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To the Stockholders of Catalyst Biosciences, Inc.:

You are cordially invited to attend a virtual special meeting of stockholders of Catalyst Biosciences, Inc., a Delaware corporation (“Catalyst”), which will be held on     , 2023, at     Pacific Time, unless postponed or adjourned to a later date. The Catalyst special meeting will be held entirely online. You will be able to attend and participate in the Catalyst special meeting online by visiting http://www.     .com, where you will be able to listen to the meeting live, submit questions and vote. On December 26, 2022, Catalyst acquired the F351 Assets (as defined below) from GNI Group Ltd., a company incorporated under the laws of Japan with limited liability (“GNI Japan”), and GNI Hong Kong Limited, a company incorporated under the laws of Hong Kong with limited liability (“GNI Hong Kong” and, together with GNI Japan, the “Sellers”), pursuant to that certain Asset Purchase Agreement, dated December 26, 2022, as amended on March 29, 2023 (the “F351 Agreement”), by and among Catalyst and the Sellers. Pursuant to the F351 Agreement, Catalyst acquired all of the assets and intellectual property rights primarily related to the Sellers’ proprietary Hydronidone compound (collectively, the “F351 Assets”), other than related assets and intellectual property rights located in the People’s Republic of China (the “PRC”). The F351 Assets include 15 issued or pending patents and patent applications outside of the PRC, with the last acquired issued patent expected to expire in August 2037.

Under the terms of the F351 Agreement and upon the effective time of the transactions contemplated by the F351 Agreement, Catalyst issued to the Sellers equity interests with an aggregate value of $35,000,000 in the form of: 6,266,521 shares of Catalyst’s common stock, par value $0.001 per share (the “Catalyst Common Stock”); and 12,340 shares of Catalyst Series X Convertible Preferred Stock, par value $0.001 per share (the “Catalyst Convertible Preferred Stock”), which Catalyst Convertible Preferred Stock is convertible, upon the approval of the stockholders of Catalyst (as further described herein) into shares of Catalyst Common Stock at a ratio of one (1) share of Catalyst Convertible Preferred Stock to 10,000 shares of Catalyst Common Stock.

In addition, Catalyst, GNI USA, Inc., a Delaware corporation (“GNI USA”), GNI Japan, GNI Hong Kong, Shanghai Genomics, Inc., a company organized under the laws of the PRC (“SG” and collectively with GNI USA, GNI Japan and GNI HK, “Contributors,” and each a “Contributor”), the individuals (each, a “Minority Holder” and collectively, the “Minority Holders”) listed on an annex thereto, and Continent Pharmaceuticals Inc., a Cayman Islands company limited by shares (“CPI”), entered into the Business Combination Agreement on December 26, 2022, as amended on March 29, 2023 (the “Business Combination Agreement”). The Business Combination Agreement contains the terms and conditions of the proposed business combination pursuant to which Catalyst will acquire an indirect controlling interest in Beijing Continent Pharmaceuticals Co., Ltd, a company organized under the laws of the PRC (“BC”).

Pursuant to the Business Combination Agreement, (a) GNI USA will contribute all of its ordinary shares in the capital of CPI, par value $0.0001 per share (each a “CPI Ordinary Share”), to Catalyst in exchange for 688,850,101 shares of Catalyst Common Stock (the “CPI Contribution”), (b) GNI USA will contribute its interest in Further Challenger International Limited, a company incorporated and existing under the laws of the British Virgin Islands with company number 1982271 (“Further Challenger”), to Catalyst in exchange for 264,971,695 shares of Catalyst Common Stock (the “FC Contribution”) and (c) each Minority Holder will contribute 100% of the interest he or she holds in his or her respective Entity (as defined in the Business Combination Agreement) to Catalyst in exchange for an aggregate of 156,954,428 shares of Catalyst Common Stock to be issued to such Minority Holders (the “Minority Holder Contributions” and together with the CPI Contribution and the FC Contribution, the “Contributions”). At the election of GNI USA or any Minority Holder, GNI USA or such Minority Holder may be issued shares of Catalyst Convertible Preferred Stock in lieu of some or all of the shares of Catalyst Common Stock GNI USA or any such Minority Holder is entitled to receive. The combined company following the Contributions is referred to herein as the combined company.

In addition, at the Effective Time (as defined in the Business Combination Agreement), BC will terminate its 2021 Stock Incentive Plan (the “2021 Plan”) and each option (a “BC Option”) to purchase common shares (the “BC

Common Shares”) of BC outstanding under the 2021 Plan will be terminated and replaced with options granted under the Gyre Therapeutics, Inc. 2023 Omnibus Incentive Plan (the “2023 Omnibus Incentive Plan”) that are substantially similar in all material respects to the BC Options previously outstanding under the 2021 Plan.

Prior to the closing of the Contributions, Catalyst will conduct a reverse stock split of the Catalyst Common Stock, at a ratio of not less than 1-for-     and not more than 1-for-     and thereafter, each share of Catalyst Common Stock and option to purchase Catalyst Common Stock that is issued and outstanding at the Effective Time will remain issued and outstanding and such shares will be unaffected by the Contributions. Immediately after the Contributions, the holders of Catalyst capital stock as of immediately prior to the Contributions are expected to own approximately 2.5% of the outstanding shares of capital stock of the combined company, GNI USA is expected to own approximately 85.2% of the outstanding shares of capital stock of the combined company and the Minority Holders are expected to own approximately 12.3% of the outstanding shares of capital stock of the combined company, in each case, assuming conversion of the Catalyst Convertible Preferred Stock. Immediately after the Contributions, the holders of the capital stock of Catalyst as of immediately prior to the Contributions are expected to own approximately 2.0% of the outstanding shares of the combined company, GNI USA is expected to own approximately 70.5% of the outstanding shares of the combined company, the Minority Holders are expected to own approximately 10.2% of the outstanding shares of the combined company, the holders of options granted under the 2023 Omnibus Incentive Plan (“Gyre Options”) are expected to own approximately 16.6% of the outstanding shares of the combined company and the holders of outstanding options of Catalyst are expected to own approximately 0.6% of the outstanding shares of the combined company, in each case, on a fully diluted basis assuming conversion of the Catalyst Convertible Preferred Stock and including the outstanding options of Catalyst and the Gyre Options to be granted in respect of the BC Options.

Shares of Catalyst Common Stock are currently listed on The Nasdaq Capital Market under the symbol “CBIO.” Catalyst intends to file a listing application for the combined company with The Nasdaq Stock Market Inc. (“Nasdaq”). After completion of the Contributions, the combined company will be renamed “Gyre Therapeutics, Inc.” and it is expected that the common stock of the combined company will trade on The Nasdaq Stock Market under the symbol “GYRE.” On     , the last trading day before the date of this proxy statement, the closing sale price of Catalyst Common Stock was $     per share.

Catalyst stockholders are cordially invited to attend the special meeting of Catalyst stockholders. Catalyst is holding its special meeting of stockholders, or the Catalyst special meeting, on     , 2023, at     Pacific Time, unless postponed or adjourned to a later date, in order to obtain the stockholder approvals necessary to complete the Contributions and related matters. The Catalyst special meeting will be held entirely online. Catalyst stockholders will be able to attend and participate in the Catalyst special meeting online by visiting www.     .com, where they will be able to listen to the meeting live, submit questions and vote. At the Catalyst special meeting, Catalyst will ask its stockholders:

After careful consideration, the Catalyst board of directors has approved the Business Combination Agreement and has determined that it is advisable to consummate the Contributions and the other transactions contemplated by the Business Combination Agreement. Catalyst’s board of directors has approved the proposals described in this proxy statement and recommends that its stockholders vote “FOR” Proposal Nos. 1, 2, 3, 4, 5, 6, 7, 9, 11 and 12, “FOR” the election of the director nominees named in Proposal No. 8 and “ONE YEAR” on Proposal No. 10, as described in this proxy statement.

More information about Catalyst, BC, the Business Combination Agreement and the transactions contemplated thereby, and the foregoing proposals is contained in this proxy statement. Catalyst urges you to read this proxy statement carefully and in its entirety. IN PARTICULAR, YOU SHOULD CAREFULLY CONSIDER THE MATTERS DISCUSSED UNDER “RISK FACTORS” BEGINNING ON PAGE 27 OF THIS PROXY STATEMENT.

Catalyst is excited about the opportunities the Contributions bring to Catalyst’s stockholders and thanks you for your consideration and continued support. Sincerely,

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the transactions in this proxy statement, passed upon the merits or fairness of the Business Combination Agreement or the Contributions, or passed upon the adequacy or accuracy of this proxy statement. Any representation to the contrary is a criminal offense.

This proxy statement is dated    , 2023 and is first being mailed to Catalyst stockholders on or about    , 2023.

To the stockholders of Catalyst Biosciences, Inc.:

NOTICE IS HEREBY GIVEN that a virtual special meeting of stockholders, or the Catalyst special meeting, will be held on     2023,     at Pacific Time, unless postponed or adjourned to a later date. The Catalyst special meeting will be held entirely online. You will be able to attend and participate in the Catalyst special meeting online by visiting http://www.     .com, where you will be able to listen to the meeting live, submit questions and vote.

The Catalyst special meeting will be held for the following purposes:

Your vote is important. Assuming a quorum is present, (i) the affirmative vote of the holders of a majority of all of the shares of Catalyst Common Stock present in person or represented by proxy at the Catalyst special meeting and entitled to vote on such matter is required for approval of Proposal Nos. 1, 2, 6, 9, 11 and 12 and for approval of one of the options set forth under Proposal No. 10, (ii) the affirmative vote of the holders of a majority of the outstanding shares of Catalyst Common Stock entitled to vote thereon is required for approval of Proposal Nos. 3, 4 and 5, (iii) the affirmative vote of the holders of two-thirds of the outstanding shares of Catalyst Common Stock entitled to vote thereon is required for approval of Proposal No. 7 and (iv) the two nominees receiving the highest number of affirmative “FOR” votes shall be elected as Class II directors pursuant to Proposal No. 8.

Approval of Proposal Nos. 1, 2, 3, 4 and 6 is a condition to the completion of the Contributions. Therefore, the Contributions cannot be consummated without the approval of Proposal Nos. 1, 2, 3, 4 and 6.

Even if you plan to virtually attend the Catalyst special meeting, Catalyst requests that you sign and return the enclosed proxy or submit a proxy to vote by mail or online to ensure that your shares will be represented at the Catalyst special meeting if you are unable to virtually attend. You may change or revoke your proxy at any time before it is voted at the Catalyst special meeting.

By Order of Catalyst’s Board of Directors,

 

This proxy statement incorporates important business and financial information about Catalyst that is not included in or delivered with this document. You may obtain this information without charge through the Securities and Exchange Commission website (www.sec.gov) or upon your written or oral request by contacting Catalyst Biosciences, Inc. at 611 Gateway Blvd. Suite 120, South San Francisco, California 94080.

To ensure timely delivery of these documents, any request should be made no later than     to receive them before the Catalyst special meeting.

For additional details about where you can find information about Catalyst, please see the section entitled “Where You Can Find More Information” beginning on page 311 of this proxy statement.

Except where specifically noted, the following information and all other information contained in this proxy statement does not give effect to the proposed reverse stock split described in Proposal No. 4 of this proxy statement.

The following section provides answers to frequently asked questions about the Contributions. This section, however, provides only summary information. For a more complete response to these questions and for additional information, please refer to the cross-referenced sections.

Pursuant to the Business Combination Agreement, (a) GNI USA will contribute all of its ordinary shares in the capital of CPI, par value $0.0001 per share (each a “CPI Ordinary Share”) to Catalyst in exchange for 688,850,101 shares of Catalyst Common Stock, par value $0.001 per share (the “Catalyst Common Stock”) (the “CPI Contribution”), (b) GNI USA will contribute its interest in Further Challenger International Limited, a company incorporated and existing under the laws of the British Virgin Islands with company number 1982271 (“Further Challenger”), to Catalyst in exchange for 264,971,695 shares of Catalyst Common Stock (the “FC Contribution”) and (c) each Minority Holder will contribute 100% of the interest he or she holds in his or her respective Entity (as defined in the Business Combination Agreement) to Catalyst in exchange for an aggregate of 156,954,428 shares of Catalyst Common Stock to be issued to such Minority Holders (the “Minority Holder Contributions” and together with the CPI Contribution and the FC Contribution, the “Contributions”). At the election of GNI USA or any Minority Holder, GNI USA or such Minority Holder shall be issued shares of Catalyst Convertible Preferred Stock in lieu of some or all of the shares of Catalyst Common Stock GNI USA or such Minority Holder is entitled to receive. References to the “combined company” are to Gyre Therapeutics, Inc. following the consummation of the transactions contemplated by the Business Combination Agreement.

In addition, at the Effective Time (as defined in the Business Combination Agreement), BC will terminate its 2021 Stock Incentive Plan (the “2021 Plan”) and each option (a “BC Option”) to purchase common shares (the “BC Common Shares”) of BC outstanding under the 2021 Plan will be terminated and replaced with options granted under the Gyre Therapeutics, Inc. 2023 Omnibus Incentive Plan (the “2023 Omnibus Incentive Plan”) that are substantially similar in all material respects to the BC Options previously outstanding under the 2021 Plan.

Prior to the closing of the Contributions, Catalyst will conduct a reverse stock split of the Catalyst Common Stock, at a ratio of not less than 1-for-     and not more than 1-for-     and thereafter, each share of Catalyst Common Stock and option to purchase Catalyst Common Stock that is issued and outstanding at the Effective Time will remain issued and outstanding and such shares will be unaffected by the Contributions. Otherwise, each share of Catalyst Common Stock and option to purchase Catalyst Common Stock that is issued and outstanding at the Effective Time will remain issued and outstanding and such shares and options will be unaffected by the Contributions. Immediately after the Contributions, Catalyst securityholders as of immediately prior to the Contributions are expected to own approximately 2.5% of the outstanding shares of the combined company, GNI USA is expected to own approximately 85.2% of the outstanding shares of the combined company and the Minority Holders are expected to own approximately 12.3% of the outstanding shares of the combined company, in each case, assuming conversion of the Catalyst Convertible Preferred Stock. Immediately after the Contributions, the holders of the capital stock of Catalyst as of immediately prior to the Contributions are expected to own approximately 2.0% of the outstanding shares of the combined company, GNI USA is expected to own approximately 70.5% of the outstanding shares of the combined company, the Minority Holders

are expected to own approximately 10.2% of the outstanding shares of the combined company, the holders of options granted under the 2023 Omnibus Incentive Plan (“Gyre Options”) are expected to own approximately 16.6% of the outstanding shares of the combined company and the holders of outstanding options of Catalyst are expected to own approximately 0.6% of the outstanding shares of the combined company, in each case, on a fully diluted basis assuming conversion of the Catalyst Convertible Preferred Stock and including the outstanding options of Catalyst and the Gyre Options to be granted in respect of the BC Options.

Approval of Proposal Nos. 1, 2, 3, 4 and 6 is a condition to the completion of the Contributions. Therefore, the Contributions cannot be consummated without the approval of Proposal Nos. 1, 2, 3, 4 and 6.

In addition to the requirement of obtaining Catalyst stockholder approval, each of the other closing conditions set forth in the Business Combination Agreement must be satisfied or waived. For a more complete description of the closing conditions under the Business Combination Agreement, please see the section entitled “The Business Combination Agreement—Conditions to the Completion of the Contributions” beginning on page 137 of this proxy statement.

The presence at the Catalyst special meeting, in person or being represented by proxy, of the holders of one-third of the outstanding shares of Catalyst Common Stock entitled to vote at the Catalyst special meeting, shall constitute a quorum at the meeting for the purpose of approving the proposals.

Assuming a quorum is present, the affirmative vote of the holders of a majority of all of the shares of Catalyst Common Stock present in person or represented by proxy at the Catalyst special meeting and entitled to vote on such matter is required for approval of Proposal No. 10. Abstentions on Proposal No. 10 will have the same effect as a vote against each option, and broker non-votes, if any, will have no effect. Because Proposal No. 10 has multiple options, if none of the options receives the affirmative vote of the holders of a majority of all of the shares of Catalyst Common Stock present in person or represented by proxy at the Catalyst special meeting and entitled to vote on the matter, then we will consider the stockholders to have approved the option selected by the holders of a plurality of the shares of Catalyst Common Stock present in person or represented by proxy at the Catalyst special meeting and entitled to vote on the matter.

Assuming a quorum is present, the affirmative vote of the holders of a majority of the outstanding shares of Catalyst Common Stock entitled to vote at the Catalyst special meeting is required for approval of Proposal Nos. 3, 4 and 5. Abstentions and broker non-votes, if any, will have the same effect as “AGAINST” votes on Proposal Nos. 3, 4 and 5.

Assuming a quorum is present, the affirmative vote of the holders of two-thirds of the outstanding shares of Catalyst Common Stock entitled to vote at the Catalyst special meeting is required for approval of Proposal No. 7. Abstentions and broker non-votes, if any, will have the same effect as “AGAINST” votes on Proposal No. 7.

Assuming a quorum is present, the two nominees receiving the highest number of affirmative “FOR” votes shall be elected as Class II directors pursuant to Proposal No. 8. Shares withheld and broker non-votes, if any, will have no effect.

As of March 1, 2023, GNI Japan and GNI HK owned or controlled approximately 16.6% of the outstanding shares of Catalyst Common Stock entitled to vote at the Catalyst special meeting. Pursuant to the Business Combination Agreement, these stockholders have agreed to vote all shares of Catalyst Common Stock owned by them as of the record date in favor of Proposal Nos. 1-6.

after the Contributions, the holders of the capital stock of Catalyst as of immediately prior to the Contributions are expected to own approximately 2.0% of the outstanding shares of the combined company, GNI USA is expected to own approximately 70.5% of the outstanding shares of the combined company, the Minority Holders are expected to own approximately 10.2% of the outstanding shares of the combined company, the holders of Gyre Options to be granted in respect of BC Options are expected to own approximately 16.6% of the outstanding shares of the combined company and the holders of outstanding options of Catalyst are expected to own approximately 0.6% of the outstanding shares of the combined company, in each case, on a fully diluted basis assuming conversion of the Catalyst Convertible Preferred Stock and including the outstanding options of Catalyst and the Gyre Options to be granted in respect of the BC Options.

At the Effective Time of the Contributions, BC will terminate the 2021 Plan and BC Options outstanding thereunder will be terminated and replaced with Gyre Options.

For a more complete description of what BC shareholders and option holders will receive in the Contributions, please see the sections titled “The Contributions—Consideration” beginning on page 125 of this proxy statement.

If you are a Catalyst stockholder of record, you may vote or provide your proxy instructions in one of four different ways:

Your signed proxy card, telephonic proxy instructions or internet proxy instructions must be received by to be counted.

If you hold your shares in “street name” (as described below), you may provide your proxy instructions via telephone or the internet by following the instructions on your vote instruction form. Please provide your proxy instructions only once, unless you are revoking a previously delivered proxy instruction and as soon as possible so that your shares can be voted at the Catalyst special meeting.

instructions, your shares may constitute “broker non-votes.” A “broker non-vote” occurs when shares held by a broker are not voted with respect to a particular proposal because the broker does not have or did not exercise discretionary authority to vote on the matter and has not received voting instructions from its clients. These matters are referred to as “non-routine” matters. On non-routine items for which you do not give your broker instructions, shares of Catalyst Common Stock will be treated as broker non-votes. Whether a proposal is considered routine or non-routine is subject to stock exchange rules and final determination by the stock exchange. To make sure that your vote is counted, you should instruct your broker to vote your shares, following the procedures provided by your broker.

Broker non-votes, if any, will be treated as shares present for the purpose of determining the presence of a quorum for the transaction of business at the Catalyst special meeting. Broker non-votes will not be treated as votes entitled to vote on a proposal.

Your signed proxy card, telephonic proxy instructions, internet proxy instructions or written notice must be received by to be counted.

If a Catalyst stockholder who owns shares of Catalyst Common Stock in “street name” has instructed a broker to vote its shares of Catalyst Common Stock, the stockholder must follow directions received from its broker to change those instructions.

Broadridge Financial Solutions, Inc.

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sendmaterial@proxyvote.com

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Under U.S. GAAP, for operating leases, the amortization of right-of-use assets and the interest expense element of lease liabilities are recorded together as lease expenses, which results in a straight-line recognition effect in the consolidated statements of operations.

Under IFRS, all leases are accounted for like finance leases where right-of-use assets are generally depreciated on a straight-line basis while lease liabilities are measured under the effective interest method, which results in higher expenses at the beginning of the lease term and lower expenses near the end of the lease term.

Under U.S. GAAP, compensation cost should be recognized only if it is probable that the performance condition will be achieved. An initial public offering (“IPO”) constitutes a performance condition that is not considered probable until the IPO completion date under U.S. GAAP, resulting in later recognition of the cost in comparison to IFRS Standards. When share-based awards are modified, and the modification is considered a type III modification — improbable to probable under U.S. GAAP — an entity will begin recording share-based compensation expense based on the fair value of the modified awards over the remaining vesting period.

Under IFRS, share-based compensation expenses are recognized to the extent of the best estimate of the number of equity instruments that will ultimately vest. The best estimate takes into account the likelihood of the service/non-marketing performance conditions being met. An IPO with the requirement of employees’ service is considered as non-marketing performance condition, and the likelihood of IPO is taken into account to determine the vesting period and the number of equity instruments to be vested.

Under U.S. GAAP, research and development activities are expensed as incurred. Milestone payment for acquired in-process research and development (“IPR&D”) incurred prior to regulatory approval are expensed as incurred.

Under IFRS, expenditure incurred on projects to develop new products can be capitalized and deferred when an entity can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the project and the ability to measure reliably the expenditure during the development.

Certain information presented in this proxy statement has been converted from Renminbi to U.S. dollars at the rates, as set by the People’s Bank of China for each of the applicable dates, below:

Exchange rates fluctuate, and such fluctuation can be significant. No representation is made that any Renminbi amounts referred to in this proxy statement could have been, or could be, converted to U.S. dollars at any particular rate, or at all.

The combined company will be faced with a market environment that cannot be predicted and that involves significant risks, many of which will be beyond its control. In addition to the other information contained or incorporated by reference in this proxy statement, you should carefully consider the material risks described below before deciding how to vote your shares of Catalyst Common Stock. You should also read and consider the other information in this proxy statement and additional information about Catalyst set forth in its Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which is filed with the Securities and Exchange Commission, or the SEC, as such risks may be updated or supplemented in its subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, each of which is incorporated by reference into this proxy statement. Please see the section entitled “Where You Can Find More Information” beginning on page 311 of this proxy statement for further information regarding the documents incorporated by reference into this proxy statement.

If the Contributions are not completed, Catalyst and the Contributors are subject to the following risks:

If the Business Combination Agreement is terminated and the board of directors of Catalyst or equivalent thereof of the Contributors determines to seek another business combination, there can be no assurance that either Catalyst or the Contributors will be able to find a partner with whom a business combination would yield greater benefits than the benefits to be provided under the Business Combination Agreement.

Even if the Business Combination Agreement is adopted by the stockholders of Catalyst, specified conditions must be satisfied or waived to complete the Contributions. These conditions are set forth in the Business Combination Agreement and described in the section entitled “The Business Combination Agreement—Conditions to the Completion of the Contributions” beginning on page 137 of this proxy statement. Catalyst and the Contributors cannot assure you that all of the conditions to the consummation of the Contributions will be satisfied or waived. If the conditions are not satisfied or waived, the Contributions may not occur or the closing may be delayed, and Catalyst and BC each may lose some or all of the intended benefits of the Contributions.

In general, neither Catalyst nor the Contributors is obligated to complete the Contributions if there is a material adverse effect affecting the other party between December 26, 2022, the date of the Business Combination Agreement, and the closing of the Contributions. However, certain types of changes are excluded from the concept of a “material adverse effect.” Such exclusions include but are not limited to changes in general economic or market conditions, industry wide changes, changes in GAAP and IFRS, changes in laws, rules or regulations of general applicability or interpretations thereof, natural disasters, epidemics, pandemics or other disease outbreaks (including

the COVID-19 pandemic), outbreaks of major hostilities or acts of terrorism, changes resulting from the announcement or pendency of the Contributions, and failures to meet internal guidance, budgets, plans or forecasts. Therefore, if any of these events were to occur impacting Catalyst, the Contributors or CPI, the other parties would still be obliged to consummate the closing of the Contributions. If any such adverse changes occur and Catalyst and BC consummate the closing of the Contributions, the stock price of the combined company may suffer. This in turn may reduce the value of the Contributions to the stockholders of Catalyst, the shareholders of BC or both. For a more complete discussion of what constitutes a material adverse effect on Catalyst, the Contributors or CPI, see the section entitled “The Business Combination Agreement—Conditions to the Completion of the Contributions” beginning on page 137 of this proxy statement.

Additional financing may not be available to the combined company when it is needed or may not be available on favorable terms. To the extent that the combined company raises additional capital by issuing equity securities, such financing will cause additional dilution to all securityholders of the combined company, including Catalyst’s pre-Contributions securityholders and BC’s former securityholders. It is also possible that the terms of any new equity securities may have preferences over the combined company’s common stock. Any debt financing the combined company enters into may involve covenants that restrict its operations. These restrictive covenants may include limitations on additional borrowing and specific restrictions on the use of the combined company’s assets, as well as prohibitions on its ability to create liens, pay dividends, redeem its stock or make investments. In addition, if the combined company raises additional funds through licensing arrangements, it may be necessary to grant licenses on terms that are not favorable to the combined company.

Directors and executive officers of Catalyst, the Contributors and CPI may have interests in the Contributions that are different from, or in addition to, the interests of other Catalyst stockholders generally. These interests with respect to Catalyst’s directors and executive officers may include, among others, that certain of Catalyst’s executives are entitled to, in connection with a qualifying termination of employment, accelerated vesting of options with respect to Catalyst Common Stock and the payment of severance, that certain of Catalyst’s executives are entitled to the extension of the applicable executive’s post-termination exercise period with respect to their options in the event of the executive’s continued employment through the closing of the Contributions, and that all of Catalyst’s directors and executive officers are entitled to certain indemnification and liability insurance coverage pursuant to the terms of the Business Combination Agreement. In addition, current members of the Catalyst board of directors, Nassim Usman, Ph.D, Thomas Eastling and Ying Luo, Ph.D., are expected to continue as directors of the combined company after the Effective Time, and, following the closing of the Contributions, will be eligible to be compensated as non-employee directors of the combined company pursuant to the Catalyst non-employee director compensation policy that is expected to remain in place following the Effective Time. These interests with respect to the Contributors’ and CPI’s directors and executive officers may include, among others, that certain of the Contributors’ and CPI’s directors and executive officers have options, subject to vesting, to purchase BC ordinary shares which, after the Effective Time, will be converted into and become options to purchase shares of the common stock of the combined company; and all of the Contributors and CPI’s directors and executive officers are entitled to certain indemnification and liability insurance coverage pursuant to the terms of the Business Combination Agreement. In addition, certain of BC’s executive officers are expected to continue as executive officers of the combined company after the Effective Time. Further, some of the current members of BC’s board of directors are expected to continue as directors of the combined company after the Effective Time, and, following the closing of the Contributions, will be eligible to be compensated as non-employee directors of the combined company pursuant to the Catalyst non-employee director compensation policy that is expected to remain in place following the Effective Time. Certain directors and executive officers own options to purchase the shares of their respective companies.

The Catalyst board of directors and the equivalent governing bodies of the Contributors and CPI were aware of and considered those interests, among other things, in reaching their decisions to approve and adopt the Business Combination Agreement, approve the Contributions, and recommend the approval of the Business Combination

Agreement and certain related matters to Catalyst and BC stockholders. These interests, among other factors, may have influenced the directors and executive officers of Catalyst, the Contributors and CPI to support or approve the Contributions.

For more information regarding the interests of Catalyst, the Contributors and CPI directors and executive officers in the Contributions, please see the sections titled “The Contributions—Interests of Catalyst’s Directors and Executive Officers in the Contributions” beginning on page 122 and “The Contributions—Interests of GNI Parties’ Directors and Executive Officers in the Contributions” beginning on page 124 of this proxy statement.

Pursuant to the Contingent Value Rights Agreement (the “CVR Agreement”) dated December 26, 2022, Catalyst’s CVR was distributed to its stockholders of record on January 5, 2023 the (“CVR Holders”). CVR distributions, if any, will consist of net proceeds from any potential future sale of Catalyst’s legacy assets or claims, net cash in excess of $1.0 million, as of the closing of the Contributions, net cash received from the transaction with Vertex Pharmaceuticals Incorporated (“Vertex”) in May 2022, up to $5.0 million, net proceeds from the payment of the remaining $5.0 million due from the sale of Catalyst’s legacy hemophilia assets to GC Biopharma (“GCBP”), and net proceeds from certain legal claims that Catalyst has against a third party. The amount that can be distributed will depend on a variety of factors, including the value, if any, received for Catalyst’s legacy assets or claims, the amount of expenses Catalyst incurs before the closing of the Contributions, and the amount, if any, received from Vertex and GCBP. There can be no assurance as to the timing or amount of distributions to Catalyst’s stockholders pursuant to the CVR Agreement, and such amounts may ultimately be higher or lower than anticipated.

Furthermore, other Catalyst stockholders, including purchasers of Catalyst common stock after January 5, 2023, will not benefit from the distribution under the CVR.

Catalyst may not be able to achieve successful results from the disposition of such assets as described above. If this is not achieved for any reason within the time periods specified in the CVR Agreement, or the permitted deductions set forth in the CVR Agreement are greater than any gross proceeds, no payments will be made under the CVRs, and the CVRs will expire valueless. For further information regarding the CVR Agreement, please see the section entitled “Agreements Related to the Contributions—CVR Agreement” beginning on page 142 of this proxy statement.

If the combined company is unable to realize the full strategic and financial benefits currently anticipated from the Contributions, Catalyst stockholders will have experienced substantial dilution of their ownership interests without receiving any commensurate benefit, or only received part of the commensurate benefit to the extent the combined company is able to realize only part of the strategic and financial benefits currently anticipated from the Contributions.

The market price of Catalyst’s common stock is subject to significant fluctuations. During the 12-month period ended December 31, 2022, the closing sales price of Catalyst’s common stock on The Nasdaq Capital Market ranged from a high of $1.99 on August 19, 2022 to a low of $0.36 on May 13, 2022. Market prices for securities of pharmaceutical, biotechnology and other life science companies have historically been particularly volatile. In addition, the market price of Catalyst Common Stock will likely be volatile based on whether stockholders and other investors believe that Catalyst can complete the Contributions or otherwise raise additional capital to support Catalyst’s operations if the Contributions are not consummated and another strategic transaction cannot be identified, negotiated and consummated in a timely manner, if at all. Additional factors that may cause the market price of Catalyst Common Stock to fluctuate include:

Moreover, the stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of individual companies. These broad market fluctuations may also adversely affect the trading price of Catalyst Common Stock. In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted class action securities litigation against such companies.

The success of the Business Combination will depend in part on the attraction, retention and motivation of executive personnel critical to the business and operations of the combined company. Executives may experience uncertainty about their future roles with Catalyst and BC during the pendency of the Business Combination or after its completion. In addition, competitors may recruit BC management. If the combined company following the Business Combination is unable to attract, retain and motivate executive personnel that are critical to the successful operations of the combined company, the combined company could face disruptions in its operations, strategic relationships, key information, expertise or know-how and unanticipated recruitment and onboarding costs. In addition, the loss of key personnel could diminish the anticipated benefits of the Business Combination.

After the completion of the Contributions, the current stockholders of Catalyst will own a smaller percentage of the combined company than their ownership of Catalyst prior to the Contributions. Immediately after the Contributions, Catalyst securityholders as of immediately prior to the Contributions are expected to own approximately 2.5% of the outstanding shares of the combined company expected to own. Charles Wu Ph.D. will serve as the Chief Executive Officer of the combined company following the completion of the Contributions.

Covenants in the Business Combination Agreement impede the ability of Catalyst to make acquisitions during the pendency of the Contributions, subject to specified exceptions. In addition, while the Business Combination Agreement is in effect, Catalyst is generally prohibited from soliciting, proposing, seeking or knowingly encouraging, facilitating or supporting any inquiries, indications of interest, proposals or offers that constitute or may reasonably be expected to lead to certain transactions involving a third party, including a merger, sale of assets or other business combination, subject to specified exceptions. Any such transactions could be favorable to Catalyst’s stockholders, but Catalyst may be unable to pursue them. For more information, see the section entitled “The Business Combination Agreement—Non-Solicitation” beginning on page 134 of this proxy statement. In addition, if the Business Combination Agreement is terminated under specified circumstances, Catalyst would be required to pay the Contributors a termination fee of $2.0 million and reimburse the Contributors for all of their reasonable out-of-pocket fees and expenses up to $2.0 million. This termination fee and expense reimbursement may discourage third parties from submitting competing proposals to Catalyst or its stockholders, and may cause the Catalyst board of directors to be less inclined to recommend a competing proposal.

The outstanding common shares of BC are privately held and are not traded in any public market. The lack of a public market makes it difficult to determine the fair market value of BC’s common shares. Because the percentage of Catalyst equity to be issued to GNI USA and the Minority Holders was determined based on negotiations between the parties, it is possible that the value of the Catalyst Common Stock to be received by GNI USA and the Minority Holders will be less than the fair market value of their indirect ownership of BC, or Catalyst may pay more than the aggregate fair market value for the indirect controlling interest in BC.

As described in the section entitled “The Contributions—Material U.S. Federal Income Tax Consequences of the Contributions” in this proxy statement, Catalyst, the Contributors and BC intend for the Contributions, taken together, to qualify as a transaction governed by Section 351(a) of the Code. However, the completion of the Contributions is not conditioned on the Contributions qualifying for the intended tax treatment or upon the receipt of an opinion of counsel to that effect. In addition, Catalyst, the Contributors and BC have not sought and do not intend to seek any opinions of counsel or rulings from the U.S. Internal Revenue Service, or IRS, regarding the intended tax treatment and, even if opinions of counsel were sought and obtained, such opinions would not be binding upon the IRS or a court. Consequently, there can be no assurance that the IRS will not challenge the intended tax treatment of the Contributions and, if challenged, that a court would not sustain the IRS’ position. In the event that the Contributions do not so qualify, GNI USA generally would recognize gain or loss upon the contribution of CPI common stock and ordinary shares of Further Challenger in the Contributions equal to the difference between the fair market value of the shares of Catalyst Common Stock received in exchange for the CPI common stock and ordinary shares of Further Challenger in the Contributions and GNI USA’s adjusted tax basis in the shares of fair market value of the shares of CPI common stock and ordinary shares of Further Challenger surrendered. Determining the actual tax consequences of the Contributions to GNI USA and the other Contributors may be complex and will depend on the facts of each Contributor’s own circumstances. Each Contributor is urged to consult with his, her or its own tax advisor with respect to the tax consequences of the Contributions.

Catalyst currently intends to conduct substantially all of its businesses and operations in a manner such that any foreign subsidiaries, including BC and Further Challenger, will not be treated as engaged in a trade or business in the United States and will not be subject to additional U.S. income tax or branch profits tax. However, it is not entirely clear when a foreign subsidiary is treated as being engaged in a trade or business in the United States for U.S. federal income tax purposes. Accordingly, Catalyst cannot assure you that the IRS will not contend, perhaps successfully, that Catalyst’s foreign subsidiaries are engaged in a trade or business in the United States or are subject to more U.S. income tax than they currently incur. A foreign corporation deemed to be so engaged would be subject to U.S. federal income tax on its income that is treated as effectively connected with the conduct of that trade or business, as well as to branch profits tax on its “dividend equivalent amount,” unless the corporation is entitled to relief under an applicable tax treaty, which is determined on an annual basis.

