What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-03-08 compared with 2023-03-30 · 359 added, 304 removed, 467 unchanged (59% of the section changed)

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Years Ended December 31, 2023 and 2022

Report of Independent Registered Public Accounting Firm (PCAOB ID 238)

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm (PCAOB ID 42 )

Report of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm

(PCAOB ID 238 )

Consolidated Financial Statements

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Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Redeemable Convertible Preferred Shares, Redeemable Noncontrolling Interest and Shareholders’ Deficit

Consolidated Statements of Redeemable Convertible Preferred Shares and Shareholders’ Equity (Deficit)

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of Structure Therapeutics Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Structure Therapeutics Inc.

(the “Company”) as of December 31, 2023, the related consolidated statements of operations and comprehensive loss, redeemable convertible preferred shares and shareholders’ equity (deficit), and cash flows for the year ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023, and the results of its operations and its cash flows for the year then ended, in conformity with U.S.

generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2023.

San Mateo, California

March 8, 2024

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Structure Therapeutics Inc.

and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of operations and comprehensive loss, of redeemable convertible preferred shares, redeemable noncontrolling interest and shareholders’ deficit and of cash flows for the years then ended, including the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

We have audited the consolidated balance sheet of Structure Therapeutics Inc.

and its subsidiaries (the “Company”) as of December 31, 2022, and the related consolidated statements of operations and comprehensive loss, of redeemable convertible preferred shares and shareholders’ deficit and of cash flows for the year ended December 31, 2022, including the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, financial position of the Company as of December 31, 2022 and the results of its operations and its cash flows for the year ended December 31, 2022 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

We conducted our audit of these consolidated financial statements in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

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March 30, 2023

We have served as the Company’s auditor since 2020.

We served as the Company’s auditor from 2020 to 2023.

STRUCTURE THERAPEUTICS INC.

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Other non-current assets

Liabilities, redeemable convertible preferred shares and shareholders’ deficit

Liabilities, redeemable convertible preferred shares and shareholders’ equity (deficit)

Current liabilities:

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Operating lease liabilities, net of current portion

Other non-current liabilities

Total liabilities

Commitments and contingencies (Note 6)

Series A redeemable convertible preferred shares – $0.0001 par value, 19,200 shares authorized, issued and outstanding as of December 31, 2022 and 2021 (liquidation preference of $32,001 as of December 31, 2022 and 2021)

Series A+ redeemable convertible preferred shares – $0.0001 par value, 12,800 shares authorized, issued and outstanding as of December 31, 2022 and 2021 (liquidation preference of $26,000 as of December 31, 2022 and 2021)

Series B redeemable convertible preferred stock – $0.0001 par value, 32,857 and 24,702 shares authorized, issued and outstanding as of December 31, 2022 and 2021, respectively (liquidation preference of $133,015 and $100,000 as of December 31, 2022 and 2021, respectively)

Series B‑1 redeemable convertible preferred stock – $0.0001 par value, 2,161 shares authorized, issued and outstanding as of December 31, 2022 and 2021 (liquidation preference of $7,000 as of December 31, 2022 and 2021)

Shareholders’ deficit:

Series A redeemable convertible preferred shares – $ 0.0001 par value, 0 and 19,200 shares authorized , issued and outstanding as of December 31, 2023 and December 31, 2022, respectively (liquidation preference of $ 0 and $ 32,001 as of December 31, 2023 and December 31, 2022, respectively)

Series A+ redeemable convertible preferred shares – $ 0.0001 par value, 0 and 12,800 shares authorized , issued and outstanding as of December 31, 2023 and December 31, 2022, respectively (liquidation preference of $ 0 and $ 26,000 as of December 31, 2023 and December 31, 2022, respectively )

Series B redeemable convertible preferred stock – $ 0.0001 par value, 0 and 32,857 shares authorized, issued and outstanding as of December 31, 2023 and December 31, 2022 , respectively (liquidation preference of $ 0 and $ 133,015 as of December 31, 2023 and December 31, 2022, respectively)

Series B ‑ 1 redeemable convertible preferred stock – $ 0.0001 par value, 0 and 2,161 shares authorized , issued and outstanding as of December 31, 2023 and December 31, 2022, respectively (liquidation preference of $ 0 and $ 7,000 as of December 31, 2023 and December 31, 2022, respectively)

Shareholders’ equity (deficit):

Undesignated shares – $ 0.0001 par value;

90,188 and 0 shares authorized as of December 31, 2023 and December 31, 2022, respectively

Ordinary shares – $ 0.0001 par value;

432,982 and 441,137 shares authorized as of December 31, 2022 and 2021, respectively;

10,527 and 10,894 shares issued and outstanding as of December 31, 2022 and 2021, respectively

500,000 and 432,982 shares authorized as of December 31, 2023 and December 31, 2022, respectively;

139,220 and 10,527 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated other comprehensive income (loss)

Accumulated deficit

Total shareholders’ deficit

Total liabilities, redeemable convertible preferred shares and shareholders’ deficit

Total shareholders’ equity (deficit)

Total liabilities, redeemable convertible preferred shares and shareholders’ equity (deficit)

The accompanying notes are an integral part of these consolidated financial statements.

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Accretion of redeemable convertible preferred shares to their redemption value

Excess of the fair value of the consideration paid over the carrying value of redeemable noncontrolling interest

Net loss attributable to ordinary shareholders

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Other comprehensive loss:

Unrealized (loss) gain on investments, net

Total other comprehensive (loss) gain

Unrealized gain (loss) on investments, net

Total other comprehensive income (loss)

Comprehensive loss

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STRUCTURE THERAPEUTICS INC.

CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED SHARES, REDEEMABLE NONCONTROLLING INTEREST AND SHAREHOLDERS’ DEFICIT

CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED SHARES AND SHAREHOLDERS’ EQUITY (DEFICIT)

(IN THOUSANDS)

REDEEMABLE CONVERTIBLE PREFERRED SHARES

NONCONTROLLING

ORDINARY SHARES

COMPREHENSIVE

SHAREHOLDERS’

Balance at December 31, 2020

Issuance of Series B redeemable convertible preferred shares, net of issuance costs of $3,551

Accretion of Series B redeemable convertible preferred shares to their redemption value

Issuance of Series Seed redeemable convertible preferred shares of Basecamp to noncontrolling interest holders, net of issuance costs of $91

Accretion of Series Seed redeemable convertible preferred shares to their redemption value

Issuance of Series B-1 redeemable convertible preferred shares in exchange of redeemable noncontrolling interest, net of issuance costs of $115 (including $1,959 representing the excess of the fair value of Series B-1 redeemable convertible preferred shares over the carrying amount of redeemable noncontrolling interest)

Accretion of Series B-1 redeemable convertible preferred shares to their redemption value

Issuance of ordinary share upon exercise of vested share options

Share-based compensation expense

Unrealized gain on investments, net

EQUITY (DEFICIT)

Balance at December 31, 2021

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Balance at December 31, 2022

Conversion of redeemable convertible preferred shares into ordinary shares upon initial public offering

Issuance of ordinary shares upon initial public offering, net of issuance costs and underwriting discount of $ 18,586

Net exercise of ordinary share warrants

Exchange of ordinary shares to non-voting ordinary shares

Issuance of ordinary shares and non-voting ordinary shares in private placement financing, net of issuance costs and underwriting discount of $ 18,538

Issuance of ordinary shares upon exercise of vested share options

Conversion of non-voting ordinary shares into ordinary shares

Share-based compensation expense

Unrealized gain on investments, net

Balance at December 31, 2023

The accompanying notes are an integral part of these consolidated financial statements.

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Share-based compensation expense

Depreciation expense

Accretion of asset retirement obligation

Non-cash lease expense

Amortization (accretion) of net investment premium (discount)

Amortization of debt discount and issuance costs

Accretion of net investment discounts

Changes in operating assets and liabilities:

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Other non-current assets

Accounts payable

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Purchases of property and equipment

Net cash (used in) provided by investing activities

Net cash used in investing activities

Cash flows from financing activities

Proceeds from issuance of common stock in initial public offering, net of underwriting discount and commissions

Proceeds from issuance of Series B redeemable convertible preferred shares, net of issuance costs

Proceeds from issuance of Series Seed redeemable convertible preferred shares of Basecamp to noncontrolling interest holders

Payments of deferred offering costs

Repurchases of unvested restricted share awards

Proceeds from private placement financing, gross

Payments of offering costs

Repurchases of restricted shares

Proceeds from exercise of share options

Payment of Series B-1 redeemable convertible preferred shares issuance costs

Net cash provided by financing activities

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Supplemental disclosures of noncash investing and financing activities

Accretion of redeemable convertible preferred shares to their redemption value

Issuance of Series B-1 redeemable convertible preferred stock to noncontrolling interest holders in exchange of Series Seed redeemable convertible preferred stock of Basecamp

Conversion of redeemable convertible preferred shares into ordinary shares upon initial public offering

Exchange of ordinary shares to non-voting ordinary shares

Conversion of non-voting ordinary shares into ordinary shares

Purchases of property and equipment in accounts payable and accrued expenses and other current liabilities

Operating lease right-of-use assets obtained in exchange for new lease liabilities, net

Operating lease right-of-use assets obtained in exchange for new lease liabilities

Recognition of asset retirement obligation

Deferred offering costs included in accounts payable and accrued expenses and other current liabilities

Accretion of redeemable convertible preferred shares to their redemption value

The accompanying notes are an integral part of these consolidated financial statements.

STRUCTURE THERAPEUTICS INC.

NOTES TO FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Organization and Nature of the Business

Structure Therapeutics Inc.

(the “Company”) is a clinical stage global biopharmaceutical company aiming to develop and deliver novel oral therapeutics to treat a wide range of chronic diseases with unmet medical needs.

(the “Company”) is a clinical stage global biopharmaceutical company aiming to develop and deliver novel oral therapeutics to treat a wide range of chronic diseases with unmet medical need.

The Company was incorporated in February 2019 in the Cayman Islands, with operating subsidiaries in the United States and China.

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Prior to the formation of the Company, the operating activities were carried out by the subsidiaries of the Company.

