GYRE THERAPEUTICS, INC.

Previous wording

Gyre Pharmaceuticals completed a pivotal Phase 3 trial of Hydronidone in the PRC evaluating its safety and efficacy for the treatment of liver fibrosis in patients with chronic hepatitis B (“CHB”) associated liver fibrosis. Building on the positive Phase 3 trial results, Gyre Pharmaceuticals is actively engaging with the NMPA to confirm Priority Review eligibility for Hydronidone’s New Drug Application. The 52-week, multicenter, double-blind, placebo-controlled trial enrolled 248 patients with CHB fibrosis across 39 hospitals in the PRC. Patients were randomized 1:1 to receive either entecavir anti-viral therapy plus Hydronidone (270 mg/day, orally) or entecavir antiviral therapy alone. The trial met its primary endpoint, with a statistically significant proportion of patients receiving Hydronidone achieving a ≥1-stage regression in liver fibrosis compared to placebo (P=0.0002). In addition, Hydronidone met a key secondary endpoint with statistically significant inflammation improvement without fibrosis progression at Week 52 versus the placebo arm. Hydronidone was well tolerated with a comparable incidence of serious adverse events (4.88% vs. 6.45% in the placebo group) and no discontinuations due to adverse events in either group.

Current wording

In May 2025, we reported that in the pivotal Phase 3 trial, Hydronidone met its primary endpoint: 52.85% of treated patients achieved ≥1-stage fibrosis regression at Week 52, compared with 29.84% in the placebo group (p=0.0002), based on centralized, blinded Ishak histologic assessment. Hydronidone also met a key secondary endpoint with statistically significant inflammation improvement without fibrosis progression at Week 52 versus placebo. Hydronidone was well tolerated, with a comparable incidence of serious adverse events (4.88% vs. 6.45% in placebo) and no discontinuations due to adverse events in the Hydronidone group.

Previous wording

Based on these positive results, we plan to file a New Drug Application with the NMPA and the submission process is ongoing. In parallel, we continue to engage with the U.S. Federal Food and Drug Administration regarding the investigational new drug application (“IND”) requirements for a Phase 2 trial evaluating Hydronidone for the treatment of metabolic dysfunction-associated steatohepatitis ("MASH")-associated liver fibrosis. Pending regulatory feedback, we plan to file the U.S. IND for Hydronidone for the treatment of MASH-associated liver fibrosis in 2026 and, subject to clearance, initiate a Phase 2 clinical trial. We plan to conduct a hepatic impairment study in U.S. subjects under our active U.S. IND. Results from this study are expected to help optimize dose selection and safe enrollment criteria in populations with reduced hepatic function, supporting a more robust Phase 2 development plan. A prior U.S. Phase 1 trial in healthy volunteers confirmed Hydronidone’s tolerability and demonstrated a pharmacokinetic profile consistent with the results of clinical trials of Hydronidone in the PRC.

Current wording

In the United States, we have completed a Phase 1 clinical trial in healthy volunteers evaluating Hydronidone’s safety, tolerability, and PK. We continue to engage with the U.S. Food and Drug Administration regarding investigational new drug (“IND”) requirements for a Phase 2 clinical trial in MASH-associated liver fibrosis. Pending regulatory feedback, we intend to file a U.S. IND in 2026 and, if the IND becomes effective, initiate a Phase 2 clinical trial.

Previous wording

In May 2024, Gyre Pharmaceuticals entered into an agreement with Jiangsu Wangao Pharmaceuticals Co., Ltd. (the “Jiangsu Wangao Agreement”), effective from May 7, 2024 to May 6, 2035. Pursuant to the Jiangsu Wangao Agreement, Gyre Pharmaceuticals obtained the drug registration certificate for and became the marketing authorization holder of Etorel® (nintedanib, ethanesulfonate soft capsules), a small-molecule drug for the treatment of SSc-ILD and PF-ILD, within the PRC. The total minimum payments under the Jiangsu Wangao Agreement are RMB 35.0 million, or approximately $4.9 million, based on the September 30, 2025 spot exchange rate. This includes an upfront transfer fee of RMB 15.0 million, or approximately $2.1 million, payable in three installments, and subsequent payments based on annual sales over eight years following the commencement of commercial sales. Additionally, Gyre Pharmaceuticals will bear the costs associated with relocating the production site to a designated location and will cover all expenses related to the manufacturing process. As of September 30, 2025, we had paid three installments totaling RMB 15.0 million, or approximately $2.1 million, based on the September 30, 2025 spot exchange rate.

