The First Quarterly Report 2022 of Huadong Medicine Co., Ltd.
Stock code: 000963 Stock abbreviation: Huadong Medicine Announcement No.: 2022-022
Huadong Medicine Co., Ltd.
The First Quarterly Report 2022
The Company and all members of the Board of Directors hereby guarantee that the information
presented in this report is authentic, accurate and complete and free of any false records,
misleading statements or material omissions.
Important Declaration:
1.The Board of Directors, Board of Supervisors, directors, supervisors and senior management of
Huadong Medicine Co., Ltd. (hereinafter referred to as the “Company”) hereby guarantee that the
information presented in this report is authentic, accurate and complete and free of any false records,
misleading statements or material omissions, and shall undertake individual and joint legal
liabilities.
2.The Company’s legal representative and the officer in charge of accounting, and head of
accounting department (accounting supervisor) hereby declare and guarantee that the financial
statements in this quarter report are authentic, accurate and complete.
3.Has the first quarterly report been audited?
□ Yes √ No
This report is prepared both in Chinese and English. Should there be any discrepancy between the
Chinese and English versions, the Chinese version shall prevail.
I. Key financial data
(I) Key Accounting Data and Financial Indicators
Whether the Company needs to perform retroactive adjustment or restatement of previous accounting data
□ Yes √ No
Change of the current
The current reporting period Same period last year reporting period over the
same period last year
Operating revenue (yuan) 8,932,579,251.75 8,896,632,277.36 0.40%
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The First Quarterly Report 2022 of Huadong Medicine Co., Ltd.
Net profit attributable to shareholders of
704,364,775.13 758,380,756.56 -7.12%
listed companies (yuan)
Net profit attributable to shareholders of
listed companies after deducting 698,524,004.62 695,792,411.78 0.39%
non-recurring gains/losses (yuan)
Net cash flow from operating activities
-260,603,628.32 302,314,164.48 -186.20%
(yuan)
Basic earnings per share (yuan/share) 0.4025 0.4334 -7.13%
Diluted earnings per share (yuan/share) 0.4025 0.4334 -7.13%
Weighted average return on equity (ROE) 4.17% 5.04% -0.87%
Change of the end of the
End of the current reporting
End of last year current reporting period
period
over the end of last year
Total assets (yuan) 28,436,893,634.69 26,996,403,366.69 5.34%
Net assets attributable to shareholders of
17,268,724,312.96 16,579,374,323.08 4.16%
listed companies (yuan)
(II)Items and amounts of non-recurring gains/losses
√ Applicable □ N/A
Amount of the current
Item Note
reporting period
Gains/losses on disposal of non-current assets (including the
1,085,520.17
written-off part of the accrued assets impairment reserve)
Government grants included in current gains/losses(excluding
those closely related to normal operating activities, in line with
10,669,007.70
national policies and measured according to unified national
standards)
Other non-operating income or expenditure -5,011,007.02
Less: Amount affected by income tax 997,808.09
Amount affected by minority interest (after tax) -95,057.75
Total 5,840,770.51 --
Details of other gains/losses items satisfying the definition of non-recurring gains/losses:
□ Applicable √ N/A
No such case.
If the Company recognizes a non-recurring gain/loss listed in the “Interpretative Announcement No. 1 on Information Disclosure
Criteria for Public Companies – Non-Recurring Profit/Loss” as a recurring gain/loss, reasons should be specified.
□ Applicable √ N/A
No such case.
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The First Quarterly Report 2022 of Huadong Medicine Co., Ltd.
(III)Changes in key accounting data and financial indicators and their reasons
√ Applicable □ N/A
Balance sheet item End of the period Beginning of the Change Notes on cause of changes
period rate
Prepayments 358,007,960.17 275,353,134.69 30.02% Mainly due to the increase in repayments for
goods
Other receivables 361,937,153.49 223,707,267.30 61.79% Mainly due to the increase of payment of land
auction money and security deposit in the
current period
Short-term borrowings 749,826,858.51 1,237,843,228.13 -39.42% Mainly due to loan repayment in the current
period
Notes payable 1,241,696,835.09 671,964,504.00 84.79% Mainly due to the increase of bill payment in the
current period
Dividends payable 224,219.60 2,184,219.60 -89.73% Mainly due to payment of dividends to
minority shareholders in the current period
Long term loan 478,247,000.00 139,178,905.04 243.62% Mainly due to newly increased borrowings in
the current period
Other current liabilities 15,546,972.37 11,386,267.11 36.54% Mainly due to the transfer of increased
corresponding tax items in contract liabilities
into other current liabilities
Income statement item Amount of the Amount of the Change Notes on cause of changes
current period previous period rate
R&D expenses 319,207,245.09 220,005,691.36 45.09% Mainly due to the increase in R&D expenses
Other income 10,669,007.70 76,459,624.41 -86.05% Mainly due to the year-on-year decrease in
government subsidies obtained in the current
period
Non-operating expenses 5,355,930.46 3,024,042.00 77.11% Mainly due to the year-on-year increase in
external donations in the current period
Minority interest income 9,667,799.11 16,093,227.89 -39.93% Mainly due to that Hudong Ningbo is no longer
included in the consolidated statements in the
current period
Cash flow statement item Amount of the Amount of the Change Notes on cause of changes
current period previous period rate
Net cash flows from operating -260,603,628.32 302,314,164.48 -186.20% Mainly due to the year-on-year decrease in
activities sales receipts and government subsidies, the
payment of security deposit, and the increase in
R&D expenses
Net cash flows from financing -5,561,294.58 113,196,714.88 -104.91% Mainly due to the year-on-year decrease in
activities borrowing obtained in the current period
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II. Shareholder information
(I) Total number of shareholders of common shares and number of shareholders of preferred shares with
voting rights restored, as well as information about top 10 shareholders
Unit: share
Total number of shareholders
Total number of shareholders of of preferred shares whose
common shares at the end of the 131,993 voting rights have been 0
reporting period restored at the end of the
reporting period (if any)
Information about top 10 shareholders
Number of shares Pledged, marked or frozen
Shareholding Number of shares
Name Nature held with sale
ratio held Status Number
restrictions
Domestic
China Grand
non-state-owned 41.77% 730,938,157 0 Pledged 187,360,000
Enterprises, Inc.
legal person
Hangzhou
Huadong State-owned legal
16.46% 288,000,000 0
Medicine Group person
Co., Ltd.
