Form 20-F Jyong Biotech Ltd. For: Dec 31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2025

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________to_________

OR

☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report:__________

For the transition period from________to_________

Commission file number: 001-42445

Jyong Biotech Ltd.

(Exact name of Registrant as specified in its charter)

N/A

(Translation of Registrant’s name into English)

Cayman Islands

(Jurisdiction of incorporation or organization)

23F-3, No. 95, Section 1, Xintai 5^th Road,
Xizhi District, New Taipei City,
Taiwan, 221
Tel: +886-2-2732-5205

(Address of principal executive offices)

Wei Zhang, Chief Financial Officer

Telephone: +886-2-2732-5205

Email address: [email protected]

23F-3, No. 95, Section 1, Xintai 5^th Road,
Xizhi District, New Taipei City, Taiwan, 221
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

As of December 31, 2025, there were 76,027,667 ordinary shares issued and outstanding, par value US$0.00001 per share.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act Yes ☐ No ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer, “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow: Item 17 ☐ Item 18 ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ☐ Yes ☐ No

TABLE OF CONTENTS

INTRODUCTION

In this annual report on Form 20-F, unless the context otherwise requires, references to:

where d is a scaling factor that is assumed as 1; EC₅₀ is the concentration causing half maximal effect; E_max is the maximum induction effect; [I] is the concentration of BDS component D in serum; w_D is the percentage of component D in BDS.

This annual report on Form 20-F includes our audited consolidated financial statements for the fiscal years ended December 31, 2025, 2024, and 2023. In this annual report, we refer to assets, obligations, commitments, and liabilities in our consolidated financial statements in U.S. dollars. Certain dollar references are based on the exchange rate of NTD to U.S. dollars, determined as of a specific date or for a specific period. Changes in the exchange rate will affect the amount of our obligations and the value of our assets in terms of U.S. dollars which may result in an increase or decrease in the amount of our obligations (expressed in dollars) and the value of our assets, including accounts receivable (expressed in dollars).

This annual report contains translations of certain NTD into U.S. dollars at specified rates. Unless otherwise stated, the following exchange rates are used in this annual report:

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

This annual report contains forward-looking statements that reflect our current expectations and views of future events. These forward-looking statements are made under the “safe-harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Known and unknown risks, uncertainties and other factors, including those listed under “Item 3. Key Information — D.  Risk Factors,” may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.

You can identify some of these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “is/are likely to,” “potential,” “continue” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include statements relating to:

These forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may later be found to be incorrect. The forward-looking statements made in this annual report relate only to events or information as of the date on which the statements are made in this annual report. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should thoroughly read this annual report and the documents that we refer to herein with the understanding that our actual future results may be materially different from and worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements.

This annual report contains certain data and information that we obtained from various government and private publications. Statistical data in these publications also include projections based on a number of assumptions. The pharmaceutical industry may not grow at the rate projected by market data, or at all. Failure of this industry to grow at the projected rate may have a material and adverse effect on our business and the market price of our ordinary shares. In addition, the competitive and rapidly changing nature of the pharmaceutical industry results in significant uncertainties for any projections or estimates relating to the growth prospects or future condition of our industry. Furthermore, if any one or more of the assumptions underlying the market data are later found to be incorrect, actual results may differ from the projections based on these assumptions. You should not place undue reliance on these forward-looking statements.

Part I

Item 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not Applicable.

Item 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not Applicable.

Item 3. KEY INFORMATION

A. [Reserved]

B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

RISK FACTORS SUMMARY

You should carefully consider the risks and uncertainties summarized below, the risks described under “Item 3. Key Information — D. Risk Factors” beginning on page 1. The risks described in “Risk Factors” in this annual report may cause us to not realize the full benefits of our strengths or may cause us to be unable to successfully execute all or part of our growth strategy. Some of the more significant risks include the following:

RISKS RELATED TO THE DISCOVERY, DEVELOPMENT, AND COMMERCIALIZATION OF OUR DRUG CANDIDATES

Our business is highly dependent on the success of our core drug candidate, Botreso^®. If we are unable to obtain marketing approval for or successfully commercialize Botreso^®, or if we experience significant delays in doing so, our business would expect to be materially and adversely affected.

We currently have no drug products that are approved for commercial sale. Compared with other companies that have multiple drug candidates in active development, our business and future success depends, in large parts, on our ability to obtain regulatory approval for, and then successfully commercialize our core drug candidate, Botreso^®. If we cannot obtain approval for Botreso^®, which is the initial indication that we are currently exploring, we will have spent substantial time and financial resources without receiving a return on investment.

The success of Botreso^® will depend on several factors, including the following:

If we do not achieve one or more of these factors, many of which are beyond our control, in a timely manner or at all, we could experience significant delays or an inability to obtain regulatory approvals or commercialize Botreso^®. Even if regulatory approvals are obtained, we may not be able to successfully commercialize Botreso^® due to various factors beyond our control. Accordingly, we may not be able to generate sufficient revenue through the sale of Botreso^® to sustain our operations.

We may allocate our limited resources to pursue a particular drug candidate, indication, or technology and fail to capitalize on existing or future drug candidates, indications or technologies that may later prove to be more profitable, or for which there is a greater likelihood of success.

Because we have limited financial and managerial resources, we intend to focus on developing drug candidates for specific indications that we identify as most likely to succeed, in terms of both their potential for marketing approval and commercialization. As a result, we may forgo or delay pursuit of opportunities with other drug candidates or for other indications or technologies that later may prove to have greater commercial potential or a greater likelihood of success. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on current and future research and development programs and drug candidates for specific indications may not yield any commercially viable drug candidates. In addition, if we do not accurately evaluate the commercial potential or target market for a particular drug candidate or technology, we may relinquish valuable rights to that drug candidate or technology through collaboration, licensing or other royalty arrangements when it would have been more advantageous for us to retain sole development and commercialization rights to such drug candidate or technology. For example, we are developing our core drug candidate, Botreso^®, to initially treat BPH/LUTS. We are also considering a number of additional indications for Botreso^®, including the potential to prevent prostate cancer. We cannot guarantee that the treatment of BPH/LUTS will be the most profitable indication for Botreso^® as opposed to other contemplated indications. This could result in us failing to capitalize on the true market potential of our core drug candidate in a timely manner or at all.

Although a substantial amount of our efforts will focus on the continued clinical testing, potential approval, manufacturing and commercialization of our existing drug candidates, the success of our business depends, in part, upon our ability to identify, license, discover, develop, and commercialize additional drug candidates or new technologies. Research efforts to identify new drug candidates and technologies require substantial technical, financial, and human resources. Although we do not currently engage in such activities, we may in the future seek to expand our drug pipeline through in-licensing arrangements. We may end up focusing our efforts and resources on potential drug candidates and technologies that ultimately prove to be unsuccessful. Our research and any future licensing efforts may fail to identify, discover or in-license new drug candidates and technologies suitable for clinical development and commercialization for a number of reasons, including, but not limited to, the following:

Accordingly, there can be no assurance that we will successfully identify and develop new drug candidates or technologies, or additional therapeutic opportunities for our drug candidates, whether through internal research or future licensing efforts, which could materially and adversely affect our future growth and prospects.

The U.S. FDA has rarely approved botanical drug products. If we are unable to obtain the U.S. FDA’s approval for marketing our drug candidates, or if we experience significant delays in doing so, our business could be materially and adversely affected.

As of the date of this annual report, only four botanical drug products have received the U.S. FDA’s approval for marketing as prescription drugs: (i) Veregen which contains the drug substance sinecatechins, which is a partially purified fraction of the water extract of green tea leaves from Camellia sinensis (L.) O Kuntze and is indicated for the treatment of genital and perianal warts, (ii) Mytesi which is a proanthocyanidin oligomer indicated to relieve symptoms of diarrhea in HIV/AIDS patients taking antiretroviral therapy and is derived from the red latex of Croton lechleri Müll. Arg., (iii) NexoBrid which is a topically administered, biological orphan drug for the enzymatic removal of eschar in patients with deep partial- and full-thickness thermal burns, and (iv) Filsuvez which is a prescription medicine used on the skin to treat wounds that may happen with dystrophic and junctional epidermolysis bullosa (EB) in adults and children 6 months of age and older.

The quality control of botanical drug products is very complex due to the variability of botanical raw material and the need to ensure that the therapeutic effect for botanical drug product batches is consistent. It is challenging to ensure batch-to-batch consistency, which must be demonstrated to obtain U.S. FDA approval. Minor changes in API source or the manufacturing process can result in meaningful difference in clinical effects and may mean that earlier developed pharmacological, nonclinical and clinical data no longer apply to the changed product.

We cannot predict the time required to secure all appropriate regulatory approvals or the extent of testing and documentation that may be required by governmental authorities, in particular, to obtain the approval for a botanical drug product from the U.S. FDA. Any delays in obtaining, or failure to obtain, regulatory approvals would significantly delay the development of markets and products and would have a material adverse effect on our business, results of operations and financial condition.

Clinical development involves a lengthy and expensive process with an uncertain outcome, and results of earlier studies may not be predictive of future study results.

There is a risk of failure for every drug candidate. Clinical testing is expensive, difficult to design and implement and can take many years to complete, so its outcome is inherently uncertain. It is difficult to predict when or if any of our drug candidates will prove effective and safe in humans or will receive regulatory approval, and failure can occur at any time during the preclinical and clinical development process. Before obtaining regulatory approval from regulatory authorities for the commercialization of any drug candidate, our drug candidates must complete preclinical studies and then be subjected to extensive clinical trials to demonstrate the safety and efficacy of our drug candidates in humans.

The results of preclinical studies and clinical trials of our drug candidates may not be predictive of the results of later-stage clinical trials. Drug candidates during later stages of clinical trials may fail to show the desired results in safety and efficacy despite having progressed through preclinical studies and initial to advanced clinical trials and despite the level of scientific rigor in the study, design and adequacy of execution. In some instances, there can be significant variability in safety and/or efficacy results among different studies of the same drug candidate due to numerous factors, including, but not limited to, differences in individual patient conditions, including genetic differences, and other compounding factors, such as other medications or pre-existing medical conditions. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their drug candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain regulatory approval of their drug candidates.

In the case of any studies we conduct, results may differ from earlier studies due to the larger number of clinical trial sites, foreign subjects and different languages involved in such studies. Clinical practices vary globally, and there is a lack of harmonization among the guidance provided by various regulatory bodies of different regions and countries with respect to the data that is required to receive marketing approval, which makes designing global studies increasingly complex. Differing regulatory approval requirements in different countries could make it more difficult for us to conduct unified global studies, which can lead to increased development costs and marketing delays or non-viability of our clinical trials. In addition, regulatory authorities may determine that clinical trial results obtained in foreign subjects do not adequately represent the results that would be obtained in local patients and are thus not supportive of relevant approvals.

In particular, if we experience delays in the start or completion of, or termination of, any clinical trial of our key drug candidates, Botreso^®, PCP and IC, the commercial prospects of them may be harmed, and our ability to generate product revenues from our key drug candidates will be delayed. In addition, any delays in completing our clinical trials will increase our costs, slow down the development and approval process for our key drug candidates, and jeopardize our ability to commence product sales and generate revenues. Any of these occurrences may significantly harm our business, financial condition and prospects. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our key drug candidates.

Investigation and development of botanical drug products is very complex due to the variability of botanical raw material and the need to ensure that the therapeutic effect for botanical drug product batches is consistent. Minor changes in API source or the manufacturing process can result in meaningful difference in clinical effects and may mean that earlier developed pharmacological, nonclinical and clinical data no longer apply to the changed product.

All of our key drug candidates are in preclinical or clinical development. If we are unable to complete clinical development and obtain regulatory approval to ultimately commercialize our key drug candidates, or if we experience significant delays in doing so, our business, financial condition, results of operations and prospects will be materially harmed.

All of our key drug candidates are still in development. Our ability to generate revenue from our key drug candidates is dependent on receipt of regulatory approval and successful commercialization of such products. We cannot guarantee that we will be able to obtain regulatory approvals for our existing drug candidates in a timely manner, or at all, and we may be unable to obtain successful commercialization of our key drug candidates even if we receive regulatory approval. Each of our key drug candidates will require additional preclinical and/or clinical development, regulatory approvals in multiple jurisdictions, development of commercial manufacturing supply and capacity, substantial investment and significant marketing efforts before we generate any revenue from product sales.

The success of our key drug candidates will depend on several factors, including, but not limited to, the following:

Any significant delays in, or an inability to, obtain regulatory approval and ultimately achieve commercial success for our existing and future drug candidates in one or more jurisdictions would materially harm our business and we may not be able to generate enough revenues and cash flows to continue our operations could further materially harm our business. As a result, our financial condition, results of operations and prospects will be materially and adversely harmed.

If we encounter delays or difficulties enrolling and retaining patients in our clinical trials, our clinical development progress and our receipt of necessary regulatory approvals could be delayed or otherwise adversely affected.

The timely completion of clinical trials in accordance with their protocols depends, among other things, on our ability to enroll a sufficient number of patients that will remain in the study until its conclusion. We may not be able to initiate or continue clinical trials for our drug candidates if we are unable to locate and enroll a sufficient number of eligible patients to participate in these studies as required by the TFDA, the U.S. FDA, and any other applicable similar regulatory authorities, or if there are delays in the enrollment of eligible patients as a result of the competitive clinical enrollment environment. Even once enrolled, we may be unable to retain a sufficient number of patients to complete any of our trials. The inability to enroll a sufficient number of patients who meet the applicable criteria for our clinical trials would result in significant delays and could require us to abandon one or more clinical trials altogether. If patients are unwilling to enroll in our clinical trials because of restrictions on travel or healthcare institution policies, negative publicity from adverse events related to the pharmaceutical industry or for other reasons, the timeline for recruiting patients, conducting studies and obtaining regulatory approval of our drug candidates may be delayed. As of the date of this annual report, we have not encountered any delays or difficulties enrolling and retaining patients in our clinical trials, however, we cannot predict or guarantee that we will be successful at enrolling subjects in future clinical trials. Even if we are able to enroll a sufficient number of patients in our clinical trials, delays in patient enrollment could result in increased development costs, delays in advancing our drug candidates, delays in testing the effectiveness of our drug candidates or termination of clinical trials altogether.

Patient enrollment for our clinical trials may be affected by other factors, including, but not limited to, the following:

Additionally, our ability to successfully initiate, enroll and complete clinical trials in any foreign country is subject to numerous risks unique to conducting business in foreign countries, including:

In addition, our clinical trials may compete with other clinical trials for drug candidates that are in the same therapeutic areas as our drug candidates, and this competition will reduce the number and types of patients available to us, because some patients who might have opted to enroll in our trials may instead opt to enroll in a trial being conducted by one of our competitors. Because the number of qualified clinical investigators and clinical trial sites is limited, we expect to conduct some of our clinical trials at the same clinical trial sites that some of our competitors use, which will reduce the number of patients who are available for our clinical trials at such clinical trial sites. For example, although we have not encountered any delays or difficulties in enrolling or retaining patients for our clinical trials in the past, we may in the future experience such delays or difficulties due to government orders and site policies on account of health epidemics, and some patients may be unwilling or unable to travel to study sites, enroll in our studies or comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services. If we have difficulty enrolling a sufficient number of patients or finding additional clinical trial sites to conduct our clinical trials as planned, we may need to delay, limit or terminate ongoing or planned clinical trials, any of which could have an adverse effect on our business, financial condition, results of operations and prospects. In addition, it is possible that health pandemics may have an impact on the workforce of the third parties on which we rely, which could adversely impact our ability to conduct preclinical studies, enroll and retain patients in our clinical trials and conduct the clinical trials of our drug candidates on expected timeframes or to complete such studies, and our ability to ultimately obtain regulatory approval. As a result, the value of our Company could decline and our ability to obtain additional financing may be impaired.

The U.S. FDA has concluded that one of our four Phase III trials failed to demonstrate a statistically significant difference between Botreso^® with API-1 and placebo in the primary efficacy endpoint in the Botreso^®-US-a study. If our future clinical trials of our key drug candidates fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or do not otherwise produce positive results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development, regulatory approval, and commercialization of our drug candidates.

Before obtaining regulatory approval for the sale of our drug candidates, we must conduct extensive clinical trials to demonstrate the safety and efficacy of our drug candidates in humans. We may experience numerous unexpected events during, or as a result of clinical trials that could delay or prevent our ability to receive regulatory approval or commercialize our drug candidates, including, but not limited to, the following:

If we are required to conduct additional clinical trials or other testing of our drug candidates beyond those that we currently plan, if we are unable to successfully complete clinical trials of our drug candidates or other testing, if the results of these studies or tests are not positive or are only modestly positive, or if they raise safety concerns, we may (i) be delayed in obtaining regulatory approval for our drug candidates; (ii) obtain approval for indications or patient populations that are not as broad as intended or desired; (iii) not obtain regulatory approval at all; (iv) have the drug removed from the market after obtaining regulatory approval; (v) be subject to additional post-marketing testing requirements; (vi) be subject to restrictions on how the drug is distributed or used; or (vii) be unable to obtain reimbursement for use of the drug. Many of the factors that cause a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our drug candidates. Further, the TFDA, the U.S. FDA or other regulatory authorities may disagree with our clinical trial design or our interpretation of data from clinical trials, or may change the requirements for approval even after it has reviewed and commented on the design for our clinical trials.

We used one supplier for API-1, which formed the basis for the NDA that has since been withdrawn by the Company. The supplier of API-1 sold a parcel of its land and is currently in the process of relocating and reconstructing its manufacturing facility. Consequently, API-1 is presently unavailable to us, and the supplier of API-1 withdrew its consent for us to reference their DMF on file with the U.S. FDA.

The U.S. FDA has determined that one of our four Phase III trials failed to demonstrate a statistically significant difference between Botreso^® with API-1 and placebo in the primary efficacy endpoint in the MCS-2-US-a study. Given the current unavailability of API-1, we requested a Type D meeting on December 12, 2023, to propose conducting a new Phase III trial and Phase I PK study using API-2. The U.S. FDA provided written responses on February 23, 2024, with their comments on the Phase III trial and Phase I PK study design and requested that we provide the Statistical Analysis Plan for the Phase III study. We are currently finalizing the Phase III protocol and the Phase I PK study protocol from the synopsis to comply with the U.S. FDA requirements. If the CMC comparability between API-1 and API-2 is approved, we will request a Type B meeting (WRO) with the U.S. FDA to discuss our revised Phase III protocol, Statistical Analysis Plan, and PK study protocol.

We intend to conduct the two studies in the US following the completion of our second round of financing, with the completion targeted within one to two years. The study budget cannot be determined at present and will need to be estimated after further comments from the U.S. FDA. The aforementioned completion timeline and study budget are additional to the originally allocated resources, necessitated by the lack of access to API-1 supplies.

Our drug candidates may cause serious adverse, undesirable or unacceptable side effects or may have other properties that could delay or prevent their regulatory approval, limit the commercial profile of an approved label, and/or result in significant negative consequences following regulatory approval, if any.

As is the case with pharmaceuticals generally, it is likely that there may be serious adverse, undesirable or unacceptable side effects caused by our drug candidates that could cause us or regulatory authorities to interrupt, delay or halt clinical trials and may result in a more restrictive label, a delay or denial of regulatory approval by the TFDA, the U.S. FDA or other comparable regulatory authorities, or a significant change in our clinical trial protocols or even our development plan. Results of our future preclinical studies and clinical trials could reveal a high and unacceptable severity or prevalence of adverse events. In such an event, our studies could be suspended or terminated and the TFDA, the U.S. FDA or other comparable regulatory authorities could order us to cease further development of, or deny approval of, our drug candidates for any or all targeted indications. Adverse events related to our drug candidates may affect patient recruitment or the ability of enrolled subjects to complete the study and could result in potential liability claims. Serious or life-threatening adverse events associated with any of our drug candidates or of a botanical constituent could be so rare in occurrence as to not be statistically likely to arise during clinical trials and may only arise after regulatory approval and marketing. Any of these occurrences may significantly influence our reputation, business, financial condition and prospects.

All identified serious adverse events have been determined to be “not related” to Botreso^®, with the exception of a pancreatitis event observed in the MCS-2-US-c trial. In this instance, the pancreatitis lasted only three days, and the causality was assessed as “possibly related” but not “definitely related,” as the event was most likely attributable to Metformin, a medication used to treat diabetes mellitus.

Additionally, the identification of serious adverse, undesirable or unacceptable side effects caused by any of our future approved drug candidates may lead to potentially significant negative consequences, which include, but are not limited to, the following:

Any of these events could prevent us from achieving or maintaining market acceptance of any particular drug candidate that is approved and could significantly harm our business, results of operations and prospects.

Further, the use of our drug candidates in conjunction with other therapies, may result in unique adverse events that could be exacerbated compared with adverse events from the use of our drug candidates alone. Results of our studies could reveal a high and unacceptable severity or prevalence of adverse events. These types of adverse events could be caused by our drug candidates and could cause us or regulatory authorities to interrupt, delay or halt clinical trials and may result in a more restrictive indication or the delay or denial of regulatory approval by the TFDA, the U.S. FDA or other comparable regulatory authority.

The manufacture of our drug products is a complex process which requires significant expertise and capital investment, and if we encounter problems in establishing our manufacturing capabilities for clinical or commercial scale or in the manufacture of our future products, our business could suffer.

As of the date of this annual report, only four botanical drug products have received the U.S. FDA’s approval for marketing as prescription drugs. The quality control of botanical drug products is very complex due to the variability of botanical raw material and the need to demonstrate that the therapeutic effect for the tested botanical drug product batches is the targeted constituent (or constituents in the aggregate). It is challenging to ensure batch-to-batch consistency, which must be demonstrated to obtain U.S. FDA approval. Minor changes in geographical location of the API source or the manufacturing process can result in meaningful differences in clinical effects and may mean that earlier developed pharmacological, nonclinical and clinical data no longer apply to the changed product. If we are unable to obtain the U.S. FDA’s approval for marketing our drug candidates, or if we experience significant delays in doing so, our business could be materially and adversely affected.

The manufacture of our drug products is a complex process, in part due to strict regulatory requirements and the inherent variability and sensitivities of the botanical nature of our drug products’ raw materials. If we are unable to identify an appropriate geographical location for growing our botanical raw materials to ensure consistency in the concentration of target constituents or if we are unable to identify an appropriate production site or suitable collaborators to develop our manufacturing infrastructure, or if we fail to do so in a timely manner, any of these may lead to significant delays in the clinical supply of our drug candidates as well as the commercial manufacturing of our drug candidates once regulatory and marketing approvals have been obtained. In turn, this could delay our clinical trials, negatively impact our ability to ultimately obtain regulatory approval and materially harm any future commercialization plans.

In addition, problems may arise during the manufacturing process for a variety of reasons, including, but not limited to, required consistency of botanical raw materials, equipment malfunction, failure to follow specific protocols and procedures, problems with (including shortage of) raw materials, global supply chain issues, delays related to the construction of new facilities or expansion of any future growing or manufacturing facilities, including changes in growing or manufacturing production sites and limits to manufacturing capacity due to regulatory requirements, changes in the types of products produced, increases in the prices of raw materials, physical limitations that could inhibit continuous supply, man-made or natural disasters and environmental factors. For example, although we have not experienced material supply disruptions due to the COVID-19 pandemic, we cannot guarantee that we will not experience supply disruptions in the future due to the COVID-19 pandemic or any other pandemics, epidemics or other public health crises, natural catastrophes or other disasters.” If problems arise during the production of a batch of future products, that batch of future products may have to be discarded and we may experience product shortages or incur added expenses. This, as well as problems that may arise during the manufacturing process, could, among other things, lead to significant additional costs and/or delays, lost revenue, damage to customer relationships, time and expense spent investigating the cause and, depending on the cause, similar losses with respect to other batches or products. If problems are not discovered before such product is released to the market, recall and product liability costs may also be incurred.

Changes in our drug candidates’ manufacturing or formulation may result in additional costs or delay.

As our drug candidates are developed through preclinical studies to late-stage clinical trials towards approval and commercialization, it is common that various aspects of the development program, such as raw materials testing and release, manufacturing methods and formulation, are altered in an effort to optimize processes, which may not pass regulatory inspections. If we engage in the scale-up of manufacturing, we may encounter unexpected issues relating to the manufacturing process or the quality, purity and stability of the product, and we may be required to refine or alter our manufacturing processes to address these issues. Such changes may not achieve these intended objectives. Any of these changes could cause our product candidates to perform differently and affect the results of preclinical studies and clinical trials. Such changes may also require additional testing, notification or approval by relevant regulatory authorities, including additional pharmacokinetics or pharmacodynamics trials. This could delay completion of preclinical studies and clinical trials; require us to conduct bridging clinical trials or studies, or to repeat one or more clinical trials; increase study or clinical trial costs; or delay approval of our product candidates and jeopardize our ability to commence product sales and generate revenue.

We have not yet obtained marketing approval for a drug candidate and we may be unable to obtain, or may be delayed in obtaining, marketing approval for our drug candidates.

We have not yet obtained marketing approval for a drug candidate. It is possible that the TFDA, the U.S. FDA or other comparable regulatory authority may refuse to accept for review any NDAs that we submit for our drug candidates. It is also possible that the U.S. FDA may conclude, after review of our data, that our application for Botreso^® is insufficient or the data fails to achieve clinical endpoints to statistical significance when compared with placebo, and thus may delay the U.S. FDA’s issuance of marketing approval of Botreso^®. If the TFDA, the U.S. FDA or other comparable regulatory authority does not accept or approve our NDAs for any of our drug candidates, it may require that we conduct additional clinical trials, preclinical studies or manufacturing validation studies and submit that data before it will reconsider our applications. Depending on the extent of these or any other required trials or studies, approval of any NDA or application that we submit may be delayed by several years or may require us to expend more resources than we have available. It is also possible that additional trials or studies, if performed and completed, may not be considered sufficient by the TFDA, the U.S. FDA or other comparable regulatory authority to approve our NDAs. Any delay in obtaining, or an inability to obtain, marketing approvals would prevent us from commercializing our drug candidates, generating revenues and achieving and sustaining profitability.

Obtaining and maintaining regulatory approval of our drug candidates in one jurisdiction does not mean that we will be successful in obtaining or maintaining regulatory approval of our drug candidates in other jurisdictions.

Obtaining and maintaining regulatory approval of our drug candidates in one jurisdiction does not guarantee that we will be able to obtain or maintain regulatory approval in any other jurisdiction, while a failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory approval process in others. For example, even if the U.S. FDA grants marketing approval of a drug candidate, comparable regulatory authorities in foreign jurisdictions must also approve the manufacturing, marketing and promotion of the drug candidate in those countries. Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and greater than, those in Taiwan or the U.S., including additional preclinical studies or clinical trials as clinical trials conducted in one jurisdiction may not be accepted by regulatory authorities in other jurisdictions.

We may also submit marketing applications in other countries. Regulatory authorities have requirements for approval of drug candidates with which we must comply prior to marketing in those jurisdictions. Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties, and costs for us and could delay or prevent the introduction of our products in certain countries. If we fail to comply with the regulatory requirements in international markets and/or receive applicable marketing approvals, our target market will be reduced and our ability to realize the full market potential of our drug candidates will be harmed.

Potential Non-Acceptance by the U.S. FDA of API-1 and API-2 Comparability could materially and adversely affect our business, financial condition, and results of operations.

Active pharmaceutical ingredient-1(API-1), the raw material we used in the previous clinical trials for Botreso^®, is currently unavailable due to the supplier’s relocation and withdrawal of their consent to reference their Drug Master File on file with the U.S. FDA. We have completed the CMC documentation on the active pharmaceutical ingredient-2 (API-2) and a plan to establish comparability between API-1 and API-2 and submitted it to the U.S. FDA on October 16, 2024, and are awaiting feedback from the U.S. FDA. As of the date of this annual report, the Company has not yet successfully demonstrated the comparability of API-1 and API-2.

We are currently in the process of providing the U.S. Food and Drug Administration (FDA) with the necessary information to demonstrate the comparability of API-1 and API-2 and are awaiting a response. However, there is a risk that the FDA may determine that API-1 and API-2 are not sufficiently comparable and we would have to perform more clinical trials.

The FDA’s concerns primarily relate to potential differences in the sources and methods of producing API-1 and API-2, including, but not limited to, changes in agricultural sites, agricultural and collection practices, processing methods, and manufacturing techniques. Each of these factors could impact the quality, safety, and efficacy of the active pharmaceutical ingredients, leading to a requirement for additional data or even new clinical trials to establish comparability.

If the FDA does not agree that API-1 and API-2 are sufficiently comparable, we could face significant consequences, including, but not limited to, regulatory delays and increased costs. We will be required to repeat the Botreso^® and PCP clinical trials using API-2, or to conduct other additional clinical trials as may be required by the U.S. FDA. For further details, see the risk factor titled “If we are unable to identify a supplier capable of producing API-2 that is sufficiently comparable to API-1, we will be required to repeat our clinical trials for Botreso^® and PCP, which could significantly delay our product development efforts and result in increased costs” on page 13.

The approval process for our drug candidates could be delayed significantly, as we may be required to conduct additional studies or provide further data to address the FDA’s concerns. The need for additional studies or data submissions could result in substantial, unanticipated costs, which could adversely affect our financial condition and operational results.

