CITIC Securities Co., Ltd

About Sichuan Baili Tianheng Pharmaceutical Co., Ltd

In FY2025, we will issue A shares to specific targets

it

Issuance of letters of sponsorship

Sponsor (Lead Underwriter)

North Block, Excellence Times Square (Phase II), No. 8, Center 3rd Road, Futian District, Shenzhen, Guangdong Province

April 2025

Declarations

The Sponsor and the Sponsor Representative are in accordance with the Company Law of the People's Republic of China (hereinafter referred to as the "Company Law"), the Securities Law of the People's Republic of China (hereinafter referred to as the "Securities Law"), the Administrative Measures for the Sponsorship Business of Securities Issuance and Listing, the Administrative Measures for the Registration of Securities Issuance of Listed Companies (hereinafter referred to as the "Registration Administrative Measures"), the Rules for the Listing of Stocks on the Science and Technology Innovation Board of the Shanghai Stock Exchange (hereinafter referred to as the "Listing Rules"), and the Implementation Rules for the Securities Issuance and Underwriting Business of Listed Companies on the Shanghai Stock Exchange and other relevant laws, administrative regulations and regulations of the China Securities Regulatory Commission and the Shanghai Stock Exchange, be honest and trustworthy, diligent and conscientious, and issue a letter of sponsorship in strict accordance with the business rules and industry self-discipline norms formulated in accordance with the law, and ensure that the documents issued are true, accurate and complete.

Unless otherwise specified, the relevant terms in this Sponsorship Statement have the same meanings as in the Prospectus for the Issuance of A Shares by Sichuan Baili Tianheng Pharmaceutical Co., Ltd. to Specific Targets in 2025.

Table of Contents

Declaration...... 1

Table of Contents...... 2

Section 1 Basic Information of the Securities Issuance ...... 3

1. Name of the sponsor...... 3

2. Sponsor representatives, project co-organizers and other project team members...... 3

III. Issuer Situation...... 3

4. The interests and main business dealings between the sponsor and its affiliates and the issuer and its affiliates

Circumstance...... 8

V. Sponsor's Kernel Procedures and Kernel Opinions...... 10

Section 2 Sponsor Commitments ...... 11

Section 3 Recommendations on the Issuance of Securities ...... 12

1. Recommended conclusions for this securities issuance...... 12

2. Verification of whether the issuer has fulfilled the decision-making procedures for this issuance...... 12

3. The issuer complies with the issuance conditions and procedures stipulated in the Company Law and the Securities Law...... 13

Fourth, the issuance of the issuance in line with the "registration management measures" provisions of the issuance conditions of the item-by-item verification...... 13

V. Main risks of the issuer...... 16

6. Evaluation of the issuer's development prospects...... 24

VII. Special Verification ...... on the Hiring of Third Parties 27

Annex I ...... 33

Section 1 Basic information on the issuance of securities

1. Name of the sponsor

CITIC Securities Co., Ltd. (hereinafter referred to as "CITIC Securities" or the "Sponsor").

2. Sponsor representatives, project co-organizers and other project team members

(1) Sponsor representatives

Yang Qin: Sponsor representative, currently the director of the medical and health industry group of the CITIC Securities Investment Bank Management Committee. He has presided over or participated in projects such as Allist's IPO, Navitas Technology IPO, Yahong Pharmaceutical IPO, Yifang Biotech IPO, Shangji CNC IPO, and Laimei Pharmaceutical's non-public offering.

Chen Wei, Sponsor Representative, is currently the Vice President of the Medical and Health Industry Group of the Investment Banking Committee of CITIC Securities. He has presided over or participated in projects such as Allist's IPO, Yahong Pharmaceutical's IPO, Sinopharm Hyundai's 2022 non-public offering, Shangji CNC's 2020 non-public offering, and Shangji CNC's 2019 convertible bonds.

(2) Project co-organizers

Zhou Zengjun is currently the Senior Vice President of the Medical and Health Industry Group of the Investment Bank Management Committee of CITIC Securities. He has presided over or participated in projects such as Allist IPO, Tianxin Pharmaceutical IPO, Yahong Pharmaceutical IPO, Yifang Biotech IPO, Bluesail Medical Convertible Bond and other projects.

(3) Other members of the project team

Other members of the project team include: Xu Chenming, Li Yang, Gong Jie, Ma Xiang, Huang Yuming, Feng Xuan, Zhao Tianwei, Li Weihan, Tong Yinzheng, Niu Rui.

3. Issuers

(1) Basic information

Company name: Sichuan Baili Tianheng Pharmaceutical Co., Ltd

English Name: Sichuan Biokin Pharmaceutical Co.,Ltd.

Limited Date of Incorporation 17 August 2006

The date of establishment of the joint-stock company is November 29, 2011

The registered capital is 40,100,000 yuan

The stock is listed on the Shanghai Stock Exchange

The A-share stock is referred to as Baili Tianheng

A-share ticker symbol 688506.SH

Legal representative: Zhu Yi

Registered address: No. 161, Baili Road, Chengdu Cross-Strait Science and Technology Industrial Park, Wenjiang District, Chengdu, Sichuan Province

Building No. 1

Office address: No. 161, Baili Road, Chengdu Cross-Strait Science and Technology Industrial Park, Wenjiang District, Chengdu, Sichuan Province

Building No. 1

Zip Code 611130

Phone 028-85321013

Fax: 028-85320270

E-mail ir@baili-pharm.com

Website http://www.baili-pharm.com/

Wholesale: biochemicals, biological products (excluding preventive biological products), chemical agents

raw materials, antibiotic APIs, Chinese patent medicines, chemical preparations, antibiotic preparations; pin

Business scope Sales: cardboard containers, plastic films, rubber products, glass instruments and glass packaging capacity

and chemical raw materials (except hazardous chemicals). (Projects subject to approval in accordance with the law, by photo.)

Business activities can only be carried out after approval by the customs department).

(2) Equity structure and top 10 shareholders

1. Equity structure

As of 31 December 2024, the issuer's shareholding structure is as follows:

Class Number (Shares) Ratio

1. Restricted shares 310,549,010 77.44%

1. State Shareholding - -

2. Shareholding by state-owned legal persons - -

3. Other domestic holdings 310,549,010 77.44%

4. Foreign Shareholding -

2. Unrestricted tradable shares 90,450,990 22.56%

1. RMB ordinary shares 90,450,990 22.56%

2. Domestically listed foreign shares - -

3. Foreign Shares Listed Overseas - -

4. Others - -

3. Total number of shares 401,000,000 100.00%

2. The shareholding of the top ten shareholders

As of 31 December 2024, the top 10 shareholders of the issuer held the following shareholdings:

Serial No. Shareholder Name/Name Number of Shares Held Shareholding Ratio

(10,000 shares)

1 Zhu Yi 29,815.94 74.35%

2 OrbiMed 2,852.72 7.11%

3 Zhang Suya 957.55 2.39%

4 China Merchants Bank Co., Ltd.-ChinaAMC SSE Science and Technology Innovation Board 50% 517.87 1.29%

exchange-traded open-ended index securities investment funds

5 Industrial and Commercial Bank of China Co., Ltd.-E Fund SSE Science and Technology Innovation 335.72 0.84%

Board 50 Component Exchange-traded Securities Investment Fund

6 Guangzhou Telford Investment Consulting Partnership (Limited Partnership)-Guangzhou 209.63 0.52%

State Defu Phase II Equity Investment Fund (Limited Partnership)

