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Adagene Inc.

Adagene Inc.ADAG财报

Nasdaq · Health Care

Adagene Inc. is a global clinical-stage biotechnology company specializing in the research, development, and commercialization of innovative antibody-based cancer immunotherapies. Leveraging its proprietary next-generation antibody technology platforms, it develops targeted oncology treatments for patients across global markets, with core R&D bases in China and clinical programs covering North America, Asia, and Europe.

What changed in Adagene Inc.'s 20-F — 2022 vs 2023

Top changes in Adagene Inc.'s 2023 20-F

642 paragraphs added · 708 removed · 503 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

145 edited+22 added−27 removed898 unchanged
Our business and the ability to generate revenue related to product sales, if ever, will depend on the successful development, regulatory approval and commercialization of our antibody product candidates for the treatment of patients with cancer, particularly ADG116, ADG126, ADG106 and ADG206, which are still in clinical stage.
Our business and the ability to generate revenue related to product sales, if ever, will depend on the successful development, regulatory approval and commercialization of our antibody product candidates for the treatment of patients with cancer, particularly ADG126, ADG116, ADG206 and ADG106, which are still in clinical stage.
Other than our wholly-owned product candidates (ADG116, ADG126, ADG106 and ADG206) and our outlicensed product candidates, ADG104 and ADG125, our current product candidates are in relatively early stages of development.
Other than our wholly-owned product candidates (ADG126, ADG116, ADG206 and ADG106) and our outlicensed product candidates, ADG104 and ADG125, our current product candidates are in relatively early stages of development.
The success of our product candidates, including ADG116, ADG126, ADG106 and ADG206, will depend on several factors, including: ● successful enrollment in, and completion of, preclinical studies and clinical trials; ● receipt of regulatory approvals from the FDA, NMPA and other comparable regulatory authorities for our product candidates; ● establishing commercial manufacturing capabilities, either by building facilities ourselves or making arrangements with third-party manufacturers; ● relying on third parties to conduct our clinical trials safely and efficiently; ● obtaining and maintaining patent, trade secret and other intellectual property protection and regulatory exclusivity; ● protecting our rights in our intellectual property; ● ensuring we do not infringe, misappropriate or otherwise violate the patent, trade secret or other intellectual property rights of third parties; ● launching commercial sales of our product candidates, if and when approved; 31 Table of Contents ● competition with other product candidates and drugs; and ● continued acceptable safety profile for our product candidates following final regulatory approval, if and when received.
The success of our product candidates, including ADG126, ADG116, ADG206 and ADG106, will depend on several factors, including: ● successful enrollment in, and completion of, preclinical studies and clinical trials; ● receipt of regulatory approvals from the FDA, NMPA and other comparable regulatory authorities for our product candidates; 31 Table of Contents ● establishing commercial manufacturing capabilities, either by building facilities ourselves or making arrangements with third-party manufacturers; ● relying on third parties to conduct our clinical trials safely and efficiently; ● obtaining and maintaining patent, trade secret and other intellectual property protection and regulatory exclusivity; ● protecting our rights in our intellectual property; ● ensuring we do not infringe, misappropriate or otherwise violate the patent, trade secret or other intellectual property rights of third parties; ● launching commercial sales of our product candidates, if and when approved; ● competition with other product candidates and drugs; and ● continued acceptable safety profile for our product candidates following final regulatory approval, if and when received.
The biotechnology and pharmaceutical industries are intensely competitive and subject to rapid and significant technological change. We are currently aware of various existing therapies and development candidates that may compete with our wholly owned clinical candidates as they engage similar targets, such as agents targeting CD137 and CTLA-4, and bispecifics targeting both.
The biotechnology and pharmaceutical industries are intensely competitive and subject to rapid and significant technological change. We are currently aware of various existing therapies and development candidates that may compete with our wholly owned clinical candidates as they engage similar targets, such as agents targeting CTLA-4 and CD137, and bispecifics targeting both.
Even if ADG116, ADG126, ADG106, ADG206 or one of our other proprietary product candidates obtains regulatory approval, we may determine that commercializing such product candidate ourselves would not be the most effective way to create value for our shareholders or holders of ADSs.
Even if ADG126, ADG116, ADG206, ADG106 or one of our other proprietary product candidates obtains regulatory approval, we may determine that commercializing such product candidate ourselves would not be the most effective way to create value for our shareholders or holders of ADSs.
To date, we have obtained bulk drug substance for ADG116, ADG126, ADG106 and ADG206 from a single-source third-party contract manufacturer. Any reduction or halt in supply of the drug substance from such contract manufacturer could severely constrain our ability to develop our product candidates until a replacement contract manufacturer is found and qualified.
To date, we have obtained bulk drug substance for ADG126, ADG116, ADG206 and ADG106 from a single-source third-party contract manufacturer. Any reduction or halt in supply of the drug substance from such contract manufacturer could severely constrain our ability to develop our product candidates until a replacement contract manufacturer is found and qualified.
If we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information.
If we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information.
We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful.
We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful.
We do not intend to furnish to any information that may be necessary for United States shareholders, if any, to comply with the CFC rules.
We do not intend to furnish any information that may be necessary for United States shareholders, if any, to comply with the CFC rules.
Moreover, international business relationships subject us to additional risks that may materially adversely affect our ability to attain or sustain profitable operations, including: ● efforts to enter into collaboration or licensing arrangements with third parties in connection with our international sales, marketing and distribution efforts may increase our expenses or divert our management’s attention from the acquisition or development of product candidates; ● changes in a specific country’s or region’s political and cultural climate or economic condition; ● differing regulatory requirements for drug approvals and marketing internationally; ● difficulty of effective enforcement of contractual provisions in local jurisdictions; 51 Table of Contents ● potentially reduced protection for intellectual property rights; ● potential third-party patent rights; ● unexpected changes in tariffs, trade barriers and regulatory requirements; ● economic weakness, including inflation or political instability; ● compliance with tax, employment, immigration and labor laws for employees traveling abroad; ● the effects of applicable tax structures and potentially adverse tax consequences; ● currency fluctuations, which could result in increased operating expenses and reduced revenue, and other obligations incidental to doing business in another country; ● workforce uncertainty and labor unrest and failure to comply with the applicable laws and regulations in relation to management of the employment of foreigners within the PRC; ● the potential for so-called parallel importing, which is what happens when a local seller, faced with high or higher local prices, opts to import goods from an international market with low or lower prices rather than buying them locally; ● failure of our employees and contracted third parties to comply with Office of Foreign Assets Control rules and regulations and the Foreign Corrupt Practices Act of the United States, and other applicable rules and regulations; ● production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and ● business interruptions resulting from geo-political actions, including war and terrorism, or natural disasters, including earthquakes, volcanoes, typhoons, floods, hurricanes and fires.
Moreover, international business relationships subject us to additional risks that may materially adversely affect our ability to attain or sustain profitable operations, including: ● efforts to enter into collaboration or licensing arrangements with third parties in connection with our international sales, marketing and distribution efforts may increase our expenses or divert our management’s attention from the acquisition or development of product candidates; ● changes in a specific country’s or region’s political and cultural climate or economic condition; ● differing regulatory requirements for drug approvals and marketing internationally; ● difficulty of effective enforcement of contractual provisions in local jurisdictions; ● potentially reduced protection for intellectual property rights; ● potential third-party patent rights; ● unexpected changes in tariffs, trade barriers and regulatory requirements; ● economic weakness, including inflation or political instability; ● compliance with tax, employment, immigration and labor laws for employees traveling abroad; ● the effects of applicable tax structures and potentially adverse tax consequences; ● currency fluctuations, which could result in increased operating expenses and reduced revenue, and other obligations incidental to doing business in another country; ● workforce uncertainty and labor unrest and failure to comply with the applicable laws and regulations in relation to management of the employment of foreigners within the PRC; ● the potential for so-called parallel importing, which is what happens when a local seller, faced with high or higher local prices, opts to import goods from an international market with low or lower prices rather than buying them locally; ● failure of our employees and contracted third parties to comply with Office of Foreign Assets Control rules and regulations and the Foreign Corrupt Practices Act of the United States, and other applicable rules and regulations; ● production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and 52 Table of Contents ● business interruptions resulting from geo-political actions, including war and terrorism, or natural disasters, including earthquakes, volcanoes, typhoons, floods, hurricanes and fires.
Our product candidates could fail to receive regulatory approval from the FDA, NMPA or a comparable regulatory authority for many reasons, including: ● disagreement with the design or implementation of our clinical trials; ● failure to demonstrate that a product candidate is safe and effective or safe, pure, and potent for its proposed indication; ● failure of clinical trial results to meet the level of statistical significance required for approval; ● failure to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; ● disagreement with our interpretation of data from preclinical trials or clinical trials; ● the insufficiency of data collected from clinical trials of our product candidates to support the submission and filing of a BLA or other submission or to obtain regulatory approval; ● the FDA, NMPA or comparable regulatory authority’s finding of deficiencies related to the manufacturing processes; ● failure of our product candidates to ensure compliance with Good Manufacturing Practice, or cGMP, following inspections during the regulatory review process or across the production cycle of our product; and ● changes in approval policies, guidances or regulations that render our preclinical and clinical data insufficient for approval.
Our product candidates could fail to receive regulatory approval from the FDA, NMPA or a comparable regulatory authority for many reasons, including: ● disagreement with the design or implementation of our clinical trials; ● failure to demonstrate that a product candidate is safe and effective or safe, pure, and potent for its proposed indication; ● failure of clinical trial results to meet the level of statistical significance required for approval; ● failure to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; ● disagreement with our interpretation of data from preclinical trials or clinical trials; ● the insufficiency of data collected from clinical trials of our product candidates to support the submission and filing of a BLA or other submission or to obtain regulatory approval; ● the FDA, NMPA or comparable regulatory authority’s finding of deficiencies related to the manufacturing processes; ● failure of our product candidates to ensure compliance with current Good Manufacturing Practice, or cGMP, following inspections during the regulatory review process or across the production cycle of our product; and ● changes in approval policies, guidances or regulations that render our preclinical and clinical data insufficient for approval.
Clinical trials can be delayed, suspended, or terminated for a variety of reasons, including the following: ● delays in or failure to obtain regulatory authorization to commence a trial; ● delays in or failure to obtain institutional review board, or IRB, approval at each site; 32 Table of Contents ● delays in or failure to reach agreement on acceptable terms with prospective contract research organizations (CROs), and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; ● difficulty in recruiting clinical trial investigators of appropriate competencies and experience; ● delays in establishing the appropriate dosage levels in clinical trials; ● delays in or failure to recruit and enroll suitable patients to participate in a trial, particularly considering study inclusion and exclusion criteria and patients’ prior lines of therapy and treatment; ● the difficulty in certain countries in identifying the sub-populations that we are trying to treat in a particular trial, which may delay enrollment and reduce the power of a clinical trial to detect statistically significant results; ● lower than anticipated retention rates of patients in clinical trials; ● failure to have patients complete a trial or return for post-treatment follow-up; ● clinical sites deviating from trial protocol or dropping out of a trial; ● delays adding new investigators or clinical trial sites; ● safety or tolerability concerns could cause us or our collaborators or governmental authorities, as applicable, to suspend or terminate a trial if it is found that the participants are being exposed to unacceptable health risks, undesirable side effects or other unfavorable characteristics of the product candidate, or if such undesirable effects or risks are found to be caused by a chemically or mechanistically similar therapeutic or therapeutic candidate; ● our third-party research contractors failing to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; ● changes in regulatory requirements, policies and guidelines; ● failure to comply with the applicable regulatory requirements through the clinical process; ● manufacturing sufficient quantities of a product candidate for use in clinical trials; ● he quality or stability of a product candidate falling below acceptable standards; ● changes in the treatment landscape for our target indications that may make our product candidates no longer relevant; and ● third-party actions claiming infringement by our product candidates in clinical trials outside the United States and obtaining injunctions interfering with our progress.
Clinical trials can be delayed, suspended, or terminated for a variety of reasons, including the following: ● delays in or failure to obtain regulatory authorization to commence a trial; ● delays in or failure to obtain institutional review board, or IRB, approval at each site; ● delays in or failure to reach agreement on acceptable terms with prospective contract research organizations (CROs), and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; ● difficulty in recruiting clinical trial investigators of appropriate competencies and experience; ● delays in establishing the appropriate dosage levels in clinical trials; ● delays in or failure to recruit and enroll suitable patients to participate in a trial, particularly considering study inclusion and exclusion criteria and patients’ prior lines of therapy and treatment; ● the difficulty in certain countries in identifying the sub-populations that we are trying to treat in a particular trial, which may delay enrollment and reduce the power of a clinical trial to detect statistically significant results; ● lower than anticipated retention rates of patients in clinical trials; ● failure to have patients complete a trial or return for post-treatment follow-up; ● clinical sites deviating from trial protocol or dropping out of a trial; ● delays adding new investigators or clinical trial sites; ● safety or tolerability concerns could cause us or our collaborators or governmental authorities, as applicable, to suspend or terminate a trial if it is found that the participants are being exposed to unacceptable health risks, undesirable side effects or other unfavorable characteristics of the product candidate, or if such undesirable effects or risks are found to be caused by a chemically or mechanistically similar therapeutic or therapeutic candidate; ● our third-party research contractors failing to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; ● changes in regulatory requirements, policies and guidelines; ● failure to comply with the applicable regulatory requirements through the clinical process; 33 Table of Contents ● manufacturing sufficient quantities of a product candidate for use in clinical trials; ● the quality or stability of a product candidate falling below acceptable standards; ● changes in the treatment landscape for our target indications that may make our product candidates no longer relevant; and ● third-party actions claiming infringement by our product candidates in clinical trials outside the United States and obtaining injunctions interfering with our progress.
