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 full-year ended December 31, 2020 and provided corporate updates.
“In 2020 we made significant advancements and leveraged this momentum to build our business and successfully completed an initial public offering, raising approximately US$161 million in gross proceeds,” said Peter Luo, Ph.D., Co-founder, Chief Executive Officer and Chairman of Adagene. “We have the financial resources to maximize the value of our mature technology platform, unlock the value of our transformative pipeline and expedite both preclinical and clinical development. We expect 2021 to be a pivotal year for Adagene and look forward to multiple upcoming catalysts.”
Recent Highlights and Upcoming Milestones
ADG106: The lead NEObody™ program is a fully human ligand-blocking, agonistic anti-CD137 IgG4 mAb that is being evaluated in patients with advanced solid tumors and/or non-Hodgkin’s lymphoma. Key priorities for 2021 will be to initiate the biomarker-driven Phase 2 global trial, identify optimal drug combinations and explore niche indications for expedited approval.
ADG116: The second NEObody program, which targets a unique epitope of CTLA-4 with a novel MOA, is being evaluated in patients with advanced/metastatic solid tumors.
ADG126: The lead SAFEbody™ program targets CTLA-4 and has been shown in preclinical studies to be safer, potent and more durable than a commonly used CTLA-4 cancer therapy.
Discovery Programs: Generated with NEObody, SAFEbody and/or POWERbody technologies.
Collaborations: Established strong academic and industry strategic partnerships.
Expansion of Leadership Team and Recent Hires
Successfully Completed Initial Public Offering
Full-Year 2020 Financial Highlights
Cash and Cash Equivalents
Our Cash and cash equivalents decreased by 19% from approximately US$92.5 million as of December 31, 2019 to approximately US$75.2 million as of December 31, 2020. The decrease in cash and cash equivalents was mainly due to increased cash outflows arising from operating activities. Moreover, Adagene successfully completed its IPO in February 2021, resulting in gross proceeds of approximately US$161 million.
Net Revenue
Our net revenue increased by 46% from US$0.5 million in 2019 to US$0.7 million in 2020. For the year ended December 31, 2019, we recognized revenue of US$0.5 million from Signal Pharmaceuticals LLC, a subsidiary of Celgene Corporation. For the year ended December 31, 2020, we recognized revenue of US$0.3 million, US$0.23 million and US$0.15 million from Signal Pharmaceuticals LLC, ADC Therapeutics SA and Tanabe Research Laboratories, Inc. respectively.
As we have received US$11 million from Exelixis in March 2021, we expect that our net revenue for Year 2021 will be significantly higher than that of Year 2020.
Research and Development Expenses
Our research and development expenses increased by 107% from US$16.2 million in 2019 to US$33.5 million in 2020, primarily attributable to (i) an increase in payroll and other related costs of personnel due to headcount growth in research and development and increased share-based compensation expenses and (ii) an increase in costs related to preclinical testing and clinical trials due to progression of the programs and increased contract manufacturing costs.
General and Administrative (G&A) Expenses
Our administrative expenses increased by 200% from US$3.4 million in 2019 to US$10.3 million in 2020. The increase was primarily due to a rise in average payroll, an increase in the number of employees and increased share-based compensation expenses.
Net Loss
Our net loss attributable to Adagene Inc.’s shareholders increased by 158% from approximately US$16.4 million in 2019 to approximately US$42.4 million in 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, increased by 104% from approximately US$15.8 million in 2019 to approximately US$32.3 million in 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 share 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 share 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 share for the year/period provide useful information about its results of operations, enhance the overall understanding of its past performance and future prospects and allow 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 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 share 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 share 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 share 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.
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 year/period for the year/period to net loss attributable to ordinary shareholders for the year/period.
About Adagene Inc.
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 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.
