UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-
16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the Month of August 2026
Commission File Number: 001-39997
4F, Building C14, No. 218
Xinghu Street, Suzhou Industrial Park
Suzhou, Jiangsu Province, 215123
People’s Republic of China
+86-512-8777-3632
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
INCORPORATION BY REFERENCE
On August 12, 2026, Adagene Inc. (the “Company”) reported the Company’s financial results for the six-month period ended June 30, 2026. This current report on Form 6-K, including Exhibits 99.1 and 99.2 attached hereof, is hereby incorporated by reference into the registration statements on Form F-3 (File No. 333-287161 and File No. 333-291196) and Form S-8 (File No. 333-255250) of the Company (including any prospectuses forming a part of such registration statements), and shall be a part thereof from the date on which this current report is furnished, to the extent not superseded by documents
or reports subsequently filed or furnished.
EXHIBIT INDEX
Exhibit | | Description |
99.1 | ||
99.2 | ||
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101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase | |
104 | Cover Page Interactive Data File (embedded within the Inline IXBRL document) |
Exhibit 99.1
Adagene Reports Six Months 2026 Financial Results and Provides Corporate Updates
Randomized Phase 2 trial in microsatellite stable colorectal cancer (MSS CRC) ongoing, with results expected in 1H 2027; potential registration trial expected in 2027 once recommended dose regimen has been established
Data reported at AACR from triple combination therapy in 1L hepatocellular carcinoma (HCC) and late-line MSS CRC highlights muzastotug’s potential as a backbone combination treatment for multiple tumor types across all lines of therapy
Initiated dosing in a global Phase 1/2 basket trial evaluating muzastotug in combination with a next-generation investigational IO agent through a clinical collaboration with Sanofi
Investigator-initiated Phase 2 trial of muzastotug in neoadjuvant setting for colorectal cancer is ongoing
Cash and cash equivalents of $127.9 million include proceeds of public offering in April 2026; provide runway into late 2028
SAN DIEGO, Calif. and SUZHOU, China, August 12, 2026 – 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, 2026, and provided corporate updates.
“The first half of 2026 was a period of meaningful advances for the company, as our lead program, muzastotug, a masked, anti-CTLA-4 SAFEbody, continues to demonstrate compelling efficacy and a favorable safety profile in MSS CRC and HCC,” said Peter Luo, Ph.D., CEO and President of R&D at Adagene. “The strength of muzastotug as a potential backbone therapy continues to be recognized with recent collaborations and the clinical data to date demonstrates the enhanced safety of muzastotug relative to legacy CTLA-4 therapies, even at approximately ten times higher doses. This enhanced safety allows muzastotug to be used as a potential backbone therapy in combination with pembrolizumab and/or other standard of care therapies, such as fruquintinib. We remain encouraged by the durable benefit we are seeing.”
“We also welcomed Peter Lebowitz to our Scientific and Strategic Advisory Board, further strengthening the clinical expertise guiding our programs;” continued Dr. Luo. “The equity offering in April brought in new investors and extended our cash runway into late 2028, allowing us to accelerate our pipeline and deliver on our mission to transform cancer immunotherapy for patients.”
PIPELINE HIGHLIGHTS
Muzastotug (ADG126) Phase 1b/2 study in combination with Merck’s (known as MSD outside of the United States and Canada) anti-PD-1 therapy, KEYTRUDA® (pembrolizumab), in patients with advanced microsatellite stable colorectal cancer (MSS CRC) with no liver metastases.
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| ● | Updated data announced in April 2026 highlighted clinical results from patients that have been treated with a muzastotug dose of either 10 mg/kg or 20 mg/kg, in combination with pembrolizumab. |
| o | In the combined 10 mg/kg cohorts, muzastotug achieved an overall response rate (ORR) of 13%. The median progression-free survival (PFS) was 4.8 months, and median overall survival (OS) was 19.8 months. |
| ◾ | In patients dosed with 10 mg/kg of muzastotug every 6 weeks (Q6W), the ORR was 0% (0/10) and median PFS was 4.5 months. |
| ◾ | In patients dosed with 10 mg/kg of muzastotug every 3 weeks (Q3W), the ORR was 17% (5/29) and median PFS was 4.8 months. |
| o | In the combined 20 mg/kg cohorts, muzastotug achieved a confirmed ORR of 31%. The median PFS was 6.7 months, and median OS was not yet reached. |
| ◾ | In patients dosed with 20 mg/kg of muzastotug every 6 weeks (Q6W), the ORR was 25% (3/12) and median PFS was 4.9 months. |
| ◾ | In the 20 mg/kg loading dose cohort (20 mg/kg, followed by 10 mg/kg Q3W), the ORR was 36% (5/14) and median PFS was 15.4 months. |
| ● | Across 67 patients in all cohorts, a low 4% overall discontinuation rate, no dose limiting toxicities, and no Grade 4 or 5 treatment-related adverse events (TRAEs); Grade 3 TRAEs were 15% in the 10 mg/kg cohorts and 38% in the 20 mg/kg cohorts, which were generally transient and manageable. |
| ● | Enrollment into the randomized Phase 2 trial is well on-track, and results are expected in 1H 2027. The Phase 2 trial is enrolling patients into two arms designed to allow dose regimen selection for the Phase 3 trial. Both arms include an induction phase to drive early efficacy and a maintenance phase to prolong overall survival. |
| o | Arm A: Patients receive 10 mg/kg induction dose of muzastotug plus 200 mg pembrolizumab Q3W for 4 doses followed by one 200 mg dose of pembrolizumab; the maintenance phase doses 10 mg/kg muzastotug Q6W plus 400 mg of pembrolizumab Q6W. |
| o | Arm B: Patients receive 20 mg/kg induction dose of muzastotug Q6W plus 400 mg pembrolizumab Q6W for 2 doses; the maintenance phase doses muzastotug at 15 mg/kg Q6W plus 400 mg pembrolizumab Q6W. |
| ● | A potential registration trial is expected to begin once the recommended dose regimen has been established, supported by the Fast Track Designation and FDA alignment under Project Optimus. |
Triple combination Phase 1b/2 study of muzastotug, atezolizumab and bevacizumab, in patients with first-line HCC:
| ● | Data presented at the American Association for Cancer Research (AACR) annual meeting in April 2026 included results from the study which is evaluating the triple combination of muzastotug, atezolizumab and bevacizumab compared to atezolizumab and bevacizumab as an active control arm. Interim results from six patients in the muzastotug arm (18.8 months median duration of follow-up) demonstrated a 66.7% ORR (4/6) using HCC-specified modified RECIST v1.1 criteria. ORR was 50.0% (3/6) using RECIST v1.1 criteria. The median PFS was 8.2 months (same for both RECIST criteria) and the median OS was not yet reached at the data cut but was greater than 22 months. |
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| ● | These results compared favorably to the 40 patients in the active control arm (17.2 months median duration of follow-up) that demonstrated an ORR of 32.5% (13/40) using HCC-specified modified RECIST v1.1 criteria, median PFS of 5.5 months, and median OS of 17.5 months. Using RECIST v1.1 criteria, the ORR was 17.5% (7/40) and the median PFS was 4.3 months. |
| ● | The triplet regimen of muzastotug, atezolizumab and bevacizumab was well-tolerated with safety data comparable to the doublet active control arm of atezolizumab and bevacizumab. Grade 3 or greater TRAEs were 50% (3/6) in the muzastotug arm and 45% (18/40) in the active control arm, which supports the potential for continuous dosing with muzastotug. Ongoing muzastotug plus atezolizumab treatment after bevacizumab discontinuation suggests potential flexibility to modify individual agents during safety-related interruptions while preserving durable clinical benefit from the muzastotug and atezolizumab doublet for an extended period of time. |
Triple combination Phase 1b/2 study of muzastotug, pembrolizumab and fruquintinib in patients with advanced or metastatic MSS CRC:
| ● | In data presented at AACR, interim results from the study demonstrated a 25% confirmed ORR (1/4) among patients at a dose of 10 mg/kg every 6 weeks (Q6W) of muzastotug (6.7 months median follow-up), and a 40% ORR (2/5) among patients at a dose of 15 mg/kg Q6W of muzastotug (5.9 months median follow-up). The triplet regimen was well-tolerated with no new safety signals, relative to known CTLA-4, PD-1, and fruquintinib monotherapy and combination safety data. There were no dose-limiting toxicities, 25 – 60% Grade 3 TRAEs, and no Grade 4 or Grade 5 TRAEs. |
Investigator-initiated Phase 2 trial of muzastotug in the neoadjuvant setting, in combination with pembrolizumab, for the treatment of MSS CRC:
| ● | Patients in this study received muzastotug up to 20 mg/kg in combination with pembrolizumab prior to surgery. Using paired tumor biopsies collected before and after treatment, the study evaluates muzastotug’s pharmacokinetic profile in tumor tissue and its pharmacodynamic effects on the immune landscape of the tumor microenvironment. These analyses are designed to further elucidate muzastotug’s unique mechanism of action and its potential to deliver an enhanced therapeutic index. |
| ● | Additionally, the trial’s primary endpoint is the rate of Major Pathologic Response (MPR), defined as ≤10% residual viable tumor in the surgical specimen, and is being evaluated in up to 20 patients. Secondary endpoints include complete pathological response, disease-free survival, and safety/tolerability. Preliminary clinical data will inform future development of muzastotug in the neoadjuvant setting. |
COLLABORATION UPDATES
| ● | Sanofi: A global Phase 1/2 basket trial evaluating muzastotug in combination with a next-generation investigational IO agent in patients with advanced solid tumors is being sponsored and conducted by Sanofi as part of an external clinical collaboration. |
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| ● | Incyte: Established clinical collaboration to evaluate muzastotug in combination with Incyte’s TGFβR2xPD-1 bispecific antibody (INCA33890), a leading PD-1-based bispecific program which has demonstrated promising clinical efficacy and safety data as a monotherapy in immune checkpoint sensitive and insensitive cancers, including MSS CRC with and without liver metastases. A Phase 1 combination study in 3L MSS CRC patients with and without liver metastases, sponsored and conducted by Incyte, is expected to begin later this year. |
| ● | Exelixis: Preclinical data was presented at AACR from antibody-drug conjugate, XB404, built with Adagene’s SAFEbody masking technology and designed to deliver a cytotoxic payload to ROR1/2-expressing tumors while minimizing on-target, off-tumor side effects. XB404 demonstrated dose-related tumor growth inhibition and improved survival in cell line models. Investigational New Drug (IND)-enabling studies are ongoing. |
| ● | ConjugateBio: The collaboration is ongoing with bispecific ADCs utilizing an Adagene-derived antibody, further demonstrating scalable platform potential. |
CORPORATE UPDATES
| ● | Added Peter Lebowitz, M.D., Ph.D., former Global Head of Oncology R&D for Johnson & Johnson, to the Scientific and Strategic Advisory Board (SAB), who is helping guide the clinical development of muzastotug, including strategies to advance the program into registration studies. |
| ● | Completed underwritten public offering of American depositary shares in April 2026 with approximately $70 million in gross proceeds. |
FINANCIAL HIGHLIGHTS
Cash and Cash Equivalents:
Cash and cash equivalents were US$127.9 million as of June 30, 2026, compared to US$74.5 million as of December 31, 2025. Cash and cash equivalents included proceeds received from the ATM offering and underwritten public offering completed in April 2026. The company expects a cash runway extending into late 2028.
