GYRE THERAPEUTICS, INC. Annual Report - Your Investor's Guide

This guide offers a clear, concise breakdown of GYRE THERAPEUTICS, INC.'s annual report. We translate complex financial and operational details into plain language, providing the essential facts you need to understand the company's performance and evaluate its potential as an investment.

The Basics: Who is GYRE Therapeutics?

GYRE Therapeutics, Inc. trades on The Nasdaq Capital Market under the ticker GYRE. Headquartered in San Diego, California, this annual report covers the company's performance for the fiscal year ending December 31, 2025.

As of December 31, 2025, GYRE's market capitalization (the total value of its outstanding shares) stood at approximately $72.6 million. The company had roughly 96.96 million shares of common stock outstanding as of March 2, 2026. Due to its size, GYRE qualifies as a "Smaller reporting company" and an "Accelerated filer," designations that affect its reporting requirements.

While approximately 45 official stockholders were on record as of March 2, 2026, many more individual investors hold shares through brokers, meaning the actual number of GYRE shareholders is significantly higher.

Financial Snapshot: How GYRE Performed This Year (as of December 31, 2025)

A clear understanding of GYRE's financial performance is crucial. Here's a quick overview of the company's financial health:

• Total Revenue: For the year ended December 31, 2025, GYRE reported $102.3 million in total revenue. This represents a significant 30.7% increase from $78.3 million in 2024, primarily driven by strong sales of its commercial products in China.
• Net Loss: Despite growing revenues, the company reported a net loss of $59.4 million for 2025, an increase from a net loss of $49.8 million in 2024. This reflects GYRE's substantial investment in research and development (R&D) for its pipeline drugs.

In essence, GYRE is a growth-focused company that is not yet profitable, heavily reinvesting in its future drug pipeline.

Business Overview: What GYRE Does

GYRE Therapeutics is a commercial-stage biopharmaceutical company. It develops and sells small-molecule medicines to treat organ fibrosis (scarring in organs) and inflammatory diseases.

The company operates through its U.S. headquarters in San Diego, California, and significantly through its majority-owned subsidiary, Gyre Pharmaceuticals, in China (the People's Republic of China).

GYRE's strategy leverages the revenue and stability from its existing successful products to fund and de-risk the development of new, promising medicines. The company also aims to expand the approved uses for its current drugs and build a diverse pipeline of treatments for diseases with limited therapeutic options.

Their Current Products: What's Already Selling

GYRE has several products already on the market, primarily in China:

• ETUARY® (pirfenidone): This anti-scarring medicine treats Idiopathic Pulmonary Fibrosis (IPF), a serious lung disease. Approved in China in 2011, it has been included on the National Reimbursement Drug List (NRDL) since 2017, ensuring insurance coverage. ETUARY® holds a leading market share of approximately 60% in China for IPF treatments.
  • Recent Developments for ETUARY®: GYRE is working to expand ETUARY®'s use to other conditions in China. In 2025, the company completed patient enrollment for a Phase 3 trial targeting another type of pulmonary fibrosis (PD). It expects to initiate a Phase 2/3 study for radiation-induced lung injury (RILI) in the first half of 2026.
• Etorel® (nintedanib esilate soft capsules): Gyre Pharmaceuticals acquired the rights to this drug in May 2024 and began selling it in China in June 2025. Etorel® is also a standard treatment for IPF and other related lung diseases.
  • Recent Developments for Etorel®: In November 2025, China's National Centralized Drug Procurement (NCDP) program selected Etorel®. While NCDP typically leads to lower per-unit drug prices, it often results in significantly higher sales volumes due to broader hospital adoption and government purchasing, potentially boosting overall revenue. The company is currently assessing the full financial impact.
• Contiva® (avatrombopag maleate tablets): GYRE acquired this drug in June 2021. It helps increase platelet counts.
  • Recent Developments for Contiva®: In June 2024, China approved Contiva® for low platelet counts related to chronic liver disease. In January 2025, it received approval for an additional use: chronic immune thrombocytopenia (ITP). Sales of Contiva® in China began in March 2025, with promising initial results.