Our ability to obtain FDA approval for our new drug application (NDA) may be delayed or denied due to concerns raised by the FDA regarding our clinical trial data and comparability of our active pharmaceutical ingredients.

The U.S. FDA has reviewed our proposed Phase III protocol and Phase I pharmacokinetic (PK) synopsis, as reflected in their written response dated February 23, 2024. The U.S. FDA raised several concerns in this response that could impact our ability to obtain approval for our new drug application (NDA):

In response to these concerns and upon U.S. FDA’s recommendation, we are developing a comparability plan to provide the U.S. FDA with convincing link and data between products containing API-1 and API-2. As of the date of this annual report, the Company is still in the process of providing the information required by the U.S. FDA and has not yet successfully demonstrated the comparability of API-1 and API-2.

After our submission of our comparability plan and, if U.S. FDA agrees our data demonstrates comparability between API-1 and API-2, we will be able to rely on trials that were previously conducted using API-1, and we then will initiate the Botreso^® Phase III study and the PK study using API-2 simultaneously. As mentioned earlier, for Botreso^® (API-1), we have conducted four Phase III clinical trials in the U.S. and Taiwan, including two pivotal trials (one in each location) and two open-label extension studies (also one in each location) using API-1. The U.S. FDA raised concerns about one pivotal Phase III trial in the U.S., which failed to demonstrate a difference between treatment groups for the primary efficacy endpoint in the intent-to-treat population. Additionally, the FDA expressed concerns regarding the reproducibility of some reported efficacy results for Study MCS-2-TWN-a. However, the U.S. FDA had no further comments on the two open-label extension studies in the U.S. and Taiwan using API-1. Therefore, if the FDA agrees that our data demonstrates comparability between API-1 and API-2, we will also need to conduct another pivotal Phase III study using API-2, and we will work with the FDA to address the reproducibility issue.

To address the U.S. FDA’s concern that Study MCS-2-US-a did not demonstrate a statistically significant difference between the drug and placebo in the primary efficacy endpoint, we plan to conduct an additional Phase III study, MCS-2-US-b, using API-2.

Regarding the U.S. FDA’s concerns about the reproducibility of the reported efficacy results for Study MCS-2-TWN-a, we propose to re-analyze the statistical results of the MCS-2-TWN-a study data using Clinical Data Interchange Standards Consortium (CDISC) data sets that match the FDA’s requested data format. Then, we will submit the reanalysis for further discussions with U.S. FDA about its concerns.

On May 14, 2024, we asked U.S. FDA to provide a written response to our questions about obtaining U.S. FDA’s review and comments on a newly proposed Phase III clinical trial protocol for Botreso^® with API-2 and a pharmacokinetic (PK) study. On May 23, 2024, we received a denial notice from the U.S. FDA, stating that it was premature to provide such a written response at this stage of drug development, however, the U.S. FDA would continue its review of the study design of PK study and Phase III clinical trial using API-2. The U.S. FDA decided that until the company provides complete Chemistry, Manufacturing, and Controls (CMC) information on API-2 and a plan to establish comparability between API-1 and API-2, the U.S. FDA is not in a position to reach any agreement on protocols designed to establish the safety and efficacy of Botreso^®. We have completed the CMC documentation on the active pharmaceutical ingredient-2 (API-2) and a plan to establish comparability between API-1 and API-2 and submitted it to the U.S. FDA on October 16, 2024, and are awaiting feedback from the U.S. FDA. If the U.S. FDA does not agree that API-1 and API-2 are comparable, we will continue to research additional API sources based on our own patent, to pursue additional outsourcing API vendors, and to follow U.S. FDA’s guidance for demonstrating comparability between API-1 and API-2 to the U.S. FDA’s satisfaction. In the event that we are unable to establish comparability between API-1 and API-2, we will be required to repeat the Botreso^® and PCP clinical trials using API-2, or to conduct other additional clinical trials as may be required by the U.S. FDA. For further details, see the risk factor titled “If we are unable to identify a supplier capable of producing API-2 that is sufficiently comparable to API-1, we will be required to repeat our clinical trials for Botreso^® and PCP, which could significantly delay our product development efforts and result in increased costs” on page 13.

There can be no assurance that the U.S. FDA will agree with our comparability plan or that our additional studies will satisfactorily address the U.S. FDA’s concerns. Any failure to adequately address these concerns could significantly delay or prevent the approval of our NDA, which would materially and adversely affect our business, financial condition, and results of operations.

If we are unable to identify a supplier capable of producing API-2 that is sufficiently comparable to API-1, we will be required to repeat our clinical trials for Botreso^® and PCP, or to conduct other additional clinical trials as may be required by the U.S. FDA, which would significantly delay our product development and increase our costs.

Our clinical trials for Botreso^® and PCP have thus far utilized API-1, an active pharmaceutical ingredient (API) produced by a supplier that is no longer available. We have transitioned to using API-2, a new API produced by an alternative supplier, and are in the process of establishing comparability between API-1 and API-2. The U.S. FDA requires that we demonstrate that API-2 is sufficiently comparable to API-1 to rely on the results of our previous clinical trials using API-1.

If we are unable to successfully demonstrate this comparability, or if we are unable to identify another supplier capable of producing an API that meets the required standards, we may be required to repeat the clinical trials that we conducted using API-1 for both Botreso^® and PCP. This would encompass phases I, II, and III studies for Botreso^® using. API-2, and phases I and II studies for PCP using API-2, or to conduct other additional clinical trials as may be required by the U.S. FDA.

This could result in significant delays in our product development timelines, increased costs, and could adversely affect our business, financial condition, and results of operations. Furthermore, we cannot guarantee that any future clinical trials using API-2 or any alternative API would yield results similar to those previously obtained using API-1, which could further hinder our ability to obtain regulatory approval and bring our products to market.

Even if any of our drug candidates receives marketing approval, we or others may later discover that the product is less effective than previously believed or causes rare undesirable side effects that were not previously identified, which could compromise our ability, or that of any future collaborators, to market the product.

Clinical trials of our drug candidates are conducted in carefully defined sets of patients who have agreed to enter into clinical trials. Consequently, it is possible that our clinical trials, or those of any future collaborator, may indicate an apparent positive effect of a drug candidate that is greater than the actual positive effect, if any, or alternatively fail to identify undesirable side effects. If, following approval of a drug candidate, we, or others, discover that the product is less effective than previously believed or causes rare undesirable side effects that were not previously identified, any of the following adverse events could occur and may have material negative influence on our business and operations:

Our drug candidates may fail to achieve the degree of market acceptance by physicians, patients, patient advocacy groups, third-party payors and others in the medical community necessary for commercial success.

Even if our drug candidates receive regulatory approval, they may nonetheless fail to gain sufficient market acceptance by physicians, patients, patient advocacy groups and others in the medical community. Efforts to educate physicians, patients, patient advocacy groups and third-party payors on the benefits of our drug candidates may require significant resources and may not be successful, and physicians and patients may prefer other drugs or drug candidates to ours. If our drug candidates do not achieve an adequate level of acceptance, we may not generate significant revenue from sales of our drugs or drug candidates and may not become profitable.

The degree of market acceptance of our drug candidates, if and only when they are approved for commercial sale, will depend on a number of factors, including, but not limited to, the following:

We face substantial competition, rapid technological change and the possibility that our competitors may discover, develop or commercialize drugs before we do or more successfully than we do, or develop therapies that are similar, more advanced or more effective than ours, each of which may adversely affect our financial condition and our ability to successfully market or commercialize our drug candidate.

The development and commercialization of new drugs are highly competitive and the pharmaceutical industry is subject to rapid and significant technological change. We face competition with respect to our drug candidates and will face competition with respect to any drug candidates that we may seek to develop or commercialize in the future, from companies of all sizes around the world, including major and specialty pharmaceutical companies and generic drug companies. Potential competitors further include academic institutions, government agencies and other public and private research organizations that conduct research, seek patent protection and establish collaborative arrangements for research, development, manufacturing and commercialization.

Our competitors may have significantly greater financial, technical, human and other resources, such as larger research and development staff and experienced marketing and manufacturing departments, and more experience in the development and regulatory approval process than we have. Mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated on our competitors. As a result, these companies may obtain regulatory approval from the TFDA, the U.S. FDA or other comparable regulatory authorities more rapidly than we are able to and may be more effective in selling and marketing their products as well. This may lead to potential increased competition from drugs that have already obtained approval in other jurisdictions. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies. Our competitors also may also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our drug development programs.

Our competitors may succeed in developing, acquiring, or licensing on an exclusive basis, products that are more effective, safer or less costly than any drug candidate that we may develop, or may achieve earlier patent protection, regulatory approval, product commercialization, and market penetration than we do. Additionally, technologies developed by our competitors may render our potential drug candidates uneconomical or obsolete, and we may not be successful in marketing our drug candidates against competitors. The availability of our competitors’ products could limit the demand, and the price we are able to charge, for any drug candidates that we may develop and commercialize.

While certain of our employees have experience in launching and marketing drug candidates, we may not be able to effectively build and manage a sales network or benefit from the sales network of third-party collaborators.

We are actively establishing a team for sales, marketing and distribution, which requires significant capital expenditures, management resources and time. We will have to compete with other biotechnology companies to recruit, hire, train and retain marketing and sales personnel. If we are unable to establish internal sales, marketing and commercial distribution capabilities for any or all of the drugs we develop or in particular regions or markets, we may pursue third-party collaborative arrangements regarding the sales and marketing of our drug products into such regions or markets. However, there can be no assurance that we will be able to establish or maintain such collaborative arrangements, or, if we are able to do so, that they will have effective sales forces. Any revenue we receive will depend on the efforts of such third parties, which may not be successful. We may have little or no control over the marketing and sales efforts of such third parties, and our revenue from product sales may be lower than if we had commercialized our drug candidates ourselves. We will also face competition in our search for third parties to assist us with the sales and marketing efforts of our drug candidates, which may result in collaborative arrangements with less-than-optimal terms.

There can be no assurance that we will be able to develop in-house sales and commercial distribution capabilities or establish or maintain relationships with third-party collaborators to successfully commercialize any product, and as a result, we may not be able to generate product sales revenue.

Even if we are able to commercialize any approved drug candidates, reimbursement may be limited or unavailable in certain market segments for our drug candidates, and we may be subject to unfavorable pricing regulations, which could harm our business.

The regulations that govern regulatory approvals, pricing and reimbursement for new therapeutic products vary widely from country to country. Some countries require approval of the sale price of a drug before it can be marketed. In many countries, the pricing review period begins after marketing or licensing approval is granted. In some non-U.S. markets, prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval is granted. As a result, we might obtain regulatory approval for a drug product in a particular country, but then be subject to price regulations that delay our commercial launch of the drug and negatively impact the revenues we are able to generate from the sale of the drug in that country. Adverse pricing limitations may hinder our ability to recoup our investment in one or more drug candidates, even if our drug candidates obtain regulatory approval.

Our ability to commercialize any drugs successfully also will depend in part on the extent to which reimbursement for these drugs and related treatments will be available from government health administration authorities, private health insurers and other organizations. Government authorities and third-party payors, such as private health insurers and health maintenance organizations, decide which medications they will pay for and establish reimbursement levels. A primary trend in the global healthcare industry is cost containment. Government authorities and these third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications. Increasingly, third-party payors are requiring that companies provide them with predetermined discounts from list prices and are challenging the prices charged for medical products. We cannot be sure that reimbursement will be available for any drug that we commercialize and, if reimbursement is available, what the level of reimbursement will be. Reimbursement may impact the demand for, or the price of, any drug for which we obtain regulatory approval. Obtaining reimbursement for certain of our drugs may be particularly difficult because of the higher prices often associated with drugs administered under the supervision of a physician. If reimbursement is not available or is available only to limited levels, we may not be able to successfully commercialize any drug candidate that we successfully develop.

There may be significant delays in obtaining reimbursement for approved drug candidates, and coverage may be more limited than the purposes for which the drug candidates are approved by the TFDA, the U.S. FDA or other comparable regulatory authorities. Moreover, eligibility for reimbursement does not imply that any drug will be paid for in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution. Interim payments for new drugs, if applicable, may also not be sufficient to cover our costs and may not be made permanent. Payment rates may vary according to the use of the drug and the clinical setting in which it is used, may be based on payments allowed for lower cost drugs that are already reimbursed, and may be incorporated into existing payments for other services. Net prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future weakening of laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in the United States or Taiwan. Our inability to promptly obtain coverage and profitable payment rates from both government-funded and private payors for any future approved drug candidates could have a material adverse effect on our business, our operating results, and our overall financial condition.

Preliminary interim or “top-line” data that we announce or publish from time to time may change as more data become available and are subject to audit and verification procedures that could result in material changes in the final data.

From time to time, we may publish preliminary interim or “top-line” data from clinical trials. Positive preliminary data from such interim analyses may not be predictive of such trial’s subsequent or overall results. Preliminary data are subject to the risk that one or more of the outcomes may materially change as more data become available. Additionally, preliminary data are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Therefore, positive preliminary results in any ongoing clinical trial may not be predictive of such results in the completed trial. We also make assumptions, estimations, calculations and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully evaluate all data. As a result, preliminary data that we report may differ from future results from the same clinical trials, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. Preliminary data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, preliminary data should be viewed with caution until the final data are available. Material adverse changes in the final data compared to preliminary data could significantly harm our business prospects.

The data and information that we gather in our research and development process could be inaccurate or incomplete, which may have negative influence on our business, reputation, financial condition and results of operations.

We collect, aggregate, process, and analyze data and information from our preclinical studies and clinical trials. We also engage in substantial information gathering following the identification of a promising drug candidate. Because data in the healthcare industry is fragmented in origin, inconsistent in format, often incomplete and rapidly evolving, the overall quality of data collected or accessed in the healthcare industry is often subject to challenge, the degree or amount of data which is knowingly or unknowingly absent or omitted can be material, and we often discover data issues and errors when monitoring and auditing the quality of our data. If we make mistakes in the capture, input, or analysis of these data, our ability to advance the development of our drug candidates may be materially harmed and our business, prospects and reputation may suffer.

We also engage in the procurement of regulatory approvals necessary for the development and commercialization of our drug candidates, for which we manage and submit data to governmental entities. These processes and submissions are governed by complex data processing and validation policies and regulations. Notwithstanding such policies and regulations, interim, top-line or preliminary 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 that could result in material changes in the final data, in which case we may be exposed to liability to a customer, court or government agency that concludes that our storage, handling, submission, delivery or display of health information or other data was wrongful or erroneous. Although we maintain insurance coverage for clinical trials this coverage may prove to be inadequate or could cease to be available to us on acceptable terms, if at all. Even unsuccessful claims could result in substantial costs and diversion of management time, attention, and resources. A claim brought against us that is uninsured or under-insured could harm our business, financial condition and results of operations.

In addition, we rely on CROs and other third parties to monitor and manage data for some of our ongoing preclinical studies and clinical trials and control only certain aspects of their activities. If any of our CROs or other third parties do not perform to our standards in terms of data accuracy or completeness, data from those preclinical studies and clinical trials may be compromised as a result, and our reliance on these parties does not relieve us of our regulatory responsibilities. For a detailed discussion, see “— Risks Related to Our Dependence on Third Parties — As we rely on third parties to conduct our clinical trials and provide other important services related to research and development, regulatory submissions, and commercialization, if we fail to maintain our relationships with these third parties or if they do not successfully carry out their contractual duties, comply with applicable laws, or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our drug candidates and our business could be substantially harmed.”

The incidence and prevalence for target patient populations of our drug candidates are based on estimates and third-party sources. The market opportunities for our drug candidates, if approved, may be smaller than we anticipate.

We expect to initially seek approval of Botreso^® for the treatment of BPH/LUTS. Our projections of the number of patients with BPH/LUTS and the portion of those patients that would benefit from treatment with Botreso^® are based on our beliefs and estimates, including the report by Frost & Sullivan, data published by third parties, including scientific literature, patient foundations and publicly available databases, and on internally generated data and assumptions. While we believe our market size information is generally reliable, such information is inherently imprecise, and relies on our and third parties’ projections, assumptions and estimates within our target market, which are necessarily subject to a high degree of uncertainty and risk due to a variety of factors. For more details, please refer to “Risks Related to the Discovery, Development, and Commercialization of Our Drug Candidates — Even if we are able to commercialize any approved drug candidates, reimbursement may be limited or unavailable in certain market segments for our drug candidates, and we may be subject to unfavorable pricing regulations, which could harm our business.” If such third-party or internally generated data prove to be inaccurate or we make errors in our projections, assumptions or estimates based on that data, our addressable target market opportunity and/or our future growth rate may be less than we currently estimate. Further, new sources may reveal a change in the estimated number of patients, and the number of patients may turn out to be lower than expected. Additionally, the potentially addressable patient population for our current programs or future drug candidates may be limited. Accordingly, the information regarding the size of our addressable market opportunity included in this annual report should not be taken as indicative of our future growth.

The ultimate market opportunity for our drug candidates will depend on, among other things, the final labeling for such drug candidates as agreed with the TFDA, the U.S. FDA and any other applicable comparable foreign regulatory authorities, acceptance by the medical community and patient access, potential competition and drug pricing and reimbursement. Even if we obtain significant market share for any drug candidate, if the potential target populations deviate from our estimation, our business, financial condition, results of operations and prospects may be harmed.

Potential product liability claims or lawsuits could divert our resources, incur substantial liabilities and limit the commercialization of any drug products that we may develop.

We face an inherent risk of product liability claims as a result of the clinical testing of our drug candidates despite obtaining appropriate informed consents from our clinical trial participants. We will face an even greater risk if we or any future collaborators commercially sell any product that we or they may develop. For example, we may be sued if any product we develop allegedly causes injury or is found to be otherwise unsuitable during clinical testing, manufacturing, marketing or sale. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability or a breach of warranties. Claims could also be asserted under state consumer protection acts. If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit the commercialization of our drug candidates.

Regardless of the merits or eventual outcome, liability claims may result in significant negative consequences to our business and prospects, including, but not limited to:

We currently maintain liability insurance covering our clinical trials. Although we maintain such insurance, any claim that may be brought against us could result in a judgment or settlement in an amount that is not covered, in whole or in part, by our insurance or which is in excess of the limits of our insurance coverage. Our insurance policies also contain various exclusions, and we may be subject to particular liability claims for which we have no coverage. We will have to pay any amount awarded by a court or negotiated in a settlement that exceeds our coverage limitations or that is not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts. In addition, if we cannot successfully defend ourselves against such claims, we may incur substantial liabilities and be required to suspend or delay our ongoing clinical trials.

Illegal and/or parallel imports and counterfeit pharmaceutical products may reduce demand for our future approved drug candidates and could have a negative impact on our reputation and business.

The illegal importation of competing products from countries where government price controls or other market dynamics result in lower prices may adversely affect the demand for our future approved drug candidates, if any, and, in turn, may adversely affect our sales and profitability in countries and regions where we plan to commercialize our products. Unapproved foreign imports of prescription drugs are illegal in most of the territories all over the world. However, illegal imports may continue to occur or even increase as the ability of patients and other customers to obtain these lower priced imports continues to grow. Furthermore, cross-border imports from lower-priced markets (which are known as parallel imports) into higher-priced markets could harm sales of our future drug products and exert commercial pressure on pricing within one or more markets. In addition, government authorities may expand consumers’ ability to import lower priced versions of our future approved products or competing products from outside Taiwan, the U.S., China or other countries where we operate or expect to operate. Any future legislation or regulations that increase consumer access to lower priced medicines from outside Taiwan, the United States, China or other countries where we may operate could have a material adverse effect on our business.

Certain products distributed or sold in the pharmaceutical market may be manufactured without proper licenses or approvals, or be fraudulently mislabeled with respect to their content or manufacturers. These products are generally referred to as counterfeit pharmaceutical products. The counterfeit pharmaceutical product control and enforcement system, particularly in developing markets may be inadequate to discourage or eliminate the manufacturing and sale of counterfeit pharmaceutical products imitating our products. Since counterfeit pharmaceutical products in many cases have very similar appearances compared with the authentic pharmaceutical products but are generally sold at lower prices, counterfeits of our products could quickly erode the demand for our future approved drug candidates.

In addition, counterfeit pharmaceutical products are not expected to meet our rigorous manufacturing and testing standards. A patient who receives a counterfeit pharmaceutical product may be at risk for a number of dangerous health consequences. Our reputation and business could suffer harm as a result of counterfeit pharmaceutical products sold under our brand name. In addition, thefts of inventory at warehouses, plants or while in-transit, which are not properly stored and which are sold through unauthorized channels, could adversely impact patient safety, our reputation and our business.

RISKS RELATED TO OUR BUSINESS AND INDUSTRY

We have been involved in legal proceedings in the ordinary course of our business, and are currently involved in active legal proceedings. Any adverse outcome of these legal proceedings could have a material adverse effect on our business, results of operations and financial condition.

As of the date of this annual report, we are a party to a legal dispute against one of our shareholders, the Taizhou City Optimization and Upgrade Investment Partnership (Limited Partnership), or the Plaintiff, concerning a claim of redemption. The dispute arose out of a share purchase agreement entered into in May 2019 among (i) the Plaintiff, (ii) Medi-life Co., Limited and Sira View Corp. (collectively, the “Transferring Shareholders”), (iii) Jyong Biotech Ltd., or “Jyong,” (iv) Health Ever Bio-Tech Co., Ltd., our Taiwan subsidiary, and (iv) our CEO, Ms. Fu Feng Kuo, under which the Plaintiff purchased 1,794,258 shares of Jyong from the Transferring Shareholders at an aggregate price of RMB112,500,000. The Plaintiff filed a complaint to the Taizhou Intermediate People’s Court and primarily claimed for a redemption of all shares of Jyong held by it, as well as confirmation of the Plaintiff’s right to liquidate all equity interests in our PRC subsidiary, Innovative Biotech Co., Ltd., which was pledged to the Plaintiff by our Hong Kong subsidiary, Top ShunXing Bio-Tech Co., Limited on July 22, 2019. This dispute went on trial on March 16, 2023 and November 29, 2023, respectively. On March 25, 2024, the Taizhou Court entered into a judgement partially in favor of the Plaintiff, ordering, among other things, the Transferring Shareholders to pay the Redemption price of RMB112,500,000 and corresponding interests, and Jyong, HEB, and Ms. Fu Feng Kuo to be jointly liable for such obligation. The Taizhou Court also ruled that the Plaintiff is entitled to liquidate all equity interest in Innovative Biotech pledged to it in order to realize the payment of the aforementioned obligations. We filed an appeal against this judgement on April 29, 2024 to the High People’s Court of Zhejiang Province (the “High Court”). The High Court held a hearing for this case on August 9, 2024, and later issued a judgement against us to sustain the ruling of the Taizhou Court. As of December 31, 2024, our total potential liability under this judgement is USD 19,378,364. The judgment is final and not appealable, and the settlement agreement becomes legally binding upon execution by the parties. Under applicable Chinese law, Taizhou is entitled to initiate enforcement proceedings to recover the approximately RMB 134.5 million (USD 19.4 million) in cash, with Jyong, HEB, and Ms. Fu Feng Kuo jointly liable for such obligations. As of the date of this annual report, the Plaintiff has initiated enforcement procedure before competent courts respectively in Taiwan, Hong Kong and Cayman Islands, however, the concerned parties are actively engaged in negotiation to reach a settlement and thus postpone or suspend the enforcement procedure. Under PRC’s civil procedure, after a judgement from civil litigation enters into effect, the parties may, at any time before and during the enforcement procedure, and until such enforcement procedure is completed, choose to enter into a settlement agreement and file to the competent court to perform such agreement in lieu of enforcing the judgement. In the opinion of our legal counsel for this lawsuit, should we eventually fail to reach a settlement with the Plaintiff, this case is likely to result in an outcome unfavorable to us. We estimated the fair value of guarantee liabilities at the fair value of the shares at the inception of this guarantee and recorded guarantee liabilities of US$19.4 million and accrued liabilities – guarantee obligation of US$21.6 million as of December 31, 2024 and 2025, respectively. For more details about the legal dispute, please see “Item 4. Information on the Company — B. Business Overview — Legal Proceedings — Taizhou Investment Dispute.” There are no insurance policies to cover related payment liabilities. The dispute may incur substantial costs of settlement or litigation and may result in an outcome adverse to our interests, which may in turn result in the loss of our PRC subsidiary and materially and adversely affect our business, financial conditions and results of operations.

In addition to the right of requesting redemption of the shares purchased, certain provisions of the share purchase agreement also stipulate that the Plaintiff shall enjoy various preferential rights and management authorities as a shareholder of Jyong. Specifically, section 7 of the share purchase agreement states that the Plaintiff shall be entitled to, among other things: (i) the right of anti-dilution should Jyong engage in financing activities at a lower price per share; (ii) the right of first refusal when Jyong issues new shares or any existing shareholder transfers shares to a third party before “Qualified Issuance and Listing” (defined as Jyong’s potential public filing of shares and listing on the main board of The Stock Exchange of Hong Kong Limited, or the HKEx, which never occurred); and (iii) the right to take prior to other shareholders in case of liquidation events. Section 8 stipulates that should Jyong fails to get listed on the HKEx by June 30, 2020, then the execution of certain matters shall obtain a written consent from the Plaintiff, including but not limited to: (i) approving any plans for initial public offering or merger/acquisition of Jyong; (ii) amending Jyong’s registered capital or issuing any securities that may increase Jyong’s registered capital or dilute Plaintiff’s shareholding; (iii) selling, transferring or licensing any important intellectual property rights of the group companies; and (iv) determining plan for issuing dividends or offsetting losses for Jyong.

On November 23, 2022, the Bureau of Natural Resources and Planning in Taizhou (“Taizhou Resources Bureau”) issued a formal notice of reminder of default, requiring Innovative Biotech Co., Ltd. to pay liquidated damages of RMB13,080,170, with the amount of damages accruing from November 24, 2022 to the date of actual construction to be calculated separately, due to its failure to commence and complete construction on a parcel of land which it acquired the use right in December 2019. This claim arose out of a land use right agreement entered into on November 29, 2019 between Innovative Biotech Co., Ltd. and Taizhou Resources Bureau, under which the land use right for a parcel of state-owned land, with an aggregated area of 26,680 square meters, was transferred to Innovative Biotech Co., Ltd. (the “Land Use Right Agreement”) for the construction of a pharmaceutical factory project (the “Factory Project”). According to the Land Use Right Agreement, the construction of the Factory Project shall commence on May 28, 2020 and complete on November 28, 2022. However, Innovative Biotech Co., Ltd. failed to commence and complete the construction on agreed schedule. As of the date of this annual report, we have not paid the liquidated damages of RMB13,080,170 yet and we are currently in litigation with Taizhou Resources Bureau and awaiting the judgment. Under the Land Use Right Agreement, in addition to the liquidated damages, Innovative Biotech Co., Ltd. is obliged to pay land idling fee if the land is left idle for more than one year but less than two years, and Taizhou Resources Bureau has the right to take back the land use right if the land is left idle for more than two years. On September 26, 2024, the Taizhou Resources Bureau issued a notice regarding taking back the land use right without compensation, giving Innovative Biotech Co., Ltd. the right to file for an administrative hearing within five business days of receipt of notice. While the Company initially applied for the administrative hearing, it subsequently decided to relinquish the land use rights to the Taizhou Resources Bureau in accordance with the notice. As a result, the Company will no longer proceed with the hearing process. On February 8, 2025, the Bureau issued a formal Decision Letter confirming the reclamation of IB’s land use rights without compensation. IB timely filed an application for administrative reconsideration with the Taizhou Municipal People’s Government. On June 26, 2025, the Municipal Government issued its decision upholding the Bureau’s reclamation order. Dissatisfied with the outcome, IB initiated an administrative lawsuit with the Taizhou Intermediate People’s Court of Zhejiang Province on July 23, 2025. On January 19, 2026, the Court rendered a judgment dismissing IB’s claims and ordering IB to bear the litigation costs of RMB 50. Although IB filed an appeal against this judgment on February 2, 2026, management, based on the advice of our local legal counsel, assesses that there is a high probability that the unfavorable judgment will be upheld on appeal. As of the date of this annual report, the appellate process remains ongoing. The claims and proceedings discussed above, and other potential claims or proceedings relating to this issue, could result in substantial costs and materially and adversely affect our business, financial conditions and results of operations. For details about the legal dispute, please also see “Item 4. Information on the Company — B. Business Overview — Legal Proceedings — Taizhou Administrative Penalty” and “Item 4. Information on the Company — B. Business Overview — License and Collaboration Agreements — Taizhou Collaboration Framework Agreement.”

