{"url_path":"/sec/casif/10-k/2026/item-3","section_key":"item-3","section_title":"Item 3 KEY INFORMATION******","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/1962738/0001104659-26-061632-index.html","accession_number":"0001104659-26-061632","cik":"0001962738","ticker":"CASIF","issuer_name":"CASI Pharmaceuticals, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1962738/0001104659-26-061632-index.html","primary_entity_key":"0001962738","primary_entity_name":"CASI Pharmaceuticals, Inc."},"word_count":24399,"has_tables":true,"body_markdown":"**ITEM 3. KEY INFORMATION******\n\nHolding Company Structure\n\nWe are not a Chinese operating company, but a Cayman Islands holding company with a significant portion of our business operations being conducted by our Chinese subsidiaries. This holding company structure and our operation in China may involve risks. We currently conduct our business through the following consolidated subsidiaries: CASI China, CASI Wuxi, CASI Biopharmaceuticals and CASI Hong Kong.\n\nWe do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us. The organizational chart of CASI as of April 30, 2026 is set forth below:\n\n​\n\n​\n\nNote: Currently CASI Hong Kong has no meaningful operations.\n\n​\n\nOn May 12, 2025, the Company entered into a definitive equity and assets transfer agreement with Kaixin Pharmaceuticals Inc. (\"Kaixin Pharmaceuticals\"), a Cayman Islands incorporated entity wholly-owned by Dr. Wei-Wu He, the chairman of the board of directors and then CEO of the Company and two direct wholly-owned subsidiaries of the Company in China (the \"Target Companies\"), pursuant to which the Company shall sell and transfer, and Kaixin Pharmaceuticals shall purchase and acquire, 100% equity interests in both Target Companies (the \"Target Equity Interests\"), and all licensing rights, distribution rights, supply arrangements and related rights related to BI-1206 (in China), CID-103(in Asia excluding Japan) and Thiotepa (in China excluding Hong Kong, Macau and Taiwan) (the \"Target Pipeline Products\") for an aggregate purchase price of $20.0 million, which shall include assumption of up to $20.0 million of indebtedness of the Company (the \"Transaction\"). The closing of the Transaction shall be subject to certain conditions, including resolution of certain judicial freeze on the Target Equity Interests issued in connection with certain ongoing legal dispute of the Company, which are not usual and customary for sales of such entities. As part of the Transaction, the Company and Kaixin Pharmaceuticals plan to enter into certain novation and/or assignment agreements with relevant licensors to effect the transfer of rights related to the Target Pipeline Products, which is expected to be completed concurrently with the transfer of the Target Equity Interests. After the closing of the Transaction, the Company expects to retain the rights related to CID-103 (in Japan\n\n7\n\n[Table of Contents](#TOC)\n\nand non-Asian regions), EVOMELA®, FOLOTYN®, CNCT19 and CB-5339, and remain firmly committed to progressing CID-103 at an accelerated pace. The Company believes this initiative aligns with its strategic pivot toward developing CID-103 for the treatment of organ transplant rejection and autoimmune diseases.\n\n​\n\nOur Recurring Operating Losses have Raised Substantial Doubt Regarding Our Ability to Continue as a Going Concern.\n\n \n\nOur recurring operating losses raise substantial doubt about our ability to continue as a going concern. Since our inception in 1991, we have incurred significant losses from operations and, as of December 31, 2025, had incurred an accumulated deficit of $748.1 million. For the year ended December 31, 2025, we had a net loss of $48.1 million and a cash outflow for operating activities of $20.8 million. As of December 31, 2025, we had net current liabilities of $36.2 million. We also entered into agreements with Precision Autoimmune Therapeutics Co., Ltd., (“PAT”) and two investors of PAT, respectively, to purchase each of their 19.8876% equity interest of PAT. The total consideration is RMB 56.8 million (approximately US$ 8.1 million) plus interest and will be paid in installments. As of the date of this report, CASI China has paid in total RMB35.4 million (approximately US$5.1 million) plus interest, the remaining consideration is due by June 30, 2026. Therefore, we will require additional liquidity to continue our operations over the next 12 months.\n\n​\n\nThese factors raise substantial doubt about our ability to continue as a going concern within a reasonable period of time, which is considered to be one year from the issuance date of the annual report for the year ended December 31, 2025. Our financial statements included in this annual report do not include any adjustments that might result if we are unable to continue as a going concern and, therefore, be required to realize our assets and discharge our liabilities other than in the normal course of business, which could cause investors to suffer the loss of all or a substantial portion of their investment. In order to have sufficient cash and cash equivalents to fund our operations in the future, we will need to raise additional equity or debt capital and cannot provide any assurance that we will be successful in doing so. The perception of our ability to continue as a going concern may make it more difficult for us to obtain financing for the continuation of our operations and could result in the loss of confidence by investors, suppliers and employees.\n\n​\n\nRisks and Uncertainties Relating to Doing Business in China\n\nWe face various risks and uncertainties related to doing business in China. Our business operations are primarily conducted in China, and we are subject to complex and evolving PRC laws and regulations. For a detailed description of risks related to doing business in China, please refer to risks disclosed under “Item 3. Key Information - D. Risk Factors - Risks Relating to Our Business Operations in China.” We have entered into a transaction to sell and transfer 100% equity interest in all of our subsidiaries in China, the closing of which is subject to the satisfaction of certain closing conditions. See “Holding Company Structure.” We have entered into a transaction to sell and transfer 100% equity interest in all of our subsidiaries in China, the closing of which is subject to the satisfaction of certain closing conditions. See “Holding Company Structure.”\n\nThe PRC government’s significant authority in regulating our operations and its oversight and control over offerings conducted overseas by, and foreign investment in, China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or become worthless. Implementation of industry-wide regulations, including data security or anti-monopoly related regulations, could result in a material change in our operations and may cause the value of our securities to significantly decline or become worthless. Risks and uncertainties arising from the legal system in China, including risks and uncertainties regarding the enforcement of laws and quickly evolving rules and regulations in China, could result in a material adverse change in our operations and the value of our ordinary shares. For example, China’s government has in recent years issued statements and regulatory actions to regulate certain market players or to improve its supervision of the market in general, such as those related to data security or anti-monopoly concerns. While we currently do not believe such regulatory actions have materially impacted our business operations, or our ability to accept foreign investments, there is no assurance that any new rules or regulations promulgated in the future will not impose additional requirements on us. If any such rules or regulations are adopted, we may be subject to more stringent regulatory scrutiny for our operation and financing efforts, which may in turn result in us incurring additional compliance costs and expenses, delay our investment and financing activities, or otherwise impact our ability to conduct our business, accept foreign investments, or list on a U.S. or other foreign exchange. For more details, see “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Business Operations in China — The legal system in China embodies uncertainties which could impose additional requirements and obligations on our business, and PRC laws, rules, and regulations can evolve quickly with little advance notice, which may materially and adversely affect our business, financial condition, and results of operations.”\n\n8\n\n[Table of Contents](#TOC)\n\nRisks Relating to Our Auditor\n\nOur auditor, the independent registered public accounting firm that issues the audit report contained in our annual report, as an auditor of companies that are traded publicly in the United States and a firm registered with the Public Company Accounting Oversight Board, or PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with applicable professional standards. Our auditor is located in mainland China, a jurisdiction where the PCAOB was historically unable to conduct inspections and investigations completely before 2022. As a result, we were deprived of the benefits of such PCAOB inspections. Pursuant to the Holding Foreign Companies Accountable Act, or the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the PCAOB for two consecutive years because of a position taken by authorities in a foreign jurisdiction, the SEC will prohibit our securities from being traded on a national securities exchange or in the over-the-counter trading market in the United States.\n\nOn December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong and our auditor was subject to that determination. In April 2022, the SEC conclusively listed us as a Commission-Identified Issuer under the HFCAA following the filing of its annual report on Form 10-K for the fiscal year ended December 31, 2021. On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. For this reason, we do not expect we will be identified as a Commission-Identified Issuer under the HFCAA after we file this annual report for the fiscal year ended December 31, 2025.\n\nEach year in the future, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the SEC, we would be identified as a Commission-Identified Issuer following the filing of the annual report for the relevant fiscal year. In accordance with the HFCAA, our ordinary shares would be prohibited from being traded on a national securities exchange or in the over-the-counter trading market in the United States if we are identified as a Commission-Identified Issuer for two consecutive years in the future. If our ordinary shares are prohibited from trading in the United States, there is no certainty that we will be able to list on a non-U.S. exchange or that a market for our ordinary shares will develop outside of the United States. A prohibition of being able to trade in the United States would substantially impair your ability to sell or purchase our ordinary shares when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price of such shares. Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects.\n\nFor more details, see “Item 3. Key Information - D. Risk Factors - Risks Relating to Our Auditor.”\n\nCash and Asset Transfer among the Company and its Subsidiaries\n\nWe provide funding to our subsidiaries from time to time through capital contributions or loans, subject to satisfaction of applicable government registration and approval requirements. For the year ended December 31, 2025, we made funding of US$1.7 million through capital contributions to CASI Hong Kong, our Hong Kong subsidiary.\n\nOur subsidiaries may pay dividends and make other distributions to us subject to satisfaction of applicable government filing and approval requirements. Such dividend or other distributions may be subject to limitations and certain tax consequences, a discussion on which is set forth below. For the year ended December 31, 2025, no dividends or other distributions were made by our subsidiaries.\n\nWe also pay service fees to our PRC subsidiaries pursuant to certain sales support service agreement and research and development support service agreement. For the year ended December 31, 2025, we paid service fees of US$26.0 million to CASI China, one of our PRC subsidiaries. Under PRC tax laws and regulations, earning of our subsidiaries under such agreements are subject to a statutory tax rate of 25%.\n\nIn the year ended December 31, 2025, no assets other than cash were transferred through our organization.\n\nAll cash transfers among us and our subsidiaries have been eliminated in our consolidated statement of cash flows.\n\n9\n\n[Table of Contents](#TOC)\n\nThe existing PRC foreign exchange regulations may limit our ability to initiate and complete the cash transfers within our group. Approval from SAFE and PBOC may be required where RMB are to be converted into foreign currencies, including U.S. dollars, and approval from SAFE and PBOC or their branches may be required where RMB are to be remitted out of China. Please see “Item 3. Key Information — D. Risk Factors —Risks Relating to Our Business Operations in China — Governmental control of currency conversion and payments of RMB out of China may limit our ability to utilize our cash balances effectively and affect the value of your investment.”\n\nWe have never declared or paid dividends on our ordinary shares or any other securities and we do not anticipate paying any dividends on our ordinary shares in the foreseeable future. We may rely on dividends from our subsidiaries in China to pay dividend and other distributions on our ordinary shares. PRC regulations may restrict the ability of our PRC subsidiaries to pay dividends to us. In addition to applicable foreign exchange limitations, under the current regulatory regime in China, a PRC company may pay dividends only out of their accumulated profit, if any, determined in accordance with PRC accounting standards and regulations, and is required to set aside as general reserves at least 10% of its after-tax profit, until the cumulative amount of such reserves reaches 50% of its registered capital, prior to any dividend distribution. In addition, a PRC company shall not distribute any profits in a given year until any losses from prior fiscal years have been offset.\n\nPermission and Filing Procedures Required from the PRC Authorities with respect to the Operations of Our PRC Subsidiaries and Future offering in the US\n\nAs the date hereof, our PRC subsidiaries have obtained the requisite licenses and permits from the PRC government authorities that are material for our business operations, including, among others, the Business License, the Drug Distribution License, the Drug Manufacturing Permit, the Clinical Trial Application with the PRC National Medical Products Administration, or NMPA, and the notification filing for international collaborative clinical trial or the application for international collaborative scientific research with the China Human Genetic Resources Agency, or HGR Agency (formerly known as the China Human Genetic Resources Administrative Office, or HGRAO). We also work with our business partners which have obtained the requisite licenses and permits for their business collaboration with us, including, among others, the Import Drug Registration for product(s) we promote and distribute in China. Given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practices of the relevant government authorities, we may be required to obtain additional permissions or approvals for our business operations. For more details, see “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Business Operations in China — The legal system in China embodies uncertainties which could impose additional requirements and obligations on our business, and PRC laws, rules, and regulations can evolve quickly with little advance notice, which may materially and adversely affect our business, financial condition, and results of operations.”\n\nAs the date hereof, we and our PRC subsidiaries (i) except for the requisite CSRC Filing(s) (as defined below), are not required to obtain permissions from the China Securities Regulatory Commission, or the CSRC, (ii) are not required to go through cybersecurity review by the Cyberspace Administration of China, or the CAC, and (iii) have not been asked to obtain or were denied such permissions by applicable PRC authority. On July 7, 2022, the CAC published the Guidelines for Data Export Security Assessment (《数据出境安全评估办法》), or the Guidelines, which took effect on September 1, 2022. Pursuant to the Guidelines, the data processor who intends to transfer certain important data or large volumes of personal information outside of China shall complete a prior CAC-led data outbound transfer security assessment. For the data we accessed through or obtained from clinical trials, we have complied with the laws and regulations then-in-effect, and completed the registration with HGR Agency or the former HGRAO, but it is unclear if we will be required to go through the CAC-led or CAC-involved security assessment or if the current HGR Agency registration procedure will be changed in the future. We will closely monitor and review any regulatory developments and comply with any new approval or license requirement when necessary. If (i) we have erroneously concluded that such permissions or approvals are not required, or (ii) applicable laws, regulations, or interpretations change and we are required to obtain such permissions or approvals in the future, we may have to expend significant time and costs to procure them. If we are unable to do so, on commercially reasonable terms, in a timely manner or otherwise, we may become subject to sanctions imposed by the PRC regulatory authorities, which could include fines and penalties, proceedings against us, and other forms of sanctions, and our ability to conduct our business, invest into China as foreign investments or accept foreign investments, or be listed on a U.S. or other overseas exchange may be restricted, and our business, reputation, financial condition, and results of operations may be materially and adversely affected.