Gyre Therapeutics, Inc. GYRE US Equity☆

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

You should read the following discussion and analysis of our financial condition and results of operations together with our audited financial statements and related notes included elsewhere in this Annual Report on Form 10-K. This discussion and other parts of this Annual Report on Form 10-K contain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section of this report entitled “Risk Factors.” You should carefully read the “Cautionary Note About Forward-Looking Statements” and “Risk Factors” sections of this Annual Report on Form 10-K to gain an understanding of the important factors that could cause actual results to differ materially from the results described below.

Overview

We are a commercial-stage biopharmaceutical company focused on the development and commercialization of small-molecule therapies for the treatment of organ fibrosis and inflammatory diseases. We operate through our majority indirectly owned subsidiary, Gyre Pharmaceuticals, in the PRC, and through our U.S. operations headquartered in San Diego, California.

Our strategy is to leverage our established commercial portfolio to support and de-risk the advancement of late-stage product candidates, expand approved products into additional indications, and build a diversified pipeline targeting significant unmet medical needs in fibrosis and related inflammatory diseases.

On March 2, 2026, we entered into the Merger Agreement with Cullgen and Merger Sub, pursuant to which, among other matters, and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Merger Sub will merge with and into Cullgen, with Cullgen continuing as a wholly owned subsidiary of Gyre and the surviving corporation of the Merger. The Merger is intended to qualify for federal income tax purposes as a tax-free reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended.

The consummation of the Merger is subject to certain closing conditions, including, among other things, (1) approval by the requisite Cullgen stockholders of the adoption and approval of the Merger Agreement and the transactions contemplated thereby, and (2) a filing under the HSR Act.

There can be no assurances that the Merger will be successfully consummated, and the intended benefits of the Merger may not be realized.

Our Commercial Portfolio

ETUARY® (pirfenidone)

Pirfenidone is a small-molecule anti-fibrotic therapy for the treatment of IPF. It was first approved in Japan and subsequently approved in the PRC, the EU, and the United States. These approvals were obtained by different sponsors in their respective jurisdictions under separate regulatory frameworks.

In the PRC, we conducted independent research and development to support our regulatory submission and received first-in-class approval in 2011 as a National Category 1.1 New Drug. We commercialized pirfenidone under the brand name ETUARY®, which was included in the NRDL in 2017 and has since maintained a leading market position.

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In addition to IPF, we are pursuing potential label expansion into additional indications in the PRC, including PD, for which, in 2025, we completed enrollment of 272 patients in our 52-week Phase 3 trial, and RILI, including cases with or without immune-related pneumonitis, for which the NMPA approved our clinical trial application in March 2025, and we expect to initiate an adaptive Phase 2/3 study in the first half of 2026.

Etorel® (nintedanib esilate soft capsules)

In May 2024, Gyre Pharmaceuticals entered into a comprehensive agreement with Jiangsu Wangao Pharmaceuticals Co., Ltd. to obtain the drug registration certificate for Etorel® (nintedanib) and become the marketing authorization holder in the PRC. Etorel® is approved as a standard-of-care therapy for IPF, SSc-ILD, and PF-ILD. The addition of Etorel® to our commercial portfolio expanded treatment options for patients and strengthened Gyre’s leading position in the pulmonary fibrosis market. Commercialization of Etorel® in the PRC commenced in June 2025.

On November 7, 2025, the NHSA released the Announcement of the Winning Bids for the National Centralized Drug Procurement, under which Etorel® was selected. As of the filing date, we are in the process of entering into procurement contracts with various participating hospitals under the National Centralized Drug Procurement program. We are currently assessing the potential impact of this development on its future operating performance.

Contiva® (avatrombopag maleate tablets)

In June 2021, Gyre Pharmaceuticals acquired avatrombopag maleate tablets pursuant to a transfer agreement with Nanjing Healthnice Pharmaceutical Technology Co., Ltd. Avatrombopag is an oral thrombopoietin receptor agonist. In June 2024, the NMPA approved avatrombopag maleate tablets for the treatment of TP associated with CLD in adult patients undergoing elective diagnostic procedures or therapy. In January 2025, the NMPA approved an additional indication for chronic ITP. Gyre Pharmaceuticals commenced commercialization of avatrombopag under the brand name Contiva® in the PRC in March 2025.

Our Product Candidate Pipeline

Hydronidone

Hydronidone is our lead development candidate for the treatment of liver fibrosis. It is a structurally modified derivative of pirfenidone designed to optimize metabolic properties while targeting the TGF-β1 signaling pathway, a key mediator of fibrogenesis. We are developing Hydronidone for two primary indications: CHB-associated liver fibrosis in the PRC and MASH-associated liver fibrosis in the United States. Hydronidone represents our primary liver-focused development program and reflects our commitment to advancing therapies targeting both viral- and metabolic-associated liver fibrosis.

CHB-Associated Liver Fibrosis (PRC)

For CHB-associated liver fibrosis, antiviral therapy may suppress viral infection but is not able to prevent, slow or reverse fibrosis progression, and anti-fibrotic treatment is recommended for intermediate and advanced liver fibrosis and early-stage cirrhosis. As of December 31, 2025, no small molecule or biologic drugs treating CHB-associated liver fibrosis have been approved globally. In recognition of the severity of the disease and the preliminary clinical evidence generated to date, the CDE of the NMPA granted Hydronidone Breakthrough Therapy designation in March 2021.

We conducted a Phase 3 randomized, double-blind, placebo controlled, Entecavir-based, multi-center trial in the PRC assessing Hydronidone in CHB-associated liver fibrosis. This trial was designed to randomize 248 patients, with a primary endpoint of ≥1-stage reduction in Ishak fibrosis score at Week 52 for Hydronidone in combination with Entecavir.

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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.

Following our pre-NDA meeting in December 2025, the CDE indicated that the existing Phase 3 data support submission for conditional approval and potential priority review eligibility, subject to formal acceptance and approval by the NMPA. We currently expect to submit an NDA seeking conditional approval in the first half of 2026, subject to completion of regulatory and technical preparations.

MASH-Associated Liver Fibrosis (United States)

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 FDA regarding 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.

Other Product Candidates

We have completed a Phase 1 clinical trial of F573 in healthy volunteers in the PRC and are currently evaluating it in a multi-stage Phase 2 clinical trial initiated in March 2023 in patients with liver injury and liver failure. The Phase 2 clinical trial is expected to be completed in 2026.

F230 is our clinical-stage product candidate for the treatment of PAH in the PRC. F230 is a selective endothelin receptor A antagonist designed to address vascular remodeling and elevated pulmonary arterial pressure associated with PAH. F230 complements our broader organ-focused portfolio by expanding our development efforts into pulmonary vascular disease while remaining aligned with our strategy of targeting fibrotic and inflammatory pathways across organ systems. We submitted an IND application for F230 to the NMPA in March 2024, and the IND was approved in May 2024. The first subject was enrolled in the Phase 1 clinical trial in June 2025.

F528 is our preclinical-stage product candidate for the treatment of COPD in the PRC. F528 is an anti-inflammatory small-molecule compound designed to inhibit multiple inflammatory cytokines and potentially modify disease progression. F528 expands our pulmonary-focused development efforts beyond fibrosis and vascular disease into chronic inflammatory respiratory conditions, supporting our broader strategy of addressing organ diseases driven by inflammatory and fibrotic pathways. We anticipate submitting an IND application to the NMPA for F528 in the first quarter of 2027.

Contingent Value Rights Agreement

Concurrent with the signing of the previously disclosed business combination agreement pursuant to which we acquired an indirect controlling interest in Gyre Pharmaceuticals, on December 26, 2022, the Company and the Rights Agent (as defined in the CVR Agreement) executed a contingent value rights agreement (the “CVR Agreement”), as amended on March 29, 2023, pursuant to which each CVR Holder (as defined in the CVR Agreement), excluding GNI Japan and GNI Hong Kong Limited, received one contractual contingent value right (a “CVR”) issued by the Company for each share of common stock held by such holders. Each CVR entitles the CVR Holder thereof to receive certain cash payments in the future. In the first quarter of 2025, we had fully settled the CVR liability and collected all outstanding amounts related to CVR receivables.

