UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2022 | |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ___________ to _____________.
Commission file number 0-20713
CASI PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
Delaware | 58-1959440 |
(State or other jurisdiction of | (I.R.S. Employer Identification No.) |
incorporation or organization) |
9620 Medical Center Drive, Suite 300
Rockville, Maryland
(Address of principal executive offices)
20850
(Zip code)
(240) 864-2600
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of exchange on which registered |
Common Stock |
| CASI |
| Nasdaq Capital Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
⌧ NO ◻
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
⌧ NO ◻
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ◻ | Accelerated filer ◻ | Non-accelerated filer þ | Smaller reporting company ☑ |
Emerging growth company ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES ☐ NO ⌧
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the most recent practicable date.
Class |
| Outstanding at November 8, 2022 |
Common Stock $.01 Par Value |
| 13,606,130 |
CASI PHARMACEUTICALS, INC.
Table of Contents
2
TRADEMARKS AND SERVICE MARKS
We own or have rights to trademarks and trademark applications for use in connection with the operation of our business, including, but not limited to, CASI and CASI PHARMACEUTICALS. All other trademarks appearing in this Quarterly Report on Form 10-Q that are not identified as marks owned by us are the property of their respective owners.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements also may be included in other statements that we make. All statements that are not descriptions of historical facts are forward-looking statements. These statements can generally be identified by the use of forward-looking terminology such as “believes,” “expects,” “intends,” “may,” “will,” “should,” or “anticipates” or similar terminology. These forward-looking statements include, among others, statements regarding the timing of our commercial launch of products, clinical trials, our cash position and future expenses, and our future revenues.
Actual results could differ materially from those currently anticipated due to a number of factors, including: the risk that we may be unable to continue as a going concern as a result of our inability to raise sufficient capital for our operational needs; the possibility that we may be delisted from trading on The Nasdaq Capital Market if we fail to satisfy applicable continued listing standards, including compliance with the Nasdaq bid price rule; the risk in relation to being identified as a “Commission Identified Issuer”; the volatility in the market price of our common stock; the outbreak of the COVID-19 pandemic and its effects on global markets and supply chains; the risk of substantial dilution of existing stockholders in future stock issuances; the difficulty of executing our business strategy on a global basis including China; our inability to enter into strategic partnerships for the development, commercialization, manufacturing and distribution of our proposed product candidates or future candidates; legal or regulatory developments in China that adversely affect our ability to operate in China; our lack of experience in manufacturing products and uncertainty about our resources and capabilities to do so on a clinical or commercial scale; risks relating to the commercialization, if any, of our products and proposed products (such as marketing, safety, regulatory, patent, product liability, supply, competition and other risks); our inability to predict when or if our product candidates will be approved for marketing by the U.S. Food and Drug Administration (FDA), European Medicines Agency (EMA), National Medical Products Administration (NMPA), or other regulatory authorities; our inability to enter into strategic partnerships for the development, commercialization, manufacturing and distribution of our proposed product candidates or future candidates; the risks relating to the need for additional capital and the uncertainty of securing additional funding on favorable terms; the risks associated with our product candidates, and the risks associated with our other early-stage products under development; the risk that result in preclinical and clinical models are not necessarily indicative of clinical results; uncertainties relating to preclinical and clinical trials, including delays to the commencement of such trials; our ability to protect our intellectual property rights; the lack of success in the clinical development of any of our products; and our dependence on third parties; the risks related to our dependence on Juventas to conduct the clinical development of CNCT19 and to partner with us to co-market CNCT19; risks related to our dependence on Juventas to ensure the patent protection and prosecution for CNCT19; risks relating to the commercialization, if any, of our proposed products (such as marketing, safety, regulatory, patent, product liability, supply, competition and other risks); risks relating to interests of our largest stockholders and our Chairman and CEO that differ from our other stockholders; and risks related to the development of a new manufacturing facility by CASI Pharmaceuticals (Wuxi) Co., Ltd. (“CASI Wuxi”). Such factors, among others, could have a material adverse effect upon our business, results of operations and financial condition.
We caution investors that actual results or business conditions may differ materially from those projected or suggested in forward-looking statements as a result of various factors including, but not limited to, those described above and in Section IA, “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and our other filings with the Securities and Exchange Commission (“SEC”). We cannot assure you that we have identified all the factors that create uncertainties. Moreover, new risks emerge from time to time and it is not possible for our management to predict all risks, nor can we assess the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained in any forward-looking statements. Readers should not place undue reliance on forward-looking statements, which only relate to events or information as of the date made. We undertake no obligation to publicly release the result of any revision of these forward-looking statements to reflect events or circumstances after the date they are made or to reflect the occurrence of unanticipated events. Additional information about the factors and risks that could affect our business, financial condition and results of operations, are contained in our filings with the U.S. Securities and Exchange Commission (“SEC”), which are available at www.sec.gov.
3
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
CASI Pharmaceuticals, Inc.
Unaudited Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
| |||||||
| September 30, 2022 |
| December 31, 2021 |
| |||
ASSETS |
|
|
|
| |||
Current assets: |
|
|
|
| |||
Cash and cash equivalents | $ | 26,742 | $ | 38,704 | |||
Restricted cash | 2,500 | — | |||||
Investment in equity securities, at fair value |
| 6,309 |
| 9,868 | |||
Accounts receivable, net of $0 allowance for doubtful accounts | 12,560 | 9,803 | |||||
Inventories | 5,773 | 1,907 | |||||
Prepaid expenses and other |
| 1,728 |
| 1,688 | |||
Total current assets |
| 55,612 |
| 61,970 | |||
Property, plant and equipment, net |
| 13,867 |
| 12,712 | |||
Intangible assets, net |
| 10,049 |
| 12,203 | |||
Long-term investments | 39,780 | 40,128 | |||||
Right of use assets | 7,666 | 9,107 | |||||
Other assets |
| 932 |
| 2,178 | |||
Total assets | $ | 127,906 | $ | 138,298 | |||
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY |
|
|
|
| |||
Current liabilities: |
|
|
|
| |||
Accounts payable | $ | 3,098 | $ | 4,789 | |||
Bank borrowings | 3,000 | — | |||||
Accrued and other current liabilities |
| 23,651 |
| 8,397 | |||
Total current liabilities |
| 29,749 |
| 13,186 | |||
Deferred income |
| 2,488 |
| 2,828 | |||
Other liabilities |
| 12,455 |
| 14,325 | |||
Total liabilities |
| 44,692 |
| 30,339 | |||
Commitments and contingencies |
|
|
|
| |||
Redeemable noncontrolling interest, at redemption value | 21,503 | 23,457 | |||||
Stockholders’ equity: |
|
|
|
| |||
Preferred stock, $1.00 par value: 5,000,000 shares authorized and 0 shares issued and |
| — |
| — | |||
outstanding | |||||||
Common stock, $0.01 par value: | |||||||
250,000,000 shares authorized at September 30, 2022 and December 31, 2021 |
|
| |||||
13,733,459 shares and 13,987,578 shares issued at September 30, 2022 and December 31, 2021, respectively; | |||||||
13,606,130 shares and 13,979,624 shares outstanding at September 30, 2022 and December 31, 2021, respectively | 1,373 | 1,399 | |||||
Additional paid-in capital |
| 696,213 |
| 694,826 | |||
Treasury stock, at cost: 127,329 shares and 7,954 shares held at September 30, 2022 and December 31, 2021 |
| (9,068) |
| (8,034) | |||
Accumulated other comprehensive income |
| (1,951) |
| 1,954 | |||
Accumulated deficit |
| (624,856) |
| (605,643) | |||
Total stockholders’ equity |
| 61,711 |
| 84,502 | |||
Total liabilities, redeemable noncontrolling interest and stockholders' equity | $ | 127,906 | $ | 138,298 | |||
The accompanying notes are an integral part of these consolidated financial statements.
4
CASI Pharmaceuticals, Inc.
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except share and per share data)
Three Months Ended September 30 |
| Nine Months Ended September 30 |
| ||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||
Revenues: | |||||||||||||
Product sales | $ | 10,213 | 8,075 | $ | 27,788 | $ | 20,900 | ||||||
Lease income from a related party |
| — | 37 |
| 60 |
| 110 | ||||||
Total revenues | 10,213 | 8,112 | 27,848 | 21,010 | |||||||||
Costs of revenues | 4,247 | 3,417 | 11,555 | 8,757 | |||||||||
Gross Profit | 5,966 | 4,695 | 16,293 | 12,253 | |||||||||
Operating expenses: |
|
|
|
|
|
| |||||||
Research and development | 3,905 | 2,895 | 11,748 | 10,408 | |||||||||
General and administrative | 4,849 | 5,259 | 15,694 | 16,249 | |||||||||
Selling and marketing |
| 3,566 | 3,433 | 10,241 | 9,508 | ||||||||
Acquired in-process research and development | — | — | — | 6,555 | |||||||||
Total operating expenses |
| 12,320 |
| 11,587 |
| 37,683 |
| 42,720 | |||||
Loss from operations | (6,354) | (6,892) | (21,390) | (30,467) | |||||||||
Non-operating income (expense): | |||||||||||||
Interest (expense)/income, net |
| (13) | 79 | 101 | 261 | ||||||||
Other income | 11 | 487 | 60 | 540 | |||||||||
Foreign exchange gains/(losses) | 637 | (6) | 2,325 | 289 | |||||||||
Change in fair value of investments |
| 696 | (3,687) | (2,012) | (205) | ||||||||
Impairment loss of long-term investments | — | — | — | (865) | |||||||||
Loss before income tax expense | (5,023) | (10,019) | (20,916) | (30,447) | |||||||||
Income tax expense | — | — | — | — | |||||||||
Net loss | (5,023) | (10,019) | (20,916) | (30,447) | |||||||||
Less: loss attributable to redeemable noncontrolling interest | (738) | (314) | (1,703) | (980) | |||||||||
Accretion to redeemable noncontrolling interest redemption value | 916 | 519 | 2,264 | 1,586 | |||||||||
Net loss attributable to CASI Pharmaceuticals, Inc. | $ | (5,201) | $ | (10,224) | $ | (21,477) | $ | (31,053) | |||||
Net loss per share (basic and diluted) | (0.38) | (0.73) | (1.57) | (2.30) | |||||||||
Weighted average number of common stock outstanding (basic and diluted) |
| 13,606,130 | 13,979,636 | 13,668,553 | 13,486,024 | ||||||||
Comprehensive loss: |
|
|
|
|
|
| |||||||
Net loss | $ | (5,023) | $ | (10,019) | $ | (20,916) | $ | (30,447) | |||||
Foreign currency translation adjustment |
| (3,127) | 15 | (6,420) | 848 | ||||||||
Total comprehensive loss | $ | (8,150) | $ | (10,004) | $ | (27,336) | $ | (29,599) | |||||
Less: Comprehensive loss attributable to redeemable noncontrolling interest | (2,074) | (309) | (4,218) | (712) | |||||||||
Comprehensive loss attributable to common stockholders | $ | (6,076) | $ | (9,695) | $ | (23,118) | $ | (28,887) | |||||
The accompanying notes are an integral part of these consolidated financial statements.
5
CASI Pharmaceuticals, Inc.
Unaudited Condensed Consolidated Statements of Stockholders’ Equity
(In thousands, except share data)
Accumulated | ||||||||||||||||||||||||||
Additional | Other | |||||||||||||||||||||||||
Preferred Stock | Common Stock | Paid-in | Treasury | Comprehensive | Accumulated | |||||||||||||||||||||
Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Stock |
| Income /(Loss) |
| Deficit |
| Total | ||||||||||
Balance at December 31, 2021 | — | $ | — | 13,979,636 | $ | 1,399 | $ | 694,826 | $ | (8,034) | $ | 1,954 | $ | (605,643) | $ | 84,502 | ||||||||||
Repurchase and retirement of common stock | — | — | (373,506) | (26) | (1,940) | (1,034) | (3,000) | |||||||||||||||||||
Stock-based compensation expense, net of forfeitures |
| — |
| — |
| — | — | 1,908 | — | — | — |
| 1,908 | |||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | — | 175 | — | 175 | |||||||||||||||||
Net loss attributable to CASI Pharmaceuticals, Inc. |
| — |
| — |
| — | — | (613) | — | — | (7,983) |
| (8,596) | |||||||||||||
Balance at March 31, 2022 |
| — | $ | — |
| 13,606,130 | $ | 1,373 |
| 694,181 |
| (9,068) | 2,129 |
| (613,626) |
| 74,989 | |||||||||
Stock-based compensation expense, net of forfeitures | — | — | — | — | 1,923 | — | — | — | 1,923 | |||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | — | (2,289) | — | (2,289) | |||||||||||||||||
Net loss attributable to CASI Pharmaceuticals, Inc. | — | — | — | — | (735) | — | — | (6,945) | (7,680) | |||||||||||||||||
Balance at June 30, 2022 |
| — | $ | — |
| 13,606,130 | $ | 1,373 | $ | 695,369 | $ | (9,068) | $ | (160) | $ | (620,571) | $ | 66,943 | ||||||||
Stock-based compensation expense, net of forfeitures | — | — | — | — | 1,760 | — | — | — | 1,760 | |||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | — | (1,791) | — | (1,791) | |||||||||||||||||
Net loss attributable to CASI Pharmaceuticals, Inc. | — | — | — | — | (916) | — | — | (4,285) | (5,201) | |||||||||||||||||
Balance at September 30, 2022 |
| — | $ | — |
| 13,606,130 | $ | 1,373 | $ | 696,213 | $ | (9,068) | $ | (1,951) | $ | (624,856) | $ | 61,711 | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
6
The accompanying notes are an integral part of these consolidated financial statements.
