Full Press Release Details
Adagene Reports Six Month Financial Results for 2024 and Provides Corporate Update
- Potential best-in-class therapeutic index for lead candidate anti-CTLA-4 SAFEbody ADG126 (muzastotug) with higher, more frequent and repeat dosing in combination with Merck's anti-PD-1 therapy KEYTRUDA* (pembrolizumab) to unleash potential efficacy, while maintaining safety comparable to pembrolizumab alone-
- Poster planned at European Society of Medical Oncology (ESMO) Congress 2024 in September for ADG126 in combination with pembrolizumab in metastatic microsatellite-stable (MSS) colorectal cancer (CRC) reinforces potential best-in-class profile in larger patient sample -
- Differentiated safety profile of ADG126 enables an immunotherapy doublet to combine with standard of care and/or different modalities across lines of therapy and patient populations -
- Cash balance of approximately US$95.7 million funds streamlined operations into 2026 -
SAN DIEGO, Calif. and SUZHOU, China, July 25, 2024 - Adagene Inc. ("Adagene") (Nasdaq: ADAG), a platform-driven, clinical-stage biotechnology company transforming the discovery and development of novel antibody-based therapies, today reported financial results for the six months ended June 30, 2024 and provided corporate updates.
"With the potential best-in-class product profile of ADG126 and its outstanding safety data in combination with the widely used anti-PD-1 therapy, pembrolizumab, we are well positioned to develop a new cornerstone immunotherapy doublet that can be broadly combined, addressing indications and patient populations beyond the available IO agents today," said Peter Luo, Ph.D., Chairman, CEO and President of R&D at Adagene. "Our deep commitment to develop a safe and effective anti-CTLA-4 therapy is coming to fruition. We are confident that higher, more frequent and repeat dosing of anti-CTLA-4 in combination will translate into improved patient outcomes, including clinical response and survival."
ADG126 is a masked anti-CTLA-4 SAFEbody targeting a unique epitope of CTLA-4 on regulatory T cells (Tregs) in tumor tissue which shows a potential best-in-class profile in combination with pembrolizumab.
ESMO Poster Presentation in September
Highlights of Prior Data Reported at ASCO GI 2024
Additional MSS CRC Patient Cohorts Enrolled
Greater China Expansion
Clinical Activity Suggested in PD-1 Experienced and PD-L1 Low Patients
Clinical Activity Suggested in MSS CRC Patients with Liver Metastases
ADDITIONAL SAFEBODY PIPELINE
2024 MILESTONES & CASH RUNWAY INTO 2026
Adagene expects its current cash balance to fund activities into 2026, with multiple readouts anticipated from the ongoing program evaluating ADG126 in combination with pembrolizumab in MSS CRC at major medical conference(s).
FINANCIAL HIGHLIGHTS
Cash and Cash Equivalents
Cash and cash equivalents were US$95.7 million as of June 30, 2024, compared to US$109.9 million as of December 31, 2023. Total borrowings from commercial banks in China (denominated in RMB) decreased to US$20.5 million as of June 30, 2024 from US$21.9 million as of December 31, 2023. The associated loan proceeds were primarily used to support the company's R&D activities in China.
Net revenue was nil for the six months ended June 30, 2024, compared to US$17.3 million for the same period in 2023. The company did not enter into any new contracts with customers and did not complete any performance obligations in relation to existing contracts with customers during the six months ended June 30, 2024.
Research and Development (R&D) Expenses:
R&D expenses were US$14.7 million for the six months ended June 30, 2024, compared to US$21.3 million for the same period in 2023. The 31% decrease 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$3.6 million for the six months ended June 30, 2024, compared to US$4.5 million for the same period in 2023. The decrease was driven by reduction in personnel and cost-control measures.
Other Operating Income, Net:
Other operating income, net was nil for the six months ended June 30, 2024, compared to US$3.4 million for the same period in 2023. The amount of US$3.4 million 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$17.0 million for the six months ended June 30, 2024, compared to US$4.1 million for the same period in 2023.