Structure Therapeutics USA Inc., a Delaware corporation (“StructureTx US”), was incorporated on June 6, 2016.

Structure Therapeutics USA Inc., a Delaware corporation (“StructureTx US”), was incorporated on June 6, 2016 (previously known as ShouTi Inc.).

On January 20, 2017, StructureTx US was reorganized as a limited liability company.

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On June 28, 2019, ShouTi Hong Kong Ltd (“ShouTi Hong Kong”) was incorporated as a wholly-owned subsidiary of the Company.

On July 26, 2019, Shanghai ShouTi Biotechnology Co., Ltd (“ShouTi Shanghai”) was incorporated as a wholly-owned subsidiary of ShouTi Hong Kong.

On July 26, 2019, Shanghai ShouTi Biotechnology Co., Ltd (“ Shanghai ShouTi”) was incorporated as a wholly-owned subsidiary of ShouTi Hong Kong.

On April 1, 2020, Lhotse Bio, Inc.

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On February 10, 2021, the Company incorporated Basecamp Bio Inc.

(“Basecamp”) in the Cayman Islands with a wholly owned subsidiary, Basecamp Bio Hong Kong Limited (“Basecamp HK”) in Hong Kong.

(“Basecamp Bio”) in the Cayman Islands with a wholly owned subsidiary, Basecamp Bio Hong Kong Limited (“Basecamp HK”) in Hong Kong.

Shanghai Basecamp Biotechnology Co., Ltd., a wholly owned subsidiary of Basecamp HK, was established on March 26, 2021 in Shanghai, China.

The purpose of Basecamp is to develop certain of the Company’s technologies in Mainland China.

In March 2021, Basecamp issued 7,000,000 Series Seed shares to other investors that are also investors of the Company, which was accounted for as redeemable noncontrolling interest in the consolidated financial statements (see Note 8).

In December 2021, the Company acquired the 7,000,000 Series Seed redeemable convertible preferred shares of Basecamp held by the other investors in exchange for 2,161,402 shares of its Series B-1 redeemable convertible preferred shares with Basecamp becoming a wholly owned subsidiary (see Note 8).

The Company has consolidated Basecamp since its incorporation.

The purpose of Basecamp Bio is to develop certain of the Company’s technologies in Mainland China.

On July 11, 2023, Aconcagua Bio, Inc.

(“Aconcagua”) and Gimigela Bio, Inc.

(“Gimigela”) were incorporated in the United States as wholly-owned subsidiaries of the Company.

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.

Initial Public Offering

On February 7, 2023, the Company closed its initial public offering (“IPO”) of American Depositary Shares (“ADS”).

In February 2023, the Company closed its initial public offering (“IPO”) of American Depositary Shares (“ADSs”).

Each ADS represents three ordinary shares.

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Upon the closing of the IPO, all outstanding shares of the Company’s redeemable convertible preferred shares converted into 67,018,087 ordinary shares.

In connection with the completion of its IPO, the

In connection with the completion of its IPO, the Company’s memorandum of association was amended and restated to provide for 500,000,000 authorized ordinary shares with a par value of $ 0.0001 per share and 100,000,000 authorized undesignated shares with

STRUCTURE THERAPEUTICS INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Company’s memorandum of association was amended and restated to provide for 500,000,000 authorized ordinary shares with a par value of $0.0001 per share and 100,000,000 authorized shares with a par value of $0.0001 per share, of such class or classes as may be designated by the Company’s board of directors in accordance with the Company’s articles of association.

The consolidated financial statements as of December 31, 2022, including share and per share amounts, do not give effect to the IPO, as it closed subsequent to December 31, 2022.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

a par value of $ 0.0001 per share, of such class or classes as may be designated by the Company’s board of directors in accordance with the Company’s articles of association.

Private Placement

On September 29, 2023, the Company entered into a share purchase agreement with certain institutional investors (the “Purchasers”), pursuant to which the Company agreed to sell and issue to the Purchasers an aggregate of 21,617,295 ordinary shares and 2,401,920 newly designated non-voting ordinary shares at a purchase price of $ 12.49 per Share (or the equivalent of $ 37.47 per ADS), the closing price of its ADS on the Nasdaq Global Market on September 28, 2023 (the “Private Placement”).

Each holder of non-voting ordinary shares had the right to convert each non-voting ordinary share held by such holder into one ordinary share, subject to certain beneficial ownership limitations.

The Private Placement closed on October 3, 2023, and the Company received $ 281.5 million in net proceeds after deducting placement agent fees and other private placement expenses.

As of December 31, 2023, all outstanding non-voting ordinary shares had been converted into ordinary shares.

Liquidity and Capital Resources

The Company has incurred significant net operating losses and negative cash flows from operations since inception and had an accumulated deficit of $ 206.6 million as of December 31, 2023.

Through December 31, 2022, the Company has financed its operations primarily through the private placement of equity securities.

On February 7, 2023, the Company completed its IPO for net proceeds of approximately $166.7 million, after deducting underwriting discounts and estimated offering costs.

To date, the Company has no product candidates approved for sale and therefore the Company has not generated any revenue from its products.

The Company has not generated any revenue from collaboration or other agreements.

Management expects operating losses and negative cash flows to continue for the foreseeable future, until such time, if ever, that it can generate significant sales from its product candidates currently in development or through collaboration or other agreements.

The Company’s prospects are subject to risks and uncertainties frequently encountered by companies in the biotechnology industry as discussed in

Prior to completion of its IPO, the Company has financed its operations primarily through the private placement of equity securities.

In February 2023, the Company completed its IPO for net proceeds of approximately $ 166.7 million, after deducting underwriting discounts and estimated offering costs.

In October 2023, the Company closed its Private Placement for net proceeds of approximately $ 281.5 million after deducting placement agent fees and other private placement expenses.

As of December 31, 2023, the Company had cash, cash equivalents and short-term investments of $ 467.3 million.

Based on its current business plan, the Company believes that its current cash, cash equivalents and short-term investments, together with the net proceeds from its IPO, will be sufficient to fund its projected operations for at least 12 months from the date of the issuance of these consolidated financial statements.

Impact of the COVID-19 Pandemic and Other Macroeconomic Factors

The COVID-19 (coronavirus) pandemic, which has impacted worldwide economic activity, poses risks that the Company or its employees, contractors, suppliers and other partners may be prevented from conducting business activities for an indefinite period of time, including due to shutdowns that may be requested or mandated by governmental authorities.

Although the impact of COVID-19 has not been material to the Company and its operations, the extent to which the COVID- 19 pandemic will impact the Company’s business will depend on future developments that are highly uncertain and cannot be predicted at this time.

While the pandemic appears to have waned, there may be significant uncertainty resulting from any changes with regards to COVID-19 infections, along with the impact of other macroeconomic factors such as inflation, supply chain issues, rising interest rates, future bank failures and the impact of the Russian/Ukraine conflict.

Based on its current business plan, the Company believes that its current cash, cash equivalents and short-term investments will be sufficient to fund its projected operations for at least 12 months from the date of the issuance of these consolidated financial statements.

Impact of Geopolitical and Macroeconomic Factors

There may be significant uncertainty resulting from the impact of other geopolitical and macroeconomic factors, including global pandemics, inflation, supply chain issues, rising interest rates, future bank failures, increased geopolitical tensions between the U.S.

and China and the impact of the Russia/Ukraine conflict and the Israel-Hamas war.

No adjustments have been made to these financial statements as a result of these uncertainties.

Summary of Significant Accounting Policies

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STRUCTURE THERAPEUTICS INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of expenses during the reporting periods.

Such estimates include lease liability, accruals for research and development activities, Series B-1 redeemable convertible preferred shares valuation, ordinary share valuation and related share-based compensation and certain other accrued liabilities.

Such estimates include lease liability, accruals for research and development activities, ordinary share valuation prior to the IPO, and related share-based compensation and certain other accrued liabilities.

Actual results could differ from those estimates.

The Company operates and manages its business as one reportable and operating segment, which is the business of research and development of medicines that target chronic diseases with unmet medical needs.

The Company’s Chief Executive Officer, who is the chief operating decision maker, reviews financial information on an aggregate basis for purposes of allocating resources and evaluating financial performance.

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government agency bonds.

The Company limits its credit risk associated with cash, cash equivalents and short-term investments by placing them with banks and institutions it believes are highly creditworthy and in highly rated investments.

The Company limits its credit risk associated with cash, cash equivalents and short-term investments by investing in investment-grade securities and using banks and institutions it believes are creditworthy.

The Company has not experienced any losses on its deposits of cash, cash equivalents and short-term investments to date.

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Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will generate any revenue from any of its products.

The Company operates in an

The Company operates in an environment of rapid change in technology and substantial competition from other pharmaceutical and biotechnology companies.

STRUCTURE THERAPEUTICS INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

environment of rapid change in technology and substantial competition from other pharmaceutical and biotechnology companies.

The Company relies and expects to continue to rely on a small number of vendors to manufacture supplies and materials for its use in the clinical trial programs.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The Company relies and expects to continue to rely on a small number of vendors to manufacture supplies and materials for use in its clinical trial programs.

These programs could be adversely affected by a significant interruption in these manufacturing services.

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The Company classifies its investments as available-for-sale and records them at fair value based upon market prices at period end.

Unrealized gains and losses that are deemed temporary in nature are recorded in accumulated other comprehensive income as a separate component of shareholders’ deficit.

Unrealized gains and losses that are deemed temporary in nature are recorded in accumulated other comprehensive income as a separate component of shareholders’ equity (deficit).

Dividend and interest income are recognized when earned.

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The Company may sell these securities at any time for use in current operations.

Other-Than-Temporary Impairment

The Company evaluates its investments with unrealized losses for other-than-temporary impairment.

When assessing investments for other-than-temporary declines in value, the Company considers factors such as, among other things, the extent and length of time the investment’s fair value has been lower than its cost basis, the financial condition and near-term prospects of the investment, the Company’s ability and intent to retain the investment for a period of time sufficient to allow for any anticipated recovery in fair value, and the expected cash flows from the security.