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Share Capital Increase Agreement

In the third quarter of 2025, pursuant to an agreement previously entered into by and among BJContinent Pharmaceuticals Limited (“BJC”), Gyre Pharmaceuticals and the other parties thereto, BJC increased its capital contribution in Gyre Pharmaceuticals by $1.28 million in exchange for 9,184,910 additional shares of Gyre Pharmaceuticals. As a result, our indirect interest in Gyre Pharmaceuticals increased from 65.2% to 69.7%.

Long-Term Investment Measured Under Equity Method

On June 28, 2024, Gyre Pharmaceuticals entered into a partnership agreement as a limited partner and is obligated to pay $4.2 million for an 18.93% equity interest in the partnership. In April 2025, a new investor joined the partnership agreement, and as a result, Gyre Pharmaceuticals’ equity interest was adjusted to 18.35%. Pursuant to the partnership agreement, Gyre Pharmaceuticals, as a limited partner, shall not participate in any activities related to the management of the investment business. However, Gyre Pharmaceuticals may appoint a member to the advisory committee of the partnership.

As of December 31, 2025 and 2024, our total investment into the partnership was $1.7 million and $1.7 million, respectively, and the carrying value of the Company’s long-term investment in this affiliate was $1.6 million and $1.6 million, respectively.

Financial Operations Overview

During the year ended December 31, 2025, we had net income of $9.9 million and net income attributable to common stockholders of $5.0 million. For the year ended December 31, 2024, our net income was $17.9 million and net income attributable to common stockholders was $12.1 million. As of December 31, 2025, we had an accumulated deficit of $68.4 million and cash and cash equivalents of $37.1 million. As of December 31, 2024, we had an accumulated deficit of $73.5 million and cash and cash equivalents of $11.8 million.

Components of Results of Operations

Revenues

Sales of Pharmaceutical Products

We generate revenue primarily through sales of ETUARY®, Etorel®, Contiva® and certain generic drugs in the PRC. Distributors are our direct customers, and sales to distributors accounted for 100.0% of the revenue from each of ETUARY®, Etorel® and Contiva®. Such distributors sell our products to certain outlets, including hospitals and other medical institutions, as well as pharmacies.

Operating Expenses

Cost of Revenue

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.

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Selling and Marketing Expenses

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.

Research and Development Expenses

Research and development costs are expensed as incurred. Nonrefundable advance payments for goods or services used in research and development are initially deferred and capitalized in prepaid and other current assets. The capitalized amounts are then expensed as the related goods are delivered or services are performed, or until it is no longer expected that the goods or services will be delivered.

Research and development costs consist primarily of costs related to the preclinical 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 preclinical research andclinical trials, materials, and consulting costs, as well as allocations of facilities, depreciation and other overhead costs.

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.

General and Administrative Expenses

General and administrative expenses consist of (i) accounting, IT, legal, administrative, and other internal service staff costs; (ii) stock-based compensation representing share options granted to our functional employees; (iii) professional service fees, primarily for legal and accounting services; and (iv) other miscellaneous expenses.

Loss on Disposal of Property and Equipment

The net loss on the sale and disposal of property and equipment is reflected in our consolidated statements of operations and comprehensive income.

Other Income (Expense), Net

Interest Income, Net

Interest income consists primarily of interest earned on our long-term certificates of deposit. Interest income is recognized on an accrual basis using the effective interest method by applying the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, when appropriate, to the net carrying amount of the financial asset.

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Other (Expense) Income, Net

Other income consists mostly of government grants. Government grants are recognized at their fair value where there is reasonable assurance that the grant will be received, and all attaching conditions will be complied with. When the grant relates to an expense item, it is recognized as income on a systematic basis over the periods that the costs, for which it is intended to compensate, are expensed. Where the grant relates to an asset, the fair value is credited to a deferred income account and is released to profit or loss over the expected useful life of the relevant asset by equal annual installments or deducted from the carrying amount of the asset and released to profit or loss by way of a reduced depreciation charge.

Other expenses consist of any non-operating costs, such as loss from equity method investments.

Change in Fair Value of Warrant Liability

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 “Convertible Preferred Stock”) and (ii) warrants to purchase up to 811 shares of Convertible 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 Warrantsare 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.

Provision for Income Taxes

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.

On July 4, 2025, 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 year ended December 31, 2025. We will continue to evaluate the impact of the OBBBA on our 2026 and subsequent financial statements.

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Results of Operations

The following table summarizes our results of operations for the years ended December 31, 2025 and 2024 (in thousands, except percentage change):

Year Ended December 31,

Operating expenses:

Loss on disposal of property and equipment 4 66 (62 ) (93.9 )%

Other income (expense), net:

Net income attributable to noncontrolling interest 4,853 5,813 (960 ) (16.5 )%

Comparison of the Years Ended December 31, 2025 and 2024

Revenues

Revenues for the years ended December 31, 2025 and 2024 were $116.6 million and $105.8 million, respectively. The $10.8 million, or 10.2%, increase in revenue was driven by $5.5 million in Contiva® sales and $4.6 million in Etorel® sales, along with a $1.1 million increase in ETUARY® sales, partially offset by a $0.4 million decline in generic drug revenue.

Sales of Contiva® and Etorel®, which commenced commercialization in March 2025 and June 2025, respectively, were primarily driven by the targeted allocation of commercial and marketing resources to support their respective launches during the first half of 2025. The increase in ETUARY® sales reflects a strategic realignment of marketing efforts in the third quarter of 2025 to optimize product mix and address evolving market dynamics.

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Cost of Revenues

Cost of revenues for the years ended December 31, 2025 and 2024 was $5.4 million and $3.9 million, respectively. The $1.5 million, or 39.4%, increase was primarily driven by a $0.8 million increase in ETUARY®'s cost due to higher plant, property and equipment depreciation from a plant renovation completed in the second half of 2024, a $0.6 million increase in the cost of Contiva® and Etorel®, in line with the corresponding increase in their sales, and a $0.5 million increase in stock-based compensation expense. These factors were partially offset by a $0.4 million decrease in costs related to generic drugs due to the decrease in sales.

Selling and Marketing Expenses

Selling and marketing expenses increased by $7.7 million, or 13.3%, for the year ended December 31, 2025 compared with the prior-year period ended December 31, 2024. This increase was primarily driven by a $2.5 million increase in conference expenses and promotional expenses, attributable to the launch of additional promotional campaigns in the current year—particularly forour new products, a $2.6 million increase in staff costs, which was driven by expanded headcount and higher sales commissions, consistent with the corresponding growth in revenue, a $2.3 million increase in stock-based compensation expense, and a $0.3 million increase in traveling and other expense.

Research and Development Expenses

The table below details our costs for research and development for the years ended December 31, 2025 and 2024 (in thousands, except percentage change):

Year Ended December 31,

Direct program expenses:

Indirect expenses:

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Research and development expenses for the year ended December 31, 2025 increased by $1.7 million, or 13.9%, compared with the year ended December 31, 2024. This increase was primarily attributable to a $1.0 million increase in clinical trial costs, primarily as a result of data analysis costs for Hydronidone, PD and RILI, a $0.4 million increase in staff costs, which included $0.2 million in stock-based compensation expense, a $0.5 million increase in facilities, depreciation and other expenses, attributable mainly to professional and consulting fees incurred in connection with research and development operations, and a $0.4 million increase in preclinical research expenses. These expense increases were partially offset by a $0.6 million decrease in materials and utilities expenses.

For the year ended December 31, 2025, we refined the classification of our research and development expenses to better reflect the nature of our development activities. Gyre's research and development expenses relate to the development of Hydronidone are now classified entirely as preclinical research, because it has not yet been submitted for an NDA or entered formal clinical trial phases as of December 31, 2025. Prior period amounts have been reclassified to conform to the current year presentation. Such reclassification did not impact total research and development expenses previously reported.

General and Administrative Expenses

General and administrative expenses increased by $4.7 million, or 29.1%, for the year ended December 31, 2025 compared with the year ended December 31, 2024. This increase was primarily driven by a $3.3 million increase in stock-based compensation expense, a $1.3 million increase in functional and administrative department's personnel expense, and a $0.9 million increase in miscellaneous expense. These cost increases were partially offset by a $0.8 million decrease in professional service expenses.

Other Income (Expense), Net

Interest income increased by $0.2 million, or 12.9%, for the year ended December 31, 2025 compared to the year ended December 31, 2024, primarily due to additional investments in long-term certificates of deposit.

