CSPC Pharmaceutical : DISCLOSEABLE TRANSACTION-LICENSE AGREEMENTS RELATING TO PATENT AND TECHNOLOGY RIGHTS

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CSPC PHARMACEUTICAL GROUP LIMITED

石 藥 集 團 有 限 公 司

(Incorporated in Hong Kong under the Companies Ordinance)

(Stock code: 1093) DISCLOSEABLE TRANSACTION LICENSE AGREEMENTS RELATING TO PATENT AND TECHNOLOGY RIGHTS THE LICENSE AGREEMENTS

On 23 June 2017, AlaMab, a subsidiary of the Company, as the licensee, entered into the License Agreements with the Licensor, pursuant to which the Licensor has agreed to grant an exclusive license under the Patent Rights and a non-exclusive license under the Technology Rights to AlaMab to, among other things, develop, manufacture, distribute, use, sell and/or import the Licensed Products and to perform the Licensed Services in Field One and Field Two in the Territory, subject to the terms of the License Agreements, and AlaMab has agreed to, among other things, pay to the Licensor (i) the Milestone Fees of a maximum aggregate amount of US$54,250,000 and US$55,250,000 in relation to Field One and Field Two respectively (subject to completion of the relevant milestone events); (ii) the License Fees of US$2,750,000 and US$1,750,000 for Field One and Field Two respectively; and (iii) Royalties on net product sales and net service sales in relation to Field One and Field Two.

LISTING RULES IMPLICATIONS.

As some of the applicable percentage ratios calculated in accordance with Rule 14.07 of the Listing Rules in respect of the aggregate estimated amount of the Milestone Fees and License Fees payable by the Group to the Licensor pursuant to the License Agreements exceed 5% but all of the applicable percentage ratios are less than 25%, the License Agreements are only subject to the reporting and announcement requirements but are exempt from the shareholders' approval requirements under Chapter 14 of the Listing Rules.

On 23 June 2017, AlaMab, a subsidiary of the Company, as the licensee, entered into the License Agreements with the Licensor, pursuant to which the Licensor has agreed to grant an exclusive license under the Patent Rights and a non-exclusive license under the Technology Rights to AlaMab to, among other things, develop, manufacture, distribute, use, sell and/or import the Licensed Products and to perform the Licensed Services in Field One and Field Two in the Territory, subject to the terms of the License Agreements, and AlaMab has agreed to, among other things, pay to the Licensor (i) the Milestone Fees of a maximum aggregate amount of US$54,250,000 and US$55,250,000 in relation to Field One and Field Two respectively (subject to completion of the relevant milestone events); (ii) the License Fees of US$2,750,000 and US$1,750,000 for Field One and Field Two respectively; and (iii) Royalties on net product sales and net service sales in relation to Field One and Field Two.

The major terms of the License Agreements are as follows:

THE LICENSE AGREEMENTS Date : 23 June 2017 Parties : (i) the Licensor: The UT Health San Antonio on behalf of the Board of

Regents of the University of Texas System, an agency of the State of Texas

(ii) the Licensee: AlaMab, a subsidiary of the Company

To the best of the Directors' knowledge, information and belief having made all reasonable enquiry, the Licensor and its ultimate beneficial owner(s) are third parties independent of the Company and connected persons (as defined in the Listing Rules) of the Company.

Licensed subject matter

: An exclusive license under the Patent Rights and a non-exclusive license under the Technology Rights granted by the Licensor to AlaMab to, among other things, develop, manufacture, distribute, use, sell and/or import the Licensed Products and to perform the Licensed Services in Field One and Field Two in the Territory, subject to the terms of the License Agreements.

Effective Date : 23 June 2017 Field One : All human and animal therapeutic and diagnostic use for breast cancer bone metastasis Field Two All human and animal therapeutic and diagnostic use for spinal cord injury Consideration : The Licensee will pay the following fees and Royalties to the Licensor:-

Milestone Fees

The Licensee will pay to the Licensor the Milestone Fees of a maximum aggregate amount of US$54,250,000 and US$55,250,000 in relation to Field One and Field Two respectively throughout the period from 2018 to 2037 in which the relevant milestone events in relation to each of Field One and Field Two (such as completion of mouse efficacy model and toxicity studies, IND filed in the US, completion of clinical trials and regulatory approvals of Licensed Products in various jurisdictions) are achieved.

License Fees

The Licensee will pay to the Licensor the License Fees of US$2,750,000 and US$1,750,000 for Field One and Field Two respectively, which are due within 30 days of the Effective Date.

The Milestone Fees and License Fees were determined after arms' length negotiations between the Licensor and the Licensee with reference to various factors, including but not limited to the expected future prospects of the development of the Licensed Products in Field One and Field Two, and will be funded by the Group's internal resources.

Royalties

The Licensee will pay to the Licensor the Royalties for Field One and Field Two on net product sales and net service sales, as follows:

1. at the following rates on net product sales and net service sales for the Licensed Products and the Licensed Services under Field One or Field Two covered by one or more Valid Claims:-

2. for Field One: at the rates of 6% (in the US market) and 8% (in all other markets);

3. for Field Two: at the rates of 5% (in the US market) and 6% (in all other markets); and

4. at the rate of 2% on net product sales and net service sales for the Licensed Products and the Licensed Services under Field One or Field Two not covered by a Valid Claim.

5. Ownership : All patent applications and patents will be in the name of the Licensor (and any co-owner identified in the License Agreements) and owned by the Licensor (and such co-owner, if any). Term : Unless earlier terminated as provided in the License Agreements, the term of the License Agreements will commence on the Effective Date and continue until the last date of expiration or termination of the Patent Rights, or if the Technology Rights are licensed and no Patent Rights are applicable, for a term of 20 years, or expiration of market exclusivity provided under a regulatory approval for the Licensed Products or Licensed Services. Grant of security interest

   : The Licensee grants to the Licensor a security interest in and to the Licensee's rights under the License Agreements, as a collateral security for the payment by the Licensee of any and all sums which may be owed from time to time by the Licensee to the Licensor.

   REASONS FOR AND BENEFITS OF ENTERING INTO OF THE LICENSE AGREEMENTS

   The Board considers that the License Agreements will enable the Group to expand and strengthen its product pipeline under development, solidifying its foundation for achieving sustainable growth. In particular, the Licensed Products are biopharmaceuticals which is one of the current development focuses of the Group.

   The Directors (including the independent non-executive Directors) consider that the terms of the License Agreements are fair and reasonable and in the interests of the Company and its shareholders as a whole.

   GENERAL INFORMATION

   The principal activity of the Company is investment holding. The subsidiaries of the Company are principally engaged in the manufacture and sales of pharmaceutical products.

   UT Health San Antonio is one of the leading health science universities in the US.

   The principal activity of the Board of Regents of the University of Texas System is to govern, operate, support, and maintain The University of Texas System and its 14 academic and health institutions.

   The principal activity of the Licensee is pharmaceutical research and development.