Viva Biotech Announces Proposed Listing on the Main Board of SEHK

Viva Biotech plans to offer an aggregate of 345,000,000 Offer Shares under the Global Offering (subject to the Over-allotment Option), consisting of 310,500,000 International Offer Shares (subject to reallocation and the Over-allotment Option) and 34,500,000 Hong Kong Offer Shares (subject to reallocation), at a price range between HK$3.42 and HK$4.41 per share.

The public offering will open at 9:00 a.m. on Thursday, 25 April 2019 and close at 12:00 noon on Tuesday, 30 April 2019 in Hong Kong. Dealings in shares on SEHK are expected to commence on Thursday, 9 May 2019, with the stock code 1873.HK in board lots of 500 shares each.

China International Capital Corporation Hong Kong Securities Limited is the Sole Sponsor, Joint Global Coordinator, Joint Bookrunner and Joint Lead Manager.

World-leading structure-based technologies that enable the Company to stand at the gateway for first-in-class drug discovery

Viva Biotech Group operates a leading structure-based, integrated drug discovery platform in terms of revenue in 2018 and beam time for synchrotron radiation in 2018, and provides structure-based drug discovery services to biotechnology and pharmaceutical customers worldwide for their pre-clinical stage innovative drug development, covering the full spectrum of customers' needs for early stage drug discovery, including target protein expression and structure research, hit screening, lead optimization and the drug candidate determination. Viva Biotech Group specializes in the structure-based drug discovery (SBDD), fragment-based drug discovery (FBDD), affinity selection mass spectrum (ASMS) screening technologies and membrane protein targeted drug discovery, which serves as a gateway of the innovative drug R&D especially in the area of first-in-class drugs' research. According to Frost & Sullivan, Viva Biotech Group provides world-leading structure-based drug discovery (SBDD) services. SBDD has resulted in faster definition of drug-binding properties and has made it easier to identify hit compounds through screening programs. The Group has provided drug discovery services to nine of the ten largest global pharmaceutical companies (in term of revenues in 2018), as well as hundreds of biotechnology companies and research institutes worldwide including 23 companies named in the Fierce Biotech Top 15 Promising Biotechs.

The Company's four core technologies are supported by its in vitro pharmacology, medicinal chemistry research, antibody generation and molecular cloning platforms. The Group had seven registered patents in the United States and China in connection with its membrane protein targeted drug discovery technology, with three additional patents pending upon application. Viva Biotech Group enjoys a world-leading position in drug target protein structure research and according to the statistics on beam time of global synchrotron radiation light source, used more than 67% of average industrial beam time from 2016 to 2018 at Shanghai Light Source, one of the four third-generation synchrotron centers accessible to global pharmaceutical industrial users, according to the Frost & Sullivan Report. As of 15 April 2019, the Company had provided drug discovery services to over 370 biotechnology and pharmaceutical customers, worked on over 1,000 independent drug targets and delivered approximately 9,500 independent protein structures.

Innovative and unique business model to tap into vast pharmaceutical market

Viva Biotech Group has developed a scalable business model combining the conventional cash-for-service (CFS) model and unique equity-for-service (EFS) model. Under the EFS model, the Group provides drug discovery and/or incubation services to selected customers in exchange for equity or economic interest in them, and to certain promising biotechnology companies which the Group invested in. By holding equity or economic interest in these selected customers or investees, the Group can effectively foster the development of these promising biotechnology startups and enjoy the upside of their IP value, while maintaining the steady cash inflow generated from services provided to CFS customers. In addition, the Group may also make strategic investments in biotechnology startup companies that the Group thinks are of potential for future cooperation.

Since 2018, Viva Biotech has strategically shifted its focus from CFS model to EFS model, and selectively increased the number of its incubation portfolio companies while maintaining steady growth and revenue stream under CFS model. Leveraging strong technical capabilities and deep industry knowledge, Viva Biotech Group is very well-positioned to benefit from the EFS model as the Group has access to a large number of early stage R&D projects, which provides a large pool of high-quality candidates to choose from before venture capital investors approach them. Through its innovative and unique business model, Viva Biotech Group is able to tap into the vast pharmaceutical market and maximize shareholders' value by sharing the upside of customers' IP value and significantly increase profit per employee to a higher level than peers.

Systematic incubation program to capture the highest return of the biotechnology value chain

In general, the return rate of investments in new drugs in their early stage is higher than the later stage investments, according to the Frost & Sullivan Report. Compared to venture capital firms that only address the financial needs of these startup projects, Viva Biotech Group focuses on early stage opportunities and enjoys unique advantages in its ability to provide the drug discovery services, experienced technicians and well-equipped laboratory. By the time the venture capital firms invest, Viva Biotech Group is ready to exit with anticipated returns and has greater flexibility on exit strategies. Furthermore, the Group's management has the expertise to assess systematically and scientifically the respective success rates of these R&D projects and minimize the associated risks of incubation portfolio companies through diversification.