These risks could result in a material change in our operations and the value of our ordinary shares or the ADSs, or could significantly limit or completely hinder our ability to conduct our business, accept foreign investments, or maintain listing on Nasdaq or list on other foreign exchange, and offer or continue to offer securities to investors, and cause the value of such securities to significantly decline or become worthless. 5 Table of Contents You should carefully consider all of the information in this annual report before making an investment in the ordinary shares or ADSs.
These risks could result in a material change in our operations and the value of our ordinary shares or the ADSs, or could significantly limit or completely hinder our ability to conduct our business, accept foreign investments, or maintain listing on Nasdaq or listing on other foreign exchange, and offer or continue to offer securities to investors, and cause the value of such securities to significantly decline or become worthless. 5 Table of Contents You should carefully consider all of the information in this annual report before making an investment in the ordinary shares or ADSs.
Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including: ● the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K; ● the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; ● the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and ● the selective disclosure rules by issuers of material nonpublic information under Regulation FD. 80 Table of Contents We will be required to file an annual report on Form 20-F within four months of the end of each fiscal year.
Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including: ● the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K; ● the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; ● the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and ● the selective disclosure rules by issuers of material nonpublic information under Regulation FD. 79 Table of Contents We will be required to file an annual report on Form 20-F within four months of the end of each fiscal year.
In addition to market and industry factors, the price and trading volume for the ADSs may be highly volatile for factors specific to our own operations, including the following: ● variations in our net revenues, earnings and cash flow; ● announcements of new investments, acquisitions, strategic partnerships, or joint ventures by us or our competitors; ● announcements of new products and services and expansions by us or our competitors; 74 Table of Contents ● changes in financial estimates by securities analysts; ● fluctuations in operating metrics; ● failure on our part to realize monetization opportunities as expected; ● changes in revenues generated from our significant business partners; ● additions or departures of key personnel; ● release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; ● detrimental negative publicity about us, our management, our competitors or our industry; ● regulatory developments affecting us or our industry; and ● potential litigation or regulatory investigations.
In addition to market and industry factors, the price and trading volume for the ADSs may be highly volatile for factors specific to our own operations, including the following: ● variations in our net revenues, earnings and cash flow; ● announcements of new investments, acquisitions, strategic partnerships, or joint ventures by us or our competitors; ● announcements of new products and services and expansions by us or our competitors; 73 Table of Contents ● changes in financial estimates by securities analysts; ● fluctuations in operating metrics; ● failure on our part to realize monetization opportunities as expected; ● changes in revenues generated from our significant business partners; ● additions or departures of key personnel; ● release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; ● detrimental negative publicity about us, our management, our competitors or our industry; ● regulatory developments affecting us or our industry; and ● potential litigation or regulatory investigations.
For details, see page 39 ● Our product candidates may cause undesirable adverse events, side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following any regulatory approval. For details, see page 39 of this annual report.
For details, see page 39 of this annual report; and ● Our product candidates may cause undesirable adverse events, side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following any regulatory approval. For details, see page 39 of this annual report.
Although we maintain incident management and disaster response plans, in the event of a major disruption caused by a natural disaster or man-made problem, such as power disruptions, computer viruses, data security breaches or terrorism, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in our development activities, lengthy interruptions in service, breaches of data security and loss of critical data, any of which could adversely affect our business, results of operations and financial condition. 63 Table of Contents If we fail to implement and maintain an effective system of internal controls, we may be unable to accurately or timely report our results of operations or prevent fraud, and investors’ confidence and the market price of our ADSs may be materially and adversely affected.
Although we maintain incident management and disaster response plans, in the event of a major disruption caused by a natural disaster or man-made problem, such as power disruptions, computer viruses, data security breaches or terrorism, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in our development activities, lengthy interruptions in service, breaches of data security and loss of critical data, any of which could adversely affect our business, results of operations and financial condition. 62 Table of Contents If we fail to implement and maintain an effective system of internal controls, we may be unable to accurately or timely report our results of operations or prevent fraud, and investors’ confidence and the market price of our ADSs may be materially and adversely affected.
Because of the numerous risks and uncertainties associated with our product development, we are unable to accurately predict the timing and amount of our operating expenditures, which will depend largely on: 27 Table of Contents ● the scope, timing, progress, costs and results of discovery, preclinical development, laboratory testing and clinical development activities of our current product candidates; ● the number, scope, progress and results of preclinical and clinical programs we decide to pursue; ● the progress of the development efforts of parties with whom we have entered or may in the future enter into collaborations and research and development agreements; ● our ability to maintain our current licenses, research and development programs, and to establish new collaboration arrangements; ● our ability to maintain competitive advantage over other AI-powered technology platforms at generating highly differentiated product candidates. ● the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; ● the cost, timing and outcome of regulatory review of any of our product candidates; ● the costs and timing of future commercialization activities, including manufacturing, marketing, sales, and distribution, for any of our product candidates for which we receive marketing approval; ● the revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval; and ● our efforts to enhance operational systems and hire additional personnel, including personnel to support development of our product candidates and satisfy our obligations as a public company.
Because of the numerous risks and uncertainties associated with our product development, we are unable to accurately predict the timing and amount of our operating expenditures, which will depend largely on: ● the scope, timing, progress, costs and results of discovery, preclinical development, laboratory testing and clinical development activities of our current product candidates; ● the number, scope, progress and results of preclinical and clinical programs we decide to pursue; ● the progress of the development efforts of parties with whom we have entered or may in the future enter into collaborations and research and development agreements; ● our ability to maintain our current licenses, research and development programs, and to establish new collaboration arrangements; ● our ability to maintain competitive advantage over other AI-powered technology platforms at generating highly differentiated product candidates. ● the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; ● the cost, timing and outcome of regulatory review of any of our product candidates; ● the costs and timing of future commercialization activities, including manufacturing, marketing, sales, and distribution, for any of our product candidates for which we receive marketing approval; ● the revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval; and ● our efforts to enhance operational systems and hire additional personnel, including personnel to support development of our product candidates and satisfy our obligations as a public company.
Regardless of the merits or eventual outcome, liability claims may result in significant negative consequences to our business and prospects, including, but not limited to: ● decreased demand for our product candidates or any resulting products; ● damage to our reputation; ● withdrawal of other clinical trial participants; ● costs to defend the related litigation; ● a diversion of our management’s time and resources; ● substantial monetary awards to trial participants or patients; ● inability to commercialize our product candidates; and ● a decline in the market price of our ADSs. 59 Table of Contents We are subject to changing law and regulations regarding regulatory matters, corporate governance and public disclosure that have increased both our costs and the risk of noncompliance.
Regardless of the merits or eventual outcome, liability claims may result in significant negative consequences to our business and prospects, including, but not limited to: ● decreased demand for our product candidates or any resulting products; ● damage to our reputation; ● withdrawal of other clinical trial participants; ● costs to defend the related litigation; ● a diversion of our management’s time and resources; ● substantial monetary awards to trial participants or patients; ● inability to commercialize our product candidates; and ● a decline in the market price of our ADSs. 58 Table of Contents We are subject to changing law and regulations regarding regulatory matters, corporate governance and public disclosure that have increased both our costs and the risk of noncompliance.
For example, if we or our CROs were to treat research animals inhumanely or in violation of international standards set out by the Association for Assessment and Accreditation of Laboratory Animal Care, it could revoke any such accreditation and the accuracy of our animal research data could be questioned. 60 Table of Contents If we or our third-party research collaborators or other contractors or consultants fail to comply with environmental, fire protection, drainage or health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business.
For example, if we or our CROs were to treat research animals inhumanely or in violation of international standards set out by the Association for Assessment and Accreditation of Laboratory Animal Care, it could revoke any such accreditation and the accuracy of our animal research data could be questioned. 59 Table of Contents If we or our third-party research collaborators or other contractors or consultants fail to comply with environmental, fire protection, drainage or health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business.
For details, see page 11 of this annual report; ● Your investments in our ADSs and/or ordinary shares are investments in equity securities of a Cayman Islands holding company rather than equity securities of our subsidiaries that have substantive business operations in China.
For details, see page 11 of this annual report; ● Your investments in our ADSs and/or ordinary shares are investments in equity securities of a Cayman Islands holding company rather than equity securities of our subsidiaries that have substantive business operations in China for instance.
Similarly, there can be no assurance that after subsequent FDA feedback we will continue to pursue or apply for accelerated approval or any other form of expedited development, review or approval, even if we initially decide to do so.
Similarly, there can be no assurance that after subsequent FDA feedback we will permit or continue to pursue or apply for accelerated approval or any other form of expedited development, review or approval, even if we initially decide to do so.
The deposit agreement governing the ADSs representing our ordinary shares provides that, to the fullest extent permitted by law, ADS holders waive the right to a jury trial of any claim they may have against us or the depositary arising out of or relating to our shares, the ADSs or the deposit agreement, including any claim under the U.S. federal securities laws. 76 Table of Contents If we or the depositary opposed a jury trial demand based on the waiver, the court would determine whether the waiver was enforceable based on the facts and circumstances of that case in accordance with the applicable state and federal law.
The deposit agreement governing the ADSs representing our ordinary shares provides that, to the fullest extent permitted by law, ADS holders waive the right to a jury trial of any claim they may have against us or the depositary arising out of or relating to our shares, the ADSs or the deposit agreement, including any claim under the U.S. federal securities laws. 75 Table of Contents If we or the depositary opposed a jury trial demand based on the waiver, the court would determine whether the waiver was enforceable based on the facts and circumstances of that case in accordance with the applicable state and federal law.
The ADSs sold in our initial public offering are freely tradable by persons other than our “affiliates” without restriction or further registration under the Securities Act, and shares held by our existing shareholders may also be sold in the public market in the future subject to the restrictions in Rule 144 and Rule 701 under the Securities Act and the applicable lock-up agreements. 75 Table of Contents Our memorandum and articles of association contain anti-takeover provisions that could have a material adverse effect on the rights of holders of our ordinary shares and the ADSs.
The ADSs sold in our initial public offering are freely tradable by persons other than our “affiliates” without restriction or further registration under the Securities Act, and shares held by our existing shareholders may also be sold in the public market in the future subject to the restrictions in Rule 144 and Rule 701 under the Securities Act and the applicable lock-up agreements. 74 Table of Contents Our memorandum and articles of association contain anti-takeover provisions that could have a material adverse effect on the rights of holders of our ordinary shares and the ADSs.
Senate passed a bill, also known as the Accelerating Holding Foreign Companies Accountable Act, to amend Section 104(i) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7214(i)) to prohibit securities of any registrant from being listed on any of the U.S. securities exchanges or traded over-the-counter if the auditor of the registrant’s financial statements is not subject to PCAOB inspection for two consecutive years, instead of three consecutive years as initially required under the HFCA Act, after the law becomes effective.
Senate passed a bill, also known as the Accelerating Holding Foreign Companies Accountable Act, to amend Section 104(i) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7214(i)) to prohibit securities of any registrant from being listed on any of the U.S. securities exchanges or traded over-the-counter if the auditor of the registrant’s financial statements is not subject to PCAOB inspection for two consecutive years, instead of three consecutive years as initially required under the HFCAA, after the law becomes effective.
For example, we may in the future enter into license agreements that are not assignable or transferable, or that require the licensor’s express consent in order for an assignment or transfer to take place. 68 Table of Contents We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time consuming and unsuccessful, and any unfavorable outcome from such litigation could limit our research and development activities and/or our ability to commercialize our product candidates.
For example, we may in the future enter into license agreements that are not assignable or transferable, or that require the licensor’s express consent in order for an assignment or transfer to take place. 67 Table of Contents We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time consuming and unsuccessful, and any unfavorable outcome from such litigation could limit our research and development activities and/or our ability to commercialize our product candidates.
Individually identifiable health information is considered sensitive data that merits stronger safeguards. 62 Table of Contents In addition, certain state and non-U.S. laws, such as the European Union General Data Protection Regulation, or the GDPR, govern the privacy and security of health information and other personal information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
Individually identifiable health information is considered sensitive data that merits stronger safeguards. 61 Table of Contents In addition, certain state and non-U.S. laws, such as the European Union General Data Protection Regulation, or the GDPR, govern the privacy and security of health information and other personal information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. 65 Table of Contents In addition, if we were to initiate legal proceedings against a third party to enforce a patent covering one of our product candidates, the defendant could counterclaim that our patent is invalid and/or unenforceable.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. 64 Table of Contents In addition, if we were to initiate legal proceedings against a third party to enforce a patent covering one of our product candidates, the defendant could counterclaim that our patent is invalid and/or unenforceable.
Our ability to generate product revenue and achieve profitability depends on, among other things: ● completing research and development of our product candidates; 26 Table of Contents ● initiating, enrolling patients in and completing clinical trials of product candidates on a timely basis; ● obtaining regulatory approvals and marketing authorizations for any product candidates for which we complete clinical trials; ● developing and maintaining adequate manufacturing capabilities either by ourselves or in connection with third-party manufacturers; ● launching and commercializing any product candidates for which we obtain regulatory approvals and marketing authorizations; ● establishing a sales, marketing and commercialization team for any future products for which we may obtain regulatory approval; ● seeking to identify additional product candidates; ● addressing any competing technological and market developments; and ● maintaining, protecting and expanding our portfolio of intellectual property rights.