Moreover, we are exposed to risks related to potential legal disputes arising from agreements and contracts entered into from time to time in our ordinary course of business. For instance, on December 21, 2018, we entered into a collaboration framework agreement, or the 2018 Taizhou Agreement, with Taizhou High-tech Industrial Park Management Committee, or the “Taizhou High-tech Committee,” and Taizhou Infrastructure Investment Group Co., Ltd., pursuant to which Taizhou High-tech Committee agreed to grant up to 40 mu (approximate 26,666.66 sq.m.) industrial land to us for the Factory Project with a favorable price of RMB400,000 per mu and 1,500 mu industry land to us subject to further negotiation. On September 12, 2019, based on the 2018 Taizhou Agreement, we entered into an investment cooperation agreement with the Taizhou Circular Economic Industrial Concentration District Administrative Committee (the “Taizhou Industry District Committee”), the successor of the Taizhou High-tech Committee, or the “2019 Taizhou Agreement,” which further specified details relating to the Factory Project with no material deviation from the 2018 Taizhou Agreement. According to the 2018 Taizhou Agreement and 2019 Taizhou Agreement, we are obligated to complete the construction of the Factory Project by 2022, which shall be ready for production by 2023. As of the date of this annual report, the construction of the Factory Project has been suspended. In addition, RMB30 million of Innovative Biotech Co., Ltd.’s registered capital shall be actually paid within one year of its registration. As of the date of this annual report, only RMB16,562,000 of Innovative Biotech Co., Ltd.’s registered capital has been paid. Furthermore, our PRC subsidiary shall pay a cash deposit of RMB 10,000 per mu after signing the “standard parcel” development and construction agreement, or the Construction Agreement, with the Taizhou Industry District Committee. As of the date of this annual report, both the deposit and the final balance for the land have already been paid in full regarding the “Standard Land” deposit. There are liquidated penalties for failing to commence construction on schedule. However, we have not received any relevant payment demand notices as of the date of this annual report. According to the 2018 Taizhou Agreement, failure to commence and conclude the construction of the Factory Project on schedule as agreed may entitle the Taizhou Municipality with the rights to replace the granted parcel, adjust or withdraw the preferential policies available under such agreement (including but not limited to the government subsidy of RMB12.0 million innovative Biotech Co., Ltd. has already received), and take back the parcel with the original purchase price of RMB400,000 per mu. See also “Item 4. Information on the Company — B. Business Overview —  License and Collaboration Agreements — Taizhou Collaboration Framework Agreement.”

On November 29, 2019, our PRC subsidiary, Innovative Biotech Co. (“IB”) entered into the Construction Agreement with the Taizhou Industry District Committee. The Construction Agreement provided specifics regarding the Factory Project IB was required to meet, including but not limited to the period of construction, plot ratio, amount of investment and tax income per mu. The Construction Agreement stipulates that before the Factory Project meets the requirements of amount of investment and plot ratio under the Construction Agreement, IB and its shareholder shall not transfer the acquired parcel, directly or via transfer or pledge of equity, to a third party. Should IB breaches this agreement and causes the purpose of the Construction Agreement unable to be realized, the Taizhou Industry District Committee shall have the right to terminate the Construction Agreement and claim corresponding damages. The Taizhou Industry District Committee did not explicitly consent to the pledging of IB’s shares to the Taizhou City Optimization and Upgrade Investment Partnership (Limited Partnership). However, as of the date of this annual report, the Taizhou Industry District Committee has yet to raise any claims against IB based on the event discussed above. As of December 31, 2024 and 2025, IB classified the liquidated damages and accrued interests of US$2.9 million and US$3.0 million as other current liabilities, respectively.

On November 29, 2022, the Taizhou Bay New District Administrative Committee (the “Plaintiff”), successor of the Taizhou Industry District Committee, filed a civil complaint to the Taizhou Intermediate People’s Court (“the Taizhou Court”) against our PRC subsidiary, IB, claiming that IB has materially breached the 2019 Taizhou Agreement by failing to initiate and conclude the construction of the Factory Project in accordance with the schedule stipulated by the 2019 Taizhou Agreement and the Land Use Right Agreement. The Plaintiff requested the Taizhou Court to terminate the 2019 Taizhou Agreement, and to order IB to return the government subsidy of RMB 12.0 million IB previously received under the 2019 Taizhou Agreement, and to pay corresponding interests calculated at the Loan Prime Rate published by the National Inter-bank Funding Center. On December 1, 2022, the Court issued an order of preliminary asset preservation, freezing the RMB 10.7 million deposit in IB’s bank account. This dispute went on trial on February 13, 2023, and two hearings were held on May 6, 2023 and August 17, 2023 respectively. On September 8, 2023, the Court entered into a judgement in favor of the Plaintiff, terminating the 2019 Taizhou Agreement and ordering IB to return the government subsidy of RMB12.0 million and corresponding interest and expenses to the Plaintiff. On September 14, 2023, we filed an appeal with the High People’s Court of Zhejiang Province (the “High Court”) regarding each of the Court’s rulings described above. The High Court held a hearing for this case on October 24, 2023. On December 12, 2023, the High Court issued a judgment against IB to affirm the Taizhou Court’s ruling in its entirety. On January 5, 2024, the Taizhou Court issued an order of enforcement, stipulating, among other things, freezing and assignment of IB’s deposit in its bank account or withholding of IB’s income up to RMB 12.0 million and corresponding interests, and the seizure, attachment and freezing of IB’s property valued at RMB 12.0 million and corresponding interests, and restrictions on making certain high expenses by IB and related personnel. As of the date of this annual report, the 40 mu (approximate 26,666.66 sq.m.) industrial land we acquired for the Factory Project have been seized by the Taizhou Court, and IB’s RMB 11.1 million deposit in its bank account has been transferred to the Plaintiff. On December 27, 2023, we filed a petition for retrial to the Supreme People’s Court of the People’s Republic of China (the “Supreme Court”). The Supreme Court issued a decision to reject our petition for retrial on August 21, 2024. As of December 31, 2024, and 2025, IB accrued US$0.4 million and US$0.4 million of other current liabilities for the loss contingencies for this dispute, respectively. For more details about the legal dispute, please see “Item 4. Information on the Company — B. Business Overview— Legal Proceedings — Taizhou Government Subsidy Dispute.” There are no insurance policies to cover related payment liabilities. This dispute has resulted in an outcome adverse to our interests, which may in turn result in financial loss and adversely affect our business, financial conditions and results of operations.

We initially planned to use approximately 10% of the net proceeds of Jyong Biotech Ltd.’s initial public offering (the “IPO”) for (i) a possible settlement of the litigation with Taizhou Bay New District Administrative Committee, including the return of government subsidy, litigation expenses and interest expenses, and (ii) commitments with Taizhou Resources Bureau, including liquidated damages and land idling fee. However, due to the significant increase in our total potential liabilities, including the judgment in the Taizhou Investment Dispute of approximately USD 21.6 million, our current liabilities now substantially exceed the originally anticipated amount. As a result, a significantly greater portion of the net proceeds from the IPO, or potentially all of such proceeds, may be required to satisfy our outstanding liabilities and legal obligations rather than being deployed for research and development or other business purposes.  We may, in the future, be subject to allegations, claims and legal actions arising in the ordinary course of our business, which may include claims by shareholders and claims by third parties, including customers, suppliers, product consumers, business partners, or regulators. If any of these proceedings is determined adversely against us, or results in judgments, fines or settlements involving a payment of a material sum of money, it could materially and adversely affect our business, financial condition, and results of operations. In addition, negative publicity could adversely affect the reputation and brand of the operating entities. Even the successful defense of these proceedings may cause the operating entities to incur substantial legal costs and may divert management’s attention and resources.

We face economic and political risks associated with doing business in Taiwan, particularly due to the geopolitical tension between Taiwan and PRC that could negatively affect our business and hence the value of your investment.

Our performance is affected by global economic conditions as well as geopolitical issues and other conditions with global reach. Macroeconomic weakness and uncertainty make it more difficult for us to manage our operations and accurately forecast financial result. As a result of the invasion of Ukraine by Russia, the United States, the European Union, the United Kingdom and other jurisdictions have imposed sanctions on certain Russian and Ukrainian persons and entities, including certain Russian banks, energy companies and defense companies, and have imposed restrictions on exports of various items to Russian and certain regions of Ukraine (including the self-proclaimed Donetsk People’s Republic and Luhansk People’s Republic and Crimea). Moreover, on February 22, 2022, the Office of Foreign Assets Control of the United States issued sanctions aimed at limiting Russia’s ability to raise funds through sovereign debt. Such ongoing events between Ukraine and Russia could also increase China/Taiwan political tensions and U.S./China trade and other relations. These geopolitical issues have resulted in increasing global tensions and create uncertainty for global commerce. Any or all of these factors could negatively affect demand for our products and our business, financial condition and result of operations. In addition, new requirements or restrictions could come into effect which might increase the scrutiny on our business or result in one or more of our business activities being deemed to have violated sanctions. Our business and reputation could be adversely affected if the authorities of the United Nations, the United States, the European Union, Taiwan or other jurisdictions were to determine that any of our activities constitutes a violation of the sanctions they impose or provides a basis for a sanction’s designation of us.

Further, our headquarters, R&D center and material laboratory are located in Taiwan. Accordingly, our business, financial condition and results of operations and the market price of our ordinary shares may be affected by changes in governmental policies, taxation, growth rate, inflation rate or interest rates and by social instability and diplomatic and social developments in or affecting Taiwan. In particular, the unique political status of Taiwan and its internal political movement cause sustained tension between PRC and Taiwan. Past developments related to the interactions between PRC and Taiwan, especially in relation to trade activities such as bans on exports of goods from time to time, have on occasions depressed the transactions and business operations of certain Taiwanese companies and overall economic environment. We cannot predict whether there will be an escalation of the tensions between PRC and Taiwan which would lead to new bans or tariffs on exports or even conflict. Any conflict which threatens the military, political or economic stability in Taiwan could have a material adverse effect on our current or future business and financial condition and results of operations.

We have engaged in transactions with related parties, and such transactions present possible conflicts of interest that could have an adverse effect on our business and results of operations.

We have entered into a number of transactions with related parties, including our significant stockholders, directors and executive officers, and their relatives. For example, we have entered into several transactions with our Co-Founder and Chief Executive Officer, Fu-Feng Kuo, including leases with landlord entities in which Ms. Kuo has or had a significant ownership interest. Also, From February 2021 to November 2021, the Company entered into several loan agreements with Nobel Consumer Corporation, which is managed by a related party of the Company. In addition, on June 24, 2025, we entered into a loan agreement with Linkage Gladden Enterprise Ltd., one of our shareholders. See “Item 7. Major Shareholders and Related Party Transactions — B. Related Party Transactions” on page 144. We may in the future enter into additional transactions with entities in which members of our board of directors and other related parties hold ownership interests.

Transactions such as loans and leases in which related parties hold ownership interests present potential conflicts of interest. The interests of the landlord entity and lender, along with their shareholders, may not align with the interests of our stockholders regarding the negotiation and certain other matters related to our lease or loan terms with that landlord entity or lender. We may have achieved more favorable terms if such transactions had not been entered into with related parties, and these transactions, individually or in the aggregate, may have an adverse effect on our business and results of operations, or may result in government enforcement actions or other litigation.

We will need to obtain substantial additional financing for our outstanding liabilities due to legal proceedings and commitment, and bank loans, and if we fail to obtain additional financing, we may not be able to continue as a going concern.

The accompanying consolidated financial statements in this annual report have been prepared in accordance with accounting principles generally accepted in the United States of America on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, the consolidated financial statements do not include any adjustments relating to the recoverability of assets and classification of liabilities that might be necessary should we be unable to continue as a going concern. We concluded that there is substantial doubt about our ability to continue as a going concern for a period of one year from the date that the unaudited interim consolidated financial statements included in this registration statement were issued. In addition, our independent registered public accounting firm has issued a report that included an explanatory paragraph referring to our significant net losses, working capital deficit and need to raise additional funds, which also raised substantial doubt about our ability to continue as a going concern as it noted.

As of the date of this annual report, we have not generated revenue and we had a net working capital deficit of approximately US$11.9 million and US$11.2 million as of December 31, 2024 and 2025, respectively. This deficit included accrued expenses of approximately US$1.2 million and US$1.0 million, accounts payable of approximately US$3,000 and US$2,000, short-term and long-term loan from banks of approximately US$7.3 million and US$8.3 million which will be due within the next twelve months, other current liabilities of approximately US$3.3million and US$3.4 million due to litigation with Taizhou Bay New District Administrative Committee and commitments with Taizhou Resources Bureau, and accrued interest owed under the loan agreement with related parties of approximately US$0.1 million and US$0.3 million, as of December 31, 2024 and 2025, respectively. As of the date of this annual report, the Company’s total potential liability under the judgment in the Taizhou Investment Dispute is approximately USD 21.6 million. The judgment is final and non-appealable. Under applicable Chinese law, Taizhou is entitled to initiate enforcement proceedings to recover approximately RMB 149.1 million (USD 21.6 million) in cash, with Jyong, HEB, and Ms. Fu Feng Kuo jointly and severally liable for such obligations. As of the date of this annual report, the Plaintiff has initiated enforcement procedure before competent courts respectively in Taiwan, Hong Kong and Cayman Islands, however, the concerned parties are actively engaged in negotiation to reach a settlement and thus postpone or suspend the enforcement procedure. The Company is engaged in ongoing discussions with the counterparty to reach a settlement; however, there can be no assurance that a settlement will be reached. In the event that a settlement is not concluded, Jyong, HEB, and Ms. Fu Feng Kuo may be required to jointly pay the full amount of approximately RMB 149.1 million (USD 21.6 million) in cash. Due to the significant increase in our total potential liabilities, a significantly greater portion of the net proceeds from our IPO, or potentially all of such proceeds, may be required to satisfy our outstanding liabilities and legal obligations.  We will seek future funding based on the requirements of our business operations until we obtain regulatory approvals to market and commercialize our drug candidates and generate sufficient revenue from them. We have the ability to exercise discretion and flexibility to deploy our capital resources used in research and development activities according to the amount and timing of our financing activities.

Given that our significant current liabilities as described above exceed US$20 million, there is a substantial risk that all or substantially all of the net proceeds from our IPO may be required to satisfy these liabilities. In such event, we would have limited funds available from the IPO proceeds to fund our research and development activities, clinical trials, or other business operations, and we would need to seek additional financing to continue our operations. There can be no assurance that such additional financing will be available on acceptable terms, or at all. If we are unable to obtain sufficient funding, we may be forced to delay, reduce, or eliminate our research and development programs, which could have a material adverse effect on our business, financial condition, and results of operations.

We cannot guarantee that we are able to obtain future financing in sufficient amounts or on terms acceptable to us, if at all. If we are unable to raise additional capital when required or on acceptable terms, we may be required to:

If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we will be prevented from pursuing development and commercialization efforts, which will have a material and adverse effect on our business, operating results and prospects which could result in a loss of your investment.

We are required to comply with extensive regulations and hold a number of permits and licenses to carry on our business in Taiwan. Our ability to obtain and maintain these regulatory approvals is uncertain, and future government regulation may place additional burdens on our efforts to commercialize our drug candidates.

We are a Taiwan-based biotechnology company which is subject to extensive government regulation and supervision in Taiwan. The regulatory framework addresses all aspects of operating in the pharmaceutical industry, including product development activities, clinical trials, registration, production, distribution, packaging, labelling, storage and shipment, advertising, licensing and post-approval pharmacovigilance certification requirements and procedures, periodic renewal and reassessment processes, data security and data privacy protection requirements and compliance and environmental protection. Violation of applicable laws and regulations may materially and adversely affect our business. In particular, if we and our cooperators are unable to obtain or renew permits or licenses required for our operations, they will not be able to manufacture or distribute our drug candidates and we will not be able to engage in the commercialization and distribution of our drug candidates and our business may be adversely affected.

The regulatory framework governing the pharmaceutical industry in Taiwan is subject to change and amendment from time to time. Any such change or amendment could materially and adversely impact our business, financial condition and prospects. The Taiwan government has introduced pharmaceutical laws and regulations in recent years, especially imposing further obligations on the pharmaceutical manufacturers with respect to the management of drug safety surveillance. In addition, in order to align Taiwan laws and regulations with the global practice, the Taiwan government also requires the pharmaceutical manufacturers to comply with several global practice rules. In addition, the Taiwan government has also introduced reforms to the health care system in recent years and may continue to do so, with an overall objective to expand basic medical insurance coverage and improve the quality and reliability of healthcare services. The specific regulatory changes under the various reform initiatives remain uncertain. The implementing measures to be issued may not be sufficiently effective to achieve the stated goals, and as a result, we may not be able to benefit from such reform to the extent we expect, if at all. Moreover, the various reform initiatives could give rise to regulatory developments, such as more burdensome administrative procedures, which may have an adverse effect on our business, financial condition and prospects.

For further information regarding government regulation in Taiwan and other jurisdictions, see “Item 4. Information on the Company — B. Business Overview — Regulations” for more details.

Even if we receive regulatory approval for any of our drug candidates, we will be subject to ongoing obligations and continued regulatory review, which may result in significant additional expense, and if we fail to comply with ongoing regulatory requirements or experience any unanticipated problems with any of our drug candidates, we may be subject to penalties.

If the TFDA, the U.S. FDA or a comparable regulatory authority approves any of our drug candidates, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion and record keeping for any such drug will be subject to extensive and ongoing regulatory requirements. These requirements may include submissions of safety and other post-marketing information and reports, facility registration and drug listing requirements, and continued compliance with current good laboratory practices, or cGLPs and current good clinical practice, or GCPs. Any regulatory approvals that we receive for our drug candidates may also be subject to limitations on the approved indicated uses for which the drug may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing.

Once a drug is approved by the TFDA, the U.S. FDA or a comparable regulatory authority for marketing, it is possible that there could be a subsequent discovery of previously unknown problems with the drug, including problems with manufacturing processes, or failure to comply with regulatory requirements. If any of the foregoing occurs with respect to our drug products, it may result in, among other things:

Any government investigation of alleged violations of law could require us to expend significant time and resources and could generate negative publicity. Moreover, regulatory policies may change or additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our drug candidates. If we are not able to maintain regulatory compliance, regulatory approval that has been obtained may be lost and we may not achieve or sustain profitability, which may harm our business, financial condition and prospects significantly.

Our future success depends on our ability to attract, retain and motivate senior management and qualified scientific employees.

We are highly dependent on the expertise of the members of our research and development team, as well as the principal members of our management. We have entered into employment agreements with our executive officers, but each of them may terminate their employment with us at any time with or without prior written notice. In addition, we currently do not have “key-man” insurance for any of our executive officers or other key personnel.

Recruiting, retaining and motivating qualified management, scientific, clinical, manufacturing and sales and marketing personnel will also be critical to our success. The loss of the services of our executive officers or other key employees could impede the achievement of our research, development and commercialization objectives and seriously harm our ability to successfully implement our business strategy. Further, replacing executive officers and key employees may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to successfully develop, gain regulatory approval of and commercialize drugs. Competition to hire from this limited pool is intense, and we may be unable to hire, train, retain or motivate these key personnel on acceptable terms given the competition among numerous biotechnology companies for similar personnel. We also experience competition for the hiring of scientific and clinical personnel from universities and research institutions. In addition, our management are required to devote significant time to compliance initiatives as we are a public company, which may require us to recruit more management personnel.

Competition for skilled personnel is intense, particularly in the pharmaceutical industry. We face competition for personnel from other companies, universities, public and private research institutions and other organizations. This competition may limit our ability to hire and retain highly qualified personnel on acceptable terms, or at all. We may not be able to attract and retain these personnel on acceptable terms given the competition among numerous biotechnology companies for similar personnel. In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development and commercialization strategy. Our consultants and advisors may be employed or may have commitments under consulting or advisory contracts with other entities that may limit their availability to us.

If we do not achieve our projected development and commercialization goals in the timeframes we announced and expected, the commercialization of any of our drug candidates may be delayed and our business will be negatively influenced.

For planning purposes, we generally estimate the timing of the accomplishment of various scientific, clinical, regulatory and other product development objectives. These milestones may include our expectations regarding the commencement or completion of scientific studies and clinical trials, the regulatory submissions or commercialization objectives. From time to time, we may publicly announce the expected timing of some of these milestones, such as the completion of an ongoing clinical trial, the initiation of other clinical trials, receipt of regulatory approval or the commercial launch of a product. The achievement of many of these milestones may be outside of our control. All of these milestones are based on a variety of assumptions which may cause the timing of achievement of the milestones to vary considerably from our estimates, including:

Certain of our facilities are mortgaged. If the mortgagees enforce the mortgage, our business could be materially and adversely affected.

Some of our properties are mortgaged to commercial banks. We currently mortgage our titles of one construction and two land parcels in Yilan County to Taiwan Cooperative Bank Suao Branch (“Taiwan Cooperative Bank”) to secure our long terms borrowings with a total amount of NTD88.2 million. The construction and two land parcels in Yilan County are currently used as our research and development center.

Taiwan Cooperative Bank may, at any time, reduce the loan amount or shorten the term of the loan to the Company, or deem it to be fully due, if any of the following circumstances apply to any of the debts owed by our Company to Taiwan Cooperative Bank, without prior notice or reminder from Taiwan Cooperative Bank: (1) when any debt is not paid off as agreed or when the principal is to be paid ; (2) when filing for settlement in accordance with the Bankruptcy Law, filing for declaration of bankruptcy, filing for company reorganization, being notified by the clearing house to refuse transactions, cessation of business, liquidation of debts; (3) when the original obligation to provide guarantee is not provided according to the agreement; (4) when an heir is declared to have abandoned the inheritance after the person’s death; (5) when the main property is confiscated due to criminal offenses; and (6) in addition to the above items, it is necessary for your bank to preserve its creditor’s rights and the matters specifically stipulated in the contract.

In case the mortgagees enforce the mortgage, we may not be able to continue using our properties. Our business may be interrupted, and additional relocation costs may be incurred if we are required to relocate operations. Even if the mortgage is not enforced, such third-party security rights may also limit our use of the collateral assets and adversely affect our operational efficiency. It could result in diversion of management attention and cause us to incur extra costs associated with addressing relevant issues. However, as of the date of this annual report, we are not aware of any action, claim or investigation being conducted or threatened by mortgagees to enforce the mortgage.

We are subject to risks relating to our leased properties.

We lease certain real properties in Taiwan and China from third parties primarily as office space and operation facilities. We may become involved in disputes with the property owners or third parties who otherwise have rights to or interests in our leased properties. We can provide no assurance that we will be able to find suitable replacement sites on terms acceptable to us on a timely basis, or at all, or that we will not be subject to material liability resulting from third parties’ challenges on our use of such properties. As a result, our business, financial condition and results of operations may be materially and adversely affected.

Furthermore, we have not registered any of our leasehold interests with the relevant Chinese governmental authorities as required by PRC law, which may expose us to potential fines if we fail to remediate after receiving any notice from the relevant Chinese governmental authorities. Failure to complete the lease registration will not affect the legal effectiveness of the lease agreements according to PRC law, but the real estate administrative authorities may require the parties to the lease agreements to complete lease registration within a prescribed period of time, and failure to do so may subject the parties to fines from RMB1,000 ($US137) to RMB10,000 ($US1,370) for each of such lease agreements. In addition, there may be tax consequences, including stamp duty and other applicable taxes, in connection with such lease agreements.

As of the date of this annual report, we are current on our mortgage payments, no defaults have occurred, and we had not been subject to any actions, claims or investigations threatened against us or our lessors with respect to the defects in our leasehold interests which may have a material adverse impact on our business, financial condition and results of operation. However, if any of our leases is terminated as a result of challenges by third parties or governmental authorities for lack of title certificates or proof of authorization to lease, we do not expect to be subject to any fines or penalties, but we may be forced to relocate the affected offices, stores or warehouses and incur additional expenses relating to such relocation. We cannot guarantee that suitable alternative locations are readily available on commercially reasonable terms, or at all, and if we fail to relocate our operations in a timely manner, our operations may be interrupted.

Our employees, consultants, collaborators and contract research organizations may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements, which could cause significant liability for us and harm our reputation.

We are exposed to the risk that our employees, consultants, collaborators and contract research organizations may engage in fraud or other misconduct, including intentional failures to comply with the TFDA and the U.S. FDA regulations or similar regulations of comparable regulatory authorities, to provide accurate information to the TFDA, the U.S. FDA or comparable regulatory authorities, to comply with manufacturing standards we have established, to comply with healthcare fraud and abuse laws and regulations and similar laws and regulations established and enforced by comparable regulatory authorities, to report financial information or data accurately or to disclose unauthorized activities to us. Such misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. It is not always possible to identify and deter misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws, standards or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, financial condition and results of operations, including the imposition of significant fines or other sanctions.

We have limited insurance coverage, and any claims beyond our insurance coverage may result in our incurring substantial costs and a diversion of resources.

We maintain insurance policies that are required under applicable laws and regulations as well as insurance based on our assessment of our operational needs and industry practice. We also maintain liability insurance covering our clinical trials as well as certain other types of insurance. Our insurance coverage may be insufficient to cover any claim for product liability, damage to our fixed assets or employee injuries. Any liability or damage to, or caused by, our facilities or our personnel beyond our insurance coverage may result in our incurring substantial costs and a diversion of resources.

Operating as a public company has made it more expensive for us to obtain director and officer liability insurance, since we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified people to serve on our board of directors, our board committees or as our executive officers. We do not know, however, if we will be able to maintain existing insurance with adequate levels of coverage. Any significant uninsured liability may result in a substantial amount of payments, which would adversely affect our cash position and results of operations.

Our future success depends on our ability to promote our brand and protect our reputation. If we are unable to effectively promote our brand, our business may be materially and adversely affected.

We believe that enhancing and maintaining awareness of our “HEB” brand is critical to achieving widespread acceptance of our drug candidates, especially Botreso^®, and attracting new customers. Successful promotion of our brand depends largely on the quality of the products we offer and the effectiveness of our branding and marketing efforts. We expect that our branding and marketing efforts will require us to incur significant expenses and devote substantial resources. We cannot guarantee that our sales and marketing efforts will be successful. Brand promotion activities may not lead to increased revenue in the near term, and, even if they do, any revenue increases may not offset the expenses we incur to promote our brand. Our failure to establish and promote our brand and any damage to our reputation will hinder our growth. In addition, our reputation may be undermined as a result of the negative publicity about our company or our industry in general. If our drug candidates do not perform to customers’ expectations, it may result in lower confidence in our products in general, which may in turn impair our operating results and our reputation.

The tax laws of the jurisdictions in which we operate may adversely affect our business and our tax results.

The tax laws applicable to our business activities are subject to change and uncertain interpretation. Our tax position could be adversely impacted by changes in tax rates, laws, practices, treaties or regulations or changes in the interpretation thereof by the authorities in jurisdictions in which we do business.

Moreover, we conduct operations through our subsidiaries in various tax jurisdictions pursuant to transfer pricing arrangements between us and our subsidiaries. While we believe that we operate in compliance with applicable transfer pricing laws and intend to continue to do so, our transfer pricing procedures are not binding on applicable tax authorities. If tax authorities in any jurisdiction in which we operate were to successfully challenge our transfer prices as not reflecting arms’ length transactions, they could require us to adjust our transfer prices and thereby reallocate our income to reflect these revised transfer prices, which could result in a higher tax liability to us. Furthermore, a tax authority could assert that we are subject to tax in a jurisdiction where we believe we have not established a taxable connection, and such an assertion, if successful, could increase our expected tax liability in one or more jurisdictions. Such circumstances could adversely affect our financial condition, results of operations and cash flows.

If we, our CROs, consultants or any other collaborators fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business.

We and third parties, such as our CROs and consultants or any other collaborators, are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Our operations may involve the use of hazardous and flammable materials, including chemicals and biological materials. Our operations also produce hazardous waste products. We generally contract with third parties for the disposal of these materials and wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties.

In addition, we may be required to incur substantial costs to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair our research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.

Although the audit report included in this annual report is issued by an independent registered public accounting firm that is subject to inspections by the Public Company Accounting Oversight Board, or the PCAOB, and has been inspected by the PCAOB on a regular basis, there is no guarantee that future audit reports will be prepared by auditors or their international affiliates in jurisdictions where the PCAOB is able to fully inspect their work, and as such, future investors may be deprived of such inspections, which could result in limitations or restrictions to our access of the U.S. capital markets.

On April 21, 2020, SEC Chairman Jay Clayton and PCAOB Chairman William D. Duhnke III, along with other senior SEC staff, released a joint statement highlighting the risks associated with investing in companies based in or having substantial operations in emerging markets including China. The joint statement emphasized the risks associated with lack of access for the PCAOB to inspect auditors and audit work papers in China and higher risks of fraud in emerging markets.

On May 18, 2020, Nasdaq filed three proposals with the SEC to (i) apply minimum offering size requirement for companies primarily operating in “Restrictive Market,” (ii) adopt a new requirement relating to the qualification of management or board of director for Restrictive Market companies, and (iii) apply additional and more stringent criteria to an applicant or listed company based on the qualifications of the company’s auditors.

On May 20, 2020, the U.S. Senate passed the HFCAA requiring a foreign company to certify it is not owned or controlled by a foreign government if the PCAOB is unable to audit specified reports because the company uses a foreign auditor not subject to PCAOB inspection. If the PCAOB is unable to inspect the company’s auditors for three consecutive years, the issuer’s securities are prohibited from trading on a national exchange. On December 2, 2020, the U.S. House of Representatives approved the HFCAA. On December 18, 2020, the HFCAA was signed into law. On March 28, 2021, the SEC issued interim measures implementing the HFCAA which became effective on May 5, 2021. On December 2, 2021, the SEC adopted final amendments implementing congressionally mandated submission and disclosure requirements of the HFCAA, which sent into effect on January 10, 2022. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act. The bill, which was enacted, shortened the three-consecutive-year compliance period under the HFCAA to two consecutive years. As a result, the time period before our ordinary shares may be prohibited from trading or delisted will be reduced. On September 22, 2021, the PCAOB adopted a final rule implementing the HFCAA, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCAA, whether the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction.