Current wording

In May 2024, Gyre Pharmaceuticals entered into an agreement with Jiangsu Wangao Pharmaceuticals Co., Ltd. (the “Jiangsu Wangao Agreement”), effective from May 7, 2024 to May 6, 2035. Pursuant to the Jiangsu Wangao Agreement, Gyre Pharmaceuticals obtained the drug registration certificate for and became the marketing authorization holder of Etorel TM (nintedanib, ethanesulfonate soft capsules), a small-molecule drug for the treatment of IPF, SSc-ILD and progressive pulmonary fibrosis, within the PRC. The total minimum payments under the Jiangsu Wangao Agreement are Chinese Renminbi (“RMB”) 35.0 million, or approximately $5.1 million, based on the March 31, 2026 spot exchange rate. This includes an upfront transfer fee of RMB 15.0 million, or approximately $2.1 million, payable in three installments, and subsequent payments based on annual sales over eight years following the commencement of commercial sales. Additionally, Gyre Pharmaceuticals will bear the costs associated with relocating the production site to a designated location and will cover all expenses related to the manufacturing process. As of March 31, 2026, we had paid three installments totaling RMB 15.0 million, or approximately $2.2 million, based on the March 31, 2026 spot exchange rate.

Previous wording

During the three months ended September 30, 2025, we had net income of $5.9 million and net income attributable to common stockholders of $3.6 million. For the nine months ended September 30, 2025, we had net income of $11.2 million and net income attributable to common stockholders of $6.8 million. During the three months ended September 30, 2024, we had net income of $2.9 million and net income attributable to common stockholders of $1.1 million. For the nine months ended September 30, 2024, we had net income of $17.3 million and net income attributable to common stockholders of $12.2 million. As of September 30, 2025, we had an accumulated deficit of $66.7 million and cash and cash equivalents of $40.4 million. As of December 31, 2024, we had an accumulated deficit of $73.5 million and cash and cash equivalents of $11.8 million.

Current wording

During the three months ended March 31, 2026, we had a net loss of $9.9 million and net loss attributable to common stockholders of $8.7 million. During the three months ended March 31, 2025, we had net income of $3.7 million and net income attributable to common stockholders of $2.7 million. As of March 31, 2026, we had an accumulated deficit of $77.7 million and cash and cash equivalents of $37.5 million. As of December 31, 2025, we had an accumulated deficit of $68.4 million and cash and cash equivalents of $37.1 million.

Previous wording

We generate revenue primarily through sales of ETUARY®, Contiva®, Etorel® and certain generic drugs in the PRC. Distributors are our direct customers, and sales to distributors accounted for 100% of the revenue. Such distributors sell pharmaceutical products to certain outlets, including hospitals and other medical institutions, as well as pharmacies.

Current wording

We generate revenue primarily through sales of ETUARYTM, Contiva TM, Etorel TM and certain generic drugs in the PRC. Distributors are our direct customers, and sales to distributors accounted for 100% of the revenue. Such distributors sell our pharmaceutical products to certain outlets, including hospitals and other medical institutions, as well as pharmacies.

Previous wording

Cost of revenue mainly consists of cost of sales representing direct and indirect costs incurred to bring the product to saleable condition. Cost of sales primarily consists of (i) raw material costs; (ii) staff costs for production employees; (iii) depreciation and amortization related to property and equipment and intangible assets used in production; (iv) taxes and surcharges; (v) transportation costs; and (vi) miscellaneous other costs.

Current wording

Cost of revenue mainly consists of cost of sales representing direct and indirect costs incurred to bring the product to saleable condition. Cost of sales primarily consists of (i) raw material costs; (ii) staff costs for production employees, including stock-based compensation; (iii) depreciation and amortization related to property and equipment and intangible assets used in production; (iv) taxes and surcharges; (v) transportation costs; and (vi) miscellaneous other costs.