Our ability to generate product revenue and achieve profitability depends on, among other things: ● completing research and development of our product candidates; ● initiating, enrolling patients in and completing clinical trials of product candidates on a timely basis; ● obtaining regulatory approvals and marketing authorizations for any product candidates for which we complete clinical trials; ● developing and maintaining adequate manufacturing capabilities either by ourselves or in connection with third-party manufacturers; ● launching and commercializing any product candidates for which we obtain regulatory approvals and marketing authorizations; ● establishing a sales, marketing and commercialization team for any future products for which we may obtain regulatory approval; ● seeking to identify additional product candidates; ● addressing any competing technological and market developments; and ● maintaining, protecting and expanding our portfolio of intellectual property rights.
For details, see page 28 of this annual report; and ● We have certain shareholders who have board representation rights and their individual interests may differ from yours. For details, see page 29 of this annual report.
For details, see page 29 of this annual report; and ● We have certain shareholders who have board representation rights and their individual interests may differ from yours. For details, see page 29 of this annual report.
If our confidential or proprietary information is divulged to or acquired by third parties, including our competitors, our competitive position in the marketplace will be adversely affected and this would have a material adverse effect on our business. 66 Table of Contents Many companies have encountered significant problems in protecting and defending intellectual property rights in certain countries.
If our confidential or proprietary information is divulged to or acquired by third parties, including our competitors, our competitive position in the marketplace will be adversely affected and this would have a material adverse effect on our business. 65 Table of Contents Many companies have encountered significant problems in protecting and defending intellectual property rights in certain countries.
Additionally, the patent applications in respect of patents licensed under our in-license arrangements may not be issued or granted, and as a result, we may not be able to have adequate protection with respect to such patents. 64 Table of Contents The patent position of biotechnology and pharmaceutical companies is generally uncertain because it involves complex legal and factual considerations.
Additionally, the patent applications in respect of patents licensed under our in-license arrangements may not be issued or granted, and as a result, we may not be able to have adequate protection with respect to such patents. 63 Table of Contents The patent position of biotechnology and pharmaceutical companies is generally uncertain because it involves complex legal and factual considerations.
For details, see page 68 of this annual report; ● We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time consuming and unsuccessful, and any unfavorable outcome from such litigation could limit our research and development activities and/or our ability to commercialize our product candidates.
For details, see page 67 of this annual report; ● We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time consuming and unsuccessful, and any unfavorable outcome from such litigation could limit our research and development activities and/or our ability to commercialize our product candidates.
As a result, our expenses associated with share-based compensation may increase, which may have an adverse effect on our results of operations. 58 Table of Contents Our employees, third-party suppliers, consultants and commercial partners may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, and insider trading.
As a result, our expenses associated with share-based compensation may increase, which may have an adverse effect on our results of operations. 57 Table of Contents Our employees, third-party suppliers, consultants and commercial partners may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, and insider trading.
As a company with less than US$1.07 billion in revenues for our last fiscal year, we qualify as an “emerging growth company” pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies.
As a company with less than US$1.235 billion in revenues for our last fiscal year, we qualify as an “emerging growth company” pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies.
Unauthorized access, loss, or dissemination could also result in delays of our product development and regulatory approval efforts as well as damage our reputation. 61 Table of Contents For example, the loss of clinical trial data from completed or ongoing clinical trials could result in delays in any regulatory approval or clearance efforts and significantly increase our costs to recover or reproduce the data, and subsequently commercialize the product.
Unauthorized access, loss, or dissemination could also result in delays of our product development and regulatory approval efforts as well as damage our reputation. 60 Table of Contents For example, the loss of clinical trial data from completed or ongoing clinical trials could result in delays in any regulatory approval or clearance efforts and significantly increase our costs to recover or reproduce the data, and subsequently commercialize the product.
As a result, our patent portfolio may not provide us with sufficient rights over a sufficient length of time to exclude others from commercializing products similar or identical to ours. 72 Table of Contents Uncertainty of the length of patent term extensions and data and market exclusivities for our pharmaceutical products could increase the risk of generic competition.
As a result, our patent portfolio may not provide us with sufficient rights over a sufficient length of time to exclude others from commercializing products similar or identical to ours. 71 Table of Contents Uncertainty of the length of patent term extensions and data and market exclusivities for our pharmaceutical products could increase the risk of generic competition.
We cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote the underlying ordinary shares represented by your ADSs. 77 Table of Contents In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for their manner of carrying out your voting instructions.
We cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote the underlying ordinary shares represented by your ADSs. 76 Table of Contents In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for their manner of carrying out your voting instructions.
The make-up duration shall not exceed five years, and the total valid duration of a patent right shall not exceed 14 years after a new drug is approved for marketing. 67 Table of Contents We may not be successful in obtaining or maintaining necessary rights for our development pipeline through acquisitions and licensing deals.
The make-up duration shall not exceed five years, and the total valid duration of a patent right shall not exceed 14 years after a new drug is approved for marketing. 66 Table of Contents We may not be successful in obtaining or maintaining necessary rights for our development pipeline through acquisitions and licensing deals.
Furthermore, we would be exposed to a threat of litigation. 69 Table of Contents Third-party intellectual property right holders may also actively bring infringement or other intellectual property-related claims against us, even if we have received patent protection for our technologies, products, and services.
Furthermore, we would be exposed to a threat of litigation. 68 Table of Contents Third-party intellectual property right holders may also actively bring infringement or other intellectual property-related claims against us, even if we have received patent protection for our technologies, products, and services.
Compliance or the failure to comply with such laws could increase the costs of our products and services, limit their use or adoption, and otherwise negatively affect our operating results and business.” 17 Table of Contents On February 24, 2023, the CSRC and other PRC governmental authorities jointly issued the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies (the “Confidentiality Provisions”), which will come into effect on March 31, 2023.
Compliance or the failure to comply with such laws could increase the costs of our products and services, limit their use or adoption, and otherwise negatively affect our operating results and business.” 17 Table of Contents On February 24, 2023, the CSRC and other PRC governmental authorities jointly issued the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies (the “Confidentiality Provisions”), which came into effect on March 31, 2023.
In addition, to the extent that our employees, consultants or contractors use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions. 70 Table of Contents Trade secrets are difficult to protect.
In addition, to the extent that our employees, consultants or contractors use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions. 69 Table of Contents Trade secrets are difficult to protect.
Accordingly, given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. Excluding any patent term adjustment and patent term extension, our currently issued patents are expected to expire from 2033 to 2038.
Accordingly, given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. Excluding any patent term adjustment and patent term extension, our currently issued patents are expected to expire from 2033 to 2039.
In addition, Cayman Islands companies may not have the standing to initiate a shareholder derivative action in a federal court of the United States. 79 Table of Contents Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records or to obtain copies of lists of shareholders of these companies.
In addition, Cayman Islands companies may not have the standing to initiate a shareholder derivative action in a federal court of the United States. 78 Table of Contents Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records or to obtain copies of lists of shareholders of these companies.
We are conducting clinical trials and may in the future conduct additional clinical trials for our product candidates outside the United States, including in Australia, Europe or other foreign jurisdictions. The acceptance of trial data from clinical trials conducted outside the United States by the FDA may be subject to certain conditions.
We are conducting clinical trials and may in the future conduct additional clinical trials for our product candidates outside the United States, including in Australia, Europe or other foreign jurisdictions. The acceptance of trial data from clinical trials conducted outside the United States by the FDA will likely be subject to certain conditions.
We were likely a passive foreign investment company, or PFIC, for 2022, and there is a significant risk that we will be a PFIC for 2023 and possibly subsequent taxable years, in which case U.S. investors will generally be subject to adverse U.S. federal income tax consequences.
We were likely a passive foreign investment company, or PFIC, for 2023, and there is a significant risk that we will be a PFIC for 2024 and possibly subsequent taxable years, in which case U.S. investors will generally be subject to adverse U.S. federal income tax consequences.
The assets shown on our balance sheet are expected to consist primarily of cash and cash equivalents for the foreseeable future. Therefore, whether we will satisfy the asset test for any taxable year will depend largely on the value of our goodwill and on how quickly we utilize the cash in our business.
The assets shown on our balance sheet are expected to consist primarily of cash and cash equivalents for the foreseeable future. Therefore, whether we will satisfy the asset test for any taxable year will depend largely on the value of our goodwill and other intangible assets and on how quickly we utilize the cash in our business.
U.S. investors that may be treated for purposes of the CFC rules as owning 10% of our stock by voting power or value should consult their tax advisors regarding the potential application of these rules in their particular circumstances. 81 Table of Contents
U.S. investors that may be treated for purposes of the CFC rules as owning 10% of our stock by voting power or value should consult their tax advisors regarding the potential application of these rules in their particular circumstances. 80 Table of Contents
Our research programs may initially show promise in identifying potential product candidates, yet fail to yield product candidates for clinical development for a number of reasons, including: ● our research or business development methodology or search criteria and process may be unsuccessful in identifying potential product candidates; ● our potential product candidates may be shown to have harmful side effects or may have other characteristics that may make the products unmarketable or unlikely to obtain marketing approval; and 29 Table of Contents ● potential product candidates may not be effective in treating their targeted diseases.
Our research programs may initially show promise in identifying potential product candidates, yet fail to yield product candidates for clinical development for a number of reasons, including: ● our research or business development methodology or search criteria and process may be unsuccessful in identifying potential product candidates; ● our potential product candidates may be shown to have harmful side effects or may have other characteristics that may make the products unmarketable or unlikely to obtain marketing approval; and ● potential product candidates may not be effective in treating their targeted diseases.
For details, see page 75 of this annual report; ● If securities or industry analysts cease to publish research or reports about our business, or if they adversely change their recommendations regarding the ADSs, the market price for the ADSs and trading volume could decline.
For details, see page 74 of this annual report; ● If securities or industry analysts cease to publish research or reports about our business, or if they adversely change their recommendations regarding the ADSs, the market price for the ADSs and trading volume could decline.
Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects. 71 Table of Contents Intellectual property rights do not necessarily protect us from all potential threats to our competitive advantages.
Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects. 70 Table of Contents Intellectual property rights do not necessarily protect us from all potential threats to our competitive advantages.
For details, see page 16 of this annual report; and ● Substantial uncertainties exist with respect to the interpretation and implementation of the newly enacted Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations. For details, see page 19 of this annual report.
For details, see page 16 of this annual report; and ● Substantial uncertainties exist with respect to the interpretation and implementation of the Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations. For details, see page 19 of this annual report.
The situation is further complicated by the political tensions between the United States and China that escalated during the COVID-19 pandemic and in the wake of the PRC National People’s Congress’ decision on Hong Kong national security legislation, sanctions imposed by the U.S.
The situation is further complicated by the political tensions between the United States and China that escalated during the outbreak of COVID-19 and in the wake of the PRC National People’s Congress’ decision on Hong Kong national security legislation, sanctions imposed by the U.S.
If granted, accelerated approval is usually contingent on the sponsor’s agreement to conduct, in a diligent manner, additional post- approval confirmatory studies to verity and describe the drug’s clinical benefit. If such post-approval studies fail to confirm the drug’s clinical benefit, the FDA may withdraw its approval of the drug.
If granted, accelerated approval is usually contingent on the sponsor’s agreement to conduct, in a diligent manner, additional post- approval confirmatory studies to verify and describe the drug’s clinical benefit. If such post-approval studies fail to confirm the drug’s clinical benefit, the FDA may withdraw its approval of the drug.
The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. We did not receive any of our revenues in Renminbi in cash in the years ended Decemebr 31, 2020, 2021 and 2022.
The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. We did not receive any of our revenues in Renminbi in cash in the years ended Decemebr 31, 2021, 2022 and 2023.
These restrictions may cause a material decline in the value of the ADSs. 78 Table of Contents You may experience dilution of your holdings due to the inability to participate in rights offerings. We may, from time to time, distribute rights to our shareholders, including rights to acquire securities.
These restrictions may cause a material decline in the value of the ADSs. 77 Table of Contents You may experience dilution of your holdings due to the inability to participate in rights offerings. We may, from time to time, distribute rights to our shareholders, including rights to acquire securities.
Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license. 73 Table of Contents We may not be able to protect and enforce our trademarks.
Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license. 72 Table of Contents We may not be able to protect and enforce our trademarks.
Our failure to comply with these regulations may require us to repeat or suspend clinical trials, which would delay the regulatory approval process. Further, these investigators and CROs are not our employees and we will not be able to control, other than by contract, the amount of resources, including time, which they devote to our product candidates and clinical trials.
Our failure to comply with these regulations may require us to repeat or suspend clinical trials, which would delay the regulatory approval process. 54 Table of Contents Further, these investigators and CROs are not our employees and we will not be able to control, other than by contract, the amount of resources, including time, which they devote to our product candidates and clinical trials.
For details, see page 26 of this annual report; ● We may need to obtain substantial additional financing to fund our growth and operations, which may not be available on acceptable terms, if at all.
For details, see page 27 of this annual report; ● We may need to obtain substantial additional financing to fund our growth and operations, which may not be available on acceptable terms, if at all.
For details, see page 27 of this annual report; ● Raising additional capital may lead to dilution of shareholdings by our existing shareholders and restrict our operations or require us to relinquish rights to our technologies or product candidates.
For details, see page 28 of this annual report; ● Raising additional capital may lead to dilution of shareholdings by our existing shareholders and restrict our operations or require us to relinquish rights to our technologies or product candidates.
For details, see page 69 of this annual report; and ● Our commercial success depends significantly on our ability to operate without infringing upon, misappropriating or otherwise violating the intellectual property rights of third parties. For details, see page 69 of this annual report.