7
CASI Pharmaceuticals, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)
Nine Months Ended |
| ||||||
| September 30, 2022 |
| September 30, 2021 |
| |||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
| |||
Net loss | $ | (20,916) | (30,447) | ||||
Adjustments to reconcile net loss to net cash used in operating activities: |
| ||||||
Depreciation for property, plant and equipment |
| 567 | 393 | ||||
Amortization of intangible assets |
| 965 | 1,009 | ||||
Reduction in the carrying amount of the right-of-use assets | 890 | 1,031 | |||||
Loss on disposal of property, plant and equipment |
| — | 65 | ||||
Government grant as a result of loan forgiveness | — | (472) | |||||
Stock-based compensation expense |
| 5,591 | 5,059 | ||||
Acquired in-process research and development |
| — | 6,555 | ||||
Change in fair value of investments |
| 2,012 | 205 | ||||
Impairment loss of long-term investments | — | 865 | |||||
Changes in operating assets and liabilities: |
| ||||||
Accounts receivable | (2,757) | (773) | |||||
Inventories | (3,866) | (371) | |||||
Prepaid expenses and other assets |
| (238) | (539) | ||||
Accounts payable |
| (1,073) | 26 | ||||
Accrued and other current liabilities and other liabilities |
| (1,376) | (1,770) | ||||
Deferred income | (44) | (37) | |||||
Net cash used in operating activities |
| (20,245) |
| (19,201) | |||
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
| |||
Proceeds from disposal of property and equipment | 138 | 10 | |||||
Purchases of property, plant and equipment | (2,186) | (3,730) | |||||
Proceeds from sales of equity securities in BioInvent | 1,294 | — | |||||
Receipt in advance from sales of equity investment in Juventas | 16,921 | — | |||||
Cash paid to acquire equity investment in Precision Autoimmune Therapeutics Co., Ltd. | (2,962) | — | |||||
Cash paid to acquire in-process research and development | — | (6,555) | |||||
Cash paid to acquire convertible loan in Cleave | — | (5,500) | |||||
Cash paid to acquire convertible loan in Black Belt Tx Limited | — | (86) | |||||
Receipt of repayment of Black Belt convertible note | — | 172 | |||||
Cash paid to acquire convertible loan in Alesta Tx | — | (261) | |||||
Net cash provided by/(used in) investing activities |
| 13,205 |
| (15,950) | |||
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
| ||||
Proceeds from bank borrowings | 4,001 | 709 | |||||
Repayment of bank borrowings | (1,001) | (463) | |||||
Repurchase of common stock | (3,000) | — | |||||
Stock issuance costs |
| — | (2,019) | ||||
Proceeds from sale of common stock |
| — | 32,500 | ||||
Net cash provided by financing activities |
| — |
| 30,727 | |||
Effect of exchange rate change on cash and cash equivalents |
| (2,422) | 486 | ||||
Net decrease in cash and cash equivalents | (9,462) | (3,938) | |||||
|
| ||||||
Cash, cash equivalents and restricted cash at beginning of period | 38,704 | 57,064 | |||||
Cash, cash equivalents and restricted cash at end of period | $ | 29,242 | $ | 53,126 | |||
|
|
| |||||
Non-cash investing and financing activities: | |||||||
Purchases of property, plant and equipment in accrued and other current liabilities | $ | 3,111 | $ | 2,680 | |||
Accrual for acquisition of in-process research and development | — | — | |||||
Cash and cash equivalents | $ | 26,742 | $ | 53,126 | |||
Restricted cash | 2,500 | — | |||||
Total cash, cash equivalents and restricted cash shown in the statement of cash flows | $ | 29,242 | $ | 53,126 | |||
The accompanying notes are an integral part of these consolidated financial statements.
8
CASI Pharmaceuticals, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
1. DESCRIPTION OF BUSINESS
CASI Pharmaceuticals, Inc. (“CASI” or the “Company”) (Nasdaq: CASI) is a U.S. biopharmaceutical company focused on developing and commercializing innovative therapeutics and pharmaceutical products in China, the United States, and throughout the world. The Company was incorporated in 1991, and in 2012, with new leadership, the Company shifted its business strategy to China and has since built an infrastructure in China that includes sales and marketing, medical affairs, regulatory and clinical development and in the foreseeable future, manufacturing. In 2014, the Company changed its name to “CASI Pharmaceuticals, Inc.” The majority of the Company’s operations and activities are now located and conducted in China. The Company is focused on acquiring, developing and commercializing products that augment its hematology/oncology therapeutic focus as well as other areas of unmet medical need. The Company is executing its plan to become a biopharmaceutical leader by launching medicines in the greater China market, leveraging its China-based regulatory, clinical and commercial competencies and its global drug development expertise.
The Company launched its first commercial product, EVOMELA® (Melphalan for Injection) in China in August 2019. In China, EVOMELA® is approved for use as a conditioning treatment prior to stem cell transplantation and as a palliative treatment for patients with multiple myeloma. The other core hematology/oncology assets in the Company’s pipeline include CNCT 19, an autologous CD19 CAR-T investigative product (“CNCT19”); BI-1206, an antibody which has a novel mode-of-action, blocking the inhibitory antibody checkpoint receptor FcγRIIB to unlock anti-cancer immunity and enhance the efficacy of antibody-based immunotherapy in both hematological malignancies and solid tumors; CB-5339, a novel VCP/p97 inhibitor focused on valosin-containing protein (VCP)/p97 as a novel target in protein homeostasis, DNA damage response and other cellular stress pathways for therapeutic use in the treatment of patients with various malignancies; and CID-103, a full human IgG1 anti-CD38 monoclonal antibody recognizing a unique epitope that has demonstrated encouraging preclinical efficacy and safety profile compared to other anti-CD38 monoclonal antibodies.
Liquidity and Capital Resources
Since its inception in 1991, the Company has incurred significant losses from operations and, as of September 30, 2022, had incurred an accumulated deficit of $624.9 million.
The Company believes that it has sufficient resources to fund its operations at least one year beyond the date that the interim consolidated financial statements are issued. As of September 30, 2022, the Company had a balance of cash and cash equivalents and restricted cash of $29.2 million, of which $22.2 million was held in the financial institutions in the PRC. The Company intends to continue to exercise tight controls over operating expenditures and will continue to pursue opportunities, as required, to raise additional capital and will also actively pursue non- or less-dilutive capital raising arrangements or opportunities.
Risks and Uncertainties
Since the second quarter of 2022, due to the outbreak of Omicron and other variants of COVID-19, the lockdown in Shanghai and restrictions in other major cities in China led to limitation of access to local hospitals, which had an adverse impact on the sales of EVOMELA® for the second and the third quarters. The restrictions also adversely impacted the enrollment of patients for the CNCT19 Phase II registration studies. Recently, the pandemic gradually spread nationwide in China, and many small and medium-sized cities have been upgrading their control measures ever since the third quarter. These series of control measures are expected to adversely impact our sales activities for the remainder of 2022. Given that such COVID-19 related restrictions are beyond our control, at this stage, it is unable to assess for how long such COVID-19 related restrictions may continue in China, and the full extent to which such restrictions may directly and indirectly impact our business operations. Considering the uncertainty of the development of COVID-19 pandemic, we will continue to pay close attention on the development of the COVID-19 pandemic and dedicate resources to take any necessary measures in a timely manner to minimize the unfavorable impact on our businesses and operations.
9
2. License and Distribution Agreements
Acrotech License Arrangements
The Company has product rights and perpetual exclusive licenses from Acrotech Biopharma L.L.C. (“Acrotech”) to develop and commercialize its commercial product EVOMELA® (Melphalan Hydrochloride For Injection) in the greater China region (which includes Mainland China, Taiwan, Hong Kong and Macau). As well the Company had similar rights to assets ZEVALIN® (Ibritumomab Tiuxetan) and MARQIBO® (Vincristine Sulfate Liposome Injection). The exclusive licenses held by the Company were originally licensed from Spectrum Pharmaceuticals Cayman, LP Inc. (“Spectrum”), and Spectrum completed the sale of its portfolio of FDA-approved hematology/oncology products including EVOMELA® to Acrotech on March 1, 2019. On December 3, 2018, the Company received NMPA’s approval for importation, marketing and sales in China and in August 2019 the Company launched commercial sales EVOMELA® in China. The NMPA required EVOMELA® post-marketing study has been completed and the clinical study report is being finalized for regulatory submission. In May 2022, Acrotech and the Company agreed to terminate the license agreement with respect to MARQIBO® and ZEVALIN®.
China Resources Pharmaceutical Commercial Group International Trading Co., Ltd.
In March 2019, the Company entered into a three-year exclusive distribution agreement with China Resources Pharmaceutical Commercial Group International Trading Co., Ltd. (“CRPCGIT”) to appoint CRPCGIT on an exclusive basis as its distributor to distribute EVOMELA® in the territory of the People’s Republic of China (excluding Hong Kong, Taiwan and Macau), subject to certain terms and conditions. The Company’s internal marketing and sales team are responsible for commercial activities, including, for example, direct interaction with Key Opinion Leaders (KOL), physicians, hospital centers and the generating of sales. The agreement was renewed in March 2022 for another two years.
Precision Autoimmune Therapeutics Co., Ltd., (previously known as Beijing Tianshi Tongda Pharmaceuticals Technology Co., Ltd)
In May 2022, the Company entered into a Sublicense Agreement (the “Sublicense Agreement”) with Precision Autoimmune Therapeutics Co., Ltd. (“PAT”), a company established under the laws of China, pursuant to which the Company granted PAT an exclusive (subject to the Commercialization and Co-Marketing rights), perpetual, worldwide license, with the right to freely grant further sublicenses subject to terms and conditions in the Sublicense Agreement, for the investigational anti-CD38 monoclonal antibody TSK011010 licensed and controlled by the Company from Black Belt Therapeutics Limited, in the treatment, prevention and diagnosis of autoimmune diseases, conditions and disorders in humans.
Pursuant to the Sublicense Agreement, PAT will make an upfront payment of $10,000,000 equivalent in two equal instalments upon completion of its first and second financing, respectively, plus potential future payments of development and sales milestones and royalties to the Company.
Also in May 2022, CASI Pharmaceuticals (China) Co., Ltd. (“CASI China”) entered into an agreement for the investment in PAT in the amount of RMB 20.0 million (approximately $3.0 million) in cash during PAT’s first equity financing (see Note 5).
Juventas Biotechnology (Tianjin) Co., Ltd. (“Juventas”)
In June 2019, the Company entered into a license agreement for exclusive worldwide license to commercialize an autologous anti-CD19 T-cell therapy product (CNCT19) from Juventas (the “Exclusive License Agreement”). Juventas is a China-based company engaged in cell therapy. The terms of the agreement include RMB 70 million ($10 million) of milestone payments upon the registration of Phase II clinical trial of CNCT19 and sales royalty payments. The milestone was met during the third quarter of 2020, the Company paid the milestone payment of RMB 70 million to Juventas in September 2020, and recognized it as acquired in-process research and development expenses in the consolidated statement of operations and comprehensive loss in 2020.
In September 2020, Juventas and its shareholders (including CASI Biopharmaceuticals (Wuxi) Co., Ltd (“CASI Biopharmaceuticals”), a subsidiary of the Company, ) agreed to certain terms and conditions required by a new third-party investor to facilitate the Series B financing of Juventas, pursuant to which the Company agreed to amend and supplement the original licensing agreement (the "Supplementary Agreement") by agreeing to pay Juventas certain percentage of net profits generated from commercial
10
sales of CNCT19 in addition to the royalty fee payment calculated as a percentage of net sales. The Supplementary Agreement also specifies a minimum annual target net profit to be distributed to Juventas and certain other terms and obligations. In return, the Company obtained additional equity interests in Juventas.
Under the Supplementary Agreement, Juventas and the Company will jointly market CNCT19, including, but not limited to, establishing medical teams, developing medical strategies, conducting post-marketing clinical studies, establishing Standardized Cell Therapy Centers, establishing and training providers with respect to cell therapy, testing for cell therapy, and monitoring quality controls (cell collection and transfusion, etc.), and patient management (adverse reactions treatment, patients’ follow-up visits, and establishment of a database). The Company also will reimburse Juventas for a portion of Juventas’ marketing expenses as reviewed and approved by a joint commercial committee to be constituted. The Company will continue to be responsible for recruiting and establishing a sales team to commercialize CNCT19.
In September 2022, CASI Biopharmaceuticals entered into an Equity Transfer Agreement to transfer its equity interest in Juventas in the amount of RMB 240.9 million (approximately $33.8 million) to a limited partnership enterprise (see Note 5). The Exclusive License Agreement is still effective after this equity transfer.
BioInvent International AB
In October 2020, the Company entered into an exclusive licensing agreement with BioInvent International AB (“BioInvent”) for the development and commercialization of novel anti-FcγRIIB antibody, BI-1206, in Mainland China, Taiwan, Hong Kong and Macau. BioInvent is a biotechnology company focused on the discovery and development of first-in-class immune-modulatory antibodies for cancer immunotherapy. BI-1206 is being investigated in a Phase 1/2 trial, in combination with anti-PD1 therapy Keytruda® (pembrolizumab), in patients with solid tumors, and in a Phase 1/2a trial in combination with MabThera® (rituximab) in patients with relapsed/refractory non-Hodgkin lymphoma (NHL). The CASI Clinical Trial Application (CTA) was approved by China National Medical Products Administration (NMPA) in December 2021 and ethics committee approvals have been received in January of 2022. The Company obtained approval from Human Genetic Resources Administration of China (“HGRAC”) in April 2022. The Company is planning a Phase 1 study of BI-1206 in combination with rituximab with a single agent BI-1206 run in phase in patients with NHL (mantle cell lymphoma, marginal zone lymphoma, and follicular lymphoma) to assess PK, safety and tolerability, select the Recommended Phase 2 Dose and assess early signs of clinical efficacy as part of its development program for BI-1206 in China. The study received regulatory approval from the China Center for Drug Evaluation (“CDE”) in the second quarter of 2022, and the first-patient dosing was achieved in the third quarter of 2022.
Under the terms of the agreement, BioInvent and CASI will develop BI-1206 in both hematological malignancies and solid tumors, with CASI responsible for commercialization in China and associated markets. CASI made a $5.9 million upfront payment in November 2020 to BioInvent and will pay up to $83 million in development and commercial milestone payments plus tiered royalties in the high-single to mid-double-digit range on net sales of BI-1206. Because BI-1206 underlying the acquired rights has not reached technological feasibility and has no alternative future uses, the Company expensed $5.9 million as acquired in-process research and development in 2020.
Black Belt Therapeutics Limited
In April 2019, the Company entered into a license agreement with Black Belt Therapeutics Limited (“Black Belt”) for exclusive worldwide rights to CID-103, an investigational anti-CD38 monoclonal antibody (Mab) (formerly known as TSK011010). The Company expects that its clinical materials and commercial inventory will be supplied by one or more contract manufacturers with whom the Company has contracted with. Under the terms of the agreement, CASI obtained global rights to CID-103 for an upfront payment of 5 million euros ($5.7 million) and would pay up to $46.3 million in development milestone payments and certain royalties based on sales milestones. In June 2021, the Company achieved the First-Patient-In (FPI) in the Phase 1 dose escalation and expansion study of CID-103, and made $750,000 milestone payment in June 2021 and €250,000 ($305,000) payment in August 2021 under the terms of the agreement. Because CID-103 underlying the acquired rights has not yet reached technological feasibility and has no alternative uses, the Company expensed 5 million euros and $1.1 as acquired in-process research and development, respectively, in 2019 and 2021. As mentioned above, in May 2022, the Company entered into the Sublicense Agreement to grant PAT an exclusive, perpetual, worldwide license, for the investigational anti-CD38 monoclonal antibody TSK011010.
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Cleave Therapeutics, Inc.
In March 2021, the Company entered into an exclusive license with Cleave Therapeutics, Inc. (“Cleave”) for the development and commercialization of CB-5339, an oral novel VCP/p97 inhibitor, in both hematological malignancies and solid tumors, in Mainland China, Hong Kong, Macau and Taiwan. Cleave is a clinical-stage biopharmaceutical company focused on valosin-containing protein (VCP)/p97 as a novel target in protein homeostasis, DNA damage response and other cellular stress pathways for therapeutic use in the treatment of patients with cancer. Cleave and the Company will develop CB-5339 in both hematological malignancies and solid tumors, with CASI responsible for development and commercialization in China and associated markets. The Company paid a $5.5 million upfront payment to Cleave in 2021 and will pay up to $74 million in development and commercial milestone payments plus tiered royalties in the high-single to mid-double-digit range on net sales of CB-5339.
CB-5339 is being evaluated by Cleave in a Phase 1 clinical trial in patients with acute myeloid leukemia (AML) and myelodysplastic syndrome (MDS). Because CB-5339 has not yet reached technological feasibility and has no alternative future uses, the Company expensed the $5.5 million upfront payment as acquired in-process research and development in 2021.