If any adjustments to fair value reflects a decline in the value of the investment that the Company considers to be “other than temporary,” the Company reduces the investment to fair value through a charge to the consolidated statements of operations and comprehensive loss.

No such adjustments were necessary during the periods presented.

Credit Losses

For short-term investments in an unrealized loss position, the Company periodically assesses its portfolio for impairment.

The assessment first considers the intent or requirement to sell the available-for-sale debt securities.

If either of these criteria are met, the amortized cost basis is written down to fair value through earnings.

If not met, the Company evaluates whether the decline resulted from credit losses or other factors by considering the extent to which fair value is less than amortized cost, any changes to the rating of the short-term investments by a rating agency, and any adverse conditions specifically related to the short-term investments, among other factors.

If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the short-term investments is compared to the amortized cost basis of the short-term investments.

If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded, with a corresponding adjustment to interest and other income (expense), net, limited by the amount that the fair value is less than the amortized cost basis.

The Company has elected to exclude accrued interest from both the fair value and the amortized cost basis of the available-for-sale debt securities for the purposes of identifying and measuring an impairment.

The Company writes off accrued interest as a reduction of interest income when an issuer has defaulted on interest payments due on a security.

Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive loss.

At December 31, 2023 and 2022, gross unrealized losses on the Company’s available-for-sale securities were not material and, accordingly, no credit loss reserves were recognized.

Fair Value of Financial Instruments

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The carrying value of cash and cash equivalents, accounts payable and accrued liabilities approximate fair value due to their relatively short maturities.

The Company determines the fair value of financial and non-financial assets and liabilities using the fair value hierarchy which establishes three levels of inputs that may be used to measure fair value (see Note 4).

The Company determines the fair value of financial and non-

STRUCTURE THERAPEUTICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

financial assets and liabilities using the fair value hierarchy which establishes three levels of inputs that may be used to measure fair value (see Note 4).

Property and Equipment, Net

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Leasehold improvements are amortized using the straight-line method over the shorter of the assets’ estimated useful lives or the remaining term of the lease.

When assets are retired or otherwise disposed of, the cost and

STRUCTURE THERAPEUTICS INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

accumulated depreciation are removed from the balance sheet, and any resulting gain or loss is reflected in operating expenses in the period realized.

When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the balance sheet, and any resulting gain or loss is reflected in operating expenses in the period realized.

Maintenance and repairs are charged to operating expenses as incurred.

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If the carrying amount of the long-lived asset is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value.

During the years ended December 31, 2022 and 2021, the Company has not recorded impairment charges on its long-lived assets.

During the years ended December 31, 2023 and 2022, the Company did not recognize any such impairment charges.

Deferred Offering Costs

The Company capitalizes, within other non-current assets, certain legal, accounting and other third-party fees that are directly related to the Company’s in-process equity financings, including its IPO, until such financings are consummated.

After consummation of the equity financing, these costs are recorded as a reduction of the proceeds received as a result of the offering.

Should a planned equity financing be abandoned, terminated or significantly delayed, the deferred offering costs will be immediately written off to general and administrative expenses.

As of December 31, 2022 and 2021, deferred offering costs were $3.4 million and $0.1 million, respectively.

Upon closing the IPO and Private Placement, all deferred offering costs were charged against the proceeds from the IPO and Private Placement and recorded in shareholders equity (deficit) as a reduction of additional paid-in capital.

As of December 31, 2023 and 2022, deferred offering costs were $ 0 and $ 3.4 million, respectively.

Accrued Research and Development Expenses

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Payments made to CMOs and CROs under these arrangements in advance of the performance of the related services are recorded as prepaid expenses and other current assets on the consolidated balance sheets until the services are rendered.

STRUCTURE THERAPEUTICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The Company determines if an arrangement is, or contains, a lease at inception and then classifies the lease as operating or financing based on the underlying terms and conditions of the contract.

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Variable lease payments are excluded from the right-of-use assets and operating lease liabilities and are recognized in the period in which the obligation for those payments is incurred.

The Company elected the practical expedient not to separate non-lease components from lease

STRUCTURE THERAPEUTICS INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

components for the Company’s facility leases and to account for the lease and non-lease components as a single lease component.

The Company elected the practical expedient not to separate non-lease components from lease components for the Company’s facility leases and to account for the lease and non-lease components as a single lease component.

Redeemable Convertible Preferred Shares

The Company records all shares of redeemable convertible preferred shares at the amount of proceeds received, less amounts allocated to redeemable convertible preferred shares tranche liability and issuance costs.

The fair value of Series B-1 redeemable convertible preferred shares issued in connection with the Basecamp share exchange transaction was estimated at fair value based on market-based factors similar to those used in determining the fair value of ordinary shares.

Though not mandatorily redeemable, the redeemable convertible preferred shares are recorded outside of permanent equity because in certain events considered not solely within the Company’s control, such as a merger, acquisition, or sale of all or substantially all of the Company’s assets (each, a “deemed liquidation event”), the redeemable convertible preferred shares may become redeemable at the option of the holders of at least a majority of the then outstanding shares on or after April 29, 2026.

The Company recorded all shares of redeemable convertible preferred shares at the amount of proceeds received, less amounts allocated to redeemable convertible preferred shares tranche liability and issuance costs.

The fair value of Series B-1 redeemable convertible preferred shares issued in connection with the Basecamp Bio share exchange transaction was estimated at fair value based on market-based factors similar to those used in determining the fair value of ordinary shares.

Though not mandatorily redeemable, the redeemable convertible preferred shares were recorded outside of permanent equity because in certain events considered not solely within the Company’s control, such as a merger, acquisition, or sale of all or substantially all of the Company’s assets (each, a “deemed liquidation event”), the redeemable convertible preferred shares could become redeemable at the option of the holders of at least a majority of the then outstanding shares on or after April 29, 2026.

The Company made an accounting policy election to recognize changes in the redemption value of redeemable convertible preferred shares immediately as they occur and adjust the carrying value of redeemable convertible preferred shares to equal it to its redemption value at the end of each reporting period.

All outstanding shares of the redeemable convertible preferred shares converted into ordinary shares upon effectiveness of its IPO.

All outstanding shares of the redeemable convertible preferred shares converted into ordinary shares upon effectiveness of the Company’s IPO in 2023.

Research and Development Expenses

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The Company’s approach to estimate the fair value of the Company’s ordinary shares is consistent with the methods outlined in the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation.

Determining the best estimated fair value of the Company’s ordinary shares requires significant judgment and management considers several factors, including the Company’s stage of development, equity market conditions affecting comparable public companies, significant milestones and progress of research and development efforts.

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progress of research and development efforts.

Subsequent to the Company’s IPO, the fair value of the Company’s ordinary shares is determined based on its closing market price of the Company’s ADS, which each represents three ordinary shares.

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Option valuation models, including the Black-Scholes option-pricing model, require the input of several assumptions.

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The Company granted share options to employees of China.

The exercise of share options granted to employees of China are conditioned to liquidity events which are outside the Company’s control.

The liquidity events are not probable until consummated and employees of China cannot benefit from their share options.

As such, no share-based compensation expense has been recognized for the employees of China’s share options during the years ended December 31, 2022 and 2021.

The Company has granted share options to employees based in China.

The exercise of share options granted to such employees was conditioned on a liquidity event, such as an IPO or change in control, which was not considered probable until consummated.

The liquidity event condition was satisfied upon the closing of the IPO, and the Company recognized cumulative share-based compensation expense for share options granted to employees based in China.

In February 2023, the Company’s board of directors approved the grant of performance share options for 1,200,000 ordinary shares, which were granted under the 2023 Equity Incentive Plan.

Each share option will vest over four years , subject to the achievement in the first year following the grant of certain clinical milestones as determined by the Company’s compensation committee, and subject to the employees’ continuous service through each vesting date.

The achievement of performance milestones was not probable as of December 31, 2023.

As such, no share-based compensation expense was recognized for performance share options during the year ended December 31, 2023.

Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the consolidated financial statement and tax bases of assets and liabilities at the applicable enacted tax rates.

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The Company recognizes interest and penalties related to income tax matters in its provision for income taxes.

There were no uncertain income tax positions or unrecognized income tax benefits as of December 31, 2022 and 2021.

As of December 31, 2023 and 2022, the unrecognized income tax benefits were $ 0.9 million and $ 0.3 million, respectively.

Net Loss Per Share Attributable to Ordinary Shareholders

Basic net loss per ordinary share is calculated by dividing the net loss attributable to ordinary shareholders by the weighted-average number of ordinary shares outstanding during the period, without consideration of potentially dilutive securities.

Net loss attributable to ordinary shareholders is computed as net loss less accretion of redeemable convertible preferred shares and less any excess of the fair value of the consideration paid over the carrying value of noncontrolling interest.

Diluted net loss per share is computed by dividing the net loss attributable to ordinary shareholders by the weighted-average number of ordinary shares and potentially dilutive securities outstanding for the period.

Basic net loss per ordinary share is calculated by dividing the net loss attributable to ordinary shareholders by the weighted-average number of ordinary shares, including non-voting ordinary shares, outstanding during the period, without consideration of potentially dilutive securities.

Net loss attributable to ordinary shareholders is computed as net loss less accretion of redeemable convertible preferred shares.

Diluted net loss per share is computed by dividing the net loss attributable to ordinary shareholders by the weighted-

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average number of ordinary shares, including non-voting ordinary shares, and potentially dilutive securities outstanding for the period.

For purposes of the diluted net loss per share calculation, the redeemable convertible preferred shares, ordinary share warrants, unvested restricted ordinary shares subject to repurchase and share options are considered to be potentially dilutive securities.

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The holders of redeemable convertible preferred shares do not have a contractual obligation to share in the Company’s losses.

As such, the net loss was attributed entirely to ordinary shareholders.

As such, the net loss was attributed entirely to ordinary shareholders, including non-voting ordinary shares.

Because the Company has reported a net loss for all periods presented, diluted net loss per ordinary share is the same as basic net loss per ordinary share for those periods.

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Comprehensive income (loss) is defined as a change in equity of a business enterprise during a period, resulting from transactions from non-owner sources.