For details, see page 68 of this annual report; and ● Our commercial success depends significantly on our ability to operate without infringing upon, misappropriating or otherwise violating the intellectual property rights of third parties. For details, see page 68 of this annual report.
A decline in the value of our company could also cause you to lose all or part of your investment. We may need to obtain substantial additional financing to fund our growth and operations, which may not be available on acceptable terms, if at all. The development of biopharmaceutical product candidates is capital-intensive.
A decline in the value of our company could also cause you to lose all or part of your investment. 27 Table of Contents We may need to obtain substantial additional financing to fund our growth and operations, which may not be available on acceptable terms, if at all. The development of biopharmaceutical product candidates is capital-intensive.
Furthermore, partners, collaborators, or other parties to such transactions or arrangements may fail to fully perform their obligations or meet our expectations or cooperate with us satisfactorily for various reasons and subject us to potential risks, including the followings: ● partners, collaborators, or other parties have significant discretion in determining the efforts and resources that they will apply to a transaction or arrangement; ● partners, collaborators, or other parties could independently develop, or develop with third parties, services and products that compete directly or indirectly with our product candidates; ● partners, collaborators, or other parties may stop, delay or discontinue clinical trials as well as repeat clinical trials or conduct new clinical trials by using our intellectual property or proprietary information; ● partners, collaborators, or other parties may not properly maintain or defend our intellectual property rights or may use our intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential liabilities; ● disputes may arise between us and partners, collaborators, or other parties that cause the delay or termination of the research, development or commercialization of our product candidates, or that result in costly litigation or arbitration that diverts management’s attention and resources; ● partners, collaborators, or other parties may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable services and products; and ● partners, collaborators, or other parties may own or co-own intellectual properties covering our product candidates that results from our collaborating with them, and in such cases, we would not have the exclusive right to commercialize such intellectual properties.
We may not realize the anticipated benefits of any such transaction or arrangement. 53 Table of Contents Furthermore, partners, collaborators, or other parties to such transactions or arrangements may fail to fully perform their obligations or meet our expectations or cooperate with us satisfactorily for various reasons and subject us to potential risks, including the following: ● partners, collaborators, or other parties have significant discretion in determining the efforts and resources that they will apply to a transaction or arrangement; ● partners, collaborators, or other parties could independently develop, or develop with third parties, services and products that compete directly or indirectly with our product candidates; ● partners, collaborators, or other parties may stop, delay or discontinue clinical trials as well as repeat clinical trials or conduct new clinical trials by using our intellectual property or proprietary information; ● partners, collaborators, or other parties may not properly maintain or defend our intellectual property rights or may use our intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential liabilities; ● disputes may arise between us and partners, collaborators, or other parties that cause the delay or termination of the research, development or commercialization of our product candidates, or that result in costly litigation or arbitration that diverts management’s attention and resources; ● partners, collaborators, or other parties may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable services and products; and ● partners, collaborators, or other parties may own or co-own intellectual properties covering our product candidates that results from our collaborating with them, and in such cases, we would not have the exclusive right to commercialize such intellectual properties.
CROs, as well as expose us to risks associated with clinical investigators who are unknown to the FDA, and different standards of diagnosis, screening and medical care. If we encounter difficulties in enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected.
CROs, as well as expose us to risks associated with clinical investigators who are unknown to the FDA, and different standards of diagnosis, screening and medical care. 34 Table of Contents If we encounter difficulties in enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected.
For details, see page 29 of this annual report; ● We may not be successful in our efforts to use and expand our proprietary platforms to build a pipeline of product candidates.
For details, see page 30 of this annual report; ● We may not be successful in our efforts to use and expand our proprietary platforms to build a pipeline of product candidates.
For details, see page 67 of this annual report; ● We may not be successful in obtaining or maintaining necessary rights for our development pipeline through acquisitions and licensing deals.
For details, see page 66 of this annual report; ● We may not be successful in obtaining or maintaining necessary rights for our development pipeline through acquisitions and licensing deals.
For details, see page 74 of this annual report; ● we are an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements.
For details, see page 73 of this annual report; ● we are an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements.
Changes in pricing regulation could restrict the amount that we are able to charge for our future approved drugs, which would adversely affect our revenue, profitability and results of operations. We intend to seek approval to market our product candidates in the United States, China and in other jurisdictions.
Changes in pricing regulation could restrict the amount that we are able to charge for our future approved drugs, which would adversely affect our revenue, profitability and results of operations. 51 Table of Contents We intend to seek approval to market our product candidates in the United States, China and in other jurisdictions.
For details, see page 64 of this annual report; ● Changes in patent law could diminish the value of patents in general, thereby impairing our ability to protect our product candidates.
For details, see page 63 of this annual report; ● Changes in patent law could diminish the value of patents in general, thereby impairing our ability to protect our product candidates.
As a result, the value of our ADSs may significantly decline. For details, see page 74 of this annual report. ● You may be subject to limitations on transfer of your ADSs.
As a result, the value of our ADSs may significantly decline. For details, see page 73 of this annual report. ● You may be subject to limitations on transfer of your ADSs.
We may not be able to enter into additional collaboration agreements beyond our existing clinical trial collaboration with Roche, technology licensing agreements with Sanofi, Exelixis and ADC Therapeutics, our outlicensing agreements with Guilin Sanjin and Dragon Boat, or Discovery Agreements such as those with NIH, Tanabe, Celgene, GSK, Hengrui and others.
We may not be able to enter into additional collaboration agreements beyond our existing clinical trial collaboration with Roche and Merck, technology licensing agreements with Sanofi and Exelixis, our outlicensing agreements with Guilin Sanjin and Dragon Boat, or Discovery Agreements such as those with NIH, Tanabe, Celgene, GSK, Hengrui and others.
As a result, we might obtain regulatory approval for a drug in a particular country, but then be subject to price regulations that delay our commercial launch of the drug and negatively impact our revenues. A primary trend in the global healthcare industry is cost containment.
As a result, we might obtain regulatory approval for a drug in a particular country, but then be subject to price regulations that delay our commercial launch of the drug and negatively impact our revenues. 50 Table of Contents A primary trend in the global healthcare industry is cost containment.
Our management conducted an evaluation of the effectiveness of our internal control over financial reporting and concluded that our internal control over financial reporting was effective as of December 31, 2022. For details, see “Item 15.
Our management conducted an evaluation of the effectiveness of our internal control over financial reporting and concluded that our internal control over financial reporting was effective as of December 31, 2023. For details, see “Item 15.
If we raise additional funds through partnerships, collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, product candidates, or future revenue streams, or grant licenses on terms that are not favorable to us. 28 Table of Contents We have certain shareholders who have board representation rights and their individual interests may differ from yours.
If we raise additional funds through partnerships, collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, product candidates, or future revenue streams, or grant licenses on terms that are not favorable to us. We have certain shareholders who have board representation rights and their individual interests may differ from yours.
For details, see page 74 of this annual report; ● The trading price of the ADSs is likely to be volatile, which could result in substantial losses to investors.
For details, see page 73 of this annual report; ● The trading price of the ADSs is likely to be volatile, which could result in substantial losses to investors.
Though we carefully manage our relationships with our CROs, there can be no assurance that we will not encounter similar challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition and prospects. 54 Table of Contents We currently rely on a third-party manufacturer to produce our product candidates.
Though we carefully manage our relationships with our CROs, there can be no assurance that we will not encounter similar challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition and prospects. We currently rely on a third-party manufacturer to produce our product candidates.
For details, see page 75 of this annual report; ● The sale or availability for sale, or perceived sale or availability for sale, of substantial amounts of the ADSs could adversely affect their market price.
For details, see page 74 of this annual report; ● The sale or availability for sale, or perceived sale or availability for sale, of substantial amounts of the ADSs could adversely affect their market price.
We will need to grow our organization, and we may experience difficulties in managing this growth, which could disrupt our operations. As of December 31, 2022, we had 248 full-time employees. As our development and commercialization plans and strategies develop, we expect to expand our employee base for managerial, operational, financial and other resources.
We will need to grow our organization, and we may experience difficulties in managing this growth, which could disrupt our operations. As of December 31, 2023, we had 174 full-time employees. As our development and commercialization plans and strategies develop, we expect to expand our employee base for managerial, operational, financial and other resources.
Passive income generally includes interest, dividends, gains from certain property transactions, rents and royalties (other than certain rents or royalties derived in the active conduct of a trade or business). Cash is generally a passive asset for PFIC purposes. Goodwill is an active asset under the PFIC rules to the extent attributable to activities that produce active income.
Passive income generally includes interest, dividends, gains from certain property transactions, rents and royalties (other than certain rents or royalties derived in the active conduct of a trade or business). Cash is generally a passive asset for PFIC purposes. Goodwill and other intangible assets are active under the PFIC rules to the extent attributable to activities that produce active income.
Pursuant to the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit our shares or ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States.
Pursuant to the HFCAA and the Consoldiated Appropriations Act, 2023, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit our shares or ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Summary of Clinical Studies & Results In March 2021, we initiated a Phase 1 trial of ADG126 (ADG126-1001) as monotherapy to evaluate safety and determine a RP2D in patients with advance metastatic tumors, using a traditional “3+3” dose escalation design.
Summary of Monotherapy Clinical Studies & Results In March 2021, we initiated a Phase 1 trial of ADG126 (ADG126-1001) as monotherapy to evaluate safety and determine a RP2D in patients with advance metastatic tumors, using a traditional “3+3” dose escalation design.
The clinical collaboration and supply agreements include two open-label, dose escalation and expansion clinical studies to evaluate our anti-CTLA-4 mAb product candidates, ADG116 and ADG126, in combination with pembrolizumab for patients with advanced/metastatic solid tumors, respectively.
The clinical collaboration and supply agreements include two open-label, dose escalation and expansion clinical studies to evaluate our anti-CTLA-4 mAb product candidates, ADG126 and ADG116, in combination with pembrolizumab for patients with advanced/metastatic solid tumors, respectively.
The NIH now leads and is responsible for the manufacturing and clinical development of the CAR-T cell therapy candidate. ● Under a material transfer agreement, we developed SAFEbody drug conjugates candidates against a tumor target selected by Tanabe Research Laboratories, Inc. ● We had worked with Celgene (now Bristol-Myers Squibb) to discover antibodies targeting novel antigens using our proprietary DPL platform. ● We collaborated with GlaxoSmithKline (China), or GSK China, where we were engaged to generate high affinity antibodies against multiple epitopes of multi-transmembrane targets; and ● We worked with Jiangsu Hengrui Medicine Company Limited, or Jiangsu Hengrui, where we were able to discover cross-reactive agonistic antibody for immuno-oncology.
The NIH leads and is responsible for the manufacturing and clinical development of the CAR-T cell therapy candidate. ● Under a material transfer agreement, we developed SAFEbody drug conjugates candidates against a tumor target selected by Tanabe Research Laboratories, Inc. ● We had worked with Celgene (now Bristol-Myers Squibb) to discover antibodies targeting novel antigens using our proprietary DPL platform. ● We collaborated with GlaxoSmithKline (China), or GSK China, where we were engaged to generate high affinity antibodies against multiple epitopes of multi-transmembrane targets; and ● We worked with Jiangsu Hengrui Medicine Company Limited, or Jiangsu Hengrui, where we were able to discover cross-reactive agonistic antibody for immuno-oncology.
Our patent strategy is focused on seeking coverage for our core technologies and products, such as the DPL platform, ADG116, ADG126, ADG106 and ADG206.
Our patent strategy is focused on seeking coverage for our core technologies and products, such as the DPL platform, ADG126, ADG116, ADG206 and ADG106.
The Draft Data Security Regulations provide a broad definition of “data processing activities,” including collection, storage, usage, processing, transfer, provision, publication, deletion and other activities, which covers the entire life cycle of data processing.
The Draft Data Security Regulations provide a broad definition of “data processing activities,” including collection, storage, usage, processing, transfer, provision, publication, deletion and other activities, which covers the entire life cycle of data processing.
Such laws include, without limitation: ● the U.S. federal Anti-Kickback Statute, which prohibits, among other things, persons and entities from knowingly and willfully soliciting, receiving, offering or paying remuneration, to induce, or in return for, either the referral of an individual, or the purchase or recommendation of an item or service for which payment may be made under any federal healthcare program; ● federal civil and criminal false claims laws, including the civil False Claims Act, and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment to the federal government, including federal healthcare programs, that are false or fraudulent; ● the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional federal criminal statutes which prohibit, among other things, executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters, and which, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, also imposes certain requirements on HIPAA covered entities and their business associates relating to the privacy, security and transmission of individually identifiable health information; ● the U.S. federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to annually report to the federal government, information related to payments or other transfers of value made to physicians, as defined by such law, certain other health care providers beginning in 2022, and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; and ● United States state and foreign law equivalents of each of the above federal laws, which, in some cases, differ from each other in significant ways, and may not have the same effect, thus complicating compliance efforts, including laws governing the privacy and security of personal data, such as the GDPR, which imposes obligations and restrictions on the collection and use of personal data relating to individuals located in the EU and EEA (including with regard to health data). 133 Table of Contents If their operations are found to be in violation of any of such laws or any other governmental regulations that apply, they may be subject to significant penalties, including, without limitation, civil, criminal and administrative penalties, damages, fines, exclusion from government-funded healthcare programs, such as Medicare and Medicaid or similar programs in other countries or jurisdictions, integrity oversight and reporting obligations to resolve allegations of non-compliance, disgorgement, imprisonment, contractual damages, reputational harm, diminished profits and the curtailment or restructuring of our operations.
