Gyre Therapeutics Inc

ITEM 1A. RISK FACTORS

You should carefully consider the factors discussed in Part I, Item 1A, Risk Factors in our Annual Report, which could materially affect our business, financial position, or future results of operations. The risks described in our Annual Report are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial position, or future results of operations. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC. There hExcept for the addition of the risk factor set forth below, there have been no material changes from the risk factors disclosed in Part I, Item 1A, Risk Factors in our Annual Report.

Our common stock is thinly traded and our outstanding shares are concentrated among a small number of holders. Sales of a substantial number of shares of our common stock, including in connection with the expiration of contractual lock-up agreements or any foreclosure upon shares pledged by our controlling stockholder, or the perception that such sales could occur, could cause the market price of our common stock to decline significantly.

Ownership of our common stock is highly concentrated. GNI Japan and its subsidiaries, including GNI USA (collectively, the GNI Parties), beneficially own a majority of our outstanding common stock, and our directors, executive officers and other principal stockholders hold a substantial portion of the remainder. As a result, the number of shares available for trading in the public market is limited, and the trading volume of our common stock is modest. Sales of a substantial number of shares of our common stock in the public market, or the perception that these sales could occur, could exceed the capacity of the trading market to absorb them at prevailing prices and could cause the market price of our common stock to decline significantly, and the concentration of our ownership and limited trading volume may make it difficult for our other stockholders to sell shares at the times and prices they consider appropriate.

Substantial sales of our common stock could occur through a number of channels. Shares may be sold under our effective registration statements, including registration statements covering resales by existing holders, or under Rule 144 following the expiration of contractual lock-up agreements, including the lock-up agreements entered into in connection with our acquisition of Cullgen that expire in stages beginning six months after the May 4, 2026 closing. In addition, holders of our common stock, including the GNI Parties and our directors and officers, may from time to time pledge their shares to secure indebtedness or other obligations, and a foreclosure upon pledged shares could result in the sale of a substantial number of shares at times and prices over which neither we nor the pledgor has control.

In that regard, GNI Japan has publicly disclosed that on June 26, 2026 it entered into a loan agreement with Mizuho Bank, Ltd. and SBI Shinsei Bank, Limited providing for a JPY 20 billion term loan to finance GNI Japans acquisition of Ayumi Pharmaceutical Holdings Co., Ltd. and related expenses, and that the loan is secured by a pledge of shares of our common stock held by the GNI Parties. According to GNI Japans public disclosures, the loan was funded on July 1, 2026, matures on July 1, 2027 and is repayable in a single payment at maturity, and the loan agreement contains financial covenants tied to GNI Japans consolidated financial results that are tested as of the end of each of GNI Japans fiscal years, beginning with the fiscal year ending December 31, 2026. The loan agreement may also contain events of default and other terms that have not been publicly disclosed. If there was a default under the loan agreement, the lenders could foreclose upon and sell the pledged shares. Given the limited trading volume of our common stock, sales of all or a portion of the pledged shares, or the perception that such sales could occur, could cause the market price of our common stock to decline significantly. A foreclosure upon and sale of the pledged shares could also result in a change in control of the Company, could cause us to cease to qualify as a controlled company under Nasdaq rules and could result in one or more new significant stockholders whose interests may differ from those of our other stockholders.