7 Bank of China Limited-GF Healthcare Equity 201.20 0.50%

Securities investment funds

8 China Construction Bank Corporation-Wells Fargo Precision Medicine 194.96 0.49%

Allocate hybrid securities investment funds to the core

9 Industrial and Commercial Bank of China Co., Ltd. - China-Europe Medical and Health Mixed 187.94 0.47%

Synthetic securities investment funds

10 SDIC Securities Investment Co., Ltd. 161.94 0.40%

Total of Top 10 Shareholders 35,435.47 88.36%

(3) Changes in previous financing, cash dividends and net assets

As of December 31, 2024, the changes in the company's previous fundraising, cash dividends and net assets are as follows:

Under:

Unit: 10,000 yuan

Net assets at the end of the period before the IPO of A-shares were 19,491.45 (as of June 30, 2022)

Issue Date Type Type Net Proceeds

Past fundraising

January 6, 2023 Initial public offering of shares 88,439.74

Cumulative cash distribution amount after initial offering of A shares -

Net assets at the end of the period prior to the issuance of 388,592.48 (as of December 31, 2024)

(4) The issuer's main financial data and financial indicators

1. Main data of the consolidated balance sheet

Unit: 10,000 yuan

Project 2024.12.31 2023.12.31 2022.12.31

Total assets 713,735.77 142,509.93 199,143.34

Total liabilities 325,143.29 127,322.60 105,753.91

Total shareholders' equity 388,592.48 15,187.33 93,389.43

Total equity attributable to shareholders of the parent company 388,592.48 15,187.33 93,389.43

2. The main data of the consolidated income statement

Unit: 10,000 yuan

Project 2024 2023 2022

Operating income 582,271.78 56,187.07 70,328.16

Operating profit 397,888.44 -76,937.65 -28,763.48

Total profit 397,815.36 -76,901.30 -28,907.38

Net profit attributable to shareholders of the parent company was 370,750.46 -78,049.89 -28,237.91

3. Main data of the consolidated cash flow statement

Unit: 10,000 yuan

Main indicators 2024 2023 2022

Net cash flow from operating activities 405,867.01 -61,535.11 -25,864.91

Net cash flow from investing activities -256,544.44 -8,187.54 -3,454.61

Net cash flow from financing activities 127,389.04 9,084.30 113,941.11

Net increase in cash and cash equivalents 281,630.56 -60,900.21 84,647.27

4. Main financial indicators

Main indicators 2024.12.31/202 2023.12.31/2023 2022.12.31/2022

4 years of the year of the year

Gross margin 95.46% 59.19% 66.91%

Weighted average return on equity (%) 184.86% -143.57% -148.18%

Weighted average return on equity (%) (after deducting non-profits) 181.27% -149.50% -176.63%

Basic earnings per share (before deduction) (RMB/share) 9.25 -1.95 -0.78

Basic earnings per share (after deducting non-profits) (RMB/share) 9.07 -2.03 -0.93

Current ratio (times) 3.19 0.74 1.93

Quick Ratio (Times) 3.10 0.60 1.80

Debt-to-asset ratio (consolidated) (%) 45.56% 89.34% 53.10%

Accounts receivable turnover ratio (times/year) 56.78 3.44 4.22

Inventory turnover ratio (times/year) 1.74 1.89 2.53

Total asset turnover ratio (times/year) 1.36 0.33 0.48

Note: 1. Gross profit margin = (operating income - operating cost) / operating income

2. Weighted average return on equity = P0/(E0+NP÷2+Ei×Mi÷M0-Ej×Mj÷M0±Ek×Mk÷M0)

Among them: P0 corresponds to the net profit attributable to ordinary shareholders of the Company and the net profit attributable to ordinary shareholders of the Company after deducting non-recurring gains and losses;

NP is net profit attributable to common shareholders of the Company;

E0 is the opening net assets attributable to ordinary shareholders of the Company;

EI refers to the new net assets attributable to ordinary shareholders of the Company during the reporting period, such as the issuance of new shares or debt-to-equity swaps;

EJ is the net assets attributable to ordinary shareholders of the Company that have been reduced by repurchases or cash dividends during the reporting period;

M0 is the number of months in the reporting period; Mi is the cumulative number of months from the next month of new net assets to the end of the reporting period;

Mj is the cumulative number of months from the month following the decrease in net assets to the end of the reporting period;

EK is the increase or decrease in net assets attributable to ordinary shareholders of the Company as a result of other transactions or events;

MK is the cumulative number of months from the month following the change in other net assets to the end of the reporting period.

3. Basic earnings per share = P0÷S

S= S0＋S1＋Si×Mi÷M0–Sj×Mj÷M0-Sk

Among them: P0 is the net profit attributable to ordinary shareholders of the Company or the net profit attributable to ordinary shareholders after deducting non-recurring gains and losses;

S is the weighted average number of common shares outstanding;

S0 Total number of shares at the beginning of the period;

S1 refers to the increase in the number of shares due to the conversion of provident fund into share capital or the distribution of stock dividends during the reporting period;

Si refers to the increase in the number of shares due to the issuance of new shares or debt-to-equity swaps in the reporting period;

Sj is the number of shares reduced due to repurchases, etc. in the reporting period;

SK is the number of shares reduced in the reporting period; M0 Number of months in the reporting period;

Mi is the cumulative number of months from the month following the increase in shares to the end of the reporting period;

Mj is the cumulative number of months from the month following the reduction of shares to the end of the reporting period.

4. Current ratio = current assets/current liabilities

5. Quick Ratio = (Current Assets - Inventory) / Current Liabilities

6. Asset-liability ratio = total liabilities/total assets

7. Accounts receivable turnover rate = operating income / average accounts receivable

8. Inventory turnover rate = operating cost / average inventory

9. Total asset turnover rate = operating income / average total assets

(5) The controlling shareholder and actual controller

1. Basic information of the controlling shareholder and actual controller of the issuer

As of December 31, 2024, Mr. Zhu Yi directly held 74.35% of the shares of the issuer and was issued

controlling shareholder and actual controller.

Mr. Zhu Yi, born in December 1963, Chinese nationality, no right of permanent residence abroad, no Sichuan University

He holds a bachelor's degree in electrical engineering, a master's degree in biology from Fudan University, and a doctorate in management from Sichuan University. He is currently the chairman, general manager, chief scientific officer and core technical personnel of the company.

From September 1987 to December 1990, he taught in the Department of Microbiology and Immunology, West China Medical University.

From January 1991 to March 1992, he served as the director of Sida Biochemical Plant of Chengdu Biomedical Engineering Center; 1992

From March to October 2012, he served as the chairman of Xinbo Technology; From August 1996 to September 2011, Zhu Yi

Mr. established Baili Pharmaceutical and served as chairman and general manager; From November 2010 to October 2011, Ren Tianheng

Chairman and General Manager of the Company; Since November 2011, he has served as the chairman and general manager of the company; At present, he is also the company's chief scientific officer and core technical personnel, chairman of Baili Pharmaceutical, executive director and manager of DotBio, executive director of Pangu Capital, and chairman and chief scientific officer of SystImmune.

During the reporting period, there was no change in the controlling shareholder and actual controller of the issuer.

2. Equity control relationship chart between the issuer and the controlling shareholder and actual controller

As of 31 December 2024, the control relationship between the issuer and the actual controller and controlling shareholder

The block diagram is as follows:

Note: The issuer established a wholly-owned subsidiary, Chengdu Nuoxin Biotechnology Co., Ltd., in March 2025.

4. The interests and main business dealings between the sponsor and its affiliates and the issuer and its affiliates

(1) The shares held by the sponsor or its controlling shareholder, actual controller, or important related party in the issuer or its controlling shareholder or important related party

As of December 31, 2024, the sponsor's proprietary business stock account, credit and securities lending account, do

Municipal accounts, a wholly-owned subsidiary of CITIC Securities and China Asset Management Co., Ltd., a holding subsidiary of CITIC Securities

The shares of the issuer or its significant affiliates are as follows: 86,705 shares of the issuer are held in the proprietary business stock account of CITIC Securities; CITIC Securities' special account for credit and securities lending holds 1,900 shares of the issuer; The CITIC Securities market-making account holds 1,599 shares of the issuer. CITIC Securities' wholly-owned subsidiaries hold a total of 1,620,849 shares of the issuer; China Asset Management Co., Ltd., a subsidiary of CITIC Securities, holds 6,947,790 shares of the issuer.