Such laws include, without limitation: ● the U.S. federal Anti-Kickback Statute, which prohibits, among other things, persons and entities from knowingly and willfully soliciting, receiving, offering or paying remuneration, to induce, or in return for, either the referral of an individual, or the purchase or recommendation of an item or service for which payment may be made under any federal healthcare program; ● federal civil and criminal false claims laws, including the civil False Claims Act, and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment to the federal government, including federal healthcare programs, that are false or fraudulent; ● the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional federal criminal statutes which prohibit, among other things, executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters, and which, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, also imposes certain requirements on HIPAA covered entities and their business associates relating to the privacy, security and transmission of individually identifiable health information; ● the U.S. federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to annually report to the federal government, information related to payments or other transfers of value made to physicians, as defined by such law, certain other health care providers beginning in 2022, and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; and ● United States state and foreign law equivalents of each of the above federal laws, which, in some cases, differ from each other in significant ways, and may not have the same effect, thus complicating compliance efforts, including laws governing the privacy and security of personal data, such as the GDPR, which imposes obligations and restrictions on the collection and use of personal data relating to individuals located in the EU and EEA (including with regard to health data). 124 Table of Contents If their operations are found to be in violation of any of such laws or any other governmental regulations that apply, they may be subject to significant penalties, including, without limitation, civil, criminal and administrative penalties, damages, fines, exclusion from government-funded healthcare programs, such as Medicare and Medicaid or similar programs in other countries or jurisdictions, integrity oversight and reporting obligations to resolve allegations of non-compliance, disgorgement, imprisonment, contractual damages, reputational harm, diminished profits and the curtailment or restructuring of our operations.
The Revised GCP Rules also set out the qualifications and requirements for the investigators and centers participating in clinical trial, who must: (i) have professional certification at a clinical trial center, professional knowledge, training experience and capability of clinical trial, and be able to provide the latest resume and relevant qualification documents per request; (ii) be familiar with the trial protocol, investigator’s brochure and relevant information of the trial drug provided by the applicant; (iii) be familiar with and comply with the Revised GCP Rules and relevant laws and regulations relating to clinical trials; (iv) keep a copy of the authorization form on work allocation signed by investigators; (v) accept supervision and inspection organized by the applicant and inspection by the drug regulatory authorities; and (vi) in the case of investigators and clinical trial centers authorizing other individual or institution to undertake certain responsibilities and functions relating to clinical trial, they shall ensure such individual or institution are qualified and establish complete procedures to ensure the responsibilities and functions are fully performed and generate reliable data. 140 Table of Contents Communication with the CDE According to the Circular on Adjusting Evaluation and Approval Procedures for Clinical Trials for Drugs, where the application for clinical trial of new investigational drug has been approved, upon the completion of Phases I and II clinical trials and prior to Phase III clinical trial, the applicant shall submit the application for Communication Session to the CDE to discuss the key technical questions including the design of Phase III clinical trial protocol.
The Revised GCP Rules also set out the qualifications and requirements for the investigators and centers participating in clinical trial, who must: (i) have professional certification at a clinical trial center, professional knowledge, training experience and capability of clinical trial, and be able to provide the latest resume and relevant qualification documents per request; (ii) be familiar with the trial protocol, investigator’s brochure and relevant information of the trial drug provided by the applicant; (iii) be familiar with and comply with the Revised GCP Rules and relevant laws and regulations relating to clinical trials; (iv) keep a copy of the authorization form on work allocation signed by investigators; (v) accept supervision and inspection organized by the applicant and inspection by the drug regulatory authorities; and (vi) in the case of investigators and clinical trial centers authorizing other individual or institution to undertake certain responsibilities and functions relating to clinical trial, they shall ensure such individual or institution are qualified and establish complete procedures to ensure the responsibilities and functions are fully performed and generate reliable data. 131 Table of Contents Communication with the CDE According to the Circular on Adjusting Evaluation and Approval Procedures for Clinical Trials for Drugs, where the application for clinical trial of new investigational drug has been approved, upon the completion of Phases I and II clinical trials and prior to Phase III clinical trial, the applicant shall submit the application for Communication Session to the CDE to discuss the key technical questions including the design of Phase III clinical trial protocol.
The process required by the FDA before biologic product candidates may be marketed in the United States generally involves the following: ● completion of preclinical laboratory tests and animal studies performed in accordance with the FDA’s GLP regulations; ● submission to the FDA of an IND, which must become effective before clinical trials may begin and must be updated annually or when significant changes are made; ● approval by an independent Institutional Review Board, or IRB, or ethics committee at each clinical site before the trial is commenced; ● performance of adequate and well-controlled human clinical trials to establish the safety and effectiveness of the proposed biologic product candidate for its intended indications; 127 Table of Contents ● preparation of and submission to the FDA of a BLA when adequate data are obtained from pivotal clinical trials; ● a determination by the FDA within 60 days of its receipt of a BLA to accept the application for review; ● satisfactory completion of an FDA Advisory Committee review, if applicable; ● satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the proposed product is produced to assess compliance with cGMP and to assure that the facilities, methods and controls are adequate to preserve the biological product’s continued safety, purity and potency, and of selected clinical investigation sites to assess compliance with Good Clinical Practices, or GCP regulations; and ● FDA review and approval of the BLA to permit commercial marketing of the product for particular indications for use in the United States.
The process required by the FDA before biologic product candidates may be marketed in the United States generally involves the following: ● completion of preclinical laboratory tests and animal studies performed in accordance with the FDA’s GLP regulations; ● submission to the FDA of an IND, which must become effective before clinical trials may begin and must be updated annually or when significant changes are made; ● approval by an independent Institutional Review Board, or IRB, or ethics committee at each clinical site before the trial is commenced; ● performance of adequate and well-controlled human clinical trials to establish the safety and effectiveness of the proposed biologic product candidate for its intended indications; ● preparation of and submission to the FDA of a BLA when adequate data are obtained from pivotal clinical trials; 118 Table of Contents ● a determination by the FDA within 60 days of its receipt of a BLA to accept the application for review; ● satisfactory completion of an FDA Advisory Committee review, if applicable; ● satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the proposed product is produced to assess compliance with cGMP and to assure that the facilities, methods and controls are adequate to preserve the biological product’s continued safety, purity and potency, and of selected clinical investigation sites to assess compliance with Good Clinical Practices, or GCP regulations; and ● FDA review and approval of the BLA to permit commercial marketing of the product for particular indications for use in the United States.
In addition to the marketed anti-CTLA-4 therapies, there are multiple “next generation” anti-CTLA-4 antibodies in clinical development globally. Examples of these programs include: Agenus (Zalifrelimab/AGEN1181), Bristol-Myers Squibb Company (BMS-986249, BMS-986288), Merck (quavonlimab/MA-1308), Onco-C4, Inc. (ONC-392) and Xilio (XTX101). Yervoy was also approved in China in 2021, where additional CTLA-4 antibodies are in clinical development.
In addition to the marketed anti-CTLA-4 therapies, there are multiple “next generation” anti-CTLA-4 antibodies in clinical development globally. Examples of these programs include: Agenus (Zalifrelimab/AGEN1181), Bristol-Myers Squibb Company (BMS-986288), Merck (quavonlimab/MA-1308), Onco-C4, Inc. (ONC-392) and Xilio (XTX101). Yervoy was also approved in China in 2021, where additional CTLA-4 antibodies are in clinical development.
We cannot predict the impact of the Draft Data Security Regulations, if any, at this stage, and we will closely monitor and assess any development in the rule-making process. 84 Table of Contents As advised by our PRC legal counsel, Jingtian & Gongcheng, given the nature of our business, since we do not possess or process personal information of more than one million users/individuals, and we do not believe we are a “critical information infrastructure operator,” “network platform operator” or a data processor whose purchase of network products and services or data processing activities affect or may affect national security, the listing of our ADSs on the Nasdaq and future potential offering of our ADSs will not be subject to the cybersecurity review process under the Cybersecurity Review Measures, although we cannot guarantee that the relevant PRC regulatory authority will agree with our interpretation.
We cannot predict the impact of the Draft Data Security Regulations, if any, at this stage, and we will closely monitor and assess any development in the rule-making process. 83 Table of Contents As advised by our PRC legal counsel, Jingtian & Gongcheng, given the nature of our business, since we do not possess or process personal information of more than one million users/individuals, and we do not believe we are a “critical information infrastructure operator,” “network platform operator” or a data processor whose purchase of network products and services or data processing activities affect or may affect national security, the listing of our ADSs on the Nasdaq and future potential offering of our ADSs will not be subject to the cybersecurity review process under the Cybersecurity Review Measures, although we cannot guarantee that the relevant PRC regulatory authority will agree with our interpretation.
The determination as to whether or not an overseas offering and listing by PRC domestic companies is indirect shall be made on a “substance over form” basis; the Listing Guidelines further stipulate that if an issuer not satisfying Condition I submits an application for issuance and listing in overseas markets in accordance with relevant non-PRC issuance regulations requiring such issuer to disclose risk factors mainly related to the PRC, the securities firm(s) and the issuer’s PRC counsel should follow the principle of “substance over form” in order to identify and argue whether the issuer should complete a filing under the Trial Measures. 150 Table of Contents Subsequent securities offerings of an issuer in (i) the same overseas market where it has previously offered and listed securities, and (ii) an overseas market other than one where the issuer has previously offered and listed securities shall be filed with the CSRC within three working days after offerings are completed.
The determination as to whether or not an overseas offering and listing by PRC domestic companies is indirect shall be made on a “substance over form” basis; the Listing Guidelines further stipulate that if an issuer not satisfying Condition I submits an application for issuance and listing in overseas markets in accordance with relevant non-PRC issuance regulations requiring such issuer to disclose risk factors mainly related to the PRC, the securities firm(s) and the issuer’s PRC counsel should follow the principle of “substance over form” in order to identify and argue whether the issuer should complete a filing under the Trial Measures. 141 Table of Contents Subsequent securities offerings of an issuer in (i) the same overseas market where it has previously offered and listed securities, and (ii) an overseas market other than one where the issuer has previously offered and listed securities shall be filed with the CSRC within three working days after offerings are completed.
According to the Eight Measures for the Public Security Fire Department to Deepen Reform and Serve Economic and Social Development promulgated by the Ministry of Public Security of the PRC in August 2015, the fire protection design and completion acceptance fire protection record of construction projects with an investment of less than RMB300,000 or a building area of less than 300 square meters (or below the limit set by the housing and urban construction department of the provincial people’s government) was no longer required. 149 Table of Contents Regulations on Overseas Securities Offering and Listing In December 2021, the CSRC promulgated the Provisions of the State Council on the Administration of Overseas Securities Offering and Listing by Domestic Companies (Draft for Comments), or the Draft CSRC Administration Provisions, and the Administrative Measures for the Filing of Overseas Securities Offering and Listing by Domestic Companies (Draft for Comments), or the Draft CSRC Filing Measures, to regulate overseas offerings by domestic companies of equity shares, depository receipts, convertible corporate bonds, or other equity-like securities, and overseas listing of the securities for trading.
According to the Eight Measures for the Public Security Fire Department to Deepen Reform and Serve Economic and Social Development promulgated by the Ministry of Public Security of the PRC in August 2015, the fire protection design and completion acceptance fire protection record of construction projects with an investment of less than RMB300,000 or a building area of less than 300 square meters (or below the limit set by the housing and urban construction department of the provincial people’s government) was no longer required. 140 Table of Contents Regulations on Overseas Securities Offering and Listing In December 2021, the CSRC promulgated the Provisions of the State Council on the Administration of Overseas Securities Offering and Listing by Domestic Companies (Draft for Comments), or the Draft CSRC Administration Provisions, and the Administrative Measures for the Filing of Overseas Securities Offering and Listing by Domestic Companies (Draft for Comments), or the Draft CSRC Filing Measures, to regulate overseas offerings by domestic companies of equity shares, depository receipts, convertible corporate bonds, or other equity-like securities, and overseas listing of the securities for trading.
ADG126 has shown a best-in-class safety profile in clinic, consistent with preclinical evaluation enabled by the broad species cross-reactivity of ADG126, including GLP toxicology data. In September 2022 and April 2023, we presented these clinical results from our ADG126 monotherapy evaluation at the ESMO and AACR annual meetings, respectively.
ADG126 has shown a differentiated, best-in-class safety profile in clinic, consistent with preclinical evaluation enabled by the broad species cross-reactivity of ADG126, including GLP toxicology data. In September 2022 and April 2023, we presented these clinical results from our ADG126 monotherapy evaluation at the ESMO and AACR annual meetings, respectively.
The following figures illustrate the reduction of CTLA-4 expression in infiltrating lymphocytes, or TILs (see figure below on the left) and regulatory T-cell depletion (see figure below on the right) by ADG126 in CT26 tumor model. Note: "Treg" refers to regulatory T-cells Preclinical Toxicology: We performed preclinical toxicology studies designed to assess the toxicity features of ADG126.
The following figures illustrate the reduction of CTLA-4 expression in infiltrating lymphocytes, or TILs (see figure below on the left) and regulatory T-cell depletion (see figure below on the right) by ADG126 in CT26 tumor model. Note: “ Treg ” refers to regulatory T-cells Preclinical Toxicology: We performed preclinical toxicology studies designed to assess the toxicity features of ADG126.
For products containing new molecular entities, priority review designation means the FDA’s goal is to take action on the marketing application within six months of the 60-day filing date (compared with ten months under standard review). 130 Table of Contents Additionally, products studied for their safety and effectiveness in treating serious or life-threatening diseases or conditions may receive accelerated approval upon a determination that the product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments.
