Hong Kong Exchanges and Clearing : UPDATE ANNOUNCEMENT IN RELATION TO THE COLLABORATION AND LICENSE ARRANGEMENT WITH KG BIO

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

Shanghai Henlius Biotech, Inc.

上海復宏漢霖生物技術股份有限公司

(A joint stock company incorporated in the People's Republic of China with limited liability)

(Stock Code: 2696)

UPDATE ANNOUNCEMENT

IN RELATION TO THE COLLABORATION AND LICENSE

ARRANGEMENT WITH KG BIO

1. INTRODUCTION
   Reference is made to the announcement (the "Announcement") issued by Shanghai Henlius Biotech, Inc. (the "Company") on 12 September 2019 in relation to the entering into of the Term Sheet with KG Bio for the collaboration arrangement for the Company's HLX10, a recombinant humanised monoclonal antibody against PD-1 being developed by the Company. Unless otherwise defined, capitalised terms used herein shall have the same meanings as those defined in the Announcement.
   The Board of Directors of the Company is pleased to announce that on 30 September 2019, the Company entered into the Exclusive License Agreement (the "Exclusive License Agreement") with KG Bio.
2. MAJOR TERMS OF THE EXCLUSIVE LICENSE AGREEMENT

Parties	the Company (as Licensor); and KG Bio (as Licensee)
Licensed Products	Pharmaceutical products that contains at least the HLX10 as
	an active ingredient, in relation to (i) the first monotherapy
	for the treatment of solid tumour (MSI-high), provided that
	this monotherapy is not approved by regulatory authority in
	Indonesia, KG Bio is allowed to choose another monotherapy,
	(ii) the two combination therapies in respect of which the
	Licensee has agreed to sponsor through paying the relevant
	milestone payments and funding of the relevant clinical
	trials, and (iii) two new indications Licensee may in license
	in accordance with the Exclusive License Agreement (each a
	"Relevant Indication").
	Licensor will solely control, in its discretion, all development
	activities related to HLX10 outside the Territory and shall use
	commercially reasonable efforts to obtain and maintain market
	approval for the Licensed Products in the PRC, and Licensee
	shall be responsible for conducting all necessary activities
	relating to obtaining and maintaining marketing approval for
	Licensed Products in relation to the Relevant Indications in the
	Territory.

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Collaboration and License Licensor will grant Licensee exclusive rights to
	(a)	use and reference the dossiers (technical, medical and
		scientific submissions, applications, registrations,
		authorizations and approvals, all related correspondence
		with the regulatory authority and all documents
		referenced in the complete regulatory chronology) of
		the Licensed Product and related intellectual property
		and know-how of the Licensor to apply for marketing
		approvals in each country in the Territory, and
	(b)	commercialise the Licensed Product in the Territory
	Licensor shall manufacture and supply the Licensed Product to
	Licensee for use in the development and commercialisation of
	the Licensed Products in the Territory.
Territory	Each of Philippines, Indonesia, Malaysia, Singapore, Thailand,
	Laos, Myanmar, Cambodia, Brunei and Vietnam
Milestone Payments	Total	milestone payments for the license of the Licensed
and Royalties	Product in the Territory comprise:
	(1)	non-creditable payment of US$10 million within 45
		calendar days upon receipt of request for payment from
		Licensor,
	(2)	regulatory milestone payments not exceeding US$22
		million, within 60 business days after the date of
		achievement of the relevant milestones. Regulatory
		milestones refer to (a) the successful completion of the
		clinical study report for the first Phase 2/3 global study
		for HLX10 for a Relevant Indication or first Phase 2/3
		China-based study for HLX10 for a Relevant Indication
		which has a position indication of being approved based
		on formal consultation with regulatory authority in the
		Territory, (b) obtaining the biologics license application
		approval for a Relevant Indication in the Territory and
		(c) obtaining marketing approval for each of the two new
		indications of HLX10 Licensee elects to in-license (other
		than the two combination therapies mentioned below);
		and
	(3)	after commercialisation of relevant Licensed Products,
		commercial sales milestone payments not exceeding
		US$650 million depending on the level of cumulative net
		sales of Licensed Products.

The Licensee shall also pay US$10 million to fund the trials of two combination therapies to be initiated and performed by Licensor.

Licensee will also pay to the Licensor fixed royalty of 15% or 18% of the annual net sales depending on the level of annual net sales of Licensed Products.

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Term	The term of the Exclusive License Agreement shall commence
	on 30 September 2019 and will be valid for 10 years from the
	first launch of any of the Licensed Product in the Territory, and
	shall be automatically renewed every five years for a period of
	five years, unless terminated earlier according to the Exclusive
	License Agreement.

1. INFORMATION ABOUT HLX10
   HLX10 is a recombinant humanised monoclonal antibody against PD-1 that the Company is developing to treat solid tumours and haematological tumours. As at the date of this announcement, the Company has obtained IND approvals for HLX10 in the US, China Mainland and Taiwan, and has commenced a Phase 2 clinical trial in China Mainland for HLX10 monotherapy. The Company is also exploring the possibility of developing HLX10 to treat HBV and has obtained an IND from TFDA for the HBV indication. In addition, HLX10 + Chemo (Cisplatin+5-FU) combination therapy is currently undergoing Phase 3 clinical trials for late stage mESCC, HLX10 + Chemo (Carboplatin+Nab-paclitaxel) combination therapy is currently undergoing Phase 3 clinical trials for late stage sqNSCLC, HLX10 + Chemo (Carboplatin+Etoposide) combination therapy is currently undergoing Phase 3 clinical trials for previously-untreatedextensive-stage SCLC and HLX10 + HLX04 (for HCC indication) has completed the first case of drug administration to patients in a Phase 2 clinical trial.

On behalf of the Board

Shanghai Henlius Biotech, Inc.

Qiyu CHEN

Chairman

Hong Kong, 30 September 2019

As at the date of this announcement, the board of directors of the Company comprises Dr. Scott Shi-Kau Liu as the executive director, Mr. Qiyu Chen as the chairman and non-executive director, Mr. Yifang Wu, Mr. Jiemin Fu, Dr. Aimin Hui and Ms. Xiaohui Guan as the non-executive directors, and Mr. Tak Young So, Dr. Lik Yuen Chan, Dr. Guoping Zhao and Mr. Ruilin Song as the independent non-executive directors.

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