Inspections of an independent registered public accounting firm conducted by the PCAOB outside China have at times identified deficiencies in those auditors’ audit procedures and quality control procedures, which may be addressed as part of the inspection process to improve future audit quality. The recent joint statement by the SEC and PCAOB, proposed rule changes submitted by Nasdaq, and the Holding Foreign Companies Accountable Act, or HFCAA, all call for additional and more stringent criteria to be applied to emerging market companies, including companies based in China, upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. On August 26, 2022, the PCAOB signed a Statement of Protocol with the China Securities Regulatory Commission and the PRC Ministry of Finance, which was the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong completely, consistent with U.S. Law. On December 15, 2022, the PCAOB determined that it was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and vacated its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB may consider the need to issue a new determination. On December 29, 2022, the Accelerating HFCAA was signed into law, which amended the HFCAA by requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three.

Our auditor, WWC, P.C., headquartered in San Mateo, California, is independent registered public accounting firms with the PCAOB, are required under the laws of the United States to undergo regular inspections by the PCAOB to assess their compliance with the laws of the United States and professional standards. Therefore, it is not subject to the determinations announced by the PCAOB on December 16, 2021 as it is not on the list published by the PCAOB. Although we have a subsidiary within the PRC, a jurisdiction where the PCAOB is currently unable to conduct inspections without the approval of the Chinese government authorities, our auditor, WWC, P.C., headquartered in San Mateo, California, has been inspected by the PCAOB on a regular basis. However, due to the recent developments in connection with the implementation of the HFCAA, we still cannot assure you whether the SEC, Nasdaq or other regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as it relates to the audit of our consolidated financial statements. The requirement in the Accelerating HFCAA that the PCAOB be permitted to inspect the issuer’s public accounting firm within two years, may result in our delisting in the future if the PCAOB is unable to inspect our accounting firm at such future time.

Our internal computer systems, or those used by our consultants or any other third-party cooperators may fail or suffer breakdowns, cyberattacks or information security breaches that could compromise the confidentiality, integrity and availability of such systems and data, result in material disruptions of our development programs and business operations, risk disclosure of confidential, financial or proprietary information, and affect our reputation.

Despite the implementation of security measures, our internal computer systems or those used by our consultants or any other third-party cooperators, may be vulnerable to damage from computer viruses and unauthorized access. As the cyber-threat landscape evolves, attacks are growing in frequency, sophistication, and intensity, and are becoming increasingly difficult to detect. These risks are increased given the recent work from home arrangements because of the monkeypox outbreak and the threat of Russian cyberattacks in response to the war in Ukraine. Such attacks could include the use of key loggers or other harmful and virulent malware, including ransomware or other denials of service, and can be deployed through malicious websites, the use of social engineering, and/or other means. If a breakdown, cyberattack, or other information security breach were to occur and cause interruptions in our operations, it could result in a misappropriation of confidential information, including our intellectual property or financial information, and a material disruption of our development programs and our business operations. For example, the loss of clinical trial data from completed, ongoing, or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. Likewise, we rely on our third-party research institution collaborators for research and development of our drug candidates and other third parties for the manufacture of our drug candidates and to conduct clinical trials, and similar events relating to their computer systems could also have a material adverse effect on our business. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or systems, or inappropriate disclosure of confidential, financial, or proprietary information, including data related to our personnel, we could incur liability or risk disclosure of confidential, financial, or proprietary information, and the further development and commercialization of our drug candidates could be delayed. There can be no assurance that we and our business counterparties will be successful in efforts to detect, prevent, or fully recover systems or data from all breakdowns, service interruptions, attacks, or breaches of systems that could adversely affect our business and operations and/or result in the loss of critical or sensitive data, which could result in financial, legal, business, or reputational harm to us.

Failure to comply with existing or future laws and regulations related to privacy or data security could lead to government enforcement actions, which could include civil or criminal fines or penalties, private litigation, other liabilities, and/or adverse publicity. Compliance or the failure to comply with such laws could increase the costs of our products, could limit their use or adoption, and could otherwise negatively affect our operating results and business.

The regulatory framework for the collection, use, safeguarding, sharing, transfer and other processing of personal information worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future. Regulatory authorities in virtually every jurisdiction in which we operate have implemented and are considering a number of legislative and regulatory proposals concerning personal data protection. Additionally, the interpretation and application of data protection laws in jurisdictions applicable to us are often uncertain and in flux. We therefore face uncertainty as to the exact interpretation of any such requirements, and we may be unsuccessful in implementing all measures required by data protection authorities or courts in interpretation of new laws.

Since we are conducting clinical trials in the U.S., we are subject to laws and regulations that address privacy, personal information protection and data security at both the federal and state levels, including federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, as amended by the Health Information Technology and Clinical Health Act, and its implementing regulations, which imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information. Numerous laws and regulations, including security breach notification laws, health information privacy laws, and consumer protection laws, govern the collection, use, disclosure and protection of health-related and other personal information. Given the variability and evolving state of these laws, we face uncertainty as to the exact interpretation of the new requirements, and we may be unsuccessful in implementing all measures required by regulators or courts in their interpretation.

We are also subject to laws and regulations that address personal information protection and data security in Taiwan, primarily including the Personal Data Protection Act (“PDPA”), under which we are generally required to give notice to and obtain consent from an individual before collecting, processing, or using any of the said individual’s personal information, subject to certain exceptions, and are restricted from providing personal information beyond the authorized scope to third parties without an individual’s prior consent. Personal data pertaining to a natural person’s medical records, healthcare, genetics, sex life, physical examination and criminal records are classified as sensitive personal data, which shall be subject to certain stricter obligations. Any violation may lead to a fine ranging from NTD20,000 to NTD500,000, in some cases up to NTD1,000,000 depending on the violating scenario and be liable for any damages caused. Moreover, in the event that the violation is with the intention of obtaining unlawful gains, or with the intention of impairing other person’s interests, thereby causing damage to others, such violation may lead to the imprisonment for no more than five years.

Regulatory authorities in Europe have implemented and are considering a number of legislative and regulatory proposals concerning data protection. For example, the General Data Protection Regulation (EU) 2016/ 679, or the GDPR, which became effective in May 2018, imposes a broad range of strict requirements on companies subject to the GDPR, such as us, including, but not limited to, requirements relating to having legal bases for processing personal information relating to identifiable individuals and transferring such information outside the European Economic Area (including to the U.S.), providing details to those individuals regarding the processing of their personal information, keeping personal information secure, having data processing agreements with third parties who process personal information, responding to individuals’ requests to exercise their rights in respect of their personal information, reporting security breaches involving personal data to the competent national data protection authority and affected individuals and recordkeeping. The GDPR substantially increases the penalties to which we could be subject in the event of any non-compliance, including fines of up to €10.0 million or up to 2% of our total worldwide annual turnover for certain comparatively minor offenses, or up to €20.0 million or up to 4% of our total worldwide annual turnover for more serious offenses. Given the new law, we face uncertainty as to the exact interpretation of the new requirements, and we may be unsuccessful in implementing all measures required by data protection authorities or courts in interpretation of the new law. National laws of member states of the European Union are in the process of being adapted to the requirements under the GDPR. Because the GDPR specifically gives member states flexibility with respect to certain matters, national laws may partially deviate from the GDPR and impose different obligations from country to country, leading to additional complexity and uncertainty.

We expect that we will continue to face uncertainty as to whether our efforts to comply with evolving obligations under global data protection, privacy and security laws will be sufficient. Any failure or perceived failure by us to comply with applicable laws and regulations could result in reputational damage or proceedings or actions against us by governmental entities, individuals or others. These proceedings or actions could subject us to significant civil or criminal penalties, damages, injunctive relief and negative publicity, result in the delayed or halted transfer or confiscation of certain personal information, require us to change our business practices, increase our costs and otherwise materially harm our business, prospects, financial condition and results of operations. In addition, our current and future relationships with customers, vendors, pharmaceutical collaborators and other third parties could be negatively affected by any proceedings or actions against us, or current or future data protection obligations imposed on them under applicable law. In addition, to the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur significant legal and financial exposure and reputational damage that could potentially have an adverse effect on the development of our drug candidates and our business.

Our Taiwan subsidiaries are subject to restrictions on paying dividend or making other payments to us, which may restrict our ability to satisfy its liquidity requirements.

As an exempted company with limited liability incorporated under the laws of the Cayman Islands structured as a holding company, we may need dividends and other distributions on equity from our Taiwan subsidiaries to satisfy our liquidity requirements. Current Taiwan regulations permit our Taiwan subsidiaries to pay dividends to their respective shareholders only out of their accumulated profits, if any, which shall first make up previous losses and set aside at least 10% of its accumulated profits each year. These reserves are not distributable as cash dividends. Furthermore, if our Taiwan subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us. Any limitation on the ability of our Taiwan subsidiaries to distribute dividends or to make payments to us may restrict our ability to satisfy our liquidity requirements. In addition, the dividend payments by our Taiwan subsidiaries to us shall be subject to the withholding tax of 21% since January 1, 2018.

Taiwan laws and regulations of loans to and direct investment in Taiwan entities by offshore holding companies may delay or prevent us from using the proceeds of our IPO to make loans or additional contributions to our Taiwan subsidiaries, which could materially and adversely affect our ability to fund and expand our business.

We are an offshore holding company conducting our operations substantially in Taiwan through our Taiwan subsidiaries. We may make loans to our Taiwan subsidiaries, or we may make additional capital contributions to our Taiwan subsidiaries, or we may establish new Taiwan subsidiaries and make capital contributions to these new Taiwan subsidiaries, or we may acquire offshore entities with business operations in Taiwan in an offshore transaction.

Most of these ways are subject to Taiwan regulations and approvals or registration. For example, investment, including lending long-term loans, in Taiwan entities require Foreign Investment Approved from the Investment Commission, Ministry of Economic Affairs. Furthermore, foreign entities are prohibited from investing in some industries which are relating to national security and environmental protection, as specified in the negative list provided by Taiwan authority.

Our Taiwan subsidiaries are subject to foreign exchange control imposed by Taiwan authorities, which may affect the paying dividends, repatriating the interest or making other payments to us.

Currently Taiwan regulates only those foreign exchange transactions that involve the conversion of the NTD into foreign currencies. Pursuant to the relevant provisions of Taiwan Foreign Exchange Control Act, foreign exchange transactions by a company shall be submitted and such remittance shall be subject to the approval of the Central Bank of Taiwan where the annual accumulated settlement amount of foreign exchange purchased or sold has exceeded USD50 million. Nevertheless, Taiwan government may impose further foreign exchange restrictions in certain emergency situations, where Taiwan government experiences extreme difficulty in stabilizing the balance of payments or where there are substantial disturbances in the financial and capital markets in Taiwan. If the dividend payments or other payments by our Taiwan subsidiaries and branches to us involves the currency conversion from NTD to US Dollar, such conversion would be subject to the foregoing foreign exchange control imposed by Taiwan authority.

We are subject to changing laws and regulations regarding regulatory matters, corporate governance and public disclosure that have increased both our costs and the risk of non-compliance.

We are subject to rules and regulations by various governing bodies, including, for example, as a public company, the SEC, which is charged with the protection of investors and the oversight of companies whose securities are publicly traded as well as Nasdaq, and the various regulatory authorities in the Cayman Islands and Taiwan, and to new and evolving regulatory measures under applicable law. Our efforts to comply with new and changing laws and regulations have resulted in and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. Further, there could be unanticipated changes in existing regulatory requirements. Any failure to comply with ongoing regulatory requirements may significantly and adversely affect our ability to commercialize and generate revenues from our drug candidates. If regulatory sanctions are applied or if regulatory approval is withdrawn, the value of our Company and our operating results will be adversely affected.

Moreover, because these laws, regulations and standards are subject to varying interpretations, their application in practice may evolve over time as new guidance becomes available. This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions to our disclosure and governance practices. If we fail to address and comply with these regulations and any subsequent changes, we may be subject to penalty and our business may be harmed.

We may be exposed to liabilities under the U.S. Foreign Corrupt Practices Act, or the FCPA, and similar anti-corruption and anti-bribery laws of Taiwan and other countries in which we operate, as well as U.S. and certain foreign export controls, trade sanctions and import laws and regulations. Compliance with these legal requirements could limit our ability to compete in foreign markets and any determination that we have violated these laws could have a material adverse effect on our business or our reputation.

Our operations are subject to the FCPA and similar anti-bribery or anti-corruption laws, regulations or rules of Taiwan and other countries in which we operate. The FCPA and these other laws generally prohibit us, our officers, and our employees and intermediaries from, directly or indirectly, offering, authorizing or making improper payments to non-U.S. government officials for the purpose of obtaining or retaining business or other advantage. We may engage third parties for preclinical studies or clinical trials outside of the United States, to sell our products abroad once we enter a commercialization phase, and/or to obtain necessary permits, licenses, patent registrations and other regulatory approvals. We have direct or indirect interactions with officials and employees of government agencies or government-affiliated hospitals, universities and other organizations. As our business expands, the applicability of the FCPA and other anti-bribery laws to our operations will increase. If our procedures and controls to monitor anti-bribery compliance fail to protect us from reckless or criminal acts committed by our employees or agents or if we, or our employees, agents, contractors or other collaborators, fail to comply with applicable anti-bribery laws, our reputation could be harmed and we could incur criminal or civil penalties, other sanctions and/or significant expenses, which could have a material adverse effect on our business, including our financial condition, results of operations, cash flows and prospects.

In addition, our products may be subject to U.S. and foreign export controls, trade sanctions and import laws and regulations. Governmental regulation of the import or export of our products, or our failure to obtain any required import or export authorization for our products, when applicable, could harm our international or domestic sales and adversely affect our revenue. Compliance with applicable regulatory requirements regarding the export of our products may create delays in the introduction of our products in international markets or, in some cases, prevent the export of our products to some countries altogether. Furthermore, U.S. export control laws and economic sanctions prohibit the shipment of certain products and services to countries, governments and persons targeted by U.S. sanctions. If we fail to comply with export and import regulations and such economic sanctions, penalties could be imposed, including fines and/or denial of certain export privileges. Moreover, any new export or import restrictions, new legislation or shifting approaches in the enforcement or scope of existing regulations, or in the countries, persons or products targeted by such regulations, could result in decreased use of our products by, or in our decreased ability to export our products to, existing or potential customers with international operations. Any decreased use of our products or limitation on our ability to export or sell our products would likely adversely affect our business.

Our operations are subject to the effects of a rising rate of inflation.

Taiwan has recently experienced historically high levels of inflation. The inflation rate of Taiwan inched up to 2.7% in December of 2022 from 2.4% in the previous month. The inflation rate in June 2022 was 3.6%, highest inflation rate since August of 2008. As of December 2024 and 2025, the inflation rate in Taiwan stood at 2.10%. and 1.31%, respectively. If the inflation rate increases, for example due to increases in the costs of labor and supplies, it will affect our expenses, such as employee compensation and research and development charges. Research and development expenses account for a significant portion of our operating expenses. Such increased charges may not be readily recoverable during the period of time that we are bringing the drug candidates to market. Additionally, Taiwan is experiencing an acute workforce shortage, which in turn, has created a very competitive wage environment that may increase our operating costs. To the extent inflation results in rising interest rates and has other adverse effects on the market, it may adversely affect our consolidated financial condition and results of operations.

Our business may be exposed to foreign exchange risks.

We conduct clinical trials in multiple jurisdictions and thus we have expenses denominated in local currencies in multiple jurisdictions in connection with, among other things, our sponsored clinical trials, purchase of drug product for our clinical trials, process development and the prosecution and maintenance of our intellectual property portfolio. As a result, we are exposed to foreign currency exchange risk, as our results of operations and cash flows are subject to fluctuations in foreign currency exchange rates. In accordance with our business decisions, our exposure to this type of risk could change depending on:

Should any of these risks materialize, this could have a material adverse effect on our business, prospects, financial condition and results of operations.

In addition, our business is conducted in Taiwan, and our books and records are maintained in NTD. The consolidated financial statements that we file with the SEC and provide to our shareholders are presented in U.S. dollars. Changes in the exchange rates between NTD and U.S. dollars affect the value of our assets and the results of our operations, when presented in U.S. dollars. The value of NTD against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in the Taiwan’s political and economic conditions and perceived changes in the economy of Taiwan and the United States. Any significant revaluation of NTD may materially and adversely affect our cash flows, revenue, and financial condition. Further, our ordinary shares offered by this annual report are offered in U.S. dollars, we will need to convert the net proceeds we receive into NTD or other currencies in order to use the funds for our business. Changes in the conversion rate among the U.S. dollar, NTD and other currencies will affect the amount of proceeds we will have available for our business.

As of the date of this annual report, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into more hedging transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to adequately hedge our exposure or at all. In addition, our currency exchange losses may be magnified by local exchange control regulations that restrict our ability to convert NTD into foreign currencies. See “— Our Taiwan subsidiaries are subject to restrictions on paying dividend or making other payments to us, which may restrict our ability to satisfy its liquidity requirements.” As a result, fluctuations in exchange rates may have a material adverse effect on your investment.

We have recorded net cash outflow from operating activities since our inception and we expect to need to obtain additional financing to fund our operations. If we are unable to obtain such financing, we may be unable to complete the development and commercialization of our drug candidates.

Since our inception, our operations have consumed substantial amounts of cash. The expenses used in our research and development activities were approximately US$0.9 million and US$0.8 million for the years ended December 31, 2024 and 2025, respectively.

We expect our expenses to increase in connection with our ongoing activities, particularly as we initiate new clinical trials of, initiate new research and preclinical development efforts for and seek marketing approval for, our drug candidates. In addition, if we obtain marketing approval for any of our drug candidates, we may incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution to the extent that such sales, marketing, manufacturing and distribution are not the responsibility of a future collaborator. Furthermore, following the completion of our IPO, we have incurred significant additional costs associated with operating as a public company. Accordingly, we expect to need to obtain substantial additional funding in connection with our continuing operations. Our financing to fund our operations may be adversely affected, delayed or fail to raise because of capital market environment, valuation of our company or the progress of our competitors. If we are unable to raise capital when needed or on attractive terms, we may be forced to delay, reduce or eliminate our research and development programs or any future commercialization efforts.

Given that our significant current liabilities exceed US$20 million, there is a substantial risk that all or substantially all of the net proceeds from our IPO may be required to satisfy these liabilities. In such event, we would have limited funds available from the IPO proceeds to fund our research and development activities, clinical trials, or other business operations, and we would need to seek additional financing to continue our operations. We do not have any committed external source of funds. Accordingly, we may have to obtain further funding through public or private equity offerings, debt financings, collaborations and licensing arrangements or other sources. The incurrence of indebtedness or the issuance of certain equity securities could result in increased fixed payment obligations and could also result in our undertaking certain additional restrictive covenants, such as limitations on our ability to incur additional debt or issue additional equity, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. However, adequate additional financing may not be available to us on acceptable terms, or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a holder of our ordinary shares.

Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy.

Our existing cash on hand will not be sufficient to enable us to meet our short-term obligations or long-term plans, including commercialization of clinical pipeline products, if approved, or initiation or completion of future clinical trials. Our future funding requirements, both short-term and long-term, will depend on many factors, including:

We have no history of commercializing pharmaceutical products, which may make it difficult to evaluate the prospects for our future viability.

We have no history of commercializing pharmaceutical products. Our operations, to date, have been limited to financing and staffing our company, developing our biotechnology and conducting preclinical research and clinical trials for our drug candidates. We have not yet demonstrated an ability to successfully obtain marketing approvals for or commercialize our drug candidates or manufacture our drug candidates on a scale sufficient to supply the commercial markets. We currently have no drug candidates approved for commercial sale and have not generated any revenue from such sales. Consequently, any predictions about our future success or viability may not be as accurate as they could be if we had a longer operating history and/or approved products on the market.

Due to the fact that we have yet to commercialize a drug product, particularly in light of the rapidly evolving drug research and development industry in which we operate and the changing regulatory and market environments we encounter, may make it difficult to evaluate our prospects for future performance. As a result, any assessment of our future performance or viability is subject to significant uncertainty. We will encounter risks and difficulties frequently experienced by early-stage companies in rapidly evolving fields as we seek to transition to a company capable of supporting commercial activities.

As we continue to build our business, we expect our financial condition and operating results may fluctuate significantly from quarter to quarter and year to year due to a variety of factors, many of which are beyond our control. Accordingly, you should not rely upon the results of any particular quarterly or annual period as indications of future operating performance.

We have incurred net losses since our inception and anticipate that we will continue to incur net losses for the foreseeable future and may not generate revenue that is significant or large enough to achieve profitability.

We have incurred significant annual net operating losses in every year since our inception. We may continue to incur net operating losses for at least the next several years. Our net losses were approximately US$3.0 million and US$4.7 million for the years ended December 31, 2024 and 2025, respectively. As of December 31, 2024 and 2025, we had an accumulated deficit of approximately US$33.0 million and US$37.8 million, respectively. In addition, we incurred negative cash flows in operating activities for the approximate amount of US$3.6 million and US$3.0 million for the years ended December 31, 2024 and 2025, respectively. We have not generated any revenues from product sales and may never have a drug candidate approved for commercialization. We have financed our operations to date primarily through bank loans. We have devoted substantially all of our financial resources and efforts to research and development, including preclinical studies and our clinical trials. Our net losses may fluctuate significantly from quarter to quarter and year to year. Net losses and negative cash flows have had, and will continue to have, an adverse effect on our stockholders’ equity and working capital.

We anticipate that our expenses will increase substantially if and as we:

We will likely need to increase the size and capabilities of our organization, and we may experience difficulties in managing our growth.

In order to execute our business plans, we expect that we will need to significantly increase the number of our employees and consultants and the scope of our operations, particularly in the areas of research and development, regulatory affairs and business development. Our future financial performance and our ability to commercialize our drug candidates and to compete effectively will depend, in part, on our ability to manage any future growth effectively. To manage our anticipated future growth, we will need to continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel. Due to our limited financial resources, we may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel. The expansion of our operations may lead to significant costs and may divert our management and business development resources. Any inability to manage growth could delay the execution of our business plans or disrupt our operations and have a material adverse effect on our business.

In addition, we currently rely, and for the foreseeable future may continue to rely, in substantial part on certain academic organizations, advisors and consultants to provide certain services. There can be no assurance that the services of these academic organizations, advisors and consultants will continue to be available to us on a timely basis when needed or that we can find qualified replacements. Furthermore, if we are unable to effectively manage our outsourced activities or if the quality or accuracy of the services provided by academic organizations, advisors or consultants is compromised for any reason, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain regulatory approval of our drug candidates or otherwise advance our business. There can be no assurance that we will be able to maintain our existing relationships with these academic organizations, advisors and consultants or find other competent academic organizations, advisors and consultants on economically reasonable terms, if at all.

If we fail to implement and maintain an effective system of internal controls, we may be unable to accurately report our results of operations, meet our reporting obligations or prevent fraud, and investor confidence and the market price of our shares may be materially and adversely affected.

We are subject to the reporting requirements of the Exchange Act of 1934, or Exchange Act, the Sarbanes-Oxley Act and the rules and regulations of the Nasdaq. Our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting, as we are not required to provide a report of management’s assessment on our internal control over financial reporting due to a transition period established by the rules of the SEC for newly public companies.

In connection with the audits of our consolidated financial statements as of December 31, 2024 and 2025, we and our independent registered public accounting firm identified material weaknesses in our internal control over financial reporting as well as other control deficiencies for the above mentioned periods. The material weakness identified is a lack of sufficient financial reporting and accounting personnel with appropriate knowledge of U.S. GAAP and SEC reporting requirements to formalize key controls over financial reporting and to prepare consolidated financial statements and related disclosures.

We intend to implement measures designed to improve our internal control over financial reporting to address the underlying causes of the material weakness, including (i) hiring more qualified staff to fill up the key roles in the operations; (ii) setting up a financial and system control framework with formal documentation of polices and controls in place; and (iii) strengthening corporate governance.

In response to the material weaknesses identified prior to our IPO, we will implement a number of measures to address the material weakness identified, including but not limited to (i) working closely with external highly qualified accountants with relevant U.S. GAAP and SEC reporting experience and qualifications to strengthen the financial reporting function, establish a financial and system control framework, and arrange regular training programs on U.S. GAAP accounting for our accounting and financial reporting personnel; (ii) strengthening and improving the overall internal control function by employing an external consulting firm to assist us in assessing the compliance requirements of the Sarbanes Oxley Act; (iii) strengthen corporate governance; and (iv) making an internal control report to the Audit Committee every quarter to report the progress and improvement in internal control, which is well monitored by the Audit Committee.

However, we cannot assure you that all these measures will be sufficient to address all the potential internal control issues for the financial reporting, and we cannot assure you that we will not identify additional material weaknesses or significant deficiencies in the future. In addition, if we are unable to meet the requirements of Section 404 of the Sarbanes-Oxley Act, our ordinary shares may not be able to remain listed on the Nasdaq Global Market.

Section 404 of the Sarbanes-Oxley Act of 2002 requires that we include a report of management on our internal control over financial reporting in our annual report on Form 20-F beginning with our annual report beginning with our second annual report on Form 20-F. In addition, once we cease to be an “emerging growth company” as such term is defined under the JOBS Act, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, as we are a public company, our reporting obligations may place a significant strain on our management, operational and financial resources and systems for the foreseeable future. We may be unable to timely complete our evaluation testing and any required remediation.

During the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, we may identify other weaknesses and deficiencies in our internal control over financial reporting. In addition, if we fail to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting. If we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could in turn limit our access to capital markets, harm our results of operations and lead to a decline in the trading price of our shares. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions. We may also be required to restate our financial statements from prior periods.

We currently have no operations in China although we have established a subsidiary in each of Hong Kong and China. However, due to the extraterritorial reach (the so-called “long arm provisions”) under the current PRC laws and regulations, the Chinese government may exert substantial oversight and influence over the manner in which we must conduct our business and may intervene in or influence our operations at any time, which could result in a material change in our operations and significantly and adversely impact the value of our ordinary shares. We endeavor to operate our business in compliance with applicable laws and regulations in all material respects.

We currently have no operations in China although we have established a subsidiary in each of Hong Kong and China. However, we may in the future expand our operations into China. The Chinese government has significant oversight and discretion over the conduct of our business and may intervene or influence our operations as the government deems appropriate to further regulatory, political and societal goals. The Chinese government has recently published new policies that significantly affected certain industries such as the education and internet industries, and we cannot rule out the possibility that it will in the future release regulations or policies regarding our industry that could require us to seek permission from Chinese authorities to continue to operate our business which adversely affect our business, financial condition and results of operations. Furthermore, recent statements made by the Chinese government have indicated an intent to increase the government’s oversight and control over offerings of companies with significant operations in China that are to be conducted in foreign markets, as well as foreign investment in China-based issuers. On February 17, 2023, the CSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Trial Measures, which became effective on March 31, 2023. We reasonably believed that the Trial Measures do not apply to us, and as of the date of this annual report, we have not received any inquiry, notice, warning or sanctions regarding our planned overseas listing from the CSRC and any other PRC governmental authorities. Although as of the date of this annual report, we do not expect to be materially affected by the foregoing statements or the Trial Measures, any such action, once taken by the Chinese government, could significantly limit or completely hinder our ability to offer or continue to offer ordinary shares to our investors, and could cause the value of our ordinary shares to significantly decline or become worthless.

Changes in the political and economic policies of the Chinese government or in relations between China and the United States may materially and adversely affect our business, financial condition, results of operations and the market price of our ordinary shares.

If we, in the future, expand our operations into China, our financial condition and results of operations may be affected by economic, political and legal developments in China. The PRC economy differs from the economies of most developed countries in many respects, including the extent of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although the PRC government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the government. In addition, the PRC government continues to play a significant role in regulating industrial development by imposing industrial policies, and change of enforcement practice of such rules and policies can occur quickly with little advance notice. The PRC government also exercises significant control over China’s economic growth by allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy, regulating financial services and institutions and providing preferential treatment to particular industries or companies.

While the PRC economy has experienced significant growth in the past four decades, growth has been uneven, both geographically and among various sectors of the economy. The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall PRC economy, but may also have a negative effect on us. If we expand our operations into China, our business, financial condition and results of operations could be materially and adversely affected by government control over capital investments or changes in tax regulations that are applicable to us.

If the business environment in China deteriorates from the perspective of domestic or international investment, or if relations between China and the United States or other governments deteriorate, the Chinese government may intervene with our operations and our business in China in the future, and then the market price of our ordinary shares, may also be adversely affected.

PRC regulation and oversight of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of our IPO to make loans or additional capital contributions to our PRC subsidiaries in China, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

We are an offshore holding company conducting our operations in Taiwan through our Taiwan subsidiaries. We currently have one subsidiary in China, namely Innovative Biotech Co., Ltd., which has no operations and generates no revenue as of the date of this annual report. In the event that we elect to expand our operations into China in the future, we may make loans to our PRC subsidiary, or we may make additional capital contributions to our PRC subsidiary, or we may establish new PRC subsidiaries and make capital contributions to these new PRC subsidiaries, or we may acquire offshore entities with business operations in China in an offshore transaction.