The U.S. federal income tax treatment of the CVRs is unclear. There is no legal authority directly addressing the U.S. federal income tax treatment of the receipt of, and payments on, the CVRs, and there can be no assurance that the IRS would not assert, or that a court would not sustain, a position that could result in adverse U.S. federal income tax consequences to holders of the CVRs. As discussed in the section entitled “Agreements Related to the Contributions—CVR Agreement—Material U.S. Federal Income Tax Consequences of the Receipt of CVRs,” Catalyst will treat the issuance of the CVRs as a distribution of property with respect to its stock. However, there is no authority directly addressing whether contingent value rights with characteristics similar to the CVRs should be

treated as a distribution of property with respect to the corporation’s stock, a distribution of equity, a “debt instrument” or an “open transaction” for U.S. federal income tax purposes. In addition, although Catalyst will estimate the value of the CVRs for purposes of reporting the distribution on Form 1099 to Catalyst stockholders, the value of the CVRs is uncertain, and the IRS or a court could determine that the value of the CVRs at the time of issuance was higher. In such case, the Catalyst stockholders could be treated as having additional income or gain upon receipt of the CVRs as described further in the section entitled “Agreements Related to the Contributions—CVR Agreement—Material U.S. Federal Income Tax Consequences of the Receipt of CVRs” beginning on page 142 of this proxy statement. Further, notwithstanding Catalyst’s position that the receipt of CVRs and the proposed reverse stock split are appropriately treated as separate transactions, it is possible that the IRS or a court could determine that the Catalyst stockholders’ receipt of the CVRs and the proposed reverse stock split constitute a single “recapitalization” for U.S. federal income tax purposes. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to Catalyst’s position, which could result in adverse U.S. federal income tax consequences to holders of the CVRs. The tax consequences of such alternative treatments are described below under the section entitled “Agreements Related to the Contributions—CVR Agreement—Material U.S. Federal Income Tax Consequences of the Receipt of CVRs,” beginning on page 142 of this proxy statement.

On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022 (“IRA”), which, among other things, imposes a 1% excise tax (the “Excise Tax”) on certain repurchases of stock by publicly-traded domestic corporations. The Excise Tax will apply to repurchases occurring in 2023 and beyond. The amount of the Excise Tax is generally 1% of the fair market value of the repurchased stock at the time of the repurchase. The U.S. Department of the Treasury has authority to provide regulations and other guidance to carry out, and prevent the abuse or avoidance of, the Excise Tax. On December 27, 2022, the U.S. Department of the Treasury issued Notice 2023-2, which provides interim guidance regarding the application of the Excise Tax pending forthcoming proposed regulations. Catalyst is in the process of performing an analysis of the Company's earnings and profits and some or all of the issuance of the CVRs could be treated as a dividend for U.S. federal income tax purposes if Catalyst determines that it has current or accumulated earnings and profits. Any portion of the issuance of CVRs that is not treated as a dividend may be subject to the 1% Excise Tax under the IRA.

The extent of the Excise Tax that Catalyst may incur would depend on a number of factors, including the extent such issuances could be treated as dividends and not repurchases, fair market value of the Catalyst Common Stock treated as being redeemed (if any), and the content of any regulations and other guidance from the U.S. Department of the Treasury that may be issued and applicable to such issuances. In addition, the amount of Excise Tax imposed with respect to repurchases of stock by a repurchasing corporation may be reduced by the fair market value of stock issued by the repurchasing corporation during the same taxable year. Absent the issuance of applicable guidance to the contrary, Catalyst currently expects that this reduction may be available with respect to the issuance of the Catalyst Common Stock in the Contributions. It is possible, however, that applicable guidance is issued that would prevent or limit the potential application of this rule.

The Excise Tax is imposed on the repurchasing corporation itself, not the investors from which shares are repurchased, and the mechanics of any required payment of the Excise Tax have not yet been determined. The imposition of the Excise Tax, if any, with respect to the issuance of the CVRs could reduce the amount of cash available to Catalyst and have a material adverse effect on liquidity and operations.

The principal purpose of the reverse stock split is to increase the per-share market price of Catalyst’s common stock above the minimum bid price requirement under the Nasdaq rules so that the listing of the combined company and the shares of Catalyst Common Stock being issued in the Contributions on Nasdaq will be approved. It cannot be assured, however, that the reverse stock split will accomplish this objective for any meaningful period of time. While it is expected that the reduction in the number of outstanding shares of common stock will proportionally increase the market price of the combined company’s common stock, it cannot be assured that the reverse stock split will increase the market price of its common stock by a multiple of the reverse stock split ratio mutually agreed by Catalyst and BC, or result in any permanent or sustained increase in the market price of the combined company’s common stock, which is dependent upon many factors, including the combined company’s business and financial

performance, general market conditions and prospects for future success. Thus, while the stock price of the combined company might meet the listing requirements for Nasdaq initially, it cannot be assured that it will continue to do so.

Although Catalyst’s board of directors believes that the anticipated increase in the market price of the combined company’s common stock resulting from the proposed reverse stock split could encourage interest in its common stock and possibly promote greater liquidity for its stockholders, such liquidity could also be adversely affected by the reduced number of shares outstanding after the reverse stock split. The reduction in the number of outstanding shares may lead to reduced trading and a smaller number of market makers for the combined company’s common stock. In addition, the reverse stock split may not result in an increase in the combined company’s stock price necessary to satisfy Nasdaq’s initial listing requirements for the combined company.

Should the market price of the combined company’s common stock decline after the reverse stock split, the percentage decline may be greater, due to the smaller number of shares outstanding, than it would have been prior to the reverse stock split. A reverse stock split is often viewed negatively by the market and, consequently, can lead to a decrease in the combined company’s overall market capitalization. If the per share market price does not increase in proportion to the reverse stock split ratio, then the value of the combined company, as measured by its stock capitalization, will be reduced. In some cases, the per-share stock price of companies that have effected reverse stock splits subsequently declined back to pre-reverse split levels, and accordingly, it cannot be assured that the total market value of the combined company’s common stock will remain the same after the reverse stock split is effected, or that the reverse stock split will not have an adverse effect on the combined company’s stock price due to the reduced number of shares outstanding after the reverse stock split.

The Catalyst board of directors is seeking approval to adjourn the special meeting of stockholders to a later date or dates if, at the special meeting of stockholders, based upon the tabulated votes, there are insufficient votes to approve each of the Condition Precedent Proposals. If the Adjournment Proposal is not approved, the Catalyst board of directors will not have the ability to adjourn the extraordinary general meeting to a later date and, therefore, will not have more time to solicit votes to approve the Condition Precedent Proposals. In such events, the Contributions would not be completed.

As described below, if the Contributions are not completed, Catalyst will reconsider its strategic alternatives, including dissolving and liquidating its assets, pursuing another strategic transaction, or operating its business. If the Contributions are not completed, Catalyst will face various risks related to its financial condition and need for capital; its ability to execute on alternative strategies; discovery, development and commercialization of its product candidates; its intellectual property; regulatory and compliance matters; and its status as a public company, all as further discussed in the Risk Factors, including this subsection entitled “—Risks Related to Catalyst.”

Unless the context otherwise requires, references to “we,” “us” and “our” in this subsection “—Risks Related to Catalyst” generally refer to Catalyst in the present tense and the post-combination Company from and after the Contributions.

Catalyst is a preclinical-stage biotechnology company and has not yet generated significant revenues. Catalyst has incurred net losses in each year since its inception in August 2002, including net losses of $8.2 million and $87.9 million for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, Catalyst had an accumulated deficit of $410.9 million.

Even after the F351 Acquisition, Catalyst is still in the early stages of development of its product candidates, and has no products approved for commercial sale. To date, Catalyst has financed its operations primarily through issuances of shares of common stock, from private placements of convertible preferred stock, and from payments under collaboration agreements.

Catalyst has devoted most of its financial resources to research and development, including its preclinical and clinical development activities. If the Contributions are not consummated, Catalyst expects to continue to incur significant expenses and operating losses over the next several years as it continues the development of its complement product candidates. Catalyst’s operating losses may fluctuate significantly from quarter to quarter and year to year. Catalyst is expected to continue to incur significant expenses and operating losses for at least the next several years as it:

To become and remain profitable, Catalyst must succeed in developing and eventually commercializing products that generate significant revenue. This will require Catalyst to be successful in a range of challenging activities, including completing preclinical testing and clinical trials of product candidates, obtaining regulatory approval for these product candidates and manufacturing, marketing and selling any products for which regulatory approval is obtained. Catalyst is only in the preliminary stages of most of these activities. Catalyst may never succeed in these activities and, even if it does, it may never generate revenues that are significant enough to achieve profitability.

Because of the numerous risks and uncertainties associated with pharmaceutical product development, Catalyst is unable to accurately predict the timing or amount of increased expenses or when, or if, Catalyst will be able to achieve profitability. Even if Catalyst does achieve profitability, Catalyst may not be able to sustain or increase profitability on a quarterly or annual basis. Failure to become and remain profitable would depress the value of Catalyst’s common stock and could impair Catalyst’s ability to raise capital, expand its business, maintain research and development efforts, diversify product offerings or even continue operations. A decline in the value of Catalyst’s common stock could also cause you to lose all or part of your investment.

If the Contributions are not completed, Catalyst will reconsider its strategic alternatives, including dissolving and liquidating its assets, pursuing another strategic transaction, or operating its business. Catalyst’s future capital requirements depend on many factors, and adequate additional financing may not be available to it on acceptable terms, or at all.

Catalyst expects to devote significant time and resources to the completion of the Contributions. However, there can be no assurances that such activities will result in the completion of the Contributions. If the Contributions are not completed, Catalyst will reconsider its strategic alternatives. Catalyst considers one of the following courses of action to be the most likely alternatives if the Contributions are not completed:

Dissolve and liquidate its assets. If, for any reason, the Contributions do not close, Catalyst’s board of directors may conclude that it is in the best interest of stockholders to dissolve the company and liquidate its assets. In that event, Catalyst would be required to pay all of its debts and contractual obligations, and to set aside certain reserves for potential future claims. There would be no assurances as to the amount or timing of available cash remaining to distribute to stockholders after paying Catalyst’s obligations and setting aside funds for reserves.

Pursue another strategic transaction. Catalyst may resume the process of evaluating a potential strategic transaction in order to attempt another strategic transaction like the Contributions.

Operate its business. Catalyst’s board of directors may elect to seek new product candidates for development.

Raise additional capital. Catalyst may raise additional capital to fund its development of Hydronidone, which may be dilutive to Catalyst stockholders. For details regarding the risks related to raising additional capital, see the Risk Factor entitled “—Catalyst will need additional capital to continue product development and may not be able to do so. If Catalyst is unable to raise sufficient capital, it will be forced to delay, reduce or eliminate product development programs.”

If Catalyst’s board of directors elects to seek new product candidates for development, Catalyst expects that it would incur significant research and development expenses. If Catalyst is unable to raise capital when needed or on attractive terms, it would be forced to delay, reduce or eliminate any such future research and development programs or commercialization efforts and/or Catalyst could be forced to revise or abandon its current business strategy.

Developing pharmaceutical products, including conducting preclinical studies and clinical trials, is expensive. If Catalyst continues with preclinical and clinical development activities, it will continue to incur expenses related to the preclinical and clinical development of its complement product candidates. Catalyst believes that its available cash and cash equivalents will be sufficient to fund its operations for 12 months from the filing of this proxy statement, assuming Catalyst’s stockholders approve the conversion of Catalyst Convertible Preferred Stock. However, Catalyst expects to need to raise substantial additional capital to continue the clinical development of Hydronidone and depending on the availability of capital, may need to delay or cease development of some or all of its product candidates. Even if Catalyst raises additional capital, it may elect to focus its efforts on one or more development programs and delay or cease other development programs.

Until Catalyst can generate sufficient revenue from its product candidates, if ever, it expects to finance future cash needs through public or private equity offerings, debt financings, corporate collaborations and/or licensing arrangements. Additional funds may not be available when Catalyst needs them on terms that are acceptable, or at all. If adequate funds are not available, Catalyst may be required to delay, reduce the scope of or eliminate some or all of its research or development programs.

Because successful development of its product candidates is uncertain, Catalyst is unable to estimate the actual funds required to complete research and development and commercialize its products under development. Catalyst’s future funding requirements, both near and long-term, will depend on many factors, including, but not limited to:

If the Contributions are not consummated, Catalyst will require additional capital to achieve its business objectives. Additional funds may not be available on a timely basis, on favorable terms or at all, and such funds, if raised, may not be sufficient to enable it to continue to implement Catalyst’s long-term business strategy. Any additional fundraising efforts may divert its management from their day-to-day activities, which may adversely affect its ability to develop and commercialize its product candidates. Further, its ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and the recent disruptions to and volatility in the credit and financial markets in the United States and worldwide resulting from the ongoing COVID-19 pandemic or the conflict between Russia and Ukraine. If Catalyst is unable to raise sufficient additional capital, it could be forced to curtail its planned operations and the pursuit of its strategy.

As discussed above, if the Contributions are not completed, Catalyst will reconsider its strategic alternatives, including dissolving and liquidating its assets, pursuing another strategic transaction, or operating its business. If Catalyst’s board of directors elects to seek product candidates for development, Catalyst will face the risks related to discovery, development and commercialization of its product candidates set forth in this section, in addition to other risks described in this Risk Factors section.

To the extent that Catalyst raises additional capital through the sale of equity or convertible debt securities, stockholders will be diluted, and the terms of these new securities may include liquidation or other preferences that adversely affect the rights of common stockholders. Catalyst currently has in place an Equity Distribution Agreement with Piper Sandler & Co. that permits it, subject to applicable SEC regulations, to issue up to $50.0 million worth of shares of its common stock in “at the market” transactions at prevailing market prices.

Debt financing, if available at all, may involve agreements that include covenants limiting or restricting its ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If Catalyst raises additional funds through collaborations, strategic alliances or licensing arrangements with third parties, Catalyst may have to relinquish valuable rights to its technologies, product candidates or future revenue streams or grant licenses on terms that are not favorable to Catalyst. Catalyst may also seek to access the public or private capital markets whenever conditions are favorable, even if it does not have an immediate need for additional capital at that time. There can be no assurance that Catalyst will be able to obtain additional funding if, and when necessary. If Catalyst is unable to obtain adequate financing on a timely basis, Catalyst could be required to delay, curtail or eliminate one or more, or all, of its development programs or grant rights to develop and market product candidates that Catalyst would otherwise prefer to develop and market ourselves.

Catalyst currently has an effective registration statement on Form S-3 that allows Catalyst to offer up to $150.0 million of securities in one or more offerings, subject to limitations under applicable SEC rules, including up to $50.0 million of common stock issuable under its Equity Distribution Agreement with Piper Sandler & Co. Any additional sales in the public market of its common stock or other securities under these shelf registration statements could adversely affect prevailing market prices for its common stock.

Catalyst began operations in August 2002. Catalyst’s operations to date have been limited to financing and staffing Catalyst, developing its technology and product candidates, establishing collaborations and conducting phase 2 clinical trials on small numbers of patients. Catalyst has not yet demonstrated an ability to successfully conduct a phase 3 clinical trial, obtain marketing approvals, manufacture a product at commercial scale repeatedly, or arrange for a third party to do so on its behalf, or conduct sales and marketing activities necessary for successful product commercialization. Consequently, predictions about Catalyst’s future product development timelines, clinical trial plans, expenses, success or viability may not be as accurate as they could be if Catalyst had a longer operating history or a history of successfully developing and commercializing pharmaceutical products.

If Catalyst is required to conduct additional preclinical studies or clinical trials of Hydronidone beyond those that Catalyst currently contemplates, if Catalyst is unable to successfully complete clinical trials of Hydronidone or other testing, or if the results of these trials or tests are not positive or are only modestly positive or if there are safety concerns, Catalyst may:

Catalyst’s future success is substantially dependent on its ability to timely obtain marketing approval for, and then successfully commercialize, Hydronidone, Catalyst’s lead product candidate. Catalyst expects to invest a majority of its efforts and financial resources into the research and development of Hydronidone. Catalyst is planning to initiate a Phase 2a, Proof-of-Concept (“PoC”) clinical trial in late 2023 to evaluate the safety, tolerability, PK, and PD of Hydronidone for patients with advanced liver fibrosis associated with noncirrhotic NASH. The FDA has provided pre-IND advice on the design of the planned Phase 2a trial of Hydronidone and provided clear guidance on the requirements for the IND filing. If Catalyst observes positive trends in the Phase 2a trial of Hydronidone, it expects to initiate a Phase 2 trial of Hydronidone.

Hydronidone will require additional clinical development, evaluation of clinical, preclinical and manufacturing activities, marketing approval in multiple jurisdictions, substantial investment and significant marketing efforts before Catalyst generates any revenues from product sales. Catalyst is not permitted to market or promote Hydronidone, or any other product candidates, before Catalyst receives marketing approval from the FDA and comparable foreign regulatory authorities, and Catalyst may never receive such marketing approvals.

The success of Hydronidone will depend on a variety of factors. Catalyst does not have complete control over many of these factors, including certain aspects of clinical development and the regulatory submission process, potential threats to Catalyst’s intellectual property rights and the manufacturing, marketing, distribution and sales efforts of any future collaborator. Accordingly, Catalyst cannot assure you that it will ever be able to generate revenue through the sale of Hydronidone, even if approved. If Catalyst is not successful in commercializing Hydronidone, or is significantly delayed in doing so, Catalyst’s business will be materially harmed.

Catalyst or its collaborators may not be able to initiate or continue clinical trials for its product candidates if Catalyst is unable to locate, enroll and maintain enrollment of a sufficient number of eligible patients to participate in these trials as required by the FDA or similar regulatory authorities outside the United States. Furthermore, there are inherent difficulties in enrolling NASH patients, which can currently only be definitively diagnosed through a liver biopsy. Specifically, identifying patients most likely to meet NASH enrollment criteria on biopsy is an on-going challenge, with existing clinical indicators lacking both sensitivity and specificity. As a result, NASH trials often suffer from high levels of screen failure following central review of the baseline liver biopsy, which can lead to lower enrollment. As a result of such difficulties and the significant competition for recruiting NASH patients in clinical trials, Catalyst or its future collaborators may be unable to enroll the patients Catalyst needs to complete clinical trials on a timely basis, or at all. In addition, Catalyst’s competitors, some of whom have significantly greater resources than Catalyst does, are conducting clinical trials for the same indications and seek to enroll patients in their studies that may otherwise be eligible for Catalyst’s clinical studies or trials. Since the number of qualified clinical investigators is limited, Catalyst expects to conduct some of its clinical trials at the same clinical trial sites that some of Catalyst’s competitors use, which could further reduce the number of patients who are available for Catalyst’s clinical trials in these sites. The availability of other approved products and other products in clinical trials have and may limit the number of patients willing to participate in Catalyst’s clinical trials.

Patient enrollment is affected by other factors including:

Catalyst’s inability to enroll a sufficient number of patients for its clinical trials will result in significant delays and could require Catalyst to abandon one or more clinical trials altogether. Enrollment delays in clinical trials conducted by Catalyst may also result in increased development costs for its product candidates, which would cause the value of Catalyst to decline and limit its ability to obtain additional financing.

If supplies of the raw materials for its product candidates are significantly delayed, or if the third parties that Catalyst engages to supply any materials or to manufacture any products for its preclinical tests and clinical trials should cease to continue to do so for any reason, including due to the effects of global economic conditions, including inflation and rising interest rates, public health crises such as the COVID-19 pandemic, and the conflict between Russia and Ukraine, Catalyst likely would experience delays in advancing these tests and trials while Catalyst identifies and qualifies replacement suppliers or manufacturers and Catalyst may be unable to obtain replacement supplies on terms that are favorable to Catalyst. In addition, if Catalyst is not able to obtain adequate supplies of its product candidates or the substances used to manufacture them, it will be more difficult for Catalyst to develop its product candidates and compete effectively.

Catalyst’s current and anticipated dependence upon third-party suppliers may adversely affect its ability to develop product candidates and could delay its clinical trials and development programs, and otherwise harm its operations and financial condition and increase its costs and expenses.

Because Catalyst has limited financial and management resources, Catalyst must focus on development programs and product candidates that Catalyst identifies for specific indications. As such, Catalyst is currently primarily focused on the development of Hydronidone. As a result, Catalyst may forego or delay pursuit of opportunities with other product candidates or for other indications for these product candidates that later prove to have greater commercial potential. Catalyst’s resource allocation decisions may cause Catalyst to fail to capitalize on viable commercial products or profitable market opportunities. Catalyst’s spending on current and future development programs and product candidates for specific indications may not yield any commercially viable products. If Catalyst does not accurately evaluate the commercial potential or target market for a particular product candidate, Catalyst may relinquish valuable rights to that product candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for Catalyst to retain sole development and commercialization rights to such product candidate.

Catalyst may not be able to continue to identify and develop new product candidates in addition to its current pipeline. Even if Catalyst is successful in continuing to build its pipeline, the potential product candidates that Catalyst identifies may not be suitable for clinical development. For example, product candidates may be shown to have harmful side effects or other characteristics that indicate that they are unlikely to be successfully developed, much less receive marketing approval and achieve market acceptance. If Catalyst does not successfully develop and commercialize product candidates based upon its approach, Catalyst will not be able to obtain product revenue in future periods, which likely would result in significant harm to its financial position and adversely affect its stock price. Clinical drug development involves a lengthy and expensive process with an uncertain outcome.

The outcome of preclinical studies and early clinical trials may not be predictive of the success of late-stage clinical trials. Trials of Catalyst’s product candidates in larger numbers of patients may not have similar efficacy results and could result in adverse effects that were not observed in the earlier trials with smaller numbers of patients.

Catalyst will be required to demonstrate substantial evidence through well-controlled clinical trials that Catalyst’s Hydronidone is safe and effective before Catalyst can seek marketing approvals for Hydronidone’s commercial sale. Demonstrations of efficacy or an acceptable safety profile in BC’s prior preclinical studies does not mean that future clinical trials will yield the same results. For instance, Catalyst does not know whether Hydronidone will perform in future clinical trials as Hydronidone has performed in preclinical studies and early clinical trials conducted by BC, and, despite Hydronidone’s phase 1 trial in the United States demonstrating a favorable safety profile, tolerability and PK and BC’s phase 2 clinical trial in the PRC demonstrating promising efficacy results in the reversal of HBV-associated fibrosis, to date, there is no effective clinical therapy for liver fibrosis, and no specific therapeutic drugs have been approved worldwide. Product candidates, including Hydronidone, may fail to demonstrate in later-stage clinical trials sufficient safety and efficacy to the satisfaction of the FDA and other comparable foreign regulatory authorities despite having progressed through preclinical studies and earlier stage clinical trials. Regulatory authorities may also limit the scope of later-stage trials until Catalyst has demonstrated satisfactory safety or efficacy results in earlier-stage trials. In particular, in late 2023, we plan to initiate a Phase 2a PoC clinical trial to evaluate the safety, tolerability, PK, and initial efficacy of Hydronidone in patients with advanced liver fibrosis associated with noncirrhotic NASH. The FDA has reviewed the planned Phase 2a trial of Hydronidone and provided clear guidance on the design and trial assessment as well as requirements for the IND filing. If Catalyst observes positive trends in the Phase 2a trial of Hydronidone, it expects to initiate a larger Phase 2 trial in Hydronidone. Although data from liver fibrosis associated with chronic hepatitis B (“CHB”) patients in BC’s phase 2 clinical trial in the PRC demonstrated Hydronidone has the potential to improve liver fibrosis, the efficacy of the Hydronidone in prior preclinical studies in a NASH model does not mean that future clinical trials will yield the same results. There is no guarantee that the FDA and other comparable foreign regulatory authorities will consider the data obtained in the Phase 2 trial sufficient to allow Catalyst to expand the development of Hydronidone in a larger Phase 2 or confirmatory Phase 3 clinical trial . Even if Catalyst is able to initiate Catalyst’s planned clinical trials on schedule, there is no guarantee that Catalyst will be able to complete such trials on the timelines Catalyst anticipates or that such trials will produce positive results. Any limitation on Catalyst’s ability to conduct clinical trials could delay or prevent regulatory approval or limit the size of the patient population to which Catalyst may market Catalyst’s product candidates, if approved.

Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in late-stage NASH clinical trials after achieving positive results in earlier development, and Catalyst may face similar setbacks. The likelihood of obtaining regulatory approval can only be determined from data obtained in clinical trials and the totality of evidence on the efficacy and safety of a product. Many companies that believed their product candidates performed satisfactorily in preclinical studies and early clinical trials have nonetheless failed to obtain marketing approval for the product candidates. Even if Catalyst believes that the results of clinical trials for its product candidates warrant marketing approval, the FDA or comparable foreign regulatory authorities may disagree and may not grant marketing approval of its product candidates without conducting additional studies.

In some instances, there can be significant variability in safety or efficacy results between different clinical trials of the same product candidate due to numerous factors, including changes in trial procedures set forth in protocols, differences in the size and type of the patient populations, changes in and adherence to the dosing regimen and other

clinical trial protocols and the rate of dropout among clinical trial participants. Any phase 2, phase 3 or other clinical trials that Catalyst may conduct may not demonstrate the efficacy and safety necessary to obtain regulatory approval to market its product candidates.

From time to time, Catalyst may publicly disclose preliminary or top-line data from Catalyst’s clinical trials, which are based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data. Catalyst also makes assumptions, estimations, calculations and conclusions as part of Catalyst’s analyses of these data without the opportunity to fully and carefully evaluate complete data. As a result, the preliminary or top-line results that Catalyst reports may differ from future results of the same studies, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated or subsequently made subject to audit and verification procedures.

Any preliminary or top-line data should be viewed with caution until the final data are available. From time to time, Catalyst may also disclose interim data from Catalyst’s preclinical studies and clinical trials. Interim data are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available or as patients from Catalyst’s clinical trials continue other treatments. Further, others, including regulatory agencies, may not accept or agree with Catalyst’s assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular product candidate and Catalyst’s company in general. In addition, the information Catalyst chooses to publicly disclose regarding a particular preclinical study or clinical trial is based on what is typically extensive information, and you or others may not agree with what Catalyst determines is material or otherwise appropriate information to include in Catalyst’s disclosure. If the preliminary, top-line or interim data that Catalyst reports differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, Catalyst’s ability to obtain approval for, and commercialize, Catalyst’s product candidates may be harmed, which could harm Catalyst’s business, operating results, prospects or financial condition.

Catalyst may also plan to eventually seek regulatory approval of Catalyst’s Hydronidone outside of the United States and, accordingly, Catalyst expects that it will be subject to additional risks related to operating in foreign countries if Catalyst obtains the necessary approvals, including differing regulatory requirements in foreign countries. Risks associated with international operations may materially adversely affect Catalyst’s business, financial condition and results of operations.

If Catalyst’s product candidates, including Hydronidone, are associated with undesirable side effects or have unexpected characteristics in preclinical studies or clinical trials when used alone or in combination with other approved products or INDs, Catalyst may need to interrupt, delay or abandon their development or limit development to more narrow uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective. Treatment-related side effects could also affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims. Any of these occurrences may prevent Catalyst from achieving or maintaining market acceptance of the affected product candidate and may adversely affect Catalyst’s business, financial condition and prospects significantly.

In general, the anticipated clinical trials of Hydronidone will include patients with advanced liver fibrosis who are at risk of further progression to cirrhosis and deterioration, but are not critically ill. A certain percentage of patients with HBV-induced liver fibrosis treated with Hydronidone have experienced adverse events, including gastrointestinal diseases, ear and labyrinth diseases, systemic diseases, metabolic and nutritional diseases, skin and subcutaneous tissue diseases, heart organ diseases, and hepatobiliary system diseases. However, the risk/benefit of Hydronidone in NASH may differ from that shown in HBV liver fibrosis patients and there is always a risk that the severity and frequency of the adverse events may worsen. See the section entitled “Catalyst’s Business—Hydronidone Overview.”

Adverse events or deaths in clinical trials involving Catalyst’s product candidates, even if not ultimately attributable to Catalyst’s product or product candidates, could result in increased government regulation, unfavorable public perception and publicity, potential regulatory delays in the testing or licensing of Catalyst’s product candidates, stricter labeling requirements for those product candidates that are licensed and a decrease in demand for any such product candidates.

Additionally, if one or more of Catalyst’s product candidates receives marketing approval and Catalyst or others later identify undesirable side effects or adverse events caused by such products, a number of potentially significant negative consequences could result. For example, regulatory authorities may suspend, limit or withdraw approvals of such product or seek an injunction against its manufacture or distribution, require additional warnings on the label, including “boxed” warnings, or issue safety alerts, require press releases or other communications containing warnings or other safety information about the product, require Catalyst to change the way the product is administered or conduct additional clinical trials or post-approval studies, require Catalyst to create a risk evaluation and mitigation strategy (“REMS”) which could include a medication guide outlining the risks of such side effects for distribution to patients, impose fines, injunctions or criminal penalties. Catalyst could also be sued and held liable for harm caused to patients, and Catalyst’s reputation may suffer. Any of these events could prevent Catalyst from achieving or maintaining market acceptance of the particular product candidate, if approved, and could seriously harm Catalyst’s business.

Hydronidone was recently designated as a Breakthrough Therapy in the PRC and is currently conducting a Phase 3 clinical trial for regulatory approval by the National Medical Products Administration (“NMPA”)in the PRC. Catalyst may, in the future, apply for Breakthrough Therapy designation in the United States, or the equivalent thereof in other foreign jurisdictions (where available), for its product candidates, depending on robustness of the clinical benefit in clinical trials. A Breakthrough Therapy is defined as a product candidate that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the product candidate may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. For product candidates that have been designated as breakthrough therapies, interaction and communication between the FDA and the sponsor of the trial can help to identify the most efficient path for clinical development while minimizing the number of patients placed in ineffective control regimens. Product candidates designated as breakthrough therapies by the FDA are also eligible for priority review if supported by clinical data at the time of the submission of the New Drug Application (“NDA”).

Designation as a Breakthrough Therapy is within the discretion of the FDA. Accordingly, even if Catalyst believes that one of its product candidates meets the criteria for designation as a Breakthrough Therapy, the FDA may disagree and instead determine not to make such designation. In any event, the receipt of a Breakthrough Therapy designation for a product candidate may not result in a faster development process, review or approval compared to product candidates considered for approval under conventional FDA procedures and it would not assure ultimate approval by the FDA. In addition, even if one or more of its product candidates qualify as breakthrough therapies, the FDA may later decide that the product candidate no longer meets the conditions for qualification or it may decide that the time period for FDA review or approval will not be shortened.

Catalyst’s drug development programs and the potential commercialization of its product candidates will require substantial additional cash to fund expenses. Catalyst has previously relied on collaborators, such as Biogen, Pfizer and ISU, to contribute to the development of its product candidates. Catalyst may, in the future, form or seek strategic alliances, create joint ventures or collaborations, or enter into licensing arrangements with third parties that it believes will complement or augment Catalyst’s development and commercialization efforts with respect to Hydronidone and/or Catalyst more broadly. Any of these relationships may require Catalyst to increase its near and long-term expenditures, issue securities that dilute Catalyst’s existing stockholders or disrupt its management and business.

Catalyst faces significant competition in seeking appropriate collaborators. Whether Catalyst can reach a definitive agreement with a collaborator will depend, among other things, upon its assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors. Those factors may include the design or results of preclinical trials, the likelihood of approval by the FDA or comparable foreign regulatory authorities and the regulatory pathway for any such approval, the potential market for the product candidate, the costs and complexities of manufacturing and delivering the product to patients and the potential of competing products. The collaborator may also consider alternative product candidates or technologies for similar indications that may be available for collaboration and whether such a collaboration could be more attractive than the one with Catalyst. There can also be no assurance that Catalyst will enter into any collaboration agreements, or that any such agreements will be on favorable terms.

Collaborations are complex and time consuming to negotiate and document. In addition, there have been a significant number of recent business combinations among large pharmaceutical companies that have resulted in a reduced number of potential future collaborators. Catalyst may not be able to negotiate collaborations on a timely basis, on acceptable terms, or at all. If Catalyst is unable to do so, Catalyst may have to curtail the development of the product candidate for which Catalyst is seeking to collaborate, reduce or delay its development program or one or more of its other development programs, delay its potential commercialization or reduce the scope of any sales or marketing activities, and increase its expenditures and undertake development or commercialization activities at its own expense. If Catalyst elects to increase its expenditures to fund development or commercialization activities on its own, Catalyst may need to obtain additional capital, which may not be available to Catalyst on acceptable terms or at all. If Catalyst does not have sufficient funds, Catalyst may not be able to further develop its product candidates or bring them to market and generate product revenue.

Catalyst currently has no internal capabilities to manufacture its product candidates for clinical use or for preclinical trials following good manufacturing practices (“GMP”), or good laboratory practices (“GLP”). Catalyst expects to rely on one or more third-party contractors to manufacture, package, label and distribute clinical supplies and commercial quantities of any product candidate that Catalyst commercializes following approval for marketing by applicable regulatory authorities. Catalyst also expects to rely on one or more third-party contractors to manufacture its product candidates for use in its clinical trials. Reliance on such third-party contractors entails risks, including:

Catalyst may incur delays in product development resulting from the need to identify or qualify manufacturers for its product candidates. Catalyst’s current and anticipated future dependence upon others for the manufacture of its product candidates may adversely affect its future profit margins and its ability to commercialize any products that receive marketing approval on a timely and competitive basis.

To date, Catalyst’s product candidates have been manufactured by third-party manufacturers solely for preclinical studies and relatively small clinical trials. The process of manufacturing its complement associated therapeutic product candidates is complex, highly regulated and subject to several risks, including:

Specifically, Catalyst plans to enter into various development, manufacturing and clinical supply services agreements with third-party manufacturers for drug substance and drug product manufacturing of its product candidate Hydronidone. If Catalyst’s third-party manufacturers are not able to provide sufficient quantities or quality of its of product candidates on a timely basis, or at all, whether due to production shortages or other supply delays or interruptions resulting from the ongoing COVID-19 pandemic or otherwise, its preclinical trials, clinical trials or regulatory approvals, as applicable, may be delayed. Significant portions of its research and development resources are focused on manufacturing. If any of its third-party manufacturers experiences difficulties in scaling production or experiences product loss due to contamination, equipment failure, improper installation or operation of equipment, vendor or operator error or improper storage conditions, the potential trials of the affected product candidate would be delayed, perhaps substantially, which could materially and adversely affect its business.

Catalyst has minimal process development capabilities and has access only to external manufacturing capabilities. Catalyst does not have, and Catalyst does not currently plan to acquire or develop, the facilities or capabilities to manufacture bulk drug substance or filled drug product for use in clinical trials or commercialization. Any delay or interruption in the supply of clinical trial material or preclinical trial material could delay the completion of clinical trials or preclinical trials, increase the costs associated with maintaining such trial programs and, depending upon the period of delay, require Catalyst to commence new clinical trials or preclinical trials at additional expense or terminate the trials completely.

All entities involved in the preparation of therapeutics for clinical studies or commercial sale, including any contract manufacturers for its product candidates, are subject to extensive regulation. Components of a finished therapeutic product approved for commercial sale or used in late-stage clinical studies must be manufactured in accordance with GMP. These regulations govern manufacturing processes and procedures (including record keeping) and the implementation and operation of quality systems to control and assure the quality of investigational products and products approved for sale. Poor control of production processes can lead to the introduction of adventitious agents or other contaminants, or to inadvertent changes in the properties or stability of its product candidates that may not be detectable in final product testing. Catalyst or its contract manufacturers must supply all necessary documentation in support of an NDA on a timely basis and must adhere to the FDA’s GLP and GMP regulations enforced by the FDA through its facilities inspection program. Catalyst’s facilities and quality systems and the facilities and quality systems of some or all its third-party contractors must pass a pre-approval inspection for compliance with the applicable regulations as a condition of regulatory approval of its product candidates. In addition, the regulatory authorities may, at any time, audit or inspect a manufacturing facility involved with the preparation of its product candidates or the associated quality systems for compliance with the regulations applicable to the activities being conducted. If these facilities do not pass a pre-approval plant inspection or do not have a GMP compliance status acceptable for the FDA, FDA approval of the products will not be granted.

The regulatory authorities also may, at any time following approval of a product for sale, audit its manufacturing facilities or those of its third-party contractors. If any such inspection or audit identifies a failure to comply with

applicable regulations or if a violation of its product specifications or applicable regulations occurs independent of such an inspection or audit, Catalyst or the relevant regulatory authority may require remedial measures that may be costly and/or time-consuming for Catalyst or a third-party to implement and that may include the temporary or permanent suspension of a clinical study or commercial sales or the temporary or permanent closure of a facility. Any such remedial measures imposed upon Catalyst or third parties with whom Catalyst contracts could materially harm its business.

