The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and the related notes to those statements included elsewhere in this Quarterly Report on Form 10-Q and the audited financial statements and related notes thereto as of and for the year ended December 31, 2022 and the related management’s discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on March 28, 2023. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. You should read the “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” sections of this report and the section entitled “Risk Factors” in our Annual Report on Form 10-K and this Quarterly Report on Form 10-Q for a discussion of important factors that could cause our actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Some of the numbers included herein have been rounded for the convenience of presentation. Overview We are a clinical stage biopharmaceutical company dedicated to bringing innovative medicines to patients with unmet medical needs in Asia. Our initial focus is to in-license assets for development and commercialization in Greater China and other Asian markets. We have a pipeline of seven therapeutic candidates across oncology, ophthalmology and inflammation indications, each with its own distinct value proposition and the potential to drive new standards of care. With operations in China, Asia Pacific, and the United States, we have built a cross-border platform to provide our licensing partners access to our regulatory, development, and commercial expertise in China and other Asian markets. We have created a diverse, balanced portfolio of highly differentiated assets that represent our broad program scope and significant potential market opportunity across various stages of development, providing multiple avenues for value creation. We intend to continue to evaluate innovative, complementary product candidates with the potential to become new standards of care in Asia to deepen our pipeline. In November 2021, we completed an initial public offering (“IPO”) of our ordinary shares through the sale and issuance of 20,312,500 American Depositary Shares (“ADSs”), at a public offering price of $16.00 per ADS. Following the closing of the IPO, on December 1, 2021, the underwriters partially exercised their option to purchase additional shares and purchased an additional 593,616 ADSs at the initial public offering price of $16.00 per ADS. We received gross proceeds of $334.5 million in connection with the IPO and subsequent exercise of the underwriters’ option and aggregate net proceeds of $304.8 million after deducting underwriting discounts, commissions and other offering expenses. The following diagram depicts our corporate structure as of September 30, 2023. As of September 30, 2023, the shares of each of our subsidiaries are 100% owned by the respective entity displayed immediately above that subsidiary. Certain warrant rights are outstanding and may be exercised in the future for equity interests in our Cayman parent entity, LianBio, as described in “Note 10: Equity” in the notes to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 28, 2023. Currently, our corporate structure contains no variable interest entities. 24 Table of Contents Within the organization, investor cash inflows have all been received by our parent Cayman entity, LianBio. Cash to fund our Chinese operations is transferred from our Cayman parent entity down through our Hong Kong entities and then into our Chinese entities through capital contributions. Cash to fund our operations in the United States is transferred from our Cayman parent entity down to our United States entity through a capital contribution. Recent Business Highlights and Clinical Development Updates Mavacamten In October 2023, we entered into an agreement with Bristol Myers Squibb (“BMS”), whereby BMS obtained our exclusive rights to develop and commercialize mavacamten in Mainland China, Hong Kong, Macau, Taiwan, Singapore and Thailand, in conjunction with termination of the exclusive license agreement we previously entered into with MyoKardia, Inc., now a wholly owned subsidiary of BMS, in August 2020 to acquire such rights. Under the terms of the agreement, we received a one-time payment of $350 million. In addition, we are released from expected payment obligations of $127.5 million in remaining milestone payments under the MyoKardia license agreement. In August 2023, we announced that data from the Phase 3 EXPLORER-CN trial of mavacamten in Chinese symptomatic obstructive hypertrophic cardiomyopathy (“oHCM”) patients were presented in a late-breaking science session at the European Society of Cardiology (ESC) Congress 2023 and simultaneously published in JAMA Cardiology, with mavacamten demonstrating statistically significant and clinically meaningful improvement in Valsalva left ventricular outflow tract (LVOT) peak gradient, the study’s primary endpoint. 