\n\nOn February 17, 2023, the CSRC released the Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic Companies (《境内企业境外发行证券和上市管理试行办法》) and five ancillary interpretive guidelines, collectively, the Overseas Listing Trial Measures, as amended, supplemented or otherwise modified from time to time, which apply to overseas\n\n10\n\n[Table of Contents](#TOC)\n\nofferings and listing by PRC-based companies, or domestic companies, of equity shares, depository receipts, corporate bonds convertible to equity shares, and other equity securities, and came into effect on March 31, 2023. According to the Overseas Listing Trial Measures, (1) domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedure and report relevant information to the CSRC, and if an overseas-listed PRC-based issuer issues new securities in the same overseas market after the overseas offering and listing, it is also required to file with the CSRC within three business days after the completion of the issuance, or the CSRC Filing; if a domestic company fails to complete the filing procedure or conceals any material fact or falsifies any major content in its filing documents, such domestic company may be subject to administrative penalties, such as order to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines; (2) if a foreign-incorporated issuer meets both of the following conditions, its overseas offering and listing shall be determined as an indirect overseas offering and listing by a domestic company of the PRC: (i) any of the total assets, net assets, revenues or profits of the domestic operating entities of the issuer in the most recent accounting year accounts for more than 50% of the corresponding line items in the issuer’s audited consolidated financial statements for the same period; and (ii) its major operational activities are carried out in China or its main places of business are located in China, or the senior managers in charge of operation and management of the issuer are mostly Chinese citizens or are domiciled in China; in addition to the aforementioned conditions, the determination of an indirect overseas offering and listing by a domestic enterprise adheres to the principle of substance over form; and (3) where a domestic company seeks to indirectly offer and list securities in an overseas market (including issuance of new securities after its overseas offering and listing), the issuer shall designate a major domestic operating entity responsible for all filing procedures with the CSRC.\n\nFurthermore, in case any of the following major events occurs after the overseas offering and listing, the issuer is also required to report the relevant information to the CSRC within three business days of the occurrence and the announcement of the relevant events: (1) change of control; (2) the foreign securities regulatory body or the relevant competent authority has taken such measures as investigation and punishment; (3) conversion of listing status or listing board; and (4) voluntary of compulsory termination of listing. Where there is any material change in the major business and operation of the issuer after overseas offering and listing, and such change does not fall within the scope of filing, the issuer shall, within three business days of the occurrence of such change, submit a special report and a legal opinion issued by a domestic law firm to the CSRC to explain the relevant situation.\n\nAs substantially all of our operations are currently based in the PRC, our future offerings and major changes shall be subject to the filing procedures under the Overseas Listing Trial Measures. We cannot assure you that we can meet such requirements, obtain the requisite permits from the relevant government authorities, or complete such filing in a timely manner or at all. Any failure may significantly limit or completely hinder our ability to continue to offer securities to investors and cause the value of our securities to significantly decline or be worthless.\n\n**A.**\n\n**[Reserved]**\n\n**B.**\n\n**Capitalization and Indebtedness**\n\nNot applicable.\n\n**C.**\n\n**Reasons for the Offer and Use of Proceeds**\n\nNot applicable.\n\n**D.**\n\n**Risk Factors******\n\n**Risks Relating to Our Ordinary Shares**\n\nPotential uncertainty involving the acquisition of all of our outstanding shares may adversely affect our business and the market price of our ordinary shares\n\nOn January 7, 2026, the Company’s board of directors received from Dr. Wei-Wu He, the chairman of the Company’s board of directors, a preliminary non-binding proposal, which was further amended by an updated preliminary non-binding proposal dated January 9, 2026 (the \"Proposal\"), to acquire all of the outstanding ordinary shares that are not already beneficially owned by Dr. He for a proposed purchase price of US$1.15 per ordinary share. As of the date of this report, no decisions have been made with respect to the\n\n11\n\n[Table of Contents](#TOC)\n\nProposal. There can be no assurance that any definitive offer will be received, that any definitive agreement will be executed relating to the transaction contemplated by the Proposal, or that the transaction contemplated by the Proposal, or any other similar transaction will be approved or consummated.\n\nPotential uncertainty involving the acquisition of our business operations in China may adversely affect our business and the market price of our ordinary shares.\n\nOn May 12, 2025, the Company entered into a definitive equity and assets transfer agreement with Kaixin Pharmaceuticals Inc. (\"Kaixin Pharmaceuticals\"), a Cayman Islands incorporated entity wholly-owned by Dr. Wei-Wu He, the chairman of the board of directors and then CEO of the Company and two direct wholly-owned subsidiaries of the Company in China (the \"Target Companies\"), pursuant to which the Company shall sell and transfer, and Kaixin Pharmaceuticals shall purchase and acquire, 100% equity interests in both Target Companies (the \"Target Equity Interests\"), and all licensing rights, distribution rights, supply arrangements and related rights related to BI-1206 (in China), CID-103(in Asia excluding Japan) and Thiotepa (in China excluding Hong Kong, Macau and Taiwan) (the \"Target Pipeline Products\") for an aggregate purchase price of $20.0 million, which shall include assumption of up to $20.0 million of indebtedness of the Company (the \"Transaction\"). The closing of the Transaction shall be subject to certain customary conditions, including resolution of certain judicial freeze on the Target Equity Interests issued in connection with certain ongoing legal dispute of the Company. As part of the Transaction, the Company and Kaixin Pharmaceuticals plan to enter into certain novation and/or assignment agreements with relevant licensors to effect the transfer of rights related to the Target Pipeline Products, which is expected to be completed concurrently with the transfer of the Target Equity Interests. After the closing of the Transaction, the Company expects to retain the rights related to CID-103 (in Japan and non-Asian regions), EVOMELA®, FOLOTYN®, CNCT19 and CB-5339, and remain firmly committed to progressing CID-103 at an accelerated pace.\n\nAs of the date of this report, CASI's ownership in CASI China and CASI Wuxi has been frozen due to the ongoing arbitration with Juventas. This presents a significant obstacle to the completion of the spin-off transaction, and no progress has been made thus far. If the transaction cannot be completed, the operation of our current business may be affected.\n\nWe 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 U.S. domestic public companies.\n\nBecause we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:\n\n●the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K;\n\n●the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act; and\n\n●the selective disclosure rules by issuers of material nonpublic information under Regulation FD.\n\nWe are required to file an annual report on Form 20 F within four months of the end of each fiscal year. In addition, we intend to publish our half-year reports, distributed through appropriate way. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6 K. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to 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.\n\nThe market price of our ordinary shares may be highly volatile or may decline regardless of our operating performance.\n\nThe volatile price of our securities makes it difficult for investors to predict the value of their investments, to sell shares at a profit at any given time, or to plan purchases and sales in advance. The Company’s share price fluctuated from year-to-year and quarter-to-quarter. We expect that the trading price of our ordinary shares is likely to be highly volatile in response to a variety of factors that are beyond our control, such as:\n\n●whether we will enter into the going private transaction with Dr. He;\n\n●whether the transaction of disposing our China-related operations and assets will close;\n\n12\n\n[Table of Contents](#TOC)\n\n●our ability to maintain regulatory approval for our launched products and other product candidates;\n\n●issues in importation, marketing and sales of EVOMELA® and FOLOTYN®;\n\n●issues in exportation, marketing and sales of generic melphalan product;\n\n●the outcome of our negotiation with Acrotech with respect to our rights to continue to commercialize EVOMELA®\n\nin China;\n\n●the outcome of our disputes with Juventas with respect to joint commercialization of CNCT19;\n\n●the success of CASI Wuxi to operate a manufacturing facility in China, and the capability of CASI Wuxi to generate revenue for certain threshold for each of the years according to the long term borrowing agreement;\n\n●the clinical development of CNCT19, thiotepa, BI-1206, CB-5339 and CID-103;\n\n●publicity regarding actual or potential clinical test results relating to products under development by our competitors or us;\n\n●initiating, completing or analyzing, or a delay or failure in initiating, completing or analyzing, pre-clinical or clinical trials or animal trials or the design or results of these trials for products in development;\n\n●the entry into, or termination of, key agreements, including key commercial partner agreements;\n\n●the initiation of, material developments in, or conclusion of litigation to enforce or defend any of our intellectual property rights or defend against the intellectual property rights of others;\n\n●achievement or rejection of regulatory approvals for products in development by our competitors or us;\n\n●announcements of technological innovations or new commercial products by our competitors or us;\n\n●developments concerning our collaborations and supply chain;\n\n●regulatory developments in the United States and foreign countries;\n\n●economic or other crises and other external factors;\n\n●the loss of key employees;\n\n●period-to-period fluctuations in our revenues and other results of operations;\n\n●changes in financial estimates by securities analysts; or\n\n●publicity or activity involving possible future acquisitions, strategic investments, partnerships or alliances.\n\nWe will not be able to control many of these factors, and we believe that period-to-period comparisons of our financial results will not necessarily be indicative of our future performance. The valuations of many biotechnology companies without consistent product revenues and earnings are extraordinarily high based on conventional valuation standards, such as price to earnings and price to sales ratios. These trading prices and valuations may not be sustained. In the future, our operating results in a particular period may not meet the expectations of any securities analysts whose attention we may attract, or those of our investors, which may result in a decline in the market price of our ordinary shares. Any negative change in the public’s perception of the prospects of biotechnology companies could depress the price of our securities regardless of our results of operations. These factors may materially and adversely affect the market price of our ordinary shares.\n\nOur largest shareholders, including our directors and officers and investment funds with which they are associated, hold a significant amount of our outstanding ordinary shares and, if they acted together, could influence our management and affairs.\n\nA small number of our shareholders, including our directors and officers and investment funds with which they are associated, hold a significant amount of our outstanding ordinary shares. In addition, our officers and directors and investment funds with which they are associated could determine to make additional purchases of ordinary shares, to the extent permitted by law. In the future, our officers and directors also could be issued ordinary shares as determined by the compensation committee and the board of directors in connection with current or future equity incentive plans.\n\nThese shareholders, if they acted together, could significantly influence the vote on all matters requiring approval by our shareholders, including the appointment of directors and the approval of mergers or other business combination transactions. We cannot assure you that our largest shareholder will not seek to influence our business and affairs in a manner that is contrary to the interests of\n\n13\n\n[Table of Contents](#TOC)\n\nour other shareholders. In addition, the significant concentration of ownership in our ordinary shares may adversely affect the trading price for our ordinary shares because investors often perceive disadvantages in owning stock in companies with significant shareholders.\n\nAs an exempted company incorporated in the Cayman Islands, we have adopted certain home country practices in relation to corporate governance matters that differ significantly from those of companies incorporated in Delaware or in other states in the United States or those of companies listed on a stock exchange, and these practices may afford less protection to shareholders.\n\nWe are an exempted company with limited liability incorporated under the laws of the Cayman Islands and not currently listed on any stock exchange. As a Cayman Islands exempted company, we are subject to the Companies Act (As Revised) of the Cayman Islands. See “Item 10. Additional Information—B. Memorandum and Articles of Association—Differences in Corporate Law” for a summary of certain significant differences between the provisions of the Companies Act applicable to us and the laws applicable to companies incorporated in the state of Delaware and their shareholders. In addition, as an exempted company, we are exempted from certain requirements of the Companies Act, including the requirement to hold an annual general meeting. See “Item 10. Additional Information—B. Memorandum and Articles of Association—Ordinary Shares—Differences in Corporate Law—Exempted Company.” Furthermore, as we are not currently listed on any stock exchange, we are not subject to any listing rules or listing standards. To the extent that we continue to follow the Nasdaq corporate governance listing standards that were previously applicable to us, we may stop following any or all of those listing standards at any time at the discretion of our board of directors or management, as the case may be. Our corporate governance practices may afford shareholders less protection than they would otherwise enjoy under Delaware law or under the corporate governance listing standards of the NYSE, the Nasdaq Stock Market or other stock exchanges.\n\n**Risks Relating to our Financial Position and Capital****Needs**\n\nWe may not have sufficient funds to acquire new product candidates or pay milestone payments.\n\nOur growth strategy relies on our in-license of new product candidates from third parties. Our pipeline will be dependent upon the availability of suitable acquisition candidates at favorable prices and upon advantageous terms and conditions. Even if such opportunities are present, we may not be able to successfully identify appropriate acquisition candidates. Moreover, other companies, many of which may have substantially greater financial resources, are competing with us for the right to acquire such product candidates.\n\nIf a product candidate is identified, the third parties with whom we seek to cooperate may not select us as a potential partner or we may not be able to enter into arrangements on commercially reasonable terms or at all. Furthermore, the negotiation and completion of collaborative and license arrangements could cause significant diversion of management’s time and resources and potential disruption of our ongoing business.\n\nWe recorded net current liabilities in the past and may continue to record net current liabilities in the future, which could expose us to liquidity risks.\n\n As of December 31, 2025, we had net current liabilities of $36.2 million. A net current liabilities position could expose us to the risk of shortfalls in liquidity, in which case our ability to raise funds, obtain bank loans and declare and pay dividends would be materially and adversely affected. Our liquidity position is dependent on, among other factors, our ability to grow our business and effectively manage our expenses, but we cannot assure you that our business will maintain the growth momentum or certain expenses can be managed. If we have net current liabilities in the future, our working capital for operations or business expansion plans could be limited and our business, financial position and results of operations could be materially and adversely affected.\n\nWe have incurred significant operating losses since inception and anticipate that we will continue to incur operating losses for the foreseeable future and may never achieve or maintain profitability.\n\nTo date, we have been engaged primarily in research and development activities. In the years ended December 31, 2023, 2024 and 2025, we had sales totaling US$33.9 million, US$28.5 million and US$20.7 million, respectively. However, as we are currently in a dispute with respect to our capability to continue to commercialize Evomela® in China, the historical sales of Evomela® may not be an appropriate reference for our future operations. See “—Risks Relating to Our Business — We are in a dispute with Acrotech with respect to the license of Evomela®.”\n\n14\n\n[Table of Contents](#TOC)\n\nWe have experienced losses in each year since inception. Through December 31, 2025, we had an accumulated deficit of US$748.1 million. We expect that we will seek to raise capital to continue our operations and, although we have been successfully funded to date through the sales of our equity securities or bank loans, our capital-raising efforts may not produce the funding needed to sustain our operations. If we are unable to obtain additional funding for operations, we may not be able to continue operations as proposed, requiring us to modify our business plan, curtail various aspects of our operations or cease operations. In any such event, investors may lose a portion or all of their investment.\n\nWe expect that our ongoing pre-clinical, clinical, marketing and corporate activities will result in operating losses for the foreseeable future. In addition, to the extent we rely on others to develop and commercialize our products, our ability to achieve profitability will depend upon the success of these other parties. To support our research and development of certain product candidates, we may seek and rely on cooperative agreements from governmental and other organizations as a source of support. If a cooperative agreement were to be reduced to any substantial extent, it may impair our ability to continue our research and development efforts. To become and remain profitable, we must successfully commercialize one or more product candidates with significant market potential. This will require us to be successful in a range of challenging activities, including completing clinical trials of our candidates, developing commercial scale manufacturing processes, obtaining marketing approval, manufacturing, marketing and selling any current and future product candidates for which we may obtain marketing approval, and satisfying any post-marketing requirements. We may never succeed in any or all of these activities and, even if we do, we may never generate sufficient revenue to achieve profitability.