If Catalyst or any of its third-party manufacturers fails to maintain regulatory compliance, the FDA can impose regulatory sanctions including, among other things, refusal to approve a pending application for a new drug product or biologic product, or revocation of a pre-existing approval. As a result, its business, financial condition and results of operations may be materially harmed.

Additionally, if supply from one approved manufacturer is interrupted, there could be a significant disruption in commercial supply. An alternative manufacturer would need to be qualified through a NDA supplement which could result in further delay. The regulatory agencies may also require additional studies if a new manufacturer is relied upon for commercial production. Switching manufacturers may involve substantial costs and is likely to result in a delay in its desired clinical and commercial timelines.

These factors could cause the delay of clinical studies, regulatory submissions, required approvals or commercialization of its product candidates, cause Catalyst to incur higher costs and prevent Catalyst from commercializing its products successfully. Furthermore, if its suppliers fail to meet contractual requirements, and Catalyst is unable to secure one or more replacement suppliers capable of production at a substantially equivalent cost, its clinical studies may be delayed, or Catalyst could lose potential revenue.

Catalyst relies on third parties such as contract research organizations (“CROs”), medical institutions and clinical investigators to conduct certain aspects of preclinical development, including assay development and testing, and to enroll qualified patients and conduct, supervise and monitor clinical trials. Catalyst’s reliance on these third parties for preclinical and clinical development activities reduces its control over these activities. Catalyst’s reliance on these third parties, however, will not relieve Catalyst of its regulatory responsibilities, including ensuring that its clinical studies are conducted in accordance with good clinical practices, and the investigational plan and protocols contained in the relevant regulatory application, such as an investigational new drug application (“IND”). In addition, the CROs with whom Catalyst contracts may not complete activities on schedule or may not conduct its preclinical studies or clinical studies in accordance with regulatory requirements or its clinical study design. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, its efforts to complete development and obtain regulatory approvals for, and to commercialize, its product candidates may be delayed or prevented.

Catalyst’s ability to compete in the highly competitive biotechnology and pharmaceutical industries depends upon its ability to attract and retain highly qualified managerial, scientific and medical personnel. Catalyst is highly dependent on its executive management and scientific personnel. Catalyst does not maintain “key man” insurance policies on the lives of these individuals or the lives of any of its other employees. In addition, Catalyst will need to add personnel to achieve its business objectives. The loss of the services of any of its executive officers, other key employees, and its inability to find suitable replacements, or its inability to hire new clinical development and manufacturing personnel, could result in delays in product development and harm its business.

Catalyst conducts operations at its facility in the San Francisco Bay Area. This region is headquarters to many other biopharmaceutical companies and many academic and research institutions. Competition for skilled personnel in its market is intense and may limit its ability to hire and retain highly qualified personnel on acceptable terms or at all.

To induce valuable employees to remain at Catalyst, in addition to salary and cash incentives, Catalyst has provided stock options that vest over time. The value to employees of stock options that vest over time may be significantly affected by movements in Catalyst’s stock price that are beyond its control and may at any time be insufficient to

counteract more lucrative offers from other companies. Despite its efforts to retain valuable employees, members of management and scientific and development teams have terminated and may terminate their employment with Catalyst on short notice. Catalyst’s employees are under at-will employment arrangements, which means that any of its employees can leave employment with Catalyst at any time, with or without notice. Failure to retain, replace or recruit personnel could harm its business.

Catalyst is exposed to the risk of fraud or other misconduct by its employees, principal investigators, consultants and collaborators. Misconduct by these parties could include intentional failures to comply with the regulations of the FDA and non-U.S. regulators, to provide accurate information to the FDA and non-U.S. regulators, to comply with healthcare fraud and abuse laws and regulations in the United States and abroad, to report financial information or data accurately or to disclose unauthorized activities to Catalyst. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Such misconduct could also involve the improper use of information obtained during clinical studies that could result in regulatory sanctions and cause serious harm to its reputation. It is not always possible to identify and deter employee misconduct, and the precautions Catalyst takes to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting Catalyst from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. If any such actions are instituted against Catalyst and Catalyst is not successful in defending itself or asserting its rights, those actions could have a significant impact on its business, including the imposition of significant fines or other sanctions.

As a public company, Catalyst has and will continue to incur significant legal, accounting and other expenses , including costs associated with public company reporting and corporate governance requirements, in order to comply with the rules and regulations imposed by the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection, as well as rules implemented by the SEC and Nasdaq. Stockholder activism, the political environment and the current high level of government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact the manner in which Catalyst operates its business in ways that are not currently anticipated. Its management and other personnel need to devote a substantial amount of time to these compliance initiatives. In addition, these rules and regulations make it difficult and expensive for Catalyst to obtain director and officer liability insurance, and Catalyst may be required to incur substantial costs to maintain its current levels of such coverage. Catalyst expects that it will annually incur significant expenses to comply with the requirements imposed on Catalyst as a public company.

Catalyst relies upon a combination of patents, trade secret protection and confidentiality agreements to protect the intellectual property related to its product candidates. The strength of patents in the biotechnology and pharmaceutical field involves complex legal and scientific questions and can be uncertain. Third parties may challenge the validity, enforceability or scope of its patents, which may result in those patents being narrowed or invalidated. The patent applications that Catalyst owns may fail to result in issued patents with claims that cover its product candidates in the United States or in other foreign countries. Furthermore, even if they are unchallenged, its patents and patent applications may not adequately protect its intellectual property, provide exclusivity for its product candidates or prevent others from designing around its claims. Certain of its patents also cover processes, for which enforcement can be difficult. Any of these outcomes could impair its ability to prevent competition from third parties that may have an adverse impact on its business.

If the patents or patent applications Catalyst holds or has in-licensed for its programs or product candidates are invalidated or fail to issue, if their breadth or strength of protection is threatened, or if they fail to provide meaningful

exclusivity for its product candidates, it could threaten its ability to commercialize future products. Further, if Catalyst encounters delays in regulatory approvals, the period of time during which Catalyst could market a product candidate under patent protection could be reduced. In addition, patents have a limited lifespan. In the United States, the natural expiration of a patent is generally 20 years after it is filed. Various extensions may be available; however the life of a patent, and the protection it affords, is limited. Once the patent life has expired for a product, Catalyst may be subject to competition from generic medications.

In addition to the protection afforded by patents, Catalyst relies on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable or that Catalyst elects not to patent and other elements of its product candidate discovery and development processes that involve proprietary know-how, information or technology that is not covered by patents. However, trade secrets can be difficult to protect. Catalyst seeks to protect its proprietary technology and processes, in part, by entering into confidentiality agreements with its employees, consultants, scientific advisors and contractors. Catalyst also seeks to preserve the integrity and confidentiality of its data and trade secrets by maintaining the physical security of its premises and physical and electronic security of its information technology systems. While Catalyst has confidence in these individuals, organizations and systems, agreements or security measures may be breached, and Catalyst may not have adequate remedies for any breach. In addition, its trade secrets may otherwise become known or be independently discovered by competitors.

Although Catalyst expects all of its employees and consultants to assign their applicable inventions to Catalyst, and all of its employees, consultants, advisors and any third parties who have access to its proprietary know-how, information or technology to enter into confidentiality agreements, Catalyst cannot provide guarantee that all such agreements have been duly executed or that its trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to its trade secrets or independently develop substantially equivalent information and techniques. Misappropriation or unauthorized disclosure of its trade secrets could impair its competitive position and may have a material adverse effect on its business. Additionally, if the steps taken to maintain its trade secrets are deemed inadequate, Catalyst may have insufficient recourse against third parties for misappropriating the trade secret. In addition, others may independently discover its trade secrets and proprietary information.

Further, filing, prosecuting and defending patents on product candidates in all countries throughout the world would be prohibitively expensive, and Catalyst’s intellectual property rights in some countries outside the United States are less extensive than those in the United States. In addition, the laws of some foreign countries do not protect proprietary rights to the same extent or in the same manner as the laws of the United States. As a result, Catalyst may encounter significant problems in protecting and defending its intellectual property both in the United States and abroad. If Catalyst is unable to prevent material disclosure of the non-patented intellectual property related to its technologies to third parties, and there is no guarantee that Catalyst will have any such enforceable trade secret protection, Catalyst may not be able to establish or maintain a competitive advantage in its market, which could materially adversely affect its business, results of operations and financial condition.

Catalyst’s commercial success depends in part on avoiding infringement of the patents and proprietary rights of third parties. There is a substantial amount of litigation, both within and outside the United States, involving patent and other intellectual property rights in the biotechnology and pharmaceutical industries, including patent infringement lawsuits, interferences, oppositions and inter partes reexamination proceedings before the USPTO, and corresponding foreign patent offices. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which Catalyst is pursuing development candidates. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that its product candidates may be subject to claims of infringement of the patent rights of third parties.

Third parties may assert that the manufacture, use or sale of its product candidates infringes patents held by such third parties, or that Catalyst is employing their proprietary technology without authorization. There may be third-party patents or patent applications with claims to compositions of matter, materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of its product candidates. Because patent applications can take many years to issue, there may be currently pending patent applications that may later result in issued patents that its product candidates or current products may infringe.

In addition, Catalyst has received confidential and proprietary information from third parties, and Catalyst employs individuals who were previously employed at other biotechnology or pharmaceutical companies. Catalyst may be subject to claims that its employees, consultants or independent contractors have inadvertently or otherwise used or disclosed confidential information of these third parties or its employees’ former employers. Litigation may be necessary to defend against these claims.

Parties making claims against Catalyst may obtain injunctive or other equitable relief that could effectively block its ability to further develop and commercialize one or more of its product candidates unless Catalyst redesigned infringing products (which may be impossible) or obtained a license under the applicable patents (which may not be available on commercially reasonable terms or at all), or until such patents expire.

Competitors may infringe Catalyst’s patents. To counter infringement or unauthorized use, Catalyst or its collaborators may be required to file infringement claims that can be expensive and time-consuming. In addition, in an infringement proceeding, a court may decide that one of Catalyst’s patents is not valid, is unenforceable and/or is not infringed, or may refuse to stop the other party from using the technology at issue on the grounds that its patents do not cover the technology in question. An adverse result in any litigation or defense proceeding could put one or more of Catalyst’s patents at risk of being invalidated or interpreted narrowly and could put its patent applications at risk of not issuing.

Interference proceedings provoked by third parties or brought by Catalyst may be necessary to determine the priority of inventions with respect to its patents or patent applications or those of its licensors. An unfavorable outcome could require Catalyst to cease using the related technology or to attempt to license rights from the prevailing party. Catalyst’s business could be harmed if the prevailing party does not offer Catalyst a license on commercially reasonable terms. Catalyst may not be able to prevent, alone or with its licensors, misappropriation of its intellectual property rights, particularly in countries where the laws may not protect those rights as fully as in the United States.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of its confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of its common stock.

Even if resolved in Catalyst’s favor, litigation or other legal proceedings relating to intellectual property claims, regardless of their merit, would cause Catalyst to incur significant expenses, and could distract its technical and management personnel from their normal responsibilities. In the event of a successful claim of infringement against Catalyst, Catalyst may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, in addition to paying royalties, redesign infringing products or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of its common stock. Such litigation or proceedings could substantially increase its operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities. Catalyst may not have sufficient financial or other resources to conduct such litigation or proceedings adequately. Some of its competitors may be able to sustain the costs of such litigation or proceedings more effectively than Catalyst can because of their greater financial resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could compromise its ability to compete in the marketplace.

A third-party may hold intellectual property, including patent rights, that is important or necessary to the development of its products. It may be necessary for Catalyst to use the patented or proprietary technology of third parties to commercialize its products, in which case Catalyst would be required to obtain a license from these third parties on commercially reasonable terms, or its business could be harmed, possibly materially.

The process of obtaining regulatory approvals, both in the United States and abroad, is unpredictable, expensive and typically takes many years following commencement of clinical trials, if approval is obtained at all, and can vary substantially based upon a variety of factors, including the type, complexity and novelty of the product candidates involved. Hydronidone currently has one active IND application with the FDA in the United States for the treatment of liver fibrosis associated with a broad spectrum of chronic liver diseases. In the future, it is expected that an additional IND will be filed for Hydronidone specifically for NASH, and Catalyst may file additional IND applications for future indications or future product candidates. If any such future IND is not approved by the FDA, Catalyst’s clinical development timeline may be negatively impacted and any future clinical programs may be delayed or terminated. As a result, Catalyst may be unable to obtain regulatory approvals or successfully commercialize its products.

Catalyst cannot guarantee that any preclinical studies and clinical trials will be conducted as planned or completed on schedule, if at all. The clinical development of its product candidates is susceptible to the risk of failure at any stage of drug development, including failure to demonstrate efficacy in a clinical trial or across a suitable population of patients, the occurrence of severe or medically or commercially unacceptable adverse events, failure to comply with protocols or applicable regulatory requirements and determination by the FDA or any comparable foreign regulatory authority that a drug product is not approvable. It is possible that even if one or more of its product candidates has a beneficial effect, that effect will not be detected during clinical evaluation as a result of one or more of a variety of factors, including the size, duration, design, measurements, conduct or analysis of its clinical trials. Conversely, as a result of the same factors, its clinical trials may indicate an apparent positive effect of a product candidate that is greater than the actual positive effect, if any.

Catalyst cannot commercialize product candidates in the United States without first obtaining regulatory approval from the FDA. Similarly, Catalyst cannot commercialize product candidates outside of the United States without obtaining regulatory approval from comparable foreign regulatory authorities. Before obtaining regulatory approvals for the commercial sale of Catalyst’s product candidates, including Catalyst’s lead product candidate Hydronidone, Catalyst must demonstrate through lengthy, complex and expensive preclinical studies and clinical trials that Catalyst’s product candidates are both safe and effective for each targeted indication. Securing regulatory approval also requires the submission of information about the drug manufacturing process to, and inspection of manufacturing facilities by, the relevant regulatory authority. Further, Catalyst’s product candidates, including Hydronidone, may not be effective, may be only moderately effective or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude Catalyst’s obtaining marketing approval.

The FDA and comparable foreign regulatory authorities have substantial discretion in the approval process and may refuse to accept any application or may decide that Catalyst’s data are insufficient for approval and require additional preclinical, clinical or other data. Catalyst’s product candidates could be delayed in receiving, or fail to receive, regulatory approval for many reasons, including:

The approval requirements for Catalyst’s product candidates are likely to vary by jurisdiction such that success in one jurisdiction is not necessarily predicative of success elsewhere.

Catalyst may experience delays in completing planned clinical trials for a variety of reasons, including delays related to:

Catalyst could also experience delays in obtaining approval if physicians encounter unresolved ethical issues associated with enrolling patients in clinical trials of its product candidates in lieu of prescribing existing treatments that have established safety and efficacy profiles given the serious nature of the diseases for the core indications for its product candidates. Additionally, a clinical trial may be suspended or terminated by Catalyst, the IRBs for the institutions in which the trials are being conducted, the Data Monitoring Committee for the trial, or by the FDA or other regulatory authorities for a number of reasons, including failure to conduct the clinical trial in accordance with regulatory requirements or its clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues, or adverse side effects, failure to demonstrate a benefit from using a product candidate, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. In addition, the FDA review and approval process could be delayed by any future shutdown of the U.S. government, and its development activities could be harmed or delayed as a result. If Catalyst experiences termination of, or delays in the completion of, any clinical trial of its product candidates, its ability to commercialize its product candidates will be harmed and its ability to generate revenue will be materially impaired. Additionally, delays in completing trials will increase costs, delay Catalyst’s product development and approval process, and impair its ability to commence product sales and generate revenue. Many of the factors that could create or lead to a delay in the commencement or completion of clinical trials may lead to the denial of regulatory approval for its product candidates.

If Catalyst were to obtain approval, regulatory authorities may approve any of Catalyst’s product candidates, including Hydronidone, for fewer or more limited indications than Catalyst requests, including failing to approve the

most commercially promising indications, may grant approval contingent on the performance of costly post-marketing clinical trials, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate. If Catalyst is not able to obtain, or if there are delays in obtaining, required regulatory approvals for Catalyst’s product candidates, including Hydronidone, Catalyst will not be able to commercialize, or will be delayed in commercializing, Catalyst’s product candidates and Catalyst’s ability to generate revenue will be materially impaired.

Catalyst is developing Hydronidone for the treatment of NASH, an indication for which there are no approved products. Although there are guidelines issued by the FDA for the development of drugs for the treatment of NASH, the development of a novel product candidate such as Hydronidone may be more expensive and take longer than for other, better known or extensively studied product candidates. As other companies are in later stages of clinical trials for their potential NASH therapies, Catalyst expects that the path for regulatory approval for NASH therapies may continue to evolve in the near term as these other companies refine their regulatory approval strategies and interact with regulatory authorities. Such evolution may impact Catalyst’s future clinical trial designs, including trial size and endpoints, in ways that Catalyst cannot predict today. In particular, regulatory authority expectations about liver biopsy data may evolve especially as more information is published about the inherent variability in liver biopsy data. Certain of Catalyst’s competitors have experienced regulatory setbacks for NASH therapies following communications from the FDA. Catalyst currently does not know the impact, if any, that these setbacks could have on the path for regulatory approval for NASH therapies generally or for Hydronidone.

Catalyst’s anticipated development costs would likely increase if development of Hydronidone or any future product candidate is delayed because Catalyst is required by the FDA to perform studies or trials in addition to, or different from, those that Catalyst currently anticipates, or make changes to ongoing or future clinical trial designs. In addition, if Catalyst is unable to leverage our safety database for NASH indications, Catalyst may be required to perform additional trials, which would result in increased costs and may affect the timing or outcome of its clinical trials. In addition, Hydronidone may not be developed as a monotherapy, but as a part of a combination therapy, which will add to the complexity of clinical development and may cause further delays in Hydronidone’s (F351) development and affect Catalyst’s costs and divert management’s resources.

If safe and effective use of any of Catalyst’s product candidates depends on an in vitro diagnostic that is not otherwise commercially available, then the FDA generally will require approval or clearance of that diagnostic, known as a companion diagnostic, at the same time that the FDA approves Catalyst’s product candidates, if at all. Companion diagnostics are developed in conjunction with clinical programs for the associated product and are subject to regulation as medical devices by the FDA and comparable regulatory authorities.

According to FDA guidance, if the FDA determines that a companion diagnostic device is essential to the safe and effective use of a novel therapeutic product or indication, the FDA generally will not approve the therapeutic product or new therapeutic product indication if the companion diagnostic is not also approved or cleared for that indication. If a satisfactory companion diagnostic is not commercially available, Catalyst may be required to develop or obtain one that would be subject to regulatory approval requirements. The process of obtaining or creating such diagnostics is time-consuming and costly. If the FDA or a comparable foreign regulatory authority requires approval of a companion diagnostic for any of Catalyst’s product candidates, including Hydronidone, whether before or after it obtains marketing approval, Catalyst, and/or future collaborators, may encounter difficulties in developing and obtaining approval for such product candidate. Any delay or failure by Catalyst or third-party collaborators to develop or obtain regulatory approval of a companion diagnostic could delay or prevent approval or continued marketing of such product candidate. Catalyst may also experience delays in developing a sustainable, reproducible and scalable manufacturing process for the companion diagnostic or in transferring that process to commercial partners or negotiating insurance reimbursement plans, all of which may prevent Catalyst from completing Catalyst’s clinical trials or commercializing Catalyst’s product candidates, if approved, on a timely or profitable basis, if at all.

Healthcare providers, physicians and third-party payors will play a primary role in the recommendation and prescription of any product candidates for which Catalyst obtains marketing approval. Catalyst’s future arrangements with third-party payors and customers may expose Catalyst to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which Catalyst would market, sell and distribute its products. As a pharmaceutical company, even though Catalyst does not and may not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party payors, federal and state healthcare laws and regulations pertaining to fraud and abuse and patients’ rights are and will be applicable to its business. These regulations include:

Efforts to ensure that its business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that its business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If Catalyst’s operations are found to be in violation of any of these laws or any other governmental regulations that may apply to it, Catalyst may be subject to significant civil, criminal and administrative penalties, damages, fines, imprisonment, exclusion from government funded healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of its operations. If any physicians or other healthcare providers or entities with whom Catalyst expects to do business are found to not be in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs.

All jurisdictions in which Catalyst conducts its research, development, manufacturing and commercialization activities regulate these activities in great depth and detail. Obtaining regulatory approvals is a lengthy, expensive and uncertain process. Catalyst intends to focus its activities in the major markets of the PRC and the United States. These geopolitical areas all have strict regulation on medical devices, and, in doing so, they employ broadly similar regulatory strategies, including regulation of product development, approval, manufacturing, sales and marketing and distribution of medical devices. However, regulatory regimes vary in different regions, which makes regulatory compliance more complex and costly for companies like Catalyst that plan to operate in each of these regions.

Legislative and regulatory actions affecting government prescription drug procurement and reimbursement programs occur relatively frequently. In the United States, the ACA was enacted in 2010 to expand healthcare coverage. Since then, numerous efforts have been made to repeal, amend or administratively limit the ACA in whole or in part. For example, the Tax Cuts and Jobs Act, signed into law by President Trump in 2017, repealed the individual health insurance mandate, which is considered a key component of the ACA. In December 2018, a Texas federal district court struck down the ACA on the grounds that the individual health insurance mandate is unconstitutional, although this ruling has been stayed pending appeal. The ongoing challenges to the ACA and new legislative proposals have resulted in uncertainty regarding the ACA’s future viability and destabilization of the health insurance market. The resulting impact on its business is uncertain and could be material.

Efforts to control prescription drug prices could also have a material adverse effect on its business. For example, in 2018, President Trump and the Secretary of the U.S. Department of Health and Human Services released the “American Patients First Blueprint” and have begun implementing certain portions. The initiative includes proposals to increase generic drug and biosimilar competition, enable the Medicare program to negotiate drug prices more directly and improve transparency regarding drug prices and ways to lower Catalyst consumers’ out-of-pocket costs. The Trump administration also proposed to establish an “international pricing index” that would be used as a benchmark to determine the costs and potentially limit the reimbursement of drugs under Medicare Part B. Among other pharmaceutical manufacturer industry-related proposals, Congress has proposed bills to alter the benefit structure to increase manufacturer contributions in the catastrophic phase. The volume of drug pricing-related bills dramatically increased under the previous Congress, and the resulting impact on its business is uncertain and could be material. The extent to which the 118th Congress will continue this approach is uncertain.

The IRA provides the Centers for Medicare & Medicaid Services (“CMS”) with the ability to directly negotiate prescription drug and biologic prices with manufacturers and to cap out-of-pocket spending for Medicare Part D enrollees. Each year, CMS will select and negotiate a preset number of high-spend drugs and biologics covered under Medicare Parts B and D that lack generic or biosimilar competition. Price negotiations for Part D begin in 2023. Taking effect in 2023, the IRA provides a new “inflation rebate” that requires drug manufacturers to pay a rebate to the federal government if the price for a drug or biologic under Medicare Parts B or D increases faster than the rate of inflation. The IRA contains a number of other provisions intended to reduce drug spending and the federal deficit, and the IRA’s impact on competition and commercialization is uncertain but could be material.

In addition, many states have proposed or enacted legislation that seeks to indirectly or directly regulate pharmaceutical drug pricing, such as by requiring biopharmaceutical manufacturers to publicly report proprietary pricing information or to place a maximum price ceiling on pharmaceutical products purchased by state agencies. For example, in 2017, California’s governor signed a prescription drug price transparency state bill into law, requiring prescription drug manufacturers to provide advance notice and explanation for price increases of certain drugs that exceed a specified threshold. Both Congress and state legislatures are considering various bills that would reform drug purchasing and price negotiations, allow greater use of utilization management tools to limit Medicare Part D coverage, facilitate the import of low priced drugs from outside the United States and encourage the use of generic drugs. Such initiatives and legislation may cause added pricing pressures on its products.

Changes to the Medicaid program at the federal or state level could also have a material adverse effect on its business. Proposals that could impact coverage and reimbursement of its products, including giving states more flexibility to manage drugs covered under the Medicaid program and permitting the re-importation of prescription medications from Canada or other countries, could have a material adverse effect by limiting its products’ use and coverage. Furthermore, state Medicaid programs could request additional supplemental rebates on its products as a result of an increase in the federal base Medicaid rebate. To the extent that private insurers or managed care programs follow Medicaid coverage and payment developments, they could use the enactment of these increased rebates to exert pricing pressure on its products, and the adverse effects may be magnified by their adoption of lower payment schedules.

Other proposed regulatory actions affecting manufacturers could have a material adverse effect on its business. It is difficult to predict the impact, if any, of any such proposed legislative and regulatory actions or resulting state actions on the use and reimbursement of its products in the United States, but its results of operations may be adversely affected.

Numerous state and federal laws and regulations govern the collection, dissemination, use, privacy, confidentiality, security, availability, integrity, and other processing of personal information. HIPAA establishes a set of national privacy and security standards for the protection of protected health information (as defined in HIPAA) (“PHI”) by health plans, healthcare clearinghouses and certain healthcare providers, referred to as covered entities, and the business associates with whom such covered entities contract for services. HIPAA requires covered entities and business associates, such as Catalyst, to develop and maintain policies with respect to the protection of, use and disclosure of electronic PHI, including the adoption of administrative, physical and technical safeguards to protect such information, and certain notification requirements in the event of a data breach.

The collection and use of personal health data and other personal data in the EU is governed by the provisions of the GDPR, which came into force in May 2018, related data protection laws in individual EU Member States as well as implementations of the GDPR in the European Economic Area. The GDPR establishes a number of strict requirements and restrictions applicable to the processing (processing includes collecting, analyzing and transferring) of personal data (i.e., data which identifies an individual or from which an individual is identifiable) in particular with respect to health data from clinical trials and adverse event reporting. The GDPR includes requirements relating to the legal basis of the processing (such as consent of the individuals to whom the personal data relates), the information provided to the individuals prior to processing their personal data, the notification obligations to the national data protection authorities and or data subjects (in particular in case of a data breach), and the security and confidentiality of the personal data. EU Member States may also impose additional requirements in relation to health, genetic and biometric data through their national legislation. Furthermore, it affords various rights to individuals (e.g., the right to access or erasure of personal data).and imposes potential penalties for breaches of up to 4.0% of the annual worldwide turnover or €20 million, whichever is greater. In case of a breach of the GDPR, individuals (e.g., study subjects) may also have a right to compensation for financial or non-financial losses (e.g., distress).

There may be circumstances under which a failure to comply with the GDPR, or the exercise of individual rights under the GDPR, would limit Catalyst’s ability to utilize clinical trial data collected on study subjects. Furthermore, there is a growing trend towards the required public disclosure of clinical trial data in the EU, which adds to the complexity of obligations relating to processing health data from clinical trials. Such public disclosure obligations are provided in the new EU Clinical Trials Regulation (EU CTR), EMA disclosure initiatives and voluntary commitments

by industry. Failing to comply with these obligations could lead to government enforcement actions and significant penalties, harm to reputation, and adversely impact the business and operating results. The uncertainty regarding the interplay between different regulatory frameworks, such as the CTR and the GDPR, further adds to the complexity.

In addition, Catalyst is subject to various U.S. state laws which may require Catalyst to modify its data processing practices and policies and to incur substantial costs and expenses in an effort to comply.

Catalyst is subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. From time to time and in the future, its operations may involve the use of hazardous and flammable materials, including chemicals and biological materials, and may also produce hazardous waste products. Even if Catalyst contracts with third parties for the disposal of these materials and waste products, Catalyst cannot completely eliminate the risk of contamination or injury resulting from these materials. In the event of contamination or injury resulting from the use or disposal of its hazardous materials, Catalyst could be held liable for any resulting damages, and any liability could exceed its resources. Catalyst also could incur significant costs associated with civil or criminal fines and penalties for failure to comply with such laws and regulations.

Catalyst maintains workers’ compensation insurance to cover Catalyst for costs and expenses Catalyst may incur due to injuries to its employees resulting from the use of hazardous materials, but this insurance may not provide adequate coverage against potential liabilities. However, Catalyst does not maintain insurance for environmental liability or toxic tort claims that may be asserted against Catalyst.

In addition, Catalyst may incur substantial costs to comply with current or future environmental, health and safety laws and regulations. Current or future environmental laws and regulations may impair its research, development or production efforts that could adversely affect its business, financial condition, results of operations or prospects. In addition, failure to comply with these laws and regulations may result in substantial fines, penalties or other sanctions.

Any regulatory approvals that Catalyst may receive for Catalyst’s product candidates will require the submission of reports to regulatory authorities and surveillance to monitor the safety and efficacy of the product candidate, including Hydronidone, may contain significant limitations related to use restrictions for specified age groups, warnings, precautions or contraindications, and may include burdensome post-approval study or risk management requirements. For example, the FDA may require a REMS in order to approve Catalyst’s product candidates, which could entail requirements for a medication guide, physician training and communication plans or additional elements to ensure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. In addition, if the FDA or comparable foreign regulatory authorities approve Catalyst’s product candidates, Catalyst’s product candidates and the activities associated with their development and commercialization, including their design, testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale, distribution, import and export will be subject to comprehensive regulation by the FDA and other regulatory agencies in the United States and by comparable foreign regulatory authorities. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as on-going compliance with cGMPs and GCPs for any clinical trials that Catalyst conducts following approval. In addition, manufacturers of drug products and their facilities are subject to continual review and periodic, unannounced inspections by the FDA and other regulatory authorities for compliance with cGMPs.

In connection with the preparation and audit of its consolidated financial statements for the year ended December 31, 2021, a material weakness was identified in Catalyst’s internal control over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a

reasonable possibility that a material misstatement of its consolidated financial statements will not be prevented or detected on a timely basis. Catalyst’s material weakness related to the following control deficiency: Catalyst did not design and maintain effective controls related to the review of certain contracts, including the proper application of U.S. GAAP. Specifically, Catalyst did not design and maintain controls to properly review the retention bonuses granted to its employees in November 2021 after its reduction in workforce to assess the appropriate accounting treatment under U.S. GAAP.

While Catalyst took steps to remediate the material weakness, Catalyst cannot assure you that the measures Catalyst has taken to date and may take in the future will prevent or avoid potential future material weakness. The effectiveness of its internal control over financial reporting is subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the possibility of human error and the risk of fraud. If Catalyst is unable to record, process and report financial information accurately, and to prepare financial statements within the time periods specified by the forms of the SEC, Catalyst could be adversely affected which, in turn, may adversely affect its reputation and business and the market price of its common stock. In addition, any such failures could result in litigation or regulatory actions by the SEC or other regulatory authorities, loss of investor confidence, delisting of its securities and harm to its reputation and financial condition, or diversion of financial and management resources from the operation of its business.

If any of its product candidates receives marketing approval, Catalyst may nonetheless fail to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical community. For example, to date, no specific therapeutic drugs treating HBV-associated liver fibrosis have been approved worldwide, and doctors may not accept or use Hydronidone as a treatment for liver fibrosis even if Hydronidone receives marketing approval. If its product candidates do not achieve an adequate level of acceptance, Catalyst may not generate significant product revenues and Catalyst may not become profitable. The degree of market acceptance of its product candidates, if approved for commercial sale, will depend on several factors, including:

Catalyst’s development candidates are not expected to be commercially available for several years, if at all. Further, the commercial success of product candidates will depend upon its acceptance by physicians, individuals, third-party payors and other key decision-makers as a therapeutic and cost-effective alternative to products available at the time, which may include competing products currently under development by others. See the risk factor titled “—Catalyst faces substantial competition that may result in others discovering, developing or commercializing products before or more successfully than Catalyst does.” If Catalyst is unable to successfully develop, obtain regulatory approval in a timely manner (including due to reasons that are beyond its control, such as changes in regulations or a shutdown of the federal government, including the FDA) and commercialize its development candidates, its ability to generate

revenue from product sales will be significantly delayed and its business will be materially and adversely affected, and Catalyst may not be able to earn sufficient revenues to continue as a going concern.

The regulatory authorities in the United States and the EU have not approved any products for the treatment of NASH, and while there are guidelines issued by the FDA for the development of drugs for the treatment of NASH and an FDA surrogate endpoint table for drug approval, it is unclear whether the requirements for approval will change in the future or whether the FDA will rely on regulatory precedent for future regulatory approvals. Any such changes may require Catalyst to conduct new trials that could delay its timeframe and increase the costs of our programs related to Hydronidone or any future product candidate for the treatment of NASH. In addition, Catalyst cannot be certain which efficacy endpoints or presentation thereof clinical or regulatory agencies may require in a Phase 3 clinical trial of NASH or for approval of Catalyst’s product candidates.

Even if the FDA or other regulatory agency approves its product candidates, the approval may impose significant restrictions on the indicated uses, conditions for use, labeling, advertising, promotion, marketing and/or production of such product and may impose ongoing commitments or requirements for post-approval studies, including additional research and development and clinical trials. The FDA and other agencies also may impose various civil or criminal sanctions for failure to comply with regulatory requirements, including withdrawal of product approval. Regulatory approval from authorities in foreign countries will be needed to market its product candidates in those countries. Approval by one regulatory authority does not ensure approval by regulatory authorities in other jurisdictions. If Catalyst fails to obtain approvals from foreign jurisdictions, the geographic market for its product candidates would be limited.

The biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, intense competition, and a strong emphasis on proprietary products. Catalyst faces potential competition from many different sources, including major pharmaceutical, specialty pharmaceutical and biotechnology companies, academic institutions and governmental agencies, and public and private research institutions. Any product candidates that Catalyst successfully develops and commercializes will compete with existing therapies and new therapies that may become available in the future.

Although there are no currently approved therapeutic drug treatments for liver fibrosis, several companies are developing product candidates in clinical studies. For details, see “BC’s Business—Competition” in this proxy statement.

Catalyst faces competition with respect to Catalyst’s current product candidates and will face competition with respect to any future product candidates from segments of the pharmaceutical, biotechnology and other related industries that pursue targeted therapies for patients with NASH. If Hydronidone or Catalyst’s future product candidates do not offer sustainable advantages over competing products, Catalyst may otherwise not be able to successfully compete against current and future competitors.

Catalyst’s competitors may obtain regulatory approval of their products more rapidly than Catalyst may or may obtain patent protection or other intellectual property rights that limit Catalyst’s ability to develop or commercialize Catalyst’s product candidates. Catalyst’s competitors may also develop drugs that are more effective, more convenient, more widely used and less costly or have a better safety profile than Catalyst’s products and these competitors may also be more successful than Catalyst in manufacturing and marketing their products. In addition, Catalyst will likely need to develop Catalyst’s product candidates in collaboration with companion diagnostic companies, and Catalyst will face competition from other companies in establishing these future collaborations.

Catalyst’s commercial opportunity in different indications could be reduced or eliminated if competitors develop and market products or therapies that are more convenient to use, more effective, less expensive, and safer to use than its products. Furthermore, if competitors gain FDA approval earlier than Catalyst does, Catalyst may be unable to establish a strong market presence or to gain market share. The key competitive factors affecting the success of all its product candidates, if approved, are likely to be their efficacy, safety, convenience, price, the level of generic competition, and the availability of reimbursement from government and other third-party payors. Catalyst’s product candidates, if any are approved, may compete with these existing drug and other therapies but may not be competitive with them in price. Catalyst expects that if Catalyst’s product candidates are approved, they will be priced at a

significant premium over competitive generic, including branded generic, products. As a result, obtaining market acceptance of, and gaining significant share of the market for, any of Catalyst’s product candidates that Catalyst successfully introduces to the market will pose challenges.

Many of the companies against which Catalyst is competing or against which Catalyst may compete in the future have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than Catalyst does. Mergers and acquisitions in the pharmaceutical, biotechnology and diagnostic industries may result in even more resources being concentrated among a smaller number of its competitors. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These competitors also compete with Catalyst in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and individual registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, its programs.

The regulations that govern marketing approvals, pricing, coverage and reimbursement for new drug products vary widely from country to country. Current and future legislation may significantly change the approval requirements in ways that could involve additional costs and cause delays in obtaining approvals. Some countries require approval of the sale price of a drug before it can be marketed. In many countries, the pricing review period begins after marketing or product licensing approval is granted. In some foreign markets, prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval is granted. As a result, Catalyst may obtain marketing approval for a product in a particular country, but then be subject to price regulations that delay its commercial launch of the product, possibly for lengthy time periods, and negatively impact the revenues Catalyst is able to generate from the sale of the product in that country. Adverse pricing limitations may hinder its ability to recoup its investment in one or more product candidates, even if its product candidates obtain marketing approval.