Hong Kong
Securities Overseas legal
2.62% 45,881,785 0
Clearing person
Company Ltd.
Domestic
China Securities
non-state-owned 1.27% 22,186,818 0
Finance Co., Ltd.
legal person
China
Construction
Bank Corporation
- ICBC Credit Others 1.03% 18,000,094 0
Suisse Frontier
Medical Equity
Investment Fund
Industrial and
Commercial
Bank of China
Others 0.57% 10,051,704 0
Limited – Zhong
Ou Healthcare
Hybrid Securities
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The First Quarterly Report 2022 of Huadong Medicine Co., Ltd.
Investment Fund
National Social
Security Fund Others 0.54% 9,499,905 0
Portfolio 503
Perseverance
Asset
Management
Others 0.43% 7,453,020 0
L.l.p. – Gaoyi
Xiaofeng No. 2
Zhixin Fund
Norges Bank－ Overseas legal
0.37% 6,560,791 0
own funds person
China Foreign
Economy and
Trade Trust Co.,
Ltd. – Foreign
Trade Trust – Others 0.34% 5,923,200 0
Gaoyi Xiaofeng
Hongyuan
Collective Fund
Trust Plan
Shares held by the top 10 shareholders of non- restricted shares
Type of shares
Name Number of shares held without sale restrictions
Type Number
RMB common
China Grand Enterprises, Inc. 730,938,157 730,938,157
shares
Hangzhou Huadong Medicine Group RMB common
288,000,000 288,000,000
Co., Ltd. shares
Hong Kong Securities Clearing RMB common
45,881,785 45,881,785
Company Ltd. shares
RMB common
China Securities Finance Co., Ltd. 22,186,818 22,186,818
shares
China Construction Bank
Corporation - ICBC Credit Suisse RMB common
18,000,094 18,000,094
Frontier Medical Equity Investment shares
Fund
Industrial and Commercial Bank of
China Limited – Zhong Ou RMB common
10,051,704 10,051,704
Healthcare Hybrid Securities shares
Investment Fund
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The First Quarterly Report 2022 of Huadong Medicine Co., Ltd.
National Social Security Fund RMB common
9,499,905 9,499,905
Portfolio 503 shares
Perseverance Asset Management
RMB common
L.l.p.– Gaoyi Xiaofeng No. 2 Zhixin 7,453,020 7,453,020
shares
Fund
RMB common
Norges Bank－own funds 6,560,791 6,560,791
shares
China Foreign Economy and Trade
Trust Co., Ltd. – Foreign Trade Trust RMB common
5,923,200 5,923,200
– Gaoyi Xiaofeng Hongyuan shares
Collective Fund Trust Plan
Notes on relations and concerted
The Company does not know whether the shareholders mentioned above are related parties
actions among the shareholders
with each other or whether they are acting-in-concert parties with each other.
mentioned above
Notes on financing and securities
At the end of the reporting period, among the top 10 common shareholders, no shareholders
loan conducted by top 10
held the Company’s shares via a securities margin trading account.
shareholders (if any)
(II)Total number of shareholders of preferred shares and information about top 10 shareholders of
preferred shares
□ Applicable √ N/A
III. Other important matters
√ Applicable □ N/A
(I) Overview of operations
1. The Company’s operations during the reporting period
In the first quarter of 2022, all work of the Company was carried out as planned. With the
pharmaceutical industry and domestic aesthetic medicine business overcoming the impact of the
Covid-19 pandemic at home, the Company’s operations were steadily improving on the whole, with
business indicators witnessing an increase from the same period in 2021. From January to March
2022, the Company realized operating income of RMB8,933 million, up 0.4% year on year, and net
profit attributable to listed company shareholders after deduction of non-recurring gains or losses of
RMB699 million, up 0.39% year on year. Calculated by the same standard of the previous year’s
annual report after excluding the controlling subsidiary Huadong Ningbo, operating income
increased by 3.79% year on year, and net profit attributable to listed company shareholders after
deduction of non-recurring gains or losses went up by 1.74% year on year.
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The First Quarterly Report 2022 of Huadong Medicine Co., Ltd.
The core subsidiary Zhongmei Huadong implemented work closely centering on its strategic
objectives and annual business plan during the reporting period. Its overall operations were stable
and sales of major products maintained growth. Affected by decreases in prices of some products, it
realized operating income of RMB2,791 million, down 9.73% year on year while up 19.45 % from
the fourth quarter of 2021. Its net profit after deduction of non-recurring gains or losses registered
RMB580 million, down 13.41% year on year while significantly up 48.08% quarter on quarter.
Zhongmei Huadong is expected to maintain growth momentum throughout the year. During the
reporting period, Zhongmei Huadong continued to deeply engage in the pharmaceutical business in
the Zhejiang market, expanded out-of-hospital markets and accelerated expansion of agency
business. Its operating income after digesting the impact of the liquidation of Huadong Ningbo went
up by 5.8% year on year. It maintained stable growth (the controlling subsidiary Huadong Ningbo,
which went into liquidation during this reporting period, realized operating income of RMB290
million in the same period last year including RMB96 million operating income from aesthetic
medicine agency business, and net profit attributable to the Company’s consolidated statements of
RMB9,265,000).
