{"url_path":"/sec/mens/10-k/2026/item-4","section_key":"item-4","section_title":"Item 4 INFORMATION ON THE COMPANY**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/1954488/0001213900-26-057073-index.html","accession_number":"0001213900-26-057073","cik":"0001954488","ticker":"MENS","issuer_name":"Jyong Biotech Ltd.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1954488/0001213900-26-057073-index.html","primary_entity_key":"0001954488","primary_entity_name":"Jyong Biotech Ltd."},"word_count":44342,"has_tables":true,"body_markdown":"** **\n\n**Item 4. INFORMATION ON THE COMPANY**\n\n** **\n\n**A. History and Development of the Company**\n\n** **\n\n**OUR CORPORATE HISTORY**\n\n \n\nJyong Biotech Ltd. is a Cayman Islands exempted\ncompany incorporated on January 26, 2018 and we primarily conduct our operations through our wholly owned subsidiaries in Taiwan.\nWe commenced our commercial operations in July 2002 through Health Ever Bio-Tech Co., Ltd., which has been wholly owned by Jyong\nBiotech Ltd. since August 2018. In September 2019, we established Genvace Biotechnology Co., Ltd., a Taiwan subsidiary wholly\nowned by Health Ever Bio-Tech Co., Ltd. for the research and development of health products.\n\n \n\nOur Hong Kong subsidiary, Top ShunXing Bio-Tech\nCo., Limited, was established in March 2019, with Jyong Biotech Ltd. as its sole shareholder. Top ShunXing Bio-Tech Co., Limited\nis a holding company and has no substantial operations in Hong Kong, except that in October 2020, all intellectual properties\nof Health Ever Bio-Tech Co., Ltd. were transferred to Top ShunXing Bio-Tech Co., Limited for the sake of centralized management and that\nin August 2019, it borrowed approximately US$ 2.3 million from third parties to invest our PRC subsidiary via capital contribution.\n\n \n\nOur PRC subsidiary, Innovative Biotech Co., Ltd., was established in\nJuly 2019 pursuant to a collaboration framework agreement we entered with Taizhou Infrastructure Investment Group Co., Ltd. on December 21,\n2018. In September 2019, according to an investment cooperation agreement Innovative Biotech Co., Ltd. entered with the successor\nof the Taizhou High-tech Industrial Park Management Committee, Innovative Biotech Co., Ltd. obtained the land use rights for a parcel\nof industrial land in Taizhou City, Zhejiang Province for the construction of manufacturing factory in the future. See “Item 4.\nInformation on the Company — B. Business Overview — License and Collaboration Agreements — Taizhou Collaboration\nFramework Agreement” for more details. We planned to construct a manufacturing factory in 2023 and the construction is expected\nto be completed in October 2026. As of the date of this annual report, the construction has not yet taken place.\n\n \n\nIn September 2022, we established our Singapore\nsubsidiary, Jyong Biotech International Pte. Ltd., with Jyong Biotech Ltd. as its sole shareholder, primarily for holding all our intellectual\nproperties which were transferred from Top ShunXing Bio-Tech Co., Limited in January 2023.\n\n** **\n\nIn June 2025, we completed our IPO. In connection\nwith our IPO, we issued and sold 2,666,667 ordinary shares, at a price to the public of $7.50 per share. As a result of the IPO, the Company\nreceived $17,771 thousand in net proceeds, after deducting underwriting discounts, commissions and offering costs.\n\n \n\n**OUR CORPORATE STRUCTURE**\n\n \n\nThe following chart illustrates our corporate structure\nas of the date of this annual report.\n\n \n\n \n\n \n\n \n\n \n\n(1)No single shareholder among “other shareholders”\nbeneficially owns more than 5% of our ordinary shares.\n\n \n\n59\n\n \n\n \n\n**CORPORATE INFORMATION**\n\n \n\nJyong Biotech Ltd. was incorporated on January 26,\n2018 as an exempted company limited by shares under the laws of Cayman Islands. Our registered office is located at 4th Floor,\nHarbour Place, 103 South Church Street, George Town, P. O. Box 10240, Grand Cayman KY1 1002, Cayman Islands.\n\n \n\nOur principal executive offices of our operating\nsubsidiaries are located at 23F-3, No. 95, Section 1, Xintai 5th Road, Xizhi District, New Taipei City, Taiwan, 221. Our\ntelephone number at this address is +886-2-2732-5205.\n\n \n\nOur agent for service of process in the United States\nis Cogency Global Inc. located at 122 East 42nd Street, 18th Floor, New York, NY 10168.\n\n \n\nInvestors should contact us for any inquiries through\nthe address and telephone number of our principal executive office. Our principal website is *https://www.healtheverbiotech.com/*.\nThe information contained on our website is not a part of this annual report.\n\n \n\n**B. Business Overview**\n\n** **\n\n**OUR MISSION**\n\n \n\nWe endeavor to develop and supply first-class innovative\ndrugs to meet our customers’ health needs. We seek to be a valuable business organization that is held in high esteem by the public.\n\n** **\n\n**OVERVIEW**\n\n \n\nWe are a science-driven biotechnology company based\nin Taiwan and are committed to developing and commercializing innovative and differentiated new drugs (plant-derived) mainly specializing\nin the treatment of urinary system diseases, with an initial focus on the markets of the U.S., the EU and Asia.\n\n \n\nSince our inception in 2002, we have built integrated capabilities\nthat encompass all key functionalities of drug development, including early-stage drug discovery and development, clinical trials, regulatory\naffairs, manufacturing and commercialization. Leveraging our strong research and development capabilities and proprietary platform, we\nhave been developing a series of botanical drug candidates, our primary botanical drug candidate, Botreso®, another clinical-stage\nbotanical drug candidate, and other preclinical-stage botanical drug candidates.\n\n \n\nWe resubmitted a new drug application, or NDA, for Botreso®\nwith the U.S. FDA on December 17, 2021, using Active Pharmaceutical Ingredient (API)-1. We voluntarily withdrew our NDA on November 30,\n2022, in order to develop more information about API-2 for the U.S. FDA’s review and to address ongoing questions regarding demonstrated\ndifference between Botreso® and placebo for the primary efficacy endpoint in a clinical study for Botreso®,\nand to address other questions U.S. FDA had previously identified in our NDA regarding U.S. FDA’s questions related to the\ndrug substance and product, validation of methods used for measuring the effect of Botreso®, manufacturing, clinical and\nnonclinical testing, data, and statistical analyses, among others. In a June 26, 2023 response to our meeting request regarding refiling\nthe NDA for Botreso® using API-2, the U.S. FDA informed us that the information we provided on API-2 was not yet sufficient\nto demonstrate comparability with API-1 since we only provided the preliminary comparative drug substance and drug product specifications\nbetween API-1 and API-2, and also mentioned the statistically significant difference between Botreso® and placebo in the\nprimary efficacy endpoint in in Study MCS-2-US-a, one of our Phase III pivotal studies. The U.S.FDA’s conclusions at that time were\nthat without new clinical information, any NDA resubmission for Botreso® would be at risk of the U.S. FDA refusing\nto accept the application, referred to as “Refusal To File” (RTF).\n\n \n\nWe submitted a Type D WRO meeting request to the U.S. FDA on December 12,\n2023. We asked that the U.S. FDA provide a written response to questions focused on obtaining U.S. FDA review and comments on a new,\nproposed Phase III clinical trial protocol for Botreso® with API-2 and a PK study. We proposed to address CMC data for\nour proposed drug product in a separate, future meeting. U.S. FDA granted our WRO meeting request but clarified that they viewed\nthe meeting as a Type C meeting because it encompasses an entirely new drug development program, including Phase I PK study and Phase\nIII clinical trial for a new product with a new active pharmaceutical ingredient.\n\n \n\nIf our new Phase I PK and Phase III studies are successful and after\naddressing other U.S.FDA-identified deficiencies summarized above, we plan to resubmit our NDA for Botreso® under the same\nNDA number to the U.S. FDA. The resubmission timeline is unclear at this point, depending on the comments from the U.S. FDA.\nAnother of our clinical-stage key botanical drug candidates, PCP, has completed the phase II clinical trial in Taiwan, with data\nlock in May 2025 and statistical analysis completed in September 2025. Another drug candidate, IC, is under preclinical studies.\n\n \n\n60\n\n \n\n \n\nIn the event that we are unable to establish comparability between\nAPI-1 and API-2, or we are unable to identify an active pharmaceutical ingredient that the FDA agrees is comparable to API-1, we will\nbe required to repeat the Botreso® and PCP clinical trials using API-2, or to conduct other additional clinical trials\nas may be required by the U.S. FDA. For further details, see the risk factor titled “If we are unable to identify a supplier capable\nof producing API-2 that is sufficiently comparable to API-1, we will be required to repeat our clinical trials for Botreso®\nand PCP, which could significantly delay our product development efforts and result in increased costs” on page 13.\n\n \n\nWe have not yet proven comparability between API-1\nand API-2 and the following chart illustrates and summarizes our current drug candidates’ status:\n\n \n\n \n\nOur pipeline features three innovative and differentiated\nnew drug candidates, and we are developing them for (i) the treatment of benign prostate hyperplasia/lower urinary tract symptoms, or\nBPH/LUTS, (ii) prostate cancer prevention, and (iii) the treatment of interstitial cystitis, respectively.\n\n \n\n \n●\n**Botreso®:** Botreso® is our new botanical drug candidate developed\nfor treatment of BPH/LUTS. Botreso® is expected to be our core product in the future. Botreso® is a\nsoftgel capsule containing patented active pharmaceutical ingredients derived from botanical raw materials, specifically, *Lycopersicon\nEsculentum*. Botreso® contains, in the largest concentrations, five carotenoids including lycopene, phytoene, phytofluene,\ntocopherol and beta-carotene. We developed Botreso® using chylomicron technology to improve its bioavailability. Chylomicron\nis a type of lipoprotein particles consisting of triglycerides and phospholipids in human body.\n\n \n\nWe have conducted four Phase III clinical trials for Botreso®\nin the U.S. and Taiwan, including two pivotal trials (one in the US and one in Taiwan) and two open-label extension studies (one in the\nUS and one in Taiwan), using API-1. Our pivotal Phase III clinical trial for Botreso® in the U.S. failed to show a difference\nbetween treatment groups for the primary efficacy endpoint in the intent-to-treat population.\n\n \n\nWe resubmitted an NDA for Botreso® using API-1 to the\nU.S. FDA on December 17, 2021. On February 22, 2022, the U.S. FDA accepted our NDA for review “with issues identified.”\nIn the February 22, 2022 Filing Issues Identified letter, the U.S. FDA identified, among other things, the lack of demonstrated\ndifference between Botreso® and placebo for the primary efficacy endpoint in the MCS-2-US-a study. U.S. FDA identified\nadditional issues, including issues regarding pharmacology, toxicology, and our pharmacokinetic submission, statistical analyses, and\nthe content and format of our proposed Prescribing Information. We used one supplier for API-1, which was the basis for the NDA that has\nsince been withdrawn by the Company. The supplier of API-1 sold a parcel of its land and is in the process of relocating and reconstructing\nits manufacturing facility, and as a result, API-1 is currently unavailable to us, and the supplier of API-1 withdrew its consent for\nus to reference their DMF on file with the U.S. FDA. This does not mean we would not be able to use API-1 in later studies or as a basis\nfor additional filings with the U.S. FDA. The supplier’s withdrawal of its consent to reference should not be interpreted as anything\nother than the supplier removing API-1 from availability for reference by us (or anyone else) in any submission to U.S. FDA. In a Mid-Cycle\nmeeting and communication with the U.S. FDA on May 24, 2022, the U.S. FDA also identified the fact that API-1, the botanical\ndrug substance used in our clinical trials and that was the basis for our NDA, was currently not available.\n\n \n\nBased upon these observations, we voluntarily withdrew our NDA on November 30,\n2022, to develop more information about API-2 for the U.S. FDA’s review, to address the U.S. FDA’s concerns of a\nlack of demonstrated difference between Botreso® and placebo for the primary efficacy endpoint, and to resolve other issues\nthe U.S. FDA had previously identified (and discussed above).\n\n \n\n61\n\n \n\n \n\nIf we are able to satisfy U.S. FDA that API-1 and API-2 are comparable,\nthat is if the U.S. FDA agrees with our data about the comparability between API-1 and API-2, then we may not need to conduct redundant\nstudies using API-2. If we are unable to demonstrate comparability, we would have to perform more clinical trials. We will work with API\nvendors to follow FDA guidance to demonstrate comparability. In the event that we are unable to establish comparability between API-1\nand API-2, we will be required to repeat the Botreso® clinical trials using API-2. For further details, see the risk factor\ntitled “If we are unable to identify a supplier capable of producing API-2 that is sufficiently comparable to API-1, we may be required\nto repeat our clinical trials for Botreso®, which could significantly delay our product development efforts and result\nin increased costs” on page 13.\n\n \n\nMoreover, we are planning the CMC meeting with U.S. FDA, one\npurpose of which is to seek the U.S FDA’s concurrence that API-2 is comparable to API-1. Those plans are no more speculative than\nthe fact that we are engaged in an ongoing drug approval process with the U.S. FDA. It is not uncommon to maintain redundant API sources\nfor the same finished drug to minimize the risk of shortages.\n\n \n\nIn the December 12, 2022 Acknowledge Withdrawal from\nthe U.S. FDA, the U.S. FDA stated that “this withdrawal will not prejudice any future decisions on filing” if we decide to\nresubmit our NDA, and we can retain the application number (NDA 212872). The retention of the NDA number signifies the U.S. FDA’s\nacknowledgment that they have not declined to approve NDA 212872. Instead, we voluntarily withdrew it. Retaining the application number\nallows U.S. FDA to review prior submissions and data when the Company resubmits in the future.\n\n \n\nWe have been conducting further research and development on Botreso®\nand identified an additional source for the botanical drug substance API-2. API-1 and API-2 are similar drug substances covered by the\nsame patent owned by us; however, because they are sourced from raw materials manufactured in different locations, the U.S. FDA considers\nthem to be different botanical drug substances. Therefore, we will conduct a comparability study for API-1 and API-2.\n\n \n\nWe submitted a meeting request to the U.S. FDA on April 14, 2023\nwith our very preliminary comparative specifications of API-1 and API-2, and request that the U.S. FDA provide a WRO to questions about\nour refiling of the NDA for Botreso® using API-2. The U.S. FDA agreed to our request and responded in writing on June 26,\n2023. The U.S. FDA informed us that the information we provided on API-2 was not sufficient to demonstrate comparability with API-1. In\naddition to a lack of API source, U.S. FDA explained that we had not demonstrated a statistically significant difference between Botreso®\nwith API-1 and placebo in the primary efficacy endpoint in the MCS-2-US-a study. The U.S. FDA stated that without new clinical information,\nany resubmission of the NDA for Botreso® would be at risk of the U.S. FDA refusing to accept the application, a RTF action.\n\n \n\nWe submitted a Type D WRO meeting request to the U.S. FDA on December 12,\n2023. We asked that the U.S. FDA provide a written response to questions focused on obtaining U.S. FDA review and comments on a new, proposed\nPhase III clinical trial protocol for Botreso® with API-2 and a Phase I PK study. We proposed to address chemistry and\nmanufacturing controls for Botreso® in a separate, future meeting. U.S. FDA granted our WRO meeting request but clarified\nthat they viewed the meeting as a Type C meeting because it encompasses an entirely new drug development program, including Phase I PK\nstudy and Phase III clinical trial for Botreso® made from API-2, which the U.S. FDA characterizes as a new product with\na new active pharmaceutical ingredient.\n\n \n\nWe provided its proposed additional Phase III study protocol\nand Phase I PK study synopsis using API-2 on December 12, 2023, for U.S. FDA to review and approve acceptability of the study design.\nThe U.S. FDA sent us written responses on February 23, 2024, which included comments on the revisions in the Phase III protocol and\nasked for the SAP (statistical analysis plan) for the Phase III protocol. U.S. FDA also asked the Company to develop the protocol for\nthe PK study from the submitted synopsis. We are following the U.S. FDA’s requirements in each respect. In addition, we will need\nto perform studies demonstrating that the source of API-2 is sufficiently similar botanical drug substance. We plan to request a meeting\nwith U.S. FDA to discuss the U.S. FDA’s concerns regarding the CMC data separately and by providing to U.S. FDA more analytical\ntesting for the API-2 for the U.S. FDA to assess whether API-1 and API-2 are comparable.\n\n \n\n62\n\n \n\n \n\nIf our new Phase I PK and Phase III studies are successful and we address\nthe other deficiencies the U.S. FDA has previously identified (including clinical, pharmacological, statistical, pharmaceutical manufacturing,\nvalidation, and other issues), we plan to resubmit our NDA for Botreso® under the same NDA number to the U.S. FDA. The\nresubmission timeline is unclear at this point, depending on the comments from the U.S. FDA.\n\n \n\nBPH/LUTS is the most common urinary tract disease in the middle-aged\nmale population. According to Frost & Sullivan, the global prevalence of BPH increased from 88.4 million in 2017 to 94.2 million\nin 2020, representing an increase of 6.5%. The global BPH drugs market increased from US$3.7 billion in 2017 to US$4.1 billion\nin 2020, representing a CAGR of 4.6%. We will set up internal sales and marketing departments, and plan to work with both domestic and\ninternational business partners to seize the great market opportunities and to help more patients reduce their distress caused by BPH/LUTS\nand drug side effects caused by chemical drugs.\n\n \n\n \n●\nPCP: PCP is our new botanical drug candidate developed for the prevention of prostate cancer. PCP, like Botreso®, contains patented active pharmaceutical ingredients derived from botanical raw materials, specifically, *Lycopersecum Esculentum*. PCP contains, in the largest concentrations, five carotenoids including lycopene, phytoene, phytofluene, tocopherol and beta-carotene. PCP and Botreso® are essentially the same in terms of active ingredients, dosage form, strength and route of administration; however, they are different drug candidates targeting different indications. Our PCP Phase II study enrollment and treatment phase using API-1 has completed statistical analysis before drafting the clinical study report (CSR). To date, we have not had any discussions with the TFDA regarding the unavailability of API-1. We will discuss the statistical results of the PCP using API-2 with Taiwan regulator and proceed with the Phase III PCP study if the U.S. FDA accepts such results and determines that API-1 and API-2 are comparable. The PCP shall not proceed to Phase III until the U.S. FDA accepts the results and determines that API-1 and API-2 are comparable.\n\n \n\nWe have completed the CMC documentation on the active pharmaceutical\ningredient-2 (API-2) and a plan to establish comparability between API-1 and API-2 and submitted it to the U.S. FDA on October 16,\n2024, and are awaiting feedback from the U.S. FDA. As of the date of this annual report, the Company is still in the process of providing\nthe information required by the U.S. FDA and has not yet successfully demonstrated the comparability of API-1 and API-2.\n\n \n\nWe are currently collaborating with a supplier to prepare the API-2\nCMC documents required by the U.S. FDA. Should the FDA concur that API-1 and API-2 are similar and comparable, we will sign the Quality\nAgreement with this supplier for the raw materials for API-2. If the U.S. FDA does not agree that API-1 and API-2 are comparable, we will\ncontinue to research additional API sources based on our own patent, to pursue additional outsourcing API vendors, and to follow U.S.\nFDA’s guidance for demonstrating comparability between API-1 and API-2 to the U.S. FDA’s satisfaction. In the event that we\nare unable to establish comparability between API-1 and API-2, we will be required to repeat the PCP clinical trials using API-2. For\nfurther details, see the risk factor titled “If we are unable to identify a supplier capable of producing API-2 that is sufficiently\ncomparable to API-1, we will be required to repeat our clinical trials for Botreso® and PCP, which could significantly\ndelay our product development efforts and result in increased costs” on page 13.\n\n \n\nProstate cancer begins when cells in the prostate gland start\nto grow out of control. In general, the more quickly prostate cells grow and divide, the more chances there are for mutations to occur.\nAccording to Frost & Sullivan, the global prevalence of prostate cancer increased from 10.0 million in 2017 to 11.2 million\nin 2020, representing a CAGR of 3.9%. The global prostate cancer market increased from US$9.7 billion in 2017 to US$12.6 billion\nin 2019, representing a CAGR of 9.1%. In addition, the prostate-specific antigen abnormal population, or PSA abnormal population, representing\nmen over 40 years old with a prostate-specific antigen test value of 4.0 ng/ml or higher, is exposed to a high risk of prostate cancer.\nFrom 2015 to 2020, the total number of PSA abnormal populations in the U.S., Taiwan and China increased from 5.0 million to 5.3 million.\n\n** **\n\n**●****IC:    **Interstitial Cystitis (IC)\nis our additional key new drug candidate which is composed of polysorbate loaded micelles as nanocarriers which can be used in the intravenous\ninjection and intravesical instillation. The micelles enhance the bioavailability by prolonging the duration of stay in the bladder and\nincrease the penetration of drug across the bladder wall. IC/BPS, refers to interstitial cystitis and bladder pain symptoms that is often\nassociated with voiding symptomatology and other systemic chronic pain disorders.\n\n \n\nWe incurred expenses in our research and development\nactivities in the amount of approximately US$0.9 million and US$0.8 million for the years ended December 31, 2024 and 2025,\nrespectively.\n\n** **\n\n63\n\n \n\n** **\n\n**OUR STRENGTHS**\n\n \n\nWe believe the following strengths have contributed\nto our success and differentiate us from others:\n\n** **\n\n**Innovative new drug (plant-derived) candidate developed for BPH/LUTS**\n\n \n\nOur core drug candidate, Botreso®, is an innovative\ndrug we have internally developed for the treatment of BPH/LUTS.\n\n \n\nBPH/LUTS is the most common urinary tract disease\nin the middle-aged male population. It is often considered a normal part of aging due to the increase in dihydrotestosterone. To date,\nthere is no effective cure for BPH/LUTS, while the currently available drugs to control the disease are either limited in efficacy or\ncan cause significant side effects, such as postural hypotension, dizziness, headache, fainting, general weakness, nasal congestion, rapid\nheartbeat, drowsiness, indigestion, abdominal pain, diarrhea, nausea, sexual dysfunction, and ejaculation difficulties. As BPH/LUTS often\noccurs in middle-aged male patients who usually require lifelong treatment to control the chronic disease conditions, the medical needs\nfor safe and effective drugs are huge, which has been underserved in the long history of BPH/LUTS drug development.\n\n \n\nWe believe that Botreso® has the potential to satisfy\nthe growing treatment needs of BPH/LUTS patients.\n\n \n\nWe have conducted four Phase III clinical trials for Botreso®\nin the U.S. and Taiwan, including two pivotal trials (one in the US and one in Taiwan) and two open-label extension studies, using\nAPI-1(one in the US and one in Taiwan).  Our pivotal Phase III clinical trial for Botreso® in the U.S. failed\nto show a difference between treatment groups for the primary efficacy endpoint in the intent-to-treat population. The U.S. FDA granted\nour WRO meeting request and is reviewing our new drug development program for API-2, including Phase I PK study and Phase III clinical\ntrial.\n\n \n\nWe believe there is a tremendous overall addressable market for Botreso®\nand significant commercial potentials. In order to facilitate global registrations and commercial launches of Botreso®,\nto which we own worldwide development and commercialization rights, we are actively seeking marketing approvals and formulating commercialization\nstrategies for Botreso® in targeted markets. Our management team has been aggressively seeking strategic cooperation\nopportunities with business partners and potential marketing teams around the world.\n\n** **\n\n**Diverse drug portfolio and pipeline drug candidates focusing on\nthe treatment of urinary system diseases**\n\n \n\nOur pipeline currently consists of three compelling new drug candidates\nfocusing on the treatment of urinary system diseases. Leveraging our strong research and development capabilities and proprietary platform,\nwe have been developing a series of botanical drug candidates, our primary botanical drug candidate, Botreso®, another\nclinical-stage botanical drug candidate, and other preclinical-stage botanical drug candidates.\n\n \n\nBotreso® is our new botanical drug candidate developed\nfor treatment of BPH/LUTS. Another two key drug candidates, PCP and IC, are developed for prostate cancer prevention and the treatment\nof interstitial cystitis, respectively. We initiated phase II clinical trials in Taiwan in November 2014 for PCP with 702 subjects\nand 20 medical centers being involved. Our new drug candidates either demonstrate the achievement of statistically significant endpoints\nin clinical trials or indicate great potentials to treat adaptive disease in preclinical studies. We believe each of our drug candidates\nhas the potential to address significant medical needs in our target markets and for the treatment of urinary system diseases that have\nbeen historically underserved and lacked innovation.\n\n \n\nIn particular, the target users of Botreso® and PCP\ncan be highly overlapping. Since only a portion of BPH/LUTS patients, who are potential users of Botreso®, will seek active\ntreatment, the remaining part of them will likely be in need of pharmaceutical products to prevent BPH/LUTS and prostate cancer, considering\nthat medical studies do show that BPH is associated with an increased risk of prostate cancer. If the follow-up research and development,\nor R&D, of PCP progresses smoothly, it would effectively synergize with Botreso® and enable us to seize a larger market\nshare in the future.\n\n \n\nWe believe that we have created a diverse, balanced\nportfolio of new drug candidates specializing in the treatment of urinary system diseases, which represents significant market potentials\nand provides multiple avenues for value creation for us.\n\n** **\n\n64\n\n \n\n** **\n\n**Leading R&D capabilities and proprietary platform for innovative\ndrugs**\n\n \n\nWe have built an innovative proprietary R&D\nplatform focused on the discovery, research and development of innovative drugs. Leveraging our leading proprietary R&D platform,\nwe are able to efficiently and swiftly develop a series of pharmaceutical products with cross-disciplinary expertise that spans a variety\nof fields, such as chemistry, biology, pharmacology, toxicology, pharmacovigilance, and translational and clinical research. Our main\nR&D center is located in New Taipei, Taiwan with a gross floor area (“GFA”) of approximately 1,029 sq.m. Furthermore,\nwe actively seek and leverage cooperation opportunities with preeminent academic researchers and institutions to keep us updated with\nthe front R&D techniques, methods and information.\n\n \n\nUtilizing our proprietary platform, our R&D team has developed\nthree innovative and differentiated drug candidates that specializing in the treatment of BPH/LUTS and interstitial cystitis, as well\nas prostate cancer prevention. We have conducted four Phase III clinical trials for Botreso® in the U.S. and\nTaiwan, including two pivotal trials (one in the US and one in Taiwan) and two open-label extension studies (one in the US and one in\nTaiwan), using API-1. Our pivotal Phase III clinical trial for Botreso® in the U.S. failed to show a difference between\ntreatment groups for the primary efficacy endpoint in the intent-to-treat population. The U.S. FDA granted our WRO meeting request and\nis reviewing our new drug development program for API-2, including Phase I PK study and Phase III clinical trial.\n\n \n\nAs of the date of this annual report, we have obtained\n31 invention patents in 19 territories and 58 trademarks in 46 territories. We believe that our innovative proprietary R&D platform\nhas contributed to our success and will continue to do so.\n\n** **\n\n**Integrated in-house capabilities that well position us for pharmaceutical\ninnovation from bench to bedside**\n\n \n\nWe have built fully integrated capabilities that\nencompass all the key functionalities of drug development, including early-stage drug discovery and development, clinical trials, regulatory\naffairs, manufacturing and commercialization. The full integration of these functionalities provides us with the opportunity to potentially\nbring our drug candidates efficiently from bench to bedside. This integration may enable us to identify and address potential clinical,\nmanufacturing, and commercial opportunities, as well as issues early in the development process. It’s important to note that as\nof now, none of our drug candidates have received regulatory approval. However, this approach allows us to focus our efforts on drugs\nthat have the potential to become clinically active, cost-effective, and commercially viable. Besides, it also allows us to process product\nmanufacturing, maintain consistent quality control and redeploy resources appropriately.\n\n \n\nLeveraging rigorous trial design and trial operational excellence,\nwe have achieved substantial progress in our innovative drug candidates. Led by Ms. Fu Feng Kuo, our founder and CEO, we have a team with\napproximately 15 employees,  which supervises and manages our clinical trials and clinical activities, including clinical trial\ndesign, implementation and the collection and analysis of trial data. We maintain control and oversight over these key functions of clinical\ntrials while partnering with reputable hospitals and contract research organizations, or CROs, for trial execution. We have established\nclose relationships with 12 reputable hospitals and CROs in Taiwan to conduct Botreso® studies, and with 20 reputable\nhospitals and CROs in Taiwan to conduct PCP trials.\n\n \n\nWe have built a seasoned team of regulatory affairs\nspecialists with rich experience in communicating and cooperating with drug regulatory agencies in Taiwan and the U.S. Leveraging\nour CEO’s rich working experience in the pharmaceutical industry, we have substantial expertise in and familiarity with regulatory\nreview requirements and processes, which enable us to communicate efficiently with regulatory authorities.\n\n \n\nWe have established one manufacturing facility in\nTaiwan. The GFA of our manufacturing facility, Yilan Letzer Pharmaceutical Factory, is approximately 1,944 sq.m. In addition, we have\ntwo new manufacturing facilities under planning in Yilan of Taiwan and Taizhou, Zhejiang Province of China which we believe will further\nenhance our production capacity in the future.\n\n \n\nWe intend to form a comprehensive internal sales\nand marketing mechanism conforming to the Code of Marketing Practices and the Good Distribution Practice drawn up by the International\nResearch-Based Pharmaceutical Manufacturers Association, a Taiwanese non-profit organization established in 1992. In Taiwan, we are establishing\na strong sales and marketing team that is expected to consist of employees with rich experience in relevant areas and our target markets.\nIn other territories, we plan to cooperate with local pharmaceuticals and leverage their sales and marketing network. Our management team\nalso brings us an average of 30 years of substantial operation, managerial and commercialization experience, resources and expertise\nthat can be leveraged to accelerate the build-out of our proprietary commercialization infrastructure.\n\n** **\n\n65\n\n \n\n** **\n\n**Visionary and experienced management and R&D team with extensive\nindustry expertise**\n\n \n\nOur management team has extensive expertise in R&D\nof innovative drugs gained from their enriching experience in well-known companies and institutions in the pharmaceutical industry, as\nwell as in-depth knowledge and understanding of our target markets and the access to top-tier hospitals and renowned medical experts,\nwhich we believe gives us an advantage in navigating the clinical development and regulatory approval process as well as the commercialization\nof our drug candidates.\n\n \n\nOur founder and CEO, Ms. Kuo, brings over 20 years\nof experience in the discovery and development of innovative drugs (plant-derived) to our Company. Over the years, she has gained\nextensive experience in the discovery, preclinical studies, and clinical development of various drug products. She also led our conferences\nwith regulatory authorities, joined meetings with CROs, assisted with the establishment of chemistry, manufacturing and controls data,\nor CMC data, monitored the execution of toxicology tests and clinical trials, and actively participated in the study of new drugs extraction\ntechnologies. She has full command of our key technologies and R&D plans. Our CTO, Dr. Fenglin Hsu is an expert in the research\nof natural medicinal chemistry, the R&D of Chinese herbal medicine, and the management of biotechnology medicine R&D. Dr. Hsu\npreviously served as a professor at the School of Pharmacy and the director of the Institute of Pharmacology at Taipei Medical University.\nOur R&D team leader, Mr. Albert Pu has expertise in the research on natural medicinal chemistry and formulation development and\npreviously served as an inspector at the TFDA.\n\n \n\nWe are proud of our R&D team which has been\ncontributing to our growth. As of the date of this annual report, our R&D team consisted of 15 employees, including three holding\ndoctorate degrees and eight holding master’s degrees. Members of our core R&D team have an average of more than 15 years\nof experience in innovative drug development.\n\n \n\nOur success is, to a large extent, the product of\nour management’s leadership and our R&D team’s expertise, which cover the full spectrum of the product development process,\nfrom preclinical studies through design and execution of clinical studies to regulatory approval.\n\n** **\n\n**OUR STRATEGIES**\n\n \n\nTo achieve our mission, we intend to execute the\nfollowing strategies:\n\n** **\n\n**Advance the clinical development of our core drug candidate Botreso®\nto seek regulatory approval and achieve commercialization in our target markets.**\n\n \n\nIn order to obtain regulatory approval and commercial rights for our\ncore drug candidate, Botreso®, in the U.S. and Taiwan, we have designed regulatory strategies that we believe will enable\nus to leverage data generated in our clinical trials that account for considerations specific to our licensed territories, including local\nclinical practice and patient preferences, with the goal of obtaining regulatory approval and maximizing patient reach for Botreso®.