Other comprehensive loss represents unrealized gains or losses on short-term investments that are reported as a component of shareholders’ deficit on the consolidated balance sheets.

Other comprehensive income (loss) represents unrealized gains or losses on short-term investments that are reported as a component of shareholders’ equity (deficit) on the consolidated balance sheets.

JOBS Act Accounting Election

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”).

Under the JOBS Act, emerging growth companies can delay adopting new or revised

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accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.

Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.

The Company has elected to use this extended transition period for complying with certain new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date the Company (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act.

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Recently Adopted Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Account Standards Update (“ASU”) No.

2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes , which simplify various aspects related to the accounting for income taxes.

This ASU removes exceptions to the general principles in Topic 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

For the Company, the amendments are effective for the year ended December 31, 2022.

The adoption of this ASU did not have a material effect on the Company’s consolidated financial statements and related disclosures.

Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No.

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Account Standards Update (“ASU”) No.

2016-13, Financial Instruments—Credit Losses (Topic 326):

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These changes will result in earlier recognition of credit losses.

The amendments in this Update are effective for the Company for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

The amendments in this ASU are effective for the Company for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

The Company adopted ASU 2016-13 as of January 1, 2023 and the adoption did not have a material impact on the Company’s consolidated financial statements and related disclosures.

Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures .

This ASU requires greater disaggregation of information about a reporting entity's effective tax rate reconciliation as well

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as information on income taxes paid.

This ASU applies to all entities subject to income taxes and is intended to help investors better understand an entity’s exposure to potential changes in jurisdictional tax legislation and assess income tax information that affects cash flow forecasts and capital allocation decisions.

This ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

This ASU should be applied on a prospective basis although retrospective application is permitted.

The Company is currently evaluating the impact the adoption of this ASU will have on its consolidated financial statements and related disclosures

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

The amendments in this ASU require disclosures, on an annual and interim basis, of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss.

This ASU requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

Public entities will be required to provide all annual disclosures currently required by Topic 280 in interim periods, and entities with a single reportable segment are required to provide all the disclosures required by the amendments in this ASU and existing segment disclosures in Topic 280.

This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The amendments in this ASU should be applied retrospectively to all prior periods presented in the financial statements.

The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures, and does not expect the standard will have a material impact on the Company’s consolidated financial statements and related disclosures.

Composition of Certain Consolidated Financial Statement Line Items

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Depreciation expense for the years ended December 31, 2022 and 2021 was $0.3 million and $0.1 million, respectively.

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Accrued expenses and other current liabilities consisted of the following (in thousands):

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Fair Value Measurements

The Company determines the fair value of financial and non-financial assets and liabilities using the fair value hierarchy which establishes three level of inputs that may be used to measure fair value, as follows:

Level 1—Observable inputs, such as quoted prices in active markets for identical assets or liabilities;

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The following tables present information about the Company’s financial assets measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values (in thousands):

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The following tables present information about the Company’s financial assets measured at fair value on a recurring basis and indicates the level of the fair value hierarchy utilized to determine such fair values (in thousands):

Money market funds

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There were no transfers in and out of Level 3 during the years ended December 31, 2023 and 2022.

The unrealized losses for marketable securities related to changes in interest rates and the Company has the intent and ability to hold the underlying securities until the estimated date of recovery of its amortized cost.

No allowance for credit losses was recorded at either December 31, 2023 or 2022, and no impairment losses were recognized for the years ended December 31, 2023 and 2022.

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Money market funds and U.S.

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These inputs include reported trades of and broker/dealer quotes on similar securities, issuer credit spreads, benchmark securities, prepayment/default projections based on historical data and other observable inputs.

On August 4, 2020, the Company entered into a Loan and Security Agreement (the “SVB Agreement”) with Silicon Valley Bank (“SVB”) to raise up to $8.0 million in debt financing (the “SVB Loan”) consisting of $5.0 million available to draw on or before July 31, 2021 (“Tranche A”), and the option to draw up to an additional $3.0 million (“Tranche B”) on or before January 31, 2022, which were conditioned to initiation of a

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Phase 1 clinical trial on or before July 31, 2021, and nomination of a development candidate for a second asset on or prior to January 31, 2022, both of which the Company accomplished in May 2021.

The Tranche B draw period was extended to July 31, 2022, upon the receipt of net cash proceeds in an amount of at least $50.0 million from the issuance and sale by the Company of its equity securities to investors and/or subordinated debt on or prior to January 31, 2022, which the Company accomplished in July 2021.

The Company elected to allow the Tranche A and Tranche B financings to expire unused on July 31, 2021 and July 31, 2022, respectively.

In connection with the entering into the SVB Agreement, the Company issued SVB a warrant to purchase shares of its ordinary shares at an exercise price of $0.48 per share (“SVB Warrant”).

The SVB Warrant is immediately exercisable for 112,279 ordinary shares of the Company and could have been exercisable for an additional number of ordinary shares equal to 44,567 ordinary shares upon draw of Tranche A and 22,283 ordinary shares upon draw of Tranche B.

The warrant for Tranche A shares and Tranche B shares expired on July 31, 2021 and July 31, 2022, respectively, as the Company elected to allow the Tranche A and Tranche B financings to expire unused on July 31, 2021 and July 31, 2022, respectively.

In February 2023, SVB fully exercised the SVB Warrant for 106,060 ordinary shares through a cashless exercise.

On August 4, 2020, the Company entered into a Loan and Security Agreement (the “SVB Agreement”) with Silicon Valley Bank (“SVB”) for up to $ 8.0 million in debt financing (the “SVB Loan”).

In connection with the entering into the SVB Agreement, the Company issued SVB a warrant to purchase 112,279 of its ordinary shares at an exercise price of $ 0.48 per share (“SVB Warrant”).

Amounts available to be borrowed under the SVB Agreement expired unused and in February 2023, the Company issued 106,060 ordinary shares through a cashless exercise upon the exercise of the SVB Warrant.

Commitments and Contingencies

Operating Leases

In January 2020, ShouTi Shanghai entered into a lease agreement to lease approximately 6,000 square feet of office space in Chamtime Plaza in Shanghai, China.

The lease commenced on November 1, 2020, and was scheduled to expire on December 31, 2022.

ShouTi Shanghai had an option to extend the lease term, however the renewal term and conditions were to be agreed to between ShouTi Shanghai and the landlord.

In June 2021, Shanghai ShouTi entered into an agreement to lease approximately 5,900 square feet of office space in Chamtime Plaza in Shanghai, China.

The lease commenced on September 16, 2021 and expired on September 15, 2023.

Shanghai ShouTi had an option to extend the lease term, however the renewal term and conditions should be agreed between Shanghai ShouTi and the landlord.

For accounting purposes, the lease term did not include the option to extend the lease term as it was not reasonably certain that the lease term would be extended.

In connection with entering into new lease agreement in Chamtime Plaza in June 2021, the lease agreement was terminated early on October 31, 2021.

In June 2021, ShouTi Shanghai entered into a lease agreement to lease approximately 5,900 square feet of office space in Chamtime Plaza in Shanghai, China.

The lease commenced on September 16, 2021 and expires on September 15, 2023.

ShouTi Shanghai has an option to extend the lease term, however the renewal term and conditions should be agreed between ShouTi Shanghai and the landlord.

For accounting purposes, the lease term did not include the option to extend the lease term as it is not reasonably certain that the lease term will be extended.

In November 2021, StructureTx US entered into a lease agreement to lease approximately 4,050 square feet of office spaces in South San Francisco, California.

The lease commenced on November 11, 2021, and expires on October 31, 2023.

In November 2021, StructureTx US entered into an agreement to lease approximately 4,050 square feet of office spaces in South San Francisco, California.

The lease commenced on November 11, 2021, and expired on October 31, 2023.

In June 2023, Shanghai ShouTi entered into a lease agreement for approximately 22,500 square feet of office space in Shanghai, China, for its research and development operations office, which commenced in July 2023 and will expire on December 31, 2026.

The annual base rent is approximately $ 0.7 million based on the exchange rate upon entering into this lease agreement, and Shanghai ShouTi is also responsible for the payment of additional costs and fees related to its use of the premises.

According to the lease agreement, the Company is obligated to restore the premises and all fixtures, fittings and equipment in the premises to its original condition.

The Company’s asset retirement obligations are primarily associated with leasehold improvements which the Company is contractually obligated to remove at the end of a lease to comply with the lease agreement.

The Company recognized an asset retirement obligation at the inception of a lease at its estimated fair value based on the expected timing of payment of the related costs.

In the determination of fair value for an asset retirement obligation, the Company uses various assumptions and judgments, including such factors as the existence of a legal obligation, estimated amounts and timing of settlements, discount and inflation rates.

The key estimates as of the inception date were the fair value of the asset retirement obligation of $ 0.4 million, timing of the settlement of 3.4 years and the discount rate of 6.8 %.

The associated estimated asset retirement costs are capitalized as part of the carrying amount of the leasehold improvements and depreciated over its useful life.

As of December 31, 2023

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and 2022, the Company had asset retirement obligations of $ 0.3 million and $ 0 , respectively, which are recorded in other non-current liabilities on the consolidated balance sheets.

In June 2023, StructureTx US entered into a sublease agreement for approximately 11,800 square feet of office space located in South San Francisco, California for its corporate headquarters.

The lease commenced in July 2023 and will expire on August 31, 2027.

The annual base rent will initially be approximately $ 0.5 million and will increase annually by 3 %, and StructureTx US will also be responsible for the payment of additional costs and fees related to its use of the premises.

In June 2023, Shanghai ShouTi entered into another lease agreement for approximately 8,400 square feet of laboratory space located in Shanghai, China for its research and development activities.

The lease commenced in December 2023 and will expire on January 31, 2027.

The annual base rent will be approximately $ 0.3 million based on the exchange rate upon entering into this lease agreement, and Shanghai ShouTi is also responsible for the payment of additional costs and fees related to its use of the premises.

The maturities of operating lease liabilities as of December 31, 2023, were as follows (in thousands):

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Operating lease liability, net of current portion

Operating lease cost was $1.1 million and $0.5 million for the years ended December 31, 2022 and 2021, respectively, including $0.7 million and $0.2 million short-term lease costs for the years ended December 31, 2022 and 2021, respectively.

