radiation exposure.

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As of the Latest Practicable Date, our valvuloplasty balloon catheter had completed type test. We plan to apply for its NMPA marketing approval in the fourth quarter of 2021, by applying for exemption from clinical trial pursuant to clauses 2 and 3, article 22 of the Medical Devices Registration Measures promulgated by the NMPA in 2014. For details, please refer to the paragraphs headed “Regulatory Overview – Regulations Relating to Medical Devices – Clinical Trials of Medical Devices in this document.

WE MAY NOT ULTIMATELY BE ABLE TO SUCCESSFULLY DEVELOP OR MARKET OUR VALVULOPLASTY BALLOON CATHETER.

Expandable Introducer Sheath

We are developing an expandable introducer sheath for creating percutaneous transarterial access in interventional procedures, which provides vascular access for the transfemoral catheter. The device consists of an expandable catheter sheath and a dilator. It has two sizes of 14 Fr and 16 Fr, respectively, which matches the relatively narrower vascular access typically observed in Chinese patients. It is mainly designed for use in TAVR procedures to reduce vascular complications. As the prosthetic valve pass through, the sheath would locally expand to accommodate the outer dimensions of the prosthetic valve, and then reverts to its previous size after the prosthetic valve passes. As of the Latest Practicable Date, our expandable introducer sheath was undergoing type test, and it was exempt from clinical trial pursuant to the Catalog of Medical Devices Exempt from Clinical Trial. We plan to apply for its NMPA marketing approval in the second quarter of 2022.

WE MAY NOT ULTIMATELY BE ABLE TO SUCCESSFULLY DEVELOP OR MARKET OUR EXPANDABLE INTRODUCER SHEATH.

Suture-Mediated Closure Device

We are developing a suture-mediated closure device for suturing the incision or cutdown after percutaneous interventions. The device consists of a closure system and a suture trimmer. The closure system closes the incision, whereas the suture trimmer tightens, knots, and cuts the suture line. The device can quickly close up the incision or cutdown after the interventional procedure. It is easy to use, and reduces vascular complications. As of the Latest Practicable Date, our suture-mediated closure device was at the design stage. We aim to initiate its type test by the first quarter of 2022, and to apply for its NMPA marketing approval in 2023.

WE MAY NOT ULTIMATELY BE ABLE TO SUCCESSFULLY DEVELOP OR MARKET OUR SUTURE-MEDIATED CLOSURE DEVICE.

CEP Device

We are developing a CEP device, which is an accessory in TAVR procedures. It is used to protect the brain during TAVR procedures. It takes the transfemoral access pathway, reaches the ascending aorta, and is released and deployed there. It prevents loosened embolisms from entering blood vessels in the brain and triggering serious complications such as stroke. As of the Latest Practicable Date, our CEP device was at the design stage. We aim to initiate its type test by the third quarter of 2022, and to apply for its NMPA marketing approval in 2025.

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WE MAY NOT ULTIMATELY BE ABLE TO SUCCESSFULLY DEVELOP OR MARKET OUR CEP DEVICE.

Atrial Septal Puncture Device

We are developing an atrial septal puncture device, which is used in transfemoral procedures to gain access to the left atrium from the right atrium by puncturing through the interatrial septum. The device consists of an atrial septal puncture needle, an atrial septal puncture sheath, and a guide wire. It provides a complete solution to the problem with puncturing the atrial septum, and it can be used to introduce all kinds of cardiovascular catheters through the atrial septum into the left side of the heart. As of the Latest Practicable Date, our atrial septal puncture device was at the design stage, and it was exempt from clinical trial pursuant to the Catalog of Medical Devices Exempt from Clinical Trial. We plan to apply for its NMPA marketing approval in the fourth quarter of 2022.

WE MAY NOT ULTIMATELY BE ABLE TO SUCCESSFULLY DEVELOP OR MARKET OUR ATRIAL SEPTAL PUNCTURE DEVICE.

Flex Catheter

We are developing our flex catheter, a steerable sheath for facilitating the transvascular entry of transcatheter devices into the heart, including entry into the left atrium through the atrial septum. The device consists of a steerable sheath and a dilator. The distal end of the sheath is steerable and designed to readily pass through the mitral and tricuspid valves. It is particularly suited for the transfemoral delivery of heart valve devices to the mitral and tricuspid valves. As of the Latest Practicable Date, our flex catheter was at the design stage, and it was exempt from clinical trial pursuant to the Catalog of Medical Devices Exempt from Clinical Trial. We plan to apply for its NMPA marketing approval in the fourth quarter of 2022.

WE MAY NOT ULTIMATELY BE ABLE TO SUCCESSFULLY DEVELOP OR MARKET OUR FLEX CATHETER.

Guide Wire

We are developing our guide wire for interventional treatments of structural heart disease. It is primarily designed for creating transvascular access pathway in interventional heart procedures and guiding transcatheter devices. The guide wire consists of a wire core, surrounded by a coil. The different sections of the guide wire are of different stiffness, giving rise to outstanding capability to navigate through blood vessels without damaging the blood vessels. The distal end, which is closer to the heart, is pre-shaped, which eliminates the need to adjust the shape during procedure, reduces the complexity and difficulty of the procedure, and reduces operation time. In short, our guide wire can be inserted smoothly in interventional heart procedures. As of the Latest Practicable Date, our guide wire was at the design stage, and it was exempt from clinical trial pursuant to the Catalog of Medical Devices Exempt from Clinical Trial. We plan to apply for its NMPA marketing approval in the fourth quarter of 2022.

WE MAY NOT ULTIMATELY BE ABLE TO SUCCESSFULLY DEVELOP OR MARKET OUR GUIDE WIRE.

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OUR PLATFORM

Research and Development

Our R&D team focuses on developing a proprietary technology platform for interventional heart valve treatments, which includes a full spectrum of proprietary technologies necessary for all aspects of the development and production of transcatheter valvular devices. We have assembled a comprehensive portfolio of transcatheter replacement and repair product candidates for the treatment of all four valves in the human heart, as well as accessories for interventional cardiac procedures. As of the Latest Practicable Date, our product pipeline included 16 product candidates, including nine valve product candidates and seven accessories. The NMPA has recognized three of our product candidates as innovative medical devices that are qualified for Special Review.

With our strong in-house R&D capabilities, we have built up a sizable patent portfolio to protect our wide-ranging proprietary technologies, As of the Latest Practicable Date, we had filed over 170 invention and utility model patent applications in China, of which 81 were invention patent filings. For protection in foreign jurisdictions of our in-house R&D achievements, as of the Latest Practicable Date we owned eight PCT applications for our product candidates. In 2019, 2020 and the four months ended April 30, 2021, we incurred research and development expenses of RMB30.9 million, RMB72.0 million and RMB96.5 million, respectively. For details, please refer to the paragraphs headed “Financial Information – Significant Factors Affecting Our Results of Operations – Our Ability to Improve Research and Development Efficiency” in this document. We intend to expand and improve our product portfolio by strengthening our research and development of new products, expanding our product pipeline and improving our existing product candidates.

Research and Development Team

Our research and development team possesses global perspectives and rich industry experience. As of the Latest Practicable Date, our R&D team consisted of 86 members with a wealth of knowledge and experience in medical device product development and manufacture techniques. The principal R&D personnel all have engaged in professional research in the relevant fields such as valvular heart disease for many years and have accumulated experience in medical device research and development, and served previously in renowned domestic and multinational medical device companies.

Our founder, chairman of the Board, executive Director, and chief executive officer, Dr. Qifeng YU, has over 16 years of experience in the research and development of medical apparatuses and over ten years of R&D experience with heart valves. He led the development of many prosthetic valves. Our co-founder, executive Director, and chief operating officer, Mr. Tao QIN, has more than 26 years of experience in the clinical cardiology field, including over 14 years of experience as a physician and over six years of clinical trial experience. Ms. Xiayan YANG is our executive Director and vice president of project management and business development. She has more than 15 years of experience in product development and quality control in the biotechnology industry. For details, please refer to the paragraphs headed “Directors, Supervisors and Senior Management – Senior Management” in this document.

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Research and Development Platforms

We have developed a complete set of proprietary technology platforms covering all aspects necessary for the development and production of transcatheter valvular devices. The following platforms complement each other and create a synergistic effect to enable us to develop our product candidates efficiently:

• Medical Metal Materials. We have mastered the material processing techniques for both cobalt-chromium alloy used in BE products and nitinol alloy used in SE products. We have acquired key pieces of technology crucial to the research, development, and design of all types of stents and clips, in addition to their complete processing techniques and production processes, including laser cutting, heat treatment, sandblasting, and polishing. Specifically, our stent design overcame the difficulties in anchoring, controllable release and retrievability and further enhances the safety during the procedure. Our inspection and testing capabilities, as well as our R&D, production, and testing equipment, are in compliance with industry and national standards.

• Medical Polymer Materials. Medical polymer materials are used in the delivery systems of transcatheter valve devices. We have mastered key technologies associated with, among others, polymer catheter design, structural design of the steerable handle, and the complete production process of transcatheter valve devices. Further, we have developed an evaluation and testing protocol for delivery system catheters.

• Biological Tissue. Bovine pericardium is a key raw material for our prosthetic replacement valve product candidates. Its durability is determined by key factors such as the anti-calcification treatment and immunogenicity-removing treatment. To date, bioprosthetic heart valve-manufacturing companies in and out of China are still devoting great amounts of effort to overcoming the major technological challenges associated with those treatments. Our R&D and manufacture capabilities, which are in compliance with industry standards, cover every step of prosthetic valve manufacturing, including raw bovine pericardium sourcing and processing, leaflet design, tailoring of processed bovine pericardium, and the eventual suturing of tailored bovine pericardium. Furthermore, our tissue engineering technique produces excellent anti-calcification and immunogen removal performances, and it is central to our prosthetic valve technology. Given that calcification has been demonstrated to be the major cause of prosthetic valve function deterioration, it is expected that prosthetic valves with anti-calcification treatment will be much more durable than similar products without such treatment.

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• Large Balloon Technology. Large balloon is a core piece of technology necessary for our BE product candidates. It requires the full set of R&D and production techniques of balloon structural design, balloon stretching, forming, folding, and shaping. We have acquired the R&D, manufacture, and testing capabilities for balloons of all sizes.

R&D Process

Our typical product design and development processes are illustrated in the figures below:

Project Planning & S1 Proposal S0 Input Stage Evaluation Stage Evaluation

Prototype Design Stage

Design S3 Verification S2 Evaluation Stage Evaluation

Design Validation Stage

Launch Post-Launch S4 Preparation S5 Monitor Evaluation Stage Evaluation Stage

• Product Proposal. Before we initiate a new product development project, we typically conduct market research to collect information on market trends and demands as well as competition products. Our product development cycle starts with a feasibility analysis of the medical needs of clinicians and patients for such product, the potential risks related to the project, and the key technologies to be applied, as well as the commercial, R&D, clinical, financial, and production potentials. Based on the feasibility analysis, at a kick-off meeting, our management will review the development proposal and decide whether to proceed with the proposed project.

• Product Planning and Prototype Design. After our management approves the project, we will then establish a project team to monitor R&D progress, the latest market trends as well as detailed analysis of similar products manufactured by our competitors. We transform the product protocol into engineering requirements using our internal manual and then develop the components according to the engineering requirements. The ultimate goal at this stage is to build the prototype with the desired function and performance.

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• Design Verification and Validation. All new products will go through several rounds of internal and external in vivo and in vitro testing, through which our management will collect feedback from our employees and clinicians on the product functionality and safety so that we can refine our designs and resolve technical issues in order to satisfy clinical needs. We also finalize the instruction manual of the product candidates. We collaborate with leading hospitals in China to conduct clinical trials for our product candidates. For details, please refer to the paragraphs headed “– Our Platform – Clinical Trials” below in this section.

• Registration and Launch. Our regulatory team is mainly responsible for regulatory filings and communication with applicable competent authorities in different jurisdictions. At this stage, we also prepare risk management report and launch plan. We expect to launch our products shortly after receiving the relevant regulatory approvals or registrations. After we launch our products, we plan to regularly monitor their safety and efficacy based on clinical results.

Technology Innovation Joint Lab for Biomaterial and Medical Device

We have set up a collaboration research center for biological material and medical device innovation with SCU, where we will combine our innovative engineering capabilities with Sichuan University’s research strength in biological materials to collaboratively develop innovative biological materials and medical devices. In March 2021, we entered into the SCU Agreement with SCU, whereby the parties agree to jointly establish a “Biomaterial and Medical Device Technology Innovation Joint Lab” (the “Joint Lab”) to research and develop cardiovascular system recovery materials and equipment, and the relevant clinical technology.

Under the SCU Agreement, SCU is primarily responsible for conducting relevant R&D activities in accordance with our technological innovation needs, undertaking clinical trials of co-developed products, facilitating applied technology promotion, providing relevant technical data and materials necessary for product registration, and offering other relevant consulting, training and technology supporting services. In exchange, we are mainly responsible for leveraging our product design and production capabilities, equipment, and facility strength to industrialize and commercialize research achievements and for funding the Joint Lab’s research activities to the tune of up to RMB20.0 million in multiple installments. As of the Latest Practicable Date, we had provided research funds of RMB4.0 million.

Pursuant to the SCU Agreement, SCU and we will jointly own the IP rights (including patents and patent applications, copyrights and other relevant rights) resulting from the collaborative activities. In addition, SCU agrees not to use, or license or assign to any third party, any such IP, without our written consent. The SCU Agreement is legally binding, has a term of five years, and will automatically terminate if the research funds are overdue for more than six months.

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Clinical Trials

Our clinical trial team has significant experience in conducting clinical trials for our product candidates. As of the Latest Practicable Date, we had 16 regulatory affair and clinical management staff members, led by our co-founder, executive Director, and chief operating officer, Mr. Tao QIN, who has more than 26 years of experience in the clinical cardiology field, including over 14 years of experience as a physician and over six years of clinical trial experience.

The goal of the clinical trial is to measure the clinical efficacy and safety of a device. Robust clinical data are an important marketing tool for increasing the credibility of our brand and products. We conduct clinical trials of our product candidates, in order to obtain the requisite regulatory approvals, and to collect post-procedural data for improving and enhancing the design and features of our product candidates.

The clinical trial team selects qualified clinical trial institutions to carry out clinical trials on human subjects. For details of our collaboration with clinical trial institutions, please refer to the paragraphs headed “Collaboration with Clinical Trial Institutions” in this section. We first prepare the clinical trial protocol plan that details such matters as the clinical trial’s purpose, timeline, methods, procedures, and risks. We then meet with clinical trial institutions to discuss the clinical trial protocol plan. Following such meeting, we prepare and send to the ethics committee of each participating clinical trial institution a proposal including our clinical trial protocol plan, patient consent forms, investigator report forms and agreements with the participating clinical trial institution. During the clinical trial, our clinical trial team monitors trial progress and patient responses pursuant to clinical trial protocols.

Collaboration With Clinical Trial Institutions

The NMPA maintains a catalog of hospitals registered as clinical trial centers, from which we select a number of leading hospitals to conduct our clinical trials. The factors we commonly consider when selecting institutions include their credentials, expertise, infrastructure, and equipment. We also meet with potential investigators to discuss the purpose and requirements of our clinical trial. After comprehensive evaluation, we and the institution generally enter into an agreement setting out the clinical trial’s purpose, timeline, procedures, methods, and risks. We then work together with the principal investigators to get an opinion from the institution’s ethics committee. The clinical trials must be conducted in accordance with the protocol approved by the ethics committee. Any amendments to the protocol must be re-evaluated and approved by the ethics committee.

Pursuant to the legally-binding agreements with those participating clinical trial institutions, the institutions are required to conduct the clinical trials strictly in accordance with the protocol, to collect data, and to issue trial reports at the end of each clinical trial. The lead institution will prepare formal reports based on the trial reports submitted by all participating institutions. In return for the institutions’ services, we make scheduled payments

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Collaboration With CROs and SMOs

We collaborate with reputable CROs and SMOs for the support of our clinical trials. When selecting CROs and SMOs, we consider a number of factors, including their expertise, experience and reputation. The CROs and SMOs must comply with all applicable laws and regulations as well as follow our protocols to ensure that all clinical trial results are accurate and authentic. Under the legally-binding agreements with our CRO or SMO, we are responsible for the trial preparation, subject enrollment, trial implementation and management, while the CRO takes responsibility for report preparation, and the SMO takes responsibility for record keeping, to guarantee the compliance of the clinical trial process with applicable regulations or standards. Key terms of our service agreement with CROs and SMOs are summarized below.

• Services. CROs and SMOs provide us with services related to clinical trials in certain phases as specified in the agreement or work order.

• Term. CROs and SMOs are required to complete the work on a project basis and within the prescribed time limit.

• Payments. We are required to make payments to the CROs or SMOs by periodic installments or according to milestones of the respective services during the clinical trials.

• Intellectual Property Rights. Intellectual property arising from the clinical trials conducted by the CROs or SMOs are exclusively owned by us.

• Confidentiality. The CROs and SMOs are required to keep confidential any information, documents, materials or data relating to our products and clinical trials, and shall promptly return all of the above to us upon the expiration of the agreements.

• Termination. Either party is entitled to terminate the agreement in case of a material breach of the other party.

Relationship With PIs and KOLs

In addition to our collaboration with clinical trial institutions, CROs and SMOs, we also maintain continuous communications with leading principal investigators, KOLs, clinicians and hospitals, who are informed of our latest research and development progress. The principal investigators we work with not only provide us with important feedback on clinical results but also present the clinical use of our product candidates in academic settings, which we believe can invite wider discussion of our product candidates and in turn contribute to our research and

– 261 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT BUSINESS development efforts. Furthermore, we participate in meetings with KOLs in our industry with respect to our research and development efforts and product candidates. We have also presented our products in multiple industry conferences to announce our latest research and development progress.

Manufacturing

Currently, our in-house production is limited to producing, assembling and testing sample products under development for the purpose of clinical trials, design verification and validation, and product development. We plan the production primarily based on the number of subjects enrolled in, and the progress of, related clinical trials, the verification and validation plans, and the product development schedule. To prepare for the launch of our product candidates, we have begun to increase our manufacture capacity. As of the Latest Practicable Date, we occupied over 7,600 square meters of R&D, office, and manufacturing floor space in Shanghai and Chengdu, which housed offices, R&D laboratories, physical, chemical, and microbiological testing facilities, as well as class 10,000 cleanroom production facilities compliant with GMP requirements. Specifically, in Shanghai, as of the Latest Practicable Date, we occupied over 4,900 square meters of R&D, office, and manufacturing floor space. In Chengdu, as of the Latest Practicable Date, we occupied approximately over 2,600 square meters of factory floor and office space intended for processing key raw materials, such as bovine pericardium.

Our Manufacturing Team

Our manufacturing team is led by our production director, Ms. Xiulan CHENG, who has over 19 years of experience in the medical technology industry. As of the Latest Practicable Date, we had 54 supply chain and manufacturing personnel. We regularly provide training to our manufacturing personnel to ensure that they possess the skill sets and techniques required in the relevant manufacturing process, and comply with our quality control requirements, as well as applicable laws and regulations.

Manufacturing Facility

We have an established manufacturing facility, which, together with offices and R&D facilities, occupies over 4,900 square meters in Shanghai. It is designed and built for manufacturing medical devices in compliance with GMP requirements with full manufacturing capability and ready for commercial-scale production. Our manufacturing facility has several production lines, including production lines for stents, valves, and delivery systems, respectively. Our facility has complete manufacturing capabilities, covering production, packaging and quality assurance, and is capable of producing various products in relation to structural heart disease. To ensure adherence to the GMP, we procured equipment and machinery from reputable suppliers and completed complex commissioning and qualification steps to verify that the equipment and programs are installed with the requisite specifications. Our annual production capacity as of the Latest Practicable Date was 3,000 sets for each of our Core Product and key product candidates. Once our plan is fully implemented, our annual

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Manufacturing Process

We will commence commercial manufacture of our products shortly after we receive the NMPA approvals for commercialization. All the steps in our production process are conducted in compliance with the applicable ISO 13485:2016 certification requirements. We typically conduct the key manufacturing steps in-house, except that we engage third party sterilization service providers for certain sterilization step.

Prosthetic Valves

The flowchart below illustrates the manufacturing process of prosthetic valves:

Stent post- Stent cutting treatment

Cutting & Valve anti- Suturing of Valve Valve suturing of calcification heart valve sterilization packaging leaflet & skirt treatment

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The following is a brief description of the key steps in our manufacturing process of prosthetic valves:

• Stent Fabrication. We use laser cutters that are highly precise, highly reliable, and contact-free, which focus the laser beam on the surface of the tubular metal material by way of optical system, and which cut the tube into the particular design of the heart valve stent in the presence of the assist gas.

• Post-Treatment of Heart Valve Stent. The cut heart valve stents that pass quality control would then undergo this step, which comprises stent cleaning and sandblasting, stent heat-treatment, acid wash, and polishing. The surface of the stent is treated by physical, chemical, and electrochemical means to satisfy the requirements for implantation.

• Cutting and Suturing of the Leaflets and Skirt Components. The raw materials for the leaflets and the skirt are cut into the particular designs for the leaflets and the skirt, respectively, using specialized laser cutters, and undergo preliminary suturing.

• Suturing of the Heart Valve. After the stent is properly cleaned, our trained, qualified, and skilled suturing technicians suture together the valve leaflets, skirt, and the stent, forming the raw prosthetic valve.

• Anti-calcification treatment. We adopt our own anti-calcification technology, which was successfully developed in-house to pre-treat the sutured prosthetic valves for anti-calcification.

• Sterilization and packaging. We sterilize the anti-calcification-treated prosthetic valves, and package the sterilized prosthetic valves, thus completing the production of the prosthetic valves.

• Quality inspection. Our quality control system is in compliance with the YY/T 0287 (ISO 13485:2016) requirements for quality control systems, and comprises process inspections at every step. The finished products are inspected for compliance with standards such as YY/T 1449.3 (ISO 5840-3) and, after passing such inspection, put into storage.

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Delivery System

The flowchart below illustrates the manufacturing process of our delivery system:

Production & Final assembly assembly of of delivery Packaging Sterilization delivery system system components

The following is a brief description of the key steps in our manufacturing process of our delivery system:

• Production and Assembly of Each Components of the Delivery System. Each component of the delivery system is fully washed and rinsed upon entering the cleanroom production facility, and are subsequently processed and assembled into key semi-finished products, which are ready for the final assembly of the delivery system.

• Final Assembly of Delivery System. The various semi-finished products and components then undergo final assembly, which yields complete sets of delivery systems.

• Packaging and Sterilization. The final assembled delivery systems are packaged and sealed into the containers, and sterilized using ethylene oxide.

• Quality Inspection. Our quality control system is in compliance with the YY/T 0287 (ISO 13485:2016) requirements for quality control systems, and comprises process inspections at every step. The finished products are inspected for compliance with standards such as YY/T 1449.3 (ISO 5840-3) and, after passing such inspection, put into storage.

Clip

The flowchart below illustrates the manufacturing process of our clip:

Stent post- Stent Membrane Stent cutting treatment assembly covering

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The following is a brief description of the key steps in our manufacturing process of our TMVr and TTVr clips:

• Post-Treatment of Clip Stent. The cut clip stents that pass quality control would then undergo this step, which comprises stent cleaning and sandblasting, stent heat- treatment, acid wash, and polishing. The surface of the stent is treated by physical, chemical, and electrochemical means to satisfy the requirements for implantation.

• Stent Assembly. The various treated components of the stent are assembled together by means such as crimping and laser welding.

• Membrane covering. Our trained, qualified, and skilled suturing technicians follow standardized suturing procedures to suture the sealing membrane to the naked stent, thus fully covering the clip, and leaving no metal exposed.

• Quality Inspection. Our quality control system is in compliance with the YY/T 0287 (ISO 13485:2016) requirements for quality control systems, and comprises process inspections at every step. The finished products are inspected, those pass quality inspection are put into storage.

Commercialization

Commercialization Strategies for Our Pipeline Candidates

We are in the process of setting our commercialization team. Our current major form of marketing activities of product candidates under development is academic outreach, by which we are determined to grow our brand recognition and establish collaboration with leading principal investigators, KOLs, clinicians and hospitals in China. We regularly meet with KOLs to discuss our product candidates, conduct product demonstrations, and provide training. We believe that through such frequent communications, demonstrations, and training, we are able to maintain good working relationships with these KOLs and clinicians, and help them gain familiarity with our product candidates. If these KOLs and clinicians formed positive opinions of our product candidates, they may recommend our product candidates when publishing articles, delivering speeches at industry conferences, or providing training to other clinicians.

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Pricing Policies

During the Track Record Period and up to the Latest Practicable Date, we had no commercialized products on the market in China or overseas. We have not yet formulated any definitive pricing policy for our product candidates. When our product candidates progress to commercialization in the future, we will determine their prices based on various factors such as our products’ advantages, our costs and the prices of competing products. For our Core Product, Prizvalve®, for which we plan to apply for marketing approval with the NMPA in 2023, we intend to determine the price based on the value it provides to patients and the price of comparable products.

As of the Latest Practicable Date, there was no guidance price set by the relevant PRC government authorities in relation to our product candidates. We might sell our products to distributors at the prices determined by us from time to time, and might be required to, or choose to, participate in a public tender process to facilitate our distributors’ sales of our products to public hospitals. Nonetheless, in China, the government maintains a high level of involvement in the determination of retail prices, as the prices are affected by the bidding and tender processes organized by government agencies and hospitals.

INTELLECTUAL PROPERTY

We have assembled a comprehensive intellectual property portfolio in China and overseas to protect our technologies, inventions and know-how and to ensure our future success after commercialization. As of the Latest Practicable Date, we owned (i) 83 issued patents in China, (ii) two issued patents in the U.S., (iii) one patent granted by European Patent Office, (iv) one patent registered in Hong Kong, and (v) 98 pending patent applications, including 87 Chinese patent applications, eight active PCT patent applications and three patent applications in Hong Kong relating to certain of our product candidates and technologies.

The following table summarizes the details of the material issued patents and filed patent applications by our Company in connection with our clinical and pre-clinical product candidates:

Last day of Application the Expected Proprietary or No. Number Patent Title Jurisdiction Status Applicant Patent Term Licensed-in

Mi-thos® 1 CN201610074782.2 A D-shaped China Issued Our Company February 1, Proprietary right interventional 2036 prosthetic heart valve (一種D形介入式人工心臟瓣膜)

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Last day of Application the Expected Proprietary or No. Number Patent Title Jurisdiction Status Applicant Patent Term Licensed-in

2 CN201620107104.7 A D-shaped China Issued Our Company February 1, Proprietary right interventional 2026 prosthetic heart valve (一種D形介入式人工心臟瓣膜) 3 CN201510186813.9 An interventional China Issued Our Company April 19, 2035 Proprietary right prosthetic heart valve and its preparation method (一種介入式人工心臟瓣膜及其制備方法) 4 CN201520238383.6 An interventional China Issued Our Company April 19, 2025 Proprietary right prosthetic heart valve (一種介入式人工心臟瓣膜) 5 CN201510186854.8 An interventional China Issued Our Company April 19, 2035 Proprietary right prosthetic heart valve delivery system (一種介入式人工心臟瓣膜輸送系統) 6 CN201520238411.4 An interventional China Issued Our Company April 19, 2025 Proprietary right prosthetic heart valve delivery system (一種介入式人工心臟瓣膜輸送系統) 7 CN201811107088.1 Heart valve bracket China Issued Our Company September 20, Proprietary right (心臟瓣膜支架) 2038 8 CN201911292769.4 Valve unhooking China Pending Our Company / Proprietary right mechanism and valve conveying device (一種瓣膜脫鈎機構及一種瓣膜輸送裝置) 9 CN201922252206.4 Valve unhooking China Issued Our Company December 11, Proprietary right mechanism and valve 2029 conveying device (一種瓣膜脫鈎機構及一種瓣膜輸送裝置) 10 CN201911272414.9 Outer tube moving China Pending Our Company / Proprietary right mechanism and valve conveying device (一種外管移動機構及一種瓣膜輸送裝置)

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Last day of Application the Expected Proprietary or No. Number Patent Title Jurisdiction Status Applicant Patent Term Licensed-in

11 CN201922253209.X Outer tube moving China Issued Our Company December 11, Proprietary right mechanism and valve 2029 conveying device (一種外管移動機構及一種瓣膜輸送裝置) 12 CN201730091549.0 Heart valve delivery China Issued Our Company March 23, Proprietary right system (2) (瓣膜輸送 2027 器(二)) 13 CN201510186257.5 Interventional heart China Issued Our Company April 19, 2035 Proprietary right valve prosthesis stent convenient to accurately locate and preparation method thereof (一種便於準確定位的介入式人工心臟瓣膜的支架及其制備方法) 14 CN201520236873.2 Interventional heart China Issued Our Company April 19, 2025 Proprietary right valve prosthesis stent convenient to accurately locate (一種便於準確定位的介入式人工心臟瓣膜的支架結構) 15 CN201510186452.8 An stent for China Issued Our Company April 19, 2035 Proprietary right interventional prosthetic heart valve and its preparation method (一種介入式人工心臟瓣膜的支架及其制備方法) 16 CN201520238406.3 An stent for China Issued Our Company April 20, 2025 Proprietary right interventional prosthetic heart valve (一種介入式人工心臟瓣膜的支架結構) 17 CN201520238308.X An interventional China Issued Our Company April 19, 2025 Proprietary right prosthetic cardiac valve stent structure with barbs (一種帶倒刺的介入式人工心臟瓣膜的支架結構)

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Last day of Application the Expected Proprietary or No. Number Patent Title Jurisdiction Status Applicant Patent Term Licensed-in

18 CN201520238195.3 A delivery device for China Issued Our Company April 19, 2025 Proprietary right interventional prosthetic cardiac valves (一種用於介入式人工心臟瓣膜的輸送裝置) 19 CN201520238196.8 A simple delivery China Issued Our Company April 19, 2025 Proprietary right device for interventional prosthetic cardiac valves (一種用於介入式人工心臟瓣膜的簡易輸送裝置) 20 CN201620107125.9 Interventional China Issued Our Company February 1, Proprietary right prosthetic cardiac 2026 valve (一種介入式人工心臟瓣膜) 21 CN201730091740.5 Heart valve delivery China Issued Our Company March 23, Proprietary right system (1) (瓣膜輸送 2027 器(一)) 22 CN201721010385.5 Mitral valve stent China Issued Our Company August 13, Proprietary right delivery system 2027 (一種二尖瓣膜支架輸送系統) 23 CN201910964860.X Heart valve outer China Pending Our Company / Proprietary right support and artificial heart valve (一種心臟瓣膜外支架及一種人工心臟瓣膜) 24 CN201921697187.X Heart valve outer China Issued Our Company October 10, Proprietary right support and artificial 2029 heart valve (一種心臟瓣膜外支架及一種人工心臟瓣膜)

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Last day of Application the Expected Proprietary or No. Number Patent Title Jurisdiction Status Applicant Patent Term Licensed-in

Prizvalve® 1 CN202010924332.4 Interventional valve China Pending Our Company / Proprietary right holders and aortic valves (介入式瓣架以及主動脈瓣膜) 2 CN202021916958.2 Interventional valve China Issued Our Company September 3, Proprietary right holders and aortic 2030 valves (介入式瓣架以及主動脈瓣膜) 3 CN201911264963.1 An artificial valve China Pending Our Company / Proprietary right delivery system (一種人造瓣膜輸送系統) 4 CN201922208345.7 An artificial valve China Issued Our Company December 10, Proprietary right delivery system (一種 2029 人造瓣膜輸送系統) 5 CN201710069056.6 Artificial heart valve China Issued Our Company February 7, Proprietary right prosthesis conveying 2037 device (一種人工心臟瓣膜輸送裝置) 6 CN201911224685.7 Balloon catheter for China Pending Our Company / Proprietary right aortic valve expansion (一種用於主動脈瓣膜擴張的球囊導管) 7 CN201922141505.0 Balloon catheter for China Issued Our Company December 3, Proprietary right aortic valve 2029 expansion (一種用於主動脈瓣膜擴張的球囊導管) 8 CN202010391930.X Balloon catheter China Pending Our Company / Proprietary right (一種球囊導管) 9 CN202020771226.2 Balloon catheter China Issued Our Company May 10, 2030 Proprietary right (一種球囊導管) 10 CN202010553622.2 Catheter sheath and China Pending Our Company / Proprietary right expansion tube (導管鞘以及擴張管) 11 CN202021123177.8 Catheter sheath and China Issued Our Company June 16, 2030 Proprietary right expansion tube (導管鞘以及擴張管) 12 CN202010610126.6 Balloon catheter China Pending Our Company / Proprietary right (一種球囊導管) 13 CN202021236646.7 Balloon catheter China Issued Our Company June 29, 2030 Proprietary right (一種球囊導管)

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Last day of Application the Expected Proprietary or No. Number Patent Title Jurisdiction Status Applicant Patent Term Licensed-in

14 CN202120877463.1 Balloon catheter China Pending Our Company / Proprietary right (一種球囊導管) 15 CN202010882566.7 Balloon catheter China Pending Our Company / Proprietary right (一種球囊導管) 16 CN202021847399.4 Balloon catheter China Issued Our Company August 27, Proprietary right (一種球囊導管) 2030 17 CN202030549910.1 Delivery system handle China Issued Our Company September 15, Proprietary right (輸送器手柄) 2030 18 CN202030723691.4 Catheter sheath set (導 China Issued Our Company November 26, Proprietary right 管鞘套件) 2030 19 CN202022859738.7 Balloon-expandable China Pending Our Company / Proprietary right catheter (一種球囊擴張導管) 20 CN202023035580.8 Balloon-expandable China Pending Our Company / Proprietary right catheter (一種球囊擴張導管) 21 CN202011530889.6 Balloon-expandable China Pending Our Company / Proprietary right catheter (一種球囊擴張導管) 22 CN202023123310.2 Balloon-expandable China Pending Our Company / Proprietary right catheter (一種球囊擴張導管) 23 PCT/CN2021/086495 Interventional valve PCT Pending Our Company / Proprietary right stent and aortic valve (介入式瓣架以及主動脈瓣膜) 24 CN202110456959.6 Balloon catheter China Pending Our Company / Proprietary right (一種球囊導管) 25 CN202021504805.7 Hand-held crimp device China Issued Our Company July 26, 2030 Proprietary right (手持壓握裝置) 26 CN202021503309.X Valve crimp device (瓣 China Issued Our Company July 26, 2030 Proprietary right 膜壓握機) 27 CN202110275735.5 A crimp device and its China Pending Our Company / Proprietary right crimping method (一種壓握機及壓握方法) 28 CN202120538761.8 A crimp device China Pending Our Company / Proprietary right (一種壓握機) 29 CN202030570599.9 Hand-held crimp device China Issued Our Company September 22, Proprietary right (手持式壓握機) 2030 30 CN202030569365.2 Desktop crimp device China Issued Our Company September 22, Proprietary right (台式壓握機) 2030 31 CN202010732430.8 Crimp system and China Pending Our Company / Proprietary right crimp method (壓握系統及壓握方法)

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Last day of Application the Expected Proprietary or No. Number Patent Title Jurisdiction Status Applicant Patent Term Licensed-in

Valveclip-MTM and Valveclip-TTM 1 CN202010242468.7 A tissue clamping China Pending Our Company / Proprietary right device and its elastic holder (一種組織夾持裝置及其彈性支架) 2 CN202020450459.2 A tissue clamping China Issued Our Company March 30, Proprietary right device and its elastic 2030 holder (一種組織夾持裝置及其彈性支架) 3 CN202010243259.4 A barbed clamping China Pending Our Company / Proprietary right piece and tissue clamping device (一種倒刺夾片及組織夾持裝置) 4 CN202020450290.0 A barbed clamping China Issued Our Company March 30, Proprietary right piece and tissue 2030 clamping device (一種倒刺夾片及組織夾持裝置) 5 CN202010390972.1 A mitral valve repair China Pending Our Company / Proprietary right control handle and mitral valve repair device (一種二尖瓣修復控制手柄及二尖瓣修復設備) 6 CN202020772808.2 A mitral valve repair China Issued Our Company May 10, 2030 Proprietary right control handle and mitral valve repair device (一種二尖瓣修復控制手柄及二尖瓣修復設備) 7 CN202010243141.1 A tissue clamping China Pending Our Company / Proprietary right device (一種組織夾持裝置) 8 CN202020451989.9 A tissue clamping China Issued Our Company March 30, Proprietary right device (一種組織夾持 2030 裝置) 9 PCT/CN2020/125267 Tissue clamping China Pending Our Company / Proprietary right devices

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Last day of Application the Expected Proprietary or No. Number Patent Title Jurisdiction Status Applicant Patent Term Licensed-in

10 CN202010243522.X A tissue clamping China Pending Our Company / Proprietary right device and clamp main body thereof (一種組織夾持裝置及其夾子主體) 11 CN202020451986.5 A tissue clamping China Issued Our Company March 30, Proprietary right device and clamp 2030 main body thereof (一種組織夾持裝置及其夾子主體) 12 CN202010391581.1 Mitral valve repair China Pending Our Company / Proprietary right device (一種二尖瓣修復設備) 13 CN202020770717.5 Mitral valve repair China Issued Our Company May 10, 2030 Proprietary right device (一種二尖瓣修復設備) 14 CN202010391597.2 A delivery tube for China Pending Our Company / Proprietary right tissue clamping device and valve repair device (一種組織夾持裝置的輸送管及瓣膜修復設備) 15 CN202020770770.5 A delivery tube for China Issued Our Company May 10, 2030 Proprietary right tissue clamping device and valve repair device (一種組織夾持裝置的輸送管及瓣膜修復設備) 16 PCT/CN2020/128544 Mitral valve repair PCT Pending Our Company / Proprietary right device and control handle thereof 17 CN202021079571.6 Barbed clamping piece China Issued Our Company June 11, 2030 Proprietary right and tissue clamping device (一種倒刺夾片及組織夾持裝置) 18 CN202010581915.1 Internal clamping arm PCT Pending Our Company / Proprietary right control mechanism, mitral valve repair device and control handle thereof (一種內夾臂控制機構、二尖瓣修復設備及其控制手柄)

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Last day of Application the Expected Proprietary or No. Number Patent Title Jurisdiction Status Applicant Patent Term Licensed-in

19 CN202021189799.0 Internal clamping arm China Issued Our Company June 22, 2030 Proprietary right control mechanism, mitral valve repair device and control handle thereof (一種內夾臂控制機構、二尖瓣修復設備及其控制手柄) 20 CN202030473684.3 Valve repair device (瓣 China Issued Our Company August 17, Proprietary right 膜修復裝置) 2030 21 CN202030472791.4 Valve repair device (瓣 China Issued Our Company August 17, Proprietary right 膜修復裝置) 2030 22 CN202023278221.5 Base of valve delivery China Pending Our Company / Proprietary right device (瓣膜輸送器械的基座) 23 CN202120177336.0 A delivery tube and China Pending Our Company / Proprietary right tissue repair device (一種輸送管和組織修復設備) 24 PCT/CN2021/094985 Mitral valve clamping PCT Pending Our Company / Proprietary right device, clamp body of mitral valve clamping device, and mitral valve repair device 25 PCT/CN2021/093102 Delivery pipes, guide PCT Pending Our Company / Proprietary right pipes and tissue repair devices 26 CN202121774645.2 A tissue clamping China Pending Our Company / Proprietary right device and tissue repair device (一種組織夾持裝置及組織修復設備) 27 CN202110876049.3 A tissue clamping China Pending Our Company / Proprietary right device and tissue repair device (一種組織夾持裝置及組織修復設備)

The term of an individual patent may vary based on the countries/regions in which it is granted. The actual protection afforded by a patent varies on a claim-by-claim and country-by-country basis and depends upon many factors, including the type of patent, the scope of its coverage, the availability of any patent term extension or adjustment, the availability of legal remedies in a particular country/region and the validity and enforceability

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We rely, in some circumstances, on trade secrets and/or confidential information to protect aspects of our technology. We seek to protect our proprietary technology and processes, in part, by entering into confidentiality arrangements with consultants, advisers and contractors. We have entered into confidentiality and non-compete agreements with our key employees and employees involved in research and development, pursuant to which intellectual property conceived and developed during their employment belongs to us and they waive all relevant rights or claims to such intellectual property. We also have established an internal policy governing the confidentiality of all company information. Despite the measures we have taken to protect our intellectual property, our proprietary information may be obtained by unauthorized parties. For details, please refer to the paragraphs headed “Risk Factors – Risks Relating to Our Product Candidates – Risks Relating to Our Intellectual Property Rights” in this document.

We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining the physical security of our premises as well as physical and electronic security of our information technology systems. Despite any measures taken to protect our data and intellectual property, unauthorized parties may attempt to or successfully gain access to and use information that we regard as proprietary. For details, please refer to the paragraphs headed “Risk Factors – Risks Relating to Our Operations – Our internal computer systems may fail or suffer security breaches” in this document.

As of the Latest Practicable Date, we also owned 45 registered trademarks in China. We will also seek trademark protection for our Company and our corporate logo in additional jurisdictions that are available and appropriate.

Our Directors confirm that, during the Track Record Period and up to the Latest Practicable Date, we were not involved in any material proceedings in respect of intellectual property right infringement claims against us or initiated by us. However, there are risks that we may be subject to claims that we have infringed the intellectual property rights of third parties, and we may not be able to adequately protect our own intellectual property rights. For details, please refer to the paragraphs headed “Risk Factors – Risks Relating to Our Product Candidates – Risks Relating to Our Intellectual Property Rights” in this document.

CUSTOMERS

During the Track Record Period and up to the Latest Practicable Date, we had no commercialized product and therefore had no customer.

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SUPPLIERS

During the Track Record Period, our suppliers mainly included suppliers of raw materials for the production of sample products under development for the purpose of clinical trials, property rental service, preclinical study and clinical trial services, R&D and manufacturing equipment, and construction and renovation services. In 2019, 2020 and the four months ended April 30, 2021, purchases from our five largest suppliers amounted to RMB7.1 million, RMB23.4 million and RMB14.1 million, respectively, representing 43.9%, 38.5% and 41.5% of our total purchases for the same periods, respectively; purchases from our largest supplier amounted to RMB1.8 million, RMB5.2 million and RMB5.2 million, respectively, representing 11.3%, 8.5% and 15.2% of our total purchases for the same periods, respectively.

Our suppliers generally settle with us by wire transfer. Credit terms granted to us are determined on a case-by-case basis based on invoice dates or milestone payments contemplated under the supply agreements. The table below summarizes the purchases from our five largest suppliers for the periods indicated:

Nature of Five Largest Products/ Length of Percentage Suppliers for Supplier Services Business Purchase of Total 2019 Background Purchased Relationship Amount Purchases RMB’000 %

Supplier A China-based Property rental Since 2015 1,827 11.3 property rental service service provider Supplier B China-based Animal study Since 2019 1,577 9.8 technical service services provider Supplier C China-based raw Bovine Since 2017 1,540 9.5 material supplier pericardium Supplier D China-based SMO Clinical trial site Since 2019 1,270 7.9 management services Supplier E China-based testing Prosthetic valve Since 2018 880 5.4 equipment fatigue testing supplier machine

Total 7,094 43.9

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Nature of Five Largest Products/ Length of Percentage Suppliers for Supplier Services Business Purchase of Total 2020 Background Purchased Relationship Amount Purchases RMB’000 %

Supplier F Australia-based raw Bovine Since 2018 5,151 8.5 material supplier pericardium Supplier G U.S.-based raw Delivery system Since 2019 4,925 8.1 material supplier Supplier H China-based Construction Since 2019 4,873 8.0 construction services service provider Supplier A China-based Property rental Since 2015 4,539 7.5 property rental service service provider Supplier I China-based Renovation Since 2019 3,890 6.4 renovation services service provider

Total 23,378 38.5

Five Largest Suppliers for the Nature of Four Months Products/ Length of Percentage Ended April 30, Supplier Services Business Purchase of Total 2021 Background Purchased Relationship Amount Purchases RMB’000 %

Supplier J China-based Renovation Since 2021 5,158 15.2 renovation services service provider Supplier F Australia-based raw Bovine Since 2018 2,913 8.6 material supplier pericardium Supplier G U.S.-based raw Delivery system Since 2019 2,752 8.1 material supplier Supplier C China-based raw Bovine Since 2017 1,935 5.7 material supplier pericardium Supplier K China-based Research services Since 2021 1,333 3.9 university

Total 14,091 41.5

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To the best of our knowledge, all of our five largest suppliers during the Track Record Period were 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 any of our five largest suppliers during the Track Record Period.

RAW MATERIAL PROCUREMENT

For our product candidates, we primarily use raw materials including bovine pericardium, nitinol alloy, nickel-cobalt alloy (MP35N), polyethylene terephthalate membrane, polymeric extrusion tubes and injection molding tools. We select our raw material suppliers based on a number of factors, including the quality of raw materials, price, delivery and after-sales service. We use reputable suppliers from China, the United States, Australia, the European Union and other countries.

We generally enter into purchase contracts with our raw material suppliers. The following table summarizes key terms of the purchase contracts with our raw material suppliers:

Quality specifications We attach technical and quality specifications for the raw materials in each purchase contract.

Price and pricing policy Price or pricing policy is specified in each agreement and/or purchase order.

Transportation and delivery Delivery method is specified in each agreement and/or purchase order.

Payment Some suppliers require prepayment for our orders; some suppliers provide us with a credit term of up to 90 days.

Raw materials return/exchange We examine raw materials when we receive them and may return any raw materials that do not meet our requirements within specified periods after receipt.

Confidentiality Pursuant to each agreement, our suppliers shall keep confidential of the information acquired in the performance of the agreement.

Exclusivity Our supply agreements generally do not have exclusive clauses prohibiting suppliers from selling their products to our competitors.

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Based on the current market conditions, we intend to maintain stable working relationships with our major suppliers of raw materials. However, we cannot assure that we will maintain our working relationships with our major suppliers on similar terms, if at all. Although we maintain a list of backup suppliers if any supplier fails to timely deliver raw materials, we are still subject to risks associated with shortage of raw materials. For details, please refer to the paragraphs headed “Risk Factors – Risks Relating to Our Product Candidates – Risks Relating to Manufacture and Supply of Our Product Candidates – We rely on a limited number of suppliers for our key raw materials, and may not be able to secure a stable supply of qualified raw materials at all times or at all” and “An increase in the market price of our key raw materials and components may adversely affect our financial position” in this document.

Our production team monitors a rolling forecast of demand for specific products while our research and development team provides specifics of raw materials to be purchased. We maintain a pool of qualified suppliers for internal purposes, which is reviewed annually. As of the Latest Practicable Date, we had a pool of qualified suppliers of raw materials for our product candidates. We inspect raw material candidates from qualified suppliers in such pool and make necessary purchases according to inventory risks and costs associated with the raw materials and components needed. During the Track Record Period and up to the Latest Practicable Date, we had not experienced any material difficulties in procuring our major raw materials and had not experienced significant fluctuations in the prices of our supplies. To the best knowledge of our Directors, there had been no material breach of our procurement agreements with our suppliers during the Track Record Period. Our Directors believe, after taking into consideration the impact of the potential outbreak of COVID-19, that we would not experience any material difficulties in procuring our major raw materials.

QUALITY CONTROL

Our quality control and regulatory team is involved in every aspect of our daily operations to ensure the quality control of our products. As of the Latest Practicable Date, our quality control team had 32 employees. We have established an internal control protocol for the design and development of medical devices, with reference to various domestic and international risk management standards including GMP standard as required by the NMPA, and the ISO13485:2016 standard. Our quality management system covers substantially every aspect of our operations, including document management, product traceability, product design and development, manufacturing, facilities and equipment management, quality inspection, supply chain, personnel training, among others. We provide trainings to relevant employees to ensure that they are able to correctly and effectively implement our quality management system. We had complied with all of our quality qualification requirements in material respects up to the Latest Practicable Date. During the Track Record Period and up to the Latest Practicable Date, we were not aware of any findings from the competent regulatory authorities indicating that our product candidates under clinical trials are defective and we had not experienced any material complaint or product return from subjects enrolled in our clinical trials or hospitals where we conducted our clinical trials.

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GOVERNMENT GRANTS, AWARDS AND RECOGNITIONS

Our Company has received a wealth of awards, including one national and eight provincial and local level research grants for our innovative product development efforts. Some of the key research grants that our Company has received are set forth in the table below:

Pipeline Date of Candidate Grant Type Grant Institution Project Name Grant Grant Amount (RMB)

Mi-thos® China National Key Ministry of Science Immunogenicity July 2016 877,500 R&D Program and Technology of elimination and During the 13th the PRC anti-calcification Five-Year Plan technology of Period (“十三五”國 animal-derived 家重點研發計劃) tissues or organs (Sub-topic No. 3) (動物源組織或器官免疫原性消除及防鈣化技術(3號子課題)) Mi-thos® Shanghai “Science Science and Development of a July 2016 700,000 and Technology Technology new cardiac micro- Innovation Action Commission of trauma mitral valve Plan” – Science and Shanghai replacement system technology support Municipality and translation of projects in results (新型心臟微 biomedicine field 創傷二尖瓣置換系 (上海市“科技創新行統研發及成果轉化) 動計劃”生物醫藥領域科技支撐項目) Valveclip-MTM Shanghai “Science Science and Transcatheter Mitral January 100,000 and Technology Technology Valve Repair 2017 Innovation Action Commission of System (經導管二尖 Plan” Technology Shanghai 瓣修復系統) Innovation Fund Municipality Project for Small and Medium-sized Enterprises (上海市 “科技創新行動計劃”科技型中小企業技術創新資金項目)

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Pipeline Date of Candidate Grant Type Grant Institution Project Name Grant Grant Amount (RMB)

Valveclip-MTM Key Science and Science and Transcatheter Mitral January 100,000 Technology Projects Technology and Valve Repair 2017 under Pudong Economic System (經導管二尖 Science and Committee of 瓣修復系統) Technology Shanghai Pudong Development Fund New District (matching with municipal innovation funds) (浦東科技發展基金重點科技項目配套資金(市創新資金配套)) Prizvalve® Shanghai “Science Science and Development of an June 2017 800,000 and Technology Technology engineering samples Innovation Action Commission of of transcatheter Plan” – Science and Shanghai aortic valve technology support Municipality replacement system projects in (經導管主動脈瓣置 biomedicine field 換系統工程樣品的 (上海市“科技創新行研發) 動計劃”生物醫藥領域科技支撐項目) Valveclip-MTM Shanghai “Science Science and Development of April 2018 700,000 and Technology Technology engineering samples Innovation Action Commission of of transcatheter Plan” – Science and Shanghai mitral valve repair technology support Municipality clutches (經導管二 projects in 尖瓣修復夾合器的 biomedicine field 工程化樣品研制) (上海市“科技創新行動計劃”生物醫藥領域科技支撐項目)

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Pipeline Date of Candidate Grant Type Grant Institution Project Name Grant Grant Amount (RMB)

Mi-thos® Shanghai Pudong New Science and A multicenter September 1,800,000 District Science and Technology and prospective clinical 2019 Technology Economic study of a domestic Development Fund Committee of transcatheter mitral – Industry-Study- Shanghai Pudong valve replacement Research Special New District system (國產經導管 Project in 二尖瓣置換系統的 Biomedical Field 多中心前瞻性臨床 (上海市浦東新區科研究) 技發展基金產學研專項:生物醫藥領域) Valvuloplasty Shanghai “Science Science and Development and November 100,000 balloon and Technology Technology industrialization of 2020 catheter Innovation Action Commission of aortic valve balloon Plan” Technology Shanghai dilatation catheter Innovation Fund Municipality (主動脈瓣球囊擴張 Project for Small 導管研發及產業化) and Medium-sized Enterprises (上海市 “科技創新行動計劃”科技型中小企業技術創新資金項目) Valvuloplasty Key Science and Science and Development and September 100,000 balloon Technology Projects Technology and industrialization of 2020 catheter under Pudong Economic aortic valve balloon Science and Committee of dilatation catheter Technology Shanghai Pudong (主動脈瓣球囊擴張 Development Fund New District 導管研發及產業化) (matching with municipal innovation funds) (浦東科技發展基金重點科技項目配套資金(市創新資金配套))

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The following table sets forth some of the important accreditations and awards we have received from the relevant authorities and organizations in China in recognition of our research and development capabilities:

Year Recipient Accreditation/Award Accreditation Organization

2020 Our Company The 3rd Prize of the 3rd China Department of Social Medical Devices Design & Development Science and Entrepreneurship Technology of the Ministry Competition, 2020 (2020年 of Science and Technology 第三屆中國醫療器械創新創 of the PRC, China National 業大賽三等獎) Center for Biotechnology Development (科技部社會發展科技司、中國生物技術發展中心) 2016 Our Company The 3rd place in the China Innovation & biomedicine group of the 5th Entrepreneurship China Innovation & Competition Committee Entrepreneurship (中國創新創業大賽組委會) Competition (第五屆中國創新創業大賽生物醫藥行業第三名) 2016 Our Company The Winning Prize of the 5th China Innovation & China Innovation & Entrepreneurship Entrepreneurship Competition (Shanghai) Competition (Shanghai), Committee (中國創新創業大 Enterprise group (第五屆中賽(上海賽區)組委會) 國創新創業大賽(上海賽區)企業組優勝獎) 2018 Our Company Star Science and Technology Shanghai Technology Enterprise of the 30th Innovation Center (上海市科 Anniversary of Shanghai 技創業中心) Technology Business Incubation (上海科技企業孵化器30年明星科創企業)

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COMPETITION

We operate in a rapidly changing market, resulting from technological advances and scientific discoveries. While we believe our robust R&D capabilities provide us with competitive advantages, we face potential competition with major international medical device companies as well as domestic medical device companies which are developing heart valve disease solutions. We compete primarily based on the clinical performance of our products and pipeline products, our ability to commercialize products, R&D capabilities and brand recognition.

For further details of our major competitors, please refer to the paragraphs headed “– Our Product Candidates” in this section and the section headed “Industry Overview” in this document.

EMPLOYEES

As of the Latest Practicable Date, we employed 227 full-time employees, who were all based in China. The following table sets forth a breakdown of our employees by function as of the Latest Practicable Date:

Function Number Percentage

Research and development 86 38% Supply chain and manufacturing 54 24% Quality control 32 14% Regulatory affair and clinical management 16 7% Office general and administration 39 17%

Total 227 100%

We recruit personnel through online platforms, recruiting websites, job fairs and internal referrals. We enter into employment contracts with our employees in accordance with the applicable PRC laws and regulations and 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. We also enter into legally-binding confidentiality and non-compete agreements with key personnel, such as our management and research and development employees. The confidentiality and non-compete agreements typically include a standard non-compete clause that prohibits the employee from competing with us, directly or indirectly, during his or her employment and for at least two years after the termination of his or her employment. The confidentiality and non-compete agreements also typically include undertakings regarding assignment of inventions and discoveries made during the course of his or her employment. For further details regarding the terms of confidentiality and employment agreements with our key management, please refer to the section headed “Directors, Supervisors and Senior Management” in this document. Our employees are represented by labor unions. We believe that we maintain a good working relationship with our employees and we have not experienced any significant labor disputes or any significant difficulty in recruiting staff for our operations.