Pharmathen Global BV
On October 29, 2019, the Company entered into an exclusive distribution agreement with Pharmathen Global BV ("Pharmathen") for the development and distribution of octreotide long acting injectable (Octreotide LAI) microsphere in China. Octreotide LAI formulations, which are approved in various European countries, are considered a standard of care for the treatment of acromegaly and the control of symptoms associated with certain neuroendocrine tumors.
The terms of the agreement include an upfront payment of 1 million euros which was paid by the Company in 2019, and up to 2 million euros of additional milestone payments, of which 1.5 million euros ($1.7 million) was paid by the Company with achievements of certain milestones and was expensed as acquired in-process research and development in 2020. CASI is responsible for the development, import drug registration, product approval and commercialization in China. CASI has a non-royalty exclusive distribution period after the product launch at an agreed supply costs for the first three years.
Riemser Pharma GmbH
In August 2019, the Company entered into a distribution agreement in China with Riemser Pharma GmbH (“Riemser”) to a novel formulation of thiotepa, a chemotherapeutic agent, which has multiple potential indications including use as a conditioning treatment for use prior to allogenic hematopoietic stem cell transplantation. Thiotepa has a long history of established use in the hematology/oncology setting. Pursuant to the distribution agreement, CASI obtained the exclusive distribution right of the products in China, and Riemser will be responsible for manufacturing and supplying CASI with clinical materials and commercial inventory. The Company is applying for NADA registration and, subject to regulatory and marketing approvals, the Company intends to advance and commercialize this product in China. In January 2020, Riemser was acquired by Esteve Healthcare, S.L. (“ESTEVE”), an international pharmaceutical company headquartered in Barcelona, Spain. There is no contingent milestone payment due to Riemser under the agreement.
3. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company's significant accounting estimates relate to recoverability of operating lease right-of-use assets, intangible assets and long-term investments, net realizable value and obsolescence allowance for inventories, deferred tax assets and valuation allowance, allowance for doubtful accounts, stock-based arrangements and fair value of investments. Management bases its estimates on historical experience and on
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various other assumptions that it believes are reasonable under the circumstances. Actual results may differ from those estimates, and such differences may be material to the consolidated financial statements.
Recent Accounting Pronouncements
In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. This update requires certain annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. This update is effective for annual periods beginning after December 15, 2021, and early application is permitted. This guidance should be applied either prospectively to all transactions that are reflected in financial statements at the date of initial application and new transactions that are entered into after the date of initial application or retrospectively to those transactions. The Company does not expect the impact of this guidance to have a material impact on the Company’s consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326) (“ASU 2016-13”) and subsequent amendments to the initial guidance including ASU No. 2018-19, ASU No. 2019-04, and ASU No. 2019-05 (collectively, “Topic 326”). Topic 326 requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. This standard is effective for public business entities, excluding entities eligible to be smaller reporting companies for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For all other entities, this standard is effective for annual and interim periods beginning after December 15, 2022 and early adoption is permitted for annual and interim periods beginning after December 15, 2018. As a smaller reporting company, the Company expects to adopt this standard in fiscal year 2023. The Company is currently assessing the impact that the adoption of this ASU will have on the consolidated financial statements.
4.Revenue Related Information
The Company’s revenue is primarily consisted of sales of EVOMELA ®. As of September 30, 2022, the Company did not incur, and therefore did not defer, any material costs to obtain or fulfill contracts. The Company did not have any contract assets or contract liabilities as of September 30, 2022 and December 31, 2021. There was no product exchange during the periods ended September 30, 2022 and 2021.
5. Investment in Equity Securities, at Fair Value and Long-term Investments
Investment in Equity Securities, at Fair Value
The following table summarizes the Company’s investment in equity securities at fair value as of September 30, 2022 and December 31, 2021, respectively:
Gross | |||||||||||
(In thousands) | unrealized | Aggregate fair | |||||||||
September 30, 2022 |
| Classification |
| Cost |
| gains /(losses) |
| value | |||
MaxCyte - equity interest |
| Investment | $ | — | $ | 2,453 | $ | 2,453 | |||
BioInvent - equity interest |
| Investment | $ | 4,337 | $ | (481) | $ | 3,856 | |||
Total | $ | 6,309 | |||||||||
Gross | |||||||||||
(In thousands) | unrealized | Aggregate fair | |||||||||
December 31, 2021 |
| Classification |
| Cost |
| gains |
| value | |||
MaxCyte - equity interest |
| Investment | $ | — | $ | 3,866 | $ | 3,866 | |||
BioInvent - equity interest |
| Investment | $ | 5,661 | $ | 341 | $ | 6,002 | |||
Total | $ | 9,868 | |||||||||
In the second quarter of 2022, the Company sold 275,000 ordinary shares of BioInvent for $1.3 million. The Company recognized gains of $131,000 in consolidated statements of operations and comprehensive loss.
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For the three and nine months ended September 30, 2022, the Company recognized unrealized gains of $0.6 million and unrealized losses $2.5 million, respectively, on the Company’s equity investments. For the three and nine months ended September 30, 2021, the Company recognized unrealized losses of $3.7 million and $0.3 million, respectively, on the Company’s equity investments. Unrealized gains (losses) on the Company’s equity investments are recognized as change in fair value of investment in the consolidated statements of operations and comprehensive loss.
Long-term Investments
Long-term investments as of September 30, 2022 and December 31, 2021 consisted of the following:
Gross | Foreign | ||||||||||||||
Gross | unrealized | currency | |||||||||||||
September 30, 2022 | unrealized | losses (including | translation | Aggregate | |||||||||||
(In thousands) |
| Cost |
| gains |
| impairment) |
| adjustment |
| fair value | |||||
Available-for-sale debt securities: |
|
|
|
|
|
|
|
| |||||||
Alesta Therapeutics B.V. - convertible loan | $ | 261 | $ | 15 | $ | — | $ | — | $ | 276 | |||||
Securities measured at fair value: | |||||||||||||||
BioInvent International AB - warrants | 656 | — | (194) | — | 462 | ||||||||||
Cleave Therapeutics, Inc. - convertible loan | 5,500 | 458 | — | — | 5,958 | ||||||||||
Equity securities without readily determinable fair value: |
|
|
|
|
|
|
|
|
| ||||||
Alesta Therapeutics B.V. - equity interests |
| 2,250 |
| — |
| (865) |
| — |
| 1,385 | |||||
Juventas Biotechnology (Tianjin) Co., Ltd. - equity interests |
| 23,500 |
| 6,958 |
| — |
| (1,569) |
| 28,889 | |||||
Juventas Biotechnology (Tianjin) Co., Ltd. - put option |
| 491 |
| — |
| (521) |
| 30 |
| — | |||||
Prepayment for investment: | |||||||||||||||
Precision Autoimmune Therapeutics Co., Ltd - equity interests | 2,962 | — | — | (152) | 2,810 | ||||||||||
Total | $ | 35,620 | $ | 7,431 | $ | (1,580) | $ | (1,691) | $ | 39,780 | |||||
Gross | Foreign | ||||||||||||||
Gross | unrealized | currency | |||||||||||||
December 31, 2021 | unrealized | losses (including | translation | Aggregate | |||||||||||
(In thousands) |
| Cost |
| gains |
| impairment) |
| adjustment |
| fair value | |||||
Available-for-sale debt securities: |
|
|
|
|
|
|
|
| |||||||
Alesta Therapeutics B.V. - convertible loan | $ | 261 | $ | 7 | $ | — | $ | — | $ | 268 | |||||
Securities measured at fair value: | |||||||||||||||
BioInvent International AB - warrants | 656 | — | (65) | — | 591 | ||||||||||
Cleave Therapeutics, Inc. - convertible loan | 5,500 | 76 | — | — | 5,576 | ||||||||||
Equity securities without readily determinable fair value: |
|
|
|
|
| ||||||||||
Alesta Therapeutics B.V. - equity interests |
| 2,250 |
| — |
| (865) |
| — |
| 1,385 | |||||
Juventas Biotechnology (Tianjin) Co., Ltd. - equity interests |
| 23,500 |
| 6,958 |
| — |
| 1,850 |
| 32,308 | |||||
Juventas Biotechnology (Tianjin) Co., Ltd. - put option |
| 491 |
| — |
| (521) |
| 30 |
| — | |||||
Total | $ | 32,658 | $ | 7,041 | $ | (1,451) | $ | 1,880 | $ | 40,128 | |||||
Investment in Precision Autoimmune Therapeutics Co., Ltd., (“PAT”)
In May 2022, CASI China entered into an agreement for the investment in PAT in the amount of RMB 20.0 million (approximately $3.0 million) in cash during PAT’s first equity financing. CASI China has paid all the consideration in June 2022. Upon consummation of such equity financing, CASI China will hold 15% equity interests of PAT and will hold third of the board seats.
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As of September 30, 2022, the transaction had not been consummated as the consideration from other investors has not been paid in full.
Sales of Investment in Juventas Biotechnology (Tianjin) Co., Ltd.
In September 2022, CASI Biopharmaceuticals entered into an equity transfer agreement (the “Equity Transfer Agreement”) with Shenzhen Jiadao Gongcheng Equity Investment Fund (Limited Partnership) (“Jiadao Gongcheng”), a third party limited partnership enterprise incorporated under the laws of China, pursuant to which CASI Biopharmaceuticals agreed to transfer to Jiadao Gongcheng all of its equity interest in Juventas in the amount of RMB 240.9 million (approximately $33.8 million). Pursuant to the Equity Transfer Agreement, CASI Biopharmaceuticals will transfer all of its rights and obligations to Jiadao Gongcheng, and Jiadao Gongcheng would make payment in two equal installments, with the first installment paid after signing the Equity Transfer Agreement and the second installment paid shortly after the completion of the registration with competent government authorities. As of September 30, 2022, CASI Biopharmaceuticals received the first installment of RMB 120.4 million (approximately $16.9 million) as advance. The transaction had not been consummated as the registration with competent governmental authorities of the transaction was still in process.
6. Inventories
The Company’s inventories consist of finished goods amounted to $5.8 million and $1.9 million, as of September 30, 2022 and December 31, 2021, respectively. No write down to the carrying amount of inventory have been recorded in the three and nine months ended September 30, 2022 and 2021.
7.Property, Plant and Equipment
Property, plant and equipment consist of the following:
In the third quarter of 2022, CASI Wuxi obtained the Certificate for Pharmaceutical Distribution, and then transferred certain assets related to the manufacturing facility in Wuxi from construction in process to leasehold improvements and furniture and equipment and started to depreciate those assets.
8. Leases
Right of use (“ROU”) assets and liabilities for operating leases are recognized at commencement date based on the present value of lease payments over the lease term. Rent expense is recognized on a straight-line basis over the lease term.
Liabilities for operating lease are included in accrued and other current liabilities and other liabilities (noncurrent) in the consolidated balance sheets as of September 30, 2022 and December 31, 2021.
In November 2019, CASI Wuxi entered into a fifty-year lease agreement for the right to use state-owned land in China for the construction of a manufacturing facility. The land parcel is 74,028.40 square meters. The Company classifies this lease as an operating
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lease. The Company prepaid all of the lease payments for the land use right in 2019 in the amount of RMB 45 million (equivalent to $6.5 million).
Rent expense for the nine months ended September 30, 2022 and 2021 was $1.0 million and $1.2 million, respectively. There were no variable lease costs or sublease income for leased assets for the nine months ended September 30, 2022 and 2021.
Right of use assets and liabilities as of September 30, 2022 and December 31, 2021 on the condensed consolidated balance sheets were as follows:
| September 30, | December 31, |
| ||||
(In thousands) |
| 2022 |
| 2021 | |||
$ | 7,666 | $ | 9,107 | ||||
$ | 922 | $ | 1,061 | ||||
| 634 |
| 1,105 | ||||
$ | 1,556 | $ | 2,166 | ||||
Supplemental cash flow information related to leases was as follows:
All of the Company’s existing leases as of September 30, 2022 and December 31, 2021 were classified as operating leases. As of September 30, 2022 and December 31, 2021, the Company had seven and eight, respectively, material operating leases for land and facilities with remaining terms expiring from 2023 through 2069 and a weighted average remaining lease term of 37.92 years and 36.47 years, respectively. The Company has fair value renewal options for many of the Company’s existing leases, none of which are considered reasonably certain of being exercised or included in the minimum lease term. Weighted average discount rates used in the calculation of the lease liability as of September 30, 2022 and December 31, 2021 were 3.53% and 3.56%, respectively. The discount rates reflect the estimated incremental borrowing rate, which includes an assessment of the credit rating to determine the rate that the Company would have to pay to borrow, on a collateralized basis for a similar term, an amount equal to the lease payments in a similar economic environment.
A maturity analysis representing the future undiscounted cash flow of the Company’s operating leases liabilities as of September 30, 2022 is as follows:
(In thousands) |
|
| |
2022 (remaining three months) | $ | 266 | |
2023 |
| 871 | |
2024 |
| 456 | |
Thereafter |
| 12 | |
Total |
| 1,605 | |
Discount factor |
| (49) | |
Lease liability |
| 1,556 | |
Amounts due within 12 months |
| 922 | |
Non-current lease liability | $ | 634 |
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9.Accrued and Other Current Liabilities, and Other Liabilities
Note (1): The receipt in advance for sale of an investment represents the first installment received for sale of Juventas (see Note 5).
10. Bank Borrowings
In May 2022, the Company entered into a Business Loan Agreement (together with related security agreements and promissory note, the “Agreement”) with East West Bank (“EWB”). Under the Agreement, EWB made available to the Company a revolving line of credit up to a maximum of $10.0 million. The Agreement will mature on December 31, 2022, unless extended to April 30, 2024 subject to certain conditions as defined in the Agreement. In general, amounts borrowed under the Agreement are secured by a lien on the Company’s assets, including first priority security interest in accounts receivable and inventory and pledge of available-for-sale securities. As of September 30, 2022, the outstanding principal balance under this agreement was $3.0 million.
In June 2022, the Company’s subsidiary, CASI China entered into a Loan Agreement with China International Trust and Investment Corporation Bank (“CITIC Bank”). Under the Loan Agreement, CITIC Bank made available to CASI China a guaranteed line of credit up to a maximum of RMB 20.0 million (approximately $3.0 million). The Loan Agreement will mature on June 13, 2023. The joint and several liability guarantee was provided by Beijing Shouchuang Financing Guarantee Co. Ltd. concurrently with the Loan Agreement. The loan was secured by a pledge of the land use right held by CASI Wuxi, one of the Company’s subsidiaries. Interest accrues on the principal amounts of the loans outstanding at a fixed annual rate of 3.98% and payable monthly. In the second quarter of 2022, CASI China made a drawdown under the loan amounted to RMB 6.7 million ($1.0 million) and repaid all the outstanding principal balance and interest in the third quarter of 2022. The Loan Agreement was terminated in July 2022 and the land use right was released from the pledge in September 2022.
