Gyre Therapeutics Issues Series B Preferred Stock to GNI Entities in Cullgen Merger

*TL;DR: Gyre Therapeutics (ticker GYRE) issued 2.6 million Series B preferred shares to GNI Group Ltd. and its U.S. affiliate as payment for the Cullgen merger; each share can later be turned into five common shares.

Context On May 4, 2026 Gyre’s subsidiary merged into Cullgen Inc., making Cullgen a wholly‑owned subsidiary of Gyre. The transaction required Gyre to compensate GNI Group Ltd. and GNI USA, each holding roughly 10 % of Cullgen before the deal.

Key Facts - GNI Group Ltd. received 2,143,706 Series B preferred shares, representing the economic equivalent of 10,718,530 common shares. - GNI USA, Inc. received 458,120 Series B preferred shares, equivalent to 2,290,600 common shares. - Each Series B share is convertible, after stockholder approval, into five common shares; the conversion is subject to a Beneficial Ownership Limitation that caps the percentage of total shares any holder may control. - The preferred shares have no expiration date, giving holders a perpetual conversion option. - The conversion ratio stems from the merger formula of 0.4753 Cullgen shares exchanged for one‑fifth of a Series B share. - Gyre’s market cap stands at roughly $1.2 billion, and the stock has traded around $12.40 per share, a modest 1.3 % rise since the merger announcement. - By comparison, the Nasdaq Biotechnology Index, a benchmark for biotech firms, has moved up 4.2 % over the same period.

What It Means The issuance of Series B preferred stock serves two purposes. First, it provides GNI entities with a liquid, convertible security that can be turned into common equity, preserving their economic stake while respecting the Beneficial Ownership Limitation. Second, the preferred structure gives Gyre flexibility; the shares do not carry a set redemption date, allowing the company to manage dilution over time. For investors, the conversion feature could add upside if Gyre’s share price climbs above the effective conversion price. However, the Beneficial Ownership Limitation may restrict GNI’s ability to accumulate a controlling block, limiting any potential activist influence. Gyre’s share price stability suggests the market views the merger as neutral to the company’s valuation. The next data point to watch is the outcome of the required stockholder vote on the conversion right, which will determine when, if ever, the preferred shares become common equity and how that will affect Gyre’s diluted share count.

*Future focus:* monitor the conversion vote results and any subsequent changes to Gyre’s share structure, as well as quarterly earnings for signs of integration progress.