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We provide formal and comprehensive company-level and department-level training to our new employees, followed by on-the-job training. We also provide training and development programs to our employees regularly to ensure their awareness and compliance with our various policies and procedures. Some of the training is conducted jointly by departments serving different functions but working with or supporting each other in our day-to-day operations. In addition, we also invite external experts to provide training to our management personnel to improve their relevant knowledge and management skills.

Our employees’ remuneration comprises salaries, bonuses, employee provident fund and social security insurance contributions and other welfare payments. In accordance with the relevant laws and regulations, we have made contributions to social security insurance funds (including pension plans, medical insurance, work-related injury insurance, unemployment insurance and maternity insurance) and housing funds for our employees. During the Track Record Period and as of the Latest Practicable Date, we did not experience any material labor disputes or strikes that may have a material and adverse effect on our business, financial condition or results of operations.

LAND AND PROPERTIES

Our headquarters are located in Shanghai. As of the Latest Practicable Date, we did not own any properties and we leased nine properties with an aggregate gross floor area (“GFA”) of over 7,600 square meters. The following table sets forth the details of our leased properties as of the Latest Practicable Date:

Location Usage GFA Expiry Date (sq.m.)

Shanghai Laboratory 277 February 28, 2026 Shanghai Office 424 May 31, 2027 Shanghai Laboratory 902 December 31, 2024 Shanghai Office and manufacturing 2,562 September 30, 2025 Shanghai Office 403 September 30, 2026 Shanghai Office 424 February 28, 2026 Chengdu, Sichuan Office and manufacturing 1,430 September 30, 2025 (planned) Chengdu, Sichuan Office and manufacturing 1,218 September 30, 2025 (planned) Beijing Office 20 July 31, 2022

Pursuant to the applicable PRC laws and regulations, property lease agreements must be registered and filed with relevant administrative authorities. As of the Latest Practicable Date, we had not completed the relevant property leasing registrations for our eight leased properties. For details of the risk associated with the unregistered lease agreements, please refer to the paragraphs headed “Risk Factors – Risks Relating to Our Operations – We are subject to risks associated with leasing space” in this document. According to our PRC Legal Adviser, the failure to complete such registration process does not affect the validity of the relevant property lease agreements, and a maximum penalty of RMB10,000 may be imposed for the non-registration of each lease agreement. During the Track Record Period and up to the Latest Practicable Date, we had not been subject to any penalties arising from the non-registration of our lease agreements, and had not experienced any dispute arising out of, or in relation to, our leased properties.

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ENVIRONMENTAL MATTERS AND WORKPLACE SAFETY

We are subject to various environmental and occupational health and safety laws and regulations and our operations are regularly inspected by local government authorities. For more details, please refer to the section headed “Regulatory Overview” in this document. Our operations involve the use of hazardous and flammable chemical materials. Our operations also produce such hazardous waste. We generally contract with third parties for the disposal of these materials and wastes. During the Track Record Period and up to the Latest Practicable Date, we had complied with the relevant environmental and occupational health and safety laws and regulations in all material aspects 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 period. During the Track Record Period, our Directors consider that the annual cost of compliance with the applicable environmental protection were insignificant. We expect our costs of complying with current and future environmental protection laws to increase in the future, as we further our research and development efforts and commence commercial manufacturing of our products after regulatory approval.

We aim 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 (“EHS”) policies and standard operating procedures relating to waste treatment, process safety management, worker health and safety requirements 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, especially for employees engaged in work involving occupational hazards; and (v) conduct regular fire safety inspections, maintenance of fire-fighting equipment and regular emergency drills.

Our quality control and regulatory team is responsible for monitoring and enforcing the compliance of our operations with environment, health and safety laws and regulations. This responsibility is executed through training; formulation and implementation of EHS strategies, policies, standards and metrics; communication of EHS policies and procedures through a team of coordinators; environmental, health and safety audits; and incident response planning and implementation.

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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 insurance covering our clinical trials. We also maintain social welfare insurance for our employees in accordance with relevant PRC laws and regulations. In the future, to the extent that any of the foregoing types of insurances becomes mandatory due to changes of law or other reasons, we will acquire such insurance in compliance with law. Our Directors consider that our existing insurance coverage is sufficient for our present operations and in line with the industry practice in the PRC. For details, please refer to the paragraphs headed “Risk Factors – Risks Relating to Our Operations – We have limited insurance coverage which may not adequately cover all the risks and hazards associated with our operations” in this document.

PERMITS, LICENSES AND OTHER APPROVALS

We are required to obtain various permits, licenses, approvals and certifications from government authorities as required under PRC laws and regulations. As of the Latest Practicable Date, we had obtained all requisite licenses, permits and certifications that are material for our current operations, and such licenses, permits and certifications all remain in full force and effect.

LEGAL PROCEEDINGS AND COMPLIANCE

We may become a party to legal, arbitral or administrative proceedings arising in the ordinary course of our business. Our Directors confirmed that, during the Track Record Period and as of the Latest Practicable Date, we were not involved in any legal, arbitral or administrative proceedings that, individually or in aggregate, would have a material and adverse effect on our business, financial condition or results of operations, and we are not aware of any potential or threatened legal, arbitral or administrative proceedings to which we will be named as a party. Our Directors confirmed that none of our Directors or senior management personnel was personally involved in any of these legal, arbitral or administrative proceedings. Our Directors further confirmed that we were not involved in any material or systemic non-compliance incidents. As advised by our PRC Legal Adviser, during the Track Record Period and up to the Latest Practicable Date, save as disclosed above, we had complied with applicable PRC laws and regulations in all material aspects.

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RISK MANAGEMENT AND INTERNAL CONTROL

Risk Management

We are exposed to various risks for our operations so risk management is important for our business. For details of the various operational risks we face, please refer to the section headed “Risk Factors” in this document. In addition, we are also exposed to various financial risks, such as credit, liquidity and foreign exchange risks that arise in the normal course of our business. For details, please refer to the paragraphs headed “Financial Information – Quantitative and Qualitative Disclosure about Market Risk” in this document. In order to identify, assess and control the risks that may cause impediments to our business, we have designed and implemented various policies and procedures to help ensure effective risk management in our operations.

We have adopted a consolidated set of risk management policies which set out a risk management framework to identify, assess, evaluate and monitor key risks associated with our strategic objectives on an on-going basis. Our audit committee, and ultimately our Board supervises the implementation of our risk management policies. Risks identified by senior management will be analyzed on the basis of likelihood and impact, and will be properly followed up and mitigated and rectified by our Company and reported to our Board.

Our senior management implements the risk management policies, strategies and plans set by our Board. Our senior management is responsible for (i) formulating our risk management policy and reviewing major risk management issues of our Company; (ii) providing guidance on our risk management approach to the relevant teams in our Company and supervising the implementation of our risk management policy by the relevant departments; and (iii) reporting to our audit committee on our material risks.

Each functional team, including the finance and investment team, monitors and evaluates the implementation of risk management and internal control policies and procedures on a day-to-day basis. The Board typically meets in-person every quarter, as necessary. In order to formalize risk management across our Company and set a common level of transparency and risk management performance, the relevant teams will (i) gather information about the risks relating to their operation or function; (ii) conduct risk assessments, which include the identification, prioritization, measurement and categorization of all key risks that could potentially affect their objectives; (iii) prepare a risk management report bi-annually for our chief executive officer’s review; (iv) continuously monitor the key risks relating to their operation or function; (v) implement appropriate risk responses where necessary; and (vi) develop and maintain an appropriate mechanism to facilitate the application of our risk management framework.

With respect to urgent matters which arise between scheduled Board meetings, the Board secretary may also seek Board approval via telephone conference call or written Board consent. Before each Board meeting, an agenda is prepared with input from Directors, as well as from senior management and other vice presidents. At Board meetings, depending on the agenda, different team heads will gather information relating to their functions and report to the Board

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Our audit committee also reviews and approves our risk management policy to ensure that it is consistent with our corporate objectives, reviews and approves our corporate risk tolerance, monitors the most significant risks associated with our business operation and our management’s handling of such risks, reviews our corporate risk in light of our corporate risk tolerance, and monitors and ensures the appropriate application of our risk management framework across our Company.

Internal Control

We have implemented various risk management policies and measures to identify, assess and manage risks arising from our operations. Details on risk categories identified by our management, internal and external reporting mechanism, remedial measures and contingency management have been codified in our policies. For details of the potential risks associated with our business, please refer to the section headed “Risk Factors” in this document.

To monitor the ongoing implementation of our risk management policies and corporate governance measures after the [REDACTED], we have adopted or will adopt, among other things, the following risk management and internal control measures:

• the establishment of an audit committee responsible for overseeing our financial records, internal control procedures and risk management systems. Please refer to the paragraphs headed “Directors, Supervisors and Senior Management – Board Committees – Audit Committee” in this document for the qualifications and experience of these committee members as well as a detailed description of the responsibility of our audit committee;

• the appointment of Mr. Xiaoxu JIANG as our chief financial officer, and Mr. Xiaoxu JIANG and Mr. Ming King CHIU as our joint company secretaries to ensure the compliance of our operation with relevant laws and regulations. For their biographical details, please refer to the section headed “Directors, Supervisors and Senior Management” in this document;

• the appointment of Somerley Capital Limited as our compliance adviser upon the [REDACTED] to advise us on compliance with the Listing Rules; and

• the engagement of external legal advisers to advise us on compliance with the Listing Rules and to ensure our compliance with relevant regulatory requirements and applicable laws, where necessary.

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We have also established procedures to protect the confidentiality of patients’ personal data. We maintain policies which require our personnel to be trained on collecting, and safeguarding personal information. We also require our CROs and SMOs to have data protection clauses in our agreements with them under which they are responsible for safeguarding data in their possession. Access to clinical trial data has been strictly limited to authorized personnel only according to the good clinical practice and relevant regulations. Additionally, we require external parties and internal employees involved in clinical trials to comply with applicable confidentiality requirements. Data can only be used for the intended purpose, as agreed by the patients and the data usage shall be consistent with the informed consent form. We have a number of ongoing or planned clinical studies in China. Any transfer of clinical trial data in connection with our product development efforts and regulatory communications is subject to the applicable China data and privacy protection laws. Together with our CROs, SMOs and other collaborators, we have implemented controls and arrangements to ensure the data management and transfer plan is developed and implemented to govern the transfer of all clinical trial data and other potentially sensitive information. For the potential impact and related risks for data privacy and security breaches, please refer to the paragraphs headed “Risk Factors – Risks Relating to Our Operations – Our internal computer systems may fail or suffer security breaches.”

Finally, we have adopted or will adopt before the [REDACTED], various internal regulations against corrupt and fraudulent activities, which include measures against receiving bribes and kickbacks, and misuse of company assets. Major measures and procedures to implement such regulations include:

• authorizing our audit and supervision department to assume responsibility for daily execution of our anti-corruption and anti-fraud measures, including handling complaints, ensuring protection for the whistle-blower and conducting internal investigations;

• providing anti-corruption and anti-bribery compliance training periodically to our senior management and employees to enhance their knowledge and compliance with applicable laws and regulations, and including relevant policies and express prohibitions against non-compliance in staff handbooks; and

• undertaking rectification measures with respect to any identified corrupt or fraudulent activities, evaluating the identified corrupt or fraudulent activities and proposing and establishing preventative measures to avoid future non-compliance.

Our Directors are of the view that such controls and measures are sufficient and effective to avoid the occurrence of corruption, bribery, or other improper conduct of our employees. During the Track Record Period and up to the Latest Practicable Date, we were not subject to any government investigation or litigation with respect to claims or allegations of monetary and non-monetary bribery activities, and to the best knowledge of our Directors, none of our employees were involved in any bribery or kickback arrangements.

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We have designated responsible personnel to monitor our ongoing compliance with relevant laws and regulations that govern our business operations, and to oversee the implementation of any necessary measures. Meanwhile, we plan to provide our Directors, senior management and relevant employees with continuing training programs and updates regarding the relevant laws and regulations on a regular basis, with a view to proactively identifying any concerns or issues relating to any potential non-compliance. We believe that we have established adequate internal procedures, systems and controls in relation to anti- corruption and anti-bribery law compliance.

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BOARD OF DIRECTORS

Our Board consists of nine Directors, with three executive Directors, three non-executive Directors and three independent non-executive Directors. Our Board serves a term of three years and is responsible for, and has general powers for, the management and conduct of our business.

The table below sets out certain information in respect of the members of the Board.

Date of Date of appointment as founding/joining Role and Name Age Position Director our Company responsibilities

Dr. Qifeng YU 42 Chairman of our Board, March 31, 2015 March 31, 2015 Overall strategic (虞奇峰) executive Director planning and decision- and chief executive making, execution, officer operation and management

Mr. Tao QIN 48 Executive Director and March 31, 2015 March 31, 2015 Overall operation, (秦濤) chief operating management and officer clinical affairs

Ms. Xiayan YANG 40 Executive Director and March 12, 2021 August 24, 2020 Internal project (楊夏燕) vice president of management and project management overall operation of and business business development development department

Dr. David Guowei 59 Non-executive Director January 15, 2020 January 15, 2020 Responsible for WANG (王國瑋) overseeing Board affairs and giving strategic advice and guidance on the business operations of our Company

Mr. Jie ZHANG 56 Non-executive Director March 31, 2015 March 31, 2015 Responsible for (張捷) overseeing Board affairs and giving strategic advice and guidance on the business operations of our Company

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Date of Date of appointment as founding/joining Role and Name Age Position Director our Company responsibilities

Mr. Kai LIU (劉愷) 35 Non-executive Director June 28, 2021 June 28, 2021 Responsible for overseeing Board affairs and giving strategic advice and guidance on the business operations of our Company

Dr. Jiangnan CAI 64 Independent Non- July 21, 2021 [REDACTED] Responsible for (蔡江南) executive Director (effective from providing independent the [REDACTED]) advice and judgment to our Board

Mr. Fengmao HUA 53 Independent Non- July 21, 2021 [REDACTED] Responsible for (華風茂) executive Director (effective from providing independent the [REDACTED]) advice and judgment to our Board

Dr. Yufeng ZHENG 47 Independent Non- July 21, 2021 [REDACTED] Responsible for (鄭玉峰) executive Director (effective from providing independent the [REDACTED]) advice and judgment to our Board

Executive Directors

Dr. Qifeng YU (虞奇峰), aged 42, is the chairman of our Board, an executive Director and the chief executive officer of our Company. Dr. Yu founded our Group in March 2015. Dr. Yu was appointed as a Director in March 2015 and was redesignated as an executive Director on July 21, 2021. He has been an executive director and the general manager of NewMed Taiwei, our wholly-owned subsidiary, since December 2016. He is primarily responsible for the overall strategic planning and decision-making, execution, operation and management of our Group.

Dr. Yu has more than 16 years of experience in the research and development of medical apparatuses. Prior to founding our Group, he worked at MicroPort Medical (Shanghai) Co., Ltd. (微創醫療器械(上海)有限公司) (currently known as Shanghai MicroPort Medical (Group) Co., Ltd (上海微創醫療器械(集團)有限公司)) from January 2005 to September 2010 where he last served as a research and development head. From September 2010 to August 2013, he was a research and development manager at Beijing Med-Zenith Medical Scientific Co., Ltd. (北京邁迪頂峰醫療科技有限公司). In these capacities, Dr. Yu was primarily responsible for product development of cardiovascular devices. From September 2013 to March 2015, he was a R&D director at Leo Medical Co., Ltd. (常州樂奧醫療科技有限公司), where he managed a R&D team on product development of interventional medical devices.

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Dr. Yu was a manager of Chengdu Weikai Medical Technology Co., Ltd (成都微凱醫療科技有限公司) whose business license was revoked on June 25, 2018 because its business had been closed for more than six months. Dr. Yu confirmed that neither this company nor Dr. Yu incurred any liability as a result of such revocation. This company was deregistered on September 5, 2018.

Dr. Yu obtained his bachelor’s degree in metal materials and heat treatment (金屬材料與熱處理) in July 2002, and completed his master’s degree in biomedical engineering (生物醫學工程) at Sichuan University (四川大學) in June 2005. Dr. Yu obtained his doctorate degree in business administration at United Business Institutes in Belgium in January 2021.

Mr. Tao QIN (秦濤), aged 48, is an executive Director and the chief operating officer of our Company. Mr. Qin founded our Group and has served as a director since March 2015. Mr. Qin was redesignated as executive Director on July 21, 2021. He was previously the general manager of our Company and was appointed as the chief operating officer of our Company on June 28, 2021. He is primarily responsible for the overall operation, management and clinical affairs of our Group.

Mr. Qin has more than 26 years of experience in the clinical cardiology field. Prior to founding our Group, Mr. Qin worked at the People’s Liberation Army of the PRC and served as an attending physician and lecturer at Xijing Hospital, The Fourth Military Medical University (第四軍醫大學西京醫院) from 1991 to March 2006. From September 2008 to January 2015, Mr. Qin worked at MicroPort Medical (Shanghai) Co., Ltd. (微創醫療器械(上海)有限公司) (currently known as Shanghai MicroPort Medical (Group) Co., Ltd. (上海微創醫療器械(集團)有限公司)), where he last served as a clinical director and was responsible for the organization and implementation of pre-market clinical procedures.

Mr. Qin received his bachelor’s degree in clinical medicine (臨床醫學學士) from the Fourth Military Medical University (第四軍醫大學) in the PRC in July 1996. He further obtained his master’s degree in internal medicine (內科學碩士) from the same university in June 2002. He was qualified as a physician by the Ministry of Health of the PRC in May 1999 and as an attending physician and lecturer by the Intermediate Specialized Technology Duty Appraisal Committee of the Fourth Military Medical University (第四軍醫大學中級專業技術職務評審委員會) in September 2003.

Ms. Xiayan YANG (楊夏燕), aged 40, is an executive Director and vice president of project management and business development department of our Company. She was appointed as a Director on March 12, 2021 and redesignated as an executive Director on July 21, 2021. Ms. Yang joined our Group in August 2020 as the director of project management. She was subsequently promoted to and has been the vice president of project management and business development department of our Company since May 2021, and has been the general manager of Chengdu NewMed, a wholly-owned subsidiary of our Company, since November 2020. She is primarily responsible for internal project management and overall operation of business development of our Group.

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Ms. Yang has more than 15 years of experience in product development and quality control in the biotechnology industry. Prior to joining our Group, Ms. Yang was a quality engineer at MicroPort Medical (Shanghai) Co., Ltd. (微創醫療器械(上海)有限公司) (currently known as Shanghai MicroPort Medical (Group) Co., Ltd. (上海微創醫療器械(集團)有限公司)) from October 2005 to May 2010, where she was responsible for the design, research and development control and quality management of implantable medical devices. She was a senior quality engineer at 3M Medical Devices and Materials Manufacturing (Shanghai) Co., Ltd. (明尼蘇達礦業製造醫用器材(上海)有限公司) from June 2010 to March 2012. From March 2012 to March 2013, Ms. Yang was a supplier management specialist at Paul Hartmann (Shanghai) Trade Co., Ltd. (保赫曼(上海)貿易有限公司), where she was responsible for the sourcing and management of suppliers in the Asia Pacific region. Ms. Yang was also a senior quality management system manager at the Covidien (China) Medical Devices Technology Co., Ltd (柯惠(中國)醫療器材技術有限公司) from April 2013 to August 2020.

Ms. Yang obtained her bachelor’s degree in environment engineering (環境工程) from Suzhou College of Science and Technology (蘇州科技學院) in the PRC in June 2003. She further received her master’s degree in environment engineering from Donghua University (東華大學) in the PRC in March 2006.

Non-executive Directors

Dr. David Guowei WANG (王國瑋), aged 59, is a non-executive Director of our Company. He was appointed as a Director on January 15, 2020 and was redesignated as a non-executive Director on July 21, 2021. Dr. Wang is primarily responsible for overseeing Board affairs and giving strategic advice and guidance on the business operations of our Company.

Dr. Wang has over eight years of experience in the pharmaceutical and biomedical industry. Prior to joining our Group, Dr. Wang served as managing director at WI Harper Group from April 2006 to July 2011. From October 2012 to May 2019, Dr. Wang was a director at Suzhou Medical System Technology Co., Ltd. (蘇州麥迪斯頓醫療科技股份有限公司), a company listed on the Shanghai Stock Exchange (stock code: 603990). From June 2015 to August 2021, he was a director of Amoy Diagnostics Co., Ltd. (廈門艾德生物醫藥科技股份有限公司), a company listed on the Shenzhen Stock Exchange (stock code: 300685). In February 2016, he was appointed as a director of, and since April 2016, he has been redesignated as a non-executive director of AK Medical Holdings Limited (愛康醫療控股有限公司), a company listed on the Stock Exchange (stock code: 1789). Besides, from August 2018 to April 2020, he was a non-executive director at EC Healthcare (醫思健康), a company listed on the Stock Exchange (stock code: 2138). Since March 2020, Dr. Wang has been a director of Gracell Biotechnologies Inc., a company listed on NASDAQ (stock symbol: GRCL). Dr. Wang is also the senior managing director of Asia at OrbiMed Advisors LLC, an investment fund with a focus on healthcare industry, where he has worked since August 2011.

Dr. Wang obtained his bachelor’s degree in medicine from Beijing Medical University (北京醫科大學) in the PRC in July 1986. In June 1995, Dr. Wang obtained his Ph.D. degree in developmental biology from California Institute of Technology in the United States.

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Mr. Jie ZHANG (張捷), aged 56, was appointed as a Director in March 2015 and was redesignated as a non-executive Director on July 21, 2021. Mr. Zhang is primarily responsible for overseeing Board affairs, giving strategic advice and guidance on the business operations of our Company.

Mr. Zhang has more than 13 years of experience in corporate management and investment. Prior to joining our Group, from January 2002 to December 2010, Mr. Zhang served as executive vice president at MicroPort Medical (Shanghai) Co., Ltd. (微創醫療器械 (上海)有限公司) (currently known as Shanghai MicroPort Medical (Group) Co., Ltd (上海微創醫療器械(集團)有限公司)). Since December 2016, Mr. Zhang has been the general partner of Shanghai Shanchi, where he is responsible for investment decisions and management. Shanghai Shanchi, a Shareholder of our Company, is ultimately owned by Mr. Zhang.

Mr. Zhang was a supervisor of Shanghai Zhongpu Technology Development Co., Ltd. (上海中普科技發展有限公司) whose business license was revoked on December 27, 2004 due to the cessation of business. Mr. Zhang confirmed that neither this company nor Mr. Zhang incurred any liability as a result of such revocation. As of the Latest Practicable Date, this company has not been deregistered.

Mr. Zhang obtained his bachelor’s and master’s degrees from Shanghai Jiao Tong University (上海交通大學), in engineering (工學) and economics (經濟學) in July 1987 and July 1989, respectively. He further completed his master’s degree in business administration in China Europe International Business School (中歐國際工商學院), PRC in April 2003.

Mr. Kai LIU (劉愷), aged 35, is a non-executive Director of our Company. He was appointed as a Director on June 28, 2021 and redesignated as a non-executive Director on July 21, 2021. Mr. Liu is primarily responsible for overseeing Board affairs and giving strategic advice and guidance on the business operations of our Company.

Mr. Liu has over six years of experience in investment. Prior to joining our Group, Mr. Liu worked at Du Pont (China) Research and Development Management Co., Ltd. (杜邦(中國) 研發管理有限公司) from January 2011 to July 2011. From April 2013 to February 2015, he worked at Boehringer Ingelheim Shanghai Pharmaceutical Co., Ltd. (上海勃林格殷格翰藥業有限公司) and then Boehringer Ingelheim (China) Investment Co., Ltd. (勃林格殷格翰(中國)投資有限公司). From March 2015 to March 2017, he worked at Shanghai Aijian Investment Partnership (Limited Partnership) (上海艾健投資合夥企業(有限合夥)). Mr. Liu was a vice president at Borui Yuye (Shanghai) Equity Investment Management Co., Ltd (博睿瑜業(上海) 股權投資管理有限公司) from July 2017 to February 2019 and has been an executive director of Borui Yuye (Shanghai) Equity Investment Management Co., Ltd (博睿瑜業(上海)股權投資管理有限公司) since February 2019, where he is responsible for the discovery, evaluation, negotiation and post-investment management of investment projects in the medical industry.

Mr. Liu obtained his master’s degree in biotechnology and medicine (生物技術與醫藥專業) from the Shanghai Institute of Biochemistry and Cell Biology, Chinese Academy of Sciences (中國科學院上海生命科學研究院) in July 2010.

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Independent Non-executive Directors

Dr. Jiangnan CAI (蔡江南), aged 64, was appointed as an independent non-executive Director of our Company on July 21, 2021 with effect from the [REDACTED]. He is primarily responsible for providing independent advice and judgment to our Board of our Company.

Dr. Cai has over 24 years of experiencing in teaching and research in the field of healthcare and economics. Prior to joining our Group, Dr. Cai was an research director at the East China University of Science and Technology (華東理工大學) in the PRC from 1987 to 1990. From April 1999 to June 2012, he worked at Center for Health Information and Analysis at Massachusetts, the United States, where he last served as a reimbursement analyst. From April 2012 to December 2019, Dr. Cai was the head of the Research Center for Health Management and Policy at the China Europe International Business School (中歐國際工商學院). Since January 2020, Dr. Cai has been the chairman of Academy of China Healthcare Innovation Platform Academy (上海創奇健康發展研究院), a non-for-profit healthcare think- tank.

From May 2014 to September 2020, Dr. Cai was an independent director of Dian Diagnostics Group (迪安診斷技術集團股份有限公司) (formerly known as Zhejiang D.A. Diagnostics Co., Ltd. (浙江迪安診斷技術股份有限公司)), a company listed on Shenzhen Stock Exchange (stock code: 300244). From March 2015 to February 2021, he was an independent non-executive director of Harmonicare Medical Holdings Limited (和美醫療控股有限公司) whose shares were delisted from the Stock Exchange in March 2021). Since June 2016, he has been an independent non-executive director of Shanghai Pharmaceuticals Holding Co., Ltd. (上海醫藥集團股份有限公司), a company listed on the Hong Kong Stock Exchange (stock code: 2607) and the Shanghai Stock Exchange (stock code: 601607). Since March 2017, he has been an independent non-executive director at Wuxi Apptec Co., Ltd. (無錫藥明康德新藥開發股份有限公司), a company listed on the Hong Kong Stock Exchange (stock code: 2359) and the Shanghai Stock Exchange (stock code: 603259). He has also been an independent director of Betta Pharmaceuticals Co., Ltd. (貝達藥業股份有限公司), a company listed on the Shenzhen Stock Exchange, (stock code: 300558) since November 2019.

Dr. Cai received his bachelor’s degree in economics from East China Normal University (華東師範大學) in the PRC in September 1982, and his master’s degree in economics from Fudan University (復旦大學) in the PRC in February 1985. He obtained his Ph.D. degree in social policy from Brandeis University in the United States in February 1997.

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Mr. Fengmao HUA (華風茂), aged 53, was appointed as an independent non-executive Director of our Company on July 21, 2021 with effect from the [REDACTED]. He is primarily responsible for providing independent advice and judgment to our Board of our Company.

Mr. Hua has over 15 years of experience in corporate finance and investment. He has been the chairman of China Finance Strategies Investment Holdings Limited (中國金融策略投資控股有限公司) since August 2005. From April 2008 to August 2014, he worked at BOCOM International Holdings Company Limited (交銀國際控股有限公司), where he last served as the managing director at the private equity department. From July 2018 to June 2021, he was an executive director and the chief financial officer of Viva Biotech Holdings (維亞生物科技控股集團), a company listed on the Hong Kong Stock Exchange (stock code: 1873), where he was responsible for the overall financial management and capital investment of the group. Mr. Hua has been the chief executive officer of ChemPartner PharmaTech Co., Ltd. (睿智醫藥科技股份有限公司), a company listed on the Shenzhen Stock Exchange (stock code: 300149) since July 2021.

Mr. Hua obtained his bachelor’s degree in English from Shanghai Foreign Language Institute (上海外國語學院) in the PRC in July 1989. He obtained a master’s degree in English from Shanghai Foreign Language Institute (上海外國語學院) in the PRC in March 1991 and a master’s degree in business administration from the International University of Japan in Japan in June 1997.

Dr. Yufeng ZHENG (鄭玉峰), aged 47, was appointed as an independent non-executive Director of our Company on July 21, 2021 with effect from the [REDACTED]. Dr. Zheng is primarily responsible for providing independent advice and judgment to our Board of our Company.

Dr. Zheng has over 22 years of experience in teaching on metals, heat treatment and material science. Prior to joining our Group, from September 1998 to August 2004, Dr. Zheng started as an assistant professor, was subsequently promoted to an associate professor and was further promoted to a professor at School of Materials Science and Engineering at the Harbin Institute of Technology (哈爾濱工業大學). Dr. Zheng has been a professor at Department of Materials Science and Engineering, College of Engineering of Peking University (北京大學) since September 2004.

Dr. Zheng obtained his bachelor’s degree in metals and heat treatment (金屬材料及熱處理) from Harbin Institute of Ship Engineering (哈爾濱船舶工程學院) (currently known as Harbin Engineering University (哈爾濱工程大學)) in the PRC in July 1993. He obtained his Ph.D. degree in material science (材料學) from Harbin Institute of Technology (哈爾濱工業大學) in the PRC in October 1998.

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General

Our Directors have confirmed that:

(1) save as disclosed in the paragraph headed “Further Information about our Directors, Supervisors and Substantial Shareholders – 3. Service Contracts” in Appendix VI to this document, none of our Directors has any existing or proposed service contract with our Company or any of its subsidiaries other than contracts expiring or determinable by the relevant member of our Company within one year without payment of compensation (other than statutory compensation);

(2) save as disclosed in the paragraph headed “Further Information about our Directors, Supervisors and Substantial Shareholders – 1. Disclosure of interests” in Appendix VI to this document and above, each of our Directors has no interests in the Shares within the meaning of Part XV of the SFO;

(3) save as disclosed above, each of our Directors has not been a director of any other publicly listed company during the three years prior to the Latest Practicable Date and as of the Latest Practicable Date;

(4) other than being a Director of our Company, none of our Directors has any relationship with any other Directors, Supervisors, senior management of our Company or substantial shareholders of our Company or Controlling Shareholder; and

(5) none of our Directors completed their respective education programs as disclosed in this section by way of attendance of long distance learning or online courses.

Except as disclosed in this document, to the best of the knowledge, information and belief of our Directors having made all reasonable enquiries:

(1) there is no other matter with respect to the appointment of our Directors that need to be brought to the attention to the Shareholders as at the Latest Practicable Date; and

(2) there is no other information relating to our Directors that is required to be disclosed pursuant to Rule 13.51(2) of the Listing Rules as at the Latest Practicable Date.

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SUPERVISORS

Our Supervisory Committee comprises three members. Our Supervisors serve a term of three years and may be re-elected for successive reappointments. The functions and duties of the Supervisory Committee include reviewing financial reports, business reports and profit distribution plans prepared by the Board and overseeing the financial and business performance of our Group. They are also entitled to appoint certified public accountants and practicing auditors to re-examine our Company’s financial information where necessary.

The following table sets out information in respect of the Supervisors.

Date of appointment as Date of joining Name Age Position Supervisor our Company Role and responsibilities

Mr. Xuyang XIE 46 Supervisor; June 28, 2021 September 12, Responsible for monitoring (解旭陽) president 2016 of the financial affairs of of our our Company, supervising Supervisory the performance of our Committee Directors and members of our senior management and performing other supervisory duties as a Supervisor

Ms. Xiulan 42 Supervisor June 28, 2021 April 1, 2015 Responsible for monitoring CHENG of the financial affairs of (程秀蘭) our Company, supervising the performance of our Directors and members of our senior management and performing other supervisory duties as a Supervisor

Mr. Xiaoyong YU 49 Supervisor March 12, 2021 March 12, 2021 Responsible for monitoring (于曉勇) of the financial affairs of our Company, supervising the performance of our Directors and members of our senior management and performing other supervisory duties as a Supervisor

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Mr. Xuyang XIE (解旭陽), aged 46, is the chairman of our Supervisory Committee. He joined our Company in September 2016 as a clinical director and was subsequently promoted to a senior clinical director in May 2021. He was appointed as a Supervisor and chairman of our Supervisory Committee on June 28, 2021. He is primarily responsible for the supervision of the performance of our Directors and members of our senior management in performing their duties to the Company.

Mr. Xie has approximately ten years of experience in the medical industry. Prior to joining our Group, Mr. Xie was a medical research and tendering manager in Shanghai MicroPort Orthopedics Co., Ltd. (上海微創骨科醫療科技有限公司) from August 2011 to July 2013, where he was responsible for the pre-market clinical research of products and the bidding of marketed products. From August 2013 to September 2016, Mr. Xie was the senior manager of clinical supervision in Shanghai MicroPort Medical (Group) Co., Ltd. (上海微創醫療器械 (集團)有限公司), where he was responsible for the pre-market clinical research of products.

Mr. Xie obtained his bachelor’s degree in general medicine (全科醫學) from Huangshan Medical University (黃山醫科大學) in the PRC in August 1999.

Ms. Xiulan CHENG (程秀蘭), aged 42, is the employee representative Supervisor. She joined our Company as a research and development engineer in April 2015 and was subsequently promoted to a production director in October 2020. She was appointed as a Supervisor on June 28, 2021. She is primarily responsible for the supervision of the performance of our Directors and members of our senior management in performing their duties to the Company.

Ms. Cheng has over 19 years of experience in the medical technology industry. Prior to joining our Group, Ms. Cheng worked at MicroPort Medical (Shanghai) Co., Ltd. (微創醫療器械(上海)有限公司) (currently known as Shanghai MicroPort Medical (Group) Co., Ltd (上海微創醫療器械(集團)有限公司)) from March 2002 to March 2015, where she was involved in products’ early-stage development and processes.

She graduated from China Central Radio and TV University (中央廣播電視大學) (currently known as Open University of China (國家開放大學)) in the PRC, where she studied jurisprudence through online courses, in January 2009.

Mr. Xiaoyong YU (于曉勇), aged 49, is the shareholders’ representative Supervisor. He was appointed as a Supervisor on March 12, 2021. He is primarily responsible for the supervision of the performance of our Directors and members of our senior management in performing their duties to the Company.

Mr. Yu has approximately 17 years of experience in investment. Prior to joining our Group, he was employed as an investment manager and was promoted to investment director at Shanghai Dingjia Ventures Co., Ltd. (上海鼎嘉創業投資管理有限公司) from August 2003 to June 2009, where he was responsible for project management and project investment. From July 2009 to November 2015, Mr. Yu was the investment director of Shanghai Zhangjiang

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Technology Venture Investment Co., Ltd. (上海張江科技創業投資有限公司), where he managed investment projects. Since December 2015, he has been the chairman of the board of Shanghai Yongkan Investment Management Co., Ltd. (上海永堪投資管理有限公司), where he has been responsible for overall operation and management. Since December 2015, he has also been an executive partner representative of ZJ Leading VC, a Shareholder of our Company. As of the Latest Practicable Date, ZJ Leading VC is managed by its general partner, Shanghai Zhangke Lingyi Enterprise Management Center (Limited Partnership) (上海張科領醫企業管理中心(有限合夥)) which is ultimately controlled by Mr. Yu.

Mr. Yu was a director of Shanghai Zhangjiang Marketing Service Co., Ltd. (上海張江營銷服務有限責任公司) whose business license was revoked on June 15, 2019 because its business had been closed for more than six months. Mr. Yu confirmed that neither this company nor Mr. Yu incurred any liability as a result of such revocation. As of the Latest Practicable Date, this company has not been deregistered.

Mr. Yu obtained his bachelor’s degree in technology economics from Jilin Industrial University (吉林工業大學) in the PRC in July 1994, and completed his master’s degree in business administration from Nankai University (南開大學) in the PRC in January 2001. Mr. Yu has been a qualified intermediate economist in the PRC since November 1998, and obtained a funds practitioners’ certificate issued by the Asset Management Association of China (中國證券投資基金業協會) in December 2017.

General

Save as disclosed above, each of our Supervisors has confirmed that:

(1) he/she does not hold and has not held any other positions in our Company and any other members of our Company as at the Latest Practicable Date;

(2) other than being a Supervisor of our Company, none of our Supervisors has any relationship with any Directors, any other Supervisors, any senior management of our Company or substantial shareholders of our Company or Controlling Shareholder;

(3) he/she does not hold and has not held any other directorships in public companies the securities of which are listed on any securities market in Hong Kong or overseas in the three years prior to the Latest Practicable Date and as at the Latest Practicable Date; and

(4) he/she has not completed their respective education programs as disclosed in this section by way of attendance of long distance learning or online courses.

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SENIOR MANAGEMENT

Our senior management is responsible for the day-to-day management and operation of our business. The table below sets out certain information in respect of the senior management of our Company.

Date of appointment as Date of Senior founding/joining Role and Name Age Position Management our Company responsibilities

Mr. Tao QIN (秦濤) 48 Executive Director and March 31, 2015 March 31, 2015 Overall operation, chief operating management and officer clinical affairs

Dr. Xiantao WEN 44 Vice president of June 28, 2021 April 1, 2017 Overall quality (溫賢濤) quality control and management and registration supervision and product registration

Mr. Xiaoxu JIANG 49 Chief financial officer June 28, 2021 May 17, 2021 Financial management (蔣小旭) and corporate development of the Company

Dr. Qifeng YU (虞奇峰), please refer to the paragraph headed “– Board of Directors – Executive Directors” in this section for details.

Mr. Tao QIN (秦濤), please refer to the paragraph headed “– Board of Directors – Executive Directors” in this section for details.

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Dr. Xiantao WEN (溫賢濤), aged 44, is the vice president of quality control and registration. She joined our Group in April 2017 as quality control and registration director. Dr. Wen was subsequently promoted to the vice president of quality control and registration in March 2020 and is primarily responsible for the overall quality management and supervision and product registration. She has also been the general manager of our branch company in Beijing since September 2020.

Dr. Wen has over twelve years of experience in the medical device industry. Prior to joining our Group, Dr. Wen was an inspection engineer of the Beijing Institute of Medical Device Testing (北京市醫療器械檢驗所) from July 2009 to March 2017.

Dr. Wen obtained her bachelor’s degree in applied chemistry (應用化學) from Sichuan Normal University (四川師範大學) in the PRC in July 1999. She obtained her master’s degree in biomedical engineering (生物醫學工程) from Sichuan University (四川大學) in the PRC in June 2005, and further obtained her Ph.D. degree in biomedical engineering from Sichuan University (四川大學) in the PRC in December 2008. Dr. Wen was certified as a senior engineer by the Beijing Municipal Bureau of Human Resources and Social Security (北京市人力資源和社會保障局) in September 2016.

Ms. Xiayan YANG (楊夏燕), please refer to the paragraph headed “– Board of Directors – Executive Directors” in this section for details.

Mr. Xiaoxu JIANG (蔣小旭), aged 49, is the chief financial office of our Company. He has joined our Group as the chief financial officer since May 2021. He is primarily responsible for overseeing the financial management and corporate development of our Company.

Mr. Jiang has over 15 years of experience in financial management and investment. Prior to joining our Group, Mr. Jiang worked as an investment banking associate at Wachovia Securities from July 2005 to February 2008. From March 2008 to October 2009, Mr. Jiang worked as an investment banking associate at Susquehanna International Group (海納國際). From March 2010 to February 2017, he was an investment banker vice president and investment banker principal at Piper Jaffray Asia Securities Limited (派杰亞洲證券有限公司). From March 2017 to November 2017, he was the managing partner of DealGlobe Capital (上海易界信息諮詢有限公司). From November 2017 to January 2021, he worked at CCB International Capital Limited (建銀國際金融有限公司), where he last served as a managing director of consumer and healthcare sector team of corporate finance division. From February 2021 to May 2021, Mr. Jiang was the chief financial officer of Fosun Kite Biotech Limited (復星凱特生物科技有限公司).

Mr. Jiang obtained his bachelor’s degree in medicine and his master’s degree in medicine from the West China University of Medical Sciences (華西醫科大學) in the PRC in June 1996, and obtained his master’s degree in computer science from the University of Iowa (愛荷華大學) in the United States in May 1999. He obtained his master’s degree in business administration from the Columbia Business School (哥倫比亞商學院) in New York in the United States in May 2005.

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General

Save as disclosed above, each of our senior management members has confirmed that:

(1) he/she does not hold and has not held any other positions in our Company and any other members of our Company as at the Latest Practicable Date;

(2) save as being a member of the Company’s senior management, none of our senior management has any relationship with any Directors, Supervisors, any other senior management members of our Company or substantial shareholders of our Company or Controlling Shareholder;

(4) he/she has not completed their respective education programs as disclosed in this section by way of attendance of long distance learning or online courses.

JOINT COMPANY SECRETARIES

Mr. Xiaoxu JIANG (蔣小旭) was appointed as a joint company secretary of our Company on July 20, 2021. Mr. Jiang is also a member of senior management of our Company. Please refer to the paragraph headed “– Senior Management” in this section for his biographical details.

Mr. Ming King CHIU (趙明璟) was appointed as a joint company secretary of our Company on July 20, 2021. Mr. Chiu has over ten years of experience in the company secretarial field. Mr. Chiu obtained a bachelor of arts from University of Toronto in Canada in June 1999 and received a master of arts in professional accounting and information systems from City University of Hong Kong in November 2003.

Mr. Chiu has been an associate member of The Chartered Governance Institute in United Kingdom and the Hong Kong Institute of Chartered Secretaries (“HKICS”) since 2003 and became a fellow member of the HKICS since September 2015. He is also a holder of the Practitioner’s Endorsement Certificate issued by HKICS. He has been a vice chairman of the Membership Committee and chairman of Professional Services Panel of HKICS and a council member of HKICS since 2020.

COMPLIANCE ADVISER

We have appointed Somerley Capital Limited as our compliance adviser pursuant to Rule 3A.19 and 19A.05 of the Listing Rules. Pursuant to Rule 3A.23 of the Listing Rules, the compliance adviser will advise us on the following circumstances:

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• before the publication of any announcements, circulars or financial reports;

• where a transaction, which might be a notifiable or connected transaction under Chapters 14 and 14A of the Listing Rules is contemplated, including share issues and share repurchases;

• where we propose to use the [REDACTED]ofthe[REDACTED] in a manner different from that detailed in this document or where our business activities, developments or results deviate from any forecast, estimate or other information in this document; and

• where the Stock Exchange makes an inquiry of us regarding unusual price movement and trading volume or other issues under Rule 13.10 of the Listing Rules.

Pursuant to Rule 19A.06 of the Listing Rules, Somerley Capital Limited will, in a timely manner, inform us of any amendment or supplement to the Listing Rules that are announced by the Stock Exchange. Somerley Capital Limited will also inform us of any amendment or supplement to applicable laws and guidelines in Hong Kong.

The terms of the appointment shall commence on the [REDACTED] and end on the date which we distribute our annual report of our financial results for the first full financial year commencing after the [REDACTED].

BOARD COMMITTEES

We have established the following committees on our Board: an audit committee, a remuneration committee and a nomination committee. The committees operate in accordance with the terms of reference established by our Board.

Audit Committee

The Company has established an audit committee (effective from the [REDACTED]) with written terms of reference in compliance with Rule 3.21 of the Listing Rules and paragraph C.3 and paragraph D.3 of the Corporate Governance Code as set out in Appendix 14 to the Listing Rules (the “Corporate Governance Code”). The audit committee consists of Mr. Fengmao HUA, Dr. Jiangnan CAI and Dr. Yufeng ZHENG, with Mr. Hua serving as the chairman. Mr. Hua holds the appropriate accounting or related financial management expertise as required under Rules 3.10(2) and 3.21 of the Listing Rules. The primary duties of the audit committee are to assist our Board by providing an independent view of the effectiveness of the financial reporting process, internal control and risk management systems of our Company, overseeing the audit process, and performing other duties and responsibilities as assigned by our Board.

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Remuneration Committee

The Company has established a remuneration committee (effective from the [REDACTED]) with written terms of reference in compliance with Rule 3.25 of the Listing Rules and paragraph B.1 of the Corporate Governance Code. The remuneration committee consists of Dr. Jiangnan Cai, Mr. Fengmao HUA and Mr. Tao QIN, with Dr. Cai serving as the chairman. The primary duties of the remuneration committee include, but are not limited to, the following: (i) making recommendations to our Board on our policy and structure for all remuneration of Directors and senior management and on the establishment of a formal and transparent procedure for developing policy on such remuneration; (ii) determining the specific remuneration packages of all Directors and senior management; and (iii) reviewing and approving performance-based remuneration by reference to corporate goals and objectives resolved by our Board from time to time.

Nomination Committee

The Company has established a nomination committee (effective from the [REDACTED]) with written terms of reference in compliance with paragraph A.5 of the Corporate Governance Code. The nomination committee consists of Dr. Qifeng YU, Dr. Yufeng ZHENG and Dr. Jiangnan CAI, with Dr. Yu serving as the chairman. The primary functions of the nomination committee include, without limitation, reviewing the structure, size and composition of our Board, assessing the independence of independent non-executive Directors and making recommendations to our Board on matters relating to the appointment of Directors.

CORPORATE GOVERNANCE

Code Provision A.2.1 of the Corporate Governance Code

Under paragraph A.2.1 of the Corporate Governance Code, the roles of chairman and chief executive should be separate and should not be performed by the same individual. Dr. Yu is the chairman of our Board and chief executive officer of our Company. With extensive experience in the medical devices industry and having served in our Company since its establishment, Dr. Yu is in charge of overall strategic planning and decision-making, execution, operation and management of our Company. Despite the fact that the roles of the chairman of our Board and chief executive officer of our Company are both performed by Dr. Yu which constitutes a deviation from paragraph A.2.1 of the Corporate Governance Code, our Board considers that vesting the roles of both the chairman of the Board and chief executive officer all in Dr. Yu has the benefit of ensuring consistent leadership and more effective and efficient overall strategic planning of our Company. The balance of power and authority is ensured by the operation of our Board, our Supervisors and our senior management, each of which comprises experienced and diverse individuals. Our Board currently comprises three executive Directors, three non-executive Directors and three independent non-executive Directors. Therefore, our Board possesses a strong independence element in its composition. Save as disclosed above, our Company intends to comply with all code provisions under the Corporate Governance Code after the [REDACTED].

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Board Diversity

We have adopted a board diversity policy (the “Board Diversity Policy”) to enhance the effectiveness of our Board and to maintain a high standard of corporate governance. Pursuant to the Board Diversity Policy, in reviewing and assessing suitable candidates to serve as a Director of the Company, the Nomination Committee will consider a range of diversity perspectives with reference to the Company’s business model and specific needs, including but not limited to gender, age, language, cultural and educational background, professional qualifications, skills, knowledge, industry and regional experience and/or length of service.

Our Directors have a balanced mixed of knowledge and skills, including but not limited to overall business management, finance and accounting, research and development, and investment. They obtained degrees in various majors including engineering, medicine, molecular biology, economics and business administration. Furthermore, our Board has a relatively wide range of ages, ranging from 35 years old to 64 years old. The Board of Directors is of the view that our Board satisfies the Board Diversity Policy. The Nomination Committee is responsible for reviewing the diversity of the Board, reviewing the Board Diversity Policy from time to time, developing and reviewing measurable objectives for implementing the Board Diversity Policy, and monitoring the progress on achieving these measurable objectives in order to ensure that the policy remains effective. The Company will (i) disclose the biographical details of each Director and (ii) report on the implementation of the Board Diversity Policy (including whether we have achieved board diversity) in its annual corporate governance report. In particular, our Company will take opportunities to increase the proportion of female members of the Board when selecting and recommending suitable candidates for Board appointments to help enhance gender diversity in accordance with stakeholder expectations and recommended best practices. Our Company also intends to promote gender diversity when recruiting staff at the mid to senior level so that our Company will have a pipeline of female senior management and potential successors to the Board. We believe that such merit-based selection process with reference to our diversity policy and the nature of our business will be in the best interests of our Company and our Shareholders as a whole.

COMPETITION

Each of our Directors confirms that as of the Latest Practicable Date, he or 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.

KEY TERMS OF EMPLOYMENT CONTRACTS

We normally enter into (i) an employment contract, (ii) a confidentiality and intellectual property agreement and (iii) a non-competition agreement with our senior management members and other key personnel (other than Directors). Below sets forth the key terms of these contracts we normally enter into with our senior management and other key personnel.

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Confidentiality

• Confidentiality obligations. The employee agrees and guarantees to keep the Company’s Proprietary information strictly confidential to the greatest extent. The confidentiality responsibility subsists during his/her employment and will continue after the termination of his/her employment relationship. Unless required by the Company or with the written consent of the relevant person of the Company, the employee shall not disclose, publish or use any Proprietary Information of the Company. Employees must obtain prior written consent of the Company before disclosing or publicly publishing any information related to their work in the Company or containing any Proprietary Information to a third party, whether in writing, orally or in any other form. Employees shall not intentionally access or obtain proprietary information unrelated to their own position. “Proprietary Information” means all non-public knowledge, data and information owned by the Company and includes but is not limited to the Company’s trade secrets, inventions, discoveries, technical updates and improvements, data (including but not limited to experimental and clinical data), designs, schemes, ideas, suggestions, operation steps, methods, processes, know-how, formulations, samples, communications, reagents, instruments and equipment, business plans, market and sales status, supplier and distributor information, customer list and characteristics, financial budget and unpublished financial statements and product price and cost regardless of whether such information is expressed in written, oral or any other form, or whether it is technical or non-technical in nature.

Ownership of intellectual work products

• Acknowledgement. The employee acknowledges and agrees that within two years after the termination of his/her employment relationship, the intellectual property rights that (a) were obtained by the employee using the Company’s property including its equipment, resources, sites and proprietary information; (b) arose from or were associated with the employee’s work in the Company; or (c) were acquired by the employee in connection with the Company’s existing or expected research and development belong to the Company.

Non-competition

• Non-competition obligation. During the employee’s employment with the Company and within 24 months after the termination of his/her employment relationship, the employee promises not to: (i) engage in, manage, operate or participate in any business that competes with the Company’s business; (ii) invest in or control entities that compete with the Company; (iii) act as a senior management member, director, employee, independent contractor, representative, consultant, consulting service provider, partner, shareholder with 5% or above interests or owner of a competitor; (iv) form a de facto or legal employment relationship, labor relationship, cooperative relationship, investment relationship, agency relationship or any other similar civil legal relationship with a competitor; (v) knowingly and intentionally

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perform any act that may give competitive advantages to a competitor; (vi) directly or indirectly work for a competitor; and (vii) provide subsidies, guarantees, suggestions or any other forms of assistance to a competitor.

Compensation for breach of covenants

• If the employee breaches the obligations under the (i) employment contract, (ii) confidentiality and intellectual property agreement and (iii) non-competition agreement, our Company shall be entitled to recover from the employee any losses incurred from such breach.

COMPENSATION OF DIRECTORS, SUPERVISORS AND MANAGEMENT

We offer our executive Directors, Supervisors and senior management members, who are also employees of our Company, emolument in the form of salaries, allowances, bonuses and benefits in kind. Our independent non-executive Directors receive emolument based on their responsibilities (including being members or chairman of Board committees).

The aggregate amount of remuneration which was paid to our Directors and Supervisors (including fees, salaries, allowances and benefits in kind, performance related bonuses, pension scheme contributions, and equity-settled share award expenses) for the years ended December 31, 2019 and 2020 and the four months ended April 30, 2021 were RMB2.2 million, RMB4.3 million and RMB64.9 million, respectively.

It is estimated that the aggregate amount of remuneration which was paid to our Directors and Supervisors (including fees, salaries, allowances and benefits in kind, performance related bonuses, pension scheme contributions, and equity-settled share award expenses in the amount of approximately RMB207.0 million) payable to Directors and Supervisors for the year ending December 31, 2021 will be approximately RMB213.7 million under arrangements currently in force.

For the years ended December 31, 2019 and 2020 and the four months ended April 30, 2021, there were three, one and three Directors and Supervisors among the five highest paid individuals, respectively. The aggregate amount of remuneration which were paid by the Group to our five highest paid individuals (excluding Directors and Supervisors) for the years ended December 31, 2019 and 2020 and the four months ended April 30, 2021 were RMB1.2 million, RMB10.3 million and RMB66.1 million, respectively.

None of our Directors or any past directors of any member of the Group has been paid any sum of money for each of the years ended December 31, 2019 and 2020 and the four months ended April 30, 2021 as (a) an inducement to join or upon joining the Company; or (b) for loss of office as a director of any member of the Group or of any other office in connection with the management of the affairs of any member of the Group.

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There has been no arrangement under which a Director has waived or agreed to waive any emoluments for each of the years ended December 31, 2019 and 2020 and the four months ended April 30, 2021.

Except as disclosed above, no other payments have been paid, or are payable, by our Company or any of our subsidiaries to our Directors, Supervisors or the five highest paid individuals of our Group during the Track Record Period.

For additional information on Directors’ and Supervisors’ remuneration during the Track Record Period as well as information on the highest paid individuals, please refer to Notes 8 and 9 of the Accountants’ Report in Appendix I to this document.

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OUR CONTROLLING SHAREHOLDER

As of the Latest Practicable Date, Dr. Yu is able to exercise approximately 39.57% voting rights in our Company through (i) 118,844,004 Shares directly held by him; and (ii) 142,307,848 Shares held by NewMed Enterprise Management and certain ESOP Platforms (namely Jiaxing Fengtao, Jiaxing Yongqi and Anji NewMed). Immediately upon completion of the [REDACTED] (assuming the [REDACTED] is not exercised), Dr. Yu will be entitled to exercise approximately [REDACTED] voting rights in our Company. Therefore, Dr. Yu is considered as the Controlling Shareholder of our Company under the Listing Rules.

NewMed Enterprise Management, which was established as a limited partnership under the laws of the PRC on January 4, 2017, is an entity through which certain of our senior management and certain ESOP Platforms (namely Jiaxing Qianqi, Anji Tongxin and Jiaxing Heting) hold Shares. Shanghai Chenlu, a limited liability company which is owned as to 70% by Dr. Yu and 30% by Ms. Li LI (李莉) (an employee of our Company and the spouse of Dr. Yu), is the general partner of NewMed Enterprise Management and is responsible for the management of NewMed Enterprise Management. For background and biographical details of Dr. Yu, please refer to the section headed “Directors, Supervisors and Senior Management” in this document. For further details of the ESOP Platforms, please refer to the paragraph headed “History, Development and Corporate Structure – Employee Incentive Platforms” in this document.

As of the Latest Practicable Date, save for the interest in our Group, Dr. Yu did not have any interest in a business which competes or is likely to compete, directly or indirectly, with the business of our Group, and which requires disclosure under Rule 8.10 of the Listing Rules.

INDEPENDENCE FROM OUR CONTROLLING SHAREHOLDER

Our Directors consider that we are capable of carrying on our business independently of our Controlling Shareholder and his close associates after the [REDACTED], taking into consideration of the factors below.