During the reporting period, the Company’s industrial microbiology business maintained good
development momentum. External order demand maintained a rapid growth, driving up the
operating income from the business by 99% during the reporting period. Hubei Meiqi Health
Technology Co., Ltd. (“Meiqi”), a joint venture established by the Company and Hubei Angel
Biological Group, has already started construction, and it will focus on the R&D, manufacturing and
sales of ingredients of nutritional and health food and functional ingredients for personal care. Anhui
Huachang High-tech Pharmaceuticals Co., Ltd. (“Huachang”), all of whose equity has been acquired
by the Company, has completed equity change registration at the administration for industry &
commerce and has been included in the Company’s consolidated statements. It recently started trial
production, with a focus on the industrialization of nucleoside series products, semisynthetic
antiparasitic drugs with microbial origins and other drugs. It aims to become a wholly new
industrialization platform of the Company in the field of industrial microbiology. The
commencement of the construction of Meiqi and the trial production of Huachang mark an important
step of the Company on its development path of industrial microbiology. This year the Company will
continue to accelerate development of relevant products in this field, expand layout, increase product
scale, promote business development, and further explore the new blue ocean of industrial
microbiology.
In February 2022, Sinclair, the Company’s wholly-owned subsidiary in the United Kingdom,
completed the acquisition of 100% equity of Viora, an energy-based aesthetic devices company, and
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The First Quarterly Report 2022 of Huadong Medicine Co., Ltd.
officially included it into the Company’s consolidated statements. Viora has advanced product
portfolios with technologies like laser, intense pulsed light, radio frequency, high-pressure jet and
microdermabrasion. Its Reaction, V series (V10, V20, V30), EnerJet and Pristine and
Infusion are currently sold overseas. In 2015, Reaction was granted the registration certificate
of Class III medical devices by the National Medical Products Administration (NMPA). Viora’s
products can effectively complement the Company’s existing energy-based product line, so the
Company will have business layout in all types of energy-based aesthetic medical devices. Through
efficient integration, High Tech will make full use of the channel resources accumulated by Viora to
expand the U.S. market. Based on the acquisition, the Company has creatively put forward the
product concept of “V Women Tech” that focuses on professional care for women with leading
aesthetic medical technology.
During the reporting period, the Company saw rapid growth in aesthetic medicine business at
both home and abroad. The dual circulation strategy has produced initial mutual facilitation effect.
The Company’s aesthetic medicine business realized total operating income of RMB453 million, up
226.8% year on year on a comparable basis (excluding Huadong Ningbo). Integration and synergy
effects were seen in the injection and EBD segment of the wholly-owned subsidiary in the United
Kingdom, Sinclair. With the lift of pandemic containment measures in a number of countries in the
European market and the push of strong sales in the Asian Pacific market, it realized consolidated
operating income of GBP31.04 million (about RMB260 million) during the reporting period, up
163.1% year on year, a record high in a single quarter. It turned around year on year and realized
operating profit for the first time in history. After acquiring Viora, Sinclair has continued to
implement operation integration. With a good number of orders in hand for the second quarter, it is
expected to maintain the rapid growth trend on the whole, making a good start for the subsidiary to
maintain rapid growth in operating income throughout the year and realize the first annual operating
benefit since the subsidiary completed acquisition.
During the reporting period, the Company’s domestic wholly-owned aesthetic medicine
company Sinclair (Shanghai) realized operating income of RMB157 million and demonstrated
strong profitability, which exceeded the contribution of Huadong Ningbo’s agency business income
to the Company’s profit in the same period last year. Sinclair (Shanghai) has actively expanded the
coverage of partner hospitals and promoted products. Currently it has signed a cooperation
agreement with more than 400 hospitals, and has more than 700 certified doctors. Since its launch,
Ellansé has maintained great market attention, enjoyed good reputation, and led the regenerative
aesthetic medicine market. The subsidiary has actively launched the genuine product traceability
campaign. It has included aesthetic medicine institutions that sell the unofficially certified products
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The First Quarterly Report 2022 of Huadong Medicine Co., Ltd.
into its cooperation blacklist and released it to the public, to urge beauty seekers to enhance
self-protection awareness and protect their legal rights and interests.
During the reporting period, Glacial Spa (F0, life cosmetology version of a frozen
freckle-removing medical device), a cold-touch cosmetic instrument introduced by the Company
from R2 Company (the USA), officially entered the Chinese market, and its sales and services were
carried out by the first group of vanguard partners in five major Chinese cities in March. Meanwhile,
the Company has worked actively despite the pandemic, leveraging its online advantages to expand
business. It has opened the online “Glacial Flagship Shop” on TMall, to run synchronously with
offline institutions. In terms of business model, Glacial Spa originated the DTC (Direct to
Customer) model. After buying a care program online, consumers choose offline contracted
cooperative institutions to provide specific services. By standardizing the purchase and
consumption procedures, the Company has made prices transparent, thus providing consumers with
high-quality services. Besides, the Company will take over Reaction (used for body and face
shaping and skin firming), a product of Viora that has already been on the domestic market, and
plans to integrate domestic EBD market resources and channels to realize resource coordination and
sharing and actively promote the rapid growth of the product in the domestic market.
2. R&D progress of the Company during the reporting period
In the reporting period, the Company accelerated the R&D work and continued to increase the
R&D investment. The total R&D investment in the pharmaceutical industry was RMB 410 million,
with a year-on-year increase of 46.49%.
As of the report release period, the innovative drug and biosimilar business of the Company
has achieved a number of milestones, with the main progress as follows:
(1) Endocrine
The last subject completed the study in the phase II clinical trial of TTP273, a global
innovative small molecule oral GLP-1 receptor agonist, in the first quarter of 2022.