\n\n \n\nIn terms of preparation for manufacturing and\nquality control for future commercialization, we have already built the Yilan Letzer Pharmaceutical Factory with an aggregate GFA of approximately\n1,944 sq.m. We are currently planning for a mass production trial at Yilan Letzer Pharmaceutical Factory and have already purchased customized\nequipment to support future operations. We plan to establish a second PIC/S GMP manufacturing facility in Lize, Yilan, Taiwan, following\nthe completion of our second round of financing. We will further strengthen our seasoned commercialization team with extensive industry\nexperience, which we believe will contribute to the marketing promotion of Botreso®. We are also actively seeking commercial\npartnerships with pharmaceutical companies to maximize the commercial value of Botreso®. We believe that these potential\npartners could bring significant strategic synergy with us in the pursuit of potential opportunities for strategic collaboration in order\nto gain reasonable commercial returns and expedite the practical use of Botreso® globally.\n\n** **\n\n66\n\n \n\n** **\n\n**Leverage differentiated approaches to advance our development of\nother drug candidates, such as PCP, IC and other new small molecule drugs, toward regulatory approvals.**\n\n \n\nWe will continue to devote substantial resources\nto the clinical trials of PCP and IC, and the innovative development of other new small molecule drugs. We have adopted and will continue\nto leverage differentiated development approaches for these drug candidates, which are specifically tailored based on the different development\nstages that the various drug candidates are undergoing, in order to maximize the value of these drug candidates and obtain potential regulatory\napprovals in the U.S., Taiwan, China and other territories.\n\n \n\n \n●\nPCP: in November 2014, we initiated a phase II clinical trial of PCP in Taiwan, and have completed the data lock in May 2025, and statistical analysis was completed in September 2025. As of December 31, 2025, 702 subjects and 20 medical centers in Taiwan have been involved. A total of 170 serious adverse events (SAEs) occurred to date in the PCP Phase II clinical trial, including PCP and Placebo group, and all of the 170 SAEs have been professionally judged by clinicians and they are not related to PCP.\n\n \n\nThe following table indicates the serious adverse\nevents (SAEs) occurred to date in the PCP Phase II clinical trial, including the PCP and Placebo group:\n\n \n\nSystem Organ Class \nNumber  \nRelationship\n\nRenal and urinary disorders \n 60  \nNot related\n\nCardiac disorders \n 23  \nNot related\n\nMusculoskeletal and connective tissue disorders \n 19  \nNot related\n\nGastrointestinal disorders \n 18  \nNot related\n\nNeoplasms benign, malignant and unspecified (incl cysts and polyps) \n 18  \nNot related\n\nRespiratory, thoracic and mediastinal disorders \n 6  \nNot related\n\nOthers \n 26  \nNot related\n\nTotal \n 170  \n \n\n \n\nWe intend to expedite our clinical development of PCP in Taiwan. We\nhave pushed our CRO to add more personnel to manage the data. Now we have completed all the SDV (Source Data Verification), with data\nlock in May 2025, and statistical analysis completed in September 2025, and achieved positive results. The results indicated it met its\nprimary endpoint, showing a reduction in positive biopsy rates and incidence of higher-grade tumors after 104 weeks of administration.\nSubsequently, the medical writer will draft the clinical study report (CSR). Once the CSR is available, we will discuss within the team\nand determine if this program should advance to Phase III. Should this program advances to Phase III, we plan to cooperate with international\npharmaceutical companies and proceed to multinational Phase III clinical trials of PCP. We have completed the CMC documentation on the\nactive pharmaceutical ingredient-2 (API-2) and a plan to establish comparability between API-1 and API-2 and submitted it to the U.S.\nFDA on October 16, 2024, and are awaiting feedback from the U.S. FDA. As of the date of this annual report, the Company has not yet\nsuccessfully demonstrated the comparability of API-1 and API-2. If the U.S. FDA agrees about comparability of API-1 and API-2, we will\ndiscuss with the TFDA the conduct of the Phase III PCP study using API-2.\n\n \n\nWe are currently collaborating with one supplier\nto prepare the CMC documents mandated by the U.S. FDA. Should the FDA concur that API-1 and API-2 are similar and comparable, we intend\nto sign the Quality Agreement with this supplier for the raw materials for API-2. We will only be able to proceed with Phase III PCP study\nthe after the U.S. FDA accepts such results and determines that API-1 and API-2 are comparable. If there is any possibility that FDA does\nnot agree that API-1 and API-2 are comparable, we will work with another supplier who is able to meet the comparability.\n\n \n\n●**IC:    **we are conducting\nthe preclinical studies of IC. Phase I clinical trials of IC are expected to be conducted in Taiwan.\n\n** **\n\n**●****Preclinical new small molecule drugs:    **our\nR&D team is developing several new small molecule drugs.\n\n** **\n\n**Establish and enhance integrated launch capabilities and strategically\nbuild commercial infrastructure customized to each of our drug candidates.**\n\n \n\nOur commercial strategy aims to efficiently maximize patient reach\nfor each of our future products. For our core drug candidate, Botreso®, we intend to keep building and then utilize a focused\nsalesforce in the U.S., the EU and Asia (primarily Taiwan and mainland China)  in order to promote our products, if approved. We\nbelieve we will be able to leverage the commercial infrastructure we create for our core product candidate to benefit our other product\ncandidates. For example, in the U.S., Taiwan and mainland China, prescription drugs across our therapeutic areas are primarily sold through\nhospitals. As a result, we believe the hospital relationships we may establish will lay the groundwork for the future launch of programs\nacross our portfolio. Our overall launch approach will focus on early integration of medical, regulatory and commercialization preparation.\n\n \n\n67\n\n \n\n \n\nWe may continue to pursue a co-commercialization\nstrategy with strategic partners globally. In the past, we entered into a license agreement with a Cambodian corporation, Chhak Kamponngsaom\nSez Co., Ltd., in 2016, which provides for the potential co-commercialization of Botreso® in Cambodia. We believe the co-commercialization\nstrategy with strategic partners would enable us to access their extensive sales network and established commercial organization globally.\n\n** **\n\n**Continue to deepen our pipeline in existing therapeutic areas with\nnew drugs that fit with our expertise, portfolio and strategy.**\n\n \n\nWe seek to anchor each therapeutic focus area with\na competitive drug product and build around these core areas. We will encourage the innovation and growth of our in-house talents and\nplan to recruit more high-quality talents, which we believe will support our expanding research and development efforts to deepen our\npipeline. We also intend to collaborate with outstanding partners, electing programs with a strong scientific basis and compelling clinical\ndata to build out a broad and clinically validated pipeline. We intend to opportunistically seek out additional hospitals and CROs as\npartners based on our market assessments. We consider our existing portfolio of product candidates, as well as those of our strategic\ncollaborations, to identify and pursue novel combination approaches. We intend to continue building our portfolio with innovative new\ndrugs that have the potential to become new standards of care in our target markets.\n\n** **\n\n**OUR DRUG CANDIDATES**\n\n \n\nWe discover and develop innovative drugs based on\ndifferentiated or clinically validated efficacy and safety. To complement our in-house research and development efforts, we may also collaborate\nwith third parties on the commercialization of our drug candidates through various arrangements. Please see “Item 4. Information\non the Company — B. Business Overview —  License and Collaboration Agreements” for more details.\n\n** **\n\n**Drug Candidates**\n\n** **\n\n**Botreso®**\n\n \n\nBotreso® is our new drug candidate developed for BPH/LUTS\ntreatment. Botreso® is expected to be our core product in the future. We have conducted four phase III clinical trials\nin the U.S. and Taiwan, including two pivotal trials and two open-label extension studies (one in the US and one in Taiwan) using\nAPI-1. One of the Phase III clinical trials for Botreso® in the U.S. failed to show a difference between treatment groups\nfor the primary efficacy endpoint in the intent-to-treat population. Therefore, we did not reach the endpoint of Phase III clinical trials\nfor Botreso®. We withdrew our NDA from U.S. FDA review for Botreso® with API-1. We have asked that\nthe U.S. FDA to provide a written response to questions focused on obtaining U.S. FDA review and comments on a new, proposed\nPhase III clinical trial protocol for Botreso® with API-2 and a pharmacokinetic study. On May 23, 2024, we received\na denial notice from the FDA, stating that it is premature for this stage of drug development, and until the company can provide complete\nChemistry, Manufacturing, and Controls (CMC) information on the active pharmaceutical ingredient-2 (API-2) and a plan to establish comparability\nbetween API-1 and API-2, the U.S. FDA is unable to reach agreement on protocols designed to establish the safety and efficacy of Botreso®.\nWe have completed the CMC documentation on the active pharmaceutical ingredient-2 (API-2) and a plan to establish comparability between\nAPI-1 and API-2 and submitted it to the U.S. FDA on October 16, 2024, and are awaiting feedback from the U.S. FDA.\n\n \n\nBPH/LUTS is the most common urinary tract disease\nin the middle-aged male population. According to Frost & Sullivan, in 2021, the global prevalence of BPH increased from 88.4 million\nin 2017 to 94.2 million in 2020, representing an increase of 6.5%. The global BPH drugs market increased from US$3.7 billion\nin 2017 to US$4.1 billion in 2020, representing a CAGR of 4.6%. We are establishing a strong sales and marketing team that is expected\nto consist of employees with rich experience in relevant areas and our target markets, and plan to work with both domestic and international\nbusiness partners to seize the great market opportunity and to help more patients reduce their distress caused by BPH/LUTS and drug side\neffects caused by chemical drugs.\n\n \n\nDisease Overview\n\n \n\nBPH is a histologic diagnosis that refers to the\nproliferation of glandular epithelial tissue, smooth muscle, and connective tissue within the prostatic transition zone. The exact etiology\nof BPH is unknown. BPH can lead to an enlargement of the prostate called benign prostatic enlargement, or BPE, which may eventually cause\nobstruction at the level of the bladder neck and in turn caused termed benign prostatic obstruction, or BPO. Males’ LUTS may\nbe caused by a variety of conditions including BPE and BPO. Since when the entire prostate gland enlarges, the prostate tissue compresses\nthe prostatic urethra and it then becomes more difficult for urine to pass through, so the urine builds up in the bladder and causes it\nto dilate. The stagnation of urine in the bladder also promotes bacterial growth and can lead to urinary tract infection. LUTS includes\nvoiding or obstructive symptoms such as hesitancy, poor and/or intermittent stream, straining, prolonged micturition, feeling of incomplete\nbladder emptying, dribbling, and storage or irritative symptoms such as frequency, urgency, urge incontinence, and nocturia. BPH/LUTS\nis the most common urinary tract disease in the middle-aged male population and the risk of BPH/LUTS in the male population increases\nwith age.\n\n \n\n68\n\n \n\n \n\nCurrent Standard Care\n\n \n\nConservative management and surgical treatment are\ncurrent standards of care for BPH/LUTS. Conservative management includes lifestyle changes and pharmacological management. Surgical treatment\nof symptomatic BPH may be classified into three general types: (i) minimally invasive sinus surgery, or MIST, (ii) simple prostatectomy,\nand (iii) transurethral surgery. Although effects and benefits from surgical treatments can show up immediately, however, there are\ninherent risks of surgery, possibilities of recurrence, and post-operative side effects, such as hematuria, pain, retrograde ejaculation,\nimpotence and urinary incontinence. In general, pharmacological management is still the prevailing method of BPH/LUTS treatment. Patients\nare treated with surgery only if pharmacological management is ineffective. The treatment of BPH focuses on relieving the lower urinary\ntract symptoms. This can be done through 5-α reductase inhibitors, or 5-Ari, and alpha-adrenergic blockers, or α-blockers.\nHowever, neither 5-Ari nor α-blockers can effectively cure BPH/LUTS. Patients generally need to take such drugs for life, but\nlong-term use of these chemical drugs can lead to drug resistance and adverse effects such as cardiac failure. Due to drug-related adverse\neffects, physicians and patients have great concerns over using medications, and thus some patients choose to watch and wait instead of\ntaking any drugs to treat BPH/LUTS.\n\n \n\nMechanism of Action\n\n \n\nBotreso® has an antioxidant capacity and can reduce\ninflammatory cytokines (IL-6). It may take effect by reducing oxidative stress and inflammation.\n\n \n\nOxidative stress is an important contributing factor in the development\nof chronic diseases. It is an imbalance between the production of reactive oxygen species, or ROS, and antioxidant defense, can lead to\noxidative damage, caused by deficiency in antioxidant defense processes, elevation in ROS due to presence of toxins and activation of\nROS mediated by chronic infection and inflammation. Based on the Cellular Antioxidant Activity, or CAA, method, the results showed a dose-dependent\nincrease in CAA for Botreso®. Botreso® caused a concentration-dependent increase in cellular antioxidant\nassay and thus exhibited antioxidant activity. The following table indicates the cellular antioxidant assay unit obtained for different\nconcentrations of standard materials and Botreso®:\n\n \n\nConc. (ppm) \nStandard \nBotreso®\n\n  \nCAA \nCAA\n\n1 \n14.23±0.00 \n9.14±2.58\n\n2 \n26.75±0.00 \n17.26±0.78\n\n3 \n34.04±0.00 \n27.20±6.59\n\n4 \n36.12±0.27 \n29.76±5.90\n\n5 \n38.90±0.17 \n37.88±1.48\n\n \n\nChronically inflamed cells can release cytokines to functionally determine\na constitutively active stroma and stimulate tumor growth and progression. Chronic inflammation in benign prostate biopsy specimens has\nbeen evident to be associated with high-grade prostate tumors in adjacent areas. IL-6 is a prototypical cytokine with various biological\neffects on a wide variety of cells. IL-6 is therefore involved in the control of immune responses and inflammation. It is produced, participating\nin host defense against infections and tissue injuries. However, over production of IL-6 leads to severe disease complications. Accordingly,\nIL-6 blockade was expected to become a therapeutic strategy for the diseases characterized by IL-6 overproduction. Based on an important\npro-inflammatory cytokine, the IL-6 levels can be determined for the understanding of anti-inflammatory activity of Botreso®.\nBotreso® is able to cause a concentration-dependent inhibition of LPS-induced IL-6 release in differentiated THP-1 cells,\nsuggesting an anti-inflammatory activity of Botreso®. The following diagram indicates that Botreso® has\nanti-inflammatory activity:\n\n \n\n  \n\n \n\n \n\n \n\nNotes:\n\n \n\n(1)LPS means lipopolysaccharides which are large molecules consisting\nof a lipid and a polysaccharide that are bacterial toxins.\n\n(2)BDS means botanical drug substance.\n\n(3)BDP means botanical drug product.\n\n(4)LPS#1 means 0.3 µg/ml LPS/0.1% DMSO.\n\n(5)LPS#2 means 0.3 µg/ml LPS/0.1% DMSO and 0.004%\nsoybean oil.\n\n(6)* means *P* < 0.05, ** means *P* < 0.01 and\n*** means *P* < 0.001 compared with LPS#1.\n\n(7)# means *P* < 0.05, ## means P *<* 0.01 and\n### means *P* < 0.001 compared with LPS#2.\n\n \n\n69\n\n \n\n \n\nThe purpose of this study is to evaluate the anti-inflammation effect\nof BDS and BDP by measuring LPS-induced IL-6 release. The data demonstrated that both BDS and BDP showed a concentration-dependent inhibition\nof LPS-induced IL-6 release. LPS is one of the main etiological factors in the pathogenesis of several diseases. LPS has been shown to\nstimulate host cells, including macrophages and fibroblasts, to produce cytokines. LPS can markedly increase the production of IL 6,\nIL 8 and TNF α in differentiated THP 1 cells. Therefore, based on an important pro-inflammatory cytokine, the IL-6 levels stimulated\nby LPS can be determined for the understanding of anti-inflammatory activity of the Botreso®.\n\n \n\nInterleukin (IL)-6 is produced at the site of inflammation. IL-6 exerts\nstimulatory effects on T- and B-cells, thus favoring chronic inflammatory responses. Although its expression is strictly controlled by\ntranscriptional and posttranscriptional mechanisms, dysregulated continual synthesis of IL-6 plays a pathological effect on chronic inflammation\nand autoimmunity. BDS (25, 50 and 100 µg/ml) and BDP (35, 70 and 140 µg/ml) were used, respectively. The data demonstrated\nthat both BDS and BDP showed a concentration-dependent inhibition of LPS-induced IL-6 release in differentiated THP-1 cells, suggesting\nan anti-inflammatory activity of Botreso®.\n\n \n\nClinical Data\n\n** **\n\n**The data in the Clinical Data section for Botreso® from\npage 70 to page 81, pertains to the clinical trials utilizing API-1 (“Botreso®\n(API-1)”), which is currently unavailable. We will be conducting new studies using API-2 (“Botreso® (API-2)”).\nHowever, we must conduct API-1 and API-2 comparability studies first and if the FDA accepts such results and determines that API-1 and\nAPI-2 are comparable, only then we will be able to conduct the additional Phase I PK study and Phase III pivotal study using API-2. If\nthe U.S. FDA does not agree that API-1 and API-2 are comparable, we will need to work with other API vendor to demonstrate the comparability\nthat meet U.S. FDA’s requirements.**\n\n \n\nConsidering a variety of factors including the current unavailability\nof API-1, we voluntarily withdrew our NDA on November 30, 2022, in order to develop more information about API-2 for the U.S. FDA’s\nreview and to address ongoing questions regarding demonstrated difference between Botreso® and placebo for the primary\nefficacy endpoint in a clinical study for Botreso®, and to address other questions FDA had previously identified in our\nNDA regarding FDA’s questions related to the drug substance and product, validation of methods used for measuring the effect of\nBotreso®, manufacturing, clinical and nonclinical testing, data, and statistical analyses, among others.\n\n \n\nThe U.S. FDA has reviewed our proposed Phase III\nprotocol and Phase I pharmacokinetic (PK) synopsis, as reflected in their written response dated February 23, 2024. The U.S. FDA\nraised several concerns in this response:\n\n \n\n(i)The U.S. FDA questioned whether one new Phase III study with\nAPI-2 would be sufficient, as they believe results from two positive Phase III efficacy studies provide more convincing evidence of effectiveness\nthan results from a single trial. Additionally, a single Phase III efficacy study could make it challenging to collect the amount of\nsafety information required for a new molecular entity.\n\n \n\n(ii)The U.S. FDA noted its concern that Study MCS-2-US-a did\nnot demonstrate a statistically significant difference between the drug and placebo in the primary efficacy endpoint. They also expressed\nconcerns regarding the treatment effect of questionable significance in Study MCS-2-TWN-a.\n\n \n\n(iii)The U.S. FDA was concerned that our study plan had not specified\neither the quantity or quality of the confirmatory evidence, and did not state a specific clinical circumstance, ethical or practical\nconsideration, or unmet medical need that would preclude the conduct of a second adequate and well-controlled efficacy study.\n\n \n\n70\n\n \n\n \n\n(iv)Additionally, regarding the comparability of API-1 and API-2,\nthe U.S. FDA commented that it will need more information on how we would demonstrate comparability between API-1 and API-2. They noted\nthat their determination of whether our original Phase III studies with API-1 would be useful depends on the quality of support for a\nconvincing link between products containing these APIs.\n\n \n\nIn response to these concerns and upon U.S. FDA’s\nrecommendation, we are developing a comparability plan to provide the U.S. FDA with convincing data to link between products containing\nAPI-1 and API-2. As of the date of this annual report, the Company is still in the process of providing the information required by the\nU.S. FDA and has not yet successfully demonstrated the comparability of API-1 and API-2.\n\n \n\nAfter our submission of our comparability plan and, if U.S. FDA agrees\nour data demonstrates comparability between API-1 and API-2, we will be able to rely on trials that were previously conducted using API-1,\nand we then will initiate the Botreso® Phase III study and the PK study using API-2 simultaneously. As mentioned earlier,\nfor Botreso® (API-1), we have conducted four Phase III clinical trials in the U.S. and Taiwan, including two pivotal trials\n(one in each location) and two open-label extension studies (also one in each location) using API-1. The U.S. FDA raised concerns about\none pivotal Phase III trial in the U.S., which failed to demonstrate a difference between treatment groups for the primary efficacy endpoint\nin the intent-to-treat population. Additionally, the FDA expressed concerns regarding the reproducibility of some reported efficacy results\nfor Study MCS-2-TWN-a. However, the U.S. FDA had no further comments on the two open-label extension studies in the U.S. and Taiwan using\nAPI-1. Therefore, if the FDA agrees that our data demonstrates comparability between API-1 and API-2, we will also need to conduct another\npivotal Phase III study using API-2, and we will work with the FDA to address the reproducibility issue.\n\n \n\nTo address the U.S. FDA’s concern that Study\nMCS-2-US-a did not demonstrate a statistically significant difference between the drug and placebo in the primary efficacy endpoint, we\nplan to conduct an additional Phase III study, MCS-2-US-b, using API-2.\n\n \n\nRegarding the U.S. FDA’s concerns about the\nreproducibility of the reported efficacy results for Study MCS-2-TWN-a, we propose to re-analyze the statistical results of the MCS-2-TWN-a\nstudy data using Clinical Data Interchange Standards Consortium (CDISC) data sets that match the FDA’s requested data format. Then,\nwe will submit the reanalysis for further discussions with U.S. FDA about its concerns.\n\n \n\nOn May 14, 2024, we asked U.S. FDA to provide a written response\nto our questions about obtaining U.S. FDA’s review and comments on a newly proposed Phase III clinical trial protocol for Botreso®\nwith API-2 and a pharmacokinetic (PK) study. On May 23, 2024, we received a denial notice from the U.S. FDA, stating that it was\npremature to provide such a written response at this stage of drug development, however, the U.S. FDA would continue its review of the\nstudy design of PK study and Phase III clinical trial using API-2. The U.S. FDA decided that until the company provides complete Chemistry,\nManufacturing, and Controls (CMC) information on the active pharmaceutical ingredient-2 (API-2) with a plan to establish comparability\nbetween API-1 and API-2, the U.S. FDA is not in a position to reach any agreement on protocols designed to establish the safety and efficacy\nof Botreso®. We have completed the CMC documentation on the active pharmaceutical ingredient-2 (API-2) and a plan to establish\ncomparability between API-1 and API-2 and submitted it to the U.S. FDA on October 16, 2024, and are awaiting feedback from the U.S.\nFDA. If the U.S. FDA does not agree that API-1 and API-2 are comparable, we will continue to research additional API sources based on\nour own patent, to pursue additional outsourcing API vendors, and to follow U.S. FDA’s guidance for demonstrating comparability\nbetween API-1 and API-2 to the U.S. FDA’s satisfaction. In the event that we are unable to establish comparability between API-1\nand API-2, we will be required to repeat the Botreso® clinical trials using API-2. For further details, see the risk factor\ntitled “**If we are unable to identify a supplier capable of producing API-2 that is sufficiently comparable to API-1, we will\nbe required to repeat our clinical trials for Botreso® and PCP, which could significantly delay our product development\nefforts and result in increased costs**” on page 13.\n\n \n\nIn addition, we are in the process of finalizing\nthe PK study protocol per U.S. FDA requirements and hope to satisfy the U.S. FDA of the comparability between API-1 and API-2. If the\nCMC comparability between API-1 and API-2 is approved, we will request a Type B meeting (WRO) with the U.S. FDA to discuss our revised\nPhase III protocol, Statistical Analysis Plan, and PK study protocol.\n\n* *\n\n71\n\n \n\n* *\n\n*Phase I Clinical Studies*\n\n \n\nPhase I clinical studies of Botreso® focused on\npharmacokinetics and clinical drug-drug interaction studies. **The data in the Phase I Clinical Studies section, pertains to the clinical\ntrials utilizing API-1, which is currently unavailable. We will be conducting new studies using API-2 (“Botreso®\n(API-2)”). However, we must conduct API-1 and API-2 comparability studies first and if the FDA accepts such results and determines\nthat API-1 and API-2 are comparable, only then we will be able to conduct the additional Phase I PK study and Phase III pivotal study\nusing API-2. If the U.S. FDA does not agree that API-1 and API-2 are comparable, we will need to work with other API vendor to demonstrate\nthe comparability that meet U.S. FDA’s requirements.**\n\n \n\nPharmacokinetics\n\n \n\nThe study of pharmacokinetics of Botreso® (API-1) was\na randomized, balanced, single-dose, two-treatment (fed versus fasted) study in healthy male adult subjects. The study was designed to\nevaluate the pharmacokinetics, or PK, of Botreso® (API-1) when it was administered in the fed and fasted state. 47 subjects\nwere randomized to receive a single dose either in the fed (24 subjects) or fasted (23 subjects) state, and the PK parameters were evaluated\nand compared for the two treatment groups. Relevant trials were conducted in U.S. and were initiated on April 22, 2015 and completed\non April 24, 2017, with 23 subjects in fed group and 22 subjects in fasted group had completed the study. The above study of the\npharmacokinetics of Botreso® was conducted using API-1, which is currently unavailable. We are continuing development of\nBotreso® using API-2 in consultation with U.S. FDA. U.S. FDA provided comments on our proposed Phase III study, and we\nare finalizing the protocol for resubmission to the U.S. FDA. In addition, we are in the process of finalizing the PK study protocol per\nU.S. FDA requirements and hope to satisfy the U.S. FDA of the comparability between API-1 and API-2. If the CMC comparability between\nAPI-1 and API-2 is approved, we will request a Type B meeting (WRO) with the U.S. FDA to discuss our revised Phase III protocol, Statistical\nAnalysis Plan, and PK study protocol.\n\n \n\nAs to the efficacy of Botreso® (API-1), the study compared\nserum active ingredient levels of five major biomarkers PL, PF, PE, TC and BC (code names of our active ingredients to represent the content\nof each carotenoid in our pharmaceutical composition), in subjects taking Botreso® (API-1) after a meal with those taking\nBotreso® (API-1) on an empty stomach. It is found that the proportion of active ingredient absorbed after a meal was better\nthan after an empty stomach. Subjects were randomized to two groups in order to obtain their pre-prandial or postprandial medication status.\nThe results showed that the adverse effects were well tolerated irrespective of the timing of administration (postprandial or postprandial),\nalthough absorption rates were higher when Botreso® (API-1) were taken after meals. The following figure indicates the\nconcentration of active ingredients in serum:\n\n \n\nPharmacokinetics (Unit) \nFed State  \nFasted State \n\nAUC0-72 (day*µmol/L) \n 0.521  \n 0.376 \n\nAUC0-last (day*µmol/L) \n 0.457  \n 0.236 \n\nCmax (day*µmol/L) \n 0.306  \n 0.217 \n\nt1/2 (day) \n 0.691  \n 2.049 \n\ntmax (day) \n 1.133  \n 0.724 \n\n \n\n \n\n \n\nNotes:\n\n \n\n(1)AUC0-72 means area under the serum concentration-time\ncurve, calculated from time zero to time 72 hours postdose by the linear trapezoidal rule (after correction for the baseline concentration).\n\n(2)AUC0-last means area under the serum concentration-time\ncurve, calculated from time zero to the last measurable concentration by the linear trapezoidal rule (after correction for the baseline\nconcentration).\n\n(3)Cmax means maximum (peak) serum drug concentration\nobserved (after correction for baseline concentration).\n\n(4)t1/2 means half-life period.\n\n(5)tmax means time of the maximum observed concentration.\n\n \n\n72\n\n \n\n \n\nAs to the safety profile of Botreso® (API-1), data indicated\nthat Botreso® was well-tolerated among 47 subjects. 22 subjects, or 46.8%, of all subjects reported at least one treatment\nemergent adverse event, or TEAE, during the study. The fasted group has a higher TEAEs rate (60.9%) than the fed group (33.3%), but the\nrate of Aes was similar for the two groups. Overall, the most frequently reported TEAEs were headache (19.1%), upper respiratory tract\ninfection (8.5%), back pain (4.3%) and nasopharyngitis (4.3%). The fasted group reported higher rate of headaches than the fed group.\nThe two groups had similar rates for other TEAEs. No subject experiences serious, severe, or life-threatening treatment emergent adverse\nevents, or TEAEs. No TEAEs resulted discontinuation of the study and no death was caused. Other data such as the changes in blood pressure,\nheart rate, respiratory rate, weight and temperature were generally small and clinically insignificant.\n\n \n\nClinical Drug-Drug Interaction\n\n \n\nThe study of clinical drug-drug interaction of Botreso®\n(API-1) was an open-label, fixed-sequence, drug-drug interaction study to evaluate the effect of Botreso® (API-1) on the\npharmacokinetics of 24 healthy male subjects. Relevant trials were initiated on May 20, 2018 and completed on September, 2018. A\ntotal of 24 subjects were enrolled in the study and 23 of them completed the study. One subject discontinued the study primarily due to\na failure to meet compulsory criteria.\n\n \n\nMidazolam is used to produce sleepiness or drowsiness\nand to relieve anxiety before surgery or certain procedures. Bupropion is indicated for the treatment of major depressive disorder, seasonal\naffective disorder, and as an aid to smoking cessation.\n\n \n\nSince our in vitro drug-drug interaction study conducted in the U.S.\nconcluded that our drug substance may be an inducer of CYP3A4 and CYP2B6 based on the calculated R values (< 0.9). U.S. FDA suggested\nthat we further investigate the potential drug-drug interactions by conducting a clinical drug-drug interaction study using a sensitive\nindex substrate. The sensitive index substrate is midazolam for CYP3A4 and bupropion for CYP2B6, respectively. Therefore, we conducted\nsuch study to assess the effect of Botreso® (API-1) on the PK of midazolam and bupropion following U.S. FDA’s suggestion\nin 2018. The coadministration of Botreso® (API-1) with midazolam and bupropion generally would not affect the efficacy\nof midazolam and bupropion, and concluded that Botreso® is not an inducer of both midazolam (CYP3A4) and bupropion (CYP2B6).\n\n \n\nThe primary objective of this clinical drug-drug interaction study\nwas to assess the effect of Botreso® (API-1) on the PK of midazolam and bupropion in healthy male subjects. The results\nindicated that the peak exposure (Cmax) and the total exposure to midazolam were not significantly affected by the co-administration of\nBotreso® (API-1). The total and peak exposures of bupropion, midazolam, and their measured metabolites were not significantly\naltered after multiple daily doses of Botreso® (API-1). The median time to peak concentration (Tmax) of bupropion, midazolam\nand their measured metabolites was not affected by multiple daily doses of Botreso® (API-1). The safety data indicated\nthat the administration of Botreso® alone or the co-administration of Botreso®, midazolam and bupropion\nwas generally tolerated by healthy male subjects in this study. Seven of 24 subjects (29.2%) treated with midazolam, bupropion, and/or\nBotreso® (API-1) experienced a total of 10 TEAEs. Six of 24 subjects (25.0%) treated with midazolam or bupropion experienced\nseven TEAEs. One of 24 subjects (4.2%) treated with Botreso® alone experienced two TEAEs. One of 23 subjects treated with\nmidazolam/bupropion and Botreso® (API-1) experienced one TEAEs. The most frequently reported TEAEs were somnolence and\nothers included headache, dry skin, macule, skin irritation and cough. However, 30% of TEAES were assessed as unrelated to the study.\nAll TEAEs were assessed as mild in severity and fully recovered or resolved at the end of the study. No TEAEs resulted discontinuation\nof the study and no serious adverse effect, or SAE, or deaths were reported.\n\n \n\nOverall summary and conclusions\n\n \n\nAccording to the Phase I clinical studies, the administration\nof a single oral (API-1) was well-tolerated in the fed and fasted state in healthy male subjects. Subjects absorbed active ingredients\nof Botreso® (API-1) better when they took Botreso® (API-1) after meals. The administration of Botreso®\nalone or the co-administration of Botreso®, midazolam and bupropion was generally tolerated by healthy male subjects in\nthis study. The coadministration of Botreso® (API-1) with midazolam and bupropion generally would not affect the efficacy\nof midazolam and bupropion. Our Phase I trial was completed several years later than Phase II and Phase III trials per U.S. FDA’s\nrequirements. Since our in vitro drug-drug interaction study conducted in the U.S. concluded that our drug substance may be an inducer\nof midazolam and bupropion based on the calculated R values (< 0.9). The U.S. FDA suggested that we conduct additional Phase I studies\non both PK and DDI using a sensitive index substrate. Therefore, we conducted such additional study to assess the effect of PCP on the\nPK of midazolam and bupropion following the U.S. FDA’s suggestion in 2018 after we had previously completed Phase II and Phase III\nstudies. The clinical DDI study concluded that Botreso® (API-1) is neither an inducer of midazolam nor an inducer of bupropion.\n\n \n\n73\n\n \n\n* *\n\n*Phase II Clinical Studies*\n\n** **\n\n**The data in the Phase II Clinical Studies\nsection, pertains to the clinical trials utilizing API-1, which is currently unavailable. We will be conducting new studies using API-2\n(“Botreso® (API-2)”).  However, we must conduct API-1 and API-2 comparability studies first and if the\nFDA accepts such results and determines that API-1 and API-2 are comparable, only then we will be able to conduct the additional Phase\nI PK study and Phase III pivotal study using API-2. If the U.S. FDA does not agree that API-1 and API-2 are comparable, we will need\nto work with other API vendor to demonstrate the comparability that meet U.S. FDA’s requirements. In the event that we are unable\nto establish comparability between API-1 and API-2, we will be required to repeat the Botreso® clinical trials using API-2.\nFor further details, see the risk factor titled “If we are unable to identify a supplier capable of producing API-2 that is sufficiently\ncomparable to API-1, we will be required to repeat our clinical trials for Botreso® and PCP, which could significantly\ndelay our product development efforts and result in increased costs” on page 13.**\n\n \n\nTrial Design\n\n \n\nThe phase II clinical trial in Taiwan was initiated on March 21,\n2004 and completed on August, 2006. The phase II clinical study was a randomized exploratory intervention one with 65 subjects involved\nand 62 subjects completed the study. 32 subjects were administered 15 mg Botreso® (API-1) per day and 29 of them\ncompleted the study. 33 subjects were administered 30 mg Botreso® per day and all of them completed the study.