\n\nOur ability to make additional payments in the future for CASI Wuxi is subject to uncertainty, be difficult to accomplish or take longer than expected. We have established a cGMP injectable products manufacturing line in a state-owned industrial facility in Wuxi Huishan Economic Development Zone and it may fail to meet regulatory standard, which may increase our losses.\n\nWe have established a cGMP injectable products manufacturing line in a state-owned industrial facility in Wuxi Huishan Economic Development Zone, which is now operational.  As we transition into routine manufacturing operations, the facility may face risks such as instability in the supply of raw material, which could impact production continuity and product quality. Our ability to maintain compliant and efficient operations in China remains subject to evolving Chinese laws and regulations such as those related to, among other things, taxation, import and export tariffs, environmental regulations, land use rights, intellectual property, employee benefits and other matters. The continued success of CASI Wuxi relies on our ability to secure a stable supply chain, manage operational costs, and maintain compliance with regulatory standards. In the future, we may require additional debt or equity financing to support ongoing operations or expansion, which could result in increased debt obligations, higher interest expense or dilution of equity ownership. If we are unable to effectively manage raw material procurement, equipment maintenance, personnel retention, or process optimization, we may face difficulties in meeting commercial demand or maintaining regulatory compliance. Any one of the factors cited above, or a combination of them, could result in unanticipated costs, which could materially and adversely affect our business and planned operations and earnings in China.  Furthermore, our investment and operational plans related to CASI Wuxi may continue to evolve in response to changing circumstances beyond our control, and our ability to meet future payment obligations remains uncertain. For additional details, see “Risks replating Our Business — The success of CASI Wuxi is subject to uncertainty in our operational execution, supply chain stability, and government regulatory actions. ”\n\nThe current capital and credit market conditions may adversely affect our access to capital, cost of capital, and ability to execute our business plan as scheduled.\n\nAccess to capital markets is critical to our ability to operate. Traditionally, we have funded our operations by raising capital in the equity markets. Declines and uncertainties in these markets over the past few years have restricted raising new capital in amounts sufficient to conduct our current operations and have affected our ability to continue to expand or fund additional development efforts. We require significant capital for research and development for our product candidates, clinical trials, and marketing activities. Our inability to access the capital markets on favorable terms because of our low stock price, or our delisting from the Nasdaq Capital Market, could affect our ability to execute our business plan as scheduled. Moreover, we rely and intend to rely on third parties, including our clinical research organizations, third party manufacturers, and certain other important vendors and consultants. As a result of the current volatile and unpredictable global economic situation, there may be a disruption or delay in the performance of our third-party contractors and suppliers. If such third parties are unable to adequately satisfy their contractual commitments to us in a timely manner, our business could be adversely affected.\n\n15\n\n[Table of Contents](#TOC)\n\nWe have limited revenue streams and we are uncertain whether additional funding will be available for our future capital needs and commitments. If we cannot raise additional funding, or access the capital markets, we may be unable to complete the development and commercialization of our products and product candidates.\n\nWe will require substantial funds in addition to our existing working capital to develop and commercialize our products and product candidates and to otherwise meet our business objectives. We have never generated sufficient revenue during any period since our inception to cover our expenses and have spent, and expect to continue to spend, substantial funds to continue our clinical development programs and commercialization of our products and product candidates. Any one of the following factors, among others, could cause us to require additional funds or otherwise cause our cash requirements in the future to increase materially:\n\n●progress of our clinical trials or correlative studies;\n\n●results of clinical trials;\n\n●changes in or terminations of our relationships with strategic partners;\n\n●changes in the focus, direction, or costs of our research and development programs;\n\n●competitive and technological advances;\n\n●establishment and expansion of marketing and sales capabilities;\n\n●manufacturing;\n\n●the regulatory approval process; or\n\n●product launch and distribution.\n\nOn December 31, 2025, we had cash and cash equivalents of US$5.6 million. We may continue to seek additional capital through public or private financing or collaborative agreements in 2026 and beyond. Our operations require significant amounts of cash. We may be required to seek additional capital for the future growth and development of our business. We can give no assurance as to the availability of such additional capital or, if available, whether it would be on terms acceptable to us. If we are not successful in obtaining sufficient capital because we are unable to access the capital markets on favorable terms, it could reduce our research and development efforts and materially adversely affect our future growth, results of operations and financial results. There can be no assurance that we would be able to obtain any required financing on a timely basis or at all.\n\n**Risks Relating to Our Business**\n\nIf we or our partners are ultimately unable to obtain regulatory approval for our drug candidates, our business will be substantially harmed.\n\nThe time required to obtain approval by the FDA and the NMPA is unpredictable and typically takes many years following the commencement of pre-clinical studies and clinical trials and depends on numerous factors, including the substantial discretion of the regulatory authorities.\n\nOur drug candidates could be delayed or fail to receive regulatory approval for many reasons, including:\n\n●failure to begin or complete clinical trials due to disagreements with regulatory authorities;\n\n●delays in subject enrollment or interruptions in clinical trial supplies or investigational product;\n\n●failure to demonstrate that a drug candidate is safe and effective or that a biologic candidate is safe, pure, and potent for its proposed indication;\n\n●failure of clinical trial results to meet the level of statistical significance required for approval;\n\n●reporting or data integrity issues related to our clinical trials;\n\n●disagreement with our interpretation of data from pre-clinical studies or clinical trials;\n\n●changes in approval policies or regulations that render our pre-clinical and clinical data insufficient for approval or require us to amend our clinical trial protocols;\n\n●regulatory requests for additional analyses, reports, data, nonclinical studies and clinical trials, or questions regarding interpretations of data and results and the emergence of new information regarding our drug or biologic candidates or other products;\n\n16\n\n[Table of Contents](#TOC)\n\n●regulatory orders new side effect warnings for existing therapies;\n\n●failure to satisfy regulatory conditions regarding endpoints, patient population, available therapies and other requirements for our clinical trials in order to support marketing approval on an accelerated basis or at all;\n\n●our failure to conduct a clinical trial in accordance with regulatory requirements or our clinical trial protocols; and\n\n●clinical sites, investigators or other participants in our clinical trials deviating from a trial protocol, failing to conduct the trial in accordance with regulatory requirements, or dropping out of a trial.\n\nThe FDA, NMPA or a comparable regulatory authority may require more information, including additional pre-clinical, chemical, manufacturing and controls, and/or clinical data, to support approval, which may delay or prevent approval and our commercialization plans, or we may decide to abandon the development program.\n\nOn August 4, 2025, the FDA cleared the IND application for CID-103 for the treatment of active and chronic active renal allograft antibody-mediated rejection (AMR) in adults. This clearance allows the Company to proceed with its clinical development plan for CID-103 in the indicated patient population. However, there can be no assurance that the FDA or other regulatory authorities will not impose clinical holds or require additional information or modifications to the clinical protocols as the program advances. Any such actions could delay or adversely impact the development timeline and regulatory approval process for CID-103.\n\nChanges in regulatory requirements and guidance may also occur, and we may need to amend clinical trial protocols submitted to applicable regulatory authorities to reflect these changes. Amendments may require us to resubmit clinical trial protocols to IRBs or ethics committees for re-examination, which may impact the costs, timing or successful completion of a clinical trial.\n\nIf we or our partners experience delays in the completion of, or the termination of, a clinical trial of any of our product candidates, the commercial prospects of that candidate may be harmed, and our ability to generate product sales revenues from any of those candidates may be delayed. In addition, any delays in completing our clinical trials will increase our costs, slow down our candidate development and approval process, and jeopardize our ability to commence product sales and generate related revenues for that candidate. Any of these occurrences may harm our business, financial condition and prospects significantly. 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 product candidates.\n\nOur success in commercializing these drugs and biologics may be inhibited by a number of factors, including:\n\n●our inability to maintain good collaboration relationship with our partners;\n\n●our inability to obtain/maintain regulatory approvals;\n\n●our inability to recruit, train and retain adequate numbers of effective sales and marketing personnel;\n\n●the inability of sales personnel to obtain access to or educate physicians on the benefits of our products;\n\n●our lack of experience in manufacturing drugs for commercial sales;\n\n●our or our partners’ inability to secure widespread acceptance of our products from physicians, healthcare payors, patients and the medical community;\n\n●our ability to win tenders through the collective tender processes in which we decide to participate;\n\n●the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines;\n\n●unforeseen costs and expenses associated with creating an independent sales and marketing organization;\n\n●generic and biosimilar competition; and\n\n●regulatory exclusivities or patents held by competitors that may inhibit our products’ entry to the market.\n\nIf we decide to rely on third parties to manufacture, sell, market and distribute our products and product candidates, we may not be successful in entering into arrangements with such third parties or may be unable to do so on terms that are favorable to us. In addition, our product revenues and our profitability, if any, may be lower if we rely on third parties for these functions than if we were to market, sell and distribute any products that we develop ourselves. We likely will have little control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market our products effectively. If we do not establish sales, marketing and distribution capabilities successfully, either on our own or in collaboration with third parties, we will not be successful in commercializing our product candidates, which would adversely affect our business and financial condition.\n\n17\n\n[Table of Contents](#TOC)\n\nWe are substantially dependent on the commercial success of EVOMELA®, FOLOTYN®, MAFALAN® and YUTUO®. Our approved medical products may fail to achieve and maintain the degree of market acceptance and utilization by physicians, patients, third-party payors, and others in the medical community necessary for commercial success.\n\n●EVOMELA®\n\nOn December 3, 2018, we received the NMPA approval for importation, marketing and sales in China for EVOMELA®, and on August 12, 2019, we announced the commercial launch of EVOMELA® in China. On December 13, 2024, we received a Termination Process Letter from Acrotech. See “—Risks Relating to Our Business — We are in a dispute with Acrotech with respect to the license of Evomela®.”\n\nReimbursement and hospital listing may be the most critical market access factors for our commercialization success in China. The National Reimbursement Drug List (the “NRDL”) is updating on an annual basis via a negotiation mechanism. Although participating in the NRDL pricing negotiation is voluntary, it usually results in significant price discount. EVOMELA® may be included in the NRDL under China's insurance policy, which stipulates that once a competitor's drug is added to the NRDL, any drug with the same generic name is automatically included. Although it was not approved this year, our market potential remains constrained due to the possibility of increased competition in the future.\n\nThe government owned hospitals in China usually restrict the drug use outside the hospital formulary. Therefore,  hospital formulary is critical for a drug’s adoption and reimbursement. In order to be listed on the hospital formulary, the Company must participate in the provincial level tendering process. Winning the tender process does not guarantee the hospital listing. If we were unable to quickly add EVOMELA® to hospitals’ formulary, doctors and patients will have limited access to EVOMELA® through hospital pharmacies, and the demand for EVOMELA® and the revenues from EVOMELA® will be materially and adversely affected. On the other hand, patients are able to purchase EVOMELA® with a prescription from a physician from outpatient pharmacies if the product is not available in the hospital; however, the hospitals do not encourage such activities.\n\nEVOMELA® faces intense competition from generic melphalan products in China, which continues to erode its market share. In 2025, one new generic injectable melphalan product has entered the market, and three additional generic applications are currently under review by the CDE. The entry of these generics, which are typically priced more competitively, has intensified pressure on pricing and marketing strategies, attracting cost-conscious healthcare providers and institutions away from branded products like EVOMELA®. This competitive landscape is expected to further dilute EVOMELA®'s market presence as additional generics receive approval and enter the market.\n\nCommencing in the third quarter of 2025, we entered into a modified distribution agreement with CRPCGIT. Under the agreement, the two parties agreed that for sales orders entered into thereafter, CRPCGIT is permitted to return goods that are close to expiration dates and unsalable for external sales. These returns reflect growing sensitivity among healthcare institutions to drug expiration dates and may lead to increased inventory write-offs, reduced orders, and potential disruptions in supply chain management.\n\n●FOLOTYN®\n\nIn July 2023, we entered into a tripartite assignment agreement with Mundipharma International Corporation Limited (“MICL”), Mundipharma Medical Company (“MMCo”) and Acrotech, pursuant to which, MICL’s rights and obligations under that certain License, Development and Commercialization Agreement (as amended and restated) dated as of May 29, 2013 for the commercialization of FOLOTYN® (Pralatrexate) in China, with certain terms of such rights and obligations amended as agreed to by the parties, is assigned to us. We will continue to spend our time, resources and efforts on the commercialization of FOLOTYN® in China.\n\nOn August 27, 2025, the Company received verbal communication from the CDE of the NMPA that the renewal application for the original Import Drug Registration License for FOLOTYN®  had not been granted and that, as a result, the current Import Drug Registration License for FOLOTYN®  expired as of August 25, 2025. Later, the Company received a formal notice from the NMPA that the Company’s renewal application was not approved. As a result, the Company ceased the sale of FOLOTYN® in China pursuant to the relevant regulations and rules. In the meantime, the Company may continue FOLOTYN® clinical trial activities in China as permitted by relevant governmental authorities. The Company will continue to monitor relevant developments and take commercially reasonable measures with respect to the commercialization plan of FOLOTYN® in China.\n\n18\n\n[Table of Contents](#TOC)\n\n●MAFALAN®\n\nOur business is substantially dependent on our ability to successfully commercialize MAFALAN® (melphalan for injection),\n\nour first self-manufactured commercial product in China. As our first locally manufactured product, MAFALAN® is positioned as a domestic alternative to the imported originator product, EVOMELA®, leveraging localized production to achieve what we believe to be a combination of international quality and competitive Chinese cost structure.\n\nAs a newly launched self-manufactured product, MAFALAN® faces significant operational and commercial risks. Unlike imported products for which we act as a distributor, MAFALAN® is manufactured at our own facility in Wuxi. This exposes us to all risks inherent in pharmaceutical manufacturing, including but not limited to: maintaining cGMP compliance, ensuring raw material supply chain stability, managing production yields and costs, and passing regulatory inspections. Any disruption, contamination, or failure in our manufacturing process could result in product shortages, recall, or regulatory sanctions, materially impacting our ability to supply MAFALAN® to the market.