After verification, the total number of shares held by the sponsor and its controlling shareholders, actual controllers and important related parties does not exceed 5% of the shares of the issuer or its controlling shareholders and important related parties.

(2) The issuer or its controlling shareholder or important related party holds shares of the sponsor or its controlling shareholder, actual controller or important related party

After verification, as of December 31, 2024, the issuer or its controlling shareholder, actual controller, heavy

The related party does not hold shares of the sponsor or its controlling shareholder, actual controller, or important related party. (3) The sponsor's sponsor representative, his or her spouse, directors, supervisors, and senior management have the rights and interests of the issuer and hold positions in the issuer

After verification, as of December 31, 2024, the sponsor's designated sponsor representative and his or her spouse, medium

The directors, supervisors and senior management of Credit Securities do not have the rights and interests of the issuer or hold positions in the issuer that may affect the fair performance of sponsor duties.

(4) The sponsor's controlling shareholder, actual controller, or important related party and the controlling shareholder, actual controller, or important related party of the issuer provide mutual guarantees or financing

After verification, as of December 31, 2024, the controlling shareholder, actual controller, and important of the sponsor

There is no guarantee or financing between the related party and the controlling shareholder, actual controller or important related party of the issuer that is different from the normal commercial conditions.

(5) Other related relationships between the sponsor and the issuer

As of 31 December 2024, there was no possible impact between the sponsor and the issuer

Other related relationships in which the sponsor performs its sponsor duties fairly.

5. Sponsor's kernel program and kernel opinion

(1) Kernel programs

CITIC Securities has set up a kernel department, which is responsible for the kernel work of the institution's investment banking projects. The specific procedures of the internal audit of the sponsor are as follows:

First of all, the kernel department conducts an on-site audit of the project according to the stage of the project and the appointment of the project team. After accepting the application documents, two full-time reviewers will conduct a preliminary review of the project application documents from a legal and financial point of view, while the core department will also hire external lawyers and accountants to review the project application documents from their own professional perspectives. The auditors will issue audit feedback to the project team based on the preliminary review and the opinions of external lawyers and accountants.

Secondly, the kernel department will convene and preside over the kernel meeting to review the project issuance application according to the project progress, and the auditors will form a written report on the main problems found in the project review process and report to the participating members at the kernel meeting; At the same time, the sponsor representative and the project team need to explain and explain the problems and their solutions or implementation to the committee members. On the basis of full discussion of the main issues, the kernel committee votes to decide whether the project issuance application will pass the review of the kernel committee. After the kernel meeting, the kernel department will issue feedback to the project team based on the opinions of the members of the kernel committee, and the project team will reply and implement it.

Finally, the Kernel Department will also review the relevant documents submitted by the project team during the continuous supervision period, and pay attention to the major anomalies that occur during the continuous supervision period.

(2) Kernel opinions

On April 2, 2025, the 2025 annual presentation of Baili Tianheng was held through the CITIC Securities conference call system

The application for the project was discussed at the core meeting of the issuance of A shares by a specific object, and the project was voted by all the participating core committee members, and the project passed the deliberation of the CITIC Securities Kernel Committee, and it was agreed that the application documents for the project of Sichuan Baili Tianheng Pharmaceutical Co., Ltd. to issue A shares to a specific object in 2025 were submitted to the regulatory authorities for review.

Section 2 Sponsor Commitments

1. The sponsor has conducted due diligence and prudent verification of the issuer and its controlling shareholder and actual controller in accordance with the laws, administrative regulations and the provisions of the China Securities Regulatory Commission, and agreed to recommend the issuer's securities for issuance and listing, and accordingly issues this letter of sponsorship.

2. Through due diligence and prudent verification, the sponsor undertakes the following:

(1) There are sufficient reasons to believe that the issuer complies with laws and regulations and the relevant regulations of the China Securities Regulatory Commission and the Shanghai Stock Exchange on the issuance and listing of securities;

(2) There are sufficient grounds to believe that there are no false records, misleading statements or material omissions in the issuer's application documents and information disclosure materials;

(3) There are sufficient grounds to believe that the issuer and its directors have sufficient and reasonable grounds to express their opinions in the application documents and information disclosure materials;

(4) There are sufficient grounds to believe that there is no substantial difference between the application documents and information disclosure materials and the opinions issued by the securities service institution;

(5) ensure that the designated sponsor representative and the relevant personnel of the sponsor have diligently and prudently conducted due diligence and prudent verification of the issuer's application documents and information disclosure materials;

(6) Guarantee that there are no false records, misleading statements or major omissions in the sponsorship letter and other documents related to the performance of sponsorship duties;

(7) Ensure that the professional services provided to the issuer and the professional opinions issued comply with laws, administrative regulations, regulations of the China Securities Regulatory Commission and industry norms;

(8) Voluntarily accept the regulatory measures taken by the China Securities Regulatory Commission in accordance with the Administrative Measures for the Sponsorship Business of Securities Issuance and Listing;

(9) Undertake to voluntarily accept the self-discipline supervision of the Shanghai Stock Exchange.

Section 3 Recommendations on the issuance of securities

1. Recommended conclusions on the issuance of securities

After due diligence and due diligence of the application documents, and communication with the issuer, the issuer's lawyers and accountants, the sponsor believes that:

The issuer's issuance is in line with the company's overall development strategy, and the funds raised by this issuance will effectively enhance the company's capital strength, improve the capital structure, improve the company's ability to resist risks and continue to operate, and promote the company's sustainable and stable development. The issuer has the necessary independence, can operate in accordance with laws, regulations and the requirements of regulatory authorities, has outstanding main business, has good development prospects, the use of raised funds is in line with the national industrial policy, in line with the Company Law, the Securities Law and the Registration Management Measures and other relevant laws, regulations and normative documents of the listed company to issue A shares to specific targets, and has fulfilled the relevant decision-making procedures.

Accordingly, the Sponsor agrees to sponsor the issuance of A shares to specific targets in 2025.

2. Verification of whether the issuer has fulfilled the decision-making procedures for this issuance

(1) The board of directors deliberates and approves

On March 9, 2025, the issuer held the 19th meeting of the fourth session of the board of directors and deliberated and approved this meeting

The board of directors of the issuer believes that the issuer has the conditions to issue A shares to specific objects, and makes resolutions on the type and par value of the shares to be issued, the issuance method and issuance time, the pricing reference date, the issue price and pricing principles, the number of shares, the issuance object and subscription method, the restricted period, the listing location, the scale and use of the raised funds, etc.

(2) Deliberation and approval by the general meeting of shareholders

On March 25, 2025, the issuer convened the first extraordinary general meeting of shareholders in 2025 to deliberate and approve each item

related to the issuance.

To sum up, the issuer has fulfilled the relevant laws, regulations, rules and normative documents such as the Company Law, the Securities Law and the Registration Management Measures, as well as the decision-making procedures stipulated by the China Securities Regulatory Commission and the Shanghai Stock Exchange. Matters related to this issuance have been deliberated and approved by the 19th meeting of the fourth board of directors of the company and the first extraordinary general meeting of shareholders in 2025; It still needs to be approved by the Shanghai Stock Exchange and approved by the China Securities Regulatory Commission

Make a decision to register.