\n\n \n\nEfficacy\n\n \n\nAccording to the results of phase II clinical trials in Taiwan,\nthe primary endpoint was the change in International Prostate Symptom Score system, or I-PSS, which is a validated, reproducible scoring\nsystem that measures severity of lower urinary tract symptoms and responses to therapeutics, from Day one to Week 12. The mean (standard\ndeviation [SD]) reductions in I-PSS from baseline decreased from 11.31 [5.84] to 9.52 [4.98] after four weeks, and decreased to 9.14 [5.86]\nafter 12 weeks in low-dose group. Thus, for subjects who took one Botreso® (API-1) softgel (15 mg) per day, their I-PSS\nreduced by 15.8% and 19.2% after four and 12 weeks, respectively. In addition, the mean [SD] reductions in I-PSS from Day one decreased\nfrom 12.30 [6.45] to 9.00 [4.98] at 4 weeks, and decreased to 7.55 [3.97] at 12 weeks in high-dose group. Thus, for subjects who took\ntwo Botreso® (API-1) softgels (30 mg) per day, their I-PSS reduced by 26.8% and 38.6% after four and 12 weeks,\nrespectively. The study result indicated that the 30 mg/day was the optimal dose. For subjects with moderate and severe BPH/LUTS, or to\nsay, for those whose I-PSS larger than 10 points (inclusive), the I-PSS decreased by 16.3% and 22.1% after 4 and 12 weeks of Botreso®\nsoftgels (15 mg/day) treatment, and the I-PSS decreased by 28.6% and 44.4%% after 4 and 12 weeks of Botreso® softgels (30\nmg/day) treatment.\n\n \n\nSafety\n\n \n\nBotreso® (API-1) were well tolerated by both groups\nof subjects. There were no adverse effects, or AEs, resulting in discontinuation of the study. And no unexpected or unanticipated events\nwere reported. 14 subjects, or 20%, of all subjects reported AEs, but most of the AEs were reported by one subject. Only one kind of AE,\ninfluenza like syndrome, occurred with an incidence greater than 5%. One subject reported one SAE which was hospitalization. However,\nthe subject reported hospitalization since it was a common practice in Taiwan to conduct transrectal ultrasound-guided prostate biopsies\nunder intravenous general anesthesia, which must be carried out in a hospital setting. In the U.S., transrectal ultrasound-guided prostate\nbiopsies are conducted in an outpatient setting. Therefore, should the subject locate in the U.S., it would not be hospitalized, and no\nSAE would be reported then.\n\n \n\nOverall summary\n\n \n\nBoth levels of Botreso® (API-1) administration, 15 mg/day\nand 30 mg/day, were well tolerated by the subjects. The incidences of AEs and SAEs were relatively low and common side effects of\n5-Ari and α-blockers were not reported during relevant trials, which showed an excellent tolerability profile of Botreso®.\n\n* *\n\n*Phase III Clinical Studies*\n\n** **\n\n**The data in the Phase III Clinical Studies section, pertains to the\nclinical trials utilizing API-1, which is currently unavailable. We will be conducting new studies using API-2 (“Botreso®\n(API-2)”). However, we must conduct API-1 and API-2 comparability studies first and if the FDA accepts such results and determines\nthat API-1 and API-2 are comparable, only then we will be able to conduct the additional Phase I PK study and Phase III pivotal study\nusing API-2. If the U.S. FDA does not agree that API-1 and API-2 are comparable, we will need to work with other API vendor to demonstrate\nthe comparability that meet U.S. FDA’s requirements. In the event that we are unable to establish comparability between API-1 and\nAPI-2, we will be required to repeat the Botreso® clinical trials using API-2. For further details, see the risk factor\ntitled “If we are unable to identify a supplier capable of producing API-2 that is sufficiently comparable to API-1, we will be\nrequired to repeat our clinical trials for Botreso® and PCP, which could significantly delay our product development efforts\nand result in increased costs” on page 13.**\n\n \n\n74\n\n \n\n \n\nPhase III clinical trials were approved by the U.S. FDA in December 2009\nand approved by Taiwan TFDA in February 2010. We have conducted four Phase III clinical trials for Botreso® (API-1)\nin the U.S. and Taiwan, including two pivotal trials (one in the US and one in Taiwan) and two open-label extension studies (one in the\nUS and one in Taiwan) using API-1. Among four Phase III clinical trials, the U.S. FDA determined our pivotal Phase III clinical trial\nfor Botreso® (API-1) in the U.S. failed to show a difference between treatment groups for the primary efficacy endpoint\nin the intent-to-treat population.\n\n \n\nIn addition, our API-1 supplier withdrew their consent to reference\ntheir DMF on file with the FDA, due to the relocation and restructuring of manufacturing facility. Considering a variety of factors, we\nvoluntarily withdrew our NDA on November 30, 2022, in order to develop more information about API-2 for the U.S. FDA’s review\nand to address ongoing questions regarding demonstrated difference between Botreso® and placebo for the primary efficacy\nendpoint in a clinical study for Botreso®, and to address other questions FDA had previously identified in our NDA regarding\nFDA’s questions related to the drug substance and product, validation of methods used for measuring the effect of Botreso®,\nmanufacturing, clinical and nonclinical testing, data, and statistical analyses, among others.\n\n \n\nThe U.S. FDA provided written responses on February 23, 2024.\nIn the response, U.S. FDA questioned whether one new Phase III study with API-2 would be sufficient, noting again its concern that Study\nBotreso®-US-a did not demonstrate a statistically significant difference between the drug and placebo in the primary efficacy\nendpoint and concerns regarding the treatment effect of questionable significance in the Study Botreso®-TWN-a. The U.S.\nFDA also commented that it will need more information on how we would demonstrate comparability between API-1 and API-2 and that its determination\nof whether our original Phase III studies with API-1 would have utility, based upon the quality of support, for a convincing link between\nproducts containing API-1 and API-2.\n\n \n\nWe followed the U.S. FDA’s advice to amend the Phase III protocol\nand develop the Phase I PK protocol. On May 14, 2024, we submitted a Type B meeting request to the FDA containing the amended protocols\nfor their review and comments. On May 23, 2024, we received a denial notice from the FDA, stating that it is premature for this stage\nof drug development, and until the company can provide complete Chemistry, Manufacturing, and Controls (CMC) information on the active\npharmaceutical ingredient-2 (API-2) and a plan to establish comparability between API-1 and API-2, the U.S. FDA is unable to reach agreement\non protocols designed to establish the safety and efficacy of Botreso®. We have completed the CMC documentation on the\nactive pharmaceutical ingredient-2 (API-2) and a plan to establish comparability between API-1 and API-2 and submitted it to the U.S.\nFDA on October 16, 2024, and are awaiting feedback from the U.S. FDA.\n\n \n\nIf the comparability between API-1 and API-2 is accepted by the U.S.\nFDA, we plan to conduct additional Phase III pivotal study in the US using API-2 (MCS-2-US-b study). If the comparability between API-1\nand API-2 is not accepted by the U.S. FDA, we will need to work with other API vendor to demonstrate the comparability that meet U.S.\nFDA’s requirements and would have to perform more clinical trials. In the event that we are unable to establish comparability between\nAPI-1 and API-2, we will be required to repeat the Botreso® clinical trials using API-2. For further details, see the risk\nfactor titled “If we are unable to identify a supplier capable of producing API-2 that is sufficiently comparable to API-1, we will\nbe required to repeat our clinical trials for Botreso® and PCP, which could significantly delay our product development\nefforts and result in increased costs” on page 13.\n\n \n\n75\n\n \n\n \n\nMore details are indicated in the following tablet:\n\n \n\n \n \n**Short-term Clinical Studies**\n \n**Long-term Clinical Studies**\n\n**Location**\n \nUSA\n \nTaiwan\n \nUSA\n \nTaiwan\n\n**Approved Date**\n \nNovember 17, 2009\n \nFebruary 1, 2010\n \nNovember 17, 2009\n \nFebruary 1, 2010\n\n**Date of the first subject randomized**\n \nSeptember 8, 2010\n \nJuly 5, 2010\n \nDecember 1, 2010\n \nSeptember 27, 2010\n\n**Study Type**\n \nPhase IIb/III\n \nPhase III\n \nOpen-label Extension\n \nOpen-label Extension\n\n**Objective**\n \n\nComparison Study of Botreso® (API-1) and placebo:\n\nthe efficacy and safety\n\n \n\nComparison Study of Botreso® (API-1) and placebo:\n\nthe efficacy and safety\n\n \n\nLong-term use of Botreso® (API-1):\n\nthe safety\n\n \n\nLong-term use of Botreso® (API-1):\n\nthe safety\n\n**Study Design**\n \n\nMulti-center\n\nDouble-Blind\n\nRandomized\n\nPlacebo-controlled\n\n \n\nMulti-center\n\nDouble-Blind\n\nRandomized\n\nPlacebo-controlled\n\n \n\nMulti-center\n\nOpen-Label\n\nSingle arm\n\n \n\nMulti-center\n\nOpen-Label\n\nSingle arm\n\n**Study drug Dosage administration**\n \n\nTwo Botreso® (API-1) softgels\n\nOnce daily\n\nOral\n\n \n\nTwo Botreso® (API-1) softgels\n\nOnce daily\n\nOral\n\n \n\nTwo Botreso® (API-1) softgels\n\nOnce daily\n\nOral\n\n \n\nTwo Botreso® (API-1) softgels\n\nOnce daily\n\nOral\n\n**Diagnosis**\n \nBPH/LUTS\n \nBPH/LUTS\n \nBPH/LUTS\n \nBPH/LUTS\n\n**Treatment Periods**\n \n12 weeks\n \n12 weeks\n \n24 weeks/40 weeks\n \n24 weeks/40 weeks\n\n \n\nThe study completion dates included in the following\ntable:\n\n \n\n  \nLast Subject Last Visit \nClinical Study Report Date\n\nMCS-2-US-a \n2013-04-09 \n2017-06-21\n\nMCS-2-US-c \n2014-03-28 \n2017-06-22\n\nMCS-2-TWN-a \n2014-03-28 \n2017-01-20\n\nMCS-2-TWN-c \n2014-03-28 \n2017-01-20\n\n \n\nThe primary objective of phase III clinical trials is to investigate\nthe clinical use of Botreso® (API-1), by measuring the difference in the changes of I-PSS between Botreso®\ngroup and placebo group after short term (12 weeks) and long-term (40 weeks). The whole clinical studies were up to 52 weeks,\nor one year. Despite the pivotal Phase III clinical trial for Botreso® (API-1) in the U.S. failing to demonstrate a difference\nbetween treatment groups for the primary efficacy endpoint in the intent-to-treat population, the remaining data, including one phase\nIII US open label extension study and two phase III studies conducted in Taiwan, still indicated that the overall results indicated that\nBotreso® (API-1) softgels could reduce the I-PSS total score. However, the U.S. FDA has expressed concerns regarding the\nreproducibility of some of the reported efficacy results for Study MCS-2- TWN-a. To address the U.S. FDA’s concerns about the reproducibility\nof the reported efficacy results for Study MCS-2-TWN-a, we propose to re-analyze the statistical results of the MCS-2-TWN-a study data\nusing Clinical Data Interchange Standards Consortium (CDISC) data sets that match the FDA’s requested data format. Then, we will\nsubmit the reanalysis for further discussions with U.S. FDA about its concerns.\n\n \n\nAs mentioned above, the data in the Phase I Clinical Studies section\npertains to the clinical trials utilizing API-1, which is currently unavailable. We will be conducting new studies using API-2 (“Botreso®\n(API-2)”). If we are unable to demonstrate comparability, we would have to work with other API vendors to follow FDA guidance to\ndemonstrate comparability. In the event that we are unable to establish comparability between API-1 and API-2, we will be required to\nrepeat the Botreso® clinical trials using API-2. For further details, see the risk factor titled “If we are unable\nto identify a supplier capable of producing API-2 that is sufficiently comparable to API-1, we will be required to repeat our clinical\ntrials for Botreso® and PCP, which could significantly delay our product development efforts and result in increased costs”\non page 13.\n\n \n\n76\n\n \n\n \n\nOverview of clinical trials\n\n \n\nThe phase III clinical trials (pivotal studies) in the U.S. and\nTaiwan primarily aimed to investigate whether daily treatment of two Botreso® (API-1) softgels can improve LUTS in patients\nwith BPH. The phase III clinical trials involved 546 subjects from two pivotal trials, including 274 subjects in the U.S. and\n272 subjects in Taiwan. Among the 546 subjects, 545 of them received more than one dose of Botreso® (API-1). 42 subjects\nreceived 15 mg Botreso® per day, 338 subjects received 30 mg Botreso® per day, and 165\nsubjects received 0 mg Botreso® (API-1) per day.\n\n \n\n  \nBotreso®\n(API-1)  \nBotreso®\n(API-1)  \nPlacebo \n\nDosage \n 15 mg/day  \n 30 mg/day  \n 0 mg/day \n\nRandomized \n 42  \n 338  \n 166 \n\nReceived ≥ 1 Dose of Study Medication \n 42 (100%)  \n 338 (100%)  \n 165 (99.4%) \n\n \n\nThe following table indicates the demographics for\nphase III pivotal clinical studies.\n\n \n\n  \n  \nBotreso®\n(API-1) \nBotreso®\n(API-1) \nPlacebo\n\nDosage \n  \n15 mg/day \n30 mg/day \n0 mg/day\n\nParameter \nStatistic \nN=42 \nN=338 \nN=165\n\nRace, n (%) \nAmerican Indian/Alaskan Native \n1 (2.4) \n1 (0.3) \n1 (0.6)\n\n  \nAsian \n1 (2.4) \n184 (54.4) \n88 (53.3)\n\n  \nBlack/African American \n1 (2.4) \n18 (5.3) \n7 (4.2)\n\n  \nCaucasian \n38 (90.5) \n129 (38.2) \n65 (39.4)\n\n  \nOther, Specify \n1 (2.4) \n3 (0.9) \n2 (1.2)\n\n  \nTaiwan Aboriginal \n0 \n3 (0.9) \n2 (1.2)\n\nAge (Years) \nn \n42 \n338 \n165\n\n  \nMean (SD) \n62.2 (8.6) \n62.2 (8.3) \n61.3 (8.9)\n\n  \nMedian \n61.0 \n61.0 \n62.0\n\n  \nMin-Max \n43.0-78.0 \n44.0-86.0 \n40.0-82.0\n\n \n\nEfficacy\n\n \n\nThe results of the treatment of LUTS caused by BPH\nwere determined by the I-PSS.\n\n \n\nThe primary endpoint was the change in I-PSS from Day 1 to Week\n12. According to the US-a Phase III clinical trial, the mean (standard deviation [SD]) reductions in I-PSS from Day 1 to Week\n12 in the Botreso® (API-1) group were insignificant than that in the placebo group (-3.36 [1.00] vs. -3.42 [1.11], p=0.1204).\nAccording to the TWN-a Phase III clinical trial, the mean (standard deviation [SD]) reductions in I-PSS from Day 1 to Week 12\nin the Botreso® (API-1) group were significant than that in the placebo group (-4.59 [4.58] vs. -2.69 [4.01], p=0.0134).\n\n \n\nTable 1: Summary of the primary endpoint for the\ntwo-Phase III studies and meta-analysis.\n\n \n\nStudy/Population \nChange from Baseline in I-PSS at Week 12\n\nTWN-a/ITT \nTreatment \nN \nBaseline \n12 Weeks \nChange\n\n  \nMCS – 2 \n148 \n17.30 \n12.72 \n-4.59\n\n  \nPlacebo \n68 \n16.22 \n13.53 \n-2.69\n\n  \nP-Value \n  \n  \n  \n0.0134\n\nUS-a/ITT \nMCS – 2 \n156 \n18.62 \n15.32 \n-3.36\n\n  \nPlacebo \n74 \n17.83 \n14.75 \n-3.42\n\n  \nP-Value \n  \n  \n  \n0.12\n\n \n\nPhase III open label extension studies, or OLEs, primarily aimed\nto evaluate the safety and tolerability of long-term administration of two Botreso® (API-1) softgels per day. The\nphase III OLEs involved a total of 361 subjects, including 181 subjects in the U.S. and 180 subjects in Taiwan. Among those,\n226 subjects received 30mg to 30 mg Botreso® (API-1) per day and 107 subjects received 0 mg to 30 mg\nBotreso® (API-1) per day.\n\n \n\n77\n\n \n\n \n\nAccording to the US-c results of phase III OLEs, all subjects,\nincluding 102 subjects receiving 30 mg to 30 mg Botreso® per day and 51 subjects receiving 0 mg to\n30 mg Botreso® (API-1) per day, were reported with significant decreases (P value < 0.05) in the I-PSS\nat Day 85, Day 169 and Day 281; and 28 subjects receiving 15 mg to 30 mg Botreso® (API-1) per day,\nwere reported with significant decreases (P value < 0.05) in the I-PSS at Day 85 and Day 169. According to the results of TWN-c\nphase III OLEs, all subjects, including 124 subjects receiving 30 mg to 30 mg Botreso® per day and\n56 subjects receiving 0 mg to 30 mg Botreso® (API-1) per day, were reported with significant decreases (P\nvalue < 0.05) in the I-PSS at Day 85, Day 169 and Day 281. Despite the pivotal Phase III clinical trial for Botreso®\n(API-1) in the U.S. failing to demonstrate a difference between treatment groups for the primary efficacy endpoint in the intent-to-treat\npopulation, the remaining data, including one phase III US open label extension study and two phase III studies conducted in Taiwan, still\nindicated statistically significant improvements with Botreso® (API-1) for up to one year, with no drug-related serious\nadverse events reported.\n\n \n\nThe following table displays the summary for the\ntwo open label extension studies.\n\n \n\nTable 2: Summary for the two open label extension\nstudies and meta-analysis:\n\n \n\nStudy/Population \nPost-\nbaseline Visit \nTreatment \nN \nChange from\nbaseline in \nI-PSS\nMean (SD) \nP-Value\n\nUS/ITT \nDay 281 \n30 mg/day to 30 mg/day \n71 \n-3.3 (7.01) \n0.0002\n\n  \n  \n0 mg/day to 30 mg/day \n21 \n-5.1 (4.93) \n0.0001\n\nTaiwan/ITT \nDay 281 \n30 mg/day to 30 mg/day \n50 \n-4.9 (5.9) \n<0.0001\n\n  \n  \n0 mg/day to 30 mg/day \n23 \n-8.0 (4.6) \n<0.0001\n\n \n\nSafety\n\n \n\nAccording to the results of US-a phase III clinical, 108 subjects,\nor 39.4% of the 274 subjects, reported AEs. The administration of 15 mg Botreso® (API-1) and 30 mg Botreso®\n(API-1) per day for 12 weeks was indicated to be safe and well tolerated. The incidence of AEs and SAEs were lower in the Botreso®\n(API-1) compared to the placebo. There were no death or premature un-blinding during the study period, and there are no drug-related SAEs.\nThe statistics of AEs, related AEs, or SAEs, of relevant subjects are indicated in the following table:\n\n \n\n \n \n \n**Phase III\nClinical Trials**\n \n\n \n \n \n**Botreso®\n\n(API-1) 15 mg/day**\n \n \n \nBotreso®\n\n(API-1)\n30 mg/day\n \n \n \n**Placebo**\n \n \n \n**Total**\n \n\n \n \n \n**N=42\nN (%)**\n \n \n \n**N=156\nN (%)**\n \n \n \n**N=76\nN (%)**\n \n \n \n**N=274\nN (%)**\n \n\nAdverse\nEvent (AE)\n \n \n16** **(38.1)\n \n \n \n59** **(37.8)\n \n \n \n33 (43.4)\n \n \n \n108 (39.4)\n \n\nRelated\nAE\n \n \n6** **(14.3)\n \n \n \n21** **(13.5)\n \n \n \n14 (18.4)\n \n \n \n41 (15.0)\n \n\nSerious\nAdverse Event (SAE)\n \n \n0** **(0.0)\n \n \n \n1** **(0.6)\n \n \n \n2 (2.6)\n \n \n \n3 (1.1)\n \n\n \n\nThe parameter of correlation of relevant subjects\nare indicated in the following table:\n\n \n\nParameter \n **15 mg N = 42 n (%)**  \n **30 mg N = 156 n (%)**  \n **0 mg N = 76 n (%)**  \n **Total N = 274 n (%)** \n\nSubjects with ≥ 1 TEAE \n 16** **(38.1)  \n 59 (37.8)  \n 33 (43.4)  \n 108 (39.4) \n\nDefinitely \n 0 (0.0)  \n 0 (0.0)  \n 0 (0.0)  \n 0 (0.0) \n\nProbably \n 0 (0.0)  \n 6 (3.8)  \n 3 (3.9)  \n 9 (3.3) \n\nPossibly \n 6 (14.3)  \n 15 (9.6)  \n 11 (14.5)  \n 32 (11.7) \n\nNot Related \n 10 (23.8)  \n 38 (24.4)  \n 19 (25.0)  \n 67 (24.5) \n\n \n\n78\n\n \n\n \n\nAccording to the results of TWN-a phase III clinical trials, 106\nsubjects, or 39.1% of the 271 subjects, reported AEs. The administration of 30 mg Botreso® (API-1) per day for\n12 weeks was indicated to be safe and well tolerated. The incidence of AEs and SAEs were lower in the Botreso® (API-1)\ncompared to the placebo. There were no death or premature un-blinding during the study period, and there are no drug-related SAEs. The\nstatistics of AEs, related AEs, or SAEs, of relevant subjects are indicated in the following table:\n\n \n\n \n \n \n**Phase III Clinical Trials**\n \n\n \n \n \n**Botreso®\n(API-1)\n30 mg/day**\n \n \n \n**Placebo**\n \n \n \n**Total**\n \n\n \n \n \n**N=182 N (%)**\n \n \n \n**N=89 N (%)**\n \n \n \n**N=271 N (%)**\n \n\nAdverse Event (AE)\n \n \n67 (36.8)\n \n \n \n39 (43.8)\n \n \n \n106 (39.1)\n \n\nRelated AE\n \n \n9 (4.9)\n \n \n \n6 (6.7)\n \n \n \n15 (5.5)\n \n\n5Serious Adverse Event (SAE)\n \n \n2 (1.1)\n \n \n \n2 (2.2)\n \n \n \n4 (1.5)\n \n\n \n\nThe parameter of correlation of relevant subjects\nare indicated in the following table:\n\n \n\nParameter \n **30 mg N = 182 n (%)**  \n **0 mg N = 89 n (%)**  \n **Total N = 271 n (%)** \n\nSubjects with ≥ 1 TEAE \n 67 (36.8)  \n 39 (43.8)  \n 106 (39.1) \n\nDefinitely \n 1 (1.1)  \n 0 (0.0)  \n 2 (0.7) \n\nProbably \n 1 (1.1)  \n 0 (0.0)  \n 2 (0.7) \n\nPossibly \n 4 (2.2)  \n 6 (6.7)  \n 10 (3.7) \n\nNot Related \n 59 (32.4)  \n 33 (37.1)  \n 92 (33.9) \n\n \n\nThe results of phase III clinical trials indicated that Botreso®\n(API-1) has fewer AEs and SAEs than that of placebo.\n\n \n\nAccording to the US-c results of phase III OLEs, Botreso®\n(API-1) softgels showed excellent tolerability. No life-threatening adverse events occurred during 40/52 weeks of taking Botreso®\n(API-1) softgels.\n\n \n\n  \n **Phase III\nClinical Trials (Long-term)** \n\n  \n **Botreso®\n(API-1) 0-30 mg/day**  \n Botreso®\n\n(API-1)\n15-30 mg/day  \n Botreso®\n\n(API-1)\n30 mg to\n30 mg/day  \n **Total** \n\n  \n **N=51\nN (%)**  \n **N=28\nN (%)**  \n **N=102\nN (%)**  \n **N=181\nN (%)** \n\nAdverse\nEvent (AE) \n 25 (49.0)  \n 5 (17.9)  \n 42 (41.2)  \n 72 (39.8) \n\nRelated\nAE \n 6 (11.8)  \n 0 (0)  \n 6 (5.9)  \n 12 (6.6) \n\nSerious\nAdverse Event (SAE) \n 3 (5.9)  \n 0 (0)  \n 6 (5.9)  \n 9 (5.0) \n\n \n\nThe parameter of correlation of relevant subjects\nare indicated in the following table:\n\n \n\nParameter \n **15 mg–30 mg N = 28 n (%)**  \n **30 mg–30 mg N = 102 n (%)**  \n **0 mg–30 mg N = 51 n (%)**  \n **Total N = 181 n (%)** \n\nSubjects with ≥ 1 TEAE \n 5 (17.9)  \n 42 (41.2)  \n 25 (49.0)  \n 72 (39.8) \n\nDefinitely \n 0 (0.0)  \n 0 (0.0)  \n l (2.0)  \n 1 (0.6) \n\nProbably \n 0 (0.0)  \n 1 (1.0)  \n 2 (3.9)  \n 3 (1.7) \n\nPossibly \n 0 (0.0)  \n 5 (4.9)  \n 3 (5.9)  \n 8 (4.4) \n\nNot Related \n 5 (17.9)  \n 39 (38.2)  \n 21 (41.2)  \n 65 (35.9) \n\n \n\n79\n\n \n\n \n\nMost AEs were unrelated to Botreso® (API-1) as illustrated\nin the table above. In the group taking 30 mg-30 mg Botreso® (API-1), the occurrence of related AEs was all less\nthan 1%. There were no related AEs reported in the group taking 15 mg-30 mg Botreso® (API-1).\n\n \n\nAccording to the results of TWN-c Phase III OLEs, Botreso®\n(API-1) softgels showed excellent tolerability. No life-threatening adverse events occurred during 40/52 weeks of taking Botreso®\n(API-1) softgels.\n\n \n\n \n \n \n**Phase III Clinical Trials (Long-term)**\n \n\n \n \n \n**Botreso®** **(API-1) 0-30 mg/day**\n \n \n \n**Botreso®** **(API-1) 30 mg to 30 mg/day**\n \n \n \n**Total**\n \n\n \n \n \n**N=56 N (%)**\n \n \n \n**N=124 N (%)**\n \n \n \n**N=180 N (%)**\n \n\nAdverse Event (AE)\n \n \n39 (69.6)\n \n \n \n71 (57.3)\n \n \n \n110 (61.1)\n \n\nRelated AE\n \n \n3 (5.4)\n \n \n \n6 (4.8)\n \n \n \n9 (5.0)\n \n\nSerious Adverse Event (SAE)\n \n \n2 (3.6)\n \n \n \n5 (4.0)\n \n \n \n7 (3.9)\n \n\n \n\nThe parameter of correlation of relevant subjects\nare indicated in the following table:\n\n \n\nParameter \n **30 mg–30 mg N = 124 n (%)**  \n **0 mg–30 mg N = 56 n (%)**  \n **Total N = 180 n (%)** \n\nSubjects with ≥ 1 TEAE \n 71 (57.3)  \n 39 (69.6)  \n 110 (61.1) \n\nDefinitely \n 1 (0.8)  \n 0 (0.0)  \n 1 (0.6) \n\nProbably \n 1 (0.8)  \n 0 (0.0)  \n 1 (0.6) \n\nPossibly \n 4 (3.2)  \n 3 (5.4)  \n 7 (3.9) \n\nNot Related \n 69 (55.6)  \n 39 (69.6)  \n 108 (60.0) \n\n \n\nMost AEs were unrelated to Botreso® (API-1) as illustrated\nin the table above. In the group taking 30 mg-30 mg Botreso® (API-1), the occurrence of related AEs was all less\nthan 1%. There were no related AEs reported in the group taking 15 mg-30 mg Botreso® (API-1).\n\n \n\nAll identified serious adverse events have been determined to be “not\nrelated” to Botreso®, with the exception of a pancreatitis event observed in the MCS-2-US-c trial. In this instance,\nthe pancreatitis lasted only three days, and the causality was assessed as “possibly related” but not “definitely related,”\nas the event was most likely attributable to Metformin, a medication used to treat diabetes mellitus.\n\n \n\nOverall summary\n\n \n\nThe data of phase III clinical trials indicated that after taking\nBotreso® (API-1) softgels for 12 weeks, patients’ LUTS caused by BPH were improved as shown by the I-PSS\nresults. When compared to the placebo group, despite the pivotal Phase III clinical trial for Botreso® (API-1) in\nthe U.S. failing to demonstrate a difference between treatment groups for the primary efficacy endpoint in the intent-to-treat population,\nthe remaining Botreso® (API-1) groups, including one phase III US open label extension study and two phase III\nstudies conducted in Taiwan, still demonstrated a statistically significant improvement (P value < 0.05) based on meta-analysis. However,\nthe U.S. FDA has expressed concerns regarding the reproducibility of some of the reported efficacy results for Study Botreso®-\nTWN-a. In addition, when compared with the baseline, there were significant decreases (P value < 0.05) in the I-PSS at Day 85,\nDay 169 and Day 281, which indicated long-term decreases in the I-PSS scores after taking Botreso® (API-1) softgels\nfor up to 52 weeks.\n\n \n\nThere were no deaths reported for either the phase III clinical\ntrials or the open-label extension studies. In the phase III clinical trials, the incidence of AEs was slightly higher in the placebo\ngroup when compared to the 15 mg and 30 mg Botreso® (API-1) treatment groups, respectively. The majority of reported\nAEs were considered unrelated to Botreso® (API-1).\n\n \n\nAs the U.S. FDA issued new statistical analysis\nstandards in December 2016, we have to retain an outsourcing statistical team to re-create our study data programs, tabulation model\nand analysis data model database for its Phase III studies and evaluation of integrated safety and efficacy, in order to match with\nU.S. FDA’s electronic submission gateway, which resulted in a delay in our NDA submission in late 2021. This NDA was later\nwithdrawn on November 30, 2022, and we currently do not have an NDA on file with the U.S. FDA.\n\n \n\n80\n\n \n\n \n\nHowever, the U.S. FDA also had concerns regarding\nthe reproducibility of some of the reported efficacy results for Study MCS-2-TWN-a. On February 23, 2024, we received a written response\nfrom the U.S. FDA. In the response, the U.S. FDA noted again its concern that Study MCS-2-US-a did not demonstrate a statistically\nsignificant difference between the drug and placebo in the primary efficacy endpoint and concerns regarding the treatment effect of questionable\nsignificance in the Study MCS-2-TWN-a.\n\n \n\nIf the comparability is accepted by the U.S. FDA, we will conduct\nadditional Phase III trial and Phase I PK study in the US using API-2 to support our NDA re-submission. If our comparability\nis not accepted by the U.S. FDA, we will need to work with other API vendor to demonstrate the comparability that meet U.S. FDA’s\nrequirements and would have to perform more clinical trials. In the event that we are unable to establish comparability between API-1\nand API-2, we will be required to repeat the Botreso® clinical trials using API-2. For further details, see the risk factor\ntitled “If we are unable to identify a supplier capable of producing API-2 that is sufficiently comparable to API-1, we will be\nrequired to repeat our clinical trials for Botreso® and PCP, which could significantly delay our product development efforts\nand result in increased costs” on page 13.\n\n** **\n\n**PCP**\n\n \n\nDisease Overview\n\n \n\nProstate cancer begins when cells in the prostate\ngland start to grow out of control. On a basic level, prostate cancer is caused by changes in the DNA of a normal prostate cell. Most\ngene mutations related to prostate cancer seem to develop during a man’s life rather than having been inherited. In general, the\nmore quickly prostate cells grow and divide, the more chances there are for mutations to occur. Therefore, anything that speeds up this\nprocess may make prostate cancer more likely. Although researchers do not know exact causes of prostate cancer, they have found some risk\nfactors that might cause prostate cells to become cancer cells. Primary risk factors include age, race/ethnicity, geography, family history\nand gene changes. Factors with less clear effects on prostate cancer risk include diet, obesity, smoking, chemical exposures, inflammation\nof the prostate, sexually transmitted infections, and vasectomy. According to Frost & Sullivan, the global prevalence of prostate\ncancer increased from 10.0 million in 2017 to 11.2 million in 2020, representing a CAGR of 3.9%. The global prostate cancer\nmarket increased from US$9.7 billion in 2017 to US$12.6 billion in 2019, representing a CAGR of 9.1%. In addition, the prostate-specific\nantigen abnormal population, or PSA abnormal population, representing men over 40 years old with a prostate-specific antigen test\nvalue of 4.0 ng/ml or higher, is exposed to a high risk of prostate cancer. From 2015 to 2020, the total number of PSA abnormal populations\nin the U.S., Taiwan and China increased from 5.0 million to 5.3 million.\n\n \n\nCurrent Standard Care\n\n \n\nAccording to the U.S. National Cancer Institute,\nseveral protective factors may decrease the risk of prostate cancer. A 10-year study showed that the risk of prostate cancer was lower\nin men who had enough folate in their diets. Folate is a kind of vitamin B that occurs naturally in some foods, such as green vegetables,\nbeans and orange juice. However, the risk of prostate cancer was increased in men who took 1 mg supplements of folic acid. Although\nsome studies have shown that finasteride or dutasteride may lower the risk for prostate cancer, U.S. FDA made a safety announcement\nin June 2011 and informed that 5-Ari may increase the risk of a more serious form of prostate cancer (high-grade prostate cancer).\nBoth finasteride or dutasteride may cause side effects such as impotence, decreased libido, ejaculation disorders, breast disorders, rash,\nasthenia, headache, hypotension, postural hypotension, peripheral edema, dizziness, somnolence, dyspnea, rhinitis, abnormal ejaculation,\ngynecomastia, dizziness, pruritus, urticaria, localized edema, serious skin reactions, angioedema, and sexual function abnormal. In addition,\nmen with a benign prostatic hyperplasia diagnosis and exposed to 5-alpha reductase inhibitor had an increased association with cardiac\nfailure. Currently, there is no drug available to prevent prostate cancer.\n\n \n\nMechanism of Action\n\n \n\nSimilar to Botreso®, PCP works through its mechanism\nof antioxidant and anti-inflammatory. PCP contains several types of patented pharmaceutical ingredients that reduce oxidative stress and\ninflammatory cytokines (IL-6), both of which are main causes of many chronic inflammatory diseases.\n\n* *\n\n81\n\n \n\n* *\n\n*Antioxidant Activity*\n\n \n\nFree radicals are highly reactive chemicals that\nhave the potential to harm cells. They are formed naturally in the human body and play an important role in many normal cellular processes.\nAt high concentrations, however, free radicals can be hazardous to the human body and damage all major components of cells, including\nDNA, proteins, and cell membranes. The damage to cells caused by free radicals, especially the damage to DNA, may play a role in the development\nof cancer and other health conditions. Elevated rates of reactive oxygen species, or ROS, have been detected in almost all cancers, where\nthey promote many aspects of tumor development and progression. A challenge for novel therapeutic strategies will be the fine-tuning of\nintracellular ROS signaling to effectively deprive cells of ROS-induced tumor-promoting events, towards tipping the balance to ROS-induced\napoptotic signaling.\n\n \n\nAntioxidants are also known as “free radical\nscavengers.” Therapeutic antioxidants may prevent early events in tumor development. Antioxidants are chemicals that interact with\nand neutralize free radicals and thus prevent free radicals from causing damages. The pharmaceutical ingredients contained in PCP are\npotent antioxidants as they modify cell growth and induce apoptosis, and possess distinctive antioxidative properties including the protection\nof important biomolecules such as DNA from free radicals and thus could decrease incidence rates of cancers.\n\n* *\n\n*Anti-inflammatory Activity*\n\n \n\nInflammation involves the induction of complex,\ncoordinated chemical signals and associated physiological processes following an injury that promote the “healing” of damaged\ntissues. Early responses include increases in vascular permeability and activation, together with the directed migration of leukocytes\n(neutrophils, monocytes and eosinophils) towards the site of injury, where the groundwork is being laid for the formation of a new extracellular\nmatrix. The directional migration is mediated by secreted chemokines (such as IL-6) that form a concentration gradient towards the site\nof inflammation. The extracellular matrix provides the structure upon which cells (fibroblasts and endothelial cells) can migrate and\nproliferate, regenerating new tissues and a vascular network. In the later stage of the inflammatory response, the macrophages are the\ndominant cell type, orchestrating and directing the healing process. Normally, inflammation is a self-limiting process due to the production\nof anti-inflammatory cytokines, which buffer the effect of pro-inflammatory cytokines. The cytokine/chemokine pattern persisting at the\ninflammatory site is important in the development of chronic diseases. The longer the inflammation persists, the higher the risk of associated\ncarcinogenesis.\n\n \n\nIL-6 is a prototypical cytokine with various biological\neffects on a wide variety of cells, which involves in the control of immune responses and inflammation. However, over production of IL-6\nlead to severe disease complications. Therefore, as illustrated in the diagram below, IL-6-mediated inflammation could be a therapeutic\ntarget for prostate cancer, since anti-IL-6 receptor antibody administration suppressed tumor growth. PCP contains several types of patented\npharmaceutical ingredients that can reduce IL-6 and thus address inflammation issues.\n\n \n\n \n\n \n\nNotes:\n\n \n\n(1)LPS means lipopolysaccharides which are large molecules consisting\nof a lipid and a polysaccharide that are bacterial toxins.\n\n(2)BDS means botanical drug substance.\n\n(3)BDP means botanical drug product.\n\n(4)LPS#1 means 0.3 µg/ml LPS/0.1% DMSO.\n\n(5)LPS#2 means 0.3 µg/ml LPS/0.1% DMSO and 0.004%\nsoybean oil.\n\n(6)* means *P* < 0.05, ** means *P* < 0.01 and\n*** means *P* < 0.001 compared with LPS#1.\n\n(7)# means *P* < 0.05, ## means *P* < 0.01 and\n### means *P* < 0.001 compared with LPS#2.\n\n \n\n82\n\n \n\n \n\nThe purpose of this study is to evaluate the anti-inflammation\neffect of BDS and BDP by measuring LPS-induced IL-6 release. The data demonstrated that both BDS and BDP showed a concentration-dependent\ninhibition of LPS-induced IL-6 release. LPS is one of the main etiological factors in the pathogenesis of several diseases. LPS has been\nshown to stimulate host cells, including macrophages and fibroblasts, to produce cytokines. LPS can markedly increase the production of\nIL 6, IL 8 and TNF α in differentiated THP 1 cells. Therefore, based on an important pro-inflammatory cytokine, the IL-6 levels\nstimulated by LPS can be determined for the understanding of anti-inflammatory activity of the PCP.\n\n \n\nInterleukin (IL)-6 is produced at the site of inflammation.\nIL-6 exerts stimulatory effects on T- and B-cells, thus favoring chronic inflammatory responses. Although its expression is strictly controlled\nby transcriptional and posttranscriptional mechanisms, dysregulated continual synthesis of IL-6 plays a pathological effect on chronic\ninflammation and autoimmunity. BDS (25, 50 and 100 µg/ml) and BDP (35, 70 and 140 µg/ml) were used, respectively. The data\ndemonstrated that both BDS and BDP showed a concentration-dependent inhibition of LPS-induced IL-6 release in differentiated THP-1 cells,\nsuggesting an anti-inflammatory activity of PCP.\n\n \n\nClinical Data\n\n* *\n\n*Phase I Clinical Studies*\n\n \n\nPhase I clinical studies of PCP focused on\npharmacokinetics and clinical drug-drug interaction studies.\n\n \n\nPharmacokinetics\n\n \n\nThe study of pharmacokinetics of PCP was a randomized,\nbalanced, single-dose, two-treatment (fed versus fasted) study in healthy male adult volunteers. The study was designed to evaluate the\nPK of PCP when the product was administered in the fed and fasted state. A total of 47 subjects were randomized to receive a single dose\neither in the fed (24 subjects) or fasted (23 subjects) state, and the PK parameters were evaluated and compared for the 2 groups of subjects.\nRelevant trials were initiated on April 22, 2015 and completed on April 24, 2017, with 23 subjects in fed group and 22 subjects\nin fasted group had completed the study.\n\n \n\nAs to the efficacy of PCP, the study compared serum\nactive ingredient levels of five major biomarkers,\n\nPL, PF, PE, TC and BC (drug codes for carotenoid chylomicrons), in subjects taking PCP after a meal with those taking PCP on an empty\nstomach, and found that the proportion of active ingredient absorbed after a meal was better than after an empty stomach. Subjects were\nrandomized to two groups in order to obtain their pre-prandial or postprandial medication status. The results showed that the adverse\neffects were well tolerated irrespective of the timing of administration (postprandial or postprandial), although absorption rates were\nhigher when PCP were taken after meals.