China Biotech Services (08037) and Yixing Ecological Science Park Industrial Development Equity Investment Partnership Inject Nearly RMB 100 Million into Shanghai Longyao

China Biotech Services Holdings Limited (08037) announced that on December 8, 2023, the company, Shanghai Longyao Biological Technology Co., LTD. (an indirect non-wholly owned subsidiary of the company), and the investor Yixing Environmental Science and Technology Park Industrial Development Equity Investment Partnership (Limited Partnership) entered into a capital injection agreement. The investor agreed to make a capital injection of RMB 48 million, of which RMB 992,670 will be used to subscribe for 5.35% of the equity interest in the enlarged registered capital of Shanghai Longyao, and RMB 47,007,330 will be credited to the capital reserve of Shanghai Longyao. The company agreed (through a wholly-owned subsidiary to be established in China) to make a capital injection of RMB 49.96 million, of which RMB 1,033,200 will be used to subscribe for 5.57% of the equity interest in the enlarged registered capital of Shanghai Longyao, and RMB 48,926,800 will be credited to the capital reserve of Shanghai Longyao. A put option was granted to the investor, entitling the investor to require Shanghai Longyao to repurchase at the put price, or (if Shanghai Longyao fails to repurchase) to require the company to acquire all or part of the investor's equity interest in Shanghai Longyao at the put price, in the event of any redemption event. A call option was granted to the company, exercisable at the discretion of the company on or before December 31, 2024, under which the company may acquire all or part of the investor's equity interest in Shanghai Longyao.

On the same day, Liu Xiaolin entered into a side letter with the investors, pursuant to which Mr. Liu committed that if the investors exercise their put option and Shanghai Longyao Biological Technology Co., LTD fails to repurchase at the put price, or the company fails to acquire all of the investors' equity interests in Shanghai Longyao at the put price, Liu Xiaolin shall acquire such equity interests in accordance with the terms of the capital injection agreement.

Upon completion of the capital injection, the Group's immediate actual equity interest in Shanghai Longyao will decrease by approximately 1.87% from about 68.13% to 66.26%. Shanghai Longyao will remain a subsidiary of the Company, and its performance, assets, and liabilities will continue to be consolidated into the Company’s consolidated financial statements.

It is reported that Shanghai Longyao Biological Technology Co., LTD. mainly engages in the research and development of CAR-T therapy.

CAR-T cell therapy has demonstrated clinical efficacy and safety in treating several types of cancer. The company believes that Shanghai Longyao's CAR-T cell immunotherapy technology holds great potential in clinical cancer treatment. It was agreed by all parties that Shanghai Longyao will use all the proceeds from the capital injection to upgrade the GMP production base, purchase instruments and equipment, conduct clinical research on CD20-CART-OX40, and fund the development of other product projects. The capital injection will advance the company’s plans to capitalize on growth opportunities in CAR-T cell therapy and other key business areas of the group.