DR10624, a multi-agonist targeting GLP-1R/GCGR/FGF21R being developed by Doer
Biologics, a holding subsidiary of the Company, has been approved for phase I clinical trials in
New Zealand in April 2022 for the treatment of type 2 diabetes, obesity and metabolic syndrome.
Liraglutide Injection, a GLP-1 receptor agonist, has been completed the drug registration
inspection for diabetes indication, and it is expected to be approved for marketing by the end of
2022. The phase III clinical study on weight loss indication has been completed in China, it is in the
pre-NDA stage now, and it is expected to submit the New Drug Application in the second quarter of
2022.
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The First Quarterly Report 2022 of Huadong Medicine Co., Ltd.
The Investigational New Drug Application (IND) for Semaglutide Injection, a GLP-1 receptor
agonist, has been accepted in April 2022.
Insulin Aspart Injection: The clinical trial approval notice has been obtained in April 2022.
Insulin Degludec Injection is in the preclinical phase, of which a pre-IND application has been
submitted in March 2022.
(2) Tumor
HDM2002 (Mirvetuximab), the world's first ADC (in development) for folate receptor α
(FRα)-positive ovarian cancer, is used to treat platinum-resistant ovarian cancer with high FRα
expression. On March 20, 2022, ImmunoGen, the Company's R&D partner, announced all the
results of its pivotal single-arm clinical trial (SORAYA Trial) in the U.S.: The trial has reached its
primary endpoint, with a confirmed objective response rate (ORR) of 32.4%, including 5 cases of
complete response. The updated median duration of response (DOR) was 6.9 months, and the
clinical trial results showed that it had clinically significant antitumor activity, consistent safety and
good tolerability for platinum-resistant ovarian cancer with a high expression of folate receptor α
(FRα). On March 29, 2022, ImmunoGen announced the submission of a Biological License
Application (BLA) for this product to the U.S. Food and Drug Administration (FDA). In addition to
SORAYA trial, MIRASOL, an international multi-center randomized controlled phase III study, is
being conducted now, and it is expected for ImmunoGen to obtain the top-line data from its
MIRASOL trial in the third quarter of 2022.
DR30303, an investigational product targeting Claudin 18.2 of the holding subsidiary Doer
Biologics, was designed for the treatment of solid tumors, for which the clinical trial approval
notice was obtained in January 2022, and the phase I clinical trial has been officially initiated.
HDM2003 (AB002) is a double-target fusion protein targeting PD-L1/L2 and IL15 for the
treatment of solid tumors. AKSO, a U.S. partner of the Company, is conducting preclinical studies
on HDM2003.
Heidelberg Pharma, a Germany partner of the Company, is currently conducting a phase I/IIa
clinical trial on HDP-101, an ATAC drug (Antibody Targeted Amanitin Conjugate) targeting B
cell maturation antigen (BCMA), for the treatment of relapsed/refractory multiple myeloma, and the
first patient was dosed on February 15, 2022.
Heidelberg Pharma, a Germany partner of the Company, is currently conducting preclinical
trials on HDP-103, an ATAC drug targeting prostate-specific membrane antigen (PSMA), of
which the target indication is metastatic castration-resistant prostate cancer (mCRPC).
(3) Autoimmunity
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The First Quarterly Report 2022 of Huadong Medicine Co., Ltd.
ARCALYST (Rilonacept), a recombinant dimer fusion protein that can block IL-1α and
IL-1β signaling, was introduced by the Company in February 2022 under a partnership agreement
with Kiniksa. ARCALYST is already available in the U.S. market for the treatment of
cryopyrin-associated periodic syndromes, deficiency of IL-1 receptor antagonist, and recurrent
pericarditis. ARCALYST has been listed in the List of the First Batch of Overseas New Drugs
Urgently Needed in Clinical Practice by CDE for the treatment of cryopyrin-associated periodic
syndromes. The Company will actively communicate with CDE, and promote the registration and
marketing of this product in China as soon as possible.
Mavrilimumab is a fully humanized monoclonal antibody targeting GM-CSFRα, for which
Kiniksa, a partner of the Company, is preparing the phase II overseas clinical trial for GM-CSF
related cardiovascular disease.
HDM3002 (PRV-3279) is a drug used to treat systemic lupus erythematosus (SLE) and
prevent or reduce the immunogenicity of gene therapy. In January 2022, Provention Bio (USA), a
partner of the Company, announced that it would launch a phase IIa clinical trial for SLE indication
in the U.S. and Hong Kong, China, and the subject screening is currently underway in the U.S.
Domestic pre-IND application has been submitted and feedback has been obtained.
HDM5001 (OP-101), an investigational product jointly developed by the Company and its
joint-stock company Ashvattha Therapeutic, Inc (U.S.) for the treatment of hyperinflammation in
hospitalized adult patients with severe COVID-19, is currently undergoing phase II clinical trial in
the U.S. The product is undergoing preparation for clinical application in China, and it is expected
to submit an IND application in the second quarter of this year.
HDM3001 (QX001S), a biosimilar of Stelara, is a product being jointly developed by the
Company and Qyuns Therapeutics for the treatment of moderate to severe plaque psoriasis in adult
patients, and the subject enrollment for phase III clinical trial has been completed ahead of schedule
in February 2022.
3. BD cooperation of the Company during the reporting period
During the reporting period, the Company focused on innovative varieties with excellent
clinical value and great market potential, continued the in-depth layout around the core therapeutic
fields, and further enriched the autoimmune and tumor innovation pipeline.
(1) In February 2022, Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd., a
wholly-owned subsidiary of the Company, signed a product exclusive license agreement with
Kiniksa Pharmaceuticals (UK), Ltd. (hereinafter referred to as "Kiniksa"), a wholly-owned
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The First Quarterly Report 2022 of Huadong Medicine Co., Ltd.
subsidiary of Kiniksa Pharmaceuticals, Ltd. (Nasdaq: KNSA). Hangzhou Zhongmei Huadong
Pharmaceutical Co., Ltd. obtained the exclusive license of Kiniksa's two globally innovative
autoimmunology products namely ARCALYST and Mavrilimumab in 24 Asia-pacific countries
and regions (excluding Japan), including China, South Korea, Australia, New Zealand and India.
