Chengjie Fu, Xufeng Cai, Xingyu Zhu, Yimo Zhu,

Yucheng Men, Zhangziyi Zhan

AI+

HEALTH BioMed

Harvey Lodish• Molecular and cell biologist• Professor at the Massachusetts Institute of

Technology (MIT)• Founding Member of the Whitehead Institute for

Biomedical Research

CONTENTS

Industry & Company Analysis

Financial Analysis & Financing Option

AI Solutions to HEALTH BioMed

01 02

03

01

Industry & Company Analysis

In Vitro Diagnosis (IVD) Industry——Late start but great potential

63

38

30

59

0

10

20

30

40

50

60

70

USA ChinaWest Europe

Japan Global Ave.

-92.06%$

Annual consumption of IVD products per capita

122153

175

230

306

362

430

517

51% 53% 55%

66%70%

74% 75%

0%

10%

20%

30%

40%

50%

60%

70%

80%

0

50

100

150

200

250

300

350

400

450

500

550

20172011

15%

2015

8%13%10% 11%

2016

11%

2013

32%

2010 2012

16%14%

2014

IVD Market Size

Molecular diagnosis share

Reagent share

IVD size & market segment

100 million ¥

01

In Vitro Diagnosis (IVD) Industry——Competitive Landscape

15.24%

13.70%

11.40%

11.89%

9.74%

27.73%

10.30%Others

Daan

Siemens

Abbott

QIAGEN

Kehua

Roche

01

Market Share

Pharmacogenomics Analysis

Human DNA Identification

Pathogen Detection

Drug Development

Genetic Sequencing

Service

Progestation Examination

Health √ √ √ √Daan √

Berry Genomics √ √ √

2017.12.31 2016.12.31 2015.12.31

Health Daan Berry Genomics Health Daan Berry

Genomics Health Daan Berry Genomics

Revenue (10k RMB) 225259 154242.93 117119.13 185242 161256.05 24783.03 152546 14733.91 23005.68

R&D Expenditure(10k RMB) 2173.2915 16510.09 4026.38 1501.48 15727.78 1410 1037.34 11365.31 1308

Profit (10k RMB) 24462 9612.06 24444.61 19933 13591.05 -418.59 16120 11775.26 -1300.87

Yoy�%� 22.72% -29.28% P 23.65% 15.42% L 21.81% -25.76% L

Net Margin 10.86% 6.23% 20.87% 10.76% 8.43% -1.69% 10.57% 7.99% -5.65%

R&D Expenditure/Revenue 0.96% 10.70% 3.44% 0.81% 9.75% 5.69% 0.68% 77.14% 5.69%

Business Comparison

Financial Analysis of Comparable Companies

Drug Development Industry——Limited Investment but Great Opportunity

35.0% 35.0%

15.0%5.0%

40.0% 40.0%

25.0%

15.0%

20.0% 15.0%

20.0%

10.0%

20.0%

25.0%

5.0% 8.0%20.0%

45.0%

2022E

0.0%

20162010

2.0%

2030E

First-Time Generic Drug

General Genric DrugChinese Characteristic DrugMe too/better

First-In-Class

Domestic Drug Sales Forecast

18.49

15.95

15.29

8.46 8.44 8.36

7.05 6.16 6.03

5.76

12.71%

7.40%7.99%

5.27%

6.54%

3.90%

4.75%

3.99%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

11%

12%

13%

012345678910111213141516171819

LivzonHumanwell

3.83%

JoincareCSPSShanghaiHisunBeiGene

5.00%

TaslyFosun

5.53

10.70%

Hengrui

100 billion ¥

17.59

Kelun

8.30%

7.13

BuchangSino Biopharm

R&D InvestmentR&D Percentage of Revenue

2017 Top A-Share and H-Share listed Pharma Companies

01

16.7% of Roche

Drug Industry——Competitive Landscape

Large TraditionalDrug Co.