Management Independence

Our Board comprises nine Directors, including three executive Directors, three non- executive Directors and three independent non-executive Directors. We believe that our Board as a whole, together with our senior management, is able to perform the managerial role in our Group independently from our Controlling Shareholder for the following considerations:

(a) each of our Directors is aware of his/her fiduciary duties as a Director which require, among others, that he/she acts for the benefit of and in the best interests of our Company and not allow any conflict between his/her duties as a Director and his/her personal interests;

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(b) our daily management and operation decisions are made by all our executive Directors and senior management, all of whom have substantial experience in the industry in which we are engaged and will be able to make business decisions that are in the best interest of our Group. For details of the industry experience of our senior management, please refer to the section headed “Directors, Supervisors and Senior Management” in this document for further details;

(c) we have appointed three independent non-executive Directors with a view to bringing independent judgment to the decision-making process of our Board;

(d) in the event that there is a potential conflict of interest arising out of any transaction to be entered into between our Group and a Director and/or his/her associate, he/she shall abstain from voting and shall not be counted towards the quorum for the voting; and

(e) we have adopted a series of corporate governance measures to manage conflicts of interest, if any, between our Group and our Controlling Shareholder which would support our independent management. For further details, please refer to the paragraph headed “Corporate Governance Measures” in this section.

Operational Independence

We have full rights to make all decisions on, and to carry out, our own business operations independently. We have our own departments specializing in these respective areas which have been in operation and are expected to continue to operate independently from our Controlling Shareholder and his close associates. We hold the licenses, intellectual property rights and qualifications necessary to carry on our principal business. We also have independent access to suppliers and have sufficient capital, facilities and employees to operate our business independently from our Controlling Shareholder and his close associates.

Based on the above, our Directors believe that we will be able to operate independently from our Controlling Shareholder and his close associates.

Financial Independence

We have an independent financial system. We make financial decisions according to our own business needs and neither our Controlling Shareholder nor his close associates intervene with our use of funds. We have established an independent finance department with a team of financial staff and an independent audit, accounting and financial management system.

In addition, we have been and are capable of obtaining financing from third parties without relying on any guarantee or security provided by our Controlling Shareholder or his close associates. As of the Latest Practicable Date, there was no loan, advance or guarantee provided by our Controlling Shareholder or his close associates.

– 314 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDER

Based on the above, our Directors believe that we are capable of carrying on our business independently of, and do not place undue reliance on our Controlling Shareholder and his close associates after the [REDACTED].

CORPORATE GOVERNANCE MEASURES

Our Directors recognize the importance of good corporate governance in protecting our Shareholders’ interests. We have adopted the following measures to safeguard good corporate governance standards and to avoid potential conflict of interests between our Group and our Controlling Shareholder:

(a) under the Articles of Association, where a Shareholders’ meeting is to be held for considering proposed transactions in which our Controlling Shareholder or any of his associates has a material interest, our Controlling Shareholder or his associate will not vote on the relevant resolutions and shall not be counted in the quorum for the voting;

(b) our Company has established internal control mechanisms to identify connected transactions. Upon the [REDACTED], if our Company enters into connected transactions with our Controlling Shareholder or any of his associates, our Company will comply with the applicable Listing Rules;

(c) our Board consists of a balanced composition of executive Directors, non-executive Directors and independent non-executive Directors, with independent non-executive Directors representing not less than one-third of our Board to ensure that our Board is able to effectively exercise independent judgment in its decision-making process and provide independent advice to our Shareholders. Our independent non-executive Directors individually and collectively possess the requisite knowledge and experience to perform their duties. They will review whether there is any conflict of interests between our Group and our Controlling Shareholder and provide impartial and professional advice to protect the interests of our minority Shareholders;

(d) where our Directors reasonably request the advice of independent professionals, such as financial advisers, the appointment of such independent professionals will be made at our Company’s expenses; and

(e) we have appointed Somerley Capital Limited as our compliance adviser to provide advice and guidance to us in respect of compliance with the applicable laws in Hong Kong and the Listing Rules, including various requirements relating to corporate governance.

Based on the above, our Directors believe that sufficient corporate governance measures have been put in place to manage conflicts of interest that may arise between our Group and our Controlling Shareholder and to protect our Shareholders’ interests as a whole after the [REDACTED].

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So far as our Directors are aware, immediately following the completion of the [REDACTED] and without taking into account any H Shares which may be issued pursuant to the exercise of the [REDACTED], the following persons will have an interest or short position in the Shares or the underlying Shares which would fall to be disclosed to our Company and the Hong Kong Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or, will be, directly or indirectly, interested 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 our Company:

Approximate Approximate percentage of percentage of Number and shareholding shareholding in class of Shares in the relevant the total share to be held class of Shares capital of our Capacity/nature of after the after the Company after the Name of Shareholder interest [REDACTED] [REDACTED](1) [REDACTED](1) (%) (%)

Dr. Yu(2) Beneficial owner 59,422,002 [REDACTED][REDACTED] H Shares 59,422,002 [REDACTED][REDACTED] Domestic Shares Interest in controlled 142,307,848 [REDACTED][REDACTED] corporations H Shares

Ms. Li LI (李莉)(3) Interest of spouse 201,729,850 [REDACTED][REDACTED] H Shares 59,422,002 [REDACTED][REDACTED] Domestic Shares

NewMed Enterprise Beneficial owner 56,902,587 [REDACTED][REDACTED] Management(2) H Shares

OAP III(4) Beneficial owner 76,262,720 [REDACTED][REDACTED] H Shares

OrbiMed Asia Partners III, Interest in controlled 76,262,720 [REDACTED][REDACTED] L.P.(4) corporations H Shares

OrbiMed Advisors III Interest in controlled 76,262,720 [REDACTED][REDACTED] Limited(4) corporations H Shares

Springleaf Investments(5) Beneficial owner 47,629,387 [REDACTED][REDACTED] H Shares

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Temasek Holdings (Private) Interest in controlled 47,629,387 [REDACTED][REDACTED] Ltd(5) corporations H Shares

Borui Yuye (Shanghai) Equity Interest in controlled 47,897,852 [REDACTED][REDACTED] Investment Management corporations H Shares Co., Ltd. (博睿瑜業(上海)股權投資管理有限公司)(6)

Ms. Ruwei ZHI (支汝葦)(6) Interest in controlled 47,897,852 [REDACTED][REDACTED] corporations H Shares

Mr. Feng TAO (陶峰)(6) Interest in controlled 47,897,852 [REDACTED][REDACTED] corporations H Shares

ZJ Leading VC(7) Beneficial owner 52,481,329 [REDACTED][REDACTED] Domestic Shares

Shanghai Lingqu Enterprise Interest in controlled 52,481,329 [REDACTED][REDACTED] Management Center (Limited corporations Domestic Shares Partnership) (上海領趨企業管理中心(有限合夥))(7)

Shanghai Zhangke Lingyi Interest in controlled 52,481,329 [REDACTED][REDACTED] Enterprise Management Center corporations Domestic Shares (Limited Partnership) (上海張科領醫企業管理中心(有限合夥))(7)

Shanghai Zhangke Lingyi Interest in controlled 52,481,329 [REDACTED][REDACTED] Investment Management corporations Domestic Shares Limited (上海張科領弋投資管理有限公司)(7)

Shanghai Yongkan Investment Interest in controlled 8,981,682 [REDACTED][REDACTED] Management Co., Ltd. (上海永 corporations H Shares 堪投資管理有限公司)(7)(8) 52,481,329 [REDACTED][REDACTED] Domestic Shares

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Mr. Xiaoyong YU (于曉勇)(7)(8) Interest in controlled 8,981,682 [REDACTED][REDACTED] corporations H Shares 52,481,329 [REDACTED][REDACTED] Domestic Shares

Notes:

(1) The calculation is based on the total number of [REDACTED] Domestic Shares in issue and [REDACTED] H Shares (assuming the [REDACTED] is not exercised) in issue upon [REDACTED].

(2) Dr. Yu holds 70% interests in Shanghai Chenlu, which is the general partner of NewMed Enterprise Management, Anji NewMed, Jiaxing Fengtao and Jiaxing Yongqi and is responsible for the management of NewMed Enterprise Management, Anji NewMed, Jiaxing Fengtao and Jiaxing Yongqi. As such, Dr. Yu is deemed to be interested in the 142,307,848 H Shares held by NewMed Enterprise Management, Anji NewMed, Jiaxing Fengtao and Jiaxing Yongqi under the SFO.

(3) Ms. Li LI (李莉) is the spouse of Dr. Yu. As such, she is deemed to be interested in the 201,729,850 H Shares and 59,422,002 Domestic Shares in which Dr. Yu is interested and is deemed to be interested.

(4) OAP III is wholly owned by OrbiMed Asia Partners III, L.P., which is managed by OrbiMed Advisors III Limited. As such, OrbiMed Asia Partners III, L.P. and OrbiMed Advisors III Limited are deemed to be interested in the 76,262,720 H Shares held by OAP III under the SFO.

(5) Springleaf Investments is an indirect wholly-owned subsidiary of Temasek Holdings (Private) Ltd. As such, Temasek Holdings (Private) Ltd is deemed to be interested in the 47,629,387 H Shares held by Springleaf Investments under the SFO.

(6) The general partner of Chengdu Boyuan Jiayu Venture Capital Partnership (Limited Partnership) (成都博遠嘉昱創業投資合夥企業(有限合夥)) (“Chengdu Boyuan”) is Ningbo Meishan Bonded Port Area Borui Jiatian Equity Investment Management Partnership (Limited Partnership) (寧波梅山保稅港區博睿嘉天股權投資管理合夥企業(有限合夥)), whose general partner is Borui Yuye (Shanghai) Equity Investment Management Co., Ltd. (博睿瑜業(上海)股權投資管理有限公司)(“Borui Yuye”). The general partner of Suzhou Boyuan Mingcheng Venture Capital Partnership (Limited Partnership) (蘇州博遠鳴誠創業投資合夥企業(有限合夥)) (“Boyuan Mingcheng”) is Borui Yuye. Borui Yuye is owned as to 60% by Ms. Ruwei ZHI (支汝葦) and 40% by Mr. Feng TAO (陶峰), respectively. As such, Borui Yuye, Ms. Ruwei ZHI (支汝葦) and Mr. Feng TAO (陶峰) are deemed to be interested in the 27,484,954 H Shares held by Chengdu Boyuan and 20,412,898 H Shares held by Boyuan Mingcheng under the SFO.

(7) ZJ Leading VC is a limited partnership established in the PRC, which is owned as to 51.21% by its limited partner, Shanghai Lingqu Enterprise Management Center (Limited Partnership) (上海領趨企業管理中心(有限合夥)) and is managed by its general partner, Shanghai Zhangke Lingyi Enterprise Management Center (Limited Partnership) (上海張科領醫企業管理中心(有限合夥)), whose general partner is Shanghai Zhangke Lingyi Investment Management Limited (上海張科領弋投資管理有限公司), which is owned as to 80% by Shanghai Yongkan Investment Management Co., Ltd. (上海永堪投資管理有限公司), which is in turn ultimately controlled by Mr. Xiaoyong YU (于曉勇) who is our Supervisor. As such, Shanghai Lingqu Enterprise Management Center (Limited Partnership) (上海領趨企業管理中心(有限合夥)), Shanghai Zhangke Lingyi Enterprise Management Center (Limited Partnership) (上海張科領醫企業管理中心(有限合夥)),

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Shanghai Zhangke Lingyi Investment Management Limited (上海張科領弋投資管理有限公司), Shanghai Yongkan Investment Management Co., Ltd. (上海永堪投資管理有限公司) and Mr. Xiaoyong YU (于曉勇) are deemed to be interested in the 52,481,329 Domestic Shares held by ZJ Leading VC under the SFO.

(8) The general partner of Zhangke Lingyi Fengtao is Jiaxing Linghe Equity Investment Partnership (Limited Partnership) (嘉興領和股權投資合夥企業(有限合夥)), whose general partner is Shanghai Yongkan Investment Management Co., Ltd. (上海永堪投資管理有限公司), which is ultimately controlled by Mr. Xiaoyong YU (于曉勇) who is our Supervisor. As such, Jiaxing Linghe Equity Investment Partnership (Limited Partnership) (嘉興領和股權投資合夥企業(有限合夥)), Shanghai Yongkan Investment Management Co., Ltd. (上海永堪投資管理有限公司) and Mr. Xiaoyong YU (于曉勇) are deemed to be interested in the 8,981,682 H Shares held by Zhangke Lingyi Fengtao under the SFO.

Save as disclosed herein, our Directors are not aware of any persons who will, immediately following completion of the [REDACTED] (assuming the [REDACTED]isnot exercised), without taking into account the [REDACTED] that may be taken up under the [REDACTED], have interests or short positions in Shares or underlying Shares which would fall to be disclosed under the provisions of Divisions 2 and 3 of Part XV of the SFO or, will be, directly or indirectly, interested 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 our Company.

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This section presents certain information regarding our share capital prior to and upon the completion of the [REDACTED].

BEFORE THE [REDACTED]

As of the Latest Practicable Date, the registered share capital of our Company was RMB660,000,000 comprising 660,000,000 Unlisted Shares with a nominal value of RMB1.00 each.

UPON COMPLETION OF THE [REDACTED]

Immediately upon completion of the [REDACTED], assuming the [REDACTED]isnot exercised, the share capital of our Company will be as follows:

Approximate percentage of the total issued Description of Shares Number of Shares share capital (%)

Domestic Shares in issue(note) [REDACTED][REDACTED] H Shares to be converted from Unlisted Shares(note) [REDACTED][REDACTED] H Shares to be issued pursuant to the [REDACTED][REDACTED][REDACTED]

Total [REDACTED][REDACTED]

Immediately upon completion of the [REDACTED], assuming the [REDACTED]is fully exercised, the share capital of our Company will be as follows:

Approximate percentage of the total issued share Description of Shares Number of Shares capital (%)

Domestic Shares in issue(note) [REDACTED][REDACTED] H Shares to be converted from Unlisted Shares(note) [REDACTED][REDACTED] H Shares to be issued pursuant to the [REDACTED][REDACTED][REDACTED]

Total [REDACTED][REDACTED]

Note: Upon completion of the [REDACTED], all the Unlisted Shares held by our existing Shareholders will be converted from Unlisted Shares into H Shares, save for 59,422,002 Shares held by Dr. Yu, 52,481,329 Shares held by ZJ Leading VC and 16,528,274 Shares held by Shanghai Shanchi which will remain as Domestic Shares.

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SHARE CLASSES

Upon completion of the [REDACTED] and conversion of [REDACTED] Unlisted Shares into H Shares, our Company would have two classes of Shares, namely Domestic Shares and H Shares. Both Domestic Shares and H Shares are ordinary shares in the share capital of our Company. Apart from certain qualified domestic institutional investors in the PRC, certain qualified PRC investors under the Shanghai-Hong Kong Stock Connect and 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 by or traded among legal and natural persons of the PRC.

The differences between the two classes of Shares and the provisions on class rights, the dispatch of notices and financial reports to shareholders, dispute resolution, registration of Shares on different registers of shareholders, the method of share transfer and appointment of dividend receiving agents are set forth in the Articles of Association and summarized in Appendix V to 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 V to this document.

Except for the differences above, Domestic Shares and H Shares will 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 the 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

All our Unlisted Shares are not listed or traded on any stock exchange. The holders of our Unlisted 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 [REDACTED] of such converted Shares on the Hong Kong Stock Exchange will also require the approval of the Hong Kong Stock Exchange.

Based on the procedures for the conversion of our Unlisted Shares into H Shares as disclosed in this section, we can apply for the [REDACTED] of all or any portion of our Domestic Shares on the Hong Kong 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 Hong Kong Stock Exchange and delivery of Shares for entry on the H Share register. As any [REDACTED] of additional Shares after our initial [REDACTED]onthe[REDACTED]is ordinarily considered by the [REDACTED] to be a purely administrative matter, it will not require such prior application for [REDACTED] at the time of our initial [REDACTED]in Hong Kong.

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No class Shareholder voting is required for the [REDACTED] and trading of the converted Shares on the Hong Kong Stock Exchange. Any application for [REDACTED]of the converted Shares on the Hong Kong Stock Exchange after our initial [REDACTED]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 procedure will need to be completed in order to effect the conversion: the relevant Unlisted Shares will be withdrawn from the Unlisted Share register and we will re-register such Shares on our H Share register maintained in Hong Kong and instruct the [REDACTED] to issue H Share certificates. Registration on our H Share register will be conditional on (a) our [REDACTED] lodging with the [REDACTED] 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 Hong Kong Stock Exchange in compliance with the [REDACTED], 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 H Share register, such Shares would not be [REDACTED] as H Shares.

TRANSFER OF SHARES ISSUED PRIOR TO [REDACTED]

Pursuant to the PRC Company Law, our Shares issued prior to the [REDACTED] shall not be transferred within one year from the [REDACTED].

REGISTRATION OF SHARES NOT LISTED ON THE 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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You should read the following discussion and analysis in conjunction with our consolidated financial statements included in “Appendix I – Accountants’ Report” to this document, together with the accompanying notes. Our consolidated financial information has been prepared in accordance with HKFRSs, which may differ in material aspects from generally accepted accounting principles in other jurisdictions. You should read the entire Accountants’ 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 analysis 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, please refer to the sections headed “Forward-Looking Statements” and “Risk Factors” in this document.

OVERVIEW

We are a leading technology-driven, innovative heart valve device company in China at the forefront of the fast-growing, high-potential market of structural heart disease treatment. With our extensive experience and in-depth technological expertise in all aspects related to structural heart disease, and through years of passionate commitment to, and tenacious efforts at, technological innovation, we have put together a comprehensive portfolio of transcatheter replacement and repair product candidates for the treatment of all four valves in the human heart, as well as accessories for interventional cardiac procedures. As of the Latest Practicable Date, our Core Product, Prizvalve® was in confirmatory clinical trial. The NMPA of China has recognized three of our product candidates, namely Mi-thos®, Prizvalve®, and Valveclip-MTM, as innovative medical devices that are qualified for Special Review, which would prioritize the qualified innovative medical device over other product candidates without such qualification at the NMPA, and which is expected to accelerate the review and approval process of the qualified innovative medical device, more than any other transcatheter heart valve device company, both in terms of the number of products and in terms of the number of product categories, according to Frost & Sullivan. We aim to commercialize those three product candidates among the first batches of domestic products in their respective product classes.

We currently have no commercialized products and have not generated any revenue from product sales. We were not profitable and incurred losses during the Track Record Period. In 2019 and 2020, and four months ended April 30, 2021, we had loss for the year/period of RMB30.7 million, RMB115.0 million and RMB185.5 million, respectively.

We expect to incur an increased amount of operating expenses in the near future as we further our preclinical research for, continue the clinical development of, seek regulatory approval for and manufacturing of, our product candidates, launch our pipeline products, and

– 323 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT FINANCIAL INFORMATION hire additional personnel to operate our business. Subsequent to the [REDACTED], we expect to incur costs associated with operating as a public company. We expect that our financial performance will fluctuate from period to period due to the development status of our product candidates, regulatory approval timeline and commercialization of our product candidates after approval.

BASIS OF PREPARATION

Our Company was established in Shanghai, the PRC on March 31, 2015 as a limited liability company. In July 2021, our Company was converted from a limited liability company into a joint stock limited company. For details, please refer to the paragraph headed “History, Development and Corporate Structure – Establishment and Development of Our Company” in this document.

The historical financial information has been prepared in accordance with HKFRSs, which collective terms include all applicable Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (“HKASs”) and interpretations issued by the HKICPA. We have adopted all applicable new and revised HKFRSs to the Track Record Period and we have not adopted any new standards or interpretations that are not yet effective for the accounting year beginning January 1, 2022, except for amendments to HKFRS 16, COVID-19-Related Concessions, which we early adopted on January 1, 2020.

SIGNIFICANT FACTORS AFFECTING OUR RESULTS OF OPERATIONS

Our Ability to Successfully Develop and Commercialize Our Product Candidates

Our business and results of operations depend on our ability to successfully advance the development of our pipeline product candidates. As of the Latest Practicable Date, we had no commercialized product and all of our product candidates were still in various stages of development. Particularly, as of the same date, we were conducting the confirmatory clinical trials for our Core Product, namely, Prizvalve®. We expect to complete the confirmatory clinical trial implantation by the end of 2021 and to apply for marketing approval in China in 2023. For more information on the development status of our pipeline product candidates, please refer to the paragraphs headed “Business – Our Product Candidates” in this document. Whether our product candidates can demonstrate favorable safety and efficacy clinical trial results, and whether we can obtain the requisite regulatory approvals for our product candidates in time, are crucial for our business and results of operations.

Our results of operations also depend on our ability to successfully commercialize our product candidates upon approval. Once our product candidates are commercialized, the commercial success of our product candidates depends upon the degree of market acceptance of each of such product candidates achieves, particularly among hospitals and physicians. Physicians and hospitals’ receptiveness to our product candidates in turn depends on, among others, our ability to convince them as to the distinctive characteristics, advantages, safety and cost effectiveness of our product candidates as compared to our competitors’ products.

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Our Ability to Improve Research and Development Efficiency

Our results of operations are significantly affected by our ability to control our costs and expenses, particularly, research and development expenses. Since our inception, we have focused our resources on research and development activities. The development of medical devices requires significant investment of resources over a prolonged period of time, and we intend to continue making sustained investments in this area. We have devoted significant resources to research and development activities, and our pipeline of product candidates has been steadily advancing and expanding. Our current research and development activities mainly relate to product design, preclinical development and clinical trials of our product candidates. Please refer to the paragraphs headed “Business – Research and Development” in this document. In 2019 and 2020, and for the four months ended April 30, 2021, we incurred research and development expenses of RMB30.9 million, RMB72.0 million and RMB96.5 million, respectively, among which RMB9.9 million, RMB29.0 million and RMB13.9 million were attributable to our Core Product. We expect that our research and development expenses will continue to contribute to a large proportion of our total operating expenses for the foreseeable future as we move pipeline products currently at earlier clinical stage into more advanced clinical trials and advance preclinical programs into clinical trials, as well as our development and expansion of our pipeline of product candidates.

Growth of the Structural Heart Disease Treatment Market in China

We believe that our financial performance and future growth are dependent on the overall growth of the structural heart disease treatment market. In China, the market for interventional medical devices targeting structural heart diseases is at its emerging stages. With the escalating prevalence of structural heart diseases, enhanced patient health awareness, favorable government policies, increased patient affordability, and improved clinical practice of physicians, the interventional medical device market in China had experienced exponential growth in recent years, and is expected to continue to maintain its growth momentum, according to Frost & Sullivan. We believe that by leveraging our first mover advantages, comprehensive product portfolio, as well as strong research and development capabilities, we are well positioned to capture the significant growth potential of markets for interventional medical devices targeting structural heart diseases.

Our Ability to Maintain Adequate Funding for Our Operations

During the Track Record Period, we primarily funded our working capital requirements through capital contributions from our shareholders, private equity financing and other borrowings. Going forward, in the event of a successful commercialization of one or more of our product candidates, we expect to fund our operations in part with revenue generated from sales of our commercialized products. However, with the continuing expansion of our business, we may require further funding through public or private offerings, debt financing or other sources. Any fluctuation in the funding for our operations will impact our cash flow schedule and our results of operations.

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SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES

We have identified certain accounting policies that are significant to the preparation of our consolidated financial statements. Some of our accounting policies involve subjective assumptions and estimates, as well as complex judgments relating to accounting items. Estimates and judgments are continually re-evaluated and are based on historical experience and other factors, including industry practices and expectations of future events that we believe to be reasonable under the circumstances. We have not changed our assumptions or estimates in the past and have not noticed any material errors regarding our assumptions or estimates. Under current circumstances, we do not expect that our assumptions or estimates are likely to change significantly in the future. When reviewing our consolidated financial statements, you should consider (i) our critical accounting policies, (ii) the judgments and other uncertainties affecting the application of such policies, and (iii) the sensitivity of reported results to changes in conditions and assumptions.

We set forth below those accounting policies that we believe are of critical importance to us or involve the most significant estimates and judgments used in the preparation of our consolidated financial statements. Our significant accounting policies and estimates, which are important for an understanding of our financial condition and results of operations, are set forth in detail in Notes 2 and 3 in the Accountants’ Report set out in Appendix I to this Document.

Significant Accounting Policies

Research and Development Expenses

Expenditure on research activities is recognized in profit or loss as incurred. Expenditure on development activities is capitalized if the product or process is technically and commercially feasible and we have sufficient resources and the intention to complete development. The expenditure capitalized includes the costs of materials, direct labor, and an appropriate proportion of overheads. Capitalized development costs are stated at cost less accumulated amortization and impairment losses. Other development expenditure is recognized as an expense in the period in which it is incurred. Research and development expenses are recognized as expenses during the Track Record Period.

Financial Instruments Issued to Investors With Preferred Rights

A contract that contains an obligation to purchase our equity instruments for cash or another financial asset gives rise to a financial liability for the present value of the redemption amount. Even if our obligations to purchase is conditional on the counterparty exercising a right to redeem, the financial instruments issued to investors with preferred rights are recognized as financial liability initially at the present value of the redemption amount and subsequently measured at amortized cost with interest included in finance costs.

We derecognize financial liabilities when, and only when, our obligations are discharged, cancelled or have expired. The carrying amount of the financial instruments derecognized was credited into the equity.

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Share-Based Payments

The fair value of equity-settled share-based payment awards granted to employees is recognized as an employee cost with a corresponding increase in a capital reserve within equity. The fair value is measured at grant date using the valuation techniques, taking into account the terms and conditions upon which the equity-settled share-based payment awards were granted. Where the employees have to meet vesting conditions before becoming unconditionally entitled to the equity-settled share-based payment awards, the total estimated fair value of the equity-settled share-based payment awards is spread over the vesting period, taking into account the probability that the equity-settled share-based payment awards will vest.

During the vesting period, the number of equity-settled share-based payment award that is expected to vest is reviewed. Any resulting adjustment to the cumulative fair value recognized in prior years is charged/credited to the profit or loss for the year/period of the review, unless the original employee expenses qualify for recognition as an asset, with a corresponding adjustment to the capital reserve. On vesting date, the amount recognized as an expense is adjusted to reflect the actual number of equity-settled share-based payment awards that vest (with a corresponding adjustment to the capital reserve) except where forfeiture is only due to not achieving vesting conditions that relate to the market price of the our shares. The equity amount is recognized in the capital reserve until either such equity-settled share-based payment award is exercised (when it is included in the amount recognized in share capital for the shares issued) or the equity-settled share-based payment award expires (when it is released directly to retained profits).

Significant Accounting Judgements and Estimates

The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying our accounting policies.

Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.

Research and Development Expenses

Development expenses incurred on the our pipelines are capitalized and deferred only when we can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, our intention to complete and the our ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the pipeline and the ability to measure reliably the expenditure during the development. Development expenses which do not meet these criteria are expensed when incurred. Management will assess the progress of each of the research and development projects and determine the criteria met for capitalization. All development expenses were expensed when incurred during the Track Record Period.

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Depreciation

Property, plant and equipment are depreciated on a straight-line basis over the estimated useful lives of the assets, after taking into account the estimated residual values. We reviews the estimated useful lives of the assets regularly in order to determine the amount of depreciation expenses to be recorded during the Track Record Period. The useful lives are based on our historical experience with similar assets and taking into account anticipated technological changes. The depreciation expenses for future periods are adjusted if there are significant changes from previous estimates.

Income Tax

Determining income tax provisions involves judgement on the future tax treatment of certain transactions. We carefully evaluates tax implications of transactions and tax provisions are set up accordingly. The tax treatment of these transactions is reconsidered periodically to take into account changes in tax legislations. Deferred tax assets are recognized for deductible temporary differences and cumulative tax losses.

As those deferred tax assets can only be recognized to the extent that it is probable that future taxable profit will be available against which they can be utilized, our judgement is required to assess the probability of future taxable profits. Our assessment is constantly reviewed and additional deferred tax assets are recognized if it becomes probable that future taxable profits will allow the deferred tax asset to be recovered.

Fair Value Measurement

We measure the Company’s financial instruments at fair value of at the end of the reporting period on a recurring basis, categorized into the three-level fair value hierarchy as defined in HKFRS 13, Fair value measurement. The level into which a fair value measurement is classified is determined with reference to the observability and significance of the inputs used in the valuation technique as follows:

Level 1 valuations – fair value measured using only Level 1 inputs, which is unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date;

Level 2 valuations – fair value measured using Level 2 inputs, which is observable inputs which fail to meet Level 1, and not using significant unobservable inputs. Unobservable inputs are inputs for which market data are not available;

Level 3 valuations – fair value measured using significant unobservable inputs.

For the financial instruments that are recognized in the financial statements on a recurring basis, we determine whether transfers have occurred between levels in the hierarchy by reassessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each of the reporting period.

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Impairment of Non-Current Assets

If circumstances indicate that the carrying amount of a non-current asset may not be recoverable, the asset may be considered “impaired”, and an impairment loss would be recognized in accordance with accounting policy for impairment of non-current assets. The carrying amounts of our non-current assets, including property, plant and equipment and right-of-use assets are reviewed periodically to determine whether there is any indication of impairment. These assets are tested for impairment whenever events or changes in circumstances indicate that their recorded carrying amounts may not be recoverable. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and the fair value less costs to sell. An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. It is difficult to precisely estimate selling price of our non-current assets because quoted market prices for such assets may not be readily available. In determining the value in use, expected future cash flows generated by the asset are discounted to their present value, which requires significant judgement relating to level of revenue, amount of operating costs and applicable discount rate. Management uses all readily available information in determining an amount that is a reasonable approximation of recoverable amount, including estimates based on reasonable and supportable assumptions and projections of revenue and amount of operating costs.

Determining the Lease Term

We recognize lease liability initially at the present value of the lease payments payable over the lease term. In determining the lease term at the commencement date for leases that include renewal options exercisable by us, we evaluate the likelihood of exercising the renewal options taking into account all relevant facts and circumstances that create an economic incentive for us to exercise the option, including favorable terms, leasehold improvements undertaken and the importance of that underlying asset to our operation. The lease term is reassessed when there is a significant event or significant change in circumstance that is within our control. Any increase or decrease in the lease term would affect the amount of lease liabilities and right-of-use assets recognized in future years.

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DESCRIPTION OF SELECTED COMPONENTS OF CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

The following table sets forth our consolidated statements of profit or loss and other comprehensive income for the periods indicated:

Year Ended December 31, Four Months Ended April 30, 2019 2020 2020 2021 RMB’000 RMB’000 RMB’000 RMB’000 (unaudited)

Loss before taxation (30,731) (115,034) (22,819) (185,451) Income tax ––––

Loss for the year/period (30,731) (115,034) (22,819) (185,451)

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Other Net Gain/(Loss)

During the Track Record Period, our other net gain/(loss) primarily consisted of (i) government grants mainly to support the research and development of our product candidates; (ii) interest income on financial assets measured at amortized cost; (iii) change in fair value of financial assets at fair value through profit or loss (“FVTPL”); and (iv) net foreign exchange loss or gain. We recorded other net gain of RMB3.4 million in 2019 and other net loss of RMB2.2 million in 2020. For the four months ended April 30, 2020 and 2021, we recorded other net gain of RMB1.5 million and RMB0.04 million, respectively.

The following table sets forth a breakdown of our other net gain/(loss) for the periods indicated:

Year Ended December 31, Four Months Ended April 30, 2019 2020 2020 2021 RMB’000 RMB’000 RMB’000 RMB’000 (unaudited)

Government grants 1,855 4,206 31 801 Interest income on financial assets measured at amortized cost 1 577 72 175 Change in fair value of financial assets at FVTPL 1,207 498 9 124 Net foreign exchange (loss)/gain (38) (7,506) 1,341 (1,060) Others 360 57 – –

3,385 (2,168) 1,453 40

Research and Development Expenses

During the Track Record Period, our research and development expenses primarily consisted of (i) share-based compensations for research and development personnel; (ii) other staff costs in connection with our research and development activities; (iii) cost of raw materials and consumables used in the research and development of our product candidates; (iv) testing and technical service fees for our product candidates including third-party contracting costs with the engagement of CROs and SMOs, hospitals and other service providers in connection with preclinical studies and clinical trials; and (v) depreciation and amortization of assets used in the development of our product candidates. For the years ended December 31, 2019 and 2020 and the four months ended April 30, 2020 and 2021, we recorded research and development expenses of RMB30.9 million, RMB72.0 million, RMB15.7 million and RMB96.5 million, respectively.

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The following table sets forth a breakdown of our research and development expenses for the periods indicated:

Year Ended December 31, Four Months Ended April 30, 2019 2020 2020 2021 RMB’000 % RMB’000 % RMB’000 % RMB’000 % (unaudited)

Share-based compensations – – 4,343 6.0 772 5.0 59,742 61.9 Other staff costs 9,452 30.6 17,009 23.6 3,115 19.8 7,976 8.3 Cost of raw materials and consumables 8,547 27.7 25,596 35.5 6,127 38.9 18,264 18.9 Testing and technical service fees 6,295 20.4 14,842 20.6 2,961 18.8 4,796 5.0 Depreciation and amortization 3,460 11.2 5,899 8.2 1,775 11.3 2,386 2.4 Others(1) 3,150 10.1 4,349 6.1 983 6.2 3,333 3.5

30,904 100.0 72,038 100.0 15,733 100.0 96,497 100.0

Note:

(1) Other research and development expenses mainly included transportation and travel expenses in connection with our research and development activities, among others.

Administrative Expenses

During the Track Record Period, our administrative expenses primarily consisted of (i) share-based compensations for administrative personnel; (ii) other staff costs in connection with our administrative activities; (iii) office and utilities expenses, (iv) professional service fees for third party services; and (v) depreciation and amortization of assets used in the administrative activities. For the years ended December 31, 2019 and 2020 and the four months ended April 30, 2020 and 2021, we recorded administrative expenses of RMB2.8 million, RMB14.6 million, RMB3.6 million and RMB78.0 million, respectively.

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The following table sets forth a breakdown of our administrative expenses for the periods indicated:

Year Ended December 31, Four Months Ended April 30, 2019 2020 2020 2021 RMB’000 % RMB’000 % RMB’000 % RMB’000 % (unaudited)

Share-based compensations – – 7,291 50.1 1,558 42.9 74,056 95.0 Other staff costs 1,762 63.7 4,085 28.1 936 25.8 2,427 3.1 Office and utilities expenses 180 6.5 511 3.5 157 4.3 502 0.6 Depreciation and amortization 142 5.1 573 3.9 167 4.6 355 0.5 Professional service fees 318 11.5 1,588 10.9 695 19.1 316 0.4 Others(1) 364 13.2 503 3.5 119 3.3 322 0.4

2,766 100.0 14,551 100.0 3,632 100.0 77,978 100.0

Note:

(1) Other administrative expenses included transportation and travel expenses, and other expenses in connection with administrative activities.

Finance Costs

During the Track Record Period, our finance costs consisted of (i) interest on financial instruments issued to investors; (ii) interest on lease liabilities; and (iii) interest on interest-bearing borrowings. For the years ended December 31, 2019 and 2020 and the four months ended April 30, 2020 and 2021, we recorded finance costs of RMB0.4 million, RMB26.3 million, RMB4.9 million and RMB11.0 million, respectively.

The following table sets forth a breakdown of our finance costs for the periods indicated:

Year Ended December 31, Four Months Ended April 30, 2019 2020 2020 2021 RMB’000 % RMB’000 % RMB’000 % RMB’000 % (unaudited)

Interest on financial instruments issued to investors – – 25,004 95.2 4,522 92.2 10,592 96.2 Interest on lease liabilities 410 91.9 1,055 4.0 328 6.7 391 3.5 Interest on interest-bearing borrowings 36 8.1 218 0.8 57 1.1 33 0.3

446 100.0 26,277 100.0 4,907 100.0 11,016 100.0

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Income Tax Expenses

During the Track Record Period, we recorded no income tax expenses.

Pursuant to the Enterprise Income Tax Law of the PRC, our Company and our PRC subsidiaries are subject to a standard enterprise income tax rate of 25% on taxable income, except that: (i) our Company was qualified as a “High and New Technology Enterprise” to enjoy a preferential income tax rate of 15% from 2019 to 2021; and (ii) NewMed Taiwei and Chengdu NewMed were qualified as small and low profit enterprises and enjoyed the preferential income tax rate of 5% during the Track Record Period. The related tax authorities review the “High Technology Enterprise” status every three years.

In addition, according to the new tax incentives policies promulgated by the State Tax Bureau of the PRC in September 2018 and March 2021, effective for the period from 1 January 2018 to 31 December 2023, an additional 75% of qualified research and development expenses incurred by our Company is allowed to be deducted from its taxable income.

PERIOD-TO-PERIOD COMPARISON OF RESULTS OF OPERATIONS

Four Months Ended April 30, 2021 Compared to Four Months Ended April 30, 2020

Other Net Gain/(Loss)

Our other net gain significantly decreased from RMB1.5 million for the four months ended April 30, 2020 to RMB0.04 million for the four months ended April 30, 2021, primarily because we recorded net foreign exchange loss of RMB1.1 million for the four months ended April 30, 2021 while we recorded net foreign exchange gain of RMB1.3 million for the corresponding period of 2020, resulting from the depreciation of U.S. dollars we received from our financing activities against RMB, our functional currency, partially offset by an increase in the government grants of RMB0.8 million, which mainly related to the subsidies received from the local government.

Research and Development Expenses

Our research and development expenses significantly increased from RMB15.7 million for the four months ended April 30, 2020 to RMB96.5 million for the four months ended April 30, 2021, mainly due to (i) an increase in the share-based compensations of RMB59.0 million incurred for our R&D personnel; (ii) an increase in other staff costs of RMB4.9 million as a result of the increased number of R&D personnel and increased salaries in line with our business expansion; and (iii) an increase in cost of materials and consumables used of RMB12.1 million as a result of the advancement of research and development stages for our product candidates. These increases were all in line with our continuous research and development efforts to support our steadily advancing and expanding pipeline of product candidates.

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Administrative Expenses

Our administrative expenses significantly increased from RMB3.6 million for the four months ended April 30, 2020 to RMB78.0 million for the four months ended April 30, 2021, mainly due to an increase in share-based compensations of RMB72.5 million incurred for our administrative personnel.

Finance Costs

Our finance costs increased significantly from RMB4.9 million for the four months ended April 30, 2020 to RMB11.0 million for the four months ended April 30, 2021, mainly due to the increase in the interest on financial instruments issued to investors of RMB6.1 million in connection with our equity financings. For more details of financial instruments issued to investors, please refer to the paragraphs headed “– Indebtedness – Financial Instruments Issued to investors” in this section.

Loss for the Period

As a result of the foregoing, our total loss for the period increased from RMB22.8 million for the four months ended April 30, 2020 to RMB185.5 million for the four months ended April 30, 2021.

Year Ended December 31, 2020 Compared to Year Ended December 31, 2019

Other Net Gain/(Loss)

We recorded other net gain of RMB3.4 million in 2019 while recorded other net loss of RMB2.2 million in 2020, primarily due to an increase in net foreign exchange loss of RMB7.5 million as a result of the depreciation of U.S. dollars we received from our financing activities against RMB, our functional currency, partially offset by an increase in the government grants of RMB2.4 million, which mainly related to the subsidies received from the local government.

Research and Development Expenses

Our research and development expenses significantly increased from RMB30.9 million in 2019 to RMB72.0 million in 2020, mainly due to (i) an increase in share-based compensations of RMB4.3 million incurred for our R&D personnel; (ii) an increase in other staff costs of RMB7.6 million as a result of the increased number of R&D personnel and increased salaries in line with continuous R&D efforts; (iii) an increase of RMB17.0 million in cost of materials and consumables used as a result of the advancement of research and development stages for our product candidates; and (iv) an increase of testing and technical service fees of RMB8.5 million primarily resulted from the advancement of our research and development activities. These increases were all in line with our continuous research and development efforts to support our steadily advancing and expanding pipeline of product candidates.

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Administrative Expenses

Our administrative expenses significantly increased from RMB2.8 million in 2019 to RMB14.6 million in 2020, primarily due to (i) an increase in share-based compensations of RMB7.3 million incurred for our administrative personnel; (ii) an increase in other staff costs of RMB2.3 million as a result of the increased number of administrative personnel and increased level of compensation due to our business expansion; and (iii) an increase in professional service fees of RMB1.2 million primarily due to an increase in the payments to our external legal, human resources and other professional advisers.

Finance Costs

Our finance costs significantly increased from RMB0.4 million in 2019 to RMB26.3 million in 2020, mainly due to the increase in the interest on financial instruments issued to investors of RMB25.0 million in connection with our equity financings. For more details of financial instruments issued to Investors, please refer to the paragraphs headed “– Indebtedness – Financial Instruments Issued to investors” in this section.

Loss for the Year

As a result of the foregoing, our loss for the year increased from RMB30.7 million in 2019 to RMB115.0 million in 2020.

DISCUSSION OF CERTAIN SELECTED ITEMS FROM THE CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

The table below sets forth selected information from our consolidated statements of financial position as of the dates indicated:

As of December 31, As of April 30, 2019 2020 2021 RMB’000 RMB’000 RMB’000

Total non-current assets 32,172 63,190 73,540 Total current assets 17,585 96,627 660,105

Total assets 49,757 159,817 733,645

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As of December 31, As of April 30, 2019 2020 2021 RMB’000 RMB’000 RMB’000

Paid-in capital 4,762 6,015 7,389 Reserves 16,513 (256,733) (550,504)

Total equity/(deficit) 21,275 (250,718) (543,115)

We recorded net liabilities of RMB543.1 million as of April 30, 2021, compared to net liabilities of RMB250.7 million as of December 31, 2020, mainly attributable to an increase in value of our financial instruments issued to investors of RMB858.3 million due to our issuance of preferred rights to investors, partially offset by (i) an increase in cash and cash equivalents of RMB441.7 million as a result of the receipt of proceeds from our issuance of shares to our investors; and (ii) an increase in financial assets at FVTPL of RMB118.1 million as a result of the purchase of more bank-issued wealth management products and structured deposits.

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Current Assets and Liabilities

The table below sets forth our current assets and current liabilities as of the dates indicated:

As of December 31, As of April 30, As of June 30, 2019 2020 2021 2021 RMB’000 RMB’000 RMB’000 RMB’000 (unaudited)

Current assets Prepayments and other receivables 5,607 11,386 15,037 14,685 Financial assets at FVTPL 11,771 7,223 125,335 404,714 Pledged bank deposits – 300 300 300 Cash and cash equivalents 207 77,718 519,433 203,389

Total current assets 17,585 96,627 660,105 623,088

Current liabilities Interest-bearing borrowings 1,734 2,861 – – Trade and other payables 7,508 13,882 26,094 16,728 Lease liabilities 3,535 5,403 6,323 5,973

Total current liabilities 12,777 22,146 32,417 22,701

Net current assets 4,808 74,481 627,688 600,387

Prepayments and Other Receivables

Our prepayments and other receivables primarily consist of prepayments, other debtors and deposits. The following table sets forth a breakdown of our prepayments and other receivables as of the dates indicated:

As of December 31, As of April 30, 2019 2020 2021 RMB’000 RMB’000 RMB’000

Prepayments 5,442 11,290 14,810 Other debtors and deposits 165 96 227

Total 5,607 11,386 15,037

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Our prepayments and other receivables increased from RMB5.6 million as of December 31, 2019 to RMB11.4 million as of December 31, 2020, and further increased to RMB15.0 million as of April 30, 2021, primarily due to an increase in the prepayments for raw materials and services.

Financial Assets at FVTPL

Our financial assets at FVTPL represent wealth management products and structured deposits issued by banks in China. The wealth management products and structured deposits are denominated in RMB and expected coupon rates range from 1.6% to 3.6% per annum. Such wealth management products are redeemable at anytime; and structured deposits are redeemable in one month. We managed and evaluated the performance of these investments on a fair value basis and therefore these investments are designated as financial assets at FVTPL. Our financial assets at FVTPL decreased from RMB11.8 million as of December 31, 2019 to RMB7.2 million as of December 31, 2020. This decrease was primarily because the bank-issued wealth management products matured and were redeemed by us in 2020. Our financial assets at FVTPL increased from RMB7.2 million as of December 31, 2020 to RMB125.3 million as of April 30, 2021, primarily because we purchased more bank-issued wealth management products and structured deposits.

In accordance with our risk management and capital preservation investment policy, we have implemented a series of internal control measures regarding our investment in wealth management products and structured deposits. Prior to making an investment, we ensure that there remains sufficient working capital for our business needs, operating activities, research and development and capital expenditures even after purchasing such wealth management products and structured deposits. We adopt a prudent approach in selecting financial products. Our investment decisions are made on a case-by-case basis and after due and careful consideration of a number of factors, such as the duration of the investment and the expected returns. To control our risk exposure, we have in the past sought, and may continue in the future to seek other low-risk financial products with terms no longer than six months. Additionally, we mainly invest in financial products offered by reputable commercial banks in China. After making an investment, we closely monitor its performance and fair value on a regular basis to ensure that the purpose of such investment is to preserve capital and liquidity until free cash is used in our primary business and operation.

Cash and Cash Equivalents

Our cash and cash equivalents increased significantly from RMB0.2 million as of December 31, 2019 to RMB77.7 million as of December 31, 2020 and further significantly increased to RMB519.4 million as of April 30, 2021, primarily due to the receipt of proceeds from our equity financings. For more details, please refer to the paragraphs headed “History, Development and Corporate Structure – Establishment and Development of Our Company – (2) Pre-[REDACTED] Investments and Major Shareholding Changes of Our Company Before Conversion into Joint Stock Limited Company” in this document.

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Trade and Other Payables

During the Track Record Period, our trade and other payables consisted of (i) trade payables; (ii) payroll payables; and (iii) other payables and accrued charges. Our trade payables are non-interest-bearing with credit terms up to 90 days. Our trade and other payables increased from RMB7.5 million as of December 31, 2019 to RMB13.9 million as of December 31, 2020, primarily due to (i) an increase in payroll payables resulted from increased salaries and bonuses paid to our employees in line with the increased number of our employees; and (ii) an increase in other payables and accrued charges resulted from payables of our construction project in 2020. Our trade and other payables further increased to RMB26.1 million as of April 30, 2021, primarily due to an increase in the other payables and accrued charged resulted from the professional service fees incurred in our financing activities.

The following table sets forth a breakdown of our trade and other payables as of the dates indicated:

As of December 31, As of April 30, 2019 2020 2021 RMB’000 RMB’000 RMB’000

Trade payables 1,124 1,107 2,037 Payroll payables 2,986 6,092 3,698 Other payables and accrued charges 3,398 6,683 20,359

Total 7,508 13,882 26,094

The following table sets forth an aging analysis of our trade payables as of the dates indicated:

As of December 31, As of April 30, 2019 2020 2021 RMB’000 RMB’000 RMB’000

Within 1 month 435 223 715 Over 1 month but within 3 months 647 546 1,116 Over 3 months but within 6 months 42 295 184 Over 6 months but within 1 year – 35 4 Over 1 year – 8 18

Total 1,124 1,107 2,037

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Non-Current Assets and Liabilities

The following table sets forth our non-current assets and non-current liabilities as of the dates indicated:

As of December 31, As of April 30, 2019 2020 2021 RMB’000 RMB’000 RMB’000

Non-current assets Property, plant and equipment 10,350 28,435 37,697 Right-of-use assets 18,357 23,599 21,876 Intangible assets 67 755 781 Other non-current assets 3,398 10,401 13,186

Total non-current assets 32,172 63,190 73,540

Non-current liabilities Lease liabilities 15,705 20,420 18,095 Financial instruments issued to investors – 367,969 1,226,248

Total non-current liabilities 15,705 388,389 1,244,343

Net non-current assets/(liabilities) 16,467 (325,199) (1,170,803)

Property, Plant and Equipment

Our property, plant and equipment primarily consist of leasehold improvements, machinery and equipment, office equipment, furniture and fixtures, and construction in progress. The following table sets forth a breakdown of our property, plant and equipment as of the dates indicated:

As of December 31, As of April 30, 2019 2020 2021 RMB’000 RMB’000 RMB’000

Leasehold improvements 105 7,916 7,882 Equipment and machinery 9,953 17,598 17,058 Office equipment, furniture and fixtures 292 1,759 2,607 Construction in progress – 1,162 10,150

Total 10,350 28,435 37,697

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Our property, plant and equipment increased from RMB10.4 million as of December 31, 2019 to RMB28.4 million as of December 31, 2020. This increase was primarily due to (i) an increase in leasehold improvements of RMB7.8 million as the result of our laboratories’ and offices’ renovation; and (ii) an increase in equipment and machinery of RMB7.6 million as a result of our purchase of new machinery, as well as equipment for our R&D activities. Our property, plant and equipment increased from RMB28.4 million as of December 31, 2020 to RMB37.7 million as of April 30, 2021, which was mainly attributable to an increase in construction in progress of RMB9.0 million resulting from the progress in the construction of our manufacturing facilities.

Right-of-Use Assets

Our right-of-use assets consist of our rights to use certain buildings pursuant to leasing agreements, which are stated at cost less accumulated depreciation and impairment losses, and adjusted for any reimbursement of the lease liability.

Our right-of-use assets increased from RMB18.4 million as of December 31, 2019 to RMB23.6 million as of December 31, 2020, primarily due to an increase in the number of our leased premises. Our right-of-use assets remained relatively stable at RMB23.6 million and RMB21.9 million as of December 31, 2020 and April 30, 2021.

Other Non-Current Assets

Our other non-current assets consist of prepayments for property, plant and equipment, deposits and value-added tax recoverable. The following table sets forth a breakdown of our other non-current assets as of the dates indicated:

As of December 31, As of April 30, 2019 2020 2021 RMB’000 RMB’000 RMB’000

Prepayments for property, plant and equipment 285 3,317 6,242 Deposits 125 1,454 1,482 Value-added tax recoverable 2,988 5,630 5,462

Total 3,398 10,401 13,186

Our other non-current assets increased from RMB3.4 million as of December 31, 2019 to RMB10.4 million as of December 31, 2020, this increase was primarily due to (i) an increase in prepayments for property, plant and equipment of RMB3.0 million resulted from the prepayment made for the purchase of equipment for R&D activities; and (ii) an increase in value-added tax recoverable of RMB2.6 million resulted from our continuous procurement of

– 342 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT FINANCIAL INFORMATION materials and services. Our other non-current assets further increased to RMB13.2 million as of April 30, 2021, primarily due to an increase in prepayments for property, plant and equipment of RMB2.9 million resulted from the prepayment made for the purchase of equipment for R&D activities.

Lease Liabilities

As of December 31, 2019 and 2020, and April 30 and June 30, 2021, we recorded lease liabilities of RMB19.2 million, RMB25.8 million, RMB24.4 million and RMB26.0 million, respectively, which was primarily in relation to the properties we leased for our office premises, manufacturing, research and development. We recognized lease liabilities with respect to all leases, except for short-term leases and leases of low value assets.

The following table sets forth the lease liabilities of our Group as of the dates indicated:

As of December 31, As of April 30, As of June 30, 2019 2020 2021 2021 RMB’000 RMB’000 RMB’000 RMB’000 (unaudited)

Current portion 3,535 5,403 6,323 5,973 Non-current portion 15,705 20,420 18,095 20,018

19,240 25,823 24,418 25,991

Financial Instruments Issued to Investors

During the Track Record Period, our financial instruments issued to investors represented preferred rights we issued to investors. As we were subject to the redemption rights of the investors upon occurrence of certain contingent events, we recognized such financial liabilities that were initially measured at the highest present value of those redemption amounts which could be payable upon occurrence of certain specific contingent event, by reclassifying them from equity. We recorded financial instruments of nil, RMB368.0 million and RMB1,226.2 million as of December 31, 2019, 2020 and April 30, 2021, respectively.

In May 2021, we entered into a supplementary agreement with the existing investors, pursuant to which, the investors with preferred rights agreed to terminate the redemption features upon the contingent triggering events that were without the control of our Company and the redemption rights. Upon the effectiveness of such supplementary agreement in May 2021, the financial liabilities recognized for the redemption obligations were derecognized upon the termination of such terms and shall be reclassified from financial liabilities to equity thereafter. For more details, please refer to Note 18 in the Accountants’ Report set out in Appendix I to this document.

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LIQUIDITY AND CAPITAL RESOURCES

Working Capital

Our primary uses of cash relate to the research and development of our product candidates and capital expenditures. During the Track Record Period and up to the Latest Practicable Date, we have primarily funded our working capital requirements through capital contributions from our shareholders, private equity financing and other borrowings. We monitor and maintain a level of cash and cash equivalents deemed adequate to finance our business operations and mitigate the effects of fluctuations in cash flows. Our net cash used in operating activities was RMB29.7 million, RMB70.3 million, and RMB42.2 million in 2019 and 2020, and for the four months ended April 30, 2021, respectively. As our business develops and expands, we expect to generate net cash from our operating activities, through the sales revenue of our future commercialized products. Going forward, we believe our liquidity requirements will be satisfied by using funds from a combination of our cash and cash equivalents and net [REDACTED] from the [REDACTED]. As of April 30, 2021, we had cash and cash equivalents of RMB519.4 million.

The Directors are of the opinion that, taking into account the financial resources available to our Group, including cash and cash equivalents and the estimated net [REDACTED] from the [REDACTED], we have sufficient working capital to cover at least 125% of our costs and expenses, including research and development expenses, administrative expenses, finance costs and other expenses, for at least the next 12 months from the date of this document.

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Cash Flows

The following table sets forth our cash flows for the periods indicated:

Year Ended December 31, Fourth Months Ended April 30, 2019 2020 2020 2021 RMB’000 RMB’000 RMB’000 RMB’000 (unaudited)

Cash outflow from operating activities before movements in working capital (27,586) (68,927) (14,464) (36,319) Changes in working capital (2,108) (1,344) (3,608) (5,863)

Cash and cash equivalents at end of the year/period 207 77,718 161,355 519,433

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Net Cash Flows Used in Operating Activities

For the four months ended April 30, 2021, our net cash used in operating activities was RMB42.2 million, which was primarily attributable to our loss before taxation of RMB185.5 million, adjusted for non-cash and non-operating items. Negative adjustments for non-cash and non-operating items primarily included (i) finance costs of RMB11.0 million mainly related to an increase in interest on financial instruments with preferred rights issued to investors; and (ii) equity-settled share-based payment expenses of RMB133.8 million. The amount was then adjusted positively by changes in working capital, primarily including (i) a decrease in trade and other payables of RMB3.6 million; and (ii) an increase in prepayments and other receivables of RMB3.7 million, which is partially offset by a decrease in other non-current assets of RMB1.4 million.

In 2020, our net cash used in operating activities was RMB70.3 million, which was primarily attributable to our loss before taxation of RMB115.0 million, adjusted for non-cash and non-operating items. Negative adjustments for non-cash and non-operating items primarily included (i) finance costs of RMB26.3 million mainly related to an increase in interest on financial instruments with preferred rights issued to investors; (ii) equity-settled share-based payment expenses of RMB11.6 million; and (iii) amortization and depreciation of RMB6.6 million. The amount was then adjusted positively by changes in working capital, primarily including (i) an increase in prepayments and other receivables of RMB5.8 million; and (ii) an increase in other non-current assets of RMB1.2 million, partially offset by an increase in trade and other payables of RMB6.0 million.