Total borrowings from commercial banks in China (denominated in RMB) decreased to US$5.7 million as of June 30, 2026 from US$6.1 million as of December 31, 2025. The associated loan proceeds were primarily used to pay for the company’s R&D activities in China.
Net Revenue:
Net revenue was US$1.6 million for the six months ended June 30, 2026, compared to nil for the same period in 2025. The increase reflects net revenue recognized upon fulfillment of certain performance obligations associated with the collaboration and technology licensing agreements with Sanofi and Exelixis, respectively.
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Research and Development (R&D) Expenses:
R&D expenses were US$14.0 million for the six months ended June 30, 2026, compared to US$12.0 million for the same period in 2025. The increase of approximately 16.2% in R&D expenses reflects continued clinical focus and development of muzastotug, the company’s masked, anti-CTLA-4 SAFEbody ADG126.
Administrative Expenses:
Administrative expenses were US$4.2 million for the six months ended June 30, 2026, compared to US$3.7 million for the same period in 2025. The increase was mainly due to increase in both personnel and office-related expenses.
Net Loss:
Net loss attributable to Adagene Inc.’s shareholders was US$16.4 million for the six months ended June 30, 2026, compared to US$13.5 million for the same period in 2025.
Ordinary Shares Outstanding:
As of June 30, 2026, there were 83,929,180 ordinary shares issued and outstanding. Each American depositary share, or ADS, represents one and one quarter (1.25) ordinary shares of the company.
Non-GAAP Net Loss:
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$14.2 million for the six months ended June 30, 2026, compared to US$11.4 million for the same period in 2025. 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 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 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 shares 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 shares 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 shares for the 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 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 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.
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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 period to net loss attributable to ordinary shareholders for the period.
About Adagene
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, while minimizing on-target off-tumor toxicity in healthy tissues.
Adagene’s lead clinical program, muzastotug (ADG126), is a masked, anti-CTLA-4 SAFEbody with FDA Fast Track designation that targets a unique epitope of CTLA-4 in regulatory T cells (Tregs) in the tumor microenvironment. Muzastotug is currently in Phase 1b/2 and Phase 2 clinical studies in combination with anti-PD-1 therapy, particularly focused on microsatellite stable (MSS) metastatic 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/multi-specific T-cell engagers.
For more information, please visit: https://investor.adagene.com.
Follow Adagene on WeChat, LinkedIn and X.
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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 Merck & Co., Inc., Rahway, NJ, USA.
Safe Harbor Statement
This press release contains forward-looking statements, including statements regarding certain clinical results of ADG126, 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.
Investor Contacts:
Raymond Tam
Raymond_tam@adagene.com
Corey Davis
LifeSci Advisors
cdavis@lifesciadvisors.com
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Unaudited Consolidated Balance Sheets
| | December 31, | | June 30, |
|
| | US$ | | US$ | |
ASSETS | | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | 74,523,782 | | 127,909,840 | |
Accounts receivable, net | | — | | 150,000 | |
Amounts due from related parties | | 17,349 | | 3,025 | |
Prepayments and other current assets | | 2,834,034 | | 4,345,758 | |
Total current assets | | 77,375,165 | | 132,408,623 | |
Property, equipment and software, net | | 717,374 | | 716,616 | |
Operating lease right-of-use assets | | 145,535 | | 390,535 | |
Other non-current assets | | 25,223 | | 59,794 | |
TOTAL ASSETS | | 78,263,297 | | 133,575,568 | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | |
Current liabilities: | | | | | |
Accounts payable | | 2,884,507 | | 15,538,937 | |
Contract liabilities | | 3,462,683 | | 2,182,770 | |
Amounts due to related parties | | 10,347,200 | | — | |
Accruals and other current liabilities | | 2,790,794 | | 2,580,704 | |
Income tax payable | | 410,198 | | — | |
Warrant liabilities | | 205,146 | | 1,178,702 | |
Short-term borrowings | | 4,268,154 | | 4,404,704 | |
Current portion of long-term borrowings | | 711,359 | | 293,647 | |
Current portion of operating lease liabilities | | 92,055 | | 181,733 | |
Total current liabilities | | 25,172,096 | | 26,361,197 | |
Long-term borrowings | | 1,138,174 | | 1,027,764 | |
Operating lease liabilities | | 53,480 | | 183,189 | |
TOTAL LIABILITIES | | 26,363,750 | | 27,572,150 | |
Commitments and contingencies | | | | | |
Mezzanine equity: | | | | | |
Series A non-voting contingently redeemable convertible preferred shares (par value of US$0.0001 per share; 1,062,500 shares authorized, issued and outstanding as of December 31, 2025 and June 30, 2026, respectively) | | 16,550,000 | | 16,550,000 | |
Total mezzanine equity | | 16,550,000 | | 16,550,000 | |
Shareholders’ equity: | | | | | |
Ordinary shares (par value of US$0.0001 per share; 640,000,000 shares authorized, and 59,231,993 shares issued and outstanding as of December 31, 2025; and 640,000,000 shares authorized, and 83,929,180 shares issued and outstanding as of June 30, 2026) | | 5,923 | | 8,393 | |
Additional paid-in capital | | 366,043,455 | | 436,768,742 | |
Accumulated other comprehensive loss | | (1,914,831) | | (2,159,885) | |
Accumulated deficit | | (328,785,000) | | (345,163,832) | |
Total shareholders’ equity | | 35,349,547 | | 89,453,418 | |
TOTAL LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY | | 78,263,297 | | 133,575,568 | |
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Unaudited Consolidated Statements of Comprehensive Loss
| | For the six months | | For the six months |
|
| | US$ | | US$ | |
Revenues | | | | | |
Licensing and collaboration revenue | | — | | 1,619,913 | |
Operating expenses and income | | | | | |
Research and development expenses | | (12,015,184) | | (13,964,667) | |
Administrative expenses | | (3,673,073) | | (4,241,785) | |
Loss from operations | | (15,688,257) | | (16,586,539) | |
Interest and investment income | | 1,214,108 | | 1,376,774 | |
Interest expense | | (318,422) | | (140,344) | |
Other income, net | | 63,436 | | 46,697 | |
Foreign exchange gain (loss), net | | 1,252,353 | | (169,880) | |
Change in fair value of warrant liabilities | | — | | (973,556) | |
Loss before income tax | | (13,476,782) | | (16,446,848) | |
Income tax benefit (expense) | | (458) | | 68,016 | |
Net loss attributable to Adagene Inc.’s shareholders | | (13,477,240) | | (16,378,832) | |
Other comprehensive income (loss) | | | | | |
Foreign currency translation adjustments, net of nil tax | | (1,168,652) | | (245,054) | |
Total comprehensive loss attributable to Adagene Inc.’s shareholders | | (14,645,892) | | (16,623,886) | |
Net loss attributable to Adagene Inc.’s shareholders | | (13,477,240) | | (16,378,832) | |
Net loss attributable to ordinary shareholders | | (13,477,240) | | (16,378,832) | |
Weighted average number of ordinary shares used in per share calculation: | | | | | |
—Basic | | 58,891,864 | | 70,773,769 | |
—Diluted | | 58,891,864 | | 70,773,769 | |
Net loss per ordinary share | | | | | |
—Basic | | (0.23) | | (0.23) | |
—Diluted | | (0.23) | | (0.23) | |
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Reconciliation of GAAP and Non-GAAP Results
| | For the six months | | For the six months |
|
| | US$ | | US$ | |
GAAP net loss attributable to ordinary shareholders | | (13,477,240) | | (16,378,832) | |
Add back: | | | | | |
Share-based compensation expenses | | 2,030,335 | | 2,131,758 | |
Non-GAAP net loss | | (11,446,905) | | (14,247,074) | |
Weighted average number of ordinary shares used in per share calculation: | | | | | |
—Basic | | 58,891,864 | | 70,773,769 | |
—Diluted | | 58,891,864 | | 70,773,769 | |
Non-GAAP net loss per ordinary share | | | | | |
—Basic | | (0.19) | | (0.20) | |
—Diluted | | (0.19) | | (0.20) | |
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Exhibit 99.2
ADAGENE INC.
INDEX TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited Interim Condensed Consolidated Financial Statements | | PAGES |
Unaudited Interim Condensed Consolidated Balance Sheets as of December 31, 2025 and June 30, 2026 | F-2 | |
F-5 | ||
F-6 | ||
F-7 | ||
Notes to the Unaudited Interim Condensed Consolidated Financial Statements | F-8 |
F-1
ADAGENE INC.