ARCALYST is already available in the U.S. market for the treatment of cryopyrin-associated
periodic syndromes, deficiency of IL-1 receptor antagonist, and recurrent pericarditis, obtaining
good clinical feedback. The product is the first and only drug approved by FDA available for the
treatment of recurrent pericarditis in people aged 12 years and above. In China, ARCALYST has
been listed in the List of the First Batch of Overseas New Drugs Urgently Needed in Clinical
Practice by CDE for the treatment of cryopyrin-associated periodic syndromes. The introduction of
the first-in-class biological drugs above is expected to accelerate to meet the clinical needs of
domestic autoimmune and rare disease patients, and it also reflects that the Company has been
accelerating the process of innovation and internationalization, and deepening the layout of immune
products.
(2) In February 2022, the Company and its wholly-owned subsidiaries Hangzhou Zhongmei
Huadong Pharmaceutical Co., Ltd. and Huadong Medicine Investment Holding (Hong Kong)
Limited signed the Equity Investment Agreement and Exclusive Product License Agreement with
Heidelberg Pharma AG (" Heidelberg Pharma "), a German listed company, and its shareholders'
representatives. Through its wholly-owned subsidiary Huadong Medicine Investment Holding
(Hong Kong) Limited, the Company will subscribe for the secondary public offering of Heidelberg
Pharma and acquire part of the equity from the counterparty, ultimately acquiring a total of 35% of
equity of Heidelberg Pharma and becoming its second largest shareholder. Hangzhou Zhongmei
Huadong Pharmaceutical Co., Ltd. has obtained the exclusive license (including exclusive
development and commercialization) from Heidelberg Pharma for its 2 products under research, i.e.,
HDP-101 and HDP-103, in 20 Asian countries and regions including Chinese Mainland, Hong
Kong SAR, Macao SAR, Taiwan Region, Korea and Singapore. In addition, Hangzhou Zhongmei
Huadong Pharmaceutical Co., Ltd. will obtain the exclusive opt-in rights for two additional
products under research of Heidelberg Pharma namely HDP-102 and HDP-104, as well as the right
of first negotiation (ROFN) for two additional products in development. Heidelberg Pharma is the
first company in the world that has successfully developed the toxin Amanitin and its derivatives
for cancer treatment through its proprietary ATAC (Antibody Targeted Amanitin Conjugate)
technology platform. Amanitin, the only known RNA polymerase II inhibitor in the world, is of a
novel mechanism of action. The cooperation will enable the Company to fully integrate its own
ADC research technology with Heidelberg Pharma's advanced and proprietary ATAC technology
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The First Quarterly Report 2022 of Huadong Medicine Co., Ltd.
platform, further enriching the Company's global ADC R&D ecosystem.
Mirvetuximab, the world's first ADC being developed by Hangzhou Zhongmei Huadong
Pharmaceutical Co., Ltd. (a wholly-owned subsidiary of the Company) and ImmunoGen for the
treatment of FRα -positive ovarian cancer, is in smooth clinical progress, and the pivotal
single-arm clinical trial in the U.S. has reached its primary endpoint. The first subject enrollment
and administration has been completed for phase I PK study and phase III clinical trial of
Mirvetuximab in China, and related clinical work is progressing on schedule. To date,the exemption
from the duty to make an offer issued by the Federal Financial Supervisory Authority (BaFin) have
been obtained; the Company has also obtained the Certificate of Non-Objection from the German
Federal Ministry for Economic Affairs and Climate Action (BMWK) regarding the transaction; and
the approval or filing of relevant overseas investment in China for this transaction is progressing on
schedule. The successful cooperation with ImmunoGen, Heidelberg Pharma and other leading
global ADC technology companies has further enhanced the Company's R&D technology and
clinical registration capabilities in the ADC field. The Company will gradually build a differentiated
ADC independent R&D platform, strengthen and optimize the oncology product innovation chain
and ADC eco-chain, and plan to develop at least 10 ADC innovative products and actively promote
registered clinical studies within three years.
(3) In February 2022, Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd., a
wholly-owned subsidiary of the Company, signed an exclusive strategic cooperation agreement
with AKSO Biopharmaceutical, Inc., U.S. ("AKSO") for the clinical development and
commercialization rights of AB002 in the Asia-pacific region (excluding Japan). AB002, a
double-target fusion protein targeting PD-L1/L2 and IL15 in preclinical development, can be used
for the treatment of solid tumors by inhibiting immune checkpoints and activating natural killer
cells (NK cells). The Company believes that AB002's unique mechanism of action is of great
potential in the immunotherapy of cancer, and this cooperation will also further enrich the
Company's oncology product pipeline.
(4) In January 2022, Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd., a wholly-owned
subsidiary of the Company, signed an exclusive product marketing agreement with Beijing
Shenogen Pharmaceutical Co., Ltd. and Hainan Shenogen Pharmaceutical Co., Ltd., two
wholly-owned subsidiaries of Beijing Shenogen Pharma Group Ltd. ("Shenogen"), and obtained the
exclusive marketing rights of "Icaritin Soft Capsule", a first-in-class national innovative drug for
small molecule immunoregulation in the treatment of advanced hepatocellular carcinoma, in 27
provinces in Chinese Mainland. The Company has a complete pharmaceutical service system and a
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The First Quarterly Report 2022 of Huadong Medicine Co., Ltd.
wide range of market resources in the pharmaceutical industry, and this cooperation is just an
affirmation of the Company's commercialization ability in the local market, which will help to build
a win-win cooperation model that can achieve mutual complementarity and collaborative
development. Moreover, it is expected to continuously improve the Company's market
competitiveness in the oncology field.