Operating lease expense was $ 1.8 million and $ 1.1 million for the years ended December 31, 2023 and 2022, respectively, including $ 0.9 million and $ 0.7 million short-term lease costs for the years ended December 31, 2023 and 2022, respectively.

As of December 31, 2023, the weighted average remaining lease term was 3.2 years, and the weighted average discount rate used to measure the lease liabilities for such operating leases upon recognition was 7.5 %.

During the years ended December 31, 2022 and 2021, cash paid for amounts included in operating lease liabilities of $0.4 million and $0.2 million, respectively, was included in cash flows from operating activities on the consolidated statements of cash flows.

During the years ended December 31, 2023 and 2022, cash paid for amounts included in operating lease liabilities of $ 0.6 million and $ 0.4 million, respectively, was included in operating activities on the consolidated statements of cash flows.

Indemnification Agreements

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The Company has never incurred material costs to defend lawsuits or settle claims related to these indemnification provisions.

The Company has also entered into indemnification agreements with its directors and officers that require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by the applicable law and the amended and restated memorandum and articles of association of the Company.

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officers to the fullest extent permitted by the applicable law and the amended and restated memorandum and articles of association of the Company.

The Company currently has directors’ and officers’ liability insurance.

As of December 31, 2022 and 2021, the Company did not have any material indemnification claims that were probable or reasonably possible and consequently had not recorded related liabilities.

As of December 31, 2023 and 2022, the Company did not have any material indemnification claims that were probable or reasonably possible and consequently had not recognized any related liabilities.

Legal Proceedings

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Redeemable Convertible Preferred Shares

Under the Company’s Memorandum and Articles of Association, as amended, the Company’s redeemable convertible preferred shares are issuable in series.

The Company’s board of directors is authorized to determine the rights, preferences, privileges and terms of each series.

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Redeemable convertible preferred shares consisted of the following (in thousands, except share and per share amounts):

DECEMBER 31, 2022

SHARES ISSUED

Under the Company’s Memorandum and Articles of Association, as amended, prior to the IPO, the Company’s redeemable convertible preferred shares were issuable in series.

As of December 31, 2022, redeemable convertible preferred shares consisted of the following (in thousands, except share and per share amounts):

DECEMBER 31, 2022

SHARES ISSUED

The original issuance price in the table above reflects the stated issuance price per the respective purchase agreements.

Series A Redeemable Convertible Preferred Shares

In April 2019, the Company entered into a Series A redeemable convertible preferred shares purchase agreement with certain investors to issue and sell 9,600,000 shares of its Series A redeemable convertible preferred shares at a price of $1.6667 per share (the “Series A Purchase Price”) for total gross proceeds of $16.0 million.

The issuance costs were $0.3 million.

The purchase agreement also provided for the issuance and sale to investors of an additional 9,600,000 Series A redeemable convertible preferred shares at the Series A Purchase Price upon achieving certain operational milestones (the “Milestone Closing”) around the selection of targeted programs and progress of certain candidate programs.

The issuance of Series A redeemable convertible preferred shares was recorded at the amount of proceeds received less issuance costs and the amounts allocated to the Milestone Closing liability (“redeemable convertible preferred shares tranche liability”).

During the year ended December 31, 2019, the carrying value of the redeemable convertible preferred shares was adjusted to equal to its redemption value.

The Milestone Closing occurred on December 9, 2019, and the Company issued 9,600,000 Series A redeemable convertible preferred shares at $1.6667 per share for gross proceeds of $16.0 million.

The redeemable convertible preferred shares tranche liability was settled upon the Milestone Closing.

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Series A+ Redeemable Convertible Preferred Shares

In March 2020, the Company entered into a Series A+ redeemable convertible preferred shares purchase agreement with certain investors to issue and sell 12,799,681 shares of its Series A+ redeemable convertible preferred shares at a price of $2.0313 per share (the “Series A+ Purchase Price”) for total gross proceeds of $26.0 million.

The issuance costs were $0.2 million.

The issuance of Series A+ redeemable convertible preferred shares was recorded at the amount of proceeds received less issuance costs.

During the year ended December 31, 2020, the carrying value of the redeemable convertible preferred shares was adjusted to equal to its redemption value.

Series B Redeemable Convertible Preferred Shares

In July 2021, the Company entered into a Series B redeemable convertible preferred shares purchase agreement with certain investors to issue and sell 24,701,732 shares of its Series B redeemable convertible preferred shares at a price of $4.0483 per share (the “Series B Purchase Price”) for total gross proceeds of $100.0 million.

The issuance costs were $3.6 million.

The issuance of Series B redeemable convertible preferred shares was recorded at the amount of proceeds received less issuance costs.

During the year ended December 31, 2022, the carrying value of the redeemable convertible preferred shares was adjusted to equal to its redemption value.

In July 2021, the Company executed letter agreements with one of the investors and its affiliates granting them the right to purchase a certain number of the Company’s ordinary shares equal to the product of (i) the total number of ordinary shares of the Company being sold in the Company’s first firm committed underwritten public offering of the capital stock of the Company (the “IPO”), and (ii) aggregate percentage ownership of the capital stock of the Company of the investor and its affiliates (the “IPO Participation Right”).

The ordinary shares offered to the investor and its affiliates shall be offered on the same terms and price at which such ordinary shares are being offered to the public pursuant to the Company’s IPO.

The purchase price of ordinary shares will be the fair value at the time of purchase as it will represent the fair value of the Company’s ordinary shares at the time of the IPO.

IPO Participation Right has no fair value as it represents a right, not obligation, to purchase additional securities at fair value.

In April 2022, the Company issued and sold an additional 8,155,272 shares of its Series B redeemable convertible preferred shares for gross proceeds of $33.0 million, pari-passu with the other Series B shareholders.

The issuance of the additional Series B redeemable convertible preferred shares was recorded at the amount of gross proceeds received less issuance costs of $1.5 million.

During the year ended December 31, 2022, the carrying value of the redeemable convertible preferred shares was adjusted to equal to its redemption value.

Series B-1 Redeemable Convertible Preferred Shares

In December 2021, the Company entered into a share exchange agreement with other investors of Series Seed redeemable convertible preferred shares of Basecamp.

The Company issued 2,161,402 Series B-1 redeemable convertible preferred shares to the other investors of Series Seed redeemable convertible preferred shares of Basecamp to acquire the 7,000,000 Series Seed redeemable convertible preferred shares of Basecamp held by the other investors.

The issuance costs were $0.1 million.

The issuance of Series B-1 redeemable convertible preferred shares was recorded at the fair value of the amount of Series B -1 redeemable convertible preferred shares.

The fair value of Series B-1 redeemable convertible shares was determined by management with input from third-party valuation specialists.

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the year ended December 31, 2022, the carrying value of the redeemable convertible preferred shares was adjusted to equal to its redemption value.

Rights, Preferences and Privileges

On February 7, 2023, upon the closing of the Company’s IPO, all outstanding redeemable convertible preferred shares automatically converted into 67,018,087 ordinary shares.

Prior to the closing of the Company’s IPO, the holders of redeemable convertible preferred shares had the following various rights and preferences:

Voting Rights

Each share of redeemable convertible preferred share has the same voting rights as the number of shares of ordinary shares into which it is convertible and votes together with the holders of ordinary shares as a single class.

The holders of shares of Series B redeemable convertible preferred shares shall be entitled, voting separately as a single class, to elect two directors of the Company (the “Series B Directors”).

The holders of shares of Series A+ redeemable convertible preferred shares shall be entitled, voting separately as a single class, to elect two directors of the Company (the “Series A+ Directors”).

The holders of shares of Series A redeemable convertible preferred shares shall be entitled, voting separately as a single class, to elect two directors of the Company (the “Series A Directors”).

The holders of ordinary shares shall be entitled, voting separately as a single class, to elect two directors of the Company.

The holders of ordinary shares and redeemable convertible preferred shares shall be entitled, voting together, to elect the remaining directors of the Company.

Holders of outstanding shares of redeemable convertible preferred shares are entitled on a pari passu basis, to participate ratably (on an as if converted to ordinary shares basis) in the payment of any dividends when, as and if declared by the board of directors on the ordinary shares.

Dividends are noncumulative, and none were declared as of December 31, 2022 and 2021.

In the event of any liquidation, dissolution or winding up of the Company, or deemed liquidation event, either voluntary or involuntary (“Liquidation”), the holders of Series B-1 and Series B redeemable convertible preferred shares shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Company to the holders of Series A+ and Series A redeemable convertible preferred shares and ordinary shares, an amount equal to $3.2386 per share and $4.0483 per share, respectively, plus all declared but unpaid dividends.

If, upon the occurrence of the Liquidation, the assets and funds thus distributed among the holders of Series B-1 and Series B redeemable convertible preferred shares shall be insufficient to permit the payment to such holders of the full amounts, then the entire assets and funds of the Company legally available for distribution shall be distributed ratably among the holders of Series B-1 and Series B redeemable convertible preferred shares in proportion to the preferential amount each such holder is otherwise entitled to receive.

After the payment to the holders of Series B-1 and Series B redeemable convertible preferred shares of the full preferential amounts specified above, the holders of Series A+ and Series A redeemable convertible preferred shares shall be entitled to receive, prior and in preference to any distribution of any of the assets of

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the Company to the holders of ordinary shares, an amount equal to $2.0313 per share and $1.6667 per share, respectively, plus all declared but unpaid dividends.

If, upon the occurrence of the Liquidation, the assets and funds thus distributed among the holders of Series A+ and Series A redeemable convertible preferred shares shall be insufficient to permit the payment to such holders of the full amounts, then the entire assets and funds of the Company legally available for distribution shall be distributed ratably among the holders of Series A+ and Series A redeemable convertible preferred shares in proportion to the preferential amount each such holder is otherwise entitled to receive.