Other expense decreased by $0.2 million, or 9.3%, for the year ended December 31, 2025 compared to the year ended December 31, 2024. The decrease was primarily attributable to a $0.7 million increase in government grant income, partially offset by a $0.5 million increase in donation-related expenses.

Change in fair value of warrant liability decreased by $4.5 million, or 62.2%, for the years ended December 31, 2025 compared with the year ended December 31, 2024. The decrease was related to the remeasurement of the Preferred Stock Warrants liability.

Provision for Income Taxes

Provision for income taxes was $4.6 million and $5.3 million for the years ended December 31, 2025 and 2024, respectively. The decrease was primarily attributable to a lower profit from Gyre Pharmaceuticals' operations and impact of option exercises for the year ended December 31, 2025 compared to the year ended December 31, 2024.

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Liquidity and Capital Resources

Sources of Liquidity

As of December 31, 2025, we had cash and cash equivalents of $37.1 million, short-term bank deposit of $15.4 million and long-term certificates of deposit of $23.5 million, which are available to fund operations, and an accumulated deficit of $68.4 million. Our net income during the year ended December 31, 2025 was $9.9 million, while cash provided by operating activities was $1.0 million. We currently have in place an ATM Program with Jefferies LLC that permits us, subject to applicable SEC regulations, to issue up to $50.0 million of shares of our common stock in “at the market” transactions at prevailing market prices. 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 12 months following the filing date of this Annual Report and thereafter for the foreseeable future.

Future Funding Requirements

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 Merger. Factors that may affect financing requirements include, but are not limited to:

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the timing, progress, cost and results of our clinical trials, preclinical studies and other discovery and research and development activities;

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the timing and outcome of, and costs involved in, seeking and obtaining marketing approvals for our products, and in maintaining quality systems standards for our products;

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the timing of, and costs involved in, commercial activities, including product marketing, sales and distribution;

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our ability to successfully commercialize and to obtain regulatory approval for, and successfully commercialize our other or future product candidates;

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increases or decreases in revenue from our marketed products, including decreases in revenue resulting from generic entrants or health epidemics or pandemics;

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the number and development requirements of other product candidates that we pursue;

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our ability to manufacture sufficient quantities of our products to meet expected demand;

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the costs of preparing, filing, prosecuting, maintaining and enforcing any patent claims and other intellectual property rights, litigation costs and the results of litigation;

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our ability to enter into collaboration, licensing or distribution arrangements and the terms and timing of these arrangements;

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the potential need to expand our business, resulting in additional payroll and other overhead expenses;

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the potential in-licensing of other products or technologies;

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the emergence of competing technologies or other adverse market or technological developments; and

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the impacts of inflation and resulting cost increases.

Future capital requirements will also depend on the extent to which we acquire or invest in additional complementary businesses, products and technologies.

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The following table summarizes our cash flows for the periods presented (in thousands):

Year Ended December 31,

Cash Flow Data:

Net cash provided by (used in) operating activities $ 1,010 $ (3,641 )

Net cash used in investing activities (474 ) (19,884 )

Net cash provided by financing activities 24,378 2,102

Effect of exchange rate changes on cash and cash equivalents 343 (273 )

Net change in cash and cash equivalents $ 25,257 $ (21,696 )

Cash Flows from Operating Activities

Cash provided by operating activities for the year ended December 31, 2025 was $1.0 million, reflecting our net income of $9.9 million and non-cash items of $6.7 million, which primarily includes $7.2 million in stock-based compensation and $2.5 million in depreciation and amortization, offset by $2.7 million related to the change in fair value of warrant liability. Additionally, cash used in operating activities reflected changes in net operating assets and liabilities of $15.6 million.

The increase in cash provided by operating activities for the year ended December 31, 2025 compared with cash used in operating activities for the year ended December 31, 2024 was primarily attributable to higher customer collections, reduced payments for raw materials and services, and lower tax payments resulting from employee stock option exercises.

Cash used in operating activities for the year ended December 31, 2024 was $3.6 million, reflecting our net income of $17.9 million, offset by non-cash items of $5.9 million primarily related to the $7.2 million cash used in change in fair value of warrant liability, depreciation and amortization of $1.5 million, stock-based compensation of $0.8 million. Additionally, cash used in operating activities reflected changes in net operating assets and liabilities of $15.7 million.

Cash Flows from Investing Activities

Cash used in investing activities for the year ended December 31, 2025 was $0.5 million, which consisted of $14.0 million in purchases of certificates of deposit, $1.2 million in purchases of property and equipment, and $0.7 million in acquisitions of intangible assets, partially offset by $15.4 million of proceeds from the maturity of certificates of deposit.

Cash used in investing activities for the year ended December 31, 2024 was $19.9 million, which consisted of $15.5 million in purchases of certificates of deposit, $2.3 million in purchases of property and equipment, $1.7 million paid for equity method investment and $0.8 million in acquisition of intangible assets, partially offset by $0.4 million of cash acquired in connection with the sale of equipment.

Cash Flows from Financing Activities

Cash provided by financing activities for the year ended December 31, 2025 was $24.4 million, and consisted of $23.0 million in proceeds from the issuance of 2,555,555 shares of common stock in a public offering, $2.4 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. These inflows were partially offset by $1.5 million of cash used in connection with deferred offering costs.

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Cash provided by financing activities for the year ended December 31, 2024 was $2.1 million due to $1.9 million in proceeds from the exercise of stock options and $0.8 million in proceeds from the issuance of common stock under our ATM Program with Jefferies LLC, partially offset by $0.5 million of cash used in connection with deferred financing costs.

Restricted Net Assets

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 $70.1 million and $64.3 million as of December 31, 2025 and December 31, 2024. We do not expect the restrictions described above to have a material impact on our ability to meet our cash obligations.

Contractual Obligations and Other Commitments

We expect to satisfy these contractual obligations and commitments through a combination of cash on hand, cash provided by operating activities, short-term deposits, and long-term certificate of deposits.

Leases

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 spaces, through May 2027. As of December 31, 2025, our fixed lease payment obligations were $1.0 million, with $0.7 million payable within 12 months.

Research and Development Programs

As of December 31, 2025, we have committed to allocating $52.8 million toward future research and development activities for various programs.

Property and Equipment

Our commitments related to the purchase of property and equipment contracted but not yet reflected in the consolidated financial statements were $3.9 million as of December 31, 2025 and are expected to be incurred within one year.

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Etorel® IP Rights

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®, 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 $5.0 million, based on the December 31, 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 December 31, 2025, we had paid three installments totaling RMB 15.0 million, or approximately $2.1 million, based on the December 31, 2025 spot exchange rate.

We are committed to annual payments to the Etorel® IP Rights transferor over eight years following the commencement of commercial sales. See Note 11—Commitments and Contingencies.

SDM Service Agreement

In December 2025, we entered into a clinical trial agreement with a third-party CRO for Hydronidone’s Phase 3c confirmatory clinical trial. This trial is designed to evaluate clinical endpoint events and satisfy the safety exposure requirements to support the potential conditional approval and subsequent conventional marketing authorization of Hydronidone capsules. The agreement, with an aggregate value of Chinese Renminbi (“RMB”) 114.0 million, or approximately $16.2 million, based on the December 31, 2025 spot exchange rate, covers full-cycle clinical trial services and features milestone-based payments. Under this agreement, we are obligated to make payments based on the achievement of specified clinical and operational milestones and the performance of clinical trial–related services, including trial preparation, patient enrollment and follow-up, site management, interim analyses, data management–related activities, and preparation of the clinical study report. All services under the agreement are related to our research and development activities and will be performed over the duration of the clinical trial. As of December 31, 2025, none of the payment conditions had been met, and no payments had been made under the agreement. Refer to Note 11—Commitments and Contingencies for further details.

Critical Accounting Policies and Estimates

The preparation of the consolidated financial statements and related disclosures in conformity with U.S. generally accepted accounting principles (“GAAP”) and our discussion and analysis of our financial condition and operating results require our management to make judgments, assumptions and estimates that affect the amounts reported in our consolidated financial statements and accompanying notes. Our significant accounting policies and methods used in preparation of the consolidated financial statements are described in Note 2 — Summary of Significant Accounting Policies to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates, and such differences may be material.

Management believes our critical accounting policies and estimates discussed below are critical to understanding its historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.