4. Miscellaneous
During the reporting period, the Company’s controlled subsidiary Huadong Ningbo officially
went into liquidation due to expiry of operating period. The Company and Huadong Ningbo’s
natural person shareholders submitted an application to Ningbo Beilun District People’s Court
(“Beilun District Court”) respectively, requesting the court to preside over the liquidation of
Huadong Ningbo. On March 14, 2022, the Company received the electronic civil ruling paper
numbered (2022) Zh. 0206 Q.S. No. 1 from Beilun District Court. The ruling is as follows: The
court accepts the application regarding the liquidation of Huadong Ningbo, and the ruling shall
come into immediate effect.
The liquidation of Huadong Ningbo is one presided over by a court. Currently, Beilun District
Court has completed the selection and appointment of an intermediary to establish a liquidation
team according to relevant procedures, and the liquidation team will preside over the liquidation of
Huadong Ningbo. In the process of liquidation of Huadong Ningbo, the Company does not have
dominance over the liquidation work or control Huadong Ningbo. According to the Company Law
and the Accounting Standards for Business Enterprises, Huadong Ningbo is no longer included in
the Company’s consolidated financial statements beginning on December 31, 2021. The Company
will assign special personnel to actively participate in and cooperate in the subsequent liquidation
work of Huadong Ningbo. The matter is unlikely to have a significant impact on the Company’s
operations.
（II）Registration form of receptions, including research, communication and interview,
undertaken
Main contents of
Index of basic
discussion and
Date Place Method Type of visitor Reception target information of the
materials
research
provided
January 5, 2022 Company Online Institution, Huatai Communication Please refer to the
14
The First Quarterly Report 2022 of Huadong Medicine Co., Ltd.
conference room conferencing individual Securities, etc. Meeting on "Record of Investor
Industrial Relations Activities on
Microbiology of January 5, 2022"
Huadong published by the
Medicine company on the
Shenzhen Stock
Exchange Interactive
Easy website and
cninfo.com.cn for
details.
Please refer to the
"Record of Investor
Relations Activities on
January 7、10, 2022"
Industrial
Investor published by the
January 7, 10, Company Communication Securities,
Institution Exchange company on the
2022 conference room by phone Horizon
Meeting Shenzhen Stock
Insights, etc.
Exchange Interactive
Easy website and
cninfo.com.cn for
details.
Please refer to the
Communication "Record of Investor
Meeting on Relations Activities on
Aesthetic February 9, 2022"
Medicine of published by the
Company Online Institution, Zheshang Fund,
February 9, 2022 Huadong company on the
conference room conferencing individual etc.
Medicine and Shenzhen Stock
Interpretation of Exchange Interactive
Overseas EBD Easy website and
Trading cninfo.com.cn for
details.
Please refer to the
"Record of Investor
Communication Relations Activities on
Meeting on March 1, 2022"
Recent published by the
Company Online Institution, Industrial
March 1, 2022 Innovative BD company on the
conference room conferencing individual Securitiess, etc.
Projects of Shenzhen Stock
Huadong Exchange Interactive
Medicine Easy website and
cninfo.com.cn for
details.
15
The First Quarterly Report 2022 of Huadong Medicine Co., Ltd.
IV. Quarterly financial statements
(I) Financial Statements
1. Consolidated balance sheet
Prepared by Huadong Medicine Co., Ltd.
March 31,2022
Unit: RMB yuan
Item Balance at the end of the reporting period Balance at the beginning of the year
Current assets:
Monetary funds 3,277,119,559.03 4,032,424,555.22
Settlement reserve
Lending to other banks and other
financial institutions
Financial assets for trade
Derivative financial assets
Notes receivable
Accounts receivable 8,276,463,607.40 6,430,482,175.97
Accounts receivable financing 524,344,158.22 509,190,888.54
Advance payments 358,007,960.17 275,353,134.69
Premiums receivable
Reinsurance accounts receivable
Reinsurance contract reserve
receivable
Other receivables 361,937,153.49 223,707,267.30
Including: Interests receivable
Dividends receivable 877,734.45 877,734.45
Financial assets purchased for
resale
Inventories 3,919,092,799.43 3,974,549,648.96
Contract assets
Assets held for sale
Non-current assets due within one
year
Other current assets 34,962,736.44 40,907,922.76
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The First Quarterly Report 2022 of Huadong Medicine Co., Ltd.
Total current assets 16,751,927,974.18 15,486,615,593.44
Non-current assets:
Loans and prepayments issuance
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments 999,348,054.71 984,927,398.68
Other equity instrument
251,734,330.18 257,815,844.68
investments
Other non-current financial assets
Real estate properties for
14,309,609.42 14,569,533.94
investment
Fixed assets 3,018,883,552.71 3,077,227,759.84
Constructions in progress 1,668,374,105.38 1,582,125,201.25
Biological assets for production
Oil & gas assets
Right-of-use assets 143,374,053.51 153,724,197.81
Intangible assets 2,225,881,462.23 2,233,450,369.34
Development expenditures
Goodwill 2,138,808,037.01 2,138,808,037.01
Long-term unamortized expenses 13,311,191.85 12,425,364.03
Deferred income tax assets 143,651,186.84 143,651,186.84
Other non-current assets 1,067,290,076.67 911,062,879.83
Total non-current assets 11,684,965,660.51 11,509,787,773.25
Total assets 28,436,893,634.69 26,996,403,366.69
Current liabilities:
Short-term borrowing 749,826,858.51 1,237,843,228.13
Borrowing from the Central bank
Borrowing from other banks and
other financial institutions
Financial liabilities for trade
Derivative financial liabilities
Notes payable 1,241,696,835.09 671,964,504.00
Accounts payable 3,929,295,600.85 3,847,719,574.86
Advance receipts 1,164,793.56 1,147,425.45
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The First Quarterly Report 2022 of Huadong Medicine Co., Ltd.