Previous wording

Selling and marketing expenses primarily relate to selling and marketing our products in the PRC and consist of expenses incurred from hosting academic conferences, seminars and symposia; promotional expenses associated with market education on ETUARY® for its use in hospitals; and staff costs primarily consisting of salaries and benefits for in-house marketing and promotion staff.

Current wording

Selling and marketing expenses primarily relate to selling and marketing our products in the PRC and consist of expenses incurred from hosting academic conferences, seminars and symposia; promotional expenses associated with market education on our products for their use in hospitals; and staff costs primarily consisting of salaries, benefits and stock-based compensation for in-house marketing and promotion staff.

Previous wording

Research and development costs consist primarily of costs related to the pre-clinical and clinical development of our product candidates, which include payroll and other personnel-related expenses, laboratory supplies and reagents, contract research and development services for pre-clinical research and clinical trials, materials, and consulting costs, as well as allocations of facilities, depreciation, and other overhead costs.

Current wording

Research and development costs consist primarily of costs related to the pre-clinical and clinical development of our product candidates, which include payroll and other personnel-related expenses, including stock-based compensation, laboratory supplies and reagents, contract research and development services for pre-clinical research and clinical trials, materials, and consulting costs, as well as allocations of facilities, depreciation, and other overhead costs.

Previous wording

We manage our research and development expenses by identifying the research and development activities we expect to be performed during a given period and then prioritizing efforts based on anticipated probability of successful technical development and regulatory approval, market potential, available human and capital resources, scientific data and other considerations. We regularly review our research and development activities based on unmet medical need and, as necessary, reallocate resources among our research and development portfolio that we believe will best support the long-term growth of our business.

Current wording

We manage our research and development expenses by identifying the research and development activities we expect to be performed during a given period and then prioritizing efforts based on anticipated probability of successful technical development and regulatory approval, market potential, available human and capital resources, scientific data and other considerations. We regularly review our research and development activities based on unmet medical need and, as necessary, reallocate resources among our research and development portfolio that we believe will best support the long-term growth of our business. Although we do track and allocate certain operational research and development costs, as described above, we do not fully track and allocate research and development expenses at the individual product candidate level.

Previous wording

In connection with the Private Placement, we issued the Preferred Stock Warrants, which are freestanding financial instruments classified as warrant liability since the underlying securities are contingently redeemable upon the occurrence of events which are outside of our control. The Preferred Stock Warrants are recorded at fair value upon issuance and are subject to remeasurement at the end of each reporting period, with any change in fair value recognized in our statements of operations as other (income) expense.

Current wording

In connection with a private placement conducted in October 2023 with GNI USA, Inc., we issued (i) 811 shares of our Series X Convertible Preferred Stock, par value $0.001 per share (the “Series X Preferred Stock”) and (ii) warrants to purchase up to 811 shares of Series X Preferred Stock (the “Preferred Stock Warrants”), which are freestanding financial instruments classified as warrant liability since the underlying securities are contingently redeemable upon the occurrence of events which are outside of our control. The Preferred Stock Warrants are recorded at fair value upon issuance and are subject to remeasurement at the end of each reporting period, with any change in fair value recognized in our statements of operations as other income.

Previous wording

Provision for income taxes are comprised primarily of current income tax provision, mainly attributable to the profitable Gyre Pharmaceuticals operations in the PRC, and deferred income tax provision, mainly including deferred tax recognized for temporary differences in relation to research and development tax credit and net operating loss carryforwards for U.S. tax purposes, deemed income inclusions from controlled foreign corporations for U.S. tax purposes, and fixed and intangible assets, net of valuation allowances.

Current wording

Provision for income taxes are comprised primarily of current income tax provision, mainly attributable to the profitable Gyre Pharmaceuticals operations in the PRC, and deferred income tax provision, mainly including deferred tax recognized for temporary differences in relation to research and development tax credit and net operating loss carryforwards for U.S. tax purposes and fixed and intangible assets, net of valuation allowances.

Previous wording

On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted into law, including, among other things, provisions allowing accelerated tax deductions for qualified property and research expenditures. We are evaluating the future impact of the OBBBA on our financial statements.