25 Table of Contents TP-03 In July 2023, our partner Tarsus Pharmaceuticals announced the U.S. Food and Drug Administration’s approval of TP-03 for the treatment of adults with Demodex blepharitis. In October 2023, we announced topline data from the Phase 3 LIBRA trial of TP-03 in Chinese patients with Demodex blepharitis. The LIBRA trial met the co-primary endpoint of mite eradication at day 43 (0<0.001). A positive, but not statistically significant trend was observed for the co-primary endpoint of complete collarette cure (p=0.15). TP-03 was well tolerated with a safety profile similar to that observed in other large-scale clinical trials, and there were no treatment-related discontinuations. We plan to discuss these results with the China National Medical Products Administration and expect to use these data to support a New Drug Application filing in China. Infigratinib In October 2023, we announced the presentation of efficacy and safety data from a Phase 2a study evaluating infigratinib in Chinese patients with locally advanced or metastatic gastric cancer or gastroesophageal junction adenocarcinoma with fibroblast growth factor receptor-2 gene amplification at the 2023 European Society for Medical Oncology Congress. Confirmed objective response rate was 23.8% (95% CI: 8.2 – 47.2), disease control rate was 76.2% (95% CI: 52.8 – 91.8) and median duration of response was 3.8 months (95% CI: 3.6 – NE). Median progression-free survival was 3.3 months (95% CI: 2.3 – 4.5) and median overall survival was 8.0 months (95% CI: 4.1 – NE). BBP-398 In July 2023, we announced a clinical supply agreement with AstraZeneca in China to evaluate the safety and efficacy of BBP-398, an investigational SHP2 inhibitor, in combination with AstraZeneca’s osimertinib, an epidermal growth factor receptor (“EGFR”) inhibitor, in a Phase 1 clinical study for the treatment of patients with non-small cell lung cancer (“NSCLC”) with EGFR mutations. In August 2023, we announced that the first patient was treated in the Phase 1 trial of BBP-398 in combination with osimertinib in Chinese NSCLC patients with EGFR mutations. Corporate Developments In October 2023, we announced that our Board of Directors initiated a comprehensive strategic review of the Company. The Board of Directors expects to provide an update on its strategic review in the first half of 2024. In October 2023, the exclusivity period under our exclusivity agreement with BridgeBio Pharma, LLC expired. Factors Affecting Our Results of Operations Impact of the COVID-19 pandemic on our operations Beginning in December 2019, the outbreak of the COVID-19 pandemic created business interruptions for companies globally, including us. For example, in the biotechnology sector, companies, including our company, have experienced delays in their ability to enroll patients at clinical trial sites because of the pandemic, potentially leading to delays in the regulatory approval process. We have been carefully monitoring the COVID-19 pandemic and its impact on our business. We have taken important steps to ensure the workplace safety of our employees when working within our administrative offices, or when traveling to our clinical trial sites. We may take further actions as may be required by federal, state or local authorities. To date, we have been able to continue our key business activities and advance our clinical programs. We maintain regular communication with our vendors and clinical sites to appropriately plan for, and mitigate, the impact of the COVID-19 pandemic on our operations. 26 Table of Contents Key Components of Results of Operations Research and development expenses We believe our ability to successfully develop product candidates will be a significant factor affecting our long-term competitiveness, as well as our future growth and development. Developing high quality product candidates requires a significant investment of resources over a prolonged period of time, and a core part of our strategy is to continue making sustained investment in this area. We expect our research and development expense to increase significantly in connection with our ongoing activities, particularly as we advance the clinical development of our product candidates and initiate additional clinical trials of, and seek regulatory approval for, these and other future product candidates. These expenses include: •payments made under third party licensing and asset acquisition agreements; •employee-related expense, including salaries, related benefits, equity-based compensation and travel expenses for employees engaged in research and development functions; •expense incurred in connection with the clinical development of our product candidates, including expenses incurred under agreements with contract research organizations (“CROs”); •costs related to compliance with regulatory requirements; and •facilities, depreciation and amortization, insurance and other direct and allocated expense incurred as a result of research and development activities. The following table sets forth the components of our research and development expenses for the periods indicated: Three Months Ended September 30, 2023 Three Months Ended September 30, 2022 Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022 Research and development expenses (in thousands): Licensing fees — — 2,500 25,000 Employee related expense 2,873 3,023 8,564 8,609 CRO costs 5,489 4,417 15,768 13,463 Other costs 656 818 2,471 2,106 Total $ 9,018 $ 8,258 $ 29,303 $ 49,178 We monitor research and development expenses associated with our clinical assets at the program level to some degree. We do not allocate employee-related expenses and other costs to specific research and development programs as these costs are deployed across multiple programs under research and development and are separately classified as unallocated research and development expenses. 