161

Revenue Recognition

We recognize revenue in accordance with ASC Topic 606 (“ASC 606”), Revenue from Contracts with Customers, whereby revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration expected to be received in exchange for those goods or services. A five-step model is used to achieve the core principle: (1) identify the customer contract, (2) identify the contract’s performance obligations, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations and (5) recognize revenue when or as a performance obligation is satisfied. We apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer.

For the sale of pharmaceutical products, revenue is recognized at a point in time when control of the asset is transferred to the customer, generally on completion of delivery of the pharmaceutical products. For the sales of pharmaceutical products, most of our customers are distributors.

Revenue from product sales is recognized as net of estimated rebates. These rebates are estimated based on sales volumes from the preceding months and applying the rebate percentages specified in each contract. The estimation process requires management judgment, particularly in determining the amount of rebates based on historical sales volumes and contractually agreed-upon rebate percentages. Additionally, variable consideration related to sales rebates is recorded as deductions from revenue based on historical experience and contract terms. Depending on the contract structure, we apply either the expected value method or the most likely amount method to estimate future rebates, selecting the approach that best predicts the amount of variable consideration. The estimates for these rebates are reviewed regularly, and adjustments are made as necessary.

Research and Development Expenses and Accruals

Research and development costs are expensed as incurred when the expenditures relate to ongoing research activities without alternative future use. A significant portion of our research and development expenses consists of preclinical and clinical trial costs, which involve contracts with third-party service providers such as contract research organizations. These costs are accrued based on management’s estimates of the services performed during the respective period.

We estimate the amount of work completed through discussion with internal personnel and external service providers in conjunction with reporting information obtained directly from the external service providers as to the progress or stage of completion of the services and the agreed-upon fee to be paid for such services. Accruals are based on progress reports, contractual terms, and management’s judgment regarding the stage of completion of various projects. Since there is often a timing difference between service delivery and invoicing, we make adjustments as more information becomes available. We also assess the likelihood of milestone-based payments under contract terms.

Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in us reporting expenses that are too high or too low in any particular period. To date, we have not made any material adjustments to our prior estimates of research and development expenses.

162

Income Taxes

We record income taxes using the liability method, under which deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are recorded against deferred tax assets, including net operating losses and tax credits, when it is determined it is more-likely-than-not that some or all of the tax benefits will not be realized.

We account for uncertain tax positions in accordance with the provisions of Financial Accounting Standards Board Accounting Standards Codification 740, Income Taxes. When uncertain tax positions exist, we recognize the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances.

Interest and penalties related to unrecognized tax benefits are recorded as a component of income tax expense, if any.

Stock-Based Compensation

We measure the cost of employee, non-employee and director services received in exchange for an award of equity instruments based on the fair value-based measurement of the award on the date of grant and recognize the related expense over the period during which an employee, non-employee or director is required to provide services in exchange for the award on a straight-line basis. The estimated fair value of equity awards that contain performance conditions is expensed over the term of the award once we have determined that it is probable that performance conditions will be satisfied.

Determining the fair value of stock-based awards at the grant date requires judgment. We use the Black-Scholes option-pricing model to determine the fair value of stock options. The determination of the grant date fair value of options using an option-pricing model is affected by our assumptions regarding a number of variables including the fair value of our common stock, its expected common stock price volatility over the expected life of the options, expected term of the stock option, risk-free interest rates and expected dividends. We record stock-based compensation as a compensation expense, net of the forfeited awards. We elected to account for forfeitures when they occur. As such, we recognize stock-based compensation expense over their requisite service period based on the vesting provisions of the individual grants. Such assumptions involve inherent uncertainties and the application of significant judgment. As a result, if factors or expected outcomes change and we use significantly different assumptions or estimates, our stock-based compensation expense could be materially different. We will continue to use judgment in evaluating the assumptions utilized for our stock-based compensation expense calculations on a prospective basis. See Note 10—Stock Based Compensation to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for more information.

163

Warrant Liability

In connection with the Private Placement, we issued the Preferred Stock Warrants (see Note 3—Fair Value Measurements and Financial Instruments to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K) 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. We use the Black-Scholes option-pricing model to determine the fair value of the Preferred Stock Warrants which is affected by our assumptions regarding a number of variables, including the fair value of our Convertible Preferred Stock, the expected share price volatility over the expected life of the options, expected term of the warrant, risk-free interest rates and expected dividends. Such assumptions involve inherent uncertainties and the application of significant judgment. As a result, if factors or expected outcomes change and we use significantly different assumptions or estimates, our estimated fair value of warrant liability could be materially different. We will continue to use judgment in evaluating the assumptions utilized for our warrant liability fair value calculations on a prospective basis.

Smaller Reporting Company and Accelerated Filer Status

We are a “smaller reporting company” as defined in the Exchange Act. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as our common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.

Based on the aggregate market value of our common stock held by non-affiliates of approximately $72.6 million as of June 30, 2025, we remain a smaller reporting company and continue to qualify as an “accelerated filer” as of December 31, 2025. As an accelerated filer, we are required, pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, to include in our Annual Report on Form 10-K for the year ending December 31, 2025 an attestation report as to the effectiveness of our internal control over financial reporting that is issued by our independent registered public accounting firm. We expect to continue to take advantage of the reduced reporting requirements applicable to smaller reporting companies.

Recent Accounting Pronouncements

Refer to Note 2 — Summary of Significant Accounting Policies to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for a discussion of recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one yet, of their potential impact on our financial condition of results of operations.

164

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Quantitative and Qualitative Disclosures About Market Risk

Market risk represents the risk of loss that may impact on our financial position because of adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of exposure resulting from potential changes in exchange rates, interest rates, or inflation.

Foreign Currency Exchange Risk

Our expenses are generally denominated in the currencies of the jurisdictions in which we conduct our operations, which are primarily in the United States and the PRC. Our results of current and future operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates. A hypothetical 10% increase or decrease in the relative value of the U.S. dollar to other currencies would not have a material effect on our operating results. As the impact of foreign currency exchange rates has not been material to our historical operating results, we have not entered into derivative or hedging transactions, but we may do so in the future if our exposure to foreign currency becomes more significant.

Inflation Risk

We do not believe that inflation has had a material effect on our business, financial condition, or results of operations, other than its impact on the general economy. Nonetheless, if our costs were to become subject to inflationary pressures, we might not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition, and results of operations.

165

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Index to Consolidated Financial Statements and Schedules on page F-1 of this Form 10-K.

166

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES.

None.

Item 9A. CONTROLS AND PROCEDURES.

Evaluation of disclosure controls and procedures

As of December 31, 2025, our management, with the participation and supervision of our principal executive officer and our principal financial officer, evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of December 31, 2025 to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) under the Exchange Act). Internal control over financial reporting is a process designed under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States.

As of December 31, 2025, our management assessed the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Based on this assessment, our management concluded that our internal control over financial reporting was effective as of December 31, 2025.

The effectiveness of our internal control over financial reporting as of December 31, 2025, has been audited by Grant Thornton Zhitong Certified Public Accountants LLP, an independent registered public accounting firm, as stated in their report that is included herein.

167

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

Gyre Therapeutics, Inc.

Opinion on internal control over financial reporting

We have audited the internal control over financial reporting of Gyre Therapeutics, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2025, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2025, and our report dated March 13, 2026 expressed an unqualified opinion on those financial statements

Basis for opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and limitations of internal control over financial reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

168

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Grant Thornton Zhitong Certified Public Accountants LLP

Beijing, China

March 13, 2026

Item 9B. OTHER INFORMATION.

Trading Arrangements

None of our directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the three months ended December 31, 2025, as such terms are defined under Item 408(a) of Regulation S-K.

Item 9C. DISCLOSURES REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

Not applicable.

169

PART III

Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The information required by this Item 10 is incorporated herein by reference to the information in our proxy statement for our 2026 Annual Meeting of Stockholders (the “2026 Proxy Statement”), which we expect to be filed with the SEC within 120 days of the end of our fiscal year ended December 31, 2025, including under the heading “Corporate Governance,” "Insider Trading Policy," and, as applicable, “Delinquent Section 16(a) Reports” per Item 405 of Regulation S-K.

We have adopted a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of the code is available on our website located at www.gyretx.com, under “Corporate Governance.” We intend to disclose on our website any amendments to, or waivers from, the code of business conduct and ethics that are required to be disclosed within four business days following the date of the amendment or waiver.