Current wording

On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted into law, which introduced several U.S. income tax provisions that have and may continue to potentially impact our provision for income taxes. The provisions include, but are not limited to, the immediate expensing of domestic research and development expenses beginning in 2025, as well as a modification to the Global Intangible Low-Taxed Income effective in 2026. We have recognized the effects of the OBBBA provisions on our financial results to the extent they are applicable to the three months ended March 31, 2026. We will continue to evaluate the impact of the OBBBA on our condensed consolidated financial statements.

Previous wording

General and administrative expenses increased by $0.5 million, or 13%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The increase was primarily driven by a $1.1 million increase in functional and administrative department's personnel and stock compensation costs and a $0.2 million increase in miscellaneous expenses, partially offset by a $0.8 million decrease in professional fees.

Current wording

General and administrative expenses increased by $2.3 million, or 46%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase was primarily driven by a $0.8 million increase in stock-based compensation costs, a $0.9 million increase in staff costs due to our internal realignment of responsibilities and compensation adjustments, and a $0.6 million increase in miscellaneous expenses.

Previous wording

Change in fair value of warrant liability increased $0.2 million, or 90%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The increase was related to the remeasurement of the Preferred Stock Warrants liability.

Current wording

Change in fair value of warrant liability decreased $2.2 million, or 96%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The decrease was related to the remeasurement of the Preferred Stock Warrants liability.

Previous wording

Provision for income taxes was $3.3 million and $5.1 million for the nine months ended September 30, 2025 and 2024, respectively. The decrease was primarily attributable to a lower profit from Gyre Pharmaceuticals’ operations and impact of the option exercising for the nine months ended September 30, 2025.

Current wording

Provision for income taxes was $0.6 million and $0.9 million for the three months ended March 31, 2026 and 2025, respectively. The decrease was attributable to changes in the valuation allowance.

Previous wording

As of September 30, 2025, we had cash and cash equivalents of $40.4 million, short-term bank deposits of $19.6 million and long-term certificates of deposit of $20.3 million, which are available to fund operations, and an accumulated deficit of $66.7 million. Our net income during the three and nine months ended September 30, 2025 was $5.9 million and $11.2 million, respectively, while cash provided by operating activities was $4.7 million and $6.6 million, respectively. We believe that our existing cash and cash equivalents, cash flows from operations, and access to capital markets will be sufficient to fund our operating activities and obligations for at least the next 12 months following the filing date of this Quarterly Report and thereafter for the foreseeable future.

Current wording

As of March 31, 2026, we had cash and cash equivalents of $37.5 million, short-term bank deposits of $12.3 million and long-term certificates of deposit of $29.4 million, which are available to fund operations, and an accumulated deficit of $77.7 million. Our net loss during the three months ended March 31, 2026 was $9.9 million, while cash provided by operating activities was $3.2 million. We believe that our existing cash and cash equivalents, cash flows from operations, and access to capital markets will be sufficient to fund our operating activities and obligations for at least the next 12 months following the filing date of this Quarterly Report and thereafter for the foreseeable future.

Previous wording

We expect to use cash flows from operations to meet our current and future financial obligations, including funding our operations, and capital expenditures. Our ability to make these payments depends on our future performance, which will be affected by financial, business, economic, regulatory, and other factors, many of which we cannot control. In particular, following results from the PRC Phase 3 trial in CHB-associated liver fibrosis and pending approval of an IND submission, we expect to initiate a Phase 2 trial to evaluate Hydronidone for the treatment of MASH-associated liver fibrosis in 2026. We cannot guarantee that a Phase 2 trial will be initiated or estimate the funding needed for such trial at this time, but may need to raise additional capital to fund this program.