Small InnovativeDrug Co.

Professional DrugDevelopment Co.

Scientific ResearchInstitution

Large Traditional Co.start from GenericDrugs to First-In-Class

Start from Single DrugSelf-Development

Multi-National Co. Develop Drug by License-In and Self-Development

Institutions Cooperate with Universities to develop new drugs

01

Patient Journey Analysis

Demand Analysis

Discovery Diagnosis Treatment Recovery> > >

96.90%

74.20% 73.40%

27.50%

0%10%20%30%40%50%60%70%80%90%

100%

ChinaGermany JapanUSA

-71.6%

Physical examination penetration

210 240

370430

580700

910

1,170

0%

5%

10%

15%

20%

25%

30%

0

200

400

600

800

1,000

1,200

206201420122009 2011 201520132010

Physical examination size

Physical examination size YOY

Physical examination market

100 million ¥74

91

114133

160178

198

22 25 26 29 30 33 35

96116

141

162

190211

232

020406080

100120140160180200220240

2023 20242019 202120202018 2022

+17.7%

Molecular diagnosis

Molecular diagnosis equipment

Molecular diagnosis reagent

China molecular diagnosis market demand forecast

100 million ¥

Morbidity MortalityCancer World China World China

Lung 31.5 57.13 27.1 45.8

Breast (F) 46.3 41.82 13.0 23.31

Stomach 15.7 30.00 11.7 21.48

Liver 13.9 26.67 12.7 13.13

Developing C. Developed C.

India S. A. China Aus. UK US

Unpatented 32% 11% 49% 5% 14% 14%

Patented 313% 157% 293% 71% 78% 192%

Total 345% 168% 342% 76% 92% 206%

Anti-Cancer Drug Expenditure to GDP per Capita

Age Standardized Rate

IVD Drug

01

Available

Affordable

Accurate

Efficient

Effective

01 HEALTH BioMed——Overview

40.69%

39.06%

12.24%

8.01%

Main sales area

44.69%

20.88%

34.43%

Revenue by hospital

OthersJiangsu

ShanghaiZhejiang OthersGrade III Hospital

Grade II Hospital

Revenue

Net Profit

Valuation

>

Hospital

Medical Center

Lab

Epidemic Station

Blood Bank

Diagnostic enzyme, antigen, antibody,

fine chemicals, etc.

Electron device, equipment, etc.

Reagent

Instruments &accessories

IVD System Agency/Sales

Patients

R&D Manufacturing Agency/SalesDrug

IVD

Supplier HEALTH BioMed Customer

One-package

Service

Coverage Financials(Million ¥)

2743

302

8900

Molecular Diagnosis

HEALTH BioMed——Equity Structure01

HEALTH BioMed Co., Ltd.

Ningbo HEALTH BioMed

Shanghai HEALTH BioMed

Zhejiang HEALTH BioMed

HEALTH Institute of Medicine

Dahongying

HEALTH Supply Chain

Jiangsu Hengqi

MuyangHengchang

DahongyingTrading

100% 90% 90% 100% 100% 95.43% 100% 37.65%98%

100%

100%

100%

10%10%2% 39.2%

Yu Jianwei

Mao Cunliang

Yu Zhongjian & 24 natural persons

HEALTH Holding

Ningbo Lanhu

Zhejiang Yuze

47.97% 11.3% 27.69% 5.8% 3.38% 2.41% 0.97% 0.48%

55.17%

HEALTH Gene Technologies

HaiyiTechnologies

HaichangInvestment

XindaInvestment

Ningbo HEALTH BioMed

Diagnostics

>

• Equity concentrationØ Decision-making

efficiencyØ ResponsibilityØ Proactiveness

IVD Group Drug GroupResearch Group

• Internal DifferentiationØ Precise DivisionØ Clear ResponsibilityØ Synergy

Drug ConsignmentNational presence, large amount of suppliers and clients

Drug Development & Sales154 products, 168 drug registration numbers, 20 drugs under production, 16 drugs in essential drug list

