Bishengyuan (00926) increased investment in ERX to maintain 3% shareholding to support innovative research and development of non-GLP-1 weight loss therapies

Zhitong Finance App News, Bishengyuan (00926) announced that the company expects to record a significant fair value loss of approximately RMB 16.3 million for its investment in ERX Pharmaceuticals Inc. (a clinical-stage biomedical company incorporated under Delaware law). This fair value loss was mainly due to recent changes in the US capital market environment. Investors' capital clearly favors technology sectors such as artificial intelligence (AI), leading to a slump in traditional drug development and clinical research financing activities, leaving ERX lacking external funding for new drug development activities. This financing difficulty put pressure on ERX's short-term valuation, leading to a sharp decline in ERX's valuation.

The Board believes that the fair value loss will not have any significant adverse impact on the company's current business, operation, or financial position. The Group's liquidity remained strong, and its overall financial and operating conditions remained stable.

ERX focuses on the discovery and clinical development of innovative drugs to treat obesity and obesity-related metabolic diseases, creating synergies with the company's core business divisions. As of the date of the investment and this announcement, ERX and its ultimate beneficial owners are each independent of the Company and its affiliates.

ERX recently proposed a capital increase of $6 million to strengthen its financial position and fund continuing operations. To prevent dilution from further eroding its investment value, on December 12, 2025, the board of directors decided to participate in this capital increase to maintain its current shareholding of about 3% in ERX.

The Board of Directors believes that further investment will be in the overall interests of the company and shareholders for the following reasons:

Further investment avoids dilution and subsequent immediate further erosion of the book value of the company's investments. Considering that ERX's diet pills are leading non-GLP-1 treatments, provide solutions for groups of patients who are unresponsive or have had adverse reactions to simeglutide therapy, and have shown great potential in combination medication plans, the board of directors remains confident in the long-term development of ERX despite short-term market headwinds. Furthermore, as of the date of this announcement, drugs developed by ERX for Prader-Willi syndrome have obtained orphan drug qualification and fast track certification from the US Food and Drug Administration. Therefore, the Board believes that this capital increase will provide ERX with the necessary resources to advance its main clinical research and is a key step in restoring and enhancing ERX's medium- to long-term value, thereby mitigating the negative financial impact of current fair value losses.

Maintaining this shareholding will preserve the company's key strategic partnerships in core business areas and ensure continued consistency and use of shared technology, supply chain and market opportunities, which will benefit the company's strategic development and long-term growth.

Further investment underscores the Board's continued confidence in ERX's long-term strategy and future prospects, as well as its commitment to protecting and enhancing the company's economic interests.