In 2019, our net cash used in operating activities was RMB29.7 million, which was primarily attributable to our loss before taxation of RMB30.7 million, adjusted for non-cash and non-operating items. Negative adjustments for non-cash and non-operating items primarily included amortization and depreciation of RMB3.9 million, partially offset by changes in fair value of financial instruments at FVTPL of RMB1.2 million. The amount was then adjusted positively by changes in working capital, primarily including an increase in prepayments and other receivables of RMB3.7 million, partially offset by an increase in trade and other payables of RMB2.2 million.

Net Cash Flows Used in Investing Activities

For the four months ended April 30, 2021, our net cash used in investing activities was RMB129.9 million, primarily as a result of placements of wealth management products and structured deposits of RMB125.0 million.

In 2020, our net cash used in investing activities was RMB21.2 million, primarily as a result of the payments for the purchase of property, plant and equipment of RMB25.4 million.

In 2019, our net cash generated from investing activities was RMB28.3 million, primarily as a result of redemption of wealth management products of RMB115.5 million, partially offset by placements of wealth management products of RMB82.9 million.

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Net Cash Flows from Financing Activities

For the four months ended April 30, 2021, our net cash generated from financing activities was RMB614.8 million, primarily as a result of capital contribution by investors of RMB619.5 million, and partially offset by repayments to interest-bearing borrowings of RMB2.9 million.

In 2020, our net cash generated from financing activities was RMB171.1 million, primarily as a result of capital contribution by investors of RMB180.4 million, partially offset by repayments to interest-bearing borrowings of RMB6.7 million.

In 2019, our net cash generated from financing activities was RMB1.5 million, primarily as a result of (i) proceeds from interest-bearing borrowings of RMB3.7 million, and (ii) capital contributions by investors of RMB1.6 million, partially offset by (i) repayments to interest- bearing borrowings of RMB2.0 million, and (ii) capital element of lease rentals paid of RMB1.3 million.

CASH OPERATING COSTS

The following table sets forth key information relating to our cash operating costs for the periods indicated:

Year Ended December 31, Four Months Ended April 30, 2019 2020 2020 2021 RMB’000 RMB’000 RMB’000 RMB’000

R&D costs R&D costs for our Core Product – Clinical trial expenses 1,901 7,110 1,252 3,439 – Staff costs 3,392 6,487 1,970 3,363 – Raw material costs 1,879 13,998 2,649 10,177 – Others 776 496 115 994 R&D costs for our other product candidates – Clinical trial expenses 4,481 8,121 2,069 3,394 – Staff costs 4,958 8,411 2,627 6,916 – Raw material costs 8,919 17,935 6,652 11,516 – Others 3,575 3,111 714 2,384 Workforce employment costs(1) 1,488 3,335 1,076 2,713 Product marketing costs(2) –––– Direct production costs(3) –––– Non-income taxes, royalties and other governmental charges 7674218 Contingency allowance ––––

31,376 69,071 19,166 44,914

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Notes:

(1) Workforce employment cost represents total non-research and development personnel costs mainly including salaries and benefits.

(2) We had not commenced product sales as of the Latest Practicable Date.

(3) We had not commenced product manufacturing as of the Latest Practicable Date.

INDEBTEDNESS

The following table sets forth the components of our indebtedness as of the dates indicated:

As of December 31, As of April 30, As of June 30, 2019 2020 2021 2021 RMB’000 RMB’000 RMB’000 RMB’000 (unaudited)

Interest-bearing borrowings 1,734 2,861 – – Financial instruments issued to investors – 367,969 1,226,248 – Lease liabilities – Current 3,535 5,403 6,323 5,973 – Non-current 15,705 20,420 18,095 20,018

20,974 396,653 1,250,666 25,991

Interest-Bearing Borrowings

Our interest-bearing borrowings during the Track Record Period represented loans from reputable PRC commercial banks and were primarily used to fund our business operations. During the Track Record Period, our interest-bearing borrowings bore interest at a rate ranging from 3.85% to 5.00% per annum. Our interest-bearing borrowings agreements contain standard terms, conditions and covenants that are customary for commercial bank loans.

Dr. Yu provided guarantees to the Company in respect of certain bank loans totalling RMB3,096,000 during 2019, of which a bank loan of RMB1,734,000 was outstanding as of December 31, 2019 and was fully repaid in 2020; other than that, during the Track Record Period, we did not have any secured or guaranteed loans.

As of June 30, 2021, we had no outstanding balance of our interest-bearing borrowings.

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Financial Instruments Issued to Investors

During the Track Record Period, our financial instruments issued to investors represented redemption rights upon occurrence of contingent events, issued to certain investors in relation to our equity financing. These financial liabilities were subsequently measured at amortized cost. For more details, please refer to Note 18 in Accountants’ Report set out in Appendix I to this document.

In May 2021, the redemption features upon the contingent triggering events that were without the control of the Company and the redemption rights were terminated. Accordingly, our financial liabilities recognized for the redemption obligations were derecognized and reclassified from financial liabilities to equity thereafter. As of June 30, 2021, we did not have any financial instruments issued to investors.

Lease Liabilities

As of December 31, 2019 and 2020, April 30, and June 30, 2021, we recorded lease liabilities of RMB19.2 million, RMB25.8 million, RMB24.4 million and RMB26.0 million, respectively, which was primarily in relation to the properties we leased for our office premises, manufacturing and research and development. We recognize a lease liability with respect to all leases, except for short-term leases and leases of low value assets.

Save as disclosed in “– Indebtedness” and “– Contingent Liabilities,” we did not have outstanding indebtedness or any loan capital issued and outstanding or agreed to be issued, bank overdrafts, loans or similar indebtedness, liabilities under acceptances (other than normal trade bills), acceptance credits, debentures, mortgages, charges, finance leases or hire purchase commitments, guarantees or other contingent liabilities or any covenant in connection therewith as of June 30, 2021, being our indebtedness statement date. Our Directors confirm that we had no material defaults in payment of interest-bearing borrowings during the Track Record Period and up to the Latest Practicable Date. Our Directors also confirm that we are not subject to any material covenants under any agreements with respect to any bank loans or other borrowings. Since June 30, 2021, the latest practicable date for the purpose of this indebtedness statement, and up to the date of this Document, there had been no material adverse change to our indebtedness.

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CAPITAL EXPENDITURE

We regularly incur capital expenditures to purchase our property, plant and equipment and intangible assets in order to enhance our development capabilities and expand our business operations. Historically, we have funded our capital expenditures mainly through equity financing and bank borrowings. The following table sets forth our capital expenditures for the periods indicated:

Year Ended December 31, Four Months Ended April 30, 2019 2020 2020 2021 RMB’000 RMB’000 RMB’000 RMB’000 (unaudited)

Payments for the purchase of property, plant and equipment 4,385 25,439 8,873 11,798 Payments for purchase of intangible assets – 914 – 131

Total 4,385 26,353 8,873 11,929

We expect to incur capital expenditures in the next five years primarily for purchase of equipment and the construction of our manufacturing facilities. Please refer to the section headed “Future Plans and Use of [REDACTED]” for more details. We plan to fund our planned capital expenditures mainly through net [REDACTED] from the [REDACTED], revenue expected to be generated from sales of our products in the future, equity financing, bank borrowings and other internal financial resources. We may adjust our capital expenditures for any given period according to our development plans or in light of market conditions and other factors we believe to be appropriate.

CONTRACTUAL OBLIGATIONS

Capital Commitments

The following table sets forth our capital commitments in respect of property, plant and equipment as of the dates indicated:

As of December 31, As of April 30, 2019 2020 2021 RMB’000 RMB’000 RMB’000

Contracted for 5,630 1,979 1,136

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CONTINGENT LIABILITIES

As of the Latest Practicable Date, we did not have any contingent liabilities.

OFF-BALANCE SHEET COMMITMENTS AND ARRANGEMENTS

During the Track Record Period and up to the Latest Practicable Date, we had not entered into any off-balance sheet transactions.

KEY FINANCIAL RATIO

The table below sets forth our key financial ratio as of the dates indicated:

As of December 31, As of April 30, 2019 2020 2021

Current ratio(1) 1.4 4.4 20.4

Note:

(1) Current ratio represents current assets divided by current liabilities as of the same date.

Our current ratio increased from 1.4 as of December 31, 2019 to 4.4 as of December 31, 2020, mainly attributable to an increase in cash and cash equivalents of RMB77.5 million. Our current ratio increased from 4.4 as of December 31, 2020 to 20.4 as of April 30, 2021, mainly attributable to (i) an increase in cash and cash equivalents of RMB441.7 million, and (ii) an increase in financial assets at FVTPL of RMB118.1 million.

RELATED PARTY TRANSACTIONS

During the Track Record Period, except for the transactions disclosed in Note 23 in the Accountant’s Report set out in Appendix I to this document, we had no other related party transactions that had material transaction amounts or balances with us. We are able to obtain alternative financings if and when needed. As such, there is no financial reliance on our related parties. For more information about related party transactions, please refer to Note 23 in the Accountant’s Report set out in Appendix I to this document.

Our Directors are of the view that the related party transactions set out in Note 23 in 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. Our Directors further confirm that all material related party transactions during the Track Record Period were conducted on an arm’s length basis, and would not distort our results of operations or make our historical results over the Track Record Period not reflective of our expectations for our future performance.

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QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

We are exposed to various financial risks, including credit risk, liquidity risk, interest rate risk and currency risk. Our Directors regularly review and agree policies for managing these risks and they are summarized below. For more details, please refer to Note 21 to the Accountants’ Report set out in Appendix I to this document.

Credit Risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in our financial losses. Our credit risk is primarily attributable to other receivables. Our exposure to credit risk arising from cash and cash equivalents is limited because the counterparties are state-owned banks or reputable commercial banks for which we considers to have low credit risk. Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis.

Management has assessed that during the Track Record Periods, 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. Management expects the incurrence of losses from non-performance by the counterparties of other receivables was remote and loss allowance provision for other receivables was immaterial.

Liquidity Risk

Our policy is to regularly monitor its liquidity requirements to ensure that it maintains sufficient reserves of cash and adequate committed lines of funding from major financial institutions to meet its liquidity requirements in the short and longer term.

Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

Our interest rate risk arises primarily from cash at banks, deposits with banks and interest-bearing borrowings. Our interest-bearing financial instruments at variable rates as of December 31, 2019 and 2020 and April 30, 2021 are primarily the cash at bank except for fixed deposits, and the cash flow interest risk arising from the change of market interest rate on these balances is not considered significant. Our exposure to interest rate risk is not significant.

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Currency Risk

We are exposed to currency risk primarily from purchases which give rise to payables that are denominated in a foreign currency, i.e. a currency other than the functional currency of the operations to which the transactions relate. The currencies giving rise to this risk is the U.S. dollars. We currently do not have a foreign currency hedging policy. However, the management team monitors foreign exchange exposure and will consider hedging significant foreign currency exposure if necessary.

DIVIDENDS

DISTRIBUTABLE RESERVES

As of April 30, 2021, we did not have any distributable reserves.

[REDACTED]

[REDACTED] represent professional fees, [REDACTED] commissions and other fees incurred in connection with the [REDACTED]. We estimate that [REDACTED]of approximately RMB[REDACTED] million (HK$[REDACTED] million), assuming the [REDACTED] is not exercised and based on the [REDACTED] of HK$[REDACTED] per [REDACTED], being the mid-point of the [REDACTED], will be incurred by our Company, approximately RMB[REDACTED] million (HK$[REDACTED] million) of which is expected to be charged to our consolidated statements of profit or loss, and approximately RMB[REDACTED] million (HK$[REDACTED] million) of which is expected to be capitalized. No such expenses were recognized and charged to our consolidated statements of profit or loss during the Track Record Period. The [REDACTED] above are the latest practicable estimate for reference only, and the actual amount may differ from this estimate.

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IMPACT OF THE COVID-19 OUTBREAK

The outbreak of a novel strain of coronavirus causing coronavirus disease (COVID-19) has materially and adversely affected the global economy. As of the Latest Practicable Date, the spread of COVID-19 continued to affect China.

The outbreak of COVID-19 has not caused any material and adverse impact on our business, financial condition and results of operations. We have employed various measures to mitigate any impact the COVID-19 outbreak may have on our ongoing clinical trials in China, including providing alternative methods for safety and efficacy assessment, continuing patient visits through remote access, and engaging necessary communications with our investigators to identify and address any issues that may arise. Due to the enhanced containment policies implemented by the PRC government, the COVID-19 outbreak has been largely controlled in China and the travel restrictions have been gradually relaxed. As of the Latest Practicable Date, we had resumed the normal patient enrollment and data entry for our clinical trials in China. Based on the foregoing, we currently expect that our ongoing clinical trials will not be significantly affected by the outbreak of COVID-19. We expect the situation to continue to be improved with the sustained implementation of containment policies in response to the COVID-19 outbreak, and we may adjust our current clinical development plan covering multiple jurisdictions to the extent necessary depending on the status of the COVID-19 outbreak worldwide. Currently, we do not expect the COVID-19 outbreak to have any material long-term impact on data quality of our clinical trials or our overall clinical development plans.

The above analyses are made by our management based on currently available information concerning COVID-19. It is uncertain whether the continuance or recurrence of the COVID-19 outbreak in China or the rest of the world will have a material adverse effect on our results of operations, financial position or prospects. For example, with the ongoing COVID-19 outbreak around the world, we cannot assure you that our clinical development plan in China will not be adversely affected. For more details, please refer to the paragraphs headed “Risk Factors – Risks Relating to Our Operations – Our business, results of operations and financial position could be adversely affected by the ongoing COVID-19 pandemic” in this document. We will continue to monitor and evaluate any impact of the COVID-19 outbreak on us and adjust our precautionary measures according to the latest developments of the outbreak.

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UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS

The following unaudited pro forma statement of adjusted consolidated net tangible assets of our Group prepared in accordance with Rule 4.29 of the Listing Rules and with reference to Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants and is set out below to illustrate the effect of the [REDACTED] on the consolidated net tangible assets of our Group attributable to the equity shareholders of our Company as of April 30, 2021 as if the [REDACTED] had taken place on April 30, 2021.

The unaudited pro forma statement of adjusted consolidated net tangible assets has been prepared for illustrative purposes only and because of its hypothetical nature, it may not give a true picture of the consolidated net tangible assets of our Group attributable to equity shareholders of our Company had the [REDACTED] been completed as of April 30, 2021 or any future date.

Consolidated net Estimated impact Unaudited pro tangible liabilities to net tangible forma adjusted attributable assets upon consolidated net Unaudited pro forma to equity reclassification tangible assets adjusted consolidated shareholders of Estimated of financial attributable net tangible assets our Company as net [REDACTED] instruments to equity attributable to equity of April 30, from the issued to shareholders of shareholders of our (2&5) 2021(1) [REDACTED] investors(3) our Company Company per Share(4) RMB’000 RMB’000 RMB’000 RMB’000 RMB HK$(5)

Based on an [REDACTED] of HK$[REDACTED] per [REDACTED] [(543,896)] [REDACTED][REDACTED][REDACTED][REDACTED][REDACTED] Based on an [REDACTED] of HK$[REDACTED] per [REDACTED] [(543,896)] [REDACTED][REDACTED][REDACTED][REDACTED][REDACTED]

Notes:

(1) The consolidated net tangible liabilities of the Group attributable to equity shareholders of the Company as of April 30, 2021 was calculated based on the audited consolidated total deficit attributable to equity shareholders of the Company of RMB543,115,000 as of April 30, 2021, less the intangible assets of RMB781,000 as of April 30, 2021, for more information, please refer to the Accountants’ Report set out in Appendix I to this document.

(2) The estimated net [REDACTED] from the [REDACTED] are based on the expected issuance of [REDACTED] shares and the estimated [REDACTED] of HK$[REDACTED] and HK$[REDACTED] per Share, being the lower end price and higher end price of the stated [REDACTED] respectively, after deduction of estimated [REDACTED] fee and other [REDACTED] payable (nil [REDACTED] have been accounted for prior to April 30, 2021), and does not take account of any Shares which may be issued upon the exercise of the [REDACTED].

(3) The aggregate balance of the financial instruments issued to investors was RMB[1,226,248,000] as of April 30, 2021, which related to certain redemption rights issued to investors, for more information, please refer to Note 18 of Appendix I to this document. Upon the [REDACTED], these redemption rights will be automatically cancelled and the financial instruments issued to investors will be reclassified from liabilities to equity, accordingly.

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that the [REDACTED] had been completed on April 30, 2021, without taking into account of the Shares (i) issued to Jiaxing Yongqi in July 2021 and related effect of the Capitalization Issue and (ii) may be issued upon exercise of the [REDACTED].

(5) For illustrative purpose, the estimated net [REDACTED] from the [REDACTED] are converted from Hong Kong dollar into Renminbi and the unaudited pro forma adjusted net tangible assets attributable to equity Shareholders of the Company per Share is converted from the Renminbi into Hong Kong dollar at a rate of HK$1 = RMB[0.83148], being the PBOC rate prevailing on the Latest Practicable Date. No representation is made that the Hong Kong Dollars amounts have been, could have been or may be converted into Renminbi, or vice versa at that rate.

(6) No adjustment has been made to reflect any trading result or other transactions entered into after April 30, 2021, including but not limited to the Shares issued to Jiaxing Yongqi in July 2021 as set out in Note 25(a) of Appendix I to this document.

Had such Shares issued to Jiaxing Yongqi been completed on April 30, 2021, our unaudited pro forma adjusted net tangible assets would have been increased by RMB[REDACTED], our Shares in issue would have been increased by [REDACTED] Shares and our unaudited pro forma adjusted net tangible assets per Share would have been decreased by RMB[REDACTED] or HK$[REDACTED] based on an [REDACTED]of HK$[REDACTED] per [REDACTED] and by RMB[REDACTED] or HK$[REDACTED] based on an [REDACTED] of HK$[REDACTED] per [REDACTED].

SUBSEQUENT EVENTS

As disclosed in Note 25 in the Accountants’ Report, our Company was converted into a joint stock limited company under the Company Law of the PRC on July 8, 2021. The net assets of our Company under the PRC GAAP as of the conversion base date were converted into 7,389,300 share capital at RMB1.00 each (the “Share”). The excess of the net assets of our Company converted over the nominal value of the ordinary shares was credited to our capital reserve account.

In July 2021, an employee shareholding platform injected RMB369,465 in cash for the subscription of our newly issued share capital of 369,465. Our Company increased its share capital to 7,758,765 at RMB1.00 each, accordingly.

In July 2021, our Company increased its share capital from 7,758,765 to 660,000,000 at RMB1.00 each, through the conversion of our Company’s capital reserve (the “Capitalization Issue”).

Save as disclosed in Note 19(b) of Appendix I to this document, after April 30, 2021, we granted 44,941,725 Shares of our Company through employee shareholding platforms to the directors and employees of our Group.

NO MATERIAL ADVERSE CHANGE

Our Directors confirm that, up to the date of this document, other than as disclosed above and under “Recent Developments and No Material Adverse Change” in the “Summary” section in this document, there had been no material adverse change in our financial, operational or prospects since April 30, 2021, being the latest balance sheet date of our consolidated financial statements in the Accountant’s Report set out in Appendix I to this document.

DISCLOSURE UNDER RULES 13.13 TO 13.19 OF THE LISTING RULES

Our Directors confirm that, except as otherwise disclosed in this document, as of the Latest Practicable Date, there was no circumstance that would give rise to a disclosure requirement under Rules 13.13 to 13.19 of the Listing Rules.

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FUTURE PLANS AND PROSPECTS

Please refer to the paragraphs headed “Business – Our Strategies” in this document for a detailed description of our future plans.

USE OF [REDACTED]

We estimate that we will receive net [REDACTED] from the [REDACTED]of HK$[REDACTED] million, after deducting [REDACTED] commissions, fees and estimated expenses payable by us in connection with the [REDACTED], and assuming an [REDACTED] of HK$[REDACTED] per Share, which is the mid-point of the indicative [REDACTED] stated in this Document. If the [REDACTED] is set at HK$[REDACTED] per Share, which is the high end of the indicative [REDACTED], the net [REDACTED] from the [REDACTED] will increase by approximately HK$[REDACTED] million. If the [REDACTED] is set at HK$[REDACTED] per Share, which is the low end of the indicative [REDACTED], the net [REDACTED] from the [REDACTED] will decrease by approximately HK$[REDACTED] million.

Assuming an [REDACTED] at the mid-point of the indicative [REDACTED], we currently intend to apply these net [REDACTED] for the following purposes:

(a) [16.7]%, or HK$[REDACTED] million, will be used for the ongoing research and development activities, further clinical studies registration filings, technology improvements, and planned commercial launch of Mi-thos®:

(i) [6.8]%, or HK$[REDACTED] million, will be used to fund the ongoing clinical trials, further clinical studies, registration filings, and post-launch follow-ups of Mi-thos®;

(ii) [4.6]%, or HK$[REDACTED] million, will be used for production input of Mi-thos®;

(iii) [3.3]%, or HK$[REDACTED] million, will be used for technology development for product improvement to further upgrade and optimize product features;

(iv) [2.0]%, or HK$[REDACTED] million, will be used for preparation of commercial launch (including sales and marketing) of Mi-thos® so as to increase our market penetration rate and expand the sales channels;

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(b) [10.5]%, or HK$[REDACTED] million, will be used for the ongoing and further research and development activities, registration filings and planned commercial launch of Valveclip-MTM:

(i) [5.8]%, or HK$[REDACTED] million, will be used to fund the ongoing clinical trials, further clinical studies, registration filings, and post-launch follow-ups of Valveclip-MTM;

(ii) [3.5]%, or HK$[REDACTED] million, will be used for production input of Valveclip-MTM;

(iii) [1.2]%, or HK$[REDACTED] million, will be used for preparation of commercial launch (including sales and marketing) of Valveclip-MTM so as to increase our market penetration rate and expand the sales channels;

(c) [7.3]%, or HK$[REDACTED] million, will be used for the ongoing research and development activities, further clinical studies, registration filings and planned commercial launch of Valveclip-TTM:

(i) [5.5]%, or HK$[REDACTED] million, will be used to fund the ongoing clinical trials, further clinical studies, registration filings, and post-launch follow-ups of Valveclip-TTM;

(ii) [1.2]%, or HK$[REDACTED] million, will be used for production input of Valveclip-TTM;

(iii) [0.6]%, or HK$[REDACTED] million, will be used for preparation of commercial launch (including sales and marketing) of Valveclip-TTM so as to increase our market penetration rate and expand the sales channels;

(a) [8.0]%, or HK$[REDACTED] million, will be used to fund the ongoing clinical trials, further clinical studies, registration filings, and post-launch follow-ups of Prizvalve®;

(b) [13.8]%, or HK$[REDACTED] million, will be used for production input of Prizvalve®;

(c) [8.3]%, or HK$[REDACTED] million, will be used for technology development for product improvement to further upgrade and optimize product features;

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(d) [6.9]%, or HK$[REDACTED] million, will be used for the preparation of commercial launch (including sales and marketing) of Prizvalve®. Specifically, we plan to provide more training programs to physicians, organize more academic conferences and carry out other general marketing activities for the commercialization of Prizvalve® to increase our market penetration rate and expand the sales channels;

(3) [11.0]%, or HK$[REDACTED] million, will be allocated to the research and development, clinical trials, registration filings, and commercialization of other product candidates in our pipeline:

(4) [7.8]%, or HK$[REDACTED] million, will be allocated to the expansion of our manufacturing capacities; and

(5) [9.7]%, or HK$[REDACTED] million, will be used for our working capital and general corporate purposes.

If the [REDACTED] is exercised in full, the net [REDACTED] that we will receive will be HK$[REDACTED] million, assuming an [REDACTED] of HK$[REDACTED] per Share (being the mid-point of the indicative [REDACTED]). We intent to apply the additional net [REDACTED] to the above purposes in the proportions stated above.

The above allocation of the net [REDACTED] from the [REDACTED] will be adjusted in the event that the [REDACTED] is fixed at a higher or lower level compared to the mid-point of the indicative [REDACTED] stated in this document. If the [REDACTED]is fixed at HK$[REDACTED] per Share, being the high end of the stated [REDACTED], our net [REDACTED] will be (i) increased by HK$[REDACTED] million, assuming the [REDACTED] is not exercised; or (ii) increased by HK$[REDACTED] million, assuming the [REDACTED] is exercised in full. In such circumstances, we currently intend to use such additional [REDACTED] to increase the net [REDACTED] applied for the same purposes as set out above on a pro rata basis. If the [REDACTED] is fixed at HK$[REDACTED] per Share being the low end of the stated [REDACTED] range, our net [REDACTED] will be (i) decreased by approximately HK$[REDACTED] million, assuming the [REDACTED]isnot exercised; or (ii) decreased by HK$[REDACTED] million, assuming the [REDACTED]is exercised in full. In such circumstances, we currently intend to reduce the net [REDACTED] applied for the same purposes as set out above on a pro rata basis.

To the extent that the net [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 or China. We will issue an appropriate announcement if there is any material 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-54, received from the Company’s reporting accountants, KPMG, Certified Public Accountants, Hong Kong, for the purpose of incorporation in this document.

[To insert firm’s letterhead]

ACCOUNTANTS’ REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE DIRECTORS OF SHANGHAI NEWMED MEDICAL CO., LTD. AND MORGAN STANLEY ASIA LIMITED AND CHINA INTERNATIONAL CAPITAL CORPORATION HONG KONG SECURITIES LIMITED

Introduction

We report on the historical financial information of Shanghai NewMed Medical Co., Ltd. (the “Company”) and its subsidiaries (together, the “Group”) set out on pages I-1 to I-54, which comprises the consolidated statements of financial position of the Group and the statements of financial position of the Company as at 31 December 2019 and 2020 and 30 April 2021 and the consolidated statements of profit or loss and other comprehensive income, the consolidated statements of changes in equity and the consolidated statements of cash flows, for each of the years ended 31 December 2019 and 2020 and the four months ended 30 April 2021 (the “Relevant Periods”), 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-1 to I-54 forms an integral part of this report, which has been prepared for inclusion in the document of the Company dated [date] (the “Document”) in connection with the initial [REDACTED] of shares of the Company on the Main Board of The Stock Exchange of Hong Kong Limited.

Directors’ responsibility for 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 and presentation set out in Note 1 to the Historical Financial Information, and for such internal control as the directors of the Company determine is necessary to enable the preparation of the Historical Financial Information that is free from material misstatement, whether due to fraud or error.

Reporting accountants’ 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 “Accountants’ 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 accountants’ 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 accountants consider 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 and presentation set out in Note 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 purpose of the accountants’ report, a true and fair view of the Company’s and the Group’s financial position as at 31 December 2019 and 2020 and 30 April 2021 and of the Group’s financial performance and cash flows for the Relevant Periods in accordance with the basis of preparation and presentation set out in Note 1 to the Historical Financial Information.

Review of stub period corresponding financial information

We have reviewed the stub period corresponding financial information of the Group which comprises the consolidated statement of profit or loss, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the four months ended 30 April 2020 and other explanatory information (the “Stub Period Corresponding Financial Information”). The directors of the Company are responsible for the preparation and presentation of the Stub Period Corresponding Financial Information in accordance with the basis of preparation and presentation set out in Note 1 to the Historical Financial Information. Our responsibility is to express a conclusion on the Stub Period Corresponding Financial Information based on our review. We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the HKICPA. A review consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Based on our review, nothing has

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REPORT ON MATTERS UNDER THE RULES GOVERNING THE LISTING OF SECURITIES ON THE STOCK EXCHANGE OF HONG KONG LIMITED AND THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE

Adjustments

In preparing the Historical Financial Information, no adjustments to the Underlying Financial Statements as defined on page I-4 have been made.

Dividends

We refer to Note 20(d) to the Historical Financial Information which states that no dividends have been paid by the Company in respect of the Relevant Periods.

Certified Public Accountants 8th Floor, Prince’s Building 10 Chater Road Central, Hong Kong

[date]

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HISTORICAL FINANCIAL INFORMATION

Set out below is the Historical Financial Information which forms an integral part of this accountants’ report.

The consolidated financial statements of the Group for the Relevant Periods, on which the Historical Financial Information is based, were audited by KPMG Huazhen LLP (畢馬威華振會計師事務所(特殊普通合夥)) in accordance with Hong Kong Standards on Auditing issued by the HKICPA (“Underlying Financial Statements”).

The Historical Financial Information is presented in Renminbi (“RMB”) and all values are rounded to the nearest thousand yuan (RMB’000) except when otherwise indicated.

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CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME (Expressed in Renminbi)

Years ended Four months 31 December ended 30 April Note 2019 2020 2020 2021 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Other net gain/(loss) 5 3,385 (2,168) 1,453 40 Research and development expenses (30,904) (72,038) (15,733) (96,497) Administrative expenses (2,766) (14,551) (3,632) (77,978)

Loss from operations (30,285) (88,757) (17,912) (174,435) Finance costs 6(a) (446) (26,277) (4,907) (11,016)

Loss before taxation 6 (30,731) (115,034) (22,819) (185,451) Income tax 7 ––––

Loss for the year/period (30,731) (115,034) (22,819) (185,451) Other comprehensive income for the year/period, net of nil tax ––––

Total comprehensive income for the year/period (30,731) (115,034) (22,819) (185,451)

Loss per share Basic and diluted (RMB) 10 N/A N/A N/A N/A

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CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Expressed in Renminbi)

31 December 31 December 30 April Note 2019 2020 2021 RMB’000 RMB’000 RMB’000

Non-current assets Property, plant and equipment 11 10,350 28,435 37,697 Right-of-use assets 17(a) 18,357 23,599 21,876 Intangible assets 67 755 781 Other non-current assets 12 3,398 10,401 13,186

32,172 63,190 73,540

Current assets Prepayments and other receivables 12 5,607 11,386 15,037 Financial assets at fair value through profit or loss (“FVTPL”) 13 11,771 7,223 125,335 Pledged bank deposits – 300 300 Cash and cash equivalents 14 207 77,718 519,433

17,585 96,627 660,105 ------

Current liabilities Interest-bearing borrowings 15 1,734 2,861 – Trade and other payables 16 7,508 13,882 26,094 Lease liabilities 17(b) 3,535 5,403 6,323

12,777 22,146 32,417 ------

Net current assets 4,808 74,481 627,688

Total assets less current liabilities 36,980 137,671 701,228

Non-current liabilities Lease liabilities 17(b) 15,705 20,420 18,095 Financial instruments issued to investors 18 – 367,969 1,226,248

15,705 388,389 1,244,343

NET ASSETS/(LIABILITIES) 21,275 (250,718) (543,115)

CAPITAL AND RESERVES Paid-in capital 20 4,762 6,015 7,389 Reserves 16,513 (256,733) (550,504)

TOTAL EQUITY/(DEFICIT) 21,275 (250,718) (543,115)

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STATEMENTS OF FINANCIAL POSITION (Expressed in Renminbi)

31 December 31 December 30 April Note 2019 2020 2021 RMB’000 RMB’000 RMB’000

Non-current assets Property, plant and equipment 11 9,297 27,588 30,017 Right-of-use assets 17(a) 18,315 17,794 16,474 Intangible assets 67 755 781 Investment in subsidiaries – 5,000 14,000 Other non-current assets 12 2,816 9,376 9,741

30,495 60,513 71,013

Current assets Prepayments and other receivables 12 4,762 11,350 12,249 Financial assets at FVTPL 13 11,771 7,223 125,335 Pledged bank deposits – 300 300 Cash and cash equivalents 14 88 73,232 517,662

16,621 92,105 655,546 ------

Current liabilities Interest-bearing borrowings 15 1,734 2,861 – Trade and other payables 16 6,817 13,019 23,084 Lease liabilities 17(b) 3,465 4,378 5,526

12,016 20,258 28,610 ------

Net current assets 4,605 71,847 626,936

Total assets less current liabilities 35,100 132,360 697,949

Non-current liabilities Lease liabilities 17(b) 15,705 15,575 13,728 Financial instruments issued to investors 18 – 367,969 1,226,248

15,705 383,544 1,239,976

NET ASSETS/(LIABILITIES) 19,395 (251,184) (542,027)

CAPITAL AND RESERVES Paid-in capital 20 4,762 6,015 7,389 Reserves 14,633 (257,199) (549,416)

TOTAL EQUITY/(DEFICIT) 19,395 (251,184) (542,027)

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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Expressed in Renminbi)

Paid-in Capital Other Accumulated Total Note capital reserve reserve losses equity/(deficit) RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Balance at 1 January 2019 3,177 96,870 – (49,626) 50,421 Changes in equity for 2019: Total comprehensive income – – – (30,731) (30,731) Capital contributions by investors 20(b) 1,585–––1,585

Balance at 31 December 2019 and 1 January 2020 4,762 96,870 – (80,357) 21,275 Changes in equity for 2020: Total comprehensive income – – – (115,034) (115,034) Capital contributions by investors 20(b) 1,253 179,104 – – 180,357 Transaction costs directly attributable to the capital contributions – (5,985) – – (5,985) Recognition of financial instruments with preferred rights 18 – – (342,965) – (342,965) Equity-settled share-based transactions 19(c) – 11,634 – – 11,634

Balance at 31 December 2020 and 1 January 2021 6,015 281,623 (342,965) (195,391) (250,718) Changes in equity for the four months ended 30 April 2021: Total comprehensive income – – – (185,451) (185,451) Capital contributions by investors 20(b) 1,374 618,128 – – 619,502 Transaction costs directly attributable to the capital contributions – (12,559) – – (12,559) Recognition of financial instruments with preferred rights 18 – – (847,687) – (847,687) Equity-settled share-based transactions 19(c) – 133,798 – – 133,798

Balance at 30 April 2021 7,389 1,020,990 (1,190,652) (380,842) (543,115)

Balance at 31 December 2019 and 1 January 2020 4,762 96,870 – (80,357) 21,275 Changes in equity for the four months ended 30 April 2020 (Unaudited): Total comprehensive income – – – (22,819) (22,819) Capital contributions by investors 1,002 179,104 – – 180,106 Transaction costs directly attributable to the capital contributions – (5,985) – – (5,985) Recognition of financial instruments with preferred rights – – (342,965) – (342,965) Equity-settled share-based transactions 19(c) – 2,330 – – 2,330

Balance at 30 April 2020 (Unaudited) 5,764 272,319 (342,965) (103,176) (168,058)

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Expressed in Renminbi)

Years ended 31 December Four months ended 30 April Note 2019 2020 2020 2021 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Operating activities Loss before taxation (30,731) (115,034) (22,819) (185,451) Adjustments for: Amortisation and depreciation 6(c) 3,906 6,636 2,043 3,444 Finance costs 6(a) 446 26,277 4,907 11,016 Change in fair value of financial assets at FVTPL 5 (1,207) (498) (9) (124) Net foreign exchange loss/(gain) – 2,101 (916) 998 Equity-settled share-based payment expenses 19(c) – 11,634 2,330 133,798 Others – (43) – –

Changes in working capital: Increase in prepayments and other receivables (3,669) (5,779) (1,064) (3,651) (Increase)/Decrease in other non- current assets (621) (1,243) (203) 1,394 Increase/(Decrease) in trade and other payables 2,182 5,978 (2,341) (3,606) Increase in pledged bank deposits – (300) – –

Net cash used in operating activities (29,694) (70,271) (18,072) (42,182) ------

Investing activities Payments for the purchase of property, plant and equipment (4,385) (25,439) (8,873) (11,798) Payments for purchase of intangible assets – (914) – (131) Placements of wealth management products and structured deposits (82,900) (11,000) (1,000) (125,000) Uplifts of wealth management products and structured deposits 115,546 16,046 10,442 7,012 Others – 75 (1,000) –

Net cash generated from/(used in) investing activities 28,261 (21,232) (431) (129,917) ------

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Years ended 31 December Four months ended 30 April Note 2019 2020 2020 2021 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Financing activities Capital element of lease rentals paid 14(b) (1,330) (3,111) (1,323) (1,405) Interest element of lease rentals paid 14(b) (410) (1,055) (328) (391) Proceeds from interest-bearing borrowings 14(b) 3,734 7,861 5,000 – Repayments to interest-bearing borrowings 14(b) (2,000) (6,734) – (2,861) Interests paid for interest-bearing borrowings 14(b) (36) (218) (56) (33) Capital contributions by investors 20 1,585 180,357 180,106 619,502 Payments of transaction costs directly attributable to the capital contributions – (5,985) (4,664) –

Net cash generated from financing activities 1,543 171,115 178,735 614,812 ------

Net increase in cash and cash equivalents 110 79,612 160,232 442,713 Cash and cash equivalents at the beginning of the year/period 97 207 207 77,718 Effects of foreign exchange rate changes – (2,101) 916 (998)

Cash and cash equivalents at the end of the year/period 207 77,718 161,355 519,433

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NOTES TO THE HISTORICAL FINANCIAL INFORMATION

1 BASIS OF PREPARATION AND PRESENTATION OF HISTORICAL FINANCIAL INFORMATION

Shanghai NewMed Medical Co., Ltd. (the “Company”)* (上海紐脈醫療科技股份有限公司), formerly known as Shanghai NewMed Medical Company Limited* (上海紐脈醫療科技有限公司), was established in Shanghai, the People’s Republic of China (the “PRC”) on 31 March 2015 as a limited liability company. In July 2021, the Company was converted from a limited liability company into a joint stock limited company.

During the Relevant Periods, the Company and its subsidiaries (together, “the Group”) are principally engaged in the research and development of medical device treating valvular heart diseases.

The financial statements of the Company and the subsidiaries of the Group for which there are statutory requirements were prepared in accordance with the relevant accounting rules and regulations applicable to entities in the countries in which they were incorporated and/or established. The statutory financial statements of the Company for the years ended 31 December 2019 and 2020 were prepared in accordance with the Accounting Regulations for Business Enterprises issued by the Ministry of Finance of the PRC and audited by Shanghai Huidecheng Certified Public Accountants (General Partnership)* (上海匯德成會計師事務所(普通合夥)).

During the Relevant Periods, the Company has direct interests in the following subsidiaries, all of which are private companies:

Proportion of Place and date of ownership interest incorporation/ Particulars of issued direct held by the Name of company establishment and paid-up capital Company Principal activities

Shanghai NewMed The PRC, as a limited RMB3,000,000/ 100% Research and Taiwei Medical Co., liability company/ RMB3,000,000 development of Ltd.* 上海紐脈太惟 12 December 2016 manufacturing and 醫療科技有限公司 testing equipment (“NewMed Taiwei”) for transcatheter (a) heart valve devices

Chengdu NewMed The PRC, as a limited RMB20,000,000/ 100% Research and Biotechnology Co., liability company/ RMB14,000,000 development of Ltd.* 成都紐脈生物 27 September 2020 bovine pericardium 科技有限公司 and accessory (“Chengdu products NewMed”) (b)

Notes:

(a) The statutory financial statements of the entity for the years ended 31 December 2019 and 2020 prepared in accordance with the Accounting Standards for Business Enterprises applicable to the enterprises in the PRC were audited by Shanghai Huidecheng Certified Public Accountants (General Partnership)* 上海匯德成會計師事務所(普通合夥).

(b) The statutory financial statements of the entity for the year ended 31 December 2020 prepared in accordance with the Accounting Standards for Business Enterprises applicable to the enterprises in the PRC were audited by Shanghai Huidecheng Certified Public Accountants (General Partnership)* 上海匯德成會計師事務所(普通合夥).

* The English translation of these entities is for reference only. The official names of the entities established in the PRC are in Chinese.

All companies comprising the Group have adopted 31 December as their financial year end date.

The Historical Financial Information has been prepared in accordance with all applicable Hong Kong Financial Reporting Standards (the “HKFRSs”), which collective term includes all applicable individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (the “HKASs”) and Interpretations issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”). Further details of the significant accounting policies adopted are set out in Note 2.

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The HKICPA has issued a number of new and revised HKFRSs. For the purpose of preparing this Historical Financial Information, the Group has adopted all applicable new and revised HKFRSs to the Relevant Periods. The accounting policies set out in Note 2 have been applied consistently throughout the Relevant Periods and the Group has not adopted any new standards or interpretations that are effective for the accounting year beginning on or after 1 January 2022, except for Amendments to HKFRS 16, Covid-19-Related Concessions which has been early adopted on 1 January 2020. The revised and new accounting standards and interpretations issued which effective for the accounting years beginning on or after 1 January 2022 and not yet adopted by the Group are set out in Note 24.

The Historical Financial Information also complies with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

The accounting policies set out below have been applied consistently to all periods presented in the Historical Financial Information.

The Stub Period Corresponding Financial Information has been prepared in accordance with the same basis of preparation and presentation adopted in respect of the Historical Financial Information.

2 SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of measurement

As the Group’s operation are primarily located in the PRC and most of the Group’s transactions are conducted and denominated in Renminbi (“RMB”), which is the functional currency of the Group, the Historical Financial Information is presented in RMB, rounded to the nearest thousand, unless otherwise stated.

The measurement basis used in the preparation of the financial statements is the historical cost basis except that certain assets and liabilities are stated at their fair value as explained in the accounting policies set out in Notes 2(d) and 2(e).

(b) Use of estimates and judgements

The preparation of financial statements in conformity with HKFRSs requires management to make judgements, 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 are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Judgements made by management in the application of HKFRSs that have significant effect on the financial statements and major sources of estimation uncertainty are discussed in Note 3.

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. When assessing whether the Group has power, only substantive rights (held by the Group and other parties) are considered.

An investment in a subsidiary is consolidated into the consolidated financial statements from the date that control commences until the date that control ceases. Intra-group balances, transactions and cash flows and any unrealised profits arising from intra-group transactions are eliminated in full in preparing the consolidated financial statements. Unrealised losses resulting from intra-group transactions are eliminated in the same way as unrealised gains but only to the extent that there is no evidence of impairment.

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Changes in the Group’s interests in a subsidiary that do not result in a loss of control are accounted for as equity transactions, whereby adjustments are made to the amounts of controlling and non-controlling interests within consolidated equity to reflect the change in relative interests, but no adjustments are made to goodwill and no gain or loss is recognised.

When the Group loses control of a subsidiary, it is accounted for as a disposal of the entire interest in that subsidiary, with a resulting gain or loss being recognised in profit or loss. Any interest retained in that former subsidiary at the date when control is lost is recognised at fair value and this amount is regarded as the fair value on initial recognition of a financial asset.

In the Company’s statement of financial position, an investment in a subsidiary is stated at cost less impairment losses (see Note 2(i)(ii)), unless the investment is classified as held for sale (or included in a disposal group that is classified as held for sale).

(d) Other investments

The Group’s policies for investments, other than investments in subsidiaries, associates and joint ventures, are set out below.

Investments are recognised/derecognised on the date the Group commits to purchase/sell the investment. The investments are initially stated at fair value plus directly attributable transaction costs, except for those investments measured at fair value through profit or loss (“FVTPL”) for which transaction costs are recognised directly in profit or loss. For an explanation of how the Group determines fair value of financial instruments, see Note 21(e). These investments are subsequently accounted for as follows, depending on their classification.

(i) Investments other than equity investments

Non-equity investments held by the Group are classified into one of the following measurement categories:

– amortised cost, if the investment is held for the collection of contractual cash flows which represent solely payments of principal and interest. Interest income from the investment is calculated using the effective interest method (see Note 2(r)(i)).

– fair value through other comprehensive income (“FVOCI”) – recycling, if the contractual cash flows of the investment comprise solely payments of principal and interest and the investment is held within a business model whose objective is achieved by both the collection of contractual cash flows and sale. Changes in fair value are recognised in other comprehensive income, except for the recognition in profit or loss of expected credit losses, interest income (calculated using the effective interest method) and foreign exchange gains and losses. When the investment is derecognised, the amount accumulated in other comprehensive income is recycled from equity to profit or loss.

– FVTPL, if the investment does not meet the criteria for being measured at amortised cost or FVOCI (recycling). Changes in the fair value of the investment (including interest) are recognised in profit or loss.

(ii) Equity Investments

An investment in equity securities is classified as FVTPL unless the equity investment is not held for trading purposes and on initial recognition of the investment the Group makes an irrevocable election to designate the investment at FVOCI (non-recycling) such that subsequent changes in fair value are recognised in other comprehensive income. Such elections are made on an instrument-by-instrument basis, but may only be made if the investment meets the definition of equity from the issuer’s perspective. Where such an election is made, the amount accumulated in other comprehensive income remains in the fair value reserve (non-recycling) until the investment is disposed of. At the time of disposal, the amount accumulated in the fair value reserve (non-recycling) is transferred to retained earnings. It is not recycled through profit or loss. Dividends from an investment in equity securities, irrespective of whether classified as at FVTPL or FVOCI, are recognised in profit or loss as other income.

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(e) Derivative financial instruments

Derivative financial instruments are recognised at fair value. At the end of each reporting period the fair value is remeasured. The gain or loss on remeasurement to fair value is recognised immediately in profit or loss.

(f) Property, plant and equipment

Property, plant and equipment, including right-of-use assets arising from leases of underlying plant and equipment (see Note 2(h)) are stated at cost less accumulated depreciation and impairment losses (see Note 2(i)(ii)).

The cost of self-constructed items of property, plant and equipment includes the cost of materials, direct labour, the initial estimate, where relevant, of the costs of dismantling and removing the items and restoring the site on which they are located, and an appropriate proportion of production overheads and borrowing costs (see Note 2(t)).

Gains or losses arising from the retirement or disposal of an item of property, plant and equipment are determined as the difference between the net disposal proceeds and the carrying amount of the item and are recognised in profit or loss on the date of retirement or disposal.

Depreciation is calculated to write off the cost of items of property, plant and equipment, less their estimated residual value, if any, using the straight-line method over their estimated useful lives as follows:

– Leasehold improvements are depreciated over the shorter of the unexpired term of lease and their estimated useful lives, being 3 to 6 years from the date of completion;

– Equipment and machinery 5 to 10 years

– Office equipment, furniture and fixtures 3 to 4 years

Where parts of an item of property, plant and equipment have different useful lives, the cost of the item is allocated on a reasonable basis between the parts and each part is depreciated separately. Both the useful life of an asset and its residual value, if any, are reviewed annually.

(g) Intangible assets

Expenditure on research activities is recognised as an expense in the period in which it is incurred. Expenditure on development activities is capitalised if the product or process is technically and commercially feasible and the Group has sufficient resources and the intention to complete development. The expenditure capitalised includes the costs of materials, direct labour, and an appropriate proportion of overheads and borrowing costs, where applicable (see Note 2(t)). Capitalised development costs are stated at cost less accumulated amortisation and impairment losses (see Note 2(i)(ii)). Other development expenditure is recognised as an expense in the period in which it is incurred.

Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation (where the estimated useful life is finite) and impairment losses (see Note 2(i)(ii)). Expenditure on internally generated goodwill and brands is recognised as an expense in the period in which it is incurred.

Amortisation of intangible assets with finite useful lives is charged to profit or loss on a straight-line basis over the assets’ estimated useful lives. The following intangible assets with finite useful lives are amortised from the date they are available for use and their estimated useful lives are as follows:

– Software 3 years

Both the period and method of amortisation are reviewed annually.

(h) Leased assets

At inception of a contract, the Group assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is conveyed where the customer has both the right to direct the use of the identified asset and to obtain substantially all of the economic benefits from that use.

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As a lessee

Where the contract contains lease component(s) and non-lease component(s), the Group has elected not to separate non-lease components and accounts for each lease component and any associated non-lease components as a single lease component for all leases.

At the lease commencement date, the Group recognises a right-of-use asset and a lease liability, except for short-term leases that have a lease term of 12 months. When the Group enters into a lease in respect of a low-value asset, the Group decides whether to capitalise the lease on a lease-by-lease basis. The lease payments associated with those leases which are not capitalised are recognised as an expense on a systematic basis over the lease term.

Where the lease is capitalised, the lease liability is initially recognised at the present value of the lease payments payable over the lease term, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, using a relevant incremental borrowing rate. After initial recognition, the lease liability is measured at amortised cost and interest expense is calculated using the effective interest method. Variable lease payments that do not depend on an index or rate are not included in the measurement of the lease liability and hence are charged to profit or loss in the accounting period in which they are incurred.

The right-of-use asset recognised when a lease is capitalised is initially measured at cost, which comprises the initial amount of the lease liability plus any lease payments made at or before the commencement date, and any initial direct costs incurred. Where applicable, the cost of the right-of-use assets also includes an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, discounted to their present value, less any lease incentives received. The right-of-use asset is subsequently stated at cost less accumulated depreciation and impairment losses (see Notes 2(f) and 2(i)(ii)).

The lease liability is remeasured when there is a change in future lease payments arising from a change in an index or rate, or there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee, or there is a change arising from the reassessment of whether the Group will be reasonably certain to exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The lease liability is also remeasured when there is a change in the scope of a lease or the consideration for a lease that is not originally provided for in the lease contract (“lease modification”) that is not accounted for as a separate lease. In this case the lease liability is remeasured based on the revised lease payments and lease term using a revised discount rate at the effective date of the modification. The only exceptions are any rent concessions which arose as a direct consequence of the COVID-19 pandemic and which satisfied the conditions set out in paragraph 46B of HKFRS 16, Leases. In such cases, the Group took advantage of the practical expedient set out in paragraph 46A of HKFRS 16 and recognised the change in consideration as if it were not a lease modification.

In the consolidated statement of financial position, the current portion of long-term lease liabilities is determined as the present value of contractual payments that are due to be settled within twelve months after the reporting period.

(i) Credit losses and impairment of assets

(i) Credit losses from financial instruments

The Group recognises a loss allowance for expected credit losses (“ECLs”) on financial assets measured at amortised cost (including cash and cash equivalents, pledged deposits, and other receivables, which are held for the collection of contractual cash flows which represent solely payment of principal and interest);

Other financial assets measured at fair value, including debt securities measured at FVTPL and derivative financial assets, are not subject to the ECL assessment.

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Measurement of ECLs

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all expected cash shortfalls (i.e. the difference between the cash flows due to the Group in accordance with the contract and the cash flows that the Group expects to receive).

The expected cash shortfalls are discounted using the following discount rates where the effect of discounting is material:

– fixed-rate financial assets and other receivables: effective interest rate determined at initial recognition or an approximation thereof; and

– variable-rate financial assets: current effective interest rate.

The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk.

In measuring ECLs, the Group takes into account reasonable and supportable information that is available without undue cost or effort. This includes information about past events, current conditions and forecasts of future economic conditions.

ECLs are measured on either of the following bases:

– 12-month ECLs: these are losses that are expected to result from possible default events within the 12 months after the reporting date; and

– lifetime ECLs: these are losses that are expected to result from all possible default events over the expected lives of the items to which the ECL model applies.

Loss allowances for other receivables are always measured at an amount equal to lifetime ECLs. ECLs on these financial assets are estimated using a provision matrix based on the Group’s historical credit loss experience, adjusted for factors that are specific to the debtors and an assessment of both the current and forecast general economic conditions at the reporting date.

For all other financial instruments, the Group recognises a loss allowance equal to 12-month ECLs unless there has been a significant increase in credit risk of the financial instrument since initial recognition, in which case the loss allowance is measured at an amount equal to lifetime ECLs.

Significant increases in credit risk

In assessing whether the credit risk of a financial instrument has increased significantly since initial recognition, the Group compares the risk of default occurring on the financial instrument assessed at the reporting date with that assessed at the date of initial recognition. In making this reassessment, the Group considers that a default event occurs when (i) the borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as realising security (if any is held); or (ii) the financial asset is 90 days past due. The Group considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort.

In particular, the following information is taken into account when assessing whether credit risk has increased significantly since initial recognition:

– failure to make payments of principal or interest on their contractually due dates;

– an actual or expected significant deterioration in a financial instrument’s external or internal credit rating (if available);

– an actual or expected significant deterioration in the operating results of the debtor; and

– existing or forecast changes in the technological, market, economic or legal environment that have a significant adverse effect on the debtor’s ability to meet its obligation to the Group.

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Depending on the nature of the financial instruments, the assessment of a significant increase in credit risk is performed on either an individual basis or a collective basis. When the assessment is performed on a collective basis, the financial instruments are grouped based on shared credit risk characteristics, such as past due status and credit risk ratings.

ECLs are remeasured at each reporting date to reflect changes in the financial instrument’s credit risk since initial recognition. Any change in the ECL amount is recognised as an impairment gain or loss in profit or loss. The Group recognises an impairment gain or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.

Basis of calculation of interest income

Interest income recognised in accordance with Note 2(r)(i) is calculated based on the gross carrying amount of the financial asset unless the financial asset is credit-impaired, in which case interest income is calculated based on the amortised cost (i.e. the gross carrying amount less loss allowance) of the financial asset.

At each reporting date, the Group assesses whether a financial asset is credit-impaired. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

Evidence that a financial asset is credit-impaired includes the following observable events:

– significant financial difficulties of the debtor;

– a breach of contract, such as a default or past due event;

– it becoming probable that the borrower will enter into bankruptcy or other financial reorganisation;

– significant changes in the technological, market, economic or legal environment that have an adverse effect on the debtor; or

– the disappearance of an active market for a security because of financial difficulties of the issuer.

Write-off policy

The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Group determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off.

Subsequent recoveries of an asset that was previously written off are recognised as a reversal of impairment in profit or loss in the period in which the recovery occurs.

(ii) Impairment of other non-current assets

Internal and external sources of information are reviewed at the end of each reporting period to identify indications that the following assets may be impaired or, except in the case of goodwill, an impairment loss previously recognised no longer exists or may have decreased:

– Property, plant and equipment, including right-of-use assets;

– intangible assets; and

– investments in subsidiaries in the Company’s statement of financial position.

If any such indication exists, the asset’s recoverable amount is estimated.

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Calculation of recoverable amount

The recoverable amount of an asset is the greater of its fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where an asset does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the smallest group of assets that generates cash inflows independently (i.e. a cash-generating unit).

Recognition of impairment losses

An impairment loss is recognised in profit or loss if the carrying amount of an asset, or the cash-generating unit to which it belongs, exceeds its recoverable amount. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (or group of units) and then, to reduce the carrying amount of the other assets in the unit (or group of units) on a pro rata basis, except that the carrying value of an asset will not be reduced below its individual fair value less costs of disposal (if measurable) or value in use (if determinable).

Reversals of impairment losses

In respect of assets other than goodwill, an impairment loss is reversed if there has been a favourable change in the estimates used to determine the recoverable amount. An impairment loss in respect of goodwill is not reversed.

A reversal of an impairment loss is limited to the asset’s carrying amount that would have been determined had no impairment loss been recognised in prior years. Reversals of impairment losses are credited to profit or loss in the year in which the reversals are recognised.

(j) Trade and other receivables

A receivable is recognised when the Group has an unconditional right to receive consideration. A right to receive consideration is unconditional if only the passage of time is required before payment of that consideration is due. If revenue has been recognised before the Group has an unconditional right to receive consideration, the amount is presented as a contract asset.

Receivables are stated at amortised cost using the effective interest method less allowance for credit losses (see Note 2(i)(i)).

(k) Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks and other financial institutions, and short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, having been within three months of maturity at acquisition. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are also included as a component of cash and cash equivalents for the purpose of the consolidated cash flow statement. Cash and cash equivalents are assessed for ECLs in accordance with the policy set out in Note 2(i)(i).

(l) Trade and other payables

Trade and other payables are initially recognised at fair value and subsequently stated at amortised cost unless the effect of discounting would be immaterial, in which case they are stated at cost.