Catalyst’s ability to commercialize any product candidates successfully also will depend in part on the extent to which coverage and adequate reimbursement for these products and related treatments will be available from government health administration authorities, private health insurers and other organizations. Government authorities and third-party payors, such as private health insurers and health maintenance organizations, decide which medications they will pay for and establish reimbursement levels. A primary trend in the U.S. healthcare industry and elsewhere is cost containment. Government authorities and third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for certain medications. Increasingly, third-party payors are requiring that drug companies provide them with predetermined discounts from list prices and are challenging the prices charged for medical products. Coverage and reimbursement may not be available for any product that Catalyst or its collaborators commercialize and, even if these are available, the level of reimbursement may not be satisfactory. Reimbursement may affect the demand for, or the price of, any product candidate that receives marketing approval. Obtaining and maintaining adequate reimbursement for its products may be difficult. Catalyst may be required to conduct expensive pharmaco-economic studies to justify coverage and reimbursement or the level of reimbursement relative to other therapies. If coverage and adequate reimbursement are not available or reimbursement is available only to limited levels, Catalyst may not be able to successfully commercialize any product candidate for which Catalyst obtains marketing approval.

There may be significant delays in obtaining reimbursement for newly approved drugs, and coverage may be more limited than the purposes for which the drug is approved by the FDA or similar regulatory authorities outside the United States. Moreover, eligibility for reimbursement does not imply that a drug will be paid for in all cases or at a rate that covers its costs, including research, development, manufacture, sale and distribution. Interim reimbursement levels for new drugs, if applicable, may also not be sufficient to cover its costs and may not be made permanent.

Reimbursement rates may vary according to the use of the drug and the clinical setting in which it is used, may be based on reimbursement levels already set for lower cost drugs and may be incorporated into existing payments for other services. Net prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in the United States. Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement policies. Catalyst’s inability to promptly obtain coverage and adequate reimbursement rates from both government-funded and private payors for

any approved products that it develops could have a material adverse effect on its operating results, ability to raise capital needed to commercialize products and overall financial condition.

The availability and extent of reimbursement by governmental and private payors is essential for most patients to be able to afford expensive treatments. Sales of Catalyst’s product candidates will depend substantially, both domestically and abroad, on the extent to which the costs of its product candidates will be paid by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or reimbursed by government health administration authorities, private health coverage insurers and other third-party payors. If reimbursement is not available, or is available only to limited levels, Catalyst may not be able to successfully commercialize its product candidates. Even if coverage is provided, the approved reimbursement amount may not be high enough to allow Catalyst to establish or maintain pricing sufficient to realize a sufficient return on its investment.

There is significant uncertainty related to the insurance coverage and reimbursement of newly approved products. Moreover, increasing efforts by governmental and third-party payors, in the United States and abroad, to cap or reduce healthcare costs may cause such organizations to limit both coverage and level of reimbursement for new products approved and, as a result, they may not cover or provide adequate payment for its product candidates. Catalyst expects to experience pricing pressures in connection with the sale of any of its product candidates, due to the trend toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative changes. The downward pressure on healthcare costs in general has become very intense. As a result, increasingly high barriers are being erected to the entry of new products.

The trading price of Catalyst Common Stock has historically been highly volatile and there have been significant periods of time in which the trading volume of its common stock has been low, which can contribute to volatility in price. Additionally, the stock market in general has experienced extreme price and volume fluctuations. The market prices of securities of pharmaceutical, biopharmaceutical and biotechnology companies in particular have been extremely volatile and have experienced fluctuations that have often been unrelated or disproportionate to operating performance. Factors giving rise to this volatility may include:

Catalyst’s operating results are likely to fluctuate significantly from quarter to quarter and year to year. These fluctuations could cause its stock price to decline. Some of the factors that may cause operating results to fluctuate on a period-to-period basis include the scope, progress, duration results and costs of preclinical and clinical development programs, as well as non-clinical studies and assessments of product candidates and programs, restructuring costs, implementation or termination of collaboration, licensing, manufacturing or other material agreements with third parties, non-recurring revenue or expenses under any such agreement, the cost, timing and outcomes of regulatory compliance, approvals or other regulatory actions and general and industry-specific economic conditions, particularly as it affects the pharmaceutical, biopharmaceutical or biotechnology industries in the United

States. Period-to-period comparisons of its historical and future financial results may not be meaningful, and investors should not rely on them as an indication of future performance. Fluctuating losses may fail to meet the expectations of securities analysts or investors. Failure to meet these expectations may cause the price of its common stock to decline.

Catalyst’s current trading volumes are modest, and sales of a substantial number of shares of its common stock in the public market, or the perception that these sales could occur, could cause the market price to decline. Catalyst has effective registration statements on Form S-3 that enables Catalyst to sell up to $150.0 million of securities in one or more offerings, subject to limitations under applicable SEC rules, including up to $50.0 million of common stock issuable under its Equity Distribution Agreement with Piper Sandler & Co. Any additional sales in the public market of its common stock or other securities under these shelf registration statements could adversely affect prevailing market prices for its common stock. In addition, Catalyst has outstanding options to purchase 8,678,767 shares of common stock at a weighted average exercise price of $1.42 as of December 31, 2022. If such options are exercised and the shares are sold into the open market, such sales also might make it more difficult for Catalyst to sell equity securities in the future at a time and at a price that Catalyst deems appropriate. Conversion or exercise of these securities into shares of its common stock will cause dilution to the other holders of its common stock, and all such stock may be sold in the public market after conversion or exercise, subject to restrictions under the securities laws, which may lead to a decline in the market price of its common stock.

Catalyst is incorporated in Delaware. Anti-takeover provisions of Delaware law and its charter documents may make a change in control or efforts to remove management more difficult. Also, under Delaware law, its board of directors may adopt additional anti-takeover measures. The existence of the following provisions of Delaware law and its restated certificate of incorporation and amended and restated bylaws could limit the price that investors might be willing to pay in the future for shares of its common stock.

Catalyst’s restated certificate of incorporation authorizes its board of directors to issue up to 5,000,000 shares of preferred stock and to determine the terms of those shares of stock without any further action by its stockholders. If the board of directors exercises this power to issue preferred stock, it could be more difficult for a third-party to acquire a majority of its outstanding voting stock and vote the stock they acquire to remove management or directors.

Catalyst’s restated certificate also provides staggered terms for the members of its board of directors, and that directors may be removed by stockholders only for cause and only by vote of the holders of 66 2/3% of voting shares then outstanding. In addition, stockholders currently are not permitted to call special meetings of stockholders, or to act by written consent without a meeting. These provisions may prevent stockholders from replacing the entire board in a single proxy contest, making it more difficult for a third party to acquire control without the consent of its board of directors. These provisions could also delay the removal of management by the board of directors with or without cause.

As a Delaware corporation, Catalyst is also subject to certain Delaware anti-takeover provisions. Under Delaware law, a publicly-held corporation may not engage in a business combination with any holder of 15% or more of its voting stock unless the holder has held the stock for three years or, among other things, the board of directors has approved the transaction. Catalyst’s board of directors could rely on Delaware law to prevent or delay an acquisition.

Catalyst has been a “smaller reporting company” as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and thus have been allowed to provide simplified executive compensation disclosures in its filings. Catalyst has also had certain other decreased disclosure obligations in its SEC filings. Catalyst cannot predict whether investors find its common stock less attractive because of its reliance on any of these exemptions. If some investors find its common stock less attractive as a result, there may be a less active trading market for its common stock and its stock price may be more volatile.

On November 2, 2022, Catalyst received a letter from the Listing Qualifications Department of Nasdaq informing Catalyst that, because the closing bid price for Catalyst’s common stock listed on Nasdaq was below $1.00 for 30 consecutive trading days, Catalyst is not in compliance with the minimum bid price requirement for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Marketplace Rule 5550(a)(2) (the “Minimum Bid Price Requirement”). In accordance with Nasdaq Marketplace Rule 5810(c)(3)(A), Catalyst has a period of 180 calendar days from November 2, 2022, or until May 1, 2023, to regain compliance with the Minimum Bid Price Requirement. If Catalyst does not regain compliance within the allotted compliance period, including any extensions that may be granted by Nasdaq, Nasdaq will provide notice that Catalyst’s common stock will be subject to delisting.

Catalyst has received such notices three times in the past six years. There can be no assurance that Catalyst will regain compliance with the Minimum Bid Price Requirement during the 180 day compliance period, secure a second period of 180 calendar days to regain compliance, or maintain compliance with the other Nasdaq listing requirements.

Catalyst’s ability to publicly or privately sell equity securities and the liquidity of its common stock could be adversely affected if it is delisted from The Nasdaq Capital Market or if it is unable to transfer its listing to another stock market. If Catalyst’s common stock is delisted by Nasdaq, it could lead to a number of negative implications, including an adverse effect on the price of its common stock, increased volatility in its common stock, limited availability of market quotations for its common stock, reduced liquidity in its common stock, the loss of federal preemption of state securities laws and greater difficulty in issuing additional securities and obtaining financing. In addition, delisting of Catalyst’s common stock could deter broker-dealers from making a market in or otherwise seeking or generating interest in its common stock, could result in a loss of current or future coverage by certain sell-side analysts and might deter certain institutions and persons from investing in its securities at all. Delisting could also cause a loss of confidence of Catalyst’s customers, collaborators, vendors, suppliers and employees, which could harm its business and future prospects.

As part of the F351 Agreement, Catalyst issued 12,340 shares of Catalyst Convertible Preferred Stock, which upon stockholder approval, will be converted to Catalyst Common Stock, subject to applicable beneficial ownership limitations. The terms of the Catalyst Convertible Preferred Stock include a cash settlement feature which provides that if Catalyst stockholders fail to approve the conversion of the Catalyst Convertible Preferred Stock by September 30, 2023, Catalyst could be required to make cash payments to the holders of Catalyst Convertible Preferred Stock significantly in excess of its current liquidity. Catalyst believes that stockholders who are entitled to vote on the conversion proposal at Catalyst's 2023 Annual Meeting of Stockholders, which is expected to be held in the third quarter of 2023, will vote to approve the proposal. However, the vote of Catalyst's common stockholders is outside of Catalyst's control. Catalyst's independent registered public accounting firm has issued a report that raised substantial doubt about Catalyst's ability to continue as a going concern.

BC is largely dependent on sales of ETUARY, but BC may not be able to maintain ETUARY’s sales volumes, pricing levels or profit margins. Sales of ETUARY accounted for 98.1% and 97.0% of BC’s total revenue in 2021 and 2022, respectively, and BC expects that sales of ETUARY will continue to comprise a substantial portion of BC’s total revenue in the near future. As a result, any reduction in sales or profit margins of ETUARY will thus have a material negative impact on BC’s business and results of operations.

In addition, the pharmaceutical industries are characterized by rapid changes in technology, constant enhancement of industrial know-how and frequent emergence of new products, which renders BC’s targeted markets highly competitive. Notably, the IPF drug market in the PRC is characterized by increasingly fierce competition, with one

pirfenidone product and one nintedanib product approved and commercialized as of December 31, 2022, in addition to BC’s ETUARY. There are also several drug candidates that have entered into Phase 2 or more advanced clinical trial stage. With the increase in the penetration rate of IPF drugs and the expansion of the overall market, more market players will join the IPF market, and, consequently, the sales of BC’s ETUARY, which accounted for 78.8% of the total market in 2021, may decrease. For details, see “BC’s Business—Our Products and Product Pipeline—ETUARY: National Class 1.1 New Drug for IPF Approved in 2011—Market Opportunities and Competition” in this proxy statement. New entrants to the IPF market in the PRC may exert downward pressure on BC’s average selling price of ETUARY, which may negatively impact sales and/or profit of ETUARY.

Many of BC’s competitors, including foreign pharmaceutical companies, may have substantially greater clinical, research, regulatory, manufacturing, marketing, financial and human resources compared to BC. Certain of BC’s competitors may be actively engaged in research and development in areas where BC has products or where BC is developing drug candidates or new indications for BC’s existing products. Other companies may discover, develop, acquire or commercialize products more quickly or more successfully than BC does. Moreover, there may also be significant consolidation in the pharmaceutical industry among BC’s competitors or ventures among competitors that may increase their market share. Furthermore, BC’s competitors may apply for and obtain marketing approvals in the PRC or other countries for products with the same intended use as BC’s drugs and drug candidates more rapidly than BC does. The capacity of the relevant authorities, such as the NMPA, to concurrently review multiple marketing applications for the same type of innovative drug may be limited. Therefore, such authorities’ review of BC’s drug candidates may be delayed when there is concurrent review of BC’s drug candidates with BC’s competitors’ products, and the registration process of BC’s products may be prolonged.

In addition to market competition from generic drugs and other products or therapies indicated for the same disease, many of the factors discussed in this Risk Factors section could adversely affect sales of ETUARY, including but not limited to, pricing pressures caused by government policies and inclusion or removal from the governmental medical insurance coverage, market acceptance among the medical community, disruptions in manufacturing or distribution, issues with product quality or side effects and disputes over intellectual property. Moreover, despite BC’s efforts, BC may be unable to develop or acquire new products that would diversify BC’s business and reduce BC’s dependence on ETUARY.

BC’s ability to generate revenue and realize profitability depends on the successful completion of the development of BC’s drug candidates, obtaining necessary regulatory approvals, and manufacturing and commercializing BC’s drug candidates, which is contingent upon various factors. Such factors include:

BC may not be able to achieve one or more of the foregoing factors in a timely manner or at all. As a result, BC could experience significant delays in or obtaining or not be able to obtain approval for and/or successful commercialization of BC’s drugs and drug candidates, which would render BC unable to achieve its planned milestones and materially harm BC’s drug development prospects.

Before obtaining regulatory approval for the sale of BC’s drug candidates, BC must conduct extensive clinical trials to demonstrate their safety and efficacy, but there can be no assurance that such trials will be completed in a timely or cost-effective manner, due to the inherently unpredictable nature of clinical drug development. Events that may prevent successful or timely completion of clinical development may include:

If BC experiences delays in the completion of, or the termination of, a clinical trial of any of BC’s drug candidates, the commercial prospects of that drug candidate may be harmed. Specifically, BC may:

Consequentially, any delays in completing BC’s clinical trials may increase BC’s costs, delay BC’s drug candidate development and approval process, and jeopardize BC’s ability to commercialize BC’s approved products and generate revenues.

The timely completion of clinical trials in compliance with BC’s protocols depends substantially on BC’s ability to enroll and retain a sufficient number of patients in a trial. However, BC may experience difficulties in patient enrollment for a variety of reasons, including BC’s drug candidates’ targeting rare diseases, the size and nature of the patient population for such rare diseases, the patient eligibility criteria defined in the protocol, the accessibility of trial sites for the patients, and the patients’ perceptions as to the potential advantages and side effects of the drug candidates being studied in relation to other available products, product candidates or therapies. Moreover, BC’s clinical trials will likely compete with other clinical trials for drug candidates that are in the same therapeutic areas as other drug candidates of BC, which will reduce the number and types of patients available to BC.

Even if BC is able to enroll a sufficient number of patients, delays in patient enrollment may result in increased costs or may affect the timing or outcome of the planned clinical trials, which could prevent completion of these trials and adversely affect BC’s ability to advance the development of drug candidates.

During the conduct of clinical trials, patients report changes in their health, including illnesses, injuries and discomforts, to their doctor. Often, it is not possible to determine whether or not the product candidate being studied caused these conditions. Regulatory authorities may draw different conclusions or require additional testing to confirm these determinations, if they occur. In addition, it is possible that as BC tests its product candidates in larger, longer and more extensive clinical trials with a broader group of patients, or as use of these product candidates becomes more widespread if they receive marketing approval, illnesses, injuries, discomforts and other AEs that were observed in earlier trials, as well as conditions that did not occur or went undetected in previous trials, will be reported by participants. Many times, side effects are only detectable after investigational product candidates are tested in large-scale, Phase 3 trials or, in some cases, after they are made available to patients on a commercial scale after approval. If additional clinical experience indicates that any of BC’s current product candidates and any future product candidates has serious or life-threatening side effects or other side effects that outweigh the potential therapeutic benefit, the development of the product candidate may fail or be delayed, or, if the product candidate has received marketing approval, such approval may be revoked, which would harm BC’s business, prospects, operating results and financial condition.

Any adverse events or serious adverse events reported in BC’s clinical trials caused by BC’s drug candidates could give rise to significant negative consequences. Such consequences may include:

In any such events, BC may suspend, delay or alter development or marketing of BC’s drug candidates, and the subsequent costs thereof may be substantially higher than anticipated.

BC faces an inherent risk of product liability as a result of clinical trials if BC’s drug candidates cause, or are perceived to cause, injury, or are found to be otherwise unsuitable during clinical testing. Regardless of the merits or eventual outcome, such liability claims may, among others, result in:

To cover such liability claims arising from clinical trials, BC has clinical trial insurance for all of its trials, which are necessary for the approval of commercialization of BC’s pipeline drugs. However, it is possible that BC’s liabilities could exceed BC’s insurance coverage or that BC’s insurance will not cover all situations in which a claim against BC could be made. BC may also not be able to maintain insurance coverage at a reasonable cost or obtain insurance coverage that will be adequate to satisfy any liability that may arise.

The global pharmaceutical market is constantly evolving, and BC must keep pace with new technologies and methodologies to maintain BC’s competitive position. BC’s future success partially depends on BC’s ability to launch new products that meet evolving market demands, in particular, new drugs, that are effective in treating new diseases and illnesses. However, there can be no assurance that BC will be able to respond to emerging or evolving trends by improving BC’s product portfolio in a timely manner, or at all. For the years ended December 31, 2021 and 2022, BC incurred substantial expenditure related to the research and development of BC’s drugs and drug candidates, and BC expects to continue to invest significant amounts of human and capital resources to develop BC’s drugs and drug candidates while enhancing BC’s technologies that will allow BC to advance its pipeline drugs. BC also intends to continue to strengthen its technical capabilities in drug discovery, development, and manufacturing, which are capital and time intensive. However, there can be no assurance that BC will be able to develop, improve or adapt to new technologies and methodologies, successfully identify new technological opportunities, or develop and bring new or enhanced products to market.

Due to limited financial and managerial resources, BC focuses its product pipeline on drug candidates that BC identifies for specific indications, and, as a result, BC may forego or delay pursuit of opportunities with other drug candidates or for other indications that may later prove to have greater commercial potential or a greater likelihood of success. If BC does not accurately evaluate the commercial potential or target market for a particular drug candidate, BC may allocate internal resources to a drug candidate in a therapeutic area and fail to allocate similar resources to other drug candidates or in other therapeutic areas for which it would have been more advantageous to pursue.

BC cannot guarantee that it will be successful in identifying potentially optimal drug candidates to enrich BC’s pipeline. Research programs to pursue the development of BC’s drug candidates for additional indications and to identify new drug candidates and drug targets require substantial technical, financial and human resources. BC’s research programs may initially show promising results in identifying potential indications and/or drug candidates, yet fail to yield results for clinical development for a number of reasons. Accordingly, there can be no assurance that BC will be able to identify new drug candidates or additional therapeutic opportunities for BC’s drug candidates or to develop suitable potential drug candidates through internal research programs, which could materially and adversely affect BC’s future growth and prospects.

Under medical insurance programs in the PRC, patients are entitled to reimbursement of all or a portion of the cost of pharmaceutical products listed in the National Reimbursement Drug List (the “NRDL”), the relevant provincial reimbursement drug lists, or other medical insurance reimbursement lists. However, such inclusion is based on a variety of factors, including clinical needs, use frequency, efficacy, safety and price, which may be outside of BC’s control. Moreover, the relevant PRC government authorities may, from time to time, review and revise, or change the scope of reimbursement for, the products that are included in the medical insurance reimbursement lists.

While BC’s ETUARY has been included in the NRDL as a Category B drug for its IPF indication since 2017, there can be no assurance that it will remain so listed, or unimpacted negatively by changes in the scope of reimbursement. To the extent that BC’s future approved drug candidates are not included in any medical insurance reimbursement list, or if any such insurance schemes are changed or canceled, which results in the removal of such drug candidates from the relevant medical insurance reimbursement lists, patients may choose, and hospitals, pharmacies and other medical institutions may recommend, alternative treatment methods, which may reduce demand for BC’s products and adversely impact BC’s sales.

BC may face pressure to lower the prices of its future approved drug candidates in order to have such drug candidates included in the medical insurance reimbursement lists, while such low price and reimbursement may not necessarily lead to increased sales. It is difficult to estimate the net effect of decreased prices and the potential of increased sales on BC’s profitability, and BC’s profits from the sales of its future products may decrease if BC significantly lowers prices without a greater increase in sales.

In addition, it is typical that the prices of pharmaceutical products will decline over the life of the product as a result of, among other things, increased competition from substitute products, the tender process by the hospitals or the government authorities, pricing policies of the relevant government authorities, or voluntary price adjustments by pharmaceutical companies. Any strategic downward price adjustments of BC’s existing or future approved products due to market competition could have a materially adverse effect on BC’s business and results of operations.

Moreover, BC’s marketed ETUARY is subject to the risk of being included in the PRC’s centralized volume-based procurement scheme. For details, see “—The policies of centralized volume-based procurement set by the PRC government may cover BC’s products in the future, and the prices of BC’s products may decrease, which in turn may have a material adverse impact on BC’s revenue, financial condition and results of operation” in this Risk Factors section.

The commercial success of BC’s existing and future approved products depends upon the degree of market acceptance such products can achieve, particularly among physicians, hospitals, pharmacies and other medical institutions, which is contingent upon a number of factors. Such factors affecting the market acceptance of a current or future approved product may include:

If BC’s existing and future approved products fail to achieve or maintain widespread market acceptance, or if new products introduced by BC’s competitors are perceived more favorably by healthcare practitioners and patients, are more cost-effective or otherwise render BC’s products obsolete, the demand for BC’s products may decline and BC’s business and profitability may be materially and adversely affected.

Because a considerable portion of pharmaceutical products BC sells to its distributors are sold to public hospitals and other medical institutions in the PRC, BC must submit bids in a centralized tender process to supply BC’s products to these institutions at specified prices. Each public medical institution in the PRC must generally procure drugs through a provincial centralized drug purchase platform and make substantially all of its purchases of pharmaceutical products through a centralized tender process. BC’s bids submitted in the centralized tender process are generally considered on the basis of price relative to substitute products and the clinical effectiveness of such substitute products, as well as the quality of BC’s products and services, among other things. As a result, BC’s sales volumes and profitability depend on BC’s ability to successfully differentiate its products and price its bids in a manner that enables BC to succeed in the centralized tender process at profitable levels.

However, BC may fail to win bids in a centralized tender process due to various factors, including reduced demand for the relevant product, noncompetitive bidding price, failure to meet certain quality requirements, or the relevant product’s being perceived to be less clinically effective than competing products. If BC’s products are not selected in the centralized tender process in one or more regions, BC’s sales of the relevant products to the public hospitals in those regions may encounter difficulties, and BC’s market share, revenues and profitability could be adversely affected.

PRC government authorities have implemented policies that aim to further increase the affordability of pharmaceutical products, including the centralized volume-based drug procurement system. For further details, see “BC’s Business—Product Pricing—Centralized Tender Process and Centralized Volume-based Procurement System” and “BC’s Business—Regulatory Requirements in the PRC—PRC Regulations in Relation to the Pharmaceutical Industry—Centralized Drug Procurement and Use” in this proxy statement.

Future procurement will include drugs listed in the NRDL that have great market demand and high purchase price, and future procurement is expected to gradually cover all types of domestically marketed drugs necessary for clinical use and of reliable quality to the extent possible. As a result, all appropriate drugs may be procured thereunder. Appropriate procurement methods for “orphan drugs” and drugs in shortage may be actively explored to ensure stable supply.

BC’s marketed ETUARY is currently not subject to the centralized volume-based procurement process. However, it is uncertain whether the centralized volume-based procurement scope would be expanded in the future and result in the inclusion of BC’s ETUARY or other drug candidates if commercialized, which may cause their retail prices to decrease. Moreover, if any products comparable or similar to BC’s products or product candidates if commercialized are included in the centralized volume-based procurement, patients’ willingness to use BC’s products may be materially and adversely affected and BC may need to change its pricing strategy. If any or all of the foregoing were to occur, BC’s sales revenue may decrease, which in turn would have a material adverse impact on BC’s financial condition, profitability and results of operation.

BC’s spending on current and future research and development programs and drug candidates for specific indications may not yield any commercially viable products, since the market opportunities for BC’s drug candidates may be smaller than BC anticipates. Similarly, the actual market size of BC’s ETUARY may not be as large as BC anticipates. The total addressable market opportunity will depend on, among other things, acceptance of the drug by the medical community and patient access, drug pricing and reimbursement. Moreover, the number of patients in the addressable markets may be lower than expected, patients may not be amenable to treatment with BC’s drugs, or new patients may become increasingly difficult to identify or access. Further, new studies may change the estimated incidence or prevalence of the diseases that BC’s drug candidates target. Any of the above unfavorable developments could have a material adverse effect on BC’s business, financial condition and results of operations. In particular, if the existing and newly identified cases of IPF patients in the PRC are fewer than BC expects, BC’s growth and financial position may be negatively impacted until the expanded indications of ETUARY and BC’s other drug candidates such as Hydronidone are approved and become profitable.

According to Frost & Sullivan, the prevalence of IPF in the PRC has increased from 83,002 in 2017 to 131,654 in 2022, and is expected to increase to 214,664 by 2027 and 320,677 by 2031. Notwithstanding the short term increase in the prevalence of IPF, with strengthening of the public health system as well as medical and technological advancement in the PRC, the potential risks that cause IPF may be lowered or eliminated in the future which in turn may lead to corresponding decrease in the prevalence of IPF in the PRC. The shrinking prevalence of IPF in the PRC, as a result, may have a negative impact on the market size of ETUARY.

Effective marketing and successful sales are crucial for BC to increase the market penetration of BC’s commercialized products, expand BC’s coverage of hospitals, pharmacies and other medical institutions and promote new products in the future. In particular, BC places a strong emphasis on academic marketing, through which BC promotes its products to medical professionals, hospitals, pharmacies and other medical institutions. While BC’s sales and marketing force actively works with medical professionals, hospitals, pharmacies and other medical institutions and BC endeavors to inform them of the distinctive characteristics, advantages, safety and efficacy of BC’s products as compared to BC’s competitors’ products, BC may not be able to successfully enhance BC’s product awareness and receive recognition from them.

In order to successfully market and sell BC’s commercialized products, BC’s sales and marketing teams possess a relatively high level of technical knowledge, up-to-date understanding of industry trends, necessary expertise in the relevant therapeutic areas and products, as well as sufficient promotion and communication abilities. However, there

can be no assurance that there will be a sufficient amount of competent sales professionals with the relevant rare disease knowledge and/or academic key opinion leaders (“KOLs”) or doctor networks available for hire. As a result, if BC is unable to effectively train its in-house sales representatives or monitor and evaluate their academic marketing performances, BC’s sales and marketing may be less successful than desired.

Moreover, BC’s ability to attract, motivate and retain a sufficient number of qualified sales professionals is especially important because BC primarily relies on its in-house sales force to market BC’s products. As competition for experienced marketing, promotion and sales personnel is intense, BC may be unable to attract, motivate and retain a sufficient number of marketing, promotion and sales professionals. If BC fails to maintain a qualified sales and marketing force, sales volume of BC’s products may be adversely affected and BC may be unable to expand BC’s coverage of hospitals, pharmacies and other medical institutions or increase BC’s market penetration.

As BC primarily relies on its network of distributors to distribute BC’s products and intends to continue engaging distributors to sell BC’s products in the foreseeable future, BC’s ability to maintain and grow its business depends on its ability to maintain and manage a sufficient number of distributors with an extensive sales network, which BC could fail to achieve for several reasons. BC’s distributors may be unable to maintain or expand their sales network, or may encounter difficulties in selling BC’s products. BC’s distributors might elect not to renew their agreements with BC or otherwise terminate their business relationships with BC for various reasons, such as price controls or other factors that substantially reduce the margins they can obtain through the resale of BC’s products. Further, BC may fail to find an appropriate group of distributors suitable for BC’s products, or the costs of doing so are prohibitively high. Any disruption to BC’s distribution network, including BC’s failure to maintain relationships, form new relationships or renew BC’s existing distribution agreements, could negatively affect BC’s ability to sell its products and may materially and adversely affect BC’s business, results of operations, financial condition and prospects.

BC’s products may cause undesirable or unintended side effects as a result of a number of factors, many of which are outside BC’s control. These factors include potential side effects not revealed in clinical testing, unusual but severe side effects in isolated cases, defective products not detected by BC’s quality management system, and misuse of BC’s products by end-users.

Further, BC’s products may be perceived to cause severe side effects if other pharmaceutical companies’ products containing the same or similar active pharmaceutical ingredients, raw materials or delivery technologies as BC’s products cause or are perceived to have caused severe side effects, or if regulators or international institutions determine that products containing the same or similar pharmaceutical ingredients as BC’s products’ cause severe side effects. BC’s products may also be perceived to cause severe side effects when a conclusive determination as to the cause of the severe side effects is not obtained or is unobtainable.

If BC’s products cause, or are perceived to cause, severe side effects, BC may face a number of consequences, including, but not limited to:

Such incidences may cause negative publicity and have material adverse impact on BC’s business and results of operations.

Products distributed or sold in the pharmaceutical market may be subject to off-label drug use, and may be prescribed for an indication, dosage or in a dosage form that is not in accordance with regulatory approved usage and labeling. As such, BC’s products may be subject to off-label drug use and may be prescribed to a patient population, or in a dosage or dosage form that has not been approved by competent authorities, which may render BC’s products less effective or entirely ineffective and cause adverse drug reactions. Any of these occurrences can create negative publicity and significantly harm BC’s business reputation, product brand name, commercial operations and financial condition, including BC’s share price. These occurrences may also expose BC to liability and cause, or lead to, a delay in the progress of BC’s clinical trials and may ultimately result in failure to obtain regulatory approval for BC’s drug candidates.

The manufacturing of pharmaceutical products is highly complex, and problems may arise during manufacturing for a variety of reasons, including, but not limited to:

Despite BC’s quality control and assurance system and procedures, BC may not be able to eliminate such risks, which may delay or suspend BC’s manufacturing activities, and BC may not be able to secure temporary, alternative manufacturers for BC’s drugs with the terms, quality and costs acceptable to BC, or at all. If BC encounters any manufacturing problems, including those listed above, BC’s clinical trials and/or the availability of BC’s products for commercial sale may be delayed, and BC may spend significant time and costs in order to rectify such problems and maintain production at BC’s manufacturing facilities. Moreover, products with quality issues may have to be discarded, resulting in product shortages or additional expenses.

Furthermore, manufacturing methods and formulation are sometimes altered through the development of drug candidates from clinical trials to approval, and further to commercialization, in an effort to optimize manufacturing processes and results. Such changes carry the risk that they will not achieve these intended objectives, and any of these changes could cause the drug candidates to perform differently and affect the results of planned clinical trials or other future clinical trials conducted with the altered materials. This could delay the commercialization of drug candidates and require bridging studies or the repetition of one or more clinical trials, which may result in increases in clinical trial costs, delays in drug approvals and jeopardize BC’s ability to commence product sales and generate revenue.

BC’s existing and planned manufacturing facilities, as well as BC’s manufacturing process, will be subject to ongoing, periodic inspection by the NMPA or other comparable regulatory agencies to ensure compliance with GMP, which is usually the prerequisite to obtain marketing approval. Moreover, BC must obtain various permits, certificates and other approvals for BC’s manufacturing facilities and other premises from the relevant administrative authorities at various stages of property development, including, planning permits, construction permits, land use rights certificates, environmental assessments, fire control assessments, construction completion inspections and ownership certificates. Failure to comply with applicable regulations could lead to increased expense and result in sanctions being imposed on BC (including fines, injunctions, civil penalties, requirements to suspend or pause one or more of BC’s clinical trials); failure to obtain marketing approval of BC’s drug candidates; delays, suspension or withdrawal of approvals; supply disruptions; license revocation; seizures or recalls of drugs or drug candidates; operating restrictions and criminal prosecutions, any of which could materially and adversely harm BC’s business.

BC is dependent on BC’s manufacturing facilities in Beijing, PRC and Cangzhou, PRC. The continued operation of BC’s manufacturing facilities and BC’s production safety may be substantially interrupted due to a number of factors, many of which are outside of BC’s control. These factors may include fire, flood, earthquakes, power outages, fuel shortages, mechanical breakdowns, terrorist attacks and wars, or other natural disasters, as well as loss of licenses, certifications and permits, changes in governmental planning for the land underlying these facilities or their vicinity and regulatory changes. Moreover, the production activities on BC’s manufacturing facilities may be suspended on a temporary basis due to governmental policies or regulations, including that on environmental protection, combating COVID-19 or organizing public events. If the operation of any of BC’s manufacturing facilities is substantially disrupted, BC may not be able to replace the equipment or inventories at such facilities, or use different sites or a third-party contractor to continue BC’s production in a legal, timely and cost-effective manner or at all. Although BC maintains property insurance for certain properties, machinery and equipment and other assets owned, operated or deemed important for BC, in line with industry practice in the PRC, BC does not have certain types of insurance, such as business interruption insurance. The amount and nature of BC’s insurance coverage may not be sufficient to cover any substantial losses in the event of a significant disruption to any of BC’s manufacturing facilities.

Since September 2021, as a result of the shortage of coal supply combined with high electricity demand from manufacturers, the PRC has experienced widespread power outages. The PRC government has imposed power curbs, including imposing power restrictions on factories in a number of provinces in the PRC to deal with an imbalance in energy supply and demand. As of March 1, 2023, we have not received any notice from relevant government authorities ordering us to temporarily suspend or limit production, and our Beijing and Cangzhou production centers were not subject to any power restrictions. The PRC government imposed power restrictions did not have a material adverse impact on our business operations or financial performance during the years ended December 31, 2021 and 2022 and up to March 1, 2023.

To produce BC’s increasing number of drug candidates, if approved, in the quantities that BC believes will be required to meet anticipated market demand, BC may need to increase BC’s production capacity over the initial level of production by constructing new manufacturing facilities and production lines. However, BC’s ability to successfully implement BC’s expansion plan for increasing production capacities is subject to a number of risks and uncertainties, including, but not limited to, the risk of construction delays and delays in equipment procurement, and BC’s ability to timely recruit sufficient qualified staff to support the increase in BC’s production capacity. If BC is unable to do so, is delayed, faces costs that are not economically feasible or cannot find a third-party manufacturer, BC may not be able to produce BC’s future approved drug candidates in sufficient quantities to meet future demand. Moreover, BC’s plans to increase BC’s production capacities require significant capital investment and the actual costs of BC’s expansion plan may exceed BC’s original estimates, which could adversely affect the return on BC’s expenditure.

Furthermore, given the size of BC’s existing and planned manufacturing facilities, BC may not be able to fully utilize within a reasonable period of time after BC commences operation. During the construction and ramp-up period, there

may be significant changes in the macroeconomics of the pharmaceutical industry, including, among other things, market demand, product and supply pricing trends and customer preferences. Any adverse trends in this area could result in operational inefficiency and unused capacity in BC’s facilities.

In order to manufacture BC’s products, BC must obtain sufficient quantities of high-quality raw materials and stable supply of energy and power at commercially acceptable prices and in a timely manner, which exposes BC to risks associated with fluctuations in prices of raw materials. The prices of such materials may be affected by a number of factors, including market supply and demand, the PRC or international environmental and regulatory requirements, natural disasters such as the outbreak of COVID-19 and the global and local economic conditions. In addition, BC may be subject to fluctuations in other costs associated with BC’s production processes, such as costs of waste disposal, which are beyond BC’s control. BC may have limited capability to increase its revenue in a timely manner, and a significant increase in such costs may increase BC’s cost of sales and negatively affect BC’s profit margins.

