Adagene Reports Full Year 2023 Financial Results and Provides Corporate Update - Data for masked anti-CTLA-4 SAFEbody ADG126 (muzastotug) highlight best-in-class therapeutic index and demonstrate clinical benefits in met

Adagene Reports Full Year 2023 Financial Results

and Provides Corporate Update

Data for masked anti-CTLA-4 SAFEbody ADG126 (muzastotug)

highlight best-in-class therapeutic index and

demonstrate clinical benefits in metastatic

microsatellite-stable (MSS) colorectal cancer (CRC) with higher, more frequent and repeat dosing of anti-CTLA-4 therapy in combination

- Ongoing combination phase 2 dose expansion

in MSS CRC increased to over 50 patients, including initiation of a new, unprecedented 20 mg/kg loading dose regimen, with data anticipated

- Validation of SAFEbody masking technology

by Exelixis and Sanofi showcases versatility of platform across modalities including antibody-drug conjugates, bi-specific and monoclonal

- Cash balance of approximately US$110 million

funds streamlined operations into 2026 -

DIEGO, Calif. and SUZHOU, China, March 29, 2024 - Adagene Inc. ("Adagene") (Nasdaq: ADAG), a platform-driven,

clinical-stage biotechnology company transforming the discovery and development of novel anti-body-based therapies, today reported financial

results for the full year 2023 and provided corporate updates.

"The SAFEbody precision masking technology

platform remains at the core of our value proposition given its ability to enhance next generation antibody-based therapies that span

modalities, including bispecific T-cell engagers and antibody-drug conjugates, both areas where a wider therapeutic index is needed to

fully address solid tumors," said Peter Luo, Ph.D., Chairman, CEO and President of R&D at Adagene.

continued, "Turning to our clinical pipeline, we remain steadfast in our belief that anti-CTLA-4 therapy can be reimagined

as a cornerstone of cancer care by enabling higher, more frequent and repeated doses in combination with anti-PD-1 and other therapies.

With our SAFEbody platform, we have a 30-fold improved therapeutic index for ADG126 and a mechanism enabling CTLA-4 mediated intratumoral

Treg depletion. We are taking anti-CTLA-4 therapy to a new level unleashing this proven immunotherapy where safety has limited its therapeutic

"In particular, our new loading dose regimen

in late-stage MSS CRC patients enables our masked anti-CTLA-4 therapy to reach a high initial concentration, close to the steady state

of activated species within the tumor tissue to immediately engage the CTLA-4 pathway and stop the tumor from aggressive growth. This

loading dose strategy, together with repeated maintenance doses at 10 mg/kg showing limited treatment-related grade 3 and no higher toxicities

with minimal late-onset toxicities for ADG126, is expected to engage the CTLA-4 target consistently, thereby maintaining and sustaining

clinical benefit, via both the initial response rate and prolonged survival benefit. We look forward to reporting more clinical results

for the ADG126 combination dose expansion in MSS CRC later this year."

Change of Board of Directors

The following changes to Adagene's Board of

Directors will be effective upon the filing of its 2023 annual report on Form 20-F ("2023 Annual Report"), unless otherwise

would like to take this opportunity to express their sincere gratitude to Dr. Min Li and Ms. Yan Li for their valuable contributions

to the Board during their tenure. Background of the newly appointed directors and their terms are detailed in the 2023 Annual Report.

2024 MILESTONES & CASH RUNWAY INTO 2026

with ongoing initiatives to prudently manage its cash balance, Adagene expects its current cash balance to fund activities

into 2026, with the following milestones:

Financial Highlights

Cash and Cash Equivalents

Cash and cash equivalents were US$109.9 million

as of December 31, 2023, compared to US$143.8 million as of December 31, 2022. Total borrowings from commercial banks in China

(denominated in RMB) decreased to US$21.9 million as of December 31, 2023 from US$27.8 million as of December 31, 2022. The

associated loan proceeds were primarily used to pay for the company's R&D activities in China.

Net revenue was US$18.1 million for the year ended

December 31, 2023, compared to US$9.3 million in 2022. The increase of approximately 95% reflects net revenue recognized upon fulfillment

of certain performance obligations associated with the collaboration and technology licensing agreements with Exelixis and Sanofi, respectively.

Net revenue also included a milestone payment of US$3.0 million from Exelixis received in June 2023.

Research and Development (R&D) Expenses:

R&D expenses were US$36.6 million for the year ended December 31,

2023, compared to US$81.3 million in 2022. The decrease of approximately 55% in R&D expenses reflects clinical focus on and prioritization

of the company's masked, anti-CTLA-4 SAFEbody ADG126.

Administrative Expenses:

Administrative expenses were US$8.7 million for

the year ended December 31, 2023, compared to US$11.9 million in 2022. The decrease was due to both a reduction in personnel and

in office-related expenses as a result of cost-control measures.

Other Operating Income, Net:

Other operating income, net was US$3.5 million

for the year ended December 31, 2023. Other operating income, net included a one-time compensation payment from a contract manufacturer

for a preclinical-related outsourcing arrangement.

Net loss attributable to Adagene Inc.'s

shareholders was US$18.9 million for the year ended December 31, 2023, compared to US$80.0 million in 2022.

Ordinary Shares Outstanding:

As of December 31, 2023, there were 55,145,839

ordinary shares issued and outstanding. Each American depository share, or ADS, represents one and one quarter (1.25) ordinary shares

Non-GAAP net loss, which is defined as net loss

attributable to ordinary shareholders for the period after excluding share-based compensation expenses, was US$11.7 million for the year

ended December 31, 2023, compared to US$69.5 million in 2022. 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, 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 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. The company believes that non-GAAP net loss and non-GAAP net loss per ordinary shares for the year 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 should not be considered in isolation or construed as an alternative to operating profit, loss for the year 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 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 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

Non-GAAP net loss and non-GAAP net loss per ordinary shares for the

year represent net loss attributable to ordinary shareholders for the year excluding share-based compensation expenses. 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

to net loss attributable to ordinary shareholders for the year/period.

Adagene Inc. (Nasdaq:

ADAG) is a platform-driven, clinical-stage biotechnology 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 globally unmet patient needs. The company has forged strategic collaborations with reputable global partners that leverage

its SAFEbody precision masking technology in multiple approaches at the vanguard of science.