Contract liabilities 129,862,570.81 118,341,141.48
Financial assets sold for
repurchase
Absorbing deposits and due from
banks
Receipts for buying and selling
securities as proxy
Receipts for underwriting
securities as proxy
Employee benefits payable 130,760,380.15 168,210,088.82
Taxes and fees payable 1,162,848,852.85 1,029,610,563.41
Other payables 2,030,591,181.07 1,935,116,784.93
Including: Interests payable
Dividends payable 224,219.60 2,184,219.60
Handling fees and commissions
payable
Reinsurance accounts payable
Liabilities held for sale
Non-current liabilities due within
238,567,736.86 244,256,705.59
one year
Other current liabilities 15,546,972.37 11,386,267.11
Total current liabilities 9,630,161,782.12 9,265,596,283.78
Non-current liabilities:
Insurance contract reserve
Long-term borrowing 478,247,000.00 139,178,905.04
Bonds payable
Including: Preferred shares
Perpetual bonds
Lease liabilities 95,759,850.89 80,889,403.39
Long-term payables 257,654,001.35 261,903,489.09
Long-term employee benefits
payable
Provision 38,645,813.86 39,086,238.25
Deferred gains 81,180,000.29 83,521,649.96
Deferred income tax liabilities 184,908,391.50 184,908,391.50
Other non-current liabilities
18
The First Quarterly Report 2022 of Huadong Medicine Co., Ltd.
Total non-current liabilities 1,136,395,057.89 789,488,077.23
Total liabilities 10,766,556,840.01 10,055,084,361.01
Ownership interest:
Share capital 1,749,809,548.00 1,749,809,548.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserve 2,229,868,312.11 2,229,868,312.11
Less: Treasury shares
Other comprehensive income -62,783,011.05 -47,768,225.80
Special reserve
Surplus reserve 1,021,670,687.31 1,021,670,687.31
General risk reserve
Undistributed profit 12,330,158,776.59 11,625,794,001.46
Total ownership interest attributable to
17,268,724,312.96 16,579,374,323.08
the parent company
Minority interest 401,612,481.72 361,944,682.60
Total ownership interest 17,670,336,794.68 16,941,319,005.68
Total liabilities & ownership interest 28,436,893,634.69 26,996,403,366.69
Legal representative: Lv Liang
Officer in charge of accounting: Lv Liang
Head of accounting department : Qiu Renbo
2. Consolidated income statement
Unit: RMB yuan
Item Amount incurred during the current period Amount incurred during the previous period
I. Total operating income 8,932,579,251.75 8,896,632,277.36
Including: Operating income 8,932,579,251.75 8,896,632,277.36
Interests received
Premiums earned
Handling fees and
commissions received
II. Total operating cost 8,028,129,305.85 8,007,420,920.98
Including: Operating cost 5,914,898,927.47 5,805,133,494.78
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The First Quarterly Report 2022 of Huadong Medicine Co., Ltd.
Interests paid
Handling fees and
commissions paid
Surrender value
Net payment of insurance
claims
Net appropriation of policy
reserve
Policy dividends paid
Reinsurance expenses
Taxes and surcharges 49,868,639.14 47,690,370.04
Selling expenses 1,433,493,143.24 1,648,517,354.06
Administrative expenses 302,601,116.29 277,542,542.53
R&D expenses 319,207,245.09 220,005,691.36
Financial expenses 8,060,234.62 8,531,468.21
Including: Interests paid 20,956,363.85 21,152,531.52
Interests received 24,163,304.15 19,057,526.99
Add: Other gains 10,669,007.70 76,459,624.41
Investment gains (Losses are
-27,961,493.36 -26,664,999.81
indicated by “-”)
Including: Investment gains
-20,764,035.59 -11,551,820.09
from associates and joint ventures
Gains from the
derecognition of financial assets
measured at amortized cost
Gains on exchange (Losses are
indicated by “-”)
Gains on net exposure hedging
(Losses are indicated by “-”)
Gains on changes in fair value
(Losses are indicated by “-”)
Credit impairment loss (Losses
are indicated by “-”)
Assets impairment loss (Losses
are indicated by “-”)
Gains on assets disposal
557,821.07 304,336.80
(Losses are indicated by “-”)
20
The First Quarterly Report 2022 of Huadong Medicine Co., Ltd.
III. Operating profit (Losses are indicated
887,715,281.31 939,310,317.78
by “-”)
Add: Non-operating income 831,619.81 338,562.61
Less: Non-operating expenditure 5,355,930.46 3,024,042.00
IV. Total profit (Total losses are
883,190,970.66 936,624,838.39
indicated by “-”)
Less: Income tax expenses 169,158,396.42 162,150,853.94
V. Net profit (Net losses are indicated by
714,032,574.24 774,473,984.45
“-”)
(I) Categorized by the continuity of
operations
1. Net profit from continued
operations (Net deficit is indicated by 714,032,574.24 774,473,984.45
“-”)
2. Net profit from discontinued
operations (Net deficit is indicated by
“-”)
(II) Categorized by attribution of the
ownership
1. Net profit attributable to owners
704,364,775.13 758,380,756.56
of the parent company
2. Gains/losses of minority
9,667,799.11 16,093,227.89
shareholders
VI. Net amount after tax of other
-15,014,785.25 118,964,837.49
comprehensive income
Net amount after tax of other
comprehensive income attributable to -15,014,785.25 118,964,837.49
owners of the parent company
(I) Other comprehensive income that
3,113,977.59
cannot be reclassified into gains/losses
1. Changes in
remeasurement on the defined benefit
plan
2. Other comprehensive
income that cannot be reclassified into
gains/losses under equity method
3. Changes in fair value of
3,113,977.59
other equity instrument investments
4. Changes in fair value of
21
The First Quarterly Report 2022 of Huadong Medicine Co., Ltd.