Integrated Diagnosis Product ConsignmentStable relationship with Beckman Coulter, Werfen

group, Immucor, Alere, Bio-Rad, etc

Molecular Biological Detection TechniquesHuman DNA Identification, Pathogen detection,

Pharmacogenomics, tec.10+ molecular diagnostic reagent research results, 22

patents

IVD Drug

HEALTH BioMed——Main Business01

95%

5% 25%

75%

01 HEALTH BioMed——Pain Points

Low Efficiency & Long Cycle

3854

78

156

200

2015 201720162014 2018E

+426.3%

Number of Agents of Imported IVD

High Consignment RatioFierce Competition Fungibility

1

4

14

20152013 2017

Agents of Beckman Coulter

78% 63%

Lower Margin

10k RMBMolecular Diagnosis Reagents

- ConsignmentMolecular Diagnosis Reagents

- Self-developed

Revenue 3,942.90 438.10 Cost 2,168.60 131.43

Margin 45% 70%

Ave. survival time for liver cancer patient

6 Months— 3 Years

12 years

HEALTH Ave. R&D Cycle for Anti-cancer Drugs

Tim

e G

ap

Mr. AI

02

AI Solutions to HEALTH BioMed

PHARMACOGENOMICS ANALYSIS

PATHOGENDETECTION

HUMAN DNA IDENTICFICATION

Artificial Intelligence

GENE TECHNOLOGIES

SURVEY

EXPERIMENT

PRODUCTION

KEY WORDS HERE

Process of DevelopingGene Detection Products

02

We apply big data and NLP technologies to build

a system to find the relationship between

genes and diseases fromthousands of papers.

AI+ Retrieval System

Molecular dynamics methodologies are

applied to simulate the process of interaction

between biological targets and specific binding substances.

AI+ Simulation System

We carry out researching experiments according to

the results of our retrieval and simulation

system.

Experiments

Finally, we put our experimental results into

mass production.

Production

01 02 03 04

AI+ GENE DETECTION PRODUCTS DEVELOPING PROCESS02

We first collect relevant abstracts on PubMed or other sites using drug names of certain diseases, and then select candidate sentences from those abstracts.

Text retrieval

Extracted relations obtained are grouped, and then we calculate

resistance type by machine learning regression methods.

Relation combination

We do simplification of sentences, parsing simplified sentences and

generating grammatical relations in this part.

Text preprocessing

According to the form of Englishlanguage expressions, we define distinct rules to extract relationsfrom parsed sentences.

Relation extraction

AI+ RETRIEVAL SYSTEM: FINDING BIOLOGICAL TARGET02

01

02

0304

Force fields are of necessity for us when doing molecular dynamic simulations. We develop a tool-kit which can learn force fields of reactants through short-time MD.

AI+ force fields build-up

We do molecular dynamics simulations of reactants selected with force fields given by AI tool-kit.

MD with FFs predicted by AI

Through our AI+ retrieval system, we obtain the proper biological targets and specific

binding substances to do simulations.

Reactant selection

Our researchers look into the results of MD, and do

evaluation to see whether such specific binding

substances are suitable to combine the biological targets.

MD results evaluation

AI+ SIMULATION SYSTEM: MOLECULAR DYNAMICS SIMULATION02

PROBLEMS OF NEW DRUGS

the rate of return for large cap biopharma companies

Drug development is a complex, high-risk and costly process

02

PROBLEMS OF NEW DRUGS

5.5 Years

Drug Discovery

10,000COMPOUNDS

Preclinical

250COMPOUNDS

~6.5 Years

$0.3 Billion

13.5 Years5 COMPOUNDS

Clinical Trails FDAReview

~7 Years

02

task1

task2

task3

task4

Activity againstAssay Target

Cytochrome P450, family 3

Cytochrome P450, family 2

Cytochrome P450, family 4

Cytochrome P450, family 1

InputLayer

HiddenLayer

Output Layer

The best drug molecules:

active against target proteins but nonactive against others

AI+ VIRTUAL SCREENING: Multi-task Neural Networks 02

More accurate prediction

Less development time

AI VS Traditional Way in HEALTH BioMed

Less cost for trial

02

03

Financial Analysis &

Financing Option

Cost and time of laboratory development greatly reduced

Independent R&D ability improved

Self-developed molecular diagnosis reagent

revenue increased. IVD

After introducing AI… By setting up AI R&D Division in two subsidiaries of Health BioMed Health Gene Technologies which focuses on in vitro diagnosis (IVD) especially molecular diagnosis products & Dahongying which focuses on pharmaceutical especially self-produced medicine

Better grasp IVD market growth space - revenue!

Self-produced medicine revenue improved for Health BioMed

03

Drug

Before AIRMB ten thousand

Molecular Diagnosis Reagents- Consignment

Molecular Diagnosis Reagents- Self-developed

Revenue 3,942.90 438.10 Cost 2,168.60 131.43

Margin 45% 70%Aggregate margin 47.5%

After AIRMB ten thousand

Molecular Diagnosis Reagents- Consignment

Molecular Diagnosis Reagents- Self-developed

Revenue 1971.45108 2409.55132Cost 1084.298094 722.865396

Margin 45% 70%Aggregate margin 58.75%

* Rationale: The adoption of AI will increase the weight of SDR and lower the weight of CR, thus change the structure of current Revenue/Cost

After Adopting AI, more Self-Develop, less Consignment

03 After introducing AI… IVD – Health Gene Technologies

Typical timeline for Pharmacy Development:

Three dimensional benefits: Time, Money and Success rate

AI can significantly cut down on the time spent during the first stage 70% ↓

AI can significantly cut down on the cost of the first stage 50%~80% ↓

AI can raise the success rate 12% to 14%

01

Total Cost for per approved new compound : 20%~30% ↓*

02

03

5 years lab experiments 5 years clinical trials

03 After introducing AI… Pharmaceutical – Dahongying

Financial Data Forecast

Revenue= Cost + Net Income + S,G&A + tax + interest

Molecular Diagnosis Reagents Self-produced medicine

ω1 1-ω1

ω2 1-ω2 1-ω3ω3

Consignment Self-developed Clinical trialLab experiment

More self-developedLess consignment

Slash on lab cost

03

Financial Data Forecast

0%

5%

10%

15%

20%

25%

30%

35%

40%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

20202016 20192014 2015 201820172013

Revenue�without AI adoption)

Net Income(with AI)

Renvenue(with AI)

Net Income(with AI&Resizing)Net Income (without AI adoption)

NetMargin(with AI)

NetMargin(without AI adoption)

Revenue(with AI & resizing)

Million ¥

03

Size and Specific Purposes of the Raised FundsWe can take Health Biomed as the main body to carry on the equity financing

Our Pitch: 60 Million RMB!

0.5% Equity

15

15

30

Computational Resources & Laboratory EquipmentsOutsourcing Cost, to AI specialized company during development process

staff salary, paid to Computer Scientists, Bio Scientists,Engineers etc.

03

60 million RMB for 0.5% equity of a firm with net asset of 8.9 billion RMB

Cheap price !

Potential to get back to IPO !

Perfect timing to get into a blue ocean industry 01

02

03

04

What will you investors get from this precious investment opportunity?

+ ������!���)&,+���'*����(���$� #����%,+���������"�,…

Favorable regulations

03

THANKS!AI+

HEALTH BioMed

Appendix-Timeline

19.01 AI+VS 19.03

AI+retrieval system

19.02CooperatewithBaidu

19.05

AI+Simulation

System 20.02

AI+Preclinical

Drug

22.05

AI+ Clinical Trails

04

Appendix04