\n\n \n\nAs to the safety profile of PCP, data indicated\nthat 22 subjects, or 46.8%, of all subjects reported at least one treatment emergent adverse event, or TEAE, during the study. The fasted\ngroup has a higher TEAEs rate (60.9%) than the fed group (33.3%), but the rate of Aes was similar for the two groups. Overall, the most\nfrequently reported TEAEs were headache (19.1%), upper respiratory tract infection (8.5%), back pain (4.3%) and nasopharyngitis (4.3%).\nThe fasted group reported higher rate of headaches than the fed group. The two groups had similar rates for other TEAEs. There were no\nserious, severe, or life-threatening TEAEs and no deaths. No TEAEs resulted discontinuation of the study. Other data such as the changes\nin blood pressure, heart rate, respiratory rate, weight and temperature were generally small and clinically insignificant.\n\n \n\nClinical Drug-Drug Interaction\n\n \n\nThe study of clinical drug-drug interaction of PCP\nwas an open-label, fixed-sequence, drug-drug interaction study to evaluate the effect of PCP on the pharmacokinetics of 24 healthy male\nsubjects. Relevant trials were initiated on May 20, 2018 and completed on September, 2018. A total of 24 subjects were enrolled in\nthe study and 23 of them completed the study. One subject discontinued the study primarily due to a failure to meet compulsory criteria.\n\n \n\nSince our in vitro drug-drug interaction study conducted\nin the U.S. concluded that our drug substance may be an inducer of CYP3A4 and CYP2B6 based on the calculated R values (< 0.9). U.S.\nFDA suggested that we further investigate the potential drug-drug interactions by conducting a clinical drug-drug interaction study using\na sensitive index substrate. The sensitive index of substrate is midazolam for CYP3A4 and bupropion for CYP2B6, respectively. Therefore,\nwe conducted such study to assess the effect of PCP on the PK of midazolam and bupropion following U.S. FDA’s suggestion in 2018.\nThe coadministration of PCP with midazolam and bupropion generally would not affect the efficacy of midazolam and bupropion, and concluded\nthat PCP is not an inducer of both midazolam (CYP3A4) and bupropion (CYP2B6).\n\n \n\n83\n\n \n\n \n\nThe primary objective of this clinical drug-drug\ninteraction study was to assess the effect of PCP on the PK of midazolam and bupropion in healthy male subjects. The results indicated\nthat the peak exposure (Cmax) and the total exposure to midazolam were not significantly affected by the co-administration of PCP. The\ntotal and peak exposures of bupropion, midazolam, and their measured metabolites were not significantly altered after multiple daily doses\nof PCP. The median time to peak concentration (Tmax) of bupropion, midazolam and their measured metabolites was not affected by multiple\ndaily doses of PCP.\n\n \n\nThe safety data Indicated that the administration of Botreso®\nalone or the co-administration of Botreso®, midazolam and bupropion was generally tolerated by healthy male subjects in\nthis study. Seven of 24 subjects (29.2%) treated with midazolam, bupropion, and/or PCP experienced a total of 10 TEAEs. Six of 24 subjects\n(25.0%) treated with midazolam or bupropion experienced seven TEAEs. One of 24 subjects (4.2%) treated with PCP alone experienced two\nTEAEs. One of 23 subjects treated with midazolam/bupropion and PCP experienced one TEAE. The most frequently reported TEAEs were\nsomnolence and others included headache, dry skin, macule, skin irritation and cough. However, 30% of TEAES were assessed as unrelated\nto the study. All TEAEs were assessed as mild in severity and fully recovered or resolved at the end of the study. No TEAE resulted discontinuation\nof the study and no SAEs or deaths were reported.\n\n \n\nOverall summary and conclusions\n\n \n\nAccording to the phase I clinical studies, the administration\nof a single oral PCP was well-tolerated among 24 subjects in both the fed and fasted states. Subjects absorbed active ingredients of PCP\nbetter when they took PCP after meals. The administration of Botreso® alone or the co-administration of Botreso®,\nmidazolam and bupropion was generally tolerated by healthy male subjects in this study. The coadministration of PCP with midazolam and\nbupropion generally would not affect the efficacy of midazolam and bupropion.\n\n* *\n\n*Phase II Clinical Studies*\n\n \n\nPhase II clinical study of PCP was a double-blind, randomized,\nplacebo-controlled, parallel one, with a group of 702 subjects for a two-year treatment of three arms, i.e. 15 mg PCP per day,\n30 mg PCP per day, and placebo. As approved by TFDA, phase II clinical trials were initiated in November 2014. 20\nmedical centers in Taiwan were involved. The 702 subjects were men with high levels of prostate specific antigen, or PSA. As of the\ndata of this annual report, phase II clinical trials are still in process. Our PCP Phase II study enrollment and treatment phase\nusing API-1 completed source data verification (SDV) stage. PCP has completed the data lock in May 2025, and statistical analysis was\ncompleted in September 2025. The results indicated it met its primary endpoint, showing a positive trend in positive biopsy rates and\nincidence of higher-grade prostate cancer after 104 weeks of administration. In addition, beyond the oncological efficacy, the Phase\nII data indicated a significant secondary potential therapeutic profile regarding metabolic regulation. Those patients treated with PCP\nfor two years exhibited a statistically significant reduction in total cholesterol (P = 0.036) and LDL levels (P = 0.018). The study further\nhighlighted a favorable lipid-modulating trend where the PCP group showed decreased triglycerides (P = 0.05), alongside a significant\nincrease in HDL (P = 0.003). In contrast, the placebo group experienced a statistically significant rise in fasting glucose (P = 0.022),\nhowever, the fasting glucose was stable (P>0.05) in the PCP group.\n\n \n\nWe are working with the U.S. FDA to establish the\ncomparability of the API-1 and API-2. To date, we have not had any discussions with the TFDA regarding the unavailability of API-1. We\nwill discuss the statistical results of the PCP using API-2 with Taiwan regulator and proceed with the Phase III PCP study if the U.S.\nFDA accepts such results and determines that API-1 and API-2 are comparable. The PCP shall not proceed to Phase III until the U.S. FDA\naccepts the results and determines that API-1 and API-2 are comparable.\n\n \n\nWe have completed the CMC documentation on the active\npharmaceutical ingredient-2 (API-2) and a plan to establish comparability between API-1 and API-2 and submitted it to the U.S. FDA on\nOctober 16, 2024, and are awaiting feedback from the U.S. FDA. As of the date of this annual report, the Company is still in the\nprocess of providing the information required by the U.S. FDA and has not yet successfully demonstrated the comparability of API-1 and\nAPI-2.\n\n \n\n84\n\n \n\n \n\nWe are currently collaborating with a supplier to prepare the API-2\nCMC documents required by the U.S. FDA. Should the FDA concur that API-1 and API-2 are similar and comparable, we will sign the Quality\nAgreement with this supplier for the raw materials for API-2. If the U.S. FDA does not agree that API-1 and API-2 are comparable, we will\ncontinue to research additional API sources based on our own patent, to pursue additional outsourcing API vendors, and to follow U.S.\nFDA’s guidance for demonstrating comparability between API-1 and API-2 to the U.S. FDA’s satisfaction. If the U.S. FDA does\nnot agree that API-1 and API-2 are comparable, we will continue to research additional API sources based on our own patent, to pursue\nadditional outsourcing API vendors, and to follow U.S. FDA’s guidance for demonstrating comparability between API-1 and API-2 to\nthe U.S. FDA’s satisfaction. In the event that we are unable to establish comparability between API-1 and API-2, we will be required\nto repeat the PCP clinical trials using API-2. For further details, see the risk factor titled “If we are unable to identify a supplier\ncapable of producing API-2 that is sufficiently comparable to API-1, we will be required to repeat our clinical trials for Botreso®\nand PCP, which could significantly delay our product development efforts and result in increased costs” on page 13.\n\n \n\nMaterial Communications\n\n \n\nAs of the date of this annual report, we have not\nreceived any relevant regulatory authority’s concerns or objections to our clinical development plans and no material unexpected\nor adverse changes have occurred since the date of issue of relevant regulations for PCP.\n\n** **\n\n**IC**\n\n \n\nDisease Overview\n\n \n\nAccording to the definition adopted by American\nUrological Association, interstitial cystitis/bladder pain syndrome, or IC/BPS, refers to a bladder pain disorder that is often associated\nwith voiding symptomatology and other systemic chronic pain disorders. The exact cause of IC/BPS is still not clear. Pain (including sensations\nof pressure and discomfort) is the hallmark symptom of IC/BPS. The prototypical IC/BPS patient also may present with marked urinary\nurgency and frequency. IC/BPS is most commonly diagnosed in individuals over 40, although the diagnosis may be delayed depending\nupon the index of suspicion for the disease, and the criteria used to diagnose it. IC/BPS most often affects women and can have a\nlong-lasting impact on quality of life. Historically, IC/BPS in men has been considered relatively unusual with a female to male ratio\nof 10:1. However, uncontrolled clinical series over the past two decades have suggested the incidence of male IC/BPS may be higher than\npreviously observed.\n\n \n\nCurrent Standard Care\n\n \n\nCurrent standard care for IC/BPS include: (i) behavioral/non-pharmacologic\ntreatments; (ii) oral medications; (iii) intravenous injection and intravesical instillations; (iv) nerve stimulation;\nand (v) surgeries including fulguration, resection, bladder and augmentation. Intravesical instillations refers to a procedure where\nthe prescription medication is placed into patients’ bladders through a thin, flexible tube inserted through the urethra. Nerve\nstimulation techniques include transcutaneous electrical nerve stimulation, which may relieve pelvic pain and, in some cases, reduce urinary\nfrequency; and sacral nerve stimulation, which may reduce urinary urgency but cannot relieve pains. Since surgery is irreversible and\nlife-altering, it is rarely used to treat IC/BPS. While some patients have complete or near-complete symptom resolution after surgery,\nothers have poor outcomes including persistent pain (even if the bladder is removed), complications or new symptoms with lifelong significant\nbother. Among all the treatment categories stated above, intravenous injection and intravesical instillations are comparatively effective\nmethods to treat IC/BPS.\n\n \n\nClinical Data\n\n* *\n\n*Preclinical Studies*\n\n \n\nData from our preclinical studies show that the\nmicelles have favorable characteristics and stability. IC micelles with a target size of micromulsion under 100nm were developed for injection.\nWe adopt a microemulsion technique of sonicating the mixture of substrate and surfactants and filtering through a sterilized 0.22-um membrane\nfilter to obtain micelle. As a result, the mixture passed through a sterilized 0.22-um membrane filter to cut the bigger particles of\nmicelle into the size of approximately 7.5 nm and 10.5 nm, respectively, with the narrow particle size distribution of low polydispersity\nof 0.033. The average size of micelle, based on the dynamic light scattering, or the DLS, and transmission electron microscopy analyses,\nis approximately 7.5 nm and 10.5 nm, respectively. The particle size distribution is narrow with low polydispersity of 0.033 being shown,\nindicating that a highly homogeneous microemulsion, the transparent or semi-transparent thermodynamically stable emulsion formed by two\nimmiscible liquids, oil and water in the presence of surfactant or co-surfactant, has been successfully prepared. The zeta potential value\nof micelle implies a good stability of microemulsion. During the storage at 4°C or 25°C for three months or the heating at\n100°C for four hours, only a minor difference in particle size (7.0 – 7.5 nm) was shown for micelle by the DLS\nanalysis, demonstrating a high stability of this microemulsion.\n\n \n\n85\n\n \n\n** **\n\n**COMMERCIALIZATION**\n\n** **\n\n**Commercialization strategies**\n\n \n\nWe are establishing a strong sales and marketing team dedicated to\nthe commercialization of our pipeline drug candidates, especially for the commercialization of Botreso®. We expect our\nsales and marketing team in Taiwan to have employees with rich experience. We will also actively seek for cooperation with local pharmaceutical\ncompanies in other territories in order to benefit from their sales and marketing network. There will be a senior product manager who\nis familiar with Botreso® and we expect he or she will be primarily responsible for strategies’ formulation. The\nhead of our sales and marketing department, senior manager-level personnel, most of the regional managers and the preliminary sales team\nare in place as of the date of this annual report. In the U.S., we retained a local company to conduct the value research survey among\nurologists and payers and obtained positive feedbacks.\n\n \n\nLeveraging the expertise and industry connections\nof our team, we will market the products primarily through a physician-targeted marketing strategy, focusing on direct and interactive\ncommunication with key opinion leaders and physicians in the respective therapeutic areas to promote the differentiating clinical aspects\nof our products. Such marketing efforts are expected to commence several months before the expected approval for the commercialization\nof a drug candidate. We will also actively organize academic conferences and seminars to publicize the clinical data and research results\nin relation of our drug candidates in order to raise our brand awareness and recognition. We are also pursuing licensing relationships\nwith global pharmaceutical companies to promote and market our products worldwide.\n\n** **\n\n**Pricing Strategy**\n\n \n\nWe primarily consider two factors when formulating\nour pricing strategies: (i) the overall impact of our drug candidates in the international market; and (ii) the market positioning\nof our drug candidates. When considering the first factor, if our drug candidate is expected to be marketed internationally, we will fully\nconsider the global market price rather than the market price in a single region. When considering the second factor, we will evaluate\nthe overall costs of production, market demand, targeted patients and competitive advantages in order to decide the proper position of\nour drug candidate.\n\n \n\nWe plan to position Botreso® as a high-end product in\nthe BPH/LUTS pharmaceuticals market. In Taiwan, we expect to sell Botreso® through our own marketing team and we\nhave consulted with the Bureau of National Health Insurance Ministry of Health and Welfare, or Taiwan NHI, regarding the pricing of Botreso®.\nBased on our preliminary communications, Taiwan NHI can determine the payment of new drugs developed in Taiwan by means of “cost-plus\npricing” or “market reference price.” Therefore, we expect that in the first two years after the launch of Botreso®\nin Taiwan, Botreso® might not be immediately included in the reimbursement list and patients need to purchase it at their\nown costs. In other territories, since we plan to cooperate with local pharmaceutical companies for the sale of Botreso®,\nwe will make necessary adjustments depending on the pricing of comparable drugs and the local medical insurance payment level in each\nspecified target market. In particular, our consultant in U.S. along with her commercial strategy team have conducted a price sensitivity\nanalysis based on updated market predictions. We plan to collaborate with a renowned U.S. pharmaceutical company to distribute our Botreso®\nin U.S. market.\n\n** **\n\n**LICENSE AND COLLABORATION AGREEMENTS**\n\n** **\n\n**Chhak License Agreement**\n\n \n\nIn April 2016, we entered into a pharmaceutical license agreement\nwith a Cambodian corporation, Chhak Kamponngsaom Sez Co., Ltd., or the “Chhak License Agreement.” Under the Chhak License\nAgreement, we granted Chhak Kamponngsaom Sez Co., Ltd., or Chhak, exclusive sale and marketing rights of Botreso® in Cambodia,\nand Chhak agreed not to sub-license any rights related to Botreso® without our prior written consent. Chhak also agreed\nto use the best efforts to help us obtain necessary regulatory approvals for Botreso® and to promote and enhance the sale\nof Botreso® in Cambodia. We agreed to provide Chhak with information related to Botreso® as may be known\nor possessed by us and as may be reasonably necessary for the sale and marketing of Botreso® in Cambodia. We would be Chhak’s\nsole manufacturer and supplier of Botreso®. In addition, we owned all the intellectual property rights of Botreso®\nor any improvements to Botreso® and we both agreed to maintain the other party’s confidential information in confidence.\n\n \n\n86\n\n \n\n \n\nUnder the terms of the Chhak License Agreement, Chhak should pay license\nfees with a total amount of US$0.25 million In addition, upon the regulatory approval of Botreso® in Cambodia, Chhak\nshould pay us a royalty of 25% of its net sales of Botreso® every six months. Chhak should also deliver to us a written\nreport showing its computation of royalties due under this agreement. We reserved the rights to review Chhak’s book, records and\nother supporting data as may be necessary to verify Chhak’s computation of royalties.\n\n \n\nWe should indemnify and hold harmless Chhak, from\nand against any and all claims, losses, costs, damages, fees and expenses arising out of or in connection with intellectual property right\ninfringement. Chhak agreed to indemnify, held harmless and defended us (including our directors, officers, employees and agents) from\nand against any and all losses we became legally obligated to pay due to any claim against Chhak (i) arising out of Chhak’s\nbreach of this agreement; or (ii) for any product liability, liability for death, illness, personal injury or other liabilities under\nany laws re regulations, to the extent that such claims are due to reasons caused by Chhak.\n\n \n\nChhak would have the right to terminate this agreement in its entirety\nby providing us with 60 days prior written notice. We would have the right to terminate this agreement if (i) Chhak experienced\na change of control; (ii) the quantity of Botreso® sold by Chhak was diverted to other markets; (iii) we reasonably\ndetermined that Chhak was unable to maintain the quality of Botreso®; (iv) Chhak was in material breach of its duties\nof non-sublicensing and confidentiality or violated the consensus that we were the sole manufacture and provider of Botreso®,\nor (v) Chhak became insolvent. We would not be held liable for any losses Chhak might incur if we terminated the agreement based\non any of the aforementioned five reasons. In case either party breached the agreement, the non-breaching party under the Chhak License\nAgreement would have the right of termination but should provide written notice to the breaching party to cure such breach, and no party\nshould be relieved of any obligations incurred prior to such termination.\n\n \n\nIn case either party breached the agreement, the\nnon-breaching party under the Chhak License Agreement would be able to terminate this agreement but should provide a written notice to\nthe breaching party who would be given a chance to cure such breach.\n\n** **\n\n**Taizhou Collaboration Framework Agreement**\n\n \n\nOn December 21, 2018, we entered into a collaboration\nframework agreement, or the “2018 Taizhou Agreement,” with Taizhou High-tech Industrial Park Management Committee, or the\n“Taizhou High-tech Committee,” and Taizhou Infrastructure Investment Group Co., Ltd., pursuant to which Taizhou High-tech\nCommittee agreed to grant up to (i) 40 mu (approximate 26,666.66 sq.m.) industrial land to us with a favorable price of RMB0.4 million\nper mu, (ii) 20 mu commercial land to us with a favorable price of RMB4.08 million per mu and (iii) 1,500 mu industrial land to us\nsubject to further negotiation. Under the 2018 Taizhou Agreement, we might also receive several government grants and subsidies when we\nmet prerequisites as agreed. 2018 Taizhou Agreement does not specify the term and termination provision. We would conduct projects under\nthe 2018 Taizhou Agreement primarily through our subsidiary in China, Innovative Biotech Co., Ltd., which was established in 2019 pursuant\nto the 2018 Taizhou Agreement.\n\n \n\nOn September 12, 2019, based on the 2018 Taizhou Agreement, we\nentered into an investment cooperation agreement with the successor of the Taizhou High-tech Committee, or the 2019 Taizhou Agreement,\nwhich further specified details relating to projects related to Botreso® manufacturing facilities with no material deviation\nfrom the 2018 Taizhou Agreement. 2019 Taizhou Agreement does not specify the term and termination provision. In December 2019, under the\nterms and conditions of the Land Use Right Agreement with the Taizhou Resources Bureau, Innovative Biotech Co., Ltd. obtained the use\nright over 26,680 square meters of industrial land in Taizhou by paying a consideration of RMB16.5 million with tax included. According\nto such Land Use Right Agreement, Innovative Biotech Co., Ltd. was obligated to commence construction of the Factory Project by May 28,\n2020, and conclude construction by November 28, 2022, as well as to meet several requirements on the specifics of the construction,\nincluding, but not limited to, the amount of the total investment, investment amount per mu, proportion of land dedicated to non-production\nfacilities, plot ratio, and building density. As of the date of this annual report, the 26,680 square meter industrial land we acquired\nfor the factory project have been seized by the Taizhou Court.  For risks associated with the legal proceeding, see more details\nunder “Item 3. Key Information — D.  Risk Factors — Risks Related to Our Business and Industry — We\nhave been involving in legal proceedings in the ordinary course of our business, and are currently involved in active legal proceedings.\n\n \n\n87\n\n \n\n** **\n\n**MANUFACTURING AND QUALITY CONTROL**\n\n \n\nWe are preparing for commercial-scale manufacturing\ncapabilities to ensure large scale delivery of high-quality products. We have already built Yilan Letzer Pharmaceutical Factory with an\naggregate GFA of approximately 1,944 sq.m. Our manufacturing team consists of three employees as of the date of this annual report.\n\n \n\nWe have in-house capabilities to manufacture our drug candidates, and\nwe employ advanced technology to produce our core drug candidate Botreso®. Yilan Letzer Pharmaceutical Factory intends\nto adopt PIC/S GMP standard of production and was authorized by TFDA to conduct drug manufacturing, packaging, laboratory operations,\ntransportation, and storage. We expect our new manufacturing facilities in Yilan and Taizhou will be in compliance with PIC/S GMP standards\nand have sufficient capacity to meet our commercial manufacturing needs in the foreseeable future.\n\n \n\nThe following flowchart indicates our general process\nof drug manufacturing we designed for future production:\n\n \n\n \n\n \n\nOur Quality Assurance team performs the quality\ncontrol function to oversee the quality of our facilities and our products, as well as the quality systems in research and development,\nmanufacturing and commercialization of drug candidates and potential future commercial products. The tasks for quality control include\n(i) ensuring quality control throughout the manufacturing process, including specification of the drug substance and the drug product,\ntesting of raw materials, and product quality assessments; (ii) establishing a quality assurance system across the entire business,\nincluding employee training programs, audits of various business segments and product manufacturing; and (iii) validation of facilities\nand equipment, which includes laboratory tests to verify that a particular process, method, program, equipment or material works properly.\n\n** **\n\n**SUPPLIERS**\n\n \n\nWe procure raw materials and equipment for the\ndevelopment and manufacture of our drug candidates from industry-leading and highly reputable manufacturers and suppliers around the world.\nFor the years ended December 31, 2024 and 2025, our purchases from our five largest suppliers in the aggregate accounted for\napproximately 75.5%, and 88.41% of our total purchases, respectively. Our purchases mainly include raw materials, third-party contracting\nservices for research and development purposes, machines and equipment, clinical trials, project construction and administrative services.\nWhen choosing our suppliers, we consider their qualification and reputation, their response speed in general, and the proposed pricing.\nThere are several raw material suppliers and third-party contracting services we can choose from, providing alternatives if the suppliers\nthat the company works with are unable to provide the material or service we need. However, the stability of the raw material supplier\nis critical to our business. We must assess the quality of the raw materials before selecting an outsourcing supplier. Changing suppliers\nand sourcing new materials will necessitate additional clinical studies and potentially regulatory approval, significantly impacting our\nbusiness and potentially delaying our regulatory approval process. To initiate the additional Phase III and Phase I PK studies, it is\nnecessary to first identify a supplier for the raw materials required to produce API-2. We are currently collaborating with one supplier\nto prepare the CMC documents mandated by the U.S. FDA. Should the FDA concur that API-1 and API-2 are similar and comparable, we will\nsign the Quality Agreement with this supplier for the raw materials for API-2. We will only be able to proceed with the Phase III PCP\nstudy after the U.S. FDA accepts such results and determines that API-1 and API-2 are comparable. If there is any possibility that FDA\ndoes not agree that API-1 and API-2 are comparable, we will work with another supplier who is able to meet the comparability.\n\n \n\nWe used one supplier for API-1, which was the basis for our now withdrawn\nNDA. The supplier of API-1 sold a parcel of its land and is in the process of relocating and reconstructing its manufacturing facility,\nand as a result, API-1 is currently not available to us and the supplier of API-1 withdrew its consent for us to reference their Drug\nMaster File on file with the U.S. FDA. We have been conducting further research and development on Botreso® and identified\nan additional source for the botanical drug substance API-2. API-1 and API-2 are similar drug substances covered by the same patent owned\nby us; however, because they are sourced from raw materials manufactured in different locations, the U.S. FDA required us to do the comparability\nstudy. Only when FDA concur that API-1 and API-2 is comparable, we are able to conduct the Phase I PK study and Phase III clinical trial\nwith this API-2.\n\n \n\n88\n\n \n\n \n\nThe U.S. FDA provided written responses on February 23,\n2024. In the response, the U.S. FDA questioned whether one new Phase study with API-2 would be sufficient, noting again its concern that\nStudy MCS-2-US-a did not demonstrate a statistically significant difference between the drug and placebo in the primary efficacy endpoint\nand concerns regarding the treatment effect of questionable significance in the Study MCS-2-TWN-a. The U.S. FDA also commented that it\nwill need more information on how we would demonstrate comparability between API-1 and API-2 and that its determination of whether our\noriginal Phase III studies with API-1 would have utility, based upon the quality of support, for a convincing link between products containing\nAPI-1 and API-2. The U.S. FDA provided comments on our proposed Phase III study, and we are finalizing the protocol for submission to\nthe U.S. FDA. In addition, we are in the process of finalizing the PK study protocol per U.S. FDA requirements and hope to satisfy the\nU.S. FDA of the comparability between API-1 and API-2.\n\n** **\n\n**COMPETITION**\n\n \n\nOur industry is highly competitive, rapidly evolving\nand subject to significant change. Although we believe that our core competencies in the identification, research and development of innovative\ntherapies and our management team’s regulatory and commercialization expertise provide us with distinct competitive advantages,\nwe face significant competition from companies of all sizes around the world, including major and specialty pharmaceutical companies,\ngeneric drug companies, academic institutions, government agencies and research institutions.\n\n \n\nMany of our competitors have significantly greater\nresources, including greater access to capital, technical capabilities and human resources, as well as more experience in the development\nand regulatory approval process than we have. Mergers and acquisitions in our industry may result in even more resources being concentrated\namong a smaller number of our competitors. Our commercial opportunities could be reduced or eliminated if our competitors develop or market\nnovel therapies or other products that are more effective, safer or less costly than our current or future product candidates, or obtain\nregulatory approval for their products more rapidly than we may obtain approval for our product candidates.\n\n** **\n\n**OUR HONORS AND AWARDS**\n\n \n\nWe have received numerous honors and a wealth of awards for our innovative\ndrug development achievements. From 2004 to 2020, we were consecutively endorsed the Symbol of National Quality (SNQ) by the Institute\nfor Biotechnology and Medicine Industry in Taiwan. As early as 2008, our core drug candidate, Botreso®, was recorded in\n*Physician’s Desk Reference 2009 (63rd Edition)*, a widely used source of drug information by American physicians\nand patients. The following table sets forth significant honors and awards we have received over the years:\n\n \n\n**Honor/Award Name**\n \n**Issuing Authority**\n \n**Year**\n\nNational Pharmaceutical Science and Technology Research and Development Award\n \nFood and Drug Administration, Department of Health, Taiwan\n \n2009\n\nBiotech and New Pharmaceuticals Company\n \nMinistry of Economic Affairs, Taiwan\n \n2010\n\nTaipei Biotechnology Award – Invention and Creation Award\n \nTaipei Municipal Government, Taiwan\n \n2012\n\nNational Industrial Innovation Award\n \nMinistry of Economic Affairs, Taiwan\n \n2015\n\nBiotech and New Pharmaceuticals Company\n \nMinistry of Economic Affairs, Taiwan\n \n2015\n\nDrug Research and Development Science and Technology Award\n \nDepartment of Health and Ministry of Economic Affairs, Taiwan\n \n2016\n\nDrug Research and Development Science and Technology Award\n \nDepartment of Health and Ministry of Economic Affairs, Taiwan\n \n2017\n\nNational Invention and Creation Award\n \nMinistry of Economic Affairs, Taiwan\n \n2018\n\nTaipei Biotech Awards: Innovation Award-Pharmaceutical Category Gold Award\n \nTaipei Municipal Government, Taiwan\n \n2025\n\n** **\n\n89\n\n \n\n** **\n\n**INTELLECTUAL PROPERTY**\n\n \n\nIntellectual property rights are important to the\nsuccess of our business. We actively seek patent protection for our drug candidates in Taiwan and other major jurisdictions worldwide,\nand file additional patent applications, when appropriate, to cover improvements to our technologies. We rely on a combination of patents,\ntrademarks and trade secrets as well as employee and third-party confidentiality agreements to safeguard our intellectual property.\n\n \n\nAs of the date of this annual report, we were not\ninvolved in any proceedings in respect of, and we had not received notice of any claims of infringement of, any intellectual property\nrights that may be threatened or pending, in which we may be a claimant or a respondent.\n\n** **\n\n**Patents**\n\n \n\nAll of our patents are self-developed based on our\nin-house R&D capabilities. We either own all material patents for each of our product candidates or have filed relevant patent applications\nwith the authorities. The term of individual patents depends on the legal term for patents in the jurisdictions in which they are granted.\nThe following table indicates our key invention patents which have all been granted as of the date of this annual report:\n\n \n\n**Type**\n \n**Territory**\n \n**Period of Validity**\n\nInvention – Composition of matter (medical grade ingredients)\n \nTaiwan\n \nMay 1, 2016 to December 9, 2034\n\nInvention – Composition of matter (medical grade ingredients)\n \nSouth Korea\n \nJanuary 18, 2017 to December 9, 2034\n\nInvention – Composition of matter (medical grade ingredients)\n \nSingapore\n \nApril 13, 2017 to December 9, 2034\n\nInvention – Composition of matter(1) (medical grade ingredients)\n \nUnited States\n \nJanuary 10, 2017 to December 9, 2034\n\nInvention – Composition of matter(2) (medical grade ingredients)\n \nUnited States  \n \nMarch 28, 2017 to December 9, 2034\n\nInvention – Composition of matter (medical grade ingredients)\n \nJapan  \n \nJune 30, 2017 to December 9, 2034\n\nInvention – Composition of matter (medical grade ingredients)\n \nMalaysia  \n \nJanuary 30, 2018 to December 9, 2034\n\nInvention – Composition of matter (medical grade ingredients)\n \nPhilippines  \n \nJune 20, 2018 to December 9, 2034\n\nInvention – Composition of matter (medical grade ingredients)\n \nVietnam  \n \nDecember 4, 2020 to December 9, 2034\n\nInvention – Composition of matter (medical grade ingredients)\n \nRussia  \n \nMarch 29, 2018 to December 9, 2034\n\nInvention – Composition of matter (medical grade ingredients)\n \nIndonesia  \n \nJuly 10, 2018 to December 9, 2034\n\nInvention – Composition of matter (medical grade ingredients)\n \nSaudi Arabia  \n \nSeptember 16, 2018 to December 9, 2034\n\nInvention – Composition of matter (medical grade ingredients)\n \nChina  \n \nDecember 18, 2018 to December 9, 2034\n\nInvention – Composition of matter (medical grade ingredients)\n \nCanada  \n \nApril 2, 2019 to December 9, 2034\n\nInvention – Composition of matter (medical grade ingredients)\n \nMacao  \n \nMay 9, 2019 to December 9, 2034\n\nInvention – Composition of matter (medical grade ingredients)\n \nIsrael  \n \nJuly 1, 2019 to December 9, 2034\n\nInvention – Composition of matter (medical grade ingredients)\n \nHong Kong  \n \nJanuary 17, 2020 to December 9, 2034\n\nInvention – Composition of matter (medical grade ingredients)\n \nIndia  \n \nFebruary 16, 2024 to December 9, 2034\n\nInvention – Composition of matter (medical grade ingredients)\n \nThailand  \n \nAugust 23, 2023 to December 9, 2034\n\nInvention – Composition of matter (medical grade ingredients)\n \nEuropean  \n \nApril 10, 2024 to December 9, 2034\n\n \n\n \n\nNotes:\n\n \n\n(1)The patent number is 9,539,219 B2, and the patent is pharmaceutical\ncomposition of carotenoid micelle. IC is covered by this patent with the compositions comprising a micelle and a carotenoid, suspended\nin an aqueous solution and suitable for intravenous administration.\n\n(2)\nThe patent number is 9,603,811 B2, and the patent is pharmaceutical composition of carotenoid with chylomicron technology. Botreso® and PCP are both covered by this patent for oral administration. This invention covers pharmaceutical compositions comprising carotenoid with chylomicron technology. The bioavailability of the carotenoid with chylomicron technology in the pharmaceutical composition is higher than the bioavailability of free carotenoid.\n\n** **\n\n90\n\n \n\n** **\n\n**Trade secrets**\n\n \n\nIn addition to patents, we also rely upon unpatented\ntrade secrets and know-hows and continuing technological innovation to develop and maintain our competitive position. We seek to protect\nour proprietary technology and information, in part, by entering into confidentiality agreements with our senior management and certain\nkey members of our research and development team and other employees who have access to trade secrets or confidential information about\nour business.\n\n** **\n\n**Trademarks and domain names**\n\n \n\nAs of the date of this annual report, we have 58\ntrademarks in 46 territories.\n\n \n\nAs of the date of this annual report, we have registered\nthe following domain names: hebiotech.com and healtheverbiotech.com.\n\n** **\n\n**LICENSES, PERMITS AND APPROVALS**\n\n \n\nAs of the date of this annual report, we have obtained\nall requisite licenses, permits and approvals from relevant authorities that are material to our pharmaceutical manufacturing operations.