After the payment to the holders of redeemable convertible preferred shares of the full preferential amounts specified above, the remaining assets of the Company available for distribution to shareholders shall be distributed among the holders of ordinary shares and redeemable convertible preferred shares pro rata based on the number of shares held by each such holder if all shares of each such series of redeemable convertible preferred shares were converted to ordinary shares until such time as the aggregate amount distributed to the holders of redeemable convertible preferred shares is equal to three times the applicable original issue price per redeemable convertible preferred shares then held by them.

After the payment to the holders of ordinary shares and redeemable convertible preferred shares of the full amounts specified above, all of the remaining assets of the Company available for distribution to shareholders shall be distributed among the holders of ordinary shares pro rata based on the number of shares of ordinary shares held by each such holder.

Each redeemable convertible preferred share is convertible, at the option of the holder, into the number of fully-paid and non-assessable ordinary shares that result from dividing the applicable original issue price per share by the applicable conversion price per share at the time of conversion.

Redeemable convertible preferred shares are convertible into the Company’s ordinary shares on a one-for-one basis.

Each share of redeemable convertible preferred share is convertible into ordinary shares automatically immediately upon the earlier of (i) the Company’s consummation of an initial public offering of the ordinary shares on an internationally recognized stock exchange (which may include, without limitation, the Hong Kong Exchange, the New York Stock Exchange or the Nasdaq Stock Market) at a public offering price per share price that implies a market capitalization of the Company immediately prior to the offering of not less than $400.0 million, and having an aggregate offering amount of not less than $60.0 million (a “Qualified IPO”), or (ii) the Company’s receipt of a written request for such conversion from the holders of the majority of the then outstanding redeemable convertible preferred shares on an as-converted to ordinary shares basis.

The redeemable convertible preferred shares are recorded within mezzanine equity because they will become redeemable at the option of the shareholders upon the occurrence of certain deemed liquidation events that are considered not solely within the Company’s control after April 29, 2026.

Basecamp Bio Inc.

In March 2021, Basecamp entered into a purchase agreement with certain investors to issue and sell 9,000,000 shares of its Series Seed redeemable convertible preferred shares of Basecamp at a price of $1.00

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per share for total gross proceeds of $9.0 million.

Of the 9,000,000 shares of Series Seed redeemable convertible preferred shares, 2,000,000 shares were issued to the Company and the remaining 7,000,000 shares were issued to other existing investors of the Company.

Concurrent with this financing, the Company and Basecamp entered into the License and Collaboration Agreement (the “License Agreement”) in which the Company granted Basecamp a license to use its proprietary structural biology technology platform to conduct a research program to discover, research and develop novel compounds for certain selected GPCR (G protein coupled receptor) targets and the Company received 14,000,000 ordinary shares of Basecamp in exchange.

The Company shall make payments to Basecamp to fund the research program specified in the License Agreement, milestone payments if and when the certain milestones are achieved by Basecamp, and royalties related to net sales.

The Company and Basecamp also executed a Services Agreement under which the Company provides research and development services, business development services, management and administrative services, operational services, intellectual property services to Basecamp in consideration for fees.

Basecamp was considered a variable interest entity and the Company consolidated Basecamp as it was considered the primary beneficiary.

The Series Seed redeemable convertible preferred shares of Basecamp held by other investors were classified as redeemable noncontrolling interest in temporary equity because while it was not mandatorily redeemable, in the deemed liquidation event the redeemable convertible preferred shares might become redeemable at the option of the holders of at least a majority of the then outstanding shares after March 22, 2028.

Losses of Basecamp were not attributed to the redeemable noncontrolling interest as the holders of Series Seed redeemable convertible preferred shares do not have a contractual obligation to share in Basecamp’s losses due to their liquidation preference right.

As the share exchange did not result in a change of control, the transaction was accounted as an equity transaction.

Series B-1 redeemable convertible preferred shares were accounted for at fair value of $9.0 million, and $2.0 million representing the excess of the fair value over the carrying amount of noncontrolling interest on the date of share exchange of $7.0 million was recorded in additional paid-in capital and accumulated deficit.

Ordinary Share Warrants

In connection with the entering into the SVB Agreement on August 4, 2020, the Company issued SVB a warrant to purchase shares of the Company’s ordinary shares which were recorded at fair value within additional paid-in capital in shareholders’ deficit.

The SVB Warrant had a fair value of $0.1 million as of the issuance date and was recorded as a deferred asset within other non-current assets on the consolidated balance sheets that was amortized to interest and other income (expense), net, on a straight-line basis until Tranche A and Tranche B availability end date.

The SVB Warrant is equity classified as it is indexed to the Company’s own shares and meets all other conditions for equity classification.

The SVB Warrant is not subsequently remeasured and is immediately exercisable for 112,279 ordinary shares of the Company.

In addition, the SVB Warrant could have been exercisable for an additional number of ordinary shares equal to 44,567 ordinary shares upon draw of Tranche A and 22,283 ordinary shares upon draw of Tranche B.

The SVB Warrant for the Tranche A shares and Tranche B shares expired on July 31, 2021 and July 31, 2022, respectively, as the Company elected to allow the Tranche A and Tranche B financings to expire unused on July 31, 2021 and July 31, 2022, respectively.

The SVB Warrant has an exercise price of $0.48 per share and expires in ten years.

In February 2023, SVB fully exercised the SVB Warrant for 106,060 ordinary shares through a cashless exercise.

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Dividends on redeemable convertible preferred shares are noncumulative and none were declared through conversion.

Upon closing of the Company’s IPO, all outstanding redeemable convertible preferred shares automatically converted into 67,018,087 ordinary shares on a one -for-one basis and therefore no redeemable convertible preferred shares were outstanding as of December 31, 2023.

Ordinary Shares

The Company’s Memorandum and Articles of Association, as amended, authorizes the Company to issue 432,981,913 ordinary shares with a par value of $0.0001 per share, as of December 31, 2022.

Ordinary shareholders are entitled to dividends if and when declared by the Company’s board of directors subject to the prior rights of the preferred shareholders.

As of December 31, 2023, the Company’s Memorandum and Articles of Association, as amended, authorizes the Company to issue 500,000,000 ordinary shares and 100,000,000 undesignated shares, of which 9,812,438 shares have been designated as non-voting ordinary shares and 90,187,562 remain undesignated shares, all with a par value of $ 0.0001 per share.

The undesignated shares may be designated by the Company’s board of directors in accordance with the Company’s Articles of Association.

In May 2023 and September 2023, the Company’s board of directors designated 7,410,518 and 2,401,920 non-voting ordinary shares, respectively, in accordance with the Articles of Association.

The non-voting ordinary shares rank on parity with the ordinary shares as to distributions of assets upon liquidation, dissolution or winding up of the Company, whether voluntary or involuntary.

The non-voting ordinary shares are entitled on an equal basis to any dividends declared on the ordinary shares on an as-converted to ordinary share basis.

Each non-voting ordinary shareholder has the right to convert each non-voting ordinary share into one ordinary share, subject to appropriate adjustment in the event of any dividend, split, reverse

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split, combination or other similar recapitalization with respect to the ordinary shares, at such holder’s election by providing written notice to the Company.

In May 2023, the Company entered into an Exchange Agreement with Biotechnology Value Fund, L.P., Biotechnology Value Fund II, L.P., and Biotechnology Value Trading Fund OS, L.P.

(collectively referred to as “BVF”), who in the aggregate hold more than 5 % of the Company’s issued share capital, pursuant to which BVF delivered to the Company, a total of 7,410,518 ordinary shares of the Company, in exchange for the Company’s delivery of 7,410,518 newly designated non-voting ordinary shares, par value $ 0.0001 per share.

The exchange did not result in any change in the aggregate number of outstanding shares of the Company as the exchange was implemented on a one -for-one basis.

On September 29, 2023, the Company entered into a share purchase agreement to issue certain shares to Purchasers, including 2,401,920 newly designated non-voting ordinary shares at a purchase price of $ 12.49 per share (or the equivalent of $ 37.47 per ADS) in the Private Placement which closed on October 3, 2023.

As of December 31, 2023, all outstanding non-voting ordinary shares had been converted into 9,812,438 ordinary shares.

Ordinary shareholders, including non-voting ordinary shareholders, are entitled to dividends if and when declared by the Company’s board of directors subject to the prior rights of the preferred shareholders.

As of December 31, 2023 and 2022, no dividends on ordinary shares had been declared by the board of directors.

The Company has the following ordinary shares reserved for future issuance (in thousands):

Conversion of redeemable convertible preferred shares

Share options available for future grant

Share options issued and outstanding

Share options available for future grant

Ordinary shares available for employee share purchase plan

Conversion of redeemable convertible preferred shares

Ordinary share warrants

1 unchanged sentence

Shareholders’ Equity

2019 Equity Incentive Plan

In April 2019, the Company adopted the 2019 Equity Incentive Plan (“2019 Plan”), under which its board of directors can issue share options.

As of December 31, 2022, there were 8,916,263 shares authorized and reserved for issuance under the 2019 Plan.

Awards granted under the 2019 Plan may be either incentive share options (“ISOs”), nonstatutory share options (“NSOs”), share appreciation rights (“SARs”), or restricted share units (“RSUs”).

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NSOs may be granted to Company employees and consultants.

The Company’s board of directors has the authority to determine to whom options will be granted, the number of shares, the term, and the exercise price.

The exercise price of ISOs and NSOs shall not be less than 100 % of the estimated fair value of the shares on the date of grant.

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2023 Equity Incentive Plan

In January 2023, prior to the IPO closing, the Company’s board of directors and shareholders approved the 2023 Equity Incentive Plan (“2023 Plan”), which became effective upon the IPO closing.

The Company initially reserved 12,000,000 ordinary shares for issuance of share-based compensation awards, including ISOs, NSOs, stock appreciation rights, restricted stock units and other stock-based awards, plus shares available for issuance under the 2019 Plan.

ISOs may be granted only to Company employees (including officers and directors who are also employees).

Shares options granted under the 2019 Plan that are forfeited or lapse unexercised will be available for issuance under the 2023 Plan.

Once the 2023 Plan became effective, no further grants were made under the 2019 Plan.