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2025 AND JUNE 30, 2026
F-2
As of December 31, | As of June 30, | |||||
| Notes | | 2025 | | 2026 | |
US$ | US$ | |||||
ASSETS |
| |
| |||
Current assets: | ||||||
Cash and cash equivalents | | | ||||
Accounts receivable, net | 3 | — | | |||
15 | | | ||||
Prepayments and other current assets | 4 | | | |||
Total current assets | | | ||||
Property, equipment and software, net | 5 | | | |||
Operating lease right-of-use assets | 16 | | | |||
Other non-current assets | | | ||||
TOTAL ASSETS | | | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | | | ||||
Contract liabilities | | | ||||
15 | | — | ||||
Accruals and other current liabilities | 6 | | | |||
Income tax payable | 13 | | — | |||
Warrant liabilities | 11 | | | |||
Short-term borrowings | 7 | | | |||
Current portion of long-term borrowings | 7 | | | |||
Current portion of operating lease liabilities | 16 | | | |||
Total current liabilities | | | ||||
Long-term borrowings | 7 | | | |||
Operating lease liabilities | 16 | | | |||
TOTAL LIABILITIES | | | ||||
Commitments and contingencies | 17 | |||||
Mezzanine equity: | ||||||
Series A non-voting contingently redeemable convertible preferred shares (par value of US$ | 9 | | | |||
Total mezzanine equity | | | ||||
Shareholders’ equity: | ||||||
Ordinary shares (par value of US$ | | | ||||
Additional paid-in capital | | | ||||
Accumulated other comprehensive loss | ( | ( |
F-3
Accumulated deficit | ( | ( | ||||
Total shareholders’ equity | | | ||||
TOTAL LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY | | |
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-4
ADAGENE INC.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2026
For the six months ended | ||||||
June 30, | ||||||
| Notes | | 2025 | | 2026 | |
US$ | US$ | |||||
Revenue |
| | |
| | |
Licensing and collaboration revenue | 12 |
| — |
| | |
Operating expenses and income |
|
| ||||
Research and development expenses |
| ( |
| ( | ||
Administrative expenses |
| ( |
| ( | ||
Loss from operations |
| ( |
| ( | ||
Interest and investment income |
| |
| | ||
Interest expense |
| ( |
| ( | ||
Other income, net |
| |
| | ||
Foreign exchange gain (loss), net |
| |
| ( | ||
Change in fair value of warrant liabilities | 11 |
| — |
| ( | |
Loss before income tax |
| ( |
| ( | ||
Income tax benefit (expense) | 13 |
| ( |
| | |
Net loss attributable to Adagene Inc.’s shareholders |
| ( |
| ( | ||
Other comprehensive income (loss) |
|
| ||||
Foreign currency translation adjustments, net of |
| ( |
| ( | ||
Total comprehensive loss attributable to Adagene Inc.’s shareholders |
| ( |
| ( | ||
Net loss attributable to Adagene Inc.’s shareholders |
| ( |
| ( | ||
Net loss attributable to ordinary shareholders |
| ( |
| ( | ||
Weighted average number of ordinary shares used in per share calculation: |
|
| ||||
—Basic | 14 |
| |
| | |
—Diluted | 14 |
| |
| | |
Net loss per ordinary share |
|
| ||||
—Basic | 14 |
| ( |
| ( | |
—Diluted | 14 |
| ( |
| ( | |
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-5
ADAGENE INC.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2026
Accumulated | ||||||||||||||||
Ordinary shares | Treasury shares | Additional | other | Total | ||||||||||||
Number of | Number of | paid‑in | comprehensive | Accumulated | shareholders’ | |||||||||||
| shares | | Amount | | shares | | Amount | | capital | | loss | | deficit | | equity | |
| | US$ | US$ | | US$ | | US$ | | US$ | | US$ | |||||
Balance as of December 31, 2024 | | | — | — | | ( | ( | | ||||||||
Net loss | — | — | — | — | — | — | ( | ( | ||||||||
Other comprehensive income (loss) | — | — | — | — | — | ( | — | ( | ||||||||
Exercise of share options (Note 10) | | — | — | — | | — | — | | ||||||||
Share-based compensation (Note 10) | | | — | — | | — | — | | ||||||||
Balance as of June 30, 2025 | | | — | — | | ( | ( | | ||||||||
Accumulated | ||||||||||||||||
Ordinary shares | Treasury shares | Additional | other | | Total | |||||||||||
Number of | Number of | paid‑in | comprehensive | Accumulated | shareholders’ | |||||||||||
| shares | | Amount | | shares | | Amount | | capital | | loss | | deficit | | equity | |
US$ | US$ | US$ | US$ | US$ | US$ | |||||||||||
Balance as of December 31, 2025 |
| |
| |
| — |
| — |
| |
| ( |
| ( |
| |
Net loss |
| — |
| — |
| — |
| — |
| — |
| — |
| ( |
| ( |
Other comprehensive income (loss) |
| — |
| — |
| — |
| — |
| — |
| ( |
| — |
| ( |
Exercise of share options (Note 10) |
| |
| |
| — |
| — |
| |
| — |
| — |
| |
Share-based compensation (Note 10) | — | — | — | — | | — | — | | ||||||||
Issuance of ordinary shares upon the underwritten public offering (the “Offering”), net of issuance cost (Note 18) | | | — | — | | — | — | | ||||||||
Issuance of ordinary shares upon the at-the-market equity offering program (the “ATM Offering”), net of issuance cost (Note 18) |
| |
| |
| — |
| — |
| |
| — |
| — |
| |
Balance as of June 30, 2026 |
| |
| |
| — |
| — |
| |
| ( |
| ( |
| |
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-6
ADAGENE INC.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2026
For the six months ended | ||||
June 30, | ||||
| 2025 | | 2026 | |
US$ | US$ | |||
Cash flows from operating activities: | ||||
Net loss | ( | ( | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Income related to short-term investments | ( | ( | ||
Depreciation and amortization | | | ||
Net loss (gain) on disposal of property, equipment, software and operating lease right-of-use asset | | ( | ||
Share-based compensation | | | ||
Amortization of right-of use assets and interest of lease liabilities | ||||
Foreign exchange loss (gain), net | ( | | ||
Change in fair value of warrant liabilities | — | | ||
Changes in operating assets and liabilities: | ||||
Accounts receivable, net | — | ( | ||
Prepayments and other current assets | | ( | ||
Amount due from related parties | | | ||
Other non-current assets | | ( | ||
Accounts payable | ( | | ||
Contract liabilities | — | ( | ||
Amount due to related parties | | ( | ||
Accruals and other current liabilities | | ( | ||
Lease liabilities | ( | ( | ||
Income tax payable | ( | ( | ||
Net cash used in operating activities | ( | ( | ||
Cash flows from investing activities: | ||||
Placement of short-term investments | ( | ( | ||
Withdrawal of short-term investments | | | ||
Proceeds from disposal of property, equipment and software | — | | ||
Purchase of property, equipment and software | ( | ( | ||
Net cash generated from investing activities | | | ||
Cash flows from financing activities: | ||||
Proceeds from borrowings | — | — | ||
Proceeds from exercise of share options | | | ||
Proceeds from issuance of the Offering, net of issuance costs | — | | ||
Proceeds from the ATM Offering, net of issuance costs | — | | ||
Repayment of borrowings | ( | ( | ||
Net cash generated from (used in) financing activities | ( | | ||
Effect of exchange rate on cash and cash equivalents | | ( | ||
Net decrease (increase) in cash and cash equivalents | ( | | ||
Cash and cash equivalents at the beginning of the period | | | ||
Cash and cash equivalents at the end of the period | | | ||
Supplemental cash flow disclosures: | ||||
Interest paid | | | ||
Income tax paid | | | ||
Cash paid for fixed operating lease costs included in the measurement of lease obligations in operating activities | | | ||
Right-of-use assets obtained in exchange for operating lease obligations | — | | ||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-7
ADAGENE INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2025 AND 2026
1. ORGANIZATION AND BASIS OF PRESENTATION
Adagene Inc. (the “Company”) is a limited liability company incorporated in the Cayman Islands on February 25, 2011. The Company, together with its subsidiaries (collectively, the “Group”), are principally engaged in research, development and production of monoclonal antibody drugs for cancers. The shares of the Company’s American Depositary Shares (“ADSs”) are traded on the NASDAQ Global Market, and each ADS represents one and one quarter (
As of June 30, 2026, the Company’s principal subsidiaries were as follows:
Percentage of legal | ||||||||
Date of | Place of | ownership | ||||||
Entity | | incorporation | | incorporation | | by the Company | | Principal activities |
Adagene (Hong Kong) Limited | December 12, 2011 |
| Hong Kong |
| % | Investment holding, and research and development of innovative medicines | ||
Adagene Incorporated | September 20, 2017 |
| The United States of America |
| % | Research and development of innovative medicines | ||
Adagene (Suzhou) Limited | February 28, 2012 |
| The People’s Republic of China (“PRC” or “China”) |
| % | Research and development of innovative medicines | ||
Adagene Australia PTY Ltd. | May 30, 2018 | Australia | % | Research and development of innovative medicines | ||||
Adagene PTE. Ltd. | March 27, 2020 | Singapore | % | Research and development of innovative medicines | ||||
Adagene AG | August 31, 2020 |
| Switzerland |
| % | Research and development of innovative medicines | ||
Adagene Project C1 PTE. Ltd. | March 25, 2022 |
| Singapore |
| % | Research and development of innovative medicines |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The interim unaudited condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The interim unaudited condensed consolidated financial statements have been prepared on the same basis as the annual audited consolidated financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments necessary for the fair statement of results for the periods presented, have been included. The results of operations of any interim period are not necessarily indicative of the results of operations for the full year or any other interim period.
The comparative year-end condensed balance sheet data was derived from the annual audited consolidated financial statements but is condensed to the same degree as the interim condensed balance sheet data.
The interim unaudited condensed consolidated financial statements and related disclosures have been prepared with the presumption that users have read or have access to the annual audited consolidated financial statements filed on April 1, 2026.
Principal accounting policies followed by the Company in the preparation of the accompanying condensed consolidated financial statements are summarized below. References to specific U.S. GAAP principles throughout these notes to the accompanying financial statements are to the Accounting Standards Codification (“ASC”), as published by the U.S. Financial Accounting Standards Board (“FASB”).
F-8
Principles of Consolidation
The condensed consolidated financial statements of the Group include the financial statements of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated upon consolidation.
Use of estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the balance sheet dates and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected in the Group’s condensed consolidated financial statements include, but are not limited to, licensing and collaboration revenue recognition, research and development expense allocation, the useful lives and impairment of long-lived assets, tax valuation allowance, share-based compensation expenses, measurement of right-of-use assets and lease liabilities, and the fair value of warrant liabilities. Management bases the estimates on historical experience and various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could materially differ from those estimates.
Foreign currency translation
The functional currency of the Company, Adagene (Hong Kong) Limited, Adagene Incorporated, Adagene PTE. Ltd. and Adagene Project C1 PTE. Ltd. is the United States dollar (“US$”). The functional currency of the Company’s PRC subsidiary is Renminbi (“RMB”). The functional currency of the Company’s Australian subsidiary is Australian dollar (“AU$”). The functional currency of the Company’s Swiss subsidiary is Swiss Franc (“CHF”). The determination of the respective functional currency is based on the criteria stated in ASC 830, Foreign Currency Matters. The Company uses US$ as its reporting currency. The financial statements of the Company’s PRC, Australian and Swiss subsidiaries are translated from the functional currency to the reporting currency.
Transactions denominated in foreign currencies are remeasured into the functional currency at the exchange rates quoted by the People’s Bank of China (the “PBOC”) prevailing on the transaction dates. Monetary assets and liabilities denominated in foreign currencies are re-measured at the exchange rates prevailing at the balance sheet date. Non-monetary items that are measured in terms of historical costs in foreign currency are re-measured using the exchange rates at the dates of the initial transactions. Exchange gains and losses are included in the condensed consolidated statements of comprehensive loss.
Assets and liabilities are translated at the exchange rates at the balance sheet date, equity accounts are translated at historical exchange rates and revenues, expenses, gains and losses are translated using the average rate for the reporting period. Translation adjustments are reported as accumulated comprehensive loss and are shown as a separate component of other comprehensive loss in the condensed consolidated statements of comprehensive loss.
Cash and cash equivalents
Cash and cash equivalents primarily consist of cash and demand deposits which are highly liquid. The Group considers highly liquid investments that are readily convertible to known amounts of cash and with original maturities from the date of purchase of three months or less to be cash equivalents. All cash and cash equivalents are unrestricted as to withdrawal and use.