According to the Frost & Sullivan Report, the incubation model based on early stage drug discovery services has strong technical barriers. As a pioneer of this model and to leverage on the gateway role in the drug discovery process, Viva Biotech Group has established a systematic, scientific and modularized program that enables the Group to effectively improve its capital utilization while managing associated risks. Since 2014, the Group has established two incubation centers and incubated 31 early stage R&D projects, and 11 of its incubation portfolio companies had closed private financing round as of April 15, 2019. The Company had realized gains from disposal of equity interest in four of its incubation portfolio companies with return rates of 212%, 494%, 200% and 315%, respectively. The Company plans to establish several additional modularized centers in Shanghai, Jiaxing and Chengdu, China, and add additional 21, 35 and 50 additional incubation projects in 2019, 2020 and 2021, respectively.

Integrated drug discovery platform attracting top scientists and talents worldwide, ensuring the sustainable development

Viva Biotech's management team and key business partners comprise of top scientists and top talents from renowned global pharmaceutical companies and other prestigious biomedical research institutes, such as Pfizer Inc., Merck & Co., Abbott and Novartis, and are specialized in innovative drug R&D in diversified therapeutic fields. With an average of more than ten years' experience of new drug R&D in multi-national pharmaceutical companies, these scientists and professionals in the Company's senior management team are familiar with the entire process and management of new drug R&D projects, possess a clear and differentiated development strategy and business philosophy, and have accurate experience-based judgment on the development trend of innovative drug R&D. Among the members of management team, one was awarded as a member to the "National Thousand Talents Program" and two were awarded as members to the "Shanghai Thousand Talents Program". As of 15 April 2019, the Company had 427 biomedical and chemical drug research personnel, accounting for 83.7% of total number of employees.

Meanwhile, Viva Biotech Group has introduced an innovative "business partners" system to identify business partners from external sources and incubation portfolio companies. At present, the Company has a team of 17 business partners consisting of top scientists from China and overseas, of which 14 are from incubation portfolio companies. The Company believes that the business partner system not only enhances the quality of incubation portfolio companies to generate additional return, but also in turn continues to develop and attract more top scientists to join as business partners, thereby ensuring the scalability and sustainability of the Company's business model.

Dr. Mao Chen Cheney, the Chairman, Chief Executive Officer and Executive Director of Viva Biotech Holdings said: "With the mission to become a cradle for promising biotechnology startups around the world, Viva Biotech Group has always been focusing on our world-leading technologies and capabilities to provide high quality drug discovery services to over 370 innovative biotechnology startups, which are mainly located in the United States, and major pharmaceutical customers worldwide as well as a number of domestic or foreign research institutes. Through years of development, we have established an excellent reputation in the industry and widely recognized by our customers and have accumulated a diversified and growing quality customer base via word of mouth. We aim to leverage on our leading drug discovery capability to scalably participate in our customers' early stage R&D activities, thereby driving and capitalizing the value of our customers' intellectual property. Leveraging on our world-leading technologies, we are able to acquire more high-quality biotechnology and pharmaceutical customers, generate higher revenues, and further invest to advance our R&D capabilities, thereby creating a virtuous circle. Going forward, we will continue to invest in cutting-edge technologies to stay at the forefront of the drug discovery service industry; and further strengthen our in-house research and development, in particular in the Cryo-EM area, thus enables us to further enhance our R&D capabilities and provide more comprehensive services to our customers and business partners."

About Viva Biotech HoldingsViva Biotech Group operates a leading structure-based, integrated drug discovery platform in terms of revenue in 2018 and beam time for synchrotron radiation in 2018 with a number of world-leading technologies and a scalable business model to share the upside of the customers' IP value. Viva Biotech Group provides structure-based drug discovery services to its biotechnology and pharmaceutical customers worldwide for their pre-clinical stage innovative drug development, covering the full spectrum of the customers' needs for early stage drug discovery, including target protein expression and structure research, hit screening, lead optimization and drug candidate determination. Viva Biotech Group has provided drug discovery services to nine of the ten largest global pharmaceutical companies (in term of revenues in 2018), as well as hundreds of biotechnology companies and research institutes worldwide including 23 companies named in the Fierce Biotech Top 15 Promising Biotechs. As of April 15, 2019, Viva Biotech Group had provided drug discovery services to over 370 biotechnology and pharmaceutical customers worldwide, worked on over 1,000 independent drug targets and delivered approximately 9,500 independent protein structures.

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References

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