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11. Redeemable Noncontrolling Interest
Changes in redeemable noncontrolling interest during the nine month periods ended September 30, 2022 and 2021 are as follows:
12. Stockholders’ Equity
Reverse Stock Split
On June 1, 2022, the Company effectuated a reverse stock split of the Company’s Common Stock (the “Reverse Stock Split”) pursuant to an amendment to its Amended and Restated Certificate of Incorporation filed on May 26, 2022. Trading of the Common Stock on a reverse stock split-adjusted basis began at the opening of trading on the Nasdaq Capital Market on June 2, 2022. After the reverse stock split, each ten (10) shares of Common Stock issued and outstanding was combined into one (1) validly issued, fully paid and non-assessable share of Common Stock. The par value per share of the Common Stock remains the same. No fractional shares were issued in connection with the Reverse Stock Split. Stockholders who would otherwise be entitled to a fractional share of Common Stock were instead entitled to receive a proportional cash payment. The Reverse Stock Split did not reduce the total number of shares of Common Stock that the Company is authorized to issue, which remains 250,000,000 shares. In addition, proportionate adjustments was made to the per share exercise price and the number of shares issuable upon the exercise of all outstanding stock options and warrants to purchase shares of Common Stock and the number of shares of Common Stock reserved for issuance pursuant to the Company’s equity incentive plans. Unless otherwise indicated, all share numbers in this report have been adjusted to reflect the Reverse Stock Split. Net loss per share was adjusted retrospectively.
Stock Repurchase Program
On December 15, 2021, the board of directors of the Company approved a stock repurchase program for the repurchase of up to $10 million of the Company’s Common Stock (and no more than 12,500,000 shares of the Company’s Common Stock, not adjusted to reflect the Reverse Stock Split) through open market purchases in compliance with Rule 10b-18 under the Securities Exchange Act of 1934 and through trading plans established pursuant to Rule 10b5-1 of the Securities Exchange Act from time to time. The Company established a Rule 10b5-1 trading plan to carry out the stock repurchase, which was terminated on March 31, 2022, and as of the termination of the plan, the Company has repurchased 3,734,992 shares of Common Stock (among which 2,541,245 shares of Common Stock were retired, not adjusted to reflect the Reverse Stock Split) amounted to $3.0 million.
Stock Purchase Warrants
In history, the Company issued shares of its common stock with accompanying warrants to certain institutional investors, accredited investors and existing stockholders.
As of September 30, 2022, the and number of warrants was 617,277 with weighted average exercise price of $36.9. All outstanding warrants are equity classified.
13. Net Loss Per Share
Net loss per share (basic and diluted) was computed by dividing net loss attributable to common stockholders, considering the accretions to redemption value of the redeemable noncontrolling interest, by the weighted average number of shares of common stock outstanding. As of September 30, 2022 and December 31, 2021, outstanding stock options totaling 3,415,729 and 3,324,368,
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respectively, and outstanding warrants both totaling 617,277, were anti-dilutive, and therefore, were not included in the computation of weighted average shares used in computing diluted loss per share. Pursuant to the reverse stock split, net loss per share was adjusted retrospectively.
The following table sets forth the basic and diluted net loss per share computation and provides a reconciliation of the numerator and denominator for the periods presented:
14. Stock-Based Compensation
The Company has adopted various stock compensation plans for executive, scientific and administrative personnel of the Company, as well as outside directors and consultants.
The stock-based compensation expenses are recorded as components of research and development expense, sales and marketing expense, and general and administrative expense, as follows:
15. Income Taxes
At December 31, 2021, the Company had a $1.4 million unrecognized tax benefit. The Company recorded a full valuation allowance on the deferred tax asset after offsetting unrecognized tax benefit recognized in the consolidated financial statements as of December 31, 2021.
During the nine months ended September 30, 2022, there were no material changes to the measurement of unrecognized tax benefits in various tax jurisdictions.
16. Fair Value Measurements
Financial instruments of the Company primarily consist of cash and cash equivalents, investment in equity securities, accounts receivable, long-term investments, accounts payable, accrued liabilities, notes payable and bank borrowings. As of September 30, 2022 and December 31, 2021, the carrying amount of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, notes payable and bank borrowings were carried at cost which approximates their fair values due to the short-term nature of the instruments.
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Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis
The Company evaluates financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level at which to classify them each reporting period. This determination requires the Company to make subjective judgments as to the significance of inputs used in determining fair value and where such inputs lie within the hierarchy.
The Company has equity investments in the common stock of two publicly traded companies. The Company’s investments in these equity securities are carried at their estimated fair value, with changes in fair value reported in the consolidated statement of operations and comprehensive loss each reporting period. The fair value of the common stock is based on quoted market price for the investees’ common stock, a Level 1 input.
The Company has an equity investment in the warrants of a publicly traded company. The Company’s investment is carried at its estimated fair value, with changes in fair value reported in the consolidated statement of operations and comprehensive loss each reporting period. The fair value of the warrants was measured using observable market-based inputs other than quoted prices in active markets for identical assets, level 2 inputs. The Company uses the Black-Scholes-Merton valuation model to estimate the fair value of warrants. Option valuation models, including Black-Scholes-Merton, require the input of highly subjective assumptions, and changes in the assumptions used can materially affect the fair value determination of a warrant.
The Company has an investment in the convertible debt of Alesta Therapeutics B.V.. The Company’s investment is carried at its estimated fair value, with changes in fair value reported in the consolidated statement of operations and comprehensive loss each reporting period using Level 3 input.
The Company has an investment in the convertible debt of Cleave. The Company’s investment is carried at its estimated fair value, with changes in fair value reported in the consolidated statement of operations and comprehensive loss each reporting period using Level 3 input. The unpaid balance for this convertible debt amounted to $5.8 million and $5.6 million as of September 30, 2022 and December 31, 2021, respectively.
The following tables present the Company’s financial assets accounted for at fair value on a recurring basis as of September 30, 2022 and December 31, 2021, by level within the fair value hierarchy:
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(In thousands) |
| Fair Value at | ||||||||||
Description |
| December 31, 2021 |
| Level 1 |
| Level 2 |
| Level 3 | ||||
Investments classified as Current and non-Current Assets | ||||||||||||
Investments in common stock | $ | 9,868 | $ | 9,868 | $ | — | $ | — | ||||
Investment in warrants - Designated as investment measured at FVTPL | $ | 591 | $ | — | $ | 591 | $ | — | ||||
Investment in convertible loan - AFS | $ | 268 | $ | — | $ | — | $ | 268 | ||||
Investment in convertible loan - Designated as investment measured at FVTPL | $ | 5,576 | $ | — | $ | — | $ | 5,576 | ||||
Quantitative Information about Level 3 Fair Value Measurements | ||||||||||||
Fair Value at | Valuation | Unobservable | ||||||||||
Description |
| December 31, 2021 |
| Techniques |
| Input |
| Average/Median | ||||
Investment in convertible loan - Designated as investment measured at FVTPL | $ | 5,576 | Discounted cash flow | Discount rate | 20%/20% | |||||||
Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis
The Company measures equity investments without readily determinable fair values at its cost, minus impairment, if any, plus or minus changes resulting from observable transactions of identical or similar securities of the same issuer.
Non-Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis
The Company had no non-financial assets and that are measured at fair value on a recurring basis as of September 30, 2022.
Non-Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis
The Company had no non-financial assets and that are measured at fair value on a non-recurring basis as of September 30, 2022.
17. Related Party Transactions
Transactions with Juventas.
On July 1, 2019 the Company entered into a one-year equipment lease with Juventas, which is classified as an operating lease. Transactions with Juventas are considered to be related party transactions as the Company’s Chairman and CEO is the chairman and one of the founding shareholders of Juventas. The lease was renewed for another year in July 2020 and in June 2021. In June 2022, the Company and Juventas entered into a lab equipment transfer contract, pursuant to which the previous leasing agreement was terminated and the Company transferred the equipment to Juventas. Total consideration for the transfer was RMB 900,000 ($138,000) in cash.
18. Commitments and Contingencies
In conjunction with the Cleave agreement entered into during 2021 (see Note 2), the Company is responsible for certain milestone and royalty payments. As of September 30, 2022, no milestones had been achieved.
In conjunction with the BioInvent agreement entered into during 2020 (see Note 2), the Company is responsible for certain milestone and royalty payments. As of September 30, 2022, no milestones had been achieved.
In conjunction with the Black Belt agreement entered into during 2019 (see Note 2), the Company is responsible for certain milestone and royalty payments. In June 2021, the Company achieved the First-Patient-In (FPI) in the Phase 1 dose escalation and expansion study of CID-103, and made $750,000 milestone payment in June 2021 and 250,000 euros ($305,000) in August 2021. As of September 30, 2022, no other milestones had been achieved.
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In conjunction with the Pharmathen agreement entered into during 2019 (see Note 2), the Company is responsible for one remaining milestone payment. As of September 30, 2022, the remaining milestone had not been achieved.
To develop a GMP manufacturing facility, in November 2019, CASI Wuxi entered into a lease agreement of a state-owned land and committed to invest in land use right and property, plant and equipment for RMB1 billion (equivalent to $143 million) by August 2022. In February 2022, the Company has reached an alignment with the Wuxi local government that the original three-year investment plan will be extended with details regarding the plan under negotiation, and most of the construction work related to the Wuxi land has not started yet. In 2020, CASI Wuxi entered into a lease agreement with local government for a manufactory building next to the leased land and a series of contracts for the construction and equipment. The total contract amount entered into for this manufacturing facility is approximately RMB 174.5 million (approximately $24.5 million), and the commitment under these contracts was RMB 59.2 million (approximately $8.3 million) as of September 30, 2022.
The Company is subject in the normal course of business to various legal proceedings in which claims for monetary or other damages may be asserted. Management does not believe such legal proceedings, unless otherwise disclosed herein, are material.
19. Subsequent Event
In October 2022, pursuant to the Equity Transfer Agreement entered into between CASI Biopharmaceuticals and Jiadao Gongcheng for the sales of the equity interest in Juventas, the registration with competent governmental authorities of the transaction has been completed.
In October 2022, the Company sold all the ordinary shares of MaxCyte for $2.4 million.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
CASI Pharmaceuticals, Inc. (“CASI” or the “Company”, or “we” or “our”) (Nasdaq: CASI) is a U.S. biopharmaceutical company focused on developing and commercializing innovative therapeutics and pharmaceutical products in China, the United States, and throughout the world. We were incorporated in 1991, and in 2012, with new leadership, we shifted our business strategy to China and have since built an infrastructure in China that includes sales and marketing, medical affairs, regulatory and clinical development and in the foreseeable future, manufacturing. We are focused on acquiring, developing and commercializing products that augment our hematology oncology therapeutic focus as well as other areas of unmet medical need. We are executing our plan to become a biopharmaceutical leader by launching medicines in the greater China market, leveraging our China-based regulatory, clinical and commercial competencies and utilizing our global drug development expertise. The majority of our operations and activities are now located in China and are conducted primarily through two of our subsidiaries: (i) CASI Pharmaceuticals (China) Co., Ltd. (“CASI China”), which is wholly owned and is located in Beijing, China, and (ii) CASI Pharmaceuticals (Wuxi) Co., Ltd. (“CASI Wuxi”), which is located in Wuxi, China. Our Beijing office is primarily responsible for our day-to-day operations, and our commercial team of over 130 hematology/oncology sales and marketing specialists is based throughout China. CASI Wuxi is part of the long-term strategy to support our future clinical and commercial manufacturing needs, to manage our supply chain for certain products, and to develop a GMP manufacturing facility in China.
We launched our first commercial product, EVOMELA® (Melphalan for Injection) in China in August 2019. In China, EVOMELA® is approved for use as a conditioning treatment prior to stem cell transplantation and as a palliative treatment for patients with multiple myeloma. The other core hematology/oncology assets in our pipeline include:
| ● | CNCT19 is an autologous CD19 CAR-T investigative product (“CNCT19”) being developed by our partner Juventas Biotechnology (Tianjin) Co., Ltd. (“Juventas”) for which we have exclusive worldwide co-commercial and profit-sharing rights. CNCT19 is being developed as a potential treatment for patients with hematological malignancies which express CD19 including, B-cell acute lymphoblastic leukemia (“B-ALL”) and B-cell non-Hodgkin lymphoma (“B-NHL”). Juventas has completed the CNCT19 Phase 1 studies in patients with B-ALL and B-NHL, and has completed the Phase 2 B-ALL pivotal study in China, the B-NHL registration study is still ongoing in China. |
| ● | In October 2020, the Company entered into an exclusive licensing agreement with BioInvent International AB (“BioInvent”) for the development and commercialization of novel anti-FcγRIIB antibody, BI-1206, in Mainland China, Taiwan, Hong Kong and Macau. BioInvent is a biotechnology company focused on the discovery and development of first-in-class immune-modulatory antibodies for cancer immunotherapy. BI-1206 is being investigated in a Phase 1/2 trial, in combination with anti-PD1 therapy Keytruda® (pembrolizumab), in patients with solid tumors, and in a Phase 1/2a trial in combination with MabThera® (rituximab) in patients with relapsed/refractory non-Hodgkin lymphoma (NHL). Clinical Trial Application (CTA) was approved by China National Medical Products Administration (NMPA) in December 2021 and ethics committee approvals have been received in January of 2022. The Company obtained approval from Human Genetic Resources Administration of China (“HGRAC”) in April 2022. The Company is planning a Phase 1 study of BI-1206 in combination with rituximab with a single agent BI-1206 run in phase in patients with NHL (mantle cell lymphoma, marginal zone lymphoma, and follicular lymphoma) to assess PK, safety and tolerability, select the Recommended Phase 2 Dose and assess early signs of clinical efficacy as part of its development program for BI-1206 in China. The study received regulatory approval from the China Center for Drug Evaluation (“CDE”) in the second quarter of 2022, and the first patient was enrolled and dosed in the third quarter of 2022. |
| ● | CB-5339 is a novel VCP/p97 inhibitor focused on valosin-containing protein (VCP)/p97 as a novel target in protein homeostasis, DNA damage response and other cellular stress pathways for therapeutic use in the treatment of patients with various malignancies. We entered into an exclusive license on March 21, 2021 with Cleave Therapeutics, Inc. (“Cleave”) for the development and commercialization of CB-5339 in Mainland China, Hong Kong, Macau and Taiwan. CB-5339, an oral second-generation, small molecule VCP/p97 inhibitor, is being evaluated in a Phase 1 clinical trial in patients with acute myeloid leukemia (AML) and myelodysplastic syndrome (MDS). The CDE has responded to CB-5339 CTA application for the multiple myeloma indication submitted in March 2022 and the Company has completed and submitted its response to the CDE. |
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| ● | CID-103 is a full human IgG1 anti-CD38 monoclonal antibody recognizing a unique epitope that has demonstrated an encouraging preclinical efficacy and safety profile compared to other anti-CD38 monoclonal antibodies, and which we have exclusive global rights. CID-103 is being developed for the treatment of patients with multiple myeloma. The Phase 1 dose escalation and expansion study of CID-103, in patients with previously treated, relapsed or refractory multiple myeloma is ongoing in France and the UK. |
CASI has built a fully integrated, world class biopharmaceutical company dedicated to the successful development and commercialization of innovative and other therapeutic products. Our business development strategy is currently focused on acquiring additional targeted drugs and immuno-oncology therapeutics through licensing that will expand our hematology/oncology franchise. We use a market-oriented approach to identify pharmaceutical/biotechnology candidates that we believe to have the potential for gaining widespread market acceptance, either globally or in China, and for which development can be accelerated under our global drug development strategy. In many cases our business development strategy includes direct equity investments in the licensor company. We intend for our pipeline to reflect a diversified and risk-balanced set of assets that include (1) late-stage clinical drug candidates in-licensed for China or global regional rights, (2) proprietary or licensed innovative drug candidates, and (3) select high quality pharmaceuticals that fit our therapeutic focus. We have focused on US/EU approved product candidates, and product candidates with proven targets or product candidates that have reduced clinical risk with a greater emphasis on innovative therapeutics. Although oncology with a focus on hematological malignancies is our principal clinical and commercial target, we are opportunistic about other therapeutic areas that can address unmet medical needs. We will continue to pursue building a robust pipeline of drug candidates for development and commercialization in China as our primary market, and if rights are available for the rest of the world.