Most of these ways are subject to PRC regulations and approvals or registration. For example, loans by us to our wholly owned PRC subsidiary to finance its activities cannot exceed statutory limits and must be registered with the local counterpart of SAFE. If we decide to finance our wholly owned PRC subsidiary by means of capital contributions, these capital contributions are subject to registration with the State Administration for Market Regulation or its local branch, reporting of foreign investment information with the PRC Ministry of Commerce, or registration with other governmental authorities in China.

SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming the Administration of Foreign Exchange Settlement of Capital of Foreign-invested Enterprises, or SAFE Circular 19, effective June 2015, in replacement of the Circular on the Relevant Operating Issues Concerning the Improvement of the Administration of the Payment and Settlement of Foreign Currency Capital of Foreign-Invested Enterprises, the Notice from the State Administration of Foreign Exchange on Relevant Issues Concerning Strengthening the Administration of Foreign Exchange Businesses, and the Circular on Further Clarification and Regulation of the Issues Concerning the Administration of Certain Capital Account Foreign Exchange Businesses. According to SAFE Circular 19, the flow and use of the RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company is regulated such that RMB capital may not be used for the issuance of RMB entrusted loans, the repayment of inter-enterprise loans or the repayment of banks loans that have been transferred to a third party. Although SAFE Circular 19 allows RMB capital converted from foreign currency-denominated registered capital of a foreign-invested enterprise to be used for equity investments within China, it also reiterates the principle that RMB converted from the foreign currency-denominated capital of a foreign-invested company may not be directly or indirectly used for purposes beyond its business scope. Thus, it is unclear whether SAFE will permit such capital to be used for equity investments in China in actual practice. SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or SAFE Circular 16, effective on June 9, 2016, which reiterates some of the rules set forth in SAFE Circular 19, but changes the prohibition against using RMB capital converted from foreign currency denominated registered capital of a foreign-invested company to issue RMB entrusted loans to a prohibition against using such capital to issue loans to non-associated enterprises. Violations of SAFE Circular 19 and SAFE Circular 16 could result in administrative penalties. SAFE Circular 19 and SAFE Circular 16 may significantly limit our ability to transfer any foreign currency we hold, including the net proceeds from our IPO, to our PRC subsidiary, which may adversely affect our liquidity and our ability to fund and expand our business in China. On October 23, 2019, the SAFE promulgated the Notice for Further Advancing the Facilitation of Cross-border Trade and Investment, or the SAFE Circular 28, which, among other things, allows all foreign-invested companies to use Renminbi converted from foreign currency-denominated capital for equity investments in China, as long as the equity investment is genuine, does not violate applicable laws, and complies with the negative list on foreign investment. However, since the SAFE Circular 28 is newly promulgated, it is unclear how SAFE and competent banks will carry this out in practice.

In light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, or at all, with respect to future loans to our PRC subsidiary or future capital contributions by us to our PRC subsidiary. As a result, uncertainties exist as to our ability to provide prompt financial support to our PRC subsidiary when needed. If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds we expect to receive from our IPO and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

RISKS RELATED TO OUR DEPENDENCE ON THIRD PARTIES

As we rely on third parties to conduct our clinical trials and provide other important services related to research and development, regulatory submissions, and commercialization, if we fail to maintain our relationships with these third parties or if they do not successfully carry out their contractual duties, comply with applicable laws, or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our drug candidates and our business could be substantially harmed.

We have relied on and plan to continue to rely on third-party CROs to monitor and manage data for some of our ongoing clinical trials. We rely on these parties for the execution of our preclinical studies and clinical trials, and control only certain aspects of their activities. Nevertheless, we are responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol and legal, regulatory and scientific standards, and our reliance on the CROs does not relieve us of our regulatory responsibilities.

Our CROs have the right to terminate their agreements with us in the event of an unrectified material breach. If any of our relationships with our third-party CROs is terminated, we may not be able to (i) enter into arrangements with alternative CROs or do so on commercially reasonable terms or (ii) meet our desired clinical development timelines. In addition, there is a natural transition period when a new CRO commences work, and the new CRO may not provide the same type or level of services as the original provider and data from our clinical trials may be compromised as a result. There is also a need for relevant technology to be transferred to the new CRO, which may take time and further delay our development timelines.

Except for remedies available to us under our agreements with our CROs, we cannot control whether or not our CROs devote sufficient time and resources to our ongoing clinical, nonclinical and preclinical studies. If our CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines or if the quality or accuracy of the clinical data they obtain is compromised due to their failure to adhere to our clinical protocols, the impacts of any pandemic on their operations, regulatory requirements or for other reasons, our clinical trials may be extended, delayed or terminated and we may not be able to obtain regulatory approval for or successfully commercialize our drug candidates. As a result, our results of operations and the commercial prospects for our drug candidates would be harmed and our costs could increase. In turn, our ability to generate revenues could be delayed or compromised.

We cannot guarantee that third parties perform duties complying with our standards or produce results in a timely manner. They may fail to perform at all. In addition, the use of third-party service providers requires us to disclose our proprietary information to these third parties, which could increase the risk that such information will be misappropriated. We currently have a limited number of employees, which limits the internal resources we have available to identify and monitor our third-party service providers. To the extent we are unable to identify and successfully manage the performance of third-party service providers in the future, our business may be adversely affected. Though we carefully manage our relationships with our CROs, there can be no assurance that we will not encounter similar challenges or delays in the future, and such challenges or delays could have a material adverse impact on our business, financial condition and prospects.

As we rely on third parties to conduct our preclinical studies and clinical trials, our business could be harmed if those third parties fail to comply with the applicable regulatory requirements.

We and our CROs are required to comply with cGCPs, cGLPs, and other regulatory regulations and guidelines enforced by the TFDA, the U.S. FDA, the International Conference on Harmonization, or ICH, and comparable foreign regulatory authorities for all of our drug candidates in clinical development. Regulatory authorities enforce these cGCPs, cGLPs or other regulatory requirements through periodic inspections of study sponsors, investigators and study sites. If we or any of our CROs fail to comply with applicable cGCPs, cGLPs or other regulatory requirements, the relevant data generated in our preclinical studies and clinical trials may be deemed unreliable and the TFDA, the U.S. FDA or other comparable regulatory authorities may require us to perform additional clinical trials before approving our marketing applications. There can be no assurance that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical trials complies with cGCPs requirements. In addition, our clinical trials must be conducted with drug candidates or products produced under governmental requirements. Failure to comply with these regulations may require us to repeat preclinical studies and clinical trials, which would delay the regulatory approval process.

We are highly dependent on third parties to supply the drug raw materials, such as API, for our developing and manufacturing activities, and the lack of availability or significant increases in cost of such drug raw materials could adversely influence our business.

The development and manufacture of drug products are complex and require significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls. Currently, our drug raw materials for our developing and manufacturing activities are supplied by multi-source suppliers. In addition, we believe that adequate alternative sources for such supplies exist. However, there is a risk that, if supplies are interrupted or if the costs of such drug materials were to significantly increase, our business would be materially harmed. For example, the COVID-19 pandemic, the monkeypox outbreak, geopolitical risk, wars and military conflicts could have an extensive impact on the production and supplies of active ingredients or other raw materials and result in a potential shortage of supply.

As mentioned elsewhere in this annual report, our API-1 supplier withdrew their consent to reference their Drug Master File on file with the U.S. FDA due to the relocation and restructuring of their manufacturing facility. The API-1 we used to perform our clinical trials of Botreso^® is now unavailable to us, causing delays and additional expenses in the development of our drug candidates. As disclosed in “Item 14. Material Modifications to the Right of Security Holders and Use of Proceeds”, approximately US$6 million have been allocated to fund the additional R&D, CMC, and Phase III trials of Botreso^® using API-2. The estimated time for completing the Phase III trials of Botreso^® using API-2 is approximately 1 to 2 years, depending on the processing and approval time from the U.S. FDA.

We have been conducting further research and development on Botreso^® and identified an additional source for the botanical drug substance API-2.  API-1 and API-2 are similar drug substances covered by the same patent owned by us; however, because they are sourced from raw materials manufactured in different locations, the U.S. FDA considers them to be different botanical drug substances. Therefore, we will conduct comparability study for API-1 and API-2. On June 26, 2023, the U.S. FDA informed us that the information we provided on API-2 was not sufficient to demonstrate comparability with API-1. In addition to current unavailability of API-1, the U.S. FDA explained that we had not demonstrated a statistically significant difference between Botreso^® with API-1 and placebo in the primary efficacy endpoint in the MCS-2-US-a study. The U.S. FDA stated that without new clinical information, any resubmission of the NDA for Botreso^® would be at risk of the U.S. FDA refusing to accept the application, a RTF action. We submitted a Type D WRO meeting request to the U.S. FDA on December 12, 2023. We asked that the U.S. FDA provide a written response to questions focused on obtaining U.S. FDA review and comments on a new, proposed Phase III clinical trial protocol for Botreso^® with API-2 and a PK study. We proposed to address CMC information for Botreso^® in a separate, future meeting. The U.S. FDA granted our WRO meeting request, and clarified that they viewed the meeting as a Type C meeting because it encompasses an entirely new drug development program, including Phase I PK study and Phase III clinical trial for Botreso^® made from API-2, which the U.S. FDA characterizes as a new product with a new active pharmaceutical ingredient. We plan to schedule a special CMC meeting with the U.S. FDA in 2024 to discuss API-2, providing comprehensive CMC information for U.S. FDA review and comments. We have completed the CMC documentation on the active pharmaceutical ingredient-2 (API-2) and a plan to establish comparability between API-1 and API-2 and submitted it to the U.S. FDA on October 16, 2024, and are awaiting feedback from the U.S. FDA. This process does not indicate a “shortage” of API-2. As of the date of this annual report, the Company is still in the process of providing the information required by the U.S. FDA and has not yet successfully demonstrated the comparability of API-1 and API-2.  If the U.S. FDA confirms that API-1 and API-2 are comparable and deems the study results using API-2 acceptable, we will proceed to re-submit our NDA.

However, if we experience a shortage in supply of active ingredients or other raw materials, including API-2, whether due to the aforementioned factors or otherwise, we could not supply adequate levels of our drug candidates. Identifying a suitable replacement and demonstrating its equivalence to API-2 could require extensive research and development efforts, potentially leading to additional costs and delays. Additionally, substituting the original ingredient with an alternative substance may necessitate conducting further clinical trials to assess the safety and efficacy of such new material. These additional trials could prolong the time to market for our products and increase regulatory scrutiny, further impacting our business operations and financial performance.

We expect to seek to establish collaborations and, if we are not able to establish them on commercially reasonable terms, we may have to alter our development and commercialization plans.

We may form or seek strategic alliances, create collaborations, or enter into licensing arrangements with third parties that we believe will complement or augment our development and commercialization efforts with respect to our drug candidates and any future drug candidates that we may develop. Any of these relationships may require us to incur recurring or non-recurring expenses and other charges, increase our near and long-term expenditures, or disrupt our management and business. In addition, we face significant competition in seeking appropriate strategic partners and the negotiation process is time-consuming and complex. Moreover, we may not be successful in our efforts to establish a strategic collaboration or other alternative arrangements for our drug candidates because they may be deemed to be at too early a stage of development for collaborative effort and third parties may not view our drug candidates as having the requisite potential to demonstrate safety and efficacy. If and when we collaborate with a third party for the development and commercialization of a drug candidate, we can expect to relinquish some or all of the control over the future success of that drug candidate to the third party.

Further, collaborations involving our drug candidates are subject to additional risks, which include, but are not limited to, the following:

As a result, if we enter into collaboration agreements or license our drugs, we may not be able to realize the benefit of such transactions if we are unable to successfully integrate these collaborations or licenses with our existing operations and company culture, which could delay our timelines or otherwise adversely affect our business.

If we are unable to reach agreements with suitable collaborators on a timely basis, on acceptable terms, or at all, we may have to curtail the development of a drug candidate, reduce or delay its development program or one or more of our other development programs, delay its potential commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense. If we elect to fund and undertake development or commercialization activities on our own, we may need to obtain additional expertise and additional capital, which may not be available to us on acceptable terms or at all. If we fail to enter into collaborations and do not have sufficient funds or expertise to undertake the necessary development and commercialization activities, we may not be able to further develop our drug candidates or bring them to market and generate product sales revenue, which would harm our business, financial condition, results of operations and prospects.

Negotiations of collaborations are complex and time-consuming, and we may not able to find suitable collaborators and enter into agreements with them.

Any collaboration agreements that we enter into in the future may contain restrictions on our ability cooperate with other potential collaborators. We may not be able to negotiate collaborations on a timely basis, on acceptable terms, or at all. If we are unable to do so, we may have to curtail the development of the drug candidate for which we are seeking to collaborate, reduce or delay its development program or one or more of our other development programs, delay its potential commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense.

RISKS RELATED TO OUR INTELLECTUAL PROPERTY

If we are unable to obtain and maintain patent and other intellectual property protection for our drug candidates, or if the scope of such intellectual property rights obtained is not sufficiently broad, third parties could develop and commercialize products and technologies similar or identical to ours and compete directly against us, and our ability to successfully commercialize any product or technology may be adversely affected.

Our success depends, in large part, on our ability to protect our proprietary technology and drug candidates from competition by obtaining, maintaining, defending and enforcing our intellectual property rights, including patent rights. As of the date of this annual report, our portfolio of self-own patents consisted of 29 issued patents in 16 countries and regions. We seek to protect and intend to seek to protect the drug candidates and technology that we consider commercially important by filing patent applications globally, relying on trade secrets or pharmaceutical regulatory protection or employing a combination of these methods. This process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications in all jurisdictions at a reasonable cost or in a timely manner. It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection.

The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much litigation. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain. Our self-own pending and future patent applications may not result in patents being issued which protect our technology or drug candidates or which effectively prevent others from commercializing competitive technologies and drug candidates. The patent examination process may require us to narrow the scope of the claims of self-own pending and future patent applications, which may limit the scope of patent protection that may be obtained. We cannot assure that all of the potentially relevant prior art relating to our self-own patents and patent applications has been found. If such prior art exists, it can invalidate a patent or prevent a patent application from being issued as a patent.

Even if patents do issue on any of these applications, there can be no assurance that a third party will not challenge their validity, enforceability, or scope, which may result in the patent claims being narrowed or invalidated, or that we will obtain sufficient claim scope in those patents to prevent a third party from competing successfully with our drug candidates. We may become involved in interference, inter partes review, post grant review, ex parte re-examination, derivation, opposition or similar other proceedings challenging our patent rights or the patent rights of others. An adverse determination in any such proceeding could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology or drug candidates and compete directly with us, or result in our inability to manufacture or commercialize drug candidates without infringing third-party patent rights. Thus, even if our self-own patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage.

Our competitors may be able to circumvent our self-own patents by developing similar or alternative technologies or drug candidates in a non-infringing manner. The issuance of a patent is not conclusive as to its scope, validity or enforceability, and our self-own patents may be challenged in the courts or patent offices in the U.S., Taiwan and other countries. Such challenges may result in patent claims being narrowed, invalidated or held unenforceable, which could limit our ability to stop or prevent us from stopping others from using or commercializing similar or identical technology and drug candidates, or limit the duration of the patent protection of our technology and drug candidates. Given the amount of time required for the development, testing and regulatory review of new drug candidates, patents protecting such assets might expire before or shortly after such assets are commercialized. As a result, our patent portfolio may not provide us with sufficient rights to exclude others from commercializing drug candidates similar or identical to ours.

Changes in either the patent laws or interpretation of the patent laws in the U.S. and other countries may diminish the value of our self-own patents or narrow the scope of our patent protection. For instance, under the America Invents Act enacted in 2011, the U.S. moved to this first-to-file system in early 2013 from the previous system under which the first to make the claimed invention was entitled to the patent. Assuming the other requirements for patentability are met, the first to file a patent application is entitled to the patent. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the U.S. and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore, we cannot be certain that we were the first to make the inventions claimed in our self-own patents or pending patent applications, or that we were the first to file for patent protection of such inventions.

We enjoy only limited geographical protection with respect to certain patents and may not be able to protect our intellectual property rights throughout the world.

Filing and prosecuting patent applications and defending patents covering our drug candidates in all countries throughout the world could be prohibitively expensive. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own drug candidates and, further, may export otherwise infringing drug candidates to territories, where we have patent protection, but enforcement rights are not as strong as those in the U.S. These drug candidates may compete with our drug candidates, and our self-own patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

The laws of some jurisdictions do not protect intellectual property rights to the same extent as the laws or rules and regulations in the U.S., and many companies have encountered significant difficulties in protecting and defending such rights in such jurisdictions. The legal systems of certain countries, particularly certain developing countries, are not as favorable as other jurisdictions with regard to the enforcement of patents, trade secrets and other intellectual property protection, which could make it difficult for us to stop the infringement of our self-own patents or marketing of competing drug candidates in violation of our proprietary rights generally and specifically in certain jurisdictions. Proceedings to enforce our patent rights in other jurisdictions, whether or not successful, could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our self-own patent applications at risk of not issuing as patents, and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop. Furthermore, while we intend to protect our intellectual property rights in our expected significant markets, we cannot ensure that we will be able to initiate or maintain similar efforts in all jurisdictions in which we may wish to market our drug candidates. Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate, which may have an adverse effect on our ability to successfully commercialize our drug candidates in all of our expected significant foreign markets. If we encounter difficulties in protecting, or are otherwise precluded from effectively protecting, the intellectual property rights important for our business in such jurisdictions, the value of these rights may be diminished, and we may face additional competition from others in those jurisdictions.

Some countries also have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In addition, some countries limit the enforceability of patents against government agencies or government contractors. In those countries, the patent owner may have limited remedies, which could materially diminish the value of such patents. If we are forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired.

Enforcing our intellectual property rights against third parties may also cause such third parties to file other counterclaims against us, which could be costly to defend and could require us to pay substantial damages, cease the sale of certain drugs or enter into a license agreement and pay royalties (which may not be possible on commercially reasonable terms or at all).

Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by government patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

Periodic maintenance fees, renewal fees, annuity fees and various other government fees on patents and applications will be due to be paid to government patent agencies over the lifetime of our owned or licensed patents and applications. In certain circumstances, we rely on our licensing partners to pay these fees due to patent agencies. The government agencies require compliance with several procedural, documentary, fee payment and other similar provisions during the patent application process. We are also dependent on our licensors to take the necessary action to comply with these requirements with respect to our licensed intellectual property. In some cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules. There are situations, however, in which non-compliance can result in abandonment or lapse of the patent or patent application, resulting in a partial or complete loss of patent rights in the relevant jurisdiction. In such an event, potential competitors might be able to enter the market with similar or identical products or technology, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

Terms of our future self-own patents may not be sufficient to effectively protect our drug candidates and business in certain jurisdictions.

In many countries where we file applications for patents, the term of an issued patent is generally 20 years from the earliest claimed filing date of a non-provisional patent application in the applicable country. Although various extensions may be available, the life of a patent and the protection it affords are limited. Even if we obtain patents covering our drug candidates, we may still be open to competition from other companies, as well as generic medications once the patent life has expired for a drug. For example, while there are patent regulations in the PRC in respect of regulatory data protection of new drugs containing new chemical components, there are currently no other clear mechanisms providing patent term extension or patent linkages for other drugs in the PRC. Therefore, it is possible that a lower-cost generic drug can emerge onto the market much more quickly. For additional information regarding potential generic competition for our products in China, see “ — The uncertainty of patent linkage, patent term extension and data and market exclusivity for our future drug products could increase the risk of early generic competition with our products in our primary sales markets.” These factors may result in weaker protection for us against generic competition in jurisdictions similar to the PRC than could be available to us in other jurisdictions, such as the U.S. In addition, patents which we expect to obtain in the PRC or similar jurisdictions may not be eligible to be extended for patent terms lost during clinical trials and the regulatory review process.

If we are unable to obtain patent term extensions or if such extensions are less than requested for, our competitors may obtain approval of competing products following our patent expirations and our business, financial condition, results of operations and prospects could be materially harmed as a result.

If the TFDA, the U.S. FDA or comparable foreign regulatory authorities approve generic versions of any of our products that receive marketing approval, or such authorities do not grant our products appropriate periods of data exclusivity before approving generic versions of our products, the sales of our products could be adversely affected.

Once an NDA is approved, the drug candidate covered thereby becomes a “reference-listed drug” in the U.S. FDA’s publication, “Approved Drug Products with Therapeutic Equivalence Evaluations,” or the Orange Book. Manufacturers may seek approval of generic versions of reference-listed drugs through submission of abbreviated new drug applications, or ANDAs, in the U.S. In support of an ANDA, a generic manufacturer need not conduct clinical trials. Rather, the applicant generally must show that its product has the same active ingredients, dosage form, strength, route of administration and conditions of use or labeling as the reference-listed drug and that the generic version is bioequivalent to the reference-listed drug, meaning it is absorbed in the body at the same rate and to the same extent. Generic products may be significantly less costly to bring to market than the reference-listed drug and companies that produce generic products are generally able to offer them at lower prices. Thus, following the introduction of a generic drug, a significant percentage of the sales of any branded product or reference-listed drug may be typically lost to the generic product.

Competition that our products may face from generic versions of our products could negatively impact our future revenue, profitability and cash flows and substantially limit our ability to obtain a return on our investments in those drug candidates.

The uncertainty of patent linkage, patent term extension and data and market exclusivity for our future drug products could increase the risk of early generic competition with our products in our primary sales markets.

In the U.S., the Federal Food, Drug and Cosmetic Act, as amended by the Drug Price Competition and Patent Term Restoration Act, or the Hatch-Waxman Act, provides the opportunity for patent-term restoration, meaning a patent term extension of up to five years to reflect patent term lost during certain portions of product development and the U.S. FDA regulatory review process. The Hatch-Waxman Act also has a process for patent linkage, pursuant to which the U.S. FDA will stay approval of certain follow-on applications during the pendency of litigation between the follow-on applicant and the patent holder or licensee, generally for a period of 30 months. Finally, the Hatch-Waxman Act provides for statutory exclusivities that can prevent submission or approval of certain follow-on marketing applications. For example, federal law provides a five-year period of exclusivity within the U.S. to the first applicant to obtain approval of a new chemical entity and three years of exclusivity protecting certain innovations to previously approved active ingredients where the applicant was required to conduct new clinical investigations to obtain approval for the modification. These provisions, designed to promote innovation, can prevent competing products from entering the market for a certain period of time after the U.S. FDA grants marketing approval for the innovative product.

Depending upon the timing, duration and specifics of any U.S. FDA marketing approval process for any drug candidates we may develop, one or more of our self-own U.S. patents, if issued, may be eligible for limited patent term extension under the Hatch-Waxman Act. The Hatch-Waxman Act permits a patent extension term of up to five years as compensation for patent term lost during clinical trials and the U.S. FDA regulatory review process. A patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of drug approval, only one patent may be extended and only those claims covering the approved drug, a method for using it, or a method for manufacturing it may be extended. The application for patent term extension is subject to approval by the U.S. Patent and Trademark Office, or USPTO, in conjunction with the U.S. FDA. However, we may not be granted an extension because of, for example, failing to exercise due diligence during the testing phase or regulatory review process, failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents, or otherwise failing to satisfy applicable requirements. Furthermore, the applicable time period or the scope of patent protection afforded could be less than we request. If we are unable to obtain a patent term extension for a given patent or the term of any such extension is less than we request, the period during which we will have the right to exclusively market our drug will be shortened and our competitors may obtain earlier approval of competing drugs, and our ability to generate revenues could be materially and adversely affected.

In Taiwan, the Patent Act grants the patent holder of drugs for human purposes the right to extend the patent term. Pursuant to the Patent Act, the patent term might be extended up to five years to reflect patent term lost during the clinical trial process and the Taiwan FDA regulatory review process. In addition, the Patent Act and the Pharmaceutical Affairs Act also provide the patent linkage process. As Taiwan adopts a double-track examination system in terms of patent prosecution, including the examination of Taiwan Intellectual Property Office (“TIPO”) and the examination of the court, under the patent linkage process, the Taiwan FDA will stay approval of certain follow-on applications during the pendency of the invalidation action and the pendency of litigation between the follow-on applicant and the patent holder or licensee. The pendency of such litigation generally lasts for a period of 12-14 months. Finally, the Pharmaceutical Affairs Act provides a five-year period of exclusivity to the first applicant to exclusively hold the drug permit and a three-year period of exclusivity to restrict other pharmaceutical firms who may apply for registration of the same drug from citing the application data submitted by the first applicant.

For those drug candidates we may develop, one or more of our self-own Taiwan patents, if issued, may be eligible for limited patent term extension under the Patent Act. The Patent Act provides that only one patent may be extended. The application for patent term extension is subject to approval by TIPO, in conjunction with the Taiwan FDA. While the Patent Act explicitly provides that TIPO and the Taiwan FDA should take into consideration the impact on public health, we may not be granted the extension because of the authorities’ discretion. In addition, if we fail to apply within applicable deadlines, fail to apply prior to the expiration of relevant patents, or otherwise fail to satisfy applicable requirements, we may not be granted the extension as well.

The Patent Act also provides that the extension term is restricted to be five years as a maximum, implying that we may be granted a shorter extension period than we request. Furthermore, pursuant to the Patent Act, any person may file an invalidation action of the granted patent term extension to the authorities, together with documents of proof. If anyone files such invalidation action with respect to our patents, the permit of the extension period may be withdrawn by TIPO.

If we are unable to obtain a patent term extension for a given patent, or the term of any such extension is less than we request, or our extension permit is withdrawn by TIPO, our competitors may compete with us in an earlier stage, and our ability to generate revenues could be materially and adversely affected.

Changes in patent law could diminish the value of patents in general, thereby impairing our ability to protect our drug candidates.

As is the case with other biotechnology companies, our success is heavily dependent on intellectual property, particularly patent rights. Obtaining and enforcing patents in the pharmaceutical market involves both technological and legal complexity, and is therefore costly, time-consuming, and inherently uncertain. For instance, the America Invents Act includes a number of significant changes that affect the way patent applications will be prosecuted and also may affect patent litigation, which could increase the uncertainties and costs surrounding the prosecution of our owned, co-owned and in-licensed patent applications and the enforcement or defense of patents issuing from those patent applications, all of which could have a material adverse effect on our business, financial condition, results of operations and prospects. Although we do not believe that our currently self-own patents and any patents that may issue from our pending patent applications directed to our drug candidates, if issued in their currently pending forms, will be found invalid, we cannot predict how relevant regulatory authorities’ future decisions may impact the value of our patent rights. There could be similar changes in the laws of foreign jurisdictions that may impact the value of our patent rights or our other intellectual property rights.

We also may be subject to claims that our employees, consultants, or advisers have wrongfully used or disclosed alleged trade secrets of their former employers or claims asserting ownership of what we regard as our own intellectual property.

Many of our employees, consultants, and advisers, including our senior management, were previously employed at or contracted by other biotechnology or pharmaceutical companies. Some of these employees, consultants, and advisers, including members of our senior management, executed proprietary rights, non-disclosure and non-competition agreements in connection with such previous employment. Although we try to ensure that our employees do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or these employees, consultants or advisors have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such individual’s former employer. We are not aware of any threatened or pending claims related to these matters or concerning the agreements with our senior management, but in the future litigation may be necessary to defend against such claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management. In addition, while we typically require our employees, consultants and advisors who may be involved in the development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who in fact develops intellectual property that we regard as our own, and furthermore, the assignment of intellectual property rights may not be self-executing, or the assignment agreements may be breached, each of which may result in claims by or against us related to the ownership of such intellectual property. If we fail in prosecuting or defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights. Even if we are successful in prosecuting or defending against such claims, litigation could result in substantial costs, be a distraction to our management and scientific personnel and have a material adverse effect on our business, financial condition, results of operations and prospects.

We may be subject to claims challenging the inventorship of our patents and other intellectual property.

We may be subject to claims that former employees, collaborators or other third parties have an interest in our patent rights, trade secrets, or other intellectual property. Litigation may be necessary to defend against these and other claims challenging inventorship or our patent rights, trade secrets or other intellectual property. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, intellectual property that is important to our therapeutic programs and other proprietary technologies we may develop. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to our management and other employees. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects.

Intellectual property litigation may lead to unfavorable publicity which may harm our reputation and any unfavorable outcome from such litigation could limit our research and development activities and/or our ability to commercialize our drug candidates.

During the course of any intellectual property litigation, there could be public announcements of the results of hearings, rulings on motions, and other interim proceedings in the litigation. If securities analysts or investors regard these announcements as negative, the perceived value of our drug candidates, future drugs, programs or intellectual property could be diminished. Such announcements could also harm our reputation or the market for our drug candidates, which could have a material adverse effect on our business.

