We refer to the query from Bursa Malaysia Securities Berhad via their letter dated 21 August 2020 (Ref No : IQL-21082020-00001) in relation to the announcement made by the Company on 19 August 2020 in respect of the Memorandum of Understanding (“MOU”) entered into between the Company and CanSino Biologics Inc. (“CanSinoBIO”) and furnish below the additional information as requested:-

1) Based on the preliminary studies conducted by the Group, the investment of setting up the fill and finish facility is estimated at RM6 million to RM8 million. Provision for working capital is also required to support the business.

The Group intends to finance the investment through internal funding, bank borrowings and/or other forms of financing such as equity.

2) The Group is still in the preliminary stage of setting up the facility. The facility will need to comply to Bio Safety Level 2 (“BSL2”) requirements and also cGMP manufacturing standard. The Group has incorporated a new subsidiary, Solution Biologics Sdn Bhd, which will apply to register the vaccine and facility with National Pharmaceutical Regulatory Agency (“NPRA”).

3) The Group may be subject to challenges and initial risks arising from the operation, however with its Directors and key management who have prior experience in biomanufacturing activities will mitigate the risk through continuously review of its operations, cost control policies, cautious budgeting and leveraging on the business acumen.

The success of commercialising the vaccine is subject to completion of the phase 3 trial and obtaining the regulatory approvals.

4) The COVID-19 vaccine, Ad5-nCoV is jointly developed by CanSinoBIO and Beijing Institute of Biotechnology, Academy of Military Medical Sciences.

The phase II clinical trial for Ad5-nCoV has been completed. CanSino is now preparng for the phase III clinical trail. The Company is currently liaising with several countries and plan to drive the international multi-center phase III clinical trial for Ad5-nCoV as soon as possible.

On 11 August 2020, CanSinoBIO being granted the patent "a recombinant novel coronavirus vaccine using human replication-deficient adenovirus as a carrier". The patent application was jointly filed by Beijing Institute of Biotechnology, Academy of Military Medical Sciences and CanSinoBIO.

5) The Group plans to setup a fill and finish facility for the vaccine to be supplied by CanSinoBIO, and to market and distribute the vaccine in Malaysia. This is subject to CanSinoBIO successfully commercialising the vaccine and obtained the relevant approvals.

The Malaysian market size is estimated at between RM500 million to RM1 billion for various type of vaccines including COVID-19.

The Board believes that the supply of vaccines and biologics possesses the potential to contribute positively to future earnings and the financial position of SGB Group due to biologics and vaccines represent one of the fastest growing classes of therapeutic molecules in modern healthcare. The annual global biologics market is expected to be approximately USD 380 billion by 2024, representing a relatively higher growth rate (~8%) compared to conventional pharmaceuticals. Currently, more than 350 biologics are commercially presented in the biopharmaceuticals market.

This announcement is dated 24 August 2020.