GYRE THERAPEUTICS, INC.

Gyre Pharmaceuticals’ Properties

Owned Properties

Gyre Pharmaceuticals has land use right certificates for two parcels of land in Shunyi District, Beijing, PRC and Cangzhou, Hebei province, PRC with an aggregate site area of 66,559 square meters and building ownership certificates for eight properties with an aggregate gross floor area of 22,169 square meters. Gyre Pharmaceuticals’ two production centers are in Beijing, PRC and Cangzhou, PRC.

Leased Properties

Gyre Pharmaceuticals leases 26 properties in the PRC. Among Gyre Pharmaceuticals’ 26 leased properties, 11 are used as offices, and 15 are used as employee dormitories.

• The Merger may be completed even though material adverse changes may result from the announcement of the Merger, industry-wide changes or other causes.
• We and/or our board of directors may become involved in securities litigation or stockholder derivative litigation in connection with the Merger, and this could divert the attention of our management and harm our business, and insurance coverage may not be available or sufficient to cover all related costs, expenses, and damages.
• We are substantially dependent on our remaining employees, key contractors and consultants to facilitate the consummation of the Merger.
• Risks Related to Our Financial Condition and Capital Requirements
• Our business is significantly dependent on the sales of ETUARY®, one of our marketed products in the PRC, amid a competitive landscape, and there is a possibility that we may not be able to sustain or boost the sales volume, pricing, and profitability of ETUARY®.
• The future of our business and financial outcomes is largely contingent on the progress and success of our product candidates in clinical and preclinical stages, such as ETUARY® for future indications in the PRC, F573 in the PRC, and Hydronidone in the PRC and in additional markets beyond the PRC. We face the risk of not being able to finalize their clinical development, secure necessary regulatory approvals, or accomplish their market launch successfully, or we may encounter substantial setbacks in these processes.
• To support the growth of our research and development activities and operations, we require further funding, which might not be obtainable on favorable terms or could be entirely unavailable. If we fail to secure the needed capital at the critical time, we might have to postpone, scale down, or halt some of our development projects, market introduction initiatives, or other operational aspects.
• Raising additional funds by issuing securities or through licensing arrangements may cause dilution to stockholders, restrict our operations or require us to relinquish proprietary rights.
• We may grow our business in part through acquisitions, which may increase our capital requirements, dilute our stockholders, cause us to incur debt or assume contingent liabilities and have material adverse effect on our ability to manage our business, and we may fail to successfully complete such acquisitions or enhance post-acquisition performances in the future.
• Our high gross margin during the years ended December 31, 2025 and 2024 may not be sustainable.
• Our five largest customers accounted for a substantial amount of our revenue during the years ended December 31, 2025 and 2024, which subjects us to concentration risks.
• We may face risk regarding the obsolescence of our inventories.
• If our intangible assets are impaired, our results of operations and financial condition may be adversely affected.
• We may be subject to credit risk in collecting trade receivables due from our customers.
• We have historically received government grants and have been entitled to preferential tax treatment, but we may not continue to receive government financial incentives in the future.
• Risks Related to Our Business Operations and Product Candidates
• There is a risk that our marketed products in the PRC, ETUARY®, Etorel® and Contiva®, along with any other products that we may receive approval for and commercialize in the future, may not attain sufficient market acceptance among physicians, healthcare facilities, pharmacies, patients, third-party payers, and the broader medical community, which is crucial for their commercial viability.
• Clinical drug development involves a lengthy and expensive process and outcomes are uncertain, and we may not successfully complete clinical trials for drugs under development, including ETUARY® for future indications in the PRC, F573 in the PRC, and Hydronidone in the PRC and in additional markets beyond the PRC, or demonstrate the safety and efficacy of our product candidates to the satisfaction of regulatory authorities.
• Liver fibrosis is an area of our focus, and our key product candidate in this area is Hydronidone. Our future clinical trials for Hydronidone may not be successful.
• If we experience delays or difficulties in the commencement of clinical trials or patient enrollment in clinical trials, our regulatory approvals could be delayed or prevented.
• Our commercialized products, ETUARY®, Etorel® and Contiva®, which are approved and commercialized by us in the PRC, and any other future product, if approved and commercialized, may be excluded or removed from national, provincial or other government-sponsored medical insurance programs.
• We may face pressure to lower the prices of our commercialized products, ETUARY®, Etorel® and Contiva®, which are approved and commercialized by us in the PRC, and any other future product, if approved and commercialized, in order for such products to qualify for medical insurance reimbursement or due to market competition.
• We may fail to win bids to sell our commercialized products, ETUARY®, and any other future products, if approved and commercialized, to PRC public hospitals through the centralized tender process.
• In the future, the policies of centralized volume-based procurement set by the PRC government may cover our commercialized product, ETUARY®, and any other future products, if approved and commercialized, and the prices of such product may decrease, which in turn may have a material adverse impact on our revenue, financial condition and results of operation.
• The true market potential for our product and product candidates may be less than expected. Our expansion could be constrained by the current and emerging number of IPF patients in the PRC, pending the approval and profitable launch of expanded applications for ETUARY® for future indications in the PRC, and our other product candidates.
• We may be unable to conduct effective academic marketing.
• We may fail to maintain a qualified sales and marketing force.
• We may fail to maintain or expand an effective distribution network for our commercialized products, ETUARY®, Etorel® and Contiva®, which are approved and commercialized by us in the PRC, and any other future products, if approved and commercialized, or further expand our distribution channel.