In the event of intellectual property litigation, there can be no assurance that we would prevail, even if the case against us is weak or flawed. If third parties successfully assert their intellectual property rights against us, prohibitions against using certain technologies, or prohibitions against commercializing our drug candidates, could be imposed by a court or by a settlement agreement between us and a plaintiff. In addition, if we are unsuccessful in defending against allegations that we have infringed, misappropriated or otherwise violated the patent or other intellectual property rights of others, we may be forced to pay substantial damage awards to the plaintiff. It is possible that the necessary license will not be available to us on commercially acceptable terms, or at all. This may not be technically or commercially feasible, may render our products less competitive, or may delay or prevent the launch of our products to the market. Any of the foregoing could limit our research and development activities, our ability to commercialize one or more drug candidates, or both.

Most of our competitors are larger than we are and have substantially greater resources. They are, therefore, likely to be able to sustain the costs of complex intellectual property litigation longer than we could. In addition, the uncertainties associated with litigation could have a material adverse effect on our ability to raise the funds necessary to conduct our clinical trials, continue our internal research activities, in-license needed technology in the future, or enter into strategic collaborations that would help us bring our drug candidates to market.

In addition, any future intellectual property litigation, interference or other administrative proceedings will result in additional expense and distraction of our personnel. An adverse outcome in such litigation or proceedings may expose us or any future strategic partners to loss of our proprietary position, expose us to significant liabilities, or require us to seek licenses that may not be available on commercially acceptable terms, if at all, each of which could have a material adverse effect on our business.

Claims that our drug candidates or the sale or use of our future products infringe, misappropriate or otherwise violate the patents or other intellectual property rights of third parties could result in costly litigation or could require substantial time and money to resolve, even if litigation is avoided.

We cannot guarantee that our drug candidates or the sale or use of our future products do not and will not in the future infringe, misappropriate or otherwise violate third-party patents or other intellectual property rights. Third parties might allege that we are infringing their patent rights or that we have misappropriated their trade secrets, or that we are otherwise violating their intellectual property rights, whether with respect to the manner in which we have conducted our research, or with respect to the use or manufacture of the compounds we have developed or are developing. The various markets in which we plan to operate are subject to frequent and extensive litigation regarding patents and other intellectual property rights. Some claimants may have substantially greater resources than we have and may be able to sustain the costs of complex intellectual property litigation to a greater degree and for longer periods of time than we could. Third parties might resort to litigation against us or other parties we have agreed to indemnify, which litigation could be based on either existing intellectual property or intellectual property that arises in the future.

It is also possible that we failed to identify, or may in the future fail to identify, relevant patents or patent applications held by third parties that cover our drug candidates. Publication of discoveries in the scientific or patent literature often lags behind actual discoveries. Therefore, we cannot be certain that we were the first to invent, or the first to file patent applications on, our drug candidates or for their uses, or that our drug candidates will not infringe patents that are currently issued or that are issued in the future. In the event that a third party has also filed a patent application covering one of our drug candidates or a similar invention, our self-own patent application may be regarded as a competing application and may not be issued in the end. Additionally, pending patent applications that have been published can, subject to certain limitations, be later amended in a manner that could cover our products or their use.

If a third party were to assert claims of patent infringement against us, even if we believe such third-party claims are without merit, a court of competent jurisdiction could hold that these third-party patents are valid, enforceable and infringed, and the holders of any such patents may be able to block our ability to commercialize the applicable product unless we obtained a license under the applicable patents, or until such patents expire or are finally determined to be invalid or unenforceable. Similarly, if any third-party patents were held by a court of competent jurisdiction to cover aspects of our compositions, formulations, or methods of treatment, prevention, or use, the holders of any such patents may be able to block our ability to develop and commercialize the applicable product unless we obtained a license or until such patent expires or is finally determined to be invalid or unenforceable. In addition, defending such claims would cause us to incur substantial expenses and could cause us to pay substantial damages, if we are found to be infringing a third party’s patent rights. These damages potentially include increased damages and attorneys’ fees if we are found to have infringed such rights willfully. In order to avoid or settle potential claims with respect to any patent or other intellectual property rights of third parties, we may choose or be required to seek a license from a third party and be required to pay license fees or royalties or both, which could be substantial. These licenses may not be available on acceptable terms, or at all. Even if we were able to obtain a license, the rights may be nonexclusive, which could result in our competitors gaining access to the same intellectual property. Ultimately, we could be prevented from commercializing a drug candidate, or be forced, by court order or otherwise, to modify or cease some or all aspects of our business operations, if, as a result of actual or threatened patent or other intellectual property claims, we are unable to enter into licenses on acceptable terms. Further, we could be found liable for significant monetary damages as a result of claims of intellectual property infringement.

Defending against claims of patent infringement, misappropriation of trade secrets or other violations of intellectual property rights is likely to be costly and time-consuming, regardless of the outcome. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. Thus, even if we were to ultimately prevail or settle at an early stage, such litigation could burden us with substantial unanticipated losses. Any claims of infringement, misappropriation or other violation of intellectual property made against us could have a material adverse effect on our business, financial condition, results of operations and prospects.

Issued patents covering one or more of our drug candidates could be found invalid or unenforceable if challenged in court.

Despite measures we take to obtain and maintain patent and other intellectual property rights with respect to our drug candidates, our intellectual property rights could be challenged or invalidated. For example, if we were to initiate legal proceedings against a third party to enforce a patent covering one of our drug candidates, the defendant could counterclaim that our self-own patent is invalid and/or unenforceable. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, for example, lack of novelty, obviousness, non-enablement, lack of sufficient written description or obviousness-type double patenting. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO, the State Intellectual Property Office, or the SIPO, or the applicable foreign counterpart, or made a misleading statement, during prosecution. Although we believe that we have conducted our patent prosecution in accordance with a duty of candor and in good faith, the outcome following legal assertions of invalidity and unenforceability during patent litigation is unpredictable. If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we could lose at least part, and perhaps all, of the patent protection on a drug candidate. Even if a defendant does not prevail on a legal assertion of invalidity and/or unenforceability, our self-own patent claims may be construed in a manner that would limit our ability to enforce such claims against the defendant and others. Even if we establish infringement, the court may decide not to grant an injunction against further infringing activity and instead award only monetary damages, which may not be an adequate remedy. In addition, if the breadth or strength of protection provided by our self-own patents is threatened, it could dissuade companies from collaborating with us to license, develop, or commercialize our current or future drug candidates. Any loss of patent protection could have a material adverse impact on one or more of our drug candidates and our business.

Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses and could distract our personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on our stock price. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities. We may not have sufficient financial or other resources to conduct such litigation or proceedings adequately. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources and more mature and developed intellectual property portfolios. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation.

If our trademarks and trade names are not adequately protected, we may not be able to build name recognition in our markets of interest and our competitive position may be adversely affected.

As of the date of this annual report, we had 58 registered trademarks in 46 territories. We may not be able to obtain trademark protection in territories that we consider of significant importance to us. In addition, any of our trademarks or trade names, whether registered or unregistered, may be challenged, opposed, infringed, cancelled, circumvented or declared generic, or determined to be infringing on other marks, as applicable. We may not be able to protect our rights to these trademarks and trade names, which we will need to build name recognition by potential collaborators or customers in our markets of interest. Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, we may not be able to compete effectively and our business may be adversely affected.

We expect to rely on trademarks as one means to distinguish any of our drug candidates that are approved for marketing from the products of our competitors. Once we select trademarks and apply to register them, our trademark applications may not be approved. Third parties may oppose our trademark applications, or otherwise challenge our use of the trademarks. In the event that our trademarks are successfully challenged, we could be forced to rebrand our products, which could result in loss of brand recognition and could require us to devote resources to advertising and marketing new brands. Our competitors may infringe our trademarks and we may not have adequate resources to enforce our trademarks.

If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.

In addition to patents, we rely upon unpatented trade secrets, know-how and continuing technological innovation to develop and maintain our competitive position. We seek to protect this trade secret and confidential information, in part, by entering into non-disclosure and confidentiality agreements with parties that have access to them, such as our employees, collaborators, CROs, consultants and other third parties. We also enter into confidentiality and invention or patent assignment agreements with our employees and consultants.

However, any of these parties may breach such agreements and disclose our proprietary information, and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret can be difficult, expensive and time-consuming, and the outcome is unpredictable. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor or other third party, we would have no right to prevent them from using that technology or information to compete with us and our competitive position would be harmed. In addition, we face the risk of cybercrime. For instance, someone could hack our information networks and gain illicit access to our proprietary information, including our trade secrets. Even if we are successful in prosecuting such claims, any remedy awarded may be insufficient to fully compensate us for the improper disclosure or misappropriation.

Intellectual property rights do not necessarily address all potential threats.

The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect our business, or permit us to maintain our competitive advantage. For instance:

Should any of these events occur, they could have a material adverse effect on our business, financial condition, results of operations and prospects.

RISKS RELATED TO OUR ORDINARY SHARES

An active trading market for our ordinary shares may not be sustained.

Our ordinary shares have been listed on Nasdaq only since June 17, 2025, and we cannot assure you that an active trading market for our ordinary shares will be sustained or maintained. The lack of an active trading market may impair the value of your shares and your ability to sell your shares at the time you wish to sell them. An inactive trading market may also impair our ability to raise capital by selling our ordinary shares and entering into strategic partnerships or acquiring other complementary products, technologies or businesses by using our ordinary shares as consideration. In addition, if we fail to satisfy exchange listing standards, we could be delisted, which would have a negative effect on the price of our ordinary shares.

The trading price of our ordinary shares may continue to be volatile, which could result in substantial losses to investors.

The price of our ordinary shares have fluctuated substantially since our IPO. As a relatively small-capitalization company with relatively small public float, we may experience greater stock price volatility, extreme price run-ups, lower trading volume and less liquidity than large-capitalization companies. Such volatility, including any stock-run up, may be unrelated to our actual or expected operating performance, financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our ordinary shares.

Moreover, the volatility and fluctuation of the trading price of our ordinary shares may happen because of broad market and industry factors, like the performance and fluctuation of the market prices of other companies with business operations located mainly in Taiwan that have listed their securities in the U.S. A number of Taiwan companies have listed or are in the process of listing their securities on U.S. stock markets. The securities of some of these companies have experienced significant volatility, including price declines in connection with their initial public offerings. The trading performances of these Taiwan companies’ securities after their offerings may affect the attitudes of investors toward Taiwan companies listed in the U.S. in general and consequently may impact the trading performance of our ordinary shares, regardless of our actual operating performance.

In addition to market and industry factors, the price and trading volume for our ordinary shares may be highly volatile for factors specific to our own operations, including the following: 

Any of these factors may result in large and sudden changes in the volume and price at which our ordinary shares trade. Furthermore, the stock market in general experiences price and volume fluctuations that are often unrelated or disproportionate to the operating performance of companies like us. These broad market and industry fluctuations may adversely affect the market price of our ordinary shares.

In addition, if the trading volumes of our ordinary shares are low, persons buying or selling in relatively small quantities may easily influence prices of our ordinary shares. This low volume of trades could also cause the price of our ordinary shares to fluctuate greatly, with large percentage changes in price occurring in any trading day session. Holders of our ordinary shares may also not be able to readily liquidate their investment or may be forced to sell at depressed prices due to low volume trading. If high spreads between the bid and asked prices of our ordinary shares exist at the time of purchase, the stock would have to appreciate substantially on a relative percentage basis for an investor to recoup their investment. Broad market fluctuations and general economic and political conditions may also adversely affect the market price of our ordinary shares. As a result of this volatility, investors may experience losses on their investment in our ordinary shares. A decline in the market price of our ordinary shares also could adversely affect our ability to issue additional ordinary shares or other of our securities and our ability to obtain additional financing in the future. No assurance can be given that an active market in our ordinary shares will develop or be sustained. If an active market does not develop, holders of our ordinary shares may be unable to readily sell the shares they hold or may not be able to sell their shares at all.

In the past, shareholders of public companies have often brought securities class action suits against those companies following periods of instability in the market price of their securities. If we were involved in a class action suit, it could divert a significant amount of our management’s attention and other resources from our business and operations and require us to incur significant expenses to defend the suit, which could harm our results of operations. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.

If securities or industry analysts do not publish research or reports about our business, or if they adversely change their recommendations regarding our ordinary shares, the market price for our ordinary shares and trading volume could decline.

The trading market for our ordinary shares may be influenced by research or reports that industry or securities analysts publish about our business. If one or more analysts who cover us downgrade our ordinary shares, the market price for our ordinary shares would likely decline. If one or more of these analysts cease to cover us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the market price or trading volume for our ordinary shares to decline.

We have broad discretion to determine how to use the net proceeds from our IPO and may use them in ways that may not enhance our results of operations or the price of the ordinary shares.

We initially intended to primarily use our net proceeds from our IPO for researching and developing new drugs and clinical trials. However, as of the date of this annual report, we have used US$15,000 thousand for a loan to Linkage Gladden Enterprise Ltd., and US$2,495 thousand towards researching and developing new drugs and clinical trials, with the remaining funds used for general corporate purposes. Our management has broad discretion over the use of net proceeds from our IPO, and we could spend the net proceeds from our IPO in ways the holders of the ordinary shares may not agree with or that do not yield a favorable return. The failure by our management to apply these funds effectively could have a material adverse effect on our business, financial condition and results of operation. You will not have the opportunity, as part of your investment decision, to assess whether the net proceeds from our IPO are being used appropriately. You must rely on the judgment of our management regarding the application of the net proceeds of our IPO.

The sale or availability for sale of substantial amounts of our ordinary shares could adversely affect their market price.

Sales of substantial amounts of our ordinary shares in the public market, or the perception that these sales could occur, could adversely affect the market price of our ordinary shares and could materially impair our ability to raise capital through equity offerings in the future. The ordinary shares sold in our IPO are freely tradable without restriction or further registration under the Securities Act of 1933, as amended, or the Securities Act, and shares held by our existing shareholders may also be sold in the public market in the future subject to the restrictions in Rule 144 and Rule 701 under the Securities Act and the applicable lock-up agreements. There were 76,027,667 ordinary shares outstanding immediately after our IPO. In connection with our IPO, our directors and officers and holders of more than 5% of our outstanding shares as of the effective date of this registration statement entered into customary lock-up agreements in favor of the underwriters for a period of twelve (12) months from the date of our IPO. Most of our holders of less than 5% of our outstanding shares as of the effective date of the registration statement entered into customary lock-up agreements in favor of the underwriters for a period of six (6) months from the closing of our IPO, which expired in December 2025. Additionally, ordinary shares held by Taizhou City Optimization and Upgrade Investment Partnership (Limited Partnership) are subject to lock-up for five (5) years from the closing date of our IPO. We have agreed with the underwriters that, for a period of twelve (12) months from the closing of our IPO, we and any successors of us will not (a) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of capital stock of us or any securities convertible into or exercisable or exchangeable for shares of capital stock of us; (b) file or caused to be filed any registration statement with the SEC relating to the offering of any shares of our capital stock or any securities convertible into or exercisable or exchangeable for shares of our capital stock; or (c) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our capital stock, whether any such transaction described in clause (a), (b) or (c) above is to be settled by delivery of shares of our capital stock or such other securities, in cash or otherwise. However, the underwriters may release these securities from these restrictions at any time, subject to applicable regulations of the Financial Industry Regulatory Authority, Inc. In December 2025, following the expiration of the lock-up agreements signed by our shareholders holding less than 5%, the price of our ordinary shares experienced substantial decrease. We cannot predict what effect, if any, the expiration of the other lock-up agreement or market sales of securities held by our significant shareholders or any other shareholder or the availability of these securities for future sale will have on the market price of our ordinary shares.

Because we do not expect to pay dividends in the foreseeable future after our IPO, you must rely on price appreciation of our ordinary shares for return on your investment.

We do not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in our ordinary shares as a source for any future dividend income.

Our board of directors has complete discretion as to whether to distribute dividends. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on, among other things, our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiary, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment in our ordinary shares will likely depend entirely upon any future price appreciation of our ordinary shares. There is no guarantee that our ordinary shares will appreciate in value after our IPO or even maintain the price at which you purchased the ordinary shares. You may not realize a return on your investment in our ordinary shares and you may even lose your entire investment in our ordinary shares.

There can be no assurance that we will not be a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for any taxable year, which could subject U.S. investors in our ordinary shares or ordinary shares to significant adverse U.S. federal income tax consequences.

We will be classified as a passive foreign investment company, or PFIC, for United States federal income tax purposes for any taxable year if either (a) 75% or more of our gross income for such year consists of certain types of “passive” income or (b) 50% or more of the value of our assets (generally determined on the basis of a quarterly average) during such year produce or are held for the production of passive income (the “asset test”). We will be treated as owning our proportionate share of the assets and earnings of any other corporation in which we own, directly or indirectly, more than 25% (by value) of the stock. Based upon our income and assets during the 2025 taxable year, including goodwill and other unbooked intangibles not reflected on our balance sheet (taking into account the proceeds from our IPO) and projections as to the market price of our ordinary shares immediately following our IPO, we were not classified as a PFIC for the 2025 taxable year.

Although for the 2025 taxable year, we were not classified as a PFIC, because the value of our assets for purposes of the asset test may be determined by reference to the market price of our ordinary shares, fluctuations in the market price of our ordinary shares may cause us to be classified as a PFIC for subsequent taxable years. The determination of whether we will be classified as a PFIC will also depend, in part, on the composition of our income and assets. In addition, the composition of our income and assets will also be affected by how, and how quickly, we use our liquid assets and the cash raised in our IPO. If we determine not to deploy significant amounts of cash for active purposes, our risk of being a PFIC may substantially increase. It is also possible that the U.S. Internal Revenue Service, or the IRS could challenge our classification of certain income and assets as non-passive, which could result in our company being or becoming a PFIC for the current or future taxable years. Because PFIC status is a factual determination made annually after the close of each taxable year, we will make this determination following the end of any particular tax year, and there can be no assurance that we will not be a PFIC for any future taxable year.

If we are a PFIC in any taxable year, a U.S. Holder (as defined in “Item 10. Additional Information—E. Taxation — U.S. Federal Income Tax Considerations”) may incur significantly increased U.S. income tax on gain recognized on the sale or other disposition of the ordinary shares and on the receipt of distributions on the ordinary shares to the extent such distribution is treated as an “excess distribution” under the U.S. federal income tax rules, and such U.S. Holder may be subject to burdensome reporting requirements. Further, if we are a PFIC for any year during which a U.S. Holder holds our ordinary shares, we generally will continue to be treated as a PFIC for all succeeding years during which such U.S. Holder holds our ordinary shares, unless we were to cease to be a PFIC and the U.S. Holder were to make a “deemed sale” election with respect to the ordinary shares. For more information see “Item 10. Additional Information—E. Taxation — U.S. Federal Income Tax Considerations — PFIC Rules.”

Our memorandum and articles of association contain anti-takeover provisions that could have a material adverse effect on the rights of holders of our ordinary shares.

Our second amended and restated memorandum and articles of association contain provisions to limit the ability of others to acquire control of our company or cause us to engage in change-of-control transactions. These provisions could have the effect of depriving our shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of our company in a tender offer or similar transaction. Our board of directors has the authority, without further action by our shareholders, to issue preferred shares in one or more series and to fix their designations, powers, preferences, privileges, and relative participating, optional or special rights and the qualifications, limitations or restrictions, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights associated with our ordinary shares. Preferred shares could be issued quickly with terms calculated to delay or prevent a change in control of our company or make removal of management more difficult. If our board of directors decides to issue preferred shares, the price of our ordinary shares may fall and the voting and other rights of the holders of our ordinary shares may be materially and adversely affected.

You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law.

We are an exempted company incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our memorandum and articles of association, the Companies Act (As Revised) of the Cayman Islands and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the U.S. In particular, the Cayman Islands has a less developed body of securities laws than the U.S. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the U.S.

Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records or to obtain copies of lists of shareholders of these companies. No shareholder (other than a director of the Company) shall have any right of inspecting any accounting record or book or document of the Company except as conferred by law or authorised by the board of directors of the Company or the Company in general meeting. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

Certain corporate governance practices in the Cayman Islands, which is our home country, differ significantly from requirements for companies incorporated in other jurisdictions such as the U.S. Currently, we plan to rely on home country practice with respect to any corporate governance matter and, our shareholders may be afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers.

As a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the U.S.

Certain judgments obtained against us by our shareholders may not be enforceable.

We are a Cayman Islands company and substantially all of our assets are located outside of the U.S. Substantially all of our current operations are conducted in Taiwan. In addition, all of our current directors and officers are nationals and residents of countries and regions other than the U.S. Substantially all of the assets of these persons are located outside the U.S. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the U.S. in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands, Taiwan, Singapore, Hong Kong and the PRC may render you unable to enforce a judgment against our assets or the assets of our directors and officers. For more information regarding the relevant laws of the Cayman Islands, Taiwan, Singapore, Hong Kong and the PRC.

We have incurred increased costs as a result of being a public company.

As a public company, we have incurred significant legal, accounting, and other expenses that we did not incur as a private company prior to our IPO. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and the Nasdaq, impose various requirements on the corporate governance practices of public companies. Compliance with these rules and regulations has increased our legal and financial compliance costs and to make some corporate activities more time-consuming and costly. For example, operating as a public company has made it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. In addition, we have incurred additional costs associated with our public company reporting requirements.

The obligation to disclose information publicly may put us at a disadvantage to competitors that are private companies.

As a publicly listed company, we are required to file annual reports with the Securities and Exchange Commission. In some cases, we need to disclose material agreements or results of financial operations that we would not be required to disclose if we were a private company. Our competitors may have access to this information, which would otherwise be confidential. This may give them advantages in competing with our company. Similarly, as a U.S.-listed public company, we are governed by U.S. laws that some of our competitors are not required to follow. To the extent compliance with U.S. laws increases our expenses or decreases our competitiveness against such companies, our public listing could affect our results of operations.

We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to United States domestic public companies.

Because we are a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the U.S. that are applicable to U.S. domestic issuers, including:

We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, under Nasdaq rules we must furnish a Form 6-K to the SEC within six months following the end of the second fiscal quarter, containing interim financial statements covering the first two fiscal quarters. . However, the information we are required to file with or furnish to the SEC is less extensive and less timely than that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer.

Because we are a foreign private issuer and are exempt from certain Nasdaq corporate governance standards applicable to U.S. issuers, you have less protection than you would have if we were a domestic issuer.

Nasdaq listing rules require listed companies to have, among other things, a majority of its board members be independent. As a foreign private issuer, however, we are permitted to, and we may follow home country practice in lieu of the above requirements, or we may choose to comply with the above requirement within one year of listing. The corporate governance practice in our home country, the Cayman Islands, does not require a majority of our board to consist of independent directors. Thus, although a director must act in the best interests of our Company, it is possible that fewer board members will be exercising independent judgment and the level of board oversight on the management of our Company may decrease as a result. Additionally, Nasdaq listing rules mandate that U.S. domestic issuers establish a compensation committee, a nominating and corporate governance committee, and an audit committee, each composed solely of independent directors. We, as a foreign private issuer, are not subject to these requirements. Nasdaq listing rules may require shareholder approval for certain corporate matters, such as requiring that shareholders be given the opportunity to vote on all equity compensation plans and material revisions to those plans, as well as certain ordinary share issuances. We intend to comply with the requirements of Nasdaq listing rules in determining whether shareholder approval is required on such matters, with regard to the requirement that a majority of our Board consists of independent directors and to appoint a nominating and corporate governance committee. We may, however, consider following home country practice in lieu of the requirements under Nasdaq listing rules with respect to certain corporate governance standards which may afford less protection to investors.

We are an emerging growth company, and the reduced disclosure requirements applicable to emerging growth companies may make our ordinary shares less attractive to investors.

We are an emerging growth company, as defined in the JOBS Act, and may remain an emerging growth company until the last day of the fiscal year following the fifth anniversary of the completion of our IPO. However, if certain events occur prior to the end of such five-year period, including if we become a “large accelerated filer,” our annual gross revenues exceed US$1.235 billion or we issue more than US$1.0 billion of non-convertible debt in any three-year period, we will cease to be an emerging growth company prior to the end of such five-year period. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. We have taken advantage of reduced reporting burdens in this annual report. In particular, in this annual report, we have provided only two years of audited consolidated financial statements and have not included all of the executive compensation related information that would be required if we were not an emerging growth company. We cannot predict whether investors will find our ordinary shares less attractive if we rely on these exemptions. If some investors find our ordinary shares less attractive as a result, there may be a less active trading market for our ordinary shares and the trading price of our ordinary shares may be reduced or more volatile.

In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of these accounting standards until they would otherwise apply to private companies.

If we cannot continue to satisfy the listing requirements and other rules of the Nasdaq Global Market, our securities may be delisted, which would negatively impact the price of our securities and your ability to sell them.

Our ordinary shares are listed on the Nasdaq Global Market, in order to maintain our listing on the Nasdaq Global Market, we are required to comply with certain rules of the Nasdaq Global Market, including those regarding minimum stockholders’ equity, minimum share price, minimum market value of publicly held shares and various additional requirements. Even if we initially met the listing requirements and other applicable rules of the Nasdaq Global Market, we may not be able to continue to satisfy these requirements and applicable rules. If we are unable to satisfy the Nasdaq Global Market criteria for maintaining our listing, our securities could be subject to delisting.

If the Nasdaq Global Market subsequently delists our securities from trading, we could face significant consequences, including:

Item 4. INFORMATION ON THE COMPANY

A. History and Development of the Company

OUR CORPORATE HISTORY

Jyong Biotech Ltd. is a Cayman Islands exempted company incorporated on January 26, 2018 and we primarily conduct our operations through our wholly owned subsidiaries in Taiwan. We commenced our commercial operations in July 2002 through Health Ever Bio-Tech Co., Ltd., which has been wholly owned by Jyong Biotech Ltd. since August 2018. In September 2019, we established Genvace Biotechnology Co., Ltd., a Taiwan subsidiary wholly owned by Health Ever Bio-Tech Co., Ltd. for the research and development of health products.

Our Hong Kong subsidiary, Top ShunXing Bio-Tech Co., Limited, was established in March 2019, with Jyong Biotech Ltd. as its sole shareholder. Top ShunXing Bio-Tech Co., Limited is a holding company and has no substantial operations in Hong Kong, except that in October 2020, all intellectual properties of Health Ever Bio-Tech Co., Ltd. were transferred to Top ShunXing Bio-Tech Co., Limited for the sake of centralized management and that in August 2019, it borrowed approximately US$ 2.3 million from third parties to invest our PRC subsidiary via capital contribution.

Our PRC subsidiary, Innovative Biotech Co., Ltd., was established in July 2019 pursuant to a collaboration framework agreement we entered with Taizhou Infrastructure Investment Group Co., Ltd. on December 21, 2018. In September 2019, according to an investment cooperation agreement Innovative Biotech Co., Ltd. entered with the successor of the Taizhou High-tech Industrial Park Management Committee, Innovative Biotech Co., Ltd. obtained the land use rights for a parcel of industrial land in Taizhou City, Zhejiang Province for the construction of manufacturing factory in the future. See “Item 4. Information on the Company — B. Business Overview — License and Collaboration Agreements — Taizhou Collaboration Framework Agreement” for more details. We planned to construct a manufacturing factory in 2023 and the construction is expected to be completed in October 2026. As of the date of this annual report, the construction has not yet taken place.

In September 2022, we established our Singapore subsidiary, Jyong Biotech International Pte. Ltd., with Jyong Biotech Ltd. as its sole shareholder, primarily for holding all our intellectual properties which were transferred from Top ShunXing Bio-Tech Co., Limited in January 2023.

In June 2025, we completed our IPO. In connection with our IPO, we issued and sold 2,666,667 ordinary shares, at a price to the public of $7.50 per share. As a result of the IPO, the Company received $17,771 thousand in net proceeds, after deducting underwriting discounts, commissions and offering costs.

OUR CORPORATE STRUCTURE

The following chart illustrates our corporate structure as of the date of this annual report.

CORPORATE INFORMATION

Jyong Biotech Ltd. was incorporated on January 26, 2018 as an exempted company limited by shares under the laws of Cayman Islands. Our registered office is located at 4^th Floor, Harbour Place, 103 South Church Street, George Town, P. O. Box 10240, Grand Cayman KY1 1002, Cayman Islands.

Our principal executive offices of our operating subsidiaries are located at 23F-3, No. 95, Section 1, Xintai 5^th Road, Xizhi District, New Taipei City, Taiwan, 221. Our telephone number at this address is +886-2-2732-5205.

Our agent for service of process in the United States is Cogency Global Inc. located at 122 East 42^nd Street, 18^th Floor, New York, NY 10168.

Investors should contact us for any inquiries through the address and telephone number of our principal executive office. Our principal website is https://www.healtheverbiotech.com/. The information contained on our website is not a part of this annual report.

B. Business Overview

OUR MISSION

We endeavor to develop and supply first-class innovative drugs to meet our customers’ health needs. We seek to be a valuable business organization that is held in high esteem by the public.

OVERVIEW

We are a science-driven biotechnology company based in Taiwan and are committed to developing and commercializing innovative and differentiated new drugs (plant-derived) mainly specializing in the treatment of urinary system diseases, with an initial focus on the markets of the U.S., the EU and Asia.

Since our inception in 2002, we have built integrated capabilities that encompass all key functionalities of drug development, including early-stage drug discovery and development, clinical trials, regulatory affairs, manufacturing and commercialization. Leveraging our strong research and development capabilities and proprietary platform, we have been developing a series of botanical drug candidates, our primary botanical drug candidate, Botreso^®, another clinical-stage botanical drug candidate, and other preclinical-stage botanical drug candidates.