27 Table of Contents The following table summarizes our research and development expenses by program for the periods indicated: Three Months Ended September 30, 2023 Three Months Ended September 30, 2022 Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022 Research and development (income) expenses (in thousands): Mavacamten 2,809 2,109 6,491 10,813 Infigratinib (474) 767 466 3,088 BBP-398 1,898 536 2,785 1,315 NBTXR3 650 721 3,403 2,178 LYR210 10 86 74 5,200 TP-03 768 546 5,933 16,342 Employee related expenses 2,873 3,022 8,564 8,610 Other costs 484 471 1,587 1,632 Total $ 9,018 $ 8,258 $ 29,303 $ 49,178 General and administrative expenses Our general and administrative expenses consist primarily of salaries and other related costs for personnel in executive, finance and administrative functions. General and administrative expenses also include professional fees for legal, consulting, auditing, tax services and insurance costs. We expect that our general and administrative expenses will increase in the future to support continued development and commercialization of our product candidates. These increases will likely include increased costs related to hiring additional personnel and fees to outside consultants, attorneys and accountants, among other expenses. Additionally, we have incurred and will continue to incur increased expenses associated with being a public company, including costs of additional personnel, accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and office insurance costs, and investor and public relations costs. Interest income, net Interest income, net consists of interest income received on our cash balances and marketable securities and from the amortization/accretion on the premiums/discounts on marketable securities. Other income, net Other income (expense), net consists of unrealized gains and losses on foreign currencies held in our China subsidiary, Shanghai LianBio Development Co., Ltd., unrealized foreign exchange activity from the remeasurement of our intercompany payables, bank fees incurred on our cash balances and depositary fees related to our ADSs. Income taxes Provision for income taxes consists of U.S. federal and state income taxes and income taxes in certain foreign jurisdictions in which we conduct business. We expect income tax expense to increase over time as the Company continues to grow net income. We recorded income tax expense of $0.6 million and $1.2 million for the three and nine months ended September 30, 2023 and $0.0 million and $0.0 million for the three and nine months ended September 30, 2022, respectively. 28 Table of Contents Results of Operations Comparison of the three months ended September 30, 2023 and 2022 The following table sets forth a summary of our consolidated results of operations for the periods indicated. Three Months EndedSeptember 30, 2023 Three Months EndedSeptember 30, 2022 Operating expenses (in thousands): Research and development $ 9,018 $ 8,258 General and administrative 17,283 16,291 Total operating expenses 26,301 24,549 Loss from operations (26,301) (24,549) Other income: Interest income, net 2,707 1,405 Other income, net 141 1,253 Net loss before income taxes (23,453) (21,891) Income taxes 586 6 Net loss $ (24,039) $ (21,897) Research and development expenses Research and development expenses increased by $0.7 million from $8.3 million for the three months ended September 30, 2022 to $9.0 million for the three months ended September 30, 2023. For the three months ended September 30, 2023, research and development cost was primarily attributable to (i) $2.9 million in personnel-related expenses, including share-based compensation expense, and (ii) $5.5 million attributable to development activities to support our clinical trials. The remaining expense was attributable to professional fees. For the three months ended September 30, 2022, research and development cost was primarily attributable to (i) $3.0 million in personnel-related expenses, and (ii) $4.4 million attributable to development activities to support our clinical trials. The remaining expense was attributable to professional fees. General and administrative expenses General and administrative expenses increased by $1.0 million from $16.3 million for the three months ended September 30, 2022 to $17.3 million for the three months ended September 30, 2023. The increase was primarily attributable to a $0.9 million increase in personnel-related expenses, including share-based compensation expense, for increased employee headcount. Interest income Interest income increased by $1.3 million from $1.4 million for the three months ended September 30, 2022 to $2.7 million for the three months ended September 30, 2023. The increase was primarily attributable to our investments in marketable securities and interest earned on cash holdings in foreign countries. Other income, net Other income, net decreased by $1.2 million from $1.3 million for the three months ended September 30, 2022 to $0.1 million for the three months ended September 30, 2023. The decrease is primarily attributable to foreign exchange losses in our foreign entities and a decrease in depositary fees related to our ADSs. Income taxes Our income tax expense was $586.0 thousand, resulting in an effective income tax rate of (2.5)%, for the three months ended September 30, 2023. Our income tax expense was $6.0 thousand, resulting in an effective income tax rate of 0.0%, for the three months ended September 30, 2022. The variation in the effective income tax rate was primarily due to taxable income in foreign jurisdictions in 2023. 29 Table of Contents Comparison of the nine months ended September 30, 2023 and 2022 The following table sets forth a summary of our consolidated results of operations for the periods indicated. Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022 Operating expenses (in thousands): Research and development $ 29,303 $ 49,178 General and administrative 48,011 46,930 Total operating expenses 77,314 96,108 Loss from operations (77,314) (96,108) Other income: Interest income, net 7,867 2,238 Other income, net 966 1,873 Net loss before income taxes (68,481) (91,997) Income taxes 1,224 17 Net loss $ (69,705) $ (92,014) Research and development expenses Research and development expenses decreased by $19.9 million from $49.2 million for the nine months ended September 30, 2022 to $29.3 million for the nine months ended September 30, 2023. For the nine months ended September 30, 2023, research and development cost was primarily attributable to (i) $2.5 million related to an upfront payment related to the Tarsus Pharmaceuticals, Inc. clinical supply agreement (the “Tarsus Supply Agreement”), (ii) $8.6 million in personnel-related expenses, including share-based compensation expense, and (iii) $15.7 million attributable to development activities to support our clinical trials. The remaining expense was attributable to professional fees. For the nine months ended September 30, 2022, research and development cost was primarily attributable to (i) $15.0 million related to a development milestone payment payable pursuant to the Tarsus License Agreement, (ii) $5.0 million related to a development milestone payment payable pursuant with the MyoKardia License Agreement, (iii) $5.0 million related to a development milestone payment payable pursuant with the Lyra License Agreement, (iv) $13.5 million attributable to development activities to support our clinical trials and (v) $8.6 million in personnel-related expenses, including share-based compensation expense. The remaining expense was attributable to professional fees. General and administrative expenses General and administrative expenses increased by $1.1 million from $46.9 million for the nine months ended September 30, 2022 and $48.0 million for the nine months ended September 30, 2023. The increase was primarily attributable to a $3.8 million increase in personnel-related expenses, including share-based compensation expense, for increased employee headcount. This increase was partially offset by a $1.3 million decrease in legal service costs, consulting costs and accounting services. The remaining decrease was attributable to a decrease in insurance and other operating costs. Interest income Interest income increased by $5.7 million from $2.2 million for the nine months ended September 30, 2022 to $7.9 million for the nine months ended September 30, 2023. The increase was primarily attributable to our investments in marketable securities and interest earned on cash holdings in foreign countries. Other income, net Other income, net decreased by $0.9 million from $1.9 million for the nine months ended September 30, 2022 to $1.0 million for the nine months ended September 30, 2023. The decrease is primarily attributable to foreign exchange losses in our foreign entities and a decrease in depositary fees related to our ADSs. 30 Table of Contents Income taxes Our income tax expense was $1.2 million, resulting in an effective income tax rate of (1.8)%, for the nine months ended September 30, 2023. Our income tax expense was $17.0 thousand, resulting in an effective income tax rate of 0.0%, for the nine months ended September 30, 2022. The variation in the effective income tax rate was primarily due to taxable income in foreign jurisdictions in 2023. Liquidity and Capital Resources Sources of liquidity Since our incorporation, our operations have been substantially financed with proceeds from sales of preferred shares as part of the Series Seed financing, the Series A financing, the issuance of the 2020 Convertible Notes and our IPO, which was completed in November 2021. As of September 30, 2023, we had cash and cash equivalents and marketable securities of $252.2 million. We are a holding company with no operations of our own and, as such, we may rely on dividends and other distributions on equity paid by our Chinese subsidiaries to fund any cash and financing requirements we may have, including the funds necessary to pay dividends and other cash distributions to our shareholders or holders of our ADSs or to service any debt we may incur. Deterioration in the financial condition, earnings or cash flow of our subsidiaries for any reason, as well as any changes in Chinese laws or regulations, could limit or impair their ability to pay such distributions. For additional information, see “Part I—Item 1A—Risk Factors—Risks Related to Doing Business in China and Our International Operations—We may rely on dividends and other distributions on equity paid by our Chinese subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our Chinese subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business” in our Annual Report on Form 10-K for the year ended December 31, 2022. Funding requirements Our primary use of cash is to fund our operating expenditures, consisting of research and development expense (including activities within our clinical and regulatory initiatives and upfront and milestone payments) and general and administrative expenses. Our use of cash is impacted by the timing and extent of the required payments for each of these activities. To date, we have not generated any material revenue. We do not expect to generate revenue from the sale of our products unless and until we (i) complete development of any of our product candidates; (ii) obtain applicable regulatory approvals; and (iii) successfully commercialize or enter into collaborative agreements for our product candidates. We do not know with certainty when, or if, any of these items will ultimately occur. We expect to incur continuing significant losses for the foreseeable future and for our losses to increase as we ramp up our clinical development programs and begin activities related to commercial launch readiness. We may encounter unforeseen expenses, difficulties, complications, delays and other currently unknown factors that could adversely affect our business. Moreover, since the completion of our IPO, we have incurred and will continue to incur additional costs associated with operating as a publicly traded company. We will require additional capital to develop our product candidates and fund our