\nThe table below sets forth the relevant details of the material licenses we hold for our operation in Taiwan:\n\n \n\n**License/Permit**\n \n**Holder**\n \n**Issuing\nAuthority**\n \n**Issue\nDate**\n \n**Expiration\nDate**\n\nPharmaceutical\nManufacturing License\n \nHealth\nEver Bio-Tech Co., Ltd., Yilan Letzer Pharmaceutical Factory\n \nDepartment\nof Health, Taiwan\n \nOctober 23,\n2014\n \nN/A\n\nFactory\nRegistration Certificate\n \nHealth\nEver Bio-Tech Co., Ltd., Yilan Letzer Pharmaceutical Factory\n \nYilan\nCounty Government, Taiwan\n \nAugust 31,\n2018\n \nN/A\n\n \n\n**EMPLOYEES**\n\n \n\nAs of the date of this annual report, we had 27\nemployees in total. The following table sets forth the number of our employees categorized by function as of the date of this annual report:\n\n \n\n**Function**\n \n**Number**\n \n \n**% of Total**\n \n\nManagement\n \n \n5\n \n \n \n18.52\n \n\nAuditing Office\n \n \n1\n \n \n \n3.70\n \n\nInformation Center\n \n \n1\n \n \n \n3.70\n \n\nR&D and Manufacturing Department\n \n \n14\n \n \n \n51.85\n \n\nFinancial and Accounting Department\n \n \n4\n \n \n \n14.81\n \n\nBusiness Operation and Development Department\n \n \n2\n \n \n \n7.42\n \n\n**Total**\n \n \n**27**\n \n \n \n**100.0**\n \n\n \n\nWe enter into individual employment contracts with\nour employees covering matters such as salaries, bonuses, employee benefits, workplace safety, confidentiality obligations, work product\nassignment clause and grounds for termination. We also enter into separate confidentiality and non-competition agreements with our senior\nmanagement and certain key members of our R&D team and other employees who have access to trade secrets or confidential information\nabout our business.\n\n \n\nTo maintain the quality, knowledge and skill levels\nof our workforce, we provide continuing education and training programs, including internal and external training, for our employees to\nimprove their technical, professional or management skills. We also provide training programs to our employees from time to time to ensure\ntheir awareness and compliance with our policies and procedures in various aspects.\n\n \n\nWe consider our relations with our employees to\nbe good. As of the date of this annual report, we have not experienced any strikes or labor disputes which had a material effect on our\nbusiness.\n\n** **\n\n**FACILITIES**\n\n \n\nOur headquarters is located in New Taipei, Taiwan.\nAs of the date of this annual report, the approximate GFA of our leased properties was approximately 1,964.8 sq.m. in aggregate. As of\nthe same date, we owned two properties with approximately 1,944.88 sq.m. in aggregate in Yilan County, Taiwan, two parcels of land with\napproximately 4,000.2 sq.m. in aggregate in Yilan County, Taiwan. We believe our properties are sufficient for our current needs and that,\nshould it be needed, suitable additional space will be available on commercially reasonable terms to accommodate any such expansion of\nour operations.\n\n** **\n\n91\n\n \n\n** **\n\n**LEGAL PROCEEDINGS AND COMPLIANCE**\n\n \n\nIn the ordinary course of our business, we are subject\nto legal or administrative proceedings from time to time. As of the date of this annual report, we are a party** **to a legal\ndispute with one of our shareholders concerning a claim of redemption, which may have material and adverse impact on our business, financial\ncondition, or the results of operations.\n\n** **\n\n**Taizhou Investment Dispute **\n\n \n\nOn May 15, 2019, Taizhou City Optimization\nand Upgrade Investment Partnership (Limited Partnership), or the Plaintiff, entered into a share purchase agreement, or the Share Purchase\nAgreement, with (i) Medi-life Co., Limited and Sira View Corp., collectively, the Transferring Shareholders, (ii) Jyong Biotech\nLtd., or “Jyong,” (iii) our Taiwan subsidiary, Health Ever Bio-Tech Co., Ltd., or HEB, and (iv) our CEO, Ms. Fu\nFeng Kuo, under which the Plaintiff purchased 1,794,258 shares of Jyong from the Transferring Shareholders at an aggregate price\nof RMB112,500,000 (US$16,366 thousand), or the Share Purchase Transaction. Pursuant to the Share Purchase Agreement, on July 1, 2019,\nour Hong Kong subsidiary, Top ShunXing Bio-Tech Co., Limited, or Top ShunXing, established our only PRC subsidiary, Innovative Biotech\nCo., Ltd., or Innovative Biotech, and later on July 22, 2019, Top ShunXing pledged 100% equity interests in Innovative Biotech to\nthe Plaintiff as a guarantee for the performance of buyback shares obligation of the Transferring Shareholders, if Jyong would not accomplish\nthe “Qualified Issuance and Listing” (defined as Jyong’s potential public filing of shares and listing on the main board\nof the HKEx which never occurred) within 5 years after the closing of the Share Purchase Transaction, or any other redemption events occurred\nunder the Share Purchase Agreement. Please also see “Note 18 Commitments and Contingencies — Commitment with the\nTaizhou Company” on pages F-26 and F-27 for more details. In August 2022, we sent a written notice to the Plaintiff by mail and\ninformed that we were preparing for our IPO. However, as of the date of this annual report, we have not received the Plaintiff’s\nwritten consent as required under section 8 of the Share Purchase Agreement.\n\n \n\nOn November 15, 2022, we received a complaint for civil suit filed\nby the Plaintiff to the Taizhou Intermediate People’s Court, or the Taizhou Court, against the Transferring Shareholders, Jyong,\nHEB, Top ShunXing, Innovative Biotech and Ms. Fu Feng Kuo (collectively, the “Defendants”), requesting, among other claims:\n(i) redemption by the Transferring Shareholders for all shares purchased by the Plaintiff under the Share Purchase Agreement for\nthe original purchase price of RMB112,500,000 (US$16,366 thousand) and corresponding interests from July 29, 2019 to the date of\nactual payment calculated at the loan prime rate in China, or the Redemption; (ii) the Taizhou Court to hold Jyong, HEB and Ms. Fu\nFeng Kuo jointly liable for the Redemption; (iii) the Taizhou Court to confirm Plaintiff’s right to liquidate all equity interest\nin Innovative Biotech held by Top ShunXing that was pledged to the Plaintiff; and (iv) the Taizhou Court to hold Innovative\nBiotech liable for the obligations of other Defendants within the scope of the benefits it received from the investment made under the\nShare Purchase Agreement. This dispute went on trial before the Taizhou Court on March 16, 2023 and November 29, 2023, respectively.\nWe estimated the fair value of guarantee liabilities at the fair value of the shares at the inception of this guarantee and recorded guarantee\nliabilities of US$19.4 million and accrued liabilities – guarantee obligation of US$21.6 million as of December 31,\n2024 and 2025, respectively. On March 25, 2024, the Taizhou Court entered into a judgement partially in favor of the Plaintiff, ordering,\namong other things, the Transferring Shareholders to pay the Redemption price of RMB112,500,000 and corresponding interests, and Jyong,\nHEB, and Ms. Fu Feng Kuo to be jointly liable for such obligation. The Taizhou Court also ruled that the Plaintiff is entitled to liquidate\nall equity interest in Innovative Biotech pledged to it in order to realize the payment of the aforementioned obligations. We filed an\nappeal against this judgement on April 29, 2024 to the High People’s Court of Zhejiang Province (the “High Court”).\nThe High Court held a hearing for this case on August 9, 2024, and later issued a judgement against us to sustain the ruling of the\nTaizhou Court. As of December 31, 2025, our total potential liability under this judgement is approximately RMB149.1 million (USD\n21.6 million).\n\n \n\nThe judgment is final and non-appealable, and\nthe settlement agreement shall become legally binding upon execution by the parties. Pursuant to applicable Chinese law, Taizhou is entitled\nto initiate enforcement proceedings to recover approximately RMB 149.1 million (USD 21.6 million) in cash, with Jyong, HEB,\nand Ms. Fu Feng Kuo jointly liable for such obligations. As of the date of this annual report, the Plaintiff has initiated enforcement\nprocedure before competent courts respectively in Taiwan, Hong Kong and Cayman Islands, however, the concerned parties are actively engaged\nin negotiation to reach a settlement and thus postpone or suspend the enforcement procedure.\n\n \n\nOn November 19, 2025, the judgment was registered\nwith the Court of First Instance of the High Court of Hong Kong. As of that registration date, the total outstanding obligation, including\ninterest and legal fees, amounted to RMB 149,458 thousand (approximately $21,372 thousand). The Transferring Shareholders were formally\nnotified of this registration on December 11, 2025. The Transferring Shareholders did not an appeal against this registration prior to\nDecember 31, 2025. On December 17, 2025, the Shilin District Court in Taipei recognized the Judgment. While HEB filed an appeal against\nthis recognition prior to December 31, 2025. On March 10, 2026, the Financial Services Division of the Grand Court of the Cayman Islands\nrecognized the Judgment. The Company filed a defense in the Grand Court of the Cayman Islands opposing enforcement of the Judgment on\nMay 5, 2026.\n\n \n\n92\n\n \n\n \n\nUnder PRC’s civil procedure, after a judgement\nfrom civil litigation enters into effect, the parties may, at any time before and during the enforcement procedure, and until such enforcement\nprocedure is completed, choose to enter into a settlement agreement and file to the competent court to perform such agreement in lieu\nof enforcing the judgement. We are actively negotiating with the Plaintiff for a settlement of this legal proceeding.\n\n \n\nThe Company and Taizhou have mutually agreed to\nexpedite the resolution of the dispute through negotiation. The key terms and conditions of the settlement are currently under discussion\nand pending confirmation by the relevant parties. The proposed resolution under negotiation involves a third party acquiring the shares\nheld by Taizhou at a price equivalent to the share subscription cost, potentially including all or part of the accrued interest. It is\nanticipated that the contemplated transaction will be structured as a post-IPO bulk trade, intended to be executed following the Company’s\nlisting and the expiration of the applicable lock-up period. The Company affirms that no proceeds from the offering will be utilized for\nany payment related to the Taizhou dispute. However, there can be no assurance that a settlement will be reached. In the event that a\nsettlement is not concluded, Jyong, HEB, and Ms. Fu Feng Kuo may be required to jointly pay the full amount of approximately RMB 149.1 million\n(USD 21.6 million) in cash.\n\n \n\nHowever, this dispute may still incur substantial\ncosts of settlement or litigation, and may result in an outcome adverse to our interests. In the opinion of our legal counsel for this\nlawsuit, should we eventually fail to reach a settlement with the Plaintiff, this case is likely to result in an outcome unfavorable to\nus. For risks associated with the legal proceeding, see more details under “Item 3. Key Information — D.  Risk Factors — Risks\nRelated to Our Business and Industry — We have been involving in legal proceedings in the ordinary course of our business,\nand are currently involved in active legal proceedings. Any adverse outcome of these legal proceedings could have a material adverse effect\non our business, results of operations and financial condition.”\n\n** **\n\n**Taizhou Administrative Penalty**\n\n \n\nOn November 29, 2019, Innovative Biotech\nCo., Ltd., our PRC subsidiary, entered into the Land Use Right Agreement with Taizhou Resources Bureau. Under the terms and conditions\nof the Land Use Right Agreement, Innovative Biotech shall commence construction on the parcel granted by May 28, 2020 and complete\nthe construction by November 28, 2022, otherwise, liquidated damages shall be paid to Taizhou Resources Bureau for each day\nof delay, being 0.1% of the total amount of the land use right grant price of approximately RMB16.0 million plus tax. On November 23,\n2022, Taizhou Resources Bureau issued a formal notice of reminder of default, requiring Innovative Biotech to pay liquidated damages of\nRMB13,080,170, with the amount of damages accruing from November 24, 2022 to the date of actual construction to be calculated separately.\nAs of the date of this annual report, we have not paid the liquidated damages of RMB13,080,170 (US$ 1,803.8 thousand) yet and we are currently\nin litigation with Taizhou Resources Bureau and awaiting the judgment. In addition, under the Land Use Right Agreement, apart from the\nliquidated damages, Innovative Biotech is obliged to pay a land idling fee if the land is left idle for more than one year but less than\ntwo years, and Taizhou Resources Bureau has the right to take back the land use right if the land is left idle for more than two years.\nOn September 26, 2024, the Taizhou Resources Bureau issued a notice regarding taking back the land use right without compensation,\ngiving Innovative Biotech Co., Ltd. the right to file for an administrative hearing within five business days of receipt of notice. While\nthe Company initially applied for the administrative hearing, it subsequently decided to relinquish the land use rights to the Taizhou\nResources Bureau in accordance with the notice. As a result, the Company will no longer proceed with the hearing process. On February\n8, 2025, the Bureau issued a formal Decision Letter confirming the reclamation of IB’s land use rights without compensation. IB\ntimely filed an application for administrative reconsideration with the Taizhou Municipal People’s Government. On June 26, 2025,\nthe Municipal Government issued its decision upholding the Bureau’s reclamation order. Dissatisfied with the outcome, IB initiated\nan administrative lawsuit with the Taizhou Intermediate People’s Court of Zhejiang Province on July 23, 2025. On January 19, 2026,\nthe Court rendered a judgment dismissing IB’s claims and ordering IB to bear the litigation costs of RMB 50. Although IB filed an\nappeal against this judgment on February 2, 2026, management, based on the advice of our local legal counsel, assesses that there is a\nhigh probability that the unfavorable judgment will be upheld on appeal. As of the date of this annual report, the appellate process remains\nongoing.\n\n \n\nAccording to the 2018 Taizhou Agreement and 2019\nTaizhou Agreement, we were obligated to complete the construction of a pharmaceutical factory project, or the Factory Project, by 2022,\nwhich shall be ready for production by 2023. As of the date of this annual report, the construction of the Factory Project has been suspended.\nIn addition, RMB30 million of Innovative Biotech Co., Ltd.’s registered capital shall be actually paid within one year of its\nregistration. As of the date of this annual report, only RMB16,562,000 (US$2,284 thousand) of Innovative Biotech Co., Ltd.’s registered\ncapital has been paid. Furthermore, our PRC subsidiary shall pay cash deposit of RMB 10,000 (US$1.4 thousand) per mu after signing the\n“standard parcel” development and construction agreement, or the Construction Agreement, with the Taizhou Industry District\nCommittee. As of the date of this annual report, no such deposit has been paid after the Construction Agreement was signed. According\nto the 2018 Taizhou Agreement, failure to commence and conclude the construction of the Factory Project on schedule as agreed may entitle\nthe Taizhou Municipality the rights to replace the granted parcel, adjust or withdraw the preferential policies available under such agreement\n(including but not limited to the government subsidy of RMB12.0 million (US$1,654.9 thousand) Innovative Biotech Co., Ltd. has already\nreceived), and take back the parcel with the original purchase price of RMB400,000 (US$55.2 thousand) per mu. See also “Item 4.\nInformation on the Company — B. Business Overview —  License and Collaboration Agreements — Taizhou Collaboration\nFramework Agreement.”\n\n \n\n93\n\n \n\n \n\nThe claims and proceedings discussed above, and\nother potential claims or proceedings relating to this issue, may incur substantial costs of settlement or litigation, and may result\nin outcome adverse to our interests. For risks associated with the legal proceeding, see more details under “Item 3. Key Information\n— D.  Risk Factors — Risks Related to Our Business and Industry — We have been involving in\nlegal proceedings in the ordinary course of our business, and are currently involved in active legal proceedings. Any adverse outcome\nof these legal proceedings could have a material adverse effect on our business, results of operations and financial condition.”\n\n \n\nOn November 29, 2019, our PRC subsidiary, Innovative\nBiotech Co. (“IB”) entered into the Construction Agreement with the Taizhou Industry District Committee. The Construction\nAgreement provided specifics regarding the Factory Project IB was required to meet, including but not limited to the period of construction,\nplot ratio, amount of investment and tax income per mu. The Construction Agreement stipulates that before construction of the Factory\nProject meet the requirements of amount of investment and plot ratio under the Construction Agreement, IB and its shareholder shall not\ntransfer the acquired parcel, directly or via transfer or pledge of equity, to a third party. Should IB breaches this agreement and causes\nthe purpose of the Construction Agreement unable to be realized, the Taizhou Industry District Committee shall have the right to terminate\nthe Construction Agreement and claim corresponding damages. The Taizhou Industry District Committee did not explicitly consent to the\npledging of IB’s shares to the Taizhou City Optimization and Upgrade Investment Partnership (Limited Partnership). However, as of\nthe date of this annual report, the Taizhou Industry District Committee has yet to raise any claims against IB based on the event discussed\nabove. As of December 31, 2024 and 2025, IB classified the liquidated damages and accrued interests of US$2.9 million, and US$3.0 million\nas other current liabilities, respectively.\n\n** **\n\n**Taizhou Government Subsidy Dispute**\n\n \n\nOn November 29, 2022, the Taizhou Bay New District\nAdministrative Committee (the “Plaintiff”), successor of the Taizhou Industry District Committee, filed a civil complaint\nto the Taizhou Intermediate People’s Court (“the Taizhou Court”) against our PRC subsidiary, Innovative Biotech Co.\n(“IB”), claiming that IB has materially breached the 2019 Taizhou Agreement by failing to initiate and conclude the construction\nof the Factory Project in accordance with the schedule stipulated by the 2019 Taizhou Agreement and the Land Use Right Agreement. The\nPlaintiff requested the Taizhou Court to terminate the 2019 Taizhou Agreement, and to order IB to return the government subsidy of RMB\n12.0 million (US$1,654.9 thousand) IB previously received under the 2019 Taizhou Agreement, and to pay corresponding interests calculated\nat the Loan Prime Rate published by the National Inter-bank Funding Center. On December 1, 2022, the Taizhou Court issued an order\nof preliminary asset preservation, freezing the RMB 10.7 million deposit in IB’s bank account. This dispute went on trial on\nFebruary 13, 2023, and two hearings were held on May 6, 2023 and August 17, 2023, respectively. On September 8, 2023,\nthe Taizhou Court entered into a judgement in favor of the Plaintiff, terminating the 2019 Taizhou Agreement and ordering IB to return\nthe government subsidy of RMB12.0 million and corresponding interest and expenses to the Plaintiff. On September 14, 2023, we\nfiled an appeal with the High People’s Court of Zhejiang Province (the “High Court”) regarding each of the Court’s\nrulings described above. The High Court held a hearing for this case on October 24, 2023. On December 12, 2023, the High Court\nissued a judgment against IB to affirm the Taizhou Court’s ruling in its entirety. On January 5, 2024, the Taizhou Court issued\nan order of enforcement, stipulating, among other things, freezing and assignment of IB’s deposit in its bank account or withholding\nof IB’s income up to RMB 12.0 million and corresponding interests, and the seizure, attachment and freezing of IB’s property\nvalued at RMB 12.0 million and corresponding interests, and restrictions on making certain high expenses by IB and related personnel.\nAs of the date of this annual report, the 40 mu (approximate 26,680 sq.m.) industrial land we acquired for the Factory Project have been\nseized by the Taizhou Court, and IB’s RMB 11.1 million deposit in its bank account has been transferred to the Plaintiff. On\nDecember 27, 2023, we filed a petition for retrial to the Supreme People’s Court of the People’s Republic of China (the\n“Supreme Court”). The Supreme Court issued a decision to reject our petition for retrial on August 21, 2024. As of December 31,\n2024 and 2025, IB accrued US$0.4 million, and US$0.4 million of other current liabilities for the loss contingencies for\nthis dispute, respectively. For risks associated with the legal proceeding, see more details under “Item 3. Key Information —\nD.  Risk Factors — Risks Related to Our Business and Industry — We have been involving in legal proceedings in the ordinary\ncourse of our business, and are currently involved in active legal proceedings.\n\n \n\n94\n\n \n\n \n\nThis dispute has resulted in an outcome adverse\nto our interests, which may in turn result in financial loss and adversely affect our business, financial conditions and results of operations.\n\n \n\nEven though we are currently involved in the legal\nproceedings as aforementioned, we are committed to maintaining the highest standards of compliance with the laws and regulations applicable\nto our business in the future. Apart from the legal proceedings discussed above, we are not engaged in, nor are we aware of, any legal\nproceeding, investigation or claim which, in the opinion of our management, is likely to have a material adverse effect on our business,\nfinancial condition or results of operations. We may from time to time be subject to various legal or administrative claims and proceedings\narising in the ordinary course of business. Litigation or any other legal or administrative proceeding, regardless of the outcome, is\nlikely to result in substantial costs and diversion of our resources, including our management’s time and attention.\n\n** **\n\n**INSURANCE**\n\n \n\nWe maintain insurance policies that we consider\nto be in line with market practice and adequate for our business. We currently maintain insurance for adverse events in clinical trials\nas we estimate the risk exposure to be minimal. We currently do not maintain product liability insurance or key person insurance.\n\n** **\n\n**REGULATIONS**\n\n \n\nWe are subject to a variety of U.S. and Taiwan\nlaws, rules and regulations across a number of aspects of our business. This section sets forth a summary of the most significant laws\nand regulations that are applicable to our current business activities within the territory of U.S. and Taiwan.\n\n** **\n\n**U.S. Government Regulation and Product Approval**\n\n \n\nThe U.S. Food and Drug Administration, or the\nU.S. FDA, and other regulatory authorities in the United States at federal, state and local levels extensively regulate, among other\nthings, the research, development, testing, manufacture, quality control, import, export, safety, effectiveness, labeling, packaging,\nstorage, distribution, recordkeeping, approval, advertising, promotion, marketing, post-approval monitoring and post-approval reporting\nof and for drug products. Along with third-party contractors, we are required to navigate the various preclinical, clinical and commercial\napproval requirements of the governing regulatory agencies of the countries in which we wish to conduct studies or seek approval or licensure\nof our product candidates. The processes for obtaining regulatory approvals in the United States and in foreign jurisdictions, along\nwith subsequent compliance with applicable laws and regulations and other regulatory authorities, require the expenditure of substantial\ntime and financial resources.\n\n \n\nThe failure to comply with applicable statutory\nand regulatory requirements may subject a sponsor, applicant or marketer to administrative or judicial enforcement actions. These actions\ncould include the suspension or termination of clinical trials by the U.S. FDA, the U.S. FDA’s refusal to approve pending applications\nor supplemental applications, withdrawal of an approval, “Warning Letters” (official messages from the U.S. FDA to a manufacturer\nor other organization providing notice that it has violated federal law) or “Untitled Letters” (initial correspondences from\nthe U.S. FDA that cite violations that do not meet the threshold of regulatory significance for a Warning Letter and request correction\nof the violation), product recalls, product seizures, total or partial suspension of production or distribution, import detention, injunctions,\nfines, refusals of government contracts, restitution, disgorgement of profits, or civil or criminal investigations and penalties brought\nby the U.S. FDA, the Department of Justice, or the DOJ, or other governmental entities.\n\n** **\n\n**Review and Approval for Licensing Drugs**\n\n \n\nThe U.S. FDA regulates drugs primarily under the\nFederal Food, Drug, and Cosmetic Act, or the FDCA, the Public Health Service Act, and their associated implementing regulations. Our product\ncandidates must be approved by the U.S. FDA through the new drug application, or the NDA, process before they may be legally marketed\nin the United States. The process required by the U.S. FDA before a drug may be marketed in the United States generally involves\nthe following:\n\n \n\n●completion of extensive preclinical studies, including preclinical\nlaboratory tests, preclinical animal studies and formulation studies all performed in compliance with applicable regulations, including\nthe current good laboratory practice, or the cGLP, regulations;\n\n \n\n95\n\n \n\n \n\n●submission to the U.S. FDA of an investigational new drug\napplication, or an IND, which must become effective before human clinical trials may begin and must be updated annually and when significant\nchanges are made, such as initiating a new clinical trial;\n\n \n\n●manufacture, labeling and distribution of an investigational\ndrug in compliance with current good manufacturing practices, or cGMP;\n\n \n\n●approval by an institutional review board, or IRB, or ethics\ncommittee at each clinical site before each clinical trial may be initiated and obtaining informed consent of all clinical trial participants;\n\n \n\n●performance of adequate and well-controlled human clinical\ntrials in accordance with the U.S. FDA’s current good clinical practices requirements, or cGCP, clinical trial registration, and\nother clinical trial related regulations, to provide substantial evidence of effectiveness and evidence of safety for the drug product’s\nproposed indication;\n\n \n\n●preparation of and submission to the U.S. FDA of an NDA after\ncompletion of all pivotal clinical trials requesting marketing approval for one or more proposed indications;\n\n \n\n●satisfactory completion of an U.S. FDA Advisory Committee\nreview, where appropriate or if applicable, as may be requested by the U.S. FDA to assist with its review;\n\n \n\n●satisfactory completion of one or more U.S. FDA pre-approval\ninspections of the manufacturing facility or facilities at which active pharmaceutical ingredient, or API, and finished drug product,\nor components thereof, are produced to assess compliance with cGMP and data integrity requirements to assure that the facilities, methods,\nand proposed chemistry, manufacturing, and controls, or CMC, are adequate to preserve the drug’s identity, safety, quality, purity,\npotency and efficacy;\n\n \n\n●satisfactory completion of U.S. FDA audits of selected preclinical\nand/or clinical investigation sites to assure compliance with cGLP and cGCP requirements and the integrity of the preclinical and/or\nclinical data;\n\n \n\n●payment of user fees under the Prescription Drug User Fee\nAct, or, as amended, the PDUFA, for the relevant year;\n\n \n\n●obtaining U.S. FDA review and approval of the NDA prior to\nany commercial marketing or sale of the drug in the United States; and\n\n \n\n●compliance with all post-approval requirements, including\nbut not limited to, cGMP, CMC, post-market reporting and pharmacovigilance, registration and listing, advertising and promotional requirements,\nthe potential requirement to implement risk evaluation and mitigations strategies, or REMS, and the potential requirement to conduct\npost-approval studies.\n\n \n\nIn addition to drug-specific requirements, combinations\nof differently regulated articles, such a drug and device (e.g., a drug delivery system or companion diagnostic) could also result in\nvarious additional requirements to consider, such as device and combination product requirements of the FDCA and its implementing regulations\nwith respect to investigation, marketing, and post-market requirements.\n\n \n\nThe approval process for botanical drug products\nis similar to that of conventional chemical drugs. The standards for the safety and efficacy of a botanical drug are the same as those\nfor a conventional chemical drug with the same indication. However, the quality control of botanical drugs is more complex than that of\nconventional chemical drugs due to the variability of botanical raw materials. Given botanicals’ chemical and biological complexity,\nefforts in characterizing the pharmacology, demonstrating therapeutic efficacy, and ensuring quality consistency remain scientific and\nregulatory challenges. For botanical drug products in particular, which may be heterogeneous in nature and may carry additional uncertainty\nabout their active constituents in comparison to synthetic small-molecule drug products, one of the critical issues during drug development\nis ensuring that the therapeutic effect for marketed drug product batches is consistent. The U.S. FDA has determined that therapeutic\nconsistency can generally be supported by a “totality of the evidence” approach, which the U.S. FDA has outlined in a 2016\nguidance for industry entitled Botanical Drug Development.\n\n \n\n96\n\n \n\n \n\nDevelopment of data and other information sufficient\nto support an NDA approval requires substantial time, effort and financial resources and we cannot be certain that any approvals for our\nproduct candidates will be granted on a timely basis, if at all. From time to time, new legislation is enacted that could significantly\nchange the statutory provisions governing the testing, approval, manufacturing and marketing of products regulated by the U.S. FDA. In\naddition to new legislation, U.S. FDA regulations and policies are often revised or interpreted by the U.S. FDA in ways that may significantly\naffect our business and our product candidates. It is impossible to predict whether further legislative changes will be enacted or whether\nU.S. FDA regulations, guidance, policies or interpretations will be changed or what the effect of such changes, if any, may be.\n\n** **\n\n**Preclinical Development**\n\n \n\nThe data required to support an NDA is generated\nin two distinct development stages: preclinical and clinical. For new chemical entities, or NCEs, the preclinical development stage generally\ninvolves synthesizing the active component, developing the formulation and determining the manufacturing process, evaluating purity and\nstability, as well as carrying out non-human toxicology, pharmacology and drug metabolism studies in the laboratory, which support subsequent\nclinical testing. The conduct of the preclinical studies must comply with federal regulations, including cGLPs. The sponsor must submit\nthe results of the preclinical studies, together with manufacturing information, analytical data, any available clinical data or literature\nand a proposed clinical protocol or protocols, to the U.S. FDA as part of its IND. The central focus of an IND submission is on the\ngeneral investigational plan and the protocol(s) for human studies. An IND is a request for authorization from the U.S. FDA to administer\nan investigational product to humans. The central focus of an IND submission is on the general investigational plan and the protocol(s) for\nhuman studies. An IND acts as an exemption from the FDCA that allows an unapproved drug to be shipped in interstate commerce for use in\nan investigational clinical trial. Such authorization must be secured prior to interstate shipment. Any subsequent protocol amendments\nmust be submitted to the U.S. FDA as part of the IND, and the U.S. FDA must allow these amendments to the IND to go into effect prior\nto their execution. Frequently, sponsors are also required to conduct additional animal studies after an IND is obtained and human clinical\ntesting begins, and is often referred to as ‘preclinical’ or ‘nonclinical’ testing, even though it occurs in parallel\nwith the clinical phase of development.\n\n** **\n\n**Clinical Development**\n\n \n\nHuman clinical trials subject to the U.S. FDA’s\njurisdiction may not begin until an IND is effective. The IND automatically becomes effective 30 days after receipt by the U.S. FDA,\nunless the U.S. FDA raises safety concerns or questions about the proposed clinical trial within the 30-day time period. In such a case,\nthe IND may be placed on clinical hold and the IND sponsor and the U.S. FDA must resolve any outstanding concerns or questions before\nthe clinical trial can begin. Submission of an IND therefore may or may not result in U.S. FDA authorization to begin a clinical trial.\n\n \n\nThe U.S. FDA may also place a clinical hold or partial\nclinical hold on such study following commencement of a clinical trial under an IND. A clinical hold is an order issued by the U.S.\nFDA to the sponsor to delay a proposed clinical investigation or to suspend an ongoing investigation. A partial clinical hold is a delay\nor suspension of only part of the clinical work requested under the IND. For example, a specific protocol or part of a protocol is\nnot allowed to proceed, while other protocols may do so. No more than 30 days after the imposition of a clinical hold or partial\nclinical hold, the U.S. FDA will provide the sponsor with a written explanation of the basis for the hold. Following issuance of a clinical\nhold or partial clinical hold, an investigation may only resume after the U.S. FDA has notified the sponsor that the investigation may\nproceed. The U.S. FDA will base that determination on information provided by the sponsor correcting the deficiencies previously cited\nor otherwise satisfying the U.S. FDA that the investigation can proceed.\n\n \n\nClinical studies involve the administration of the\ninvestigational product to human subjects under the supervision of qualified investigators in accordance with cGCP regulations. Clinical\nstudies are conducted under protocols detailing, among other things, the objectives of the study, the parameters to be used in monitoring\nsafety and the effectiveness criteria to be evaluated. A separate submission to the existing IND must be made for each successive clinical\ntrial conducted during product development and for any subsequent protocol amendments.\n\n \n\n97\n\n \n\n \n\nFurthermore, an IRB for each site proposing to conduct\nthe clinical trial must review and approve the plan for any clinical trial before the clinical trial begins at that site, and must monitor\nthe study until completed. Some studies also include oversight by an independent group of qualified experts organized by the clinical\ntrial sponsor, known as a data safety monitoring board, or the DSMB. DSMBs provide authorization for whether or not a study may move\nforward at designated check points based on access to certain data from the study and may halt the clinical trial if a DSMB determines\nthat there is an unacceptable safety risk for subjects or based on other grounds, such as no demonstration of efficacy. Other grounds\nfor suspension or termination may be made based on evolving business objectives and/or competitive climate. There are also requirements\ngoverning the reporting of ongoing clinical trials and clinical trial results to public registries.