Options under the 2023 Plan may be granted for periods of up to 10 years at exercise prices no less than the fair market value of the Company’s ordinary shares on the date of grant;

provided, however, that the exercise price of an ISO granted to a 10 % shareholder may not be less than 110 % of the fair market value of the shares on the date of grant and such option may not be exercisable after the expiration of five years from the date of grant.

Vesting conditions determined by the plan administrator may apply to share options and may include continued service, performance and/or other conditions.

Generally, share options vest over a four-year period.

The maximum number of ordinary shares that may be issued under the 2023 Plan as of December 31, 2023 was 20,589,597 .

In addition, t he number of ordinary shares reserved for issuance under our 2023 Plan will automatically increase on January 1 of each calendar year, starting on January 1, 2024 through January 1, 2033, in an amount equal to 4 % of the total number of ordinary shares outstanding on the last day of the calendar month before the date of each automatic increase, or a lesser number of ordinary shares determined by the Company’s board of directors.

In January 2024, the number of ordinary shares available for issuance under the 2023 Plan was increased by 5,568,838 shares as a result of the automatic increase provision in the 2023 Plan.

A summary of share option activity is set forth below (in thousands except per share amounts and years):

1 unchanged sentence

As of December 31, 2022

Additional shares authorized

As of December 31, 2023

1 unchanged sentence

Vested and expected to vest at December 31, 2023

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The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying share options and the fair value of the Company’s ordinary shares for share options that were in-the-money at the end of each period.

The aggregate intrinsic value of options exercised for the years ended December 31, 2022 and 2021 was $0.2 million and less than $0.1 million, respectively.

The aggregate intrinsic value of options exercised for the years ended December 31, 2023 and 2022 was $ 3.9 million and $ 0.2 million, respectively.

The total fair value of options that vested during the years ended December 31, 2023 and 2022 was $ 5.5 million and $ 1.5 million, respectively.

Employee Share Purchase Plan

In February 2023, the Company adopted the 2023 Employee Share Purchase Plan (“ESPP”).

The Company allows eligible employees to purchase shares of the Company's ordinary shares through payroll deductions at a price equal to 85 % of the lesser of the fair market value of the ordinary shares as of the first date of each offering period or the ending date of each purchase period.

Each offering period is typically 24 months consisting of four purchase periods of six months .

There were 1,000,000 ordinary shares initially reserved for issuance under the ESPP.

The number of ordinary shares reserved for issuance will automatically increase on January 1 of each calendar year, beginning on January 1, 2024 through January 1, 2033, by the lesser of (i) 1 % of the total number of our outstanding share capital on the last day of the calendar month before the date of the automatic increase;

and (ii) 3,000,000 ordinary shares;

provided that before the date of any such increase, our board of directors may determine that such increase will be less than the amount set forth in clauses (i) and (ii) .

In January 2024, the number of ordinary shares available for issuance under the ESPP was increased by 1,392,210 shares as a result of the automatic increase provision in the ESPP.

The offering period and purchase periods are determined by the board of directors.

The first offering period for approximately 24 months was initiated during the fourth quarter of 2023 and consists of four purchase periods or approximately six months .

As of December 31, 2023, 1,000,000 shares under the ESPP remain available for purchase.

Compensation expense is calculated using the fair value of the employees' purchase rights under the Black-Scholes model, which was estimated using the following weighted-average assumptions:

Expected term (in years)

Expected volatility

Risk-free interest rate

Expected dividend yield

Restricted Shares

On April 29, 2019, 5,891,064 shares of the Company’s ordinary shares which were previously issued to its founders were converted to restricted ordinary shares with a vesting term of four years with 25 % of the shares vesting after one year from the vesting commencement date of April 29, 2019 and the remainder ratably on a monthly basis over the following three years , provided that the shareholder continues to provide services to the Company as of the date of such vesting.

The transaction was accounted for as a grant of restricted shares with weighted-average per share grant-date fair value of $0.33 per share with the total compensation cost of $1.9 million, which will be recognized over the four years of requisite service period.

The transaction was accounted for as a grant of restricted shares with weighted-average per share grant-date fair value of $ 0.33 per share with the total compensation cost of $ 1.9 million, which will be recognized over the four-year requisite service period.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Activity with respect to restricted shares was as follows (in thousands, except per share amounts):

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Unvested, December 31, 2023

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The fair value of restricted shares vested during the years ended December 31, 2023 and 2022 was $ 0.1 million and $ 0.4 million, respectively.

Share-Based Compensation Associated with Awards to Employees and Non-Employees

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Total share-based compensation

Share options and restricted shares

Total share-based compensation

As of December 31, 2023, the total unrecognized share-based compensation expense related to unvested share options was $ 31.0 million, which is expected to be recognized over the remaining weighted-average vesting period of 3.1 years.

As of December 31, 2022, the total unrecognized compensation expense related to unvested restricted shares was $0.1 million, which is expected to be recognized over the remaining weighted-average vesting period of 0.3 years.

The fair value of restricted shares vested during the years ended December 31, 2022 and 2021 was $0.4 million and $0.5 million, respectively.

As of December 31, 2023, the total unrecognized share-based compensation expense related to the ESPP was $ 0.6 million, which is expected to be recognized over the remaining weighted-average vesting period of 1.9 years.

The Company estimated the fair value of share options using the Black Scholes option-pricing model.

The fair value of share options is being amortized on a straight-line basis over the requisite service period of the awards.

The options granted during the years ended December 31, 2022 and 2021 had a weighted-average per share grant-date fair value of $1.96 and $1.07 per share, respectively, which was estimated using the following weighted-average assumptions:

The options granted during the years ended December 31, 2023 and 2022 had a weighted-average

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per share grant-date fair value of $ 6.21 and $ 1.96 per share, respectively, which was estimated using the following weighted-average assumptions:

Expected term (in years)

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The mid-point between the vesting date and the maximum contractual expiration date is used as the expected term under this method.

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For awards with multiple vesting-tranches, the times from grant until the mid-points for each of the tranches may be averaged to provide an overall expected term.

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● Expected Dividend yield.

The expected dividend is assumed to be zero as the Company has never paid dividends and has no current plans to.

The expected dividend is assumed to be zero as the Company has never paid dividends and has no current plans to do so.

In addition to the assumptions used in the Black-Scholes option-pricing model, the Company recognizes the actual forfeitures by reducing the employee share-based compensation expense in the same period the forfeiture occurs.

Share Option Modification

In November 2021, the Company entered into a separation and consulting agreement in connection with the resignation of a Company founder and executive.

The terms of the agreement resulted in compensation expense for unvested awards expected to vest during the consultancy of $0.5 million was recognized immediately during the year ended December 31, 2021 as no substantive future service was required.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The following table presents loss before income tax expense (in thousands):

3 unchanged sentences

Loss before income tax expense

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The following table presents the current and deferred income tax provision for income taxes (in thousands):

2 unchanged sentences

Total provision (benefit) for income taxes:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The Company is domiciled in the Cayman Islands.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Significant components of the Company’s net deferred tax asset or liability were as follows (in thousands):

1 unchanged sentence

Research and experimentation expenses

Property and equipment

Research credits

Operating lease liability

Related party accrued expenses

Research credits

Prepaid expenses

Property and equipment

Unrealized gains and losses

Total deferred tax assets

2 unchanged sentences

Right-of-use assets

Property and equipment

Unrealized gains and losses

9 unchanged sentences

The federal credit carryovers begin to expire in 2039 and the state credit carryovers do not expire.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The Company has not completed a study to determine whether any ownership change per the provisions of Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), as well as similar state provisions, has occurred.

1 unchanged sentence

These ownership changes may limit the amount of the net operating loss and income tax credit carryover that can be utilized annually to offset future taxable income.

In general, an

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“ownership change” as defined by Section 382 of the Code results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50% of the outstanding ordinary shares of a company by certain shareholders.

In general, an “ownership change” as defined by Section 382 of the Code results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50% of the outstanding ordinary shares of a company by certain shareholders.

Uncertain Tax Positions

8 unchanged sentences

The total unrecognized tax benefits do not impact the Company’s effective tax rate.

The Company does not anticipate that there will be a substantial change in unrecognized tax benefits within the next twelve months.

The Company recognizes interest and penalties related to unrecognized tax positions within the income tax expense line in the accompanying consolidated statements of operations and comprehensive loss.

8 unchanged sentences

The Company has not recorded a deferred tax liability related to the income taxes and foreign withholding taxes on indefinitely reinvested undistributed earnings of foreign subsidiaries.

If the Company decides to repatriate the foreign earnings, it would need to adjust the income tax provision in the period it was determined that the earnings would no longer be indefinitely invested outside the Cayman Islands.

The Company’s subsidiaries in the United States do not have undistributed earnings to distribute.

As of December 31, 2022, a subsidiary in China has $0.7 million of undistributed earnings which would be subject to a 10% withholding tax if distributed.

If the Company decides to repatriate the foreign earnings, it would need to adjust the income tax provision in the period it was determined that the earnings

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NOTES TO FINANCIAL STATEMENTS (CONTINUED)

On December 22, 2017 the legislation commonly known as the Tax Cuts and Jobs Act ("TCJA") was signed into law.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

would no longer be indefinitely invested outside the Cayman Islands.

The Company’s subsidiaries in the United States do not have undistributed earnings to distribute.

As of December 31, 2023, a subsidiary in China has no undistributed earnings.

On December 22, 2017 the legislation commonly known as the Tax Cuts and Jobs Act (“TCJA”) was signed into law.

The TCJA resulted in significant changes to the treatment of research or experimental (“R&E”) expenditures under Internal Revenue Code Section 174.

5 unchanged sentences

Net Loss Per Share

The following table sets forth the computation of basic and diluted net loss per share attributable to ordinary shareholders, which excludes unvested restricted shares and shares which are legally outstanding, but subject to repurchase by the Company (in thousands, except share and per share amounts):

Net loss attributable to ordinary shareholders

Accretion of redeemable convertible preferred shares to their redemption value

Excess of the fair value of the consideration paid over the carrying value of NCI

Net loss attributable to ordinary shareholders

3 unchanged sentences

Net loss per share attributable to ordinary shareholders, basic and diluted

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The following outstanding shares of potentially dilutive securities were excluded from the computation of diluted net loss per share attributable to ordinary shareholders for the periods presented because including them would have been antidilutive (in thousands):

Redeemable convertible preferred shares

Options to purchase ordinary shares

Shares committed under ESPP

Redeemable convertible preferred shares

Ordinary share warrants

Unvested restricted ordinary share awards

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Defined Contribution Plan

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Employee contributions are voluntary and are determined on an individual basis subject to the maximum allowable under federal tax regulations.

