Shanghai Junshi Biosciences : VOLUNTARY ANNOUNCEMENT - ENTERING INTO THE LICENSE CONTRACT WITH LETO LABORATORIES

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SHANGHAI JUNSHI BIOSCIENCES CO., LTD.*

上海君實生物醫藥科技股份有限公司

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

(Stock code: 1877)

VOLUNTARY ANNOUNCEMENT - ENTERING

INTO THE LICENSE CONTRACT WITH LETO LABORATORIES

This announcement is made by Shanghai Junshi Biosciences Co., Ltd.* (上海君實生物醫藥科技股 份有限公司) (the "Company") on a voluntary basis.

The board (the "Board") of directors (the "Directors") of the Company is pleased to announce that recently, the Company has entered into a Technology License Contract for Intramolecular Disulfide Bond IL-2 Drugs (the "License Contract") with Beijing Leto Laboratories Technology Co., Ltd. ("Leto Laboratories"), and the Company will be granted a world-wide exclusive license to conduct preclinical development, clinical research and commercialization for IL-2 drugs (project code: LTC002) and use related patented technologies.

KEY TERMS OF THE CONTRACT

1. License Scope

The Company will be granted a world-wide exclusive license to conduct preclinical development, clinical research and commercialization for LTC002 and use related patented technologies. Subject to compliance with the relevant conditions, the Company shall be entitled to sublicense the rights granted to the third party during the license period.

1. Financial Terms
2. 1. Upfront payment

The Company will pay an upfront payment of RMB21 million to Leto Laboratories.

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(II) Milestone payment and technical service fee

The Company will pay Leto Laboratories milestone payments and technical service fees of no more than RMB938 million in aggregate based on the R&D, commercialization and sales situations.

(III) Royalties

Since the commercialization of LTC002, the Company will pay Leto Laboratories the royalties of 6-8% of the net sales in accordance with the agreed proportion.

1. Conditions to Effectiveness
   The License Contract will come into effect on the date of signing by the parties.

IV. Governing Law and Dispute Resolution

The execution, effect, interpretation, performance and dispute resolution of the License Contract shall be governed by the laws and regulations officially promulgated by the People's Republic of China. Any disputes arising from the execution and performance of the License Contract shall be settled by the parties through negotiation. If the negotiation fails, either party shall be entitled to refer the disputes to the Shanghai Arbitration Commission.

ABOUT LTC002

Discovered in 1976, Interleukin 2 (IL-2) was called T cell growth factor (TCGF). It is a globular glycoprotein that plays an important role in maintaining the normal functions of T lymphocyte and NK cell. As it is generated by activated T cells, IL-2 can stimulate the proliferation and differentiation of T cell and keep T cell activated. Also, IL-2 stimulates production, proliferation and activation of natural killer (NK) cells, induce the generation of cytotoxic T lymphocytes (CTL) as well as induce and activate killer cells (LAK) and tumor infiltrating lymphocytes activated by a lymph gene. Thus, IL-2 has great potentials for anti-virus and anti-cancer and broad clinical treatment. However, the current wild-typeIL-2 on the market, given the low dose, will bond with high-affinity receptor presented on the surface of Treg cell, which could suppress the immune system and thus lose the therapeutic effect. The high-doseIL-2 can neutralize the immune suppression caused by Treg activation by activating a large number of T effector cells, while it also leads to more toxic side effects and cell apoptosis. Leto Laboratories has adopted a unique and innovative way to eliminate the bond with IL2Rα receptors and introduced additional disulfide into IL-2. The additional disulfide can keep IL-2 more stable in its structure and also form a barrier to allow the IL-2 molecule to destroy the conjunct plane with the α receptor with minimal changes. Though mutant molecules cannot bond with endogenous α receptors in the body, they can combine with β and γ receptor subunits. Therefore, reducing or eliminating the interaction between IL-2 and

• receptor subunits may be an important aspect of the effectiveness of treatment and of reducing the side effects of treatment in cancer patients. The project is at the pre-clinical stage.

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ABOUT LETO LABORATORIES

Legal representative:	Zhang Wei (張維)
Registered capital:	RMB17,551,497
Date of establishment:	12 December 2014
Address:	Room A0928, Science and Technology Complex, No. 7
	Beinong Road, Huilongguan Town, Changping District, Beijing
	(Changping Demonstration Park)
Business scope:	Technical development of biological engineering, biological
	reagents and medicine; software development; sales of biological
	reagents (excluding hazardous chemicals and drugs), chemical
	products (excluding hazardous chemicals), machinery and
	equipment; retail drugs.

Based on the information provided to the Company, Leto Laboratories is an innovative and R&D-driven biotechnology platform enterprise. Its founding team has served as a leader of R&D projects and a member of the expert group of project approval department and other important R&D positions in international pharmaceutical companies, and contributed to the R&D of Semaglutide and Somapacitan approved by the U.S. Food and Drug Administration in the past two years. Leto Laboratories is committed to the research and development of peptide and enzymatic protein drugs in the field of life science, and has advanced peptide and enzymatic molecular design and process manufacturing technology. Leto Laboratories has fully mastered a number of core technologies related to structural design, purification process and their stable forms in the process of the development of peptide and enzymatic products and drugs, and developed a series of drug R&D pipelines in the fields of anti-tumor cytokine drugs and recombinant enzyme drugs.

To the best of the knowledge, information and belief of the Company having made all reasonable enquires, Leto Laboratories is not a connected person (as defined in the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited) of the Company.

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IMPACT OF LICENSE CONTRACT ON THE COMPANY

The cooperation is conducive to expanding the Company's R&D pipeline in the field of cancer treatment, improving the Company's market layout, and providing alternative treatment options for the unmet clinical needs in the market, which will have a positive impact on the sustained operations of the Company.

RISK WARNING

As pharmaceutical product is characterized by high technology, high risk and high added value with a long-life cycle constituted of R&D, clinical development, drug approval and commercial production, and is prone to be affected by uncertainties, thus the successful approval and release of LTC002 is subject to certain risks. In addition, the milestone payments and technical service fees as agreed in the license contract are subject to certain conditions and the ultimate amount of payment is subject to uncertainities. Investors are reminded to exercise caution in making decisions and be cautious of investment risks. The Company will fulfill its information disclosure obligations in a timely manner in relation to the subsequent progress of the project in accordance with relevant regulations.

By order of the Board

Shanghai Junshi Biosciences Co., Ltd.*

Mr. Xiong Jun

Chairman

Shanghai, the PRC, 28 August 2020

As at the date of this announcement, the board of directors of the Company comprises Mr. Xiong Jun, Dr. Li Ning, Dr. Feng Hui, Mr. Zhang Zhuobing, Dr. Wu Hai and Dr. Yao Sheng as executive Directors; Mr. Tang Yi, Mr. Li Cong, Mr. Yi Qingqing and Mr. Lin Lijun as non-executive Directors; and Dr. Chen Lieping, Mr. Chen Xinjun, Mr. Qian Zhi, Mr. Zhang Chun and Dr. Roy Steven Herbst as independent non-executive Directors.

* For identification purpose only

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