\n\n \n\nA sponsor may choose, but is not required, to conduct\na foreign clinical trial under an IND. When a foreign clinical trial is conducted under an IND, all U.S. FDA IND requirements must be\nmet unless waived. When the foreign clinical trial is not conducted under an IND, the sponsor must ensure that the study complies with\ncGCP regulations in order to use the study as support for an IND or application for marketing approval, including review and approval\nby an independent ethics committee and informed consent from subjects. If conducting a clinical study in a non-U.S. population, acceptance\nof clinical trial results by the U.S. FDA will depend, among other things, on whether the non-U.S. population that enrolled in the\nstudy is sufficiently similar to the indicated U.S. population that the results of the trial would fairly represent expected results\nin the U.S. population. The same issue can also arise in multi-national trials where non-U.S. sites are enrolling subjects that\nwill become part of the data submitted to the U.S. FDA.\n\n \n\nFor purposes of drug approval, clinical trials are\ntypically conducted in the following sequential phases that may overlap or be combined:\n\n \n\n●Phase I:    The investigational\nproduct is initially introduced into a small number of healthy human subjects or patients with the target disease or condition. These\nstudies are designed to test the safety, dosage tolerance, absorption, metabolism and distribution of the investigational product in\nhumans and the side effects associated with increasing doses. These studies may also yield early evidence of effectiveness.\n\n \n\n●Phase II:    The investigational\nproduct is administered to a limited patient population with a specified disease or condition to evaluate the preliminary efficacy, optimal\ndosages and dosing schedule and to identify possible adverse side effects and safety risks.\n\n \n\n●Phase III:    The investigational\nproduct is administered to an expanded patient population generally at multiple geographically dispersed clinical trial sites to further\nevaluate dosage, to provide statistically significant evidence of clinical efficacy and to further test for safety. These clinical trials\nare intended to generate sufficient data to statistically evaluate the efficacy and safety of the product for approval, to establish\nthe overall risk/benefit ratio of the investigational product and to provide an adequate basis for product approval by the U.S. FDA and\nlabeling of the drug product.\n\n \n\nIn some cases, the U.S. FDA may require, or companies\nmay voluntarily pursue, additional clinical trials after a product is approved to gain more information about the product, sometimes referred\nto as “Phase IV” studies. Such post-approval studies, when applicable, are conducted following initial approval, typically\nto develop additional data and information relating to the biological characteristics of the product and the treatment of patients in\nthe intended therapeutic indication.\n\n \n\nProgress reports detailing the results of the clinical\ntrials must be submitted at least annually to the U.S. FDA and more frequently if serious adverse events occur. In addition, IND safety\nreports must be submitted to the U.S. FDA for any of the following: suspected serious and unexpected adverse reactions; findings\nfrom epidemiological studies, pooled analysis of multiple studies, animal or in vitro testing, or other clinical trials, whether or not\nconducted under an IND, and whether or not conducted by the sponsor, that suggest a significant risk in humans exposed to the drug; and\nany clinically important increase in the rate of a serious suspected adverse reaction over such rate listed in the protocol or investigator\nbrochure, which is a comprehensive document summarizing the body of information about an investigational product obtained during clinical\nand non-clinical trials.\n\n \n\n98\n\n \n\n \n\nEach of Phase I, Phase II and Phase III\nclinical trials may not be completed successfully within any specified period, or at all. Furthermore, the U.S. FDA or the sponsor may\nsuspend or terminate a clinical trial at any time on various grounds, including a finding that the research patients are being exposed\nto an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution, or an institution\nit represents, if the clinical trial is not being conducted in accordance with such IRB’s requirements or if the drug has been associated\nwith unexpected serious harm to patients. Additionally, if a clinical trial is overseen by a Data Safety Monitoring Board, or DSMB, the\nDSMB will provide authorization for whether or not a study may move forward at designated check points based on access to certain data\nfrom the study.\n\n \n\nConcurrent with clinical trials, companies must\ndevelop additional information about the chemistry and physical characteristics of the drug and finalize a process for manufacturing the\nproduct in commercial quantities in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing\nquality batches of the product candidate, and cGMPs impose, among other things, extensive procedural, substantive and recordkeeping requirements\nto ensure and preserve the long-term stability and quality of the final drug product. Additionally, appropriate packaging must be selected\nand tested and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration\nover its shelf life. Any changes to the drug product during development, and especially after Phase II, can raise questions with\nrespect to impact of changes on study results, and whether results may be extrapolated to support approval of a final finished dosage\nform for which approval is sought.\n\n \n\nDuring the clinical development process, earlier\nphase drug results may be promising, but it cannot be assumed that subsequent phases of development will be successful. In fact, it is\noften the case that drugs with promising early phase data fail to ultimately show sufficient efficacy or safety to support approval in\nlater phases of development.\n\n** **\n\n**NDA Submission and Review**\n\n \n\nFollowing study completion, study results and data\nare analyzed to assess safety and efficacy. The results of preclinical studies and clinical trials are then submitted to the U.S. FDA\nas part of an NDA, along with relevant patent information, proposed labeling for the drug, information about the manufacturing process\nand facilities that will be used to ensure drug quality, results of analytical testing conducted on the chemistry of the drug and other\nrelevant information. The NDA is a request for approval to market the drug and must contain adequate evidence of safety and substantial\nevidence of efficacy, which is demonstrated by extensive preclinical and clinical testing. Data may come from company-sponsored clinical\ntrials intended to test the safety and efficacy of a use of a drug, or from a number of alternative sources, including studies initiated\nby investigators. To support marketing approval, the data submitted must be sufficient in quality and quantity to establish the safety\nand efficacy of the investigational drug product to the satisfaction of the U.S. FDA.\n\n \n\nUnder the PDUFA, each NDA must generally be accompanied\nby a significant application user fee. The U.S. FDA adjusts the PDUFA user fees on an annual basis. Fee waivers or reductions are available\nin certain circumstances, including a waiver of the application fee for the first application filed by a small business which has fewer\nthan 500 employees; in assessing whether an application qualifies as a ‘first application’ and calculating the number of employees,\naffiliates of the small business making the NDA submission are considered. Additionally, no user fees are assessed on NDAs for products\ndesignated as orphan drugs, unless the product also includes a non-orphan indication.\n\n \n\nThe U.S. FDA reviews all NDAs submitted before it\naccepts them for filing and may request additional information rather than accepting an NDA for filing. The U.S. FDA conducts a preliminary\nreview of an NDA within 60 days of receipt and informs the sponsor by the 74th day after the U.S. FDA’s receipt\nof the submission to determine whether the application is sufficiently complete to permit substantive review. Once the submission is accepted\nfor filing, the U.S. FDA begins an in-depth review of the NDA. Under the goals and policies agreed to by the U.S. FDA under PDUFA,\nthe U.S. FDA has ten months from the filing date in which to complete its initial review of a standard NDA and respond to the applicant,\nand six months from the filing date for a “priority review” NDA. The U.S. FDA does not always meet its PDUFA goal\ndates for standard and priority review NDAs, and the review process is often significantly extended by U.S. FDA requests for additional\ninformation or clarification.\n\n \n\n99\n\n \n\n \n\nAfter the NDA submission is accepted for filing,\nthe U.S. FDA reviews the NDA to determine, among other things, whether the proposed drug is safe and effective for its intended use, and\nwhether the drug is being manufactured in accordance with cGMP to assure and preserve the drug’s identity, strength, quality, purity\nand efficacy. The U.S. FDA may refer applications for novel drugs or product candidates that present difficult questions of safety or\nefficacy to an advisory committee. Typically, an advisory committee consists of a panel that includes clinicians and other experts who\nwill review, evaluate and provide a recommendation as to whether the application should be approved and, if so, under what conditions.\nThe U.S. FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making\ndecisions and usually follows such recommendations. The U.S. FDA may re-analyze the clinical trial data, which could result in extensive\ndiscussions between the U.S. FDA and us during the review process.\n\n \n\nBefore approving an NDA, the U.S. FDA will also\nconduct a pre-approval inspection of the manufacturing facilities for the new drug to determine whether they comply with cGMPs. The U.S.\nFDA will not approve the drug unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements\nand adequate to assure consistent production of the drug within required specifications. In addition, before approving an NDA, the U.S.\nFDA may also audit data from clinical trials to ensure compliance with cGMP requirements. After the U.S. FDA evaluates the application,\nmanufacturing process and manufacturing facilities where the drug product and/or its API will be produced, it may issue an approval letter\nor a complete response letter. An approval letter authorizes commercial marketing of the drug with specific prescribing information for\nspecific indications. A complete response letter indicates that the review cycle of the application is complete and the application is\nnot ready for approval. A complete response letter usually describes all of the specific deficiencies in the NDA identified by the U.S.\nFDA. The complete response letter may require additional clinical data and/or an additional pivotal clinical trial(s), and/or other\nsignificant, expensive and time-consuming requirements related to preclinical studies or clinical trials or manufacturing. If a complete\nresponse letter is issued, the applicant may either resubmit the NDA, addressing all of the deficiencies identified in the letter, or\nwithdraw the application. Even if such data and information is submitted, the U.S. FDA may ultimately decide that the NDA does not satisfy\nthe criteria for approval. Data obtained from clinical trials are not always conclusive and the U.S. FDA may interpret data differently\nthan we interpret the same data.\n\n \n\nIf a drug receives marketing approval, the approval\nmay be limited to specific diseases and dosages or the indications for use may otherwise be limited. Further, the U.S. FDA may require\nthat certain contraindications, warnings or precautions be included in the drug labeling or may condition the approval of the NDA on other\nchanges to the proposed labeling, development of adequate controls and specifications, or a commitment to conduct post-market testing\nor clinical trials and surveillance to monitor the effects of approved drugs. For example, the U.S. FDA may require Phase IV testing\nwhich involves clinical trials designed to further assess a drug’s safety and effectiveness and may require testing and surveillance\nprograms to monitor the safety of approved drugs that have been commercialized. The U.S. FDA may also place other conditions on approvals\nincluding the requirement for a REMS to ensure that the benefits of a drug or biological product outweigh its risks. If the U.S. FDA concludes\na REMS is needed, the sponsor of the NDA must submit a proposed REMS and the U.S. FDA will not approve the NDA without a REMS that the\nU.S. FDA has determined is acceptable. A REMS could include medication guides, physician communication plans or elements to assure safe\nuse, such as restricted distribution methods, patient registries and other risk minimization tools. Any of these limitations on approval\nor marketing could restrict the commercial promotion, distribution, prescription or dispensing of a drug. Drug approvals may be withdrawn\nfor non-compliance with regulatory standards or if problems occur following initial marketing.\n\n** **\n\n**Post-Approval Requirements**\n\n \n\nAny products manufactured or distributed pursuant\nto U.S. FDA approvals are subject to pervasive and continuing regulation by the U.S. FDA, including, among other things, requirements\nrelating to monitoring, recordkeeping, registration and listing, periodic reporting, reporting of certain deviations and adverse experiences,\nproviding the regulatory authorities with updated safety and efficacy information, drug sampling and distribution requirements, complying\nwith applicable promotion and advertising requirements, and the provision and maintenance of data about each sale of prescription drugs\nto authorized trading partners in a secure and interoperable manner, and systems for the identification and management of suspect and\nillegitimate products. After approval, most changes to the approved product, such as adding new indications or other labeling claims,\nare subject to U.S. FDA review and approval and may require the development and submission of data, including clinical data. There\nalso are continuing user fee requirements, under which the U.S. FDA assesses an annual program fee for each product identified in an approved\nNDA.\n\n \n\n100\n\n \n\n \n\nU.S. FDA regulations also require that approved\nproducts be manufactured in specific approved facilities and in accordance with cGMP. We currently use contract manufacturing organizations,\nor CMOs, to manufacture the drugs used in our clinical trials and expect to rely on third parties for the production of commercial quantities\nof our products in accordance with cGMP regulations. NDA holders using CMOs, laboratories or packagers are responsible for the selection\nand monitoring of qualified firms, and, in certain circumstances, qualified suppliers to these firms. These manufacturers must comply\nwith cGMP regulations that require, among other things, quality control and quality assurance as well as the corresponding maintenance\nof records and documentation and the obligation to investigate and correct any deviations from cGMP. Drug manufacturers and their\nthird-party contractors are required to register their establishments with the U.S. FDA and certain state agencies. These establishments\nare subject to routine and periodic unannounced inspections by the U.S. FDA and certain state agencies for compliance with cGMP and data\nintegrity requirements, which impose certain procedural and documentation requirements to assure quality of manufacturing and product.\nAny interference with U.S. FDA inspection activities at our company or at CMOs can result in substantial penalties. The U.S. FDA has increasingly\nobserved cGMP violations involving data integrity during site inspections and investigating compliance with data integrity requirements\nis a significant focus of its oversight. Requirements with respect to data integrity include, among other things, controls to ensure data\nare complete and secure; requiring that activities are documented at the time of performance; audit trail functionality; requiring authorized\naccess and limitations; validated computer systems; and the review of records for accuracy, completeness and compliance with established\nstandards.\n\n \n\nPost-approval changes to the manufacturing process,\nincluding changes of the site of manufacture, are strictly regulated, and, depending on the significance of the change, may require U.S.\nFDA approval before being implemented. U.S. FDA regulations also require investigation and correction of any deviations from cGMP and\nimpose reporting requirements upon us and any third-party CMOs that we may decide to use. Accordingly, manufacturers must continue to\nexpend time, money and effort in the area of production and quality control to maintain compliance with cGMP, data integrity, pharmacovigilance\n(*i.e.*, post-marketing safety reporting obligations) and other aspects of regulatory compliance.\n\n \n\nThe U.S. FDA may withdraw a product approval if\ncompliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market. Later\ndiscovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing\nprocesses, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information;\nimposition of post-approval studies or clinical trials to assess new safety risks; or imposition of distribution or other restrictions\nunder a REMS. Other potential consequences include:\n\n \n\n●restrictions on the marketing or manufacturing of a product,\ncomplete withdrawal of the product from the market or product recalls;\n\n \n\n●fines, Warning Letters, Untitled Letters or holds on post-approval\nclinical trials;\n\n \n\n●refusal of the U.S. FDA to approve pending applications or\nsupplements to approved applications, or suspension or revocation of existing product approvals;\n\n \n\n●product seizure or detention, or refusal of the U.S. FDA\nto permit the import or export of products that it believes present safety problems by issuing an Import Alert;\n\n \n\n●permanent injunctions and consent decrees, including the\nimposition of civil or criminal penalties;\n\n \n\n●adverse publicity;\n\n \n\n●voluntary or mandatory product recall; and\n\n \n\n●recoupment of payment and damages for noncompliant drug products\nbased on various legal theories, including a theory that reimbursement for noncompliant products violates federal and state false claims\nlaws (e.g., the federal False Claims Act).\n\n \n\nThe U.S. FDA strictly regulates the marketing, labeling,\nadvertising and promotion of prescription drug products placed on the market. A company can make only those claims relating to safety\nand efficacy, identity, strength, quality, purity and potency that are approved by the U.S. FDA and in accordance with the provisions\nof the approved label. Promotional claims relating to a product’s safety or effectiveness are prohibited before the drug is approved.\nAfter approval, a product generally may not be promoted for uses that are not approved by the U.S. FDA, as reflected in the product’s\nprescribing information. In the United States, healthcare professionals are generally permitted to prescribe drugs for such uses\nnot described in the drug’s labeling, known as off-label uses, because the U.S. FDA does not regulate the practice of medicine.\nHowever, U.S. FDA regulations impose rigorous restrictions on manufacturers’ communications, prohibiting the promotion of off-label\nuses. It may be permissible, under very specific, narrow conditions, for a manufacturer to engage in non-promotional, non-misleading communication\nregarding off-label information, such as distributing scientific or medical journal information in accordance with the U.S. FDA’s\ngood reprint practices or unsolicited request doctrine.\n\n \n\n101\n\n \n\n \n\nIf a company is found to have promoted off-label\nuses, it may become subject to adverse public relations and administrative and judicial enforcement by the U.S. FDA, the DOJ or the Office\nof the Inspector General of the Department of Health and Human Services, as well as other federal and state authorities. This could subject\na company to a range of penalties that could have a significant commercial impact, including civil and criminal fines and agreements that\nmaterially restrict the manner in which a company promotes or distributes products. The federal government has levied large civil and\ncriminal fines against companies for alleged improper promotion, and has also requested that such companies enter into consent decrees\nand permanent injunctions under which specified promotional conduct is changed or curtailed. Among other legal theories, penalties may\nbe sought based on a theory that off-label promotion causes submission of claims that for an unapproved use in violation of state and\nfederal false claims laws.\n\n** **\n\n**Other Regulatory Matters**\n\n \n\nManufacturing, sales, promotion and other activities\nfollowing drug approval are also subject to regulation by numerous regulatory authorities in addition to the U.S. FDA, including, in the\nUnited States, the Centers for Medicare & Medicaid Services, other divisions of the Department of Health and Human Services,\nthe Drug Enforcement Administration for controlled substances, the Consumer Product Safety Commission, the Federal Trade Commission, the\nOccupational Safety & Health Administration, the Environmental Protection Agency and state and local governments. The activities\nof pharmaceutical manufacturers are subject to federal and state laws designed to prevent “fraud and abuse” in the healthcare\nindustry. The laws generally limit financial interactions between manufacturers and health care providers or other participants in the\nhealthcare industry, require disclosure to the government and public of such interactions, and govern various matters regarding reimbursement\nof healthcare products. Many of these laws and regulations contain ambiguous requirements or require administrative guidance for implementation.\nPharmaceutical manufacturers are also required to provide discounts or rebates under government healthcare programs or to certain government\nand private purchasers in order to obtain coverage under federal healthcare programs such as Medicaid. Participation in such programs\nmay require tracking and reporting of certain drug prices. Manufacturers are subject to fines and other penalties if such prices are not\nreported accurately. Additionally, the handling of any controlled substances must comply with the U.S. Controlled Substances Act\nand Controlled Substances Import and Export Act. Drugs must meet applicable child-resistant packaging requirements under the U.S. Poison\nPrevention Packaging Act. Manufacturing, sales, promotion and other activities are also potentially subject to federal and state consumer\nprotection and unfair competition laws.\n\n \n\nThe distribution of prescription drugs and biologics\nare subject to the Drug Supply Chain Security Act, which requires manufacturers and other stakeholders to comply with product labeling,\ntracing, verification, detection and disposition of suspect and illegitimate products, notifications regarding illegitimate products,\nand products with a high risk of illegitimacy, and state permitting or licensing requirements. Manufacturers of prescription drugs must\ndevelop secure, electronic and interoperable recordkeeping systems that track transaction data at the package level when they sell prescription\nproducts to their authorized downstream customers and be able to produce those records when requested by U.S. FDA. In addition, the Prescription\nDrug Marketing Act and its implementing regulations and state laws limit the distribution of prescription pharmaceutical product samples,\nand the Drug Supply Chain Security Act imposes requirements to ensure accountability in distribution and to identify, quarantine, investigate,\nand remove from the market prescription drug and biological products that may be counterfeit, stolen, contaminated, or otherwise harmful.\n\n** **\n\n102\n\n \n\n** **\n\n**Hatch-Waxman Protections**\n\n \n\nPatent Term Restoration\n\n \n\nAfter approval, owners of relevant drug or biological\nproduct patents may apply for up to a five-year patent extension to restore a portion of patent term lost during product development and\nU.S. FDA review of an NDA if approval of the application is the first permitted commercial marketing or use of a drug containing the API\nunder the Hatch-Waxman Act. The allowable patent term extension is calculated as one-half of the product’s testing phase, which\nis the time between IND and NDA submission, and all of the review phase, which is the time between NDA submission and approval, up to\na maximum of five years. The time can be shortened if the U.S. FDA determines that the applicant did not pursue approval with due\ndiligence. The total patent term after the extension may not exceed more than 14 years from the date of U.S. FDA approval of the\nproduct. Only one patent claiming each approved product is eligible for restoration and the patent holder must apply for restoration within\n60 days of approval. The US Patent and Trademark Office (US PTO), in consultation with the U.S. FDA, reviews and approves the application\nfor patent term restoration.\n\n \n\nFor patents that might expire during the application\nphase, the patent owner may request an interim patent extension. An interim patent extension increases the patent term by one year and\nmay be renewed up to four times. For each interim patent extension granted, the post-approval patent extension is reduced by one year.\nThe director of the US PTO must determine that approval of the product candidate covered by the patent for which a patent extension is\nbeing sought is likely. Interim patent extensions are not available for a product candidate for which an NDA has not been submitted.\n\n \n\nPatent Listing and the Orange Book\n\n \n\nIn seeking approval for a drug through an NDA, applicants\nare required to list with the U.S. FDA each drug substance, drug product, and method-of-use patent whose claims cover the NDA drug product.\nUpon approval of the NDA, each of the patents listed in the application for the drug is published in the U.S. FDA’s Approved Drug\nProducts with Therapeutic Equivalence Evaluations, commonly known as the Orange Book. Drugs listed in the Orange Book can, in turn, be\ncited by potential competitors as reference listed drugs, or RLDs, in support of approval of an abbreviated new drug application, or ANDA,\nor 505(b)(2) NDA which relies upon the RLD’s approval to support its own.\n\n \n\nAn ANDA provides for marketing of a drug product\nthat has the same active ingredients in the same strengths and dosage form as the listed drug and has been shown through bioequivalence\ntesting to be therapeutically equivalent to the listed drug. Other than the requirement for bioequivalence testing, ANDA applicants are\nnot required to conduct, or submit results of, nonclinical or clinical tests (beyond, potentially, bioequivalence studies) to prove the\nsafety or effectiveness of their drug product. Drugs approved in this way are commonly referred to as “generic equivalents”\nto the listed drug, and can often be substituted by pharmacists under prescriptions written for the original listed drug under various\nstate laws. A 505(b)(2) NDA is generally used where there are one more difference from the RLD in terms of dosage form, labeling,\nor other properties, but where an applicant may nonetheless rely upon U.S. FDA’s prior approval determinations with respect to the\nRLD to support safety and/or efficacy of the 505(b)(2) NDA drug product.\n\n \n\nAn ANDA or 505(b)(2) NDA applicant is required\nto certify to the U.S. FDA concerning any patents listed for the RLD in the U.S. FDA’s Orange Book. Specifically, the applicant\nmust certify that: (i) the required patent information has not been filed; (ii) the listed patent has expired; (iii) the\nlisted patent has not expired, but will expire on a particular date and approval is sought after patent expiration; or (iv) the listed\npatent is invalid or will not be infringed by the new product. An ANDA applicant may also elect to submit a section viii statement, certifying\nthat its proposed ANDA label does not contain or carve out any language regarding the patented method-of-use, rather than certify to a\nlisted method-of-use patent.\n\n \n\nIf the applicant does not challenge the listed patents,\nthe ANDA or 505(b)(2) NDA will not be approved until all the listed patents claiming the referenced product have expired. A certification\nthat the new product will not infringe the already approved product’s listed patents, or that such patents are invalid, is called\na Paragraph IV certification. If the ANDA or 505(b)(2) NDA applicant has provided a Paragraph IV certification to the U.S.\nFDA, the applicant must also send notice of the Paragraph IV certification to the NDA and patent holders once the ANDA or 505(b)(2) NDA\nhas been accepted for filing by the U.S. FDA. The NDA and patent holders may then initiate a patent infringement lawsuit in response\nto the notice of the Paragraph IV certification. The filing of a patent infringement lawsuit within 45 days of the receipt of\na Paragraph IV certification automatically prevents the U.S. FDA from approving the ANDA or 505(b)(2) NDA until the earlier\nof 30 months, expiration of the patent, settlement of the lawsuit, or a decision in the infringement case that is favorable to the\nANDA or 505(b)(2) NDA applicant.\n\n \n\n103\n\n \n\n \n\nThe ANDA or 505(b)(2) NDA also will not be\napproved until any applicable non-patent market exclusivity listed in the Orange Book for the referenced product have expired.\n\n \n\nMarket Exclusivity\n\n \n\nUpon NDA approval of a new chemical entity (NCE),\nwhich is a drug that contains no active moiety that has been approved by the U.S. FDA in any other NDA, that drug receives five years\nof marketing exclusivity during which time the U.S. FDA cannot receive any ANDA or 505(b)(2) NDA seeking approval that uses the NDA\nas its RLD. Certain changes to a drug, such as the addition of a new indication to the package insert, are associated with a three-year\nperiod of exclusivity during which the U.S. FDA cannot approval an ANDA or 505(b)(2) NDA seeking approval that uses the NDA as its\nRLD.\n\n \n\nAn ANDA or 505(b)(2) NDA may be submitted one\nyear before NCE exclusivity expires if a Paragraph IV certification is filed. If there is no listed patent in the Orange Book, there\nmay not be a Paragraph IV certification, and, thus, no ANDA or 505(b)(2) may be filed before the expiration of the exclusivity\nperiod.\n\n \n\nThe Federal Food, Drug, and Cosmetic Act directs\nthe U.S. FDA to meet with sponsors, pursuant to a sponsor’s written request, for the purpose of reaching agreement on the design\nand size of clinical trials intended to form the primary basis of an efficacy claim in an NDA. If an agreement is reached, the U.S.\nFDA will reduce the agreement to writing and make it part of the administrative record. This agreement is called a special protocol assessment,\nor an SPA. While the U.S. FDA’s guidance on SPAs states that documented SPAs should be considered binding on the review division,\nthe U.S. FDA has latitude to change its assessment if certain exceptions apply. Exceptions include public health concerns emerging that\nwere unrecognized at the time of the protocol assessment, identification of a substantial scientific issue essential to the safety or\nefficacy testing that later comes to light, a sponsor’s failure to follow the protocol agreed upon, or the U.S. FDA’s reliance\non data, assumptions or information that are determined to be wrong.\n\n \n\nAn SPA request can be requested after a pre-Phase III\nmeeting with the U.S. FDA. It allows the U.S. FDA and sponsor to agree on the study design for a Phase III study whose efficacy\nresults will be the basis of an NDA. There is no guarantee that we will request or be able to receive and maintain Fast Track designation,\nBreakthrough Therapy designation, Priority Review designation, Accelerated Approval designation or a Special Protocol Assessment for any\nof our product candidates.\n\n** **\n\n**Disclosure of Clinical Trial Information**\n\n \n\nSponsors of clinical trials of certain U.S. FDA-regulated\nproducts, including prescription drugs, are required to register and disclose certain clinical trial information on a public website maintained\nby the U.S. National Institutes of Health. Information related to the product, patient population, phase of investigation, clinical\ntrial sites and investigator, and other aspects of the clinical trial is made public as part of the registration. Sponsors are also obligated\nto disclose the results of these clinical trials after completion if the product candidate is ultimately approved, and disclosure of the\nresults of these clinical trials will be delayed until such approval. Competitors may use this publicly-available information to gain\nknowledge regarding the design and progress of in development programs.\n\n** **\n\n**U.S. Healthcare Regulation**\n\n \n\nPharmaceutical Coverage and Reimbursement\n\n \n\nSignificant uncertainty exists as to the coverage\nand reimbursement status of any products for which we may obtain regulatory approval. In the United States, sales of any products\nfor which we may receive regulatory approval for commercial sale will depend in part on the availability of coverage and reimbursement\nfrom third-party payors. Third-party payors include government authorities, managed care providers, private health insurers and other\norganizations. Third-party payors establish the coverage and reimbursement policies for pharmaceutical products, and the marketability\nof any products for which we may receive regulatory approval for commercial sale depends on those payors’ coverage policies and\nreimbursement rates. Third-party payors may limit coverage to specific products on an approved list, or formulary, which might not include\none or more of our product candidates, if approved. Third-party payors, together with regulators and others, are increasingly challenging\nthe prices charged for pharmaceutical products and health services, in addition to their cost-effectiveness, safety and efficacy. In addition,\nno uniform policy for coverage and reimbursement exists in the United States. Third-party payors often rely upon Medicare coverage\npolicy and payment limitations in setting their own coverage and reimbursement policies, but also have their own methods and approval\nprocess apart from Medicare determinations. Therefore, coverage and reimbursement rates can vary significantly from payor to payor.\n\n \n\n104\n\n \n\n \n\nMoreover, obtaining coverage and adequate reimbursement\nis a time-consuming and costly process. We may be required to provide scientific and clinical support for the use of any product to each\nthird-party payor separately with no assurance that approval will be obtained, and we may need to conduct expensive pharmacoeconomic studies\nin order to demonstrate the cost-effectiveness of our products. We cannot be certain that our product candidates will be considered cost-effective\nby third-party payors. This process could delay the market acceptance of any product candidates for which we may receive approval and\ncould have a negative effect on our future revenues and operating results.\n\n \n\nOther U.S. Healthcare Laws and Compliance Requirements\n\n \n\nOur business may be subject to healthcare fraud\nand abuse regulation and enforcement by both the federal government and the states in which we conduct our business, particularly once\nthird-party reimbursement becomes available for one or more of our products. The healthcare fraud and abuse laws and regulations that\nmay affect our ability to operate include, but are not limited to:\n\n \n\n●The federal Anti-Kickback Statute, which prohibits, among\nother things, knowingly and willfully soliciting, receiving, offering or paying any remuneration (including any kickback, bribe or rebate),\ndirectly or indirectly, overtly or covertly, in cash or in kind, to induce, or in return for, either the referral of an individual, or the purchase, lease, order or recommendation\nof any good, facility, item or service for which payment may be made, in whole or in part, under the Medicare and Medicaid programs, or\nother federal healthcare programs;\n\n \n\n●The federal civil and criminal false claims laws and civil\nmonetary penalty laws, including the civil False Claims Act, which prohibits, among other things, knowingly presenting, or causing to\nbe presented, claims for payment of government funds that are false or fraudulent, or knowingly making, or using or causing to be made\nor used, a false record or statement material to a false or fraudulent claim to avoid, decrease, or conceal an obligation to pay money\nto the federal government;\n\n \n\n●HIPAA, which, among other things, prohibits executing a scheme\nto defraud any healthcare benefit program, including private third-party payors, and prohibits (i) knowingly and willfully falsifying,\nconcealing or covering up a material fact or making any materially false, fictitious or fraudulent statement or representation and (ii) making\nor using any false writing or document knowing the same to contain any materially false, fictitious or fraudulent statement or entry\nin connection with the delivery of or payment for healthcare benefits, items or services;\n\n \n\n●HIPAA, as amended by the Health Information Technology for\nEconomic and Clinical Health Act of 2009, or HITECH, and their respective implementing regulations, which impose requirements\nrelating to the privacy, security and transmission of individually identifiable health information held by covered entities, including\nhealth plans, healthcare clearinghouses and certain healthcare providers, and their business associates, individuals or entities that\nperform certain services on behalf of a covered entity that involve the use or disclosure of individually identifiable health information.