3. The issuer complies with the issuance conditions and procedures stipulated in the Company Law and the Securities Law

(1) The issuance complies with the provisions of Article 143 of the Company Law

The shares issued by the issuer to specific targets are all RMB ordinary shares, and the issuance conditions and prices of each share are the same, and the types of shares issued this time are the same as the A shares issued and listed by the issuer, and each share has the same rights, in accordance with the provisions of Article 143 of the Company Law.

(2) The issuance complies with the provisions of Article 148 of the Company Law

The issue price of the issuer's issuance of shares to specific targets exceeds the par amount, which is in accordance with the provisions of Article 148 of the Company Law.

(3) The issuance complies with the provisions of Article 151 of the Company Law

The issuer's plan to issue shares to specific targets has been deliberated and approved by the issuer's first extraordinary general meeting of shareholders in 2025, in accordance with the provisions of Article 151 of the Company Law

(4) There is no prohibition under Article 9 of the Securities Law in this issuance

The issuer's issuance of A-shares to specific targets did not adopt advertising, public solicitation and disguised disclosure, which met the requirements of Article 9 of the Securities Law, which stipulates that "non-public issuance of securities shall not be subject to advertising, public solicitation and disguised disclosure".

(5) The issuance complies with the provisions of Article 12 of the Securities Law

The issuer's issuance complies with the provisions of Article 12 of the Securities Law that "the issuance of new shares by a listed company shall meet the conditions stipulated by the securities regulatory authority of the State Council approved by the State Council, and the specific management measures shall be prescribed by the securities regulatory authority of the State Council".

To sum up, the sponsor believes that the issuer's issuance complies with the issuance conditions and procedures stipulated in the Company Law and the Securities Law.

4. The issuance meets the issuance conditions stipulated in the "Registration Management Measures" item-by-item verification

In accordance with the relevant provisions of the Registration Management Measures, the sponsor conducted a case-by-item review of the issuer's issuance plan through due diligence, and believed that the issuer's offering complied with the relevant provisions of the Registration Management Measures.

The specific verification process is as follows:

(1) The issuer does not have the circumstance that it is not allowed to issue shares to specific targets as stipulated in Article 11 of the Registration Management Measures

1. According to the issuer's explanation, and after consulting the "Report on the Use of the Previous Raised Funds" and the "Report on the Use of the Previous Raised Funds and the Assurance Report", the issuer does not change the use of the previous raised funds without authorization;

2. According to the "Audit Report" and the issuer's explanation, and after consulting the issuer's periodic reports during the reporting period, the preparation and disclosure of the issuer's financial statements in the most recent year comply with the provisions of the accounting standards for business enterprises or relevant information disclosure rules in material respects, and there is no audit report issued with negative opinions, qualified opinions or inability to express opinions in the financial accounting reports of the most recent year;

3. According to the questionnaire filled in by the directors, supervisors and senior management of the issuer, and after searching the websites of the China Securities Regulatory Commission, Shenzhen Stock Exchange, Shanghai Stock Exchange, etc., the current directors, supervisors and senior management of the issuer have not been subject to administrative punishment by the China Securities Regulatory Commission in the past three years, or have been publicly reprimanded by the stock exchange in the past year;

4. According to the "Special Credit Report for Market Entities (Certificate of No Violations of Laws and Regulations)" and the compliance certificate issued by the relevant government authorities, the questionnaire filled in by the directors, supervisors and senior management personnel and/or their certificates of no criminal record, and after searching the websites of the China Securities Regulatory Commission, the issuer and its current directors, supervisors and senior management personnel are not under investigation by the judicial authorities for suspected crimes or are being investigated by the China Securities Regulatory Commission for suspected violations of laws and regulations;

5. After reviewing the issuer's periodic reports during the reporting period, Zhu Yi, the controlling shareholder and actual controller of the issuer, has not committed any major illegal acts that seriously damage the interests of the issuer or the legitimate rights and interests of investors in the past three years;

6. According to the issuer's explanation, the "Special Credit Report for Market Entities (No Violation of Laws and Regulations)" and the compliance certificate issued by the relevant government authorities, the issuer has not committed any major illegal acts that seriously damage the legitimate rights and interests of investors or the public interest in the past three years.

(2) The use of the raised funds shall comply with the provisions of Article 12 of the Registration Management Measures

1. After deducting the issuance costs, all the funds raised in this issuance are intended to be used for innovative drug research and development projects, which are in line with the national industrial policy and relevant laws and administrative regulations on environmental protection and land management;

2. The funds raised in this issuance will not be used to hold financial investments, nor will they be directly or indirectly invested in companies whose main business is to buy and sell securities;

3. After the implementation of the fund-raising project, there will be no new intra-industry competition or obviously unfair related party transactions with the controlling shareholder, actual controller and other enterprises controlled by the controlling shareholder, the actual controller and other enterprises under their control, or the independence of the company's production and operation will be seriously affected;

4. The funds raised in this issuance will be invested in the business in the field of scientific and technological innovation.

(3) The issuer complies with the provisions of Article 55 of the Registration Management Measures

The issuance of shares to specific targets is for no more than 35 (including 35) specific investors, including securities investment fund management companies, securities companies, trust companies, finance companies, insurance institutional investors, qualified foreign institutional investors and other legal persons, natural persons or other institutional investors who meet the conditions stipulated by relevant laws and regulations. Securities investment fund management companies, securities companies, qualified foreign institutional investors and RMB qualified foreign institutional investors shall be deemed to be one issuance target if they subscribe for two or more products under their management; As the object of issuance, the trust company can only subscribe with its own funds. The number of issuance objects shall comply with the provisions of the Registration Administration Measures and other relevant laws and regulations, and the number of issuance objects shall be appropriate.

(4) The issue price complies with the provisions of Article 56 of the Registration Management Measures

The pricing benchmark date of this issuance to a specific target is the first day of the issuance period, and the issuance price of this issuance to a specific target is not less than 80% of the average trading price of the company's shares in the 20 trading days prior to the pricing reference date. The above average price is calculated as follows: average stock trading price in the 20 trading days before the pricing base date = total stock trading volume in the 20 trading days before the pricing base date / total stock trading volume in the 20 trading days before the pricing base date.

(5) The pricing reference date complies with the provisions of Article 57 of the Registration Management Measures

The pricing benchmark date for the issuance of shares to specific targets is the first day of the issuance period, and the issue price is not less than 80% of the average trading price of the company's shares in the 20 trading days before the pricing benchmark date; If the company has dividends, share gifts, allotments, capital reserve to increase share capital and other ex-rights and dividends from the pricing basis date to the issuance date, the issue price will be adjusted accordingly; The resolution of the board of directors of this issuance did not determine the specific issuance object.

(6) The restriction period complies with the provisions of Article 59 of the Registration Management Measures

After the completion of the issuance of shares to specific targets, the shares subscribed for by the issuer will be issued from this time

The shares issued cannot be transferred within six months from the date of completion of the issuance (i.e., from the date on which the shares of this offering are registered to the name).

After the completion of the issuance, the shares issued by the listed company to a specific target based on the shares obtained by the listed company obtained in this transaction, and the shares derived from the distribution of stock dividends by the listed company and the conversion of capital reserve into share capital shall also comply with the above-mentioned share lock-up arrangement. Where laws, regulations, and normative documents have other provisions on the sales restriction period, follow those provisions.

The shares of the listed company obtained by the issuer based on this transaction shall also comply with the relevant laws, regulations and normative documents such as the Company Law, the Securities Law, and the Listing Rules of the Science and Technology Innovation Board after the expiration of the lock-up period.

(7) The issuance complies with the provisions of Article 87 of the Registration Management Measures

The offering will not result in a change of control of the issuer.

After verification, the sponsor believes that the issuer's issuance does not exist under Article 87 of the Registration Management Measures.

