Full Press Release Details
CONNECT BIOPHARMA HOLDINGS LIMITED
INDEX TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| Page | ||||
| Unaudited Interim Condensed Consolidated Statements of Loss for the six months ended June 30, 2020 and 2021 | 2 | |||
| Unaudited Interim Condensed Consolidated Statements of Comprehensive Loss for the six months ended June 30, 2020 and 2021 | 3 | |||
| Unaudited Interim Condensed Consolidated Balance Sheets as of December 31, 2020 and June 30, 2021 | 4 | |||
| Unaudited Interim Condensed Consolidated Statements of Changes in Shareholders (Deficit)/Equity for the six months ended June 30, 2020 and 2021 | 5 | |||
| Unaudited Interim Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2021 | 7 | |||
| Notes to Unaudited Interim Condensed Consolidated Financial Statements | 8 |
CONNECT BIOPHARMA HOLDINGS LIMITED
Unaudited Interim Condensed Consolidated Statements of Loss
| For Six Months Ended June 30, | ||||||||||||||||
| Notes | 2020 | 2021 | 2021 | |||||||||||||
| RMB 000 | RMB 000 | USD 000 Note 2 | ||||||||||||||
| Research and development expenses | 5 | (59,047 | ) | (217,806 | ) | (33,716 | ) | |||||||||
| Administrative expenses | 5 | (7,086 | ) | (47,965 | ) | (7,424 | ) | |||||||||
| Other income | 7 | 2,715 | 5,041 | 780 | ||||||||||||
| Other gains/(losses) - net | 8 | 878 | (7,640 | ) | (1,183 | ) | ||||||||||
| Operating loss | (62,540 | ) | (268,370 | ) | (41,543 | ) | ||||||||||
| Finance income | 569 | 180 | 28 | |||||||||||||
| Finance cost | (19 | ) | (22 | ) | (4 | ) | ||||||||||
| Finance income - net | 550 | 158 | 24 | |||||||||||||
| Fair value loss of financial instruments with preferred rights | 19 | (13,217 | ) | (674,269 | ) | (104,374 | ) | |||||||||
| Loss before income tax | (75,207 | ) | (942,481 | ) | (145,893 | ) | ||||||||||
| Income tax expense | 9 | |||||||||||||||
| Net loss | (75,207 | ) | (942,481 | ) | (145,893 | ) | ||||||||||
| Net loss attributable to: | ||||||||||||||||
| Owners of the Company | (75,207 | ) | (942,481 | ) | (145,893 | ) | ||||||||||
| RMB | RMB | USD | ||||||||||||||
| Net loss attributable to: | ||||||||||||||||
| Basic and diluted | 10 | (4.4 | ) | (20.1 | ) | (3.1 | ) |
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
CONNECT BIOPHARMA HOLDINGS LIMITED
Unaudited Interim Condensed Consolidated Statements of Comprehensive Loss
| For the Six Months Ended June 30, | ||||||||||||||||
| Notes | 2020 | 2021 | 2021 | |||||||||||||
| RMB 000 | RMB 000 | USD 000 | ||||||||||||||
| Note 2 | ||||||||||||||||
| Net loss | (75,207 | ) | (942,481 | ) | (145,893 | ) | ||||||||||
| Other comprehensive (loss)/income | ||||||||||||||||
| Items that may be reclassified to profit or loss | ||||||||||||||||
| Exchange differences on translation of foreign operations | (5,173 | ) | 5,523 | 855 | ||||||||||||
| Items that will not be reclassified to profit or loss | ||||||||||||||||
| Exchange differences on translation of foreign operations | (672 | ) | (21,846 | ) | (3,382 | ) | ||||||||||
| Other comprehensive loss, net of tax | (5,845 | ) | (16,323 | ) | (2,527 | ) | ||||||||||
| Total comprehensive loss | (81,052 | ) | (958,804 | ) | (148,420 | ) | ||||||||||
| Total comprehensive loss attributable to: | ||||||||||||||||
| Owners of the Company | (81,052 | ) | (958,804 | ) | (148,420 | ) |
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
CONNECT BIOPHARMA HOLDINGS LIMITED
Unaudited Interim Condensed Consolidated Balance Sheets