\nHITECH also created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to\nbusiness associates and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts\nto enforce HIPAA and seek attorneys’ fees and costs associated with pursuing federal civil actions;\n\n \n\n●Federal laws that require pharmaceutical manufacturers to\nreport certain calculated product prices to the government or provide certain discounts or rebates to government authorities or private\nentities, often as a condition of reimbursement under government healthcare programs;\n\n \n\n●The federal Physician Payments Sunshine Act, being implemented\nas the Open Payments Program, which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available\nunder Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the CMS, information\nrelated to direct or indirect payments and other transfers of value to physicians and teaching hospitals, as well as ownership and investment\ninterests held in a company by physicians and their immediate family members. Beginning in 2022, applicable manufacturers will also be\nrequired to report information regarding payments and transfers of value provided to physician assistants, nurse practitioners, clinical\nnurse specialists, certified nurse anesthetists and certified nurse-midwives; and\n\n \n\n105\n\n \n\n \n\n●U.S. state and local laws and regulations, such as state\nanti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services\nreimbursed by non-governmental third-party payors, including private insurers; state laws that require pharmaceutical companies to comply\nwith the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal\ngovernment or otherwise restrict payments that may be made to healthcare providers; state laws that restrict the ability of manufacturers\nto offer co-pay support to patients for certain prescription drugs; state laws that require drug manufacturers to report information\nrelated to clinical trials, or information related to payments and other transfers of value to physicians and other healthcare providers\nor marketing expenditures; state laws that require drug manufacturers to report information on the pricing of certain drugs; state laws\nand local ordinances that require identification or licensing of sales representatives; state and local laws regarding the manufacturing\nand distribution of drugs; and state laws governing the privacy and security of health information in certain circumstances, many of\nwhich differ from each other in significant ways and often are not pre-empted by HIPAA, thus complicating compliance efforts.\n\n \n\nWe will be required to spend substantial time and\nmoney to ensure that our business arrangements with third parties comply with applicable healthcare laws and regulations. Even then, governmental\nauthorities may conclude that our business practices do not comply with current or future statutes, regulations or case law involving\napplicable fraud and abuse or other healthcare laws and regulations. If governmental authorities find that our operations violate any\nof these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative\npenalties, damages, fines, disgorgement, individual imprisonment, exclusion from government funded healthcare programs, such as Medicare\nand Medicaid, and additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement\nto resolve allegations of non-compliance with these laws, and we may be required to curtail or restructure our operations. Moreover, we\nexpect that there will continue to be federal and state laws and regulations, proposed and implemented, that could impact our operations\nand business. In addition, the approval and commercialization of any product candidate we develop outside the United States will\nalso likely subject us to foreign equivalents of the healthcare laws mentioned above, among other foreign laws. The extent to which future\nlegislation or regulations, if any, relating to health care fraud and abuse laws or enforcement, may be enacted or what effect such legislation\nor regulation would have on our business remains uncertain.\n\n \n\nHealthcare Reform\n\n \n\nIn the United States there have been, and continue\nto be, several legislative and regulatory changes and proposed changes regarding the healthcare system that could prevent or delay marketing\napproval of product candidates, restrict or regulate post-approval activities, and affect the ability to profitably sell product candidates\nfor which marketing approval is obtained. Among policy makers and payors in the United States, there is significant interest in promoting\nchanges in healthcare systems with the stated goals of containing healthcare costs, improving quality and/or expanding access. The Patient\nProtection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, collectively the Affordable Care Act,\nenacted in March 2010, has substantially changed healthcare financing and delivery by both governmental and private insurers. Among\nother things the Affordable Care Act included the following provisions:\n\n \n\n●an annual, nondeductible fee on any entity that manufactures\nor imports certain specified branded prescription drugs and biologic agents apportioned among these entities according to their market\nshare in some government healthcare programs;\n\n \n\n●an increase in the statutory minimum rebates a manufacturer\nmust pay under the Medicaid Drug Rebate Program;\n\n \n\n●a new Medicare Part D coverage gap discount program,\nin which manufacturers must agree to offer 50% point-of-sale discounts, which through subsequent legislative amendments, will be increased\nto 70%, starting in 2019, off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period,\nas a condition for the manufacturers’ outpatient drugs to be covered under Medicare Part D;\n\n \n\n106\n\n \n\n \n\n●extension of manufacturers’ Medicaid rebate liability\nto covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations;\n\n \n\n●expansion of eligibility criteria for Medicaid programs;\n\n \n\n●expansion of the entities eligible for discounts under the\n340B Drug Discount Program;\n\n \n\n●a Patient-Centered Outcomes Research Institute to oversee,\nidentify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research;\n\n \n\n●a methodology by which rebates owed by manufacturers under\nthe Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted, or injected; and\n\n \n\n●a licensure framework for follow-on biological products.\n\n \n\nSince its enactment, there have been numerous judicial,\nadministrative, executive, and legislative challenges to certain aspects of the Affordable Care Act, and we expect there will be additional\nchallenges and amendments to the Affordable Care Act in the future. Various portions of the Affordable Care Act are currently undergoing\nlegal and constitutional challenges in the United States Supreme Court and members of Congress have introduced several pieces of\nlegislation aimed at significantly revising or repealing the Affordable Care Act. The implementation of the Affordable Care Act is ongoing,\nthe law appears likely to continue the downward pressure on pharmaceutical pricing, especially under the Medicare program, and may also\nincrease our regulatory burdens and operating costs. Litigation and legislation related to the Affordable Care Act are likely to continue,\nwith unpredictable and uncertain results.\n\n \n\nIn addition, other legislative changes have been\nproposed and adopted since the Affordable Care Act was enacted. On August 2, 2011, the Budget Control Act of 2011 was signed\ninto law, which, among other things, included aggregate reductions to Medicare payments to providers of 2% per fiscal year, which went\ninto effect on April 1, 2013 and, due to subsequent legislative amendments to the statute will remain in effect through 2030 unless\nadditional Congressional action is taken. These reductions have been suspended from May 1, 2020 through December 31, 2020 due\nto the COVID-19 pandemic. The Consolidated Appropriations Act of 2021, extended the suspension period to March 31, 2021.\nAn Act to Prevent Across-the-Board Direct Spending Cuts, and for Other Purposes, signed into law on April 14, 2021, has extended\nthe suspension period to December 31, 2021. On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed\ninto law, which, among other things, reduced Medicare payments to several providers, including hospitals, and increased the statute of\nlimitations period for the government to recover overpayments to providers from three to five years.\n\n \n\nMoreover, payment methodologies may be subject to\nchanges in healthcare legislation and regulatory initiatives. For example, CMS may develop new payment and delivery models, such as bundled\npayment models. In addition, recently there has been heightened governmental scrutiny over the manner in which manufacturers set prices\nfor their commercial products, which has resulted in several Congressional inquiries and proposed and enacted state and federal legislation\ndesigned to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer\npatient programs and reform government program reimbursement methodologies for pharmaceutical products. For example, for the fiscal year\nof 2023, the U.S. Department of Health & Human Services, or the HHS, proposes $127.3 billion in discretionary funding and $1.7\ntrillion in mandatory funding, including Medicare and Medicaid. On March 10, 2020, the previous administration sent “principles”\nfor drug pricing to Congress, calling for legislation that would, among other things, cap Medicare Part D beneficiary out-of-pocket\npharmacy expenses, provide an option to cap Medicare Part D beneficiary monthly out-of-pocket expenses and place limits on pharmaceutical\nprice increases. Further, the previous administration previously released a “Blueprint” to lower drug prices and reduce out\nof pocket costs of drugs that contained proposals to increase drug manufacturer competition, increase the negotiating power of certain\nfederal healthcare programs, incentivize manufacturers to lower the list price of their products and reduce the out of pocket costs of\ndrug products paid by consumers. HHS has solicited feedback on some of these measures and has implemented others under its existing authority.\nFor example, in May 2019, CMS issued a final rule to allow Medicare Advantage Plans the option of using step therapy, a type of prior\nauthorization, for Part B drugs beginning January 1, 2020. This final rule codified CMS’s policy change, which was effective\nas of January 1, 2019. Although a number of these and other measures may require additional authorization to become effective, Congress\nand the Biden administration have each indicated that they will continue to seek new legislative and/or administrative measures to control\ndrug costs. Any reduction in reimbursement from Medicare and other government programs may result in a similar reduction in payments from\nprivate payors. In addition, individual states in the United States have also increasingly passed legislation and implemented regulations\ndesigned to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain\nproduct access and marketing cost disclosure and transparency measures and, in some cases, designed to encourage importation from other\ncountries and bulk purchasing. In addition, it is possible that additional governmental action is taken to address the COVID-19 pandemic.\nFor example, on April 18, 2020, CMS announced that qualified health plan issuers under the ACA may suspend activities related to\nthe collection and reporting of quality data that would have otherwise been reported between May and June 2020 given the challenges\nhealthcare providers are facing responding to the ongoing COVID-19 pandemic.\n\n \n\n107\n\n \n\n \n\nAt the state level, legislatures have increasingly\npassed legislation and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement\nconstraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases,\ndesigned to encourage importation from other countries and bulk purchasing.\n\n \n\nAdditionally, on May 30, 2018, the Right to\nTry Act was signed into law. The law, among other things, provides a federal framework for certain patients to access certain investigational\nnew drug products that have completed a Phase I clinical study and that are undergoing investigation for U.S. FDA approval. Under\ncertain circumstances, eligible patients can seek treatment without enrolling in clinical studies and without obtaining U.S. FDA permission\nunder the U.S. FDA expanded access program. There is no obligation for a drug manufacturer to make its drug products available to eligible\npatients as a result of the Right to Try Act. If we obtain approval to market a product candidate in the United States, any healthcare\nreforms adverse to drug manufacturers, including but not limited to, any significant spending reductions affecting Medicare, Medicaid\nor other publicly funded or subsidized health programs, that may be implemented and/or any significant taxes or fees that may be imposed\non us could have an adverse impact on our results of operations.\n\n** **\n\n**TAIWAN REGULATION**\n\n** **\n\n**Regulations on Company Establishment**\n\n \n\nThe establishment, operation and management of companies\nin Taiwan is governed by the Taiwan Company Act, which was latest amended on December 29, 2021. There are four types of companies\nin Taiwan: unlimited company, unlimited company with limited liability shareholders, limited company and company limited by shares. Unlimited\ncompany and unlimited company with limited liability shareholders are rarely used in practice; a company limited by shares is the most\ncommon form of business undertaken for foreign investors in Taiwan. The Taiwan Company Act applies to both Taiwan domestic companies and\nforeign-invested companies, unless otherwise provided in the relevant foreign investment laws and regulations.\n\n** **\n\n**Regulations on Foreign Investment**\n\n \n\nThe principal regulations governing foreign investments\nin Taiwan are the Statute for Investment by Foreign Nationals, the Regulations for Verification of Investment by Overseas Chinese and\nForeign Nationals, and the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals. In order to efficiently\nprovide services and manage foreign investments, Taiwan government has specifically established the Investment Commission under the Ministry\nof Economic Affairs.\n\n \n\nAll investments made by foreign nationals within\nthe territory of Taiwan must comply with the provisions of the Statute for Investment by Foreign Nationals and receive permission from\nthe Investment Commission. According to the administrative ordinance “Negative List for Investment by Overseas Chinese and Foreign\nNationals” issued by the Investment Commission, Taiwan maintains a negative list of industries closed to foreign investment as the\nauthorities determine that they relate to national security and environmental protection, including public utilities, power distribution,\nnatural gas, postal service, telecommunications, mass media, and air and sea transportation.\n\n** **\n\n108\n\n \n\n** **\n\n**Regulations on Merger and Acquisition**\n\n \n\nThe main laws and regulations governing merger and\nacquisition (“M&A) activities in Taiwan are the Business Merger and Acquisitions Act, the Company Act, the Securities and Exchange Act\nand the Fair Trade Act.\n\n \n\nThe competent authority in charge of the regulations\nin relation to M&A is the Ministry of Economic Affairs. The main regulatory body in charge of public M&A transactions is the Securities\nFutures Bureau of the Financial Supervisory Commission, the government agency in charge of public companies. Other relevant regulatory\nbodies include the Fair Trade Commission, the authority in charge of antitrust clearance, and the Investment Commission, the authority\nin charge of reviewing foreign and PRC investments. If the M&A target holds any special license, the transaction may also be subject\nto the review of the authority in charge of such special license.\n\n \n\nExcept for certain specific sensitive activities,\nforeign investments are generally not restricted in Taiwan but are subject to the prior approval from the Investment Commission of Taiwan\nwhere a foreign investor seeks to acquire 10% or more of the shares of a Taiwan listed company. The approval must be obtained before the\nfinal completion of the transaction.\n\n** **\n\n**Drug Regulations**\n\n** **\n\n**Government Regulation and Competent Authority**\n\n \n\nThe legal structure of Taiwan consists of the constitution,\nlaws, and regulations. Taiwan’s Legislative Yuan established the Pharmaceutical Affairs Act in accordance with the Constitution\nto protect people’s health and sanitation. The Pharmaceutical Affairs Act provides that the drugs are prohibited to be marketed\nfor sale unless they are approved by the Taiwan Food and Drug Administration (“TFDA”). In addition to the provisions regarding\nthe licensing procedures, the Pharmaceutical Affairs Act also address the management of pharmaceutical companies, patent linkage of drugs,\nsales and manufacture of drugs, and drug advertisement.\n\n \n\nThe TFDA is the competent authority for drug management\nin Taiwan. The TFDA is responsible for approving the license application required by the Pharmaceutical Affairs Act. In addition, the\nTFDA should continuously monitor and inspect the safety of the drugs from the development stage to the marketing and sales stage. Furthermore,\nit has the power to penalize those who violate the provisions in the Pharmaceutical Affairs Act.\n\n** **\n\n**Review and Approval for Licensing Drugs**\n\n \n\nBefore a drug is permitted to sale as a product\non the market, the pharmaceutical firm is required to obtain the following approvals or licenses:\n\n \n\n●Approval for the investigational new drug application (“IND”);\n\n \n\n●Drug license;\n\n \n\n●Drug manufacturing factory registration;\n\n \n\n●Drug manufacturing license;\n\n \n\n●Western pharmaceuticals distribution license;\n\n \n\n●Approval to publish or broadcast drug advertisement.\n\n \n\n109\n\n \n\n \n\nThe process required by the TFDA before a drug may\nbe marketed in Taiwan generally involves the following steps:\n\n \n\n●Completion of the preclinical research which is incompliance\nwith the Good Laboratory Practice (“GLP”);\n\n \n\n●Submission of the IND to the TFDA, which application should\nbe approved before starting the clinical trial;\n\n \n\n●Completion of the clinical trial which is incompliance with\nthe Regulations for Good Clinical Practice and the Guidance for Good Clinical Practice (collectively as “GCP”);\n\n \n\n●Starting from the stage of the clinical trial stage, the\ninvestigational drugs and the drug products should be in compliance with the Good Manufacturing Practice (“GMP”);\n\n \n\n●Submission of the NDA to the TFDA, along with the complete\nrisk evaluation and mitigation strategy (“REMS”);\n\n \n\n●Register the drug manufacturing factory with the Ministry\nof Economic Affairs and comply with the Factory Management Act;\n\n \n\n●After obtaining the approval of the NDA from the TFDA, the\npharmaceutical firm should continuously report the adverse drug reactions (“ADR”) of the drugs to the TFDA, and counsel the\nobligations provided by the Regulations for the Management of Drug Safety Surveillance and the Good Pharmacovigilance Practices (“GPvP”);\n\n \n\n●After the drug products are manufactured, the pharmaceutical\nfirm shall distribute the products in compliance with the Good Distribution Practice (“GDP”); and\n\n \n\n●Every time when the pharmaceutical firm would like to publish\nor broadcast drug advertisement, it should obtain the TFDA’s approval regarding the contents of the advertisement.\n\n** **\n\n**Preclinical Development**\n\n \n\nAs a requirement to apply for the IND, the applicant\nshall submit the documents containing the drug characteristic data (non-clinical and clinical trial data such as drug physical and chemical\nproperties, toxic pharmacological effects, pharmacokinetics, etc.). In order to collect the data, the applicant shall conduct pre-clinical\nresearch.\n\n \n\nIn order to encourage the pharmaceutical firms to\ndevelop new drugs, the TFDA has engaged a non-profit organization, Center for Drug Evaluation (“CDE”), to involve in the whole\nprocess before the new drugs are approved to market in Taiwan. Anyone who intends to apply for the IND can reach out to the CDE for advice\nbefore he/she submits the application. When CDE receives the request, it will meet with the potential applicant and provide its advice\nfrom the preclinical research stage.\n\n \n\nDifferent from the clinical trial which is human\nstudy, the preclinical research is animal testing or testing with the human biological samples in the laboratory. To perform an experiment\nwhich may be approved by the TFDA when applying for the IND, the researchers shall conduct the research in compliance with the GLP. If\nthe applicant for the IND fails to conduct the preclinical research in compliance with the GLP, the TFDA may reject the application for\nthe IND.\n\n** **\n\n**Clinical Development**\n\n \n\nThe IND is valid subject to both the TFDA’s\nand the Institutional Review Board (“IRB”)’s approvals. After the sponsor submits the application documents to the TFDA,\nincluding the approval letter of the IRB, the TFDA will starts to examine the application. Depending on the TFDA’s discretion, it\nmay form a professional consulting committee, a committee formed by pharmaceutical and medical experts, to evaluate the feasibility of\nthe clinical trial. In practice, if it is the first time for the drug to be applied on human studies, the TFDA is more likely to form\nthe committee and come out with the decision after considering the committee’s conclusion. Generally, the TFDA comes out with a\ndecision whether to approve the application or not around 60-90 days. Once the sponsor obtains the TFDA’s approval, the\nsponsor is permitted to administer the investigational product to humans.\n\n \n\n110\n\n \n\n \n\nThe clinical trials are typically conducted in the\nfollowing three phases:\n\n \n\n●Phase I:    The purpose for Phase I\nis mainly to understand the safe dose of the drug, the highest dose that can be tolerated by the human body. This phase is usually performed\nby experienced physicians in specific clinical trial wards. Pursuant to Regulations for Registration of Medicinal Products, there should\nbe at least 10 valid Taiwanese subjects for a Phase I clinical trial, such as pharmacokinetics study or pharmacodynamics study.\n\n \n\n●Phase II:    Through studying with\na group of patients with high homogeneity, the efficacy and safety of the drug is able to be explored out. Phase II is a clinical\ntrial for a small number of patients, usually dozens of people. The outcome of the Phase II clinical trial will be referred to evaluate\nhow many subjects should be included in Phase III. Pursuant to Regulations for Registration of Medicinal Products, there should\nbe at least 20 valid Taiwanese subjects for a phase II clinical trial.\n\n \n\n●Phase III:    In this phase, a larger-scale\nclinical trial will be conducted. The design is generally carried out in the form of random allocation, double-blind and controlled trials,\netc., mainly to verify the efficacy and safety of the drug, as a pre-marketing trial. Pursuant to Regulations for Registration of Medicinal\nProducts, there should be at least 80 valid Taiwanese subjects for a Phase III pivotal trial; and the results have to show the similarity\nbetween Taiwan and other countries.\n\n \n\nThough Regulations for Registration of Medicinal\nProducts provides the standard number of the subjects, if the TFDA deems necessary, it has the power to request the investigator or the\nsponsor to include more subjects on grounds of the improvement in quality, safety or efficacy of the drug, the nation’s welfare\nor special circumstances.\n\n \n\nDuring the whole process of the clinical trials,\nthe clinical trials shall always comply with the GCP Rules. The obligations provided in the GCP Rules include the following four aspects:\n\n \n\nAlarm Reporting Requirements\n\n \n\nIf any of the following events occurs, the investigator\nor the sponsor of the clinical trial shall report to the TFDA:\n\n \n\n●The investigator or the sponsor decides to suspend or terminate\nthe clinical trial;\n\n \n\n●If the clinical trial has a data safety monitoring board\n(“DSMB”), and the DSMB decides that certain issues should be reported to the TFDA;\n\n \n\n●If the investigator has implemented the deviation or change\nof the protocol; and\n\n \n\n●Any unexpected serious adverse reactions have occurred.\n\n \n\nSubmitting the Reports\n\n \n\nUnder the GCP rules, the investigator or the sponsor\nis not required to provide periodic reports to the TFDA. However, the TFDA is entitled to request the investigator or the sponsor\nto provide specific reports. For example, the TFDA may require the investigator or the sponsor to provide the safety reports or the report\nelaborating the trial status. Though the periodic reports are not a requirement, the sponsor is required to submit a clinical trial report\nupon the end of the clinical trial. Along with the clinical trial report, a risk management plan should also be submitted.\n\n \n\nComplying with the GMP\n\n \n\nThe GCP Rules provides that the manufacturing, handling\nand storage of the investigational product(s) shall comply with the GMP. Whether the product complies with the GMP is relevant\nto the quality of the products. Therefore, the GMP compliance requirement is required not only in the clinical trial stage, but also in\nthe stage after the NDA is approved.\n\n \n\nTo verify whether the clinical trial complies with\nthe GCP Rules, the TFDA has the power to inspect the sponsor and the trial site at any time. In practice, the TFDA does not inspect all\nof the clinical trials but focus only on those trials relating to human studies involving new drugs. If the TFDA requests to inspect,\nthe sponsor and the trial site shall cooperate with the inspection without interruption.\n\n \n\n111\n\n \n\n \n\nBridging Study Evaluation\n\n \n\nIf the clinical trial is conducted outside Taiwan,\nthe TFDA may accept the outcome from such foreign clinical trial as part of the NDA documents, provided that the applicant has completed\nthe bridging study evaluation (“BSE”) in Taiwan.\n\n \n\nA BSE is carried out through evaluating the data\nof pharmacokinetics/pharmacodynamics, efficacy, safety, and dosage to evaluate whether the foreign clinical trial data can be extrapolated\nto the corresponding population in Taiwan. The BSE data can be used to support new drug applications and to reduce duplicate clinical\ntrials. An applicant should submit documents in accordance with the requirements set forth in the Guidelines on Bridging Studies, and\nverify whether the drug is regarded as requiring a BSE before submission.\n\n \n\nIn addition to the BSE requirement, if a foreign\nclinical trial is included in the NDA, the TFDA will also evaluate if the foreign clinical trial is in compliance with those laws and\nregulations which the domestic clinical trial shall comply, such as the GCP and GMP.\n\n** **\n\n**NDA Submission and Review**\n\n \n\nAfter the clinical trial is completed, and the applicant\nhas prepared the required documents, the applicant can submit the NDA to the TFDA. The NDA review process conducted by the TFDA mainly\nfocuses on three aspects.\n\n \n\nThe first aspect is to examine the safety and the\nefficacy of the drugs. At this stage, the TFDA focuses on (i) if the chemical, manufacturing and regulatory data can show that the\nquality of the raw materials and preparations of the drug is well controlled, and has stable quality consistency between different batches;\n(i) if the pharmacological and toxicological data of animals can support the mechanism of action of the drug and can fully evaluate\nthe possible potential toxic reactions; (iii) if the basic pharmacokinetics/pharmacodynamics of the drug can be understood from the\npharmacokinetic/pharmacodynamic data of animals and humans The pharmacokinetic information of the drug in special groups and the interaction\ninformation with other drugs are helpful to evaluate the rationality of the dosage adjustment of the drug in special groups and in combination\nwith other drugs; and (iv) if the results of clinical trials can show that the drug has credible curative effect and acceptable safety\nin the group of declared indications, so as to support the rationality of the claimed usage and dosage.\n\n \n\nThe second aspect is to examine the quality of the\ndrugs. At this stage, the TFDA will examine the chemistry, manufacturing and controls (“CMC”), and will perform the audit\nto examine if the clinical trial is in compliance with the GMP, GLP and GCP.\n\n \n\nThe third aspect is to examine the labeling of the\ndrugs. At this stage, the TFDA will evaluate whether the direction of use shown on the labeling is appropriate and will not mislead the\npatients.\n\n \n\nAfter the TFDA receives the NDA, it will convene\na filing meeting within 30 days to verify if the application is submitted along with all required documents. If the application lacks\nrequired documents, the TFDA will issue a notice before the 42th day to inform the applicant that the application is not\nqualified. On the other hand, if the application meets the requirements, the TFDA will not issue any notice to the applicant on the 42th day.\nThe TFDA will then convene a review meeting before the 100th day. On the review meeting, if the examiners decide that\nthe applicant should provide supplementary documents, the TFDA will issue a request letter to the applicant before the 120th day.\nIf the applicant provides the supplementary documents on time, the TFDA will then convene another review meeting before the 210th day\nand will complete the review report before the 315th day. If the TFDA decides to approve the NDA, it will issue the approval\nletter before the 330th day. Generally, the applicant is able to obtain the drug license around the 360th day\nafter the submission.\n\n** **\n\n112\n\n \n\n** **\n\n**Post-Approval Requirements**\n\n \n\nAfter the TFDA approves the NDA, the new drug products\nare obligated to comply with several laws and regulations. The post-approval requirements under the Pharmaceutical Affairs Act and its\nrelative regulations mainly relating to four aspects:\n\n \n\nManufacturing\n\n \n\nPursuant to the Pharmaceutical Affairs Act, the\nmanufacturer of the drugs is prohibited from manufacturing prior to registering its manufacturing factory with the Ministry of Economic\nAffairs and obtaining the manufacturing License from the TFDA (“Manufacturing License”). In practice, the registration of\nthe factory and the Manufacturing License will be issued by the respective authorities at almost the same time upon the approval of the\nNDA.\n\n \n\nWhen operating the factory, the manufacturers are\nrequired to continuously comply with applicable laws and regulations; otherwise, the Ministry of Economic Affair is entitled to de-register\nthe factory.\n\n \n\nThe Manufacturing License is valid for two years.\nWhen the two year period expires, the manufacturer shall apply for another Manufacturing License. As continuous compliance of the GMP\nis the requirement for the TFDA to issue the Manufacturing License, the manufacturer shall always comply with the GMP.\n\n \n\nDistribution\n\n \n\nThe manufacturer of pharmaceuticals is obliged to\nobtain a pharmaceuticals distribution license (“Distribution License”) before distributing the products. The requirement for\nthe TFDA to issue the Distribution License is that the manufacturer shall comply with the GDP. The Distribution License is valid\nfor 3-5 years, subject to the TFDA’s discretion. If the manufacturer fails to comply with the GDP, the TFDA is entitled\nto reject the renewal of the Distribution License, leading to the suspension of the distributing of the drug products.\n\n \n\nAdvertisement\n\n \n\nIn order to prevent pharmaceutical firms from conveying\nmisleading information to the public, the Pharmaceutical Affairs Act provides that the pharmaceutical firm should obtain the approval\nof the TFDA before publishing or broadcasting drug advertisement. If the pharmaceutical firm fails to comply with the provision, the TFDA\nshall announce in the newspaper the name of the responsible person of the pharmaceutical firm, the name of the drug, and the act of violation.\nIn the case of serious violation, the approval of the NDA may be revoked by the TFDA, along with the restriction that no application for\nuse of the original name of the said drug shall be accepted within a period of two years thereafter.\n\n \n\nDrug Safety Surveillance\n\n \n\nIn order to ensure the quality, efficacy and safety\nof drugs, and to reduce the incidence of adverse drug reactions, the pharmaceutical firm is required to survey the safety of the drugs\nand to report any serious adverse reactions caused by drugs to the TFDA.\n\n \n\nThe Regulations for the Management of Drug Safety\nSurveillance (“Surveillance Regulations”) provides the main obligations which the pharmaceutical firm shall fulfil. Under\nthe current Surveillance Regulations, in addition to reporting any serious adverse reactions within the period provided by the Regulations\nfor Reporting Severe Adverse Reactions of Drugs, the pharmaceutical firm shall also submit drug safety update reports periodically during\nthe first five years after the pharmaceutical firm obtains the drug license.\n\n \n\nThough such provisions are still in effect as of\nnow, the TFDA has already promulgated the amendment of the Surveillance Regulations in April 2022, and the amendment will come into\neffect from January 1, 2023. Pursuant to the amendment, the TFDA extends the surveillance period from the first five years upon\nthe pharmaceutical firm obtaining the drug license to the whole effective period of the drug license. As long as the drug license is in\neffect, the pharmaceutical firm shall keep tracking the safety of the drugs. Pursuant to the amendment, the pharmaceutical firm shall\nhave a pharmacovigilance plan as its internal policy. During the surveillance period, which is also the effective period of the drug license,\nthe pharmaceutical firm shall follow its own pharmacovigilance plan and take mitigation measures, if necessary. In addition to keep submitting\nthe periodic drug safety update reports during the first five years just as current practice, the pharmaceutical firm shall also\nsubmit a drug safety summary report at the end of the first five years of the surveillance period. For the remaining period of the\nsurveillance period, the pharmaceutical firm should only keep implementing its pharmacovigilance plan without submitting the update reports\nto the TFDA. However, if the TFDA considers necessary, it may request the pharmaceutical firm continues to collect the data and submit\nthe periodic update for a designated period. Furthermore, the TFDA may provide such request more than once.\n\n** **\n\n113\n\n \n\n** **\n\n**Regulations on Intellectual Property Rights**\n\n** **\n\n**Patent Protection**\n\n \n\nPursuant to the Taiwan Patent Act, amended on May 4,\n2022, there are three types of patents in Taiwan: invention patents, utility model patents, and design patents. The respective patent\nterms are 20, 10, and 15 years, all calculated from the filing date of a patent application, while the patent rights are\nactionable from the issue date of the patent. An extension of patent term of a maximum of 5 years is possible for invention patents\ninvolving pharmaceuticals, agrichemicals, or manufacturing processes thereof to compensate for the regulatory delay caused by marketing\nauthorization procedures.