5. The main risks of the issuer

(1) Industry policy risks

As an industry related to the national economy and people's livelihood and people's health, the development status and business environment of enterprises are greatly affected by national policies. China has formulated laws and regulations in the research and development, production and operation of drugs, and strictly supervised. In recent years, in order to encourage the research and development of innovative drugs, deepen the reform of the medical system, and promote the long-term development of the pharmaceutical industry, the state has launched a number of industry policies, involving drug registration and approval, price circulation reform, medical insurance catalog management, centralized procurement and other aspects. At the same time, China is currently in a period of economic restructuring, and various reforms are gradually deepening. With the deepening of China's medical and health system reform and the gradual improvement of the social medical security system, industry-related regulatory policies will be adjusted accordingly, and the policy environment of China's medical and health market may face significant changes.

If the company cannot adjust its business strategy and take effective measures to deal with the changes in the regulatory environment and market rules brought about by the policy reform of the pharmaceutical industry, it will be difficult to achieve a balance between meeting market demand and adapting to industry policies, which will have an adverse impact on the company's operation.

(2) Market risk

1. Market competition risk

In terms of innovative drugs, the company faces competition from various biopharmaceutical companies around the world, and many large biopharmaceutical companies are already selling or developing drugs with the same or similar product pipelines as the company. If competitors discover, develop, or commercialize competing drugs faster or more successfully than the Company, or if competitors develop and commercialize safer, more effective, more convenient, or less expensive drugs, the Company's commercial opportunities may be significantly reduced or even eliminated.

If the company cannot continue to launch new products with market competitiveness, or can not invest more funds and manpower in marketing, or can not continue to invest in research and development for product upgrades, the company may not be able to effectively respond to the increasingly fierce competition in the pharmaceutical market, and then face the risk of declining market share and profitability.

2. Risks in the macro environment

As a company with R&D centers in both China and the United States, the Company and its subsidiaries are required to comply with the relevant laws and regulations that may be issued or amended from time to time by the legislatures, government departments and other regulatory authorities of the country and region where the business and business activities are involved, which may have a material impact on the Company or its subsidiaries. In addition, the uncertainty of the international political, economic and market environment in the future may also have a certain adverse impact on the company's global operation.

(3) Operational risks

1. Drug R&D risks

The R&D of innovative drugs is characterized by high investment, high risk and long cycle. Before a drug is approved for marketing, various preclinical studies and clinical trials must be conducted to prove the safety and efficacy of the drug under development. The results of preclinical studies and early clinical trials cannot predict and guarantee the final clinical trial results, and the results of clinical trials may be poor, and the success of clinical trials does not guarantee that the drug will eventually receive regulatory approval and be successfully marketed. If the Company's drug candidates fail to achieve the expected results or delay in achieving the expected results in any of the above stages, the Company may not be able to successfully or timely complete the clinical trial, obtain regulatory approval or commercialize the drugs, which in turn will damage the Company's business and future earnings and have a material impact on the Company's business operations.

2. The risk that the promotion of new products is not as expected

After the company's new products are successfully developed and approved for marketing, it is necessary to carry out market development and promotion, and transmit information such as mechanism of action, usage, safety, and comparison results of competing products to the market through a variety of means, so that the market is familiar with and accept the company's products. If the new product is not accepted by the market, or the company fails to effectively organize the appropriate sales team and partners to promote the product, it will affect the market development of the product, which will adversely affect the company's profitability. In addition, if the company's products are not included in the medical insurance catalog in the future, it will have an adverse impact on the sales of related products.

3. Risks of cooperating with BMS on BL-B01D1

In December 2023, the issuer entered into an exclusive licensing and collaboration agreement with BMS for the purpose of co-developing and

Co-commercialization BL-B01D1. According to the Collaboration Agreement, (1) the Company and BMS will jointly develop and commercialize BL-B01D1 in the United States, and the parties will share the expenses related to the development of BL-B01D1 in the United States and the net profit or net loss from sales based on an agreed percentage; (2) the Company is solely responsible for the development and commercialization of BL-B01D1 in Chinese mainland, and BMS will receive royalties from net sales in Chinese mainland; (3) BMS will be solely responsible for the development and commercialization of BL-B01D1 in the rest of the world, and the Company will receive tiered royalties from net sales. Following the effective date of the agreement, BMS has made an irrevocable, non-deductible upfront payment of $800 million to the company.

Suppose the collaboration between the issuer and BMS for BL-B01D1 does not materialize within the expected timeframe

The issuer may not be able to obtain milestone payments, royalties or earn profits, and may adversely affect the issuer's business operations by contributing part of the development expenses or incurring part of the net loss.

4. Risks faced by the business segment of chemical drug preparations and Chinese patent medicine preparations

During the reporting period, in addition to the cooperation between the company and BMS for BL-B01D1 to achieve intellectual property licensing income,

The company's main revenue comes from the chemical drug preparations and Chinese patent medicine preparations business segments. Affected by factors such as centralized drug procurement and intensified market competition, the relevant operating income in each period of the reporting period was 701.8331 million yuan, 560.4156 million yuan and 486.7586 million yuan respectively, which was in a downward trend.

The business segment of chemical drug preparations and Chinese patent medicine preparations is faced with the failure to win the bid for the centralized procurement of national drugs, the failure to win the bid for the centralized procurement of local drugs, the reduction of product sales prices due to the centralized procurement of drugs, and the inability of generic drugs to pass or

Risks such as failure to pass the consistency evaluation within the time limit may adversely affect the company's operations. In addition, the R&D of the Company's chemical drug preparations also faces the risk of R&D failure, failure to be approved for marketing or failure to be approved for marketing within the expected time; At the same time, competitors may launch products to the market before the company, which will affect the company's market share after the commercialization of drug candidates, which will adversely affect the company's business.

5. GMP standard production management risk

On December 1, 2019, the new Drug Administration Law came into effect. The GMP certification of the drug was officially withdrawn

Out of the stage of history. The cancellation of GMP certification marks the transformation of the regulatory function of the National Medical Products Administration and the clarification of regulatory thinking, from certification supervision to daily supervision, and more attention is paid to the whole process of supervision, and drug manufacturers will face more normalized and rigorous inspections. In the past two years since the cancellation of GMP certification, the frequency of unannounced inspections has increased significantly, showing a trend of normalization, and the inspection has become increasingly strict. As a pharmaceutical manufacturer, the company will face increasingly frequent unannounced inspections in the future, and needs to produce drugs more strictly in accordance with GMP standards in daily production activities, otherwise it will face the risk of stopping production due to production not meeting standard specifications.

6. Management risks of dealers and promotion service providers

The company's sales are mainly based on the distribution model, and the products are finally sold to the terminal institutions through the pharmaceutical circulation enterprises that hold the drug business license. The company's revenue scale is large, the number of dealers is large, and the sales scope covers most of the provinces, autonomous regions and municipalities directly under the central government. In the future, with the continuous development of the company's business operations, the number of dealers may further increase, and the company's difficulty in organizing and managing dealers and risk management will also increase. If the company is unable to continue to effectively manage dealers, or cannot maintain the cooperative relationship with existing important dealers, or dealers misbehaved in the process of marketing promotion, distribution and maintenance, or dealers are not effective in promotion, it will have an adverse impact on the company's brand image and business performance in the corresponding region.

The company hires a promotion service provider to carry out promotion activities for the company's drugs. Although the company will take many measures to strengthen the management of promotion service providers and promotion activities, due to the large number of promotion service providers distributed throughout the country, the company's daily management depth of promotion service providers will still have certain restrictions. If the promotion service provider misbehaves or does not promote effectively in the process of marketing and promotion, it will have an adverse impact on the company's brand image and business performance in the corresponding region.