Consolidated Balance Sheets
| As of December 31 | ||||||
| 2019 (audited) | 2020 (unaudited) | 2020 (unaudited) | ||||
| US$ | US$ | US$ | ||||
| (Pro forma*) | ||||||
| ASSETS | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | 92,532,788 | 75,150,998 | 75,150,998 | |||
| Short-term investments | 8,000,000 | — | — | |||
| Accounts receivable, net | 480,000 | — | — | |||
| Amounts due from related parties | 1,433,186 | 132,396 | 132,396 | |||
| Prepayments and other current assets | 1,476,973 | 3,813,984 | 3,813,984 | |||
| Total current assets | 103,922,947 | 79,097,378 | 79,097,378 | |||
| Property, equipment and software, net | 1,879,325 | 2,067,125 | 2,067,125 | |||
| Other non-current assets | 87,227 | 3,098,234 | 3,098,234 | |||
| TOTAL ASSETS | 105,889,499 | 84,262,737 | 84,262,737 | |||
| LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ DEFICIT | ||||||
| Current liabilities: | ||||||
| Accounts payable | 712,714 | 1,809,975 | 1,809,975 | |||
| Contract liabilities | 993,378 | 725,536 | 725,536 | |||
| Amounts due to related parties | 1,895,779 | 2,535,358 | 2,535,358 | |||
| Accruals and other current liabilities | 2,540,164 | 6,059,497 | 6,059,497 | |||
| Short-term borrowings | 716,723 | 3,831,476 | 3,831,476 | |||
| Current portion of long-term borrowings | 322,525 | 1,183,926 | 1,183,926 | |||
| Total current liabilities | 7,181,283 | 16,145,768 | 16,145,768 | |||
| Long-term borrowings | 1,515,868 | 2,965,563 | 2,965,563 | |||
| Other non-current liabilities | — | 91,955 | 91,955 | |||
| TOTAL LIABILITIES | 8,697,151 | 19,203,286 | 19,203,286 | |||
| Commitments and contingencies | ||||||
| LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ DEFICIT (CONTINUED) | ||||||
| Mezzanine equity: | ||||||
| Series A-1 convertible redeemable preferred shares (par value of US$0.0001 per share; 5,473,957 and 5,473,957 shares authorized, issued and outstanding as of December 31, 2019 and 2020, respectively; and none outstanding on a pro-forma basis as of December 31, 2020) | 5,473,957 | 5,473,957 | — | |||
| Series A-2 convertible redeemable preferred shares (par value of US$0.0001 per share; 2,370,414 and 2,370,414 shares authorized, issued and outstanding as of December 31, 2019 and 2020, respectively; and none outstanding on a pro-forma basis as of December 31, 2020) | 3,000,000 | 3,000,000 | — | |||
| Series B convertible redeemable preferred shares (par value of US$0.0001 per share; 7,494,537 and 7,494,537 shares authorized, issued and outstanding as of December 31, 2019 and 2020, respectively; and none outstanding on a pro-forma basis as of December 31, 2020) | 27,999,995 | 27,999,995 | — | |||
| Series C-1 convertible redeemable preferred shares (par value of US$0.0001 per share; 5,597,354 and 5,597,354 shares authorized, issued and outstanding as of December 31, 2019 and 2020, respectively; and none outstanding on a pro-forma basis as of December 31, 2020) | 48,727,343 | 48,975,456 | — | |||
| Series C-2 convertible redeemable preferred shares (par value of US$0.0001 per share; 1,861,121 and 1,861,121 shares authorized, issued and outstanding as of December 31, 2019 and 2020, respectively; and none outstanding on a pro-forma basis as of December 31, 2020) | 18,999,999 | 18,999,999 | — | |||
| Series C-3 convertible redeemable preferred shares (par value of US$0.0001 per share; 4,452,441 and 4,452,441 shares authorized, issued and outstanding as of December 31, 2019 and 2020, respectively; and none outstanding on a pro-forma basis as of December 31, 2020) | 50,000,000 | 50,000,000 | — | |||
| Total mezzanine equity | 154,201,294 | 154,449,407 | — | |||
| Shareholders’ deficit: | ||||||
| Ordinary shares (par value of US$0.0001 per share; 500,000,000 and 500,000,000 shares authorized; 15,193,136 shares issued and outstanding as of December 31, 2019; 18,888,070 shares issued and 16,603, 070 shares outstanding as of December 31, 2020; and 46,137,894 shares issued and 43,852,894 shares outstanding on a pro forma basis as of December 31, 2020) | 1,519 | 1,889 | 4,614 | |||
| Subscriptions receivable from shareholders | (197,068 | ) | (7,172,192 | ) | (7,172,192 | ) |
| Additional paid-in capital | 6,789,542 | 23,786,652 | 178,233,334 | |||
| Accumulated other comprehensive loss | (344,894 | ) | (350,981 | ) | (350,981 | ) |
| Accumulated deficit | (63,258,045 | ) | (105,655,324 | ) | (105,655,324 | ) |
| Total shareholders’ deficit | (57,008,946 | ) | (89,389,956 | ) | 65,059,451 | |
| TOTAL LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ DEFICIT | 105,889,499 | 84,262,737 | 84,262,737 | |||
* The unaudited pro forma balance sheet information as of December 31, 2020 assumes the automatic conversion of all of the outstanding convertible redeemable preferred shares into ordinary shares at a conversion ratio of 1:1, as if the conversion and expiry had occurred as of December 31, 2020.