• We may fail to sufficiently and promptly respond to clinical demand and market changes in the pharmaceutical industry.
• Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.
• We have limited insurance coverage, and any claims beyond our insurance coverage may result in substantial costs and a diversion of resources.
• Risks Related to the Discovery, Development and Commercialization of Our Product Candidates
• We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.
• We may be unable to identify, discover, or develop new product candidates, or to identify additional therapeutic opportunities for our product candidates, in order to expand or maintain our product pipeline.
• Results from preclinical or early stage clinical trials, including the results of our preclinical testing and early clinical trials of ETUARY®, Hydronidone and F573, may not be confirmed in later trials or be predictive of the success of later clinical trials.
• Preliminary, “top-line” or interim data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures.
• In conducting drug research and development, we face potential liabilities; in particular, product liability claims or lawsuits that could cause us to incur substantial liabilities.
• Adverse drug reactions and negative results from off-label use of our commercialized products, ETUARY®, Etorel® and Contiva®, which are approved and commercialized by us in the PRC, and any other future products, if approved, could materially harm our business reputation, product brand name, and financial condition and expose us to liability.
• Breakthrough Therapy designation by the FDA for any product candidate may not lead to a faster development or regulatory review or approval process, and it does not increase the likelihood that the product candidate will receive marketing approval.
• Risks Relating to Manufacture and Supply of Our Product and Product Candidates
• Manufacturing pharmaceutical products on a large commercial scale is highly exacting and complex, and we and our third-party manufacturers may encounter problems during the process.
• We and our contract manufacturers will be subject to significant regulation with respect to manufacturing our products, ETUARY®, Etorel® and Contiva®, which are approved and commercialized by us in the PRC, and our product candidates. Delays in completing and receiving regulatory approvals for our and our third-party manufacturing facilities could delay our development plans or commercialization efforts.
• We may experience substantial disruption to our production sites and problems in manufacturing our products, ETUARY®, Etorel® and Contiva®, which are approved and commercialized by us in the PRC, and future products, if approved.
• We may not be able to meet the increasing demand for our commercialized products, ETUARY®, Etorel® and Contiva®, which are approved and commercialized by us in the PRC, and any other future products, if approved and commercialized, maintain adequate manufacturing capacity or successfully manage our anticipated growth.
• Fluctuations in prices of our raw materials and energy supply, as well as other costs associated with our production processes, may have a material adverse effect on us if we are not able to pass the cost increases on to our customers.
• Failure to maintain optimal inventory levels could increase our operating costs or lead to unfulfilled customer orders.
• Risks Related to Our Reliance on Third Parties
• We have established, and may continue to establish, collaborative agreements and strategic partnerships. However, there is no guarantee we will fully achieve the anticipated benefits from these collaborations, alliances, or licensing agreements, and conflicts could emerge with our present or prospective partners.
• Our rights to develop and commercialize some of our product candidates are subject, in part, to the terms and conditions of licenses granted to us by others.
• We rely on third parties to conduct certain aspects of our preclinical studies and any clinical trials, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such tasks or trials.
• If our distributors act in violation of the relevant agreements, or if sub-distributors with whom we have not entered into distribution agreements do not comply with policies and measures that our distributors agree to comply with, our business, prospects and reputation could be materially and adversely affected.
• Because we rely on a limited number of suppliers for certain of our raw materials, we may experience supply interruptions that could harm our ability to manufacture products.
• Risks Related to Employee Matters, Managing Growth and Our Business Operations
• Our ongoing success is reliant on our capacity to retain key executives and to recruit, maintain, and inspire skilled professionals.
• Our employees, principal investigators, consultants and commercial partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements and insider trading.
• We will continue to incur significant costs as a result of operating as a public company, and our management is required to devote substantial time to compliance with regulations related to operating as a public company.
• Increased labor costs negatively affect our operations and have an adverse impact on our profitability.
• Risks Related to Our Intellectual Property
• Should we or our licensors fail to secure, uphold, defend, or extend adequate patent and other intellectual property rights for our products, ETUARY®, Etorel® and Contiva®, which are approved and commercialized by us in the PRC, and any product candidates globally, or if the breadth of these intellectual property rights is insufficient, our ability to effectively compete in our markets could be compromised.
• Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
• The scope of our patent protection may be uncertain, and third-party claims of intellectual property infringement or challenging the inventorship or ownership of our patents may prevent or delay our development and commercialization efforts.
• We may be involved in lawsuits to protect or enforce our patents.
• Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their normal responsibilities.
• Changes in patent law could diminish the value of patents generally, which may impair our ability to protect ETUARY®, Etorel®, Contiva® and our product candidate pipeline.
• We may need to license certain intellectual property from third parties, and such licenses may not be available or may not be available on commercially reasonable terms.
• We may fail to protect our trademarks and trade names, which may negatively affect our ability to build brand recognition in our markets of interest.
• Intellectual property rights may not address all potential threats to our business or competitive advantage.
• Risks Related to Regulatory Approval of Our Product Candidates and Other Compliance Matters