| December 31, | June 30, | June 30, | ||||||||||||
| Notes | 2020 | 2021 | 2021 | |||||||||||
| RMB 000 | RMB 000 | USD 000 | ||||||||||||
| Note 2 | ||||||||||||||
| ASSETS | ||||||||||||||
| Non-current assets | ||||||||||||||
| Property, plant and equipment | 11 | 6,939 | 24,524 | 3,796 | ||||||||||
| Right-of-use assets | 12 | 929 | 23,358 | 3,616 | ||||||||||
| Intangible assets | 342 | 284 | 43 | |||||||||||
| Other non-current assets | 13 | 19,860 | 27,614 | 4,275 | ||||||||||
| Total non-current assets | 28,070 | 75,780 | 11,730 | |||||||||||
| Current assets | ||||||||||||||
| Cash and cash equivalents | 15 | 1,010,076 | 2,025,046 | 313,470 | ||||||||||
| Other receivable and prepayments | 14 | 33,655 | 72,900 | 11,285 | ||||||||||
| Financial assets at fair value through profit or loss | 3 | 13,068 | ||||||||||||
| Total current assets | 1,056,799 | 2,097,946 | 324,755 | |||||||||||
| Total assets | 1,084,869 | 2,173,726 | 336,485 | |||||||||||
| LIABILITIES | ||||||||||||||
| Non-current liabilities | ||||||||||||||
| Lease liabilities | 12 | 309 | 482 | 75 | ||||||||||
| Financial instruments with preferred rights | 3, 19 | 2,071,508 | ||||||||||||
| Total non-current liabilities | 2,071,817 | 482 | 75 | |||||||||||
| Current liabilities | ||||||||||||||
| Lease liabilities | 604 | 615 | 95 | |||||||||||
| Trade payables | 24,638 | 65,628 | 10,159 | |||||||||||
| Other payables and accruals | 18 | 12,755 | 24,383 | 3,774 | ||||||||||
| Total current liabilities | 37,997 | 90,626 | 14,028 | |||||||||||
| Total liabilities | 2,109,814 | 91,108 | 14,103 | |||||||||||
| Net (liabilities)/assets | (1,024,945 | ) | 2,082,618 | 322,382 | ||||||||||
| SHAREHOLDERS (DEFICIT)/EQUITY | ||||||||||||||
| Share capital | 16 | 24 | 66 | 10 | ||||||||||
| Share premium | 16 | 41,466 | 4,092,298 | 633,473 | ||||||||||
| Treasury shares | (3 | ) | (3 | ) | ||||||||||
| Share-based compensation reserve | 6,602 | 24,608 | 3,809 | |||||||||||
| Other reserves | (1,693 | ) | (20,529 | ) | (3,178 | ) | ||||||||
| Accumulated losses | (1,071,341 | ) | (2,013,822 | ) | (311,732 | ) | ||||||||
| Total shareholders (deficit)/equity | (1,024,945 | ) | 2,082,618 | 322,382 | ||||||||||
| Total liabilities and shareholders (deficit)/equity | 1,084,869 | 2,173,726 | 336,485 |
The accompanying notes are an integral part of these interim condensed consolidated financial
CONNECT BIOPHARMA HOLDINGS LIMITED
Unaudited Interim Condensed Consolidated Statements of Changes in Shareholders (Deficit)/Equity
| Notes | Share capital | Share premium | Treasury shares | Share-based compensation reserves | Other reserves | Accumulated losses | Total shareholders deficit | |||||||||||||||||||||||
| RMB 000 | RMB 000 | RMB 000 | RMB 000 | RMB 000 | RMB 000 | RMB 000 | ||||||||||||||||||||||||
| Balance at December 31, 2019 | 21 | 38,123 | (1 | ) | 4,411 | (48,725 | ) | (292,116 | ) | (298,287 | ) | |||||||||||||||||||
| Comprehensive loss | ||||||||||||||||||||||||||||||
| Net loss | (75,207 | ) | (75,207 | ) | ||||||||||||||||||||||||||
| Exchange differences | (5,845 | ) | (5,845 | ) | ||||||||||||||||||||||||||
| (5,845 | ) | (75,207 | ) | (81,052 | ) | |||||||||||||||||||||||||
| Transactions with owners | ||||||||||||||||||||||||||||||
| Issuance of shares to co-founders | 17 | 1 | 3,343 | (3,344 | ) | |||||||||||||||||||||||||
| Issuance of treasury shares | 1 | (1 | ) | |||||||||||||||||||||||||||