(m) Financial instruments issued to investors with preferred rights

A contract that contains an obligation to purchase the Company’s equity instruments for cash or another financial asset gives rise to a financial liability for the present value of the redemption amount. Even if the Company’s obligations to purchase is conditional on the counterparty exercising a right to redeem, the financial instruments issued to investors with preferred rights are recognised as financial liability initially at the present value of the redemption amount and subsequently measured at amortised cost with interest included in finance costs.

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The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or have expired. The carrying amount of the financial instruments derecognised was credited into the equity.

(n) Interest-bearing borrowings

Interest-bearing borrowings are measured initially at fair value less transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost using the effective interest method. Interest expense is recognised in accordance with the Group’s accounting policy for borrowing costs (see Note 2(t)).

(o) Employee benefits

(i) Short-term employee benefits and contributions to defined contribution retirement plans

Salaries, annual bonuses, paid annual leave, contributions to defined contribution retirement plans and the cost of non-monetary benefits are accrued in the year in which the associated services are rendered by employees. Where payment or settlement is deferred and the effect would be material, these amounts are stated at their present values.

(ii) Share-based payments

The fair value of equity-settled share-based payment awards granted to employees is recognised as an employee cost with a corresponding increase in a capital reserve within equity. The fair value is measured at grant date using the valuation techniques, taking into account the terms and conditions upon which the equity-settled share-based payment awards were granted. Where the employees have to meet vesting conditions before becoming unconditionally entitled to the equity-settled share-based payment awards, the total estimated fair value of the equity-settled share-based payment awards is spread over the vesting period, taking into account the probability that the equity-settled share-based payment awards will vest.

During the vesting period, the number of equity-settled shared-based payment award that is expected to vest is reviewed. Any resulting adjustment to the cumulative fair value recognised in prior years is charged/credited to the profit or loss for the year/period of the review, unless the original employee expenses qualify for recognition as an asset, with a corresponding adjustment to the capital reserve. On vesting date, the amount recognised as an expense is adjusted to reflect the actual number of options that vest (with a corresponding adjustment to the capital reserve) except where forfeiture is only due to not achieving vesting conditions that relate to the market price of the Company’s shares. The equity amount is recognised in the capital reserve until either the equity-settled shared-based payment award is exercised (when it is included in the amount recognised in share capital for the shares issued) or the equity-settled shared-based payment award expires (when it is released directly to retained profits).

(iii) Termination benefits

Termination benefits are recognised at the earlier of when the Group can no longer withdraw the offer of those benefits and when it recognises restructuring costs involving the payment of termination benefits.

(p) Income tax

Income tax for the year comprises current tax and movements in deferred tax assets and liabilities. Current tax and movements in deferred tax assets and liabilities are recognised in profit or loss except to the extent that they relate to items recognised in other comprehensive income or directly in equity, in which case the relevant amounts of tax are recognised in other comprehensive income or directly in equity, respectively.

Current tax is the expected tax payable on the taxable income for the year/period, using tax rates enacted or substantively enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous years.

Deferred tax assets and liabilities arise from deductible and taxable temporary differences respectively, being the differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax assets also arise from unused tax losses and unused tax credits.

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Apart from certain limited exceptions, all deferred tax liabilities, and all deferred tax assets, to the extent that it is probable that future taxable profits will be available against which the asset can be utilised, are recognised. Future taxable profits that may support the recognition of deferred tax assets arising from deductible temporary differences include those that will arise from the reversal of existing taxable temporary differences, provided those differences relate to the same taxation authority and the same taxable entity, and are expected to reverse either in the same period as the expected reversal of the deductible temporary difference or in periods into which a tax loss arising from the deferred tax asset can be carried back or forward. The same criteria are adopted when determining whether existing taxable temporary differences support the recognition of deferred tax assets arising from unused tax losses and credits, that is, those differences are taken into account if they relate to the same taxation authority and the same taxable entity, and are expected to reverse in a period, or periods, in which the tax loss or credit can be utilised.

The limited exceptions to recognition of deferred tax assets and liabilities are those temporary differences arising from goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit (provided they are not part of a business combination), and temporary differences relating to investments in subsidiaries to the extent that, in the case of taxable differences, the Group controls the timing of the reversal and it is probable that the differences will not reverse in the foreseeable future, or in the case of deductible differences, unless it is probable that they will reverse in the future.

The amount of deferred tax recognised is measured based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the end of the reporting period. Deferred tax assets and liabilities are not discounted.

The carrying amount of a deferred tax asset is reviewed at the end of each reporting period and is reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow the related tax benefit to be utilised. Any such reduction is reversed to the extent that it becomes probable that sufficient taxable profits will be available.

Additional income taxes that arise from the distribution of dividends are recognised when the liability to pay the related dividends is recognised.

Current tax balances and deferred tax balances, and movements therein, are presented separately from each other and are not offset. Current tax assets are offset against current tax liabilities, and deferred tax assets against deferred tax liabilities, if the Company or the Group has the legally enforceable right to set off current tax assets against current tax liabilities and the following additional conditions are met:

– in the case of current tax assets and liabilities, the Company or the Group intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously; or

– in the case of deferred tax assets and liabilities, if they relate to income taxes levied by the same taxation authority on either:

– the same taxable entity; or

– different taxable entities, which, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered, intend to realise the current tax assets and settle the current tax liabilities on a net basis or realise and settle simultaneously.

(q) Provisions and contingent liabilities and onerous contracts

(i) Provisions and contingent liabilities

Provisions are recognised when the Group has a legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation.

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

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(ii) Onerous contracts

An onerous contract exists when the Group has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract. Provisions for onerous contracts are measured at the present value of the lower of the expected cost of terminating the contract and the net cost of continuing with the contract.

(r) Other income

Further details of the Group’s other income recognition policies are as follows:

(i) Interest income

Interest income is recognised as it accrues under the effective interest method using the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of the financial asset. For financial assets measured at amortised cost or FVOCI (recycling) that are not credit-impaired, the effective interest rate is applied to the gross carrying amount of the asset. For credit-impaired financial assets, the effective interest rate is applied to the amortised cost (i.e. gross carrying amount net of loss allowance) of the asset (see Note 2(i)(i)).

(ii) Government grants

Government grants are recognised in the statement of financial position initially when there is reasonable assurance that they will be received and that the Group will comply with the conditions attaching to them. Grants that compensate the Group for expenses incurred are recognised as income in profit or loss on a systematic basis in the same periods in which the expenses are incurred. Grants that compensate the Group for the cost of an asset are recognised as deferred income and subsequently recognised in profit or loss on a systematic basis over the useful life of the asset.

(s) Translation of foreign currencies

Foreign currency transactions during the year are translated at the foreign exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the foreign exchange rates ruling at the end of the reporting period. Exchange gains and losses are recognised in profit or loss.

Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the foreign exchange rates ruling at the transaction dates. The transaction date is the date on which the Company initially recognises such non-monetary assets or liabilities. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated using the foreign exchange rates ruling at the dates the fair value was measured.

(t) Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of that asset. Other borrowing costs are expensed in the period in which they are incurred.

The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or complete.

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(u) Related parties

(a) A person, or a close member of that person’s family, is related to the Group if that person:

(i) has control or joint control over the Group;

(ii) has significant influence over the Group; or

(iii) is a member of the key management personnel of the Group or the Group’s parent.

(b) An entity is related to the Group if any of the following conditions applies:

(i) The entity and the Group are members of the same Group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a Group of which the other entity is a member).

(iii) Both entities are joint ventures of the same third party.

(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.

(v) The entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group.

(vi) The entity is controlled or jointly controlled by a person identified in (a).

(vii) A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

(viii) The entity, or any member of a Group of which it is a part, provides key management personnel services to the Group or to the Group’s parent.

Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.

(v) Segment reporting

Operating segments, and the amounts of each segment item reported in the financial statements, are identified from the financial information provided regularly to the Group’s most senior executive management for the purposes of allocating resources to, and assessing the performance of, the Group’s various lines of business and geographical locations.

Individually material operating segments are not aggregated for financial reporting purposes unless the segments have similar economic characteristics and are similar in respect of the nature of products and services, the nature of production processes, the type or class of customers, the methods used to distribute the products or provide the services, and the nature of the regulatory environment. Operating segments which are not individually material may be aggregated if they share a majority of these criteria.

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3 ACCOUNTING JUDGEMENT AND ESTIMATES

(a) Critical accounting judgement in applying the Group’s accounting policies

In the process of applying the Group’s accounting policies, management has made the following accounting judgement:

Research and development expenses

Development expenses incurred on the Group’s pipelines are capitalised and deferred only when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, the Group’s intention to complete and the Group’s ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the pipeline and the ability to measure reliably the expenditure during the development. Development expenses which do not meet these criteria are expensed when incurred. Management will assess the progress of each of the research and development projects and determine the criteria met for capitalisation. All development expenses were expensed when incurred during the Relevant Periods.

(b) Sources of estimation uncertainty

Notes 19 and 21(e) contains information about the assumptions and risk factors relating to fair value of equity-settled share-based transactions and financial instruments. Other key sources of estimation uncertainty are as follows:

Depreciation

Property, plant and equipment are depreciated on a straight-line basis over the estimated useful lives of the assets, after taking into account the estimated residual values. The Group reviews the estimated useful lives of the assets regularly in order to determine the amount of depreciation expenses to be recorded during the Relevant Periods. The useful lives are based on the Group’s historical experience with similar assets and taking into account anticipated technological changes. The depreciation expenses for future periods are adjusted if there are significant changes from previous estimates.

Income tax

Determining income tax provisions involves judgement on the future tax treatment of certain transactions. The management carefully evaluates tax implications of transactions and tax provisions are set up accordingly. The tax treatment of these transactions is reconsidered periodically to take into account changes in tax legislations. Deferred tax assets are recognised for deductible temporary differences and cumulative tax losses.

As those deferred tax assets can only be recognised to the extent that it is probable that future taxable profit will be available against which they can be utilised, management’s judgement is required to assess the probability of future taxable profits. Management’s assessment is constantly reviewed and additional deferred tax assets are recognised if it becomes probable that future taxable profits will allow the deferred tax asset to be recovered.

Impairment of non-current assets

If circumstances indicate that the carrying amount of a non-current asset may not be recoverable, the asset may be considered “impaired”, and an impairment loss would be recognised in accordance with accounting policy for impairment of non-current assets as described in Note 2(i)(ii). The carrying amounts of the Group’s non-current assets, including property, plant and equipment and right-of-use assets are reviewed periodically to determine whether there is any indication of impairment. These assets are tested for impairment whenever events or changes in circumstances indicate that their recorded carrying amounts may not be recoverable. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and the fair value less costs to sell. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. It is difficult to precisely estimate selling price of the Group’s non-current assets because quoted market prices for such assets may not be readily available. In determining the value in use, expected future cash flows generated by the asset are discounted to their present value, which requires significant judgement relating to level of revenue, amount of operating costs and applicable discount rate. Management uses all readily available information in determining an amount that is a reasonable approximation of recoverable amount, including estimates based on reasonable and supportable assumptions and projections of revenue and amount of operating costs.

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Determining the lease term

As explained in Note 2(h), the lease liability is initially recognised at the present value of the lease payments payable over the lease term. In determining the lease term at the commencement date for leases that include renewal options exercisable by the Group, the Group evaluates the likelihood of exercising the renewal options taking into account all relevant facts and circumstances that create an economic incentive for the Group to exercise the option, including favourable terms, leasehold improvements undertaken and the importance of that underlying asset to the Group’s operation. The lease term is reassessed when there is a significant event or significant change in circumstance that is within the Group’s control. Any increase or decrease in the lease term would affect the amount of lease liabilities and right-of-use assets recognised in future years.

4 SEGMENT REPORTING

(a) Segment information

For the purpose of resource allocation and performance assessment, the Group’s chief executive officer, being the chief operating decision maker, reviews the consolidated results when making decisions about allocating resources and assessing performance of the Group as a whole and hence, the Group has only one reportable segment which is engaged in the research and development of medical devices and instruments and no further analysis of this single segment is presented.

(b) Geographical information

All of the non-current assets of the Group are physically located in the PRC. The geographical location of customers is based on the location at which the customers operate is all derived from operations in the PRC during the Relevant Periods.

5 OTHER NET GAIN/(LOSS)

Years ended 31 December Four months ended 30 April 2019 2020 2020 2021 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Government grants (Note) 1,855 4,206 31 801 Interest income on financial assets measured at amortised cost 1 577 72 175 Change in fair value of financial assets at FVTPL 1,207 498 9 124 Net foreign exchange (loss)/gain (38) (7,506) 1,341 (1,060) Others 360 57 – –

3,385 (2,168) 1,453 40

Note: Government grants primarily comprise subsidies received from the government for the encouragement of research and development projects.

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6 LOSS BEFORE TAXATION

Loss before taxation is arrived at after charging:

(a) Finance costs

Years ended 31 December Four months ended 30 April 2019 2020 2020 2021 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Interest on interest-bearing borrowings (Note 14(b)) 36 218 57 33 Interest on lease liabilities (Note 14(b)) 410 1,055 328 391 Interest on financial instruments issued to investors (Note 18) – 25,004 4,522 10,592

446 26,277 4,907 11,016

(b) Staff costs

Years ended 31 December Four months ended 30 April 2019 2020 2020 2021 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Equity-settled share-based payment expenses (Note 19(c)) – 11,634 2,330 133,798 Contributions to defined contribution retirement plans (Note) 1,023 143 101 1,035 Salaries, wages and other benefits 12,100 24,641 4,698 12,223

13,123 36,418 7,129 147,056

Note: Employees of the Group’s PRC subsidiaries are required to participate in a defined contribution retirement scheme administered and operated by the local municipal government. The Group’s PRC subsidiaries contribute funds which are calculated on certain percentages of the average employee salary as agreed by the local municipal government to the scheme to fund the retirement benefits of the employees.

Years ended 31 December Four months ended 30 April 2019 2020 2020 2021 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Amortisation of intangible assets 103 226 35 105 Depreciation of owned property, plant and equipment (Note 11) 1,861 1,951 609 1,616 Depreciation of right-of-use assets (Note 17) 1,942 4,459 1,399 1,723

3,906 6,636 2,043 3,444

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Years ended 31 December Four months ended 30 April 2019 2020 2020 2021 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Auditors’ remuneration 5 10 – – Research and development expenses 30,904 72,038 15,733 96,497

During the years ended 31 December 2019 and 2020 and the four months ended 30 April 2020 and 2021, research and development expenses include staff costs and depreciation expenses of RMB13,944,000, RMB28,746,000, RMB6,059,000 (Unaudited) and RMB71,445,000, respectively, which are included in the respective total amounts disclosed separately above.

7 INCOME TAX IN THE CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

(a) Reconciliation between income tax expense and accounting loss at applicable tax rates:

Years ended 31 December Four months ended 30 April 2019 2020 2020 2021 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Loss before taxation (30,731) (115,034) (22,819) (185,451)

Notional tax on loss before taxation, calculated at the rates applicable to profits in the PRC (i) (7,683) (28,759) (5,705) (46,363) Effect of preferential tax rate (ii) & (iv) 3,316 11,732 2,374 18,767 Effect of additional deduction on research and development expenses (iii) (2,790) (4,820) (1,048) (2,497) Effect of other non-deductible expenses 124 5,717 1,103 21,734 Effect of tax losses not recognised 6,970 15,697 3,210 8,346 Effect of deductible temporary differences not recognised 63 433 66 13

Actual tax expenses ––––

(i) Pursuant to the Enterprise Income Tax (the “EIT”) Law of the PRC (the “EIT Law”), the Company and its PRC subsidiaries are liable to EIT at a rate of 25% unless otherwise specified.

(ii) According to the EIT Law and its relevant regulations, entities that qualified as high-technology enterprise are entitled to a preferential income tax rate of 15%. The Company obtained the certificate of high-technology enterprise on 6 December 2019 and is subject to income tax rate at 15% for a three years period. The Company did not have any taxable income for the Relevant Periods.

(iii) According to the new tax incentives policies promulgated by the State Tax Bureau of the PRC in September 2018 and March 2021, effective for the period from 1 January 2018 to 31 December 2023, an additional 75% of qualified research and development expenses incurred is allowed to be deducted from the taxable income.

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(iv) NewMed Taiwei and Chengdu NewMed were qualified as small and low profit enterprises according to the EIT Law and its relevant regulations. These two subsidiaries did not have any taxable income for the Relevant Periods.

(b) Deferred tax assets not recognised

As at 31 December 2019 and 2020 and 30 April 2021, the Group has not recognised deferred tax assets in respect of their respective cumulative tax losses of RMB115,645,000, RMB222,490,000 and RMB279,941,000 and temporary differences of RMB419,000, RMB3,309,000, and RMB3,391,000, respectively, in accordance with the accounting policy set out in Note 2(p), as it is not probable that future taxable profits against which the losses can be utilised will be available in the relevant tax jurisdiction and entity.

8 DIRECTORS’ AND SUPERVISORS’ EMOLUMENTS

Details of the emoluments of the directors and supervisors of the Company during the Relevant Periods are as follows:

Year ended 31 December 2019 Directors’ Salaries, and allowances Retirement Equity-settled supervisor’s and benefits Discretionary scheme share-based fees in kind bonuses contributions payment Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Executive directors Qifeng Yu (a) – 545 241 49 – 835 Tao Qin (b) – 545 240 49 – 834 Non-executive directors Jie Zhang (c) –––––– Dawei Fu (d) –––––– Guanglu Bai (e) –––––– Penghui Chen (f) –––––– Tao Peng (g) –––––– Supervisor Haishan Wang (h) – 316 125 43 – 484

– 1,406 606 141 – 2,153

Year ended 31 December 2020 Directors’ Salaries, and allowances Retirement Equity-settled supervisors’ and benefits Discretionary scheme share-based fees in kind bonuses contributions payment Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Executive directors Qifeng Yu (a) – 722 177 4 128 1,031 Tao Qin (b) – 774 453 4 – 1,231 Xiayan Yang (k) – 196 145 – 425 766 Non-executive directors Jie Zhang (c) –––––– Guanglu Bai (e) –––––– Penghui Chen (f) –––––– Tao Peng (g) –––––– David Guowei Wang (i) –––––– Supervisors Dawei Fu (d) –––––– Haishan Wang (h) – 502 150 4 650 1,306 Weitao Ye (j) ––––––

– 2,194 925 12 1,203 4,334

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Four months ended 30 April 2021 Directors’ Salaries, and allowances Retirement Equity-settled supervisors’ and benefits Discretionary scheme share-based fees in kind bonuses contributions payment Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Executive directors Qifeng Yu (a) – 267 – 18 877 1,162 Tao Qin (b) – 267 – 18 61,395 61,680 Xiayan Yang (k) – 202 10 18 1,363 1,593 Non-executive directors Jie Zhang (c) –––––– Penghui Chen (f) –––––– David Guowei Wang (i) –––––– Ye Shen (l) –––––– Supervisors Dawei Fu (d) –––––– Haishan Wang (h) – 168 9 18 229 424 Weitao Ye (j) –––––– Xiaoyong Yu (m) ––––––

– 904 19 72 63,864 64,859

Four months ended 30 April 2020 (Unaudited) Directors’ Salaries, and allowances Retirement Equity-settled supervisors’ and benefits Discretionary scheme share-based fees in kind bonuses contributions payment Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Executive directors Qifeng Yu (a) – 198 32 4 128 362 Tao Qin (b) – 198 152 4 – 354 Non-executive directors Jie Zhang (c) –––––– Penghui Chen (f) –––––– David Guowei Wang (i) –––––– Supervisors Dawei Fu (d) –––––– Haishan Wang (h) – 128 10 4 188 330 Weitao Ye (j) ––––––

– 524 194 12 316 1,046

Notes:

(a) Qifeng Yu (“Dr. Yu”) was appointed as executive director of the Company on 31 March 2015. He was key management personnel of the Group and his remuneration disclosed above included those for services rendered by him as key management personnel.

(b) Tao Qin (“Mr. Qin”) was appointed as executive director of the Company on 31 March 2015. He was key management personnel of the Group and his remuneration disclosed above included those for services rendered by him as key management personnel.

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(d) Dawei Fu was appointed as non-executive directors of the Company on 29 January 2016 and was appointed as supervisor of the Company on 15 January 2020 and resigned on 12 March 2021.

(e) Guanglu Bai was appointed as non-executive directors of the Company on 1 July 2015 and resigned on 15 January 2020.

(f) Penghui Chen was appointed as non-executive director of the Company on 1 June 2018 and resigned on 28 June 2021.

(g) Tao Peng was appointed as non-executive director of the Company on 1 June 2018 and resigned on 15 January 2020.

(h) Haishan Wang was appointed as supervisor of the Company on 17 March 2015.

(i) David Guowei Wang was appointed as non-executive directors of the Company on 15 January 2020.

(j) Weitao Ye was appointed as supervisor of the Company on 15 January 2020 and resigned on 12 March 2021.

(k) Xiayan Yang was appointed as executive director of the Company on 12 March 2021. She was key management personnel of the Group and her remuneration disclosed above included those for services rendered by her as key management personnel. She was also employee of the Group during the Relevant Periods and the Group paid emoluments to her in her capacity as the employee of the Group before her appointment as executive director of the Company.

(l) Ye Shen was appointed as non-executive director of the Company on 12 March 2021.

(m) Xiaoyong Yu was appointed as supervisor of the Company on 12 March 2021.

(n) Kai Liu was appointed as non-executive director of the Company on 28 June 2021. Jiangnan Cai, Fengmao Hua and Yufeng Zheng were appointed as independent non-executive directors of the Company on 21 July 2021 (effective from the date of the [REDACTED] of the Company).

9 INDIVIDUALS WITH HIGHEST EMOLUMENTS

For the five individuals with the highest emoluments of the Group for the years ended 31 December 2019 and 2020 and for the four months ended 30 April 2020 (Unaudited) and 2021, three, one, two and three are directors and supervisors whose emoluments are disclosed in Note 8 and the emoluments in respect of the remaining two, four, three and two individuals during the Relevant Periods are as follows:

Years ended 31 December Four months ended 30 April 2019 2020 2020 2021 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Salaries and other benefits 753 1,994 404 430 Discretionary bonuses 365 644 41 22 Retirement scheme contribution 97 13 10 27 Equity-settled share-based payment expenses – 7,623 1,734 65,667

1,215 10,274 2,189 66,146

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The emoluments of the individuals who are not director or supervisor and with the highest emoluments are within the following bands:

Years ended 31 December Four months ended 30 April 2019 2020 2020 2021 Number of Number of Number of Number of Individuals Individuals Individuals Individuals (Unaudited)

Nil to Hong Kong Dollar (“HK$”) 1,000,000 2–21 HK$1,000,001 to HK$1,500,000 –1–– HK$1,500,001 to HK$2,000,000 –21– HK$7,000,001 to HK$7,500,000 –1–– HK$78,000,001 to HK$78,500,000 –––1

10 LOSS PER SHARE

No loss per share information is presented as its inclusion, for the purpose of this report, is not considered meaningful due to the presentation of the result of the Group for the Relevant Periods on the basis of preparation and presentation as disclosed.

11 PROPERTY, PLANT AND EQUIPMENT

The Group

Office Equipment equipment, Leasehold and furniture Construction improvements machinery and fixtures in progress Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Cost: At 1 January 2019 3,571 8,337 607 – 12,515 Additions – 3,450 174 – 3,624

At 31 December 2019 and 1 January 2020 3,571 11,787 781 – 16,139 Transfer from construction in progress 7,918 1,055 800 (9,773) – Additions – 8,234 901 10,935 20,070 Disposals – (36) (204) – (240)

At 31 December 2020 and 1 January 2021 11,489 21,040 2,278 1,162 35,969 Transfer from construction in progress 542 – – (542) – Additions – 297 1,051 9,530 10,878

At 30 April 2021 12,031 21,337 3,329 10,150 46,847 ------

Accumulated depreciation and amortisation: At 1 January 2019 2,835 765 328 – 3,928 Charge for the year 631 1,069 161 – 1,861

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Office Equipment equipment, Leasehold and furniture Construction improvements machinery and fixtures in progress Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

At 31 December 2019 and 1 January 2020 3,466 1,834 489 – 5,789 Charge for the year 107 1,620 224 – 1,951 Written back on disposals – (12) (194) – (206)

At 31 December 2020 and 1 January 2021 3,573 3,442 519 – 7,534 Charge for the period 576 837 203 – 1,616

At 30 April 2021 4,149 4,279 722 – 9,150 ------

Net book value: At 31 December 2019 105 9,953 292 – 10,350

At 31 December 2020 7,916 17,598 1,759 1,162 28,435

At 30 April 2021 7,882 17,058 2,607 10,150 37,697

The Company

Office Equipment equipment, Leasehold and furniture and Construction improvements machinery fixtures in progress Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Cost: At 1 January 2019 2,278 8,006 546 – 10,830 Additions – 3,450 174 – 3,624 Disposals – (862) – – (862)

At 31 December 2019 and 1 January 2020 2,278 10,594 720 – 13,592 Transfer from construction in progress 7,918 1,055 800 (9,773) – Additions – 8,235 901 10,935 20,071 Disposals – (36) (204) – (240)

At 31 December 2020 and 1 January 2021 10,196 19,848 2,217 1,162 33,423 Additions – 296 774 2,916 3,986

At 30 April 2021 10,196 20,144 2,991 4,078 37,409 ------

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Office Equipment equipment, Leasehold and furniture and Construction improvements machinery fixtures in progress Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Accumulated depreciation and amortisation: At 1 January 2019 2,278 759 297 – 3,334 Charge for the year – 1,037 142 – 1,179 Written back on disposals – (218) – – (218)

At 31 December 2019 and 1 January 2020 2,278 1,578 439 – 4,295 Charge for the year 2 1,528 216 – 1,746 Written back on disposals – (12) (194) – (206)

At 31 December 2020 and 1 January 2021 2,280 3,094 461 – 5,835 Charge for the period 556 804 197 – 1,557

At 30 April 2021 2,836 3,898 658 – 7,392 ------

Net book value: At 31 December 2019 – 9,016 281 – 9,297

At 31 December 2020 7,916 16,754 1,756 1,162 27,588

At 30 April 2021 7,360 16,246 2,333 4,078 30,017

12 PREPAYMENTS, OTHER RECEIVABLES AND OTHER NON-CURRENT ASSETS

The Group

31 December 31 December 30 April 2019 2020 2021 RMB’000 RMB’000 RMB’000

Other non-current assets Prepayments for property, plant and equipment 285 3,317 6,242 Deposits 125 1,454 1,482 Value-added tax recoverable (Note) 2,988 5,630 5,462

3,398 10,401 13,186

Prepayments and other receivables Prepayments 5,442 11,290 14,810 Other debtors and deposits 165 96 227

5,607 11,386 15,037

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The Company

31 December 31 December 30 April 2019 2020 2021 RMB’000 RMB’000 RMB’000

Other non-current assets Prepayments for property, plant and equipment 285 3,317 4,379 Deposits 125 1,095 1,114 Value-added tax recoverable (Note) 2,406 4,964 4,248

2,816 9,376 9,741

Prepayments and other receivables Prepayments 4,706 11,062 11,829 Other debtors and deposits 56 288 420

4,762 11,350 12,249

Note: As at 31 December 2019 and 2020 and 30 April 2021, value-added tax recoverable was classified as other non-current assets since they are expected to be deducted from future value-added tax payables arising on the Group’s revenue which are not expected to be generated within the next 12 months from the end of each of the reporting period.

All the current prepayments and other receivables are expected to be recovered or recognised as expenses within one year.

13 FINANCIAL ASSETS AT FVTPL

The Group and the Company

31 December 31 December 30 April 2019 2020 2021 RMB’000 RMB’000 RMB’000

Wealth management products and structured deposits 11,771 7,223 125,335

The Group and the Company’s wealth management products and structured deposits were purchased from banks in the PRC during the Relevant Periods.

14 CASH AND CASH EQUIVALENTS AND OTHER CASH FLOW INFORMATION

(a) Cash and cash equivalents

The Group

31 December 31 December 30 April 2019 2020 2021 RMB’000 RMB’000 RMB’000

Cash at bank 207 77,718 519,433

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The Company

31 December 31 December 30 April 2019 2020 2021 RMB’000 RMB’000 RMB’000

Cash at bank 88 73,232 517,662

(b) Reconciliation of liabilities arising from financing activities

The table below details changes in the Group’s liabilities from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are liabilities for which cash flows were, or future cash flows will be, classified in the Group’s consolidated cash flow statements as cash flows from financing activities.

Financial Interest- instruments bearing issued to Lease borrowings investors liabilities Total RMB’000 RMB’000 RMB’000 RMB’000 (Note 15) (Note 18) (Note 17(b))

At 1 January 2019 – – 5,296 5,296 ------

Changes from financing cash flows: Proceeds from interest-bearing borrowings 3,734 – – 3,734 Repayments of interest-bearing borrowings (2,000) – – (2,000) Interests paid for interest-bearing borrowings (36) – – (36) Payments for capital element of lease liabilities – – (1,330) (1,330) Payments for interest element of lease liabilities – – (410) (410)

Total changes from financing cash flows 1,698 – (1,740) (42) ------

Other changes: Interest expenses 36 – 410 446 Increase in lease liabilities from entering into new leases during the year – – 15,274 15,274

36 – 15,684 15,720 ------

At 31 December 2019 1,734 – 19,240 20,974

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Financial Interest- instruments bearing issued to Lease borrowings investors liabilities Total RMB’000 RMB’000 RMB’000 RMB’000 (Note 15) (Note 18) (Note 17(b))

At 31 December 2019 1,734 – 19,240 20,974 ------

Changes from financing cash flows: Proceeds from interest-bearing borrowings 7,861 – – 7,861 Repayments of interest-bearing borrowings (6,734) – – (6,734) Interests paid for interest-bearing borrowings (218) – – (218) Payments for capital element of lease liabilities – – (3,111) (3,111) Payments for interest element of lease liabilities – – (1,055) (1,055)

Total changes from financing cash flows 909 – (4,166) (3,257) ------

Other changes: Interest expenses 218 25,004 1,055 26,277 Increase in lease liabilities from entering into new leases during the year – – 10,059 10,059 Termination of lease – – (365) (365) Recognition of financial instruments with preferred rights – 342,965 – 342,965

218 367,969 10,749 378,936 ------

At 31 December 2020 2,861 367,969 25,823 396,653

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Financial Interest- instruments bearing issued to Lease borrowings investors liabilities Total RMB’000 RMB’000 RMB’000 RMB’000 (Note 15) (Note 18) (Note 17(b))

At 31 December 2020 2,861 367,969 25,823 396,653 ------

Changes from financing cash flows: Repayments of interest-bearing borrowings (2,861) – – (2,861) Interests paid for interest-bearing borrowings (33) – – (33) Payments for capital element of lease liabilities – – (1,405) (1,405) Payments for interest element of lease liabilities – – (391) (391)

Total changes from financing cash flows (2,894) – (1,796) (4,690) ------

Other changes: Interest expenses 33 10,592 391 11,016 Recognition of financial instruments with preferred rights – 847,687 – 847,687

33 858,279 391 858,703 ------

At 30 April 2021 – 1,226,248 24,418 1,250,666

Years ended 31 December Four months ended 30 April 2019 2020 2020 2021 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Within operating cash flows 167 144 65 26 Within financing cash flows 1,740 4,166 1,651 1,796

1,907 4,310 1,716 1,822

All these amounts relate to the lease rentals paid.

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15 INTEREST-BEARING BORROWINGS

As of the end of each reporting period, the interest-bearing borrowings were repayable for the Group and the Company as follow:

31 December 31 December 30 April 2019 2020 2021 RMB’000 RMB’000 RMB’000

Unsecured bank loans, within 1 year on demand 1,734 2,861 –

Dr. Yu provided guarantees to the Company in respect of certain bank loans totalling RMB3,096,000 during 2019, of which a bank loan of RMB1,734,000 was outstanding as at 31 December 2019 and was fully repaid in 2020.

16 TRADE AND OTHER PAYABLES

The Group

31 December 31 December 30 April 2019 2020 2021 RMB’000 RMB’000 RMB’000

Trade payables (i) 1,124 1,107 2,037 Payroll payables 2,986 6,092 3,698 Other payables and accrued charges 3,398 6,683 20,359

7,508 13,882 26,094

(i) As of the end of the reporting period, the ageing analysis of the trade payables based on invoice date is as follows:

31 December 31 December 30 April 2019 2020 2021 RMB’000 RMB’000 RMB’000

Within 1 month 435 223 715 Over 1 month but within 3 months 647 546 1,116 Over 3 months but within 6 months 42 295 184 Over 6 months but within 1 year – 35 4 Over 1 year – 8 18

1,124 1,107 2,037

The Company

31 December 31 December 30 April 2019 2020 2021 RMB’000 RMB’000 RMB’000

Trade payables (i) 1,124 1,107 2,035 Payroll payables 2,970 5,954 3,487 Other payables and accruals 2,723 5,958 17,562

6,817 13,019 23,084

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(i) As of the end of the reporting period, the ageing analysis of the trade payables based on invoice date is as follows:

31 December 31 December 30 April 2019 2020 2021 RMB’000 RMB’000 RMB’000

Within 1 month 435 223 713 Over 1 month but within 3 months 647 546 1,116 Over 3 months but within 6 months 42 295 184 Over 6 months but within 1 year – 35 4 Over 1 year – 8 18

1,124 1,107 2,035

All of the above balances classified as current liabilities are expected to be settled within one year.

17 LEASES

(a) Right-of-use assets

The analysis of the net book value of right-of-use assets by class of underlying asset is as follows:

The Group

Buildings RMB’000

At 1 January 2019 5,025 Additions 15,274 Charge for the year (1,942)

At 31 December 2019 and 1 January 2020 18,357 Additions 10,059 Charge for the year (4,459) Effects of termination of leases (358)

At 31 December 2020 and 1 January 2021 23,599 Charge for the period (1,723)

At 30 April 2021 21,876

The Company

Buildings RMB’000

At 1 January 2019 4,728 Additions 15,275 Charge for the year (1,688)

At 31 December 2019 and 1 January 2020 18,315 Additions 3,708 Charge for the year (3,871) Effects of termination of leases (358)

At 31 December 2020 and 1 January 2021 17,794 Charge for the period (1,320)

At 30 April 2021 16,474

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The analysis of expense items in relation to leases recognised in profit or loss is as follows:

Years ended 31 December Four months ended 30 April 2019 2020 2020 2021 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Depreciation charge of right-of-use assets by class of underlying asset: Properties leased for own use 1,942 4,459 1,399 1,723

Interest on lease liabilities 410 1,055 328 391 Expenses relating to short-term leases 167 144 65 26

Details of total cash outflow for leases and the maturity analysis of lease liabilities and the future cash outflows arising from leases that are not yet commenced are set out in Notes 14(b) and 17(b), respectively.

The Group leases office buildings under leases expiring in no more than five years. Some leases include an option to renew the lease when all terms are renegotiated. None of the leases includes variable lease payments.

(b) Lease liabilities

The Group

The following table shows the remaining contractual maturities of the Group’s lease liabilities at the end of each of the reporting period.

31 December 2019 31 December 2020 30 April 2020 Present Present Present value of the Total value of the Total value of the Total minimum minimum minimum minimum minimum minimum lease lease lease lease lease lease payments payments payments payments payments payments RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Within 1 year 3,535 4,372 5,403 6,505 6,323 7,349 ------

After 1 year but within 2 years 3,131 3,816 4,813 5,679 4,957 5,745 After 2 years but within 5 years 10,346 11,446 15,607 16,699 13,138 13,990 After 5 years 2,228 2,265––––

15,705 17,527 20,420 22,378 18,095 19,735 ------

19,240 21,899 25,823 28,883 24,418 27,084

Less: Total future interest expenses (2,659) (3,060) (2,666)

Present value of lease liabilities 19,240 25,823 24,418

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The Company

The following table shows the remaining contractual maturities of the Company’s lease liabilities at the end of each of the reporting period.

31 December 2019 31 December 2020 30 April 2021 Present Present Present value of the Total value of the Total value of the Total minimum minimum minimum minimum minimum minimum lease lease lease lease lease lease payments payments payments payments payments payments RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Within 1 year 3,465 4,302 4,378 5,223 5,526 6,312 ------

After 1 year but within 2 years 3,131 3,816 3,673 4,339 3,799 4,404 After 2 years but within 5 years 10,346 11,446 11,902 12,727 9,929 10,572 After 5 years 2,228 2,265––––

15,705 17,527 15,575 17,066 13,728 14,976 ------

19,170 21,829 19,953 22,289 19,254 21,288

Less: Total future interest expenses (2,659) (2,336) (2,034)

Present value of lease liabilities 19,170 19,953 19,254

During 2020, the Group and the Company received rent concessions at the amount of RMB988,000 and RMB891,000, respectively on fixed payments.

18 FINANCIAL INSTRUMENTS ISSUED TO INVESTORS

In 2016, the Company entered into agreements with an investor (the “Series Pre-A Investor”), pursuant to which, the Series Pre-A Investor agreed to inject a total of RMB25 million in the Company as a consideration for the subscription of the Company’s newly issued paid-in capital of RMB896,100.

In 2018, the Company entered into agreements with several investors (the “Series A Investors”), and the existing shareholders of the Company pursuant to which, the Series A Investors agreed to (i) inject a total of RMB70 million in the Company as a consideration for the subscription of the Company’s newly issued paid-in capital of RMB865,900; and (ii) acquire paid-in capital of RMB98,900 from an existing shareholder of the Company.

In December 2019 and February 2020, the Company entered into agreements with several investors and the existing shareholders, (the “Series B Investors”), pursuant to which, the Series B Investors agreed to (i) inject a total of RMB180 million in the Company as a consideration for the subscription of the Company’s newly issued paid-in capital of RMB1,002,500; and (ii) acquire paid-in capital of RMB300,800 from several existing shareholders of the Company.

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In March 2021, the Company entered into agreements with several investors (the “Series C Investors”) and the existing shareholders, pursuant to which, the Series C Investors agreed to (i) inject a total of RMB619 million in the Company as a consideration for the subscription of the Company’s newly issued paid-in capital of RMB990,300; and (ii) acquire paid-in capital of RMB403,100 from several existing shareholders of the Company.

In accordance with these agreements, the Series Pre-A Investor, the Series A Investors, the Series B Investors and the Series C Investors (collectively, the “Investors with Preferred Rights”) were granted certain preferred rights upon the above subscriptions, including the redemption rights upon certain specified contingent events and anti-dilution rights. Significant terms of these preferred rights that impacted the accounting treatment of the Group and the Company are outlined below:

Investors’ redemption rights upon occurrence of contingent events

The Series C Investors had a right (effective from 2021) to require the Company to redeem their investments, if (i) [REDACTED] or buyout of the Company does not occur before 31 December 2025; or (ii) the Company commits a major criminal violation and agreement violation and has a substantial adverse impact on the progress of [REDACTED]; or (iii) the Company receives the redemption requests from any other investors with preferred rights.

The Series B Investors had a right (effective from 2020) to require the Company to redeem their investments, if (i) [REDACTED] or buyout of the Company does not occur before 3 April 2025; or (ii) the Company receives the redemption requests from the holders of other investors with preferred rights with the prior written consent of the majority of the Series A Investor and the Series B Investors.

The Series A Investor had a right (effective from 2020) to require the Company to redeem its investment, if [REDACTED] or buyout of the Company does not occur before 3 April 2025.

The redemption amounts upon the occurrence of above redemption events were the sum amount of: (i) original investment amount plus an annual simple rate of 10% of the original investment amount for a period of time commencing from the investment payment date to the settlement date; and (ii) any accrued and unpaid dividends if any.

Other than above, the Company was obliged to buy back the shares from these Investors upon occurrence of the specified deemed liquidation events, such as change of control of the Company, at the following redemption amounts: (i) the Series Pre-A Investor and the Series A Investors shall be entitled to receive an amount equals to the original investment amount; and (ii) the Series B Investors and the Series C Investors shall be entitled to receive an amount equals to the original investment amount plus an annual simple rate of 10% of the original investment amount for a period of time commencing from the investment payment date to the settlement date.

Anti-dilution right

If the Company increases its paid-in capital at a price lower than the price paid by the Investors with Preferred Rights on a per paid-in capital basis, the Investors with Preferred Rights would have a right to require the Company to issue some new paid-in capital for nil consideration (or nominal consideration) to the investors, so that the total amount paid by the investors divided by the total amount of paid-in capital obtained is equal to the price per paid-in capital in the new issuance.

Presentation and classification

As the Company did not have unconditional right to avoid the occurrence of the specified contingent events that would trigger the redemption rights, the Company recognised the financial liabilities that were initially measured at the highest present value of those redemption amounts that could be payable upon occurrence of these events, by reclassifying from equity in accordance with the accounting policies as set out in Note 2(m). These financial liabilities were subsequently measured at amortised cost with interests included in the finance costs.

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The movements of the abovementioned financial instruments issued to investors of the Group and the Company during the Relevant Periods are as follows:

As at As at As at 31 December 31 December 30 April 2019 2020 2021 RMB’000 RMB’000 RMB’000

At the beginning of the year/period – – 367,969 Recognition of financial instruments issued to investors – 342,965 847,687 Interest charges (Note 6(a)) – 25,004 10,592

At the end of the year/period – 367,969 1,226,248

In May 2021, the Company entered into a supplementary agreement with the existing investors, pursuant to which, the Investors with Preferred Rights agreed to terminate the redemption features upon the contingent triggering events that were without the control of the Company and the redemption rights. Accordingly, the directors of the Company considered that the financial liabilities recognised for the redemption obligations under the preferred rights were derecognised upon the termination of the terms and shall be reclassified from financial liabilities to equity thereafter.

19 EQUITY-SETTLED SHARE-BASED PAYMENT TRANSACTIONS

(a) Pre-[REDACTED] restricted share units scheme

The Company adopted a restricted share units (the “RSUs”) scheme (the “RSU Scheme”) to retain the eligible directors and employees of the Company for the continual operation and development of the Group. The participant of the RSU Scheme invests in the Company by way of (i) subscribing for newly issued paid-in capital/share of the Company; or (ii) acquiring paid-in capital/share of the Company from the existing shareholder, through certain employee shareholding platforms.

(i) The terms, conditions and movement of the RSUs is as follows:

Set out below is the movement in amount of the underlying paid-in capital of the Company under the RSU Scheme (before the Capitalisation Issue as defined in Note 25(a)):

31 December 31 December 30 April 2019 2020 2021 RMB’000 RMB’000 RMB’000

Underlying paid-in capital of the Company: Outstanding at the beginning of the year/period – 105 354 Granted during the year/period 105 251 414 Vested during the year/period – (2) (384)

Outstanding at the end of the year/period 105 354 384

The subscription price of the RSUs granted during the Relevant Periods ranged from RMB1.00 to RMB46.68 per paid-in capital of the Company (before the Capitalisation Issue).

Up to 30 April 2021, the total RSUs granted by the Company represented paid-in capital of the Company of RMB769,965 (before the Capitalisation Issue) totally, of which,

(a) the RSUs representing the paid-in capital of the Company of RMB383,559 (before the Capitalisation Issue), with certain service conditions and non-market performance conditions. These employees have to transfer out their equity interests to limited partners nominated by the general partners, or to general partners themselves of the employee shareholding platforms, if their employments with the Group were terminated within the vesting period or certain conditions as specified in the agreement; and

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(b) the remaining RSUs representing the paid-in capital of the Company of RMB386,406 (before the Capitalisation Issue), did not have any service condition or performance condition and were vested immediately upon the grants.

(ii) Fair value of RSUs and assumptions:

The RSUs on each grant date were valued, being the difference between the fair value of the paid-in capital/share of the Company on the grant date and the considerations paid by the employees.

Back-solve method was used to determine the underlying equity fair value of the Company and the equity allocation model was used to determine the fair value of the underlying paid-in capital/share. Key assumptions adopted in determining the fair value are as follows (before the Capitalisation Issue):

Granted in 2019 Granted in 2020 Granted in 2021

Fair value of the RSUs per underlying RMB280.69/ paid-in capital RMB67.24 RMB73.02 RMB326.38 Fair value of the underlying paid-in capital RMB74.02 RMB74.02 RMB327.38 Risk-free interest rate 2.96% 2.96% 3.06% Expected volatility 36.41% 36.41% 38.34% Expected dividend yield 0.00% 0.00% 0.00%

During the years ended 31 December 2019 and 2020 and the four months ended 30 April 2020 (Unaudited) and 2021, expenses in relation to the RSUs of RMBnil, RMB8,509,000, RMB2,330,000 (Unaudited) and RMB129,665,000 were charged to profit or loss, respectively.

(b) Pre-[REDACTED] Share option scheme

The Company adopted a share option scheme (the “Pre-[REDACTED] Share Option Scheme”), pursuant to which, the holder of the share option has right to acquire certain equity interest in the employee shareholding platforms, which enables the holder has indirect equity interest in the Company.

(i) The terms, conditions and movement of the share options is as follows (before the Capitalisation Issue):

31 December 2019 31 December 2020 30 April 2021 Underlying Underlying Underlying Weighted paid-in Weighted paid-in Weighted paid-in average capital average capital average capital exercise of the exercise of the exercise of the price Company price Company price Company RMB RMB’000 RMB RMB’000 RMB RMB’000

Outstanding at the beginning of the year/period ––––66.77 141 Granted during the year/period – – 66.77 141 96.96 14 Forfeited during the year/period ––––(96.96) (2)

Outstanding and exercisable at the end of the year/period – – 66.77 141 71.67 153

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As at 31 December 2020 and 30 April 2021, the weighted average remaining contractual life for the share options granted was 9.57 and 9.29 years, respectively. The contractual life of above share options is ten years.

Subsequent to 30 April 2021, the Group and the grantees entered into the supplemental agreements, pursuant to which, the outstanding share options were converted to the RSUs of the Company with the similar terms and conditions as before.

(ii) Fair value of share options and assumption:

Back-solve method was used to determine the underlying equity fair value of the Company. Equity allocation model to determine the fair value of the underlying paid-in capital/share. Binomial tree model was used to determine the fair value of the abovementioned share options. Key assumptions adopted in determining the fair value are as follows (before the Capitalisation Issue):

Granted in 2020 Granted in 2021

Fair value of the share option per underlying paid-in capital RMB37.78 – RMB284.08 RMB239.42 Fair value of the underlying paid-in capital RMB74.02 – RMB327.38 RMB327.38 Exercise price per underlying paid-in capital RMB46.68 – RMB96.96 RMB96.96 Expected volatility 37.72% – 37.89% 38.10% Option life 10 years 10 years Risk-free interest rate 2.65% – 3.18% 3.18% Expected dividend yield 0.00% 0.00%

During the years ended 31 December 2019 and 2020 and the four months ended 30 April 2020 (Unaudited) and 2021, expenses in relation to the Pre-[REDACTED] Share Option Scheme of RMBnil, RMB3,125,000, RMBnil (Unaudited) and RMB4,133,000 were charged to profit or loss, respectively.

(c) Equity-settled share-based payment expenses recognised in the consolidated statements of profit or loss and other comprehensive income during the Relevant Periods:

Years ended 31 December Four months ended 30 April 2019 2020 2020 2021 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Research and development expenses – 4,343 772 59,742 Administrative expenses – 7,291 1,558 74,056

– 11,634 2,330 133,798

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20 CAPITAL, RESERVES AND DIVIDENDS

(a) Movements in components of equity

The reconciliation between the opening and closing balances of each component of the Group’s consolidated equity is set out in the consolidated statements of changes in equity. Details of the changes in the Company’s equity between the beginning and the end of the year are set out below.

Paid-in Capital Accumulated Total equity/ Note capital reserve Other reserve losses (deficit) RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Balance at 1 January 2019 3,177 96,870 – (50,635) 49,412 Changes in equity for 2019: Total comprehensive income – – – (31,602) (31,602) Capital contributions by investors 20(b) 1,585–––1,585

Balance at 31 December 2019 and 1 January 2020 4,762 96,870 – (82,237) 19,395 Changes in equity for 2020: Total comprehensive income – – – (113,620) (113,620) Capital contributions by investors 20(b) 1,253 179,104 – – 180,357 Transaction costs directly attributable to the capital contributions – (5,985) – – (5,985) Recognition of financial instruments with preferred rights 18 – – (342,965) – (342,965) Equity-settled share-based transactions 19(c) – 11,634 – – 11,634

Balance at 31 December 2020 and 1 January 2021 6,015 281,623 (342,965) (195,857) (251,184) Changes in equity for the four months ended 30 April 2021: Total comprehensive income – – – (183,897) (183,897) Capital contributions by investors 20(b) 1,374 618,128 – – 619,502 Transaction costs directly attributable to the capital contributions – (12,559) – – (12,559) Recognition of financial instruments with preferred rights 18 – – (847,687) – (847,687) Equity-settled share-based transactions 19(c) – 133,798 – – 133,798

Balance at 30 April 2021 7,389 1,020,990 (1,190,652) (379,754) (542,027)

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(b) Paid-in Capital

Paid-in capital RMB’000

Balance at 1 January 2019 3,177 Capital contributions by investors (i) 1,585

Balance at 31 December 2019 and 1 January 2020 4,762 Capital contributions by investors (ii) 1,253

Balance at 31 December 2020 6,015 Capital contributions by investors (iii) 1,374

Balance at 30 April 2021 7,389

Notes:

(i) For the year ended 31 December 2019, Dr. Yu and Shanghai NewMed Enterprise Management Consulting Partnership (Limited Partnership)* 上海紐脈企業管理諮詢合夥企業(有限合夥) (“NewMed Enterprise Management”), an employee shareholding platform injected RMB697,100 and RMB887,500 in the Company for the subscription of the Company’s newly issued paid-in capital of RMB697,100 and RMB887,500, respectively.

(ii) For the year ended 31 December 2020, the Series B Investors completed the injections totalling RMB180,000,000 in the Company for the subscription of the Company’s newly issued paid-in capital of RMB1,002,500 (see Note 18).

In addition, Anji NewMed Enterprise Management Partnership (Limited Partnership)* 安吉紐脈企業管理合夥企業(有限合夥), an employee shareholding platform injected RMB250,600 in the Company for the subscription of the Company’s newly issued paid-in capital of RMB250,600.

(iii) For the four months ended 30 April 2021, the Series C Investors completed the injections totalling RMB619,000,000 in the Company for the subscription of the Company’s newly issued paid-in capital of RMB990,300 (see Note 18).

In addition, Jiaxing Fengtao Enterprise Management Partnership (Limited Partnership)* 嘉興峰滔企業管理合夥企業(有限合夥), an employee shareholding platform injected RMB383,900 in the Company for the subscription of the Company’s newly issued paid-in capital of RMB383,900.

The other reserve primarily comprises the recognition of financial instruments issued to investors as stipulated in Note 18.

(d) Dividends

No dividends were paid or declared by the Company or any of its subsidiaries during the Relevant Periods.

(e) Capital management

The Group’s objectives in the aspect of managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Group may return capital to shareholders or issue new shares. The Group is not subject to any externally imposed capital requirements. No changes were made in the objectives, policies or processes for managing capital as at the end of each of the Relevant Periods.

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21 FINANCIAL RISK MANAGEMENT AND FAIR VALUES OF FINANCIAL INSTRUMENTS

Exposure to credit, liquidity, interest rate and currency risks arises in the normal course of the Group’s business. The Group’s exposure to these risks and the financial risk management policies and practices used by the Group to manage these risks are described below.

(a) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Group. The Group’s credit risk is primarily attributable to other receivables. The Group’s exposure to credit risk arising from cash and cash equivalents is limited because the counterparties are state-owned banks or reputable commercial banks for which the Group considers to have low credit risk. Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis.

Management has assessed that during the Relevant Periods, 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. Management of the Company expect the occurrence of losses from non-performance by the counterparties of other receivables was remote and loss allowance provision for other receivables was immaterial.

(b) Liquidity risk

The Group’s policy is to regularly monitor its liquidity requirements to ensure that it maintains sufficient reserves of cash and adequate committed lines of funding from major financial institutions to meet its liquidity requirements in the short and longer term.

The following tables show the remaining contractual maturities at the end of each reporting period of the Group’s non-derivative financial liabilities, which are based on contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on rates current at the end of each reporting period) and the earliest date the Group can be required to pay:

As at 31 December 2019 Contractual undiscounted cash outflow More than More than Within 1 year but 2 years but 1 year or less than less than More than Carrying on demand 2 years 5 years 5 years Total amount RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Interest-bearing borrowings 1,792–––1,792 1,734 Trade and other payables 7,508–––7,508 7,508 Lease liabilities 4,372 3,816 11,446 2,265 21,899 19,240

13,672 3,816 11,446 2,265 31,199 28,482

As at 31 December 2020 Contractual undiscounted cash outflow More than More than Within 1 year but 2 years but 1 year or less than less than More than Carrying on demand 2 years 5 years 5 years Total amount RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Interest-bearing borrowings 2,898–––2,898 2,861 Trade and other payables 13,882 – – – 13,882 13,882 Lease liabilities 6,505 5,679 16,699 – 28,883 25,823

23,285 5,679 16,699 – 45,663 42,566

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As at 30 April 2021 Contractual undiscounted cash outflow More than More than Within 1 year but 2 years but 1 year or less than less than More than Carrying on demand 2 years 5 years 5 years Total amount RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Trade and other payables 26,094 – – – 26,094 26,094 Lease liabilities 7,349 5,745 13,990 – 27,084 24,418

33,443 5,745 13,990 – 53,178 50,512

As at 31 December 2020 and 30 April 2021, the financial instruments issued to investors of RMB367,969,000 and RMB1,226,248,000, respectively, represented the Company’s obligations to repurchase its own equity interests upon the occurrence of certain events, which are set out in Note 18. In May 2021, such financial instruments issued to investors were reclassified into equity.

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The Group’s interest rate risk arises primarily from cash at banks, deposits with banks and inherent-bearing borrowings. The Group’s interest-bearing financial instruments at variable rates as at 31 December 2019 and 2020 and 30 April 2021 are primarily the cash at bank except for fixed deposits, and the cash flow interest risk arising from the change of market interest rate on these balances is not considered significant. The Group’s exposure to interest rate risk is not significant.

The Group’s interest rate profile as monitored by management is set out below.

31 December 2019 31 December 2020 30 April 2021 Effective Effective Effective interest rate Amount interest rate Amount interest rate Amount RMB’000 RMB’000 RMB’000

Net fixed rate instruments: Pledged bank deposits – – 1.30% 300 1.30% 300 Interest-bearing borrowings 5.00% (1,734) 3.85% (2,861) – – Lease liabilities 4.75%-4.90% (19,240) 4.75%-4.90% (25,823) 4.75%-4.90% (24,418) Financial instruments to investors – – 7.90%-10.00% (367,969) 7.90%-10.00% (1,226,248)

(20,974) (396,353) (1,250,366)

Net variable rate instruments: Cash at banks 0.30% 207 0.30% 77,718 0.30% 519,433

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(d) Currency risk

The Group is exposed to currency risk primarily from purchases which give rise to payables that are denominated in a foreign currency, i.e. a currency other than the functional currency of the operations to which the transactions relate. The currencies giving rise to this risk is the United State dollars (“USD”).