For products containing new molecular entities, priority review designation means the FDA’s goal is to take action on the marketing application within six months of the 60-day filing date (compared with ten months under standard review). 121 Table of Contents Additionally, products studied for their safety and effectiveness in treating serious or life-threatening diseases or conditions may receive accelerated approval upon a determination that the product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments.
If the products are produced or sold with known defects, causing deaths or severe adverse health issues, the infringed party has the right to claim punitive damages in addition to compensatory damages. 148 Table of Contents Regulations on Environment Protection Pursuant to the Environmental Protection Law of the PRC promulgated by the Standing Committee of the NPC, in December 1989, amended in April 2014 and effective in January 2015, any entity which discharges or will discharge pollutants during its course of operations or other activities must implement effective environmental protection safeguards and procedures to control and properly treat waste gas, waste water, waste residue, dust, malodorous gases, radioactive substances, noise vibrations, electromagnetic radiation and other hazards produced during such activities.
If the products are produced or sold with known defects, causing deaths or severe adverse health issues, the infringed party has the right to claim punitive damages in addition to compensatory damages. 139 Table of Contents Regulations on Environment Protection Pursuant to the Environmental Protection Law of the PRC promulgated by the Standing Committee of the NPC, in December 1989, amended in April 2014 and effective in January 2015, any entity which discharges or will discharge pollutants during its course of operations or other activities must implement effective environmental protection safeguards and procedures to control and properly treat waste gas, waste water, waste residue, dust, malodorous gases, radioactive substances, noise vibrations, electromagnetic radiation and other hazards produced during such activities.
In addition to the upfront payment of US$11.0 million received in 2021, in the aggregate, we could be eligible to receive up to US$55,000,000 in development milestone payments, among which we have received US$3.0 million in 2022, US$200,000,000 in regulatory milestone payments, and up to US$525,000,000 in sales milestone payments for both targets under the Exelixis Agreement.
In addition to the upfront payment of US$11.0 million received in 2021, in the aggregate, we could be eligible to receive up to US$55,000,000 in development milestone payments, among which we have received US$3.0 million in 2022 and US$3.0 million in 2023, US$200,000,000 in regulatory milestone payments, and up to US$525,000,000 in sales milestone payments for both targets under the Exelixis Agreement.
The abundant discovery hits with diversified binding epitopes show the power of our AI-powered DPL platform not only in creating novel antibodies in targeting different epitopes of a given antigen, but also in targeting the conserved epitope across different species of a given antigen with broad species cross-reactivity from human, monkey to mouse, which enables us to study their efficacy and safety in extensive immuno-competent or syngeneic animal models, to explore their pharmacodynamics and predictive biomarkers in responding vs nonresponding tumor models in vivo, and to understand their deep target biology and novel MOA before testing them in human clinical trials to look for their clinical signals consistent with their MOA.
The abundant discovery hits with diversified binding epitopes show the power of our DPL platform not only in creating novel antibodies in targeting different epitopes of a given antigen, but also in targeting the conserved epitope across different species of a given antigen with broad species cross-reactivity from human, monkey to mouse, which enables us to study their efficacy and safety in extensive immuno-competent or syngeneic animal models, to explore their pharmacodynamics and predictive biomarkers in responding vs nonresponding tumor models in vivo, and to understand their deep target biology and novel MOA before testing them in human clinical trials to look for their clinical signals consistent with their MOA.
The ACA contains a number of provisions of particular import to the pharmaceutical and biotechnology industries, including, but not limited to, those governing enrollment in federal healthcare programs, a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected, and annual fees based on pharmaceutical companies’ share of sales to federal healthcare programs. 134 Table of Contents Since its enactment, there have been judicial, Congressional, and executive branch challenges to certain aspects of the ACA, and we expect there will be additional challenges and amendments to the ACA in the future.
The ACA contains a number of provisions of particular import to the pharmaceutical and biotechnology industries, including, but not limited to, those governing enrollment in federal healthcare programs, a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected, and annual fees based on pharmaceutical companies’ share of sales to federal healthcare programs. 125 Table of Contents Since its enactment, there have been judicial, Congressional, and executive branch challenges to certain aspects of the ACA, and we expect there will be additional challenges and amendments to the ACA in the future.
We believe that the high affinity and species cross-reactive primary hits from our DPL library screening saves time and cost from primary hits to straight PCC. The broad species cross-reactivity of the primary hits also streamlines lead identification through simple syngeneic tumor models for safety and efficacy testing.
We believe that the high affinity and species cross-reactive primary hits from our DPL screening saves time and cost from primary hits to straight PCC. The broad species cross-reactivity of the primary hits also streamlines lead identification through simple syngeneic tumor models for safety and efficacy testing.
Previously, we have entered into technology licensing agreements with Sanofi, Exelixis and ADC Therapeutics to develop antibody-based therapeutics against tumor targets using our SAFEbody technology. We have also out-licensed the Greater China rights for two antibody candidates to Dragon Boat Pharmaceuticals and its affiliates.
Previously, we have entered into technology licensing agreements with Sanofi and Exelixis to develop antibody-based therapeutics against tumor targets using our SAFEbody technology. We have also out-licensed the Greater China rights for two antibody candidates to Dragon Boat Pharmaceuticals and its affiliates.
Biosimilars and Reference Product Exclusivity The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively, the ACA, signed into law in 2010, includes a subtitle called the Biologics Price Competition and Innovation Act of 2009, or BPCIA, which created an abbreviated approval pathway for biological products that are biosimilar to or interchangeable with an FDA-approved reference biological product. 132 Table of Contents Biosimilarity, which requires that there be no clinically meaningful differences between the biological product and the reference product in terms of safety, purity, and potency, can be shown through analytical studies, animal studies, and a clinical trial or studies.
Biosimilars and Reference Product Exclusivity The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively, the ACA, signed into law in 2010, includes a subtitle called the Biologics Price Competition and Innovation Act of 2009, or BPCIA, which created an abbreviated approval pathway for biological products that are biosimilar to or interchangeable with an FDA-approved reference biological product. 123 Table of Contents Biosimilarity, which requires that there be no clinically meaningful differences between the biological product and the reference product in terms of safety, purity, and potency, can be shown through analytical studies, animal studies, and a clinical trial or studies.
The Revised GCP Rules summarize the requirements for initiating an MRCT, that is, before initiating an MRCT: (i) the applicant shall ensure that all the centers participating in the clinical trial comply with the trial protocol; (ii) the applicant shall provide each center with the same trial protocol, and each center shall comply with the same unified evaluation criterion for clinical trial and laboratory data and the same guidance for case report form; (iii) each center shall use the same case report form to record the data of each human subject obtained during the trial; (iv) before initiating a clinical trial, a written document is required to specify the responsibilities of the investigators of each center; and (v) the applicant shall ensure the communication among the investigators of each center. 142 Table of Contents Data derived from international multi-center clinical trials can be used for the new drug applications with the NMPA.
The Revised GCP Rules summarize the requirements for initiating an MRCT, that is, before initiating an MRCT: (i) the applicant shall ensure that all the centers participating in the clinical trial comply with the trial protocol; (ii) the applicant shall provide each center with the same trial protocol, and each center shall comply with the same unified evaluation criterion for clinical trial and laboratory data and the same guidance for case report form; (iii) each center shall use the same case report form to record the data of each human subject obtained during the trial; (iv) before initiating a clinical trial, a written document is required to specify the responsibilities of the investigators of each center; and (v) the applicant shall ensure the communication among the investigators of each center. 133 Table of Contents Data derived from international multi-center clinical trials can be used for the new drug applications with the NMPA.
In addition, exclusive marketing rights in the United States may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition. 131 Table of Contents Post-Approval Requirements Any products manufactured or distributed by us pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to record keeping, reporting of adverse experiences, periodic reporting, product sampling and distribution, and advertising and promotion of the product.
In addition, exclusive marketing rights in the United States may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition. 122 Table of Contents Post-Approval Requirements Any products manufactured or distributed by us pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to record keeping, reporting of adverse experiences, periodic reporting, product sampling and distribution, and advertising and promotion of the product.
See “Item 3 Key Information—3.D.Risk Factors—Risks Related to Doing Business in the PRC—Failure to comply with existing or future laws and regulations related to privacy or data security could lead to government enforcement actions, which could include civil or criminal fines or penalties, investigation or sanction by regulatory authorities, private litigation, other liabilities, and/or adverse publicity.” 85 Table of Contents Material Licenses and Approvals Our PRC subsidiary has obtained all material licenses and approvals required for our operations in China.
See “Item 3 Key Information—3.D.Risk Factors—Risks Related to Doing Business in the PRC—Failure to comply with existing or future laws and regulations related to privacy or data security could lead to government enforcement actions, which could include civil or criminal fines or penalties, investigation or sanction by regulatory authorities, private litigation, other liabilities, and/or adverse publicity.” 84 Table of Contents Material Licenses and Approvals Our PRC subsidiary has obtained all material licenses and approvals required for our operations in China.
J Immunother Cancer 2020;8:e000391. doi:10.1136/jitc-2019-000391 92 Table of Contents The following chart shows that ipilimumab has a strong dose-dependent toxicity and efficacy in the combination setting with anti-PD-1, as shown for second-line HCC: Ipilimumab: Combination Data in HCC Highlight Dose Dependent Challenge of Anti-CTLA-4 Therapy For HCC, approved dose level is Nivo 1mg/kg+ Ipi 3mg/kg; Nivo + 4 doses of Ipi; patient population is previously treated with sorafenib (2L); dosing regimens Q3W for 4 doses.
J Immunother Cancer 2020;8:e000391. doi:10.1136/jitc-2019-000391 The following chart shows that ipilimumab has a strong dose-dependent toxicity and efficacy in the combination setting with anti-PD-1, as shown for second-line HCC: Ipilimumab: Combination Data in HCC Highlight Dose Dependent Challenge of Anti-CTLA-4 Therapy 89 Table of Contents For HCC, approved dose level is Nivo 1mg/kg+ Ipi 3mg/kg; Nivo + 4 doses of Ipi; patient population is previously treated with sorafenib (2L); dosing regimens Q3W for 4 doses.
Our approach recognizes that a protein’s native state is not accurately represented by a single static structure but rather by a variety of structures in dynamic equilibrium, resulting in a high level of functional diversity, in contrast to the conventional static antibody drug discovery paradigm of “one sequence, one structure and one function.” We have developed our proprietary AI-Powered DPL platform to explore the dynamic conformational diversity of protein sequences, and the flexible binding sites of antibody sequences in particular, as a new paradigm for antibody drug discovery.
Our approach recognizes that a protein’s native state is not accurately represented by a single static structure but rather by a variety of structures in dynamic equilibrium, resulting in a high level of functional diversity, in contrast to the conventional static antibody drug discovery paradigm of “one sequence, one structure and one function.” We have developed our proprietary DPL platform to explore the dynamic conformational diversity of protein sequences, and the flexible binding sites of antibody sequences in particular, as a new paradigm for antibody drug discovery.
The parties whose trade secrets are being misappropriated may petition for administrative corrections, and regulatory authorities may stop any illegal activities and fine infringing parties. 145 Table of Contents Trademarks According to the Trademark Law of the PRC promulgated by the Standing Committee of the NPC in August 1982, and amended in February 1993, October 2001, August 2013 and April 2019, respectively, the period of validity for a registered trademark is ten years, commencing on the date of registration.
The parties whose trade secrets are being misappropriated may petition for administrative corrections, and regulatory authorities may stop any illegal activities and fine infringing parties. 136 Table of Contents Trademarks According to the Trademark Law of the PRC promulgated by the Standing Committee of the NPC in August 1982, and amended in February 1993, October 2001, August 2013 and April 2019, respectively, the period of validity for a registered trademark is ten years, commencing on the date of registration.
The processing of personal information shall follow the principles of lawfulness, legitimacy, necessity and good faith, and it is not allowed to process personal information by misleading, fraud, coercion or otherwise. 146 Table of Contents Information security and review On November 7, 2016, the Standing Committee of NPC promulgated the Cybersecurity Law of the PRC, which became effective on June 1, 2017, pursuant to which, network operators shall fulfill their obligations to safeguard security of the network when conducting business and providing services.
The processing of personal information shall follow the principles of lawfulness, legitimacy, necessity and good faith, and it is not allowed to process personal information by misleading, fraud, coercion or otherwise. 137 Table of Contents Information security and review On November 7, 2016, the Standing Committee of NPC promulgated the Cybersecurity Law of the PRC, which became effective on June 1, 2017, pursuant to which, network operators shall fulfill their obligations to safeguard security of the network when conducting business and providing services.
The following table summarizes material pending patent applications in the United States, China, Europe and under Patent Cooperation Treaty, or PCT, covering our product candidates, including ADG116, ADG126, ADG106 and ADG104 and ADG125.
The following table summarizes material pending patent applications in the United States, China, Europe and under Patent Cooperation Treaty, or PCT, covering our product candidates, including ADG126, ADG116, ADG206, ADG106, ADG104 and ADG125.
The primary responsibilities of the NMPA include: ● monitoring and supervising the administration of pharmaceutical products, medical appliances and equipment as well as cosmetics in the PRC; ● formulating administrative rules and policies concerning the supervision and administration of pharmaceutical, medical devices, and cosmetics industry; ● evaluating, registering and approving new drugs, generic drugs, imported drugs and traditional Chinese medicine; ● approving and issuing permits for the manufacture and export/import of pharmaceutical products, medical appliances and equipment; 137 Table of Contents ● approving the establishment of enterprises to be engaged in the manufacture and distribution of pharmaceutical products; ● examining and evaluating the safety of pharmaceutical products, medical devices, and cosmetics; and ● managing significant accidents involving pharmaceutical products, medical devices and cosmetics.