| Share-based compensations | 17 | 1,590 | 1,590 | |||||||||||||||||||||||||||
| 2 | 3,343 | (1 | ) | (1,754 | ) | 1,590 | ||||||||||||||||||||||||
| Balance at June 30, 2020 | 23 | 41,466 | (2 | ) | 2,657 | (54,570 | ) | (367,323 | ) | (377,749 | ) |
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
CONNECT BIOPHARMA HOLDINGS LIMITED
Unaudited Interim Condensed Consolidated Statements of Changes in Shareholders (Deficit)/Equity
| Notes | Share capital | Share premium | Treasury shares | Share-based compensation reserves | Other reserves | Accumulated losses | Total shareholders (deficit)/equity | |||||||||||||||||||||||
| RMB 000 | RMB 000 | RMB 000 | RMB 000 | RMB 000 | RMB 000 | RMB 000 | ||||||||||||||||||||||||
| Balance at December 31, 2020 | 24 | 41,466 | (3 | ) | 6,602 | (1,693 | ) | (1,071,341 | ) | (1,024,945 | ) | |||||||||||||||||||
| Comprehensive loss | ||||||||||||||||||||||||||||||
| Net loss | (942,481 | ) | (942,481 | ) | ||||||||||||||||||||||||||
| Exchange differences | (16,323 | ) | (16,323 | ) | ||||||||||||||||||||||||||
| (16,323 | ) | (942,481 | ) | (958,804 | ) | |||||||||||||||||||||||||
| Transactions with owners | ||||||||||||||||||||||||||||||
| Issuance of ordinary shares, net of issuance costs | 16 | 14 | 1,305,818 | 1,305,832 | ||||||||||||||||||||||||||
| Conversion from preferred shares to ordinary shares | 16 | 28 | 2,743,597 | 2,743,625 | ||||||||||||||||||||||||||
| Repurchase of ordinary shares | 16 | (2,513 | ) | (2,513 | ) | |||||||||||||||||||||||||
| Issuance of shares to co-founders | 17 | 1,417 | (1,417 | ) | ||||||||||||||||||||||||||
| Share-based compensations | 17 | 19,423 | 19,423 | |||||||||||||||||||||||||||
| 42 | 4,050,832 | 18,006 | (2,513 | ) | 4,066,367 | |||||||||||||||||||||||||
| Balance at June 30, 2021 | 66 | 4,092,298 | (3 | ) | 24,608 | (20,529 | ) | (2,013,822 | ) | 2,082,618 |
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
CONNECT BIOPHARMA HOLDINGS LIMITED
Unaudited Interim Condensed Consolidated Statements of Cash Flows
| For the Six Months Ended June 30, | ||||||||||||||
| Notes | 2020 | 2021 | 2021 | |||||||||||
| RMB 000 | RMB 000 | USD 000 | ||||||||||||
| Note 2 | ||||||||||||||
| Cash flows from operating activities | ||||||||||||||
| Cash used in operations | 20 | (53,549 | ) | (252,936 | ) | (39,154 | ) | |||||||
| Interest received | 569 | 180 | 28 | |||||||||||
| Net cash used in operating activities | (52,980 | ) | (252,756 | ) | (39,126 | ) | ||||||||
| Cash flows from investing activities | ||||||||||||||
| Purchase of property, plant and equipment | (343 | ) | (23,477 | ) | (3,634 | ) | ||||||||
| Payment in relation to right-of-use assets | (22,284 | ) | (3,449 | ) | ||||||||||
| Purchase of financial assets at fair value through profit or loss | (43,200 | ) | (42,500 | ) | (6,579 | ) | ||||||||
| Proceeds from disposal of financial assets at fair value through profit or loss | 47,854 | 55,706 | 8,623 | |||||||||||
| Net cash generated from/ (used in) investing activities | 4,311 | (32,555 | ) | (5,039 | ) | |||||||||
| Cash flows from financing activities | ||||||||||||||
| Proceeds from issuance of ordinary shares | 16 | 1,431,775 | 221,634 | |||||||||||
| Payment in relation to listing expenses | (111,440 | ) | (17,251 | ) | ||||||||||
| Payment for lease liabilities | (223 | ) | (480 | ) | (74 | ) | ||||||||
| Payment in relation to share repurchase | (2,513 | ) | (389 | ) | ||||||||||
