– Established three clinical collaborations with Merck to conduct global combination trials with pembrolizumab for three clinical-stage oncology candidates –
– Evidence of ADG106 efficacy with favorable safety profile shown in monotherapy trials; combination trials ramping up to target biomarker-enriched indications and PD-1 resistant patients –
– Strong potential for differentiated profile of novel NEObody™ anti-CTLA-4 candidate, ADG116, demonstrated in ongoing phase 1 trial –
– First SAFEbody™ program, ADG126, advancing in phase 1 dose-escalation –
– Continued execution of multiple preclinical programs towards IND, leveraging the company’s powerful antibody-based technology platforms –
– Further strengthened leadership team and expanded network of scientific and strategic advisors to develop best-in-class pipeline –
SAN FRANCISCO and SUZHOU, China, Aug. 26, 2021 (GLOBE NEWSWIRE) — Adagene Inc. (“Adagene”) (Nasdaq: ADAG), a platform-driven, clinical-stage biopharmaceutical company committed to transforming the discovery and development of novel antibody-based immunotherapies, today reported financial results for the six months ended June 30, 2021, and provided corporate updates.
“During the first half of 2021, we advanced our clinical pipeline of three highly differentiated immuno-oncology candidates, while building a robust pipeline of novel preclinical programs that leverage our unique computational biology and artificial intelligence (AI) powered technology platforms,” said Peter Luo, Ph.D., Co-founder, Chief Executive Officer and Chairman of Adagene. “With three Merck collaborations now in place, we’ve refined our global clinical development strategies to enhance efficiency and optimize our plans moving forward, while we anticipate key upcoming data from ongoing trials. Our pipeline aims to transform cancer therapy with the first of a new class of agonist antibodies targeting CD137, as well as new modalities and novel combinations to unlock the value of CTLA-4 as a proven target and the backbone of future immunotherapies. Applying our unique technology platforms and translational expertise, our goal is to strike a balance between safety and efficacy, addressing the core challenge of oncology drug development.”
Recent Highlights and Upcoming Milestones
ADG106: This NEObody™ program is a fully human ligand-blocking, agonistic anti-CD137 IgG4 monoclonal antibody (mAb) that is being evaluated in patients with advanced solid tumors and/or non-Hodgkin’s lymphoma.
ADG116: This NEObody program, targeting a unique epitope of CTLA-4, is being evaluated in patients with advanced/metastatic solid tumors. ADG116 is designed to enhance efficacy by potent Treg depletion in the tumor microenvironment (TME) and to maintain its physiological function by soft ligand blocking in order to address safety concerns associated with existing CTLA-4 therapeutics.
ADG126: The SAFEbody™ program targets CTLA-4 with a compelling preclinical profile and is designed to provide enhanced safety. ADG126 is designed for conditional activation in the TME, as well as to enhance efficacy by potent Treg depletion and to maintain its physiological function by soft ligand blocking in order to expand the therapeutic index and further address safety concerns with existing CTLA-4 therapies.
Preclinical Discovery Programs: The company continues to expand and advance a pipeline of innovative preclinical programs leveraging its NEObody, SAFEbody and/or POWERbody™ technologies to support the goal of submitting more than ten INDs or equivalent applications in the next three to five years.
Collaborations:
Corporate Updates
Financial Highlights
Cash and Cash Equivalents
Cash and cash equivalents were US$208.3 million as of June 30, 2021, compared to US$75.2 million as of December 31, 2020. The increase was mainly due to net proceeds of US$145.9 million from the company’s Initial Public Offering in February 2021. In addition, in March 2021, Adagene received US$11.0 million from Exelixis, Inc., as per the terms of the collaboration and license agreement.
Prepayments and Other Current Assets
Prepayments and other current assets were US$5.4 million as of June 30, 2021, compared to US$3.8 million as of December 31, 2020. The increase was driven by expanded R&D activities and associated advanced payments made.
Contract Liabilities
Contract liabilities were US$11.1 million as of June 30, 2021, compared to US$0.7 million as of December 31, 2020. The increase was due to the collaboration and license agreement signed with Exelixis as the related performance obligations have not been fulfilled.
Net Revenue
Net revenue was US$1.4 million for the six months ended June 30, 2021, compared to US$0.3 million for the same period in 2020. The increase was due to a payment of US$1.2 million from Dragon Boat Pharmaceuticals, a subsidiary of Sanjin, related to fulfillment of performance obligations associated with the companies’ collaboration to develop antibody-based therapies.