(i) Exposure to currency risk

The following table details the Group’s exposure at the end of the reporting period to currency risk arising from recognised assets or liabilities denominated in a currency other than the functional currency of the entity to which they relate. For presentation purposes, the amounts of the exposure are shown in RMB, translated using the spot rate at the year/period-end date. Differences resulting from the translation of the financial statements of the entities into the Group’s presentation currency are excluded.

Exposure to foreign currencies (expressed in RMB) 31 December 31 December 30 April 2019 2020 2021 USD USD USD RMB’000 RMB’000 RMB’000

Cash and cash equivalents – 60,909 163,438 Trade and other payables (232) – (129)

Net exposure arising from recognised (liabilities)/assets (232) 60,909 163,309

(ii) Sensitivity analysis

The following table indicates the instantaneous change in the Group’s loss after tax (and accumulative losses) that would arise if foreign exchange rates to which the Group has significant exposure at the end of each of the reporting period had changed at that date, assuming all other risk variables remained constant.

Years ended 31 December Four months ended 30 April 2019 2020 2021 Increase/ Increase/ Increase/ (decrease) Effect on loss (decrease) Effect on loss (decrease) Effect on loss in foreign after tax and in foreign after tax and in foreign after tax and exchange accumulated exchange accumulated exchange accumulated rates losses rates losses rates losses RMB’000 RMB’000 RMB’000

USD (against RMB) 3% 7 3% (1,827) 3% (4,899) (3%) (7) (3%) 1,827 (3%) 4,899

Results of the analysis as presented in the above table represent an aggregation of the instantaneous effects on each of the Group entities’ loss after tax and equity measured in the respective functional currencies, translated into RMB at the exchange rate ruling at the end of each of the reporting period for presentation purposes.

The sensitivity analysis assumes that the change in foreign exchange rates had been applied to re-measure those financial instruments held by the Group which expose the Group to foreign currency risk at the end of each of the reporting period. The analysis has been performed on the same basis for the Relevant Periods.

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(e) Fair value measurement

(i) Financial assets and liabilities measured at fair value

Fair value hierarchy

The following table presents the fair value of the Group’s financial instruments measured at the end of the reporting period on a recurring basis, categorised into the three-level fair value hierarchy as defined in HKFRS 13, Fair value measurement. The level into which a fair value measurement is classified is determined with reference to the observability and significance of the inputs used in the valuation technique as follows:

– Level 1 valuations: Fair value measured using only Level 1 inputs i.e. unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date – Level 2 valuations: Fair value measured using Level 2 inputs i.e. observable inputs which fail to meet Level 1, and not using significant unobservable inputs. Unobservable inputs are inputs for which market data are not available – Level 3 valuations: Fair value measured using significant unobservable inputs

Fair value measurements as at 31 December 2019 categorised into Fair value at 31 December 2019 Level 1 Level 2 Level 3 RMB’000 RMB’000 RMB’000 RMB’000

Recurring fair value measurement Financial assets at FVTPL: – Wealth management products 11,771 – – 11,771

Fair value measurements as at 31 December 2020 categorised into Fair value at 31 December 2020 Level 1 Level 2 Level 3 RMB’000 RMB’000 RMB’000 RMB’000

Recurring fair value measurement Financial assets at FVTPL: – Wealth management products 7,223 – – 7,223

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Fair value measurements as at 30 April 2021 categorised into Fair value at 30 April 2021 Level 1 Level 2 Level 3 RMB’000 RMB’000 RMB’000 RMB’000

Recurring fair value measurement Financial assets at FVTPL: – Wealth management products and structured deposits 125,335 – – 125,335

During the Relevant Periods, there were no transfers between Level 1 and Level 2, or transfers into or out of Level 3. The Group’s policy is to recognise transfers between levels of fair value hierarchy as at the end of each of the reporting period in which they occur.

Information about Level 3 fair value measurements

The fair value of the wealth management products and structured deposits is determined by using the discounted cash flow method. Main unobservable input used by the Group is the expected rate of return of the wealth management products and structured deposits. At 31 December 2019 and 2020 and 30 April 2021, if the expected rate of return of wealth management products and structured deposits held by the Group had been one percentage point higher/lower, the Group’s loss for the year/period and accumulated losses would have been RMB23,000, RMB10,000 and RMB50,000 lower/higher, respectively.

(ii) Fair value of financial assets and liabilities carried at other than fair value

The carrying amounts of the Group’s financial instruments carried at cost or amortised cost were not materially different from their fair values as at 31 December 2019 and 2020 and 30 April 2021.

22 COMMITMENTS

Capital commitments in respect of property, plant and equipment at 31 December 2019 and 2020 and 30 April 2021 not provided for in the financial statements were as follows:

31 December 31 December 30 April 2019 2020 2021 RMB’000 RMB’000 RMB’000

Contracted for 5,630 1,979 1,136

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23 MATERIAL RELATED PARTY TRANSACTIONS

(a) Key management personnel and an employee’s remuneration

Remuneration for key management personnel and an employee (who is the spouse of a director) of the Group, including amounts paid to the Company’s directors as disclosed in Note 8 and certain of the highest paid individuals as disclosed in Note 9, is as follows:

Years ended 31 December Four months ended 30 April 2019 2020 2020 2021 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Salaries and other benefits 1,353 1,820 462 894 Discretionary bonuses 637 775 188 28 Equity-settled share-based payment expenses – 5,975 1,486 128,904

1,990 8,570 2,136 129,826

(b) Related party transactions

During the Relevant Periods, the directors are of the view that the following company and individuals are related parties:

Name of the related party Relationship

NewMed Enterprise Management Shareholder of the Company Dr. Yu Chairman and director of the Company Mr. Qin Director of the Company Ms. Li Li An employee of the Company and the spouse of Dr. Yu

During the Relevant Periods, the Group entered into the following material related party transactions:

Years ended 31 December Four months ended 30 April 2019 2020 2020 2021 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Payment on behalf of NewMed Enterprise Management –11– Advances to the directors of the Company 1,150 1,000 1,000 – Refund of advances to the directors of the Company 1,150 1,000 – –

Dr. Yu provided guarantees to the Company in respect of certain bank loans as detailed in Note 15.

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The outstanding balances arising from the above transactions as at the end of each of the Relevant Periods are as follows:

31 December 31 December 30 April 2019 2020 2021 RMB’000 RMB’000 RMB’000

Amounts due from related parties NewMed Enterprise Management – 1 1 A director of the Company – – –

24 POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE FOR THE RELEVANT PERIODS

Up to the date of issue of the Historical Financial Information, the HKICPA has issued a number of amendments and a new standard, HKFRS 17, Insurance contracts, which are not yet effective for the Relevant Periods and which have not been adopted in the Historical Financial Information. These developments include the following which may be relevant to the Group.

Effective for accounting periods beginning on or after

Annual Improvements to HKFRS Standards 2018 – 2020 1 January 2022 Amendments to HKFRS 3, Reference to the Conceptual Framework 1 January 2022 Amendments to HKAS 16, Property, plant and equipment: proceeds before 1 January 2022 intended use Amendments to HKAS 37, Onerous contracts – cost of fulfilling a contract 1 January 2022 Amendments to HKAS 1, Classification of liabilities as current or non-current 1 January 2023 HKFRS 17, Insurance contracts and Amendments to HKFRS 17, Insurance 1 January 2023 contracts Amendments to HKAS 1 and HKFRS Practice Statement 2, Disclosure of 1 January 2023 Accounting Policies Amendments to HKAS 8, Definition of Accounting Estimates 1 January 2023 Amendments to HKAS 12, Deferred Tax related to Assets and Liabilities arising 1 January 2023 from a Single Transaction Amendments to HKFRS 4, Extension of the temporary exemption from applying 1 January 2023 HKFRS 9 Amendments to HKFRS 10 and HKAS 28, Sale or contribution of assets between To be determined* an investor and its associate or joint venture

* The effective date for these amendments was deferred indefinitely. Early adoption continues to be permitted.

The Group is in the process of making an assessment of what the impact of these developments is expected to be in the period of initial application. So far it has concluded that the adoption of them is unlikely to have a significant impact on the consolidated financial statements.

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25 SUBSEQUENT EVENTS

(a) Capitalisation issue and share increase

As disclosed in Note 1, the Company was converted into a joint stock limited company under the Company Law of the PRC on 8 July 2021. The net assets of the Company under the PRC GAAP as of the conversion base date were converted into 7,389,300 share capital at RMB1.00 each (the “Share”). The excess of the net assets of the Company converted over the nominal value of the ordinary shares was credited to the Company’s capital reserve account.

In July 2021, an employee shareholding platform injected RMB369,465 in cash for the subscription of the Company’s newly issued share capital of 369,465. The Company increased its share capital to 7,758,765 at RMB1.00 each, accordingly.

In July 2021, the Company increased its share capital from 7,758,765 to 660,000,000 at RMB1.00 each, through the conversion of the Company’s capital reserve (the “Capitalisation Issue”).

(b) Employee incentives

Save as disclosed in Note 19(b), subsequent to 30 April 2021, the Group also granted 44,941,725 Shares of the Company through employee shareholding platforms to the directors and employees of the Group.

SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the Company and its subsidiaries in respect of any period subsequent to 30 April 2021.

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The following information does not form part of the Accountants’ Report from KPMG, Certified Public Accountants, Hong Kong, the Company’s reporting accountants, as set out in Appendix I to this document, and is included for illustrative purposes only. The unaudited pro forma financial information should be read in conjunction with the “Financial Information” section in this document and the Accountants’ Report set out in Appendix I to this document.

A. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS

The following unaudited pro forma statement of adjusted consolidated net tangible assets of the Group prepared in accordance with Rule 4.29 of the Listing Rules and with reference to Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants and is set out below to illustrate the effect of the [REDACTED] on the consolidated net tangible assets of the Group attributable to the equity shareholders of the Company as at 30 April 2021 as if the [REDACTED] had taken place on 30 April 2021.

The unaudited pro forma statement of adjusted consolidated net tangible assets has been prepared for illustrative purposes only and because of its hypothetical nature, it may not give a true picture of the consolidated net tangible assets of the Group attributable to equity shareholders of the Company had the [REDACTED] been completed as at 30 April 2021 or any future date.

Unaudited pro forma Consolidated net Estimated impact to adjusted tangible liabilities net tangible assets consolidated net attributable upon tangible assets Unaudited pro forma to equity Estimated reclassification of attributable adjusted consolidated net shareholders of the [REDACTED] financial to equity tangible assets attributable to Company as at 30 from the instruments issued shareholders of equity shareholders of the (2&5) April 2021(1) [REDACTED] to investors(3) the Company Company per Share(4) RMB’000 RMB’000 RMB’000 RMB’000 RMB HK$(5)

Based on an [REDACTED]of HK$[REDACTED] per [REDACTED] (543,896) [REDACTED][REDACTED][REDACTED][REDACTED][REDACTED] Based on an [REDACTED]of HK$[REDACTED] per [REDACTED] (543,896) [REDACTED][REDACTED][REDACTED][REDACTED][REDACTED]

Notes:

(1) The consolidated net tangible liabilities of the Group attributable to equity shareholders of the Company as at 30 April 2021 is calculated based on the audited consolidated total deficit attributable to equity shareholders of the Company of RMB543,115,000 as at 30 April 2021, less the intangible assets of RMB781,000 as at 30 April 2021, extracted from the Accountants’ Report set out in Appendix I to the Document.

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(2) The estimated net [REDACTED] from the [REDACTED] are based on the expected issuance of [REDACTED] shares and the estimated [REDACTED] of HK$[REDACTED] and HK$[REDACTED] per Share, being the lower end price and higher end price of the stated [REDACTED] range respectively, after deduction of estimated [REDACTED] and other [REDACTED] expenses payable of the Group (nil [REDACTED] expenses have been accounted for prior to 30 April 2021), and does not take account of any Shares which may be issued upon the exercise of the [REDACTED].

(3) The aggregate balance of the financial instruments issued to investors was RMB1,226,248,000 as of 30 April 2021, which related to certain redemption rights issued to investors (as set out in Note 18 of Appendix I in this Document). Upon the [REDACTED], these redemption rights will be automatically cancelled and the financial instruments issued to investors will be reclassified from liabilities to equity, accordingly.

(4) The unaudited pro forma adjusted net tangible assets attributable to equity shareholders of the Company per Share is arrived at after adjustments on the basis that [REDACTED] Shares (taking into account of the effect of the Capitalisation Issue as defined in Note 25(a) of Appendix I in this Document) were in issue assuming that the [REDACTED] had been completed on 30 April 2021 without taking into account of the Shares (i) issued to Jiaxing Yongqi in July 2021 and related effect of the Capitalisation Issue (as detailed in Note 25(a) of Appendix I in this Document) and (ii) may be issued upon exercise of the [REDACTED].

(5) For illustrative purpose, the estimated net [REDACTED] from the [REDACTED] are converted from Hong Kong dollar into Renminbi and the unaudited pro forma adjusted net tangible assets attributable to equity Shareholders of the Company per Share is converted from the Renminbi into Hong Kong dollar at a rate of HK$1 = RMB0.83148, being the PBOC rate prevailing on the Latest Practicable Date. No representation is made that the Hong Kong Dollars amounts have been, could have been or may be converted into Renminbi, or vice versa at that rate.

(6) No adjustment has been made to reflect any trading result or other transactions of the Group entered into subsequent to 30 April 2021, including but not limited to the Shares issued to Jiaxing Yongqi in July 2021 (as set out in Note 25(a) of Appendix I in this Document).

Had such Shares issued to Jiaxing Yongqi been completed on 30 April 2021, our unaudited pro forma adjusted net tangible assets would have been increased by RMB369,465, our Shares in issue would have been increased by [REDACTED] Shares and our unaudited pro forma adjusted net tangible assets per Share would have been decreased by RMB[REDACTED] or HK$[REDACTED] based on an [REDACTED] of HK$[REDACTED] per [REDACTED] and by RMB[REDACTED]or HK$[REDACTED] based on an [REDACTED] of HK$[REDACTED] per [REDACTED].

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[REDACTED]

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[REDACTED]

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[REDACTED]

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TAXATION OF SECURITY HOLDERS

The taxation of income and capital gains of holders of H Shares is subject to the laws and practices of the PRC and of jurisdictions in which holders of H Shares are residents or otherwise subject to tax. The following summary of certain relevant taxation provisions is based on current effective laws and practices, and no predictions are made about changes or adjustments to relevant laws or policies, and no comments or suggestions will be made accordingly. The discussion has no intention to cover all possible tax consequences resulting from the [REDACTED] in H Shares, nor does it take the specific circumstances of any particular [REDACTED] into account, some of which may be subject to special regulations. Accordingly, you should consult your own tax adviser regarding the tax consequences of an [REDACTED] in H Shares. The discussion is based upon laws and relevant interpretations in effect as of the date of this document, which is subject to change or adjustment and may have retrospective effect.

No issues of PRC or Hong Kong taxation other than income tax, capital appreciation and profit tax, business tax/appreciation tax, stamp duty and estate duty are addressed in this discussion. Prospective [REDACTED] are urged to consult their financial advisers regarding the PRC, Hong Kong and other tax consequences of owning and disposing of H Shares.

The PRC Taxation

Taxation on Dividends

Individual Investors

Pursuant to the Individual Income Tax Law of the PRC (《中華人民共和國個人所得稅法》), which was most recently amended on August 31, 2018 and the Implementation Provisions of the Individual Income Tax Law of the PRC (《中華人民共和國個人所得稅法實施條例》), which was most recently amended on December 18, 2018 (hereinafter collectively referred to as the “IIT Law”), dividends distributed by PRC enterprises are subject to individual income tax levied at a flat rate of 20%. For a foreign individual who is not a resident of the PRC, the receipt of dividends from an enterprise in the PRC is normally subject to individual income tax of 20% unless specifically exempted by the tax authority of the State Council or reduced by relevant tax treaty.

Enterprise Investors

In accordance with the Corporate Income Tax Law of the PRC (《中華人民共和國企業所得稅法》) issued by NPC on March 16, 2007 and latest amended on December 29, 2018 and the Implementation Provisions of the Corporate Income Tax Law of the PRC (《中華人民共和國企業所得稅法實施條例》) issued by the State Council on December 6, 2007, came into effect on January 1, 2008 and amended on April 23, 2019 (hereinafter collectively referred to as the “CIT Law”), the rate of enterprise income tax shall be 25%. A non-resident enterprise is generally subject to a 10% corporate income tax on PRC-sourced income (including dividends received from a PRC resident enterprise), if it does not have an establishment or

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The Circular of the State Taxation Administration of the PRC on Issues Relating to the Withholding and Remitting of Corporate Income Tax by PRC Resident Enterprises on Dividends Distributed to Overseas Non-Resident Enterprise Shareholders of H Shares (《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》), which was issued and implemented by the STA on November 6, 2008, further clarified that a PRC-resident enterprise must withhold corporate income tax at a rate of 10% on the dividends of 2008 and onwards that it distributes to overseas non-resident enterprise shareholders of H Shares.

Pursuant to the Arrangement between the Mainland and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and the Prevention of Fiscal Evasion (《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》) (hereinafter referred to as the “the Arrangement”), which was signed on August 21, 2006, the Chinese Government may levy taxes on the dividends paid by a Chinese company to Hong Kong residents (including natural persons and legal entities) in an amount not exceeding 10% of the total dividends payable by the Chinese company unless a Hong Kong resident directly holds 25% or more of the equity interest in a Chinese company, then such tax shall not exceed 5% of the total dividends payable by the Chinese 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 (《<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》), which came into effect on December 6, 2019, adds a criteria for the qualification of entitlement to enjoy treaty benefits. Although there may be other provisions under the Arrangement, the treaty benefits under the criteria shall not be granted in the circumstance where relevant gains, after taking into account all relevant facts and conditions, are reasonably deemed to be one of the main purposes for the arrangement or transactions which will bring any direct or indirect benefits under this Arrangement, except when the grant of benefits under such circumstance is consistent with relevant objective and goal under the Arrangement. The application of the dividend clause of tax agreements is subject to the requirements of PRC tax law and regulation, such as the Notice of the State Taxation Administration of the PRC on the Issues Concerning the Application of the Dividend Clauses of Tax Agreements (《國家稅務總局關於執行稅收協定股息條款有關問題的通知》).

Tax Treaties

Non-resident investors residing in jurisdictions which have entered into treaties or adjustments for the avoidance of double taxation with the PRC might be entitled to a reduction of the Chinese corporate income tax imposed on the dividends received from PRC companies. The PRC currently has entered into Avoidance of Double Taxation Treaties or Arrangements with a number of countries and regions including Hong Kong Special Administrative Region,

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Macau Special Administrative Region, Australia, Canada, France, Germany, Japan, Malaysia, the Netherlands, Singapore, the United Kingdom and the United States. Non-PRC resident enterprises entitled to preferential tax rates in accordance with the relevant taxation treaties or arrangements are required to apply to the Chinese tax authorities for a refund of the corporate income tax in excess of the agreed tax rate, and the refund application is subject to approval by the Chinese tax authorities.

Taxation on Share Transfer

VAT and Local Additional Tax

Pursuant to the Notice on Fully Implementing the Pilot Reform for the Transition from Business Tax to Value-added Tax (《關於全面推開營業稅改徵增值稅試點的通知》) (hereinafter referred to as “Circular 36”), which was implemented on May 1, 2016, entities and individuals engaged in the services sale in the PRC are subject to VAT and “engaged in the services sale in the PRC” means that the seller or buyer of the taxable services is located in the PRC. Circular 36 also provides that transfer of financial products, including transfer of the ownership of marketable securities, shall be subject to VAT at 6% on the taxable revenue (which is the balance of sales price upon deduction of purchase price), for a general or a foreign VAT taxpayer. However, individuals who transfer financial products are exempt from VAT, which is also provided in the Notice of Ministry of Finance and State Taxation Administration of the PRC on Several Tax Exemption Policies for Business Tax on Sale and Purchase of Financial Commodities by Individuals (《財政部、國家稅務總局關於個人金融商品買賣等營業稅若干免稅政策的通知》) effective on January 1, 2009. According to these regulations, if the holder is a non-resident individual, the PRC VAT is exempted from the sale or disposal of H shares; if the holder is a non-resident enterprise and the H-share buyer is an individual or entity located outside China, the holder is not necessarily required to pay the PRC VAT, but if the H-share buyer is an individual or entity located in China, the holder may be required to pay the PRC VAT. However, it is still uncertain whether the non-Chinese resident enterprises are required to pay the PRC VAT for the disposal of H shares in practice.

At the same time, VAT payers are also required to pay urban maintenance and construction tax, education surtax and local education surcharge (hereinafter collectively referred to as “Local Additional Tax”), which shall be usually subject to 12% of the value-added tax, business tax and consumption tax actually paid (if any).

Income tax

Individual Investors

According to the IIT Law, gains on the transfer of equity interests in the PRC resident enterprises are subject to individual income tax at a rate of 20%. Pursuant to the Circular on Declaring that Individual Income Tax Continues to be Exempted over Income of Individuals from the Transfer of Shares (《關於個人轉讓股票所得繼續暫免徵收個人所得稅的通知》) issued by the STA on March 20, 1998, from January 1, 1997, income of individuals from

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However, on December 31, 2009, the Ministry of Finance, STA and China Securities Regulatory Commission jointly issued the Circular on Related Issues on Levying Individual Income Tax over the Income Received by Individuals from the Transfer of Listed Shares Subject to Sales Limitation (《關於個人轉讓上市公司限售股所得徵收個人所得稅有關問題的通知》), which came into effect on December 31, 2009, which states that individuals’ income from the transfer of listed shares obtained from the public offering of listed companies and transfer market on the Shanghai Stock Exchange and the Shenzhen Stock Exchange shall continue to be exempted from individual income tax, except for the relevant shares which are subject to sales restriction (as defined in the Supplementary Notice on Issues Concerning the Levy of Individual Income Tax on Individuals’ Income from the Transfer of Restricted Stocks of Listed Companies (《關於個人轉讓上市公司限售股所得徵收個人所得稅有關問題的補充通知》) jointly issued and implemented by such departments on November 10, 2010). As of the Latest Practicable Date, no aforesaid provisions have expressly provided that individual income tax shall be levied from non-Chinese resident individuals on the transfer of shares in PRC resident enterprises listed on overseas stock exchanges.

Enterprise Investors

In accordance with the CIT Law, a non-resident enterprise is generally subject to corporate income tax at the rate of a 10% on PRC-sourced income, including gains derived from the disposal of equity interests in a PRC resident enterprise, if it does not have an establishment or premise in the PRC or has an establishment or premise in the PRC but its PRC-sourced income has no real connection with such establishment or premise. Such income tax payable for non-resident enterprises are deducted at source, where the payer of the income is required to withhold the income tax from the amount to be paid to the non-resident enterprise. Such tax may be reduced or exempted pursuant to relevant tax treaties or agreements on avoidance of double taxation.

Stamp Duty

Pursuant to the Provisional Regulations of the PRC on Stamp Duty (《中華人民共和國印花稅暫行條例》), which was issued on August 6, 1988 and latest amended on January 8, 2011, and the Implementation Provisions of Provisional Regulations of the PRC on Stamp Duty (《中華人民共和國印花稅暫行條例施行細則》), which came into effect on October 1, 1988, PRC stamp duty only applies to specific taxable document executed or received within the PRC, having legally binding force in the PRC and protected under the PRC laws, thus the requirements of the stamp duty imposed on the transfer of shares of PRC listed companies shall not apply to the acquisition and disposal of H Shares by non-PRC investors outside of the PRC.

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Estate Duty

As of the date of this document, no estate duty has been levied in the PRC under the PRC laws.

HONG KONG TAXATION

Taxation on Dividends

No tax is payable by any person or corporation under the laws of Hong Kong in respect of dividends paid by our Company.

Profits Tax

Hong Kong profits tax will not be payable by any Shareholders (other than Shareholders carrying on a trade, profession or business in Hong Kong and holding the Shares for trading purposes) on any capital gains made on the sale or other disposal of the Shares. Shareholders should take advice from their own professional advisers as to their particular tax position.

Stamp Duty

Hong Kong stamp duty will be charged on the sale and purchase of Shares at the current rate of 0.26% of the consideration for, or (if greater) the value of, the Shares being sold or purchased, whether or not the sale or purchase is on or off the Hong Kong Stock Exchange. The Shareholder selling the Shares and the purchaser will each be liable for one-half of the amount of Hong Kong stamp duty payable upon such transfer. In addition, a fixed duty of HK$5 is currently payable on any instrument of transfer of Shares.

Estate Duty

The Revenue (Abolition of Estate Duty) Ordinance 2005 came into effect on February 11, 2006 in Hong Kong, pursuant to which no Hong Kong estate duty is payable and no estate duty clearance papers are needed for an application of a grant of representation in respect of holders of H Shares whose deaths occur on or after February 11, 2006.

TAXATION OF OUR COMPANY IN HONG KONG

Profits Tax

Our Company will be subject to Hong Kong profits tax in respect of profits arising in or derived from Hong Kong at the current rate of 16.5%. Dividend income derived by our Company from its subsidiaries will be excluded from Hong Kong profits tax.

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FOREIGN EXCHANGE

The lawful currency of the PRC is Renminbi, which is currently subject to foreign exchange control and cannot be freely converted into foreign currency. The State Administration of Foreign Exchange (hereinafter referred to as “SAFE”), with the authorization of the People’s Bank of China (hereinafter referred to as “PBOC”), is empowered with the functions of administering all matters relating to foreign exchange, including the enforcement of foreign exchange control regulations.

The Regulations on Foreign Exchange Control of the PRC (《中華人民共和國外匯管理條例》) (the “Foreign Exchange Control Regulations”), which was issued by the State Council on January 29, 1996, implemented on April 1, 1996 and latest amended on August 5, 2008, classifies all international payments and transfers into current items and capital items. Current items are subject to the reasonable examination of the veracity of transaction documents and the consistency of the transaction documents and the foreign exchange receipts and payments by financial institutions engaging in conversion and sale of foreign currencies and supervision and inspection by the foreign exchange control authorities. For capital items, overseas organizations and overseas individuals making direct investments in China shall, upon approval by the relevant authorities in charge, process registration formalities with the foreign exchange control authorities. 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. In the event that international revenues and expenditure occur or may occur a material misbalance, or the national economy encounters or may encounter a severe crisis, the State may adopt necessary safeguard and control measures on international revenues and expenditure.

The Regulations for the Administration of Settlement, Sale and Payment of Foreign Exchange (《結匯、售匯及付匯管理規定》), which was promulgated by the PBOC on June 20, 1996 and implemented on July 1, 1996, removes other restrictions on convertibility of foreign exchange under current items, while imposing existing restrictions on foreign exchange transactions under capital account items.

According to the Announcement on Improving the Reform of the Renminbi Exchange Rate Formation Mechanism (《關於完善人民幣匯率形成機制改革的公告》), which was issued by the PBOC and implemented on July 21, 2005, the PRC has started 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 since July 21, 2005. Therefore, the Renminbi exchange rate was no longer pegged to the U.S. dollar. PBOC would publish the closing price of the exchange rate of the Renminbi against trading currencies such as the U.S. dollar in the interbank foreign exchange market after the closing of the market on each working day, as the central parity of the currency against Renminbi transactions on the following working day.

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According to the relevant laws and regulations in the PRC, PRC enterprises (including foreign investment enterprises) which need foreign exchange for current item transactions may, without the approval of the foreign exchange administrative authorities, effect payment through foreign exchange accounts opened at the designated foreign exchange bank, on the strength of valid transaction 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 (such as our Company) may, on the strength of resolutions of the board of directors or the shareholders’ meeting on the distribution of profits, effect payment from foreign exchange accounts at the designated foreign exchange bank, or effect exchange and payment at the designated foreign exchange bank.

According to the Decisions 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》) which was promulgated by the State Council on October 23, 2014, it decided to cancel the approval requirement of the SAFE and its branches for the remittance and settlement of the proceeds raised from the overseas listing of the foreign shares into RMB domestic accounts.

According to the Notice of the State Administration of Foreign Exchange on Issues Concerning the Foreign Exchange Administration of Overseas Listing (《國家外匯管理局關於境外上市外匯管理有關問題的通知》) issued by the SAFE and implemented on December 26, 2014, a domestic company shall, within 15 business days from the date of the end of its overseas listing issuance, register the overseas listing with the local branch office of state administration of foreign exchange at the place of its establishment; the proceeds from an overseas listing of a domestic company may be remitted to the domestic account or deposited in an overseas account, but the use of the proceeds shall be consistent with the content of the document and other disclosure documents.

According to the Notice of the State Administration of Foreign Exchange on Further Simplifying and Improving Policies for the Foreign Exchange Administration of Direct Investment (《國家外匯管理局關於進一步簡化和改進直接投資外匯管理政策的通知》), which was issued by the SAFE on February 13, 2015, came into effect on June 1, 2015 and partially repealed on December 30, 2019, the confirmation of foreign exchange registration under domestic direct investment and the confirmation of foreign exchange registration under overseas direct investment shall be directly examined and handled by banks. SAFE and its branch offices shall indirectly regulate the foreign exchange registration of direct investment through banks.

According to the Notice of the State Administration of Foreign Exchange of the PRC on Revolutionizing and Regulating Capital Account Settlement Management 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》) which was promulgated by the SAFE and implemented on June 9, 2016, foreign currency earnings in capital account that relevant policies of willingness exchange settlement have been clearly implemented on (including the recalling of raised capital by overseas listing) may undertake foreign exchange settlement in the banks according to actual business needs of the domestic institutions. The tentative percentage of foreign exchange settlement for foreign currency earnings in capital account of domestic institutions is 100%, subject to adjust of the SAFE in due time in accordance with international revenue and expenditure situations.

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PRC LEGAL SYSTEM

The PRC legal system is based on the Constitution of the PRC (《中華人民共和國憲法》) (the “Constitution”) and is made up of written laws, administrative regulations, local regulations, autonomous regulations, separate regulations, rules and regulations of departments, rules and regulations of local governments, international treaties of which the PRC government is a signatory, and other regulatory documents. Court verdicts do not constitute binding precedents. However, they may be used as judicial reference and guidance.

According to the Constitution and the Legislation Law of the PRC (2015 revision) (《中華人民共和國立法法(2015年修訂)》) (the “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 basic laws governing civil and criminal matters, state organs and other matters. The Standing Committee of the NPC is empowered to formulate and amend laws other than those required to be enacted by the NPC and to supplement and amend any parts of laws enacted by the NPC during the adjournment of the NPC, provided that such supplements and amendments are not in conflict with the basic principles of such laws.

The State Council is the highest organ of the PRC administration and has the power to formulate administrative regulations based on the Constitution and laws.

The people’s congresses of provinces, autonomous regions and municipalities and their respective standing committees may formulate local regulations based on the specific circumstances and actual requirements of their own respective administrative areas, provided that such local regulations do not contravene any provision of the Constitution, laws or administrative regulations.

The ministries and commissions of the State Council, PBOC, the State Audit Administration as well as the other organs endowed with administrative functions directly under the State Council may, in accordance with the laws as well as the administrative regulations, decisions and orders of the State Council and within the limits of their power, formulate rules.

The people’s congresses of cities divided into districts and their respective standing committees may formulate local regulations in terms of urban and rural development and management, environmental protection, and historical and cultural protection based on the specific circumstances and actual requirements of such cities, which will become enforceable after being reported to and approved by the standing committees of the people’s congresses of the relevant provinces or autonomous regions but such local regulations shall conform with the Constitution, laws, administrative regulations, and the relevant local regulations of the relevant provinces or autonomous regions. People’s congresses of national autonomous areas have the power to enact autonomous regulations and separate regulations in light of the political, economic and cultural characteristics of the nationality (nationalities) in the areas concerned.

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The people’s governments of the provinces, autonomous regions, and municipalities directly under the central government and the cities divided into districts or autonomous prefectures may enact rules, in accordance with laws, administrative regulations and the local regulations of their respective provinces, autonomous regions or municipalities.

The Constitution has supreme legal authority and no laws, administrative regulations, local regulations, autonomous regulations or separate regulations may contravene the Constitution. The authority of laws is greater than that of administrative regulations, local regulations and rules. The authority of administrative regulations is greater than that of local regulations and rules. The authority of local regulations is greater than that of the rules of the local governments at or below the corresponding level. The authority 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 city divided into districts or autonomous prefecture 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 administrative regulations that contravene the Constitution and laws, to annul any local regulations that contravene the Constitution, laws or administrative regulations, and to annul any autonomous regulations or local regulations which have been approved by the standing committees of the people’s congresses 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 congresses 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 a lower level.

According to the Constitution and the Legislation Law, the power to interpret laws is vested in 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, if the scope prescribed by laws or decrees needs to be further defined or supplementary provisions need to be made, the Standing Committee of the NPC shall interpret them or make provisions by means of decrees, the Supreme People’s Court of the PRC (the “Supreme People’s Court”) has the power to give general interpretation on questions involving the specific application of laws and decrees in court trials. Issues involving the specific application of laws and decrees in the procuratorial work of the procuratorate shall be interpreted by the Supreme People’s procuratorate. If there are principled differences in the interpretation of the Supreme People’s court and the Supreme People’s procuratorate, they shall be submitted to the Standing Committee of the NPC for interpretation or decision. Issues that do not involve the specific

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PRC JUDICIAL SYSTEM

Under the Constitution and the PRC Law on the Organization of the People’s Courts (2018 revision) (《中華人民共和國人民法院組織法(2018年修訂)》), the PRC judicial system is made up of the Supreme People’s Court, the local people’s courts and special people’s courts.

The local people’s courts are comprised of the primary people’s courts, the intermediate people’s courts and the higher people’s courts. The higher level of people’s court supervises the trial work of the people’s court at a lower level. The people’s procuratorates also have the right to exercise legal supervision over the proceedings of people’s courts of the same level and lower levels. The Supreme People’s Court is the highest judicial body in the PRC. It supervises the trial work of local people’s courts at all levels and special people’s courts.

The PRC Civil Procedure Law (2017 revision) (《中華人民共和國民事訴訟法(2017年修訂)》) (the “Civil Procedure Law”), which was adopted in 1991 and amended in 2007, 2012 and 2017, sets forth the criteria for instituting a civil action, 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 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 express agreement, select a judicial court where civil actions may be brought, provided that the judicial court is either the plaintiff’s or the defendant’s domicile, the place of execution or implementation of the contract or the place of the object of the action, provided that the provisions of this law regarding the level of jurisdiction and exclusive jurisdiction shall not be violated.

A foreign national, a person without nationality, a foreign enterprise or a foreign organization 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 apply the same limitations to the citizens and enterprises of that foreign country within the PRC.

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If any party to a civil action refuses to comply with the effective judgement, ruling, conciliation statement and other legal documents to be executed by the people’s court or an award made by the arbitration tribunal in the PRC, the other party may apply to the people’s court for the enforcement of the same. There are time limits of two years imposed on the right to apply for such enforcement.

A party seeking to enforce a judgment or ruling of a people’s court against a party who is not personally or whose property is not within the PRC may apply to a foreign court with jurisdiction over the case for recognition and enforcement of the judgment or ruling. A foreign judgment or ruling may also be recognized and enforced by the people’s court according to PRC enforcement procedures if the PRC has entered into or acceded to an international treaty with the relevant foreign country, which provides for such recognition and enforcement, or if the judgment or ruling satisfies the court’s examination according to the principle of reciprocity, unless the people’s court finds that the recognition or enforcement of such judgment or ruling will result in a violation of the basic legal principles of the PRC, its sovereignty or security or against social and public interest.

THE COMPANY LAW, SPECIAL REGULATIONS AND MANDATORY PROVISIONS

A joint stock limited company which was incorporated in the PRC and seeking a listing on the Hong Kong Stock Exchange is mainly subject to the following three laws and regulations in the PRC:

• The PRC Company Law which was promulgated by the Standing Committee of the NPC on December 29, 1993, came into effect on July 1, 1994, revised on December 25,1999, August 28, 2004, October 27, 2005 and December 28, 2013 respectively and the latest revision of which was implemented on October 26, 2018;

• The Special Regulations of the State Council on Share Offering and Listing Overseas by Joint-Stock Limited Companies (the “Special Regulations”) which were promulgated by the State Council on August 4, 1994 pursuant to Articles 85 and 155 of the Company Law in force at that time, and were applicable, to the overseas share subscription and listing of joint stock limited companies; and

• The Mandatory Provisions of Articles of Association of Companies Listing Overseas (the “Mandatory Provisions”) which were issued jointly by the former Securities Commission of the State Council and the former State Economic Restructuring Commission on August 27, 1994, stating the mandatory provisions which must be incorporated into the articles of association of a joint stock limited company seeking an overseas listing. As such, the Mandatory Provisions are set out in the Articles of Association of the Company, the summary of which is set out in the section entitled “Appendix V – Summary of Articles of Association” in this document.

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Set out below is a summary of the major provisions of the Company Law, the Special Regulations and the Mandatory Provisions applicable to the Company.

General

A joint stock limited company refers to an enterprise legal person incorporated under the Company Law with its registered capital divided into shares of equal par value. The liability of its shareholders is limited to the amount of shares held by them and the company is liable to its creditors for an amount equal to the total value of its assets.

A joint stock limited company shall conduct its business in accordance with laws and administrative regulations. It may invest in other limited liability companies and joint stock limited companies and its liabilities with respect to such invested companies are limited to the amount invested. Unless otherwise provided by law, the joint stock limited company may not be a contributor that undertakes joint and several liabilities for the debts of the invested companies.

Incorporation

A joint stock limited company may be incorporated by promotion or public subscription.

A joint stock limited company may be incorporated by a minimum of two but not more than 200 promoters, and at least half of the promoters must have residence within the PRC. According to the Special Regulations, SOEs or enterprises with the majority of their assets owned by the PRC government may be restructured into joint stock limited companies which may issue shares to overseas investors in accordance with the relevant regulations. These companies, if incorporated by promotion, may have less than five promoters and may issue new shares once incorporated.

The promoters must convene an inaugural meeting within 30 days after the issued shares have been fully paid up, and must give notice to all subscribers or make an announcement of the date of the inaugural meeting 15 days before the meeting. The inaugural meeting may be convened only with the presence of promoters or subscribers representing at least half of the shares in the company. At the inaugural meeting, matters including the adoption of articles of association and the election of members of the board of directors and members of the board of supervisors 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 30 days after the conclusion of the inaugural meeting, the board of directors must apply to the registration authority for registration of the establishment of the joint stock limited company. A company is formally established, and has the status of a legal person, after the business license has been issued by the relevant registration authority. Joint stock limited

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A joint stock limited company’s promoters shall be liable for: (i) the payment of all expenses and debts incurred in the incorporation process jointly and severally if the company cannot be incorporated; (ii) the refund of subscription monies to the subscribers, together with interest, at bank rates for a deposit of the same term jointly and severally if the company cannot be incorporated; and (iii) damages suffered by the company as a result of the default of the promoters in the course of incorporation of the company. According to the Interim Provisional Regulations on the Administration of Share Issuance and Trading (《股票發行與交易管理暫行條例》) promulgated by the State Council on April 22, 1993 (which is only applicable to the issuance and trading of shares in the PRC and their related activities), if a company is established by means of public subscription, the promoters of such company are required to sign on the document to ensure that the document does not contain any misrepresentation, serious misleading statements or material omissions, and assume joint and several responsibility for it.

Share Capital

The promoters of a company can make capital contributions in cash or in kind, which can be valued in currency and transferable according to law such as intellectual property rights or land use rights based on their appraised value.

If capital contribution is made other than in cash, valuation and verification of the property contributed must be carried out and converted into shares.

A company may issue registered or bearer share. However, shares issued to promoter(s) or legal person(s) shall be in the form of registered share and shall be registered under the name(s) of such promoter(s) or legal person(s) and shall not be registered under a different name or the name of a representative.

The Special Regulations and the Mandatory Provisions provide that shares issued to foreign investors and listed overseas shall be issued in registered form and shall be denominated in Renminbi and subscribed for in foreign currency.

Under the Special Regulations and the Mandatory Provisions, shares issued to foreign investors and investors from the territories of Hong Kong, the Macau and Taiwan and listed overseas are known as overseas listed foreign invested shares, and those shares issued to investors within the PRC other than the territories specified above are known as Domestic Shares.

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A company may offer its shares to the public overseas with approval by the securities administration department of the State Council. Specific provisions shall be specifically formulated by the China Securities Regulatory Commission (the “CSRC”). Under the Special Regulations, upon approval of the CSRC, a company may agree, in the underwriting agreement in respect of an issue of overseas listed foreign invested shares, to retain not more than 15% of the aggregate number of overseas listed foreign invested shares proposed to be issued after accounting for the number of underwritten shares.

The share offering price may be equal to or greater than nominal value, but shall not be less than nominal value.

The transfer of shares by shareholders should be conducted via the legally established stock exchange or in accordance with other methods as stipulated by the State Council. Transfer of registered shares by a shareholder must be made by means of an endorsement or by other means stipulated by laws or administrative regulations. Bearer shares are transferred by delivery of the H Share Certificates to the transferee.

Transfers of shares may not be entered in the register of shareholders within 20 days before the date of a shareholders’ meeting or within five days before the record date set for the purpose of distribution of dividends.

Allotment and Issue of Shares

All issue of shares of a joint stock limited company shall be based on the principles of equality and fairness. The same class of shares must carry equal rights. Shares issued at the same time and within the same class must be issued on the same conditions and at the same price. It may issue shares at par value or at a premium, but it may not issue shares below the par value.

A company shall obtain the approval of the CSRC to offer its shares to the overseas public. Under the Special Regulations, shares issued to foreign investors by joint stock limited companies and listed overseas are known as “overseas listed and foreign invested shares.” Shares issued to investors within the PRC by joint stock limited companies, which also issues overseas listed and foreign shares, are known as “domestic shares.” Upon approval of the securities regulatory authority of the State Council, a company issuing overseas listed and foreign invested shares in total shares determined by the issuance program may agree with underwriters in the underwriting agreement to retain not more than 15% of the aggregate number of overseas listed and foreign invested shares outside the underwritten amount. The issuance of the retained shares is deemed to be a part of this issuance.

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Registered Shares

Under the Company Law, the shareholders may make capital contributions in cash, or alternatively may make capital contributions with such valuated non-monetary property as physical items, intellectual property rights, and land-use rights that may be valued in monetary term and may be transferred in accordance with the law. Pursuant to the Special Regulations, overseas listed and foreign invested shares issued shall be in registered form, denominated in Renminbi and subscribed for in a foreign currency. Domestic shares issued shall also be in registered form.

Under the Company Law, when the company issues shares in registered form, it shall maintain a register of shareholders, stating the following matters:

• the name and domicile of each shareholder;

• the number of shares held by each shareholder;

• the serial numbers of shares held by each shareholder; and

• the date on which each shareholder acquired the shares.

Increase of Share Capital

According to the Company Law, when the joint stock limited company issues new shares, resolutions shall be passed by a shareholders’ general meeting, approving the class and number of the new shares, the issue price of the new shares, the commencement and end of the new share issuance and the class and amount of new shares to be issued to existing shareholders. When the company launches a public issuance of new shares with the approval of the securities regulatory authorities of the State Council, it shall publish a document and financial and accounting reports, and prepare the share subscription form. After the new share issuance has been paid up, the change shall be registered with the company registration authorities and an announcement shall be made.

Reduction of Share Capital

A company may reduce its registered capital in accordance with the following procedures prescribed by the Company Law:

• it shall prepare a balance sheet and a property list;

• the reduction of registered capital shall be approved by a shareholders’ general meeting;

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• it shall inform its creditors of the reduction in capital within 10 days and publish an announcement of the reduction in the newspaper within 30 days after the resolution approving the reduction has been passed;

• creditors may within 30 days after receiving the notice, or within 45 days of the public announcement if no notice has been received, require the company to pay its debts or provide guarantees covering the debts;

• it shall apply to the relevant administration of registration for the registration of the reduction in registered capital.

Repurchase of Shares

According to the Company Law, a joint stock limited company may not purchase its shares other than for one of the following purposes: (i) to reduce its registered capital; (ii) to merge with other company that holds its shares; (iii) to grant its shares for carrying out an employee stock ownership plan or equity incentive plan; (iv) to purchase its shares from shareholders who are against the resolution regarding the merger or division with other companies at a shareholders’ general meeting; (v) use of shares for conversion of convertible corporate bonds issued by a listed company; and (vi) the share buyback is necessary for a listed company to maintain its company value and protect its shareholders’ equity.

The purchase of shares on the grounds set out in (i) and (ii) above shall require approval by way of a resolution passed by the shareholders’ general meeting. For a company’s share buyback under any of the circumstances stipulated in (iii), (v) or (vi) above, a resolution of the company’s board of directors shall be made by a two-third majority of directors attending the meeting according to the provisions of the company’s articles of association or as authorized by the shareholders’ meeting.

Following the purchase of shares in accordance with (i), such shares shall be canceled within 10 days from the date of purchase. The shares shall be assigned or deregistered within six months if the share buyback is made under the circumstances stipulated in either (ii) or (iv). The shares held in total by a company after a share buyback under any of the circumstances stipulated in (iii), (v) or (vi) shall not exceed 10% of the company’s total outstanding shares, and shall be assigned or deregistered within three years.

Listed companies making a share buyback shall perform their obligation of information disclosure according to the provisions of the Securities Law. If the share buyback is made under any of the circumstances stipulated in (iii), (v) or (vi) hereof, centralized trading shall be adopted publicly.

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Transfer of Shares

Shares held by shareholders may be transferred in accordance with the relevant laws and regulations. Pursuant to the Company Law, transfer of shares by shareholders shall be carried out at a legally established securities exchange or in other ways stipulated by the State Council. No modifications of registration in the share register caused by transfer of registered shares shall be carried out within 20 days prior to the convening of shareholder’s general meeting or five days prior to the base date for determination of dividend distributions. However, where there are separate provisions by law on alternation of registration in the share register of listed companies, those provisions shall prevail. Pursuant to the Mandatory Provisions, no modifications of registration in the share register caused by transfer of shares shall be carried out within 30 days prior to convening of shareholder’s general meeting or five days prior to any base date for determination of dividend distributions.

Under the Company law, shares issued prior to the public issuance of shares shall not be transferred within one year from the date of the joint stock limited company’s listing on a stock exchange. Directors, supervisors and the senior management shall declare to the company their shareholdings in the company and any changes of such shareholdings. They shall not transfer more than 25% of all the shares they hold in the company annually during their tenure. They shall not transfer the shares they hold within one year from the date on which the company’s shares are listed and commenced trading on a stock exchange, nor within six months after their resignation from their positions with the company.

Shareholders

Under the Company Law and the Mandatory Provisions, the rights of holders of ordinary shares of a joint stock limited company include:

• the right to attend or appoint a proxy to attend shareholders’ general meetings and to vote thereat;

• the right to transfer shares in accordance with laws, administrative regulations and provisions of the articles of association;

• the right to inspect the company’s articles of association, share register, counterfoil of company debentures, minutes of shareholder’s general meetings, resolutions of meetings of the board of directors, resolutions of meetings of the board of supervisors and financial and accounting reports and to make proposals or enquires on the company’s operations;

• the right to bring an action in the people’s court to rescind resolutions passed by shareholder’s general meetings and board of directors where the articles of association is violated by the above resolutions;

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• the right to receive dividends and other types of interest distributed in proportion to the number of shares held;

• in the event of the termination or liquidation of the company, the right to participate in the distribution of residual properties of the company in proportion to the number of shares held; and

• other rights granted by laws, administrative regulations, other regulatory documents and the company’s articles of association.

The obligations of a shareholder include the obligation to abide by the Company’s articles of association, to pay the subscription moneys in respect of the shares subscribed for and in accordance with the form of making capital contributions, to be liable for the company’s debts and liabilities to the extent of the amount of his or her subscribed shares and any other shareholders’ obligation specified in the company’s articles of association.

Shareholders’ General Meetings

The shareholders’ general meeting is the organ of authority of the company, which exercises its powers in accordance with the Company Law.

Under the Company Law, the shareholders’ general meeting exercises the following principal powers:

• to decide on the company’s operational policies and investment plans;

• to elect or remove the directors and supervisors (other than the representative of the employees of the company) and to decide on matters relating to the remuneration of directors and supervisors;

• to examine and approve reports of the board of directors;

• to examine and approve reports of the board of supervisors or supervisors;

• to examine and approve the company’s proposed annual financial budget and final accounts;

• to examine and approve the company’s proposals for profit distribution plans and loss recovery plans;

• to decide on any increase or reduction of the company’s registered capital;

• to decide on the issue of bonds by the company;

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• to decide on issues such as merger, division, dissolution and liquidation of the company and other matters;

• to amend the company’s articles of association; and

• other powers as provided for in the articles of association.

Shareholders’ annual general meetings are required to be held once every year. Under the Company Law, an extraordinary shareholders’ general meeting is required to be held within two months after the occurrence of any of the following:

• the number of directors is less than the number stipulated by the law or less than two thirds of the number specified in the articles of association;

• the aggregate losses of the company which are not recovered reach one-third of the company’s total paid-in share capital;

• when shareholders alone or in aggregate holding 10% or more of the company’s shares request the convening of an extraordinary general meeting;

• whenever the board of directors deems necessary;

• when the board of supervisors so requests; or

• other circumstances as provided for in the articles of associations.

Under the Company Law, shareholders’ general meetings 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 does not perform his duties, the meeting shall be presided over by the vice chairman. In the event that the vice chairman is incapable of performing or not performing his duties, a director nominated by more than half of directors shall preside over the meeting.

Where the board of directors is incapable of performing or not performing its duties of convening the shareholders’ general meeting, the board of supervisors shall convene and preside over such meeting in a timely manner. In case the board of supervisors fails to convene and preside over such meeting, shareholders alone or in aggregate holding more than 10% of the company’s shares for 90 days consecutively may unilaterally convene and preside over such meeting.

Under the Company Law, notice of shareholders’ general meeting shall state the time and venue of and matters to be considered at the meeting and shall be given to all shareholders 20 days before the meeting. Notice of extraordinary shareholder’s general meetings shall be given to all shareholders 15 days prior to the meeting. Under the Special Regulations and the

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Mandatory Provisions, such notice shall be delivered to all the registered shareholders 45 days in advance to the meeting, and the matters to be considered and time and venue of the meeting shall be specified. The written reply of shareholders planning to attend the meeting shall be delivered to the company 20 days in advance of the meeting.

There is no specific provision in the Company Law regarding the number of shareholders constituting a quorum in a shareholders’ meeting. Pursuant to the Special Regulations and the Mandatory Provisions, shareholder’s general meeting may be convened where the number of voting shares held by the shareholders present at the meeting reaches one half or more of the company’s total voting shares. If this is not attained, the company shall within five days notify the shareholders again of the matters to be considered and time and venue of the meeting to shareholders in the form of public announcement. The company may convene the shareholders’ general meeting after such public announcement. Pursuant to the Mandatory Provisions, modification or abrogation of rights conferred to any class of shareholders shall be passed both by special resolution of shareholders’ general meeting and by class meeting convened respectively by shareholders of the affected class.

Pursuant to the Special Regulations, where the company convenes annual shareholder’s general meeting, shareholders holding more than 5% of voting shares have a right to submit to the company new proposals in writing, in which the matters falling within the scope of shareholder’s general meeting shall be placed in the agenda of the meeting.

Under the Company Law, shareholders present at 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.

Pursuant to the provisions of the articles of association or a resolution of the shareholders’ general meeting, the accumulative voting system may be adopted for the election of directors and supervisors at the shareholders’ general meeting. Under the accumulative voting system, each share shall be entitled to vote equivalent to the number of directors or supervisors to be elected at the shareholders’ general meeting and shareholders may consolidate their voting rights when casting a vote.

Pursuant to the Company Law and the Mandatory Provisions, resolutions of the shareholders’ general meeting shall be adopted by more than half of the voting rights held by the shareholders present at the meeting. However, resolutions of the shareholders’ general meeting regarding the following matters shall be adopted by more than two-thirds of the voting rights held by the shareholders present at the meeting: (i) amendments to the articles of association; (ii) the increase or decrease of registered capital; (iii) the issue of any types of shares, warrants or other similar securities; (iv) the issue of debentures; (v) the merger, division, dissolution, liquidation or change in the form of the company; (vi) other matters considered by the shareholders’ general meeting, by way of an ordinary resolution, to be of a nature which may have a material impact on the company and should be adopted by a special resolution.

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Under the Company Law, meeting minutes shall be prepared in respect of decisions on matters discussed at the shareholders’ general meeting. The chairman of the meeting and directors attending the meeting shall sign to endorse such minutes. The minutes shall be kept together with the shareholders’ attendance register and the proxy forms.

Board

Under the Company Law, a joint stock limited company shall have a board of directors, which shall consist of 5 to 19 members. Members of the board of directors may include representatives of the employees of the company, who shall be democratically elected by the company’s staff at the staff representative assembly, general staff meeting or otherwise. The term of a director shall be stipulated in the articles of association, but no term of office shall last for more than three years. Directors may serve consecutive terms if re-elected. A director shall continue to perform his duties in accordance with the laws, administrative regulations and articles of association until a duly re-elected director takes office, if re-election is not conducted in a timely manner upon the expiry of his term of office, or if the resignation of directors results in the number of directors being less than the quorum.

Under the Company Law, the board of directors mainly exercises the following powers:

• to convene the shareholders’ general meetings and report on its work to the shareholders’ general meetings;

• to implement the resolutions passed in shareholders’ general meetings;

• to decide on the company’s business plans and investment proposals;

• to formulate the company’s proposed annual financial budget and final accounts;

• to formulate the company’s profit distribution proposals and loss recovery proposals;

• to formulate proposals for the increase or reduction of the company’s registered capital and the issuance of corporate bonds;

• to prepare plans for the merger, division, dissolution and change in the form of the company;

• to formulate the company’s basic management system; and

• to exercise any other power under the articles of association.

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Board Meetings

Under the Company Law, meetings of the board of directors of a joint stock limited company shall be convened at least twice a year. Notice 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 voting rights, more than one-third of the directors or the board of supervisors. The chairman shall convene and preside over such meeting within 10 days after receiving such proposal. Meetings of the board of directors shall be held only if half or more of the directors are present. Resolutions of the board of directors shall be passed by more than half of all directors. Each director shall have one vote for resolutions to be approved by the board of directors. Directors shall attend board meetings in person. If a director is unable to attend a board meeting, he may appoint another director by a written power of attorney specifying the scope of the authorization to attend the meeting on his behalf.

If a resolution of the board of directors violates the laws, administrative regulations or the articles of association, 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 may be released from that liability.

Chairman of the Board

Under the Company Law, the board of directors shall appoint a chairman and may appoint a vice chairman. The chairman and the vice chairman are elected with approval of more than half of all the directors. The chairman shall convene and preside over board meetings and examine the implementation of board resolutions. The vice chairman shall assist the work of the chairman. In the event that the chairman is incapable of performing or not performing his duties, the duties shall be performed by the vice chairman. In the event that the vice chairman is incapable of performing or not performing his duties, a director nominated by more than half of the directors shall perform his duties.

Qualification of Directors

The Company Law provides that the following persons may not serve as a director:

• a person who is unable or has limited ability to undertake any civil liabilities;

• a person who has been convicted of an offense of bribery, corruption, embezzlement or misappropriation of property, or the destruction of socialist market economy order; or who has been deprived of his political rights due to his crimes, in each case where less than five years have elapsed since the date of completion of the sentence;

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• a person who has been a former director, factory manager or manager of a company or an enterprise that has entered into insolvent 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;

• 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 and 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; or

• a person who is liable for a relatively large amount of debts that are overdue.