For the year ended December 31, 2022, the Company started to make safe-harbor matching contributions of 100% of each dollar contributed by eligible employees, up to 4% of an employee’s eligible compensation.

For the years ended December 31, 2023 and 2022, the Company started to make safe-harbor matching contributions of 100 % of each dollar contributed by eligible employees, up to 4 % of an employee’s eligible compensation.

The Company may also make discretionary contributions to the 401(k) plan.

During the year ended December 31, 2022, matching contributions were $0.2 million.

During the years ended December 31, 2023 and 2022, matching contributions were $ 0.2 million and $ 0.2 million, respectively.

Related Party Transactions

2 unchanged sentences

During the years ended December 31, 2022 and 2021, the Company had existing collaboration agreements to use the results provided by Schrödinger’s software platform for its research purposes.

During the years ended December 31, 2022 and 2021, the Company paid $0.2 million and $0.7 million to Schrödinger, respectively, and had none and less than $0.1 million payable balance to Schrödinger as of December 31, 2022 and 2021, respectively.

As discussed in Note 8 during the year ended December 31, 2021, existing Company shareholders acquired a redeemable noncontrolling interest in Basecamp and ultimately exchanged that interest for Series B-1 redeemable convertible preferred shares of the Company.

Subsequent Events

In January 2023, the Company’s board of directors approved share options for 3,550,000 ordinary shares to certain officers of the Company, which were granted under the 2023 Equity Incentive Plan on February 2, 2023.

The exercise price per share of these share options are equal to $5.00, which is the fair market value of each ordinary share, based on the public offering price of $15.00 per ADS in the Company’s IPO.

Each share option will vest over four years, subject to the executive’s continuous service through each vesting date.

Of these share options granted, share options for 1,200,000 ordinary shares are subject to achievement of certain clinical milestones in the first year following grant.

During the years ended December 31, 2023 and 2022, the Company paid $ 0.3 million and $ 0.2 million to Schrödinger, respectively, and had $ 0.5 million and $ 0 payable balance to Schrödinger as of December 31, 2023 and 2022, respectively.

Lhotse Collaboration Agreement with Schrödinger

In October 2020, Lhotse Bio, Inc., the Company’s wholly-owned subsidiary (“Lhotse”), entered into a Collaboration Agreement (the “Lhotse-Schrödinger Agreement”) with Schrödinger, which is one of the Company’s shareholders, to discover and develop novel, orally bioavailable, small molecule inhibitors of lysophosphatidic acid 1 receptor (“LPA1R”).

Under the Lhotse-Schrödinger Agreement, Schrödinger is obligated to provide computational modeling and design support, including by using its technology platform to perform virtual screens, and Lhotse is obligated to provide day-to-day chemistry and biology support.

Pursuant to the Lhotse-Schrödinger Agreement, a joint steering committee comprised of representatives from both parties oversees the research performed under the agreement.

During the term of the Lhotse-Schrödinger Agreement and for a specified period thereafter while Lhotse is engaged in active development of any compound having activity against LPA1R that is discovered or developed under the Lhotse-Schrödinger Agreement, Schrödinger is obligated to work exclusively with Lhotse on the design, research, development and commercialization of compounds that inhibit LPA1R.

Lhotse will solely own the research

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results, work product, inventions and other intellectual property generated under the Lhotse-Schrödinger Agreement that are directed to LPA1R.

Under the Lhotse-Schrödinger Agreement, Lhotse is obligated to pay Schrödinger a quarterly active program payment in the low six digits for each successive three-month period during which Schrödinger continues to perform research work as agreed by the parties, and as of December 31, 2023, the Company has paid to Schrödinger an aggregate of $ 0.8 million.

If Lhotse develops and commercializes a product containing a compound (a “Lhotse Collaboration Compound”), that is discovered or developed under the Lhotse-Schrödinger Agreement (a “Lhotse Collaboration Product”), Lhotse is obligated to pay Schrödinger development and regulatory milestone payments of up to an aggregate of $ 17.0 million, regardless of the number of Lhotse Collaboration Products that reach such milestones.

Lhotse will also be obligated to pay Schrödinger tiered royalties on a Lhotse Collaboration Product-by-Lhotse Collaboration Product basis equal to low single digit percentages on aggregate worldwide net sales of Lhotse Collaboration Products, subject to specified reductions and offsets.

Lhotse’s obligation to pay royalties to Schrödinger will expire on a Lhotse Collaboration Product-by-Lhotse Collaboration Product and country-by-country basis on the later of (i) the expiration of the last-to-expire Lhotse patent claim covering the composition of matter of the Lhotse Collaboration Compound contained in such Lhotse Collaboration Product in such country, (ii) the expiration of regulatory, pediatric, orphan drug, or data exclusivity with respect to such Lhotse Collaboration Product in such country, and (iii) ten years after the first commercial sale of such Lhotse Collaboration Product in such country (the “Lhotse Royalty Term”).

Unless terminated earlier, the Lhotse-Schrödinger Agreement will continue for three years , subject to extension by mutual written agreement of the parties.

Either party may terminate the Lhotse-Schrödinger Agreement for the other party’s uncured material breach, subject to certain notice and cure periods, or for the other party’s bankruptcy or insolvency.

Lhotse’s obligation to make milestone and royalty payments (subject to the Lhotse Royalty Term) to Schrödinger continues after the expiration or termination of the Lhotse-Schrödinger Agreement.

As of December 31, 2023, no milestone or royalty payments have been paid or accrued.

Aconcagua Collaboration Agreement with Schrödinger

In November 2023, Aconcagua Bio, Inc., the Company’s wholly-owned subsidiary (“Aconcagua”), entered into a collaboration agreement (the “Aconcagua-Schrödinger Agreement”) with Schrödinger to discover and develop novel, small molecule modulators of a specific target.

Under the Aconcagua-Schrödinger Agreement, Schrödinger is obligated to provide computational modeling and design support, including by using its technology platform to perform virtual screens, and Aconcagua is obligated to provide day-to-day chemistry and biology support.

Pursuant to the Aconcagua-Schrödinger Agreement, a joint steering committee comprised of representatives from both parties oversees the research performed under the agreement.

During the term of the Aconcagua-Schrödinger Agreement or if longer, for a specified number of years after the effective date of the Aconcagua-Schrödinger Agreement, Schrödinger is obligated, subject to certain exceptions, to work exclusively with Aconcagua on the design, research, development and commercialization of compounds that inhibit the target.

Aconcagua will solely own the research results, work product, inventions and other intellectual property generated under the Aconcagua-Schrödinger Agreement other than improvements to Schrödinger’s background intellectual property.

During the term of the Aconcagua-Schrödinger Agreement, Aconcagua is obligated to pay Schrödinger a monthly active program payment in the low six digits, which payment includes fees payable for certain Schrödinger software employed in the Collaboration, and as of December 31, 2023, the Company has paid to Schrödinger an aggregate of $ 0.3 million.

STRUCTURE THERAPEUTICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

If Aconcagua develops and commercializes a product containing a compound (“Aconcagua Collaboration Compound”) that is discovered or developed under the Aconcagua-Schrödinger Agreement or a derivative thereof (“Aconcagua Collaboration Product”), Aconcagua is obligated to pay Schrödinger development, regulatory and commercialization milestone payments of up to an aggregate of $ 89.0 million for the first Aconcagua Collaboration Product to achieve a particular milestone event, regardless of the number of Aconcagua Collaboration Products that reach such milestones.

Aconcagua will also be obligated to pay Schrödinger tiered royalties in the low single digit range on aggregate worldwide net sales of all Aconcagua Collaboration Products, subject to specified reductions and offsets.

Aconcagua’s obligation to pay royalties to Schrödinger will expire on a Aconcagua Collaboration Product-by-Aconcagua Collaboration Product and country-by-country basis on the later of (i) the expiration of the last-to-expire Aconcagua owned patent claim covering the composition of matter of the Aconcagua Collaboration Compound contained in such Aconcagua Collaboration Product in such country and (ii) ten years after the first commercial sale of such Aconcagua Collaboration Product in such country (“Aconcagua Royalty Term”).

Unless terminated earlier, the Aconcagua-Schrödinger Agreement will continue for three years , subject to extension by mutual written agreement of the parties.

Either party may terminate the Aconcagua-Schrödinger Agreement for convenience after a specified period or for the other party’s uncured material breach.

Aconcagua’s obligation to make milestone and royalty payments (subject to the Aconcagua Royalty Term) to Schrödinger continues after the expiration or termination of the Aconcagua-Schrödinger Agreement, unless the Aconcagua-Schrödinger Agreement is terminated under specified circumstances.

As of December 31, 2023, no milestone or royalty payments have been paid or accrued under this agreement.

Purchase of non-voting ordinary shares by BVF

In May 2023, the Company entered into an Exchange Agreement with BVF, who in the aggregate hold more than 5 % of the Company’s issued share capital, pursuant to which BVF delivered to the Company, a total of 7,410,518 ordinary shares of the Company, in exchange for the Company’s delivery of 7,410,518 newly designated non-voting ordinary shares, par value $ 0.0001 per share.

The exchange did not result in any change in the aggregate number of outstanding shares of the Company as the exchange was implemented on a one -for-one basis.

On September 29, 2023, the Company entered into a share purchase agreement to issue certain shares to Purchasers, including 2,401,920 newly designated non-voting ordinary shares at a purchase price of $ 12.49 per share (or the equivalent of $ 37.47 per ADS) to BVF, a more than 5 % shareholder of the Company, for aggregate gross proceeds of approximately $ 30.0 million, in the Private Placement which closed on October 3, 2023.

As of December 31, 2023, all outstanding non-voting ordinary shares were converted into 9,812,438 ordinary shares.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data