Short-term investments
Short-term investments consist primarily of investments in money market funds, which are measured at fair value and are expected to be redeemed within one year. As of June 30, 2026 and December 31, 2025, there were
Accounts receivable and allowance for doubtful accounts
Account receivable is recorded when the Group has an unconditional right to consideration. A right to consideration is unconditional if only the passage of time is required before payment of that consideration is due. Accounts receivable is carried at net realizable value. The allowance for credit losses reflects the best estimate of future losses over the contractual life of outstanding accounts receivable and is determined on the basis of historical experience, specific allowances for known troubled accounts, other currently available information including customer financial condition, and both current and forecasted economic conditions.
F-9
Fair value measurements
The Group applies ASC 820, Fair Value Measurements and Disclosures. ASC 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC 820 requires disclosures to be provided for fair value measurements. ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2—Other inputs that are directly or indirectly observable in the marketplace.
Level 3—Unobservable inputs which are supported by little or no market activity.
ASC 820 describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach; and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset.
The carrying amounts of cash and cash equivalent, accounts receivable, amounts due to related parties and other current assets, accounts payable, amounts due to related parties, accrued liabilities and other current liabilities, and short - term borrowings approximate their fair values because of their generally short maturities. The carrying amount of long - term borrowings approximates their fair values since they bear interest rates which approximate market interest rates.
As more fully described in Note 11, the Group issued warrants to purchase its ordinary shares during the year ended December 31, 2025. The Group measured its warrant liabilities at fair value on a recurring basis. As the Group’s warrants are not traded in an active market with readily observable prices, the Group uses significant unobservable inputs to measure the fair value of warrant liabilities. Refer to Note 11 for a detailed description of the unobservable inputs used. The warrant liabilities are categorized in the Level 3 valuation hierarchy based on the significance of unobservable factors in the overall fair value measurement.
The following table presents a reconciliation of all financial instruments measured at fair value on a recurring basis using Level 3 unobservable inputs:
| Warrant liabilities | |
US$ | ||
Initial recognition during the year ended December 31, 2025 |
| |
Fair value change |
| ( |
Balance as of December 31, 2025 |
| |
Fair value change |
| |
Balance as of June 30, 2026 |
| |
The Group did
Property, equipment and software
Property and equipment and software are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets as follows:
Category | | Estimated Useful Life |
Machinery and laboratory equipment | ||
Vehicles | ||
Furniture and tools | ||
Electronic equipment | ||
Computer software | ||
Lesser of lease terms or estimated useful lives of the assets |
F-10
Repair and maintenance costs are charged to expense as incurred, whereas the cost of renewals and betterments that extend the useful lives of property, equipment and software are capitalized as additions to the related assets. Retirements, sales and disposals of assets are recorded by removing the cost and accumulated depreciation and amortization from the asset and accumulated depreciation and amortization accounts with any resulting gain or loss reflected in the condensed consolidated statements of comprehensive loss.
Impairment of long-lived assets
The Group evaluates the recoverability of its long-lived assets, including fixed assets and intangible assets with finite lives, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. When these events occur, the Group measures impairment by comparing the carrying amount of the assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amount of the assets, the Group recognizes an impairment loss based on the excess of the carrying amount of the assets over their fair value. Fair value is generally determined by discounting the cash flows expected to be generated by the assets, when the market prices are not readily available. The adjusted carrying amount of the assets is the new cost basis and is depreciated over the assets’ remaining useful lives. Long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.
Revenue recognition
At contract inception of collaboration and out-licensing arrangements, the Group analyzes its arrangements to assess whether they are within the scope of ASC 808, Collaborative Arrangements (“ASC 808”) to determine whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities. For collaboration arrangements within the scope of ASC 808 that contain multiple elements, the Group first determines which elements of the collaboration are deemed to be within the scope of ASC 808 and those that are reflective of a vendor-customer relationship and therefore within the scope of ASC 606, Revenue from Contracts with Customers (“ASC 606”). For elements of collaboration arrangements that are accounted for pursuant to ASC 808, an appropriate recognition method is determined and applied consistently. Under the criteria of ASC 606, the Group recognizes revenue to depict the transfer of control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to receive in exchange for those goods or services.
The Group adopted ASC 606 for all periods presented. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price, including variable consideration, if any; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Group only applies the five-step model to contracts when it is probable that the entity will collect substantially all the consideration to which it is entitled in exchange for the goods or services it transfers to the customer. The Group reviews the contract to determine which performance obligations are distinct and represent a promise to provide distinct goods or services or a series of distinct goods or services as defined by the standard. The Group recognizes as revenue the amount of the transaction price that is allocated to each performance obligation as and when that performance obligation is satisfied.
Licenses of Intellectual Property: Upfront non-refundable payments for licensing the Group’s intellectual property are evaluated to determine if the license is distinct from the other performance obligations identified in the arrangement. For licenses determined to be distinct, the Group recognizes revenues from non-refundable, up-front fees allocated to the license at a point in time, when the transfer of control of the license to the licensee occurs and the licensee is able to use and benefit from the license. For licenses determined not to be distinct, the Group accounts for the promise to grant a license and those other promised goods or services together as a single performance obligation when recognizing revenue.
Research and Development Services: The portion of a transaction price allocated to research and development services performance obligations is deferred and recognized as collaboration revenue over time as delivery or performance of such services occurs.
F-11
Milestone Payments: At the inception of each arrangement that includes development, commercialization, and regulatory milestone payments, the Group evaluates whether the milestones are considered probable of being reached and to the extent that a significant reversal of cumulative revenue would not occur in future periods, estimates the amount to be included in the transaction price using the most likely amount method. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which the Group recognizes revenue as or when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, the Group re-evaluates the probability of achieving such development milestones and any related constraint, and if necessary, adjust the estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment.
Royalties: For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Group recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).
Contract assets and contract liabilities
When a customer pays consideration before the Group transfers products or services, the Group records its obligation as a contract liability; When the Group satisfies its performance obligations by providing products or services to a customer before the customer pays consideration and before payment is due, the Group recognizes its rights to consideration as a contract asset.
Research and development expenses
Elements of research and development expenses primarily include (1) payroll and other related costs of personnel engaged in research and development activities, (2) costs related to pre - clinical testing of the Group’s technologies under development and clinical trials such as payments to contract research organizations (“CRO”) and contract development and manufacturing organizations (“CDMO”), investigators and clinical trial sites that conduct the clinical studies; (3) costs to develop the product candidates, including raw materials and supplies, product testing, depreciation and amortization, and facility related expenses, and (4) other research and development expenses. Research and development costs are expensed as incurred when the related research and development services are provided to the Group and the resulting assets, if any, have no alternative future uses. As of December 31, 2025 and June 30, 2026, the Group had several ongoing clinical studies in various clinical trial stages. The contracts with CRO and CDMO are generally cancellable, with notice, at the Group’s option. The Group did not record any accrued expenses related to cancellation of CRO or CDMO contracts as of December 31, 2025 or June 30, 2026 as the Group did not have any plan to cancel the existing CRO or CDMO contracts.
Government subsidies
Government subsidies primarily consist of financial subsidies received from provincial and local governments for operating a business in their jurisdictions and compliance with specific policies promoted by the governments. The Group’s PRC based subsidiary received government subsidies from certain local government. The Group’s government subsidies consist of specific subsidies and other subsidies. Specific subsidies are subsidies that the local government has set certain conditions for the subsidies. Other subsidies are the subsidies that the local government has not set any conditions and are not tied to future trends or performance of the Group, receipt of such subsidy income is not contingent upon any further actions or performance of the Group and the amounts do not have to be refunded under any circumstances. These specific subsidies are recorded as other non-current liabilities upon receipt and are recognized as other income when the conditions are met. Other subsidies are recognized as other income upon receipt as further performance by the Group is not required.
There were
Leases
In accordance with ASC 842, Leases (“ASC 842”), the Group determines if an arrangement is or contains a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and lease liabilities on the condensed consolidated balance sheet. Lease liabilities that become due within one year of the balance sheet date are classified as current liabilities. The Group does not have any finance leases since the adoption date.
F-12
ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and lease liabilities are calculated as the present value of the lease payments not yet paid. As the rate implicit in the Group’s leases is not typically readily available, the Group uses an incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. This incremental borrowing rate reflects the fixed rate at which the Group could borrow the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. ROU assets include any lease prepayments and are reduced by lease incentives. Operating lease expense for lease payments is recognized on a straight-line basis over the lease term. Lease terms are based on the non-cancelable term of the lease and may contain options to extend the lease when it is reasonably certain that the Group will exercise that option.
The Group has elected to adopt the following lease policies (i) elect for each lease not to separate non-lease components from lease components and instead to account for each separate lease component and the non-lease components associated with that lease component as a single lease component; (ii) for leases that have lease terms of 12 months or less and does not include a purchase option that is reasonably certain to exercise, the Group elected not to apply ASC 842 recognition requirements; and (iii) the Group elected to apply the package of practical expedients for existing arrangements entered into prior to January 1, 2022 to not reassess (a) whether an arrangement is or contains a lease, (b) the lease classification.
Comprehensive income (loss)
Comprehensive income (loss) is defined as the changes in equity of the Group during a period from transactions and other events and circumstances excluding transactions resulting from investments by shareholders and distributions to shareholders. Accumulated other comprehensive income (loss) of the Group includes foreign currency translation adjustments related to the Group and its subsidiaries whose functional currency is not US$.
Income taxes
The Group follows the liability method of accounting for income taxes in accordance with ASC 740, Income Taxes (“ASC 740”). Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Group records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rate is recognized in tax expense in the period that includes the enactment date of the change in tax rate.
The Group evaluates its uncertain tax positions using the provisions of ASC 740, which prescribes a recognition threshold that a tax position is required to meet before being recognized in the condensed consolidated financial statements.
The Group recognizes in the condensed consolidated financial statements the benefit of a tax position which is “more likely than not” to be sustained under examination based solely on the technical merits of the position assuming a review by tax authorities having all relevant information. Tax positions that meet the recognition threshold are measured using a cumulative probability approach, at the largest amount of tax benefit that has a greater than fifty percent likelihood of being realized upon settlement. It is the Group’s policy to recognize interest and penalties related to unrecognized tax benefits, if any, as a component of income tax expense.
Borrowings
Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the condensed consolidated statements of comprehensive loss over the period of the borrowings using the effective interest method.
Share-based compensation
The Company grants restricted shares and stock options to eligible employees and nonemployees and accounts for share-based compensation in accordance with ASC 718, Compensation—Stock Compensation.
F-13
Share-based compensation awards are measured at the grant date fair value of the awards and recognized as expenses (a) immediately at the grant date if no vesting conditions are required; (b) for share-based awards granted with only service conditions, using the straight-line method over the vesting period; or (c) for share-based awards granted with service conditions and performance conditions, using the graded vesting method over the vesting period if and when the Company concludes that it is probable that the performance conditions will be achieved.
A change in any of the terms or conditions of share-based awards is accounted for as a modification of the awards. The Group calculates incremental compensation expense of a modification as the excess of the fair value of the modified awards over the fair value of the original awards immediately before its terms are modified at the modification date. For vested awards, the Group recognizes incremental compensation cost in the period when the modification occurs. For awards not being fully vested, the Group recognizes the sum of the incremental compensation expense and the remaining unrecognized compensation expense for the original awards over the remaining requisite service period after modification.