7. Risk of misconduct by employees and partners

In the pharmaceutical industry, there have been many cases of corporate employees, distributors, promotion service providers or terminal organizations suspected of receiving kickbacks, bribes or other illegal gains related to drug prescriptions. The company's products under development are mainly innovative students

The products on sale are mainly chemical drug preparations and Chinese patent medicine preparations, and the business development process involves the communication and interaction between the company's employees, third-party institutions and medical institutions, doctors and patients. Improper conduct by the Company's employees or third parties that results in a violation of anti-commercial bribery laws in China or other jurisdictions may adversely affect the Company's business operations.

(4) Financial risks

1. The risk of continuous loss of performance

As of the end of the reporting period, all of the Company's innovative drug candidates were still in clinical trials and preclinical studies. In each period of the reporting period, the company's net profit was -282.3791 million yuan, -780.4989 million yuan and 3707.5046 million yuan respectively, and in 2024, the company generated a large amount of intellectual property licensing income for BL-B01D1 and achieved profit for the current period.

With the steady progress of the company's R&D projects, R&D expenditures will continue to increase in the coming period, and the company expects that the company may still experience performance losses in 2025 and subsequent years before commercializing drug candidates and generating large-scale profits, and there is a risk of continuous performance losses.

There is a risk that the Company will not be able to successfully or timely complete clinical trials, obtain regulatory approvals or commercialize drugs, which could materially damage the Company's business and future earnings if the Company fails to successfully or timely obtain regulatory approvals and complete the commercialization of drugs and drug candidates.

2. The risk of declining gross profit margin of drug sales

During the reporting period, the gross profit margins of the company's chemical drug preparations were 74.92%, 69.46% and 52.75%, respectively, and the gross profit margins of Chinese patent medicine preparations were 41.65%, 37.80% and 34.24% respectively. The change in the gross profit margin of drug sales is mainly affected by the changes in product sales prices, changes in raw material purchase prices, labor costs, cost control capabilities and changes in product structure. With the advancement of the reform of the national medical insurance payment system and the implementation of the centralized drug procurement policy, the decline in the sales price of chemical drug preparations is an inevitable trend. Proprietary Chinese medicine preparations are also facing the risk of price reduction due to the reform of the medical insurance payment system.

If the sales price of the company's main drugs decreases, the purchase price of raw materials and labor costs rise, and the company cannot maintain competitiveness in technological innovation, production efficiency, cost control ability and product structure, the company's drug sales will face the risk of declining gross profit margin, which will reduce the company's profitability.

3. Risk of changes in tax incentives and government subsidy policies

Some entities of the issuer enjoy preferential income tax policies, including preferential income tax policies for high-tech enterprises,

Preferential income tax policies for the development of the western region, preferential enterprise income tax policies for the employment of disabled persons, and government subsidies such as value-added tax refunds for the employment of disabled persons in enterprises.

If the relevant income tax incentives or government subsidy policies are adjusted by the competent state authorities in the future, or the company no longer meets the conditions for relevant recognition or subsidies due to other reasons, the company will not be able to continue to enjoy the preferential corporate income tax rate or face a reduction in government subsidies, which will have a certain impact on the company's operating performance and profit level.

4. Risk of exchange rate fluctuations

With the advancement of the company's and its subsidiaries' global R&D and commercialization strategies, the company's operating results and cash flow are affected by fluctuations in foreign exchange rates, which may expose the company to foreign exchange risks. The value of RMB against the US dollar and other currencies may be affected by changes in global political and economic conditions, and although the Company can make reasonable use of foreign exchange tools to mitigate the impact of exchange rate fluctuations, it is still impossible to completely avoid the adverse effects that future foreign exchange fluctuations may have on the Company's financial condition, results of operations and cash flows.

(5) Technical risks

1. Risks related to intellectual property rights

In the process of R&D and production, the company has generated many intellectual property rights, including but not limited to patents, trademarks, copyrights and know-how. The Company relies on trade secrets and/or drug regulation to protect drug candidates and core technologies that the Company deems commercially significant. However, the Company cannot guarantee that the Company's intellectual property rights will not be illegally used or damaged by others, and competitors may independently develop similar or substitute intellectual property rights. If the Company fails to adequately protect its intellectual property rights on a global scale, or if the Company's intellectual property scope fails to adequately protect the Company's proprietary rights, other companies in the same industry may compete with the Company directly or indirectly, which may adversely affect the Company's business operations.

Second, with the dynamic changes in third-party patent applications and patent protection, and the continuous strengthening of patent protection in the field of development of the Company's drug candidates, the Company may be at risk of infringing third-party patent rights of which it is not currently aware, and may face intellectual property infringement claims, appeals or other potential legal disputes, which will adversely affect the R&D and continuous operation of the Company's related technologies and products.

Third, the company has formulated a confidentiality system and protected the core technology by signing relevant agreements with core technical personnel containing confidentiality clauses and non-competition clauses, applying for patents and other measures, but it cannot completely guarantee that the above-mentioned core technologies will not be disclosed. If the core technology is leaked due to the failure to effectively implement the company's relevant internal control system, it may adversely affect the sustainability of the company's core competitiveness, thereby causing a negative impact on the company

The company's production and operation have been adversely affected.

2. Drug production risks

Due to the complexity of the drug production process, the drug production schedule and drug quality will be affected by many factors. If there is an occasional supply shortage, facility and equipment failure, human error, etc. in the procurement and production process of raw and auxiliary materials, the company will not be able to provide sufficient clinical samples and commercial products to meet the needs of clinical research and commercial sales in a timely manner or inability, thereby affecting the normal development of the company's clinical research and production and operation; In the event of a major quality and safety accident or adverse event, the company will face penalties from the regulatory authorities and cause serious damage to the company's reputation. All of these factors will adversely affect the Company's profitability and ability to continue as a going concern.

For the products under development, the company needs to break through various technical difficulties in large-scale production, including process, quality control, environmental protection, cost control and other aspects, in order to finally obtain safe, effective and controllable quality drugs. If the company is unable to overcome the technical difficulties of large-scale production after the completion of product research and development, or the cost of large-scale production is too high, it may affect the market performance and future operating performance of the company's products after they are launched.

(6) Legal and internal control risks

1. Product quality and medical dispute liability risk

Pharmaceutical products are directly related to the life safety of patients, so quality control is a crucial part of enterprise production and management. According to the needs of quality management and in strict accordance with the requirements of relevant laws and regulations such as the Drug Administration Law and the Good Manufacturing Practice for Drugs, the company has established a drug production quality management system that meets the requirements of GMP, covering the whole process from raw and auxiliary packaging material procurement, product development and production, product sales and after-sales, and managing and controlling the whole life cycle of drugs from R&D to post-marketing. At the same time, the company has also established a relevant management system for post-marketing quality and safety monitoring, and carried out pharmacovigilance activities to minimize drug quality and safety risks. Although the company has established a sound internal control over product quality and medical disputes, with the development of the company's business operations and the development and launch of new products, if the company cannot continuously evaluate and improve the quality control system and implement it effectively, it may face the risk that the quality control capability cannot adapt to the expansion of business scale and increasingly stringent regulatory requirements. If a patient uses the company's products and causes medical disputes, it may adversely affect the company's production and operation and market reputation.

2. Environmental protection risks

The pharmaceutical manufacturing industry in which the company is located is a highly polluting industry and is subject to strict environmental protection policies. The company's main environmental pollutants are wastewater, exhaust gas, solid waste and noise generated in the production process. For this

For some pollutants, the company has established an environmental protection hardware equipment and personnel management system suitable for the scale of production, and the pollutants have been treated in an organized manner, and the main pollutants have been effectively treated. However, in the company's daily operation, there may still be a risk that the violation of laws, regulations and departmental rules related to environmental protection constitutes violations of laws and regulations, and is subject to administrative penalties as a result, which will adversely affect the company's production and business activities.