\n\nReimbursement and hospital listing are critical market access factors for MAFALAN®'s commercial success in China. The NRDL is updated annually through a negotiation mechanism. Although participating in NRDL pricing negotiations is voluntary, inclusion typically requires significant price concessions. As a newly approved product, MAFALAN® has not yet been included in the NRDL. While China's insurance policy provides that once a competitor's drug with the same generic name is added to the NRDL, other products with the same generic name are automatically included, there can be no assurance that MAFALAN® will benefit from such automatic inclusion in a timely manner, or at all.\n\nHospital formulary inclusion is essential for broad market adoption. Government-owned hospitals in China typically restrict use of drugs not listed in their formularies. To achieve formulary listing, we must successfully navigate provincial tender processes, though winning a tender does not guarantee hospital inclusion. If we are unable to promptly add MAFALAN® to hospital formularies, doctors and patients will have limited access through hospital pharmacies, materially and adversely affecting demand and revenue. While patients can technically obtain MAFALAN® with a prescription from outpatient pharmacies, hospitals generally do not encourage this practice.\n\nMAFALAN® faces intense competition in the melphalan market in China. As of 2025, one generic injectable melphalan product has entered the market, and three additional generic applications are currently under review by the CDE. The entry of these generics, typically priced competitively, has intensified pressure on pricing and marketing strategies. While MAFALAN®'s localized production may offer cost advantages, there can be no assurance that we can compete effectively on price while maintaining sustainable margins, particularly as additional generics enter the market.\n\nOur ability to successfully commercialize MAFALAN® is also linked to the ongoing dynamics surrounding EVOMELA®. EVOMELA® is the imported originator product for which we previously held exclusive distribution rights, though we are currently in a dispute with Acrotech regarding that license. While MAFALAN® is a separate, self-manufactured product, the market perception, pricing dynamics, and competitive landscape for melphalan products in China are interconnected. Any adverse developments in the EVOMELA® dispute or in the broader melphalan market could indirectly impact MAFALAN®'s commercial prospects.\n\nIf we are unable to successfully manufacture MAFALAN® at commercial scale, secure favorable reimbursement and hospital listings, or compete effectively in the increasingly crowded melphalan market, our revenue, margins, and overall financial performance could be materially and adversely affected.\n\n●YUTUO®\n\nIn January 2025, we entered into a three-year distribution agreement with Guangzhou Gloria Biosciences Co., Ltd., pursuant to which CASI China was appointed as a non-exclusive distributor for the sales of YuTuo® in China. The PD-1 inhibitor market in China is intensely competitive and rapidly evolving. YuTuo® competes with numerous domestically developed and internationally sourced PD-1/PD-L1 inhibitors, many of which have established brand recognition, broader approved indications, and larger sales forces. As of December 31, 2025, the Chinese market has over eight approved PD-1 inhibitors, with additional products in late-stage development. This saturation creates significant pressure on pricing and makes it challenging for any single product to gain substantial market share.\n\n19\n\n[Table of Contents](#TOC)\n\nIf we are unable to generate meaningful sales of YuTuo® due to competitive pressures, pricing erosion, supply constraints, or limitations inherent in our non-exclusive distribution arrangement, our revenue and results of operations could be adversely affected. There can be no assurance that the distribution agreement will contribute materially to our business or that we will be able to renew it on favorable terms, or at all, upon its expiration in three years.\n\nWe are in a dispute with Acrotech with respect to the license of Evomela®\n\nOn December 13, 2024, we received a termination process letter from Acrotech of a certain License Agreement dated September 17, 2014, between Spectrum Pharmaceuticals, Inc. and the Company granting the exclusive rights to the Company to commercialize Evomela® in China, which was later assigned to Acrotech on March 1, 2019. In April 2026, the Company and Acrotech resolved their dispute through an amicable settlement and entered into a binding term sheet. The parties are currently negotiating a longer-form settlement agreement. See “Item 8 — Financial Information — A. Consolidated Statements and Other Financial Information – Legal Proceedings”. If we cannot reach agreements with Acrotech with terms satisfactory to us, our capability to continue to commercialize Evomela® in China will be restricted or even lost, which will in turn materially and adversely affect our operation results and financial position.\n\nWe are involved in arbitration proceedings against Juventas in relation to Juventas’ purported termination of the CNCT19 Agreements.\n\nOn March 2, 2024, CASI received a notice from Juventas, which purported to terminate the CNCT19 Agreements based on certain alleged non-performance by CASI of its obligations under the CNCT19 Agreements in relation to the preparation for the commercialization of CNCT19. CASI responded to Juventas’ purported termination notice, noting that Juventas was not entitled to unilaterally terminate the CNCT19 Agreements and further demanding that Juventas cease any conduct that may constitute further breach of the CNCT19 Agreements and execute a written undertaking regarding compliance with the CNCT19 Agreements by March 13, 2024.  Juventas did not comply with CASI’s demands. On March 20, 2024, CASI submitted a Notice of Arbitration at the Hong Kong International Arbitration Centre (“HKIAC”) against Juventas pursuant to the CNCT19 Agreements’ dispute resolution clauses, claiming that Juventas’ purported termination was invalid and that Juventas breached the CNCT19 Agreements and seeking, among other things, damages and injunctive reliefs. Together with the Notice of Arbitration, CASI also submitted an application for the appointment of an emergency arbitrator, seeking emergency injunctive reliefs. On the same day, Juventas also submitted a Notice of Arbitration at the HKIAC against CASI, alleging, among other things, that the CNCT19 Agreements were validly terminated and that CASI breached the CNCT19 Agreements. In December 2025, the HKIAC tribunal held a merits hearing regarding the parties’ claims.  The HKIAC tribunal has indicated that they plan to issue a final award by June 30, 2026. See “Item 8 — Financial Information — A. Consolidated Statements and Other Financial Information – Legal Proceedings”.\n\nThe Company cannot predict right now the outcome of either of these proceedings. If we do not prevail in either of these proceedings completely or in part, or fail to reach a favorable settlement with Juventas, our plan with respect to the commercialization of CNCT 19 may be delayed or otherwise adversely impacted, which will in turn result in adverse impacts on our results of operations, financial condition and prospects.\n\nThe success of CASI Wuxi is subject to uncertainty in our business plan and government regulatory actions.\n\nIn December 2018, together with our partner Wuxi LP, we established CASI Wuxi, to build and operate a manufacturing facility in the Wuxi Huishan Economic Development Zone in Jiangsu Province, China. We initially held 80% of the equity interests in CASI Wuxi and intended to invest, over time, US$80 million in CASI Wuxi. We have paid US$31 million in cash and transferred selected ANDAs. Wuxi LP held 20% of the equity interest in CASI Wuxi through its investment paid in RMB equivalent of US$20 million in cash in 2019.\n\nIn November 2019, CASI Wuxi entered into a lease agreement for the right to use state-owned land in Wuxi for the construction of a manufacturing facility. Pursuant to this agreement, CASI Wuxi intended to invest in land use rights and property, plant and equipment of RMB1 billion by August 2022. Construction of the manufacturing facility began in the fourth quarter of 2020.\n\nSince our business focus has been shifted from ANDAs to the hematology-oncology therapeutic area, a substantial  investment in GMP manufacturing facilities does not fit the current business focus. Therefore, in December 2022, we returned the land use right to\n\n20\n\n[Table of Contents](#TOC)\n\nthe local Wuxi government for an amount of RMB 44.42 million, equivalent to the original payment for the land use right. Meanwhile, all construction in progress on the land was disposed. The Company recorded a total disposal loss amounted to US$2.2 million.\n\nSince we failed to meet the land development milestone, the local land administration authority requested CASI Wuxi to pay a land vacancy fee equivalent to 20% of the price for the land use rights according to the PRC Land Administration Law. We paid such fee in the amount of RMB 8.88 million to the local land administration authority in December 2022. Additionally, the Company received a government grant for the land development in April 2020 and November 2021, respectively, in the total amount of RMB 18.9 million. We are currently in negotiation with the local Wuxi government on the further treatment of the grant. The Wuxi government may require the Company to fully or partially return the grant and the Company may incur further losses.\n\nCASI Wuxi is now operating a cGMP injectable products manufacturing line in a state-owned industrial facility in Wuxi Huishan Economic Development Zone. Frequent regulatory audits could lead to compliance findings, requiring costly remediation and possibly affecting production timelines. Injectable products require aseptic processing or terminal sterilization. Any contamination could lead to recalls, regulatory actions, or patient harm.\n\nIn December 2023, the Company entered into a series of agreements, including a capital reduction agreement, a long term borrowing agreement, and four guarantee agreements, with Wuxi LP, CASI China and CASI Wuxi, pursuant to which, (i) CASI Wuxi will reduce its registered capital and return to Wuxi LP the investment principal made by Wuxi LP in CASI Wuxi in the amount of RMB134.2 million (equivalent to its original investment of US$20 million, the “Investment Principal”), together with certain investment return in the amount of RMB26.2 million to be paid in instalments, and Wuxi LP shall cease to be a shareholder of CASI Wuxi, (ii) Wuxi LP shall reinvest the Investment Principal into a three-year long term borrowing to CASI Wuxi (the “Long term borrowing”), which shall have a non-compounding annual interest rate of 4.05% and can, from the beginning date of the Long term borrowing term till the six month anniversary after the maturity of the Long term borrowing, be partially or fully converted into the equity interest of any subsidiaries of the Company at the conversion date fair value, solely at Wuxi LP’s discretion, and (iii) each of the Company and CASI China will provide irrevocable joint and several liability guarantees on the above-mentioned payment obligations. The term of the Long term borrowing started on December 25, 2023 and will end on December 31, 2026.\n\nThe provision allowing Wuxi LP to request immediate repayment of the long term borrowing if CASI Wuxi fails to generate revenue for certain threshold for each of the years during the term, which represents a significant liquidity risk for CASI. For the years ended December 31, 2024 and 2025, CASI Wuxi failed to satisfy the revenue threshold, therefore Wuxi LP has the right to request immediate repayment of all of the balances of the long term borrowing. If Wuxi LP exercises this option, CASI would be required to allocate a substantial portion of its cash reserves or secure additional financing, which could severely impact its operational cash flow. Converting the investment principal into a three-year long term borrowing introduces uncertainties related to financial stability.\n\nThe existence of counterfeit pharmaceutical products in pharmaceutical markets may compromise our brand and reputation and have a material adverse effect on our business, operations and prospects.\n\nCounterfeit products, including counterfeit pharmaceutical products, are a significant problem, particularly in China. Counterfeit pharmaceuticals are products sold or used for research under the same or similar names, or similar mechanism of action or product class, but which are sold without proper licenses or approvals. Such products may be used for indications or purposes that are not recommended or approved or for which there is no data or inadequate data with regard to safety or efficacy. Such products divert sales from genuine products, often are of lower cost, often are of lower quality (having different ingredients or formulations, for example), and have the potential to damage the reputation for quality and effectiveness of the genuine product. If counterfeit pharmaceuticals illegally sold or used for research result in adverse events or side effects to consumers, we may be associated with any negative publicity resulting from such incidents. Consumers may buy counterfeit pharmaceuticals that are in direct competition with our pharmaceuticals, which could have an adverse impact on our revenues, business and results of operations. In addition, the use of counterfeit products could be used in non-clinical or clinical studies, or could otherwise produce undesirable side effects or adverse events that may be attributed to our products as well, which could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in the delay or denial of regulatory approval by the FDA or other regulatory authorities and potential product liability claims. With respect to China, although the government has made efforts to reduce the counterfeit pharmaceuticals, there is not yet an effective counterfeit pharmaceutical regulation control and enforcement system in China. As a result, we may not be able to prevent third parties from selling or purporting to sell our products in China. The proliferation of counterfeit pharmaceuticals has grown in recent years and may continue to grow in the future. The existence of and any increase in the sales and production of counterfeit\n\n21\n\n[Table of Contents](#TOC)\n\npharmaceuticals, or the technological capabilities of counterfeiters, could negatively impact our revenues, brand reputation, business and results of operations.\n\nWe face significant competition from other biotechnology and pharmaceutical companies and our business will suffer if we fail to compete effectively.\n\nIf competitors were to develop superior drug candidates, our products could be rendered noncompetitive or obsolete, resulting in a material adverse effect to our business. Developments in the biotechnology and pharmaceutical industries are expected to continue at a rapid pace. Success depends upon achieving and maintaining a competitive position in the development of products and technologies. Competition from other biotechnology and pharmaceutical companies can be intense. Many competitors have substantially greater research and development capabilities, marketing, financial and managerial resources and experience in the industry.\n\nThe availability of our competitors’ products could limit the demand, and the price we are able to charge, for product candidates we develop. We will not achieve our business plan if the acceptance of our products is inhibited by price competition or reimbursement issues or if physicians switch to other new drug products or choose to reserve our product candidates for use in limited circumstances. The inability to compete with existing or subsequently introduced drug products would have a material adverse impact on our business, financial condition and prospects.\n\nWe may need new collaborative partners to further develop and commercialize products, and if we enter into such arrangements, we may lose control over the development and approval process.\n\nWe may develop and commercialize our product candidates both with and without corporate alliances and partners. Nonetheless, we intend to explore opportunities for new corporate alliances and partners to help us develop, commercialize and market our product candidates. We may grant to our partners certain rights to commercialize any products developed under these agreements, and we may rely on our partners to conduct research and development efforts and clinical trials on, obtain regulatory approvals for, and manufacture and market any products licensed to them. Each individual partner will seek to control the amount and timing of resources devoted to these activities generally. We anticipate obtaining revenues from our strategic partners under such relationships in the form of research and development payments and payments upon achievement of certain milestones. Since we generally expect to obtain a royalty for sales or a percentage of profits of products licensed to third parties, our revenues may be less than if we retained all commercialization rights and marketed products directly. In addition, there is a risk that our corporate partners will pursue alternative technologies or develop competitive products as a means for developing treatments for the diseases targeted by our product candidates.\n\nWe may not be successful in establishing any collaborative arrangements. Even if we do establish such collaborations, we may not successfully commercialize any products under or derive any revenues from these arrangements. There is a risk that we will be unable to manage simultaneous collaborations, if any, successfully. With respect to existing and potential future strategic alliances and collaborative arrangements, we will depend on the expertise and dedication of sufficient resources by these outside parties to develop, manufacture, or market products. If a strategic alliance or collaborative partner fails to develop or commercialize a product to which it has rights, we may not recognize any revenues on that particular product.\n\nWe must show the safety and efficacy of our product candidates through clinical trials, the results of which are uncertain.\n\nBefore obtaining regulatory approvals for the commercial sale of our products, we must demonstrate, through pre-clinical studies (animal testing) and clinical trials (human testing), that our proposed products are safe and effective for use in each target indication. Testing of our product candidates will be required, and failure can occur at any stage of testing. Clinical trials may not demonstrate sufficient safety and efficacy to obtain the required regulatory approvals or results in marketable products. The failure to adequately demonstrate the safety and efficacy of a product under development could delay or prevent regulatory approval of the potential product.