What's in the Pipeline: Their Future Medicines

GYRE's future growth potential largely lies in its promising drug development pipeline:

• Hydronidone (Lead Candidate): This is GYRE's most advanced new drug, designed to treat liver scarring (fibrosis). It is a modified version of pirfenidone (like ETUARY®).
  • For CHB-Associated Liver Fibrosis (in China): This represents a significant opportunity, as no small-molecule drugs are currently approved globally for this condition, addressing a major unmet medical need. China's drug agency (NMPA) granted Hydronidone "Breakthrough Therapy" status in 2021.
    • Key Phase 3 Results (May 2025): Hydronidone successfully met its main goal in a pivotal Phase 3 trial. 52.85% of patients experienced a significant reduction in liver scarring, compared to only 29.84% in the placebo group. The drug also improved inflammation and demonstrated good tolerability.
    • Next Steps: Following a December 2025 meeting, the NMPA indicated that this data supports an application for conditional approval and potentially a priority review. GYRE expects to submit this application in the first half of 2026, a major step toward potential market entry.
  • For MASH-Associated Liver Fibrosis (in the U.S.): GYRE completed an early-stage trial in healthy volunteers and plans to file an application with the FDA in 2026 to initiate a Phase 2 trial for this condition in the U.S.
• Other Candidates:
  • F573: This drug is currently in a Phase 2 trial (started March 2023) in China for liver injury and failure, with completion expected in 2026.
  • F230: Targeting Pulmonary Arterial Hypertension (PAH), a lung blood vessel disease, in China. A Phase 1 trial began in June 2025.
  • F528: An early-stage drug for Chronic Obstructive Pulmonary Disease (COPD) in China. GYRE expects to apply to start human trials in early 2027.

Management Discussion & Analysis (MD&A) Highlights

Management reported a substantial 30.7% increase in total revenue for 2025, primarily driven by strong sales of its commercial products in China, including ETUARY®, Etorel®, and Contiva®. This growth reflects successful market penetration and strategic product launches. Despite this revenue growth, the company incurred a net loss of $59.4 million, an increase from the prior year. This loss directly results from management's strategic decision to make significant investments in research and development (R&D) to advance its pipeline drugs, particularly Hydronidone, and expand its product portfolio.

The company currently experiences significant cash burn due to these R&D expenditures and commercialization efforts. Management acknowledges that additional capital will likely be required in the future to fund ongoing operations and pipeline development. A key strategic initiative announced post-period is the proposed merger with Cullgen. This merger aims to expand GYRE's pipeline into new technology platforms, diversify its geographic R&D presence, and accelerate therapy development. This move underscores management's commitment to long-term growth and innovation, though its successful integration and realization of benefits remain subject to future execution and market conditions.

Financial Health (Debt, Cash, Liquidity)

As of December 31, 2025, GYRE held $50.5 million in cash and cash equivalents. The company currently experiences significant cash burn, primarily due to substantial investments in research and development and commercial expansion. This necessitates careful management of liquidity. Additional capital, potentially through debt or equity financing, will be required to sustain operations and advance its extensive pipeline. GYRE's ability to secure this funding on favorable terms will be crucial for its continued financial health and growth.

Future Outlook (Guidance, Strategy)

GYRE's future outlook focuses on leveraging its existing commercial success in China to fund and de-risk its promising development pipeline. Key strategic initiatives include:

• Pipeline Advancement: GYRE aggressively pursues regulatory approvals and clinical development for its lead candidate, Hydronidone. The company expects to submit an NMPA application in H1 2026 for CHB-associated liver fibrosis in China and an FDA application in 2026 to initiate a Phase 2 trial for MASH-associated liver fibrosis in the U.S. Other pipeline candidates like F573, F230, and F528 are also progressing through various clinical stages.
• Product Expansion: The company aims to expand the indications for approved products like ETUARY® (e.g., Phase 3 for PD, Phase 2/3 for RILI) and maximize the commercial potential of recently launched products like Etorel® and Contiva® in China, particularly through programs like NCDP.
• Strategic Growth through M&A: The proposed merger with Cullgen represents a significant strategic move. It aims to broaden GYRE's technological capabilities into targeted protein degradation, enhance its U.S. R&D footprint, and diversify its pipeline, thereby accelerating the development of novel therapies.
• Capital Management: The company acknowledges its current cash burn and the likely need for future capital raises to support its ambitious growth plans.

Management's strategy is to build a diversified portfolio of treatments for diseases with high unmet medical needs, aiming for long-term value creation despite current unprofitability.