| Net cash (used in)/ generated from financing activities | (223 | ) | 1,317,342 | 203,920 | ||||||||||
| Net (decrease)/increase in cash and cash equivalents | (48,892 | ) | 1,032,031 | 159,755 | ||||||||||
| Cash and cash equivalents at the beginning of period | 308,972 | 1,010,076 | 156,356 | |||||||||||
| Effects of exchange rate changes on cash and cash equivalents | 4,226 | (17,061 | ) | (2,641 | ) | |||||||||
| Cash and cash equivalents at end of the period | 264,306 | 2,025,046 | 313,470 |
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
CONNECT BIOPHARMA HOLDINGS LIMITED
Notes to Unaudited Interim Condensed Consolidated Financial Statements
Connect Biopharma Holdings Limited (the Company ) was incorporated on November 23, 2015 in the Cayman Islands as an exempted
company with limited liability. The address of the Company s registered office is P.O. Box 613, Harbour Centre, George Town, Grand Cayman KY1-1107, Cayman Islands. The Company completed its initial public
offering ( IPO ) in March 2021 and the Company s American Depositary Shares ( ADSs ) have been listed on the Nasdaq Global Market ( Nasdaq ) since then. Each ADS of the Company represents one ordinary share, par
value USD 0.000174 per share.
The Company and its subsidiaries (collectively the Group ) is a clinical-stage company focused on
the discovery and development of next-generation immune modulators for the treatment of serious autoimmune diseases and inflammation. The Group has leveraged its expertise in the biology of T cell modulation to build a portfolio of drug candidates
consisting of small molecules and antibodies targeting critical pathways of inflammation. The Group currently carries out clinical trials on its product candidates globally.
Connect Biopharma Hong Kong Limited ( Connect HK ) is a direct wholly owned subsidiary of the Company, and the Group carries out its
business through Connect HK s wholly owned subsidiaries: Suzhou Connect Biopharma Co., Ltd. ( Connect SZ ), Connect Biopharm LLC ( Connect US ) and Connect Biopharma Australia PTY LTD ( Connect AU ).
The unaudited interim condensed consolidated financial statements have been prepared in accordance with International Accounting Standard
( IAS ) 34 Interim Financial Reporting issued by the International Accounting Standards Board ( IASB ). Accordingly, they do not include all of the information and footnotes required by IFRS for complete financial statements.
Certain information and note disclosures normally included in the annual financial statements prepared in accordance with IFRS have been condensed or omitted.
The unaudited interim condensed consolidated financial statements included all adjustments as necessary for the fair statement of the
Company s financial position as of June 30, 2021, and results of operations and cash flows for the six months ended June 30, 2020 and 2021. The consolidated balance sheet as of December 31, 2020 has been derived from the audited
financial statements at that date but does not include all the information and footnotes required by International Financial Reporting Standards ( IFRS ). The unaudited interim condensed consolidated financial statements and related
disclosures have been prepared with the presumption that users of the unaudited interim condensed consolidated financial statements have read or have access to the audited consolidated financial statements for the preceding fiscal years.