\n\nClinical trials for the product candidates we are developing may be delayed by many factors, including that potential patients for testing are limited in number. The failure of any clinical trials to meet applicable regulatory standards could cause such trials to be delayed or terminated, which could further delay the commercialization of any of our product candidates. Newly emerging safety risks observed in animal or human studies also can result in delays of ongoing or proposed clinical trials. Any such delays will increase our product development costs. If such delays are significant, they could negatively affect our financial results and the commercial prospects for our products.\n\n22\n\n[Table of Contents](#TOC)\n\nCompliance with ongoing post-marketing obligations for our approved products may uncover new safety information that could give rise to a product recall, updated warnings, or other regulatory actions that could have an adverse impact on our business.\n\nAfter the FDA approves a drug or biologic for marketing, the product’s sponsor must comply with several post-marketing obligations that continue until the product is discontinued. These post-marketing obligations include the reporting of adverse events to the agency within specified timeframes, the submission of product-specific annual reports that include changes in the distribution, manufacturing, and labeling information, and notification when a drug product is found to have significant deviations from its approved manufacturing specifications (among others). Our ongoing compliance with these types of mandatory reporting requirements could result in additional requests for information from the FDA and, depending on the scope of a potential product issue that the FDA may decide to pursue, potentially also result in a request from the agency to conduct a product recall or to strengthen warnings and/or revise other label information about the product. The FDA may also require or request the withdrawal of the product from the market. Any of these post-marketing regulatory actions could materially affect our sales and, therefore, have the potential to adversely affect our business, financial condition, results of operations and cash flows.\n\nUndesirable adverse events caused by our medicines and drug candidates could interrupt, delay or halt clinical trials, delay or prevent regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following any regulatory approval.\n\nUndesirable adverse events (\"AEs\") caused by our medicines and drug candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval, or could result in limitations or withdrawal following approvals. If the conduct or results of our trials or patient experience following approval reveal a high and unacceptable severity or prevalence of AEs, our trials could be suspended or terminated and regulatory authorities could order us to cease further development of, or deny approval of, our drug candidates or require us to cease commercialization following approval.\n\nAs is typical in the development of pharmaceutical products, drug-related AEs and serious AEs (\"SAEs\") have been reported in our clinical trials. Some of these events have led to patient deaths. Drug-related AEs or SAEs could affect patient recruitment or the ability of enrolled subjects to complete the trial and could result in product liability claims. Any of these occurrences may harm our reputation, business, financial condition and prospects significantly. In our periodic and current reports filed with the SEC and our press releases and scientific and medical presentations released from time to time we disclose clinical results for our drug candidates, including the occurrence of AEs and SAEs.\n\nPotential products may subject us to product liability for which insurance may not be available or claims may exceed coverage.\n\nThe use of our potential products in clinical trials and the marketing of any pharmaceutical products may expose us to product liability claims. We have obtained a level of liability insurance coverage that we believe is adequate in scope and coverage for our current stage of development. However, our present insurance coverage may not be adequate to protect us from liabilities we might incur. In addition, our existing coverage will not be adequate as we further develop products and, in the future, adequate insurance coverage and indemnification by collaborative partners may not be available in sufficient amounts or at a reasonable cost. If a product liability claim or series of claims are brought against us for uninsured liabilities, or in excess of our insurance coverage, the payment of such liabilities could have a negative effect on our business and financial condition.\n\nIf we are unable to obtain both adequate coverage and adequate reimbursement from third-party payers for our products before the competitor’s product launch, our revenues and prospects for profitability will suffer.\n\nSuccessful commercialization of our products is highly dependent on the extent to which coverage and reimbursement is, and will be, available from third-party payers, including governmental payers and private health insurers. Patients may not be capable of paying for our products themselves and may rely on third-party payers to pay for, or subsidize, the costs of their medications, among other medical costs. If third-party payers do not provide coverage or reimbursement for our products, our revenues and prospects for profitability will suffer. In addition, even if third-party payers provide some coverage or reimbursement for our products, the availability of such coverage or reimbursement for prescription drugs under private health insurance and managed care plans often varies based on the type of contract or plan purchased.\n\n23\n\n[Table of Contents](#TOC)\n\nCybersecurity incidents could impair our ability to conduct business effectively.\n\nCybersecurity incidents against us or against a third party that has authorized access to our data or networks, failure of our disaster recovery systems, or consequential employee error, could have an adverse effect on our ability to communicate or conduct business, negatively impacting our operations and financial condition. This adverse effect can become particularly acute if those events affect our electronic data processing, transmission, storage, and retrieval systems, or impact the availability, integrity, or confidentiality of our data.\n\nWe depend heavily upon IT systems to perform necessary business functions. Our computer systems, networks, and data, like those of other companies, could be subject to cyberattacks and unauthorized access, use, alteration, or destruction. If one or more of these events occurs, it could potentially jeopardize the confidential, proprietary, and other information processed, stored in, and transmitted through our computer systems and networks. Such an attack could cause interruptions or malfunctions in our operations, which could result in financial losses, litigation, regulatory penalties, reputational damage, and increased costs associated with mitigation of damages and remediation. Third parties with which we do business may also be sources of cybersecurity or other technological risk.\n\nPolicies of extended periods of remote working, whether by us or third parties with which we do business with, could strain technology resources, introduce operational risks and otherwise heighten the risks described above.\n\nOur business depends substantially on the continuing efforts of our senior management, key employees and qualified personnel, and our business operations may be adversely and negatively impacted if we lose their services.\n\nOur future success depends substantially on the continued efforts of our senior management team and key employees. Our employees play key roles in the areas of product development, marketing, sales, and general and administrative functions. Competition for qualified staff or other key employees in the biopharmaceutical industry in China is intense, particularly for individuals with multinational experience. If one or more of our members of senior management or key employees are unable or unwilling to continue their services with us, we might not be able to replace them easily, at an acceptable cost or in a timely manner, if at all.\n\nMany of the companies with which we compete for experienced personnel have greater resources than we have and some of these companies may offer more lucrative compensation packages. If any of our key personnel joins a competitor or forms a competing company, we may lose customers, know-how and key professionals and staff members. Even if we enter into employment agreements and non-compete agreements with our employees, certain provisions under these agreements may be deemed invalid or unenforceable under US and PRC laws. Our continued ability to compete effectively depends on our ability to attract new employees and to retain and motivate our existing employees. Since the demand and competition for talent is intense in our industry, we may need to offer higher compensation and other benefits in order to attract and retain key personnel in the future, which could increase our compensation expenses. If we do not succeed in attracting additional highly skilled personnel or retaining or motivating our existing personnel, we may be unable to grow effectively.\n\nCertain of our directors and officers may have business interests that may conflict with our interests and those of our shareholders.\n\nDr. Wei-Wu He, chairman of our board of directors, is the founder and managing partner of Emerging Technology Partners, LLC (“ETP”), a life science focused venture fund. Dr. Wei-Wu He, together with ETP, holds 18.2% of the Company’s outstanding shares. James Huang, our director, is the sole owner of Panacea Innovation Limited (“Panacea”), a venture capital fund that focuses on the medical and health sector. James Huang, together with Panacea, holds 22.0% of the Company’s outstanding shares. To the extent we fail to appropriately deal with any such conflicts of interest, it could negatively impact our reputation and ability to raise additional funds and the willingness of counterparties to do business with us, all of which could have an adverse effect on our business, financial condition, results of operations, and cash flows.\n\nWe or the third parties upon whom we rely on may be adversely affected by epidemic outbreaks, earthquakes, tornadoes, hurricanes or other natural disasters, and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster.\n\nWe have the principal executive office in Beijing, China, through which substantially all of our operations are conducted, and an office in South San Francisco, California, United States. We also rely and intend to rely on third parties, including our clinical research\n\n24\n\n[Table of Contents](#TOC)\n\norganizations, third party manufacturers, and certain other important vendors and consultants in China and in United States. The occurrence of one or more epidemic outbreaks such as Ebola, Zika, SARS-CoV, COVID-19, pandemic influenza or measles, natural disasters, such as tornadoes, hurricanes, fires, floods, hail storms and earthquakes, unusual weather conditions, terrorist attacks or disruptive political events in regions where we operate our business could adversely affect the operations of the third parties we rely on and our business, results of operations, financial condition and our prospects.\n\nIf an epidemic outbreak, natural disaster, power outage or other event occurred that prevented us or the third parties we rely on from using all or a significant portion of our or their offices, damaged critical infrastructure or disrupted operations, it may be difficult, or in certain cases, impossible for us to continue our business for a substantial period of time. The disaster recovery and business continuity plan we have in place currently are limited and are unlikely to prove adequate in the event of a serious disaster or similar event. We may incur substantial expenses as a result of the limited nature of our disaster recovery and business continuity plans, which could have a material adverse effect on our business.\n\n**Risks Relating to Our Reliance on Third Parties**\n\nIndependent clinical investigators and contract research organizations that we engage to conduct our clinical trials may not devote sufficient time or attention to our clinical trials or be able to repeat their past success.\n\nWe depend on independent clinical investigators and contract research organizations (“CROs”) to assist in the conduct of our clinical trials under their agreements with us. The investigators are not our employees, and we cannot control the amount or timing of resources that they devote to our programs. If independent investigators fail to devote sufficient time and resources to our drug development programs, or if their performance is substandard or deviates from regulatory requirements, good clinical practice (“GCPs”), or the protocol, it could delay the approval of our FDA applications and our introduction of new products. The CROs we contract with to assist with the execution of our clinical trials play a significant role in the conduct of the trials and the subsequent collection and analysis of data. Failure of the CROs to meet their obligations, as well as any failure of us or our collaborators to effectively monitor and audit our CROs and clinical trials, could adversely affect clinical development of our products.\n\nWe have limited manufacturing capacity and rely on limited suppliers for some of our products.\n\nWe have established a cGMP injectable products manufacturing line in the Wuxi Huishan Economic Development Zone in Jiangsu Province, China, which is now operational and produced our first self-manufactured commercial product, MAFALAN®.  While this facility represents a significant strategic asset, our manufacturing operations are still in the early stage and we have limited experience in operating at commercial scale.\n\nOperating our own manufacturing facility exposes us to significant risks inherent in pharmaceutical production. These risks include but are not limited to: maintaining continuous compliance with cGMP requirements imposed by the NMPA and other regulatory authorities; ensuring the stability and quality of raw material supply chains; managing production yields and controlling manufacturing costs; preventing contamination, equipment failures, or other disruptions; and successfully passing regulatory inspections. Any significant problem encountered in our manufacturing operations—whether due to equipment malfunction, human error, raw material defects, natural disasters, or other causes—could result in production delays, product shortages, recalls, or regulatory sanctions, materially impacting our ability to supply products to the market.\n\nWe depend on our third-party suppliers for certain raw materials, components, and services. These third parties may not meet their obligations and any such non-performance may delay clinical development or submission of products for regulatory approval, or otherwise impair our competitive position. Any significant problem experienced by one of our suppliers could result in a delay or interruption in the supply of materials to us until such supplier resolves the problem or an alternative source of supply is located. Any delay or interruption would likely lead to a delay or interruption of manufacturing operations, which could negatively affect our operations. Although we have identified alternative suppliers for our product candidates, we have not entered into contractual or other arrangements with some of them. If we needed to use an alternate supplier for any product, we would experience delays while we negotiated an agreement with them for the manufacture of such product. In addition, we may be unable to negotiate manufacturing terms with a new supplier as favorable as the terms we have with our current suppliers.\n\nProblems with any manufacturing processes, including deviations from cGMP, could result in product defects, which could require us to delay shipment of products or recall products previously shipped, as well as regulatory action. In addition, any prolonged\n\n25\n\n[Table of Contents](#TOC)\n\ninterruption in the operations of the manufacturing facilities of one of our sole-source suppliers could result in the cancellation of shipments. A number of factors could cause interruptions, including equipment malfunctions or failures, or damage to a facility due to natural disasters or otherwise. Regulatory authorities conduct periodic inspections of manufacturing facilities, and any findings of non-compliance could result in warning letters, fines, import restrictions, or suspension of manufacturing approvals. Given that our Wuxi facility is newly operational and we have limited regulatory inspection history, we face heightened scrutiny and uncertainty regarding our ability to maintain compliance over time.\n\nThe manufacture of pharmaceutical products can be an expensive, time consuming, and complex process. Manufacturers often encounter difficulties in scaling-up production of new products, including quality control and assurance and shortages of personnel. Delays in formulation and scale-up to commercial quantities could result in additional expense and delays in our clinical trials, regulatory submissions, and commercialization.\n\nFailure of manufacturing facilities producing our product candidates to maintain regulatory approval could delay or otherwise hinder our ability to market our product candidates. Any manufacturer of our product candidates will be subject to applicable cGMP prescribed by the NMPA or other rules and regulations prescribed by the FDA and other foreign regulatory authorities. We and any of our collaborators may be unable to enter into or maintain relationships either domestically or abroad with manufacturers whose facilities and procedures comply or will continue to comply with cGMP and who are able to produce our products in accordance with applicable regulatory standards. Failure by a manufacturer of our products to comply with cGMP could result in significant time delays or our inability to obtain marketing approval or, should we have market approval, for such approval to continue. Changes in our manufacturers could require new product testing and facility compliance inspections. In the U.S., failure to comply with cGMP or other applicable legal requirements can lead to federal seizure of violated products, injunctive actions brought by the federal government, inability to export product, and potential criminal and civil liability on the part of a company and its officers and employees.\n\nIf we fail to maintain an effective distribution channel for our medicines, our business and sales could be adversely affected.\n\nWe rely on third-party distributors to distribute our approved medicines. Our ability to maintain and grow our business will depend on our ability to maintain an effective distribution channel that ensures the timely delivery of our medicines. However, we have relatively limited control over our distributors, who may fail to distribute our drugs in the manner we contemplate. If price controls or other factors substantially reduce the margins our distributors can obtain through the resale of our medicines to hospitals, medical institutions and sub-distributors, they may terminate their relationship with us. While we believe alternative distributors are readily available, there is a risk that, if the distribution of our medicines is interrupted, our sales volumes and business prospects could be adversely affected.