Net loss per share
In accordance with ASC 260, Earnings Per Share, basic net loss per share is computed by dividing net loss attributable to ordinary shareholders by the weighted average number of unrestricted ordinary shares outstanding during the period using the two-class method. Under the two-class method, net loss is allocated between ordinary shares and other participating securities based on dividends declared (or accumulated) and participating rights in undistributed earnings as if all the earnings for the reporting period had been distributed. Diluted net loss per share is calculated by dividing net loss attributable to ordinary shareholders, as adjusted for the effect of dilutive ordinary equivalent shares, if any, by the weighted average number of ordinary and dilutive ordinary equivalent shares outstanding during the period. Ordinary equivalent shares include ordinary shares issuable upon the conversion of the contingently redeemable convertible preferred shares using the if-converted method as applicable, and ordinary shares issuable upon the exercise of share options and warrants using the treasury stock method. Ordinary share equivalents are excluded from the computation of diluted earnings per share if their effects are anti-dilutive. For the periods presented herein, the computation of basic net loss per share using the two-class method is not applicable as the Group does not have participating securities that have contractual rights and obligations to share in the losses of the Group.
Employee defined contribution plan
As stipulated by the regulations of the PRC, full-time employees of the Group are entitled to staff welfare benefits including medical care, welfare subsidies, unemployment insurance and pension benefits through a PRC government-mandated multi-employer defined contribution plan. The Group is required to accrue for these benefits based on certain percentages of the qualified employees’ salaries. The Group is required to make contributions to the plans out of the amounts accrued. The PRC government is responsible for the medical benefits and the pension liability to be paid to these employees and the Group’s obligations are limited to the amounts contributed. The Group has no further payment obligations once the contributions have been paid. The Group recorded employee benefit expenses of US$
Concentration of risks
Concentration of credit risk
As of December 31, 2025 and June 30, 2026, the amount of cash and cash equivalents of US$
Accounts receivable is typically unsecured and denominated in US$ and/or RMB and is derived from revenues earned from customers. The Group manages credit risk of accounts receivable through ongoing monitoring of the outstanding balances.
Concentration of suppliers
A significant portion of the Group’s research and development services were purchased from
F-14
Business and economic risk
The Group believes that changes in any of the following areas could have a material adverse effect on the Group’s future consolidated financial position, results of operations or cash flows: changes in the overall demand for services; competitive pressures due to new entrants; advances and new trends in new technologies and industry standards; changes in certain strategic relationships; regulatory considerations and risks associated with the Group’s ability to attract employees necessary to support its growth. The Group’s operations could also be adversely affected by significant political, regulatory, economic and social uncertainties in the PRC.
Foreign currency exchange rate risk
A significant portion of the Group’s businesses are transacted in RMB, which is not a freely convertible currency. On January 1, 1994, the PRC government abolished the dual rate system and introduced a single rate of exchange as quoted daily by the PBOC. However, the unification of the exchange rates does not imply that the RMB may be readily convertible into US$ or other foreign currencies. All foreign exchange transactions continue to take place either through the PBOC or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the PBOC. Approval of foreign currency payments by the PBOC or other institutions requires submitting a payment application form together with suppliers’ invoices, shipping documents and signed contracts.
From July 21, 2005, the RMB is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. For U.S. dollar against RMB, there were depreciation of approximately
The functional currency and the reporting currency of the Company are the US$. However, the Group incurs portions of our expenses, and derives revenues, in currencies other than US$, in particular, the RMB. Any significant fluctuation of the valuation of RMB may materially affect the Group’s cash flows, expenses, losses and financial position, and the value of any dividends payable on the American Depositary Shares in US$.
Recently issued accounting pronouncements
The Group is an emerging growth company (“EGC”) as defined by the Jumpstart Our Business Startups Act (“JOBS Act”). The JOBS Act provides that an EGC can take advantage of extended transition periods for complying with new or revised accounting standards. This allows an EGC to delay adoption of certain accounting standards until those standards would otherwise apply to private companies. The Group elected to take advantage of the extended transition periods. However, this election will not apply when the Group ceases to be classified as an EGC on December 31, 2026.
New and amended standards not yet adopted by the Group
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires disclosure about the types of costs and expenses included in certain expense captions presented on the income statement. The standard allows the amendments to be applied on a prospective basis or a retrospective basis. In January 2025, the FASB issued ASU 2025-01, which revises the effective date of ASU 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Group is currently in the process of evaluating the impact of this accounting standard update on its condensed consolidated financial statements and related disclosures.
In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities (“ASU 2025-10”), which establishes authoritative guidance on the recognition, measurement, presentation, and disclosure of government grants. Under ASU 2025-10, government grants are recognized when it is probable that the entity will both comply with the conditions of the grant and the grant will be received. The standard provides specific accounting models for grants related to assets and grants related to income, including options to recognize government grants as deferred income or as a reduction of the asset’s cost basis. The standards also require enhanced disclosures regarding the nature of government grants, significant terms and conditions, accounting policies applied, and amounts recognized in the financial statements. ASU 2025-10 is effective for fiscal years beginning after December 15, 2028, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2025-10.
F-15
3. ACCOUNTS RECEIVABLE, NET
As of | ||||
December 31, | As of June 30, | |||
| 2025 | | 2026 | |
US$ | US$ | |||
Accounts receivable |
| — |
| |
Allowance for doubtful accounts |
| — |
| — |
| — |
| |
4. PREPAYMENTS AND OTHER CURRENT ASSETS
Prepayments and other current assets consisted of the following:
As of | ||||
December 31, | As of June 30, | |||
| 2025 | | 2026 | |
US$ | US$ | |||
Prepayments |
| |
| |
Deposits (a) |
| |
| |
Others |
| |
| |
| |
| |
Note (a): The deposits represented the amounts that the Group paid to its CRO vendors for various outsourced research and development programs according to the terms of respective CRO agreements. The Group expects to recover the deposits if the programs fail or the agreements are cancelled.
5. PROPERTY, EQUIPMENT AND SOFTWARE, NET
Property, equipment and software consisted of the following:
As of | ||||
December 31, | As of June 30, | |||
| 2025 | | 2026 | |
US$ | US$ | |||
Machinery and laboratory equipment | |
| | |
Leasehold improvements | |
| | |
Electronic equipment | |
| | |
Furniture and tools | |
| | |
Vehicles | |
| | |
Software | |
| | |
Total property, equipment and software | |
| | |
Less: accumulated depreciation and amortization | ( |
| ( | |
Net book value | |
| |
Depreciation and amortization expenses recognized for the six months ended June 30, 2025 and 2026 were US$
F-16
6. ACCRUALS AND OTHER CURRENT LIABILITIES
Accrued liabilities and other current liabilities consisted of the following:
As of | ||||
December 31, | As of June 30, | |||
| 2025 | | 2026 | |
US$ | US$ | |||
Professional service fees | |
| | |
Payroll and related liabilities | | | ||
Other taxes and surcharge | |
| | |
Others | |
| | |
| |
| |
7. BORROWINGS
As of | ||||
December 31, | As of June 30, | |||
| 2025 | | 2026 | |
US$ | US$ | |||
Current |
| |||
Short-term borrowings: |
| |||
Bank loans | |
| | |
Current portion of long-term borrowings | |
| | |
Total current borrowings | |
| | |
Non-Current |
| |||
Long-term borrowings: |
| |||
Bank loans | |
| | |
Total non-current borrowings | |
| | |
Total borrowings | |
| |
Short-term borrowings
In June 2024, the Group borrowed a loan with the amount of RMB
In September 2024, the Group borrowed a loan with the amount of RMB
In July 2025, the Group borrowed a loan with the amount of RMB
In December 2025, the Group borrowed a loan with the amount of RMB
Long-term borrowings
In May 2022, the Group borrowed a loan with the amount of RMB
F-17
Also in May 2022, the Group borrowed a loan with the amount of RMB
In August 2022, the Group borrowed a loan with the amount of RMB
Also in August 2022, the Group borrowed a loan with the amount of RMB
In November 2022, the Group borrowed a loan with the amount of RMB
Also in November 2022, the Group borrowed a loan with the amount of RMB
In April 2023, the Group borrowed a loan with the amount of RMB
In August 2023, the Group borrowed a loan with the amount of RMB
In September 2023, the Group borrowed another loan with the amount of RMB
In December 2025, the Group borrowed a loan with the amount of RMB
The proceeds from the loans were primarily used to pay for the Group’s research and development activities in China, including CMC costs of clinical and preclinical programs. As of December 31, 2025 and June 30, 2026, none of the Group’s borrowings were collateralized in the respective loan agreements.
Future maturities of short-term borrowings and long-term borrowings
Future principal maturities of short-term borrowings and long-term borrowings as of June 30, 2026 were as follows:
As of June 30, | ||
2026 | ||
| US$ | |
Remainder of 2026 | | |
2027 | | |
|
F-18
8. SEGMENT INFORMATION
The Group’s principal business activities are related to the discovery and development of novel antibody-based cancer medicines. The Group manages the business activities on a consolidated basis and operates in
Significant expenses within income (loss) from operations, as well as within net income (loss), include research and development, and administrative expenses, which are each separately presented on the Group’s condensed consolidated statements of comprehensive loss. Other segment items within net income (loss) include interest and investment income, interest expense, other income, net, and income tax benefit (expense).
In addition to the significant expense categories included within the consolidated net loss presented on the Group’s condensed consolidated statements of comprehensive loss, see below for disaggregated amounts that comprise research and development expenses:
| For the six months ended June 30, | |||
| 2025 | | 2026 | |
US$ | US$ | |||
Direct research and development expenses(a) |
| |
| |
Indirect research and development expenses(b) | ||||
Payroll and other related costs of personnel |
| |
| |
Lab supplies and other research and development expenses |
| |
| |
Total indirect research and development expenses |
| |
| |
Total research and development expenses |
| |
| |
Note (a): Direct research and development expenses consist principally of: (1) costs related to clinical trials such as payments to CRO, CDMO, investigators, and clinical trial sites that conduct the clinical studies; and (2) costs to develop the product candidates, including costs related to product testing.
Note (b): Indirect research and development expenses are not allocated directly to each program, and primarily consist of compensation and other personnel related costs, overhead and infrastructure costs to maintain our facilities, and other costs related to activities that benefit multiple projects.
The measure of segment assets is reported on the condensed consolidated balance sheets as consolidated total assets. The Group’s long-lived assets consist primarily of property, plant and equipment, net. No geographical segments are presented as a substantial portion of the Group’s long-lived assets are located in the PRC with the exception of certain laboratory and electronic equipment which are located in the U.S.