Competitive Position

GYRE Therapeutics operates in highly competitive biopharmaceutical markets for organ fibrosis and inflammatory diseases. The company's competitive advantages and positioning include:

• Established Market Leadership in China: ETUARY® holds a leading market share of approximately 60% in China for Idiopathic Pulmonary Fibrosis (IPF) treatments, demonstrating strong commercial execution and brand recognition in a key therapeutic area. Its inclusion on the National Reimbursement Drug List (NRDL) further solidifies its market access and competitive standing.
• Focus on Unmet Medical Needs: GYRE strategically targets conditions with significant unmet medical needs, such as CHB-associated liver fibrosis. For this condition, its lead candidate Hydronidone received "Breakthrough Therapy" status in China, and no approved small-molecule drugs currently exist globally. This focus allows GYRE to potentially capture substantial market share if successful.
• Diversified Portfolio and Pipeline: The company's strategy uses revenue from existing commercial products to fund a robust and diversified pipeline across various development stages (from early-stage F528 to late-stage Hydronidone). This approach helps mitigate risk and provides multiple avenues for future growth.
• Strategic Expansion: The proposed merger with Cullgen aims to enhance GYRE's competitive edge by integrating innovative targeted protein degradation technology, expanding its R&D capabilities, and strengthening its presence in the U.S. market. This diversifies its competitive approach beyond its current China-centric commercial operations.

Despite these strengths, the company acknowledges intense competition from established pharmaceutical companies and emerging biotechs, which could impact market share and pricing power for both its current products and pipeline candidates.

Where They Operate: Their Physical Footprint

• U.S. Headquarters: GYRE leases a relatively small office space (about 1,643 square feet) in San Diego, California. Its lease began in November 2023 and runs for approximately 38 months.
• China Operations (Gyre Pharmaceuticals): Most of GYRE's physical assets are located here. The company owns land rights for two large parcels and eight buildings (totaling over 22,000 square meters of building space) in Beijing and Cangzhou, which include its two production centers. It also leases 26 other properties for offices and employee housing.

Important Things to Know: Key Risks & Other Details

Investing in a biopharmaceutical company, especially one with significant international operations, involves specific risks:

• Financial Health & Future Funding: As noted, GYRE currently operates at a net loss and experiences significant cash burn. While it has cash on hand, the company will likely need to raise additional capital in the future to fund its extensive R&D pipeline and commercial expansion. This could lead to dilution of existing shareholders through new stock offerings or by taking on debt.
• No Dividends Expected: Investors should not expect regular cash payments from GYRE in the near future. The company plans to reinvest any future profits back into the business to fuel growth.
• Regulatory & Development Risk: The success of biopharmaceutical companies heavily relies on successful clinical trials and regulatory approvals. There is no guarantee that pipeline drugs like Hydronidone will ultimately gain full approval or that approved drugs will achieve commercial success. The drug development process is long, expensive, and prone to failure.
• Competition: The markets for organ fibrosis and inflammatory diseases are competitive, with established players and new therapies constantly emerging. GYRE's products and pipeline face competition from other approved drugs and drugs in development, which could impact their market share and pricing power.
• Concentration & Geopolitical Risk in China: A substantial portion of GYRE's current revenue and physical assets are located in China. This exposes the company to specific risks, including:
  • Changes in Chinese healthcare policy and drug pricing: Programs like the NRDL and NCDP can boost volume but may also reduce profit margins.
  • Regulatory hurdles: Evolving regulations for drug approvals, manufacturing, and data security in China.
  • Geopolitical tensions: Broader U.S.-China relations could impact operations, supply chains, and market access.
  • Difficulty Enforcing Judgments: Because most of GYRE's assets and many of its key personnel (directors and officers) are located in China, U.S. investors could face significant challenges enforcing legal judgments against the company or its foreign-based individuals due to differences in legal systems and treaties.
• Internal Controls & Financial Reporting: As an "accelerated filer" since 2024, GYRE's auditors must now provide an opinion on its internal financial controls. Ensuring accurate and timely financial statements is a significant, costly, and ongoing effort. Failure in this area could harm the stock price, lead to penalties, or make future capital raises more difficult. The company actively works on strengthening these controls.
• Cybersecurity: GYRE has systems and teams in place (both internal and third-party) to protect its data and networks from cyber threats. The Chief Financial Officer and the Board of Directors oversee these efforts. While the company has not experienced any major incidents recently, cybersecurity remains an ongoing risk for any organization.
• Legal Proceedings: GYRE is not currently involved in any major lawsuits. However, like any company, it could face legal issues in the future, which can be costly and distracting.

In summary, GYRE Therapeutics is a growing biopharmaceutical company with increasing revenues from its commercial products in China and a promising pipeline, particularly with the positive Phase 3 results for Hydronidone. The proposed merger with Cullgen could significantly expand its technological capabilities and U.S. presence. However, investors should be aware of the company's current unprofitability, reliance on future funding, and the inherent risks associated with drug development and extensive operations in the Chinese market.