We believe our China operations offer a significant market and growth potential due to the extraordinary increase in demand for high quality medicines coupled with regulatory reforms in China that facilitate the entry of new pharmaceutical products into the country. We will continue to in-license clinical-stage and late-stage drug candidates, and leverage our cross-border operations and expertise, and hope to be the partner of choice to provide access to the China market. We expect the implementation of our plans will include leveraging our resources and expertise in both the U.S. and China so that we can maximize regulatory, development and clinical strategies in both countries.
Our commercial product, EVOMELA®, was originally licensed from Spectrum Pharmaceuticals, Inc. (“Spectrum”) and we had a supply agreement with Spectrum to support our application for import drug registration and for commercialization purposes. Spectrum completed the sale of its portfolio of FDA-approved hematology/oncology products including EVOMELA® to Acrotech Biopharma L.L.C. (“Acrotech”) on March 1, 2019. The original supply agreement with Spectrum was assumed by Acrotech.
As part of the long-term strategy to support our future clinical and commercial manufacturing needs and to manage our supply chain for certain products, on December 26, 2018, we established CASI Wuxi, between the Company and Wuxi Jintou Huicun Investment Enterprise, a limited partnership (“Wuxi LP”). To develop a GMP manufacturing facility, CASI Wuxi entered into a lease agreement of a state-owned land in 2019, a lease agreement of a manufactory building in 2020, and a series of contracts for construction and equipment since 2020.
In 2020, the worldwide outbreak of the COVID-19 pandemic adversely impacted our EVOMELA® marketing and sales activities as well as the supply chain for EVOMELA®. We currently rely on a single source for the supply of EVOMELA®. The continuation of the COVID-19 pandemic or the emergence of new COVID-19 variants or new pandemics may affect the economies and financial markets of many countries, which may result in a period of economic slowdown or recessions. In such an event, our ability to continue to commercialize and expand distribution of EVOMELA® could be adversely affected if the supplier refuses or is unable to provide products for any reason, which would likely interrupt the manufacturing of EVOMELA®, cause supply chain delays and increase costs. Early in the COVID-19 pandemic, we experienced a disruption to our supply chain for EVOMELA®, we have not experienced supply disruption in 2021 and the first three quarters of 2022; however, there can be no assurance that we will not experience supply disruption again for EVOMELA® during the emergence of new COVID-19 variants.
In 2021, the COVID-19 pandemic in China has been effectively contained by the prompt and effective governmental control measures, and we have experienced minimal disruption to our business activities. However, due to the outbreak of Omicron and other variants of COVID-19 in the second quarter of 2022, the lockdown in Shanghai and restrictions in other major cities in China led to limitation of access to local hospitals, which had an adverse impact on the sales of EVOMELA® for the second and the third quarters. The restrictions also adversely impacted the enrollment of patients for the CNCT19 Phase II registration studies. Recently, the pandemic
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gradually spread nationwide in China, and many small and medium-sized cities have been upgrading their control measures ever since the third quarter. These series of control measures are expected to adversely impact our sales activities for the remainder of 2022. Given that such COVID-19 related restrictions are beyond our control, at this stage, it is unable to assess how long such COVID-19 related restrictions may continue in China, and the full extent to which such restrictions may directly and indirectly impact our business operations. Considering the uncertainty of the development of COVID-19 pandemic, we will continue to pay close attention to the development of the COVID-19 pandemic and dedicate resources to take any necessary measures in a timely manner to minimize the unfavorable impact on our businesses and operations.
RESULTS OF OPERATIONS
Operating Items
Revenues
Product Sales
Product sales consist of sales of EVOMELA® that launched during August 2019. Revenue was $10.2 million and $27.8 million, respectively, for the three and nine months ended September 30, 2022, compared to $8.1 million and $20.9 million, respectively, for the corresponding periods in 2021. Revenues increased by 26% and 33%, respectively, for the three and nine months ended September 30, 2022 as compared to the corresponding periods of 2021 due to the continued growth in EVOMELA® sales.
Lease Income
Lease income consists primarily of an equipment lease with Juventas. Lease income was nil and $60,000, respectively, for the three and nine months ended September 30, 2022, compared to $37,000 and $110,000, respectively, for the corresponding periods in 2021.
Operating Expenses
Cost of Revenues
Cost of revenues consists primarily of the cost of inventories of EVOMELA® and sales-based royalties related to the sale of EVOMELA®.
Costs of revenues were $4.2 million and $11.6 million, respectively, for the three and nine months ended September 30, 2022, compared to $3.4 million and $8.8 million, respectively, for the corresponding periods in 2021. Gross profit was around 58% for all the four periods, which was stable.
Research and Development Expenses
Research and development (R&D) expenses consist primarily of compensation and other expenses related to research and development personnel, research collaborations, costs associated with internal and contract preclinical testing and clinical trials of our product candidates, including the costs of drug substance and drug product, regulatory maintenance costs of ANDAs, facilities expenses, and amortization expense of acquired ANDAs.
Research and development expenses were $3.9 million and $11.7 million, respectively, for the three and nine months ended September 30, 2022, compared to $2.9 million and $10.4 million, respectively, for the corresponding periods in 2021. The increase of research and development expenses for the three months periods was mainly due to expense incurred for BI-1206 and CID-103.
General and Administrative Expenses
General and administrative expenses include compensation and other expenses related to executive, finance, business development and administrative personnel, professional services, investor relations and facilities.
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General and administrative expenses were $4.8 million and $15.7 million, respectively, for the three and nine months ended September 30, 2022, compared to $5.3 million and $16.2 million, respectively, for the corresponding periods in 2021. The decrease in general and administrative expenses was mainly due to the decrease in professional fee.
Selling and Marketing Expenses
Selling and marketing expenses are the direct costs related to the sales of EVOMELA® that was launched in China in August 2019, such as sales force salaries, bonuses, advertising, and other marketing efforts.
Selling and marketing expenses were $3.6 million and $10.2 million, respectively, for the three and nine months ended September 30, 2022, compared to $3.4 million and $9.5 million, respectively, for the corresponding periods in 2021. The increase in selling and marketing expenses was due to the increase of sales commission in accordance with the increase in sales of EVOMELA® and expansion of sales team in China.
Acquired in-process Research and Development
There were no acquired in-process R&D expenses for the three and nine months ended September 30, 2022. Acquired in-process R&D expenses for the three and nine months ended September 30, 2021 were nil and $6.6 million, respectively. Among the total $6.6 million, $5.5 million was related to the upfront payment to Cleave for the development of CB-5339, and $1.1 million was related to the milestone payment for the development of CID-103.
Non-Operating Items
Interest (expense)/income, net
Interest (expense)/income, net was expense of $13,000 and income of $101,000, respectively, for the three and nine months ended September 30, 2022, compared to $79,000 and $261,000, respectively, for the corresponding periods in 2021.
Other income
Other income was $11,000 and $60,000, respectively, for the three and nine months ended September 30, 2022, compared to $487,000 and $540,000, respectively, for the corresponding periods in 2021. Other income recognized in 2022 was mainly related to the amortized government grant. Other income recognized in the third quarter of 2021 mainly related to the loan to the Company under the Paycheck Protection Program (PPP) that was forgiven in September 2021.
Foreign exchange gains/(losses)
Foreign exchange gains were $0.6 million and $2.3 million, respectively, for the three and nine months ended September 30, 2022, compared to losses of $6,000 and gains of $289,000, respectively, for the corresponding periods in 2021. The foreign exchange gains were primarily due to accounts receivable with CRPCGIT and USD denominated cash accounts that are held by our Chinese subsidiaries.
Change in fair value of investments
The changes in fair value of investments for the three and nine months ended September 30, 2022 were gains of $0.7 million and losses of $2.0 million, respectively, compared to losses of $3.7 million and $0.2 million, respectively, for the corresponding periods in 2021. The changes represent unrealized gains or losses on the Company’s investments in equity securities and long-term investments. The changes were mainly due to the fluctuations in the market price of two publicly traded companies invested by us.
Impairment loss of long-term investments
There was no impairment loss of long-term investments during the three and nine months ended September 30, 2022. Impairment loss of long-term investments for the three and nine months ended September 30, 2021 was nil and $0.9 million, respectively. The loss was related to the investment in Black Belt Tx.
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LIQUIDITY AND CAPITAL RESOURCES
To date, the Company has been engaged primarily in research and development activities. As a result, the Company has incurred and expect to continue to incur operating losses in 2022 and the foreseeable future.
The Company will require significant additional funding to fund operations beyond the third quarter of 2023 until such time, if ever, it becomes profitable. The Company intends to augment its cash balances by pursuing other forms of capital infusion, including strategic alliances or collaborative development opportunities with organizations that have capabilities and/or products that are complementary to its capabilities and products in order to continue the development of its potential product candidates that they intend to pursue to commercialization. If the Company seeks strategic alliances, licenses, or other alternative arrangements, such as arrangements with collaborative partners or others, to raise further financing, it may need to relinquish rights to certain of its existing product candidates, or products they would otherwise seek to develop or commercialize on its own, or to license the rights to its product candidates on terms that are not favorable to it.
The Company also invested in its development of the Wuxi land and construction of the manufacturing building. Commencing from the fourth quarter of 2020, in relation to the development of the Wuxi land and construction of the manufacturing building, the Company entered into a series of contracts for the development and construction work. Total commitment under these contracts was RMB 59.2 million (approximately $8.3 million) as of September 30, 2022.
The Company will continue to seek to raise additional capital to fund its commercialization efforts, expansion of its operations, capital expenditure, research and development, and for the acquisition of new product candidates, if any. The Company intends to and is currently actively communicating to explore one or more of the following alternatives to raise additional capital:
| ● | raising bank loans; |
| ● | selling additional equity securities; |
| ● | out-licensing product candidates to one or more corporate partners; |
| ● | completing an outright sale of non-priority assets; and/or |
| ● | engaging in one or more strategic transactions. |
The Company also will continue to manage its cash resources prudently and cost-effectively.
There can be no assurance that adequate additional financing under such arrangements will be available to the Company on terms that they deem acceptable, if at all. If additional funds are raised by issuing equity securities, dilution to existing stockholders may result, or the equity securities may have rights, preferences, or privileges senior to those of the holders of its common stock. If they fail to obtain additional capital when needed, they may be required to delay or scale back their commercialization efforts, advancement of the Spectrum products or plans for other product candidates, if any.
Since its inception in 1991, the Company has incurred significant losses from operations and, as of September 30, 2022, had incurred an accumulated deficit of $624.9 million. The Company believes that it has sufficient resources to fund its operations at least one year beyond the date that the interim consolidated financial statements are issued for the period ended September 30, 2022.
FINANCING ACTIVITIES
Bank Borrowings
In May 2022, the Company entered into a Business Loan Agreement (together with related security agreements and promissory note, the “Agreement”) with East West Bank (“EWB”). Under the Agreement, EWB made available to the Company a revolving line of credit up to a maximum of $10.0 million. The Agreement will mature on December 31, 2022, unless extended to April 30, 2024 subject to certain conditions as defined in the Agreement. In general, amounts borrowed under the Agreement are secured by a lien on the Company’s assets, including first priority security interest in accounts receivable and inventory and pledge of available-for-sale securities. Under the Agreement, the Company shall maintain at least $2.5 million cash on deposit at EWB. EWB shall, when certain conditions are met, partially or fully release this cash deposit requirement. Amounts borrowed under the Agreement bear interest, payable
27
monthly. Interest shall accrue based upon the daily Wall Street Journal Prime Rate (as quoted in the “Money Rates” column of The Wall Street Journal (Western Edition)) plus 0.35% with a floor rate of 3.85%. Interest is calculated by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. As of September 30, 2022, the outstanding principal balance under this agreement was $3.0 million.
In June 2022, the Company’s subsidiary, CASI China entered into a Loan Agreement with China International Trust and Investment Corporation Bank (“CITIC Bank”). Under the Loan Agreement, CITIC Bank made available to CASI China a guaranteed line of credit up to a maximum of RMB 20.0 million (approximately $3.0 million). The Loan Agreement will mature on June 13, 2023. The joint and several liability guarantee was provided by Beijing Shouchuang Financing Guarantee Co. Ltd. concurrently with the Loan Agreement. The loan was secured by a pledge of the land use right held by CASI Wuxi. Interest accrues on the principal amounts of the loans outstanding at an fixed annual rate of 3.98% and payable monthly. In the second quarter of 2022, CASI China made a drawdown under the loan amounted to RMB 6.7 million ($1.0 million) and repaid all the outstanding principal balance and interest in the third quarter of 2022. The Loan Agreement was terminated in July 2022 and the land use right was released from the pledge in September 2022.
Stock Repurchase Program
On December 15, 2021, our board of directors approved a stock repurchase program for the repurchase of up to $10 million of our common stock (and no more than 12,500,000 shares of our common stock, not adjusted to reflect the Reverse Stock Split) through open market purchases in compliance with Rule 10b-18 under the Securities Exchange Act of 1934 and through trading plans established pursuant to Rule 10b5-1 of the Securities Exchange from time to time. The Company established a Rule 10b5-1 trading plan to carry out the stock repurchase, which was terminated on March 31, 2022, and as of the termination date, we had repurchased 3,734,992 shares of Common Stock (among which 2,541,245 shares of Common Stock were retired, not adjusted to reflect the Reverse Stock Split) amounted to $3.0 million.
INTEREST RATE CHANGES
Management does not believe that our working capital needs are sensitive to changes in interest rates.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Based on an evaluation under the supervision and with the participation of our management, our Chief Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) were effective as of September 30, 2022 to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
We believe that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
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Changes in Internal Control Over Financial Reporting
There have not been any changes in our internal control over financial reporting during the quarter ended September 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are subject in the normal course of business to various legal proceedings in which claims for monetary or other damages may be asserted. Management does not believe such legal proceedings, unless otherwise disclosed herein, are material.
ITEM 1A. RISK FACTORS
For information regarding factors that could affect the Company’s results of operations, financial condition and liquidity, see the risk factors discussion set forth in Item 1A of CASI’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, Quarterly Report on Form 10-Q for the three months ended June 30, 2022, and the information under “Special Note Regarding Forward-Looking Statements” included in this report. Other than disclosed herein, there have been no material changes to our risk factors from those disclosed in our Quarterly Report on Form 10-Q for the three months ended June 30, 2022.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
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ITEM 6. EXHIBITS
EXHIBIT INDEX
10.1* ˄ |
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31.1* | ||
31.2* | ||
32.1** | ||
32.2** | ||
101.INS | Inline XBRL Instance Document. The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document. | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101 filed herewith). |
*Filed Herewith
**Furnished Herewith
˄ Certain confidential information contained in this exhibit has been omitted because it (i) is not material and (ii) would be competitively harmful if publicly disclosed.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| CASI PHARMACEUTICALS, INC. | ||
(Registrant) | |||
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|
| |
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Date: November 14, 2022 | /s/ Wei-Wu He | ||
| Wei-Wu He | ||
| Chief Executive Officer | ||
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Date: November 14, 2022 | /s/ Larry (Wei) Zhang | ||
| Larry (Wei) Zhang | ||
| Principal Financial Officer |
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Exhibit 10.1
Certain confidential information contained in this document, marked by brackets and *** asterisk, has been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K, because it (i) is not material and (ii) would be competitively harmful if publicly disclosed.