Research and Development Expenses
Research and development expenses were US$31.5 million for the six months ended June 30, 2021, compared to US$14.9 million for the same period in 2020. The increase was primarily attributable to an (i) increase in payroll and other related personnel costs by US$4.3 million due to headcount growth and average payroll increase in research and development, (ii) increase in non-cash share-based compensation expenses by US$3.1 million, and (iii) increase in costs related to preclinical testing and clinical trials due to progression of the programs and increased contract manufacturing costs by US$8.0 million. Adagene incurred US$16.6 million for project ADG106, ADG116 and ADG126 for the six months ended June 30, 2021, compared to US$13.0 million for the same period in 2020. Besides, Adagene incurred US$14.8 million for preclinical product candidates, research pipeline and others for the six months ended June 30, 2021, compared to US$1.9 million for the same period in 2020.
General and Administrative (G&A) Expenses
G&A expenses were US$7.4 million for the six months ended June 30, 2021, compared to US$4.7 million for the same period in 2020. The increase was primarily due to an (i) increase in headcount and average payroll and (ii) increase in professional fees and office expenses.
Net Loss
The net loss attributable to Adagene Inc.’s shareholders was US$37.2 million for the six months ended June 30, 2021, compared to US$18.2 million for the six months ended June 30, 2020.
Non-GAAP Net Loss
Non-GAAP net loss, which is defined as net loss attributable to ordinary shareholders for the period after excluding (i) share-based compensation expenses and (ii) accretion of convertible redeemable preferred shares to redemption value was US$27.0 million for the six months ended June 30, 2021, compared to US$11.1 million for the six months ended June 30, 2020. Please refer to the section in this press release titled “Reconciliation of GAAP and Non-GAAP Results” for details.
Non-GAAP Financial Measures
The Company uses non-GAAP net loss and non-GAAP net loss per ordinary shares for the year/period, which are non-GAAP financial measures, in evaluating its operating results and for financial and operational decision-making purposes. The Company believes that non-GAAP net loss and non-GAAP net loss per ordinary shares for the year/period help identify underlying trends in the Company’s business that could otherwise be distorted by the effect of certain expenses that the Company includes in its loss for the year/period. The Company believes that non-GAAP net loss and non-GAAP net loss per ordinary shares for the year/period provide useful information about its results of operations, enhances the overall understanding of its past performance and future prospects and allows for greater visibility with respect to key metrics used by its management in its financial and operational decision-making.
Non-GAAP net loss and non-GAAP net loss per ordinary shares for the year/period should not be considered in isolation or construed as an alternative to operating profit, loss for the year/period or any other measure of performance or as an indicator of its operating performance. Investors are encouraged to review non-GAAP net loss and non-GAAP net loss per ordinary shares for the year/period and the reconciliation to their most directly comparable GAAP measures. Non-GAAP net loss and non-GAAP net loss per ordinary shares for the year/period here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to the Company’s data. The Company encourages investors and others to review its financial information in its entirety and not rely on a single financial measure.
Non-GAAP net loss and non-GAAP net loss per ordinary shares for the year/period represent net loss attributable to ordinary shareholders for the year/period excluding (i) share-based compensation expenses, and (ii) accretion of convertible redeemable preferred shares to redemption value. Share-based compensation expense is a non-cash expense arising from the grant of stock-based awards to employees. The Company believes that the exclusion of share-based compensation expenses from the net loss in the Reconciliation of GAAP and Non-GAAP Results assists management and investors in making meaningful period-to-period comparisons in the Company’s operating performance or peer group comparisons because (i) the amount of share-based compensation expenses in any specific period may not directly correlate to the Company’s underlying performance, (ii) such expenses can vary significantly between periods as a result of the timing of grants of new stock-based awards, and (iii) other companies may use different forms of employee compensation or different valuation methodologies for their share-based compensation.
Please see the “Reconciliation of GAAP and Non-GAAP Results” included in this press release for a full reconciliation of non-GAAP net loss and non-GAAP net loss per ordinary shares for the year/period for the year/period to net loss attributable to ordinary shareholders for the year/period.
About Adagene
Adagene Inc. (Nasdaq: ADAG) is a platform-driven, clinical-stage biopharmaceutical company committed to transforming the discovery and development of novel antibody-based cancer immunotherapies. Adagene combines computational biology and artificial intelligence to design novel antibodies that address unmet patient needs. Powered by its proprietary DPL platform, composed of NEObody, SAFEbody™, and POWERbody™ technologies, Adagene’s highly differentiated pipeline features novel immunotherapy programs. Adagene has forged strategic collaborations with reputable global partners that leverage its technology in multiple approaches at the vanguard of science.