\n\n**Risks Related to Extensive Government Regulation**\n\nAll material aspects of the research, development, manufacturing and commercialization of pharmaceutical products are heavily regulated, and we may face difficulties in complying with or be unable to comply with such regulations, which could have a material adverse effect on our business.\n\nAll jurisdictions in which we conduct or intend to conduct our pharmaceutical-industry activities regulate these activities in great depth and detail. We are currently focusing our activities in the major markets of the United States, China and Europe. These geopolitical areas all strictly regulate the pharmaceutical industry, and in doing so they employ broadly similar regulatory strategies, including regulation of product development and approval, manufacturing, and marketing, sales and distribution of products. However, there are differences in the regulatory regimes - some minor, some significant - that make for a more complex and costly regulatory compliance burden for a company like ours that plans to operate in each of these regions.\n\nThe process of obtaining regulatory approvals and compliance with appropriate laws and regulations require the expenditure of substantial time and financial resources. Failure to comply with the applicable requirements at any time during the product development process, approval process, or after approval, may subject us to administrative or judicial sanctions. These sanctions could include a regulator’s refusal to approve pending applications, withdrawal of an approval, license revocation, a clinical hold, voluntary or mandatory product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement, or civil or criminal penalties. The failure to comply with these regulations could have a material adverse effect on our business.\n\n26\n\n[Table of Contents](#TOC)\n\nWe are subject to certain U.S. healthcare laws, regulation and enforcement; our failure to comply with those laws could have a material adverse effect on our results of operations and financial condition.\n\nWe are subject to certain U.S. healthcare laws and regulations and enforcement by the federal government and the states in which we conduct our business. The U.S. healthcare laws are evolving and changing rapidly and our business would be affected by existing and future healthcare reform measures. The laws that may affect our ability to operate include, without limitation:\n\n●the federal Anti-Kickback Statute (“AKS”), which governs our business activities, including our marketing practices, educational programs, pricing policies, and relationships with healthcare providers or other entities. The AKS prohibits, among other things, persons and entities from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under federal healthcare programs such as the Medicare and Medicaid programs. Remuneration has been broadly interpreted to include anything of value, including for example, gifts, discounts, coupons, the furnishing of supplies or equipment, credit arrangements, payments of cash, waivers of payments, ownership interests and providing anything at less than its fair market value. This statute has been broadly interpreted to apply to manufacturer arrangements with prescribers, purchasers and formulary managers, among others;\n\n●the Federal Food, Drug, and Cosmetic Act, and its regulations which prohibit, among other things, the introduction or delivery for introduction into interstate commerce of any food, drug, device, biologic, or cosmetic that is adulterated or misbranded;\n\n●the Public Health Service Act, which prohibits, among other things, the introduction into interstate commerce of biological product unless a biologics license is in effect for that product;\n\n●federal civil and criminal false claims laws and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payers that are false or fraudulent, or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government;\n\n●federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;\n\n●Health Insurance Portability and Accountability Act (as amended by the Health Information Technology and Clinical Health Act) and its implementing regulations, which impose certain requirements relating to the privacy, security and transmission of individually identifiable health information;\n\n●state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, which may apply to items or services reimbursed by any third-party payer, including commercial insurers, and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts;\n\n●federal and state consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers;\n\n●federal and state government price reporting laws that require us to calculate and report complex pricing metrics to government programs, where such reported prices may be used in the calculation of reimbursement and/or discounts on our marketed drugs (participation in these programs and compliance with the applicable requirements may subject us to potentially significant discounts on our products, increased infrastructure costs, and could potentially affect our ability to offer certain marketplace discounts); and\n\n●federal and state financial transparency laws, which generally require certain types of expenditures in the U.S. to be tracked and reported (compliance with such requirements may require investment in infrastructure to ensure that tracking is performed properly, and some of these laws result in the public disclosure of various types of payments and relationships with healthcare providers and healthcare entities, which could potentially have a negative effect on our business and/or increase enforcement scrutiny of our activities).\n\n27\n\n[Table of Contents](#TOC)\n\nIn addition, certain marketing practices, including off-label promotion, may also violate certain federal and state healthcare fraud and abuse laws, FDA rules and regulations, as well as false claims laws. If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we, or our officers or employees, may be subject to penalties, including administrative civil and criminal penalties, damages, fines, withdrawal of regulatory approval, the curtailment or restructuring of our operations, the exclusion from participation in federal and state healthcare programs and imprisonment, any of which could adversely affect our ability to sell our products or operate our business and also adversely affect our financial results.\n\nWe are subject to certain anti-bribery laws, regulation and enforcement; our failure to comply with those laws could have a material adverse effect on our results of operations and financial condition.\n\nIf we fail to comply with applicable anti-bribery laws, our reputation may be harmed, and we could be subject to penalties and significant expenses that have a material adverse effect on our business, financial condition and results of operations. We are obligated to adhere to anti-bribery laws in China that prohibit companies and intermediaries from offering payments to government officials to gain or retain business or any other undue advantage. Furthermore, even though our primary business operations are in China, we are also subject to the Foreign Corrupt Practices Act (\"FCPA\"). The FCPA prohibits us from making inappropriate payments to non-U.S. officials to obtain or retain business. While we have established policies and processes to guarantee compliance with anti-bribery legislation, we cannot ensure that our intermediaries, employees, or agents will abstain from engaging in bribery activities. Failure to comply with anti-bribery regulations could harm our operations and result in severe criminal and civil penalties, including fines, imprisonment, loss of export licenses, suspension of our ability to do business with the government, denial of government reimbursement for our products, and/or exclusion from participating in government healthcare programs. We may need to make additional changes or enhancements to our procedures, policies, and controls, as well as potentially enforce disciplinary measures and personnel changes, any of which may have a substantial negative effect on our business, financial position, operating performance, and liquidity. Furthermore, allegations of violating these laws may adversely impact our organization.\n\nWe may not be able to obtain regulatory approval for our drug candidates.\n\nAll material aspects of the research, development and commercialization of pharmaceutical products are heavily regulated. Our pharmaceutical-industry activities will be carried out in jurisdictions that impose strict regulations on such activities, particularly in the major markets of China and the United States. These regulatory frameworks cover various aspects of the industry, including product development, approval, manufacturing, marketing, sales, and distribution. Although these jurisdictions employ similar regulatory strategies, there are differences in their regulatory regimes. As a result, compliance with regulations is a more complex and expensive process for our company, which intends to operate in these regions.\n\nObtaining regulatory approvals and ensuring compliance with laws and regulations is a time-consuming and expensive process. If an applicant fails to comply with applicable requirements at any point during product development or the approval process, or even after approval has been granted, they may face administrative or judicial sanctions. These sanctions may take the form of refusal to approve pending applications, license revocation, clinical holds, product recalls (voluntary or mandatory), product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, requirements for restitution, disgorgement, or other civil or criminal penalties. Noncompliance with regulations could significantly harm our business.\n\nThe regulatory approval processes of the FDA, NMPA, EMA and other comparable regulatory authorities are time-consuming and may evolve over time, and if we are ultimately unable to obtain regulatory approval for our drug candidates, our business will be substantially harmed.\n\nThe process of obtaining regulatory approval from authorities such as the FDA and NMPA is highly uncertain and dependent on various factors, including the discretion of the regulatory bodies. Typically, such approvals take several years to acquire after the initiation of pre-clinical studies and clinical trials. However, they are typically granted within 12 to 18 months after the completion of regulatory submission of the NDA. Furthermore, regulatory approval policies, regulations, and the type and amount of clinical data required for approval may change during the development of a drug candidate and may differ among jurisdictions.\n\nAt present, we have secured IND approvals from the NMPA for three of our drug candidates, namely CID-103, BI-1206 and CB-5339. Nevertheless, we cannot be sure that we will receive regulatory approval for our other drug candidates that are already in existence or any drug candidates we may discover, acquire or license and seek to develop in the future. There are numerous reasons why\n\n28\n\n[Table of Contents](#TOC)\n\nour drug candidates may fail to obtain regulatory approval from the FDA, NMPA, EMA or other comparable regulatory bodies, including but not limited to:\n\n●Disagreement with the design or implementation of our clinical trials\n\n●Failure to demonstrate the safety, efficacy, and potency of our drug candidates for their proposed indication\n\n●Failure of our clinical trial results to meet the required level of statistical significance for approval\n\n●Failure of our clinical trial process to pass relevant Good Clinical Practice (GCP) inspections\n\n●Inability to demonstrate that the clinical benefits of a drug candidate outweigh its safety risks\n\n●Disagreement with our interpretation of data from pre-clinical studies or clinical trials\n\n●Insufficient data collected from clinical trials to support submissions for regulatory approval\n\n●Failure of our drug candidates to pass cGMP inspections during regulatory review or production\n\n●Failure of our clinical sites to pass audits by regulatory authorities, potentially invalidating our research data\n\n●Findings of deficiencies related to our manufacturing processes or facilities of third-party manufacturers with whom we contract for clinical and commercial supplies\n\n●Changes in approval policies or regulations that render our pre-clinical and clinical data insufficient for approval\n\n●Inability of our clinical trial process to keep up with scientific or technological advancements required by approval policies or regulations\n\nObtaining regulatory approval from the FDA, NMPA, EMA or other comparable regulatory authorities may require additional information, such as more pre-clinical or clinical data, which could delay or prevent approval and our commercialization plans. Even if we were to obtain approval, regulatory authorities may approve our drug candidates for fewer or more limited indications than we requested. They may also grant approval subject to the performance of costly post-marketing clinical trials or approve a drug candidate for an indication that is not desirable for its successful commercialization. Any of these scenarios could have a significant negative impact on the commercial potential of our drug candidates.\n\nOur medicines and any future approved drug candidates will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our medicines and drug candidates.\n\nOur medicines and any additional drug candidates that are approved will be subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage, advertising, promotion, sampling, record-keeping, conduct of post-marketing studies, and submission of safety, efficacy, and other post-marketing information, including requirements in China, both federal and state requirements in the US and requirements in other regions. As such, we and our collaborators will be subject to ongoing review and periodic inspections to assess compliance with applicable post-approval regulations. Additionally, to the extent we want to make certain changes to the approved medicines, product labeling, or manufacturing processes, we will need to submit new applications or supplements to regulatory authorities for approval.\n\nManufacturers and manufacturers’ facilities are required to comply with extensive FDA, NMPA, EMA or comparable regulatory authority requirements, ensuring that quality control and manufacturing procedures conform to GMP regulations. As such, we and our contract manufacturers are and will be subject to continual review and inspections to assess compliance with GMP and adherence to commitments made in any NDA or BLA, other marketing application, and previous responses to any inspection\n\n29\n\n[Table of Contents](#TOC)\n\nobservations. Accordingly, we and others with whom we work must continue to expend time, money and effort in all areas of regulatory compliance, including manufacturing, production and quality control. The failure to comply with these requirements could have a material adverse effect on our business.\n\nThe regulatory approvals for our medicine and any approvals that we receive for our drug candidates are and may be subject to limitations on the approved indicated uses for which the medicine may be marketed or to the conditions of approval, which could adversely affect the drug’s commercial potential or contain requirements for potentially costly post-marketing testing and surveillance to monitor the safety and efficacy of the drug or drug candidate. The FDA, NMPA, EMA or comparable regulatory authorities may also require a Risk Evaluation and Mitigation Strategy (“REMS”) program or comparable program as a condition of approval of our drug candidates or following approval. In addition, if the FDA, NMPA, EMA or a comparable regulatory authority approves our drug candidates, we will have to comply with requirements including, for example, submissions of safety and other post-marketing information and reports, establishment registration, as well as continued compliance with GMP and GCP for any clinical trials that we conduct post-approval.\n\nThe FDA, NMPA, EMA or comparable regulatory authorities may seek to impose a consent decree or withdraw marketing approval if compliance with regulatory requirements is not maintained or if problems occur after the drug reaches the market. Later discovery of previously unknown problems with our medicines or drug candidates or with our drug’s manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information; imposition of post-market studies or clinical studies to assess new safety risks; or imposition of distribution restrictions or other restrictions under a REMS program. Other potential consequences include, among other things:\n\n●restrictions on the marketing or manufacturing of our medicines, withdrawal of the product from the market, or voluntary or mandatory product recalls;\n\n●fines, untitled or warning letters, or holds on clinical trials;\n\n●refusal by the FDA, NMPA, EMA or comparable regulatory authorities to approve pending applications or supplements to approved applications filed by us or suspension or revocation of license approvals or withdrawal of approvals;\n\n●product seizure or detention, or refusal to permit the import or export of our medicines and drug candidates; and\n\n●injunctions or the imposition of civil or criminal penalties.\n\nThe FDA, NMPA, EMA and other regulatory authorities strictly regulate the marketing, labeling, advertising and promotion of products that are placed on the market. Drugs may be promoted only for their approved indications and for use in accordance with the provisions of the approved label. The FDA, NMPA, EMA and other regulatory authorities actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability. The policies of the FDA, NMPA, EMA and of other regulatory authorities may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our drug candidates. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad, particularly in China, where the regulatory environment is constantly evolving. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any regulatory approval that we may have obtained and we may not achieve or sustain profitability.\n\nIn addition, if we obtain accelerated approval or conditional approval of any of our drug candidates, as we have done with the initial approval of EVOMELA® and FOLOTYN® in China, we have been required to conduct a confirmatory study (also called Post Marketing Study, or the “PMS”) to verify the predicted clinical benefit and may also be required to conduct post-marketing safety studies. Other comparable regulatory authorities may have similar requirements. The results from the confirmatory study may not support the clinical benefit, which could result in the approval being withdrawn. While operating under accelerated approval, we will be subject to certain restrictions that we would not be subject to upon receiving regular approval.