Item 11. EXECUTIVE COMPENSATION.

The information required by this Item 11 is incorporated herein by reference to the information in our 2026 Proxy Statement, including under headings “Executive Compensation” and “Corporate Governance.”

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The information required by this Item 12 is incorporated herein by reference to information in our 2026 Proxy Statement, including under headings “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” and “Securities Authorized for Issuance Under Equity Compensation Plans.”

Item 13. CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.

The information required by this Item 13 is incorporated herein by reference to information in our 2026 Proxy Statement, including under headings “Corporate Governance” and “Certain Relationships and Related Party Transactions.”

Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The information required by this Item 14 is incorporated herein by reference to information in our 2026 Proxy Statement, including under the heading “Ratification of Independent Auditor Appointment.”

170

PART IV

Item 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES.

(a)

The following documents are filed as part of this Annual Report on Form 10-K:

1.

Consolidated Financial Statements

See Index to Consolidated Financial Statements at Part II, Item 8 Financial Statements and Supplementary Data, herein.

2.

Consolidated Financial Statement Schedules

All schedules are omitted because they are not applicable or the required information is shown under Item 8. “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.

3.

See LIST OF EXHIBITS

(b)

See LIST OF EXHIBITS

171

Item 16.

FORM 10-K SUMMARY.

None.

172

LIST OF EXHIBITS

Incorporated by reference

ExhibitNo. Exhibit title Form File No. ExhibitNo. Filing Date

173

Incorporated by reference

ExhibitNo. Exhibit title Form File No. ExhibitNo. Filing Date

174

Incorporated by reference

ExhibitNo. Exhibit title Form File No. ExhibitNo. Filing Date

21.1* List of subsidiaries of the Company.

24.1* Power of Attorney (included as part of the signature page hereto).

175

Incorporated by reference

ExhibitNo. Exhibit title Form File No. ExhibitNo. Filing Date

101.INS* Inline XBRL Instance Document

101.SCH* Inline XBRL Taxonomy Extension Schema Document

101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

** Furnished.

† The annexes, schedules, and certain exhibits to this Exhibit have been omitted pursuant to Item 601(a)(5).

# Pursuant to Item 601(b)(10) of Regulation S-K, certain confidential portions of this exhibit were omitted by means of marking such portions with an asterisk because the identified confidential portions (i) the Company customarily and actually treats that information as private or confidential and (ii) the information was not material.

+ Denotes management contract, compensatory plan or arrangement.

176

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

GYRE THERAPEUTICS, INC.

Date: March 13, 2026 By: /s/ Ping Zhang

Ping Zhang

Executive Chairman and Interim Chief Executive Officer

(Principal Executive Officer)

Date: March 13, 2026 By: /s/ Ruoyu Chen

Ruoyu Chen

Chief Financial Officer

(Principal Financial and Accounting Officer)

POWER OF ATTORNEY

Each person whose individual signature appears below hereby authorizes and appoints Ping Zhang and Ruoyu Chen, and each of them, with full power of substitution and resubstitution and full power to act without the other, as his or her true and lawful attorney-in-fact and agent to act in his or her name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file any and all amendments to this annual report on Form 10-K and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature Title Date

Ping Zhang

Ruoyu Chen

/s/ Songjiang Ma President and Director March 13, 2026

Songjiang Ma

/s/ Thomas Eastling Director March 13, 2026

Thomas Eastling

/s/ Gordon Carmichael, Ph.D. Director March 13, 2026

Gordon Carmichael, Ph.D.

177

/s/ Dan Weng, M.D. Director March 13, 2026

Dan Weng, M.D.

/s/ Rodney L. Nussbaum Director March 13, 2026

Rodney L. Nussbaum

/s/ Renate Parry, Ph.D. Director March 13, 2026

Renate Parry, Ph.D.

/s/ David M. Epstein, Ph.D. Director March 13, 2026

David M. Epstein, Ph.D.

178

Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID #1487) F-2

Consolidated Financial Statements

Consolidated Balance Sheets F-4

Consolidated Statements of Operations and Comprehensive Income F-5

Consolidated Statements of Convertible Preferred Stock and Equity F-6

Consolidated Statements of Cash Flows F-7

Notes to the Consolidated Financial Statements F-8

Schedule I - Condensed Financial Information of Parent Company F-49

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

Gyre Therapeutics, Inc.

Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of Gyre Therapeutics, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive income, consolidated statements of convertible preferred stock and equity, and cash flows for each of the two years in the period ended December 31, 2025, and the related notes and the financial statements schedule included in Schedule I (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2025 based on criteria established in the 2013 Internal Control—Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 13, 2026 expressed an unqualified opinion.

Basis for opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical audit matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

F-2

Preferred stock warrants

As described in Note 3 and 9 to the consolidated financial statements, in October 2023, the Company completed a private placement whereby the Company issued shares of convertible preferred stock and warrants to purchase shares of convertible preferred stock. The warrants were classified as a liability instrument and are subject to fair value remeasurement at the end of each reporting period.

The fair value of warrant liabilities was estimated by management using the Black-Scholes option pricing model. As the Company's warrant liabilities are not traded in an active market with readily observable prices, the use of this model includes significant unobservable inputs to measure the fair value of the warrant liabilities. We identified the warrant liabilities to be a critical audit matter.

The principal considerations for our determination that warrant liabilities is a critical audit matter is the significant judgment by management when assessing the volatility and expected term assumptions, which in turn led to a high degree of auditor judgment and effort in performing procedures and evaluating audit evidence relating to those assumptions. The audit effort also involved the use of professionals with specialized skills and knowledge.

Our audit procedures related to the preferred stock warrants included the following, among others:

•

Reading and evaluating the convertible preferred shares and warrants agreement

•

Evaluating, with the assistance of specialists, management’s assessment of the fair value of the warrant liabilities, specifically the reasonableness of the expected volatility used by management in determining the fair value

•

Evaluating the competence, capability and objectivity of the independent valuation firm engaged by the Company

/s/ Grant Thornton Zhitong Certified Public Accountants LLP

We have served as the Company’s auditor since 2023.

Beijing, China

March 13, 2026

F-3

Gyre Therapeutics, Inc.

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

Assets

Current assets:

Other receivables from GNI 230 230

Receivable from GCBP — 4,961

Liabilities and stockholders' equity

Current liabilities:

Contract liabilities 14 61

Accrued expenses and other current liabilities 14,345 10,615

Operating lease liabilities, current 636 713

CVR derivative liability — 4,961

Operating lease liabilities, noncurrent 303 885

Deferred government grants 852 928

Warrant liability, noncurrent 2,961 5,668

Other noncurrent liabilities 1,448 7

Commitments and Contingencies (Note 11)

Stockholders’ equity:

Accumulated other comprehensive loss (779 ) (2,597 )

Total liabilities and stockholders' equity $ 166,132 $ 125,406

The accompanying notes are an integral part of these consolidated financial statements.

F-4

Gyre Therapeutics, Inc.

Consolidated Statements of Operations and Comprehensive Income

(In thousands, except share and per share amounts)

Year Ended December 31,

Operating expenses:

Loss on disposal of assets, net 4 66

Other income (expenses):

Change in fair value of warrant liability 2,707 7,167

Provision for income taxes (4,556 ) (5,320 )

Net income attributable to noncontrolling interest 4,853 5,813

Net income attributable to common stockholders $ 5,027 $ 12,085

Net income per share attributable to common stockholders:

Other comprehensive income:

Foreign currency translation adjustments 2,636 (1,460 )

Net income attributable to noncontrolling interest 4,853 5,813

Comprehensive income attributable to noncontrolling interest 5,671 5,306

Comprehensive income attributable to common stockholders $ 6,845 $ 11,132

The accompanying notes are an integral part of these consolidated financial statements.

F-5

Gyre Therapeutics, Inc.