Accordingly, these financial statements should be read in conjunction with audited consolidated financial statements and related footnotes for the years ended December 31, 2019, and 2020 included in the Company s final prospectus filed
with the Securities and Exchange Commission on March 19, 2021. The accounting policies applied are consistent with those applied in the audited consolidated financial statements for the preceding fiscal year. Results for the six months ended
June 30, 2021 are not necessarily indicative of the results expected for the full fiscal year or for any future period.
interim condensed consolidated financial statements for the six months ended June 30, 2020 and 2021 were authorized for issue by the Company s board of directors (the Board ) on August 31, 2021.
CONNECT BIOPHARMA HOLDINGS LIMITED
Notes to Unaudited Interim Condensed Consolidated Financial Statements
Since inception, the Group has incurred accumulated losses of RMB 2,013.8 million (USD 311.7 million) as of June 30, 2021. For the
six months ended June 30, 2021, the Group had net operating loss of RMB 268.4 million (USD 41.5 million) and net operating cash outflow of RMB 252.8 million (USD 39.1 million). The principal sources of funding have historically been
continuous cash contributions from common equity holders and preferred shareholders. The cumulative contributions up through June 30, 2021 approximated USD 440.1 million, among which included USD 219.9 million of proceeds from
issuance of ordinary shares in connection with the IPO or RMB 1,431.8 million based on the exchange rate as of the date of the IPO. As of June 30, 2021, the Group had net assets of RMB 2,082.6 million (USD 322.4 million), including a
cash and cash equivalents balance of RMB 2,025.0 million (USD 313.5 million). Taking this into consideration, the Board believes that the Group will have sufficient available financial resources to meet its obligations becoming due and working
capital requirements in the next twelve months from the date of issuance of these financial statements. Accordingly, the Board considers that it is appropriate to prepare the consolidated financial information on a going concern basis.
The outbreak of a novel strain of the coronavirus, specifically identified as COVID-19 , has
spread globally. COVID-19 is a virus causing potentially deadly respiratory tract infections and has impacted the global economy. In March 2020, the World Health Organization declared COVID-19 a pandemic.
The Group has taken measures to protect the safety of its employees and
continuously monitors and evaluates the situation regarding COVID-19. COVID-19 ultimately may impact the Group s clinical trials, including potential delays and
restrictions on the ability to recruit and retain patients, principal investigators, and healthcare employees. COVID-19 could also affect the operations of contract research organizations ( CROs )
engaged by the Group. The Group continuously monitors the possible impact of COVID-19 on the Group, its CROs, contract manufacturing organizations and clinical sites performing research and development
activities for the Group and has developed alternatives to limit the impact of COVID-19 on its operations going forward.
Management expects that COVID-19 will have some impact on the Company s business and operations,
but it is not expected to have a material adverse effect on the financial condition or liquidity of the Company.
The accounting policies and method of computation used in the preparation of the interim condensed consolidated financial statements are
consistent with those used in the preparation of the audited consolidated financial statements for the preceding fiscal years included in the Company s final prospectus filed with the Securities and Exchange Commission on March 19, 2021.
Convenience translation
Translations of the unaudited interim condensed consolidated balance sheet, the unaudited interim condensed consolidated statement of loss,
unaudited interim condensed consolidated statement of comprehensive loss and unaudited interim condensed consolidated statement of cash flows from RMB into USD as of and for the six months ended June 30, 2021 are solely for the convenience of
the readers and calculated at the rate of USD 1.00 = RMB 6.4601, representing the exchange rate as of June 30, 2021 set forth in the China Foreign Exchange Trade System. No representation is made that the RMB amounts could have been, or could
be, converted, realized or settled into USD at that rate, or at any other rate.