\n\n30\n\n[Table of Contents](#TOC)\n\n**Risks Relating to Our Intellectual Property**\n\nWe depend on patents and other proprietary rights, some of which are uncertain. If we are unable to protect our intellectual property rights our business and competitive position would be harmed.\n\nWe have in-licensed rights to a variety of product candidates. Our success, competitive position and future revenues with respect to these product candidates will depend, in part, on our ability to protect our intellectual property. We will be able to protect our proprietary rights from unauthorized use by third parties only to the extent that our proprietary rights are covered by valid and enforceable patents or are effectively maintained as trade secrets. We attempt to protect our proprietary position by maintaining trade secrets and by filing U.S. and foreign patent applications related to our in-licensed technology, inventions and improvements that are important to the development of our business. Our failure to do so may adversely affect our business and competitive position.\n\nThe patent positions of biotechnology and pharmaceutical companies can be highly uncertain and involve complex legal and factual questions for which important legal principles remain unresolved. We may not be able to protect our intellectual property rights throughout the world. No consistent policy regarding the breadth of claims allowed in pharmaceutical patents has emerged to date in the U.S. or in many jurisdictions outside of the U.S. Changes in either the patent laws or interpretations of patent laws in the U.S. and other countries may diminish the value of our intellectual property and therefore we cannot predict with certainty whether any patent applications that we have filed or that we may file in the future will be approved, will cover our products or product candidates or that any resulting patents will be enforced. In addition, third parties may challenge, seek to invalidate, limit the scope of or circumvent any of our patents, once they are issued. Thus, any patents that we own or license from third parties or CASI Wuxi or development partners may not provide any protection against competitors. Any patent applications that we have filed or that we may file in the future, or those we may license from third parties or CASI Wuxi or development partners, may not result in patents being issued. Moreover, disputes between our licensing or joint development partners and us may arise over license scope, or ownership, assignment, inventorship and/or rights to use or commercialize patent or other proprietary rights, which may adversely impact our ability to obtain and protect our proprietary technology and products. Also, patent rights may not provide us with adequate proprietary protection or competitive advantages against competitors with similar technologies or products.\n\nThird parties may initiate legal proceedings alleging infringement of intellectual property rights, the outcome of which would be uncertain and could harm our business.\n\nThird parties may assert patent or other intellectual property infringement claims against us or our licensors arising from the manufacture, use and sale of our current or future product candidates in China or in any other jurisdictions we ultimately commercialize in. The validity of our current or future patents or patent applications or those of our licensors may be challenged in litigation, interference or derivation proceedings, opposition, post grant review, inter parts review, or other similar enforcement and revocation proceedings provoked by third parties or brought by us, as may be necessary to determine the validity of our patents or patent applications or those of our licensors. Our patents could be found invalid, unenforceable, or their scope significantly reduced.\n\nAn unfavorable outcome could require us to cease using the related technology or to attempt to license rights to it from the prevailing party. Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms. Our defense of litigation or interference proceedings may fail and, even if successful, may result in substantial costs and distract our management and other employees. In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, pay royalties, redesign our infringing products or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure.\n\nAlthough China recently adopted changes to its patent law to include patent term extension and an early resolution mechanism for pharmaceutical patent disputes starting in June 2021, key provisions of the law remain unclear and/or subject to implementing regulations. The absence of detailed implementing rules on data exclusivity for pharmaceutical products in China could further increase the risk of early generic or biosimilar competition with our medicines in China.\n\nIn China, laws on patent term extension (PTE), patent linkage, and data exclusivity (referred to as regulatory data protection) are still developing. Therefore, a lower-cost generic drug can emerge onto the market much more quickly. Chinese regulators have set forth a framework for integrating patent linkage and data exclusivity into the Chinese regulatory regime, as well as for establishing a pilot program for patent term extension. The Economic and Trade Agreement Between the United States of America and the People’s Republic of China announced in January 2020 (the “Trade Agreement”) also provides for a mechanism for early resolution of patent\n\n31\n\n[Table of Contents](#TOC)\n\ndisputes and patent term extension systems. To be implemented, this framework will require adoption of legislation and regulations. In October 2020, China adopted amendments to its Patent Law (the “Amended PRC Patent Law”), which became effective on June 1, 2021. The Amended PRC Patent Law contains both patent term extension and a mechanism for early resolution of patent disputes, which may be comparable to patent linkage in the United States. Since July 2021, China's patent linkage system has been fully operational, allowing pharmaceutical patent disputes to be resolved before generic drug approval. Additionally, the China National Intellectual Property Administration has started granting patent term extensions for eligible pharmaceutical patents, with further details outlined in the revised Implementing Regulations of the Patent Law, which took effect on January 20, 2024. Once it becomes effective on May 15, 2026, the revised Implementing Regulations of the Drug Administration Law will establish a six-year data exclusivity regime for drugs containing new chemical entities and other eligible drugs, prohibiting unfair commercial use of undisclosed test data. However, uncertainties remain regarding the implementation of data exclusivity, as relevant regulations are still under consideration and have yet to be finalized.\n\nUntil the relevant implementing regulations for patent term extension and an early resolution mechanism in the Amended PRC Patent Law are implemented, and until data exclusivity is implemented, we may be subject to earlier generic competition.\n\n**Risks Relating to Our Auditor**\n\nThe PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections.\n\nOur auditor, the independent registered public accounting firm that issued the audit report contained in our annual report and incorporated herein by reference, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. Our auditor is located in mainland China, a jurisdiction where the PCAOB was historically unable to conduct inspections and investigations completely before 2022. As a result, we and investors in our common stock were deprived of the benefits of such PCAOB inspections. The inability of the PCAOB to conduct inspections of auditors in China in the past has made it more difficult to evaluate the effectiveness of our independent registered public accounting firm’s audit procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections. On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. However, if the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong, and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the SEC, we and investors in our ordinary shares would be deprived of the benefits of such PCAOB inspections again, which could cause investors and potential investors in our ordinary shares to lose confidence in our audit procedures and reported financial information and the quality of our financial statements.\n\nOur ordinary shares will be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act, or the HFCAA, in the future if the PCAOB is unable to inspect or completely investigate auditors located in China. The delisting of our ordinary shares, or the threat of such ordinary shares being delisted, may materially and adversely affect the value of your investment.\n\nPursuant to the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the PCAOB for two consecutive years beginning in 2021 or any year thereafter, the SEC will prohibit our securities from being traded on a national securities exchange or in the over-the-counter trading market in the United States.\n\nOn December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong and our auditor was subject to that determination. In April 2022, the SEC conclusively listed us as a Commission-Identified Issuer under the HFCAA following the filing of its annual report on Form 10-K for the fiscal year ended December 31, 2021.\n\nOn December 15, 2022, the PCAOB removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. For this reason, we do not expect to be identified as a\n\n32\n\n[Table of Contents](#TOC)\n\nCommission-Identified Issuer under the HFCAA after we file our annual report on Form 20-F for the fiscal year ended December 31, 2023.\n\nEach year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the SEC, we would be identified as a Commission-Identified Issuer following the filing of the annual report for the relevant fiscal year. In accordance with the HFCAA, our ordinary shares would be prohibited from being traded on a national securities exchange or in the over-the-counter trading market in the United States if we are identified as a Commission-Identified Issuer for two consecutive years in the future. If our ordinary shares are prohibited from trading in the United States, there is no certainty that we will be able to list on a non-U.S. exchange or that a market for our securities will develop outside of the United States. A prohibition of being able to trade in the United States would substantially impair your ability to sell or purchase our ordinary shares when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price of such securities. Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects.\n\n**Risks Relating to Our Business Operations in China**\n\nWe conduct substantially all of our operations in China. Changes in international trade and economic policy by the U.S. and Chinese governments could have a material adverse effect on our business and operations.\n\nWe have substantial operations and conduct business in China. Therefore, we are subject to risks related to operating in China, which include complex laws or regulatory requirements or unexpected changes to those laws or requirements; other laws and regulatory requirements to which our business activities are subject, such as the Foreign Corrupt Practices Act; changes in the political or economic condition of a specific country or region; fluctuations in the value of foreign currency versus the U.S. dollar; our ability to deploy funds in an efficient manner; tariffs, trade protection measures, import or export licensing requirements, trade embargoes, and sanctions (including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury), and other trade barriers; difficulties in attracting and retaining qualified personnel; and cultural differences in the conduct of business. There is currently significant uncertainty about the future relationship between the U.S. and various other countries, including China, with respect to trade policies, treaties, government regulations and tariffs.\n\nAny of the foregoing could harm our business and we cannot anticipate all of the ways in which the current political climate could adversely impact our business.\n\nThe legal system in China embodies uncertainties which could impose additional requirements and obligations on our business, and PRC laws, rules, and regulations can evolve quickly with little advance notice, which may materially and adversely affect our business, financial condition, and results of operations.\n\n*The rules and regulations in China can change quickly with little advance notice*\n\nWe conduct substantially all of our business through our PRC subsidiaries. Our operations in China are governed by PRC laws and regulations. PRC laws, rules, and regulations evolve rapidly with little advance notice, and the interpretations of laws, regulations, and rules may contain uncertainties. These uncertainties could limit the legal protections available to us. In addition, we cannot predict the effect of future developments in the PRC legal system, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the preemption of local regulations by national laws. Such unpredictability towards our contractual, property (including intellectual property) and procedural rights could adversely affect our business and impede our ability to continue our operations, which may in turn cause the value of our securities to significantly decline or be worthless. From time to time, we may have to resort to judicial and administrative proceedings to enforce our legal rights. Any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention. However, since the authorities in China have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to predict the outcome of a judicial or administrative proceeding in China than in other legal systems. Furthermore, the PRC legal system is based, in part, on government policies and internal rules, some of which are not published in a timely manner, or at all, but which may have retroactive effect. As a result, we may not always be aware of any potential violation of these policies and rules.\n\n33\n\n[Table of Contents](#TOC)\n\n*We may be required to obtain additional permissions or approvals for our business operations and securities offerings*\n\nAs of the date hereof, our PRC subsidiaries have obtained the requisite licenses and permits from the PRC government authorities that are material for our business operations, including, among others, the Business License, the Drug Distribution License, the Clinical Trial Application with NMPA, and the notification filing for international collaborative clinical trial or the application for international collaborative scientific research with the HGR Agency or the former HGRAO. We also work with our business partners which have obtained the requisite license and permits for their business collaboration with us, including among others the Import Drug Registration for product(s) we promote and distribute in China. Given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practice by relevant government authorities, we may be required to obtain additional licenses, permits, or approvals in the future, failure to obtain which may hinder our ability to carry out our business plan or continue our business operations.\n\nAs of the date hereof, we and our PRC subsidiaries (i) are not required to obtain permissions from the CSRC, (ii) are not required to go through cybersecurity review by the CAC, and (iii) have not been asked to obtain or were denied such permissions by any PRC authority. On July 7, 2022, the CAC published the Guidelines for Data Export Security Assessment (《数据出境安全评估办法》) (the “Guidelines”), which took effect on September 1, 2022. Pursuant to the Guidelines, the data processor who intends to transfer certain important data or large volume of personal information outside of China shall complete a prior CAC-led data outbound transfer security assessment. Subsequently, the CAC issued the Provisions on Promoting and Regulating Cross-Border Data Flows on March 22, 2024, which define \"important data\" and specify the thresholds and circumstances under which a data processor must complete a prior CAC-led data outbound transfer security assessment. For the data we accessed through or obtained from clinical trials, we have complied with the laws and regulations then-in-effect, and completed the registration with HGR Agency or the former HGRAO, but it is unclear if the current HGR Agency registration procedure will be changed in the future. We will closely monitor and review any regulatory development and comply with any new approval or license requirement when necessary. If (i) we inadvertently conclude that such permissions or approvals are not required, or (ii) applicable laws, regulations, or interpretations change and we are required to obtain such permissions or approvals in the future, we may have to expend significant time and costs to procure them. If we are unable to do so, on commercially reasonable terms, in a timely manner or otherwise, we may become subject to sanctions imposed by the PRC regulatory authorities, which could include fines and penalties, proceedings against us, and other forms of sanctions, and our ability to conduct our business, invest into China as foreign investments or accept foreign investments, or be listed on a U.S. or other overseas exchange may be restricted, and our business, reputation, financial condition, and results of operations may be materially and adversely affected.\n\nIn addition, new laws and regulations may be enacted from time to time, and PRC laws, rules, and regulations can evolve quickly with little advance notice. Substantial uncertainties exist regarding the interpretation and implementation of current and any future PRC laws and regulations applicable to our businesses. In particular, the PRC government authorities may continue to promulgate new laws, regulations, rules and guidelines with respect to a wide range of issues, such as competition and antitrust, intellectual property, and other matters, which may result in additional obligations imposed on us, and may impact our ability to conduct our business, accept foreign investments, or list on a U.S. or other foreign exchange. Compliance with these laws, regulations, rules, guidelines, and implementations may be costly, and any incompliance or associated inquiries, investigations, and other governmental actions may divert significant management time and attention and our financial resources, bring negative publicity, subject us to liabilities or administrative penalties, or materially and adversely affect our business, financial condition, and results of operations.