For more information, please visit: https://investor.adagene.com.
Safe Harbor Statement
This press release contains forward-looking statements, including statements regarding the potential implications of clinical data for patients, and Adagene’s advancement of, and anticipated preclinical activities, clinical development, regulatory milestones, and commercialization of its product candidates. Actual results may differ materially from those indicated in the forward-looking statements as a result of various important factors, including but not limited to Adagene’s ability to demonstrate the safety and efficacy of its drug candidates; the clinical results for its drug candidates, which may not support further development or regulatory approval; the content and timing of decisions made by the relevant regulatory authorities regarding regulatory approval of Adagene’s drug candidates; Adagene’s ability to achieve commercial success for its drug candidates, if approved; Adagene’s ability to obtain and maintain protection of intellectual property for its technology and drugs; Adagene’s reliance on third parties to conduct drug development, manufacturing and other services; Adagene’s limited operating history and Adagene’s ability to obtain additional funding for operations and to complete the development and commercialization of its drug candidates; Adagene’s ability to enter into additional collaboration agreements beyond its existing strategic partnerships or collaborations, and the impact of the COVID-19 pandemic on Adagene’s clinical development, commercial and other operations, as well as those risks more fully discussed in the “Risk Factors” section in Adagene’s filings with the U.S. Securities and Exchange Commission. All forward-looking statements are based on information currently available to Adagene, and Adagene undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.
Internal Contact:
Ami Knoefler
Adagene
650-739-9952
ir@adagene.com
External Contact:
Bruce Mackle
LifeSci Advisors
646-889-1200
bmackle@lifesciadvisors.com
FINANCIAL TABLES FOLLOW
Unaudited Consolidated Balance Sheets
As of December 31, 2020 (audited) |
As of June 30, 2021 |
|||||
US$ | US$ | |||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | 75,150,998 | 208,274,215 | ||||
Accounts receivable, net | — | 619,185 | ||||
Amounts due from related parties | 132,396 | 928,408 | ||||
Prepayments and other current assets | 3,813,984 | 5,387,310 | ||||
Total current assets | 79,097,378 | 215,209,118 | ||||
Property, equipment and software, net | 2,067,125 | 2,593,357 | ||||
Other non-current assets | 3,098,234 | 59,569 | ||||
TOTAL ASSETS | 84,262,737 | 217,862,044 | ||||
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ DEFICIT | ||||||
Current liabilities: | ||||||
Accounts payable | 1,809,975 | 2,833,974 | ||||
Contract liabilities | 725,536 | 11,100,000 | ||||
Amounts due to related parties | 2,535,358 | 6,411,083 | ||||
Accruals and other current liabilities | 6,059,497 | 3,558,332 | ||||
Short-term borrowings | 3,831,476 | 3,854,429 | ||||
Current portion of long-term borrowings | 1,183,926 | 1,818,857 | ||||
Total current liabilities | 16,145,768 | 29,576,675 | ||||
Long-term borrowings | 2,965,563 | 2,000,743 | ||||
Other non-current liabilities | 91,955 | 61,919 | ||||
TOTAL LIABILITIES | 19,203,286 | 31,639,337 |
Unaudited Consolidated Balance Sheets (Continued)
As of December 31, 2020 (audited) |
As of June 30, 2021 |
|||||
US$ | US$ | |||||
Mezzanine equity: | ||||||
Series A-1 convertible redeemable preferred shares (par value of US$0.0001 per share; 5,473,957 shares authorized, issued and outstanding as of December 31, 2020, and none outstanding as of June 30, 2021 respectively) | 5,473,957 | — | ||||
Series A-2 convertible redeemable preferred shares (par value of US$0.0001 per share; 2,370,414 shares authorized, issued and outstanding as of December 31, 2020, and none outstanding as of June 30, 2021 respectively) | 3,000,000 | — | ||||
Series B convertible redeemable preferred shares (par value of US$0.0001 per share; 7,494,537 shares authorized, issued and outstanding as of December 31, 2020, and none outstanding as of June 30, 2021 respectively) | 27,999,995 | — | ||||