New and amended standards and interpretations not yet adopted by the Group
| Effective for annual periods beginning on or after | ||||
| Amendments to IAS 1 | Classification of Liabilities as Current or Non-current | January 1, 2022 | ||
| Amendments to IAS 16 | Property, Plant and Equipment: Proceeds before intended use | January 1, 2022 | ||
| Amendments to IFRS 3 | Reference to the Conceptual Framework | January 1, 2022 | ||
| Annual Improvements | Annual Improvements to IFRS Standards 2018 2020 | January 1, 2022 |
The table below analyzes the Group s financial instruments carried at fair value as of December 31, 2020 and June 30, 2021 by
level of the inputs to valuation techniques used to measure fair value. Such inputs are categorized into three levels within a fair value hierarchy as follows:
As of June 30, 2021, the Group did not carry any financial assets or liabilities measured at fair value.
| As of December 31, 2020 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| RMB 000 | RMB 000 | RMB 000 | RMB 000 | |||||||||||||
| Assets | ||||||||||||||||
| Financial assets at fair value through profit or loss | 13,068 | 13,068 | ||||||||||||||
| Total assets | 13,068 | 13,068 | ||||||||||||||
| Liabilities | ||||||||||||||||
| Financial instruments with preferred rights | 2,071,508 | 2,071,508 | ||||||||||||||
| Total liabilities | 2,071,508 | 2,071,508 |
There were no transfers between Levels 1, 2 and 3 during the periods presented.
Financial instruments in Level 3
If one or more of the significant inputs are not based on observable market data, the instrument is included in Level 3.
Specific valuation techniques used to value financial instruments include:
Level 3 instruments within the Group s assets and
liabilities include short-term investment in wealth management products measured at fair value through profit or loss and financial instruments with preferred rights.
The following table presents the changes in Level 3 instruments of short-term investment in wealth management products for the six months
ended June 30, 2020 and 2021.
| Six Months Ended June 30, | ||||||||
| 2020 | 2021 | |||||||
| RMB 000 | RMB 000 | |||||||
| Financial assets at fair value through profit or loss | ||||||||
| Opening balance | 30,632 | 13,068 | ||||||
| Additions | 43,200 | 42,500 | ||||||
| Settlements | (47,854 | ) | (55,706 | ) | ||||
| Investment income credited to profit or loss* | 396 | 138 | ||||||
| Closing balance | 26,374 | |||||||
| *includes unrealized gains recognized in profit or loss attributable to balances held at the end of the reporting period | 177 |
The valuation of financial instruments with preferred rights is set out in Note 19.
The carrying amounts of the Group s other financial assets and liabilities, including cash and cash equivalents, other receivables, trade
payable and other payables, approximate their fair values.
The preparation of the interim condensed consolidated financial statements requires the use of accounting estimates which, by definition, may
not equal the actual results. Management also needs to exercise judgment in applying the Group s accounting policies. Estimates and judgments are continually evaluated. They are based on historical experience and other factors, including
expectations of future events that may have a financial impact on the Group and that are believed to be reasonable under the circumstances.
In preparing the interim condensed consolidated financial statements, the nature of significant judgments made by management in applying
accounting policies and the key sources of estimation uncertainty were consistent with those described in the audited consolidated financial statements for the preceding fiscal years included in the Company s final prospectus filed with the
Securities and Exchange Commission on March 19, 2021.
| Six Months Ended June 30, | ||||||||
| 2020 | 2021 | |||||||
| RMB 000 | RMB 000 | |||||||
| Clinical trials related expenses | 40,486 | 182,545 | ||||||
| Employee benefit expenses (Note 6) | 9,861 | 40,635 | ||||||
| Consultancy fee | 11,716 | 31,002 | ||||||
| Office expenses | 696 | 2,821 | ||||||
| R&D materials and consumable supplies | 846 | 6,602 | ||||||
| Depreciation and amortization | 395 | 1,432 | ||||||
| Others | 2,133 | 734 | ||||||
| 66,133 | 265,771 |
| Six Months Ended June 30, | ||||||||
| 2020 | 2021 | |||||||
| RMB 000 | RMB 000 | |||||||
| Wages, salaries and bonuses | 6,574 | 17,998 | ||||||
| Share-based compensation expenses (Note 17) | 1,590 | 19,423 | ||||||
| Welfare expenses | 436 | 2,641 | ||||||
| Housing funds | 307 | 573 | ||||||
| Contributions to defined benefit plan (i) | 954 | |||||||
| 9,861 | 40,635 |
Employee benefit expenses were charged in the following line items in the interim