operations into the foreseeable future. We anticipate that we will eventually need to raise substantial additional capital, the requirements for which will depend on many factors, including: •the number and scope of clinical programs we decide to pursue; •the cost, timing and outcome of preparing for and undergoing regulatory review of our product candidates; •the cost and timing associated with commercializing our product candidates, if they receive regulatory approval; •the amount of revenue, if any, received from commercial sales of our product candidates, should any of our product candidates receive regulatory approval; •the achievement of milestones or occurrence of other developments that trigger payments under any collaboration agreements we might have at such time; •the extent to which we acquire or in-license other product candidates and technologies; •the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; 31 Table of Contents •our ability to establish and maintain collaborations on favorable terms, if at all; •our efforts to enhance operational systems and our ability to attract, hire and retain qualified personnel, including personnel to support the development of our product candidates and, ultimately, the sale of our products, following regulatory approval; •the impact of the COVID-19 pandemic and the Russian invasion of Ukraine on our clinical development or operations; and •the costs associated with being a public company. A change in the outcome of any of these or other variables with respect to the development and regulatory approval of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate. Furthermore, our operating plans may change in the future, and we will continue to require additional capital to meet operational needs and capital requirements associated with such operating plans. If we raise additional funds by issuing equity securities, our shareholders may experience dilution. Any future debt financing into which we enter may impose upon us additional covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our ordinary shares, make certain investments or engage in certain merger, consolidation or asset sale transactions. Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our shareholders. Adequate funding may not be available to us on acceptable terms or at all. Our potential inability to raise capital when needed could have a negative impact on our financial condition and our ability to pursue our additional licensing opportunities. Cash flows The following table sets forth the primary sources and uses of cash and cash equivalents for each of the periods presented: Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022 Net cash (used in) provided by (in thousands): Operating activities $ (52,814) $ (68,472) Investing activities 78,044 (80,197) Financing activities — 1,710 Net cash used in operating activities During the nine months ended September 30, 2023, operating activities used approximately $52.8 million of cash, primarily due to our net loss of $69.7 million, and non-cash consideration of $3.4 million and $1.2 million related to the amortization of discounts on investments and unrealized foreign currency transaction gains, respectively, partially offset by non-cash consideration of $13.3 million related to share-based compensation expense, $1.0 million related to depreciation expense and $7.2 million related to changes in operating assets and liabilities. During the nine months ended September 30, 2022, operating activities used approximately $68.5 million of cash, primarily due to our net loss of $92.0 million, and non-cash consideration of $1.4 million related to unrealized foreign currency transaction gains, partially offset by non-cash consideration of $13.9 million related to share-based compensation expense and $10.4 million related to changes in operating assets and liabilities. Net cash used in investing activities During the nine months ended September 30, 2023, investing activities provided approximately $78.0 million, consisting of approximately $206.4 million from the sales and redemption of marketable securities, partially offset by $128.1 million from the purchases of marketable securities. During the nine months ended September 30, 2022, investing activities used approximately $80.2 million, consisting of approximately $260.4 million for purchases of marketable securities, and approximately $1.6 million for purchases of property and equipment, partially offset by the sales and redemption of marketable securities of approximately $181.8 million. 32 Table of Contents Net cash provided by financing activities During the nine months ended September 30, 2023, we did not generate any net proceeds from financing activities. During the nine months ended September 30, 2022, financing activities provided approximately $1.7 million, primarily resulting from the proceeds from the exercise of share options. Critical Accounting Policies and Significant Judgments and Estimates Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance with generally accepted accounting principles in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during the reporting periods. Actual results may differ from these estimates under different assumptions or conditions. During the nine months ended September 30, 2023, there were no material changes to our critical accounting policies as reported in our Annual Report on Form 10-K for the year ended December 31, 2022. Impact of New Accounting Standards The adoption of new accounting standards and the impact of recent accounting pronouncements not yet effective on our consolidated financial statements, if any, is discussed in Note 2 to the interim unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q.