BC is required to maintain optimal inventory levels in order to satisfy demand coming from BC’s extensive distribution network and successfully meet BC’s customers’ demand. However, BC may not be able to maintain proper inventory levels of BC’s products as a result of rapid changes in product life cycles, changing clinical demands and uncertainty of product developments and launches, as well as the volatile economic environment in the PRC. There can be no assurance that BC can accurately predict these trends and events and avoid over-stocking or under-stocking BC’s products. Further, demand for products could change significantly between the time when the products are ordered and the time they are ready for delivery.

Inventory levels in excess of demand may result in inventory write-downs, expiration of BC’s products or an increase in inventory holding costs and a potential negative effect on BC’s liquidity. On the other hand, if BC underestimates demand, BC may experience inventory shortages which may, in turn, result in unfulfilled customer orders, leading to a negative impact on BC’s customer relationships.

BC has in the past formed, and may in the future seek and form, strategic alliances, joint ventures or other collaborations, including entering into licensing arrangements with third parties that BC believes will complement or augment BC’s development and commercialization efforts with respect to BC’s existing drug candidates and any future drug candidates that BC may develop. BC’s strategic collaboration with partners involves numerous risks. BC may not achieve the revenue and cost synergies expected from the transactions, as such synergies are inherently uncertain and subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and are beyond BC’s control. In addition, the synergies from BC’s collaboration with BC’s partners may be offset by other costs incurred during the collaboration, including increases in other expenses, operating losses or problems in the business unrelated to BC’s collaboration. BC may not be able to recover any consideration that BC paid or will pay during past or future collaborations, including upfront payments, if BC fails to successfully realize benefits from the collaboration.

Moreover, disputes may arise between BC and BC’s current or future collaboration partners. Such disputes or BC’s partners’ failure to fully perform their obligations may cause delay or termination of the research, development or commercialization of BC’s drug candidates, or result in costly litigation or arbitration that may divert management attention and resources. In particular, international business relationships subject BC to additional risks that may materially and adversely affect BC’s ability to attain or sustain profitable operations, including, difficulty of effective enforcement of contractual provisions in local jurisdictions, and third-party collaborators may not properly obtain, maintain, protect or enforce BC’s patent, trade secret and other intellectual property rights and regulatory exclusivity for BC’s drug candidates or may use BC’s intellectual property that exposes BC to potential litigation or other intellectual property-related proceedings that could jeopardize or invalidate BC’s intellectual property.

The success of BC’s collaborations with BC’s partners depends on each party’s performing its respective obligations under the relevant collaboration agreement. Such agreements may impose on BC diligence obligations in product development or commercialization, payment obligations when certain development or regulatory milestones and sales are achieved and other obligations. If BC fails to comply with BC’s obligations under BC’s current or future agreements, BC’s counterparties may have the right to terminate these agreements, in which event BC may not be able to develop, manufacture or market the drug candidate that is covered under the agreements. Termination of the licenses or assignments provided for under these agreements or reduction or elimination of BC’s rights under these agreements may result in BC having to negotiate new or amended agreements with less favorable terms, or cause BC to lose BC’s rights under these agreements, including BC’s rights to important intellectual property or technology.

In addition, BC may not have the exclusive right to control the preparation, filing, prosecution, maintenance, enforcement and defense of patents and patent applications covering the drug candidates that BC is licensed or assigned from third parties. In the event that these patents and patent applications are not prepared, filed, prosecuted, maintained, enforced and defended in a manner consistent with the best interests of BC’s business, BC’s rights to the relevant intellectual property may be reduced or eliminated, and BC’s right to develop and commercialize the drug candidates covered under the agreement could be adversely affected.

Moreover, the third parties on whom BC relies with respect to licenses to certain patent rights and other intellectual property rights that are important or necessary to the development, manufacture or commercialization of BC’s drug candidates may themselves rely on upstream licenses from other third parties. Such sub-licenses may not provide exclusive rights to use the covered intellectual property in all relevant fields of use or in all territories in which BC may wish to develop or commercialize BC’s drug candidates, and add further uncertainties and complications as to the scope of BC’s rights under the relevant agreement.

Further, the license or assignment agreements BC has entered into, or will enter into in the future, are complex, and certain provisions in such agreements may be susceptible to multiple interpretations. The resolution of any contract interpretation disagreement that may arise could narrow what BC believes to be the scope of its rights to the relevant intellectual property or technology, or increase what BC believes to be its financial or other obligations under the relevant agreement, either of which could have a material adverse effect on BC’s advancement through its collaboration relationship with its partners.

BC has worked with, and plans to continue to work with, third-party collaborators, such as CROs, to monitor and manage data for BC’s ongoing pre-clinical and clinical programs and for the manufacturing of a portion of BC’s drug candidate supply for use in preclinical and clinical trials. For more details, see “BC’s Business—Our Research and Development” in this proxy statement. BC’s CROs are not its employees or affiliates, and except for remedies available to BC under its agreements with its CROs, BC cannot control whether or not its CROs devote sufficient time and resources to BC’s ongoing pre-clinical studies, clinical and non-clinical programs and manufacturing processes. If CROs do not successfully carry out their contractual duties or obligations or meet expected timelines, compromise the quality or accuracy of the clinical data obtained by CROs or BC’s investigators due to failure to adhere to BC’s clinical protocols, regulatory requirements or for other reasons, or the quality of the products manufactured fails to comply with GMP, BC’s clinical trials may be extended, delayed or terminated and BC may fail to obtain regulatory approval for or successfully commercialize BC’s drug candidates.

If any of BC’s collaborators breach or terminate their agreements with BC, BC may not be able to enter into arrangements with alternative collaborators or to do so on commercially reasonable terms. Switching or adding collaborators involves additional cost and delays, which can materially affect BC’s ability to meet its desired clinical development timelines.

Additionally, BC, its CROs for clinical programs and BC’s investigators are required to comply with GCP for all of BC’s drug candidates in clinical development. If BC or any of its CROs or investigators fail to comply with

applicable GCP, the clinical data generated in BC’s clinical trials may be deemed unreliable and NMPA or comparable regulatory authorities may require BC to perform additional clinical trials before approving BC’s marketing applications, which would delay the regulatory approval process.

While BC relies on the distribution agreements and the policies and measures BC has in place to manage BC’s distributors, BC cannot guarantee that it will be able to effectively manage BC’s distributors, or that BC’s distributors will comply with BC’s agreements and policies. If BC’s distributors take one or more of the following actions, BC’s business, results of operations, prospects and reputation may be adversely affected:

Any such actual or alleged violation or non-compliance by BC’s distributors of the distribution agreements, BC’s policies or any applicable laws and regulations could result in the erosion of BC’s goodwill, expose BC to liabilities, disrupt BC’s distribution network and create an unfavorable public perception about the quality of BC’s products.

Moreover, some of BC’s distributors engage sub-distributors to distribute BC’s products, and BC does not engage these sub-distributors directly or maintain contractual relationships with them. Instead, BC mainly relies on BC’s distributors to manage and control their sub-distributors in accordance with regulatory requirements, the terms of the distribution agreements between BC and its distributors and BC’s policies for its distributors. Since BC’s control is limited over these sub-distributors, there is no assurance that the sub-distributors will comply with the geographical restrictions agreed to with BC’s distributors or other distribution requirements under BC’s distribution agreements and policies. As a result, there can be no assurance that BC will be able to identify or remediate any practices by any sub-distributors’ that may be detrimental to BC’s business in a timely manner or at all, which may adversely affect BC’s results of operations and reputation.

During the years ended December 31, 2021 and 2022, BC had a small number of suppliers, with whom BC believes it has stable relationships. However, the stability of operations and business strategies of BC’s suppliers are beyond its control, and there can be no assurance that it will be able to maintain a stable relationship and high-quality outsourced raw materials or services with BC’s large suppliers. Moreover, BC has single-source suppliers for some principal raw materials. For details, see “BC’s Business—Raw Materials and Suppliers” in this proxy statement. There can be no assurance that BC can timely find a replacement if needed to provide the raw materials of equal quality at a similar price, which could disrupt BC’s operations.

All jurisdictions in which BC intends to conduct BC’s research, development, manufacturing and commercialization activities regulate these activities in great depth and detail. Obtaining regulatory approvals and maintaining compliance with applicable laws and regulations is a lengthy, expensive and uncertain process which requires the expenditure of substantial time and financial resources. Failure to comply with the applicable requirements at any time during the drug development process or approval process, or after approval, may subject BC to administrative or judicial sanctions. These sanctions could include, but are not limited to, a regulator’s refusal to approve pending applications, withdrawal of an approval, license revocation, a clinical hold, voluntary or mandatory product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties.

Obtaining regulatory approvals for pharmaceutical products is a lengthy, costly and uncertain process. Specifically, BC could fail to receive regulatory approval for BC’s drug candidates for many reasons, including:

All these factors, among others, may delay or prevent approval and BC’s commercialization plans, or may result in BC ceasing a development program.

Additionally, clinical trials conducted in one country may not be accepted by regulatory authorities in other countries, and regulatory approval in one country does not mean that regulatory approval will be obtained in any other country. Approval procedures vary among countries and can involve additional product testing and validation and additional administrative review periods. Seeking regulatory approvals in various jurisdictions could result in significant delays, difficulties and costs for BC, and there can be no assurance that BC will be able to meet regulatory requirements of different jurisdictions. Also, BC’s failure to obtain regulatory approval in any country may delay or have negative effects on the process for regulatory approval in other countries.

BC’s drugs and future approved drug candidates are or will be subject to ongoing regulatory requirements with respect to manufacturing, labeling, packaging, storage, advertising, promotion, sampling, record-keeping, conduct of post-market studies, submission of safety, efficacy and other post-market information, and other requirements of regulatory authorities in the PRC and/or other countries in which BC commercializes its drugs and drug candidates. Following an approval for commercial sale of any drug candidates, certain changes to the product, such as changes in manufacturing processes and additional labeling claims, may be subject to additional review and approval by the NMPA and/or comparable regulatory authorities. Accordingly, BC expects to devote time, resources and management’s effort in all areas of regulatory compliance. For details of other potential consequences in the event that BC fails to maintain compliance with such ongoing or additional regulatory requirements, see “—All material aspects of the research, development, manufacturing and commercialization of BC’s drugs and drug candidates are heavily regulated” in this section.

Pursuant to relevant laws, regulations and relevant regulatory practice by governmental authorities, BC is required to obtain and maintain various approvals, licenses, permits and certificates from relevant authorities to operate BC’s business. Some of these approvals, permits, licenses and certificates are subject to periodic renewal and/or reassessment by the relevant authorities, and the standards of such renewal and/or reassessment may change from time to time. Any failure to obtain or renew any approvals, licenses, permits and certificates necessary for BC’s operations may result in enforcement actions thereunder, including orders issued by the relevant regulatory authorities ceasing BC’s operations, and may include corrective measures requiring capital expenditure or remedial actions. If the interpretation or implementation of existing laws and regulations changes, or new regulations come into effect requiring BC to obtain any additional approvals, permits, licenses or certificates that were previously not required to operate BC’s existing businesses, there can be no assurance that it will successfully obtain such approvals, permits, licenses or certificates.

If BC obtains approval from the NMPA or other comparable regulatory authorities for any of BC’s drug candidates and begins commercializing those drugs in the PRC and BC’s other target markets, BC’s operations may be subject to various fraud and abuse laws of various jurisdictions, including, but not limited to, the PRC Anti-Unfair Competition Law, the PRC Criminal Law and the physician payment sunshine laws and regulations. There are ambiguities as to what is required to comply with any of these requirements, and violations of such fraud and abuse laws may be punishable by criminal and/or civil sanctions, including penalties, fines and/or exclusion or suspension from governmental healthcare programs and debarment from contracting with the relevant jurisdiction. As law enforcement authorities increase their focus on enforcing these laws, efforts to ensure that BC’s business arrangements with third parties comply with applicable healthcare laws and regulations may involve substantial costs.

BC is subject to the anti-bribery laws of various jurisdictions. As BC’s business expands, the applicability of relevant anti-bribery laws to BC’s operations is expected to increase. BC’s procedures and controls to monitor anti-bribery compliance may fail to protect BC from reckless or criminal acts committed by BC’s employees or agents. If BC, due to either BC’s own deliberate or inadvertent acts or those of third parties, fails to comply with applicable anti-bribery laws, BC’s reputation could be harmed and BC could incur criminal or civil penalties, other sanctions and/or significant expenses, which could have a material adverse effect on BC’s business, including BC’s financial condition, results of operations, cash flows and prospects.

The policies of the NMPA and other regulatory authorities may change, or additional government regulations may be enacted, that could prevent, limit or delay regulatory approval of BC’s drug candidates, restrict or regulate post-approval activities and affect BC’s profitability. BC cannot predict the likelihood, nature or extent of governmental policies or regulations that may arise from future legislation or administrative actions in the PRC or abroad, where the regulatory environment is constantly evolving. For example, if changes to regulatory requirements and guidance require BC to substantially amend clinical trial protocols, BC may experience increased costs or inability to complete clinical trials in a timely manner or at all. Changes in government regulations relating to pharmaceutical product registrations and approvals, such as a relaxation in regulatory requirements, or the introduction of simplified approval procedures, could lower the barriers to entry for potential competitors, or increased regulatory requirements could increase the difficulty to satisfy such requirements.

In recent years, there have been, and will likely continue to be, efforts to enact administrative or legislative measures that include more rigorous coverage criteria and may result in downward pressure on prices on BC’s products. For details of the risks associated with such downward pricing pressure, see “—Risks Relating to the Research and Development and Sales and Distribution of BC’s Drugs and Drug Candidates—BC may face pressure to lower the prices of its products in order for such products to qualify for medical insurance reimbursement or due to market competition.” in this Risk Factors section.

Furthermore, any changes in laws and regulations on collection and transfer of personal data in the PRC, including the Personal Information Protection Law of the PRC and the Administrative Regulations on Human Genetic Resources of the PRC, could affect BC’s ability to use medical data and subject BC to liability for the use of such data for previously permitted purposes.

The PRC government or other government authorities in countries where BC plans to sell BC’s products could adopt new or different regulations with respect to sales of pharmaceutical products to address bribery, corruption or other concerns. New or different regulations could result in increased costs incurred by BC, its employees or distributors in selling BC’s products, or impose restrictions on sales and marketing activities, which could, in turn, increase BC’s costs.

When conducting its clinical trials, BC may be subject to relevant local, state, national and international data protection and privacy laws, directives, regulations, standards and contractual obligations that apply to the collection, use, retention, protection, disclosure, transfer and other processing of personal data in the jurisdictions in which BC currently and expects to operate and conduct its clinical trials. If such institutions or personnel release or transfer patient private or medical records without patient consent, they may be held liable for damage caused thereby. Data protection and privacy law regimes may continue to evolve, which may result in increased public scrutiny and stricter levels of enforcement and sanctions, which could result in increased costs of compliance. Failure to comply with any of these laws could result in enforcement action against BC, including fines, imprisonment of company officials and public censure. Although BC’s access to personal data is limited to trial data, including case report forms, the retention of which is required by applicable laws and regulations, any failure or perceived failure by BC to prevent information security breaches, to comply with applicable privacy policies or privacy-related legal obligations, or secure information that results in the unauthorized release or transfer of personally identifiable information or other patient data, could cause reputational harm to BC and expose BC to legal proceedings. While BC has and expects to continue to have measures to maintain the confidentiality of the medical records and personal data collected of patients enrolled in BC’s clinical trials, including providing for confidentiality obligations under agreements with BC’s clinical trial collaborators, these measures may not always be effective.

In addition, BC’s clinical trials frequently involve professionals from third-party institutions working on site with BC’s staff and enrolled patients. BC cannot ensure that such persons will always comply with BC’s data privacy measures. BC cooperates with third parties, including hospitals, CROs and other third-party contractors and consultants for BC’s clinical trials and operations. If BC’s third-party partners release or transfer, or are perceived to release or transfer, patient data in an unauthorized manner, or misuse or are perceived to misuse patient data for an unauthorized purpose, patients may perceive such actions as a compromise of BC’s confidentiality measures.

BC’s success depends in large part on BC’s ability to protect its proprietary technology, drugs and drug candidates from competition by obtaining, maintaining and enforcing BC’s intellectual property rights, including patent rights. In order to protect the technologies, drugs and drug candidates that BC considers commercially important, BC, among others, filed and continues to file patent applications in the PRC and other countries. However, applying for patent protection is an expensive and time-consuming process, and BC may not be able to successfully file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. BC may not be able to prevent competitors from developing and commercializing competitive products in all such fields and territories.

Patents may be invalidated and patent applications may not be granted for various reasons, including because of known or unknown prior deficiencies in the patent applications or due to the lack of novelty or inventiveness of the underlying invention or technology. For example, there can be no assurance that BC was the first to make the inventions claimed in BC’s patents or pending patent applications because of the delay between publications of discoveries in scientific or patent literature and actual discoveries and patent applications. Under the “first-to-file” system adopted by the PRC, and, recently, the United States, even after reasonable investigation, BC may be unable to determine with certainty whether BC’s drugs, drug candidates, processes, technologies, improvement and other related matters are or may become unpatentable because a third party filed or may file a patent application earlier than BC has or does for inventions thereunder that are the same or substantially similar to BC’s inventions.

Therefore, the validity of issued patents, patentability of pending patent applications and applicability of such patent protections to BC’s programs may be lower in priority than third-party patents issued on a later date if the application for such patents was filed prior to BC’s and the technologies underlying such patents are the same or substantially

similar to BC’s. In addition, BC may be involved in claims and disputes of intellectual property infringement in other jurisdictions (for example, in the United States), and the defense of these claims or disputes, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from BC’s business.

The China National Intellectual Property Administration (the “CNIPA”) and other governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. For example, in several stages over the lifetime of a patent, periodic maintenance fees are due to be paid to the CNIPA and other patent agencies. Although an inadvertent lapse can, in many cases, be cured by payment of a late fee or by other means in accordance with the applicable rules, non-compliance could result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Such non-compliance events may include failure to respond to official actions in a timely manner, non-payment of fees, and failure to properly submit formal documents. In addition, under PRC patent law, any applicant that applies for a patent in a foreign country for an invention or utility model accomplished in the PRC must report to the CNIPA for confidentiality examination. If the applicant fails to report to the CNIPA for confidentiality examination, the patent right may not be granted if an application is later filed in the PRC.

The coverage claimed in a patent application can be significantly reduced before the patent is issued, and its scope can be reinterpreted after issuance. Even if patent applications BC licenses or owns currently or in the future are to be issued as patents, they may not be issued in a form that will provide BC with any meaningful protection, prevent competitors or other third parties from competing with BC, or otherwise provide BC with any competitive advantage. In addition, the patent position of medical device companies generally is highly uncertain, involves complex legal and factual questions, and has been the subject of much litigation in recent years. As a result, the issuance, scope, validity, enforceability and commercial value of BC’s patent rights are highly uncertain.

The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and BC’s owned or licensed patents may be challenged in the courts or patent offices in the PRC and other jurisdictions. For example, BC may be subject to a third-party submission of prior art to the CNIPA or other related intellectual property offices, or become involved in post-grant proceedings such as opposition, derivation, revocation, invalidation, re-examination or inter partes review, or interference proceedings or similar proceedings in foreign jurisdictions challenging the priority of BC’s invention or other features of patentability of BC’s patents and patent applications. Moreover, any claims that BC asserts against competitors who infringe, or are perceived to infringe, BC’s patent rights or misappropriate or otherwise violate BC’s intellectual property rights could, in turn, assert against BC invalidity or unenforceability of BC’s patents. Third-party submissions, proceedings or litigation may result in substantial costs and require significant time from BC’s scientists, experts and management, even if the outcome is favorable to BC. An adverse determination or outcome of a third-party submission, proceeding or litigation may result in loss of patent rights or exclusivity, or in patent claims being narrowed, invalidated or held unenforceable, which could limit BC’s ability to prevent competitors from using or commercializing similar or identical technologies and products, or limit the duration of the patent protection of BC’s technologies, drugs and drug candidates.

Even if BC is able to obtain patent protection for BC’s drugs and drug candidates, the term of such protection, if any, may be limited, and third parties could develop and commercialize products and technologies similar or identical to BC’s and compete directly against BC after the expiration of BC’s patent rights.

Although various adjustments and extensions may be available, the term of a patent, and the protection it affords, may be limited. Given the amount of time required for the development, testing and regulatory review of new drug candidates, patents protecting such drug candidates may expire before or shortly after such drug candidates are commercialized. Even if BC successfully obtains patent protection for a drug candidate, such drug candidate may face competition from generic or biosimilar medications once the patent has expired. Upon the expiration of BC’s current or future issued patents, BC will not be able to assert such patent rights against potential competitors and BC’s business and results of operations may be adversely affected.

In the PRC, the recent amendment to the PRC Patent Law, which was promulgated in October 2020 and effective as of June 2021, provides for the general principles of patent term extension and patent linkage, but does not include the revised implementation rules and operational details. Since 2020, several draft measures have been published by the NMPA, CNIPA, and the Supreme People’s Court for public comment, proposing frameworks for patentees to defend their patent exclusivity and apply for patent term extension. As of December 31, 2022, the final versions of these draft measures have not been published, and it is uncertain how the Chinese government will implement the patent term extension or patent linkage system. The patents BC has in-licensed or owns in the PRC may not be eligible to be extended for any patent term lost during the regulatory review process. If BC is unable to obtain patent term extension in the PRC, BC’s competitors or other third parties may obtain approval for competing products following BC’s patent expiration.

BC’s commercial success depends, in part, on BC’s ability to avoid infringing, misappropriating or otherwise violating the intellectual property rights of third parties. However, BC’s efforts to identify and avoid infringing on third parties’ intellectual property rights may not always be successful. Defending against third parties’ intellectual right infringement allegations, meritorious or not, may be expensive and time consuming, and could be a substantial diversion of BC’s resources and BC’s management team’s attention. Furthermore, because of the substantial amount of discovery that may be required in connection with intellectual property litigation, BC’s confidential information may be compromised by disclosure made during discovery.

In the event that third parties assert infringement claims against BC, there can be no assurance that the outcome would be in BC’s favor, as whether a product infringes on third parties’ intellectual property rights involves an analysis of complex legal and factual issues, and the burden of proof required to successfully challenge a third-party intellectual property right may be high. If BC was found by courts or other competent authorities to have infringed on the patent or other intellectual property rights of third parties, BC may be subject to injunctive or other equitable relief, which could prevent BC from developing and commercializing BC’s drugs and drug candidates, or delay the development or commercialization process. BC may be required to obtain and maintain licenses from third parties in order to continue the development of BC’s drug candidates or BC’s general operations, which may have an adverse impact on BC’s financial position and profitability. Even if litigations or other proceedings are resolved in BC’s favor, BC’s involvement in such proceedings may attract publicity and result in a substantial adverse effect on BC’s reputation and brand name.

BC’s owned or in-licensed patents and other intellectual property may be subject to priority disputes, inventorship disputes or similar proceedings, and BC or BC’s licensors may be unsuccessful in such proceedings. If BC or BC’s licensors are unsuccessful in such proceedings, BC may need to obtain licenses from third parties, which may not be available on commercially reasonable terms or at all. If BC is unable to obtain licenses in a timely manner or at all, BC may cease the development, manufacture and commercialization of one or more of BC’s drugs or drug candidates.

BC or BC’s licensors may be subject to claims from former employees, collaborators or other third parties that allege they have an interest in BC’s owned or licensed patents or other intellectual property. If BC or BC’s licensors are unsuccessful in interference proceedings or other priority or validity disputes to which BC’s owned or licensed intellectual properties are subject, BC may lose valuable intellectual property rights, such as loss of one or more patents or exclusive ownership, or BC’s patent claims’ being narrowed, invalidated or held unenforceable. BC may be required to obtain and maintain licenses from third parties, including parties involved in any such interference proceedings or other priority or inventorship disputes, in order to continue the development, manufacture and commercialization of one or more of BC’s drug candidates. However, such licenses may not be available on commercially reasonable terms or at all, or may be non-exclusive. Even if BC is successful in an interference proceeding or other similar priority or inventorship disputes, it could result in substantial costs and may be a distraction to BC’s management and other employees.

Decisions made by the National People’s Congress of the PRC and the CNIPA could change the laws and regulations governing patents in unpredictable ways that may affect BC’s ability to obtain new patents or to enforce BC’s existing patents and/or future patents. The United States has enacted and is currently implementing wide-ranging patent reform legislation. In addition, recent U.S. Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations. Similar changes in the laws of other jurisdictions may impact the value of BC’s patent rights or BC’s other intellectual property rights. In addition to increasing uncertainty with regard to BC’s ability to obtain patents in the future, there is uncertainty with respect to the value of patents once obtained, if any. As the laws and regulations governing patents evolve in the PRC and other jurisdictions, such changes may have a negative impact on BC’s intellectual property protection.

In addition to BC’s issued patent and pending patent applications, BC relies on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain BC’s competitive position and to protect BC’s drugs and drug candidates. In order to protect these trade secrets, BC implements various measures, including entering into non-disclosure and confidentiality agreements or including non-disclosure and confidentiality provisions in agreements with parties that have access to BC’s trade secrets. However, non-disclosure agreements with employees, consultants, contractors and other parties may not adequately prevent unauthorized disclosure of BC’s trade secrets and other proprietary information. Parties may breach such agreements and wrongfully disclose BC’s proprietary information, and BC may not be able to obtain adequate remedies for such breach. Pursuing a claim that a party illegally disclosed or misappropriated a trade secret could be difficult, expensive and time-consuming, and the outcome of such claim is unpredictable.

Moreover, some of BC’s employees, including senior management, may have been employed at other pharmaceutical companies, including BC’s competitors or potential competitors. Such employees may have executed proprietary rights, non-disclosure and non-competition agreements in connection with such previous employment. BC may be subject to claims that it or these employees have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such employee’s former employer. In the event that litigation is necessary to defend against such claims, BC may be subject to monetary damages and lose valuable intellectual property rights or personnel.

BC currently owns issued trademark registrations and has trademark applications pending in order to build name recognition among potential partners and customers in BC’s markets of interest. However, such trademark registrations and applications subject BC to risks of trademark invalidity, dilution and infringement. BC’s trademark registrations and applications may be subject to a governmental or third-party objection, and may be challenged, infringed, circumvented or declared generic. If an issued trademark registration or trademark application is successfully challenged, then BC may not be able to register or maintain such trademark registration or application. Moreover, as BC’s products continue to be marketed, such products’ reliance on BC’s trademarks to differentiate BC from its competitors may increase. BC may not be able to prevent third parties from adopting, registering or using trademarks and trade dress that infringe, dilute or otherwise violate BC’s trademark rights, or from engaging in conduct that constitutes unfair competition, defamation or other violations of BC’s trademark rights. In addition, owners of other registered trademarks or trademarks that incorporate variations of BC’s registered or unregistered trademarks or trade names may pursue trade name or trademark infringement claims against BC. If BC is unable to establish name recognition based on BC’s trademarks and trade names, then BC may not be able to compete effectively in its markets of interest, and BC’s business may be adversely affected.

Filing, prosecuting, and defending patents on drug candidates in all jurisdictions worldwide would be prohibitively expensive. Moreover, the legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property protection, particularly those relating to

biotechnology products, which could make it difficult for BC to prevent patent infringement or marketing of competing products in violation of BC’s intellectual property and proprietary rights. In jurisdictions where BC has not obtained patent protection, competitors may be able to use BC’s technologies to develop their own products and sell or import products made using BC’s inventions in such jurisdictions. These products may compete with BC’s products, and BC’s existing patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

The degree of protection afforded by BC’s intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect BC’s business or permit BC to maintain its competitive advantage. The limitations of currently available intellectual property protection regimes include that:

Should any of these events occur, they could have a material adverse effect on BC’s business, financial condition, results of operations and prospects.

The development, commercialization, manufacturing, marketing, sales and distribution of biopharmaceutical products and product candidates is capital-intensive. BC’s business operations and its implementation of strategies will require significant funding, including:

In addition, many aspects of BC’s general business operations have on-going funding requirements that may increase over time. While BC expects that the implementation of its strategies and business plans may require BC to rely in

part on external financing sources, BC’s ability to obtain additional capital on commercially reasonable terms is subject to a variety of factors, many of which are outside of BC’s control, including BC’s future financial condition, results of operations and cash flows, the global economic conditions, industry and competitive conditions, interest rates, prevailing conditions in the credit markets and government policies on lending. If BC cannot obtain additional capital on commercially reasonable terms or at all, BC may not be able to execute its strategies and business plans as currently contemplated, which could have a material adverse effect on BC’s business, financial condition and results of operations.

During the years ended December 31, 2021 and 2022, BC maintained a high level of gross margin. BC’s profit margins were 95.5% and 95.6% for the years ended December 31, 2021 and 2022, respectively. However, there can be no assurance that BC will sustain a similarly high gross margin in the future. Various factors may affect BC’s gross margin, many of which are beyond its control. For example, changes in the competitive landscape of the relevant markets may decrease the average selling prices of BC’s products, which may have a negative effect on BC’s gross margin. Moreover, BC’s gross margin will be influenced by various components of BC’s costs, such as the cost of raw materials. For details, see “—Risks Relating to Manufacture and Supply of BC’s Products—Fluctuations in prices of BC’s raw materials and energy supply, as well as other costs associated with BC’s production processes, may have a material adverse effect on BC if BC is not able to transfer the cost increase to BC’s customers” in this Risk Factors section.

BC’s five largest customers accounted for a substantial amount of BC’s revenue for the years ended December 31, 2021 and 2022. For details, see “BC’s Business—Customers” in this proxy statement. As such, BC may be exposed to credit risks, and there can be no assurance that it can properly assess and respond in a timely manner to changes in BC’s customers’ credit profile. As of December 31, 2021 and 2022, BC had certain concentrations of credit risk of 10% and 10%, respectively. In addition, as of December 31, 2021, 53.7% and 85.1%, and as of December 31, 2022, 45.1% and 78.3%, of BC’s trade receivables were due from BC’s largest customer and BC’s five largest customers, respectively. If such customers’ cash flows, working capital, financial condition or results of operations decrease, they may be unable, or they may otherwise be unwilling, to pay trade receivables owed to BC promptly or at all. Any substantial defaults or delays could materially and adversely affect BC’s cash flows, and if BC terminates its relationships with its customers as a result of such customers’ default or payment delay, then that may adversely and materially affect BC’s cash flows and operations.

If any of BC’s major customers stops purchasing BC’s products or substantially reduces order size in the future, whether due to the termination or amendment of BC’s contractual relationship with such customer, or due to any other reason unrelated to BC, BC may not be able to identify and sell BC’s products to an alternative customer in a timely manner, or at all. As a result, BC’s business and financial performance may be materially and adversely affected.

BC adopted employee incentive plans for the benefit of BC’s employees as remuneration for their services provided to BC to incentivize and reward eligible persons who have contributed to the success of BC. During the year ended December 31, 2021, BC reversed expenses for share-based compensation of $0.28 million. During the year ended December 31, 2022, BC incurred expenses for share-based compensation of $1.28 million.

Effective upon the consummation of the Contributions, BC intends to terminate the 2021 Plan and all awards outstanding thereunder. Thereafter, a sub-plan to the 2023 Omnibus Incentive Plan (the “PRC Sub-plan”) will be used to facilitate grants of stock options to certain BC employees, on terms substantially similar in all material respects to those previously outstanding under the 2021 Plan. Issuance of additional shares pursuant to the PRC Sub-plan may dilute the ownership of the combined company’s existing stockholders.

BC’s inventories consist of raw materials, works in progress, semi-finished goods and finished goods. As of December 31, 2021 and 2022, BC’s inventories were valued at $5.7 million and $6.1 million, respectively. During the years ended December 31, 2021 and 2022, BC did not identify material inventory items requiring impairment

provisioning, and BC believes that maintaining appropriate levels of inventory helps BC meet market demands in a timely manner. BC generally purchases supplies based on its estimated demand and manufacturing capacity, and BC’s management system covers each stage of the warehousing process. The storage and distribution of BC’s inventories are closely monitored in order to keep BC’s inventories and logbook consistent. However, as BC’s business expands, BC’s inventory levels may increase and the risk of obsolescence may increase accordingly. Furthermore, any unexpected material fluctuations in the supplies or changes in customers’ preferences may lead to decreased demand and overstocking of supplies and increase the risk of obsolescence.

BC has intangible assets primarily consisting of product development in progress, patents, technological know-how, and computer software, which accounted for a considerable portion of BC's total assets as of December 31, 2021 and 2022. The value of BC's intangible assets is based on a number of assumptions made by BC's management. If any of these assumptions do not materialize, or if the performance of BC's business is not consistent with such assumptions, BC may have to write off a significant portion of BC's intangible assets and record a significant impairment loss. In addition, BC's determination on whether intangible assets are impaired requires an estimation of the carrying amount and recoverable amount of an intangible asset. If the carrying amount exceeds its recoverable amount, BC's intangible assets may be impaired, which could have a material adverse effect on BC's business, financial condition and results of operations. For details of BC's accounting policies with respect to intangible assets, see “Audited Financial Statements of Beijing Continent Pharmaceuticals Co., Ltd. —Summary of Significant Accounting Policies” in this proxy statement.

The SEC permits foreign private businesses to present financial statements in accordance with IFRS as issued by the IASB. In the future, if BC were required to change its basis of accounting from IFRS to U.S. GAAP, it may be difficult and costly for BC to comply with.

At any time in the future, BC may decide to convert the accounting standards of its financial statements from IFRS to U.S. GAAP. The application by BC of different accounting standards could have a significant effect on BC's reported financial results. Additionally, U.S. GAAP is subject to interpretation by the Financial Accounting Standards Board, the American Institute of Certified Public Accountants, the SEC, and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on BC's reported financial results.

As of December 31, 2021 and 2022, BC’s trade receivables amounted to $10.0 million and $15.6 million, respectively, which primarily represented the balances due from BC’s distributors. BC’s liquidity and cash flow are directly affected by its customers’ ability to pay BC in a timely manner, but there can be no assurance that BC’s customers will not default on BC in the future, despite BC’s efforts to conduct credit assessments. During the years ended December 31, 2021 and 2022, BC’s trade receivables turnover days were 37 days and 46 days, respectively.

If any of BC’s customers’ business, cash flow, conditions or results of operations decrease, such customers may be unable or unwilling to pay trade receivables owed to BC promptly or at all. Bankruptcy or deterioration of the credit condition of BC’s major customers could also materially and adversely affect BC’s collection of trade receivables. For details of the risk associated with concentrations of credit risk that BC is exposed to, see “—BC’s five largest customers accounted for a substantial amount of BC’s revenue during the years ended December 31, 2021 and 2022, which subjects BC to concentration risks” in this Risk Factors section. If significant amounts due to BC is not settled in a timely manner, BC may incur significant write-offs and BC’s liquidity and cash flow may be adversely affected.

BC has historically received government grants in connection with certain of its research and development and manufacturing activities, and recognized government grants under other income and gains of $0.1 million and $0.9 million for the years ended December 31, 2021 and 2022, respectively. For details of the amounts of BC’s other

recognized income, see Note 5 to the Audited Financial Statements of Beijing Continent Pharmaceuticals Co., Ltd. to this proxy statement. BC was also entitled to a preferential corporate income tax rate of 15% for each of the years ended December 31, 2021 and 2022 as a High and New Technology Enterprise. In addition, BC’s ETUARY has been entitled to a preferential value-added tax (“VAT”) treatment at the tax rate of 3%. However, there can be no assurance of the continued availability of such preferential treatment. BC’s eligibility for government grants and preferential tax rates depends on a variety of factors, including, but not limited to, the assessment of BC’s improvement on existing technologies, relevant government policies and the availability of funding at different granting authorities. In addition, the timing, amount and criteria of government financial incentives are determined within the sole discretion of the local PRC government authorities. Government financial incentives are non-recurring in nature, and there can be no guarantee that BC will continue to receive government incentives. In addition, some government financial incentives may be subject to the satisfaction of certain conditions, including compliance with the applicable financial incentive agreements and completion of the specific projects therein, which BC may not satisfy. Any reduction or elimination of the government financial incentives BC currently receives could have an adverse effect on BC’s financial condition.

