Chengdu Advanced Medicine Development Co., Ltd. (referred to as "Chengdu Advanced" or "the Company", stock code: 688222.SH), a company listed on the Shanghai Stock Exchange's Science and Technology Innovation Board, announced its semi-annual report for 2024 (referred to as "the Semi-Annual Report") on the evening of August 28. In the first half of 2024, Chengdu Advanced continuously optimized its international and domestic market strategies, achieved more precise market positioning and more efficient business operations through cross-market resource sharing and complementary advantages, and deepened cooperation with partners globally. At the same time, the company focused more on the practical application of research and development results, continuously explored the commercial opportunities of new research and development projects, and promoted their implementation. During the reporting period, the company's overall performance remained stable, with operating revenue of 195 million yuan, a year-on-year increase of 25.10%; net income attributable to the parent company of 10.1977 million yuan, a year-on-year increase of 75.19%; non-GAAP net income attributable to the parent company of 2.0595 million yuan, a year-on-year increase of 876.80%; net cash flow from operating activities of 73.019 million yuan, a year-on-year increase of 162.28%; the overall gross profit margin of the main business was 46.59%, an increase of 3.78 percentage points year-on-year.

Dr. Li Jin, Chairman and CEO of Chengdu Advanced, said, "Since 2024, there have been many continuously changing external challenges. The company has fully leveraged the synergies of various core technology platforms and key new drug R&D capabilities to enhance its commercial value, achieving growth in operating revenue and net profit. At the same time, the company has deepened external cooperation, iterated internal innovative capabilities, and continued to accumulate growth potential, laying a solid foundation for growth potential and development resilience, thus driving the company's long-term high-quality development. Although there are still uncertainties in the future, we firmly believe that as long as we always strive towards the goal of improving human life and health, the twists and turns ahead will become the touchstone of our abilities and opportunities, helping us achieve our goals and create more value. Guided by the Board of Directors, the company will effectively use strategies and resources that are conducive to the steady development of the enterprise to achieve the goals of enterprise development and investor returns."

In the first half of 2024, the synergistic effect of Chengdu Advanced's core technology platforms and key new drug R&D capabilities continued to expand, achieving double growth in profits. Specifically, the DEL segment, as the company's cornerstone business, maintained stable growth with revenue of 72.7574 million yuan, a year-on-year increase of 1.91%; in the first half of the year, in response to market demand from different customers, the company's DEL-related custom library and screening business became more flexible and diversified. The FBDD/SBDD segment, the UK subsidiary Vernalis (R&D) Limited, achieved milestone revenue for early-stage projects, driving the entire segment's revenue to 62.6415 million yuan, a year-on-year increase of 52.05%, demonstrating the effectiveness and commercial value of its technology and professional experience. The STO segment continued its growth momentum, achieving revenue of 28.811 million yuan, a year-on-year increase of 59.31%, with significant contributions from commercial transformation of delivery molecule-related oligonucleotide one-stop projects and nucleic acid CDMO projects. The TPD segment achieved revenue of 8.2494 million yuan, a year-on-year increase of 101.40%, through business such as project collaborations and development based on PROTAC, as well as the commercial transformation of new projects based on Molecular Glue technology. Other key new drug R&D capabilities continued to create commercial value, including revenue of 9.6405 million yuan, a year-on-year increase of 63.12%, from chemical services (ChemSer) based on small molecule chemical synthesis and parallel synthesis, facilitated by the company's independently designed and built automated high-throughput chemical synthesis platform.

In the first half of 2024, Chengdu Advanced continued to invest in its four core technology platforms and new drug pipelines, further enhancing its research and development innovation capabilities and achieving significant progress and results in multiple fields. During the reporting period, as the number of commercialized projects on technology platforms increased, the company moderately shifted its focus to commercial projects, while steadily and prudently advancing its independent research and development pipeline. Therefore, the overall investment in research and development was 30.734 million yuan, accounting for 15.78% of operating revenue, a decrease of 9.48 percentage points year-on-year, slightly lower than the same period last year.