The primary responsibilities of the NMPA include: ● monitoring and supervising the administration of pharmaceutical products, medical appliances and equipment as well as cosmetics in the PRC; ● formulating administrative rules and policies concerning the supervision and administration of pharmaceutical, medical devices, and cosmetics industry; ● evaluating, registering and approving new drugs, generic drugs, imported drugs and traditional Chinese medicine; ● approving and issuing permits for the manufacture and export/import of pharmaceutical products, medical appliances and equipment; 128 Table of Contents ● approving the establishment of enterprises to be engaged in the manufacture and distribution of pharmaceutical products; ● examining and evaluating the safety of pharmaceutical products, medical devices, and cosmetics; and ● managing significant accidents involving pharmaceutical products, medical devices and cosmetics.
Taken together, these preclinical studies (summarized below) have demonstrated that ADG116 has at least a five-fold greater potency profile than ipilimumab, a commercially-available anti-CTLA-4 therapy, and superior activity in various tumor specific models, while its safety profile is at least three-fold better based on GLP monkey data. ​ 95 Table of Contents ADG116 is designed to target a unique conserved epitope of CTLA-4.
Taken together, these preclinical studies (summarized below) have demonstrated that ADG116 has at least a five-fold greater potency profile than ipilimumab, a commercially-available anti-CTLA-4 therapy, and superior activity in various tumor specific models, while its safety profile is at least three-fold better based on GLP monkey data. 101 Table of Contents ADG116 is designed to target a unique conserved epitope of CTLA-4.
Royalties, if any, will be payable on a country-by-country and product-by-product basis until the latest of (i) the tenth anniversary of the first commercial sale of such product in such country, (ii) the expiration of the last-to-expire of certain specified patents that cover such product's composition of matter or method of use as sold in such country or (iii) the expiration of regulatory exclusivity for such product in such country. 117 Table of Contents The Sanofi Agreement will expire upon the termination of all royalty obligations.
Royalties, if any, will be payable on a country-by-country and product-by-product basis until the latest of (i) the tenth anniversary of the first commercial sale of such product in such country, (ii) the expiration of the last-to-expire of certain specified patents that cover such product’s composition of matter or method of use as sold in such country or (iii) the expiration of regulatory exclusivity for such product in such country. 109 Table of Contents The Sanofi Agreement will expire upon the termination of all royalty obligations.
Other PRC Government Regulations Regulations on Intellectual Property Rights In terms of international conventions, China has entered into (including but not limited to) the Agreement on Trade-Related Aspects of Intellectual Property Rights, the Paris Convention for the Protection of Industrial Property, the Madrid Agreement Concerning the International Registration of Marks and the Patent Cooperation Treaty. 144 Table of Contents Patents According to the Patent Law of the PRC, which was promulgated by the Standing Committee of the NPC in March 1984, amended in September 1992, August 2000, December 2008 and October 2020, and came into effect in June 2021, and the Implementation Rules of the Patent Law of the PRC, which was promulgated by the State Council in June 2001 and amended in December 2002 and January 2010, there are three types of patents in the PRC: invention patents, utility model patents and design patents.
Other PRC Government Regulations Regulations on Intellectual Property Rights In terms of international conventions, China has entered into (including but not limited to) the Agreement on Trade-Related Aspects of Intellectual Property Rights, the Paris Convention for the Protection of Industrial Property, the Madrid Agreement Concerning the International Registration of Marks and the Patent Cooperation Treaty. 135 Table of Contents Patents According to the Patent Law of the PRC, which was promulgated by the Standing Committee of the NPC in March 1984, amended in September 1992, August 2000, December 2008 and October 2020, and came into effect in June 2021, and the Implementation Rules of the Patent Law of the PRC, which was promulgated by the State Council in June 2001 and amended in December 2002, January 2010 and December 2023, there are three types of patents in the PRC: invention patents, utility model patents and design patents.
For investigational products developed for oncology indications, the Phase I trials are normally conducted in patients with serious or life-threatening diseases without other treatment alternatives. 128 Table of Contents ● Phase II—The investigational product is administered to a limited patient population with a specified disease or condition to evaluate the preliminary efficacy, optimal dosages and dosing schedule and to identify possible adverse side effects and safety risks.
For investigational products developed for oncology indications, the Phase I trials are normally conducted in patients with serious or life-threatening diseases without other treatment alternatives. 119 Table of Contents ● Phase II—The investigational product is administered to a limited patient population with a specified disease or condition to evaluate the preliminary efficacy, optimal dosages and dosing schedule and to identify possible adverse side effects and safety risks.
Since January 1, 2020, for foreign investors carrying out investment activities directly or indirectly in China, the foreign investors or foreign-invested enterprises shall submit investment information to the relevant commerce administrative authorities according to the Measure on Reporting of Foreign Investment Information. 136 Table of Contents Regulation on Pharmaceutical Product Development, Approval and Registration Drug Regulatory Regime The Drug Administration Law of the PRC, or the Drug Administration Law, was promulgated by the Standing Committee of the NPC, in September 1984.
Since January 1, 2020, for foreign investors carrying out investment activities directly or indirectly in China, the foreign investors or foreign-invested enterprises shall submit investment information to the relevant commerce administrative authorities according to the Measure on Reporting of Foreign Investment Information. 127 Table of Contents Regulation on Pharmaceutical Product Development, Approval and Registration Drug Regulatory Regime The Drug Administration Law of the PRC, or the Drug Administration Law, was promulgated by the Standing Committee of the NPC, in September 1984.
The delisting of the ADSs, or the threat of them being delisted, may materially and adversely affect the value of your investment.” 83 Table of Contents Cybersecurity Review Measures On December 28, 2021, the Cyberspace Administration of China, or the CAC, and 12 other relevant PRC government authorities published the amended Cybersecurity Review Measures, or the Cybersecurity Review Measures, which went on February 15, 2022 and supersede and replace the current Cybersecurity Review Measures previously promulgated on April 13, 2020.
The delisting of the ADSs, or the threat of them being delisted, may materially and adversely affect the value of your investment.” 82 Table of Contents Cybersecurity Review Measures On December 28, 2021, the Cyberspace Administration of China, or the CAC, and 12 other relevant PRC government authorities published the amended Cybersecurity Review Measures, or the Cybersecurity Review Measures, which went on February 15, 2022 and supersede and replace the current Cybersecurity Review Measures previously promulgated on April 13, 2020.
Under terms of the agreement, Merck provides pembrolizumab and input on our clinical trials evaluating pembrolizumab in combination with ADG116 and ADG126, respectively. 116 Table of Contents TECHNOLOGY COLLABORATIONS WITH BIOPHARMACEUTICAL COMPANIES We enter into collaborations with biotechnology and pharmaceutical companies to leverage the power of our technology platforms, creating a network of potential future revenue streams that complements future long-term value from our wholly-owned pipeline.
Under terms of the agreement, Merck provides pembrolizumab and input on our clinical trials evaluating pembrolizumab in combination with ADG126 and ADG116, respectively. 108 Table of Contents TECHNOLOGY COLLABORATIONS WITH BIOPHARMACEUTICAL COMPANIES We enter into collaborations with biotechnology and pharmaceutical companies to leverage the power of our technology platforms, creating a network of potential future revenue streams that complements future long-term value from our wholly-owned pipeline.
The robust CMC attributes of our DPL library are designed to also eliminate the requirement to optimize antibody sequences before starting CMC process for IND enabling and formulation studies.
The robust CMC attributes of our DPL are designed to also eliminate the requirement to optimize antibody sequences before starting CMC process for IND enabling and formulation studies.
Such approval process has been further enacted into the 2019 Amendment. 139 Table of Contents Trial Exemptions and Acceptance of Foreign Data The NMPA issued the Technical Guidance Principles on Accepting Foreign Drug Clinical Trial Data in July 2018, as one of the implementing rules for the Innovation Opinions, which provides that overseas clinical data can be submitted for the drug registration applications in China.
Such approval process has been further enacted into the 2019 Amendment. 130 Table of Contents Trial Exemptions and Acceptance of Foreign Data The NMPA issued the Technical Guidance Principles on Accepting Foreign Drug Clinical Trial Data in July 2018, as one of the implementing rules for the Innovation Opinions, which provides that overseas clinical data can be submitted for the drug registration applications in China.
The Bio-security Law of the PRC further stipulates that the department of science and technology under the State Council shall be the competent authority for the approval or filing of using China’s human genetic resources. 143 Table of Contents Regulations on Drug Manufacturing and Distribution Drug Manufacturing According to the Drug Administration Law and the Implementing Regulations of the Drug Administration Law, a drug manufacturing enterprise is required to obtain a drug manufacturing license from the relevant provincial drug administration authority of the PRC.
The Bio-security Law of the PRC further stipulates that the department of science and technology under the State Council shall be the competent authority for the approval or filing of using China’s human genetic resources. 134 Table of Contents Regulations on Drug Manufacturing and Distribution Drug Manufacturing According to the Drug Administration Law and the Implementing Regulations of the Drug Administration Law, a drug manufacturing enterprise is required to obtain a drug manufacturing license from the relevant provincial drug administration authority of the PRC.
Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. 126 Table of Contents MATERIAL LICENSES AND APPROVALS The following table sets forth a list of material licenses and approvals, subject to further renewal, that our PRC subsidiary is required to obtain to carry out our operations in China.
Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. 117 Table of Contents MATERIAL LICENSES AND APPROVALS The following table sets forth a list of material licenses and approvals, subject to further renewal, that our PRC subsidiary is required to obtain to carry out our operations in China.
Notwithstanding the submission of any requested additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval. 129 Table of Contents After the FDA evaluates a BLA and conducts inspections of manufacturing facilities where the commercial product and/or its drug substance will be produced, the FDA may issue an approval letter or a Complete Response letter.
Notwithstanding the submission of any requested additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval. 120 Table of Contents After the FDA evaluates a BLA and conducts inspections of manufacturing facilities where the commercial product and/or its drug substance will be produced, the FDA may issue an approval letter or a Complete Response letter.
For the details of the risks associated with the enactment of the HFCA Act, see “Item 3. Key Information––3.D. Risk Factors––Risks Related to Doing Business in the PRC––Our ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China.
For the details of the risks associated with the enactment of the HFCAA, see “Item 3. Key Information––3.D. Risk Factors––Risks Related to Doing Business in the PRC––Our ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China.
Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we do. 125 Table of Contents We compete in the segments of the pharmaceutical, biotechnology and other related markets that develop cancer treatments. There are many other companies that have commercialized and/or are developing immuno-oncology treatments for cancer, including large pharmaceutical and biotechnology companies.
Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we do. 116 Table of Contents We compete in the segments of the pharmaceutical, biotechnology and other related markets that develop cancer treatments. There are many other companies that have commercialized and/or are developing immuno-oncology treatments for cancer, including large pharmaceutical and biotechnology companies.
If any patents issue from our pending patent applications, excluding any patent term adjustments and patent term extension, such patents will be expected to expire from 2033 to 2043. If any patents issue from our pending patent applications, excluding any patent term adjustments and patent term extension, such patents will be expected to expire from 2033 to 2042.
If any patents issue from our pending patent applications, excluding any patent term adjustments and patent term extension, such patents will be expected to expire from 2033 to 2043.
Clinical development of this candidate is ongoing. 120 Table of Contents 2019 Collaboration Agreements In May 2019, we 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.
Clinical development of this candidate is ongoing. 111 Table of Contents 2019 Collaboration Agreements In May 2019, we 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.
Social Insurance and Housing Provident Funds According to the Social Insurance Law of PRC, which was promulgated by the Standing Committee of the NPC in October 2010 and came into effect in July 2011, and further amended in December 2018, and the Interim Regulations on the Collection and Payment of Social Security Funds, which was promulgated by the State Council in January 1999 and amended in March 2019, and the Regulations on the Administration of Housing Provident Funds, which was promulgated by the State 152 Table of Contents Council in April 1999 and amended in March 2002 and March 2019, employers are required to contribute, on behalf of their employees, to a number of social security funds, including funds for basic pension insurance, unemployment insurance, basic medical insurance, occupational injury insurance, maternity insurance and to housing provident funds.
Social Insurance and Housing Provident Funds According to the Social Insurance Law of PRC, which was promulgated by the Standing Committee of the NPC in October 2010 and came into effect in July 2011, and further amended in December 2018, and the Interim Regulations on the Collection and Payment of Social Security Funds, which was promulgated by the State Council in January 1999 and amended in March 2019, and the Regulations on the Administration of Housing Provident Funds, which was promulgated by the State Council in April 1999 and amended in March 2002 and March 2019, employers are required to contribute, on behalf of their employees, to a number of social security funds, including funds for basic pension insurance, unemployment insurance, basic medical insurance, occupational injury insurance, maternity insurance and to housing provident funds.
If the PCAOB determines in the future that it no longer has full access to inspect and investigate accounting firms headquartered in mainland China and Hong Kong and we continue to use such accounting firm to conduct audit work, we would be identified as a “Commission-Identified Issuer” under the HFCA Act following the filing of the annual report for the relevant fiscal year, and if we were so identified for two consecutive years, trading in our securities on U.S. markets would be prohibited.
If the PCAOB determines in the future that it no longer has full access to inspect and investigate accounting firms headquartered in mainland China and Hong Kong and we continue to use such accounting firm to conduct audit work, we would be identified as a “Commission-Identified Issuer” under the HFCAA following the filing of the annual report for the relevant fiscal year, and if we were so identified for two consecutive years, trading in our securities on U.S. markets would be prohibited.