credit risk of the enterprise
5. Others
(II) Other comprehensive income to
-15,014,785.25 115,850,859.90
be reclassified into gains/losses
1. Other comprehensive
income that can be reclassified into
gains/losses under equity method
2. Changes in fair value of
other debt investments
3. Amount of financial assets
reclassified into other comprehensive
income
4. Credit impairment reserve
of other debt investments
5. Cash flow hedging reserve
6. Exchange differences arise
from translation of foreign currency -15,014,785.25 115,850,859.90
financial statements
7. Others
Net amount after tax of other
comprehensive income attributable to
minority shareholders
VII. Total comprehensive income 699,017,788.99 893,438,821.94
Total comprehensive income
attributable to owners of the parent 689,349,989.88 877,345,594.05
company
Total comprehensive income
9,667,799.11 16,093,227.89
attributable to minority shareholders
VIII. Earnings per share (EPS):
(I) Basic EPS 0.4025 0.4334
(II) Diluted EPS 0.4025 0.4334
As for enterprise merger under the same control in the current period, the net profit generated by the merged party before the merger
is 0 yuan, and that generated during the previous period is 0 yuan.
Legal representative: Lv Liang
Officer in charge of accounting: Lv Liang
Head of accounting department : Qiu Renbo
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The First Quarterly Report 2022 of Huadong Medicine Co., Ltd.
3. Consolidated cash flow statement
Unit: RMB yuan
Item Amount incurred during the current period Amount incurred during the previous period
I. Cash flows from operating activities:
Cash from the sale of goods and
8,140,456,622.41 8,756,095,736.42
provision of services
Net increase in customer deposits
and due from banks
Net increase in borrowing from the
central bank
Net increase in borrowing from
other financial institutions
Cash from the premium of the
original insurance policy
Net cash from reinsurance
Net increase in deposits and
investment of the insured
Cash from interests, handling fees
and commissions
Net increase in borrowing from
other banks and other financial
institutions
Net increase in funds for
repurchase
Net cash received for buying and
selling securities as proxy
Tax refund received 4,056,067.04 625,547.43
Other cash receipts in relation to
74,818,262.98 196,821,042.17
operating activities
Total cash inflows from operating
8,219,330,952.43 8,953,542,326.02
activities
Cash payments for goods and
5,856,237,111.49 6,125,835,203.59
services
Net increase in customer loans and
prepayments
Net increase in deposits of central
bank and due from banks
23
The First Quarterly Report 2022 of Huadong Medicine Co., Ltd.
Cash for payment of original
insurance claims
Net increase in lending to other
banks and other financial institutions
Cash for payment of interests,
handling fees and commissions
Cash for payment of policy
dividends
Cash payments to and for
719,758,010.16 653,692,760.67
employees
Payment of taxes and fees 477,339,851.40 456,958,349.66
Other cash payments in relation to
1,426,599,607.70 1,414,741,847.62
operating activities
Total cash outflows for operating
8,479,934,580.75 8,651,228,161.54
activities
Net cash flows from operating activities -260,603,628.32 302,314,164.48
II. Cash flows from investing activities
Cash from recovery of investments
Cash from investment gains
Net cash from disposal of fixed
assets, intangible assets and other 1,439,970.00 50,504.23
long-term assets
Net cash from disposal of
subsidiaries and other business units
Other cash receipts in relation to
investing activities
Total cash inflows from investing
1,439,970.00 50,504.23
activities
Cash payments for purchase and
construction of fixed assets, intangible 193,143,577.15 302,645,383.17
assets and other long-term assets
Cash payments for investment 29,400,000.00 105,706,000.00
Net increase in pledge loans
Net cash paid for acquisition of
284,030,413.64
subsidiaries and other business units
Other cash payments in relation to
100,000,000.00 78,680,000.00
investing activities
Total cash outflows for investing 606,573,990.79 487,031,383.17
24
The First Quarterly Report 2022 of Huadong Medicine Co., Ltd.
activities
Net cash flows from investing activities -605,134,020.79 -486,980,878.94
III. Cash flows from financing
activities:
Cash from absorbing investments 30,000,000.00
Including: Cash from absorption of
minority shareholders’ investments by
subsidiaries
Cash from borrowing 709,751,200.00 852,692,161.43
Other cash receipts in relation to
109,951,775.00
financing activities
Total cash inflows from financing
849,702,975.00 852,692,161.43
activities
Cash for repayment of debt 815,271,409.82 710,289,400.95
Cash payments for dividends,
38,336,990.15 28,945,045.60
profits or interests
Including: Payment of dividends
and profits by subsidiaries to minority 1,960,000.00
shareholders
Other cash payments in relation to
1,655,869.61 261,000.00
financing activities
Total cash outflows for financing
855,264,269.58 739,495,446.55
activities
Net cash flows from financing activities -5,561,294.58 113,196,714.88
IV. Influence of exchange rate
fluctuations on cash and cash 10,811,591.15 -2,854,862.94
equivalents
V. Net increase in cash and cash
-860,487,352.54 -74,324,862.52
equivalents
Add: Balance of cash and cash
equivalents at the beginning of the 3,580,140,638.17 3,157,407,073.26
period
VI. Balance of cash and cash
2,719,653,285.63 3,083,082,210.74
equivalents at the end of the period
(II)Audit report
Has the first quarterly report been audited?
□ Yes √ No
25
The First Quarterly Report 2022 of Huadong Medicine Co., Ltd.
The first quarterly report has not been audited.
The Board of Directors of Huadong Medicine Co., Ltd.
April 28, 2022
26