\n\n \n\nIn terms of the infringement disputes of a patent,\nthe civil division of the Intellectual Property Court (“IP Court”) hears civil actions relating to patent infringement. If\nthe defendant of an infringement action challenges the validity of the disputed patent as a defense, the civil division will deal with\nthe infringement and validity issues simultaneously. However, any person who intends to invalidate the disputed patent in all aspects\nmust file revocation proceedings (invalidation action) with the TIPO. Decisions of the TIPO in an invalidation action can be appealed\nto the Ministry of Economic Affairs, and subsequently to the IP Court by way of filing an administrative lawsuit.\n\n \n\nPatent Term Extension\n\n \n\nPursuant to the Patent Act, where a regulatory approval\nshall be obtained for the exploitation of an invention patent involving a pharmaceutical or agrichemical, or the manufacturing process\nthereof, if such regulatory approval is obtained after the publication of the concerned invention patent, the patentee may apply for one\nand only one extension of the patent term of said invention patent based on the first regulatory approval. The said regulatory approval\nis allowed to be used only once for seeking patent term extension.\n\n \n\nThe calculation of the extension period includes:\n(i) the period of clinical trials conducted for obtaining a pharmaceutical license from the TFDA; and (ii) the period for the\nNDA review process. The extension period approved shall not exceed the length of time when the patent cannot be exploited because of the\nfiling of a request for the regulatory approval with the competent authorities in charge of the business. If the time needed to obtain\nthe said regulatory approval exceeds five years, the granted patent term extension shall still be five years. When requesting\nfor patent term extension, the request shall be submitted within three months after obtaining the first regulatory approval; no request\nfor patent term extension shall be filed within six months prior to the expiry of the original patent term.\n\n \n\nPatent Linkage System\n\n \n\nTaiwan has established the patent linkage system\nthrough the Patent Act and the Pharmaceutical Affairs Act in 2018. In order to reduce the patent search burden of generic drug manufacturers\nand achieve the goal of early listing of generic drugs, the first important procedure of the patent linkage system is to enable generic\ndrug manufacturers to quickly grasp the patent status of the brand drug. That is to say, since the purpose of patent linkage system is\nto avoid patent infringement disputes of generic drugs on the market, the generic pharmaceutical firm should be able to know what patent\nrights the brand drug has. Therefore, after the brand drug manufacturer obtains the drug license, patent information of new drugs should\nbe disclosed within the statutory period.\n\n \n\nSince the brand drug manufacturer is obliged to\nannounce the patent rights of the new drug, there should be a corresponding procedure to require the generic pharmaceutical company to\nclarify and determine whether it will have a patent in the future within certain period. If the brand drug does not involve any patent\nrights or all patent rights have been extinguished, the TFDA should allow the generic drug to be marketed. In addition, if the brand drug\nis still protected by the patent right, and the generic pharmaceutical company has no intention of having an infringement dispute with\nthe brand drug pharmaceutical company, then the TFDA should only allow the generic drug to be marketed after all patent rights have expired.\nOn the other hand, if a generic drug intends to obtain the drug license earlier, it should avoid infringing on the patent right in the\nfuture.\n\n \n\n114\n\n \n\n \n\nAs Taiwan adopts a double-track examination system\nin terms of patent invalidation procedures, anyone who intends to invalidate a patent may take two kinds of measures; one is to submit\nthe application of ground for patent invalidation to the Taiwan Intellectual Property Office (“TIPO”); the other one is to\nfile a lawsuit. Subject to such double-track examination system, if the generic drug manufacturer intends to obtain the drug license earlier,\nit may the following actions:\n\n \n\n(i)Engaging in patent avoidance designs;\n\n \n\n(ii)Challenging the validity of the drug patent right through\nsubmitting the application of ground for patent invalidation to the TIPO;\n\n \n\n(iii)While the brand drug pharmaceutical firm files a patent infringement\nlawsuit against the generic drug pharmaceutical company, it may defend that the patent right of the brand drug has grounds for revocation;\nand\n\n \n\n(iv)Filing a lawsuit to request the court to confirm that the\ngeneric drug does not infringe the patent right.\n\n \n\nBefore it is clarified whether the generic drug\nmanufacturer has successfully avoided infringing the patent right or whether the patent right of the brand drug is invalid, patent infringement\ndisputes may arise if the generic drug has been approved to obtain the drug license. Therefore, the Pharmaceutical Affairs Act provides\nthat the drug license cannot be issued within 12 months, commencing from the date when the brand drug manufacturer receives the notice\nfrom the generic drug manufacturer regarding whether the drug patent is in doubt. With such provision, the brand drug manufacturer and\nthe generic drug manufacturer have a certain period of time to clarify doubts through filing the application to the TIPO or filing the\npatent infringement lawsuit.\n\n \n\nMarket Exclusivity\n\n \n\nAs a supporting measure of the patent linkage system,\nthe Pharmaceutical Affairs Act rewards generic drug manufacturers who take positive actions to achieve the legislative intention of promoting\nthe early marketing of generic drugs. Such reward is that those generic drugs which meet the legal requirements have a 12-month exclusive\nsales period. During this 12-month exclusive period, only the brand drug and the generic drug exist on the market. Before the period expires,\nthe TFDA will not approve other generic drugs for marketing, so that generic drugs that actively challenge the validity of the patent\nof the brand drug or engage in patent avoidance design may enjoy certain profits and rewards.\n\n** **\n\n**Copyright**\n\n \n\nThe Taiwan Copyright Law provides that original\ncopyrightable works shall enjoy exclusive rights automatically upon their completion, with no form of registration required. The competent\nauthority for the application and registration of trademarks is the Taiwan Intellectual Property Office (“TIPO”) under the\nMinistry of Economic Affairs. A copyrighted work is protected throughout the author’s lifetime and 50 years after.\n\n \n\nAs a copyright holder, when enforcing a copyright,\nbears the burden of proving the copyright ownership (and sometimes even the creation time of the copyright, if such issue is being raised),\nrelevant evidence of copyright ownership can be preserved by having the evidence notarized by a notary public. For important copyrighted\nwork, it is recommendable to obtain a copyright certificate issued by a copyright owners’ organization to serve as prima facie evidence\nof the completion and ownership of the copyright. However, it is important to note that such private organizations do not and cannot conduct\nany substantive examination of the copyrightability of a work. Therefore, when a work’s copyrightable is being challenged, only\na court will have a final say over such dispute on a case-by-case basis.\n\n** **\n\n**Trademarks**\n\n \n\nTrademark rights in Taiwan are governed by the Trademark\nAct. The competent authority for the application and registration of trademarks is the TIPO. Types of protection include trademarks,\ncertification marks, collective membership marks and collective trademarks. The trademarks which are registered are protected for 10 years\nfrom publication in the Trademark Gazette. This term may be extended successively every 10 years via application for renewal.\n\n** **\n\n115\n\n \n\n** **\n\n**Trade Secrets**\n\n \n\nThe Taiwan Trade Secret Act mainly governs the following\nitems: (1) the required elements of a trade secret; (2) ownership of a trade secret; (3) the licensing of a trade secret;\n(4) misappropriation of a trade secret; (5) the civil remedy and criminal penalty for the misappropriation of a trade secret;\n(6) the issuance of a protective order during criminal investigation. Pursuant to the Trade Secret Act, the information that can\nbe protected under the Trade Secret Act is defined as any method, technique, process, formula, program, design, or other information that\nmay be used in the course of production, sale or operation, and must meet the following requirements: (1) secrecy; (2) economic\nvalue; and (3) reasonable measures to maintain secrecy. Under the Trade Secret Act, the types of misappropriation include acquisition,\nuse and divulging of a trade secret by unlawful means. The Trade Secret Act provides civil remedies and criminal penalties for trade-secret\nmisappropriation.\n\n** **\n\n**TFDA Expedited Programs**\n\n \n\nThe TFDA has developed five expedited programs to\nhelp to accelerate the application process, include abbreviated review program, priority review program, accelerated approval program,\nbreakthrough therapy program, and pediatric and rare severe disease priority review voucher program. The TFDA is responsible for evaluating\napplications for designation. There are specific criteria for each expedited program. If a drug meets these criteria, it is eligible for\nexpedited programs. At the time of NDA submission, the applicant should provide the designation letter.\n\n \n\nFor the abbreviated review program, the qualifying\ncriteria include that (i) the drug should be New chemical entities (“NCE”); (ii) the drug has been approved by two\nof the three regulatory agencies (U.S. FDA, EMA, or MHLW/PMDA); and (iii) No ethnic difference in BSE. Under the abbreviated\nreview program, the review process may be completed within 180 days, commencing from the submission date of the NDA.\n\n \n\nFor the priority review program, the drug should\nqualify two of the three qualifying criteria, including (i) the drug is NCE or new administration routes or new therapeutic compounds;\n(ii) the drug is intended to treat a serious condition and address an unmet medical need with major clinical advance; (iii) the\ndrug is intended to address a public health or an unmet medical need which is under priority counseling and grant for research from the\ngovernment. The review process will be shorter than standard review; however, the evaluation will be under normal TFDA approval standards\nin safety, effectiveness, and quality. Under the priority review program, the review process may be completed within 240 days, commencing\nfrom the submission date of the NDA.\n\n \n\nFor the accelerated approval program, the qualifying\ncriteria include that (i) the drug is NCE or new administration routes or new therapeutic compounds; (ii) the drug shall meet\none of the following criteria: (a) A drug is intended to treat a serious condition and address unmet medical need; or (b) A\ndrug is intended to address an unmet medical need and granted as orphan drug in US, UK, Japan, Switzerland, Canada, France, Australia,\nGermany, Belgium, and Sweden; or (c) A drug is not an orphan drug in Taiwan; however, it is intended to address an unmet medical\nneed and with difficulties of manufacturing or importing. The drug in accelerated approval program may be approved on the basis of the\neffect on a surrogate endpoint to predict clinical benefit. It can shorten the time from R&D to marketing. In principle, post-marketing\nconfirmatory trials are required to verify its clinical benefit. Under the accelerated approval program, the review process may be completed\nwithin 240 days, commencing from the submission date of the NDA.\n\n \n\nFor the breakthrough therapy program, the qualifying\ncriteria include that (i) the drug is NCE or new administration routes or new therapeutic compounds; (ii) preliminary clinical\nevidence indicates substantial improvement over available therapies on one or more clinically significant endpoints; (iii) the applicant\nhas conducted at least a clinical trial in Taiwan, especially clinical trials in the early phase. The applicant should report the implementation\nprogress and the R & D plan to TFDA at least every 3 months after designation. If an applicant has any regulatory issue,\nthey can request the consultation with TFDA. Under the breakthrough therapy program, the review process may be completed within 240 days,\ncommencing from the submission date of the NDA.\n\n \n\nFor the pediatric and rare severe disease priority\nreview voucher program, the qualifying criteria include that (i) the drug is NCE or new administration routes or new therapeutic\ncompounds; (ii) the drug is intended to treat a serious condition; (iii) the disease is mainly prevalent in pediatric population\nor the prevalence of the disease is less than five per ten thousand; (iv) the drug is intended to address an unmet medical need.\nUnder the pediatric and rare severe disease priority review voucher program, the review process may be completed within 240 days,\ncommencing from the submission date of the NDA.\n\n** **\n\n116\n\n \n\n** **\n\n**Taiwan Healthcare Regulation**\n\n** **\n\n**Drug Price Regulations**\n\n \n\nTaiwan has been implementing a compulsory, universal,\nsingle-payer national health insurance system since 1995, with the overall coverage reaching 99.9%. The benefit package is comprehensive,\ncovering inpatient, outpatient, and dental services, traditional Chinese medicine, and so on. Most drugs including orphan drugs, target\ntherapy drugs, and many expensive drugs are covered. In Taiwan, the National Health Insurance Agency (“NHI”), one of the departments\nof the Ministry of Health and Welfare, imposes direct price controls on drugs by fixing the reimbursement prices product by product. Every\none or two years, the NHI implements the price regulation to re-set (usually decrease) the reimbursement price of each product. According\nto NHI’s Principles on Drug Reimbursement Price Approval, a new drug is defined as a newly applied pharmaceutical product that owns\na new chemical entity, new dosage form, new administrated route or new therapeutic effect compound to the listed items in the pharmaceutical\nbenefit scheme. New drugs are further categorized as breakthrough, generic, and line extension based on drug innovation. Different reimbursement\nprice policies are applied in accordance with how drugs are categorized based upon these definitions.\n\n** **\n\n**National Health Insurance Reform**\n\n \n\nDue to the Taiwan healthcare system’s accessibility,\nTaiwan’s healthcare expenditures have increased steadily over the years, and there is currently a budget shortfall. During\nrecent years, there have been calls to reform Taiwan’s National Health Insurance to avoid bankruptcy of the healthcare system.\n\n \n\nAs a large portion of the healthcare expenditures\narise from the drug reimbursement, one of the main targets in the reform plan is to utilize the healthcare budget more reasonably and\nto allocate more reimbursement on new drugs considering patients’ benefits.\n\n \n\nIn order to achieve such goal, the National Health\nInsurance Agency has taken some reform measures since 2018. The National Health Insurance Agency has adopted the mechanism of managed\nentry agreement to set up an upper limit of drug expenditures in order to mitigate the financial impact caused by new drugs on the National\nHealth Insurance. Though under the managed entry agreement mechanism, the price of the new drugs is subject to limitation, the National\nHealth Insurance Agency have increased its budgets on new drug reimbursement during 2020 to 2021, to achieve a balance between including\nmore new drugs in the medical insurance coverage and the financial impact it may cause to the healthcare system.\n\n** **\n\n**Other Healthcare Compliance Requirements**\n\n \n\nThough Taiwan does not enact a special law for the\nmanagement of the healthcare fraud, healthcare fraud shall be prosecuted under the Criminal Code. In order to establish a clearer standard\nfor the pharmaceutical firms and the doctors to follow, the TFDA has published the Rule of the Relationship Between the Doctors and the\nPharmaceutical Firms. Though such rule does not have mandatory enforcement, the court may refer to such rule as the standard to judge\nwhether the behavior of doctors or pharmaceutical firms constitute fraud as defined in the Criminal Code.\n\n** **\n\n**Regulations on Consumer Protection**\n\n \n\nIn Taiwan, the main regulation governing the consumer\nprotection is the Consumer Protection Act. Pursuant to the Consumer Protection Act, a manufacture shall be liable for any damage caused\nby its products, unless it is able to prove that the products have met and complied with the contemporary technical and professional standards\nof reasonably expected safety requirements prior to the launching of such products into the market. Furthermore, if the products may endanger\nconsumers’ lives, bodies, health or property, they shall be labelled in a conspicuous place with a warning and the methods for emergency\nhandling of such danger. If an enterprise fails to perform its labelling obligations in this regard, it will be held liable for the damage\ncaused thereby.\n\n \n\n117\n\n \n\n \n\nIn addition to the Consumer Protection Act, Taiwan\nregulations also provide special liability regimes for medicinal products. Pursuant to the Drug Injury Relief Act, the pharmaceutical\nmanufactures and importers are required to make contributions to the Drug Injury Relief Fund according to a certain percentage of their\ndrug sales in the previous year. Under the Drug Relief Act, alleged victims or their heirs/legal guardians may apply for drug injury compensation\nfor death, disability and serious illness. Violation of such provision may result in fines.\n\n** **\n\n**Regulations on Personal Data Protection**\n\n \n\nThe Personal Data Protection Act is the main law\nin Taiwan governing personal data protection. Under the Personal Data Protection Act, unless otherwise specified, a company is generally\nrequired to give notice to and obtain consent from an individual before collecting, processing, or using any of the said individual’s\npersonal information, subject to certain exceptions.\n\n \n\nPursuant to the Personal Data Protection Act, the\npersonal data pertaining to a natural person’s medical records, healthcare, genetics, sex life, physical examination and criminal\nrecords is classified as sensitive personal data, which shall be subject to certain stricter obligations.\n\n \n\nIn addition to the Personal Data Protection Act,\nwhen conducting the clinical trial, the sponsor and the investigator shall also comply with other relative regulations or practices with\nregard to the protection of the subject’s personal data, such as the Human Subjects Research Act and the Regulations on Human Trials.\n\n** **\n\n**Regulations on Environmental Protection**\n\n \n\nThe bedrock of environmental protection in Taiwan\nis the Basic Environment Act. In addition to the Basic Environment Act, Taiwan regulations regulate each type of pollution by a different\nset of regulations, including the Soil and Groundwater Pollution Remediation Act, the Waste Disposal Act, the Air Pollution Control Act,\nthe Water Pollution Control Act, and Toxic and Concerned Chemical Substances Control Act. The competent authority governing the environmental\nregulations is the Environmental Protection Agency (EPA). Failure to comply with such regulations may result in fines and other administrative\nsanctions.\n\n** **\n\n**Regulations on Foreign Currency Exchange**\n\n \n\nThe principal regulation governing foreign currency\nexchange in Taiwan is the Foreign Exchange Regulation Act, amended on April 29, 2009. Pursuant to the Foreign Exchange Regulation Act,\nTaiwan Dollars amounting under the amount of NTD$500,000 are freely convertible no matter what transaction they are in relation with.\nOn the other hand, the transactions involving NTD$500,000 or more or its equivalent in foreign currency shall fulfill certain obligations\nas provided in the Regulations Governing the Declaration of Foreign Exchange Receipts and Disbursements or Transactions.\n\n \n\nUnder the Regulations Governing the Declaration\nof Foreign Exchange Receipts and Disbursements or Transactions, for those foreign exchange transactions which amounts more than NTD$500,000\nand relates to the sales of goods or provision of services, such transaction shall be declared through filing a declaration statement.\nFor those foreign exchange transactions which are not related to the sales of goods or provision of services, ranging from NTD$500,000\nto US$ 50 million, such transaction shall be declared through filing a declaration statement, and providing supporting documents,\nsuch as contracts or letters of approval, to the bank. For those foreign exchange transactions which are not related to the sales of goods\nor provision of services, amounting more than USD 50 million, such transaction shall be declared through filing a declaration\nstatement, providing supporting documents to the bank, and obtaining the approval of the Central Bank of Taiwan.\n\n \n\nThough Taiwan government has promulgated the Regulations\nGoverning Foreign Exchange Control on July 2, 1997, pursuant to the Foreign Exchange Regulation Act, the requirements for the\ngovernment to implement those foreign exchange control measures should be subject to either of the following conditions: (1) When\nthe domestic or foreign economic disorder might endanger the stability of the domestic economy; and (2) When Taiwan suffers a severe\nbalance of payments deficit. From the past history, the Taiwan government only implemented these foreign exchange control measures once,\nin 1997 during the Asian Financial Crisis.\n\n** **\n\n118\n\n \n\n** **\n\n**Regulations on Dividend Distribution**\n\n \n\nThe principal regulations governing dividend distribution\nis the Company Act. Pursuant to the Company Act, a Taiwan company shall not pay dividends unless its losses have been covered and statutory\nreserve funds has been set aside, which should be 10% of the company’s after-tax net profits. However, in the event that the company’s\nstatutory reserve funds have reached the total amount of the company’s capital, the company does not need to set aside any amounts\nfor its statutory reserve funds. If the company has no net profits, in principle, it shall not pay dividends.\n\n** **\n\n**Regulations on Employee Stock Incentive Plan**\n\n \n\nThe principal regulations governing dividend distribution\nis the Company Act. Pursuant to the Company Act, a Taiwan company may choose to implement the employee stock incentive plan in 5 ways:\n(1) employee stock compensation, (2) employee stock option certificates, (3) employee subscription of new shares using\ncash as consideration, (4) treasury shares transferred to employees, (5) employee restricted share units. After the amendment\nof the Company Act on August 1, 2018, transferring the company’s stocks to the employees of the company’s parent company\nor its subsidiaries under the employee stock incentive plan is also permitted by law.\n\n** **\n\n**Regulations on Employment and Social Insurance**\n\n \n\nThe labor law in Taiwan is regulated mainly by the\nLabor Standards Act, amended in June 2020. The Labor Standards Act governs the terms and conditions of employment such as working hours,\nholidays, rest periods, wages, overtime, leave, and termination of employment. According to Labor Standard Act, an employer is required\nto reach an agreement on salary with the employees, in which the agreed salary shall meet with the minimum amount set by the competent\nauthority. Violations of the Labor Standards Act may result in fines and other administrative sanctions, and serious violations may result\nin criminal liabilities.\n\n \n\nIn order to protect workers’ safety and health\nand to prevent occupational accidents, employers in Taiwan are also required to comply with the Occupational Safety and Health Act. According\nto the Occupational Safety and Health Act, the employer shall arrange safety equipment to prevent any emergency. In addition, the employer\nshall provide safety education and training for employees which shall enable the employees to protect themselves when any accident occurs.\n\n \n\nTaiwan governmental authorities have passed a variety\nof laws and regulations regarding social insurance and employee’s pension from time to time, including, among others, the Labor\nInsurance Act, the National Health Insurance Act, the Labor Pension Act, and the Employment Insurance Act. Pursuant to these laws and\nregulations, Taiwan companies must make contributions at specified levels for their employees to the relevant social insurance and pension\nfunds. Failure to comply with such laws and regulations may result in various fines and legal sanctions.\n\n** **\n\n**Regulations on Taxation**\n\n \n\nAccording to the Taiwan Income Tax Act, a company\nincorporated in Taiwan is a Taiwan tax resident and will be subject to 20% corporate income tax on its worldwide income. A non-resident\ncompany will be subject to 20% corporate income tax on its Taiwan-sourced income. If a resident company does not distribute its financial\nearnings generated in a year to its shareholders by the end of the following year, a surtax of 5% would be imposed on the undistributed\nearnings.\n\n \n\nEffective from 2020, the Taiwan Statute for\nIndustrial Innovation was amended, which extends the tax incentive by 10 years until December 31, 2029 for research and development\n(“R&D”) expenditure. Under the tax incentive program, a company conducting qualifying R&D activities may select one\nof the following incentives: (i) up to 15% of qualifying R&D expenses may be credited against corporate income tax payable in\nthe current year; or (ii) up to 10% of qualifying R&D expenses may be credited against corporate income tax payable in the year\nexpenses incurred and carried forward for the next 2 years. In addition, if a company uses NTD 1 million or more of its undistributed\nearnings to construct or purchase buildings, software or hardware equipment, or technology for use in production or operation within 3 years\nfrom the year such earnings are derived, such investment amounts may be deducted from the undistributed earnings in calculation of the\ncurrent year’s undistributed earnings for assessment of surtax imposed on undistributed earnings from the year 2018.\n\n \n\n119\n\n \n\n \n\nThe alternative minimum tax (“AMT”)\nimposed under the Taiwan Income Basic Tax Act is a supplemental income tax which applies if the amount of regular income tax calculated\npursuant to the Taiwan Income Tax Act and relevant laws and regulations is below the amount of basic tax prescribed under the Taiwan Income\nBasic Tax Act. The taxable income for calculating AMT includes most income that is exempt from income tax under various legislations,\nsuch as capital gains from qualified securities and future transactions. The prevailing AMT rate for business entities is 12%.\n\n \n\nAccording to the Taiwan Income Tax Act, a withholding\ntax rate of 21% shall generally be applicable to dividends distributed to non-Taiwan resident enterprise/individual investors. The withholding\ntax on the dividends may be reduced pursuant to a tax treaty between Taiwan and the jurisdictions in which the non-Taiwan shareholders\nreside. Taiwan currently has a treaty network with 34 countries.\n\n** **\n\n**SINGAPORE**\n\n** **\n\n**Regulations on Intellectual Property Rights**\n\n \n\nThe Intellectual Property Office of Singapore administers\nthe intellectual property legislative framework in Singapore, which includes copyrights, trademarks and patents. Singapore is a member\nof the main international conventions regulating intellectual property matters, and the WTO’s Agreement on Trade Related Aspects\nof Intellectual Property Rights.\n\n** **\n\n**Copyright**\n\n \n\nPursuant to the Copyright Act 2021 of Singapore,\nauthors of protected works enjoy various exclusive rights, including the rights of reproduction and communication to the public. Generally,\nan author will automatically enjoy copyright protection as soon as he creates and expresses an original work in a tangible form. Authors\nand performers also have a distinct right to be identified whenever their works or performances are used in public unless exceptions apply.\nFor commissioned works, the copyright will be owned by the author by default, unless otherwise agreed by contract. On the other hand,\nemployers by default own the copyright in all content created by their employees in the course of the employees’ employment, unless\notherwise agreed by contract.\n\n \n\nThere is no need to file for registration to obtain\ncopyright protection. Copyright works sent over the internet or stored on web servers are treated in the same manner as copyright material\nin other media. Online games and computer programs would qualify for such copyright protection, for example, as literary works, artistic\nworks and/or cinematograph films.\n\n** **\n\n**Trademarks**\n\n \n\nSingapore operates a first-to-file system in respect\nof registered trademarks under the Trade Marks Act 1988 of Singapore, and the registered proprietor is granted a statutory monopoly\nof the trademark in Singapore in relation to the product or service for which it is registered. In the event of any trademark infringement,\nthe registered proprietor will be able to rely on the registered trademark as proof of his right to the mark, and the infringement of\na trademark may give rise to civil and criminal liabilities. Statutory protection of a registered trademark can last indefinitely, as\nlong as the registration is renewed every 10 years.\n\n** **\n\n**Patents**\n\n \n\nThe Patents Act 1994 of Singapore confers protection\non patentable inventions on a first-to-file basis in Singapore, provided that the invention satisfies the requirements of novelty, having\nan inventive step and industrial applicability. Patents are valid for 20 years from the date of filing, subject to the payment of\nannual renewal fees. During the life of the patent, the owner will have the exclusive right to exploit the invention that is the subject\nof the patent.\n\n** **\n\n120\n\n \n\n** **\n\n**Regulations on Dividend Distributions**\n\n \n\nThe governing legislation for the distribution of\ndividends in Singapore is the Companies Act 1967 of Singapore, or the Companies Act. Under Section 403 of the Companies Act,\na Singapore company is only allowed to pay dividends out of profits and there are certain restrictions on the use of profits for the purposes\nof dividend declaration. Firstly, any profits of a company applied towards the purchase of its shares pursuant to the share buyback provisions\nunder the Companies Act cannot be payable as dividends to the shareholders. However, the foregoing restriction does not apply to any part\nof the proceeds received by the company from a sale or disposal of its treasury shares where the sums that were utilized to purchase those\ntreasury shares initially came out of profits in the first place. Finally, any gains derived from the sale of treasury shares cannot be\npayable as dividends to the shareholders of the company.\n\n \n\nIn addition to complying with the Companies Act,\nthe payment of dividends must also be in accordance with the company’s constitution and the generally acceptable accounting principles\nin Singapore.\n\n** **\n\n**Regulations on Anti-money Laundering and Prevention of Terrorism\nFinancing**\n\n \n\nThe primary anti-money laundering legislation in\nSingapore is the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act 1992 of Singapore, or CDSA,\nprovides for the confiscation of benefits derived from, and to combat, corruption, drug dealing and other serious crimes. Generally, the\nCDSA criminalizes the concealment or transfer of the benefits of criminal conduct as well as the knowing assistance of the concealment,\ntransfer or retention of such benefits.\n\n \n\nThe Terrorism (Suppression of Financing) Act 2002\nof Singapore, or TSOFA, is the primary legislation for the combating of terrorism financing. It was enacted to give effect to the International\nConvention for the Suppression of the Financing of Terrorism. Besides criminalizing the laundering of proceeds derived from drug dealing\nand other serious crimes and terrorism financing, the CDSA also requires suspicious transaction reports to be lodged with the Suspicious\nTransaction Reporting Office and the TSOFA requires information about any property belonging to any terrorist or terrorist entity\nto be reported to the Commissioner of Police. If any person fails to lodge the requisite reports under the CDSA and the TSOFA, it may\nbe subject to criminal liability.\n\n** **\n\n**INTERNATIONAL REGULATION**\n\n \n\nIn addition to regulations in the United States,\nthe European Union and Taiwan, we will be subject to a variety of other regulations governing clinical trials and commercial sales and\ndistribution of our products to the extent we choose to develop or sell any products outside of the United States, Europe or Taiwan.\nThe approval and reimbursement process varies from country to country and the time may be longer or shorter than that required to obtain\nU.S. FDA, EMA or NMPA approval. The requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement\nvary greatly from country to country. In all cases the clinical trials must be conducted in accordance with cGCP requirements and the\napplicable regulatory requirements and the ethical principles having their origin in the Declaration of Helsinki.\n\n** **\n\n**Anti-Corruption Laws**\n\n \n\nThe FCPA, the U.S. domestic bribery statute\ncontained in 18 U.S.C. §201, the U.S. Travel Act, the USA PATRIOT Act, and possibly other state and national anti-bribery and\nanti-money laundering laws in countries in which we conduct activities, prohibit any U.S. individual or business from paying, offering\nor authorizing payment or offering of anything of value, directly or indirectly, to any foreign official, political party or candidate\nfor the purpose of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or\nretaining business. This could become relevant in the conduct of international clinical trials where the sites for such studies may be\na government-owned hospital. The FCPA also obligates companies whose securities are listed in the United States to comply with accounting\nprovisions requiring the company to maintain books and records that accurately and fairly reflect all transactions of the corporation,\nincluding international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international\noperations. Activities that violate the FCPA, even if they occur wholly outside the United States, can result in criminal and civil\nfines, imprisonment, disgorgement, oversight and debarment from government contracts.\n\n \n\n121\n\n \n\n \n\nIn the European Union, interactions between pharmaceutical\ncompanies and physicians are governed by strict laws, regulations, industry self-regulation codes of conduct and physicians’ codes\nof professional conduct both at the European Union level and in the individual European Union member states. The provision of benefits\nor advantages to physicians to induce or encourage the prescription, recommendation, endorsement, purchase, supply, order or use of medicinal\nproducts is prohibited in the European Union. The provision of benefits or advantages to physicians is also governed by the national anti-bribery\nlaws of the European Union member states. Violation of these laws could result in substantial fines and imprisonment. Payments made to\nphysicians in certain European Union member states also must be publicly disclosed. Moreover, agreements with physicians must often be\nthe subject of prior notification and approval by the physician’s employer, his/her regulatory professional organization, and/or\nthe competent authorities of the individual European Union member states. These requirements are provided in the national laws, industry\ncodes, or professional codes of conduct, applicable in the individual European Union member states. Failure to comply with these requirements\ncould result in reputational risk, public reprimands, administrative penalties, fines or imprisonment.\n\n \n\n**C. Organizational Structure**\n\n \n\nSee “— A. History\nand Development of the Company.”\n\n \n\n**D. Property, Plants and Equipment**\n\n \n\nSee “— B. Business\nOverview — Facilities.”"}