Ordinary Shares Outstanding:
As of June 30, 2024, there were 55,338,480 ordinary shares issued and outstanding. Each American depository share, or ADS, represents one and one quarter (1.25) ordinary shares of the company.
Non-GAAP net loss, which is defined as net loss attributable to ordinary shareholders after excluding share-based compensation expenses, was US$14.5 million for the six months ended June 30, 2024, compared to US$0.1 million for the same period in 2023. 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 share for the 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 share for the 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 period. The company believes that non-GAAP net loss and non-GAAP net loss per ordinary share for the 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 share for the period should not be considered in isolation or construed as an alternative to operating profit, loss for the 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 share for the period and the reconciliation to their most directly comparable GAAP measures. Non-GAAP net loss and non-GAAP net loss per ordinary share for the 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 share for the period represent net loss attributable to ordinary shareholders for the period 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 share for the period to net loss attributable to ordinary shareholders for the 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.
Powered by its proprietary Dynamic Precision Library (DPL) platform, composed of NEObody , SAFEbody, and POWERbody technologies, Adagene's highly differentiated pipeline features novel immunotherapy programs. The company's SAFEbody technology is designed to address safety and tolerability challenges associated with many antibody therapeutics by using precision masking technology to shield the binding domain of the biologic therapy. Through activation in the tumor microenvironment, this allows for tumor-specific targeting of antibodies in tumor microenvironment, while minimizing on-target off-tumor toxicity in healthy tissues.
Adagene's lead clinical program, ADG126 (muzastotug), is a masked, anti-CTLA-4 SAFEbody that targets a unique epitope of CTLA-4 in regulatory T cells (TREGs) in the tumor microenvironment. ADG126 is currently in phase 1b/2 clinical studies in combination with anti-PD-1 therapy, particularly focused on Metastatic Microsatellite-stable (MSS) Colorectal Cancer (CRC). Validated by ongoing clinical research, the SAFEbody platform can be applied to a wide variety of antibody-based therapeutic modalities, including Fc empowered antibodies, antibody-drug conjugates, and bi/multispecific T-cell engagers.
For more information, please visit: https://investor.adagene.com. Follow Adagene on WeChat, LinkedIn and Twitter.
SAFEbody is a registered trademark in the United States, China, Australia, Japan, Singapore, and the European Union.
KEYTRUDA is a registered trademark of Merck Sharp & Dohme LLC, a subsidiary of Merk & Co., Inc., Rahway, NJ, USA.
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 outbreak of a widespread health epidemic 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 annual report for the year of 2023 on Form 20-F filed 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.
Investor & Media Contact:
FINANCIAL TABLES FOLLOW
Unaudited Consolidated Balance Sheets
| December 31, | June 30, | |||
| 2023 | 2024 | |||
| US$ | US$ | |||
| ASSETS | ||||
| Current assets: | ||||
| Cash and cash equivalents | 109,934,257 | 95,673,787 | ||
| Amounts due from related parties | 222,027 | 31,419 | ||
| Prepayments and other current assets | 3,287,445 | 3,099,362 | ||
| Total current assets | 113,443,729 | 98,804,568 | ||
| Property, equipment and software, net | 1,835,121 | 1,439,102 | ||
| Operating lease right-of-use assets | 365,103 | 254,048 | ||