Clinical demand and market conditions for pharmaceutical products may change rapidly and significantly, and BC’s success in part depends on BC’s ability to anticipate product offering lead-times and demand, identify customer preferences and adapt BC’s products to these preferences. BC may need to adjust BC’s research and development plan, production scale and schedule, product portfolio and inventory levels based on customer demand, sales trends and other market conditions. However, there can be no assurance that BC will be able to sufficiently and promptly respond to changes in clinical demand and purchasing patterns in a timely manner or at all.

BC’s operations, and those of BC’s distributors, suppliers, research institution collaborators and other business partners, could be subject to natural or man-made disasters, health epidemics or business interruptions, for which BC is predominantly self-insured. Damage or extended periods of interruption to BC’s and BC’s partners’ administration, development, research, manufacturing or storage facilities due to fire, natural disaster, health epidemic, power loss, communications failure, unauthorized entry or other events could cause BC to cease or delay development or commercialization of some or all of BC’s drug candidates, seriously harm BC’s and its partners’ operations and financial condition and increase BC’s and its partners’ costs and expenses.

BC’s success is highly dependent the services of its directors and senior management to manage BC’s business and operations, and BC’s key research and development personnel to develop new products, technologies and applications and to enhance BC’s existing products. BC’s ability to attract, hire, retain and motivate qualified scientific, technical, clinical, manufacturing and sales and marketing personnel, as well as other consultants and advisers, is also crucial for BC. Although BC has entered into employment agreements and consulting agreements with each of BC’s executives, employees, consultants and advisers, they may terminate their agreements with BC at their election. The loss of the services of any of these persons could impede the achievement of BC’s research, development and commercialization objectives. If BC is not able to retain its management and to attract, on terms acceptable to BC, additional qualified personnel necessary for the continued development of BC’s business, BC may not be able to sustain its operations or grow.

BC competes for qualified personnel with other pharmaceutical and biotechnology companies, universities and research institutions. The pool of suitable candidates is limited, and BC may not be able to hire and retain enough skilled and experienced scientists or other technical personnel at the current level of wages, and may need to offer higher compensation and other benefits, which could materially and adversely affect BC’s financial condition and results of operations.

BC’s future performance will also depend, in part, on its ability to successfully integrate newly hired executive officers into its management team and BC’s ability to develop an effective working relationship among senior management. BC’s failure to integrate these individuals and create effective working relationships among them and other members of management could result in inefficiencies in the development and commercialization of BC’s product candidates, harming future marketing approvals, sales of BC’s product candidates and BC’s results of operations.

BC’s business operations have been, and may continue to be, negatively affected by the COVID-19 pandemic. For example, any temporary suspension of production, shortage of labor and raw materials or disruption of local and international travel may affect imports related to BC’s business. In addition, the completion of technological improvements to BC’s manufacturing facilities may be delayed. The COVID-19 pandemic may delay the development progress of drug candidates due to a prolonged process of patient enrollment for BC’s ongoing clinical trials, the removal of enrolled patients and the delay of response from the relevant governmental authorities reviewing BC’s clinical trial applications.

COVID-19 has impacted the eligible patients for BC’s trials, including BC’s ongoing clinical trials of pirfenidone in CTD-ILD and pneumoconiosis and its Phase 3 trial in Hydronidone and Phase 2 trial in F573, which has resulted in delays in patient recruitment and the clinical results of BC’s trials. Despite the measures BC has taken to arrange procurement, manufacturing and sales in response to COVID-19, there can be no assurance that BC will not be subject to further negative impact if the outbreak persists or escalates. BC cannot forecast with certainty the future impact of additional outbreaks or government restrictions, including further shelter-in-place or other government restrictions implemented in response to such outbreaks, or the ability of BC’s suppliers and other business partners to remain in business during the ongoing pandemic or additional outbreaks. With the uncertainties surrounding the COVID-19 outbreak, the risk to BC’s business and the related financial impact remains uncertain.

BC may from time to time become subject to various litigation, legal or contractual disputes, investigations or administrative proceedings arising in the ordinary course of BC’s business, including, but not limited to, various disputes with or claims from BC’s suppliers, customers, contractors, licensors, business partners and other third parties that BC engages for its business operations. Ongoing or threatened litigation, legal disputes, claims, investigations or administrative proceedings may divert BC’s management’s attention and BC’s time and resources. Furthermore, whether a certain litigation, dispute, investigation or proceeding may have a materially adverse effect on BC is subject to a variety of factors, including, but not limited to, the facts and circumstances of the proceeding, the likelihood of loss, the monetary amount at stake and the parties involved. If any verdict or award is rendered against BC or if BC agrees to settle with an adverse party, BC could be required to pay significant monetary damages, assume other liabilities and/or suspend or terminate the related business projects. Negative publicity arising from litigation, legal disputes, investigations or administrative proceedings may damage BC’s reputation and adversely affect the image of BC’s brands and products.

BC is subject to risks related to actions taken by BC, BC’s employees, distributors, agents, suppliers or affiliates that may or are perceived to constitute violations of anti-corruption and other related laws in jurisdictions where BC conducts business. Allegations of corrupt practices against BC, BC’s employees, distributors, agents or affiliates or the pharmaceutical industry in general could generate negative publicity and materially and adversely affect BC’s reputation and business prospects. Despite BC’s procedures and controls to monitor compliance with applicable anti-corruption laws, BC may be exposed to risks for actions taken by BC, BC’s employees or distributors, in which case government authorities may seize the products involved in any illegal or improper conduct engaged in by BC, BC’s employees or distributors. BC may also be subject to claims, fines or suspension of its operations.

BC is exposed to product liability risks as a result of developing, producing, marketing, promoting and selling pharmaceutical products in the PRC and other jurisdictions. Such claims may arise if any of BC’s products are deemed or proven to be unsafe, ineffective, defective or contaminated, or if BC is alleged to have engaged in practices such as insufficient or improper labeling of products or providing inadequate, insufficient or misleading warnings or disclosures regarding side effects. A product liability claim brought against BC may, regardless of merit or outcome, result in reputational harm and strain on financial resources and may consume the time and attention of BC’s management. If BC is unable to successfully defend itself against such claims, BC may, among others, be subject to product recalls, civil liability for physical injury, death or other losses caused by BC’s products, criminal liability and the revocation of BC’s business licenses. PRC laws and regulations currently do not require BC to, and BC does not, maintain liability insurance to cover product liability claims. As a result, BC may not be able to recover BC’s losses resulting from future product liability claims.

To enhance BC’s growth and benefit BC’s product development, technology advancement and distribution network, BC may acquire businesses, products, technologies or know-how or enter into strategic partnerships. Any completed, in-process or potential acquisition or strategic partnership may entail numerous risks, including:

BC’s plan to grow its business through such acquisitions may not materialize as expected.

BC has an internal control system in place to monitor and control potential risk areas relevant to BC’s business operations. However, due to the inherent limitations in the design and implementation of BC’s internal control system, if external circumstances change substantially or extraordinary events take place, BC’s internal control system may not be sufficiently effective in identifying, managing and preventing all risks. Further, integration of various business operations from future acquisitions may expose BC to additional, unknown internal control risks, despite BC’s efforts to anticipate such issues. BC’s risk management and internal controls also depend on effective

implementation by BC’s employees. There can be no assurance that such implementation by BC’s employees will always function as intended, or such implementation will not be subject to human errors, mistakes or intentional misconduct.

BC’s information systems may fail and are subject to risks of breakdown, breach, interruption or damage from computer viruses, computer hackers, malicious code, employee error or malfeasance, theft or misuse, denial-of-service attacks, sophisticated nation-state and nation-state-supported actors, unauthorized access, natural disasters, terrorism, war, telecommunication and electrical failures or other compromise. Any system damage or failure that interrupts data input, retrieval or transmission or increases service time could disrupt BC’s normal operations, including the loss of clinical trial data from completed or future clinical trials. Loss of clinical trial data could result in delays in BC’s regulatory approval efforts and significantly increase BC’s costs to recover or reproduce the data. There can be no assurance that BC will be able to effectively handle a failure of BC’s information systems, or that BC will be able to restore BC’s operational capacity in a timely manner or at all to avoid disruption to BC’s business. To the extent that any disruption or security breach were to result in a loss of, or damage to, BC’s data or applications, or inappropriate use, disclosure of or access to confidential or proprietary information, BC could incur liability, BC’s competitive position could be harmed and the further development and commercialization of BC’s drugs and drug candidates could be hindered or delayed.

BC may collect and store sensitive personal data in the ordinary course of BC’s business. For details, see “—Risks Relating to Extensive Governmental Regulations—BC is subject to stringent privacy laws, information security policies and contractual obligations related to data privacy and security, and BC is exposed to risks related to BC’s management of patient medical data and other personal or sensitive information.” in this Risk Factors section. If personal data are compromised due to a material breach of BC’s information, the market perception of the effectiveness of BC’s security measures could be harmed and BC’s reputation and credibility could be damaged. BC could be subject to regulatory actions and/or claims made by individuals and groups in private litigation involving privacy issues related to data collection and use practices and other data privacy laws and regulations.

Because BC’s operations involve the use of hazardous chemical materials and may produce hazardous waste, BC is subject to numerous environmental, health and safety laws and regulations, including those governing air emissions, discharge of water and the handling, use, storage, treatment and disposal of hazardous materials and wastes. While BC has entered into hazardous waste disposal agreements with third parties for the disposal of these materials and wastes, BC cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from BC’s use of hazardous materials, BC could be held liable for any resulting damages, and incur significant costs associated with civil or criminal fines and penalties. Further, BC does not maintain insurance for environmental liability or toxic tort claims that may be asserted against BC in connection with BC’s storage, use or disposal of hazardous materials and waste.

BC’s strategies and business growth may require BC to hire additional employees, and BC may also hire additional employees as a result of acquisitions. The average cost of labor in the PRC has been steadily increasing in recent years as a result of inflation, government-mandated wage increases and other changes in PRC labor laws, as well as competition for talent and qualified employees among pharmaceutical companies. As a result, increased labor costs could have negative effects on BC’s growth and decrease BC’s profitability.

BC operates in the pharmaceutical industry, which involves numerous operating risks and occupational hazards. The insurance policies BC maintains are required under the applicable laws and regulations as well as based on BC’s assessment of its operational needs and industry practice. For more details, see “BC’s Business—Insurance” in this proxy statement. However, there can be no assurance that the existing insurance coverage is sufficient to compensate

for actual losses suffered or incurred. In addition, there are certain types of losses, such as losses from war, acts of terrorism, health or public security hazards, earthquakes, typhoons, flooding and other natural disasters, for which BC cannot obtain insurance at a reasonable cost or at all. If an uninsured loss or a loss in excess of insured limits were to occur, BC’s business, results of operations and financial condition may be materially and adversely affected. For details of the specific risks of inadequate insurance coverage in the event of product liability claims and environmental liabilities, see “—BC may be subject to product liability claims that could expose BC to costs and liabilities” and “—If BC fails to comply with environmental, health and safety laws and regulations, BC could become subject to fines or penalties or incur costs that could materially and adversely affect the success of BC’s business,” respectively, in this section.

International market conditions and the international regulatory environment have historically been affected by competition among countries and geopolitical frictions. Changes to trade policies, treaties and tariffs of the jurisdictions in which BC operates, or the perception that these changes could occur, could adversely affect the financial and economic conditions of the jurisdictions in which BC operates, as well as BC’s overseas expansion, BC’s financial condition and results of operations.

For example, BC purchased raw materials from certain overseas suppliers through procurement agents during the years ended December 31, 2021 and 2022. In the event that the countries from which BC’s agents import raw materials impose export controls, trade restrictions or other trade barriers affecting the exportation of such components or raw materials, BC may not be able to obtain a steady supply of necessary components or raw materials at competitive prices, and BC’s business and operations may be materially and adversely affected. In addition, the United States government has recently made significant changes in its trade policy and has taken certain actions that may materially impact international trade, such as announcing import tariffs which have led to other countries, including the PRC and members of the European Union, imposing tariffs against the United States in response. There can be no assurances as to whether and to what extent any such actions would have a significant effect on BC or BC’s industry.

The Chinese government has some oversight and discretion over the conduct of BC’s business and may intervene or influence BC’s operations as the government deems appropriate to further regulatory, political and societal goals. The Chinese government has recently published new policies that significantly affected certain industries such as the education and internet industries, and BC cannot rule out the possibility that it will in the future release regulations or policies regarding BC’s industry that could require BC to seek permission from Chinese authorities to continue to operate BC’s business that could potentially affect BC’s business, financial condition and results of operations. Furthermore, recent statements made by the Chinese government, including the Opinions on Strictly Cracking Down Illegal Securities Activities in Accordance with the Law, and new rules published for comments by the Chinese government, including the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Enterprises to become effective on March 31, 2023, establish a new filing-based regime to regulate overseas offerings and listings by domestic companies. If BC were to become subject to the direct intervention or influence of the Chinese government at any time due to changes in laws or other unforeseeable reasons, it may require a material change in BC’s operations.

The pharmaceutical industry in the PRC is subject to comprehensive government regulation and supervision, encompassing the approval, registration, manufacturing, packaging, licensing and marketing of new drugs. For details of a discussion of regulatory requirements that are applicable to BC’s current and planned business in the PRC, see “BC’s Business—Regulatory Requirements in the PRC” in this proxy statement. BC believes its strategy and approach are consistent with the Chinese government’s policies, but BC cannot ensure that its strategy and approach will continue to be consistent. In recent years, the regulatory framework for the pharmaceutical industry in the PRC has undergone significant changes, and BC expects that it will continue to undergo significant changes. Any such changes or amendments may result in:

Chinese authorities have also become increasingly vigilant in enforcing laws in the pharmaceutical industry, and any failure by BC to maintain compliance with applicable laws and regulations may result in the suspension or termination of BC’s business activities in the PRC.

BC’s business, results of operations, financial condition and prospects may be influenced to a significant degree by economic, political, legal and social conditions in the PRC. The PRC’s economy differs from the economies of developed countries in many respects, including with respect to the amount of government involvement, level of development, growth rate, control of foreign exchange, allocation of resources and an evolving regulatory system. The PRC government has implemented various measures to encourage economic development and guide the allocation of resources, but some of these measures may have a negative effect on BC. For example, BC’s financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations that are currently applicable to BC. Growth of the PRC economy has been uneven across different regions and among various economic sectors of the PRC, and there can be no assurance that future growth will be sustained at similar rates or at all. If the business environment or economic conditions in the PRC deteriorates from the perspective of domestic or international investment, BC’s business may also be adversely affected.

The PRC legal system is a civil law system based on written codes and statutes. Unlike the common law system, prior court decisions may be cited as persuasive authority, but have limited precedential value. Since the late 1970s, the PRC government has promulgated a comprehensive system of laws, rules and regulations governing economic matters in general. However, as these laws and regulations are relatively recent and the number of published decisions is limited, their interpretation and enforcement involve significant and certainties, and can be inconsistent and unpredictable. Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection BC may experience compared to developed legal systems. These uncertainties may impede BC’s ability to enforce the contracts BC has entered into and could materially and adversely affect BC’s business, financial condition and results of operation.

Furthermore, PRC laws and regulations afford significant protection to state-owned assets. Contributions that may lead to losses of state-owned assets are subject to heightened scrutiny by the competent authorities, and the competent authorities have significant discretion in interpreting and implementing the relevant laws and regulations. In the event BC or its affiliates conduct transactions with state-owned enterprises or their affiliates, BC is exposed to risks and uncertainties involving the potential of loss of state-owned assets, which may subject BC to liabilities and could materially and adversely affect BC’s business, financial condition and results of operation.

The Chinese legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all, and which may have a retroactive effect. As a result, BC may not be aware of BC’s violation of these policies and rules until after the occurrence of the violation.

BC is incorporated under the laws of the PRC with limited liability, and substantially all of BC’s assets are located in the PRC. In addition, a majority of BC’s directors and supervisors and all of BC’s senior management personnel reside within the PRC, and substantially all their assets are located within the PRC. As a result, it may not be possible to effect service of process within the United States or elsewhere outside the PRC upon BC or most of BC’s directors, supervisors and senior management personnel.

When it comes to trans-jurisdictional recognition and enforcement of judgments, the PRC does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the United States or many other

countries. In addition, Hong Kong has no arrangement for the reciprocal enforcement of judgments with the United States. As a result, recognition and enforcement in the PRC or Hong Kong of judgments of a court obtained in the United States and any of the other jurisdictions mentioned above may be difficult or impossible.

On July 14, 2006, Hong Kong and the PRC entered into the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and of the Hong Kong Special Administrative Region Pursuant to Choice of Court Agreements Between Parties Concerned (the “Arrangement”), pursuant to which a party with an enforceable final court judgment rendered by a Hong Kong court requiring payment of money in a civil and commercial case according to a choice of court agreement in writing may apply for recognition and enforcement of the judgment in the PRC. Similarly, a party with an enforceable final judgment rendered by a PRC court requiring payment of money in a civil and commercial case pursuant to a choice of court agreement in writing may apply for recognition and enforcement of such judgment in Hong Kong. A choice of court agreement in writing is defined as any agreement in writing entered into between parties after the effective date of the Arrangement in which a Hong Kong court or a PRC court is expressly designated as the court having sole jurisdiction for the dispute.

On January 18, 2019, the Supreme People’s Court and the government of the Hong Kong Special Administrative Region entered into the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and of the Hong Kong Special Administrative Region (the “New Arrangement”), which seeks to establish a mechanism with further clarification on and certainty for recognition and enforcement of judgments in a wider range of civil and commercial matters between Hong Kong Special Administrative Region and the PRC. The New Arrangement discontinued the requirements for a choice of court agreement for bilateral recognition and enforcement. The New Arrangement will only take effect after the promulgation of a judicial interpretation by the Supreme People’s Court and the completion of the relevant legislative procedures in the Hong Kong Special Administrative Region. The New Arrangement will, upon its effectiveness, supersede the Arrangement. Therefore, before the New Arrangement becomes effective it may be difficult or impossible to enforce a judgment rendered by a Hong Kong court in the PRC if the parties in the dispute do not agree to enter into a choice of court agreement in writing. As a result, it may be difficult or impossible for investors to effect service of process against BC’s assets or management in the PRC in order to seek recognition and enforcement of foreign judgments in the PRC.

Pursuant to the PRC Labor Contract Law, employers are subject to stricter requirements in terms of signing labor contracts, minimum wages, paying remuneration, determining the term of employees’ probation and unilaterally terminating labor contracts. Due to lack of detailed interpretative rules and broad discretion of the local competent authorities, it is uncertain as to how the labor contract law and its implementation rules will affect BC’s current employment policies and practices. BC’s employment policies and practices may violate the labor contract law or its implementation rules, and BC may thus be subject to related penalties, fines or legal fees.

Compliance with the labor contract law and its implementation rules may increase BC’s operating expenses, in particular, BC’s personnel expenses. In the event that BC decides to terminate some of BC’s employees or otherwise change BC’s employment or labor practices, the labor contract law and its implementation rules may also limit BC’s ability to effect those changes in a desirable or cost-effective manner, which could adversely affect BC’s business and results of operations. According to the PRC Social Insurance Law (the “Social Insurance Law”), employees must participate in pension insurance, work-related injury insurance, medical insurance, unemployment insurance and maternity insurance, and the employers must, together with their employees or separately, pay the social insurance premiums for such employees. Recently, the PRC government enhanced its measures relating to social insurance collection, which may lead to stricter enforcement.

BC expects its labor costs to increase due to the implementation of these laws and regulations. Compliance with the Social Insurance Law and its implementation rules may increase BC’s operating expenses, in particular, BC’s personnel expenses. As the interpretation and implementation of these laws and regulations are still evolving, there can be no assurance that BC’s employment practice policy will at all times be deemed to be in full compliance with

labor-related laws and regulations in the PRC, which may subject BC to labor disputes or government investigations. If BC is deemed to have violated relevant labor laws and regulations, BC could be required to provide additional compensation to BC’s employees and BC’s business, financial condition and results of operations could be materially and adversely affected.

The change in the value of the Renminbi against other currencies may fluctuate and is affected by, among other things, changes in the PRC’s political and economic conditions and the PRC’s foreign exchange policies, as well as supply and demand in the local market. BC is exposed to the risks of market forces or government policies and their impact on the exchange rate between Renminbi or other currencies in the future. Substantially all of BC’s costs are denominated in Renminbi and most of BC’s financial assets are also denominated in Renminbi.

The PRC government from time to time adjusts or changes its tax laws and regulations, and future adjustments or changes to PRC tax laws and regulations, together with any uncertainty resulting therefrom, could have an adverse effect on BC’s results of operations. BC’s ETUARY has been subject to a preferential VAT treatment at the tax rate of 3%, applicable to a number of drugs for rare diseases, since March 2019. However, there can be no assurance that BC’s applicable VAT rate will stay the same or decrease, and any future changes to the VAT policies may negatively impact the selling price of BC’s products and future approved drug candidates.

Furthermore, under the amended Individual Income Tax Law, foreign nationals who have no domicile in the PRC, but have resided in the PRC for a total of 183 days or more in a tax year, are subject to PRC individual income tax on their income gained within or outside the PRC. The amended Individual Income Tax Law may materially affect BC’s ability to attract and retain highly skilled foreign scientists and research technicians to work in the PRC. BC is also subject to periodic examinations on fulfillment of BC’s tax obligation under the PRC tax laws and regulations by PRC tax authorities, and there can be no assurance that any such examinations by PRC tax authorities would not result in fines, other penalties or actions that could adversely affect BC’s business, financial condition and results of operations, as well as BC’s reputation.

On March 17, 2018, the General Office of the State Council promulgated the Measures for the Management of Scientific Data (the “Scientific Data Measures”), which provides a broad definition of scientific data and relevant rules for the management of scientific data. According to the Scientific Data Measures, enterprises in the PRC must seek governmental approval before any scientific data involving a state secret may be transferred abroad or to foreign parties. Upon approval by the competent authorities, the enterprise shall undergo the required procedures, and enter into the confidentiality agreements with the users of the scientific data. Further, any researcher conducting research funded at least in part by the Chinese government is required to submit relevant scientific data for management by the entity to which such researcher is affiliated before such data may be published in any foreign academic journal. Given that the term “state secret” is not clearly defined, if and to the extent any data collected or generated in connection with BC’s R&D of medical drug candidates are subject to the Scientific Data Measures and any subsequent laws as required by the relevant government authorities, there can be no assurance that BC can always obtain relevant approvals for sending scientific data (such as the results of BC’s pre-clinical studies or clinical trials conducted within the PRC) abroad or to BC’s foreign partners in the PRC. As a result, BC may be subject to fines and other administrative penalties imposed by those government authorities.

In addition, pursuant to the Service Guide for Administrative Licensing Items Concerning Examination and Approval of Sampling, Collecting, Trading or Exporting Human Genetic Resources, or Taking Such Resources out of the PRC (the “Service Guide”), the sampling, collection or research activities of human genetic resources through clinical trials is required to be filed online with the China Human Genetic Resources Management Office. Furthermore, the Administrative Regulations on Human Genetic Resources of the PRC (the “Human Genetic Resources Regulation”) stipulates that collecting human genetic resources of the PRC’s important genetic families and specific regions, or collecting those human genetic resources in such categories and quantities as prescribed by the administrative department for science and technology under the State Council, preserving the PRC’s human genetic resources and providing the basic platform for scientific research, utilization of the PRC’s human genetic resources for international cooperation in scientific research, as well as transporting the PRC’s materials of human genetic resources abroad shall be subject to the approval of the administrative department for science and technology under the State Council.

If BC is unable to obtain necessary approvals or comply with the regulatory requirements in a timely manner, or at all, BC’s R&D of drug candidates may be hindered. If the relevant government authorities consider the transmission of BC’s scientific data or collection and usage of human genetic resources to be in violation of the requirements under applicable PRC laws and regulations, BC may be subject to fines and other administrative penalties imposed by those government authorities. Furthermore, it is possible that the regulation may be interpreted and applied in a manner that is inconsistent with BC’s clinical trial practices, potentially resulting in the confiscation of human genetic resources samples and associated data and administrative fines.

Due to BCs operations in the PRC, BC’s business, results of operations and financial condition may be influenced to a certain degree by economic, political, legal and social conditions in the PRC or changes in government relations between the PRC and the United States or other governments. There is significant uncertainty about the future relationship between the United States and the PRC with respect to trade policies, treaties, government regulations and tariffs. the PRC’s economy differs from the economies of developed countries in many respects, including with respect to the amount of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. While the PRC’s economy has experienced significant growth over the past four decades, growth has been uneven across different regions and among various economic sectors. The Chinese government has implemented various measures to encourage economic development and guide the allocation of resources. Some of these measures may benefit the overall Chinese economy, but may have a negative effect on BC. In addition, in the past, the Chinese government implemented certain measures, including interest rate increases, to control the pace of economic growth. These measures may cause a decrease in economic activity in the PRC, which may affect BC’s business and results of operations.

During the years ended December 31, 2021 and 2022, BC relied on certain overseas suppliers to obtain raw materials, and BC has relied on collaboration with entities in foreign countries and regions in connection with its business operations. BC may also pursue partnerships with entities in foreign countries and regions in the future. BC’s business is therefore subject to changing international economic, regulatory, social and political conditions, and local conditions in foreign countries and regions. As a result, the PRC’s political relationships with those foreign countries and regions may affect development and commercialization of BC’s drugs and drug candidates.

Additionally, the PRC’s political relationships with those foreign countries and regions may also affect BC’s current and future relationships with third parties. There can be no assurance that BC’s existing or potential collaborators will not alter their perception of BC or their preferences as a result of adverse changes to the state of political relationships between the PRC and the relevant foreign countries or regions, and such alteration may cause a decline in the demand for BC’s products and adversely affect BC’s business, financial condition, results of operations, cash flows and prospects.

In July 2021, the Chinese government provided new guidance on the PRC-based companies raising capital outside of the PRC, including through arrangements called variable interest entities (“VIEs”). In light of such developments, the SEC has imposed enhanced disclosure requirements on the PRC-based companies seeking to register securities with the SEC. Although BC does not have a VIE structure, due to BC’s operations in the PRC, any future Chinese, U.S. or other rules and regulations that place restrictions on capital raising or other activities by companies with operations in the PRC could affect BC’s business and results of operations. If the business environment in the PRC deteriorates from the perspective of domestic or international investment, or if relations between the PRC and the United States or other governments deteriorate, the Chinese government may intervene with BC’s operations and BC’s business in the PRC and United States.

The U.S. government, including the SEC, has made statements and taken certain actions that led to changes to United States and international relations, and will impact companies with connections to the United States or the PRC, including imposing several rounds of tariffs affecting certain products manufactured in the PRC, imposing certain sanctions and restrictions in relation to the PRC and issuing statements indicating enhanced review of companies with certain operations based in the PRC. It is unknown whether and to what extent new legislation, executive orders, tariffs, laws or regulations will be adopted, or the effect that any such actions would have on companies with

significant connections to the United States or to the PRC, BC’s industry or on BC. BC conducts research activities and has business operations both in the United States and the PRC. Any unfavorable government policies on cross-border relations and/or international trade, including increased scrutiny on companies with certain operations based in the PRC, capital controls or tariffs, may affect the competitive position of BC’s drug products, the hiring of scientists and other research and development personnel, the demand for BC’s drug products, the import or export of raw materials in relation to drug development or BC’s ability to raise capital, or prevent BC from selling its drug products in certain countries. Furthermore, the SEC has issued statements primarily focused on companies with certain operations based in the PRC, such as BC. For example, on July 30, 2021, Gary Gensler, Chairman of the SEC, issued a Statement on Investor Protection Related to Recent Developments in the PRC, pursuant to which Chairman Gensler stated that he has asked the SEC staff to engage in targeted additional reviews of filings for companies with certain operations based in the PRC. The statement also addressed risks inherent in companies with VIE structures. BC does not have a VIE structure and is not in an industry that is subject to foreign ownership limitations by the PRC. However, it is possible that the combined company’s periodic reports and other filings with the SEC may be subject to enhanced review by the SEC and this additional scrutiny could affect BC’s ability to effectively raise capital in the United States.

In response to the SEC’s July 30, 2021 statement, the China Securities Regulatory Commission (“CSRC”) announced on August 1, 2021 that “[i]t is our belief that Chinese and U.S. regulators shall continue to enhance communication with the principle of mutual respect and cooperation, and properly address the issues related to the supervision of the PRC-based companies listed in the U.S. so as to form stable policy expectations and create benign rules framework for the market.” While the CSRC will continue to collaborate “closely with different stakeholders including investors, companies, and relevant authorities to further promote transparency and certainty of policies and implementing measures,” it emphasized that it “has always been open to companies’ choices to list their securities on international or domestic markets in compliance with relevant laws and regulations.”

If any new legislation, executive orders, tariffs, laws and/or regulations are implemented, if existing trade agreements are renegotiated, if the U.S. or Chinese governments take retaliatory actions due to the recent U.S.-PRC tension or if the Chinese government exerts more oversight and control over securities offerings that are conducted in the United States, such changes could have an adverse effect on BC’s business, financial condition and results of operations, and BC’s ability to raise capital.

The PRC has implemented or will implement rules and is considering a number of additional proposals relating to data protection. The Data Security Law provides that the data processing activities must be conducted based on “data classification and hierarchical protection system” for the purpose of data protection and prohibits entities in the PRC from transferring data stored in the PRC to foreign law enforcement agencies or judicial authorities without prior approval by the Chinese government.

Additionally, the PRC’s Cyber Security Law and the Administrative Measures for the Hierarchical Protection of Information Security requires companies to take certain organizational, technical and administrative measures and other necessary measures to ensure the security of their networks and data stored on their networks. Under the multi-level protection scheme (“MLPS”), entities operating information systems must have a thorough assessment of the risks and the conditions of their information and network systems to determine the level of the entity’s information and network systems. These levels range from the lowest Level 1 to the highest Level 5 pursuant to a series of national standards on the grading and implementation of the classified protection of cyber security. The grading result will determine the set of security protection obligations that entities must comply with. Entities classified as Level 2 or above should report the grade to the relevant government authority for examination and approval.

Recently, the CAC has taken action against several Chinese internet companies in connection with their initial public offerings on U.S. securities exchanges for alleged national security risks and improper collection and use of the personal information of Chinese data subjects. According to the official announcement, the action was initiated based on the National Security Law, the Cyber Security Law and the Cybersecurity Review Measures, which are aimed at “preventing national data security risks, maintaining national security and safeguarding public interests.”

Pursuant to the Revised CAC Measures, critical information infrastructure operators procuring network products and services, and online platform operators (as opposed to “data processors” in the Revised Draft CAC Measures) carrying out data processing activities which affect or may affect national security, shall conduct a cybersecurity review pursuant to the provisions therein. In addition, online platform operators possessing personal information of more than one million users seeking to be listed on foreign stock markets must apply for a cybersecurity review. On November 14, 2021, the CAC further published the Regulations on Network Data Security Management (Draft for Comment), or the Draft Management Regulations, under which data processors refer to individuals and organizations who determine the data processing activities in terms of the purpose and methods at their discretion. The Draft Management Regulations reiterate that data processors shall be subject to cybersecurity review if  (i) they process personal information of more than one million persons and they are aiming to list on foreign stock markets or (ii) their data processing activities affect or may affect Chinese national security. The Draft Management Regulations also request data processors seeking to list on foreign stock markets to annually assess their data security by themselves or through data security service organizations, and submit the assessment reports to relevant competent authorities. As the Draft Management Regulations are released only for public comment, the final version and the effective date thereof is subject to change.

As of the date of this proxy statement, BC has not received any notice from any Chinese regulatory authority identifying BC as a “critical information infrastructure operator,” “online platform operator” or “data processor,” or requiring BC to go through the cybersecurity review procedures pursuant to the Revised CAC Measures and the Draft Management Regulations. Based on BC’s understanding of the Revised CAC Measures, and the Draft Management Regulations if enacted as currently proposed, BC does not expect to become subject to cybersecurity review by the CAC for issuing securities to foreign investors because: (i) the clinical and preclinical data BC handles in its business operations, either by its nature or in scale, do not normally trigger significant concerns over PRC national security and (ii) BC has not processed, and does not anticipate to process in the foreseeable future, personal information for more than one million users or persons. However, there remains uncertainty as to how the Revised CAC Measures, and the Draft Management Regulations, if enacted as currently proposed, will be interpreted or implemented. Furthermore, there remains uncertainty as to whether the Chinese regulatory authorities may adopt new laws, regulations, rules, or detailed implementation and interpretation in relation, or in addition, to the Revised CAC Measures and the Draft Management Regulations. While BC intends to closely monitor the evolving laws and regulations in this area and take all reasonable measures to mitigate compliance risks, BC cannot guarantee that its business and operations will not be adversely affected by the potential impact of the Revised CAC Measures, the Draft Management Regulations or other laws and regulations related to privacy, data protection and information security.

Furthermore, the Personal Information Protection Law provides a comprehensive set of data privacy and protection requirements that apply to the processing of personal information and expands data protection compliance obligations to cover the processing of personal information of persons by organizations and individuals in the PRC, and the processing of personal information of persons in the PRC outside of the PRC if such processing is for purposes of providing products and services to, or analyzing and evaluating the behavior of, persons in the PRC. The Personal Information Protection Law also provides that critical information infrastructure operators and personal information processing entities who process personal information meeting a volume threshold to be set by Chinese cyberspace regulators are also required to store in the PRC personal information generated or collected in the PRC, and to pass a security assessment administered by Chinese cyberspace regulators for any export of such personal information. Lastly, the Personal Information Protection Law contains proposals for significant fines for serious violations of up to approximately $7.2 million or 5% of annual revenues from the prior year and may also be ordered to suspend any related activity by competent authorities. BC does not maintain, nor does BC intend to maintain in the future, personally identifiable health information of patients in the PRC.

Interpretation, application and enforcement of these laws, rules and regulations evolve from time to time and their scope may continually change, through new legislation, amendments to existing legislation or changes in enforcement. Compliance with the PRC’s new Cyber Security Law and Data Security Law could significantly increase the cost to BC of providing BC’s service offerings, require significant changes to BC’s operations or even prevent BC from providing certain service offerings in jurisdictions in which BC currently operates or in which BC may operate in the future. Despite BC’s efforts to comply with applicable laws, regulations and other obligations relating to privacy, data protection and information security, it is possible that BC’s practices, offerings or platform could fail to meet all of the requirements imposed on BC by the Cyber Security Law, the Data Security Law and/or related implementing regulations. Any failure on BC’s part to comply with such law or regulations or any other

obligations relating to privacy, data protection or information security, or any compromise of security that results in unauthorized access, use or release of personally identifiable information or other data, or the perception or allegation that any of the foregoing types of failure or compromise has occurred, could damage BC’s reputation, discourage new and existing counterparties from contracting with BC or result in investigations, fines, suspension or other penalties by Chinese government authorities and private claims or litigation, any of which could adversely affect BC’s business, financial condition and results of operations. Even if BC’s practices are not subject to legal challenge, the perception of privacy concerns, whether or not valid, may harm BC’s reputation and brand and adversely affect BC’s business, financial condition and results of operations. Moreover, the legal uncertainty created by the Data Security Law, the Revised CAC Measures and the recent Chinese government actions could adversely affect BC’s ability, on favorable terms, to raise capital.

BC’s operations are subject to the FCPA and similar anti-bribery or anti-corruption laws, regulations or rules of the PRC and other countries in which BC operates. The FCPA and these other laws generally prohibit BC, BC’s officers and BC’s employees and intermediaries from, directly or indirectly, offering, authorizing or making improper payments to non-U.S. government officials for the purpose of obtaining or retaining business or other advantage. BC may engage third parties for clinical trials outside of the United States, to sell BC’s products abroad and/or to obtain necessary permits, licenses, patent registrations and other regulatory approvals. BC has direct or indirect interactions with officials and employees of government agencies or government-affiliated hospitals, universities and other organizations. As BC’s business expands, the applicability of the FCPA and other anti-bribery laws to BC’s operations will increase. If BC’s procedures and controls to monitor anti-bribery compliance fail to protect BC from reckless or criminal acts committed by BC’s employees or agents or if BC, or BC’s employees, agents, contractors or other collaborators, fail to comply with applicable anti-bribery laws, BC’s reputation could be harmed and BC could incur criminal or civil penalties, other sanctions and/or significant expenses, which could have a material adverse effect on BC’s business, including BC’s financial condition, results of operations, cash flows and prospects.