\n\n*The Chinese government may influence our operations at any time, or may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers*\n\nThe PRC government authorities may influence our operations at any time, or may exert more control and strengthen oversight over offerings that are conducted overseas and/or foreign investment in overseas-listed China-based issuers like us. Such actions are beyond our control and could result in a material change in our operations and/or the value of our securities.\n\nOn February 17, 2023, the CSRC released the Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic Companies (《境内企业境外发行证券和上市管理试行办法》) and five ancillary interpretive guidelines (collectively, the “Overseas Listing Trial Measures”), which apply to overseas offerings and listing by PRC-based companies, or domestic companies, of equity shares, depository receipts, corporate bonds convertible to equity shares, and other equity securities, and came into effect on March 31, 2023 . According to the Overseas Listing Trial Measures, (1) domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedure and report relevant information to the CSRC, and if a overseas-listed\n\n34\n\n[Table of Contents](#TOC)\n\nPRC-based issuer issues new securities in the same overseas market after the overseas offering and listing, it is also required to file with the CSRC within three business days after the completion of the issuance; if a domestic company fails to complete the filing procedure or conceals any material fact or falsifies any major content in its filing documents, such domestic company may be subject to administrative penalties, such as order to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines; (2) if a foreign-incorporated issuer meets both of the following conditions, its overseas offering and listing shall be determined as an indirect overseas offering and listing by a domestic company of the PRC: (i) any of the total assets, net assets, revenues or profits of the domestic operating entities of the issuer in the most recent accounting year accounts for more than 50% of the corresponding line item in the issuer’s audited consolidated financial statements for the same period; and (ii) its major operational activities are carried out in China or its main places of business are located in China, or the senior managers in charge of operation and management of the issuer are mostly Chinese citizens or are domiciled in China; and (3) where a PRC domestic company seeks to indirectly offer and list securities in an overseas market (including issuance of new securities after its overseas offering and listing), the issuer shall designate a major domestic operating entity responsible for all filing procedures with the CSRC.\n\nFurthermore, in case any of the following major events occurs after the overseas offering and listing, the issuer is also required to report the relevant information to the CSRC within three business days of the occurrence and the announcement of the relevant events: (1) change of control; (2) the foreign securities regulatory body or the relevant competent authority has taken such measures as investigation and punishment; (3) conversion of listing status or listing board; and (4) voluntary or compulsory termination of listing. Where there is any material change in the major business and operation of the issuer after overseas offering and listing, and such change does not fall within the scope of filing, the issuer shall, within three business days of the occurrence of such change, submit a special report and a legal opinion issued by a domestic law firm to the CSRC to explain the relevant situation.\n\nAs substantially all of our operations are currently based in the PRC, our future offerings and major changes shall be subject to the foregoing filing procedures under the Overseas Listing Trial Measures. We cannot assure you that we could meet such requirements, obtain such permit from the relevant government authorities, or complete such filing in a timely manner or at all. Any failure may significantly limit or completely hinder our ability to continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless. In addition, as the Overseas Listing Trial Measures was promulgated, there remains substantial uncertainties as to its interpretation and implementation and how it may impact our ability to raise or utilize fund and business operation.\n\nThere is no assurance that any new rules or regulations promulgated in the future will not impose additional requirements on us. If the PRC government authorities later promulgate new rules or implementation of industry-wide regulations directly targeting our operations, it could cause the value of our securities to significantly decline or become worthless. Therefore, investors of our Company and our business face potential uncertainty from actions taken by the PRC government affecting our business.\n\nGovernmental control of currency conversion and payments of RMB out of China may limit our ability to utilize our cash balances effectively and affect the value of your investment.\n\nOur China subsidiaries have cash and cash equivalents of RMB27.8 million, valued at US$4.0 million in U.S. dollars as of December 31, 2025. On a consolidated basis this balance accounts for 70.7% of our total cash and cash equivalents. The Chinese government imposes controls on the convertibility of RMB into foreign currencies and, in certain cases, the remittance of RMB out of China. Control on payments out of China may restrict the ability of our China subsidiaries to remit RMB to us. Approval from China’s State Administration of Foreign Exchange (“SAFE”) and the People’s Bank of China (“PBOC”) may be required where RMB are to be converted into foreign currencies, including U.S. dollars, and approval from SAFE and the PBOC or their branches may be required where RMB are to be remitted out of China. Specifically, under the existing restrictions, without prior approval from SAFE and the PBOC, the cash balance of our China subsidiaries is not available to us for activities outside of China, including the support of our in-licensing efforts. Furthermore, because repatriation of funds requires the prior approval of SAFE and the PBOC, such repatriation could be delayed, restricted or limited.\n\nChanges in China’s economic, political or social conditions or government policies could have a material adverse effect on our business and operations.\n\nChinese society and the Chinese economy continue to undergo significant change. Adverse changes in the political and economic policies of the Chinese government could have a material adverse effect on the overall economic growth of China, which could adversely affect our ability to conduct business in China. The Chinese government continues to adjust economic policies to\n\n35\n\n[Table of Contents](#TOC)\n\npromote economic growth. Some of these measures benefit the overall Chinese economy but may also have a negative effect on us. For example, our financial condition and results of operations in China may be adversely affected by government control over capital investments or changes in tax regulations. As the Chinese pharmaceutical industry grows and evolves, the Chinese government may also implement measures to change the structure of foreign investment in this industry. We are unable to predict the frequency and scope of such policy changes, any of which could materially and adversely affect our liquidity, access to capital and its ability to conduct business in China. Any failure on our part to comply with changing government regulations and policies could result in the loss of our ability to develop and commercialize our product candidates in China.\n\nThe Chinese government exerts substantial influence over the manner in which we must conduct our business activities.\n\nThe Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation, import and export tariffs, environmental regulations, land use rights, property, healthcare regulations, and other matters. We believe that our operations in China are in material compliance with all applicable legal and regulatory requirements. However, the central or local governments of the jurisdictions in which we operate may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations.\n\nAccordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof and could require us to divest ourselves of any interest we then hold in Chinese properties, subsidiaries, or joint ventures.\n\nWe are subject to the Enterprise Income Tax Law, and we may therefore be subject to PRC income tax on our global income.\n\nUnder the PRC Enterprise Income Tax Law and its implementing rules, both of which came into effect on January 1, 2008, enterprises established under the laws of jurisdictions outside of China with “de facto management bodies” located in China may be considered PRC tax resident enterprises for tax purposes and may be subject to the PRC enterprise income tax at the rate of 25% on their global income. “De facto management body” refers to a managing body that exercises substantive and overall management and control over the production and business, personnel, accounting books and assets of an enterprise. The State Administration of Taxation issued the Notice Regarding the Determination of Chinese-Controlled Offshore-Incorporated Enterprises as PRC Tax Resident Enterprises on the basis of de facto management bodies, or Circular 82, on April 22, 2009. Circular 82 provides certain specific criteria for determining whether the “de facto management body” of a Chinese-controlled offshore-incorporated enterprise is located in China.\n\nAlthough Circular 82 only applies to offshore enterprises controlled by PRC enterprises, not those controlled by foreign enterprises or individuals, the determining criteria set forth in Circular 82 may reflect the State Administration of Taxation’s general position on how the “de facto management body” test should be applied in determining the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises. If we were to be considered a PRC resident enterprise, we would be subject to PRC enterprise income tax at the rate of 25% on our global income. In such case, our profitability and cash flow may be materially reduced as a result of our global income being taxed under the Enterprise Income Tax Law. Although we believe that none of our entities outside of China should be considered a PRC resident enterprise for PRC tax purposes, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body.”\n\nChinese regulations relating to investments in offshore companies by China residents may subject our China-resident shareholders, beneficial owners or our China subsidiaries to liability or penalties, limit our ability to inject capital into our China subsidiaries or limit our China subsidiaries’ ability to increase their registered capital or distribute profits to us.\n\nThe SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, on July 4, 2014, which replaced the former circular commonly known as “SAFE Circular 75” promulgated by SAFE on October 21, 2005. SAFE Circular 37 requires China residents to register with local branches of SAFE in connection with their direct establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing, with such China residents’ legally owned assets or equity interests in domestic enterprises or offshore assets or interests, referred to in SAFE Circular 37 as a “special purpose vehicle.” SAFE\n\n36\n\n[Table of Contents](#TOC)\n\nCircular 37 further requires amendment to the registration in the event of any significant changes with respect to the special purpose vehicle, such as increase or decrease of capital contributed by China individuals, share transfer or exchange, merger, division or other material event. In the event that a China shareholder holding interests in a special purpose vehicle fails to fulfill the required SAFE registration, the China subsidiaries of that special purpose vehicle may be prohibited from making profit distributions to the offshore parent and from carrying out subsequent cross-border foreign exchange activities, and the special purpose vehicle may be restricted in its ability to contribute additional capital into its China subsidiary. Moreover, failure to comply with the various SAFE registration requirements described above could result in liability under China law for evasion of foreign exchange controls. According to the Notice on Further Simplifying and Improving Policies for the Foreign Exchange Administration of Direct Investment released on February 13, 2015 by SAFE, local banks will examine and handle foreign exchange registration for overseas direct investment, including the initial foreign exchange registration and amendment registration, under SAFE Circular 37 from June 1, 2015.\n\nAccording to SAFE Circular 37, our shareholders or beneficial owners, who are China residents, are subject to SAFE Circular 37 or other foreign exchange administrative regulations in respect of their investment in our Company. We may not be aware of the identities of all of our shareholders or beneficial owners who are China residents, and we do not know whether they are aware of SAFE Circular 37. We do not have control over our shareholders or beneficial owners and there can be no assurance that all of our China-resident shareholders or beneficial owners will comply with SAFE Circular 37 and subsequent implementation rules, and there is no assurance that the registration under SAFE Circular 37 and any amendment will be completed in a timely manner, or will be completed at all. The failure of our shareholders or beneficial owners who are China residents to register or amend their foreign exchange registrations in a timely manner pursuant to SAFE Circular 37 and subsequent implementation rules, or the failure of future shareholders or beneficial owners who are China residents to comply with the registration procedures set forth in SAFE Circular 37 and subsequent implementation rules, may subject such shareholders or beneficial owners or our China subsidiaries to fines and legal sanctions. Failure to register or comply with relevant requirements may also limit our ability to contribute additional capital to our China subsidiaries and limit our China subsidiaries’ ability to distribute dividends to us. Because a majority of our operating activities take place in and our strategic focus is on China, any such limitations would have a material adverse effect on our business, financial condition and results of operations.\n\nWe may be subject to fines and legal sanctions by SAFE or other Chinese government authorities if we or our employees who are China citizens fail to comply with regulations relating to employee share options granted by companies listed on exchanges outside of China to China citizens.\n\nOn February 15, 2012, SAFE promulgated the Circular on Relevant Issues Concerning the Foreign Exchange Administration for Domestic Individuals’ Participating in the Share Incentive Plans of Overseas-Listed Companies, or SAFE Circular 7, replacing earlier rules promulgated in 2007. Under SAFE Circular 7, China resident individuals who participate in a share incentive plan of a company that is listed on an overseas exchange are required to register with SAFE and complete certain other procedures. All participants to a plan need to retain a China agent through Chinese subsidiaries of the overseas listed company to handle foreign exchange registration, account opening, funds transfer and remittance and other related matters. An overseas agent should also be designated to handle matters in connection with the exercise or sale of share awards and proceeds transferring for the share incentive plan participants. We believe that our share incentive plans for our China resident employees are in compliance with SAFE Circular 7; however, any failure to comply with these or similar regulations in the future may subject us or our Chinese employees to fines and legal sanctions imposed by SAFE or other government authorities and may prevent us from further granting options under our share incentive plans to our employees. Such events could adversely affect our business operations.\n\n**General Risk Factors**\n\nWe may engage in strategic, commercial and other corporate transactions that could negatively affect our financial condition and prospects.\n\nWe may consider strategic, commercial, and other corporate transactions as opportunities present themselves. There are risks associated with such activities. These risks include, among others, incorrectly assessing the quality of a prospective strategic partner, encountering greater than anticipated costs in integration, being unable to profitably deploy assets acquired in the transaction, such as drug candidates, possible dilution to our shareholders, and the loss of key employees due to changes in management. Further, strategic transactions may place additional constraints on our resources by diverting the attention of our management from our business operations. To the extent we issue securities in connection with additional transactions, these transactions and related issuances may have a dilutive effect on existing shareholders. Our financial condition and prospects after an acquisition depend in part on our ability\n\n37\n\n[Table of Contents](#TOC)\n\nto successfully integrate the operations of the acquired business or technologies. We may be unable to integrate operations successfully or to achieve expected cost savings. Any cost savings which are realized may be offset by losses in revenues or other charges to earnings.\n\nIf securities or industry analysts publish inaccurate or unfavorable research about our business, our stock price could decline.\n\nThe trading market for our ordinary shares will depend in part on the research and reports that securities or industry analysts publish about us or our business. If one or more of the analysts who may cover us downgrade our securities or publish inaccurate or unfavorable research about our business, the price of our securities would likely decline.\n\nSubsequent resales of our ordinary shares in the public market may cause the market price of our ordinary shares to fall.\n\nThe market value of our ordinary shares could decline as a result of sales by investors from time to time, or perceptions that such sales may occur, of a substantial amount of such ordinary shares held by them.\n\nIssuances of additional ordinary shares may cause substantial dilution of existing shareholders.\n\nWe may issue additional ordinary shares or other securities that are convertible into or exercisable for such ordinary shares in connection with future acquisitions, future sales of our securities for capital raising purposes, future strategic relationships, or for other business purposes. The future issuance of any additional ordinary shares may create downward pressure on the trading price of our ordinary shares. There can be no assurance that we will not be required to issue additional shares, warrants or other convertible securities in the future in conjunction with any capital raising efforts, including at a price (or exercise prices) below the price at which our ordinary shares are then traded. “Item 9. The Offer and Listing — C. Markets” for further information."}