HitGen Inc. has been committed to the development, application, and upgrading of core DNA Encoded Library (DEL) technology. In the first half of 2024, the company formulated a trillion DEL library iterative plan and completed the iteration of some DEL molecules. At the same time, the company continuously expands the diversity of the DEL library, expanding the covalent compound library, protein degradation compound library, molecular fragment compound library, macrocycle compound library, peptide compound library, cyclic peptide compound library, and other new types of molecules for pharmaceutical companies and biotechnology companies that track cutting-edge research in innovative drug discovery. During the reporting period, the average success rate of screening projects (obtaining functional molecules) exceeded 85%, and completed the compound IP transfer of 10 projects. As of the end of June 2024, the company has completed a total of 96 projects (more than 900 compound entities) for compound IP transfer.

Meanwhile, the STO platform has made rapid progress in capacity building and has developed a variety of nucleic acid drug delivery systems with independent intellectual property rights, such as liver-targeted GalNAc and C16-based extracellular delivery molecules, among which C16-based and other undisclosed target delivery molecules have achieved commercial revenue. In addition, the holding subsidiary PreEminence Pharmaceuticals has completed the first small nucleic acid CDMO commercial project that meets GMP conditions, and the business prospects are promising. The TPD platform capability has also been further enhanced, and the company has jointly initiated new project collaborations and research and development based on PROTAC with partners, and added screening projects based on Molecular Glue technology.

In addition, the company continues to promote the research and development and capacity building of DEL+AI/ML (Artificial Intelligence/Machine Learning) in drug discovery and optimization. The self-designed and constructed automated high-throughput chemical synthesis platform was officially put into operation in the first half of 2024. At the same time, AI/ML data-driven synthesis route planning has been completed for AI/ML algorithms and modeling, and the first round of "Design-Synthesis-Testing-Analysis" (DMTA) cycle iteration has been completed.

In terms of the new drug pipeline, after the previous focus adjustment, as of the end of the reporting period, there are a total of 3 projects in Phase 1 clinical stage, 2 projects in IND preparation stage, and 2 projects in preclinical candidate compound (PCC) confirmation stage. Among them, HG146 (for late-stage solid tumors or lymphoma indications) has completed Phase 1 clinical trial and determined the Recommended Phase 2 Dose (RP2D) and differentiated indications, and is currently preparing for Phase 2 clinical trial. With the improvement of the drug discovery and optimization platform, the company will generate more new drug projects in the future and advance them to the clinical stage, while accelerating the external transfer of some new drug pipelines.

*Proper noun explanation:

• DEL: DNA-encoded compound library platform (related services including the design, synthesis, screening, transfer of intellectual property rights of the DEL library, and expanded applications)
• FBDD/SBDD: Fragment-based drug design platform based on molecular fragments and three-dimensional structural information (related services including protein expression, crystallization, and drug design based on molecular fragments and three-dimensional structural information)
• STO: Oligonucleotide drug development platform (related services including synthesis of delivery molecules, design, modification and synthesis of oligonucleotides/special monomers, in vitro and in vivo evaluation of nucleic acid drugs, CMC, and one-stop customized siRNA services)
• TPD: Targeted Protein Degradation Platform (related services such as novel E3 ligand discovery, molecular gel filtration, PROTAC molecule synthesis and biological evaluation)
• ChemSer: Chemical Services (related services such as small molecule synthesis, parallel synthesis, etc.)

Forward-looking statements: The forward-looking descriptions of future plans and development strategies mentioned in this report do not constitute substantial commitments by the Company to investors due to the existence of uncertain factors. Investors are advised to pay attention to investment risks.

About Hitgen Inc.

Chengdu Hitgen Pharmaceutical Development Co., Ltd. (Stock Code: 688222.SH, Stock Name: Chengdu Hitgen) is committed to becoming a world-class innovative biopharmaceutical company. Headquartered in Chengdu, China, it has subsidiaries in Cambridge, United Kingdom, and Houston, USA. The company focuses on the discovery and optimization of small molecule and nucleic acid drugs, and has built an internationally leading DNA-encoded library technology platform (including the design, synthesis, screening, and application expansion of DEL libraries), as well as molecular fragment-based drug design technology (FBDD/SBDD), oligonucleotide drug development technology (STO), and targeted protein degradation technology (TPD). Through diversified business models such as new drug development services, transfer of projects at different stages of research, and future drug marketing, Chengdu Hitgen has established partnerships with hundreds of pharmaceutical companies, biotechnology companies, chemical companies, foundations, and research institutions worldwide. Currently, the company has multiple internal new drug projects at different stages of clinical and preclinical development.

For more information, please call +86-28-85197385, +1-508-840-9646 or visit the website.

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