We resubmitted a new drug application, or NDA, for Botreso^® with the U.S. FDA on December 17, 2021, using Active Pharmaceutical Ingredient (API)-1. We voluntarily withdrew our NDA on November 30, 2022, in order to develop more information about API-2 for the U.S. FDA’s review and to address ongoing questions regarding demonstrated difference between Botreso^® and placebo for the primary efficacy endpoint in a clinical study for Botreso^®, and to address other questions U.S. FDA had previously identified in our NDA regarding U.S. FDA’s questions related to the drug substance and product, validation of methods used for measuring the effect of Botreso^®, manufacturing, clinical and nonclinical testing, data, and statistical analyses, among others. In a June 26, 2023 response to our meeting request regarding refiling the NDA for Botreso^® using API-2, the U.S. FDA informed us that the information we provided on API-2 was not yet sufficient to demonstrate comparability with API-1 since we only provided the preliminary comparative drug substance and drug product specifications between API-1 and API-2, and also mentioned the statistically significant difference between Botreso^® and placebo in the primary efficacy endpoint in in Study MCS-2-US-a, one of our Phase III pivotal studies. The U.S.FDA’s conclusions at that time were that without new clinical information, any NDA resubmission for Botreso^® would be at risk of the U.S. FDA refusing to accept the application, referred to as “Refusal To File” (RTF).

We submitted a Type D WRO meeting request to the U.S. FDA on December 12, 2023. We asked that the U.S. FDA provide a written response to questions focused on obtaining U.S. FDA review and comments on a new, proposed Phase III clinical trial protocol for Botreso^® with API-2 and a PK study. We proposed to address CMC data for our proposed drug product in a separate, future meeting. U.S. FDA granted our WRO meeting request but clarified that they viewed the meeting as a Type C meeting because it encompasses an entirely new drug development program, including Phase I PK study and Phase III clinical trial for a new product with a new active pharmaceutical ingredient.

If our new Phase I PK and Phase III studies are successful and after addressing other U.S.FDA-identified deficiencies summarized above, we plan to resubmit our NDA for Botreso^® under the same NDA number to the U.S. FDA. The resubmission timeline is unclear at this point, depending on the comments from the U.S. FDA. Another of our clinical-stage key botanical drug candidates, PCP, has completed the phase II clinical trial in Taiwan, with data lock in May 2025 and statistical analysis completed in September 2025. Another drug candidate, IC, is under preclinical studies.

In the event that we are unable to establish comparability between API-1 and API-2, or we are unable to identify an active pharmaceutical ingredient that the FDA agrees is comparable to API-1, we will be required to repeat the Botreso^® and PCP clinical trials using API-2, or to conduct other additional clinical trials as may be required by the U.S. FDA. For further details, see the risk factor titled “If we are unable to identify a supplier capable of producing API-2 that is sufficiently comparable to API-1, we will be required to repeat our clinical trials for Botreso^® and PCP, which could significantly delay our product development efforts and result in increased costs” on page 13.

We have not yet proven comparability between API-1 and API-2 and the following chart illustrates and summarizes our current drug candidates’ status:

Our pipeline features three innovative and differentiated new drug candidates, and we are developing them for (i) the treatment of benign prostate hyperplasia/lower urinary tract symptoms, or BPH/LUTS, (ii) prostate cancer prevention, and (iii) the treatment of interstitial cystitis, respectively.

We have conducted four Phase III clinical trials for Botreso^® in the U.S. and Taiwan, including two pivotal trials (one in the US and one in Taiwan) and two open-label extension studies (one in the US and one in Taiwan), using API-1. Our pivotal Phase III clinical trial for Botreso^® in the U.S. failed to show a difference between treatment groups for the primary efficacy endpoint in the intent-to-treat population.

We resubmitted an NDA for Botreso^® using API-1 to the U.S. FDA on December 17, 2021. On February 22, 2022, the U.S. FDA accepted our NDA for review “with issues identified.” In the February 22, 2022 Filing Issues Identified letter, the U.S. FDA identified, among other things, the lack of demonstrated difference between Botreso^® and placebo for the primary efficacy endpoint in the MCS-2-US-a study. U.S. FDA identified additional issues, including issues regarding pharmacology, toxicology, and our pharmacokinetic submission, statistical analyses, and the content and format of our proposed Prescribing Information. We used one supplier for API-1, which was the basis for the NDA that has since been withdrawn by the Company. The supplier of API-1 sold a parcel of its land and is in the process of relocating and reconstructing its manufacturing facility, and as a result, API-1 is currently unavailable to us, and the supplier of API-1 withdrew its consent for us to reference their DMF on file with the U.S. FDA. This does not mean we would not be able to use API-1 in later studies or as a basis for additional filings with the U.S. FDA. The supplier’s withdrawal of its consent to reference should not be interpreted as anything other than the supplier removing API-1 from availability for reference by us (or anyone else) in any submission to U.S. FDA. In a Mid-Cycle meeting and communication with the U.S. FDA on May 24, 2022, the U.S. FDA also identified the fact that API-1, the botanical drug substance used in our clinical trials and that was the basis for our NDA, was currently not available.

Based upon these observations, we voluntarily withdrew our NDA on November 30, 2022, to develop more information about API-2 for the U.S. FDA’s review, to address the U.S. FDA’s concerns of a lack of demonstrated difference between Botreso^® and placebo for the primary efficacy endpoint, and to resolve other issues the U.S. FDA had previously identified (and discussed above).

If we are able to satisfy U.S. FDA that API-1 and API-2 are comparable, that is if the U.S. FDA agrees with our data about the comparability between API-1 and API-2, then we may not need to conduct redundant studies using API-2. If we are unable to demonstrate comparability, we would have to perform more clinical trials. We will work with API vendors to follow FDA guidance to demonstrate comparability. In the event that we are unable to establish comparability between API-1 and API-2, we will be required to repeat the Botreso^® clinical trials using API-2. For further details, see the risk factor titled “If we are unable to identify a supplier capable of producing API-2 that is sufficiently comparable to API-1, we may be required to repeat our clinical trials for Botreso^®, which could significantly delay our product development efforts and result in increased costs” on page 13.

Moreover, we are planning the CMC meeting with U.S. FDA, one purpose of which is to seek the U.S FDA’s concurrence that API-2 is comparable to API-1. Those plans are no more speculative than the fact that we are engaged in an ongoing drug approval process with the U.S. FDA. It is not uncommon to maintain redundant API sources for the same finished drug to minimize the risk of shortages.

In the December 12, 2022 Acknowledge Withdrawal from the U.S. FDA, the U.S. FDA stated that “this withdrawal will not prejudice any future decisions on filing” if we decide to resubmit our NDA, and we can retain the application number (NDA 212872). The retention of the NDA number signifies the U.S. FDA’s acknowledgment that they have not declined to approve NDA 212872. Instead, we voluntarily withdrew it. Retaining the application number allows U.S. FDA to review prior submissions and data when the Company resubmits in the future.

We have been conducting further research and development on Botreso^® and identified an additional source for the botanical drug substance API-2. API-1 and API-2 are similar drug substances covered by the same patent owned by us; however, because they are sourced from raw materials manufactured in different locations, the U.S. FDA considers them to be different botanical drug substances. Therefore, we will conduct a comparability study for API-1 and API-2.

We submitted a meeting request to the U.S. FDA on April 14, 2023 with our very preliminary comparative specifications of API-1 and API-2, and request that the U.S. FDA provide a WRO to questions about our refiling of the NDA for Botreso^® using API-2. The U.S. FDA agreed to our request and responded in writing on June 26, 2023. The U.S. FDA informed us that the information we provided on API-2 was not sufficient to demonstrate comparability with API-1. In addition to a lack of API source, U.S. FDA explained that we had not demonstrated a statistically significant difference between Botreso^® with API-1 and placebo in the primary efficacy endpoint in the MCS-2-US-a study. The U.S. FDA stated that without new clinical information, any resubmission of the NDA for Botreso^® would be at risk of the U.S. FDA refusing to accept the application, a RTF action.

We submitted a Type D WRO meeting request to the U.S. FDA on December 12, 2023. We asked that the U.S. FDA provide a written response to questions focused on obtaining U.S. FDA review and comments on a new, proposed Phase III clinical trial protocol for Botreso^® with API-2 and a Phase I PK study. We proposed to address chemistry and manufacturing controls for Botreso^® in a separate, future meeting. U.S. FDA granted our WRO meeting request but clarified that they viewed the meeting as a Type C meeting because it encompasses an entirely new drug development program, including Phase I PK study and Phase III clinical trial for Botreso^® made from API-2, which the U.S. FDA characterizes as a new product with a new active pharmaceutical ingredient.

We provided its proposed additional Phase III study protocol and Phase I PK study synopsis using API-2 on December 12, 2023, for U.S. FDA to review and approve acceptability of the study design. The U.S. FDA sent us written responses on February 23, 2024, which included comments on the revisions in the Phase III protocol and asked for the SAP (statistical analysis plan) for the Phase III protocol. U.S. FDA also asked the Company to develop the protocol for the PK study from the submitted synopsis. We are following the U.S. FDA’s requirements in each respect. In addition, we will need to perform studies demonstrating that the source of API-2 is sufficiently similar botanical drug substance. We plan to request a meeting with U.S. FDA to discuss the U.S. FDA’s concerns regarding the CMC data separately and by providing to U.S. FDA more analytical testing for the API-2 for the U.S. FDA to assess whether API-1 and API-2 are comparable.

If our new Phase I PK and Phase III studies are successful and we address the other deficiencies the U.S. FDA has previously identified (including clinical, pharmacological, statistical, pharmaceutical manufacturing, validation, and other issues), we plan to resubmit our NDA for Botreso^® under the same NDA number to the U.S. FDA. The resubmission timeline is unclear at this point, depending on the comments from the U.S. FDA.

BPH/LUTS is the most common urinary tract disease in the middle-aged male population. According to Frost & Sullivan, the global prevalence of BPH increased from 88.4 million in 2017 to 94.2 million in 2020, representing an increase of 6.5%. The global BPH drugs market increased from US$3.7 billion in 2017 to US$4.1 billion in 2020, representing a CAGR of 4.6%. We will set up internal sales and marketing departments, and plan to work with both domestic and international business partners to seize the great market opportunities and to help more patients reduce their distress caused by BPH/LUTS and drug side effects caused by chemical drugs.

We have completed the CMC documentation on the active pharmaceutical ingredient-2 (API-2) and a plan to establish comparability between API-1 and API-2 and submitted it to the U.S. FDA on October 16, 2024, and are awaiting feedback from the U.S. FDA. As of the date of this annual report, the Company is still in the process of providing the information required by the U.S. FDA and has not yet successfully demonstrated the comparability of API-1 and API-2.

We are currently collaborating with a supplier to prepare the API-2 CMC documents required by the U.S. FDA. Should the FDA concur that API-1 and API-2 are similar and comparable, we will sign the Quality Agreement with this supplier for the raw materials for API-2. If the U.S. FDA does not agree that API-1 and API-2 are comparable, we will continue to research additional API sources based on our own patent, to pursue additional outsourcing API vendors, and to follow U.S. FDA’s guidance for demonstrating comparability between API-1 and API-2 to the U.S. FDA’s satisfaction. In the event that we are unable to establish comparability between API-1 and API-2, we will be required to repeat the PCP clinical trials using API-2. For further details, see the risk factor titled “If we are unable to identify a supplier capable of producing API-2 that is sufficiently comparable to API-1, we will be required to repeat our clinical trials for Botreso^® and PCP, which could significantly delay our product development efforts and result in increased costs” on page 13.

Prostate cancer begins when cells in the prostate gland start to grow out of control. In general, the more quickly prostate cells grow and divide, the more chances there are for mutations to occur. According to Frost & Sullivan, the global prevalence of prostate cancer increased from 10.0 million in 2017 to 11.2 million in 2020, representing a CAGR of 3.9%. The global prostate cancer market increased from US$9.7 billion in 2017 to US$12.6 billion in 2019, representing a CAGR of 9.1%. In addition, the prostate-specific antigen abnormal population, or PSA abnormal population, representing men over 40 years old with a prostate-specific antigen test value of 4.0 ng/ml or higher, is exposed to a high risk of prostate cancer. From 2015 to 2020, the total number of PSA abnormal populations in the U.S., Taiwan and China increased from 5.0 million to 5.3 million.

We incurred expenses in our research and development activities in the amount of approximately US$0.9 million and US$0.8 million for the years ended December 31, 2024 and 2025, respectively.

OUR STRENGTHS

We believe the following strengths have contributed to our success and differentiate us from others:

Innovative new drug (plant-derived) candidate developed for BPH/LUTS

Our core drug candidate, Botreso^®, is an innovative drug we have internally developed for the treatment of BPH/LUTS.

BPH/LUTS is the most common urinary tract disease in the middle-aged male population. It is often considered a normal part of aging due to the increase in dihydrotestosterone. To date, there is no effective cure for BPH/LUTS, while the currently available drugs to control the disease are either limited in efficacy or can cause significant side effects, such as postural hypotension, dizziness, headache, fainting, general weakness, nasal congestion, rapid heartbeat, drowsiness, indigestion, abdominal pain, diarrhea, nausea, sexual dysfunction, and ejaculation difficulties. As BPH/LUTS often occurs in middle-aged male patients who usually require lifelong treatment to control the chronic disease conditions, the medical needs for safe and effective drugs are huge, which has been underserved in the long history of BPH/LUTS drug development.

We believe that Botreso^® has the potential to satisfy the growing treatment needs of BPH/LUTS patients.

We have conducted four Phase III clinical trials for Botreso^® in the U.S. and Taiwan, including two pivotal trials (one in the US and one in Taiwan) and two open-label extension studies, using API-1(one in the US and one in Taiwan).  Our pivotal Phase III clinical trial for Botreso^® in the U.S. failed to show a difference between treatment groups for the primary efficacy endpoint in the intent-to-treat population. The U.S. FDA granted our WRO meeting request and is reviewing our new drug development program for API-2, including Phase I PK study and Phase III clinical trial.

We believe there is a tremendous overall addressable market for Botreso^® and significant commercial potentials. In order to facilitate global registrations and commercial launches of Botreso^®, to which we own worldwide development and commercialization rights, we are actively seeking marketing approvals and formulating commercialization strategies for Botreso^® in targeted markets. Our management team has been aggressively seeking strategic cooperation opportunities with business partners and potential marketing teams around the world.

Diverse drug portfolio and pipeline drug candidates focusing on the treatment of urinary system diseases

Our pipeline currently consists of three compelling new drug candidates focusing on the treatment of urinary system diseases. Leveraging our strong research and development capabilities and proprietary platform, we have been developing a series of botanical drug candidates, our primary botanical drug candidate, Botreso^®, another clinical-stage botanical drug candidate, and other preclinical-stage botanical drug candidates.

Botreso^® is our new botanical drug candidate developed for treatment of BPH/LUTS. Another two key drug candidates, PCP and IC, are developed for prostate cancer prevention and the treatment of interstitial cystitis, respectively. We initiated phase II clinical trials in Taiwan in November 2014 for PCP with 702 subjects and 20 medical centers being involved. Our new drug candidates either demonstrate the achievement of statistically significant endpoints in clinical trials or indicate great potentials to treat adaptive disease in preclinical studies. We believe each of our drug candidates has the potential to address significant medical needs in our target markets and for the treatment of urinary system diseases that have been historically underserved and lacked innovation.

In particular, the target users of Botreso^® and PCP can be highly overlapping. Since only a portion of BPH/LUTS patients, who are potential users of Botreso^®, will seek active treatment, the remaining part of them will likely be in need of pharmaceutical products to prevent BPH/LUTS and prostate cancer, considering that medical studies do show that BPH is associated with an increased risk of prostate cancer. If the follow-up research and development, or R&D, of PCP progresses smoothly, it would effectively synergize with Botreso^® and enable us to seize a larger market share in the future.

We believe that we have created a diverse, balanced portfolio of new drug candidates specializing in the treatment of urinary system diseases, which represents significant market potentials and provides multiple avenues for value creation for us.

Leading R&D capabilities and proprietary platform for innovative drugs

We have built an innovative proprietary R&D platform focused on the discovery, research and development of innovative drugs. Leveraging our leading proprietary R&D platform, we are able to efficiently and swiftly develop a series of pharmaceutical products with cross-disciplinary expertise that spans a variety of fields, such as chemistry, biology, pharmacology, toxicology, pharmacovigilance, and translational and clinical research. Our main R&D center is located in New Taipei, Taiwan with a gross floor area (“GFA”) of approximately 1,029 sq.m. Furthermore, we actively seek and leverage cooperation opportunities with preeminent academic researchers and institutions to keep us updated with the front R&D techniques, methods and information.

Utilizing our proprietary platform, our R&D team has developed three innovative and differentiated drug candidates that specializing in the treatment of BPH/LUTS and interstitial cystitis, as well as prostate cancer prevention. We have conducted four Phase III clinical trials for Botreso^® in the U.S. and Taiwan, including two pivotal trials (one in the US and one in Taiwan) and two open-label extension studies (one in the US and one in Taiwan), using API-1. Our pivotal Phase III clinical trial for Botreso^® in the U.S. failed to show a difference between treatment groups for the primary efficacy endpoint in the intent-to-treat population. The U.S. FDA granted our WRO meeting request and is reviewing our new drug development program for API-2, including Phase I PK study and Phase III clinical trial.

As of the date of this annual report, we have obtained 31 invention patents in 19 territories and 58 trademarks in 46 territories. We believe that our innovative proprietary R&D platform has contributed to our success and will continue to do so.

Integrated in-house capabilities that well position us for pharmaceutical innovation from bench to bedside

We have built fully integrated capabilities that encompass all the key functionalities of drug development, including early-stage drug discovery and development, clinical trials, regulatory affairs, manufacturing and commercialization. The full integration of these functionalities provides us with the opportunity to potentially bring our drug candidates efficiently from bench to bedside. This integration may enable us to identify and address potential clinical, manufacturing, and commercial opportunities, as well as issues early in the development process. It’s important to note that as of now, none of our drug candidates have received regulatory approval. However, this approach allows us to focus our efforts on drugs that have the potential to become clinically active, cost-effective, and commercially viable. Besides, it also allows us to process product manufacturing, maintain consistent quality control and redeploy resources appropriately.

Leveraging rigorous trial design and trial operational excellence, we have achieved substantial progress in our innovative drug candidates. Led by Ms. Fu Feng Kuo, our founder and CEO, we have a team with approximately 15 employees,  which supervises and manages our clinical trials and clinical activities, including clinical trial design, implementation and the collection and analysis of trial data. We maintain control and oversight over these key functions of clinical trials while partnering with reputable hospitals and contract research organizations, or CROs, for trial execution. We have established close relationships with 12 reputable hospitals and CROs in Taiwan to conduct Botreso^® studies, and with 20 reputable hospitals and CROs in Taiwan to conduct PCP trials.

We have built a seasoned team of regulatory affairs specialists with rich experience in communicating and cooperating with drug regulatory agencies in Taiwan and the U.S. Leveraging our CEO’s rich working experience in the pharmaceutical industry, we have substantial expertise in and familiarity with regulatory review requirements and processes, which enable us to communicate efficiently with regulatory authorities.

We have established one manufacturing facility in Taiwan. The GFA of our manufacturing facility, Yilan Letzer Pharmaceutical Factory, is approximately 1,944 sq.m. In addition, we have two new manufacturing facilities under planning in Yilan of Taiwan and Taizhou, Zhejiang Province of China which we believe will further enhance our production capacity in the future.

We intend to form a comprehensive internal sales and marketing mechanism conforming to the Code of Marketing Practices and the Good Distribution Practice drawn up by the International Research-Based Pharmaceutical Manufacturers Association, a Taiwanese non-profit organization established in 1992. In Taiwan, we are establishing a strong sales and marketing team that is expected to consist of employees with rich experience in relevant areas and our target markets. In other territories, we plan to cooperate with local pharmaceuticals and leverage their sales and marketing network. Our management team also brings us an average of 30 years of substantial operation, managerial and commercialization experience, resources and expertise that can be leveraged to accelerate the build-out of our proprietary commercialization infrastructure.

Visionary and experienced management and R&D team with extensive industry expertise

Our management team has extensive expertise in R&D of innovative drugs gained from their enriching experience in well-known companies and institutions in the pharmaceutical industry, as well as in-depth knowledge and understanding of our target markets and the access to top-tier hospitals and renowned medical experts, which we believe gives us an advantage in navigating the clinical development and regulatory approval process as well as the commercialization of our drug candidates.

Our founder and CEO, Ms. Kuo, brings over 20 years of experience in the discovery and development of innovative drugs (plant-derived) to our Company. Over the years, she has gained extensive experience in the discovery, preclinical studies, and clinical development of various drug products. She also led our conferences with regulatory authorities, joined meetings with CROs, assisted with the establishment of chemistry, manufacturing and controls data, or CMC data, monitored the execution of toxicology tests and clinical trials, and actively participated in the study of new drugs extraction technologies. She has full command of our key technologies and R&D plans. Our CTO, Dr. Fenglin Hsu is an expert in the research of natural medicinal chemistry, the R&D of Chinese herbal medicine, and the management of biotechnology medicine R&D. Dr. Hsu previously served as a professor at the School of Pharmacy and the director of the Institute of Pharmacology at Taipei Medical University. Our R&D team leader, Mr. Albert Pu has expertise in the research on natural medicinal chemistry and formulation development and previously served as an inspector at the TFDA.

We are proud of our R&D team which has been contributing to our growth. As of the date of this annual report, our R&D team consisted of 15 employees, including three holding doctorate degrees and eight holding master’s degrees. Members of our core R&D team have an average of more than 15 years of experience in innovative drug development.

Our success is, to a large extent, the product of our management’s leadership and our R&D team’s expertise, which cover the full spectrum of the product development process, from preclinical studies through design and execution of clinical studies to regulatory approval.

OUR STRATEGIES

To achieve our mission, we intend to execute the following strategies:

Advance the clinical development of our core drug candidate Botreso^® to seek regulatory approval and achieve commercialization in our target markets.

In order to obtain regulatory approval and commercial rights for our core drug candidate, Botreso^®, in the U.S. and Taiwan, we have designed regulatory strategies that we believe will enable us to leverage data generated in our clinical trials that account for considerations specific to our licensed territories, including local clinical practice and patient preferences, with the goal of obtaining regulatory approval and maximizing patient reach for Botreso^®.

In terms of preparation for manufacturing and quality control for future commercialization, we have already built the Yilan Letzer Pharmaceutical Factory with an aggregate GFA of approximately 1,944 sq.m. We are currently planning for a mass production trial at Yilan Letzer Pharmaceutical Factory and have already purchased customized equipment to support future operations. We plan to establish a second PIC/S GMP manufacturing facility in Lize, Yilan, Taiwan, following the completion of our second round of financing. We will further strengthen our seasoned commercialization team with extensive industry experience, which we believe will contribute to the marketing promotion of Botreso^®. We are also actively seeking commercial partnerships with pharmaceutical companies to maximize the commercial value of Botreso^®. We believe that these potential partners could bring significant strategic synergy with us in the pursuit of potential opportunities for strategic collaboration in order to gain reasonable commercial returns and expedite the practical use of Botreso^® globally.

Leverage differentiated approaches to advance our development of other drug candidates, such as PCP, IC and other new small molecule drugs, toward regulatory approvals.

We will continue to devote substantial resources to the clinical trials of PCP and IC, and the innovative development of other new small molecule drugs. We have adopted and will continue to leverage differentiated development approaches for these drug candidates, which are specifically tailored based on the different development stages that the various drug candidates are undergoing, in order to maximize the value of these drug candidates and obtain potential regulatory approvals in the U.S., Taiwan, China and other territories.

The following table indicates the serious adverse events (SAEs) occurred to date in the PCP Phase II clinical trial, including the PCP and Placebo group:

We intend to expedite our clinical development of PCP in Taiwan. We have pushed our CRO to add more personnel to manage the data. Now we have completed all the SDV (Source Data Verification), with data lock in May 2025, and statistical analysis completed in September 2025, and achieved positive results. The results indicated it met its primary endpoint, showing a reduction in positive biopsy rates and incidence of higher-grade tumors after 104 weeks of administration. Subsequently, the medical writer will draft the clinical study report (CSR). Once the CSR is available, we will discuss within the team and determine if this program should advance to Phase III. Should this program advances to Phase III, we plan to cooperate with international pharmaceutical companies and proceed to multinational Phase III clinical trials of PCP. We have completed the CMC documentation on the active pharmaceutical ingredient-2 (API-2) and a plan to establish comparability between API-1 and API-2 and submitted it to the U.S. FDA on October 16, 2024, and are awaiting feedback from the U.S. FDA. As of the date of this annual report, the Company has not yet successfully demonstrated the comparability of API-1 and API-2. If the U.S. FDA agrees about comparability of API-1 and API-2, we will discuss with the TFDA the conduct of the Phase III PCP study using API-2.

We are currently collaborating with one supplier to prepare the CMC documents mandated by the U.S. FDA. Should the FDA concur that API-1 and API-2 are similar and comparable, we intend to sign the Quality Agreement with this supplier for the raw materials for API-2. We will only be able to proceed with Phase III PCP study the after the U.S. FDA accepts such results and determines that API-1 and API-2 are comparable. If there is any possibility that FDA does not agree that API-1 and API-2 are comparable, we will work with another supplier who is able to meet the comparability.

Establish and enhance integrated launch capabilities and strategically build commercial infrastructure customized to each of our drug candidates.

Our commercial strategy aims to efficiently maximize patient reach for each of our future products. For our core drug candidate, Botreso^®, we intend to keep building and then utilize a focused salesforce in the U.S., the EU and Asia (primarily Taiwan and mainland China)  in order to promote our products, if approved. We believe we will be able to leverage the commercial infrastructure we create for our core product candidate to benefit our other product candidates. For example, in the U.S., Taiwan and mainland China, prescription drugs across our therapeutic areas are primarily sold through hospitals. As a result, we believe the hospital relationships we may establish will lay the groundwork for the future launch of programs across our portfolio. Our overall launch approach will focus on early integration of medical, regulatory and commercialization preparation.

We may continue to pursue a co-commercialization strategy with strategic partners globally. In the past, we entered into a license agreement with a Cambodian corporation, Chhak Kamponngsaom Sez Co., Ltd., in 2016, which provides for the potential co-commercialization of Botreso^® in Cambodia. We believe the co-commercialization strategy with strategic partners would enable us to access their extensive sales network and established commercial organization globally.

Continue to deepen our pipeline in existing therapeutic areas with new drugs that fit with our expertise, portfolio and strategy.

We seek to anchor each therapeutic focus area with a competitive drug product and build around these core areas. We will encourage the innovation and growth of our in-house talents and plan to recruit more high-quality talents, which we believe will support our expanding research and development efforts to deepen our pipeline. We also intend to collaborate with outstanding partners, electing programs with a strong scientific basis and compelling clinical data to build out a broad and clinically validated pipeline. We intend to opportunistically seek out additional hospitals and CROs as partners based on our market assessments. We consider our existing portfolio of product candidates, as well as those of our strategic collaborations, to identify and pursue novel combination approaches. We intend to continue building our portfolio with innovative new drugs that have the potential to become new standards of care in our target markets.

OUR DRUG CANDIDATES

We discover and develop innovative drugs based on differentiated or clinically validated efficacy and safety. To complement our in-house research and development efforts, we may also collaborate with third parties on the commercialization of our drug candidates through various arrangements. Please see “Item 4. Information on the Company — B. Business Overview —  License and Collaboration Agreements” for more details.

Drug Candidates

Botreso^®

Botreso^® is our new drug candidate developed for BPH/LUTS treatment. Botreso^® is expected to be our core product in the future. We have conducted four phase III clinical trials in the U.S. and Taiwan, including two pivotal trials and two open-label extension studies (one in the US and one in Taiwan) using API-1. One of the Phase III clinical trials for Botreso^® in the U.S. failed to show a difference between treatment groups for the primary efficacy endpoint in the intent-to-treat population. Therefore, we did not reach the endpoint of Phase III clinical trials for Botreso^®. We withdrew our NDA from U.S. FDA review for Botreso^® with API-1. We have asked that the U.S. FDA to provide a written response to questions focused on obtaining U.S. FDA review and comments on a new, proposed Phase III clinical trial protocol for Botreso^® with API-2 and a pharmacokinetic study. On May 23, 2024, we received a denial notice from the FDA, stating that it is premature for this stage of drug development, and until the company can provide complete Chemistry, Manufacturing, and Controls (CMC) information on the active pharmaceutical ingredient-2 (API-2) and a plan to establish comparability between API-1 and API-2, the U.S. FDA is unable to reach agreement on protocols designed to establish the safety and efficacy of Botreso^®. We have completed the CMC documentation on the active pharmaceutical ingredient-2 (API-2) and a plan to establish comparability between API-1 and API-2 and submitted it to the U.S. FDA on October 16, 2024, and are awaiting feedback from the U.S. FDA.