Current wording

We expect to use cash provided by operating activities, short-term deposits, and long-term certificate of deposits, as well as potential cash issuances to meet our current and future financial obligations, including funding our operations, research and development activities, clinical pipelines, and capital expenditures. Our ability to make these payments depends on our future performance, which will be affected by financial, business, economic, regulatory, and other factors, many of which we cannot control. In particular, pending approval of an IND submission, we expect to initiate a Phase 2 trial to evaluate Hydronidone for the treatment of MASH-associated liver fibrosis in 2026. We cannot guarantee that a Phase 2 trial will be initiated or estimate the funding needed for such trial at this time, but may need to raise additional capital to fund this program. In addition, we anticipate that we will incur expenses related to and in connection with the integration between our business and Cullgen. Factors that may affect financing requirements include, but are not limited to:

Previous wording

The increase in cash provided by operating activities for the nine months ended September 30, 2025 compared with cash used in operating activities for the nine months ended September 30, 2024 was primarily attributable to higher customer collections, increased government grants, reduced payments for raw materials and services, and lower tax payments resulting from employee stock option exercises.

Current wording

The increase in cash provided by operating activities for the three months ended March 31, 2026 compared with cash used in operating activities for the three months ended March 31, 2025 was primarily attributable to higher customer collections and lower tax payments.

Previous wording

Cash provided by operating activities for the nine months ended September 30, 2025 was $6.6 million, reflecting our net income of $11.2 million and non-cash items of $1.5 million, which primarily includes $2.6 million in stock-based compensation and $1.8 million in depreciation and amortization, offset by $2.4 million related to the change in the fair value of warrant liability. Additionally, cash used in operating activities reflected changes in net operating assets and liabilities of $6.1 million.

Current wording

Cash used in operating activities for the three months ended March 31, 2025 was $0.1 million, reflecting our net income of $3.7 million, offset by non-cash items of $0.5 million primarily driven by a $2.3 million change in the fair value of warrant liability, $0.5 million in stock-based compensation, $0.5 million in depreciation and amortization, $0.5 million in accrued interest, and $0.2 million in non-cash lease expense. Additionally, cash used in operating activities reflected changes in net operating assets and liabilities of $3.3 million.

Previous wording

Cash used in investing activities for the nine months ended September 30, 2024 was $17.9 million, which consisted of $14.1 million in purchases of certificates of deposit, $2.4 million in purchases of property and equipment, and $1.7 million in equity method investment, partially offset by $0.3 million in proceeds from sale of equipment.

Current wording

Cash used in investing activities for the three months ended March 31, 2026 was $3.1 million, which consisted of $10.1 million of cash acquired in connection with the maturity of certificates of deposit, offset by $13.0 million in purchases of certificates of deposit and $0.2 million in purchases of property and equipment.

Previous wording

Cash used in investing activities for the nine months ended September 30, 2025 was $2.3 million, which consisted of $11.2 million in purchases of certificates of deposit, $1.0 million in purchases of property and equipment, $0.7 million in acquisition of intangible assets, and $0.6 million in purchase of short-term investments, partially offset by $11.2 million of proceeds from the maturity of certificates of deposit.

Current wording

Cash provided by investing activities for the three months ended March 31, 2025 was $2.0 million, which consisted of $11.2 million of cash acquired in connection with the maturity of certificates of deposit, partially offset by $8.4 million in purchases of certificates of deposit, $0.1 million in purchases of property and equipment, and $0.7 million in acquisition of intangible assets.

Previous wording

Cash provided by financing activities for the nine months ended September 30, 2024 was $1.1 million due to deferred financing costs, as well as proceeds from the exercise of stock options.

Current wording

Cash provided by financing activities for the three months ended March 31, 2026 was $21 thousand due to proceeds from the exercise of stock options.

Previous wording

Cash provided by financing activities for the nine months ended September 30, 2025 was $24.1 million due to $23.0 million in proceeds from the issuance of common stock pursuant to our public offering of 2,555,555 shares of common stock, $2.0 million in proceeds from the exercise of stock options, and $0.5 million in proceeds from the issuance of common stock under our at-the-market offering program with Jefferies LLC, partially offset by $1.5 million of cash used in connection with deferred offering costs.

Current wording

Cash provided by financing activities for the three months ended March 31, 2025 was $1.3 million due to $0.9 million in proceeds from the exercise of stock options and $0.5 million in proceeds from the issuance of common stock under our ATM Program with Jefferies LLC, partially offset by $0.1 million of cash used in connection with deferred financing costs.