Consolidated Statements of Convertible Preferred Stock and Equity

(In thousands, except share amounts)

Stock-based compensation expense — — — — 831 — — — 831 — 831

Issuance of Common Stock upon ATM program — — 70,267 — 773 — — — 773 — 773

CVR Liability settlement — — — — 30 — — — 30 — 30

Deferred Offering Costs Amortization — — — — (9 ) — — — (9 ) — (9 )

Stock-based compensation expense — — — — 7,157 — — — 7,157 — 7,157

CVR Liability settlement — — — — 25 — — — 25 — 25

Stock insurance cost — — — — (1,676 ) — — — (1,676 ) — (1,676 )

Deferred Offering Costs amortization — — — — (7 ) — — — (7 ) — (7 )

Capital injection in a subsidiary — — — — 4,503 — — — 4,503 (4,503 ) —

The accompanying notes are an integral part of these consolidated financial statements.

F-6

Gyre Therapeutics, Inc.

Consolidated Statements of Cash Flows

(In thousands)

Year Ended December 31,

Operating Activities

Depreciation and amortization 2,481 1,549

Amortization of land use rights 39 39

Deferred income taxes, net (1,109 ) (1,002 )

Bad debt expense and other non-cash items (63 ) 170

Accrued interest on bank deposit 28 (1,046 )

Change in fair value of receivables from GCBP (39 ) (239 )

Change in fair value of derivative liabilities 39 239

Change in fair value of warrant liability (2,707 ) (7,167 )

Equity loss of unconsolidated affiliates 77 37

Loss on disposal of property and equipment 4 66

Changes in operating assets and liabilities:

Prepaid and other assets (206 ) 520

Accounts payable 13 (245 )

Other noncurrent liabilities (47 ) 23

Due to related parties (1 ) (83 )

Accrued expenses and other liabilities 946 (1,497 )

Operating lease liabilities (744 ) (816 )

Net proceeds from CVR liability settlement 25 —

Net cash provided by (used in) operating activities 1,010 (3,641 )

Investing Activities

Acquisition of intangible assets (733 ) (813 )

Purchase of certificates of deposit (14,010 ) (15,471 )

Purchase of property and equipment (1,190 ) (2,315 )

Proceeds from sale of equipment 30 401

Purchase of equity method investment — (1,686 )

Maturity of certificates of deposit 15,429 —

Net cash used in investing activities (474 ) (19,884 )

Financing Activities

Proceeds from the issuance of common stock in ATM program 509 773

Proceeds from the exercise of stock options 2,356 1,865

Proceeds from the issuance of common stock in a public offering 23,000 —

Net cash provided by financing activities 24,378 2,102

Effect of exchange rate changes on cash and cash equivalents 343 (273 )

Net increase (decrease) in cash and cash equivalents 25,257 (21,696 )

Cash and cash equivalents at beginning of the period 11,813 33,509

Cash and cash equivalents at end of period $ 37,070 $ 11,813

Supplemental Disclosure of Non-Cash Financing and Investing Activities:

Convertible preferred stock conversion $ — $ 64,525

Supplemental Disclosure of Cash Flow Information:

Cash paid for income taxes $ 5,621 $ 8,518

The accompanying notes are an integral part of these consolidated financial statements.

F-7

Gyre Therapeutics, Inc.

Notes to the Consolidated Financial Statements

1. Organization and Nature of Operations

Description of Business

Gyre Therapeutics, Inc. (the “Company,” “Gyre,” or the “combined company”), formerly known as Catalyst Biosciences, Inc. (“Catalyst”), is a biopharmaceutical company originally incorporated in Delaware on March 7, 1997 under the name Targacept, Inc.

As of December 31, 2025, the Company holds a 69.7% indirect interest in Beijing Continent Pharmaceuticals Co., Ltd. (d/b/a Gyre Pharmaceuticals Co., Ltd., “Gyre Pharmaceuticals”), a commercial-stage biopharmaceutical company registered and established in the People’s Republic of China (“PRC”) in 2002. The majority shareholder of Gyre is GNI USA, Inc. (“GNI USA”), which is indirectly wholly owned by GNI Group Ltd. (“GNI Japan”). Gyre is a financially sustainable commercial-stage biotechnology company with a proven track record of success in developing and commercializing small-molecule anti-inflammatory and anti-fibrotic drugs targeting organ diseases, focusing specifically on organ fibrosis. Fibrotic diseases represent a large patient population with significant unmet medical needs.

On November 7, 2025, the National Healthcare Security Administration (“NHSA”) released the Announcement of the Winning Bids for the National Centralized Drug Procurement, under which Etorel® (nintedanib, ethanesulfonate soft capsules) has been selected. As of the filing date, the Company is in the process of entering into procurement contracts with various participating hospitals under the National Centralized Drug Procurement program. The Company is currently assessing the potential impact of this development on its future operating performance.

Contingent Value Rights Agreement

Concurrent with the signing of the previously disclosed business combination agreement pursuant to which the Company acquired an indirect controlling interest in Gyre Pharmaceuticals, on December 26, 2022, Catalyst and the Rights Agent (as defined in the CVR Agreement) executed a contingent value rights agreement (the “CVR Agreement”), as amended on March 29, 2023, pursuant to which each holder of Catalyst common stock as of January 5, 2023 (a “CVR Holder”), excluding GNI Japan and GNI Hong Kong Limited (“GNI Hong Kong”), received one contractual contingent value right (a “CVR”) for each share of Catalyst common stock held by such holder. Each CVR entitles the holder thereof to receive certain cash payments in the future. In the first quarter of 2025, the Company had fully settled the CVR liability and collected all outstanding amounts related to CVR receivables.

Liquidity

For the year ended December 31, 2025, the Company had a net income of $9.9 million, while net cash provided by operating activities was $1.0 million. As of December 31, 2025, the Company had an accumulated deficit of $68.4 million and cash and cash equivalents of $37.1 million. Based on the Company’s current operating plan, management believes that existing cash and cash equivalents, cash flows from operations, and access to capital markets will be sufficient to fund the Company’s operating activities and obligations for at least 12 months following the issuance of these consolidated financial statements.

F-8

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements include the accounts of the Company and its controlled subsidiaries and have been prepared in accordance with U.S. GAAP. Intercompany accounts and transactions, if applicable, have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, allowance of doubtful accounts, long-term receivable, warrant liability, allowance for credit losses, reserves for excess or obsolete inventory, operating lease right-of-use assets and liabilities, recognition of research and development expenses to the appropriate financial reporting period based on the progress of the research and development projects, income taxes, stock-based compensation and useful lives of property and equipment and intangibles with definite lives. The Company bases its estimates on various assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ from those estimates.

Noncontrolling Interest

The Company reports noncontrolling interest (“NCI”) in a subsidiary as a separate component of equity in the consolidated balance sheets. Additionally, the Company reports the portion of net income and comprehensive income attributed to the Company and NCI separately in the consolidated statements of operations and comprehensive income.

Segments

Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The measure of segment profit or loss is reported on the income statement as consolidated net income. The CODM uses net income to evaluate income generated from segment assets in deciding whether to reinvest profits and monitor budget versus actual results in assessing the performance of the segment.

The Company’s CODM, as a group, includes (i) the Executive Chairman of Gyre’s Board of Directors (“Gyre’s Board”) who also serves as Gyre’s Interim Chief Executive Officer and (ii) Gyre’s Chief Operating Officer who also serves as Gyre Pharmaceuticals’ General Manager. The Company has determined that it operates in two distinct operating segments and has two reportable segments.

F-9

Risks and Uncertainties

The Company is subject to a number of risks associated with companies at a similar stage, including dependence on key individuals, competition from larger and established companies, uncertainty of clinical results, ability to obtain adequate financing to support growth, the ability to attract and retain additional qualified personnel to manage the anticipated growth of the Company, and general economic conditions.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, accounts receivable, note receivable, long-term certificates of deposits, and short-term bank deposits.

The Company is exposed to United States credit risk in the event of default by the United States institutions holding cash to the extent beyond the amount insured by the United States federal depository insurance corporation. In the United States, the Federal Deposit Insurance Corporation (“FDIC”) insures deposits at federally insured financial institutions up to a limit of $250,000 per depositor, per insured bank, for each account ownership category. The Securities Investor Protection Corporation (“SIPC”) protects customer assets held by registered broker‐dealers, with a standard limit of $500,000 per customer. The Company maintains cash and deposits in excess of the amount protected by FDIC and SIPC insurance. in the event of failure or insolvency of one of these financial institutions, the Company may be unable to recover its deposits in full. Management believes that these financial institutions are of high credit quality and continually monitors the creditworthiness of these financial institutions. As of December 31, 2025 and 2024, the Company had cash and cash equivalents held in U.S. financial institutions of $25.9 million and $4.3 million, respectively. Of the 2025 balance, $5.6 million represented general bank deposits and $20.3 million represented investment related cash. The entire 2024 balance of $4.3 million represented general bank deposits. At December 31, 2025, the Company’s U.S. cash balances exceeded FDIC insurance coverage by $5.3 million and exceeded SIPC coverage by $19.8 million. At December 31, 2024, the Company’s U.S. cash balances exceeded FDIC insurance coverage by $4.1 million, with no SIPC coverage excess as there was no investment related cash.