| Other non current assets | 84,885 | 281,881 | ||
| TOTAL ASSETS | 115,728,838 | 100,779,599 | ||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
| Current liabilities: | ||||
| Accounts payable | 3,093,752 | 3,370,641 | ||
| Amounts due to related parties | 16,714,326 | 17,333,926 | ||
| Accruals and other current liabilities | 3,001,508 | 2,658,532 | ||
| Income tax payable | 52,884 | 38,382 | ||
| Short term borrowings | 4,235,673 | 4,209,463 | ||
| Current portion of long-term borrowings | 4,161,549 | 11,765,449 | ||
| Current portion of operating lease liabilities | 195,955 | 141,281 | ||
| Total current liabilities | 31,455,647 | 39,517,674 | ||
| Long term borrowings | 13,540,034 | 4,560,251 | ||
| Operating lease liabilities | 173,660 | 114,086 | ||
| TOTAL LIABILITIES | 45,169,341 | 44,192,011 | ||
| Commitments and contingencies | ||||
| Shareholders' equity: | ||||
| Ordinary shares (par value of US$0.0001 per share; 640,000,000 shares authorized, and 55,145,839 shares issued and outstanding as of December 31, 2023; and 640,000,000 shares authorized, and 55,338,480 shares issued and outstanding as of June 30, 2024) | 5,547 | 5,554 | ||
| Treasury shares, at cost (1 share as of December 31, 2023 and June 30, 2024) | (4) | (4) | ||
| Additional paid in capital | 350,105,518 | 352,645,033 | ||
| Accumulated other comprehensive loss | (1,800,088) | (1,299,803) | ||
| Accumulated deficit | (277,751,476) | (294,763,192) | ||
| Total shareholders' equity | 70,559,497 | 56,587,588 | ||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 115,728,838 | 100,779,599 |
Unaudited Consolidated Statements of Comprehensive Loss
| For the Six Months | For the Six Months | |||
| Ended June 30, 2023 | Ended June 30, 2024 | |||
| US$ | US$ | |||
| Revenues | ||||
| Licensing and collaboration revenue | 17,295,745 | - | ||
| Operating expenses and income | ||||
| Research and development expenses | (21,289,434) | (14,724,553) | ||
| Administrative expenses | (4,470,520) | (3,597,278) | ||
| Other operating income, net | 3,415,230 | - | ||
| Loss from operations | (5,048,979) | (18,321,831) | ||
| Interest and investment income | 1,918,971 | 1,976,559 | ||
| Interest expense | (573,507) | (428,328) | ||
| Other income, net | 287,430 | 47,040 | ||
| Foreign exchange gain (loss), net | 1,620,415 | (283,768) | ||
| Loss before income tax | (1,795,670) | (17,010,328) | ||
| Income tax expense | (2,313,136) | (1,388) | ||
| Net loss attributable to Adagene Inc.'s shareholders | (4,108,806) | (17,011,716) | ||
| Other comprehensive income (loss) | ||||
| Foreign currency translation adjustments, net of nil tax | (407,330) | 500,285 | ||
| Total comprehensive loss attributable to Adagene Inc.'s shareholders | (4,516,136) | (16,511,431) | ||
| Net loss attributable to Adagene Inc.'s shareholders | (4,108,806) | (17,011,716) | ||
| Net loss attributable to ordinary shareholders | (4,108,806) | (17,011,716) | ||
| Weighted average number of ordinary shares used in per share calculation: | ||||
| -Basic | 54,604,787 | 55,213,051 | ||
| -Diluted | 54,604,787 | 55,213,051 | ||
| Net loss per ordinary share | ||||
| -Basic | (0.08) | (0.31) | ||
| -Diluted | (0.08) | (0.31) |
Reconciliation of GAAP and Non-GAAP Results
| For the Six Months | For the Six Months | |||
| Ended June 30, 2023 | Ended June 30, 2024 | |||
| US$ | US$ | |||
| GAAP net loss attributable to ordinary shareholders | (4,108,806) | (17,011,716) | ||
| Add back: | ||||
| Share-based compensation expenses | 4,030,214 | 2,477,108 | ||
| Non-GAAP net loss | (78,592) | (14,534,608) | ||
| Weighted average number of ordinary shares used in per share calculation: | ||||
| -Basic | 54,604,787 | 55,213,051 | ||
| -Diluted | 54,604,787 | 55,213,051 | ||
| Non-GAAP net loss per ordinary share | ||||
| -Basic | - | (0.26) | ||
| -Diluted | - | (0.26) |