Segment Information

6 Months Ended

Jun. 30, 2024

Segment Reporting [Abstract]

Segment Information

16. Segment Information

The Company is a consolidated entity comprised of two distinct operating segments: Gyre Pharmaceuticals and Gyre after the Contributions. The Company’s reportable segments are based upon internal organizational structure, the manner in which operations are managed, the criteria used by CODM to evaluate segment performance, the availability of separate financial information, and overall materiality considerations. All Gyre’s operations are within the U.S., while all of Gyre Pharmaceuticals’ operations are in mainland China.

Gyre Pharmaceuticals

Gyre Pharmaceuticals has one major commercial drug product, ETUARY, and several product candidates in pre-clinical and clinical development. Gyre Pharmaceuticals’ product revenues are mainly generated from the sale of ETUARY and certain generic drugs. Gyre Pharmaceuticals primarily sells its pharmaceutical products to distributors in the PRC, who ultimately sell the products to hospitals, other medical institutions and pharmacies. Gyre Pharmaceuticals also generates revenue from license agreements. However, the license agreements did not generate any revenue for the three and six months ended June 30, 2024 or 2023.

Gyre

Gyre is a biopharmaceutical company focused on the development and commercialization of F351 for the treatment of non-alcoholic steatohepatitis-associated liver fibrosis in the United States. Other than the IP associated with F351 in the U.S., Gyre has no other product candidates since the Company sold all of its legacy IP assets prior to the closing of the Contributions. Subsequent to the closing of the Contributions, Gyre has not generated any revenue.

Other

Other represents the financial information from other subsidiaries, consisting of mainly CPI, GNI HK, and Continent Pharmaceuticals U.S., Inc. During the year ended December 31, 2023, prior to the Contributions, CPI divested almost all of its assets other than its 56.0% indirect ownership interest in Gyre Pharmaceuticals (see Note 8 – Restructuring in the Annual Report).

Segment information for the three and six months ended June 30, 2024 and 2023 is as follows (in thousands):

	Three Months Ended June 30, 2024
	Gyre Pharmaceuticals		Gyre			Other			Consolidated
Revenues	$	25,225	$	—		$	—		$	25,225
Cost of revenues		770		—			—			770
Gross profit		24,455		—			—			24,455
Operating expenses excluding cost of revenues:
Selling and marketing		14,414		—			—			14,414
Research and development		3,077		278			—			3,355
General and administrative		2,549		874			1			3,424
Total operating expenses excluding cost of revenues		20,040		1,152			1			21,193
Income (loss) from operations	$	4,415	$	(1,152	)	$	(1	)	$	3,262
Supplemental disclosure of stock-based compensation expense:
General and administrative	$	—	$	16		$	—		$	16
Stock-based compensation total	$	—	$	16		$	—		$	16

	Six Months Ended June 30, 2024
	Gyre Pharmaceuticals		Gyre			Other			Consolidated
Revenues	$	52,397	$	—		$	—		$	52,397
Cost of revenues		1,749		—			—			1,749
Gross profit		50,648		—			—			50,648
Operating expenses excluding cost of revenues:
Selling and marketing		26,956		—			—			26,956
Research and development		5,086		451			—			5,537
General and administrative		4,806		2,015			1			6,822
Total operating expenses excluding cost of revenues		36,848		2,466			1			39,315
Income (loss) from operations	$	13,800	$	(2,466	)	$	(1	)	$	11,333
Supplemental disclosure of stock-based compensation expense:
General and administrative	$	—	$	27		$	—		$	27
Stock-based compensation total	$	—	$	27		$	—		$	27

	Three Months Ended June 30, 2023
	Gyre Pharmaceuticals		Gyre		Other			Consolidated
Revenues	$	29,329	$	—	$	—		$	29,329
Cost of revenues		1,077		—		—			1,077
Gross profit		28,252		—		—			28,252
Operating expenses excluding cost of revenues:
Selling and marketing		17,999		—		—			17,999
Research and development		3,568		—		—			3,568
General and administrative		1,174		—		537			1,711
Total operating expenses excluding cost of revenues		22,741		—		537			23,278
Income (loss) from operations	$	5,511	$	—	$	(537	)	$	4,974
Supplemental disclosure of stock-based compensation expense:
Stock-based compensation total	$	—	$	—	$	—		$	—

	Six Months Ended June 30, 2023
	Gyre Pharmaceuticals		Gyre		Other			Consolidated
Revenues	$	54,260	$	—	$	—		$	54,260
Cost of revenues		2,202		—		—			2,202
Gross profit		52,058		—		—			52,058
Operating expenses excluding cost of revenues:
Selling and marketing		30,767		—		—			30,767
Research and development		6,203		—		—			6,203
General and administrative		2,896		—		554			3,450
Total operating expenses excluding cost of revenues		39,866		—		554			40,420
Income (loss) from operations	$	12,192	$	—	$	(554	)	$	11,638
Supplemental disclosure of stock-based compensation expense:
Stock-based compensation total	$	—	$	—	$	—		$	—

The table below presents total assets as of June 30, 2024 and December 31, 2023.

	June 30, 2024
	Gyre Pharmaceuticals		Gyre		Other		Consolidated
Total assets	$	109,484	$	10,533	$	912	$	120,929

	December 31, 2023
	Gyre Pharmaceuticals		Gyre		Other		Consolidated
Total assets	$	101,761	$	13,865	$	913	$	116,539

The table below only includes cash outflows for the purchase of property and equipment and excludes non-cash activities.

	Six Months Ended June 30, 2024
	Gyre Pharmaceuticals		Gyre		Other		Consolidated
Purchase of property and equipment	$	1,673	$	14	$	—	$	1,687

	Six Months Ended June 30, 2023
	Gyre Pharmaceuticals		Gyre		Other		Consolidated
Purchase of property and equipment	$	4,219	$	—	$	—	$	4,219