Lakeshore Biopharmaceuticals Co., Ltd. (formerly known as Yisheng Biopharmaceuticals Co., Ltd., hereinafter referred to as the “Company”) is a global company dedicated to the discovery, development, manufacturing, and delivery of next-generation vaccines and therapeutic biologics for infectious diseases and cancer. Founded by Mr. Zhang Yi, the Company’s stock began trading on the Nasdaq Stock Exchange on March 17, 2023, under the ticker symbol “YS.” Following the company’s name change in May 2024, the ticker symbol was changed to “LSB.” On December 9, 2023, the then-current Board of Directors voted to remove Mr. Zhang Yi from the position of Chairman. The Company announced this event on December 12, 2023.
The above-mentioned act of removing of the Chairman of the Board of Directors through the Board of Directors violates the relevant provisions of the Company’s Articles of Association. Article 88 of the Company’s Articles of Association stipulates that directors may be removed by various resolutions (except for the removal of the chairman, who may be removed by a special resolution). Both ordinary and special resolutions are generated by the Shareholders Meetings. Ordinary resolutions are adopted by a simple majority of entitled shareholders to vote; special resolutions are adopted by a majority of not less than two-thirds of entitled shareholders to vote. Therefore, under the Company’s Articles of Association, the Board of Directors has no power to remove the Chairman. At the time, Mr. Zhang Yi held a 52.75% stake in the company, making it impossible for a shareholder meeting to remove him from his position as the Chairman. Mr. Zhang Yi has filed a lawsuit in the Cayman Islands Court against the then-directors for illegally removing him as the Chairman, and the relevant legal proceedings are currently ongoing. The drastic changes in the company’s equity structure since February 2024 have significantly harmed the interests of some shareholders, and we are therefore issuing this letter with our serious concern.
According to Form Schedule 13D filed with the SEC on February 7, 2024, the Company entered into a share purchase agreement with Apex Prospect Limited (“Apex Prospect”), pursuant to which Apex Prospect subscribed for 95,269,762 common shares of the Company at a price of US$0.41986 per share. The shares purchased represented approximately 50.59% of the company’s total share capital, resulting in a change in the company’s controlling shareholder. The company previously announced on November 14, 2023, that an independent third party had rated the company’s stock as “Outperform” with a 12-month target price of US$5.25 per share. The aforementioned issue price of US$0.41986 per share was significantly lower than the company’s book value and even significantly below the company’s net assets. This large-scale, ultra-low-price offering resulted in significant losses for prior shareholders. Of particular note is that Nasdaq Trading Rule 5635(b) explicitly states that “a shareholder approval is required before the issuance of securities when the issuance or potential issuance of securities by a company will result in a change of the corporate control.” However, the company’s stock issuance was not approved by any Shareholders Meeting at all, but only by a vote of the then-Board of Directors. The company’s founder, Mr. Zhang Yi, has filed a lawsuit in the Cayman Islands Court challenging the legality and validity of the stock issuance, and the relevant legal proceedings are currently ongoing.
According to the Company’s Form 6-K filed with the SEC on July 8 and July 15, 2025, the Company completed a private placement on July 8 (the “Private Placement”), issuing 16,987,542 shares of common stock at $0.883 per share and 16,987,542 warrants at $1.079 per share to Jingfeng Investment Inc. (“Jingfeng Investment”), and further issuing 4,033,790 shares of common stock associated with the options to Jingfeng Investment without cash consideration. As a result of the transaction, Jingfeng Investment held a total of 21,021,332 shares of the Company’s common stock, representing approximately 51% of the Company’s total equity. Based on the 10:1 reverse stock split on October 1, 2024, the private placement price corresponded to a pre-reverse-split share price of $0.0883 per share. The company once again conducted a large-scale, ultra-low-priced offering, and the change of control offering was once again not approved by a Shareholders Meeting.
According to the Company’s Form 6-K filed with the SEC on August 28, 2025, the Company’s Board of Directors received a proposal on August 26, in which a consortium consisting of Haisong Investment Fund II LP, Haisong Capital Inc. (collectively, “Haisong Capital”), and Jingfeng Investment proposed to acquire all outstanding common shares of the Company not currently held by the consortium in an all-cash transaction at a price of US$0.86 per share. Following receipt of the proposal, a special committee of three independent directors of the Company has been formed to evaluate the proposal.
Based on the company’s 10:1 reverse stock split on October 1, 2024, the consortium’s proposed acquisition price corresponded to a pre-reverse-split share price of $0.086 per share. The completion of the acquisition transaction meant that Summit Prospects Investments incurred a massive loss of over $31 million in just over a year. For most early investors, their original investment cost was approximately $8 per share, and the acquisition price of $0.086 per share meant a complete loss of those prior investors. Strangely, Summit Prospects did not take any action of protest or rejection against Jingfeng Investment’s low price of $0.0883 per share investment and the consortium’s low acquisition price of $0.086 per share, neither did it engage other existing shareholders to oppose the acquisition, nor did it publicly challenge the Board of Directors or the Special Committee. Mr. Pan Yue, who served as Chairman of Apex Prospects, had also remained silent. These circumstances reasonably caused the belief that the acquisition consortium comprised of Haisong Capital and Jingfeng Investment had a connection with Apex Prospects, or that significant behind-the-scenes dealings were taken place among them. The Board of Directors and the Special Committee of the Company approved the private placement, supporting Jingfeng Investment’s low-priced acquisition of $0.0883 per share without taking any action to protect shareholders’ interests, which is a serious breach of fiduciary duty. If they approve the consortium’s low-priced acquisition of $0.086 per share again, minority shareholders will lose all their money, indicating that the Board of Directors has been manipulated by the majority shareholders and seriously undermined the interests of minority shareholders.
Therefore, we, the minority shareholders, have voiced our opposition to the consortium’s acquisition proposal through the media, urging the Board of Directors and the Special Committee to fulfill their fiduciary duties, protect the interests of all shareholders, and reject the consortium’s acquisition proposal. We will further safeguard our legitimate shareholder rights through legal means, including filing an investigation request with the SEC and filing lawsuits with the courts. Shareholders interested in joining the legal defense team can contact us at max19880218@126.com or yzbgsih@126.com.