In addition, BC’s products may be subject to U.S. and foreign export controls, trade sanctions and import laws and regulations. Governmental regulation of the import or export of BC’s products, or BC’s failure to obtain any required import or export authorization for BC’s products, when applicable, could harm BC’s international or domestic sales and adversely affect BC’s revenue. Compliance with applicable regulatory requirements regarding the export of BC’s products may create delays in the introduction of BC’s products in international markets or, in some cases, prevent the export of BC’s products to some countries altogether. Furthermore, U.S. export control laws and economic sanctions prohibit the shipment of certain products and services to countries, governments and persons targeted by U.S. sanctions. If BC fails to comply with export and import regulations and such economic sanctions, penalties could be imposed, including fines and/or denial of certain export privileges. Moreover, any new export or import restrictions, new legislation or shifting approaches in the enforcement or scope of existing regulations, or in the countries, persons or products targeted by such regulations, could result in decreased use of BC’s products by, or in BC’s decreased ability to export BC’s products to, existing or potential customers with international operations. Any decreased use of BC’s products or limitation on BC’s ability to export or sell BC’s products would likely adversely affect BC’s business.

BC’s ability to obtain currency exchange is subject to significant foreign exchange controls and, in the case of transactions under the capital account, requires the approval of and/or registration with Chinese government authorities, including the State Administration of Foreign Exchange, or SAFE. In particular, if BC finances by means of foreign debt from BC or other foreign lenders, the amount is not allowed to, among other things, exceed the statutory limits and such loans must be registered with the local branch of SAFE. If BC finances by means of additional capital contributions, these capital contributions are subject to registration with the State Administration for Market Regulation or its local branch, reporting of foreign investment information with the Ministry of Commerce of the PRC (“MOFCOM”), or its local branch or registration with other governmental authorities in the PRC.

In light of the various requirements imposed by Chinese regulations on loans to, and direct investment in, PRC-based entities by offshore holding companies, there can be no assurance that BC will be able to complete the necessary government requirements or obtain the necessary government approvals on a timely basis, if at all, with respect to future loans or capital contributions by BC. If BC fails to adhere to such requirements or obtain such approval, BC’s ability to capitalize or otherwise fund BC’s Chinese operations, including BC’s technology development may be negatively affected, which could materially and adversely affect BC’s ability to fund and expand BC’s business.

The Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37 requires residents of the PRC to register with local branches of SAFE in connection with their direct establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing, with such residents’ legally owned assets or equity interests in domestic enterprises or offshore assets or interests, referred to in SAFE Circular 37 as a “special purpose vehicle.” The term “control” under SAFE Circular 37 is broadly defined as the operation rights, beneficiary rights or decision-making rights acquired by residents of the PRC in the offshore special purpose vehicles or Chinese companies by such means as acquisition, trust, proxy, voting rights, repurchase, convertible bonds or other arrangements. SAFE Circular 37 further requires amendment to the registration in the event of any changes with respect to the basic information of or any significant changes with respect to the special purpose vehicle, such as an increase or decrease of capital contributed by PRC residents, share transfer or exchange, merger, division or other material events. If the shareholders of the offshore holding company who are residents of the PRC do not complete their registration with the local SAFE branches, the Chinese subsidiaries may be prohibited from making distributions of profits and proceeds from any reduction in capital, share transfer or liquidation to the offshore parent company and from carrying out subsequent cross-border foreign exchange activities, and the offshore parent company may be restricted in its ability to contribute additional capital into its Chinese subsidiaries. Moreover, failure to comply with the SAFE registration and amendment requirements described above could result in liability under Chinese law for evasion of applicable foreign exchange restrictions.

Certain residents of the PRC may hold direct or indirect interests in BC’s company, and BC will request residents of the PRC who BC knows hold direct or indirect interests in BC’s company, if any, to make the necessary applications, filings and amendments as required under SAFE Circular 37 and other related rules. However, BC may not at all times be fully aware or informed of the identities of BC’s shareholders or beneficial owners that are required to make such registrations, and BC cannot provide any assurance that these residents will comply with BC’s requests to make or obtain any applicable registrations or comply with other requirements under SAFE Circular 37 or other related rules. The failure or inability of BC’s PRC resident shareholders to comply with the registration procedures set forth in these regulations may subject BC to fines or legal sanctions, restrictions on BC’s cross-border investment activities. Moreover, failure to comply with the various foreign exchange registration requirements described above could result in liability under Chinese law for circumventing applicable foreign exchange restrictions. As a result, BC’s business operations and BC’s ability to make distributions to you could be materially and adversely affected.

Pursuant to the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plans of Overseas Publicly Listed Companies, or the Stock Option Rules and other relevant rules and regulations, Chinese citizens or non-Chinese citizens residing in the PRC for a continuous period of not less than one year who participate in any stock incentive plan of an overseas publicly listed company, subject to a few exceptions, are required to register with SAFE through a domestic qualified agent, which could be a Chinese subsidiary of such overseas listed company, and complete certain procedures. BC’s employees who are Chinese citizens or who reside in the PRC for a continuous period of not less than one year and who participate in Catalyst’s stock incentive plans will be subject to such regulation. BC plans to assist BC’s employees to register their equity awards. However, any failure of Chinese individual beneficial owners and holders of equity awards under Catalyst’s stock incentive plans to comply with the SAFE registration requirements may subject them to fines and legal sanctions.

Under Article 2 of the PRC Enterprise Income Tax Law, a resident enterprise is an enterprise that is established within the territory of the PRC or an enterprise established with a “de facto management body” within the PRC.

BC is a PRC tax resident for PRC tax purposes by default because it is a legal entity registered in Beijing, PRC. Because BC is a PRC tax resident for PRC enterprise income tax purposes, BC is subject to PRC tax at a rate of 25% on its world-wide income, which materially reduces BC’s net income. In addition, BC is also subject to PRC tax resident income tax reporting obligations.

Furthermore, because BC is a PRC tax resident for enterprise income tax purposes, gains realized on the Contributions may be subject to PRC tax, at a rate of 10% in the case of non-PRC enterprises or 20% in the case of non-PRC individuals (in each case, subject to the provisions of any applicable tax treaty), if such gains are deemed to be from PRC sources.

The PRC tax authorities have enhanced their scrutiny over the direct or indirect transfer of certain taxable assets, including, in particular, equity interests in a PRC resident enterprise, by a non-resident enterprise by promulgating and implementing Notice of Ministry of Finance and State Administration of Taxation (“SAT”) on Several Issues relating to Treatment of Corporate Income Tax Pertaining to Restructured Business Operations of Enterprises (“Circular 59”) and the Notice on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises (“Circular 698”). Pursuant to the Bulletin on Issues of Enterprise Income Tax and Indirect Transfers of Assets by Non-PRC Resident Enterprises (“Bulletin 7”) an “indirect transfer” of assets, including equity interests in a PRC resident enterprise, by non-PRC resident enterprises may be recharacterized and treated as a direct transfer of PRC taxable assets, if such arrangement does not have a reasonable commercial purpose and was established for the purpose of avoiding payment of PRC enterprise income tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax.

According to Bulletin 7, “PRC taxable assets” include assets attributed to an establishment in the PRC, immoveable properties located in the PRC, and equity investments in PRC resident enterprises, in respect of which gains from their transfer by a direct holder, being a non-PRC resident enterprise, would be subject to PRC enterprise income taxes. When determining whether there is a “reasonable commercial purpose” of the transaction arrangement, factors to be taken into consideration include: whether the main value of the equity interest of the relevant offshore enterprise derives from PRC taxable assets; whether the assets of the relevant offshore enterprise mainly consists of direct or indirect investment in the PRC or if its income mainly derives from the PRC; whether the offshore enterprise and its subsidiaries directly or indirectly holding PRC taxable assets have real commercial nature which is evidenced by their actual function and risk exposure; the duration of existence of the business model and organizational structure; the replicability of the transaction by direct transfer of PRC taxable assets; and the tax situation of such indirect transfer and applicable tax treaties or similar arrangements. In respect of an indirect offshore transfer of assets of a PRC establishment, the resulting gain is to be included with the enterprise income tax filing of the PRC establishment or place of business being transferred, and would consequently be subject to PRC enterprise income tax at a rate of 25%. Where the underlying transfer relates to the immoveable properties located in the PRC or to equity investments in a PRC resident enterprise, which is not related to a PRC establishment or place of business of a non-resident enterprise, a PRC enterprise income tax at 10% would apply, subject to available preferential tax treatment under applicable tax treaties or similar arrangements, and the party who is obligated to make the transfer payments has the withholding obligation. Where the payor fails to withhold any or sufficient tax, the transferor shall declare and pay such tax to the tax authority by itself within the statutory time limit. Late payment of applicable tax will subject the transferor to default interest. Bulletin 7 does not apply to transactions of sale of shares by investors through a public stock exchange where such shares were acquired from a transaction through a public stock exchange.

Bulletin 7 may be determined by the tax authorities to be applicable to some of BC’s offshore restructuring transactions or sales of the shares of BC’s offshore holding companies or investments where PRC taxable assets are involved. The transferors and the transferees may be subject to tax filing or withholding and tax payment obligations,

while BC may be requested to assist in such filings. Furthermore, the transferors or the transferees (as withholding agent) may be required to spend valuable resources to comply with Bulletin 7 or to establish that the transferors should not be taxed under Bulletin 7, for BC’s previous and future restructuring or disposal of shares of BC’s offshore subsidiaries. The PRC tax authorities have the discretion under Bulletin 7 to adjust the taxable capital gains based on the difference between the fair value of the taxable assets transferred and the cost of investment. If the PRC tax authorities adjust the taxable income of the transactions under Bulletin 7, income tax costs on the transferor side associated with such potential acquisitions or disposals will increase.

BC faces uncertainties on the reporting and consequences on future private equity financing transactions, share exchange or other transactions involving the transfer of shares in BC by investors that are non-PRC resident enterprises. The PRC tax authorities may pursue such non-resident enterprises with respect to a filing or the transferees with respect to withholding obligation, and request BC to assist in the filing. As a result, non-resident enterprises in such transactions may become at risk of being subject to filing obligations or being taxed, under Circular 59 or Bulletin 7 and Bulletin 37, and may be required to expend valuable resources to comply with Circular 59, Bulletin 7 and Bulletin 37 or to establish that its non-resident enterprises should not be taxed under these circulars.

The PRC tax authorities have the discretion under SAT Circular 59, Bulletin 7 and Bulletin 37 to adjust the taxable capital gains based on the difference between the fair value of the taxable assets transferred and the cost of investment. Although BC currently has no plans to pursue any acquisitions in the PRC or elsewhere in the world, BC may pursue acquisitions in the future that may involve complex corporate structures. Because BC is a PRC tax resident by default, and if the PRC tax authorities adjust the taxable income of the transactions under SAT Circular 59 or Bulletin 7 and Bulletin 37, BC’s income tax costs associated with such potential acquisitions will be increased, which may have an adverse effect on BC’s financial condition and results of operations.

In determining whether you should approve the issuance of shares of Catalyst Common Stock, the change of control resulting from the Contributions and other matters related to the Contributions, as applicable, you should carefully read the following risk factors in addition to the risks described above.

The market price of the combined company’s common stock following the Contributions could be subject to significant fluctuations. Some of the factors that may cause the market price of the combined company’s common stock to fluctuate include:

Moreover, the stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of individual companies. These broad market fluctuations may also adversely affect the trading price of the combined company’s common stock. In addition, macroeconomic conditions, a recession, depression or other sustained adverse market event resulting from the spread of COVID-19 or otherwise could materially and adversely affect the combined company’s business and the value of its common stock. In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted class action securities litigation against such companies. Furthermore, market volatility may lead to increased shareholder activism if the combined company experiences a market valuation that activists believe is not reflective of its intrinsic value. Activist campaigns that contest or conflict with the combined company’s strategic direction or seek changes in the composition of its board of directors could have an adverse effect on its operating results and financial condition.

The Contributions involves the combination of two companies which currently operate as independent companies. The combined company may fail to realize some or all of the anticipated benefits of the Contributions if the integration process takes longer than expected or is more costly than expected.

Potential difficulties the combined company may encounter in the integration process include the following:

In addition, Catalyst and BC have operated and, until the completion of the Contributions, will continue to operate, independently. It is possible that the integration process also could result in the diversion of each company’s

management’s attention, the disruption or interruption of, or the loss of momentum in, each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies, any of which could adversely affect the combined company’s ability to maintain its business relationships or the ability to achieve the anticipated benefits of the Contributions, or could otherwise adversely affect the business and financial results of the combined company.

Developing pharmaceutical products, including conducting preclinical studies and clinical trials, is expensive. The combined company has only generated revenues from the commercial sale of ETUARY and will not be able to generate any additional product revenues until the combined company receives approval to sell its other product candidates from the FDA, NMPA or other regulatory authorities. The cash expected from both Catalyst and BC at closing, in addition to the funds generated by the combined company’s revenue, is expected to fund operations for at least the next twelve months. As the combined company has only generated revenue from commercial sales of ETUARY to date and does not expect to generate any additional revenue from its other drug candidates for at least twelve months through the combined company’s Phase 2a trial, if ever, the combined company will need to raise substantial additional capital in order to fund its future research and development, including its plans for new clinical trials, product development, partnerships with third parties and strategic collaborations.

The combined company may seek to raise additional funds through various potential sources, such as equity and debt financings, or through strategic collaborations and license agreements. There can be no assurance that the combined company will be able to secure such additional sources of funds to support its operations or, if such funds are available, that such additional financing will be sufficient to meet its needs. Moreover, to the extent that the combined company raises additional funds by issuing equity securities, its stockholders may experience additional significant dilution and new investors could gain rights, preferences and privileges senior to the holders of common stock. Debt financing, if available, may involve restrictive covenants. To the extent that the combined company raises additional funds through collaboration and licensing arrangements, it may be necessary to relinquish some rights to its technologies or product candidates, or grant licenses on terms that may not be favorable.

Given the combined company’s capital constraints, it will need to prioritize spending on its clinical and preclinical programs. If the combined company is unable to raise sufficient funds to support its planned operations, it may elect to discontinue certain of its ongoing activities or programs. The combined company’s inability to raise additional funds could also prevent it from taking advantage of opportunities to pursue promising new or existing programs in the future.

The combined company’s forecasts regarding its beliefs in the sufficiency of its financial resources to support its planned operations are forward-looking statements and involve significant risks and uncertainties, and actual results could vary as a result of a number of factors, including the factors discussed elsewhere in this “Risk Factors” section. These estimates are based on assumptions that may prove to be wrong, and the combined company could utilize its available capital resources sooner than currently expected.

The combined company will incur significant legal, accounting and other expenses as a public company that BC did not incur as a private company, including costs associated with public company reporting obligations under the Exchange Act. Several members of the combined company’s management team will be executive officers of BC prior to the Contributions, some of whom have not previously managed and operated a public company. These executive officers and other personnel will need to devote substantial time to gaining expertise related to public company reporting requirements and compliance with applicable laws and regulations to ensure that the combined company complies with all of these requirements. Any changes the combined company makes to comply with these obligations may not be sufficient to allow it to satisfy its obligations as a public company on a timely basis, or at all. These reporting requirements, rules and regulations, coupled with the increase in potential litigation exposure associated with being a public company, could also make it more difficult for the combined company to attract and retain qualified persons to serve on the board of directors or on board committees or to serve as executive officers, or to obtain certain types of insurance, including directors’ and officers’ insurance, on acceptable terms.

The unaudited pro forma financial data for Catalyst and BC included in this proxy statement is presented for illustrative purposes only and is not necessarily indicative of the combined company’s actual financial condition or results of operations of future periods, or the financial condition or results of operations that would have been realized had the entities been combined during the periods presented. The unaudited pro forma financial statements have been derived from the historical financial statements of Catalyst and BC and adjustments and assumptions have been made regarding the combined company after giving effect to the Contributions. The information upon which these adjustments and assumptions have been made is preliminary, and these kinds of adjustments and assumptions are difficult to make with accuracy. Moreover, the unaudited pro forma financial statements do not reflect all costs that are expected to be incurred by the combined company in connection with the transactions or that have been incurred since the date of such unaudited pro forma financial statements. The assumptions used in preparing the unaudited pro forma financial information may not prove to be accurate, and other factors may affect the combined company’s financial condition following the transaction. The combined company’s actual results and financial position after the Contributions may differ materially and adversely from the unaudited pro forma financial data included in this proxy statement. For more information see the section entitled “Selected Historical and Unaudited Pro Forma Condensed Combined Financial Information—Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 288.

Provisions that will be included in the combined company’s certificate of incorporation and bylaws may discourage, delay or prevent a merger, acquisition or other change in control of the combined company that stockholders may consider favorable, including transactions in which its common stockholders might otherwise receive a premium price for their shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of the combined company’s common stock, thereby depressing the market price of its common stock. In addition, because the combined company’s board of directors will be responsible for appointing the members of the combined company’s management team, these provisions may frustrate or prevent any attempts by the combined company’s stockholders to replace or remove its current management by making it more difficult for stockholders to replace members of the combined company’s board of directors. Among other things, these provisions will:

Moreover, because the combined company is incorporated in Delaware, it is governed by the provisions of Section 203 of the DGCL, which generally prohibits a person who, together with their affiliates and associates, owns

15% or more of the company’s outstanding voting stock from, among other things, merging or combining with the company for a period of three years after the date of the transaction in which the person acquired ownership of 15% or more of the company’s outstanding voting stock, unless the merger or combination is approved in a prescribed manner.

The certificate of incorporation and bylaws of the combined company will provide that the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) is the sole and exclusive forum for any derivative action or proceeding brought on the combined company’s behalf, any action asserting a breach of fiduciary duty owed by any director, officer, other employee or stockholder of the combined company, any action asserting a claim against it arising pursuant to any provisions of the DGCL or as to which the DGCL confers jurisdiction on the Court of Chancery, its certificate of incorporation or its bylaws or any action asserting a claim against it that is governed by the internal affairs doctrine. The provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the combined company or its directors, officers or other employees or stockholders, which may discourage such lawsuits against the combined company and its directors, officers and other employees and stockholders. Alternatively, if a court were to find the choice of forum provision contained in the bylaws to be inapplicable or unenforceable in an action, the combined company may incur additional costs associated with resolving such action in other jurisdictions, which could materially and adversely affect its business, financial condition and results of operations.

As of December 31, 2022, Catalyst had approximately $194.1 of federal and $3.6 of state net operating loss carryforwards (“NOLs”) available to reduce future taxable income. Under Section 382 and Section 383 of the Code and corresponding provisions of state law, if a corporation undergoes an “ownership change,” its ability to use its pre-change NOLs and other pre-change tax attributes (such as research tax credits) to offset its post-change income may be limited. A Section 382 “ownership change” is generally defined as a greater than 50 percentage point change (by value) in its equity ownership by certain stockholders over a three-year period. Such limitations may result in expiration of a portion of the NOL carryforwards before utilization. The Company determined that ownership changes occurred December 31, 2007, August 20, 2015, April 13, 2017, February 15, 2018; February 18, 2020, and December 26, 2022. Approximately $156.5 million and $75.2 million of the NOLs will expire unutilized for federal and California purposes, respectively. The Contributions, if completed, may result in an additional ownership change and Catalyst may experience additional ownership changes in the future due to subsequent shifts in its stock ownership (some of which are outside of its control).

In addition, the combined company’s ability to use its NOLs to offset potential future taxable income and related income taxes that would otherwise be due is dependent upon the combined company’s generation of future taxable income, and Catalyst and BC cannot predict with certainty when, or whether, the combined company will generate sufficient taxable income to use all of its NOLs.

Even if the combined company achieves profitability, it may not be able to utilize a material portion of Catalyst’s or the combined company’s NOLs and other tax attributes, which could have a material adverse effect on cash flow and results of operations. Similar provisions of state tax law may also apply to limit the combined company’s use of accumulated state tax attributes. There is also a risk that due to regulatory changes, such as suspensions on the use of NOLs, or other unforeseen reasons, the combined company’s existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities.

The rules dealing with U.S. federal, state and local income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Treasury Department. Changes in tax law may adversely affect the combined company’s business or financial condition or holders of its common stock. In recent years, many such

changes have been made and changes are likely to continue to occur in the future. It cannot be predicted whether, when, in what form or with what effective dates tax laws, regulations and rulings may be enacted, promulgated or issued, which could result in an increase in the combined company’s or its stockholders’ tax liability or require changes in the manner in which the combined company operates in order to minimize or mitigate any adverse effects of changes in tax law. Prospective investors should consult their tax advisors regarding the potential consequences of changes in tax law on combined company’s business and on the ownership and disposition of its common stock.

The current expectation is that the combined company will retain its future earnings, if any, to fund the growth of the combined company’s business as opposed to paying dividends. As a result, capital appreciation, if any, of the common stock of the combined company will be your sole source of gain, if any, for the foreseeable future.

Prior to the Contributions, there had been no public market for shares of BC common shares. An active trading market for the combined company’s common stock may never develop or be sustained following the Effective Time. In the absence of an active trading market for the combined company’s common stock, investors may be unable to sell their shares. In addition, there can be no assurance that, at the time of the extraordinary general meeting, the combined company will have received confirmation from Nasdaq of the listing of the combined company’s common stock, or that approval will be obtained prior to the consummation of the Contributions, and it is possible that such condition to the consummation of the Contributions may be waived by the parties to the Business Combination Agreement. As a result, you may be asked to vote to approve the Contributions and the other proposals included in this proxy statement without such confirmation, and, further it is possible that such confirmation may never be received and the Contributions could still be consummated if such condition is waived in writing by the parties to the Business Combination Agreement and therefore the combined company’s common stock would not be listed on any nationally recognized securities exchange.

If existing securityholders of Catalyst and BC sell, or indicate an intention to sell, substantial amounts of the combined company’s common stock in the public market after legal restrictions on resale discussed in this proxy statement lapse, the trading price of the common stock of the combined company could decline. Based on shares outstanding as of December 31, 2022, and shares expected to be issued upon completion of the Contributions, the combined company is expected to have outstanding a total of approximately 1,148,532,798 shares of common stock immediately following the completion of the Contributions (before adjustment for the reverse stock split). All outstanding shares of common stock, other than shares held by affiliates of the combined company, will be freely tradable, without restriction, in the public market. In addition, shares of common stock that are subject to outstanding options of BC will become eligible for sale in the public market to the extent permitted by the provisions of various vesting agreements and Rules 144 and 701 under the Securities Act. If these shares are sold, the trading price of the combined company’s common stock could decline.

After the consummation of the Contributions, the GNI Parties will control a majority of the voting power of combined company outstanding common stock. As a result, the combined company will qualify as a “controlled company” within the meaning of the corporate governance standards of Nasdaq. Under these rules, a listed company of which more than 50% of the voting power with respect to the election of directors is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including the requirement that (i) a majority of the combined company board of directors consist of independent directors, (ii) director nominees be selected or recommended to the board entirely by independent directors and (iii) the compensation committee be composed entirely of independent directors.

Following the consummation of the Contributions, the combined company intends to rely on some or all of these exemptions. As a result, at least initially, the combined company will not have a majority of independent directors, and the combined company’s compensation committee and nominating committee will not consist entirely of independent directors. Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of Nasdaq.

Upon the completion of the Contributions, it is anticipated that the combined company’s executive officers, directors and principal stockholders will, in the aggregate, beneficially own approximately 8% of the combined company’s outstanding shares of common stock. As a result, if these stockholders were to choose to act together, they would be able to control or significantly influence all matters submitted to the combined company’s stockholders for approval, as well as the combined company’s management and affairs. For example, these persons, if they choose to act together, would control or significantly influence the election of directors and approval of any merger, consolidation or sale of all or substantially all of the combined company’s assets. This concentration of voting power could delay or prevent an acquisition of the combined company on terms that other stockholders may desire.

The combined company may be exposed to increased litigation from stockholders, suppliers and other third parties due to the combination of Catalyst’s business and BC’s business following the Contributions. Such litigation may have an adverse impact on the combined company’s business and results of operations or may cause disruptions to the combined company’s operations. In addition, in the past, stockholders have initiated class action lawsuits against biotechnology companies following periods of volatility in the market prices of these companies’ stock. Such litigation, if instituted against the combined company, could cause the combined company to incur substantial costs and divert management’s attention and resources, which could have a material adverse effect on the combined company’s business, financial condition and results of operations.

The trading market for the combined company’s common stock will be influenced by the research and reports that equity research analysts publish about it and its business. Equity research analysts may elect not to provide research coverage of the combined company’s common stock after the completion of the Contributions, and such lack of research coverage may adversely affect the market price of its common stock. In the event it does have equity research analyst coverage, the combined company will not have any control over the analysts or the content and opinions included in their reports. The price of the combined company’s common stock could decline if one or more equity research analysts downgrade its stock or issue other unfavorable commentary or research. If one or more equity research analysts ceases coverage of the combined company or fails to publish reports on it regularly, demand for its common stock could decrease, which in turn could cause its stock price or trading volume to decline.

As a privately held company, BC was not required to evaluate its internal control over financial reporting in a manner that meets the standards of publicly traded companies required by Section 404 of the Sarbanes-Oxley Act, or Section 404. Following the Contributions, the combined company’s management will be required to report on the effectiveness of the combined company’s internal control over financial reporting. The rules governing the standards that must be met for the combined company’s management to assess the combined company’s internal control over financial reporting are complex and require significant documentation, testing and possible remediation.

Any failure to maintain effective internal control over financial reporting could severely inhibit the combined company’s ability to accurately report its financial condition, results of operations or cash flows. If the combined company is unable to conclude that its internal control over financial reporting is effective, or if the combined

company’s independent registered public accounting firm determines the combined company has a material weakness or significant deficiency in the combined company’s internal control over financial reporting once that firm begins its reporting on internal control over financial reporting, investors may lose confidence in the accuracy and completeness of the combined company’s financial reports, the market price of the combined company’s common stock could decline and the combined company could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities. Failure to remedy any material weakness in the combined company’s internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict the combined company’s future access to the capital markets.

On December 18, 2020, the Holding Foreign Companies Accountable Act (the “HFCAA”) was signed into law. The HFCAA requires that the SEC identify issuers that retain an auditor that has a branch or office that is located in a foreign jurisdiction and that the PCAOB determines it is unable to inspect or investigate completely because of a position taken by an authority in that foreign jurisdiction. As the combined company may have an auditor that is located in the PRC, a jurisdiction where the PCAOB has been unable to conduct inspections without the approval of the Chinese authorities, they would not be subject to inspection. Among other things, the HFCAA requires the SEC to prohibit the securities of any issuer from being traded on any of the U.S. national securities exchanges, such as The Nasdaq Capital Market, or on the U.S. “over-the-counter” markets, if the auditor of the issuer’s financial statements is not subject to PCAOB inspections for three consecutive “non-inspection” years after the law became effective.

On December 29, 2022, the Accelerating Holding Foreign Companies Accountable Act (the “AHFCAA”) was signed into law as part of a package of bills. The AHFCAA reduces the number of consecutive non-inspection years required for triggering the listing and trading prohibitions under the HFCAA from three years to two years, thus reducing the time period before the combined company’s securities may be prohibited from trading or delisted.

On December 16, 2021, the PCAOB issued a report on its determination that it is unable to inspect or investigate completely PCAOB-registered accounting firms headquartered in the PRC and in Hong Kong.

On December 2, 2021, the SEC adopted final amendments to its rules implementing the HFCAA and established procedures to identify issuers and prohibit the trading of the securities of certain registrants as required by the HFCAA. This rule stated that only the principal accountant, as defined by Rule 2-05 of Regulation S-X and PCAOB AS 1205, is “deemed ‘retained’ for purposes of Section 104(i) of the Sarbanes-Oxley Act and the Commission’s determination of whether the registrant should be a Commission Identified Issuer.” The HFCAA does not apply to registrants that retain a principal accountant that is headquartered in the U.S. and subject to PCAOB inspection. Accordingly, if the combined company’s principal accountant is headquartered in the United States, then the HFCAA would not apply.

On December 15, 2022, the PCAOB announced that it was able to conduct inspections and investigations completely of PCAOB-registered public accounting firms headquartered in mainland PRC and Hong Kong in 2022. The PCAOB vacated its previous 2021 determinations accordingly. While vacating those determinations, the PCAOB noted that, should it encounter any impediment to conducting an inspection or investigation of auditors in mainland PRC or Hong Kong as a result of a position taken by any authority there, the PCAOB would act to immediately reconsider the need to issue new determinations consistent with the HFCAA and PCAOB’s Rule 6100.

If the combined company’s operations require its independent registered public accounting firm be located in the PRC or Hong Kong in order to comply with the standards of the PCAOB regarding principal auditor then the HFCAA would apply to the combined company, including the potential delisting from The Nasdaq Capital Market and prohibition from trading in the over-the counter market in the United States. Such a restriction would negatively impact the combined company’s ability to raise capital. We view the likelihood to be uncertain that the combined company’s operations will require its principal auditor to be located in the PRC or Hong Kong. Additionally, it is possible that in the future Congress could amend the HFCAA or the SEC could modify its regulations to apply the restrictions, including trading prohibitions and delisting, under the HFCAA in situations in which an independent registered public accounting firm in the PRC or Hong Kong performs part of the audit such as in the combined company’s current situation. There are currently no such proposals.

Inspections of auditors conducted by the PCAOB in territories outside of the PRC have at times identified deficiencies in those auditors’ audit procedures and quality control procedures, which may be addressed as part of the inspection process to improve future audit quality. The lack of PCAOB inspections of audit work undertaken in the PRC prevents the PCAOB from evaluating the effectiveness of such audits and such auditors’ quality control procedures. As a result, investors are deprived of the potential benefits of such PCAOB inspections, which could cause investors and potential investors in the combined company’s common stock to lose confidence in the audit procedures conducted, which may negatively impact investor sentiment towards the combined company or its PRC operations, which in turn could adversely affect the market price of its common stock.

Substantially all of the combined assets are located outside of the United States. Most of the combined company’s operations and administrative and corporate functions will be conducted in the PRC. In addition, several of the combined company’s directors and officers are nationals and residents of countries other than the United States. A substantial portion of the assets of these persons are located outside the United States. As a result, due to the lack of reciprocity and treaties between the United States and some of these foreign jurisdictions, together with cost and time constraints, it may be difficult for you to effect service of process within the United States upon these persons. In particular, several of the combined company’s officers and directors are generally located in the PRC, and it will be more difficult to enforce liabilities and enforce judgments on those individuals.

This proxy statement contains forward-looking statements relating to Catalyst, BC, the Business Combination and the other proposed transactions contemplated thereby that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this proxy statement, including statements regarding Catalyst’s, BC’s or the combined company’s future results of operations and financial position, business strategy, development plans, planned clinical trials, future results of clinical trials, expected research and development costs, regulatory approvals, commercial strategy, timing and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential” “predict,” “project,” “should,” “target,” “will” or “would” or the negative of these terms or other similar expressions. Forward-looking statements contained in this proxy statement include, but are not limited to, statements about:

These forward-looking statements are based largely on the current expectations and projections of Catalyst’s, BC’s or the combined company’s business, the industry in which Catalyst and BC operate and financial trends that Catalyst and BC believe may affect the business, financial condition, results of operations and prospects of Catalyst, BC or the combined company, and these forward-looking statements are not guarantees of future performance or development. These forward-looking statements speak only as of the date of this proxy statement and are subject to a number of risks, uncertainties and assumptions described in the section entitled “Risk Factors” beginning on page 27 of this proxy statement. Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in reports filed with the SEC by Catalyst. Please see the section entitled “Where You Can Find More Information” beginning on page 311 of this proxy statement. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in these forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, Catalyst and BC do not plan to publicly update or revise any forward-looking statements contained herein until after the distribution this proxy statement, whether as a result of any new information, future events or otherwise.

In addition, statements that say “Catalyst and/or BC believe(s)” and similar statements reflect the beliefs and opinions on the relevant subject of Catalyst and BC. These statements are based upon information available to Catalyst and BC as of the date of this proxy statement, and while Catalyst and BC believe such information forms a reasonable basis for such statements, such information may be limited or incomplete and the statements of Catalyst and/or BC should not be read to indicate that Catalyst or BC have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.

You should read this proxy statement and the documents that are referenced in this proxy statement with the understanding that the actual future results, levels of activity, performance and events and circumstances of Catalyst, BC or the combined company may be materially different from what Catalyst or BC expects.

In addition, this proxy statement includes statistical and other industry and market data that was obtained from independent industry publications and research, surveys and studies conducted by independent third parties, as well as Catalyst’s and BC’s estimates. The market data used in this proxy statement involves a number of assumptions and limitations and you are cautioned not to give undue weight to such data. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. Catalyst’s and BC’s estimates include assumptions based on their respective industry knowledge, industry publications, third-party research and other surveys. While Catalyst and BC believe that their respective internal assumptions and estimates are reasonable, no independent source has verified such assumptions or estimates.

The Catalyst special meeting will be held on     , 2023, commencing at     Pacific Time, unless postponed or adjourned to a later date. The Catalyst special meeting will be held entirely online. Catalyst is sending this proxy statement to its stockholders in connection with the solicitation of proxies by Catalyst’s board of directors for use at the Catalyst special meeting and any adjournments or postponements of the Catalyst special meeting. This proxy statement is first being mailed to Catalyst stockholders on or about     , 2023.

The purposes of the Catalyst special meeting are:

The issuance of shares of common stock of Catalyst in connection with the Contributions pursuant to Proposal No. 1 and the conversion of Catalyst Convertible Preferred into shares of Catalyst Common Stock pursuant to the F351 Agreement cannot take place unless approved by Catalyst stockholders and the Contributions are consummated. Therefore, the Contributions cannot be consummated without the approval of Proposals No. 1, 2, 3, 4 and 6.

Only holders of record of Catalyst Common Stock at the close of business on the record date, which is     , 2023, are entitled to notice of and to vote at the Catalyst special meeting. At the close of business on the record date, there were     registered holders of record of Catalyst Common Stock and there were     shares of Catalyst Common Stock issued and outstanding. Each share of Catalyst Common Stock entitles the holder thereof to one vote on each matter submitted for stockholder approval.

This proxy statement is solicited on behalf of Catalyst’s board of directors for use at the Catalyst special meeting.

If, as of the record date referred to above, your shares were registered directly in your name with the transfer agent for Catalyst Common Stock, American Stock Transfer & Trust Company, LLC, then you are a stockholder of record. Whether or not you plan to attend the Catalyst special meeting online, Catalyst urges you to fill out and return the proxy card or submit a proxy to vote over the telephone or on the internet as instructed below to ensure your vote is counted.

The procedures for voting are as follows:

If you are a beneficial owner of shares registered in the name of your broker, bank or other agent, you should have received a voting instruction card and voting instructions with these proxy materials from that organization rather than from Catalyst. Simply complete and mail the voting instruction card to ensure that your vote is counted. To vote in person at the Catalyst special meeting, you must obtain a valid proxy from your broker, bank or other agent. Follow the instructions from your broker, bank or other agent included with these proxy materials, or contact your broker, bank or other agent to request a proxy form.

Catalyst provides internet proxy voting to allow you to submit your proxy to vote your shares online, with procedures designed to ensure the authenticity and correctness of your proxy vote instructions. However, please be aware that you must bear any costs associated with your internet access, such as usage charges from internet access providers and telephone companies.

If you hold shares beneficially in “street name” and do not provide your broker or other agent with voting instructions, your shares may constitute “broker non-votes.” A “broker non-vote” occurs when shares held by a broker are not voted with respect to a particular proposal because the broker does not have or did not exercise discretionary authority to vote on the matter and has not received voting instructions from its clients. These matters are referred to as “non-routine” matters. On non-routine items for which you do not give your broker instructions, shares of Catalyst Common Stock will be treated as broker non-votes. Whether a proposal is considered routine or non-routine is subject to stock exchange rules and final determination by the stock exchange.