In May 2015, a new Deposit Insurance System (“DIS”) managed by the People’s Bank of China was implemented by the Chinese government. Deposits in the licensed banks in mainland China are protected by DIS, up to a limit of Chinese Renminbi (“RMB”) 500,000, or approximately $71,136, based on the December 31, 2025 spot exchange rate. The Company maintains cash and deposits in excess of the amount protected by DIS and in the event of bankruptcy of one of these financial institutions, the Company may be unable to claim its deposits back in full. Management believes that these financial institutions are of high credit quality and continually monitors the creditworthiness of these financial institutions. As of December 31, 2025 and 2024, the Company had cash and cash equivalents of $37.1 million and $11.8 million, and long-term certificates of deposit of $23.5 million and $24.6 million, respectively. In addition, the Company had short-term bank deposits of $15.4 million and $14.9 million as of December 31, 2025 and 2024, respectively. For the years ended December 31, 2025 and 2024, cash and cash equivalents, short-term bank deposits and long-term certificates of deposits exceeded the PRC DIS coverage by $49.4 million and $46.3 million, respectively.

Accounts receivable are typically unsecured and are derived from product sales. The Company manages credit risk related to the accounts receivable through ongoing monitoring of outstanding balances and limiting the amount of credit extended based upon payment history and creditworthiness. Historically, the Company has collected receivables from customers within the credit terms with no significant credit losses incurred. Note receivable is also subject to credit risk. The Company monitors the creditworthiness and repayment performance of the borrower on an ongoing basis and has not experienced significant credit losses related to such receivable.

F-10

Concentration of Customer Risk

For the years ended December 31, 2025 and 2024, one customer, Sinopharm Group Co., Ltd., accounted for approximately 53.3% and 54.3% of accounts receivable, respectively. For the year ended December 31, 2025, three customers, Sinopharm Group Co., Ltd., China Resources Pharmaceutical Group Ltd, and Shanghai Pharmaceuticals Holding Co., Ltd accounted for approximately 51.7%, 13.3%, and 11.6% of total revenue, respectively. For the year ended December 31, 2024, three customers, Sinopharm Group Co., Ltd., China Resources Pharmaceutical Group Ltd, and Shanghai Pharmaceuticals Holding Co., Ltd accounted for approximately 48.5%, 13.6%, and 10.6% of total revenue, respectively. All customers are located in the PRC.

Regulatory and Pricing Risk

The Company’s operating results are subject to risks and uncertainties arising from changes in government healthcare policies and pricing regulations in the PRC. On November 7, 2025, the NHSA released the Announcement of the Winning Bids for the National Centralized Drug Procurement, under which Etorel® was selected. As of December 31, 2025 the Company has not entered into or executed a procurement contract under this program.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, demand deposits and money market mutual funds. The Company considers all highly liquid investments with original maturities of three months or less from the date of purchase to be cash equivalents.

Fair Value Measurements

The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis.

Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The fair value hierarchy requires an entity to maximize the use of observable inputs when estimating fair value. The fair value hierarchy includes the following three-level classification which is based on the market observability of the inputs used for estimating the fair value of the assets or liabilities being measured:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

For assets and liabilities that are recognized in the financial statements at fair value on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by reassessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

F-11

Derivative Financial Instruments

The Company evaluates its contracts to determine if those contracts qualify as derivatives under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date. Any changes in fair value are recorded as non-operating, non-cash other income or expense for each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument is probable within the next 12 months from the balance sheet date.

The Company determined that certain contingent payments under the CVR Agreement qualified as derivatives under ASC 815, and as such, were recorded as a liability. The derivative liability was fully settled in the first quarter of 2025. Refer to Note 3 — Fair Value Measurements and Financial Instruments for additional information regarding the CVR derivative liability.

Preferred Stock Warrants

Warrants to purchase shares of the Convertible Preferred Stock (“Preferred Stock Warrants”) are freestanding financial instruments classified as warrant liability on the Company’s consolidated balance sheets since the underlying securities are contingently redeemable upon the occurrence of events which are outside of the Company’s control. The Preferred Stock Warrants are recorded at fair value upon issuance and are subject to remeasurement at the end of each reporting period. Any change in the fair value of the Preferred Stock Warrants is recorded as changes in fair value of warrant liability in other income (expense), net on the consolidated statement of operations and comprehensive income (loss). The Company adjusts the liability for changes in fair value of the Preferred Stock Warrants until the warrants are exercised or expired.

Convertible Preferred Stock

The Company records shares of non-voting Convertible Preferred Stock (the “Convertible Preferred Stock”) at its relative fair value on the date of issuance. The Company applied the guidance in ASC 480-10-S99-3A, SEC Staff Announcement: Classification and Measurement of Redeemable Securities, to account for the Convertible Preferred Stock. The Convertible Preferred Stock could become redeemable upon the occurrence of an event that is not solely within the control of the issuer and therefore, is classified within mezzanine equity in the accompanying consolidated balance sheets.

Long-term Certificates of Deposit

The long-term certificates of deposit will mature betweenJanuary 2027 and November 2028. Certificates of deposit are accounted for at amortized cost with no adjustments for changes in fair value. Premiums and discounts, if any, are amortized or accreted over the lives of the related fixed maturities as an adjustment to the yield using the effective interest method. The Company recorded no allowance for credit losses associated with the certificates of deposit as of December 31, 2025 and 2024.

Short-term Bank Deposits

The short-term bank deposits will mature between January 2026 and July 2026. Short-term bank deposits consist of bank deposits with original maturities of one year or less, and long-term deposits that have a remaining maturity of less than one year. These deposits are recorded at amortized cost. Interest income from these deposits is recognized and reported within interest income. The Company recorded no allowance for credit losses associated with the short-term certificates of deposit as of December 31, 2025 and 2024.

F-12

Long-Term Receivable

Catalyst sold its legacy rare bleeding disorder program to GC Biopharma Corp. (“GCBP”) in February 2023. The Company determined that the hold-back from the GCBP asset sale qualified as a long-term receivable. The receivable is considered a loan held for investment since the Company has the intent and ability to hold to maturity. The Company has elected to account for the receivable under the fair value option method of accounting and any changes in fair value are recorded in interest and other income, net on the consolidated statement of operations and comprehensive income (loss). The receivable was fully settled in the first quarter of 2025. Refer to Note 3 — Fair Value Measurements and Financial Instruments for additional information regarding the long-term receivable.

Long-term Investments

The Company’s long-term investments include equity investments in an affiliate in which it does not have a controlling financial interest, but has the ability to exercise more than minor influence over the operating and financial policies of the investee. The investment is accounted for using the equity method of accounting in accordance with ASC Topic 323, Investments—Equity Method and Joint Ventures (“ASC 323”). Under the equity method, the Company initially records its investments at fair value. The Company subsequently adjusts the carrying amount of the investment to recognize the Company’s proportionate share of the equity investee’s net income or loss after the date of investment. The Company evaluates the equity method investment for impairment under ASC 323. An impairment loss on the equity method investments is recognized in losses when the decline in value is determined to be other-than-temporary. No impairment charge was recognized for the years ended December 31, 2025 and 2024.

Accounts and Note Receivables, Net

The Company recognizes a receivable when it has an unconditional right to payment, which represents the amount the Company expects to collect in a transaction. The Company’s trading terms with its customers are mainly on credit, and the credit period is usually within three months. Accounts and note receivables are recorded at net realizable value. The allowance for credit losses is determined by management’s best estimate of expected credit losses of the receivables based on historical data, current information, and future economic forecasts. Receivables are grouped into asset pools based on delinquency status and customer type, with fixed reserve percentages set for each pool. The reserve percentages are determined by considering factors such as historical experience with customers, regulatory and legal environments, and other relevant current and future macroeconomic factors.