凯信生物医药（无锡）有限公司
CASI Biopharmaceuticals (Wuxi) Co., Ltd.
与
AND
深圳嘉道功程股权投资基金（有限合伙）
Shenzhen Jiadao Gongcheng Equity Investment Fund (Limited Partnership)
关于
ABOUT
转让合源生物科技（天津）有限公司股权
Transfer of Equity Interest in Juventas Biotechnology (Tianjin) Co., Ltd.
之
股权转让协议
Equity Transfer Agreement
本《股权转让协议》（”本协议”）于2022年9月22日（”签署日”）签订：
This Equity Transfer Agreement (this “Agreement”), dated September 22, 2022 (the “Execution Date”), is entered into by and between:
1. | 凯信生物医药（无锡）有限公司，一家根据中国法律注册成立的有限责任公司，统一社会信用代码为91320206MA1Y9QKR89（”转让方”）； |
CASI Biopharmaceuticals (Wuxi) Co., Ltd., a limited liability company registered and incorporated under the laws of the PRC with uniform social credit code of 91320206MA1Y9QKR89 (the “Transferor”);
2. | 深圳嘉道功程股权投资基金（有限合伙），一家根据中国法律注册成立的有限合伙企业，统一社会信用代码为91440300319612500C（”受让方”）。 |
Shenzhen Jiadao Gongcheng Equity Investment Fund (Limited Partnership), a limited partnership enterprise registered and incorporated under the laws of the PRC with its unified social credit code of 91440300319612500C (“Transferee”).
以上分别称为”一方”，合称为”双方”。
The above shall be referred to individually as a “Party” and collectively as the “Parties”.
鉴于：
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Whereas,
1. | 截至签署日，转让方持有对应合源生物科技（天津）有限公司（”标的公司”）注册资本[*****] 的股权。根据标的公司与转让方及其他相关方于2021年10月13日签署的《关于合源生物科技（天津）有限公司之股东协议》（”股东协议”），转让方就前述股权享有作为A+轮投资者（定义见股东协议）的权利。 |
As of the Execution Date, the Transferor holds [*****] of the registered capital of Juventas Biotechnology (Tianjin) Co., Ltd. (the “Company”). In accordance with the Shareholders’ Agreement regarding Juventas Biotechnology (Tianjin) Co., Ltd., dated as of October 13, 2021, among the Company, Transferor, and other relevant parties (the “Shareholders’ Agreement”), the Transferor shall have the right as a Series A + Investor (as defined in the Shareholders’ Agreement) with respect to the aforesaid equity interests.
2. | 受让方拟按照本协议的条款与条件受让转让方持有的对应标的公司注册资本[*****] 的股权，转让方拟按照本协议的条款与条件转让其持有的该等标的公司股权。 |
The Transferee intends to purchase the Transferor’s equity interests corresponding to [*****] of the registered capital of the Company, and the Transferor intends to transfer such equity interests in the Company, pursuant to the terms and subject to the conditions of this Agreement.
3. | 标的公司与转让方的关联方（定义见下）CASI Pharmaceuticals, Inc.（”CASI US”）分别于2019年6月15日和2020年9月29日签署《Exclusive License Agreement》及《独家许可协议之补充协议》（合称”独家许可协议”）。本次股权转让（定义见下）完成后，转让方希望独家许可协议能够继续被严格履行。 |
The Company and CASI Pharmaceuticals, Inc., an Affiliate (defined below) of the Transferor, entered into the Exclusive License Agreement and the Supplementary Agreement to the Exclusive License Agreement (collectively the “Exclusive License Agreement”) on June 15, 2019 and September 29, 2020, respectively. It is the intention of the Transferor that the performance of the Exclusive License Agreement can be continuously secured after the completion of the Equity Transfer (defined below).
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据此，双方达成本协议各项条款如下：
Now, therefore, the Parties agree as follows:
第一条本次股权转让
I.Equity Transfer
1.1本次股权转让
1.1Equity Transfer
1.1.1 | 转让方同意将其持有的截至签署日对应标的公司注册资本 [*****] 的股权（”目标股权”），按本协议的条款与条件以 [*****]（”股权转让价款”）的对价转让给受让方，受让方同意按本协议的条款与条件受让目标股权（”本次股权转让”）。 |
1.1.1 | The Transferor agrees to transfer to the Transferee its equity interests in the amount of [*****] of the registered capital of the Company as of the Execution Date (the “Target Equity”) for a consideration of [*****] (the “Equity Transfer Price”), subject to the terms and conditions of this Agreement, and the Transferee agrees to accept the transfer of the Target Equity subject to the terms and conditions of this Agreement (this “Equity Transfer”). |
1.1.2 | 受限于本协议的约定，双方同意配合与本次股权转让相关的一切程序（包括但不限于在市场监督管理部门就本次股权转让办理的必要程序）。 |
1.1.2 | Subject to the provisions herein, the Parties agree to cooperate in all procedures in connection with the Equity Transfer (including, without limitation, the procedures necessary for the Equity Transfer with the market supervision and administration authority). |
第二条交割
II.Closing
2.1交割
2.1Closing
2.1.1 | 双方确认并同意，在本协议第四条规定的先决条件得以全部满足或受让方以书面形式予以豁免之日（”交割条件满足日”）后，受让方应分两期向转让方支付股权转让价款： |
(1) | 第一期：交割条件满足日起 [*****]内，受让方向转让方支付本次股权转让对价的[*****]，即[*****] （大写：壹亿贰仟零肆拾叁万陆仟柒佰伍拾元整）； |
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(2) | 第二期：标的公司办理完毕标的股权的工商变更登记后[*****] 内，受让方向转让方支付本次股权转让对价的剩余[*****]，即[*****] （大写：壹亿贰仟零肆拾叁万陆仟柒佰伍拾元整）。 |
转让方全额收到第一期股权转让价款之日为本次股权转让的首次付款日（”首次付款日”）；转让方全额收到第二期股权转让价款之日为本次股权转让的交割日（”交割日”）。
2.1.1 | The Parties acknowledge and agree that the Transferee shall pay the Equity Transfer Price to the Transferor in two tranches after the date on which all conditions precedent set forth in Article IV hereof are satisfied or waived by the Transferee in writing (the “Closing Conditions Satisfaction Date”): |
(1) | The 1st Tranche: within [*****] after the Closing Conditions Satisfaction Date, the Transferee shall pay [*****] of the Equity Transfer Price, which is [*****]; |
(2) | The 2nd Tranche: within [*****] after the completion of the Equity Transfer Registration, the Transferee shall pay the remaining [*****] of the Equity Transfer Price, which is [*****]; |
The date on which the Transferor has received the first Tranche of the Equity Transfer Price in full shall be the date of first payment (the “First Payment Date”); the date on which the Transferor has received the second Tranche of the Equity Transfer Price in full shall be the closing date of the Transfer (the “Closing Date”).
2.1.2 | 双方确认并同意，转让方应在收到受让方支付的每期股权转让价款后的[*****] 内向受让方出具书面的收款通知，以证明受让方已完成该期股权转让价款支付义务。 |
2.1.2 | The Parties acknowledge and agree that the Transferor shall issue a written receipt notice to the Transferee within [*****] after the receipt of each tranche of the Equity Transfer Price paid by the Transferee to evidence that the Transferee has fulfilled its obligation to pay such tranche of the Equity Transfer Price. |
2.2股东身份及股东权利
2.2Shareholders’ Status and Rights
2.2.1 | 自首次付款日起，受让方取得全部目标股权，并获得目标股权的全部权利、权属和权益，包括但不限于目标股权的所有权和任何与之相关的或 |
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源于该所有权的权利和利益，同时承担目标股权对应的义务。
2.2.1 | From the First Payment Date, the Transferee shall acquire all the Target Equity, as well as all rights, titles and interests in, to and under the Target Equity, including without limitation the ownership of the Target Equity and any rights and interests relating to or arising from such ownership, and shall assume the obligations corresponding to the Target Equity. |
2.2.2 | 特别地，双方一致同意并确认，自首次付款日，受让方就目标股权享有作为A+轮投资者根据股东协议（或股东协议后续不时修订或者修改）享有相应的股东的权利。 |
2.2.2 | In particular, the Parties unanimously agree and confirm that, upon the First Payment Date, the Transferee shall be entitled to the relevant shareholders’ rights as a Series A + Investor with respect to the Target Equity in accordance with the Shareholders’ Agreement, as amended or modified from time to time subsequently. |
第三条陈述与保证和承诺
III.REPRESENTATIONS, WARRANTIES AND COVENANTS
3.1陈述与保证
3.1Representations and Warranties
3.1.1 | 转让方特此向受让方作出如下陈述与保证，并确认受让方对本协议的签署依赖于该等陈述与保证直至交割日（含交割日）在所有方面的真实、准确、完整和不具有误导性： |
3.1.1 | The Transferor hereby makes the following representations and warranties to the Transferee and acknowledges that the Transferee has entered into this Agreement in reliance on these representations and warranties being true, accurate, complete and not misleading in all respects as of the Closing Date (inclusive): |
(1) | 转让方系依照中国法律合法成立和有效存续的实体。 |
(1) | The Transferor is an entity duly organized and validly existing under the laws of China. |
(2) | 转让方根据适用法律具备民事权利能力和民事行为能力签署、交付和履行本协议项下与其相关事项；转让方已经就其签署、交付和履行本次股权转让项下与其相关事项取得所需的一切的授权、许可和批准。除本协议约定的各项变更手续（即在市场监督管理部门的变更登记/备案手续），转让方签署、交付和履行本协议并完成本次股权 |
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转让项下与其相关事项无需获取任何第三方的同意、授权、许可或批准。本协议在经转让方签署后将构成对其合法、有效和具有约束力的义务，并可按照相应交易文件的条款对其强制执行。
(2) | The Transferor has the capacity for civil rights and conducts in accordance with applicable laws to execute, deliver and perform this Agreement. The Transferor has obtained all necessary authorizations, permits and approvals in connection with its execution, delivery and performance of the matters regarding the Transferor under the Equity Transfer. Except for the procedures for amendments as set forth in this Agreement (i.e. amendment registration/filing with the market supervision authority), the Transferor is not required to obtain any consent, authorization, permit or approval from any third party for the Transferor’s execution, delivery and performance of this Agreement or completion of the matters regarding the Equity Transfer. This Agreement will constitute a legal, valid and binding obligation of the Transferor, and will be enforceable against the Transferor in accordance with the provisions in the relevant transaction documents. |
(3) | 转让方签署、交付和履行本协议并完成本次股权转让，不会违反适用法律或任何政府指令，不会违反其章程或其他组织文件（如有），不会违反对其有约束力或适用的法院判决、裁定、仲裁庭裁决、行政决定、命令，不会违反转让方作为签约一方的任何文件、合同或协议，或对其或其资产具有约束力的任何文件、合同或协议，不会导致任何第三方向转让方提出任何权利请求。 |
(3) | The execution, delivery and performance of this Agreement and the completion of the Equity Transfer by the Transferor will not violate any applicable laws or any governmental orders, the articles of association or other organizational documents (if any), or any binding court judgments, rulings, arbitration tribunal awards, administrative decisions or orders binding upon or applicable to it, or any documents, contracts or agreements to which the Transferor is a party or any documents, contracts or agreements binding upon the Transferor or its assets, nor will it result in any third party to claim against the Transferor. |
(4) | 目标股权没有且不涉及任何国有资产，根据任何国有资产监管法律无需为完成本次股权转让而取得国有资产审批/备案手续、任何形式的国有资产评估程序，或进行任何国有资产产权交易所进场交易的相关程序。 |
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(4) | The Target Equity does not involve any state-owned assets. Therefore, according to any law on the supervision and administration of state-owned assets, there is no need to obtain state-owned assets approval/filing procedures, any form of state-owned assets appraisal procedures, or relevant procedures to conduct any trading at any state-owned assets property exchange. |
(5) | 转让方是目标股权的合法持有人，其获得目标股权的对价均已经按时足额支付，且其持有的目标股权对应的注册资本已足额缴纳，转让方不存在迟延缴纳目标股权注册资本、虚假出资或抽逃出资的行为。转让方持有的目标股权上，不存在任何现有或潜在的争议、纠纷、诉讼、仲裁、索赔、强制执行或其他行政程序或法律程序。转让方持有的目标股权上不存在任何代持安排，亦不存在质押、抵押等担保权益或任何种类的权利负担，或任何其他第三方权利或权益。转让方对其持有的目标股权具有完全和排他的所有权和处分权，并具有依法转让其所持目标股权的权利。 |
(5) | The Transferor is the lawful holder of the Target Equity, and has fully paid the consideration for the Target Equity, and the registered capital corresponding to the Target Equity has been fully paid. The Transferor has not delayed payment of the registered capital for the Target Equity, committed false capital contribution or withdrawn capital contribution. There are no existing or potential disputes, disagreements, litigations, arbitrations, claims, enforcements or other administrative or legal proceedings in connection with the Target Equity. The Target Equity is not subject to any nominee holding arrangement, pledge, mortgage or other security interest or encumbrance of any kind, or any other third party right or interest. The Transferor has full and exclusive ownership and right to dispose of the Target Equity, and has the right to transfer the Equity Interest pursuant to law. |
3.1.2 | 受让方特此向转让方作出如下陈述与保证，并确认转让方对本协议的签署依赖于该等陈述与保证直至交割日（含交割日）在所有方面的真实、准确、完整和不具有误导性： |
3.1.2 | The Transferee hereby makes the following representations and warranties to the Transferor and acknowledges that the Transferor has entered into this Agreement in reliance on these representations and warranties being true, accurate, complete |
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and not misleading in all respects as of the Closing Date (inclusive):
(1) | 授权和有效性。受让方系依照中国法律合法成立和有效存续的实体。 |
(1) | Authority and Validity. The Transferee is an entity duly organized and validly existing under the laws of China. |
(2) | 受让方根据适用法律具备民事权利能力和民事行为能力签署、交付和履行本协议项下与其相关事项；受让方已经就其签署、交付和履行本次股权转让项下与其相关事项取得所需的一切的授权、许可和批准。除本协议约定的各项变更手续（即在市场监督管理部门的变更登记/备案手续），受让方签署、交付和履行本协议并完成本次股权转让项下与其相关事项无需获取任何第三方的同意、授权、许可或批准。本协议在经受让方签署后将构成对其合法、有效和具有约束力的义务，并可按照相应交易文件的条款对其强制执行。 |
(2) | The Transferee has the capacity for civil rights and conducts in accordance with applicable laws to execute, deliver and perform this Agreement. The Transferee has obtained all necessary authorizations, permits and approvals in connection with its execution, delivery and performance of the matters regarding the Transferee under the Equity Transfer. Except for the procedures for amendments as set forth in this Agreement (i.e. amendment registration/filing with the market supervision authority), the Transferee is not required to obtain any consent, authorization, permit or approval from any third party for the Transferee’s execution, delivery and performance of this Agreement or completion of the matters regarding the Equity Transfer. This Agreement will constitute a legal, valid and binding obligation of the Transferee, and will be enforceable against the Transferee in accordance with the provisions in the relevant transaction documents. |
(3) | 受让方签署、交付和履行本协议并完成本次股权转让，不会违反适用法律或任何政府指令，不会违反其章程或其他组织文件（如有），不会违反对其有约束力或适用的法院判决、裁定、仲裁庭裁决、行政决定、命令，不会违反受让方作为签约一方的任何文件、合同或协议，或对其或其资产具有约束力的任何文件、合同或协议，不会导致任何第三方向受让方提出任何权利请求。 |
(3) | The execution, delivery and performance of this Agreement and the completion of the Equity Transfer by the Transferee will not violate any applicable laws or any governmental orders, the articles of association or other organizational documents (if any), or any binding court judgments, |
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rulings, arbitration tribunal awards, administrative decisions or orders binding upon or applicable to it, or any documents, contracts or agreements to which the Transferee is a party or any documents, contracts or agreements binding upon the Transferee or its assets, nor will it result in any third party to claim against the Transferee.
(4) | 本次股权转让系受让方的真实意思表示，受让方确认其用以购买目标股权的资金来源合法、合规，受让方具备履行本协议项下支付义务所需的财务能力。 |
(4) | The Equity Transfer is the expression of its true intentions. The Transferee confirms that the source of funds used to purchase the Target Equity is legal and compliant, and the Transferee has the financial capacity as required by the payment obligations hereunder. |
3.2承诺
3.2Covenants
3.2.1 | 自签署日至交割日，除实施本协议项下的本次股权转让外，未经受让方事先书面同意，转让方不得转让、出售、质押或以其他任何方式处置目标股权，包括但不限于不得在其上设置任何权利负担；且转让方不得实施任何可能对目标股权或本协议或其他交易文件的履行有重大不利影响的行为； |
3.2.1 | From the Execution Date to the Closing Date, except for the Equity Transfer hereunder, without the prior written consent of the Transferee, Transferor shall not transfer, sell, pledge or otherwise dispose of the Target Equity, including without limitation not creating any encumbrance thereon; and the Transferor shall not take any action that may have any material adverse effect on the Target Equity or the performance of this Agreement or other Transaction Documents; |
3.2.2 | 转让方应协助并配合标的公司及受让方就本次股权转让完成在市场监督管理部门的变更登记/备案手续，该等变更应体现本次股权转让安排以及相应的股东变更安排（”股权转让变更登记”）。转让方承诺，在其全额收到第一期股权转让价款（即[*****] ）的前提下，其应尽商业合理努力协助并配合标的公司及受让方使得股权转让变更登记手续在下述日期孰早之日前完成：（1）转让方全额收到第一期股权转让价款（即[*****] ）后第[*****] 届满之日；（2）2022年10月31日。转让方应在收到第一期股 |
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权转让价款（即 [*****] ）后的[*****] 内向公司及受让方提供股权转让变更登记中需转让方提供的文件和资料。
3.2.2 | The Transferor shall assist and cooperate with the Company and the Transferee in completing the amendment registration/filing procedures with the relevant market supervision and administration authority; such change shall reflect the arrangement for the Equity Transfer and the arrangement for change of shareholders (the “Amendment Registration of Equity Transfer”). The Transferor covenants and undertakes that, in the event that it has received the first tranche of the Equity Transfer Price (i.e. [*****]) in full, it shall make commercially reasonable efforts to assist and cooperate with the Company and the Transferee to ensure the Amendment Registration of Equity Transfer to be completed prior to the earlier of (1) the expiration of the [*****] after the date on which the Transferor has received the first tranche of the Equity Transfer Price (i.e. [*****]) in full; or (2) October 31, 2022. The Transferor shall, within [*****] after receiving the first tranche of the Equity Transfer Price (i.e. [*****] in full), provide the Company and the Transferee with the documents and materials required for the Amendment Registration of Equity Transfer. |
3.2.3 | [*****] |
第四条先决条件
IV.Conditions Precedent
受让方履行其在本协议项下的交割义务应以交割条件满足日或之前，下列条件全部得到满足、确认或被受让方以书面形式予以豁免为先决条件（”先决条件”）：
The obligations of the Transferee to carry out the Closing hereunder shall be conditional upon the satisfaction, confirmation or written waiver by the Transferee of all of the following conditions on or prior to the date on which the Conditions Precedent are satisfied (the “Conditions Precedent”):
4.1双方同意并正式签署本协议；
4.1 | Agreement and duly execution by the Parties of this Agreement; |
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4.2本次股权转让以及本次股权转让项下目标股权全部权利、权属和权益（包括目标股权享有A+轮投资者根据股东协议（或股东协议后续不时修订或者修改）享有相应的股东的权利）的一并转让取得标的公司股东会决议通过；
4.2 | The Equity Transfer and the transfer of all rights, titles and interests in, to and under the Target Equity of the Equity Transfer (including the Target Equity shall be entitled to the relevant shareholders’ rights as a Series A + Investor with respect to the Target Equity in accordance with the Shareholders’ Agreement, as amended or modified from time to time subsequently) have been approved by the shareholders’ meeting of the Company; |
4.3 | 转让方已经就其签署、交付和履行本次股权转让项下与其相关事项取得所需的一切的授权、许可和批准，包括但不限于转让方或关联方的股东会决议和/或董事会决议等。 |
4.3 | The Transferor has obtained all necessary authorizations, permits and approvals in connection with its execution, delivery and performance of the matters regarding the Transferor under the Equity Transfer, including without limitation the shareholders resolutions and/or board resolutions of the Transferor or its Affiliates. |
4.4转让方在本协议项下的陈述与保证自签署日至交割日持续保持是真实、完整、准确和不具有误导性的；转让方没有违反本协议约定的行为；
4.4 | The representations and warranties of the Transferor under this Agreement remain true, complete, accurate and non-misleading as of the Execution Date to the Closing Date; the Transferor has not committed any act in violation of this Agreement; |
4.5截至交割日，不存在限制、禁止本次股权转让的任何行动、程序，不存在任何尚未取得的与本次股权转让有关的许可、批准或第三方许可；
4.5 | As of the Closing Date, there are no actions or procedures restricting or prohibiting the Equity Transfer, and there are no outstanding permits, approvals or third party permits in connection with the Equity Transfer; |
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4.6转让方向受让方出具书面付款通知，记载收取股权转让价款的转让方指定的银行账户；
4.6 | The Transferor’s issuance of a written payment notice to the Transferee reflecting the payment of the Equity Transfer Price to the bank account designated by the Transferor; |
4.7转让方向受让方出具书面交割通知，承诺本第四条规定的先决条件全部得到满足。
4.7 | The Transferor’s issuance of a written closing notice to the Transferee undertaking the satisfaction of all the Conditions Precedent set forth in this Article IV. |
第五条赔偿
V.INDEMNIFICATION
5.1赔偿
若一方或其关联方、董事、代表以及前述各主体的继承人和受让人（合称为”被赔偿方”）因下述事项遭受任何损失，另一方应对被赔偿方进行赔偿、保护并使其免受因下述原因而遭受或承担任何损失、损害、责任、成本或支出，包括但不限于合理的诉讼、仲裁费用和律师费，并使被赔偿方的权益恢复至该等事件未发生时的状态：
5.1INDEMNIFICATION
If a Party or its Affiliates, directors, representatives, successors and assignees (collectively, the “Indemnified Party”) suffers any losses arising from the following matters, the other Party shall indemnify, protect and hold the Indemnified Party harmless from and against any loss, damage, liability, cost or expense, including without limitation reasonable litigation or arbitration costs and attorneys’ fees, incurred or incurred by the Indemnified Party, and shall restore the Indemnified Party’s right and interest to that state if such events had not occurred, as a result of:
5.1.1 | 另一方在本协议项下中所作的任何陈述或保证不真实、不准确、不完整或存在误导性； |
5.1.1 | Any of the representations or warranties made by the other Party under this Agreement is untrue, inaccurate, incomplete or misleading; |
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5.1.2 | 另一方违反本协议规定的应由该方履行的任何承诺或义务。 |
5.1.2 | The other Party is in breach of any covenant or obligation to be performed by such Party pursuant to this Agreement. |
第六条终止
VI.Termination
6.1 | 合同解除的情形 |
6.1 | Circumstances of Termination of the Contract |
本协议可以通过下列方式解除：
This Agreement may be terminated in the following ways:
6.1.1. | 本协议双方共同以书面协议解除并确定解除生效时间； |
6.1.1 | The Parties shall terminate this Agreement and determine the effective date of such termination by mutual written agreement; |
6.1.2 | 受让方超过本协议约定的付款日期延迟付款超过 [*****]，且经转让方催告后[*****] 仍未付款的；转让方有权发出书面通知单方解除本协议； |
6.1.2 | The Transferee is late for the payment described under this Agreement for more than [*****], and still fails to complete such payment within another [*****] after being requested by the Transferor thereafter, the Transferor has the right, at its sole discretion, to terminate this Agreement by a written notice; |
6.1.3 | 在受让方全额支付第一期股权转让价款（即 [*****]）的前提下，股权转让变更登记未在本协议第3.2.2条约定的期限内完成且延期超过 [*****] ，经受让方催告后 [*****] 仍未完成的；受让方有权发出书面通知单方解除本协议。 |
6.1.3 | In the event that the Transferor has received the first tranche of the Equity Transfer Price (i.e. [*****]) in full), if the Amendment Registration of Equity Transfer has not been completed within [*****] after the respective period as set forth in this Section 3.2.2, and has not been completed within another [*****] after being requested by the Transferee thereafter, the Transferee has the right, at its sole discretion, to terminate this Agreement by a written notice. |
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6.2合同解除的效力
6.2 | Effect of Termination of Contract |
6.2.1. | 除非本协议另有约定，当本协议依上述之第6.1项任何一款解除后，本协议即无效力，但本协议第五条至第十条仍然有效。 |
6.2.1 | Unless otherwise provided for in this Agreement, if this Agreement is terminated according to any of the provisions set forth in Section 6.1 above, this Agreement shall have no effect upon termination, except for Article V to Article X hereof. |
6.2.2. | 本协议解除后，受让方无需支付任何股权转让价款，若受让方已支付股权转让价款的，转让方应自本协议解除之日起 [*****] 内向受让方返还已支付的股权转让价款；如本协议解除之前股权转让变更登记已完成，受让方应促使标的公司于本协议解除之日起[*****] 内在相关市场监督管理部门完成相应的变更登记/备案手续，且受让方应促使该等变更确保转让方恢复为目标股权的登记持有人并享有股东协议下转让方原享有的全部股东权利。除本协议另有约定外，本协议解除后，本协议双方应本着公平、合理、诚实信用的原则在 [*****] 内或者双方另行确认的其他期限内尽最大努力恢复本协议签订前的状态。 |
6.2.2 | Upon termination of this Agreement, the Transferee is not required to pay any Equity Transfer Price. If the Transferee has already paid the Equity Transfer Price, the Transferor shall refund the paid Equity Transfer Price to the Transferee within [*****] after the termination of this Agreement; If the Amendment Registration of Equity Transfer is completed before the termination of this Agreement, the Transferee shall, within [*****] after the termination, cause the Company to complete the amendment registration/filing procedures with the relevant market supervision and administration authority, which shall reflect that the Transferor reverts to the duly registered holder of the Target Equity and is entitled to all of its shareholder rights and benefits under the Shareholders’ Agreement. Unless otherwise provided for in this Agreement, after the termination of this Agreement, the Parties shall, based on the principles of fairness, reasonableness, honesty and good faith, make their best efforts to resume the status before the execution of this Agreement within [*****] or other time limit as otherwise agreed by both Parties. |
6.2.3. | 本协议解除后，除本协议另有约定外，双方在本协议项下的权利和义务即告终止，但本协议的解除不影响任何一方在本协议项下获得赔偿或补 |
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偿的权利。
6.2.3 | Unless otherwise provided for in this Agreement, the rights and obligations of the Parties under this Agreement shall forthwith terminate upon the termination of this Agreement, provided that the termination of this Agreement shall not affect any Party’s rights to obtain indemnification or compensation under this Agreement. |
第七条不可抗力
VII.Force Majeure
7.1 | 若由于地震、台风、洪水、火灾、流行病、战争、暴乱、敌对行动、公众动乱、罢工以及其他任何无法预见并且是受影响方无法防止亦无法避免的不可抗力事件（统称为”不可抗力”），而直接或间接致使本协议任何一方不能履行或不能完全履行本协议时，则受上述不可抗力影响的一方不对此不履行或部分履行承担责任，前提是该受影响方须立即毫不迟延地按照本协议约定的通知方式向另一方发出书面通知，并须在发出该书面通知后[*****] 内向另一方提供不可抗力事件的详情，解释其此种不能履行、部分不能履行或需要迟延履行的原因。 |
7.1 | In the case of earthquakes, typhoons, floods, fires, flu, wars, riots, hostilities, public disturbances, strikes or any other events of force majeure that cannot be predicted and are unpreventable and unavoidable by the affected Party (collectively referred to as “Force Majeure”), which directly or indirectly causes the failure of either Party to perform or completely perform this Agreement, then the Party affected by such Force Majeure shall not be held liable for such non-performance or partial performance, provided that the affected Party shall immediately and without delay give the other Party written notice in accordance with the methods set forth herein, and shall provide details of the event of Force Majeure to the other Party within [*****] after sending out such written notice, explaining the reasons for such failure of, partial or delay of performance. |
7.2 | 若主张不可抗力的一方未能根据以上规定通知另一方并提供适当证明，其不得免于承担未能履行其在本协议项下义务的责任。受不可抗力影响的一方应作出合理的努力，以减低该不可抗力造成的后果，并在该不可抗力终止后尽快恢复履行所有有关义务。如受不可抗力影响的一方在因 |
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不可抗力而暂免履行义务的理由消失后未有恢复履行有关义务，该方应就此向另一方承担责任。
7.2 | If such Party claiming Force Majeure fails to notify the other Party and furnish it with proof pursuant to the above provision, such Party shall not be excused from non-performance of its obligations under this Agreement. The Party so affected by the event of Force Majeure shall use reasonable efforts to minimize the consequences of such Force Majeure and to promptly resume performance hereunder whenever the causes of such excuse are cured. Should the Party so affected by the event of Force Majeure fail to resume performance hereunder when the causes of such excuse are cured, such Party shall be liable to the other Party. |
7.3 | 不可抗力发生时，双方应立即互相协商，以求达致公平解决方案，并须作出一切合理努力，尽量减低该不可抗力造成的后果。 |
7.3 | In the event of Force Majeure, the Parties shall immediately consult with each other to find an equitable solution and shall use all reasonable endeavors to minimize the consequences of such Force Majeure. |
第八条通知
VIII.Notices
8.1 | 本协议要求的或根据本协议做出的任何通知、请求、要求和其他通信往来应以书面形式送达有关方如附件一所示地址。 |
8.1 | Any notice, request, demand and other correspondences required or given by this Agreement shall be made in writing and sent to the addresses of relevant Parties set forth in Appendix A. |
8.2 | 该等通知或其他通信视为有效送达的日期按如下方式确定：(i) 面呈的通知在被通知人签收或拒收时视为送达；(ii) 可以邮寄方式进行的通知均应采用挂号快件或特快专递的方式进行，挂号快件应在投寄后第 [*****] 视为送达，特快专递应在被通知地址签收或拒收时视为送达；(iii) 经电子邮箱发送的通知自该邮件到达收件人邮箱系统之时视为已实际送达。 |
8.2 | The dates on which such notices or other correspondences shall be deemed to have been effectively given shall be determined as follows: (i) notices delivered in person shall be deemed delivered upon receipt or refusal by the receiving Party; (ii) notices that may be sent by post shall be sent by registered mail or |
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express mail, and [*****] after the registered mail is posted, or upon receipt or refusal at the address of the receiving Party, if delivered by express mail; (iii) notices sent by email shall be deemed effectively delivered upon delivery of such email into the email system of the recipients.
