Yipinhong Pharmaceutical to receive significant equity gift from controlling shareholder

Guangrun Group, Yipinhong Pharmaceutical's controlling shareholder, has pledged to unconditionally transfer its subsidiary Guangrun Health Industry (Hong Kong) Co. Limited's 9.07% equity stake in Arthrosi to Yipinhong. This transfer will be based on Arthrosi's E-round post-investment net proceeds (Arthrosi E-round post-investment valuation of $383m), following Arthrosi's acquisition by Sobi US Holding Corp. for an initial payment of $950m and up to $550m in milestone payments. This move aims to support Yipinhong's research and development and foster sustainable growth.

The transaction is categorized as an "accidental related party transaction" and is considered an unconditional, gratuitous benefit to Yipinhong, requiring no payment or obligations from the company. The board of directors has approved this support, noting its potential to enhance the company's cash flow, asset liquidity, and overall financial structure.

This related party transaction will be subject to appropriate accounting treatment in line with enterprise accounting standards, pending confirmation by the annual audit. The support commitment, however, acknowledges inherent risks such as the high investment and long development cycle of innovative drugs, as well as potential sales impacts from market dynamics and competition.