3. The risk of renewal of business qualifications

According to the "Measures for the Administration of Drug Business Licenses", "Good Practice for Drug Operation", "Regulations for the Implementation of the Drug Administration Law", "Good Manufacturing Practice for Drugs", "Measures for the Administration of Drug Registration" and other regulations, the company has obtained the relevant licenses, qualifications and certifications required for production and operation, including drug production licenses, drug business licenses, clinical trial approvals/clinical trial notices, etc. Upon the expiration of some certificates, the Company will be subject to re-assessment by the relevant authorities in order to extend the validity period of the Certificates. If the company fails to continue to meet the corresponding conditions for the renewal of the administrative license during the inspection or evaluation, fails to renew the new license or renew the registration in time when the validity period of the relevant license and approval document expires, or fails to obtain the re-registration approval of the product within the specified time, the company will not be able to continue to develop, produce or sell the relevant products, which will adversely affect the normal production and operation of the company.

(7) Risks in the implementation of fundraising and investment projects

The issuer intends to use the funds raised this time for innovative drug R&D projects, which are often accompanied by a greater risk of failure in the R&D process due to the high technical requirements, difficult development, long R&D cycle and high cost of new drug R&D projects, so there is a risk of failure for such R&D projects as investment projects of raised funds. For details of the relevant risks, please refer to "(3) 1. Drug R&D Risks" in this section.

At the same time, the feasibility analysis of the fundraising project is based on the current market environment, industry policies, industry development trends and other factors, and in the implementation of the fundraising project, it is also faced with many uncertainties such as market demand changes, relevant policy changes, and technology updates, which may lead to the delay or inability of the project to be implemented; Moreover, innovative drug R&D projects cannot directly bring economic benefits, and it will take some time to achieve economic benefits. Therefore, the new R&D expenses of the raised funds investment project will further affect the company's net profit, working capital, net assets and return on net assets, etc., and adversely affect the company's short-term profitability.

(8) Risks associated with the Offering

1. Review and issuance risk

The plan to issue shares to specific targets is subject to the approval of the Shanghai Stock Exchange and the approval of the China Securities Regulatory Commission before it can be implemented. There is uncertainty as to the outcome of these approvals and the timing of their final approval

Sex.

At the same time, the issuance of shares to specific targets is issued to no more than 35 (including 35) specific investors. Investors' subscription intentions and subscription ability are affected by various internal and external factors such as the overall situation of the securities market, the company's stock price trend, investors' recognition of the issuance plan and the market capital situation, and may face the risk of insufficient funds and even issuance failure.

2. The risk of diluting spot returns

After the completion of the issuance of shares to specific targets, the company's total share capital and net assets will increase, and the use and implementation of the raised funds will take a certain amount of time. According to estimates, the offering may not result in dilution of the company's earnings per share. However, if there is a significant change in the assumptions of the calculation or the company's operating conditions, the possibility that the immediate return will be diluted due to this issuance cannot be ruled out, and the company still has the risk that the immediate return will be diluted due to this issuance.

3. Stock price fluctuation risk

The stock price not only depends on the company's operating conditions, but also affects the country's economic policies, economic cycles, supply and demand conditions in the stock market, the occurrence of major natural disasters, investors' psychological expectations and other factors. Therefore, there are certain uncertainties in the price of the company's shares, which may fluctuate due to the above-mentioned risk factors, which directly or indirectly bring uncertainty to investors about investment returns.

6. Evaluation of the issuer's development prospects

(1) The issuer's industry is facing better development opportunities

1. The scale of the global and Chinese oncology drug market is growing rapidly and has broad market prospects

Cancer, a widespread disease in which abnormal cells grow uncontrollably, has become the leading cause of death worldwide, and the incidence of cancer has increased significantly as the global population ages. According to CIC, the number of new cancer cases in China, the United States, and the world in 2023 will be 5 million, 2.4 million, and 20.4 million, respectively, with the high incidence rate driving the continued growth of the oncology drug market. Oncology drugs worldwide

The market grew from USD 129.0 billion in 2018 to USD 223.2 billion by 2023, growing at a CAGR during the period

reached 11.6% and is expected to grow at a CAGR of 9.9% from 2023 to 5,750 in 2033

billion dollars. China's oncology drug market grew from US$19.9 billion in 2018 to US$30.9 billion in 2023.

It grew at a CAGR of 9.2% during the period and is expected to grow to 933 at a CAGR of 11.7% in 2033

billion dollars. Driven by an aging population, rising cancer incidence, and innovative drug research and development, the global and Chinese oncology drug industry is growing rapidly, showing broad market prospects. It is expected that with the advancement of treatment technology and the further release of market demand in the future, the oncology drug industry is expected to continue to maintain a rapid growth trend.

2. Pharmaceutical industry policies promote the development of domestic innovative drugs

In recent years, China has issued a series of relevant laws, regulations and industry policies for innovative drugs, providing support and preferential treatment to innovative drug companies from drug research and development, review and approval, and new drug listing, and vigorously encouraging pharmaceutical companies to innovate. The "14th Five-Year Plan" for the development of the pharmaceutical industry clearly states that it will adhere to innovation as the basic principle, take innovation as the core task of promoting the high-quality development of the pharmaceutical industry, accelerate the implementation of the innovation-driven development strategy, build an open innovation ecology, improve the quality and efficiency of innovation, accelerate the industrialization of innovation achievements, and create a new engine for the sustainable and healthy development of the pharmaceutical industry; At the same time, it is proposed that in the field of antibody drugs, focus on the development of new antibody drugs for tumors and other diseases. With the entry into force of a series of laws and regulations, such as the 2020 revision of the Measures for the Administration of Drug Registration, the NMPA has gradually established an accelerated drug registration system to support clinical value-oriented drug innovation. With the promulgation of policies such as the "Drug Evaluation Center to Accelerate the Review of Marketing Authorization Applications for Innovative Drugs (Trial)", the "Breakthrough Therapy Drug Review Procedures (Trial)" and other policies, as well as the "Working Procedures for the Review and Approval of Drug Conditional Approval of Marketing Applications (Trial) (Draft Revisions for Solicitation of Comments)", the policy framework for the review and approval of innovative drugs is becoming more and more perfect, and innovative drugs with real clinical value are expected to shorten the product development cycle and gain more market opportunities through accelerated approval.

(2) The issuer has a good competitive advantage in the market

1. The model of dual R&D centers in China and the United States combines efficiency advantages and innovation ecology to maintain efficient and stable R&D progress

Adhering to the global development strategy and R&D layout, the issuer has established a dual R&D center in China and the United States with a global vision, fully integrating the efficiency advantages of China and the innovation ecosystem in North America to carry out breakthrough innovation quickly and efficiently. Relying on this model, the issuer has built a world-class "end-to-end" innovative R&D capability and competitive advantage covering the fields of ADC, GNC and ARC drugs, ensuring that the issuer's innovative drug R&D continues to advance steadily and efficiently, maintaining its leading position in the industry, continuously iterating innovative technologies, and continuously launching competitive innovative drugs

The product portfolio provides a solid foundation. As of 31 December 2024, the issuer's R&D team consisted of:

There are 1,112 members, which is about 44.11% of the company's total workforce.

2. Focus on the field of oncology, with the core technology platform of innovative drugs with completely independent intellectual property rights and sustainable innovation capabilities

After years of technological innovation and accumulation, the issuer has built an innovative ADC drug R&D platform (HIRE-ADC platform), an innovative multi-specific antibody drug R&D platform (GNC platform), a specificity-enhancing bispecific antibody drug R&D platform (SEBA platform) and an innovative ARC (nuclear medicine) R&D platform (HIRE-ARC platform) with global rights and completely independent intellectual property rights.