9. CONTINGENTLY REDEEMABLE CONVERTIBLE PREFERRED SHARES
In July 2025, the Company issued
The key features of the Series A Preferred Shares are as follows:
F-19
Dividends
Holders of the Series A Preferred Shares will be entitled to receive, only when, as and if declared by the Board of Directors, a dividend on each outstanding Series A Preferred Share equal to US$
Voting
Holders of the Series A Preferred Shares have limited voting rights. They possess a protective vote requiring majority approval to adversely change their share rights, but otherwise hold no voting rights on Company matters.
Liquidation preference
In the event of a liquidation or deemed liquidation event, the Series A Preferred Shares carry a liquidation preference that remains in effect until the later of (i) December 31, 2027, or (ii) the public release of top-line data for ADG126. Before such date, holders of the Series A Preferred are entitled to a preferential payment per share before any distribution to ordinary shareholders. This amount is the greater of (i) the original purchase price plus any declared but unpaid dividends, or (ii) the amount they would receive if their shares were converted to ordinary shares immediately prior to the event. After receiving this full preferential amount, the holders of the Series A Preferred Shareholders do not participate in any further distributions. After such date, the holders of the Series A Preferred Shareholders participate alongside ordinary shareholders on a pro rata basis, as if their Series A Preferred Shares had been converted to ordinary shares immediately prior to the event.
Conversion
Holders of the Series A Preferred Shares have the right to convert each Series A Preferred Shares into
Accounting for Series A Preferred Shares
The Series A Preferred Shares are classified as mezzanine equity in the condensed consolidated balance sheets because they are contingently redeemable upon the occurrence of an event outside of the Company’s control. The deemed liquidation event includes events of merger or consolidation in which (i) the Company is a constituent party, or (ii) a subsidiary of the Company is a constituent party and the Company issues ordinary shares pursuant to such merger or consolidation; and such event is not in control of the Company. The Preferred Shares are recorded at their respective issuance date fair value, net of issuance cost.
The Company concluded that the Series A Preferred Shares were not currently redeemable, and were not probable to become redeemable as of December 31, 2025 and June 30, 2026. Consequently, no accretion charge was recorded as the redemption value was fixed to original issue price for the year ended December 31, 2025 and June 30, 2026.
F-20
10. SHARE-BASED COMPENSATION
On January 16, 2021, the Company passed a board resolution , pursuant to which the 2021 Performance Incentive Plan (the “2021 Plan”) was adopted. Under the 2021 Plan, an aggregate of
On January 7, 2022, the Company passed a board resolution, pursuant to which the vesting schedules and conditions of
On November 17, 2024, the Company passed a board resolution, pursuant to which
During the six months ended June 30, 2025, pursuant to the 2021 Plan, a total of
During the six months ended June 30, 2026, pursuant to the 2021 Plan, a total of
The following table sets forth the share options activities for the six months ended June 30, 2025 and 2026:
Weighted‑ | ||||||||||
Average | Weighted | |||||||||
Weighted‑ | Grant | Average | ||||||||
Average | Date | Remaining | Aggregate | |||||||
Number of | Exercise | Fair | Contractual | Intrinsic | ||||||
| Options | | Price | | Value | | Term | | Value | |
US$ per | US$ per | |||||||||
option | option | Years | US$ | |||||||
Outstanding at December 31, 2024 | | | | | ||||||
Granted | | | | — | — | |||||
Exercised | ( | | | — | — | |||||
Forfeited | ( |
| |
| |
| — |
| — | |
Outstanding at June 30, 2025 | |
| |
| |
|
| | ||
Outstanding at December 31, 2025 | | | | | ||||||
Granted | | | | — | — | |||||
Exercised | ( | | | — | — | |||||
Forfeited | ( | | | — | — | |||||
Outstanding at June 30, 2026 | | | | | ||||||
Vested and expected to vest at June 30, 2026 | | | | | ||||||
Exercisable at June 30, 2025 | | | | | ||||||
Exercisable at June 30, 2026 | | | | |
F-21
The aggregate intrinsic value in the table above represents the difference between the exercise price of the awards and the fair value of the underlying ordinary shares at each reporting date, for those awards that had exercise price below the estimated fair value of the relevant ordinary shares.
The aggregate fair value of the equity awards vested during the six months ended June 30, 2025 and 2026 was US$
The fair value of RSUs was determined using the closing price for the Company’s ADSs, as reported by NASDAQ Global Market, of the grant date.
Fair value of share options
The fair value of share options was determined using the binomial option valuation model, with the assistance from an independent third-party appraiser. The binomial model requires the input of highly subjective assumptions, including the expected volatility, the exercise multiple, the risk-free rate and the dividend yield. For expected volatility, the Group has made reference to historical volatility of several comparable companies in the same industry. The exercise multiple was estimated as the average ratio of the stock price to the exercise price of when employees would decide to voluntarily exercise their vested share options. The risk-free rate for periods within the contractual life of the share options is based on the market yield of U.S. Treasury Bonds in effect at the time of grant. The dividend yield is based on the expected dividend policy over the contractual life of the share options.
The assumptions used to estimate the fair value of the share options granted were as follows:
For the Six Months Ended June 30, | ||||
| 2025 | | 2026 | |
Risk‑free interest rate | ||||
Dividend yield | ||||
Expected volatility range | ||||
Exercise multiple | ||||
Contractual life | ||||
Total share-based compensation expenses recognized for the six months ended June 30, 2025 and 2026 were as follows:
For the Six Months Ended June 30, | ||||
| 2025 | | 2026 | |
US$ | US$ | |||
Research and development expenses |
| |
| |
Administrative expenses |
| |
| |
Total share‑based compensation expenses |
| |
| |
11. WARRANT LIABILITIES
In July and September 2025, the Company issued warrants to a consultant at
F-22
The warrants are freestanding instruments and classified as liabilities in accordance with ASC 480, Distinguishing Liabilities from Equity. The warrants are initially recognized at fair value, with subsequent changes in fair value recorded currently in earnings. The Company recognized losses from the increase in fair value of the warrants of US$
The following table summarizes the activities in warrants for the six months ended June 30, 2026:
Weighted Average | ||||||
Number of Warrants | Exercise Price | Remaining Life | ||||
| | US$per | | Years | ||
Ordinary Share | ||||||
Outstanding at December 31, 2025 |
| |
| |
| |
Granted |
| — |
| — |
| — |
Exercised |
| — |
| — |
| — |
Outstanding at June 30, 2026 |
| |
| |
| |
Exercisable at June 30, 2026 |
| |
| |
|
The Company has measured the warrant liabilities at fair values on a recurring basis using significant unobservable inputs (Level 3) for the year ended December 31, 2025 and six months ended June 30, 2026. The Group used the binomial option pricing model to estimate the fair value of warrant liabilities as of December 31, 2025 and June 30, 2026 using the following assumptions:
| For the year |
| For the six months |
| |
ended |
| ended |
| ||
December 31, |
| June 30, |
| ||
2025 |
| 2026 |
| ||
Risk-free interest rate |
| ||||
Exercise price per ordinary share |
| US$ | US$ | ||
Expected volatility range | |||||
Term of warrants |
| ||||
Dividend yield |
|
12. COLLABORATION ARRANGEMENTS
Guilin Sanjin Pharmaceutical Co., Ltd. License Agreement
In December 2018, the Group entered into (i) a collaboration agreement (the “Sanjin Greater China Agreement”) that covers Greater China with Guilin Sanjin Pharmaceutical Co., Ltd. (“Sanjin”) and certain of its subsidiaries (collectively, “Sanjin Parties”) and (ii) a collaboration agreement (the “Sanjin ROW Agreement”, together with the Sanjin Greater China Agreement, the “2018 Sanjin Agreements”) that covers the regions other than Greater China with Sanjin. Pursuant to the Sanjin Greater China Agreement, the Group licensed the Chinese intellectual property directly related to a monospecific antibody molecule that binds to the PD-L1 target (the “PD-L1 Project”), including patent rights, patent application rights and technologies based on the core sequence of the molecule, to Sanjin Parties. Sanjin Parties will own all the Chinese intellectual property developed in the exercise of Sanjin Parties’ rights under the agreement, including but not limited to improvements (including combination products), clinical trials, regulatory filings, and commercialization rights relating thereto. The Group also granted Sanjin Parties a royalty-free license to use our other existing intellectual property and improvements thereto which are related to the PD-L1 Project for the purposes of exploiting its rights and performing its obligations under the agreement. Sanjin Parties will enjoy all the economic benefits deriving from the PD-L1 Project in Greater China, including but not limited to patent transfer fee, licensing fee, sales revenue and sales commission, etc. Sanjin Parties will pay the Group (i) single-digit percentage of net sales of the products that use the licensed antibody after such products enter the market and (ii) a low to mid-low double-digit percentage of the profits resulting from any transfer of the license to any third parties depending on the timing of the transfer relative to the development stage of the product. Prior to 2023, the Group received RMB
F-23
Pursuant to the Sanjin ROW Agreement, the Group granted Sanjin a royalty-free license to use all intellectual property relating to (i) the collaboration under the agreement that the Group controlled before the Group entered into the agreement or acquired independently of the agreement and (ii) improvements thereto for the purposes of exploiting its rights and performing its obligations under the agreement. Any intellectual property generated independently by a party under the agreement will be solely owned by that party who generated such intellectual property, and any intellectual property generated from cooperation between the Group and Sanjin’s affiliates in connection with the collaboration will be jointly owned. The Group retain the ownership of patent rights of key intellectual property pertaining to PD-L1 outside of the Greater China. In addition, all the results obtained by Sanjin relating to the research and development of any new antibody developed under the agreement will be owned by Sanjin. The Group retain a majority of the economic benefits derived from the Sanjin ROW Agreement, including but not limited to any patent transfer fee, licensing fee and gains realized under such transfer. In case the Group intend to transfer to a third party our share of economic interests in any country outside of Greater China, the Group must notify Sanjin and Sanjin will receive a right of first refusal if it pays the Group a deposit equal to a low double-digit percentage of the consideration that the Group expect to receive from such third party. If Sanjin waives the right of first refusal, the Group can proceed with the transfer, provided that the final transaction price with the third party is not lower than the amount of the offering price that was included in the Group’s notice to Sanjin.
The Group agreed not to (i) independently develop any monospecific antibodies that bind to the PD-L1 target or (ii) grant any rights associated with such antibodies to any third parties during the period from the effective date of the agreement. The exclusivity obligation does not prevent the Group from (i) developing or granting any licenses to third parties for intellectual property that covers bispecific antibodies, ADCs, diagnostic antibodies, nano-particles and masked antibody against PD-L1 target and (ii) continuing to provide antibody screening service that were commenced before the execution of the Sanjin Greater China Agreement and either party has the independent right to conduct combination therapy studies outside of the Greater China. Either non-breaching party may terminate the 2018 Sanjin Agreements if the other party’s ability to comply with its respective obligations under the agreements is negatively affected by contingencies such as failure to maintain operation or changes in core project management and the other party fails to take effective remedial measures. Each agreement automatically terminates upon the termination of the other agreement. Upon the rescission or termination, Sanjin Parties will return to the Group all the intellectual property, documents and data provided by the Group under the 2018 Sanjin Agreements.
