Sihuan Pharmaceutical Holdings Group Co., Ltd. (the "Company" or "Sihuan Pharmaceutical", together with its subsidiaries, collectively referred to as the "Group:" Hong Kong Stock Exchange Stock Code: 0460) is pleased to announce that Beijing MeiYan KongJian Technology Co., Ltd. ("MeiYan KongJian") under the Group and Bluepha Co., Ltd. ("Bluepha") entered into an agreement on 19 January 2022 for the establishment of joint venture to jointly develop PHA microspheres and biomanufacturing based regenerative medical materials. They will jointly complete the research and development, compliance declaration and subsequent commercial promotion of the products.

PHA is a natural polyester existing in microbial cells, and is a linear polymer connected by the ester bonds formed by the carboxyl group of a hydroxy fatty acid monomer and the hydroxyl groups in the same or different types of hydroxy fatty acid monomers. PHA has good biocompatibility with cells in vivo, the ultimate degradation products of which are carbon dioxide and water, which have no poisonous effect on cells. The cells can grow well on the scaffold comprised of PHA. Therefore, PHA is widely applied in medical field. Due to the special biodegradability, gas isolation, biological histocompatibility, anticoagulant activity, hydrophobicity, optical isomerism and other characteristics of PHA, as an upscale biomedical material, it has distinctive advantages when applied in the medical equipment, histological engineering, drug carrier as well as other fields. The surgical suture, absorbable surgical membrane and other medical equipment comprised of PHA have been approved for launching in the United States by the FDA.

As light medical aesthetics enters the era of regeneration, and given that there are currently only three regenerative injection products in China that meets compliance standards, the market is in urgent need of new materials to offer diversified choices to the customers. Among the existing products, both PLA and PCL require chemical interaction to achieve molecular aggregation and are subject to the risk of chemical interaction agent residue. PHA, a type of intracellular polyester synthesized by microorganisms, is a natural high-molecular polymer, which will be a good choice for light medical aesthetics whether as a new material to enter light medical aesthetics market with large scarcity or for its own safety.

Founded in 2016, Bluepha is a company engaging in molecular and material innovation based on synthetic biology technologies. It is dedicated to designing, developing, manufacturing and selling new types of biomolecule and material and had completed the Series B financing in January 2022, with an aggregate amount of RMB1.5 billion. Bluepha is one of the pioneers on the synthetic biology industrialization in China. Its synthetic biology research and development platform enables the design of a variety of high-performance PHA materials according to users' demands, which is applied to a wide range of industries such as consumer goods, food, medical, agriculture and industry. Bluepha is equipped with abundant technical reserves and intellectual property layout in all links of the PHA-related technology chain (including the preparation process of PHA microsphere lyophilized powder), such as strain research and development, bio-transformation, separation and purification, material modification and others.

As early as in 2004, synthetic biology has long been recognized by MIT Technology Review as one of the top 10 new technologies that will change the world. In respect of its latent and significant development prospects, synthetic biology is regarded as the world-leading "Third Biotechnology Revolution" after the two biotechnology revolutions of the discovery of the DNA double helix structure and the human genome sequencing. For commercial application, the synthetic biology market is expected to grow rapidly at a compound annual growth rate of nearly 30% by 2025.

Dr. Che Fengsheng, chairman and executive director of Sihuan Pharmaceutical Holding Group, said: "Sihuan Pharmaceutical has a forward-looking layout in the medical aesthetics field, and entered into an exclusive distribution agreement in China with Hugel Inc., a leading biomedical company in the South Korea, in relation to botulinum toxin Letybo® and hyaluronic acid in 2014. The strategic cooperation reached between the Group and Bluepha in respect of technology development and commercialized application of PHA microsphere related products for medical aesthetics, and the joint establishment of joint venture provide the Group with a chance to enter the huge blue ocean of synthetic biology in advance, which is a significant step forward in vertical extension from the medical aesthetics industry to the upstream raw materials supply. This will not only help the Group to further improve its product matrix in medical aesthetics field, but also significantly enhance its comprehensive capability in non-surgical medical aesthetics field and strengthen its core competitiveness."