Consolidated Statements of Comprehensive Loss
| For the years ended December 31, | ||||
| 2019 (audited) | 2020 (unaudited) | |||
| US$ | US$ | |||
| Revenues | ||||
| Licensing revenue | 480,000 | 700,913 | ||
| Expenses | ||||
| Research and development expenses | (16,211,750 | ) | (33,538,035 | ) |
| Third parties | (10,507,444 | ) | (23,645,740 | ) |
| Related parties | (5,704,306 | ) | (9,892,295 | ) |
| Administrative expenses | (3,437,900 | ) | (10,314,536 | ) |
| Loss from operations | (19,169,650 | ) | (43,151,658 | ) |
| Interest income | 922,680 | 629,288 | ||
| Interest expense | (138,096 | ) | (202,165 | ) |
| Other income | 723,476 | 971,949 | ||
| Foreign exchange gain, net | 21,867 | (644,693 | ) | |
| Change in fair value of warrant liabilities | 1,207,415 | — | ||
| Loss before income tax | (16,432,308 | ) | (42,397,279 | ) |
| Income tax expense | — | — | ||
| Net loss attributable to Adagene Inc.’s shareholders | (16,432,308 | ) | (42,397,279 | ) |
| Other comprehensive income (loss) | ||||
| Foreign currency translation adjustments, net of nil tax | 65,799 | (6,087 | ) | |
| Total comprehensive loss attributable to Adagene Inc.’s shareholders | (16,366,509 | ) | (42,403,366 | ) |
| Net loss attributable to Adagene Inc.’s shareholders | (16,432,308 | ) | (42,397,279 | ) |
| Deemed contribution from convertible redeemable preferred shareholders | — | — | ||
| Accretion of convertible redeemable preferred shares to redemption value | (246,184 | ) | (248,113 | ) |
| Net loss attributable to ordinary shareholders | (16,678,492 | ) | (42,645,392 | ) |
| Weighted average number of ordinary shares used in per share calculation: | ||||
| —Basic | 15,178,232 | 15,950,698 | ||
| —Diluted | 15,178,232 | 15,950,698 | ||
| Net loss per ordinary share | ||||
| —Basic | (1.10 | ) | (2.67 | ) |
| —Diluted | (1.10 | ) | (2.67 | ) |
Reconciliation of GAAP and Non-GAAP Results
| For the years ended December 31, | ||||
| 2019 | 2020 | |||
| US$ | US$ | |||
| GAAP Net loss attributable to ordinary shareholders | (16,678,492 | ) | (42,645,392 | ) |
| Add back: | ||||
| Share-based compensation expenses | 611,711 | 10,129,541 | ||
| Accretion of convertible redeemable preferred shares to redemption value | 246,184 | 248,113 | ||
| Non-GAAP net loss | (15,820,597 | ) | (32,267,738 | ) |
| Weighted average number of ordinary shares used in per share calculation: | ||||
| —Basic | 15,178,232 | 15,950,698 | ||
| —Diluted | 15,178,232 | 15,950,698 | ||
| Non-GAAP net loss per ordinary share | ||||
| —Basic | (1.04 | ) | (2.02 | ) |
| —Diluted | (1.04 | ) | (2.02 | ) |
Investors Contact:
Raymond Tam
Adagene
86-512-8777-3626
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Bruce Mackle
LifeSci Advisors
646-889-1200
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Media Contact:
Annie Starr
6 Degrees
973-768-2170
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| Last Trade: | US$1.95 |
| Daily Change: | -0.06 -2.99 |
| Daily Volume: | 36,353 |
| Market Cap: | US$86.330M |
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