As of December 31, 2024, the issuer and its subsidiaries have authorized a total of 183 invention patents, including

This includes 80 in China, 13 in the United States, and 90 in other jurisdictions. The above-mentioned core technology platform as well

Patent protection builds a company's comparative advantage in the industry and lays the foundation for issuers to maintain long-term competitiveness.

3. It has a potential super blockbuster drug with global competitiveness and a rich drug R&D pipeline

After years of continuous R&D investment, the issuer has built a rich and echeloned product and research management

line system. The issuer has successfully developed 14 clinical-stage assets, including 3 Phase III clinical assets (its).

2 ADC drugs and 1 bispecific antibody drug), as well as a series based on the core technology platform of innovative drugs

Preclinical innovative drug project assets. The pipeline includes EGFR×HER3, which is in clinical stages around the world

Bispecific antibody ADC (BL-B01D1), and more than 4 to date that have entered the global clinical stage or IND stage

Specific antibodies.

4. The issuer has the ability to develop the entire industry chain from R&D to independent production and commercialization

In terms of innovative drug production, the issuer's subsidiary, DotBio, has established antibodies in accordance with cGMP standards that can meet the needs of clinical sample production of innovative biologics and the needs of early commercial production after approval

/ADC drug production workshop, including cell culture workshop (scale of 6 x 2,000 liter bioreactors & 1

1,000 liter bioreactors), purification plant, ADC conjugation plant, and 1 formulation line for finished products

Formulation filling/lyophilization. DotBio's current production capacity is capable of supporting IND filings, clinical trials, and future commercialization of the issuer's pipeline drug candidates as they progress through global development. Based on the global R&D progress of pipeline drugs, the issuer is planning to enhance its large-scale production and supply capacity to further support the subsequent clinical trials and future commercialization of the issuer's innovative drugs.

In terms of the production of chemical drug preparations and Chinese patent medicine preparations, Guorui Pharmaceutical (injection and oral preparation), Baili Pharmaceutical (oral solid preparation and lyophilized powder for injection), and Haiyate/Jingxi Pharmaceutical (intermediates and chemical raw materials)

As for the synergies between the three bases, the issuer has strategically established a production platform for generic drugs and proprietary Chinese medicines (APIs-finished drugs). The production platform integrates the production process from raw materials to finished products, ensuring continuous and sufficient supply of commercial sales of products already on the market.

The issuer also has complete commercialization capabilities. As of December 31, 2024, the issuer has been established

Establish a comprehensive commercialization system covering more than 30 provinces, autonomous regions and municipalities directly under the central government and more than 200 cities across the country, ensuring that the issuer's commercial products reach all major markets and cities, counties and towns. The issuer's professional commercialization team has strong sales capabilities and extensive experience to support system planning and efficient network operations. According to the differences in product sales channels, terminals, marketing entities, etc., issuers are divided into direct sales models and distribution models; At the same time, in order to achieve in-depth and professional marketing of specialized products and specialized markets, the sales team implements the division system, and different business divisions are responsible for the promotion of different products and products under different sales channels. The issuer's commercialization infrastructure and dedicated sales team effectively meet the needs of different market segments, including the prescription and over-the-counter markets, enabling the issuer to continuously strengthen its established product brands in the prescription and over-the-counter drug markets and increase the market penetration of its products.

In summary, the Sponsor believes that the issuer faces good industry development opportunities, has a strong market competitive advantage and has good development prospects. The issuance will have a positive impact on the issuer's future business operations.

VII. Special Verification of the Hiring of Third Parties

In accordance with the provisions of the "Opinions on Strengthening the Prevention and Control of Integrity Risks such as Securities Companies Hiring Third Parties in Investment Banking Business" (CSRC Announcement [2018] No. 22), the sponsor has verified the behavior of Baili Tianheng in hiring a third-party institution or individual (hereinafter referred to as the "third party") for compensation in the issuance of A shares to specific targets as follows:

(1) Verification of the issuer's paid engagement of a third party and other related acts

The issuer hired CITIC Securities Co., Ltd. as the sponsor (lead underwriter) of the offering, Beijing JunHe Law Firm as the issuer's lawyer for the offering, and Lixin Certified Public Accountants (special general partnership) as the accounting firm for the offering.

Except for the above, the issuer does not directly or indirectly engage other third parties for compensation.

The sponsor believes that there is no direct or indirect paid employment for the issuer in this issuance and listing, except for the sponsor (lead underwriter), law firm, accounting firm and other securities service institutions that need to be hired in accordance with the law

Acts of other third parties. The issuer's engagement of a third party is lawful and compliant, in accordance with the relevant provisions of the Opinions on Strengthening the Prevention and Control of Integrity Risks in Securities Companies Engaging Third Parties in Investment Banking Business. (2) Verification of the sponsor's paid hiring of a third party and other related acts

After verification, as of the date of issuance of the sponsorship letter, the sponsor does not have any direct or indirect paid employment of the sponsor's lawyer, the sponsor's accountant or other third parties in the issuance of shares by Baili Tianheng to specific objects.

(No text below)

(There is no text on this page, it is "CITIC Securities Co., Ltd. about Sichuan Baili Tianheng Pharmaceutical Co., Ltd.")

Signature and seal page of the Sponsorship Letter for the Issuance of A Shares to Specific Targets in 2025)

Sponsor Representative:

Yang Qin, Chen Wei

Project Co-Organizers:

Zhou Zengjun

CITIC Securities Co., Ltd

YYYYYYYYYYYYYYYYY

(There is no text on this page, it is the signed and stamped page of the "Letter of Sponsorship of CITIC Securities Co., Ltd. on the Issuance of A Shares by Sichuan Baili Tianheng Pharmaceutical Co., Ltd. to Specific Targets in 2025")

Kernel Lead:

Zhu Jie

Head of Sponsor Business Unit:

Cheng Jie

Head of Sponsor Business:

Sun Yi

CITIC Securities Co., Ltd

YYYYYYYYYYYYYYYYY

(There is no text on this page, it is the signed and stamped page of the "Letter of Sponsorship of CITIC Securities Co., Ltd. on the Issuance of A Shares by Sichuan Baili Tianheng Pharmaceutical Co., Ltd. to Specific Targets in 2025")

Managing director:

Zou Yingguang

CITIC Securities Co., Ltd

YYYYYYYYYYYYYYYYY

(There is no text on this page, it is the signed and stamped page of the "Letter of Sponsorship of CITIC Securities Co., Ltd. on the Issuance of A Shares by Sichuan Baili Tianheng Pharmaceutical Co., Ltd. to Specific Targets in 2025")

Chairman:

Zhang Youjun

CITIC Securities Co., Ltd

YYYYYYYYYYYYYYYYY

Annex I

CITIC Securities Co., Ltd. on Sichuan Baili Tianheng Pharmaceutical Co., Ltd

In FY2025, we will issue A shares to specific targets

Special power of attorney from the sponsor representative

I, Zhang Youjun, the legal representative of CITIC Securities Co., Ltd., hereby authorize Yang Qin and Chen Wei, the sponsor representatives of this institution, to serve as the sponsor of the issuance and listing of A shares issued by Sichuan Baili Tianheng Pharmaceutical Co., Ltd. to specific targets, as well as the continuous supervision of Sichuan Baili Tianheng Pharmaceutical Co., Ltd. after the listing of the shares.

This authorization is valid from the date of authorization to the expiration of the continuous supervision period. If the institution reappoints other sponsor representatives to replace the above-mentioned comrades who are responsible for the sponsorship and continuous supervision of Sichuan Baili Tianheng Pharmaceutical Co., Ltd. during the validity period of the authorization, this authorization letter shall be abolished.

Authorization is hereby granted.

Authorized Person:

Yang Qin

Chen Wei

Legal representative:

Zhang Youjun

CITIC Securities Co., Ltd

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