On the evening of May 14th, Huasen Pharmaceutical announced that in order to integrate and supplement its innovative drug research and development pipeline, further strengthen its own innovative drug research and development capabilities, and accelerate transformation and upgrading, the company and its wholly-owned subsidiary - Chongqing Huasen Yingnuo Biotechnology Co., Ltd. (referred to as "Huasen Yingnuo") and existing shareholders Yang Shengyong, Huang Qi, etc. of Chengdu Aorui Pharmaceutical Co., Ltd. (referred to as "Aorui Pharmaceutical") have signed a "Equity Change Agreement". Huasen Yingnuo will acquire 37.3619% equity of Aorui Pharmaceutical for free as compensation for the repurchase obligations of relevant shareholders in the historical transaction documents of the company and Huasen Yingnuo. After the completion of this equity transfer, in addition to the 28.6381% equity previously held by the company in Aorui Pharmaceutical, the company and its subsidiaries will hold a total of 66% equity in Aorui Pharmaceutical, which will be included in the scope of consolidated financial statements.

It is understood that Aurui Pharmaceutical is a small molecule innovative drug enterprise based on AI+innovative drug research and development established by Huasen Pharmaceutical as an angel round investor. Its founder, Professor Yang Shengyong, has worked in the State Key Laboratory of Biotherapy of West China Hospital of Sichuan University since 2005. It is a well-known scholar in the field of small molecule targeted drug research in China, a distinguished professor of the "Yangtze River Scholars Award Program", a winner of the National Science Fund for Distinguished Young Scholars, a national candidate for the Hundred Thousand Talents Project, and a leader of the innovation team of the Ministry of Education. He is mainly engaged in research on drug molecular design methods, lead compound optimization, targeted drug design, synthesis and development. So far, he has published multiple SCI papers in top or important journals and has been granted more than 70 patents, including 21 international patents. The 8 candidate new drugs developed by it have been transferred to large domestic pharmaceutical companies, of which 5 have entered clinical trials.

The core asset of ORIC-1940 is ORIC-1940, which has been approved for clinical use and is currently in the research and development stage of clinical Ia/Ib phase. ORIC-1940 hydrochloride for injection has a clear target mechanism of action, high potency, and good safety. It may be the first original Class 1 innovative drug used for secondary hemophagocytic histiocytosis (HLH) in China.

Given that the company highly values the innovative drug research and development capabilities of founding shareholder Professor Yang Shengyong and recognizes the potential market value of the RIPK1 project, and that the core asset of Orui Pharmaceutical, the RIPK1 inhibitor project ORIC-1940, has obtained clinical approval from NMPA on July 2, 2024, the company agrees to merge Orui Pharmaceutical into the innovative drug division of Huasen Pharmaceutical and promote the overall development of Huasen's innovative drugs through resource integration.

Through communication and negotiation with existing shareholders of Aorui Pharmaceutical, all parties finally agreed that the founding shareholders, Professor Yang Shengyong and Dr. Huang Qi, would transfer their 37.3619% equity corresponding to the registered capital of 2024.1233 million yuan held by Aorui Pharmaceutical to Huasen Yingnuo free of charge, as compensation for Huasen Pharmaceutical and Huasen Yingnuo's obligation to repurchase the equity held by the founding shareholders to Series A investors in the Supplementary Agreement. At the same time, all parties have renegotiated the terms of equity repurchase. According to the agreement, the range of repurchase obligations that Huasen Yingnuo and Huasen Pharmaceutical may undertake is between 38.02 million yuan and 40.78 million yuan. (Wang Yi)