Accounts and note receivables, net, consisted of the following at the dates indicated (in thousands):

December 31,

Allowance for credit losses (151 ) (209 )

Accounts and note receivables, net $ 36,716 $ 23,962

F-13

Changes in the allowance for credit losses as of December 31, 2025 and 2024 consisted of the following (in thousands):

Balance, beginning of year $ (209 ) $ (41 )

Provision for allowance for credit losses (189 ) (177 )

Recoveries collected and write-off 251 7

Foreign currency translation adjustments (4 ) 2

Balance, end of year $ (151 ) $ (209 )

Inventories

Inventories, consisting of raw materials, work in progress, and finished goods, are valued at the lower of cost or net realizable value, with cost being determined on the first-in, first-out method. The Company will record a write-down to its net realizable value in cost of sales in the periods that the decline in value is first identified. The average cost of work in progress and finished goods consists primarily of material, labor and manufacturing overhead expenses (including fixed production-overhead costs) and includes the services and products of third-party suppliers. Net realizable value is based on estimated selling prices less any estimated costs to be incurred to completion and disposal. The Company also regularly monitors inventory quantities on hand and in transit, and reserves for excess and obsolete inventories using estimates based on historical experience, historical and projected sales trends, specific categories of inventory, and expiration and age of on-hand inventory. Inventories presented in the consolidated balance sheets are net of reserves for excess and obsolete inventory. If actual conditions or product demands are less favorable than assumptions, additional inventory reserves may be required.

Property and Equipment, Net

Property and equipment ("PPE"), except for construction-in-progress, are stated at cost less accumulated depreciation and any impairment losses. The cost of an item of property and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use.

Expenditure incurred after items of property and equipment that have been put into operation, such as repairs and maintenance, is normally charged to profit or loss in the period in which it is incurred. In situations where the recognition criteria are satisfied, the expenditure for a major inspection is capitalized in the carrying amount of the asset as a replacement. Where significant parts of property and equipment are required to be replaced at intervals, the Company recognizes such parts as individual assets with specific useful lives and depreciates them accordingly.

Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets, as follows:

Buildings 20 to 30 years

Machinery and electronic devices 3 to 10 years

Furniture and fixtures 3 to 5 years

Motor vehicles 3 to 5 years

An item of property and equipment including any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. The difference between the net sales proceeds and the carrying amount of the asset is recorded as gain or loss in profit or loss in the reporting period the relevant asset is derecognized.

F-14

Construction in progress represents a building under construction or machinery not yet put into operation, which is stated at cost less any impairment losses, if applicable, and is not depreciated. Cost comprises the direct costs of construction and machinery, and capitalized borrowing costs on related funds borrowed during the period of construction. Construction in progress is reclassified to the appropriate category of property and equipment when completed and ready for use.

Intangible Assets, Net

Intangible assets acquired separately are measured upon initial recognition at cost. The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives, consisting primarily of patents, technological know-how, computer software and technology rights, are subsequently amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired.

Patents and Technological Know-How

Patents and technological know-how that have finite useful lives are stated at cost less any impairment losses and are amortized on a basis that best reflects how their economic benefits are utilized or on the straight-line basis, if not materially different from actual utilization, over their estimated useful life of 10 to 20 years.

Computer Software

Purchased computer software is stated at cost less any impairment losses and is amortized on the straight-line basis over its estimated useful life of two to three years.

Technology rights

Technology rights refer to the intellectual property (“IP”) associated with Etorel® (nintedanib, ethanesulfonate soft capsules), which were obtained upon the successful transfer of the marketing authorization holder following approval by the PRC’s National Medical Products Administration (the “NMPA”) in March 2025, and the commercial sales of Etorel® commenced in June 2025. Technology rights with finite lives are amortized on a straight-line basis over their estimated useful lives, beginning on the date the Company obtains control of the technology rights and the related product is available for its intended use.

Leases

The Company assesses at contract inception whether a contract is, or contains, a lease based on the unique facts and circumstances present. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Operating lease right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset during the lease term, and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating leases are included in ROU assets, current operating lease liabilities, and long-term operating lease liabilities on the accompanying consolidated balance sheets. Operating lease liabilities are recognized based on the present value of the future minimum lease payments over the expected lease term at commencement date or the lease modification date, if applicable. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes its incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Certain adjustments to the ROU assets may be required for items such as initial direct costs paid or incentives received.

F-15

The Company determines the expected lease term as the noncancelable period of the lease and may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Leases with a term of 12 months or less are not recognized on the consolidated balance sheets. The Company recognizes lease expense for these short-term leases on a straight-line basis over the lease term. The Company’s leases do not contain any residual value guarantees.

The Company has elected to combine lease and non-lease components as a single component. The lease expense for minimum lease payments is recognized over the expected term on a straight-line basis. Variable lease payments, which are primarily comprised of property maintenance, taxes, and other payments based on usage, are recognized when the expense is incurred.

Land Use Rights, Net

All land in mainland China is subject to government or collective ownership, and land use rights can be purchased for a specified period of time. The purchase price of land use rights represents the operating lease prepayments under ASC Topic 842, Leases and is recorded as land use rights, net asset on the consolidated balance sheets, which is amortized over the remaining lease term.

Impairment of Long-Lived Assets

Long-lived assets, including property and equipment, finite-lived intangible assets, ROU assets and land use rights, are reviewed for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. The evaluation is performed at the asset group level, i.e., the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability of these assets is measured by a comparison of the carrying amounts of an asset group to the future undiscounted cash flows the assets are expected to generate from the use and eventual disposition. If such a review indicates the carrying amount of the asset group is not recoverable, an impairment loss shall be measured as the amount by which the carrying amount of an asset group exceeds its fair value. Any impairment loss is allocated to the long-lived assets of the group on a pro rata basis using the relative carrying amounts of those assets, except that the carrying amount of an individual asset shall not be reduced below its fair value. Calculating the fair value of the assets involves significant estimates and assumptions. These estimates and assumptions include, among others, projected future cash flows, risk-adjusted discount rates, future economic and market conditions, and the determination of appropriate market comparables. Changes in these factors and assumptions used can materially affect the amount of impairment loss recognized in the period the asset was considered impaired. The Company did not record any impairment of long-lived assets as of December 31, 2025 and 2024.

Income Tax Expense

Income taxes are recorded using the liability method, under which deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are recorded against deferred tax assets, including net operating losses and tax credits, when it is determined it is more-likely-than-not that some or all of the tax benefits will not be realized.

The Company accounts for uncertain tax positions in accordance with the provisions of ASC Topic 740, Income Taxes. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances.

Interest and penalties related to unrecognized tax benefits, if any, are recorded as a component of income tax expense.

F-16

Revenue Recognition

The Company records revenue in accordance with ASC Topic 606 (“ASC 606”), Revenue from Contracts with Customers, whereby revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration expected to be received in exchange for those goods or services. A five-step model is used to achieve the core principle: (1) identify the customer contract, (2) identify the contract’s performance obligations, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations and (5) recognize revenue when or as a performance obligation is satisfied. The Company applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer.

Sale of Pharmaceutical Products

The Company mainly sells its pharmaceutical products to distributors in mainland China, who ultimately sell the products to hospitals, other medical institutions and pharmacies. Revenue from the sale of pharmaceutical products is recognized at the point in time when control of the product is transferred to the customer upon delivery of the underlying products.

The Company records revenue for product sales, net of estimated product returns. Customers have limited return rights related only to the product damage or defect identified upon delivery of the product. Based on historical experience and the limited nature of return rights, product returns have not been significant, and no material refund liability has been recorded as of December 31, 2025.

Rebates are offered to distributors, consistent with pharmaceutical industry practices. The estimated amounts of unpaid or unbilled rebates are recorded as a reduction of revenue, if any. Estimated rebates are determined based on contracted rates and sales volumes and, to a lesser extent, distributor inventories. The Company regularly reviews the information related to these estimates and adjusts the amounts accordingly. The Company uses the expected value method to estimate the amount of consideration to which it will be entitled.

The requirements on constraining estimates of variable consideration, i.e., when it is probable that a significant revenue reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with the variable consideration is subsequently resolved, are applied and the expected future rebates are deducted from the trade receivables from the customers.

The Company has applied the practical expedients under ASC 606 with regard to assessment of financing component and concluded that there is no significant financing component given that the period between delivery of goods and payment is generally one year or less.