TRANSCENTA-B (06628) plans to sell its CDMO assets for 190 million yuan.

TRANSCENTA-B (06628) announced that on August 6, 2026 (after trading hours), the seller (a wholly-owned subsidiary of the Company) and the buyer, Hangzhou Wuhan Easy Diagnosis Biomedicine Technology Co., Ltd., entered into an asset purchase agreement, whereby the seller conditionally agreed to sell, and the buyer conditionally agreed to purchase the CDMO assets for a total consideration of RMB 190 million (subject to adjustments as stated in the asset purchase agreement). Upon completion of the second phase, the Company will no longer hold any equity interest in the CDMO assets. The CDMO assets include all rights, ownership, and interests in the following: (a) The CDMO facility owned by the seller, specifically the land use rights and property ownership of the premises located at No. 291 Fucheng Road, Xiasha Street, Qiantang New District, Hangzhou, Zhejiang Province, China, and Building 3 of the Dayaog Valley Center (the target real estate); (b) All facilities and equipment held and/or used by the seller, including subordinate usage rights (such as software usage rights) and operating materials (such as operation manuals and maintenance records) (the target equipment), as well as inventory relating to the transferred business contracts as of the effective date of the relevant transfer, with a final list to be confirmed in writing by both parties; and (c) Buildings owned by the seller that are permanently attached to the target real estate, as well as ancillary facilities, appurtenances, and other rights (structures) that must be transferred in conjunction with the target real estate by law or by nature, rights related to the target real estate, target equipment, and business contracts that are inseparable from them (such as all claims, rights of recourse, rights of set-off, and other rights against third parties) (for the avoidance of doubt, excluding any intellectual property rights held by the seller that are related), and all materials necessary for the buyer to own, operate, maintain, and use the CDMO assets (such as asset ledgers, contract files, blueprints, operating procedures, maintenance records) (collectively, relevant assets and rights). The CDMO assets mainly consist of GMP production facilities involved in the Groups past CDMO services. The transaction does not involve the sale of any intellectual property rights held by the Group related to its candidate drug product pipeline or its core biomanufacturing platform and technology (including the Highly Intensified Continuous Bioprocessing (HiCB) platform and cell culture medium ExcelPro CHO). After the completion of the transaction, the Company will continue to generate revenue through external licensing and cooperation arrangements related to such core technologies for CDMO services. The Company believes that the transaction is beneficial to the Company and its overall shareholders for the following reasons: (a) The transaction will bring significant short-term cash inflows to the Group without diluting the equity interests of the Company's shareholders, and is expected to considerably improve the Group's going concern assumptions for the fiscal year 2026. According to the Companys current estimates, assuming all conditions precedent are met or waived, and the consideration does not have a significant downward adjustment, the first, second, and third installment payments of the consideration are expected to be received in 2026; while the final payment is anticipated to be received in the first quarter of 2027. (b) The transaction enables the Group to focus resources on its core business, namely, the discovery, research and development, and commercialization of its product pipeline: (i) The Group has retained all intellectual property rights related to its candidate drug product pipeline, thus its core business is unaffected by the transaction. The net proceeds from the transaction will be used for the Group's general working capital and the development of its product pipeline. (ii) The anticipated sale of the CDMO assets will significantly reduce the Groups operating expenses. Notably, as of December 31, 2025, more than half of the Groups employees were employed in the CDMO assets. The transaction will enable the Group to conduct its core business with a streamlined cost structure. (c) The Group has retained all intellectual property rights related to its core biomanufacturing platform and technology (including the HiCB platform and cell culture medium ExcelPro CHO), and will continue to license out and establish cooperation arrangements for such technologies, generating income from them. Although past CDMO services have generated a significant portion of revenue for the Group, this was due to the Companys product pipeline previously consisting of clinical stage and preclinical stage candidate drugs; thus, the Companys core business has not yet begun to generate substantial revenue. The Company does not consider the provision of CDMO services to be a core part of its main business. (d) The Group has retained certain internal CMC capabilities to support the ongoing development of its candidate drug pipeline and the continued development and external licensing of the aforementioned biomanufacturing platforms and technologies. If the Company requires additional CMC support for its candidate drug pipeline, it will hire other CDMO service providers as needed. The Company anticipates that the transaction will not result in any interruption in the ongoing development of its pipeline.