In the event that the failure of the development of the product candidate solely arises from the Group’s research and development basis specified under this agreement, Sanjin has the right to claim back all the payment made to the Group. The Group considers the possibility of occurrence of such event is remote.
Dragon Boat Biopharmaceutical (Shanghai) Limited License Agreement
In May 2019, the Group entered into (i) a collaboration agreement that covers Greater China (the “Dragon Boat Greater China Agreement”) and (ii) a collaboration agreement that covers the regions other than Greater China (the “Dragon Boat ROW Agreement,” together with the Dragon Boat Greater China Agreement, the “2019 Dragon Boat Agreements”), with Dragon Boat Biopharmaceutical (Shanghai) Limited (“Dragon Boat”), a subsidiary of Sanjin. Pursuant to the Dragon Boat Greater China Agreement, the Group will license the Chinese intellectual property directly related to a certain monospecific antibody molecule that binds to a specified target (the “Specified Project”), including the patent rights, patent application rights and technologies based on the core sequence of the molecule, to Dragon Boat. Dragon Boat will own all the Chinese intellectual property developed in the exercise of Dragon Boat’s rights under the agreement, including but not limited to improvements (including combination products), clinical trials, regulatory filings, and commercialization rights relating thereto. The Group also granted Dragon Boat a royalty-free license to use our other existing intellectual property and improvements thereto which are related to the Specified Project for the purposes of exploiting its rights and performing its obligations under the agreement. Dragon Boat will enjoy all the economic benefits deriving from the Specified Project in Greater China, including but not limited to patent transfer fee, licensing fee, sales revenue and sales commission, etc. and will pay the Group (i) certain high-six figure dollar milestone payments upon the achievement of certain milestones (including milestones of launch of pre-clinical safety evaluation animal test, obtaining Investigational New Drug (“IND”) approval in PRC and completion of clinical phase I test in PRC) and (ii) a single-digit percentage of net sales of the products that use the licensed antibody after such products enter the market.
F-24
Pursuant to the Dragon Boat ROW Agreement, the Group granted Dragon Boat a royalty-free license to use all intellectual property relating to (i) the collaboration under the agreement that the Group controlled before the Group entered into the agreement or acquired independently of the agreement and (ii) improvements thereto for the purposes of exploiting its rights and performing its obligations under the agreement. Any intellectual property generated independently by a party under the agreement will be solely owned by that party who generated such intellectual property, and any intellectual property generated from cooperation between the Group and Dragon Boat in connection with the collaboration will be jointly owned. The Group retain the ownership of patent rights of key intellectual property pertaining to the specified target outside of the Greater China. In addition, all the results obtained by Dragon Boat relating to the research and development of any new antibody developed under the agreement will be owned by Dragon Boat. The Group retains a majority of the economic benefits derived from the Dragon Boat ROW Agreement, including but not limited to any patent transfer fee, licensing fee and gains realized under such transfer. In case the Group intend to transfer to a third party our share of economic interests in any country outside of Greater China, the Group must notify Dragon Boat and Dragon Boat will receive a right of first refusal if it pays the Group a deposit equal to a low double-digit percentage of the consideration that the Group expects to receive from such third party. If Dragon Boat waives the right of first refusal, the Group can proceed with the transfer, provided that the final transaction price with the third party is not lower than the amount of the offering price that was included in our notice to Dragon Boat.
Under the 2019 Dragon Boat Agreements, the Group agreed not to (i) independently develop any monospecific antibodies that bind to the specified target or (ii) grant any rights associated with such antibodies to any third parties during the
In the event that the failure of the development of the product candidate solely arises from the Group’s research and development basis specified under this agreement, Dragon Boat has the right to claim back all the payment made to the Group. The risk of failure is considered remote upon recognition of revenue.
Prior to 2025, the Group received upfront fee of RMB
Exelixis, Inc. Agreements
In February 2021, the Group entered into a collaboration and license agreement (the “Exelixis Agreement”) with Exelixis, Inc. (“Exelixis”), pursuant to which the Group agreed to generate masked antibodies with its SAFEbody technology against an initial target selected and a second target to be selected by Exelixis. The Group will generate masked antibodies in the form of alternative compounds in accordance with the program plan for each target at its own cost and deliver the related data packages to Exelixis. Exelixis will select lead compounds (the “Lead Compounds”) to further develop, obtain regulatory approval and commercialize product(s) for each target (the “Products under the Exelixis Agreement”). Under the Exelixis Agreement, the Group will also grant Exelixis an exclusive, worldwide, sublicensable license (the “Adagene License”) upon delivery of the data package to research, develop, make, have made, sell, offer for sale, import and commercialize products containing the masked antibodies to be generated by the Group with respect to both targets. Exelixis will own the inventions relating to the Lead Compounds arising in connection with the Exelixis Agreement.
The Exelixis Agreement will remain effective until the expiration of the defined royalty terms of the Products under the Exelixis Agreement, unless terminated by either party. Exelixis may terminate the Exelixis Agreement for any or no reason, in its entirety or on a target-by-target basis. Any payment received by the Group before the termination shall be non-refundable.
F-25
Under the Exelixis Agreement, Exelixis agreed to pay the Group an upfront non-refundable fee of US$
In April 2022, the Group entered in a letter agreement (the “Exelixis Letter Agreement”) in reference to the Exelixis Agreement with Exelixis for expanded collaboration in SAFEbody discovery. Under the Exelixis Letter Agreement, the Group will generate additional masked antibodies against the target selected by Exelixis per the Exelixis Agreement. Exelixis agreed to pay the Group an additional upfront non-refundable fee of US$
In September 2025, the Group entered into an amendment to the Exelixis Agreement (the “Exelixis Amendment”). Under the Exelixis Amendment, the Group will generate a masked monoclonal antibody utilizing the SAFEbody technology for an additional target selected by Exelixis. The Group is eligible to receive development and commercialization milestones and royalties on net sales of products developed around this third target, in terms similar to the Exelixis Agreement. Exelixis agreed to pay the project fee for the generation of the additional antibody in two installments, one upon execution of the Exelixis Amendment, and the other upon delivery of the data package for this third target to Exelixis, subject to receipt of the applicable invoices from the Group. The Group received the first installment payment in 2025.
The Group determined that generating masked antibodies with its SAFEbody technology is reflective of a vendor-customer relationship and therefore within the scope of ASC 606. Under the Exelixis Agreement, the delivery of data packages for each target, along with the Adagene License used to develop the related compounds, represents one performance obligation, as they are not distinct from each other. Transaction price is allocated to each one of the two performance obligations using the relative standalone selling price method. The Group records revenue at a point in time, when the data packages for each target were delivered to Exelixis. Considering that the development, regulatory and sales-based milestone payments and the royalties are constrained, the transaction price shall initially only include upfront payment and the milestone payments that are considered probable. Subsequently, once the uncertainty associated with the milestone payments is resolved, the milestone payments shall be included in the total transaction price when it is no longer probable that a significant reversal of cumulative revenue would occur in future periods. The sales-based royalty and sales-based milestones promised in exchange for the Adagene License granted are recognized when (or as) the later of (1) the subsequent sale or usage occurs, or (2) the performance obligation to which some or all of the sales-based royalty or sales-based milestones being allocated has been satisfied (or partially satisfied). Under the Exelixis Amendment, the delivery of data packages for the third target, along with the Adagene License used to develop the related compounds, represents one performance obligation. Revenue will be recognized at a point in time upon delivery of the data package for the third target for the same reasons as discussed above.
Prior to 2025, the Group received US$
F-26
Sanofi Agreement
In March 2022, the Group entered into a collaboration and license agreement (the “Sanofi Agreement”) with Genzyme Corporation, a wholly-owned subsidiary of Sanofi (“Sanofi”), pursuant to which the Group agreed to perform early-stage research activities to develop masked versions of Sanofi candidate antibodies (each a “Target”, and together, “Targets”), using the Group’s SAFEbody technology for development and commercialization by Sanofi. Sanofi has the ability to advance two initial Targets in the collaboration, followed by an option for two additional Targets. The Group will generate masked antibodies in the form of customized compounds and complete the compound research activities in accordance with the program plan for each Target at its own cost and deliver the compounds and related data packages to Sanofi. Sanofi is solely responsible for later stage research and all clinical, product development and commercialization activities. Under the Sanofi Agreement, the Group granted Sanofi an exclusive, worldwide, sublicensable license to research, develop, use, make, have made, sell, offer for sale, import and commercialize products containing the masked antibodies to be generated by the Group.
The Sanofi Agreement will remain effective until the expiration of the defined royalty on a product-by-product and country-by-country basis, unless terminated earlier with cause or by mutual agreements of both parties. Sanofi may terminate the Sanofi Agreement without cause, in its entirety, or on a Target-by-Target or country-by-country basis.
Under the Sanofi Agreement, Sanofi agreed to pay the Group an upfront non-refundable fee of US$
In June 2025, the Group entered into an amended and restated agreement with Sanofi (the “Amended Sanofi Agreement”), under which, Sanofi exercised its option to select an additional Target for further development. The Group will generate masked antibodies and complete the compound research activities in accordance with a program plan for this third Target. Sanofi has the right to initiate one additional research program for one additional Target for a fee. Sanofi also has the one-time right to replace the third Target and each additional Target added pursuant to the option right for additional costs. In addition to the option exercise fee, the Group is also eligible to receive development and sales-based milestones and royalties on net sales of products developed around the third Target.
The Group determined that this collaboration is more reflective of a vendor-customer relationship and therefore within the scope of ASC 606. Under the Sanofi Agreement, the performance of early-stage research activities to develop compounds for each Target, along with the grant of the license, represents one performance obligation, as they are not distinct from each other. Transaction price is allocated to each one of the two performance obligations based on the relative standalone selling price. Since the early-stage research activities does not generate an asset for alternative use and the Group has an enforceable right to the upfront payment, the Group records revenue over time using labor hour as the input to assess the satisfaction of the performance obligations. Considering that the development, regulatory and sales-based milestone payments and the royalties are constrained, the transaction price shall initially only include upfront payment and the milestone payments that are considered probable. Subsequently, once the uncertainty associated with the milestone payments is resolved, the milestone payments shall be included in the total transaction price when it is no longer probable that a significant reversal of cumulative revenue would occur in future periods. The sales-based royalty and sales-based milestones promised in exchange for the license granted are recognized when (or as) the later of (1) the subsequent sale or usage occurs, or (2) the performance obligation to which some or all of the sales-based royalty or sales-based milestones being allocated has been satisfied (or partially satisfied). Under the Amended Sanofi Agreement, the performance of early-stage research activities to develop compounds for the third Target, along with the grant of the license, represents one additional performance obligation. Revenue will be recognized over time using labor hour as the input to assess the satisfaction of the performance obligation for the same reasons as discussed above.
