GYRE THERAPEUTICS, INC. Stock Compensation Disclosure

2023 Omnibus Incentive Plan

The Gyre Therapeutics, Inc. 2023 Omnibus Incentive Plan (the “2023 Omnibus Incentive Plan”) was approved by Catalyst’s stockholders in August 2023 and ratified by Gyre’s board of directors (the “Board”) in October 2023. The 2023 Omnibus Incentive Plan became effective on October 30, 2023. The 2023 Omnibus Incentive Plan permits the Company to issue up to 17,845,496 shares of common stock and will automatically increase by the lesser of (i) 5% of the total number of outstanding shares of common stock on December 31st of the preceding calendar year and (ii) such smaller number of shares of common stock as determined by the Board on the first day of each fiscal year beginning on January 1, 2024. On January 1, 2024, pursuant to the automatic increase in the number of shares reserved, an additional 3,829,780 shares of common stock were reserved and made available for issuance under the 2023 Omnibus Incentive Plan. On January 1, 2025, pursuant to the automatic increase in the number of shares reserved, an additional 4,315,377 shares of common stock were reserved and made available for issuance under the 2023 Omnibus Incentive Plan. During the year ended December 31, 2025, certain members of senior management were granted both awards subject solely to time-based vesting requirements and awards that are subject to the achievement of certain levels of specific performance, in addition to time-based vesting requirements (the “Performance-Based Awards”). These Performance-Based Awards are subject to the achievement of certain sales metrics and approval of Hydronidone for commercialization. The Performance-Based Awards may vest in full after two or three years. The awards become eligible to vest only if the goals are achieved and will vest only if the grantee remains employed by us through each applicable vesting date.

On November 20, 2025, the Company granted non-qualified stock options to employees of Gyre Pharmaceuticals, pursuant to the 2023 Omnibus Incentive Sub-Plan for Chinese Participants under the Company’s equity incentive arrangements. The awards covered an aggregate of 2,100,000 shares of the Company’s common stock and were granted as part of the Company’s employee compensation program.

The stock options were granted with an exercise price of $7.57 per share and have a contractual term of ten years from the grant date, subject to earlier termination upon cessation of employment. The awards generally vest based on a combination of time-based and performance-based vesting conditions. Specifically, 25% of the options vest immediately on the grant date, 35% vest in substantially equal monthly installments over a 24-month service period, and the remaining options are subject to the achievement of specified performance targets related to the Company’s consolidated revenue and the employee’s individual performance for the 2025 and 2026 calendar years. Performance-Based Awards vest only if the applicable performance conditions are achieved and the employee remains in service through the applicable vesting determination date.

The Company recognizes stock-based compensation expense for these awards based on their grant-date fair value and recognizes compensation cost over the requisite service periods. The Company has elected to account for forfeitures as they occur. Performance-Based Awards are expensed only when achievement of the applicable performance conditions is considered probable.

The weighted-average grant date fair value of options granted was $5.98 per share and $7.25 per share for the years ended December 31, 2025 and 2024, respectively.

The aggregate intrinsic value of options exercised during the years ended December 31, 2025 and 2024 was $17.6 million and $9.6 million, respectively.

The fair value of all equity awards that vested during the periods ended December 31, 2025 and 2024 was $5.4 million and $0.5 million, respectively.

Cash received from the exercise of options was approximately $2.4 million and $1.9 million for the years ended December 31, 2025 and 2024, respectively.

Valuation Assumptions

The Company estimated the fair value of time-based stock options granted using the Black-Scholes option-pricing formula and a single option award approach. Due to its limited relevant historical data, the Company estimated its volatility considering a number of factors, including the use of the volatility of comparable public companies. The expected term of options granted under the 2023 Omnibus Incentive Plan, all of which qualify as “plain vanilla” per SEC Staff Accounting Bulletin 107, is determined based on the simplified method due to the Company’s limited relevant history. The risk-free rate is based on the yield of a U.S. Treasury security with a term consistent with the option. This fair value is being amortized ratably over the requisite service periods of the awards, which is generally the vesting period.

The Company also granted performance-based stock options that vest under two types of independent performance conditions. One condition is tied to a certain sales target that is deemed probable as of December 31, 2025. The other condition is tied to the approval in the PRC of a New Drug Application (“NDA”) for Hydronidone, which is not considered probable as of December 31, 2025. The grant-date fair value of these awards was determined using the Black-Scholes option-pricing model, which incorporates key inputs such as stock price, exercise price, expected volatility, risk-free interest rate, time to expiration, and a zero-dividend yield.

The following table shows the weighted-average grant date fair value of options and the assumptions used to estimate the fair value for time-based awards, and for Performance-Based Awards during the years ended December 31, 2025 and 2024:

As of December 31, 2025, the Company had an unrecognized stock-based compensation expense of $18.3 million, related to unvested stock option awards, which is expected to be recognized over an estimated weighted-average period of 2.44 years.