Series C-1 convertible redeemable preferred shares (par value of US$0.0001 per share; 5,597,354 shares authorized, issued and outstanding as of December 31, 2020, and none outstanding as of June 30, 2021 respectively) | 48,975,456 | — | ||||
Series C-2 convertible redeemable preferred shares (par value of US$0.0001 per share; 1,861,121 shares authorized, issued and outstanding as of December 31, 2020, and none outstanding as of June 30, 2021 respectively) | 18,999,999 | — | ||||
Series C-3 convertible redeemable preferred shares (par value of US$0.0001 per share; 4,452,441 shares authorized, issued and outstanding as of December 31, 2020, and none outstanding as of June 30, 2021 respectively) | 50,000,000 | — | ||||
Total mezzanine equity | 154,449,407 | — | ||||
Shareholders’ deficit: | ||||||
Ordinary shares (par value of US$0.0001 per share; 640,000,000 and 640,000,000 shares authorized; 18,888,070 shares issued and 16,603, 070 shares outstanding as of December 31, 2020; and 56,415,883 shares issued and 54,470,883 shares outstanding as of June 30, 2021) | 1,889 | 5,642 | ||||
Subscriptions receivable from shareholders | (7,172,192 | ) | — | |||
Additional paid-in capital | 23,786,652 | 329,216,570 | ||||
Accumulated other comprehensive income (loss) | (350,981 | ) | (153,498 | ) | ||
Accumulated deficit | (105,655,324 | ) | (142,846,007 | ) | ||
Total shareholders’ equity (deficit) | (89,389,956 | ) | 186,222,707 | |||
TOTAL LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY (DEFICIT) | 84,262,737 | 217,862,044 | ||||
Unaudited Consolidated Statements of Comprehensive Loss
For the Six Months Ended June 30, 2020 |
For the Six Months Ended June 30, 2021 |
|||||
US$ | US$ | |||||
Revenues | ||||||
Licensing and collaboration revenue | 309,500 | 1,358,836 | ||||
Expenses | ||||||
Research and development expenses | (14,913,987 | ) | (31,462,546 | ) | ||
Administrative expenses | ( 4,733,496 | ) | (7,400,123 | ) | ||
Loss from operations | (19,337,983 | ) | (37,503,833 | ) | ||
Interest income | 523,557 | 69,332 | ||||
Interest expense | — | (192,866 | ) | |||
Other income, net | 629,672 | 822,837 | ||||
Foreign exchange gain (loss), net | (592 | ) | (386,153 | ) | ||
Loss before income tax | (18,185,346 | ) | (37,190,683 | ) | ||
Income tax expense | — | — | ||||
Net loss attributable to Adagene Inc.’s shareholders | (18,185,346 | ) | (37,190,683 | ) | ||
Other comprehensive income (loss) | ||||||
Foreign currency translation adjustments, net of nil tax | 39,829 | 197,483 | ||||
Total comprehensive loss attributable to Adagene Inc.’s shareholders | (18,145,517 | ) | (36,993,200 | ) | ||
Net loss attributable to Adagene Inc.’s shareholders | (18,185,346 | ) | (37,190,683 | ) | ||
Deemed contribution from convertible redeemable preferred shareholders | — | — | ||||
Accretion of convertible redeemable preferred shares to redemption value | (123,221 | ) | (28,553 | ) | ||
Net loss attributable to ordinary shareholders | (18,308,567 | ) | (37,219,236 | ) | ||
Weighted average number of ordinary shares used in per share calculation: | ||||||
—Basic | 15,948,252 | 45,514,701 | ||||
—Diluted | 15,948,252 | 45,514,701 | ||||
Net loss per ordinary share | ||||||
—Basic | (1.15 | ) | (0.82 | ) | ||
—Diluted | (1.15 | ) | (0.82 | ) | ||
Reconciliation of GAAP and Non-GAAP Results
For the Six Months Ended June 30, 2020 |
For the Six Months Ended June 30, 2021 |
|||||
US$ | US$ | |||||
GAAP net loss attributable to ordinary shareholders | (18,308,567 | ) | (37,219,236 | ) | ||
Add back: | ||||||
Share-based compensation expenses | 7,093,006 | 10,152,791 | ||||
Accretion of convertible redeemable preferred shares to redemption value | 123,221 | 28,553 | ||||
Non-GAAP net loss | (11,092,340 | ) | (27,037,892 | ) | ||
Weighted average number of ordinary shares used in per share calculation: | ||||||
—Basic | 15,948,252 | 45,514,701 | ||||
—Diluted | 15,948,252 | 45,514,701 | ||||
Non-GAAP net loss per ordinary share | ||||||
—Basic | (0.70 | ) | (0.59 | ) | ||
—Diluted | (0.70 | ) | (0.59 | ) |
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