8.3 | 若任何一方的上述通讯地址或通知方式发生变化（”变动方”），变动方应当在该变更发生后的 [*****] 内通知其他方。变动方未按约定及时通知的，变动方应承担由此造成的损失。 |
8.3 | If either Party changes the above mailing address or contact information (the “Changing Party”), it shall notify the other Party within [*****] after the occurrence of such change. If the Changing Party fails to notify the other Party of the same in a timely manner, it shall bear the losses arising therefrom. |
第九条保密
IX.Confidentiality
9.1 | 双方应就其签署本协议及其他交易文件的事实、本协议及其他交易文件的条款以及双方就签署和履行本协议及其他交易文件而交换的任何信息予以保密，不得向任何第三方披露前述信息。 |
9.1 | The Parties shall maintain confidential the fact that the Parties have executed this Agreement and the other Transaction Documents, the terms hereof and thereof and any information exchanged by the Parties in connection with the execution and performance of this Agreement and the other Transaction Documents, and shall not disclose to any third party the aforementioned information. |
9.2 | 上述限制不适用于：(i) 该信息在披露时已为公众所知悉；(ii) 为履行本协议项下交易之目的，一方向同意履行保密义务的其关联方、董事、股东、管理人员、员工、会计师、顾问、代表及代理人所披露；(iii) 一方按照对其有管辖权的政府部门的要求而披露，披露之前一方先以书面形式将披露的保密信息的确切性质通知其他方。如果可行，在作出上述披露前的合理时间内，披露方应与其他方就该披露进行协商，并就其他方合理要求尽可能对该披露寻求保密处理。 |
9.2 | The above restrictions shall not apply to: (i) information which is already known to the public at the time of disclosure; (ii) information disclosed by a Party to its Affiliates, directors, shareholders, officers, employees, accountants, consultants, |
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representatives and agents who agree to comply with the obligations of confidentiality for the purpose of implementing the transactions contemplated hereby; (iii) information disclosed by a Party in accordance with the requirements of any competent governmental authority; provided, however, that prior to such disclosure, such Party shall have notified the other Parties in writing of the exact nature of the Confidential Information to be disclosed. If practicable, within the reasonable time before such disclosure, the disclosing Party shall consult with the other Parties regarding such disclosure and seek confidential treatment for such disclosure as much as possible upon the reasonable request of the other Parties.
9.3 | 不论本协议是否变更、解除或终止，本条均有法律效力。 |
9.3 | This Article shall have legal effect irrespective of changes to, and rescission or termination of, this Agreement. |
第十条其他条款
X.Miscellaneous Provisions
10.1生效日
本协议自双方正式签署（其中企业法人或其他非自然人实体须加盖公章）后于本协议文首所载日期起生效，构成对双方合法、有效及有约束力的权利及义务，可依照本协议的条款强制执行。
10.1 | Effective Date |
This Agreement shall become effective on the date first written above upon due execution by the Parties (corporate legal person or other non- natural person entity shall affix official seal). This Agreement shall constitute the legal, valid and binding rights and obligations of the Parties, enforceable in accordance with its terms.
10.2适用法律
本协议的签署、生效、履行、解释、终止以及争议的解决，均应适用中国法律。为本协议目的，本协议中提及的”中国法律”均指中华人民共和国法律，不包括香港特别行政区、澳门特别行政区和台湾地区法律。
10.2 | Governing Law |
The execution, effectiveness, performance, interpretation, termination of this Agreement and the resolution of disputes hereunder shall be governed by the
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laws of China. For the purposes of this Agreement, the laws of China herein referred to shall mean the laws of the People’s Republic of China, and not include any laws of Hong Kong, Macao and Taiwan regions of China.
10.3争议解决
任何因本协议或其解释、违反、终止或有效性而引起的、或与之有关的争议、争论或申诉，均应提交至位于北京的中国国际经济贸易仲裁委员会，按照申请仲裁时该会现行有效的仲裁规则进行仲裁，仲裁地点在北京。仲裁裁决是终局的，对双方均有约束力。在根据本条仲裁程序进行期间，除仲裁事项之外，本协议应在所有方面保持全部效力。除仲裁事项所涉及的义务之外，双方应继续履行其在本协议项下的义务及行使其在本协议项下的权利。
10.3 | Dispute Resolution |
Any dispute, controversy or claim arising out of or relating to this Agreement, or the interpretation, breach, termination or validity hereof shall be submitted to China International Economic and Trade Arbitration Commission (“CIETAC”) in Beijing for arbitration in accordance with its arbitration rules in effect at the time of applying for arbitration. The arbitration shall be conducted in Beijing. The arbitration award shall be final and binding upon both Parties. During the course of arbitration proceedings under this Section, this Agreement shall remain in full force and effect in all respects except for the matter (s) under arbitration. Except for the obligations involved in the matter (s) under arbitration, the Parties shall continue to perform their obligations and exercise their rights under this Agreement.
10.4简版协议
双方同意为便于办理本次股权转让相关的政府程序，双方应善意协商另行签订与本协议项下事项有关的其他任何合同、协议或文件（包括但不限于根据市场监督管理部门的要求签署的简版股权转让协议及其他文件，如适用），但该等合同、协议或文件与本协议有任何矛盾或不一致之处，以本协议为准。
10.4 | Short Form Agreement |
The Parties agree that for the convenience of the government procedures relating to the Equity Transfer, the Parties shall negotiate in good faith any other contract, agreement or document relating to the matters hereunder (including,
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without limitation, a short form equity transfer agreement and other documents, if applicable, executed as required by the market supervision and administration authority) to be separately entered into by the Both Parties. In the event of any contradiction or discrepancy between any of such contract, agreement or document and this Agreement, this Agreement shall prevail.
10.5整体协议
本协议是双方之间就本协议所涉及的事项达成的整体协议，取代本协议签署前所作的一切口头或书面的，明示或默示的协议、约定和陈述。
10.5 | Entire Agreement |
This Agreement shall constitute the entire agreement between the Parties with respect to the matters covered herein and shall supersede all oral or written, express or implied agreements, covenants and representations made prior to the execution of this Agreement.
10.6弃权
协议任何一方未行使或迟延行使本协议及其修改或补充协议所规定的任何权利或救济的行为，都不应构成或被视为弃权行为；任何单一或部分行使上述权利和救济的行为也不应妨碍对该权利和救济的进一步行使。
10.6 | Waiver |
No failure or delay on the part of either Party hereto to exercise any right or remedy provided for in this Agreement or any amendment or supplement hereto shall operate or be construed as a waiver of such right or remedy, nor shall any single or partial exercise of such right or remedy preclude any further exercise thereof or the exercise of any other right or remedy.
10.7可分割性
如果本协议中任何规定被判定为不合法、无效、或不具有可强制执行性，则双方同意该项规定应当在可行的最大限度内予以强制执行，以实现双方的意图，且本协议所有其他规定的有效性、合法性和可强制执行力均不受到任何损害。如果为了使双方的意图生效而有此必要的话，双方将以诚信协商修订本协议，以尽可能贴近上述意图且能够强制执行的文字来取代不可强制执行的文字。
10.7 | Severability |
If any provision of this Agreement shall be held to be illegal, invalid, or
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unenforceable, the Parties agree that such provision shall be enforced, to the extent possible, so as to give effect to the intent of the Parties, and the validity, legality and enforceability of all other provisions of this Agreement shall not in any way be impaired. To the extent necessary to give effect to the intent of the Parties, the Parties shall negotiate in good faith to amend this Agreement by replacing the unenforceable provision with an enforceable provision that comes as close as possible to the intent of the Parties.
10.8税费承担
除非本协议另有规定，本次股权转让所涉及的各项税费按照中国法律的规定应由一方承担的，由该方自行承担并缴纳。受让方没有义务支付或代扣代缴转让方根据相关法律法规应为本协议项下的交易所需支付的税负。
办理股权转让变更登记所涉及的费用由标的公司承担并支付。任何一方要求就本次股权转让开展的评估、审计的，所发生的费用由其自行承担。
10.8 | Taxes and Fees |
Unless otherwise provided herein, all taxes involved in this Equity Transfer that should be borne by one Party according to the laws of China shall be borne and paid by the Party itself. The Transferee shall have no obligations to pay or withhold any tax of any nature that is required by the applicable Laws to be paid by the Transferor in connection with the transactions contemplated under this Agreement.
Any fees involved in handling the Amendment Registration of Equity Transfer shall be borne and paid by the Company. If either Party requests to conduct any evaluation or auditing on this Equity Transfer, the fees incurred thereof shall be borne by itself.
10.9转让和继承
本协议对双方当事人的继承人和受让人有效，上述继承人和受让人可享有本协议项下的权益并承担本协议项下的义务。未经另一方事先书面同意，任何一方均不得让与或转让其本协议项下的任何权利或义务。
10.9 | Assignment and Succession |
This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Parties and such successors and assigns may assume the obligations under this Agreement. Neither Party may assign or transfer any of
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its rights or obligations under this Agreement without the prior written consent of the other Party.
10.10修改和补充
双方应以书面协议的方式对本协议进行修改和补充。经过双方签字的有关本协议的修改协议和补充协议是本协议的组成部分，具有与本协议同等的法律效力。
10.10 | Amendments and Supplements |
Any amendments and supplements to this Agreement shall be in writing. The amendment agreements and supplementary agreements that have been signed by the Parties and that relate to this Agreement shall be an integral part of this Agreement and shall have the same legal validity as this Agreement.
10.11附件
本协议的附件是本协议不可分割的组成部分，与本协议正文互为补充具有同等的法律效力，本协议附件与本协议冲突的，以本协议正文约定为准且须进行相应修改。
10.11 | Appendix |
The Appendix to this Agreement shall be an integral part of this Agreement and shall be complementary to the text of this Agreement and shall have the same legal validity. In the event of any conflict between the Appendix to this Agreement and this Agreement, the provisions of the text of this Agreement shall prevail and be modified accordingly.
10.12关联方
为本协议之目的，就任何特定的主体而言，其”关联方”系指任何直接或间接控制该主体，或直接或间接被该主体控制，或直接或间接与该主体共同受控制的任何其他主体。为免疑义，任何自然人的”关联方”还包括该自然人的近亲属，包括配偶、父母、祖父母、外祖父母、兄弟姐妹及其配偶、子女及其配偶、孙子女及其配偶、外孙子女及其配偶、配偶的父母、配偶的兄弟姐妹及其配偶、以该自然人及/或其近亲属作为受益人或全权信托对象的任何信托的受托人，以及由上述人员控制的任何主体也应视为该自然人的关联方。
10.12 | Affiliates |
For the purpose of this Agreement, an “Affiliate” of any specified Person means
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any other Person that directly or indirectly Controls, is Controlled by, or is under common Control with, such specified Person. For the avoidance of doubt, the “Affiliate” of a natural person shall also include such natural person’s immediate family, including his or her spouse, parents, grandparents, siblings and their spouses, children and their spouses, grandchildren and their spouses, spouses’ parents, spouses’ brothers and sisters and their spouses, trustees of any trust of which such natural person and/or his or her immediate family is a beneficiary or discretionary object, and any Person Controlled by any of the aforesaid persons, shall also be deemed as an Affiliate of such natural person.
10.13语言和文本
本协议用中英文双语书就，如两种语言文本出现任何不一致的，应以中文文本为准。本协议一式四份，每份具有同等法律效力。
10.13 | Language and Counterparts |
This Agreement is written both in Chinese and English versions. In case of any discrepancy between the two language versions, the Chinese version shall prevail. This Agreement is made in four copies, and each copy shall have the same legal effect.
（以下无正文）
(The remainder of this page is intentionally left blank)
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此证，本协议的每一方已促使其正式授权的代表于文首所载的日签订本协议，以昭信守。
IN WITNESS WHEREOF, each Party hereto has caused this Agreement to be executed by its duly authorized representative as of the date and year first above written.
凯信生物医药（无锡）有限公司（公章）
CASI Biopharmaceuticals (Wuxi) Co., Ltd. (Seal)
签署：/s/ Wei Zhang
______________________
Signature:
姓名：WEI ZHANG
Name: WEI ZHANG
职务：法定代表人
Title: Legal Representative
《凯信生物医药（无锡）有限公司与深圳嘉道功程股权投资基金（有限合伙）
关于转让合源生物科技（天津）有限公司股权之股权转让协议》签署页
Signature Page
此证，本协议的每一方已促使其正式授权的代表于文首所载的日期签订本协议，以昭信守。
IN WITNESS WHEREOF, each Party hereto has caused this Agreement to be executed by its duly authorized representative as of the date and year first above written.
深圳嘉道功程股权投资基金（有限合伙）（公章）
Shenzhen Jiadao Gongcheng Equity Investment Fund (Limited Partnership) (Seal)
签署：/s/ Kung Hung Ka
______________________
Signature:
姓名：
Name: Kung Hung Ka
职务：
Title: Authorized Representative
《凯信生物医药（无锡）有限公司与深圳嘉道功程股权投资基金（有限合伙）
关于转让合源生物科技（天津）有限公司股权之股权转让协议》签署页
Signature Page
附件一 通知信息
Appendix A Notice Information
转让方 Transferor | 地址：中国北京市朝阳区 建国路81号华贸中心写字楼一座17层1701-1702 Address: 1701-1702 Tower 1,China Central Place, No. 81 Jianguo Street, Chaoyang district, Beijing, 100025, China 电话：[*****] Telephone: [*****] 邮箱：[*****] E-mail: [*****] 联系人：[*****] Contact: [*****] |
受让方 Transferee | 地址：中国广州市天河区临江大道59号天銮广场A6栋3902室 Address: Room 3902, A6 Building, Tianluan Guangchang, No.59 Linjiang Avenue, Tianhe district, Guangzhou, China. 电话：[*****] Telephone: [*****] 邮箱：[*****] E-mail: [*****] 联系人：[*****] Contact: [*****] |
附件一Appendix A
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
Date: November 14, 2022 |
|
| |
| |
/s/ Wei-Wu He | |
Wei-Wu He |
|
Chief Executive Officer |
|
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
Date: November 14, 2022 |
|
| |
| |
/s/ Larry (Wei) Zhang | |
Larry (Wei) Zhang |
|
Principal Financial Officer |
|
Exhibit 32.1
CERTIFICATION BY CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of CASI Pharmaceuticals, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Wei-Wu He, as Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the dates and periods covered by the Report. |
The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.
Date: November 14, 2022 | /s/ Wei-Wu He |
| Wei-Wu He |
| Chief Executive Officer |
Exhibit 32.2
CERTIFICATION BY PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of CASI Pharmaceuticals, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Larry (Wei) Zhang, as Principal Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the dates and periods covered by the Report. |
The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.
Date: November 14, 2022 | /s/ Larry (Wei) Zhang |
| Larry (Wei) Zhang |
| Principal Financial Officer |