All properly-executed proxies that are not revoked will be voted at the Catalyst special meeting and at any adjournments or postponements of the Catalyst special meeting in accordance with the instructions contained in the proxy. If a holder of Catalyst Common Stock executes and returns a proxy and does not specify otherwise, the shares represented by that proxy will be voted “FOR” Proposal Nos. 1, 2, 3, 4, 5, 6, 7, 9, 11 and 12, “FOR” the election of each of the director nominees named in Proposal No. 8 and “ONE YEAR” on Proposal No. 10 in accordance with the recommendation of Catalyst’s board of directors.

If you are a stockholder of record of Catalyst, you may change your vote at any time before your proxy is voted at the Catalyst special meeting in any one of the following ways:

If your shares are held by your broker, bank or other agent, you should follow the instructions provided by them.

The presence at the Catalyst special meeting, in person or represented by proxy, of the holders of one-third of the outstanding shares of Catalyst Common Stock entitled to vote at the Catalyst special meeting shall constitute a quorum for the transaction of business. Abstentions and broker non-votes, if any, will be counted towards a quorum.

Votes will be counted by the inspector of election appointed for the meeting, who will separately count “FOR” and “AGAINST” votes, abstentions and broker non-votes. Assuming a quorum is present, the affirmative vote of the holders of a majority of all of the shares of Catalyst Common Stock present in person or represented by proxy at the Catalyst special meeting and entitled to vote on such matter is required for approval of Proposal Nos. 1, 2, 6, 9, 11 and 12. On Proposal Nos. 1, 2, 6, 9, 11 and 12, abstentions will have the same effect as “AGAINST” votes and broker non-votes, if any, will have no effect.

Assuming a quorum is present, the affirmative vote of the holders of a majority of all of the shares of Catalyst Common Stock present in person or represented by proxy at the Catalyst special meeting and entitled to vote on such matter is required for approval of Proposal No. 10. Abstentions on Proposal No. 10 will have the same effect as a vote against each option, and broker non-votes, if any, will have no effect. Because Proposal No. 10 has multiple options, if none of the options receives the affirmative vote of the holders of a majority of all of the shares of Catalyst Common Stock present in person or represented by proxy at the Catalyst special meeting and entitled to vote on the matter, then we will consider the stockholders to have approved the option selected by the holders of a plurality of the shares of Catalyst Common Stock present in person or represented by proxy at the Catalyst special meeting and entitled to vote on the matter.

Assuming a quorum is present, the affirmative vote of the holders of a majority in voting power of the outstanding shares of Catalyst Common Stock entitled to vote thereon is required for approval of Proposal Nos. 3, 4 and 5. Abstentions and broker non-votes, if any, will have the same effect as “AGAINST” votes on Proposal Nos. 3, 4 and 5.

Assuming a quorum is present, the affirmative vote of the holders of two-thirds in voting power of the outstanding shares of Catalyst Common Stock entitled to vote thereon is required for approval of Proposal No. 7. Abstentions and broker non-votes, if any, will have the same effect as “AGAINST” votes on Proposal No. 7.

Assuming a quorum is present, the two nominees receiving the highest number of affirmative “FOR” votes shall be elected as Class II directors pursuant to Proposal No. 8. Shares withheld and broker non-votes, if any, will have no effect.

Proposal Nos. 1, 2, 3, 4 and 6 are a condition to the completion of the Contributions. Therefore, the Contributions cannot be consummated without the approval of Proposal Nos. 1, 2, 3, 4 and 6. The issuance of Catalyst Common Stock in connection with the Contributions will not take place unless Proposal Nos. 1, 2, 3, 4 and 6 are approved by Catalyst stockholders and the Contributions are consummated.

As of March 1, 2023, the directors and certain executive officers of Catalyst owned or controlled approximately 0.3% of the outstanding shares of Catalyst Common Stock entitled to vote at the Catalyst special meeting. As of March 1, 2023, GNI Japan and GNI Hong Kong owned or controlled approximately 16.6% of the outstanding shares of Catalyst Common Stock entitled to vote at the Catalyst special meeting.

In addition to solicitation by mail, the directors, officers, employees and agents of Catalyst may solicit proxies from Catalyst stockholders by personal interview, telephone, email, fax or otherwise. Catalyst and the GNI Parties will share equally the costs of printing and filing this proxy statement and proxy card. Arrangements will also be made with brokerage firms and other custodians, nominees and fiduciaries who are record holders of Catalyst Common Stock for the forwarding of solicitation materials to the beneficial owners of Catalyst Common Stock. Catalyst and the GNI Parties will reimburse these brokers, custodians, nominees and fiduciaries for the reasonable out-of-pocket expenses they incur in connection with the forwarding of solicitation materials. Catalyst will retain Broadridge to assist it in soliciting proxies using the means referred to above. Catalyst and the GNI Parties will pay the fees of Broadridge, which are expected to be approximately $    plus reimbursement of out-of-pocket expenses.

As of the date of this proxy statement, Catalyst’s board of directors does not know of any business to be presented at the Catalyst special meeting other than as set forth in the notice in this proxy statement. If any other matters should properly come before the Catalyst special meeting, it is intended that the shares represented by proxies will be voted with respect to such matters in accordance with the judgment of the persons voting the proxies.

This section and the section entitled “The Business Combination Agreement” beginning on page 129 of this proxy statement describe the material aspects of the Contributions and the Business Combination Agreement. While Catalyst and the GNI Parties believe that this description covers the material terms of the Contributions and the Business Combination Agreement, it may not contain all of the information that is important to you. You should read carefully this entire proxy statement for a more complete understanding of the Contributions and the Business Combination Agreement and the other documents to which you are referred in this proxy statement. See the section entitled “Where You Can Find More Information” beginning on page 311 of this proxy statement.

In November 2021, Catalyst announced the discontinuation of its Phase 3 and Phase 1/2 clinical trials of MarzAA based on a number of factors, including challenges in enrollment resulting from the limited number of potential patients eligible to enroll in these trials, difficulties in identifying and enrolling eligible patients during the pandemic, delays in enrollment resulting from COVID-19, competition from approved therapies, the capital requirements to complete the trials, and other factors.

In February 2022, Catalyst announced that it had engaged Perella Weinberg Partners (“PWP”), a leading global independent advisory firm, as a financial advisor to assist Catalyst in exploring strategic alternatives, including a potential sale of Catalyst, a sale of Catalyst’s assets, or other alternatives to monetize Catalyst’s assets. In February 2022, Catalyst’s board of directors also formed a transaction committee to oversee its strategic alternative process (the “Transaction Committee”).

Between February and early April 2022, PWP and Catalyst explored Catalyst’s strategic alternatives related to the licensing or sale of Catalyst’s complement and hemophilia programs engaged with many potential counterparties. This exploration included outreach to approximately 75 potentially interested parties, the execution of confidentiality agreements with 15 parties, due diligence conducted by 14 parties, process letters sent to 13 parties, two offers received to purchase Catalyst’s complement-related assets, including an offer from Vertex. Catalyst also received one subsequent verbal offer for the purchase of Catalyst’s complement-related assets. Throughout this period, the Transaction Committee reviewed these proposals with Catalyst’s entire board of directors, PWP, Catalyst’s management, and Catalyst’s outside legal advisors, and discussed negotiating strategies and plans.

In parallel, between February 2022 and July 2022, Catalyst, PWP and another financial advisor, Raymond James (“RJ”), reviewed approximately 40 potential reverse merger transactions. In February 2022, Catalyst received an initial indication of interest to combine with a company (“Company A”) in a reverse merger transaction. This proposed transaction was subject to several conditions, including a concurrent $70 million financing by Company A and an assumed Catalyst net cash amount at closing equal to $30 million. Catalyst and Company A and their respective outside legal and financial advisors negotiated the terms and conditions of definitive legal agreements through May 2022, at which time it became apparent that all conditions could not be satisfied. As a result, Catalyst ceased negotiations with Company A.

During the period between February and July 2022 the Transaction Committee held approximately 21 meetings, often with representatives of PWP and RJ, to evaluate all potential transactions including reverse mergers, out-licensing, and asset sales.

With respect to reverse merger transactions reviewed during this period, the Transaction Committee elected not to proceed with any of these potential transactions because of, among other reasons: uncertainty about the scientific rationale or business prospects of the proposed counterparties to such transactions; transaction requirements related to Catalyst retaining significant amounts of cash to fund future operations of the resulting entity, thereby reducing the amount of cash that Catalyst could distribute to its stockholders; the capital requirements of the surviving company following any such transaction and the likelihood of raising such capital at reasonable valuations, if at all; dilution to Catalyst stockholders from the initial proposed transaction and likely additional dilution resulting from additional fundraising; and uncertainty of completing any such transaction.

During April and May 2022, Catalyst and Vertex and their respective outside legal and financial advisors conducted due diligence on Catalyst’s complement-related assets and certain other assets, and negotiated the final terms and definitive legal agreements under which Vertex would acquire such assets from Catalyst for up to $60 million in cash, including an initial payment of $55 million at closing and a subsequent payment of up to $5 million payable on the completion of certain obligations. In May 2022, Catalyst’s board of directors and its outside legal and financial

advisors discussed the terms and conditions of such proposed asset sale to Vertex and related matters, following which Catalyst’s board of directors unanimously approved the Vertex transaction. Among the factors considered by Catalyst’s board of directors were the non-contingent cash consideration offered by Vertex, the amount, duration, and conditions related to consideration holdback, Catalyst’s board of directors’ belief that the terms and conditions offered by Vertex were superior to all other offers received as part of Catalyst’s exploration of strategic alternatives with PWP during this period, the opinion of Potter Anderson & Coroon LLP that a vote of the Catalyst stockholders to approve the Vertex transaction was not required under Delaware law, the fact that the Vertex proposal provided for a simultaneous signing and closing of the transaction, which was viewed favorably by Catalyst’s board of directors, and Catalyst’s board of directors’ belief that the Vertex transaction provided certainty of closing.

Following the consummation of the Vertex transaction, Catalyst’s assets consisted primarily of the discontinued MarzAA and other hemophilia assets and cash on hand. Catalyst also owned certain contractual rights related to the sale of legacy assets from a prior company, Targacept, which were of uncertain value.

In June, July, and August 2022, Catalyst’s board of directors continued their review of strategic alternatives. In furtherance of the foregoing, Catalyst’s board of directors, along with its outside legal and financial advisors, continued to discuss potential reverse merger transactions, potential transactions to sell MarzAA and the other hemophilia assets, and alternatives for distributing cash to Catalyst’s stockholders, including a potential dividend or tender offer. In late August 2022, following the dismissal of certain stockholder litigation and the closing of the Vertex transaction, Catalyst’s board of directors declared a special cash dividend to its stockholders of approximately $45 million, which was paid in September 2022.

In September 2022, Catalyst’s board of directors considered two potential reverse merger transactions, one of which Catalyst’s board of directors did not consider feasible due to financing considerations, and the other of which Catalyst’s board of directors had uncertainties about due to the nature of the target company’s business. The Catalyst Board, along with its outside legal advisors, also discussed the potential to dissolve Catalyst, including the requirement to obtain a stockholder vote and the probability of doing so, timing, potential expense, and the amounts and timing of potential distributions to stockholders.

In October 2022, Catalyst received, and Catalyst’s board of directors discussed, a letter of intent from GNI regarding the Transaction, including the possibility of valuing MarzAA and DalcA assets as part of the Transaction. GNI’s and Catalyst’s legal representatives continued to discuss potential transaction structures considering GNI’s financial reporting obligations and tax considerations.

In November 2022, GNI provided a revised letter of intent regarding the Transaction, including the addition of a cash distribution to Catalyst stockholders, the distribution of the CVR to Catalyst’s current stockholders that would include value received for MarzAA, DalcA, and Catalyst's other assets, and provisions related to expense sharing between Catalyst and GNI, with a goal towards maximizing the amount of cash that could be distributed to Catalyst stockholders in connection with the Transaction. Catalyst reviewed the updated term sheet with members of the Transaction Committee, who unanimously favored moving forward with negotiations for the Transaction. On November 10, 2022, Catalyst’s board of directors met and discussed the status of discussions with GNI regarding the Transaction, as well as the status of other potential asset sale or acquisition discussions.

In November and December 2022, legal representatives from Catalyst and GNI exchanged and negotiated draft legal documents regarding the Transaction. On November 9, 2022, Catalyst engaged Raymond James to conduct an analysis of the fairness of the Transaction to Catalyst from a financial point of view. On December 20, 2022, Catalyst’s board of directors reviewed the terms and conditions of the Transaction. At this meeting, representatives or Orrick, Herrington & Sutcliffe LLP, Catalyst’s legal advisors, discussed Catalyst’s board of directors’ fiduciary duties with respect to the Transaction, and representatives of Raymond James delivered their opinion that the Transaction Consideration (as defined in the Raymond James Fairness Opinion) to be paid by Catalyst pursuant to the Business Combination Agreement is fair to Catalyst from a financial point of view. See “—Opinion of Catalyst’s Financial Advisor” below. On December 21, 2022, Catalyst’s board of directors unanimously approved the Transaction and related matters. See “—Catalyst’s Reasons for the Contributions” below.

During the course of its evaluation of the F351 Agreement and the Business Combination Agreement and the transactions contemplated thereby, Catalyst’s then-board of directors held numerous meetings, consulted with Catalyst’s management, legal counsel and financial advisors and reviewed and assessed a significant amount of

information. In reaching its decision to approve the Contributions and the transactions contemplated by the F351 Agreement and the Business Combination Agreement, Catalyst’s then-board of directors considered a number of supporting factors and risks and countervailing factors related to entering into the F351 Agreement and the Business Combination Agreement and the transactions contemplated thereby, including:

Catalyst’s then-board of directors also reviewed the terms of the F351 Agreement, the Business Combination Agreement and related transaction documents, including those described below and concluded that the terms of the F351 Agreement, the Business Combination Agreement and related transaction documents, in the aggregate, were advisable and reasonable under the circumstances:

The foregoing information and factors considered by Catalyst’s then-board of directors are not intended to be exhaustive, but are believed to include all of the material factors considered by Catalyst’s then-board of directors. In

view of the wide variety of factors considered in connection with its evaluation of the Contributions and the complexity of these matters, Catalyst’s then-board of directors did not find it useful and did not attempt, to quantify, rank or otherwise assign relative weights to these factors. In considering the factors described above, individual members of Catalyst’s then-board of directors may have given different weight to different factors. Catalyst’s then-board of directors conducted an overall analysis of the factors described above, including thorough discussions with and questioning of the Catalyst management team and the legal and financial advisors of Catalyst, and considered the factors overall to be favorable to and to support its determination.

In the course of reaching their decision to approve the Contributions, the board of directors and executive directors, as applicable, of the GNI Parties held numerous meetings, consulted with senior management of the GNI Parties, BC’s financial advisors and legal counsel and considered a wide variety of factors, including, among others, the following material factors (which factors are not necessarily presented in any order of relative importance):

The board of directors and executive directors, as applicable, of the GNI Parties also considered a number of uncertainties and risks in its deliberations concerning the Contributions and the other transactions contemplated by the Business Combination Agreement, including the following:

The foregoing information is not intended to be exhaustive, but summarizes the material factors considered by the board of directors and executive directors, as applicable, of the GNI Parties in their consideration of the Business Combination Agreement and the transactions contemplated. The board of directors and executive directors, as applicable, of the GNI Parties concluded that the benefits, advantages and opportunities of a potential transaction outweighed the uncertainties and risks described above. After considering these and other factors, the board of directors and executive directors, as applicable, of the GNI Parties each unanimously approved the Business Combination Agreement, the Contributions and the other transactions contemplated by the Business Combination Agreement.

Catalyst retained Raymond James & Associates, Inc., or Raymond James, as its financial advisor in connection with the Contributions and other transactions contemplated by the F351 Agreement and the Business Combination Agreement. Catalyst’s then-board of directors selected Raymond James to act as Catalyst’s financial advisor based on Raymond James' qualifications, reputation, experience and expertise in the biopharmaceutical industry, its knowledge of and involvement in recent transactions in the biopharmaceutical industry and its relationship with

Catalyst and its business. Raymond James is an internationally-recognized investment banking and financial services company that has substantial experience in transactions similar to the Contributions and other transactions contemplated by the F351 Agreement and the Business Combination Agreement.

In connection with this engagement, Catalyst’s then-board of directors requested that Raymond James evaluate the fairness, from a financial point of view, to Catalyst of the Transaction Consideration (as defined in the Raymond James fairness opinion) to be paid by Catalyst. On December 21, 2022, at a meeting of Catalyst’s then-board of directors, Raymond James rendered to Catalyst’s then-board of directors its oral opinion, which was subsequently confirmed by delivery of a written opinion dated December 21, 2022, that, as of such date and based upon and subject to the various procedures followed, assumptions made, matters considered and the qualifications and limitations upon the review undertaken by Raymond James in preparing its opinion, the Transaction Consideration to be paid by Catalyst was fair, from a financial point of view, to Catalyst.

The full text of the Raymond James fairness opinion, which describes, among other things, the various procedures followed, assumptions made, matters considered, qualifications and limitations upon the scope of the review undertaken by Raymond James in preparing its opinion, is attached to this proxy statement as Annex C and is incorporated by reference in its entirety to this proxy statement.

Raymond James’ financial advisory services and opinion were provided for the information and assistance of the members of Catalyst’s then-board of directors (in their capacity as directors and not in any other capacity) in connection with and for purposes of Catalyst’s then-board of directors’ consideration of the Contributions and other transactions contemplated by the F351 Agreement and the Business Combination Agreement and the Raymond James fairness opinion addressed only the fairness, from a financial point of view, to Catalyst as of the date thereof, of the Transaction Consideration (as defined in the Raymond James fairness opinion) to be paid by Catalyst. The opinion of Raymond James does not address any other term or aspect of the F351 Agreement or the Business Combination Agreement or the Contributions or other transactions contemplated thereby. The Raymond James fairness opinion does not constitute a recommendation to Catalyst’s board of directors or any stockholder of Catalyst as to whether or how such holder should vote or otherwise act with respect to the Contributions, other transactions contemplated by the F351 Agreement or the Business Combination Agreement or any other matter.

The full text of the Raymond James fairness opinion should be read carefully in its entirety for a description of the assumptions made and the qualifications and limitations upon the review undertaken by Raymond James in preparing its opinion.

In connection with rendering the opinion described above and performing its related financial analyses, Raymond James, among other things:

Raymond James also performed a discounted cash flow analysis with respect to BC and the Purchased Assets based upon the Projections, received a certificate addressed to Raymond James from a member of senior management of Catalyst regarding, among other things, the accuracy of the information, data and other materials (financial or otherwise) provided to, or discussed with, Raymond James by or on behalf of Catalyst, conducted such other financial studies, analyses and inquiries and considered such other information and factors as Raymond James deemed appropriate and discussed with members of the senior management of Catalyst certain information relating to the aforementioned and any other matters which Raymond James has deemed relevant to its inquiry.

With the consent of Catalyst's then-board of directors, Raymond James has assumed and relied upon the accuracy and completeness of all information supplied by or on behalf of Catalyst or otherwise reviewed by or discussed with Raymond James and Raymond James has undertaken no duty or responsibility to, nor did Raymond James, independently verify any of such information. Raymond James has not made or obtained an independent appraisal of the assets or liabilities (contingent or otherwise) of Catalyst or BC. With respect to the Projections and any other forward-looking information and data provided to or otherwise reviewed by or discussed with Raymond James, Raymond James has, with the consent of Catalyst’s then-board of directors, assumed that the Projections and such other information and data have been reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of the management of Catalyst and Raymond James has relied upon Catalyst to advise Raymond James promptly if any information previously provided became inaccurate or was required to be updated during the period of Raymond James review. Raymond James expresses no opinion with respect to the Projections or the assumptions on which they are based. Raymond James has assumed that the final forms of the Transaction Agreements will be substantially similar to the drafts reviewed by Raymond James and that the Contributions and other transactions contemplated by the F351 Agreement and the Business Combination Agreement will be consummated in accordance with the terms of the Transaction Agreements without waiver or amendment of any conditions thereto. Furthermore, Raymond James has assumed, in all respects material to its analysis, that the representations and warranties of each party contained in the Transaction Agreements are true and correct and that each such party will perform all of the covenants and agreements required to be performed by it under the Transaction Agreements without being waived. Raymond James has relied upon and assumed, without independent verification, that (i) the Contributions and other transactions contemplated by the F351 Agreement and the Business Combination Agreement will be consummated in a manner that complies in all respects with all applicable international, federal and state statutes, rules and regulations and (ii) all governmental, regulatory and other consents and approvals necessary for the consummation of the Contributions will be obtained and that no delay, limitations, restrictions or conditions will be imposed or amendments, modifications or waivers made that would have an effect on the Contributions or such other transactions contemplated by the F351 Agreement and the Business Combination Agreement, Catalyst or BC that would be material to Raymond James' analyses or the Raymond James fairness opinion. Furthermore, at Catalyst’s direction, Raymond James has ascribed no value to the CVRs and therefore is not providing any opinion with regard to any aspect of the CVRs, which are further described in the CVR Agreement.

The Raymond James fairness opinion is based upon market, economic, financial and other circumstances and conditions existing and disclosed to Raymond James as of December 20, 2022 and any material change in such circumstances and conditions would require a reevaluation of the Raymond James fairness opinion, which Raymond James is under no obligation to undertake. Raymond James has relied upon and assumed, without independent verification, that there has been no change in the business, assets, liabilities, financial condition, results of operations, cash flows or prospects of Catalyst, Continent, GNI Japan, BC, any Asset Seller or any Contributor since the

respective dates of the most recent financial statements and other information, financial or otherwise, provided to Raymond James that would be material to Raymond James' analyses or the Raymond James fairness opinion and that there is no information or any facts that would make any of the information reviewed by Raymond James incomplete or misleading in any material respect.

Raymond James expresses no opinion as to the underlying business decision to effect the Contributions or other transactions contemplated by the F351 Agreement and the Business Combination Agreement, the structure or tax consequences of the Contributions or other transactions contemplated by the F351 Agreement and the Business Combination Agreement or the availability or advisability of any alternatives to the Contributions. While Raymond James provided advice to Catalyst with respect to the proposed Contributions and other transactions contemplated by the F351 Agreement and the Business Combination Agreement, Raymond James did not recommend any specific amount of consideration or that any specific consideration constituted the only appropriate consideration for the Contributions and other transactions contemplated by the F351 Agreement and the Business Combination Agreement. In addition, Raymond James does not express any opinion as to the likely trading range of Catalyst Common Stock following the Contributions and other transactions contemplated by the F351 Agreement and the Business Combination Agreement, which may vary depending on numerous factors that generally impact the price of securities or on the financial condition of Catalyst at that time.

The Raymond James fairness opinion is limited to the fairness, from a financial point of view, to Catalyst of the Transaction Consideration to be paid by Catalyst. Raymond James expresses no opinion with respect to any other reasons, legal, business or otherwise, that may support the decision of the board of directors of Catalyst to approve or consummate the Contributions and other transactions contemplated by the F351 Agreement and the Business Combination Agreement. Furthermore, no opinion, counsel or interpretation is intended by Raymond James on matters that require legal, accounting or tax advice. It is assumed that such opinions, counsel or interpretations have been or will be obtained from the appropriate professional sources. Furthermore, Raymond James has relied, with the consent of Catalyst's then-board of directors, on the fact that Catalyst has been assisted by legal, accounting and tax advisors and Raymond James has, with the consent of Catalyst's then-board of directors, relied upon and assumed the accuracy and completeness of the assessments by Catalyst and its advisors as to all legal, accounting and tax matters with respect to Catalyst and the Contributions and other transactions contemplated by the F351 Agreement and the Business Combination Agreement.

In formulating its opinion, Raymond James has considered only what it understands to be the Transaction Consideration to be paid by Catalyst in the Contributions and other transactions contemplated by the F351 Agreement and the Business Combination Agreement as described above and Raymond James did not consider and expresses no opinion on, the fairness of the amount or nature of any compensation to be paid or payable to any of Catalyst’s, Continent’s, any Asset Seller’s or any Contributor’s officers, directors or employees, or class of such persons, whether relative to the compensation received by any such party or otherwise. Raymond James has not been requested to opine as to and the Raymond James fairness opinion does not express an opinion as to or otherwise address, among other things: (i) the fairness of the Contributions or other transactions contemplated by the F351 Agreement and the Business Combination Agreement to the holders of any class of securities, creditors or other constituencies of Catalyst, or to any other party, or (ii) the fairness of the Transaction to any one class or group of Catalyst’s or any other party’s security holders or other constituencies vis-à-vis any other class or group of Catalyst’s or such other party’s security holders or other constituencies (including, without limitation, the allocation of any consideration to be received in the Contributions and other transactions contemplated by the F351 Agreement and the Business Combination Agreement amongst or within such classes or groups of security holders or other constituencies or parties). Raymond James is not expressing any opinion as to the impact of the Contributions and other transactions contemplated by the F351 Agreement and the Business Combination Agreement on the solvency or viability of Catalyst, Continent, any Asset Seller or any Contributor or the ability of Catalyst, Continent, any Asset Seller or any Contributor to pay their respective obligations when they come due.

The preparation of an opinion regarding fairness is a complex process and is not susceptible to a partial analysis or summary description. Raymond James believes that its analyses must be considered as a whole and that selecting portions of its analyses, without considering the analyses taken as a whole, would create an incomplete view of the process underlying its opinion. In addition, Raymond James considered the results of all its analyses and did not assign relative weights to any of the analyses, but rather made qualitative judgments as to significance and relevance of each analysis and factor, so the ranges of valuations resulting from any particular analysis described above should not be taken to be the view of Raymond James as to the actual value of Catalyst.

In performing its analyses, Raymond James made numerous assumptions with respect to industry performance, general business, economic and regulatory conditions and other matters, many of which are beyond the control of Catalyst. The analyses performed by Raymond James are not necessarily indicative of actual values, trading values or actual future results which might be achieved, all of which may be significantly more or less favorable than suggested by its analyses. Such analyses were provided to the then-Catalyst board of directors (solely in its capacity as such) and were prepared solely as part of the analysis of Raymond James of the fairness, from a financial point of view, to Catalyst of the Transaction Consideration to be paid by Catalyst. The analyses do not purport to be appraisals or to reflect the prices at which companies may actually be sold, and such estimates are inherently subject to uncertainty. The opinion of Raymond James was one of many factors taken into account by the then-board of directors of Catalyst in making its determination to approve the Contributions and other transactions contemplated by the F351 Agreement and the Business Combination Agreement. Neither Raymond James’ opinion nor the analyses described above should be viewed as determinative of the then-board of directors of Catalyst or Catalyst management’s views with respect to Catalyst or the Contributions and other transactions contemplated by the F351 Agreement and the Business Combination Agreement.

The Raymond James opinion was necessarily based upon market, economic, financial and other circumstances and conditions existing and disclosed to it on December 20, 2022, and any material change in such circumstances and conditions may affect the opinion of Raymond James, but Raymond James does not have any obligation to update, revise or reaffirm that opinion. Raymond James relied upon and assumed, without independent verification, that there had been no change in the business, assets, liabilities, financial condition, results of operations, cash flows or prospects of Catalyst since the respective dates of the most recent financial statements and other information, financial or otherwise, provided to Raymond James that would be material to its analyses or its opinion, and that there was no information or any facts that would make any of the information reviewed by Raymond James incomplete or misleading in any material respect.

During the two years preceding the date of Raymond James’ written opinion, Raymond James has been engaged by or otherwise performed services for the Catalyst for which it was paid a fee (separately from any amounts that were paid to Raymond James under the engagement letter described in this proxy statement pursuant to which Raymond James was retained as a financial advisor to the Catalyst to assist in reviewing strategic alternatives).

For services rendered in connection with the delivery of its opinion, Catalyst paid Raymond James a cash advisory fee upon delivery of its opinion, which fee was not contingent upon the successful completion of the Contributions or other transactions contemplated by the F351 Agreement and the Business Combination Agreement or on the conclusion reached in its opinion. Catalyst also agreed to reimburse Raymond James for its expenses incurred in connection with its services, including the fees and expenses of its counsel, and will indemnify Raymond James against certain liabilities arising out of its engagement.

Raymond James is actively involved in the investment banking business and regularly undertakes the valuation of investment securities in connection with public offerings, private placements, business combinations and similar transactions. In the ordinary course of business, Raymond James may trade in the securities of Catalyst for its own account and for the accounts of its customers and, accordingly, may at any time hold a long or short position in such securities. Raymond James may provide investment banking, financial advisory and other financial services to Catalyst or other participants in the Contributions or other transactions contemplated by the F351 Agreement and the Business Combination Agreement in the future, for which Raymond James may receive compensation.

The delivery of the Raymond James fairness opinion was approved by an opinion committee of Raymond James.

The Raymond James fairness opinion is for the information of the then-board of directors of Catalyst (solely in each director’s capacity as such) in evaluating the proposed Contributions and other transactions contemplated by the F351 Agreement and the Business Combination Agreement and does not constitute a recommendation to the board or any stockholder of Catalyst regarding how the board or any such stockholder should vote on the proposed Contributions and other transactions contemplated by the F351 Agreement and the Business Combination Agreement.

In considering the recommendation of Catalyst’s then-board of directors with respect to the Contributions, holders of shares of Catalyst Common Stock should be aware that Catalyst’s executive officers and directors may have interests in the Contributions that may be different from, or in addition to, those of Catalyst stockholders generally. These interests may create potential conflicts of interest. Catalyst’s then-board of directors was aware of these

potential conflicts of interest and considered them, among other matters, in reaching its decision to approve the Contributions and related transactions and to recommend that Catalyst stockholders vote in favor of the proposals.

The combined company’s board of directors is expected to approve grants of awards of fully vested stock options under the 2023 Omnibus Incentive Plan to Nassim Usman, Seline Miller and Thomas Eastling.

Pursuant to the severance agreements between Catalyst and Grant Blouse, in the event that Catalyst consummates the Contributions prior to the expiration of the nine-month period beginning from his separation from Catalyst, Catalyst will pay Mr. Blouse all then unpaid severance pay in a lump sum within 30 days following the later of (i) the Effective Time and (ii) the effective date of his severance agreements.

Pursuant to his employment agreement with Catalyst, as modified by that certain Waiver Agreement dated January 17, 2023, in connection with the termination of his employment, Dr. Nassim Usman shall be entitled to receive, subject to certain conditions described in Dr. Usman’s amended and restated employment agreement, the following:

Pursuant to her employment agreement with Catalyst, as modified by that certain Waiver Agreement dated January 17, 2023, if Seline Miller’s employment is terminated, she shall be entitled to receive, subject to certain conditions described in Mrs. Miller’s employment agreement, the following:

As of March 1, 2023, Catalyst’s directors and executive officers beneficially owned, in the aggregate, approximately 0.3% of the shares of Catalyst Common Stock, which, for purposes of this subsection, excludes any shares of Catalyst Common Stock issuable upon exercise or settlement of stock options to purchase shares of Catalyst Common Stock or restricted stock units held by such individual.

Three of Catalyst’s existing directors, Thomas Eastling, Ying Luo and Nassim Usman, Ph.D., will continue as directors of the combined company after the Effective Time and, following the closing of the Contributions, will be eligible to be compensated as a non-employee director of Catalyst pursuant to the Catalyst non-employee director compensation policy that is expected to remain in place following the Effective Time.

One of Catalyst’s existing executive officers, Seline Miller, will continue as an executive officer of the combined company after the Effective Time and, following the closing of the Contributions, will be eligible to be compensated as an executive officer of Catalyst pursuant to the Catalyst executive compensation policy that is expected to remain in place following the Effective Time.

Catalyst has entered into indemnification agreements with each of Catalyst’s directors and executive officers, including the two directors appointed to the board following the signing of the Business Combination Agreement, Ying Luo, Ph.D. and Thomas Eastling. Pursuant to the indemnification agreements, Catalyst has agreed to indemnify

and hold harmless these directors and officers to the fullest extent permitted by the DGCL. The agreements generally cover expenses that a director or officer incurs or amounts that a director or officer becomes obligated to pay because of any proceeding to which he or she is made or threatened to be made a party or participant by reason of his or her service as a current or former director, officer, employee or agent of Catalyst. The agreements also provide for the advancement of expenses to the directors and officers subject to specified conditions. There are certain exceptions to Catalyst’s obligation to indemnify the directors and officers, including any intentional malfeasance or act where the director or officer did not in good faith believe he or she was acting in Catalyst’s best interests, with respect to “short-swing” profit claims under Section 16(b) of the Exchange Act and, with certain exceptions, with respect to proceedings that he or she initiates.

In considering the recommendation of the board of directors and executive directors, as applicable, of the GNI Parties with respect to approving the Contributions, stockholders should be aware that the board of directors and executive directors, as applicable, of the GNI Parties may have interests in the Contributions that are different from, or in addition to, the interests of BC. These interests may present them with actual or potential conflicts of interest and these interests, to the extent material, are described below.

The board of directors and executive directors, as applicable, of the GNI Parties were aware of these potential conflicts of interest and considered them, among other matters, in reaching its decision to approve the Business Combination Agreement and the Contributions.

As of March 1, 2023, GNI Japan and GNI Hong Kong beneficially owned, in the aggregate, approximately 16.6% of the shares of Catalyst Common Stock and 80.5% of the shares of Catalyst Common Stock upon conversion of the Catalyst Convertible Preferred Stock that is convertible upon the approval of Proposal No. 2 and successful application for initial listing with The Nasdaq Stock Market.

At the Effective Time of the Contributions, BC will terminate the 2021 Plan and BC Options outstanding thereunder will be terminated and replaced with options granted under the 2023 Omnibus Incentive Plan that are substantially similar in all material respects to the BC Options previously outstanding under the 2021 Plan.

The table below sets forth information regarding the BC Options held as of March 1, 2023 granted under any employee or director stock option, stock purchase or equity compensation plan, arrangement or agreement of BC. The number of shares of common stock underlying the Gyre Options granted in respect of the BC Options will be adjusted appropriately to reflect the proposed reverse stock split. In addition, when such Gyre Options are exercised in exchange for shares of the combined company’s common stock, BC is expected to issue a pro rata number of BC Common Shares to BJ Continent Pharmaceuticals Limited, a wholly-owned subsidiary of CPI and direct shareholder of BC, to proportionally increase the combined company’s indirect interest in BC. This increase in the combined company’s indirect interest in BC will maintain the combined company’s proportionate ownership in BC when such Gyre Options are exercised for the combined company’s common stock.

As described elsewhere in this proxy statement, including in the section captioned “Management Following the Contributions,” certain of BC’s directors and executive officers are expected to become the directors and executive officers of the combined company upon the closing of the Contributions.

For a discussion of the indemnification provisions related to the directors and executive officers of BC and Further Challenger are entitled to under the Business Combination Agreement, please see the section entitled “The Business Combination Agreement—Indemnification and Insurance for Directors and Officers” beginning on page 136 of this proxy statement.

Pursuant to the Business Combination Agreement, Catalyst will acquire an indirect controlling interest in BC pursuant to the following transactions: (a) GNI USA will contribute all of its CPI Ordinary Share to Catalyst, (b) GNI USA will contribute its interest in Further Challenger to Catalyst and (c) each Minority Holder will contribute 100% of the interest he or she holds in his or her respective Entity to Catalyst. The Contributions are intended to qualify as exchanges governed by Section 351 of Code for U.S. federal income tax purposes.

Subject to the terms and conditions of the Business Combination Agreement, at the Effective Time, (a) GNI USA will contribute all of the CPI Ordinary Shares it holds immediately prior to the Effective Time to Catalyst in exchange for 688,850,101 shares of Catalyst Common Stock, (b) GNI USA will contribute all of the ordinary shares of Further Challenger it holds immediately prior to the Effective Time to Catalyst in exchange for 264,971,695 shares of Catalyst Common Stock and (c) each Minority Holder will contribute 100% of the interest he or she holds in his or her respective Entity to Catalyst in exchange for an aggregate of 156,954,428 shares of Catalyst Common Stock in the amounts set forth on an annex to the Business Combination Agreement. At the election of GNI USA or any Minority Holder, GNI USA or such Minority Holder shall be issued shares of Catalyst Convertible Preferred Stock in lieu of some or all of the shares of Catalyst Common Stock GNI USA or such Minority Holder is entitled to receive.

Pursuant to the terms of the Business Combination Agreement, Catalyst’s “final net cash” means, whether positive or negative, without duplication, as of immediately prior to the Effective Time the sum (without duplication) of the following: