ASCENTAGE PHARMA GROUP INTERNATIONAL

Ascentage Pharma Group International, a Cayman Islands exempted company, operates primarily through its subsidiaries with substantive business operations in China and the United States, focusing on the discovery, development, and commercialization of therapies for hematological malignancies ¹. The company's financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the IASB, with its fiscal year ending on December 31 ². The company has incurred significant net losses in the past, reporting a net loss of RMB1,243.0 million (US$177.7 million) ³ for the year ended December 31, 2025, and accumulated losses of RMB7,013.3 million (US$1,002.9 million) ⁴ as of December 31, 2025.

The core business model revolves around the development and commercialization of pharmaceutical products, with Olverembatinib and Lisaftoclax being the only products that have received regulatory approval for commercial sale in China ⁵. The company generates revenue from the sales of pharmaceutical products, commercialization rights income from an agreement with Innovent, intellectual property income from an agreement with Takeda, and management fee income ⁶. For the year ended December 31, 2025, the company recognized RMB574.1 million (US$82.1 million) ⁷ in revenue from these sources.

Ascentage Pharma's product portfolio includes Olverembatinib and Lisaftoclax, which are currently commercialized in China. Olverembatinib is approved for the treatment of adult patients with chronic myeloid leukemia in chronic phase (CML-CP) or accelerated phase (CML-AP) with the T315I mutation, and adult patients with CML-CP resistant or intolerant to first- and second-generation tyrosine kinase inhibitors (TKIs) ⁸. Lisaftoclax is approved for the treatment of adult patients with chronic lymphocytic leukemia/small lymphocytic lymphoma (CLL/SLL) who have previously received at least one systemic therapy, including Bruton’s tyrosine kinase (BTK) inhibitors ⁹. Beyond these, the company has several other drug candidates in clinical and preclinical development, including Alrizomadlin, Pelcitoclax, APG-5918, APG-2449, and APG-3288, which are in ongoing clinical trials ¹⁰.

For the fiscal year ended December 31, 2025, the company reported a net loss of RMB1,243.0 million (US$177.7 million) ¹¹, compared to RMB405.7 million ¹² and RMB925.7 million ¹³ for the years ended December 31, 2024 and 2023, respectively. Revenue from the sales of pharmaceutical products, commercialization rights income, intellectual property income, and management fee income was RMB574.1 million (US$82.1 million) ¹⁴ for the year ended December 31, 2025, a decrease from RMB980.7 million ¹⁵ in 2024. As of December 31, 2025, the company had cash and bank balances of RMB2,470.1 million (US$353.2 million) ¹⁶. Bank loans amounting to RMB600.2 million (US$85.8 million) ¹⁷ were secured by the pledge of buildings with a net carrying amount of RMB677.0 million (US$96.8 million) ¹⁸ and right-of-use assets of RMB25.3 million (US$3.6 million) ¹⁹.

The company's revenues for the years ended December 31, 2024 and 2023 were substantially driven by sales of Olverembatinib and Lisaftoclax in China ²⁰. However, a substantial portion of the revenue for the year ended December 31, 2024, was also related to intellectual property income and an option payment received from Takeda ²¹. The company has significantly increased its research, development, manufacturing, and commercial capabilities since its HKEx listing in 2019, growing to approximately 767 full-time employees ²² as of December 31, 2025.

Significant operational developments include the commercialization of Olverembatinib and Lisaftoclax in China and ongoing Phase 3 registrational trials for both drugs in the United States and other countries outside of China ²³. The company also entered into an exclusive option agreement with Takeda in June 2024, granting Takeda an exclusive option to license Olverembatinib in the Territory ²⁴. The company maintains a global research and development center and manufacturing facility in Suzhou, with a manufacturing capacity for oral solid tablets and capsules of up to 250 million dosage units per year ²⁵, and also leases a facility in China Medical City, Taizhou, Jiangsu Province, China, for preclinical test articles and clinical trial materials ²⁶.

Management expects to continue incurring substantial and increasing losses for the foreseeable future as the company invests in the development and regulatory approval of its drug candidates, including Olverembatinib and Lisaftoclax outside of China, and commercializes approved drug candidates ²⁷. The company believes its existing cash and bank balances of RMB2,470.1 million (US$353.2 million) ²⁸ and its loan facility will fund operating expenses and capital expenditure requirements through at least the next 12 months from the issuance of the consolidated financial statements ²⁹. However, these funds may not be sufficient to fund any drug candidates through regulatory approval, which may last several years ³⁰.

Major growth vectors include expanding the approved indications for Olverembatinib and Lisaftoclax in China, extending regulatory approval of these drugs to other countries, and continuing the clinical development of other drug candidates globally ³¹. Olverembatinib has received Fast Track designation from the FDA for CML treatment in patients with certain genetic markers who have failed existing TKIs ³², and orphan drug designation for CML, AML, ALL, and GIST ³³. Lisaftoclax has been granted orphan drug designation for the treatment of myelodysplastic syndrome ³⁴. The company plans to pursue accelerated development strategies in areas of high unmet need where possible ³⁵.

Operationally, the company expects increased sales and marketing and manufacturing expenses if Olverembatinib, Lisaftoclax, or other drug candidates receive regulatory approval in the United States or other jurisdictions ³⁶. The company also anticipates increasing its headcounts to support expansion, and fixed expenses such as rent, interest expense, and other contractual commitments are expected to increase ³⁷. The Suzhou facility has a manufacturing capacity for oral solid tablets and capsules of up to 250 million dosage units per year ³⁸, and the company also produces preclinical test articles and clinical trial materials at a leased facility in Taizhou ³⁹.

Planned capital allocation includes continued substantial spending on drug discovery, advancing clinical development of drug candidates, and launching and commercializing approved drug candidates, including by building and expanding commercial organizations for certain markets ⁴⁰. The company may finance future cash needs through public or private equity offerings, license agreements, debt financings, collaborations, strategic alliances, and marketing or distribution arrangements ⁴¹.

Management has explicitly flagged several structural headwinds and execution risks. These include the inherent uncertainty and high risk of failure in clinical drug development ⁴², the lengthy and unpredictable regulatory approval processes of the FDA, NMPA, and other comparable authorities ⁴³, and the potential for drug candidates to cause significant adverse events or undesirable side effects ⁴⁴. The company is substantially dependent on the commercial success of Olverembatinib and Lisaftoclax, and any inability to maintain or increase sales would adversely affect revenue generation ⁴⁵. Furthermore, the company has limited commercialization experience outside of China and may lack the necessary expertise and resources for successful commercialization in other markets ⁴⁶. Geopolitical risks, particularly tensions between the United States and China, pose significant challenges that may impact business, including potential restrictions on working with certain Chinese biotechnology companies and CMOs, and data transfer restrictions ⁴⁷. The BIOSECURE Act, signed into law on December 18, 2025, targets U.S. government contracts for entities using equipment and services from Chinese biotechnology companies of concern, which could impact the company's suppliers like WuXi STA ⁴⁸.

The company faces material risks including significant net losses incurred in the past, with a net loss of RMB1,243.0 million (US$177.7 million) ⁴⁹ for the year ended December 31, 2025, and accumulated losses of RMB7,013.3 million (US$1,002.9 million) ⁵⁰ as of December 31, 2025, necessitating additional financing to fund operations. Clinical development of drug candidates is inherently uncertain, with potential for delays, failures to demonstrate safety and efficacy, and heightened risk of adverse events, including death, in critically ill patient populations. Regulatory approval processes are lengthy, time-consuming, and unpredictable, with risks that data from trials conducted outside a jurisdiction may not be accepted, or that expedited pathways may not be granted or lead to faster approvals. Commercialization risks include substantial dependence on Olverembatinib and Lisaftoclax sales in China, limited commercialization experience outside China, intense competition from major pharmaceutical and biotechnology companies, and market opportunities potentially limited to small patient populations or later-line therapies. Manufacturing facilities are subject to damage, destruction, or interruptions, and reliance on third-party manufacturers and suppliers, including a single-source supplier for drug substance, poses risks of insufficient quantities, quality issues, or supply chain disruptions, potentially exacerbated by legislation like the BIOSECURE Act. Intellectual property risks involve challenges to patent validity or enforceability, inability to protect trade secrets, and potential infringement claims from third parties. Operational risks include difficulties managing growth, retaining key personnel, and compliance with evolving privacy, data protection, and information security laws, such as the GDPR, which imposes significant fines up to the greater of €20 million or 4% of global turnover (and the higher of £17.5 million or 4% of global turnover in the case of the UK GDPR) ⁵¹. Geopolitical tensions, particularly between the United States and China, pose significant challenges, including trade policies, tariffs, export controls, and foreign investment laws that could restrict business operations and capital raising activities. Compliance with PRC regulations on employee benefit plans, foreign exchange, and indirect transfers of equity interests also presents risks of penalties or limitations on capital injection and profit distribution.

Management's message to shareholders emphasizes the company's commitment to continued substantial investment in its business, particularly in research and development, despite having incurred significant net losses in the past, including RMB1,243.0 million (US$177.7 million) ⁵² for the year ended December 31, 2025. A key strategic priority is the expansion of regulatory approvals for Olverembatinib and Lisaftoclax beyond China, including in the United States, and the ongoing clinical development of other drug candidates globally. Management also highlights the importance of increasing revenues to offset rising operating expenses, noting that the company's existing cash and bank balances of RMB2,470.1 million (US$353.2 million) ⁵³ and loan facility are expected to fund operations and capital expenditures for at least the next 12 months ⁵⁴. Another strategic focus is the management of growth, particularly in research, development, manufacturing, and commercial capabilities, which has led to an increase to approximately 767 full-time employees ⁵⁵ as of December 31, 2025.