Other circumstances under which a person is disqualified from acting as a director are set out in the Mandatory Provisions.

Board of Supervisors

A joint stock limited company shall have a board of supervisors composed of not less than three members. The board of supervisors is made up of representatives of the shareholders and an appropriate proportion of representatives of the employees of the company. The actual proportion shall be stipulated in the articles of association, provided that the proportion of representatives of the employees shall not be less than one third of the supervisors. Representatives of the employees of the company in the board of supervisors shall be democratically elected by the employees at the employees’ representative assembly, employees’ general meeting or otherwise.

The directors and senior management may not act concurrently as supervisors.

The board of supervisors shall appoint a chairman and may appoint a vice chairman. The chairman and the vice chairman of the board of supervisors are elected with approval of more than half of all the supervisors. The chairman of the board of supervisors shall convene and preside over the meetings of the board of supervisors. In the event that the chairman of the board of supervisors is incapable of performing or not performing his duties, the vice chairman of the board of supervisors shall convene and preside over the meetings of the board of supervisors. In the event that the vice chairman of the board of supervisors is incapable of performing or not performing his duties, a supervisor nominated by more than half of the supervisors shall convene and preside over the meetings of the board of supervisors.

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Each term of office of a supervisor is three years and he or she may serve consecutive terms if re-elected. A supervisor shall continue to perform his duties in accordance with the laws, administrative regulations and 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 term of office, or if the resignation of supervisors results in the number of supervisors being less than the quorum.

The board of supervisors of a company shall hold at least one meeting every six months. According to the PRC Company Law, a resolution of the board of supervisors shall be passed by more than half of all the supervisors, while according to the Opinions on Supplementary Amendment to Articles of Associations by Companies to be listed in Hong Kong (《關於到香港上市公司對公司章程作補充修改的意見的函》), a resolution of the board of supervisors shall be passed by more than two-thirds of all the supervisors.

The board of supervisors exercises the following powers:

• to review the company’s financial position;

• 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 laws, regulations, the articles of association or the resolutions of shareholders’ meeting;

• when the acts of directors and senior management are harmful to the company’s interests, to require correction of those acts;

• to propose the convening of extraordinary shareholders’ general meetings and to convene and preside over shareholders’ general meetings when the board of directors fails to perform the duty of convening and presiding over shareholders’ general meeting under this law;

• to initiate proposals for resolutions to shareholders’ general meeting;

• to initiate proceedings against directors and senior management;

• other powers specified in the articles of association; and

• Supervisors may attend board meetings and make enquiries or proposals in respect of board resolutions. The board of supervisors may initiate investigations into any irregularities identified in the operation of the company and, where necessary, may engage an accounting firm to assist their work at the company’s expense.

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Manager and Senior Management

Under the Company Law, a company shall have a manager who shall be appointed or removed by the board of directors. The manager shall report to the board of directors and may exercise the following powers:

• to supervise the business and administration of the company and arrange for the implementation of resolutions of the board of directors;

• to arrange for the implementation of the company’s annual business plans and investment proposals;

• to formulate the general administration system of the company;

• to formulate the company’s detailed rules;

• to recommend the appointment and dismissal of deputy managers and person in charge of finance;

• to appoint or dismiss other administration officers (other than those required to be appointed or dismissed by the board of directors); and

• to other powers conferred by the board of directors or the articles of association.

The manager shall comply with other provisions of the articles of association concerning his/her powers. The manager shall attend board meetings.

According to the Company Law, senior management shall mean the manager, deputy manager(s), person-in-charge of finance, board secretary (in case of a listed company) of a company and other personnel as stipulated in the articles of association.

Duties of Directors, Supervisors and Senior Management

Directors, supervisors and senior management of the company are required under the Company Law to comply with the relevant laws, regulations and the articles of association, and have fiduciary and diligent duties to the company. Directors, supervisors and senior management are prohibited from abusing their powers to accept bribes or other unlawful income and from misappropriating of the company’s properties. Directors and senior management are prohibited from:

• misappropriation of the company’s capital;

• depositing the company’s capital into accounts under his own name or the name of other individuals;

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• loaning company funds to others or providing guarantees in favor of others supported by the company’s assets in violation of the articles of association or without prior approval of the shareholders’ general meeting or board of directors;

• entering into contracts or deals with the company in violation of the articles of association or without prior approval of the shareholders’ general meeting;

• using their position and powers to procure business opportunities for themselves or others that should have otherwise been available to the company or operating for their own benefits or managing on behalf of others businesses similar to that of the company without prior approval of the shareholders’ general meeting;

• accept and possess commissions paid by a third party for transactions conducted with the company;

• unauthorized divulgence of confidential business information of the company; or

• other acts in violation of their duty of loyalty 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 duties resulting in any loss to the company shall be personally liable to the company.

Finance and Accounting

Under the Company Law, a company shall establish financial and accounting systems according to laws, administrative regulations and the regulations of the financial department of the State Council and shall at the end of each financial year prepare a financial and accounting report which shall be audited by an accounting firm as required by law. The company’s financial and accounting report shall be prepared in accordance with provisions of the laws, administrative regulations and the regulations of the financial department of the State Council.

Pursuant to the Company Law, the company shall deliver its financial and accounting reports to all shareholders within the time limit stipulated in the articles of association and make its financial and accounting reports available at the company for inspection by the shareholders at least 20 days before the convening of an annual general meeting of shareholders. It must also publish its financial and accounting reports.

When distributing each year’s after-tax profits, it shall set aside 10% of its after-tax profits into a statutory common reserve fund (except where the fund has reached 50% of its registered capital).

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If its statutory common reserve fund is not sufficient to make up losses of the previous year, profits of the current year shall be applied to make up losses before allocation is made to the statutory common reserve fund pursuant to the above provisions.

After allocation of the statutory common reserve fund from after-tax profits, it may, upon a resolution passed at the shareholders’ general meeting, allocate discretionary common reserve fund from after-tax profits.

The remaining after-tax profits after making up losses and allocation of common reserve fund shall be distributed in proportion to the number of shares held by the shareholders, unless otherwise stipulated in the articles of association.

Shares held by the Company shall not be entitled to any distribution of profit.

The premium received through issuance of shares at prices above par value and other incomes required by the financial department of the State Council to be allocated to the capital reserve fund shall be allocated to the company’s capital reserve fund.

The Company’s reserve fund shall be applied to make up losses of the company, expand its business operations or be converted to increase the registered capital of the company. However, the capital reserve fund may not be applied to make up the company’s losses. Upon the conversion of statutory common reserve fund into capital, the balance of the statutory common reserve fund shall not be less than 25% of the registered capital of the company before such conversion.

The Company shall have no other accounting books except the statutory accounting books. Its assets shall not be deposited in any accounts opened in the name of any individual.

Appointment and Retirement of Accounting Firms

Pursuant to the Company Law, the appointment or dismissal of accounting firms responsible for the auditing of the company shall be determined by shareholders’ general meeting or board of directors in accordance with provisions of articles of association. The accounting firm should be allowed to make representations when the shareholders’ general meeting or board of directors conducts a vote on the dismissal of the accounting firm. The company should provide true and complete accounting evidences, books, financial and accounting reports and other accounting data to the accounting firm it employs without any refusal, withholding and misrepresentation.

The Special Regulations provide that a company shall employ an independent accounting firm complying with the relevant regulations of the State to audit its annual report and review and check other financial reports of the company. The accounting firm’s term of office shall commence from their appointment at a shareholders’ annual general meeting to the end of the next shareholders’ annual general meeting.

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Distribution of Profits

According to the Company Law, a company shall not distribute profits before losses are covered and the statutory common reserve is drawn. Under the Mandatory Provisions, a company shall appoint receiving agents on behalf of holders of the overseas listed and foreign invested shares to receive on behalf of such shareholders dividends and other distributions payable in respect of their overseas listed and foreign invested shares.

Amendments to Articles of Association

Any amendments to the company’s articles of association must be made in accordance with the procedures set out in the company’s articles of association. Any amendment of provisions incorporated in the articles of association in connection with the Mandatory Provisions will only be effective after approval by the company’s approval department authorized by the State Council and the CSRC. In relation to matters involving the company’s registration, its registration with the authority must also be changed.

Dissolution and Liquidation

According to the Company Law, a company shall be dissolved by reason of the following: (i) the term of its operations set down in the articles of association has expired or other events of dissolution specified in the articles of association have occurred; (ii) the shareholders’ general meeting have resolved to dissolve the company; (iii) the company is dissolved by reason of merger or division; (iv) the business license is revoked; the company is ordered to close down or be dissolved; or (v) the company is dissolved by the people’s court in response to the request of shareholders holding shares that represent more than 10% of the voting rights of all its shareholders, on the grounds that the company suffers significant hardship in its operation and management that cannot be resolved through other means, and the ongoing existence of the company would bring significant losses for shareholders.

In the event of (i) above, it may carry on its existence by amending its articles of association. The amendment of the articles of association in accordance with provisions set out above shall require approval of more than two thirds of voting rights of shareholders attending a shareholders’ general meeting.

Where the company is dissolved in the circumstances described in subparagraphs (i), (ii), (iv), or (v) above, a liquidation group shall be established and the liquidation process shall commence within 15 days after the occurrence of an event of dissolution. The members of the company’s liquidation group shall be composed of its directors or the personnel appointed by the shareholders’ general meeting. If a liquidation group is not established within the stipulated period, creditors may apply to the people’s court and request the court to appoint relevant personnel to form the liquidation group. The people’s court should accept such application and form a liquidation group to conduct liquidation in a timely manner.

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The liquidation group shall exercise the following powers during the liquidation period:

• to handle the company’s assets and to prepare a balance sheet and an inventory of the assets;

• to notify creditors through notice or public announcement;

• to deal with the company’s outstanding businesses related to liquidation;

• to pay any tax overdue as well as tax amounts arising from the process of liquidation;

• to claim credits and pay off debts;

• to handle the company’s remaining assets after its debts have been paid off; and

• to represent the company in civil lawsuits.

The liquidation group shall notify the company’s creditors within 10 days after its establishment and issue public notices in newspapers within 60 days. A creditor shall lodge his claim with the liquidation group within 30 days after receiving notification, or within 45 days of the public notice if he did not receive any notification. A creditor shall state all matters relevant to his creditor rights in making his claim and furnish evidence. The liquidation group shall register such creditor rights. The liquidation group shall not make any debt settlement to creditors during the period of claim.

Upon liquidation of properties and the preparation of the balance sheet and inventory of assets, the liquidation group shall draw up a liquidation plan to be submitted to the shareholders’ general meeting or people’s court for confirmation.

The company’s remaining assets after payment of liquidation expenses, wages, social insurance expenses and statutory compensation, outstanding taxes and debts shall be distributed to shareholders according to their shareholding proportion. It shall continue to exist during the liquidation period, although it can only engage in any operating activities that are related to the liquidation. The company’s properties shall not be distributed to the shareholders before repayments are made in accordance to the foregoing provisions.

Upon liquidation of the company’s properties and the preparation of the balance sheet and inventory of assets, if the liquidation group becomes aware that the company does not have sufficient assets to meet its liabilities, it must apply to the people’s court for a declaration for bankruptcy. Following such declaration, the liquidation group shall hand over all matters relating to the liquidation to the people’s court. Upon completion of the liquidation, the liquidation group shall submit a liquidation report to the shareholders’ general meeting or the people’s court for verification. Thereafter, the report shall be submitted to the registration

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Upon completion of the liquidation, the liquidation committee shall submit a liquidation report to the shareholders’ general meeting or relevant regulatory authorities for confirmation. Thereafter, the report shall be submitted to the company registration authority in order to cancel the company’s registration, and a public notice of its termination shall be issued. Members of the liquidation committee are required to discharge their duties honestly and perform their obligation according to laws. A member of the liquidation group is liable to indemnify the company and its creditors in respect of any loss arising from his intentional or gross negligence.

Overseas Listing

According to the Special Regulations, a company shall obtain the approval of the CSRC to list its shares overseas. According to Rule 2(6) of the Regulatory Guidelines for the Application Documents and Examination Procedures for the Overseas Share Issuance and Listing by Joint Stock Companies (《關於股份有限公司境外發行股票和上市申報文件及審核程序的監管指引》) promulgated by CSRC (effective from January 1, 2013), the approval documents for overseas stock issuance and listing by the company granted by CSRC shall be valid for a period of 12 months.

Loss of H Share Certificates

If a registered share certificate is lost, stolen or destroyed, the relevant shareholder may apply, in accordance with the relevant provisions set out in the Civil Procedure Law, to a people’s court to declare such certificate invalid. After the people’s court declares the invalidity of such certificate, the shareholder may apply to the company for a replacement share certificate. A separate procedure regarding the loss of overseas listed and foreign invested H Share Certificates is provided for in the Mandatory Provisions.

Suspension and Termination of Listing

The Company Law has deleted provisions governing suspension and termination of listing. The PRC Securities Law (2019 revision) (《中華人民共和國證券法》(2019年修訂)) has also deleted provisions regarding suspension of listing. Where listed securities fall under the delisting circumstances stipulated by the stock exchange, the stock exchange shall terminate its listing and trading in accordance with the business rules.

Where the stock exchange decides on delisting of securities, it shall promptly announce and file records with the securities regulatory authority of the State Council.

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Merger and Demerger

Companies may merge through merger by absorption or through the establishment of a newly merged entity. If it merges by absorption, the company which is absorbed shall be dissolved. If it merges by forming a new corporation, both companies will be dissolved.

SECURITIES LAW AND REGULATIONS

The PRC has promulgated a number of regulations that relate to the issue and trading of 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 of securities markets, supervising securities companies, regulating public offers 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. In April 1998, the State Council consolidated the two departments and reformed the CSRC.

The Interim Provisional Regulations on the Administration of Share Issuance and Trading (《股票發行與交易管理暫行條例》) deals with 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, the disclosure of information with respect to a listed company, investigation, penalties and dispute settlement.

On December 25, 1995, the State Council promulgated and implemented the Regulations of the State Council Concerning Domestic Listed Foreign Shares of 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 deal mainly with the issue, subscription, trading and declaration of dividends and other distributions of domestic listed and foreign invested shares and disclosure of information of joint stock limited companies having domestic listed and foreign invested shares.

The PRC Securities Law took effect on July 1, 1999 and was revised on August 28, 2004, October 27, 2005, June 29, 2013, August 31, 2014 and December 28, 2019, respectively. This is the first national securities law in the PRC, which is divided into 14 chapters and 226 articles regulating, among other things, the issue and trading of securities, takeovers by 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 shall comply with the relevant provisions of the State Council. to list its shares outside the PRC. Currently, the issue and trading of foreign issued shares (including H shares) are mainly governed by the rules and regulations promulgated by the State Council and the CSRC.

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ARBITRATION AND ENFORCEMENT OF ARBITRAL AWARDS

The Arbitration Law of the PRC (《中華人民共和國仲裁法》) (the “Arbitration Law”) was passed by the Standing Committee of the NPC on August 31, 1994, became effective on September 1, 1995 and was amended on August 27, 2009 and September 1, 2017. Under the Arbitration Law, an arbitration committee may, before the promulgation by the PRC Arbitration Association of arbitration regulations, formulate interim arbitration rules in accordance with the Arbitration Law and the Civil Procedure Law. Where the parties have by agreement provided arbitration as the method for dispute resolution, the people’s court will refuse to handle the case except when the arbitration agreement is declared invalid.

The Mandatory Provisions require an arbitration clause to be included in the articles of association of an issuer. Matters in arbitration include any disputes or claims in relation to the issuer’s affairs or as a result of any rights or obligations arising under its articles of association, the Company Law or other relevant laws and administrative regulations.

Where a dispute or claim of rights referred to in the preceding paragraph is referred to arbitration, the entire claim or dispute must be referred to arbitration, and all persons who have a cause of action based on the same facts giving rise to the dispute or claim or whose participation is necessary for the resolution of such dispute or claim, must comply with the arbitration. Disputes in respect of the definition of shareholder and disputes in relation to the issuer’s register of shareholders need not be resolved by arbitration.

A claimant may elect for arbitration to be carried out at either the China International Economic and Trade Arbitration Commission (中國國際經濟貿易仲裁委員會)(“CIETAC”) in accordance with its rules or the Hong Kong International Arbitration Center (“HKIAC”) in accordance with its Securities Arbitration Rules (the “Securities Arbitration Rules”). Once a claimant refers a dispute or claim to arbitration, the other party shall submit to the arbitral body elected by the claimant. If the claimant elects for arbitration to be carried out at the HKIAC, any party to the dispute or claim may apply for a hearing to take place in Shenzhen in accordance with the Securities Arbitration Rules. In accordance with the Arbitration Regulations of CIETAC (《中國國際經濟貿易仲裁委員會仲裁規則》) which was amended on November 4, 2014 and implemented on January 1, 2015, CIETAC shall deal with economic and trading disputes over contractual or non-contractual transactions, based on an agreement of the parties, including disputes involving Hong Kong based on the agreement of the parties. The arbitration commission is established in Beijing and its branches and centers have been set up in Shenzhen, Shanghai, Tianjin, Chongqing, Zhejiang, Hubei, Fujian, Shanxi, Jiangsu, Sichuan, Shandong and Hainan.

Under the Arbitration Law and the Civil Procedure Law, an arbitral award is final and binding on the parties. If a party fails to comply with an award, the other party to the award may apply to the people’s court for enforcement. A people’s court may refuse to enforce an

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A party seeking to enforce an arbitral award of PRC arbitration panel against a party who, or whose property, is not within the PRC, may apply to a foreign court with jurisdiction over the case for enforcement. Similarly, an arbitral award made by a foreign arbitration body may be recognized and enforced by the PRC courts in accordance with the principles of reciprocity or any international treaty 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 June 10, 1958 pursuant to a resolution of the Standing Committee of the NPC passed on December 2, 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 recognized and enforced by all other parties to the New York Convention, subject to their right to refuse enforcement under certain circumstances, including where the enforcement of the arbitral award is against the public policy of the state to which the application for enforcement is made. It was declared by the Standing Committee of the NPC simultaneously with the accession of the PRC that (i) the PRC will only recognize and enforce foreign arbitral awards on the principle of reciprocity and (ii) the PRC will only apply the New York Convention in disputes considered under PRC laws to arise from contractual and non-contractual mercantile legal relations.

An arrangement was reached between Hong Kong and the Supreme People’s Court for the mutual enforcement of arbitral awards. On June 18, 1999, the Supreme People’s Court adopted the Arrangement on Mutual Enforcement of Arbitral Awards between Mainland China and Hong Kong (《關於內地與香港特別行政區相互執行仲裁裁決的安排》), which became effective on February 1, 2000. In accordance with this arrangement, awards made by PRC arbitral authorities under the Arbitration Law can be enforced in Hong Kong, and Hong Kong arbitration awards are also enforceable in the PRC.

Judicial judgment and its enforcement

According to the Arrangement on Mutual Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland China and of the Hong Kong Special Administrative Region Pursuant to Agreed Jurisdiction by Parties Concerned (《最高人民法院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》) promulgated by the Supreme People’s Court on July 3, 2008 and implemented on August 1, 2008, in the case of final judgment, defined with payment amount and enforcement power, made between the court of China and the court of the Hong Kong Special Administrative Region in a civil and commercial case with written jurisdiction agreement, any party concerned may apply to the People’s Court of China or the court of the Hong Kong Special Administrative Region for recognition and enforcement based on this arrangement. “Choice of court agreement in written” refers to a written agreement defining the exclusive jurisdiction of either the People’s Court of China or the court of the Hong Kong Special

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Administrative Region in order to resolve dispute with particular legal relation occurred or likely to occur by the party concerned. Therefore, the party concerned may apply to the Court of China or the court of the Hong Kong Special Administrative Region to recognize and enforce the final judgment made in China or Hong Kong that meet certain conditions of the aforementioned regulations.

Shanghai-Hong Kong Stock Connect

On April 10, 2014, CSRC and Hong Kong Securities and Futures Commission (hereinafter referred to as “HKSFC”) issued the Joint Announcement of China Securities Regulatory Commission and Hong Kong Securities and Futures Commission – Principles that Should be Followed when the Pilot Program that Links the Stock Markets in Shanghai and Hong Kong is Expected to be Implemented and approved in principle the launch of the pilot program that links the stock markets in Shanghai and Hong Kong (hereinafter referred to as “Shanghai-Hong Kong Stock Connect”) by the Shanghai Stock Exchange (hereinafter referred to as “SSE”), the Stock Exchange, China Securities Depository and Clearing Corporation Limited (hereinafter referred to as “CSDCC”) and HKSCC. Shanghai-Hong Kong Stock Connect comprises the two portions of Northbound Trading Link and Southbound Trading Link. Southbound Trading Link refers to the entrustment of China securities houses by China investors to trade stocks listed on the Stock Exchange within a stipulated range via filing by the securities trading service company established by the SSE with the Stock Exchange. During the initial period of the pilot program, the stocks of Southbound Trading Link consist of constituent stocks of the Stock Exchange Hang Seng Composite Large Cap Index and the Hang Seng Composite MidCap Index as well as stocks of A+H stock companies concurrently listed on the Stock Exchange and the SSE. The total limit of Southbound Trading Link is RMB250 billion and the daily limit is RMB10.5 billion. During the initial period of the pilot program, it is required by HKSFC that China investors participating in Southbound Trading Link are only limited to institutional investors and individual investors with a securities account and capital account balance of not less than RMB500,000.

On November 10, 2014, CSRC and HKSFC issued a Joint Announcement, approving the official launch of Shanghai-Hong Kong Stock Connect by SSE, the Stock Exchange, CSDCC and HKSCC. Pursuant to the Joint Announcement, trading of stocks under Shanghai-Hong Kong Stock Connect will commence on November 17, 2014.

On September 30, 2016, CSRC issued the Filing Provision on the Placement of Shares by Hong Kong Listed Companies with Domestic Original Shareholders under Southbound Trading Link which came into effect on the same day. The act of the placement of shares by Hong Kong listed companies with domestic original shareholders under Southbound Trading Link shall be filed with CSRC. Hong Kong listed companies shall file the application materials and approved documents with CSRC after obtaining approval from the Stock Exchange for their share placement applications. CSRC will carry out supervision based on the approved opinion and conclusion of the Hong Kong side.

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This Appendix sets out summaries of the main clauses of our Articles of Association adopted on July 21, 2021 which shall become effective as at the date on which the H shares are [REDACTED] on the Stock Exchange. As the main purpose of this Appendix is to provide potential investors with an overview of the Articles of Association, it may not necessarily contain all information that is important for prospective investors. As discussed in the appendix headed “Appendix VII – Documents Delivered to the Registrar of Companies in Hong Kong and Available for Inspection” to this document, the full document of the Articles of Association in Chinese is available for examination.

1 DIRECTORS AND BOARD OF DIRECTORS

(1) Power to allocate and issue shares

The Articles of Association does not contain clauses that authorize the Board of Directors to allocate or issue shares. The Board of Directors shall prepare suggestions for share allotment or issue, which are subject to approval by the Shareholders at the general Shareholders’ meeting in the form of a special resolution. Any such allotment or issue shall be in accordance with the procedures stipulated in appropriate laws, administrative regulations and supervision rules of shares listed region.

(2) Power to dispose assets of our Company or any subsidiary

In any case that the Board of Directors intends to dispose assets, if the sum of the expected value of the fixed assets to be disposed of, and the amount or value of the value received from the fixed assets of our Company disposed of within the four months immediately preceding this suggestion for disposal exceeds 33% of the value of fixed assets of our Company indicated on the latest audited balance sheet submitted at the Shareholders’ meeting, the Board of Directors shall not dispose of or agree to dispose of the fixed assets without the approval of the Shareholders’ meeting.

For the purposes of the Articles of Association, a disposition of fixed assets includes certain acts of transfer of interests in assets but does not include the provision of fixed assets as security.

The validity of the transactions with respect to the disposal of fixed assets of our Company shall not be affected by the violation of the above restrictions contained in the Articles of Association.

(3) Emoluments or compensation for Directors and Supervisors

As provided in the written contract entered between our Company and the Directors or Supervisors in connection with their emoluments, they are entitled to compensation or other payments subject to the approval of the Shareholders at the Shareholders’ meeting in advance. The aforesaid emoluments include:

i. Emoluments in respect of his service as a Director, Supervisor or senior management of our Company;

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ii. Emoluments in respect of his service as a Director, Supervisor or senior management of any subsidiary of our Company;

iii. Emoluments in respect of other service in relation to the management of our Company and any subsidiary of our Company; and

iv. Payment by way of compensation for loss of office or retirement from office of a Director or Supervisors.

It should be concluded in the emolument contract that where our Company is to be acquired, the Directors and Supervisors should be entitled to compensation or other payments for loss of office or retirement from office subject to the approval of the Shareholders at the Shareholders’ meeting in advance.

Acquisition of our Company refers to any of the following circumstances:

i. An offer made by any person made to all Shareholders; or

ii. An offer is made by any person with a view to the offeror becoming the controlling shareholder of our Company. The definition of controlling shareholder is the same as defined in the Articles of Association.

If the relevant Director or Supervisor fails to comply with the above requirements, any payment received shall belong to the person who sells the shares for accepting the aforesaid offer. The Director or Supervisor shall bear all expenses arising from the distribution of such payments to the person in a proportional manner and all related expenses shall not be deducted from these payments distributed.

(4) Loans or Guarantees of Loans to Directors, Supervisors or other management personnel

Our Company shall neither provide the Directors, Supervisors or senior management of our Company or our parent company with loans or loan guarantees either directly or indirectly nor provide persons related to the above personnel with loans or loan guarantees. In the event that our Company provides loans in violation of this restriction, the person who receives the loan(s) must pay off the loan(s) immediately, regardless of the conditions of loans. Any loan guarantee provided by our Company in violation of the above requirements shall not be mandatorily enforced against us, unless under the following circumstances:

i. The loan provider unknowingly provides loans to personnel related to the Directors, Supervisors or senior management of our Company or its parent company; or

ii. The collateral provided by our Company is sold lawfully by the lender to the buyer in good faith.

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The following circumstances are exempted from the above clauses:

(i) Our Company provides our subsidiaries with loans or loan guarantees;

(ii) Our Company provides any of the Directors, Supervisors or senior management with loans, loan guarantees or any other fund pursuant to the employment contracts approved at the Shareholders’ meeting to pay all expenses incurred for the purpose of our Company or performing his duties owed to our Company; and

(iii) In case that the normal scope of business of our Company covers the provision of loans or loan guarantees, our Company may provide any of the Directors, Supervisors or senior management and other related personnel with loans or loan guarantees, provided that the conditions governing the above loans or loan guarantees shall be normal commercial conditions.

(5) Provide financial assistance for acquiring the shares of the Company or shares of any subsidiary

Subject to the Articles of Association, our Company or our subsidiaries (including our affiliated enterprises) shall not provide any financial assistance at any time or in any kind to personnel that acquires or plans to acquire our shares. Such personnel include any who undertake obligations, directly or indirectly, from acquiring the shares; and our Company or any of our subsidiaries (including our affiliated enterprises) shall not provide personnel mentioned in the preceding paragraph with financial assistance at any time or in any manner, to mitigate or exempt the obligations of the above personnel.

For the purpose of the above provisions, “Financial assistance” includes, but is not limited to:

i. Gifts;

ii. Guarantees (including acts of the guarantor assuming liabilities or providing properties to ensure that the obligor performs the obligations), compensation (excluding compensation arising from mistakes of our Company), release or waiver of rights;

iii. Provision of loans or signing of contracts whereby our Company performs some obligations before others, change of the parties to the loans/contracts as well as the assignment of the rights in the loans/contracts; and

iv. Financial assistance provided by our Company in any other manner when it is insolvent, has no net assets, or will suffer significant decreases in net assets.

“Assuming obligations” includes obligator undertaking obligations by way of contract or the making of an arrangement (whether enforceable or not, and whether made on its own account or with any other persons), or changing its financial status in any other manner.

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The following transactions are not deemed to be prohibited, unless prohibited by relevant laws, administrative regulations, regulations of the authorities and regulatory documents:

i. Related financial assistance provided by our Company which is in good faith in our interest and the main purpose of the financial assistance is not to acquire our shares or is an incidental part of a master plan of our Company;

ii. The lawful distribution of our properties by way of dividend;

iii. The allotment of bonus shares as shares;

iv. Reducing the registered capital, redeeming the shares or adjusting the equity structure pursuant to the Articles of Association;

v. Our Company granting loans within our scope of business and in the ordinary course of our business, provided that such loans shall not result in reduction in the net assets of our Company or even if the net assets are reduced, such financial assistance is paid from the profit available for distribution; and

vi. Our Company providing the employee stock ownership plan with fund, provided that such financial assistance shall not result in reduction in the net assets of our Company or, even if the net assets are reduced, such financial assistance is paid from the profit available for distribution.

(6) Disclosure of interests in contracts, transactions or arrangements with the Company

Where a Directors, Supervisors and senior management has material interests in the contracts, transactions or arrangements that our Company has entered into or plans to enter into directly or indirectly (except for employment contracts that our Company has entered into with the Directors, Supervisors and senior management), the above personnel shall disclose the nature and degree of their interests to the Board of Directors as soon as possible no matter whether the above contracts, transactions or arrangements are subject to the approval of the Board of Directors in normal circumstances.

With respect to any contract, transaction or arrangement in which a Director or his Associates (defined in Hong Kong Listing Rules) have a material interest, the Director shall not vote and shall not be included in the quorum, except for the exceptions provided in Note 1 Appendix 3 in Hong Kong Listing Rules.

Unless the Directors, Supervisors and senior management who have interests have made disclosure to the Board of Directors in accordance with the above requirements and the Board of Directors approves the matters at the meeting in which they are not included in the quorum nor participate in voting, our Company shall have the right to cancel the contracts, transactions or arrangements, except where the opposite party is a party in good faith without knowledge of the acts of related Directors, Supervisors and senior management violating their obligations.

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Where related personnel of the Directors, Supervisors and senior management have interests in certain contracts, transactions and arrangements, the relevant Directors, Supervisors and senior management shall be deemed to have interests.

Prior to our Company’s first considering the relevant contracts, transactions or arrangements, if the Directors, Supervisors and senior management have notified the Board of Directors in writing and stated that with regard to the content of such notice, they have interest in certain contracts, transactions and arrangements thereafter. And within the scope specified by such notice, the relevant Directors, Supervisors and senior management should be considered having made disclosures which are in accordance with this Article of Association.

(7) Remuneration

Our Company shall sign written agreements with the Directors and Supervisors regarding remuneration, which shall be subject to prior approval of the general Shareholders’ meeting.

(8) Appointment, Resignation and Dismissal

The Board of Directors consists of nine Directors, at least three of whom are independent non-executive Directors. The Board of Directors has one chairman. Directors are elected at the general Shareholders’ meeting. The Directors need not hold any of our shares.

The chairman of the Board shall be elected and dismissed by a vote of more than one half of the Directors. Provided that it is in compliance with relevant laws, regulations and rules as well as the regulatory rules of which the Company’s shares are listed, the general Shareholders’ meeting may remove any Director whose term has not expired by an ordinary resolution without affecting any claim for damages that may be made pursuant to any contract.

The chairman of the Board and other Directors serve three-year terms. Upon expiration of the term, the Director may be re-elected. Director can be the general manager or other senior management personnel at the same time. However, the number of the Directors who are also general manager or other senior management personnel shall not be more than half of the total number of Directors. There is no provision in the Articles of Association that imposes any age limit for Directors beyond which retirement of a Director is mandatory.

None of the following persons shall serve as our Director, Supervisor or senior management:

i. A person who has no civil capacity or has limited civil capacity;

ii. A person who has been imposed penalty for the offense of corruption, bribery, embezzlement, larceny, or disrupting the social economic order and is within five years of the expiry date of punishment or has been deprived of political rights because of this conviction and is within five years of the expiry date of the sentence;

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iii. A person who is a former director, factory manager or general manager of a company or enterprise that is bankrupt and liquidated because of poor operation, was personally liable for the bankruptcy of such company or enterprise, and is within three years of the date of completion of bankruptcy and liquidation of such company or enterprise;

iv. A person who has served as the legal representative of a company or enterprise whose business license was revoked or was ordered to close due to violation of laws, was personally liable, and is within three years of the date on which the business license of such company or enterprise was revoked;

v. A person who has a relatively large sum of debt, which was not paid at maturity;

vi. A person who is investigated by the judicial agencies for violation of criminal law and whose case is pending;

vii. A person who is prohibited to serve leadership in a company pursuant to laws and administrative regulations;

viii. A person judged by the competent agencies to have violated the provisions of relevant securities laws, being involved in deceptive or dishonest acts and is within five years of the date on which the judgment was made;

ix. A person who is not a natural person; or

x. Any other person who is otherwise not eligible under laws, administrative regulations, regulations of the authorities, regulatory documents and other conditions set out by the relevant regulatory bodies.

The election, appointment or employment of the Directors, Supervisors or other senior management shall be invalid if such election, appointment or employment is against the Articles of Association. If the Directors, Supervisors or senior management falls into the situations provided in the above-mentioned situations during their term of office, they would be dismissed by our Company.

The validity of an act of the Directors or senior management on behalf of our Company to bona fide third parties shall not be affected by any irregularities in their appointment, election or qualifications.

(9) Borrowing powers

The Board of Directors shall be entitled to decide to borrow money within the scope of authorization by the general Shareholder’s meeting or it is required according to the listing rules of the stock exchange where our Company is [REDACTED].

The Board of Directors shall be entitled to develop proposals for our Company to issue bonds and to list its Shares, and that such bond issues must be approved by the Shareholders by a special resolution at the general Shareholders’ meeting.

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(10) Duties

The Directors, Supervisors and senior management shall bear the obligations of good faith and diligence towards our Company. In the event of violation of obligations owed to our Company by the Directors, Supervisors and senior management, we shall have the right to take the following measures in addition to various rights and remedial measures stipulated in laws and administrative regulations:

i. Require related Directors, Supervisors or senior management to compensate our Company for losses sustained as a result of their neglect of duty;

ii. Cancel any contract or transaction entered into between our Company and related Directors, Supervisors or senior management as well as any contract or transaction entered into between our Company and third person when the third person knew or should have known that the Directors, Supervisors or senior management acting on behalf of our Company violated their obligations owed to our Company;

iii. Require the relevant Directors, Supervisors or senior management to turn over the proceeds obtained from the violation of their obligations;

iv. Recover funds collected by the relevant Directors, Supervisors or senior management that should have been collected for our Company, including but not limited to commissions;

v. Require the relevant Directors, Supervisors or senior management to return the interest earned or that may be earned from funds that should have been paid to our Company;

When performing their duties, the Directors, Supervisors and senior management of the Company must comply with the principle of integrity and shall not put themselves in situations where their own interests may conflict with the obligations they have undertaken. This principle includes, without limitation, performing the following obligations:

i. Acting honestly in the best interests of our Company as the starting point of any action;

ii. Exercising powers within and not exceeding the scope of authority;

iii. Exercising conferred discretionary powers personally without being manipulated by others; not transferring discretionary powers to other persons unless permitted by laws, administrative regulations or with the informed consent given in a general Shareholders’ meeting;

iv. Treating Shareholders of the same class equally and Shareholders of different classes fairly;

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v. Entering into contract, transaction or arrangement with our Company is not allowed, unless in line with the Articles of Association or otherwise by the approval of the general Shareholders’ meeting with its full knowledge;

vi. Seeking private gain using the properties of our Company in any manner is not allowed, unless agreed by the general Shareholders’ meeting with its full knowledge;

vii. Using one’s position to take bribes or other illegal income is not allowed, nor is any form of embezzlement of our property, including, but not limited to, opportunities beneficial to our Company;

viii. Accepting commissions associated with transactions of our Company is not allowed unless agreed by the general Shareholders’ meeting with its full knowledge;

ix. Compliance with the Articles of Association, faithfully execute one’s duties and protect the Company’s interests, and not to exploit one’s position and power in the Company to advance one’s own private interests;

x. Not to compete with our Company in any kind unless agreed by the general Shareholders’ meeting with its full knowledge;

xi. Not to lend our Company’s funds to any other person, misappropriate our funds or deposit the assets or funds of our Company in an account opened in one’s own name or other names, and not to provide securities for the debt of our shareholder or any other people using our Company’s assets, unless otherwise provided by the laws, regulations or the Articles of Association;

xii. Disclosure of confidential information relating to our Company obtained during employment without the consent of the general Shareholders’ meeting with its full knowledge; unless in the interest of our Company, using such information is also not allowed; however, under the following circumstances the information may be disclosed to a court or other competent government agencies as required by:

(i) The provisions of the law;

(ii) For the public interests;

(iii) The interests of the Directors, Supervisors or senior management.

The relevant personnel shall return the income obtained from violation of the above provisions to our Company and shall bear the liability of compensation if our Company suffers damage.

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The Directors, Supervisors and senior management may not direct the following personnel or institutions (“related personnel”) to do what they are prohibited from doing:

i. Spouses or minor children of the Directors, Supervisors and senior management;

ii. Trustors of the Directors, Supervisors and senior management or the persons mentioned in the preceding paragraph;

iii. Partners of the Directors, Supervisors and senior management or persons mentioned in i and ii above;

iv. Any company under de facto control by the Directors, Supervisors and senior management individually or jointly with the persons or other directors, supervisors and senior management of companies mentioned in i, ii and iii above; and

v. Directors, Supervisors or senior management of the controlled companies mentioned in the preceding paragraph.

The good faith obligation of the Directors, Supervisors and senior management may not necessarily cease with the termination of their terms; their obligation to keep the trade secrets of our Company in confidence shall survive the termination of their terms. Other duties may continue for such period as fairness may require depending on the time lapse between the termination and the act concerned and any circumstance and condition under which the relationships between them and the Company are terminated.

Unless otherwise provided in the Articles of Association, liabilities of Directors, Supervisors and senior management arising from the violation of specific duties may be dissolved by informed general Shareholders’ meeting.

Apart from the obligations set forth in related laws, administrative regulations or the listing rules of the stock exchange where the shares of the Company are listed, the Directors, Supervisors or senior management shall assume the following obligations for each of the Shareholders when exercising their rights and performing their responsibilities:

i. They shall not cause our Company to operate beyond the scope of business indicated on our business license;

ii. They shall sincerely take the best interests of our Company as the starting point of any action;

iii. They may not deprive our Company of our assets in any manner, including, but not limited to, opportunities beneficial to our Company; and

iv. They shall not deprive the Shareholders of personal rights and interests, including, but not limited to, the right to receive dividends and to vote, except for restructuring of our Company approved at the Shareholders’ meeting pursuant to the provisions of the Articles of Association.

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The Directors, Supervisors and senior management of the Company have the responsibility when exercising their rights or carrying out their obligations to act with the care, diligence and skill due from a reasonably prudent person under similar circumstances.

In the event of any loss caused to our Company as a result of violation of any laws, administrative regulations or Articles of Association by the Directors or senior management when performing their duties in our Company, the Shareholders holding 1% or more shares separately or jointly for over 180 consecutive days may submit a written request to the Board of Supervisors to file an action with the people’s court. Where supervisors violate laws, administrative regulations or the Articles of Association in their duty performance and cause loss to our Company, the Shareholders may submit a written request to the Board of Directors to file an action with the people’s court.

In the event that the Board of Supervisors or the Board of Directors refuse to file an action upon receipt of the Shareholders’ written request specified in the preceding paragraph, or fail to file an action within 30 days upon receipt thereof, or in the event that the failure to immediately file an action in an emergency case will cause irreparable damage to the interests of our Company, the Shareholder(s) specified in the preceding paragraph may, in their own name, directly file an action to the court for the interest of our Company.

In the event of any other person infringes upon the legitimate rights and interests of our Company and causes losses thereto, the shareholder(s) specified in this Articles of Association may file an action with the competent court pursuant to the provisions of the preceding two paragraphs.

In the event of a Director or senior management person violates laws, administrative regulations or our Company’s Articles of Association, thereby damaging the interests of the Shareholder(s), the Shareholder(s) may file an action with the competent court.

2 MODIFICATION OF THE ARTICLES OF ASSOCIATION

Our Company may amend the Articles of Association based on the provisions of the laws, administrative regulations and Articles of Association.

Where the amendments to the Articles of Association passed by the general Shareholders’ meetings need the examination and approval of the competent authorities, these amendments shall be submitted hereto for approval. Where the amendment of the Articles of Association involves registration, it shall be necessary to carry out the lawfully prescribed procedures for registration change.

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3 VARIATION OF RIGHTS OF EXISTING SHARES OR CLASSIFIED SHARES

Any plan of our Company of changing or abolishing the rights of a classified Shareholder is subject to the approval of the general Shareholders’ meeting in the form of a special resolution and the approval of the affected classified Shareholders at a separately convened the Shareholders’ meeting before it can be implemented.

No approval by a general Shareholders’ meeting or a classified Shareholders’ meeting is required for variation or abrogation of rights of classified shareholders resulting from any change in domestic or foreign laws and administrative regulations and listing rules where the Company’s shares are listed, and those resulting from decisions made by domestic or foreign regulatory authorities.

The rights of a classified Shareholder shall be deemed as changed or abolished under the following circumstances:

i. Increase or decrease the number of the classified shares, or increase or decrease the number of classified shares with equal or more voting rights, distribution rights, other privileges than this type of classified shares;

ii. Convert all or part of the classified shares into other classes or convert another class of shares, partly or wholly, into the shares of such class or grant such conversion right;

iii. Remove or reduce the right of the classified shares to accrued dividends generated or rights to cumulative dividends;

iv. Reduce or remove a dividend preference or a liquidation preference attached to shares of such class;

v. Add, remove or reduce the right of the classified shares to convert share rights, options rights, voting rights, transfer rights, and pre-emptive rights, or the right to obtain the securities of our Company;

vi. Remove or reduce the right of the classified shares to receive funds payable of our Company in specified currencies;

vii. Create new classified shares entitled to equal or more voting rights, distribution rights, or other privileges than the classified shares;

viii. Restrict the transfer or ownership of the classified shares or increase such restrictions;

ix. Issue subscription or conversion rights for this or other classified shares;

x. Increase the rights and privileges of other classes of shares;

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xi. The restructuring plan of our Company may constitute different classes of Shareholders to assume responsibilities disproportionately in restructuring; and

xii. Amend or abolish clauses stipulated in this section of our Articles of Association.

Whether or not the affected classified Shareholders have voting rights at the Shareholders’ meeting, in the event of matters described above from ii through viii, xi to xii, they have voting rights at the classified Shareholders’ meeting, but the Shareholders that have interests at stake shall have no voting rights at the classified Shareholders’ meeting.

Shareholders that have interests at stake include:

i. Where the Company makes an offer to all the Shareholders at the same ratio according to this Articles of Association or purchase their own shares through public transaction in the Stock Exchange, Shareholders that have interests at stake refer to controlling shareholders as defined in this Articles of Association;

ii. Where our Company purchase its own shares through reaching an agreement outside the Stock Exchange and in accordance with the Articles of Association, Shareholders that have interests at stake shall mean the Shareholders who are relevant to such agreement;

iii. In our Company’s re-organization plan, Shareholders that have interests at stake shall mean Shareholder who bear liability at a rate that is lower than other Shareholders in the same class or who hold different interests with other Shareholders in the same class.

The resolution of the classified Shareholders’ meeting shall be passed by votes representing more than two thirds of shareholding with voting rights attending the classified Shareholders’ meeting.

At least 20 business days before convening an annual classified Shareholders’ meeting, or 15 days or 10 business days (the longer one would prevail, excluding the day sending the notice and the day convening the meeting) before convening an extraordinary classified Shareholders’ meeting, our Company shall send a written notice to inform all registered holders of the classified shares on matters to be deliberated at the meeting, as well as the date and venue of the meeting.

For shareholders holding domestic shares, the notice of Shareholder’s meeting could be in the form of announcement, which should be published on one or more newspapers designated by the security regulatory authority of the State Council. All the shareholders holding domestic shares would be considered having received the notice regarding Shareholder’s meeting once the announcement is published. For shareholders holding overseas listed foreign shares, the announcement could be published on the website designated by Hong Kong Exchange Stock or the website of our Company. All the shareholders holding overseas listed foreign shares would be considered having received the notice regarding Shareholder’s meeting once the announcement is published.

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Where there are special rules in the listing rules of the stock exchange where the shares are listed, the special rules prevail.

Insofar as possible, any classified Shareholders’ meeting shall be held in accordance with the same procedures as those of the Shareholders’ meeting, and unless otherwise provided in the Articles of Association, any clause that relates to the procedures for convening the Shareholders’ meeting in the Articles of Association shall apply to classified Shareholders’ meeting.

Apart from the holders of other classified shares, the holders of domestic shares and the holders of overseas listed foreign shares are deemed as different classified Shareholders.

The special procedures for voting by the classified Shareholders shall not apply under the following circumstances:

i. Upon the approval by a special resolution at the general Shareholders’ meeting, our Company either separately or concurrently issues domestic shares and overseas listed foreign shares once every 12 months, and the number of those domestic shares and overseas listed foreign shares to be issued shall not account for more than 20% of each of its outstanding shares;

ii. The plan to issue domestic shares and overseas listed foreign shares upon the establishment of our Company is completed within 15 months of the date of approval by the securities regulatory authorities of the State Council; and

iii. Transfer of shares held by holders of domestic unlisted shares to overseas investors or domestic unlisted shares to be converted into foreign shares listed overseas under the approval by the securities regulatory authority of the State Council and Hong Kong Stock Exchange, and are dealt with on overseas stock exchanges.

iv. Upon the approval by the securities regulatory authorities of the State Council, the domestic shares and foreign shares under unlisted transactions are converted to overseas listed foreign shares which are listed and traded overseas markets.

4 SPECIAL RESOLUTIONS NEEDED TO BE ADOPTED BY ABSOLUTE MAJORITY VOTE

The resolutions of the Shareholders’ meeting shall be divided into ordinary resolutions and special resolutions.

An ordinary resolution may be adopted by a simple majority of the votes held by the Shareholders (including proxies of Shareholders) attending the general Shareholders’ meeting.

A special resolution can be adopted by a two-thirds majority of the votes held by the Shareholders (including proxies of Shareholders) attending the general Shareholders’ meeting.

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5 VOTING RIGHTS

The ordinary Shareholders have the right to attend or appoint a proxy to attend and vote at the general Shareholders’ meeting. When voting at the general Shareholders’ meeting, the Shareholder (including proxy) may exercise his or her voting rights in accordance with the number of shares with voting power held with each share representing one vote.

General Shareholders’ meeting adopt vote by hands or open ballot. When voting at a general Shareholders’ meeting, Shareholders (including their proxies) who are entitled to two or more votes are not required to vote against or in favour with their total number of votes.

When the number of dissenting votes equals the number of supporting votes, regardless of voting by ballot or show of hands, the chairman of the Board of Directors is entitled to one additional vote.

6 RULES ON GENERAL SHAREHOLDERS’ MEETINGS

The general Shareholders’ meetings are divided into annual general Shareholders’ meetings and extraordinary general Shareholders’ meetings. The annual general shareholders’ meeting shall be convened once a year and be held within six months of the end of the previous fiscal year.

7 ACCOUNTING AND AUDITS

(1) Financial and accounting policies

Our Company shall develop its financial accounting policies pursuant to laws, administrative regulations and rules developed by the competent department. Where there are special rules in the listing rules of the stock exchange where the shares are listed, the special rules would prevail.

The Board of Directors shall submit the financial reports to Shareholders, as required by the laws, rules and regulations or regulatory documents to be prepared by our Company, at every annual general Shareholders’ meetings.

Apart from the PRC accounting standards and regulations, the financial statements of our Company shall also conform to international accounting standards or the accounting standards of overseas areas where the shares are listed. In the event of any major discrepancy between the financial statements prepared in accordance with the two types of accounting standards, such difference must be provided in the notes to the financial statements. As to the distribution of after-tax profits of our Company in a fiscal year, the after-tax profits indicated on the two financial reports, whichever is lower shall prevail.

Our Company shall make its financial reports available at the Company for inspection by the Shareholders 20 days before the annual general Shareholders’ meeting is convened. Each Shareholder is entitled to obtain one copy of the financial report.

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Our Company shall send the financial reports, together with the balance sheet and income statement or income and expenditure statement to each of the holders of overseas listed foreign shares by postage-paid mail or by the manner, including publication on the Company’s website or website of the Hong Kong Stock Exchange and other websites provided by Hong Kong Listing Rules revised from time to time, as allowed in laws and regulation of the region where our Company’s shares are listed and the listing rules of the stock exchange where our Company’s shares are listed at least 21 days before the annual general Shareholders’ meeting is convened and the recipient’s address shall be the address as registered in the register of Shareholders.

The interim results or financial information published or disclosed by our Company shall at the same time be prepared in accordance with the PRC accounting standards, rules and regulations as well as international accounting standards or the accounting standards of the overseas area in which the shares are listed.

Our Company shall publish the financial reports twice in each accounting year. Interim financial reports shall be published within 60 days of the end of the first six months of a fiscal year, while the annual financial report shall be published within 120 days of the end of each accounting year.

(2) Appointment and Dismissal of Accountants

Our Company shall appoint an independent accounting firm that meets appropriate requirements of the relevant regulations of the PRC to be responsible for auditing its annual financial report and reviewing its other financial reports.

The first accounting firm of our Company can be appointed by the founding meeting before the first annual general Shareholders’ meeting and the term of the appointment will expire at the close of the first annual general Shareholders’ meeting. In event that the founding meeting does not exercise such power, the Board of Directors shall take it.

The term of the accounting firm appointed by our Company shall start at the close of such annual general Shareholders’ meeting of the Company and continue until the close of the next annual general Shareholders’ meeting.

If the position of an appointed accounting firm is vacant, the Board of Directors may appoint an accounting firm before the start of general Shareholders’ meeting. However, if during the vacant period, our Company has other incumbent accounting firm, such accounting firm may take the vacant.

The Shareholders may replace the accounting firm through an ordinary resolution at the general Shareholders’ meeting prior to the expiration of the term of any accounting firm notwithstanding the terms and conditions of the contract howsoever entered into between our Company and the accounting firm. With respect to the compensation rights against the Company by the relevant accounting firm due to dismissal shall not be affected thereof.

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8 NOTICE AND AGENDA OF GENERAL SHAREHOLDERS’ MEETINGS

The general Shareholders’ meeting is the authorized organ of our Company that performs duties and exercises powers in accordance with the law.

Under any of the following circumstances, the Board of Directors shall convene an extraordinary general Shareholders’ meeting within two months:

i. The number of Directors is less than the number specified in the PRC Company Law or less than two thirds of the number required in the Articles of Association;

ii. The uncovered losses of our Company reach one-third of its total paid-in share capital;

iii. The Shareholders with 10% or more shares of the Company separately or jointly request to convene an extraordinary general Shareholders’ meeting in writing (the number of shares shall be calculated by the day of the request);

iv. The Board of Directors considers it necessary;

v. The Board of Supervisors considers it necessary;

vi. Any other circumstances stipulated in laws, administrative regulations, regulations of the authorities, the Articles of Association and the listing rules of stock exchange of the place in which our Company’s shares are listed.

In the event that the Board of Director agree to convene an extraordinary general Shareholders’ meeting, the notice of convening extraordinary general Shareholders’ meeting shall be issued within 5 days after the Board of Directors made a resolution. With regard to the proposal of convening an extraordinary general Shareholders’ meeting made by the Board of Supervisors, if the Board of Directors made a rejection or does not respond within 10 days after it receiving the proposal, it shall be viewed as the Board of Directors is unable to or fails to perform its meeting duty of convening the general Shareholders’ meeting and the Board of Supervisors may convene and preside over the meeting by its own.

Shareholders who separately or jointly hold 10% or more of the shares may request in writing to convene an extraordinary Shareholders’ meeting. If the Board of Directors does not issue a notice of convening the meeting within 10 days after receiving the above written requirement, or refused to convene, the shareholders who make the request may request the Board of Supervisors in writing to convene the meeting. If the Board of Supervisors does not issue the notice about convening the meeting within 5 days after receiving the above written requirement, the shareholders who make the request could convene and preside the meeting by themselves.

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In the event that the general shareholders’ meeting is convened, the Board of Directors, the Board of Supervisors and shareholders who separately or jointly hold more than 3% of the shares of our Company may submit a proposal 10 days before the meeting.

When convening a general shareholders’ meeting, our Company shall send a written notice 20 business days before it is convened. When convening an extraordinary shareholders’ meeting, our Company shall send a written notice 15 days or 10 business days (the longer would prevail, excluding the day sending the notice and the day convening the meeting) before it is convened. Where there are special rules in the laws, rules and the stock exchange.

Our Company shall calculate the number of shares with voting power represented by the shareholders planning to attend the general shareholders’ meeting in accordance with the written replies received 20 days before the meeting is convened. In the event that the number of shares with voting power represented by the shareholders attending the meeting reaches more than one half of our total number of shares with voting power, our Company may convene the general shareholders’ meeting. If this number is not reached, our Company shall again inform the shareholders of the matters to be deliberated and the date and venue of the meeting within five days in the form of an announcement and then approved by announcement before the general shareholders’ meeting may be convened. The extraordinary general Shareholders’ meeting shall not decide on issues which are not listed in the notice.

The notice of the general shareholders’ meeting shall be made in writing, including the following contents:

i. the place, the date and the hour of the meeting;

ii. the matters to be discussed at the meeting;

iii. conspicuous statement that all shareholders are entitled to attend the meeting and appoint proxy to attend and vote and that proxy need not be a shareholder;

iv. name and phone number of the standing contact person for affairs;

v. information and explanations necessary for the shareholders to exercise an informed judgment on the proposals before them. It principally includes (but is not limited to), where a proposal is made to amalgamate the Company, to repurchase shares, to reorganize the share capital or to restructure our Company in any other way, the conditions of the proposed transaction must be provided in detail together with the proposed contract (if any), and the cause and consequence of such proposal must be properly explained;

vi. disclosure of the nature and extent, if any, of the material interests of any Director, Supervisor, senior management in the matter to be discussed and the effect of the proposed matter on such Director, Supervisor, or senior management in their capacity as shareholders in so far as it is different from the effect on the interests of the shareholders of the same class;

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vii. the full text of any special resolution proposed to be voted at the meeting;

viii. the delivery date and place lodging proxy forms;

ix. the registration date of the share of the holder entitled to attend;

x. other requirements specified in the laws, administrative regulations, regulations of the authorities, regulatory rules where the shares are listed and the Articles of Association, etc.

Unless otherwise provided by laws, rules, Hong Kong Listing Rules, and the Articles of Association, the notice of the general shareholders’ meeting shall be sent in person or by postage-paid mail to the shareholders (regardless of whether such shareholders have the right to vote at the shareholders’ meeting), whereas recipient’s address shall be according to the address registered with the register of shareholders. For domestic shareholders, the notice of our shareholders’ meeting may be given in the form of an announcement.

Abovementioned announcement shall be published in one or more newspapers designated by the securities governing authority of the State Council, 45 days and 50 days prior to the meeting. Once the announcement is made, all domestic shareholders shall be deemed to have received the notice of the general shareholders’ meeting.