Prior to 2025, the Group received US$
For the six months ended June 30, 2025,
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In late 2025, the Group received the option exercise payment under the Amended Sanofi Agreement. The option exercise payment was recognized as revenue over time using the input method. The revenue recognized during the six months ended June 30, 2026 was US$
ConjugateBio Agreement
In July 2025, the Group entered into a license agreement (the “ConjugateBio Agreement”) with ConjugateBio Inc. (“ConjugateBio”), pursuant to which the Group agreed to grant an exclusive license of its proprietary antibody to ConjugateBio. ConjugateBio will use the antibody and the associated license for the development, manufacture and commercialization of compounds and pharmaceutical products containing or comprising the compounds. ConjugateBio has the sole right and responsibility, at its sole cost and expense, for the development and commercialization of the pharmaceutical products.
The ConjugateBio Agreement will remain effective until the expiration of the defined royalty term on a product-by-product and country-by-country basis, unless terminated earlier with cause or by mutual agreements of both parties.
Under the ConjugateBio Agreement, ConjugateBio agreed to pay the Group a one-time, non-refundable, non-creditable upfront payment in consideration of the antibody provided and the license granted. On a compound-by-compound and/or product-by-product basis, the Group will be eligible to receive milestone payments conditioned upon achieving certain development, clinical and regulatory approval milestones, and sales-based milestone payments. In addition, the Group is also entitled to royalties in respect of the aggregate annual net sales of the products developed, subject to certain reductions.
The Group determined that the provision of the antibody and the grant of the license are reflective of a vendor-customer relationship and therefore within the scope of ASC 606. Under the ConjugateBio Agreement, the provision of the antibody, along with the license used to develop the related compounds, represents one performance obligation, as they are not distinct from each other. The Group records revenue at a point in time, when the antibody is delivered to ConjugateBio as the license is considered a functional IP that gives ConjugateBio the right to use the IP. Considering that the development, clinical, regulatory and sales-based milestone payments and the royalties are constrained, the transaction price shall initially only include upfront payment and the milestone payments that are considered probable. Subsequently, once the uncertainty associated with the milestone payments is resolved, the milestone payments shall be included in the total transaction price when it is no longer probable that a significant reversal of cumulative revenue would occur in future periods. The sales-based royalty and sales-based milestones promised in exchange for the license granted are recognized when (or as) the later of (1) the subsequent sale or usage occurs, or (2) the performance obligation to which some or all of the sales-based royalty or sales-based milestones being allocated has been satisfied (or partially satisfied).
In 2025, the Group received the upfront payment under the ConjugateBio Agreement. The upfront payment was recognized as revenue at a point in time upon provision of the antibody to ConjugateBio in 2025.
Third Arc Agreement
In November 2025, the Group entered into a license agreement (the “Third Arc Agreement”) with Third Arc Bio, Inc. (“Third Arc”), pursuant to which the Group agreed to grant an exclusive license on a molecule specific license to Third Arc to use the Group’s SAFEbody technology for a masked CD3 for the research, development, manufacture, commercialization and other exploitation of licensed compounds and licensed products worldwide. Third Arc has the sole right and decision-making authority, at its sole cost and expense, for the development and commercialization of the licensed compounds and products.
The Group has an option from Third Arc for an exclusive license to develop and commercialize for specific licensed products in Greater China, Singapore and South Korea. If the Group exercises the option, the Group and Third Arc shall enter into a separate agreement governing the Group’s manufacture and summarization of the specific licensed products in the specific territory.
The Third Arc Agreement will remain effective until the expiration of the defined royalty term on a licensed product-by-product and country-by-country basis, unless terminated earlier with cause or by mutual agreements of both parties.
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Under the Third Arc Agreement, Third Arc agreed to pay the Group a one-time, non-refundable, non-creditable upfront payment of US$
The Group determined that the grant of the license in the form of sequence data is reflective of a vendor-customer relationship and therefore within the scope of ASC 606. The Group records revenue at a point in time, when the sequence data is delivered to Third Arc as the license is considered a functional IP that gives Third Arc the right to use the IP. Considering that the development and commercial-based milestone payments and the royalties are constrained, the transaction price shall initially only include upfront payment and the milestone payments that are considered probable. Subsequently, once the uncertainty associated with the milestone payments is resolved, the milestone payments shall be included in the total transaction price when it is no longer probable that a significant reversal of cumulative revenue would occur in future periods. The sales-based royalty and commercial-based milestones promised in exchange for the license granted are recognized when (or as) the later of (1) the subsequent sale or usage occurs, or (2) the performance obligation to which some or all of the sales-based royalty or commercial-based milestones being allocated has been satisfied (or partially satisfied).
In 2025, the Group received US$
13. INCOME TAX BENFIT (EXPENSE)
The income tax benefit (expense) and the effective income tax rate resulting from operations were as follows:
For the Six Months Ended June 30, | |||||
| 2025 | | 2026 | ||
US$ | US$ | ||||
Loss before income tax |
| ( |
| ( |
|
Income tax benefit (expense) |
| ( |
| |
|
Effective income tax rate |
| % | ( | % | |
The change in the effective income tax rate for the six months ended June 30, 2026 compared with the six months ended June 30, 2025 is primarily due to changes to tax credits claimed, amount of loss before income tax and jurisdictional mix of loss before income tax.
14. NET LOSS PER SHARE
Basic and diluted net loss per share for the six months ended June 30, 2025 and 2026 were calculated as follows:
For the Six Months Ended June 30, | ||||
2025 | 2026 | |||
| US$ | | US$ | |
Numerator: |
| |
| |
Net loss attributable to Adagene Inc.’s shareholders |
| ( |
| ( |
Net loss attributable to ordinary shareholders |
| ( |
| ( |
Denominator: |
| |
| |
Weighted‑average number of ordinary shares outstanding—basic and diluted |
| |
| |
Net Loss per share—basic and diluted |
| ( |
| ( |
The effects of all outstanding share options, share and RSU grant, Series A Preferred Shares and warrants have been excluded from the computation of diluted loss per share for the six months ended June 30, 2025 and 2026 as their effects would be anti-dilutive.
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The potentially dilutive securities that have not been included in the calculation of diluted net loss per share as their inclusion would be anti-dilutive are as follows:
For the Six Months Ended June 30, | ||||
| 2025 | | 2026 | |
Incremental shares on share options, share grant, RSU grant, Series A Preferred Shares and warrants |
| |
| |
15. RELATED PARTY TRANSACTIONS
| a) | Related Parties |
Name of related parties | | Relationship |
Peter Luo |
| Chairman, Chief Executive Officer and a principal shareholder of the Company |
Certain senior management personnel |
| Management and ordinary shareholders of the Company |
WuXi AppTec Co., Ltd. (“WuXi AppTec Group”) (a) |
| A principal shareholder of the Company |
WuXi Biologics (Cayman) Inc. (a) |
| Controlled by the ultimate controlling party of a principal shareholder of the Company |
Note (a): In April 2026, the Company closed an underwritten public offering of
| b) | The Group had the following related party balances as of December 31, 2025 and June 30, 2026: |
As of December 31, | As of June 30, | |||
2025 | 2026 | |||
| US$ | | US$ | |
| |
| — | |
Certain senior management personnel | | | ||
| |
| |
As of December 31, 2025, the amounts due from WuXi AppTec Group represented prepayments made for the CRO and CDMO services. As of December 31, 2025 and June 30, 2026, the amounts due form certain senior management member represented rent deposit and advance rent payments made to one senior management personnel for operating lease of the senior management member’s personal property for business use.
As of December 31, | As of June 30, | |||
2025 | 2026 | |||
| US$ | | US$ | |
| |
| — | |
| |
| — | |
| |
| — |
As of December 31, 2025, the amounts due to related parties represented payables for the CRO and CDMO services.
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| c) | The Group had the following related party transactions during the six months ended June 30, 2025 and 2026: |
For the Six Months Ended June 30, | ||||
2025 | 2026 | |||
| US$ | | US$ | |
WuXi Biologics (Cayman) Inc(a). |
| |
| |
WuXi AppTec Group(a) |
| |
| |
Certain senior management personnel | | | ||
| |
| | |
For the six months ended June 30, 2025, expenses incurred with WuXi Biologics (Cayman) Inc and WuXi AppTec Group resulted from receipt of CRO and CDMO services. For the six months ended June 30, 2026, expenses incurred with WuXi Biologics (Cayman) Inc and WuXi AppTec Group resulted from receipt of CRO and CDMO services from January 1, 2026 to the closing of the public underwritten offering.
For the six months ended June 30, 2025 and 2026, expenses incurred with certain senior management personnel represented rent expenses incurred from operating lease of one senior management member’s personal property for business use.
16. LEASES
As of December 31, 2025 and June 30, 2026, the Group had operating leases recorded on its condensed consolidated balance sheets for certain office spaces and laboratory equipment that expire on various dates through 2029. The Group’s lease arrangements have no renewal options, rent escalation clauses, restrictions or contingent rents and are all executed with third parties. All of the Group’s leases qualify as operating leases.
Information related to operating leases as of December 31, 2025 and June 30, 2026 is as follows:
| As of December 31, | As of June 30, | |||
| 2025 | | 2026 | ||
| US$ | US$ | |||
Assets |
| | | ||
Operating lease right-of-use assets |
| | | ||
Liabilities |
| ||||
Current portion of operating lease liabilities |
| | | ||
Operating lease liabilities |
| | | ||
Weighted average remaining lease term (years) |
| ||||
Weighted average discount rate | % | % |
Information related to operating lease activity during the six months ended June 30, 2025 and 2026 is as follows:
| For the Six Months Ended June 30, | |||
| 2025 | | 2026 | |
US$ | US$ | |||
Operating lease rental expense |
| | | |
Amortization of right-of-use assets |
| | | |
Expense for short-term leases within 12 months |
| | | |
Interest of lease liabilities |
| | | |
| | | ||
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Maturities of lease liabilities were as follows:
| As of December 31, | As of June 30, | ||
2025 | | 2026 | ||
US$ | US$ | |||
Remainder of 2026 |
| | | |
2027 |
| | | |
2028 | — | | ||
2029 | — | | ||
Total undiscounted lease payments |
| | | |
Less: imputed interest |
| ( | ( | |
Total lease liabilities |
| | |
17. COMMITMENTS AND CONTINGENCIES
Contingencies
The Group is currently not involved in any legal or administrative proceedings that may have a material adverse impact on the Group’s business, financial position or results of operations.
18. ORDINARY SHARES
On April 2, 2026, the Company entered into an underwriting agreement with Leerink Partners LLC (“Leerink Partners”) and LifeSci Capital LLC, pursuant to which the Company agreed to issue and sell in an underwritten public offering (the “Offering”) an aggregate of
In March 2024, the Company entered into a sales agreement with Leerink Partners relating to the sale of the Company’s ADSs. A prospectus supplement was filed with the Securities and Exchange Commission for the sale of ADSs having an aggregate offering price of up to US$
F-32