BESUNYEN (00926) announced that the company expects to record a significant fair value loss of approximately RMB 16.3 million on its investment in ERX Pharmaceuticals Inc., a clinical-stage biopharmaceutical company incorporated under Delaware law. This fair value loss primarily stems from recent shifts in the U.S. capital market environment, where investor funds have notably favored sectors like artificial intelligence (AI), leading to subdued financing activities for traditional drug development and clinical research. Consequently, ERX faces a lack of external funding for its new drug development programs, exerting downward pressure on its short-term valuation.

The board believes this fair value loss will not materially adversely affect the company's existing operations, business, or financial condition. BESUNYEN maintains strong liquidity, with its overall financial and operational position remaining robust. ERX focuses on discovering and clinically developing innovative therapies for obesity and related metabolic disorders, aligning synergistically with BESUNYEN's core business segments. As of the investment and announcement date, ERX and its ultimate beneficial owners operate independently of BESUNYEN and its affiliates.

ERX recently proposed a $6 million capital increase to bolster its financial position and fund ongoing operations. To prevent further dilution of its investment value, on December 12, 2025, BESUNYEN's board resolved to participate in the capital increase, maintaining its existing ~3% stake in ERX. The board considers this additional investment to be in the best interests of the company and shareholders for the following reasons:

1. **Mitigating Dilution**: The move avoids immediate further erosion of the investment's book value due to dilution. 2. **Confidence in ERX's Pipeline**: ERX's obesity drug, a leading non-GLP-1 therapy, offers a solution for patients with inadequate responses or adverse reactions to semaglutide-based treatments. It also demonstrates significant potential in combination therapies. Despite short-term market headwinds, the board remains confident in ERX's long-term prospects. 3. **Regulatory Milestones**: As of the announcement date, ERX's drug targeting Prader-Willi syndrome has received both orphan drug designation and fast-track status from the U.S. FDA.

The board believes this capital injection will provide ERX with essential resources to advance key clinical studies, serving as a critical step toward restoring and enhancing its medium-to-long-term value, thereby offsetting the current fair value loss. Maintaining the stake also preserves BESUNYEN's strategic partnership in core business areas, ensuring continued alignment in technology sharing, supply chains, and market opportunities—factors vital to the company's strategic growth.

This further investment underscores the board's sustained confidence in ERX's long-term strategy and future potential, as well as its commitment to safeguarding and enhancing shareholder value.