BPH/LUTS is the most common urinary tract disease in the middle-aged male population. According to Frost & Sullivan, in 2021, the global prevalence of BPH increased from 88.4 million in 2017 to 94.2 million in 2020, representing an increase of 6.5%. The global BPH drugs market increased from US$3.7 billion in 2017 to US$4.1 billion in 2020, representing a CAGR of 4.6%. We are establishing a strong sales and marketing team that is expected to consist of employees with rich experience in relevant areas and our target markets, and plan to work with both domestic and international business partners to seize the great market opportunity and to help more patients reduce their distress caused by BPH/LUTS and drug side effects caused by chemical drugs.

Disease Overview

BPH is a histologic diagnosis that refers to the proliferation of glandular epithelial tissue, smooth muscle, and connective tissue within the prostatic transition zone. The exact etiology of BPH is unknown. BPH can lead to an enlargement of the prostate called benign prostatic enlargement, or BPE, which may eventually cause obstruction at the level of the bladder neck and in turn caused termed benign prostatic obstruction, or BPO. Males’ LUTS may be caused by a variety of conditions including BPE and BPO. Since when the entire prostate gland enlarges, the prostate tissue compresses the prostatic urethra and it then becomes more difficult for urine to pass through, so the urine builds up in the bladder and causes it to dilate. The stagnation of urine in the bladder also promotes bacterial growth and can lead to urinary tract infection. LUTS includes voiding or obstructive symptoms such as hesitancy, poor and/or intermittent stream, straining, prolonged micturition, feeling of incomplete bladder emptying, dribbling, and storage or irritative symptoms such as frequency, urgency, urge incontinence, and nocturia. BPH/LUTS is the most common urinary tract disease in the middle-aged male population and the risk of BPH/LUTS in the male population increases with age.

Current Standard Care

Conservative management and surgical treatment are current standards of care for BPH/LUTS. Conservative management includes lifestyle changes and pharmacological management. Surgical treatment of symptomatic BPH may be classified into three general types: (i) minimally invasive sinus surgery, or MIST, (ii) simple prostatectomy, and (iii) transurethral surgery. Although effects and benefits from surgical treatments can show up immediately, however, there are inherent risks of surgery, possibilities of recurrence, and post-operative side effects, such as hematuria, pain, retrograde ejaculation, impotence and urinary incontinence. In general, pharmacological management is still the prevailing method of BPH/LUTS treatment. Patients are treated with surgery only if pharmacological management is ineffective. The treatment of BPH focuses on relieving the lower urinary tract symptoms. This can be done through 5-α reductase inhibitors, or 5-Ari, and alpha-adrenergic blockers, or α-blockers. However, neither 5-Ari nor α-blockers can effectively cure BPH/LUTS. Patients generally need to take such drugs for life, but long-term use of these chemical drugs can lead to drug resistance and adverse effects such as cardiac failure. Due to drug-related adverse effects, physicians and patients have great concerns over using medications, and thus some patients choose to watch and wait instead of taking any drugs to treat BPH/LUTS.

Mechanism of Action

Botreso^® has an antioxidant capacity and can reduce inflammatory cytokines (IL-6). It may take effect by reducing oxidative stress and inflammation.

Oxidative stress is an important contributing factor in the development of chronic diseases. It is an imbalance between the production of reactive oxygen species, or ROS, and antioxidant defense, can lead to oxidative damage, caused by deficiency in antioxidant defense processes, elevation in ROS due to presence of toxins and activation of ROS mediated by chronic infection and inflammation. Based on the Cellular Antioxidant Activity, or CAA, method, the results showed a dose-dependent increase in CAA for Botreso^®. Botreso^® caused a concentration-dependent increase in cellular antioxidant assay and thus exhibited antioxidant activity. The following table indicates the cellular antioxidant assay unit obtained for different concentrations of standard materials and Botreso^®:

Chronically inflamed cells can release cytokines to functionally determine a constitutively active stroma and stimulate tumor growth and progression. Chronic inflammation in benign prostate biopsy specimens has been evident to be associated with high-grade prostate tumors in adjacent areas. IL-6 is a prototypical cytokine with various biological effects on a wide variety of cells. IL-6 is therefore involved in the control of immune responses and inflammation. It is produced, participating in host defense against infections and tissue injuries. However, over production of IL-6 leads to severe disease complications. Accordingly, IL-6 blockade was expected to become a therapeutic strategy for the diseases characterized by IL-6 overproduction. Based on an important pro-inflammatory cytokine, the IL-6 levels can be determined for the understanding of anti-inflammatory activity of Botreso^®. Botreso^® is able to cause a concentration-dependent inhibition of LPS-induced IL-6 release in differentiated THP-1 cells, suggesting an anti-inflammatory activity of Botreso^®. The following diagram indicates that Botreso^® has anti-inflammatory activity:

Notes:

The purpose of this study is to evaluate the anti-inflammation effect of BDS and BDP by measuring LPS-induced IL-6 release. The data demonstrated that both BDS and BDP showed a concentration-dependent inhibition of LPS-induced IL-6 release. LPS is one of the main etiological factors in the pathogenesis of several diseases. LPS has been shown to stimulate host cells, including macrophages and fibroblasts, to produce cytokines. LPS can markedly increase the production of IL 6, IL 8 and TNF α in differentiated THP 1 cells. Therefore, based on an important pro-inflammatory cytokine, the IL-6 levels stimulated by LPS can be determined for the understanding of anti-inflammatory activity of the Botreso^®.

Interleukin (IL)-6 is produced at the site of inflammation. IL-6 exerts stimulatory effects on T- and B-cells, thus favoring chronic inflammatory responses. Although its expression is strictly controlled by transcriptional and posttranscriptional mechanisms, dysregulated continual synthesis of IL-6 plays a pathological effect on chronic inflammation and autoimmunity. BDS (25, 50 and 100 µg/ml) and BDP (35, 70 and 140 µg/ml) were used, respectively. The data demonstrated that both BDS and BDP showed a concentration-dependent inhibition of LPS-induced IL-6 release in differentiated THP-1 cells, suggesting an anti-inflammatory activity of Botreso^®.

Clinical Data

The data in the Clinical Data section for Botreso^® from page 70 to page 81, pertains to the clinical trials utilizing API-1 (“Botreso^® (API-1)”), which is currently unavailable. We will be conducting new studies using API-2 (“Botreso^® (API-2)”). However, we must conduct API-1 and API-2 comparability studies first and if the FDA accepts such results and determines that API-1 and API-2 are comparable, only then we will be able to conduct the additional Phase I PK study and Phase III pivotal study using API-2. If the U.S. FDA does not agree that API-1 and API-2 are comparable, we will need to work with other API vendor to demonstrate the comparability that meet U.S. FDA’s requirements.

Considering a variety of factors including the current unavailability of API-1, we voluntarily withdrew our NDA on November 30, 2022, in order to develop more information about API-2 for the U.S. FDA’s review and to address ongoing questions regarding demonstrated difference between Botreso^® and placebo for the primary efficacy endpoint in a clinical study for Botreso^®, and to address other questions FDA had previously identified in our NDA regarding FDA’s questions related to the drug substance and product, validation of methods used for measuring the effect of Botreso^®, manufacturing, clinical and nonclinical testing, data, and statistical analyses, among others.

The U.S. FDA has reviewed our proposed Phase III protocol and Phase I pharmacokinetic (PK) synopsis, as reflected in their written response dated February 23, 2024. The U.S. FDA raised several concerns in this response:

In response to these concerns and upon U.S. FDA’s recommendation, we are developing a comparability plan to provide the U.S. FDA with convincing data to link between products containing API-1 and API-2. As of the date of this annual report, the Company is still in the process of providing the information required by the U.S. FDA and has not yet successfully demonstrated the comparability of API-1 and API-2.

After our submission of our comparability plan and, if U.S. FDA agrees our data demonstrates comparability between API-1 and API-2, we will be able to rely on trials that were previously conducted using API-1, and we then will initiate the Botreso^® Phase III study and the PK study using API-2 simultaneously. As mentioned earlier, for Botreso^® (API-1), we have conducted four Phase III clinical trials in the U.S. and Taiwan, including two pivotal trials (one in each location) and two open-label extension studies (also one in each location) using API-1. The U.S. FDA raised concerns about one pivotal Phase III trial in the U.S., which failed to demonstrate a difference between treatment groups for the primary efficacy endpoint in the intent-to-treat population. Additionally, the FDA expressed concerns regarding the reproducibility of some reported efficacy results for Study MCS-2-TWN-a. However, the U.S. FDA had no further comments on the two open-label extension studies in the U.S. and Taiwan using API-1. Therefore, if the FDA agrees that our data demonstrates comparability between API-1 and API-2, we will also need to conduct another pivotal Phase III study using API-2, and we will work with the FDA to address the reproducibility issue.

To address the U.S. FDA’s concern that Study MCS-2-US-a did not demonstrate a statistically significant difference between the drug and placebo in the primary efficacy endpoint, we plan to conduct an additional Phase III study, MCS-2-US-b, using API-2.

Regarding the U.S. FDA’s concerns about the reproducibility of the reported efficacy results for Study MCS-2-TWN-a, we propose to re-analyze the statistical results of the MCS-2-TWN-a study data using Clinical Data Interchange Standards Consortium (CDISC) data sets that match the FDA’s requested data format. Then, we will submit the reanalysis for further discussions with U.S. FDA about its concerns.

On May 14, 2024, we asked U.S. FDA to provide a written response to our questions about obtaining U.S. FDA’s review and comments on a newly proposed Phase III clinical trial protocol for Botreso^® with API-2 and a pharmacokinetic (PK) study. On May 23, 2024, we received a denial notice from the U.S. FDA, stating that it was premature to provide such a written response at this stage of drug development, however, the U.S. FDA would continue its review of the study design of PK study and Phase III clinical trial using API-2. The U.S. FDA decided that until the company provides complete Chemistry, Manufacturing, and Controls (CMC) information on the active pharmaceutical ingredient-2 (API-2) with a plan to establish comparability between API-1 and API-2, the U.S. FDA is not in a position to reach any agreement on protocols designed to establish the safety and efficacy of Botreso^®. We have completed the CMC documentation on the active pharmaceutical ingredient-2 (API-2) and a plan to establish comparability between API-1 and API-2 and submitted it to the U.S. FDA on October 16, 2024, and are awaiting feedback from the U.S. FDA. If the U.S. FDA does not agree that API-1 and API-2 are comparable, we will continue to research additional API sources based on our own patent, to pursue additional outsourcing API vendors, and to follow U.S. FDA’s guidance for demonstrating comparability between API-1 and API-2 to the U.S. FDA’s satisfaction. In the event that we are unable to establish comparability between API-1 and API-2, we will be required to repeat the Botreso^® clinical trials using API-2. For further details, see the risk factor titled “If we are unable to identify a supplier capable of producing API-2 that is sufficiently comparable to API-1, we will be required to repeat our clinical trials for Botreso^® and PCP, which could significantly delay our product development efforts and result in increased costs” on page 13.

In addition, we are in the process of finalizing the PK study protocol per U.S. FDA requirements and hope to satisfy the U.S. FDA of the comparability between API-1 and API-2. If the CMC comparability between API-1 and API-2 is approved, we will request a Type B meeting (WRO) with the U.S. FDA to discuss our revised Phase III protocol, Statistical Analysis Plan, and PK study protocol.

Phase I Clinical Studies

Phase I clinical studies of Botreso^® focused on pharmacokinetics and clinical drug-drug interaction studies. The data in the Phase I Clinical Studies section, pertains to the clinical trials utilizing API-1, which is currently unavailable. We will be conducting new studies using API-2 (“Botreso^® (API-2)”). However, we must conduct API-1 and API-2 comparability studies first and if the FDA accepts such results and determines that API-1 and API-2 are comparable, only then we will be able to conduct the additional Phase I PK study and Phase III pivotal study using API-2. If the U.S. FDA does not agree that API-1 and API-2 are comparable, we will need to work with other API vendor to demonstrate the comparability that meet U.S. FDA’s requirements.

Pharmacokinetics

The study of pharmacokinetics of Botreso^® (API-1) was a randomized, balanced, single-dose, two-treatment (fed versus fasted) study in healthy male adult subjects. The study was designed to evaluate the pharmacokinetics, or PK, of Botreso^® (API-1) when it was administered in the fed and fasted state. 47 subjects were randomized to receive a single dose either in the fed (24 subjects) or fasted (23 subjects) state, and the PK parameters were evaluated and compared for the two treatment groups. Relevant trials were conducted in U.S. and were initiated on April 22, 2015 and completed on April 24, 2017, with 23 subjects in fed group and 22 subjects in fasted group had completed the study. The above study of the pharmacokinetics of Botreso^® was conducted using API-1, which is currently unavailable. We are continuing development of Botreso^® using API-2 in consultation with U.S. FDA. U.S. FDA provided comments on our proposed Phase III study, and we are finalizing the protocol for resubmission to the U.S. FDA. In addition, we are in the process of finalizing the PK study protocol per U.S. FDA requirements and hope to satisfy the U.S. FDA of the comparability between API-1 and API-2. If the CMC comparability between API-1 and API-2 is approved, we will request a Type B meeting (WRO) with the U.S. FDA to discuss our revised Phase III protocol, Statistical Analysis Plan, and PK study protocol.

As to the efficacy of Botreso^® (API-1), the study compared serum active ingredient levels of five major biomarkers PL, PF, PE, TC and BC (code names of our active ingredients to represent the content of each carotenoid in our pharmaceutical composition), in subjects taking Botreso^® (API-1) after a meal with those taking Botreso^® (API-1) on an empty stomach. It is found that the proportion of active ingredient absorbed after a meal was better than after an empty stomach. Subjects were randomized to two groups in order to obtain their pre-prandial or postprandial medication status. The results showed that the adverse effects were well tolerated irrespective of the timing of administration (postprandial or postprandial), although absorption rates were higher when Botreso^® (API-1) were taken after meals. The following figure indicates the concentration of active ingredients in serum:

Notes:

As to the safety profile of Botreso^® (API-1), data indicated that Botreso^® was well-tolerated among 47 subjects. 22 subjects, or 46.8%, of all subjects reported at least one treatment emergent adverse event, or TEAE, during the study. The fasted group has a higher TEAEs rate (60.9%) than the fed group (33.3%), but the rate of Aes was similar for the two groups. Overall, the most frequently reported TEAEs were headache (19.1%), upper respiratory tract infection (8.5%), back pain (4.3%) and nasopharyngitis (4.3%). The fasted group reported higher rate of headaches than the fed group. The two groups had similar rates for other TEAEs. No subject experiences serious, severe, or life-threatening treatment emergent adverse events, or TEAEs. No TEAEs resulted discontinuation of the study and no death was caused. Other data such as the changes in blood pressure, heart rate, respiratory rate, weight and temperature were generally small and clinically insignificant.

Clinical Drug-Drug Interaction

The study of clinical drug-drug interaction of Botreso^® (API-1) was an open-label, fixed-sequence, drug-drug interaction study to evaluate the effect of Botreso^® (API-1) on the pharmacokinetics of 24 healthy male subjects. Relevant trials were initiated on May 20, 2018 and completed on September, 2018. A total of 24 subjects were enrolled in the study and 23 of them completed the study. One subject discontinued the study primarily due to a failure to meet compulsory criteria.

Midazolam is used to produce sleepiness or drowsiness and to relieve anxiety before surgery or certain procedures. Bupropion is indicated for the treatment of major depressive disorder, seasonal affective disorder, and as an aid to smoking cessation.

Since our in vitro drug-drug interaction study conducted in the U.S. concluded that our drug substance may be an inducer of CYP3A4 and CYP2B6 based on the calculated R values (< 0.9). U.S. FDA suggested that we further investigate the potential drug-drug interactions by conducting a clinical drug-drug interaction study using a sensitive index substrate. The sensitive index substrate is midazolam for CYP3A4 and bupropion for CYP2B6, respectively. Therefore, we conducted such study to assess the effect of Botreso^® (API-1) on the PK of midazolam and bupropion following U.S. FDA’s suggestion in 2018. The coadministration of Botreso^® (API-1) with midazolam and bupropion generally would not affect the efficacy of midazolam and bupropion, and concluded that Botreso^® is not an inducer of both midazolam (CYP3A4) and bupropion (CYP2B6).

The primary objective of this clinical drug-drug interaction study was to assess the effect of Botreso^® (API-1) on the PK of midazolam and bupropion in healthy male subjects. The results indicated that the peak exposure (Cmax) and the total exposure to midazolam were not significantly affected by the co-administration of Botreso^® (API-1). The total and peak exposures of bupropion, midazolam, and their measured metabolites were not significantly altered after multiple daily doses of Botreso^® (API-1). The median time to peak concentration (Tmax) of bupropion, midazolam and their measured metabolites was not affected by multiple daily doses of Botreso^® (API-1). The safety data indicated that the administration of Botreso^® alone or the co-administration of Botreso^®, midazolam and bupropion was generally tolerated by healthy male subjects in this study. Seven of 24 subjects (29.2%) treated with midazolam, bupropion, and/or Botreso^® (API-1) experienced a total of 10 TEAEs. Six of 24 subjects (25.0%) treated with midazolam or bupropion experienced seven TEAEs. One of 24 subjects (4.2%) treated with Botreso^® alone experienced two TEAEs. One of 23 subjects treated with midazolam/bupropion and Botreso^® (API-1) experienced one TEAEs. The most frequently reported TEAEs were somnolence and others included headache, dry skin, macule, skin irritation and cough. However, 30% of TEAES were assessed as unrelated to the study. All TEAEs were assessed as mild in severity and fully recovered or resolved at the end of the study. No TEAEs resulted discontinuation of the study and no serious adverse effect, or SAE, or deaths were reported.

Overall summary and conclusions

According to the Phase I clinical studies, the administration of a single oral (API-1) was well-tolerated in the fed and fasted state in healthy male subjects. Subjects absorbed active ingredients of Botreso^® (API-1) better when they took Botreso^® (API-1) after meals. The administration of Botreso^® alone or the co-administration of Botreso^®, midazolam and bupropion was generally tolerated by healthy male subjects in this study. The coadministration of Botreso^® (API-1) with midazolam and bupropion generally would not affect the efficacy of midazolam and bupropion. Our Phase I trial was completed several years later than Phase II and Phase III trials per U.S. FDA’s requirements. Since our in vitro drug-drug interaction study conducted in the U.S. concluded that our drug substance may be an inducer of midazolam and bupropion based on the calculated R values (< 0.9). The U.S. FDA suggested that we conduct additional Phase I studies on both PK and DDI using a sensitive index substrate. Therefore, we conducted such additional study to assess the effect of PCP on the PK of midazolam and bupropion following the U.S. FDA’s suggestion in 2018 after we had previously completed Phase II and Phase III studies. The clinical DDI study concluded that Botreso^® (API-1) is neither an inducer of midazolam nor an inducer of bupropion.

Phase II Clinical Studies

The data in the Phase II Clinical Studies section, pertains to the clinical trials utilizing API-1, which is currently unavailable. We will be conducting new studies using API-2 (“Botreso^® (API-2)”).  However, we must conduct API-1 and API-2 comparability studies first and if the FDA accepts such results and determines that API-1 and API-2 are comparable, only then we will be able to conduct the additional Phase I PK study and Phase III pivotal study using API-2. If the U.S. FDA does not agree that API-1 and API-2 are comparable, we will need to work with other API vendor to demonstrate the comparability that meet U.S. FDA’s requirements. In the event that we are unable to establish comparability between API-1 and API-2, we will be required to repeat the Botreso^® clinical trials using API-2. For further details, see the risk factor titled “If we are unable to identify a supplier capable of producing API-2 that is sufficiently comparable to API-1, we will be required to repeat our clinical trials for Botreso^® and PCP, which could significantly delay our product development efforts and result in increased costs” on page 13.

Trial Design

The phase II clinical trial in Taiwan was initiated on March 21, 2004 and completed on August, 2006. The phase II clinical study was a randomized exploratory intervention one with 65 subjects involved and 62 subjects completed the study. 32 subjects were administered 15 mg Botreso^® (API-1) per day and 29 of them completed the study. 33 subjects were administered 30 mg Botreso^® per day and all of them completed the study.

Efficacy

According to the results of phase II clinical trials in Taiwan, the primary endpoint was the change in International Prostate Symptom Score system, or I-PSS, which is a validated, reproducible scoring system that measures severity of lower urinary tract symptoms and responses to therapeutics, from Day one to Week 12. The mean (standard deviation [SD]) reductions in I-PSS from baseline decreased from 11.31 [5.84] to 9.52 [4.98] after four weeks, and decreased to 9.14 [5.86] after 12 weeks in low-dose group. Thus, for subjects who took one Botreso^® (API-1) softgel (15 mg) per day, their I-PSS reduced by 15.8% and 19.2% after four and 12 weeks, respectively. In addition, the mean [SD] reductions in I-PSS from Day one decreased from 12.30 [6.45] to 9.00 [4.98] at 4 weeks, and decreased to 7.55 [3.97] at 12 weeks in high-dose group. Thus, for subjects who took two Botreso^® (API-1) softgels (30 mg) per day, their I-PSS reduced by 26.8% and 38.6% after four and 12 weeks, respectively. The study result indicated that the 30 mg/day was the optimal dose. For subjects with moderate and severe BPH/LUTS, or to say, for those whose I-PSS larger than 10 points (inclusive), the I-PSS decreased by 16.3% and 22.1% after 4 and 12 weeks of Botreso^® softgels (15 mg/day) treatment, and the I-PSS decreased by 28.6% and 44.4%% after 4 and 12 weeks of Botreso^® softgels (30 mg/day) treatment.

Safety

Botreso^® (API-1) were well tolerated by both groups of subjects. There were no adverse effects, or AEs, resulting in discontinuation of the study. And no unexpected or unanticipated events were reported. 14 subjects, or 20%, of all subjects reported AEs, but most of the AEs were reported by one subject. Only one kind of AE, influenza like syndrome, occurred with an incidence greater than 5%. One subject reported one SAE which was hospitalization. However, the subject reported hospitalization since it was a common practice in Taiwan to conduct transrectal ultrasound-guided prostate biopsies under intravenous general anesthesia, which must be carried out in a hospital setting. In the U.S., transrectal ultrasound-guided prostate biopsies are conducted in an outpatient setting. Therefore, should the subject locate in the U.S., it would not be hospitalized, and no SAE would be reported then.

Overall summary

Both levels of Botreso^® (API-1) administration, 15 mg/day and 30 mg/day, were well tolerated by the subjects. The incidences of AEs and SAEs were relatively low and common side effects of 5-Ari and α-blockers were not reported during relevant trials, which showed an excellent tolerability profile of Botreso^®.

Phase III Clinical Studies

The data in the Phase III Clinical Studies section, pertains to the clinical trials utilizing API-1, which is currently unavailable. We will be conducting new studies using API-2 (“Botreso^® (API-2)”). However, we must conduct API-1 and API-2 comparability studies first and if the FDA accepts such results and determines that API-1 and API-2 are comparable, only then we will be able to conduct the additional Phase I PK study and Phase III pivotal study using API-2. If the U.S. FDA does not agree that API-1 and API-2 are comparable, we will need to work with other API vendor to demonstrate the comparability that meet U.S. FDA’s requirements. In the event that we are unable to establish comparability between API-1 and API-2, we will be required to repeat the Botreso^® clinical trials using API-2. For further details, see the risk factor titled “If we are unable to identify a supplier capable of producing API-2 that is sufficiently comparable to API-1, we will be required to repeat our clinical trials for Botreso^® and PCP, which could significantly delay our product development efforts and result in increased costs” on page 13.

Phase III clinical trials were approved by the U.S. FDA in December 2009 and approved by Taiwan TFDA in February 2010. We have conducted four Phase III clinical trials for Botreso^® (API-1) in the U.S. and Taiwan, including two pivotal trials (one in the US and one in Taiwan) and two open-label extension studies (one in the US and one in Taiwan) using API-1. Among four Phase III clinical trials, the U.S. FDA determined our pivotal Phase III clinical trial for Botreso^® (API-1) in the U.S. failed to show a difference between treatment groups for the primary efficacy endpoint in the intent-to-treat population.

In addition, our API-1 supplier withdrew their consent to reference their DMF on file with the FDA, due to the relocation and restructuring of manufacturing facility. Considering a variety of factors, we voluntarily withdrew our NDA on November 30, 2022, in order to develop more information about API-2 for the U.S. FDA’s review and to address ongoing questions regarding demonstrated difference between Botreso^® and placebo for the primary efficacy endpoint in a clinical study for Botreso^®, and to address other questions FDA had previously identified in our NDA regarding FDA’s questions related to the drug substance and product, validation of methods used for measuring the effect of Botreso^®, manufacturing, clinical and nonclinical testing, data, and statistical analyses, among others.

The U.S. FDA provided written responses on February 23, 2024. In the response, U.S. FDA questioned whether one new Phase III study with API-2 would be sufficient, noting again its concern that Study Botreso^®-US-a did not demonstrate a statistically significant difference between the drug and placebo in the primary efficacy endpoint and concerns regarding the treatment effect of questionable significance in the Study Botreso^®-TWN-a. The U.S. FDA also commented that it will need more information on how we would demonstrate comparability between API-1 and API-2 and that its determination of whether our original Phase III studies with API-1 would have utility, based upon the quality of support, for a convincing link between products containing API-1 and API-2.

We followed the U.S. FDA’s advice to amend the Phase III protocol and develop the Phase I PK protocol. On May 14, 2024, we submitted a Type B meeting request to the FDA containing the amended protocols for their review and comments. On May 23, 2024, we received a denial notice from the FDA, stating that it is premature for this stage of drug development, and until the company can provide complete Chemistry, Manufacturing, and Controls (CMC) information on the active pharmaceutical ingredient-2 (API-2) and a plan to establish comparability between API-1 and API-2, the U.S. FDA is unable to reach agreement on protocols designed to establish the safety and efficacy of Botreso^®. We have completed the CMC documentation on the active pharmaceutical ingredient-2 (API-2) and a plan to establish comparability between API-1 and API-2 and submitted it to the U.S. FDA on October 16, 2024, and are awaiting feedback from the U.S. FDA.

If the comparability between API-1 and API-2 is accepted by the U.S. FDA, we plan to conduct additional Phase III pivotal study in the US using API-2 (MCS-2-US-b study). If the comparability between API-1 and API-2 is not accepted by the U.S. FDA, we will need to work with other API vendor to demonstrate the comparability that meet U.S. FDA’s requirements and would have to perform more clinical trials. In the event that we are unable to establish comparability between API-1 and API-2, we will be required to repeat the Botreso^® clinical trials using API-2. For further details, see the risk factor titled “If we are unable to identify a supplier capable of producing API-2 that is sufficiently comparable to API-1, we will be required to repeat our clinical trials for Botreso^® and PCP, which could significantly delay our product development efforts and result in increased costs” on page 13.

More details are indicated in the following tablet:

The study completion dates included in the following table:

The primary objective of phase III clinical trials is to investigate the clinical use of Botreso^® (API-1), by measuring the difference in the changes of I-PSS between Botreso^® group and placebo group after short term (12 weeks) and long-term (40 weeks). The whole clinical studies were up to 52 weeks, or one year. Despite the pivotal Phase III clinical trial for Botreso^® (API-1) in the U.S. failing to demonstrate a difference between treatment groups for the primary efficacy endpoint in the intent-to-treat population, the remaining data, including one phase III US open label extension study and two phase III studies conducted in Taiwan, still indicated that the overall results indicated that Botreso^® (API-1) softgels could reduce the I-PSS total score. However, the U.S. FDA has expressed concerns regarding the reproducibility of some of the reported efficacy results for Study MCS-2- TWN-a. To address the U.S. FDA’s concerns about the reproducibility of the reported efficacy results for Study MCS-2-TWN-a, we propose to re-analyze the statistical results of the MCS-2-TWN-a study data using Clinical Data Interchange Standards Consortium (CDISC) data sets that match the FDA’s requested data format. Then, we will submit the reanalysis for further discussions with U.S. FDA about its concerns.

As mentioned above, the data in the Phase I Clinical Studies section pertains to the clinical trials utilizing API-1, which is currently unavailable. We will be conducting new studies using API-2 (“Botreso^® (API-2)”). If we are unable to demonstrate comparability, we would have to work with other API vendors to follow FDA guidance to demonstrate comparability. In the event that we are unable to establish comparability between API-1 and API-2, we will be required to repeat the Botreso^® clinical trials using API-2. For further details, see the risk factor titled “If we are unable to identify a supplier capable of producing API-2 that is sufficiently comparable to API-1, we will be required to repeat our clinical trials for Botreso^® and PCP, which could significantly delay our product development efforts and result in increased costs” on page 13.

Overview of clinical trials

The phase III clinical trials (pivotal studies) in the U.S. and Taiwan primarily aimed to investigate whether daily treatment of two Botreso^® (API-1) softgels can improve LUTS in patients with BPH. The phase III clinical trials involved 546 subjects from two pivotal trials, including 274 subjects in the U.S. and 272 subjects in Taiwan. Among the 546 subjects, 545 of them received more than one dose of Botreso^® (API-1). 42 subjects received 15 mg Botreso^® per day, 338 subjects received 30 mg Botreso^® per day, and 165 subjects received 0 mg Botreso^® (API-1) per day.

The following table indicates the demographics for phase III pivotal clinical studies.