Where in accordance with the requirements of laws, administrative regulations, regulations of the authorities and regulatory rules where the shares are listed and performing relevant procedures, notice sent to H share shareholders could be published on the websites designated by Hong Kong Stock Exchange and the website of our Company, as alternative to in person or by postage-paid mail. Once the announcement is published, all shareholders holding overseas listed foreign shares shall be deemed to have received the notice of the general shareholders’ meeting.

The resolution of the general shareholders’ meeting includes ordinary resolution and special resolution. The following matters shall be approved by the general shareholders’ meeting through ordinary resolutions:

i. Work report of the Board of Directors and the Board of Supervisors;

ii. Plans of earnings distribution and loss make-up schemes drafted by the Board of Directors;

iii. Appointment or dismissal of the members of the Board of Directors and the Board of Supervisors, and their payment and payment methods;

iv. Annual budget and final account report, balance sheet, income statement and other financial statements;

v. Annual report of the Company;

vi. Other matters other than those approved by special resolution stipulated in the laws, administrative regulations, listing rules of the stock exchange where the shares are listed or the Articles of Association.

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The following matters shall be approved by special resolution at the general shareholders’ meeting:

i. the increase or decrease of the registered capital, or the issuance of shares, warrants or other quasi-securities;

ii. resolutions on the issuance of debt or other securities and listing scheme;

iii. Division, merger, dissolution and liquidation of our Company and the change of form of our Company;

iv. Amendment of the Articles of Association;

v. Substantial assets acquired or disposed of (including but not limited to land, tenement, equipment, production lines and equity) or security provided for an amount exceeding 30% of the latest audited total assets of our Company within one year;

vi. the formulation, amendment and performance of share equity incentive plan; and

vii. Other matters as required by the laws, administrative regulations, listing rules of the stock exchange where the shares are listed and the Articles of Association, and as approved by ordinary resolution of the general shareholders’ meeting which are believed could materially affect our Company and need to be approved by special resolution.

In the event that any resolution of the general Shareholders’ meeting or resolution of the Board of Directors violates laws or administrative regulations, any shareholder is entitled to request the court to deem it as invalid.

In the event that the convening procedure or voting formula of the shareholders meeting or meeting of the Board of Directors violates any of laws, administrative regulations or the Articles of Association, or resolution of which violates the Articles of Association, any shareholder is entitled to ask the court to overturn within 60 days after the resolution was adopted.

9 SHARE TRANSFERS

The shares of our Company holding by the funders thereof shall not be transferred within one year of the date of establishment of our Company. The shares issued before the public issuance of shares by our Company shall not be transferred within one year of the date on which the stocks of our Company are listed and traded on a securities exchange.

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The Directors, Supervisors, and senior management of our Company shall declare, to our Company, information on their holdings of the shares of our Company and the changes thereto. The shares transferrable by them during each year of their term of office shall not exceed 25 percent of their total holdings of the shares of our Company. The shares that they held in our Company shall not be transferred within one year of the date on which the stocks of our Company are listed and traded. The aforesaid persons shall not transfer their shares of our Company within six months from the date of their resignation.

With regard to the H Shares that capital of which has been full-paid could be transferred without limitation in accordance with the Articles of Association. However, unless meeting the following conditions, the Board of Directors may refuse to recognise any transfer document without giving any reason:

i. Document that related to any share ownership or transfer documents that may affect the ownership of the shares shall be registered and such payment shall not exceed the maximum fee provided by the Stock Exchange of Hong Kong in its Listing Rules from time to time;

ii. The transfer documents only involve H Shares listed in Hong Kong;

iii. The stamp duty chargeable on the transfer documents has been paid;

iv. The relevant share certificate, and upon the reasonable request of the Board of Directors, any evidence in relation to the right of the transferor to transfer the shares has been submitted;

v. If the shares are to be transferred to joint holders, the number of the joint holders shall not exceed four;

vi. Our Company does not have any lien on the relevant shares; and

vii. The shares shall not be transferred to minors or the person who is insane or legally incapacitated.

Respective parts of shareholder register’s revision or rectification shall be subject to the laws of region where respective parts the revised or rectified shareholder register is stored. No change may be made to the information in the register of shareholders as a result of the share transfer within 30 days before the general shareholders’ meeting is convened or within five days prior to the benchmark date on which our Company has decided to distribute dividends.

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10 RIGHTS OF OUR COMPANY TO PURCHASE OUR OUTSTANDING ISSUED SHARES

Under any of the following circumstances, our Company may submit to relevant competent authorities for approval to buy back our outstanding issued shares according to legal procedures with approval of procedures stipulated in the Articles of Association:

i. Reduce our Company’s registered capital;

ii. Merger with other companies which hold our shares;

iii. Granting shares to the staff of our Company as incentives;

iv. Requesting the Company to buy back its shares from shareholders who vote against any resolutions adopted at the general shareholders’ meeting concerning the merger and division of the Company;

v. To convert shares into bond issued by our Company which is convertible to stock of our Company;

vi. Necessary for our Company to maintain our Company’s value and Shareholders’ equity; or

vii. Other circumstances as permitted by the laws, administrative regulations, regulations of the authorities and listing rules of which the shares of the Company are listed.

Our Company may buy back shares in any of the following ways:

i. Making a comprehensive buyback offer in the same proportion to all shareholders;

ii. Buying back shares through public trading on the securities exchange;

iii. Buying back shares by an agreement outside a stock exchange;

iv. In other ways approved by the laws, administrative regulations and other measures permitted by relevant regulatory authorities.

Where our Company buys back the shares by an agreement outside a stock exchange, it shall obtain prior approval at the general shareholders’ meeting pursuant to the Articles of Association. Likewise, subject to the prior approval of the general shareholders’ meeting, our Company may cancel or amend the contract signed in the aforesaid manner or waive any of its rights in the contract.

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The contract that buys back the shares includes (but is not limited to) an agreement that consents to undertake the obligation to buy back the shares and obtain the rights to buy them back.

Our Company shall not transfer any contract that buys back the shares or any rights conferred under the contract.

Unless our Company has entered into the liquidation process, we must observe the following provisions for the buyback of issued shares:

i. Where our Company buys back shares at book value, the funds shall be deducted from the book balance of our distributable earnings and the proceeds obtained from the issue of new shares to buy back the old shares;

ii. Where our Company buys back the shares at a premium to the book value, the portion equivalent to book value shall be deducted from the book balance of our distributable earnings and the proceeds obtained from the issue of new shares made for the purpose of buying back of old shares, while the portion higher than book value shall be dealt with in the following manner:

(i) Where the shares bought back were issued at book value, the funds shall be deducted from the book balance of our distributable revenue;

(ii) Where the shares bought back were issued at a premium to the book value, the funds shall be deducted from the book balance of our distributable revenue and the proceeds obtained from the issue of new shares made for the purpose of buying back of old shares. However, the amount deducted from the proceeds obtained from the issue of new shares shall not exceed the total premium amount obtained when the shares bought back were issued or the amount in our premium account (or capital reserve account) when the old shares are bought back (including the premium amount of the issue of new shares).

iii. The funds paid by our Company for the following purposes shall be expensed from our distributable earnings:

(i) To obtain the right to buy back the shares;

(ii) To modify contract to buy back the shares;

(iii) To release obligation of our Company under the share buyback contract.

iv. After the total book value of the cancelled shares is deducted from our registered capital pursuant to the relevant provisions, the amount deducted from the distributable earnings for paying up the book value portion of the shares bought back shall be credited to our premium account (or capital reserve account).

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11 POWER FOR ANY SUBSIDIARY OF OUR COMPANY TO OWN SHARES IN ITS PARENT

There are no provisions in the Articles of Association relating to ownership by subsidiary of our Company of shares in its parent.

12 DIVIDEND AND OTHER DISTRIBUTION METHODS

The Company may distribute dividends in the manner of cash or stock.

A shareholder is entitled to receive interest with regard to payment of the shares which was paid before reminder notice. However, advance payment of the shares is not subject to any further dividend thereof.

Our Company shall appoint receiving agents on behalf of shareholders holding overseas listed foreign shares.

Receiving agents shall receive dividends and other payable funds that are distributed with respect to our overseas listed foreign shares for relevant shareholders. Receiving agents appointed by our Company shall on behalf of shareholders of shares listed in Stock Exchange shall be a trust company registered under the Trustee Ordinance of Hong Kong.

After the shareholders’ meeting of our Company make a resolution on dividends distribution plan, the Board of Directors shall complete the distribution within 2 months after the convening of the shareholders’ meeting.

13 SHAREHOLDER PROXIES

Any shareholder who is entitled to attend and vote at general shareholders’ meeting has the right to appoint one or more persons (who may not necessarily be shareholders) as his or her shareholder proxy to attend and vote at the meeting in his or her place. Pursuant to the authorisation of the shareholder, the proxy may exercise the following rights:

i. Speak for the shareholder at the general shareholders’ meeting;

ii. Demand a poll individually or with others;

iii. exercise the right to vote by a show of hands or a poll, but the shareholder proxy may only exercise the right to vote by a poll when more than one proxy is appointed.

The proxy appointment shall be in writing and shall be signed by the appointor or a person duly authorised in writing. Where the appointor is a legal person, the stamp of the legal person shall be affixed, or signed by its Director or a duly authorised agent.

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The power of attorney must be kept at the residential address or other location designated in the notice convening the meeting no later than 24 hours before the meeting at which the power of attorney is put to vote is convened or 24 hours before the designated time. If the power of attorney is signed by another person authorised by the appointor by means of power of attorney or other instrument of authorisation, the power of attorney or other instrument must be verified by a notary. The power of attorney or other instrument verified by the notary must be kept together with the power of attorney at our residential address or other location designated at the notice convening the meeting.

A legal person shareholder should attend the meeting by its legal representatives or persons authorised by its Board of Directors or other decision-making authorities.

Any blank power of attorney form sent by the Directors to the shareholder for appointing a shareholder proxy shall allow the shareholder, according to his or her free will, to instruct the proxy to vote and provide instructions separately for matters to be put to vote on each item on the meeting agenda. The power of attorney shall specify whether the shareholder proxy could vote at his or her own discretion if the shareholder does not provide specific instructions.

The votes of the shareholder proxy given pursuant to the terms of the power of attorney shall remain valid notwithstanding the death, loss of capacity of the appointor or revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the shares in respect of which the proxy is given, provided that our Company does not receive written notice concerning such matters before the related meeting is convened.

14 REVIEW THE REGISTER OF SHAREHOLDERS AND OTHER RIGHTS OF SHAREHOLDERS

Our Company shall make a register of shareholders in accordance with evidentiary documents provided by the securities registration authorities.

Pursuant to the understanding reached and agreement entered into between the competent agency in charge of securities of the PRC and the overseas securities regulatory authorities, our Company may keep the original register of the shareholders of the overseas listed foreign shares overseas and entrust an overseas entity to manage it. The original register of the shareholders of the overseas listed foreign shares listed in Hong Kong shall be kept in Hong Kong.

Our Company shall keep a copy of the register of the holders of the overseas listed foreign shares at our residential address. The overseas entrusted agency shall at all times maintain consistency between the original and copy of the register of the holders of the overseas listed foreign shares.

In case of inconsistency between the original and copy of the register of the holders of the overseas listed foreign shares, the original shall prevail.

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Our Company must keep a complete register of shareholders. The register of Shareholders shall include the following:

i. Register of shareholders kept at our residential address other than those specified in ii and iii below;

ii. Register of the holders of our overseas listed foreign shares kept at the location of the stock exchange where such shares are listed; and

iii. Register of shareholders kept in other locations according to the decision of the Board of Directors as required for the [REDACTED] of the shares.

Different parts of the shareholders’ register shall not overlap. The transfer of shares registered in a certain part of the register of shareholders shall not be registered elsewhere in the register of shareholders as long as the shares remain registered.

Any alteration or rectification to any part of the register of shareholders shall be made in accordance with the laws in the place where such part of the register of shareholders is maintained.

No change of the register of shareholders as a result of share transfer shall be made within 30 days before the general shareholders’ meeting is convened or within five days prior to the base date on which our Company decides to pay dividends.

When our Company convenes the general shareholders’ meeting, pays dividends, goes into liquidation or is involved in other actions that require the confirmation of identities, the Board of Directors shall fix a date as the equity registration date, upon expiration of which the shareholders whose names registered on the register of shareholders shall be the shareholders entitled to relevant equity.

Any person who objects to the register of shareholders and requests to register his or her name (title) in the register of shareholders or to remove his or her name (title) from the register of shareholders may apply to the court with jurisdiction to amend the register of shareholders.

15 RESTRICTIONS ON RIGHTS OF CONTROLLING SHAREHOLDER

Apart from the obligations required in laws, administrative regulations, or the listing rules of the stock exchange on which our shares are listed, our Controlling Shareholder shall not make any decision that is detrimental to the interest of all or part of the shareholders on the following issues by exercising his or her shareholder voting rights:

i. Releasing the Directors and Supervisors from the responsibility of acting honestly in the best interest of our Company;

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ii. Permitting the Directors and Supervisors (for their own or others’ interests) to deprive our Company of assets in any form, including, but not limited to, any opportunity that is beneficial to our Company; and

iii. Permitting the Directors and Supervisors (for their own or others’ interests) to deprive other shareholders of their personal rights and interests, including, but not limited to, any distribution or voting right, but excluding the restructuring of the Company approved at the general shareholders’ meeting pursuant to the Articles of Association.

16 PROCEDURES FOR LIQUIDATION

Under any of the following circumstances, our Company shall be lawfully dissolved and liquidated:

i. The term of business of our Company has expired;

ii. The general shareholders’ meeting adopts a resolution to dissolve our Company;

iii. Our Company needs to be dissolved for the purpose of merger or division;

iv. Our Company is declared legally bankrupt as a result of failure to pay debts as they fall due;

v. The business license is revoked, or our Company is ordered to close or be eliminated according to applicable law; or

vi. Where our Company encounters significant difficulties in business and management, continuous survival may be significantly detrimental to the interests of the shareholders, and the difficulties may not be overcome through other means, shareholders who hold more than 10% of all voting rights of the Company’s shareholders may request the People’s Court to dissolve the Company.

vii. Other circumstances that may lead to the liquidation of our Company as stipulated in the Articles of Association.

Where our Company is dissolved due to the provisions set forth in i, ii, vi and vii above, the liquidation team shall be established within 15 days from the date of the event leading to liquidation to commence dissolution and the personnel of the liquidation team shall consist of the persons determined by general shareholders’ meeting. In the event the liquidation team is not established to conduct liquidation during such period, the creditors can request the people’s court to appoint relevant personnel to establish the liquidation team for liquidation. In the event that our Company is dissolved in accordance with the provisions set forth in iv above, the people’s court shall organise the shareholders, related agencies and professionals to form the liquidation team pursuant to relevant provisions of the law. Where our Company is dissolved due to the provisions set forth in v above, the relevant competent authority shall organize the shareholders, the relevant authorities and professionals to set up a liquidation team for conducting such liquidation.

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If the Board of Directors decides to liquidate our Company (except where our Company is liquidated after declaring bankruptcy), the Board of Directors shall state in the notice of the general shareholders’ meeting convened for this purpose that the Board of Directors has performed a comprehensive investigation of the status of our Company and believes that our Company is able to pay off all of our debts within 12 months of the commencement of the liquidation.

After the resolution to liquidate our Company is adopted by the general shareholders’ meeting, the powers of the Board of Directors shall terminate immediately.

In accordance with the instructions of the general shareholders’ meeting, the liquidation team shall at least once a year report at the general shareholders’ meeting on the income and expenditure of the liquidation team, progress of the business and liquidation of our Company, and submit a final report at the general shareholders’ meeting upon completion of liquidation.

Within 10 days of the establishment of the liquidation team, the creditors shall be notified and an announcement shall be published in the newspaper within 60 days. The creditors shall declare their claims to the liquidation team within 30 days of the date on which the notice is received or 45 days of the date of announcement if the notice is not received.

Creditors who declare claims shall state relevant issues related to the claims and provide proofs. The liquidation team shall carry out registration of the claims. During the period for declaration of claims, the liquidation group shall not make any repayment to the creditors.

During the liquidation, our Company shall continue to exist, but shall not carry out business activities irrelevant to the liquidation. The property of our Company shall not be distributed to any shareholder before full payments have been made out of the property according to the aforesaid provision.

Upon liquidation for the purpose of company dissolution, in the event the liquidation team finds that, after taking stock of our Company’s property and preparing the balance sheet and list of property, that the assets are insufficient to pay the debts, it shall immediately apply to the people’s court to declare bankruptcy.

After our Company is declared bankrupt by ruling of the people’s court, the liquidation team shall turn over matters regarding the liquidation to the people’s court.

Upon closure of liquidation of our Company, the liquidation team shall prepare a liquidation report, income and expenditure statement and financial record during the liquidation period, which, after being verified by a China-registered accountant, shall be submitted to our general shareholders’ meeting or the people’s court for recognition. Within 30 days of the date of confirmation by the shareholders’ meeting or people’s court, the liquidation team shall submit the above-mentioned documents to our Company registration authority and apply for cancellation of our registration and publish an announcement on our termination.

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17 OTHER IMPORTANT PROVISIONS FOR OUR COMPANY OR THE SHAREHOLDERS

(1) General Provisions

Our Company is a permanently existing joint stock limited company.

Our Company may invest in other limited liability companies or joint stock limited company, provided that except as otherwise provided by law, the liabilities of our Company to be invested in are limited to the amount of its capital contribution and our Company could not assume joint and several liability to the invested company.

The Articles of Association regulate our Company’s organisation and conduct guidance and is binding on our Company, the shareholders, Directors, Supervisors and senior management. Subject to no violation of the relevant provisions of the Articles of Association, shareholders may sue shareholders; shareholders may sue the Directors, Supervisors and senior management; shareholders may sue our Company, and our Company may sue shareholders, Directors, Supervisors, general manager or other senior management.

The above said suing includes filing an action with a court and applying for an arbitration with an arbitral institution.

(2) Share and Transfer

Our Company may increase stock capital by the following means:

i. Issuing new shares to unspecified investors;

ii. Placing new shares to specified investors;

iii. Allocating or giving new shares to existing shareholders;

iv. Converting the reserve funds into share capital;

v. Other means approved by the laws, administrative regulations and relevant regulatory authorities.

Upon approval to increase our Company’s capital via an issue of new shares according to the provisions of the Articles of Association, the matter shall be dealt with in accordance with the procedures of related laws, administrative regulations of the PRC and of Hong Kong Listing Rules. etc.

Our Company may decrease our registered share capital and shall comply with the procedures stipulated in Company Law of the PRC, other related regulations and the Articles of Association.

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If our Company decreases our registered capital, we shall prepare a balance sheet and a list of properties.

Upon approval by the competent securities department of the State Council, our Company may issue shares to domestic and overseas investors.

For the purpose of the preceding paragraph, overseas investors shall refer to investors from foreign countries and Hong Kong, Macao or Taiwan region who subscribe for shares issued by our Company; domestic investors shall refer to investors within the territory of the PRC apart from above-mentioned region who subscribe for shares issued by our Company.

Where permitted by the laws, administrative regulations and regulations of authorities, upon approval by the competent securities department of the State Council, the not listed shares of the Company can be listed and traded on an overseas stock exchange. Such domestic shares shall be in compliance with the regulatory procedures, provisions and requirements of overseas securities market after being listed and traded on an overseas stock exchange.

(3) Shareholders

The shareholders of our Company are persons lawfully holding the Company’s shares and whose names (titles) are already listed in the register of shareholders. Shareholder is entitled to rights and assumes obligations pursuant to the classification and ratio of his or her shares. Shareholder holding the same classified share has the same rights and assumes the same obligations.

The rights of our ordinary shareholders are as follows:

i. To receive distribution of dividends and other forms of benefits according to the number of shares held;

ii. To legally require, convene, preside over, participate in or appoint a shareholder proxy to participate in and exercise corresponding voting rights at the Shareholders’ meeting;

iii. To supervise and manage business and operational activities of our Company, provide suggestions or submit queries;

iv. To transfer, grant and pledge the Company’s shares held according to the provisions of the laws, administrative regulations and the Articles of Association;

v. To obtain relevant information according to the provisions of the Articles of Association;

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vi. To participate in the distribution of the remaining assets of our Company according to the proportion of shares held upon our termination or liquidation;

vii. To require our Company to acquire the shares from Shareholders voting against any resolutions adopted at the general Shareholders’ meeting concerning the merger and division of the Company;

viii. To submit a written extraordinary proposal 10 days before the meeting for shareholder(s) who separately or jointly hold(s) more than 3% of the shares of our Company; and

ix. Other rights conferred by laws, administrative regulations, regulations of the authorities, regulatory rules where our Company’s shares are listed, or the Articles of Association.

When any person is interested directly or indirectly in the shares of our Company, our Company shall not freeze or otherwise impair any of the rights attaching to any share by reason only that the person has not disclosed his interests to our Company.

The H Share Certificates are signed by the chairman of the Board of Directors. Where the stock exchange on which our Company’s shares are listed requires our general manager or other senior management to sign the H Share Certificates, they shall also be signed by other such personnel. The H Share Certificates shall become effective after being affixed with the stamp of our Company or print-stamped. Affixing our Company stamp to the H Share Certificates is subject to the authorisation of the Board of Directors. The signature of the chairman of the Board of Director, general manager or other senior management may also be printed. Under conditions of paperless issuance and trading, the provisions of securities administrative authorities of the region where the Company’s shares listed shall apply.

If any person whose name appears in the register of shareholders or requests to register his or her name (title) in the register of shareholders loses his or her H Share Certificates (that is, “original H Share Certificates”), he or she may apply to our Company to reissue new H Share Certificates for those shares.

In the event holder of Domestic shares applies to our Company for a reissue after losing the H Share Certificates, the matter shall be dealt with pursuant to related provisions of the Company Law.

In the event a holder of overseas listed foreign shares applies to our Company for a reissue after losing the H Share Certificates, the matter may be dealt with pursuant to the laws, rules of the stock exchange where the original register of holders of the overseas listed foreign shares is kept, or other related provisions.

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If a H shareholder loses H Share Certificates and applies to the Company for a replacement issue, the H Share Certificates shall be issued in compliance with the following requirements:

i. The applicant shall submit the application in the standard format designated by our Company and attach a notary certificate or legal declaration. The contents of the notary certificate or legal declaration shall include the reason for the applicant’s request, circumstances and evidence of loss of H Share Certificates, as well as a statement that nobody else may request to be registered as a shareholder with respect to the pertinent shares;

ii. Before deciding to issue new H Share Certificates, our Company does not receive any statement in which any person other than the applicant requests to be registered as the shareholder with respect to the shares;

iii. If our Company decides to issue new H Share Certificates to the applicant, we shall publish an announcement in an eligible newspaper designated by the Board of Directors indicating that we plan to reissue new H Share Certificates. The announcement period shall be 90 days and the announcement shall be published at least once every 30 days;

iv. Before publishing the announcement indicating that we plan to re-issue new H Share Certificates, our Company shall submit a copy of the announcement to be published to the stock exchange on which the shares are listed and may publish the announcement after receiving a reply from the stock exchange confirming that the announcement has been displayed at the stock exchange. The period of displaying the announcement at the stock exchange is 90 days. If the registered shareholders of the related shares do not approve the application for reissue of new H Share Certificates, our Company shall mail the copy of the announcement to be repeatedly published to the Shareholders;

v. In the event that nobody raises any objection to the reissue of new H Share Certificates to our Company, upon expiration of the 90-day display period of the announcement specified in iii and iv above, the new H Share Certificates may be reissued according to the application made by the applicant;

vi. When re-issuing new H Share Certificates according to the Articles of Association, our Company shall immediately cancel the original H Share Certificates and register the cancellation and replacement issue on the register of shareholders;

vii. All expenses incurred by our Company from the cancellation of the original H Share Certificates and replacement issue of the new H Share Certificates shall be borne by the applicant. Before the applicant has provided reasonable security, our Company shall have the right to refuse to take any action.

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(4) Shareholders Failing to be Contacted

In compliance with the provisions of related laws and regulations of the PRC, our Company may exercise expropriate right to unclaimed dividend. However, our Company can only exercise such right after the expiration of the applicable corresponding valid period which started after the distribution of dividend was declared.

Our Company may terminate sending dividend coupons by mail to any holder of the overseas listed foreign shares. However, the said termination can only be made after the holder fails to withdraw from the dividend coupons for consecutive two times or the dividend coupons cannot be delivered to the receiver and returned thereof.

In compliance with the conditions indicated below, Our Company is entitled to dispose the stock held by overseas listed foreign shareholders whom we fail to contact at first time in accordance with appropriate manner as considered by the Board of Directors:

i. Our Company has paid dividends at least three times on these Shares within 12 years, but no one has claimed the dividends during that period;

ii. Upon expiration of the 12-year period, our Company publishes an announcement in one or more newspaper of the Company’s listing place, indicating our intention to sell the Shares and notifies the stock exchange where such Shares are listed of such intention.

(5) The Board of Directors

The Board of Directors is responsible to the general Shareholders’ meeting and exercises the following powers:

i. To convene the general Shareholders’ meeting and report on work to the general Shareholders’ meeting;

ii. Implement the resolutions of the general Shareholders’ meeting;

iii. Determine the business and investment plans of our Company;

iv. Devise the annual financial budget and closing account plans of our Company;

v. Devise the earnings distribution and loss offset plans of our Company;

vi. Formulate the plans for increasing or decreasing our Company’s registered capital, the issuance of shares, corporate bonds or other securities, as well as the listing of the stock of our Company;

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vii. Formulate plans for major acquisitions or disposal of the Company, the buy-back of shares of our Company, corporate merger, separation of our Company, changing the form and dissolution of our Company;

viii. Decide on the setup of our Company’s internal management organisation;

ix. Appoint or dismiss the general manager of our Company, the secretary of the Board of Directors and the Secretary of our Company; based on the nomination of the general manager, appoint or dismiss senior management of our Company such as the chief operating officer, the chief financial officer, vice manager, and determine their remuneration;

x. Set the basic management systems of our Company;

xi. Make the modification plan to the Articles of Association;

xii. Propose the appointment or replacement of the accounting firm that performs audits for our Company at the general Shareholders’ meeting;

xiii. Attend to the work report of our Company’s general manager and review the work of the general manager;

xiv. Manage the disclosure of company information;

xv. Consider and approve the transactions required to be decided by the Board of Directors in accordance with the Hong Kong Listing Rules (including but not limited to the disclosable transactions and connected transactions);

xvi. Other powers and duties authorised by the laws, administrative regulations, regulations of the authorities, listing rules of the place where the shares of our Company are listed and the Articles of Association.

The above resolutions adopted by the Board of Directors, except those in vi, vii and xi must be approved by more than a two-thirds vote of the Directors, may be approved by more than half of the votes by the Directors.

Meetings of the Board of Directors shall be attended by more than one-half of the Directors (including proxies) before the Board of Directors meeting can be convened.

(6) Independent Non-executive Director

At least one-third of member of the Board of Directors of the Company shall be the independent non-executive Directors and the amount shall not be less than three. At least one independent non-executive Director shall have applicable professional qualification or are equipped with applicable accounting or relevant financial management expertise.

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(7) Secretary of the Board of Directors

Our Company shall have one secretary of the Board of Directors. The secretary of the Board of Directors must be a natural person with the requisite expertise and experience and be appointed by the Board of Directors.

(8) Board of Supervisors

Our Company shall set up a Board of Supervisors.

The Board of Supervisors consists of three Supervisors and includes one chairman. The chairman of the Board of Supervisors shall be elected and dismissed by more than a two-thirds vote of the members of the Board of Supervisors.

The Board of Supervisors shall consist of Shareholder’s representatives and employee’s representatives. The Supervisors assumed by the employee representatives shall be elected and dismissed democratically by the employees and shall account for no less than one-third of the Board of Supervisors of our Company.

Meetings of the Board of Supervisors shall be attended by more than half of the Supervisors before it may be convened. Resolutions of the Board of Supervisors shall require approval from two-third of all the Supervisors. The Supervisors serve three-year terms.

The Supervisors may, after the expiration of the term of office, be re-elected and re-appointed.

The Directors and senior management shall not also serve as Supervisors.

The Board of Supervisors is responsible to the general Shareholders’ meeting and lawfully exercises the following powers:

i. Examine the financial standing of our Company;

ii. Supervise the Company’s duties performing of Directors and senior management, and put forward suggestions for dismissing any Directors or senior management who are in breach of the laws, administrative regulations, the Articles of Association or resolutions of the general Shareholders’ meetings;

iii. Require the Directors and senior management to take corrective measures when their actions are detrimental to the Company’s interests;

iv. Propose to convene an extraordinary general Shareholders’ meeting, and where the Board of Directors fails to perform the duties in relation, to convene or preside over the general Shareholders’ meeting, to convene and preside over the general Shareholders’ meeting;

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v. Submit proposals at the general Shareholders’ meetings;

vi. Negotiate with Directors on behalf of the Company or initiate litigations against Directors and senior management;

vii. Investigate into any abnormalities in operation of our Company; if necessary, to engage accounting firms, law firms and other professional institutions to assist its work, and the expenses shall be borne by our Company;

viii. Verify the financial information such as the financial reports, business reports and profit distribution plans to be submitted by the Board to the general Shareholders’ meetings and, should any queries arise, to authorize, in the name of our Company, a re-examination by the certified public accountants and practicing auditors;

ix. Other powers and duties stipulated in the Articles of Association.

The Supervisors may attend the meetings of the Board of Directors, query or provide suggestions on the resolution matters of the Board meeting.

(9) General manager

Our Company has one general manager, appointed or dismissed by the Board of Directors. The general manager of our Company is responsible to the Board of Directors and exercises the following powers:

i. Be in charge of the producing and operational management of our Company, organise the enforcement of resolutions of the Board of Directors and report to the Board of Directors on work;

ii. Organise the implementation of the annual operation plans and investment schemes decided by the Board of Directors;

iii. Formulate the structure scheme of the internal department of our Company;

iv. Formulate the fundamental management policies of our Company;

v. Formulate the basic management rules of our Company;

vi. Propose the appointment or dismissal of the Company’s chief operating officer, chief financial officer and vice general manager to the Board of Directors.

vii. Appoint or dismiss other management personnel except those who shall be appointed or dismissed by the Board of Directors;

viii. Other responsibilities authorised by the Articles of Association and the Board of Directors.

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(10) Reserves

When the annual after-tax earnings of our Company are distributed, our Company must allocate 10% of the earnings to the statutory reserve of the Company.

When the total amount of the statutory reserve exceeds 50% of our Company’s registered capital, no more allocations need to be drawn.

If the Company’s statutory reserve is insufficient to offset our losses during the previous year, the earnings generated during the current year must be used to make up the losses before allocating the statutory reserve in accordance with the requirements set forth above.

After allocation to the statutory reserve from the after-tax earnings of our Company, we may also allocate to the reserves at will from after-tax earnings in line with the resolution(s) adopted at the general Shareholders’ meeting.

After our Company has made up for its losses and made allocations to its statutory reserve fund, the remaining profits are distributed in proportion to the number of shares held by the Shareholders, unless otherwise specified by the Articles of Association.

If the general Shareholders’ meeting or Directors violates the above provisions and profits are distributed to the Shareholders before the Company makes up for losses or makes allocations to the statutory reserve fund, the profits distributed in violation of the provisions must be returned by such Shareholders to the Company.

The shares held by our Company itself shall not be subject to profit distribution.

The Company’s reserves must be used only for offsetting losses of the Company, expanding the scale of business and operations or for conversion into capital to increase our capital, but the capital reserve shall not be used to offset losses of the Company.

Where the statutory reserve converses into capital, the remaining statutory reserve shall not be less than 25% of the registered capital of our Company before such conversion.

(11) Settlement of Disputes

Our Company shall comply with the following rules governing the settlement of disputes:

i. Whenever there occur any dispute or claim between shareholders of the overseas listed foreign Shares and our Company, shareholders of foreign Shares (including shareholders of overseas listed or non-listed foreign Shares) and our Company’s Directors, Supervisors, general manager or other senior management, or shareholders of the overseas listed foreign Shares and shareholders of overseas non-listed foreign shares or shareholders of domestic Shares regarding the rights or

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obligations relating to the affairs of our Company conferred or imposed by the Articles of Association, the Company Law or any other relevant laws and administrative regulations, such disputes or claims shall be referred by the relevant parties to arbitration.

Where the aforesaid dispute or claim of rights is referred to arbitration, the entire claim or the dispute as a whole must be referred to arbitration, and any parties who have a cause of action based on the same facts giving rise to the dispute or the claim or whose participation is necessary for the settlement of such dispute or claim, are bound by the award of the arbitration provided that such person is our Company or a shareholder of our Company, a Director, a Supervisor, general manager or other senior management.

Disputes in relation to the definition of shareholders and disputes in relation to the shareholders’ register need not be resolved by arbitration;

ii. A claimant may elect for arbitration at either the China International Economic and Trade Arbitration Commission in accordance with its rules or the Hong Kong International Arbitration Centre in accordance with its arbitration rules. Once a claimant refers a dispute or claim to arbitration, the other party must submit to the arbitral body so elected by the applicants.

If a claimant elects for arbitration at HKIAC, any party to the dispute or claim may request the arbitration to be conducted in Shenzhen in accordance with the Securities Arbitration Rules of the HKIAC;

iii. The laws of the PRC are applicable to the arbitration for the disputes or claims of rights referred to in paragraph (i) above, unless otherwise provided in the laws and administrative regulations;

iv. The award of an arbitration body shall be final and binding on all parties.

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FURTHER INFORMATION ABOUT OUR COMPANY

1. Incorporation of Our Company

Our Company was established as a limited liability company in the PRC on March 31, 2015 and was converted into a joint stock company with limited liability on July 8, 2021 under the laws of the PRC. As of the Latest Practicable Date, the registered share capital of our Company was RMB660,000,000.

Our Company has established a place of business in Hong Kong at Room 1901, Lee Garden One, 33 Hysan Avenue, Causeway Bay, Hong Kong and has registered as a non-Hong Kong company in Hong Kong under Part 16 of the Companies Ordinance on [●], 2021. Mr. Ming King CHIU, the joint company secretary of our Company, has been appointed as our authorized representative for the acceptance of service of process in Hong Kong whose correspondence address is the same as our place of business in Hong Kong.

2. Changes in Share Capital of Our Company

On March 31, 2015, our Company was established as a limited liability company with a registered capital of RMB3,000,000. The following sets out changes in the share capital of our Company within the two years immediately preceding the date of this document:

(a) On February 11, 2020, the registered capital of our Company increased from RMB4,762,000 to RMB5,792,300 with the additional capital subscribed for by Anji NewMed and OAP III.

(b) On March 31, 2020, the registered capital of our Company increased from RMB5,792,300 to RMB6,015,100 with the additional capital subscribed for by LAV Newmed Limited.

(c) On April 22, 2021, the registered capital of our Company increased from RMB6,015,100 to RMB7,389,300 with additional capital subscribed for by Jiaxing Fengtao, Springleaf Investments, Zhangke Lingyi Fengtao, Shanghai CW ChuangVest Venture Capital Partnership (Limited Partnership) (上海成為創伴創業投資合夥企業(有限合夥)), Youyu Global Limited (有魚環球有限公司), OAP III, LAV Newmed Limited and Chanrong Hechuang Beijing Industry Integration Venture Capital Fund Center (Limited Partnership) (北京市產融合創投資基金中心 (有限合夥)).

(d) On July 8, 2021, our Company was converted into a joint stock company with limited liability with a registered share capital of RMB7,389,300 comprising of 7,389,300 Shares with a nominal value of RMB1.00 each, which was subscribed by all the then existing shareholders with part of the audited net assets of our Company as of May 31, 2021.

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(e) On July 9, 2021, the registered capital of our Company increased from RMB7,389,300 to RMB7,758,765 with the additional capital subscribed by Jiaxing Yongqi.

(f) On July 13, 2021, the registered capital of our Company increased from RMB7,758,765 to RMB660,000,000 by way of capitalization of the capital reserve of our Company of RMB652,241,235 on the basis of 850.650845 Shares for every 10 Shares.

For further details, please refer to the section headed “History, Development and Corporate Structure” in this document. Save as aforesaid, as of the Latest Practicable Date, there has been no alteration in our share capital within two years immediately preceding the date of this document.

3. Changes in the Share Capital of Our Subsidiaries

Our subsidiaries as of the Latest Practicable Date are set out in the section headed “History, Development and Corporate Structure” in this document. As of the Latest Practicable Date, there has been no alteration in the share capital of our subsidiaries within two years immediately preceding the date of this document.

4. Resolutions of the Shareholders

Pursuant to a general meeting of our Shareholders held on July 21, 2021, the following resolutions, among others, were passed by our Shareholders:

(a) the issue 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 be issued;

(b) the number of H Shares to be issued shall not be more than [REDACTED]ofthe total issued share capital of our Company as enlarged by the [REDACTED], and the grant to the [REDACTED] (or their representatives) of the [REDACTED]ofnot more than [REDACTED] of the number of H Shares issued pursuant to the [REDACTED];

(c) subject to the completion of the [REDACTED], the adoption of the Articles of Association which shall become effective on the [REDACTED], and the authorization to the Board to amend the Articles of Association in accordance with the requirements of the relevant laws and regulations and the Listing Rules; and

(d) authorization of our Board to handle all relevant matters relating to, among other things, the issue and [REDACTED] of the H Shares.

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FURTHER INFORMATION ABOUT THE BUSINESS OF OUR COMPANY

1. Summary of Material Contract

We have entered into the following contract (not being contracts entered into in the ordinary course of business) within the two years immediately preceding the date of this document that is or may be material:

(a) the [REDACTED].

2. Intellectual Property Rights

Trademarks

As of the Latest Practicable Date, we have registered the following trademarks in the PRC, which we considered to be material to our business:

Place of No. Owner Registration No. Registration Trademark Class Validity Period

1 Company 36471114 PRC 35 October 7, 2019 to October 6, 2029 2 Company 30508086 PRC 10 February 14, 2019 to February 13, 2029 3 Company 17163175 PRC 10 August 7, 2016 to August 6, 2026 4 Company 36490704 PRC 35 December 21, 2019 to December 20, 2029 5 Company 37493253 PRC 35 December 14, 2019 to December 13, 2029 6 Company 37478045 PRC 10 December 14, 2019 to December 13, 2029 7 Company 36490714 PRC 35 October 7, 2019 to October 6, 2029 8 Company 28610980 PRC 10 December 7, 2018 to December 6, 2028 9 Company 36487662 PRC 35 October 7, 2019 to October 6, 2029 10 Company 23146131 PRC 10 March 7, 2018 to March 6, 2028 11 Company 17162896 PRC 10 August 21, 2016 to August 20, 2026

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Place of No. Owner Registration No. Registration Trademark Class Validity Period

12 Company 20880267 PRC 10 September 28, 2017 to September 27, 2027 13 Company 20880489 PRC 10 September 28, 2017 to September 27, 2027

As of the Latest Practicable Date, we have applied for registration of the following trademarks, which we considered to be material to our business:

Place of No. Owner Application No. Registration Trademark Class Application Date

1 Company 305617828 Hong Kong 10, 35 May 7, 2021

2 Company 305617819 Hong Kong 10, 35 May 7, 2021

Patents

Please refer to the paragraph headed “Business – Intellectual Property” in this document for patents registered as of the Latest Practicable Date, which we considered to be material to our business.

Domain Names

As of the Latest Practicable Date, we have registered the following domain names which we consider to be material to our business:

No. Owner Domain Name Registration Date

1. Company www.newmed.cn March 5, 2014 2. Company www.newmed.com.cn March 5, 2014

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FURTHER INFORMATION ABOUT OUR DIRECTORS, SUPERVISORS AND SUBSTANTIAL SHAREHOLDERS

1. Disclosure of Interests

Save as disclosed below, immediately following completion of the [REDACTED] (without taking into account the H Shares which may be allotted and issued pursuant to the exercise of the [REDACTED]), so far as our Directors are aware, none of our Directors, Supervisors and chief executive has any interest or short positions in our Shares, underlying Shares or debentures of our Company or any associated corporations (within the meaning of Part XV of the SFO) which will have to be notified to our Company and the [REDACTED] pursuant to [REDACTED] (including interests and short positions which they are taken or deemed to have under such provisions of the SFO), or which will be required, pursuant to [REDACTED], to be entered in the register referred to therein, or which will be required to be notified to our Company and the [REDACTED] pursuant to the Model Code for Securities Transactions by Directors of [REDACTED] contained in the [REDACTED].

Approximate Approximate percentage of percentage of shareholding in shareholding the total share in the relevant capital of Number class of Shares our Company Nature of and class of after the after the Name Position Interest Shares held [REDACTED](1) [REDACTED](1) (%) (%)

Dr. Yu(2) Chairman of Beneficial 59,422,002 [REDACTED][REDACTED] our Board, owners (H Shares) executive 59,422,002 [REDACTED][REDACTED] Director and (Domestic chief Shares) executive Interest in 142,307,848 [REDACTED][REDACTED] officer controlled (H Shares) corporations

Mr. Tao QIN Executive Interest in 32,659,974 [REDACTED][REDACTED] (秦濤)(3) Director and controlled (H Shares) chief corporations operating officer

Mr. Jie ZHANG Non-executive Interest in 16,528,273 [REDACTED] [REDACTED] (張捷)(4) Director controlled (H Shares) [REDACTED] [REDACTED] corporations 16,528,274 (Domestic Shares)

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Mr. Xiaoyong Supervisor Interest in 8,981,682 [REDACTED][REDACTED] YU (于曉勇)(5) controlled (H Shares) corporations 52,481,329 [REDACTED][REDACTED] (Domestic Shares)

Notes:

(1) The calculation is based on the total number of [REDACTED] Domestic Shares in issue and [REDACTED] H Shares (assuming the [REDACTED] is not exercised) in issue upon [REDACTED].

(3) Mr. Tao QIN holds 37.09% interest in Jiaxing Fengtao as a limited partner. As such, Mr. Qin is deemed to be interested in the 32,659,974 H Shares held by Jiaxing Fengtao.

(4) Shanghai Shanchi is a limited partnership established in the PRC. Shanghai Pujian Jikang Zhongchuang Space Management Co., Ltd (上海普健濟康眾創空間管理有限公司) is the general partner of Shanghai Shanchi and is owned as to 85% by Mr. Jie ZHANG. As such, Mr. Zhang is deemed to be interested in the 16,528,273 H Shares and the 16,528,274 Domestic Shares held by Shanghai Shanchi under the SFO.

(5) Each of (i) Shanghai Zhangke Lingyi Enterprise Management Center (Limited Partnership) (上海張科領醫企業管理中心(有限合夥)), the general partner of ZJ Leading VC and (ii) Jiaxing Linghe Equity Investment Partnership (Limited Partnership) (嘉興領和股權投資合夥企業(有限合夥)), the general partner of Zhangke Lingyi Fengtao is ultimately controlled by Mr. Xiaoyong YU. As such, Mr. Yu is deemed to be interested in the 52,481,329 Domestic Shares held by ZJ Leading VC and the 8,981,682 H Shares held by Zhangke Lingyi Fengtao under the SFO.

2. Substantial Shareholders

For the information on the persons who will, immediately following the completion of the [REDACTED], have interests or short positions in our Shares or underlying Shares which would be required to be disclosed to our Company and the [REDACTED] under [REDACTED], please refer to the section headed “Substantial Shareholders” in this document.

Save as set out above, our Directors are not aware of any other person (other than our Directors, Supervisors or chief executive) will, immediately following completion of the [REDACTED], directly or indirectly, be interested 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 other member of our Group.

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3. Service Contracts

Pursuant to Rules 19A.54 and 19A.55 of the Listing Rules, we have entered into a contract with each of our Directors and Supervisors in respect of, among other things, compliance with relevant laws and regulations, the Articles of Association and applicable provisions on arbitration.

Each of our Directors has entered into a service contract with our Company. The principal particulars of these service contracts comprise (a) a term of three years commencing from the date of appointment; and (b) termination provisions in accordance with their respective terms. Our Directors may be re-appointed subject to Shareholders’ approval.

Each of our Supervisors has entered into a service contract with our Company. Each contract contains provisions relating to compliance with relevant laws and regulations, observation of our Articles of Association and resolution of disputes by means of arbitration.

Save as disclosed above, none of our Directors and Supervisors has or is proposed to have entered into any service contract with any member of our Group (excluding contracts expiring or determinable by any member of our Group within one year without payment of compensation other than statutory compensation).

4. Remuneration of Directors and Supervisors

Save as disclosed in the section headed “Directors, Supervisors and Senior Management” and the paragraph headed “Notes to The Historical Financial Information – 8. Directors’ and Supervisors’ Emoluments” in Appendix I to this document for the two financial years ended December 31, 2019 and 2020 and the four months ended April 30, 2021, none of our Directors or Supervisors received other remunerations of benefits in kind from us.

5. Employee Incentive Scheme

We have adopted the Employee Incentive Scheme. The purpose of the Employee Incentive Scheme is to enhance the responsibilities of our senior management and core employees to promote the development of our Company and to align the interest of our Company, our Shareholders and our employees as a whole.

As of the Latest Practicable Date, our Company had established the ESOP Platforms, namely Anji NewMed, Jiaxing Fengtao, Jiaxing Yongqi, Jiaxing Qianqi, Jiaxing Heting and Anji Tongxin in connection with the implementation of the Employee Incentive Scheme. Anji NewMed, Jiaxing Fengtao and Jiaxing Yongqi held a total number of 85,405,261 Unlisted Shares. Each of Jiaxing Qianqi, Jiaxing Heting and Anji Tongxin is a limited partner of NewMed Enterprise Management, which held 56,902,587 Unlisted Shares as of the Latest Practicable Date. The grantees under the Employee Incentive Scheme have been granted awards in the form of economic interest in the ESOP Platforms and are indirectly interested in

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As of the Latest Practicable Date, we granted equity interests of the ESOP Platforms representing a total number of 114,201,406 Shares (representing all the underlying Shares available under the ESOP Platforms) to 63 grantees who are Directors, Supervisors, senior management and employees of our Group under the Employee Incentive Scheme. No further awards will be granted under the Employee Incentive Scheme after [REDACTED].

The awards shall be subject to a lock-up period and satisfaction of performance to be determined by our Company. During the lock-up period, selected participants shall not be entitled to any cash dividends of the underlying Shares. The selected participants may not dispose of, transfer, pledge or otherwise encumber their interest in the limited partnership without the consent of the administrators prior to the [REDACTED] and shall make an application to the administrators in connection with the disposal of any awards upon expiry of the relevant lock-up period after the [REDACTED].

Dr. Yu and Mr. Tao QIN, being administrators of the Employee Incentive Scheme, shall be responsible for the administration and implementation of the scheme subject to approval and authorization by our Board, including, among others, to review the performance of selected participants and make adjustments to awards as appropriate.

The Employee Incentive Scheme is not subject to the provisions of Chapter 17 of the Listing Rules as it does not involve the grant of options by our Company after the [REDACTED]. Given the underlying Shares under the Employee Incentive Scheme had already been issued, there will not be any dilution effect to the issued Shares upon the vesting of the awards under the Employee Incentive Scheme.

6. Disclaimers

Save as disclosed in this document:

(a) save as disclosed in this document, none of our Directors, Supervisors or any of the parties listed in the paragraph headed “Other Information – 5. Qualifications of Experts” in this Appendix is:

(i) interested in our promotion, or in any assets which have been, within two years immediately preceding the date of this document, acquired or disposed of by or leased to us, or are proposed to be acquired or disposed of by or leased to any member of our Company; or

(ii) materially interested in any contract or arrangement subsisting at the date of this document which is significant in relation to our business;

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(b) save in connection with the [REDACTED] and the [REDACTED], none of the parties listed in the paragraph headed “Other Information – 5. Qualification of Experts” in this Appendix:

(i) is interested legally or beneficially in any shares in any member of our Group; or

(ii) has any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for any securities in any member of our Group;

(c) none of our Directors or Supervisors is a director or employee of a company that has an interest in the share capital of our Company which, once the H Shares are [REDACTED] on the Hong Kong Stock Exchange, would have to be disclosed pursuant to [REDACTED]; and

(d) so far as is known to our Directors, none of our Directors or Supervisors or their respective close associates (as defined under the Listing Rules) or Shareholders who owns more than 5% of the issued shares of our Company has any interests in the five largest customers or the five largest suppliers of our Group.

OTHER INFORMATION

1. Estate duty

Our Directors have been advised that no material liability for estate duty is likely to impose on our Company or any of our subsidiaries under the laws of the PRC.

2. Litigation

As of the Latest Practicable Date, no member of our Group was involved in any litigation, arbitration or claim of material importance, and, so far as we are aware, no litigation, arbitration or claim of material importance is pending or threatened against any member of our Group, which would have a material adverse effect on our financial condition or results of operations, taken as a whole.

3. Joint Sponsors

The Joint Sponsors have made an application on behalf of our Company to the [REDACTED] for the [REDACTED] of, and permission to [REDACTED] in, our H Shares. All necessary arrangements have been made to enable the securities to be admitted into [REDACTED].

Each of the Joint Sponsors satisfies the independence criteria applicable to sponsors set out in Rule 3A.07 of the Listing Rules. Each of the Joint Sponsors will receive a fee of US$500,000 to act as a sponsor to our Company in connection with the [REDACTED].

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4. Preliminary expenses

As of the Latest Practicable Date, our Company has not incurred material preliminary expenses.

5. Qualifications of Experts

The qualifications of the experts (as defined under the Listing Rules and the Companies (Winding Up and Miscellaneous Provisions) Ordinance) who have given opinions and/or advice in this document are as follows:

Name Qualifications

Morgan Stanley Licensed to conduct Type 1 (dealing in securities), Type 4 Asia Limited (advising on securities), Type 5 (advising on futures contracts), Type 6 (advising on corporate finance) and Type 9 (asset management) of regulated activities as defined under the SFO

China International Licensed to conduct Type 1 (dealing in securities), Type 2 Capital Corporation (dealing in futures contracts), Type 4 (advising on Hong Kong Securities securities), Type 5 (advising on futures contracts) and Type Limited 6 (advising on corporate finance) of regulated activities as defined under the SFO

KPMG Certified public accountants, and Public Interest Entity Auditor registered in accordance with the Financial Reporting Council Ordinance

Jingtian & Gongcheng PRC legal adviser

Frost & Sullivan Independent industry consultant (Beijing) Inc., Shanghai Branch Co.

6. Consents

Each of the experts as referred to in the paragraph headed “5. Qualifications of Experts” in this Appendix has given and has not withdrawn its respective written consents to the issue of this document with the inclusion of certificates, letters, opinions or reports and the references to its name included herein in the form and context in which it respectively included.

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7. Taxation of Holders of H Shares

(1) Hong Kong

The sale, purchase and transfer of H Shares are subject to Hong Kong stamp duty. The current rate charged on each of the purchaser and seller is 0.1% of the consideration or, if higher, the fair value of the H Shares being sold or transferred. For further details in relation to taxation, please refer to Appendix III to this document.

(2) Consultation with professional advisers

Potential investors in the [REDACTED] are urged to consult their professional tax advisers if they are in any doubt as to the taxation implications of subscribing for, purchasing, holding or disposing of or dealing in our H Shares (or exercising rights attached to them). None of our Company, our Directors, the Joint Sponsors, the [REDACTED], the [REDACTED], the [REDACTED], or any other person or party involved in the [REDACTED] accept responsibility for any tax effects on, or liabilities of, any person, resulting from the subscription, purchase, holding or disposal of, dealing in or the exercise of any rights in relation to our H Shares.

8. No Material Adverse Change

Our Directors confirm that, as of the date of this document, there has been no material adverse change in the financial or trading position of our Company since April 30, 2021 (being the date to which the latest audited consolidated financial statements of our Company were prepared).

9. Promoters

The promoters of our Company are all then 20 shareholders of our Company as of June 28, 2021 before our conversion into a joint stock company with limited liability. Save as disclosed in this document, within the two years preceding the date of this document, no cash, securities or other benefit has been paid, allotted or given or is proposed to be paid, allotted or given to any promoter in connection with the [REDACTED] and the related transactions described in this document.

10. Restrictions on Repurchase

For details, please refer to Appendices IV and V to this document.

– VI-11 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX VI STATUTORY AND GENERAL INFORMATION

11. Binding Effect

This document shall have the effect, if an application is made in pursuance of it, of rendering all persons concerned bound by all of the provisions (other than the penal provisions) of [REDACTED] of the Companies (Winding Up and Miscellaneous Provisions) Ordinance so far as applicable.

12. Bilingual Document

The English and Chinese language versions of this document are being published separately, in reliance upon the exemption provided under [REDACTED] of the Companies (Exemption of Companies and Prospectuses from Compliance with Provisions) Notice (Chapter 32L of the Laws of Hong Kong).

13. Miscellaneous

Save as otherwise disclosed in this document:

(a) within the two years preceding the date of this document, (i) 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; and (ii) no commission, discount, brokerage or other special term has been granted in connection with the issue or sale of any shares of our Company;

(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;

(g) our Company is not presently listed on any stock exchange or traded on any trading system; and

(h) our Company is a joint stock limited company and is subject to the PRC Company Law.

– VI-12 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX VII DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES AND AVAILABLE FOR INSPECTION

DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES IN HONG KONG

The documents attached to a copy of this document and delivered to the Registrar of Companies in Hong Kong for registration were:

(i) a copy of the [REDACTED];

(ii) a copy of each of the material contracts referred to in the paragraph headed “Further Information about the Business of our Company – 1. Summary of Material Contracts” in Appendix VI to this document; and

(iii) the written consents referred to in the paragraph headed “Other information – 6. Consents” in Appendix VI to this document.

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the office of O’Melveny & Myers at 31/F AIA Central, 1 Connaught Road Central, Hong Kong during normal business hours up to and including the date which is 14 days from the date of this document:

(a) the Articles of Association;

(b) the accountants’ report prepared by KPMG, the text of which is set out in Appendix I to this document;

(c) the audited consolidated financial statements of our Group for the two years ended December 31, 2019 and 2020 and the four months ended April 30, 2021;

(d) the report prepared by KPMG on the unaudited pro forma financial information of our Group, the text of which is set out in Appendix II to this document;

(e) the industry report issued by Frost & Sullivan (Beijing) Inc., Shanghai Branch Co. referred to in the section headed “Industry Overview” in this document;

(f) the PRC legal opinions issued by Jingtian & Gongcheng, our legal adviser as to PRC law, in respect of, among other things, the general matters and property interests of our Group under the PRC laws;

(g) the material contract referred to in the paragraph headed “Further Information about the Business of our Company – 1. Summary of Material Contract” in Appendix VI to this document;

– VII-1 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX VII DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES AND AVAILABLE FOR INSPECTION

(h) the service contracts referred to in the paragraph headed “Further Information about Our Directors, Supervisors and Substantial Shareholders – 3. Service Contracts” in Appendix VI to this document;

(i) the written consents referred to in the paragraph headed “Other Information – 6. Consents” in Appendix VI to this document;

(j) the PRC Company Law, the Special Regulations and the Mandatory Provisions together with unofficial English translations thereof; and

(k) the Employee Incentive Scheme.

– VII-2 –