Previous wording

Under PRC laws and regulations, Gyre Pharmaceuticals is subject to restrictions on foreign exchange and cross-border cash transfers, including to parent companies and U.S. stockholders. The ability to distribute earnings to the parent companies and U.S. stockholders is also limited. Current PRC regulations permit Gyre Pharmaceuticals to pay dividends to BJC only out of its accumulated profits as determined in accordance with PRC accounting standards and regulations. Amounts restricted include paid-in capital and the statutory reserves of Gyre Pharmaceuticals. The aggregate amounts of restricted capital and statutory reserves of the relevant subsidiaries not available for distribution were $66.4 million and $64.3 million as of September 30, 2025 and December 31, 2024, respectively. We do not expect the restrictions described above to have a material impact on our ability to meet our cash obligations.

Current wording

Under PRC laws and regulations, Gyre Pharmaceuticals is subject to restrictions on foreign exchange and cross-border cash transfers, including to parent companies and U.S. stockholders. The ability to distribute earnings to the parent companies and U.S. stockholders is also limited. Current PRC regulations permit Gyre Pharmaceuticals to pay dividends to BJC only out of its accumulated profits as determined in accordance with PRC accounting standards and regulations. Amounts restricted include paid-in capital and the statutory reserves of Gyre Pharmaceuticals. The aggregate amounts of restricted capital and statutory reserves of the relevant subsidiaries not available for distribution were $72.4 million and $70.1 million as of March 31, 2026 and December 31, 2025. We do not expect the restrictions described above to have a material impact on our ability to meet our cash obligations.

Previous wording

We have entered into lease arrangements in (1) San Diego, California for our headquarters, which expires on the last day of the 38th full calendar month beginning on or after November 11, 2023, and (2) the PRC, for office and laboratory spaces through May 2027. As of September 30, 2025, our fixed lease payment obligations were $1.2 million, with $0.3 million payable within the remaining three months of 2025.

Current wording

We have entered into lease arrangements in (1) San Diego, California for our headquarters, which expires on the last day of the 38th full calendar month beginning on or after November 11, 2023, and (2) the PRC, for office and laboratory spaces through May 2027. As of March 31, 2026, our fixed lease payment obligations were $0.8 million, with $0.5 million payable within the remaining nine months.

Previous wording

As of September 30, 2025, we have committed to allocate $37.6 million toward future research and development activities for various programs, including the Hydronidone program.

Current wording

As of March 31, 2026, we have committed to allocate $64.1 million toward future research and development activities for various programs.

Previous wording

Our commitments related to the purchase of property and equipment contracted but not yet reflected in the unaudited condensed consolidated financial statements were $4.6 million as of September 30, 2025 and are expected to be incurred within one year.

Current wording

Our commitments related to the purchase of property and equipment contracted but not yet reflected in the unaudited condensed consolidated financial statements were $1.5 million as of March 31, 2026 and are expected to be incurred within one year.

Previous wording

We are committed to annual payments to the Etorel® IP Rights transferor over eight years following the commencement of commercial sales. See Note 12 —Commitments and Contingencies.

Current wording

The Company is committed to annual payments to the Etorel TM IP Rights transferor over eight years following the commencement of commercial sales. See Note 11 —Commitments and Contingenciesto the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.

Previous wording

Based on the aggregate market value of our common stock held by non-affiliates as of June 30, 2025, we remain a smaller reporting company and continue to qualify as an “accelerated filer”. As a result of our accelerated filer status, we were required, pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), to include in our Annual Report an attestation report from our independent registered public accounting firm regarding the effectiveness of our internal control over financial reporting, and we have complied with this requirement by including the attestation report in our Annual Report. However, we expect to continue to take advantage of the reduced reporting requirements applicable to smaller reporting companies.

Current wording

Based on the aggregate market value of our common stock held by non-affiliates as of June 30, 2025, we remain a smaller reporting company and continue to qualify as an “accelerated filer”. As a result of our transition to accelerated filer status, we were required, pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), to include in our Annual Report an attestation report from our independent registered public accounting firm regarding the effectiveness of our internal control over financial reporting, and we have complied with this requirement by including the attestation report in our Annual Report. However, we expect to continue to take advantage of the reduced reporting requirements applicable to smaller reporting companies.