By exploiting conformational diversity, we have designed and precisely constructed approximately one trillion (10 12 ) antibody sequences in our DPL. These antibodies feature broad epitope (the portion of an antigen that are recognized by an antibody) coverage and robust chemistry, manufacturing, and control, or CMC, attributes.
By exploiting conformational diversity, we have designed and precisely constructed approximately one trillion (10 12 ) antibody sequences in our DPL. These antibodies feature broad epitope (the portion of an antigen that is recognized by an antibody) coverage and robust chemistry, manufacturing, and control, or CMC, attributes.
Product Candidates Title of Patent Application Type of Patent Applications (1) Jurisdiction ADG116 ​ Anti-CTLA4 antibodies and methods of making and using the same ​ Composition of matter/ method of use/ method of making ​ United States of America, China and European Patent Office ​ ADG126 ​ Anti-CTLA4 antibodies and methods of making and using the same ​ Composition of matter/ method of use/ method of making ​ United States of America, China and European Patent Office ​ ADG106 ​ Anti-CD137 molecules and uses thereof Combination therapy comprising anti-CD137 antibodies ​ Composition of matter/ method of use/ method of making method of treatment/ method of use ​ United States of America China and European Patent Office ​ ADG206 ​ Anti-CD137 antibodies and methods of making and using the same ​ Composition of matter/method of use/method of making ​ Patent Cooperation Treaty (2) ​ ADG104 ​ Anti-PD-L1 antibodies and use thereof ​ Composition of matter/ method of use/ method of making ​ United States of America and European Patent Office ​ ​ ADG125 ​ Anti-CSF1R molecules and use thereof ​ Composition of matter/method of use/method of making ​ United States of America and European Patent Office ​ (1) You should read the Risk Factors included elsewhere in this annual report for important information about risks posed by the loss of patent protection, in particular the risks described under “Item 3 Key Information—3.D.Risk Factors—Risks Related to Our Intellectual Property.” (2) Patent Application of ADG125 has not yet entered into national phase of Patent Cooperation Treaty. 123 Table of Contents The following table summarizes material issued patents in Europe and China covering our proprietary technologies and product candidates. ​ ​ Application No.
Product Candidates Title of Patent Application Type of Patent Applications (1) Jurisdiction ADG126 ​ Anti-CTLA-4 antibodies and methods of making and using the same ​ Composition of matter/ method of use/ method of making ​ United States of America, China and European Patent Office ​ ADG116 ​ Anti-CTLA-4 antibodies and methods of making and using the same ​ Composition of matter/ method of use/ method of making ​ United States of America, China and European Patent Office ​ ADG206 ​ Anti-CD137 antibodies and methods of making and using the same ​ Composition of matter/method of use/method of making ​ Patent Cooperation Treaty (2) ​ ADG106 ​ Anti-CD137 molecules and uses thereof Combination therapy comprising anti-CD137 antibodies ​ Composition of matter/ method of use/ method of making method of treatment/ method of use ​ United States of America China and European Patent Office ​ ADG104 ​ Anti-PD-L1 antibodies and use thereof ​ Composition of matter/ method of use/ method of making ​ United States of America and European Patent Office ​ ​ ADG125 ​ Anti-CSF1R molecules and use thereof ​ Composition of matter/method of use/method of making ​ United States of America and European Patent Office ​ (1) You should read the Risk Factors included elsewhere in this annual report for important information about risks posed by the loss of patent protection, in particular the risks described under “Item 3 Key Information—3.D.Risk Factors—Risks Related to Our Intellectual Property.” (2) Patent Application of ADG206 has not yet entered into national phase of Patent Cooperation Treaty. 114 Table of Contents The following table summarizes material issued patents in the United States, Europe and China covering our proprietary technologies and product candidates. ​ ​ Application No.
For the avoidance of doubt, as of the date of this annual report, the CD28 T-cell engagers have not entered into IND-enabling stage. ​ 110 Table of Contents OUR PLATFORM Overview Our proprietary DPL platform is built upon our insights into precise and dynamic antibody-antigen interaction.
For the avoidance of doubt, as of the date of this annual report, the CD28 T-cell engagers have not entered into IND-enabling stage. ​ 106 Table of Contents OUR PLATFORM Overview Our proprietary DPL platform is built upon our insights into precise and dynamic antibody-antigen interaction.
Detailed implementation rules for drug classification and requirements for corresponding application materials will be promulgated by the NMPA. 138 Table of Contents In March 2016, the CFDA issued the Reform Plan for Registration Category of Chemical Medicine, which outlined the reclassifications of drug applications under the Registration Measures.
Detailed implementation rules for drug classification and requirements for corresponding application materials will be promulgated by the NMPA. 129 Table of Contents In March 2016, the CFDA issued the Reform Plan for Registration Category of Chemical Medicine, which outlined the reclassifications of drug applications under the Registration Measures.
Our patents and patent applications cover our key technologies and product candidates, including the DPL platform, our clinical candidates, ADG116, ADG126, ADG106, ADG206 and our preclinical candidates including ADG153, ADG138 and ADG152. Excluding any patent term adjustment and patent term extension, our currently issued patents are expected to expire from 2033 to 2038.
Our patents and patent applications cover our key technologies and product candidates, including the DPL platform, our clinical candidates, ADG126, ADG116, ADG206, ADG106 and our preclinical candidates including ADG153, ADG138 and ADG152. Excluding any patent term adjustment and patent term extension, our currently issued patents are expected to expire from 2033 to 2039.
Pilot Plan for the MAH System The Innovation Opinions provide a pilot plan for the MAH system. 141 Table of Contents Under the authorization of the Standing Committee of the NPC, the General Office of the State Council issued the Pilot Plan for the Drug Marketing Authorization Holder Mechanism in May 2016, which provides a detailed pilot plan for the MAH system in 10 Chinese provinces.
Pilot Plan for the MAH System The Innovation Opinions provide a pilot plan for the MAH system. 132 Table of Contents Under the authorization of the Standing Committee of the NPC, the General Office of the State Council issued the Pilot Plan for the Drug Marketing Authorization Holder Mechanism in May 2016, which provides a detailed pilot plan for the MAH system in 10 Chinese provinces.
Title of Patent Type of Patent (1) Jurisdiction 13877452.6 ​ An Integrated System for Library Construction, Affinity Binder Screening and Expression Thereof ​ Method ​ European Patent Office ​ 201380074656.1 ​ An Integrated System for Library Construction, Affinity Binder Screening and Expression Thereof ​ Method ​ China ​ 14908246.3 ​ Methods and Systems for Autoinduction of Protein Expression ​ Method ​ European Patent Office ​ 201410789857.6 ​ Filter Vector System And Its Applications ​ Method ​ China ​ 16108018 ​ Anti-CD137 Molecules and Use Thereof ​ Composition of matter ​ United States of America ​ 15536939 ​ Methods and Systems for Autoinduction of Protein Expression ​ Method ​ United States of America ​ 201480084652.6 ​ Methods and Systems for Autoinduction of Protein Expression ​ Method ​ China ​ 16640673 ​ Dynamic Human Antibody Light Chain Libraries ​ Library ​ United States of America ​ 16640679 ​ Dynamic Human Heavy Chain Antibody Libraries ​ Library ​ United States of America ​ 16265946 ​ Anti-CTLA4 Antibodies And Methods of Making and Using the Same ​ Composition of matter ​ United States of America ​ (1) You should read the Risk Factors included elsewhere in this annual report for important information about risks posed by the loss of patent protection, in particular the risks described under “Item 3 Key Information—3.D.Risk Factors—Risks Related to Our Intellectual Property.” We continually assess and refine our intellectual property strategy as we develop new platform technologies and product candidates.
Title of Patent Type of Patent (1) Jurisdiction 13877452.6 ​ An Integrated System for Library Construction, Affinity Binder Screening and Expression Thereof ​ Method ​ European Patent Office ​ 201380074656.1 ​ An Integrated System for Library Construction, Affinity Binder Screening and Expression Thereof ​ Method ​ China ​ 14908246.3 ​ Methods and Systems for Autoinduction of Protein Expression ​ Method ​ European Patent Office ​ 15536939 ​ Methods and Systems for Autoinduction of Protein Expression ​ Method ​ United States of America ​ 201480084652.6 ​ Methods and Systems for Autoinduction of Protein Expression ​ Method ​ China ​ 201410789857.6 ​ Filter Vector System And Its Applications ​ Method ​ China ​ 16108018 ​ Anti-CD137 Molecules and Use Thereof ​ Composition of matter ​ United States of America ​ 16640684 ​ Method for Treating Cancer using anti-CD137 antibody ​ Method ​ United States of America ​ 16640673 ​ Dynamic Human Antibody Light Chain Libraries ​ Library ​ United States of America ​ 16640679 ​ Dynamic Human Heavy Chain Antibody Libraries ​ Library ​ United States of America ​ 16265946 ​ Anti-CTLA-4 Antibodies And Methods of Making and Using the Same ​ Composition of matter ​ United States of America ​ 16966844 ​ Anti-CTLA4 Antibodies And Methods of Making and Using the Same ​ Composition of matter ​ United States of America ​ (1) You should read the Risk Factors included elsewhere in this annual report for important information about risks posed by the loss of patent protection, in particular the risks described under “Item 3 Key Information—3.D.Risk Factors—Risks Related to Our Intellectual Property.” We continually assess and refine our intellectual property strategy as we develop new platform technologies and product candidates.
We have entered into a framework agreement with Wuxi Biologics, under which it provides services to us on a project-by-project basis. Adagene is also working with other qualified manufacturers to diversify manufacturing outsourcing for the clinical supply production.
We have entered into a framework agreement with Wuxi Biologics, under which it provides services to us on a project-by-project basis. Adagene is also working with other qualified manufacturers to optimize manufacturing outsourcing for the clinical supply production.
We have persistently and pursued and implements seamless translational studies using the epitope across different species for both programs, observing a good correlation between preclinical and clinical results both as single agents and in combination with anti-PD-1.
We have persistently pursued and implemented seamless translational studies using the epitope across different species for both programs, observing a good correlation between preclinical and clinical results both as single agents and in combination with anti-PD-1.
The abundant discovery hits with diversified binding epitopes for varying degree of species cross-reactivity show the power of our AI-powered DPL platform not only in creating novel NEObodies in targeting different epitopes of a given antigen, but also in targeting the conserved epitope across different species of a given antigen to enable translational studies from immune-competent animal tumor models to human patients due to their broad species cross-reactivities.
The abundant discovery hits with diversified binding epitopes for varying degree of species cross-reactivity show the power of our DPL not only in creating novel NEObodies in targeting different epitopes of a given antigen, but also in targeting the conserved epitope across different species of a given antigen to enable translational studies from immune-competent animal tumor models to human patients due to their broad species cross-reactivities.
It is currently under Phase 1b/2 clinical evaluation in multiple trials in the U.S., China and APAC, both as monotherapy and in combination with anti-PD-1 therapy. 99 Table of Contents ADG126 is designed to address the toxicity issues of the approved CTLA-4 immuno-oncology therapy and achieve enhance anti-tumor efficacy to expand the potential of CTLA-4 as a target for the treatment of cancer.
It is currently under Phase 1b/2 clinical evaluation in multiple trials in the U.S., China and APAC, both as monotherapy and in combination with anti-PD-1 therapy. ADG126 is designed to address the toxicity issues of the approved CTLA-4 immuno-oncology therapy and achieve enhance anti-tumor efficacy to expand the potential of CTLA-4 as a target for the treatment of cancer.
It applies our proprietary SAFEbody technology to a parental antibody, ADG116, enabling ADG126 to be activated primarily in tumor tissues rather than healthy tissues, minimizing the risk of on-target, off-tumor toxicities. In September 2022, we presented the first clinical results from our monotherapy evaluation in a poster presentation at the European Society of Medical Oncology (ESMO) annual congress.
It applies our proprietary SAFEbody technology to a parental antibody, ADG116, enabling ADG126 to be activated primarily in tumor tissues rather than healthy tissues, minimizing the risk of on-target, off-tumor toxicities. 91 Table of Contents In September 2022, we presented the first clinical results from our monotherapy evaluation in a poster presentation at the European Society of Medical Oncology (ESMO) annual congress.
Risk Factors–– The enactment of the Accelerating Holding Foreign Companies Accountable Act decreases the number of non-inspection years from three years to two, thus reducing the time period before our ADSs may be prohibited from trading on the Nasdaq Stock Market or in the over-the-counter market or delisted.” 82 Table of Contents On December 16, 2021, PCAOB issued the HFCA Act Determination Report, according to which our auditor was subject to the determinations that the PCAOB is unable to inspect or investigate completely (the “2021 Determinaitons”).
Risk Factors–– The enactment of the Accelerating Holding Foreign Companies Accountable Act decreases the number of non-inspection years from three years to two, thus reducing the time period before our ADSs may be prohibited from trading on the Nasdaq Stock Market or in the over-the-counter market or delisted.” 81 Table of Contents On December 16, 2021, PCAOB issued the HFCAA Determination Report, according to which our auditor was subject to the determinations that the PCAOB is unable to inspect or investigate completely (the “2021 Determinaitons”).
These data support the mechanism of action for ADG126 as shown below in data presented at AACR 2023: ADG126 Monotherapy Tumor Biopsy: Case Study Shows Increased Teff / Treg with Treg Depletion in TME of an HCC Patient who Progressed on Atezolizumab + Bevacizumab* 101 Table of Contents * Data from paired tumor biopsies were collected before and after treatment.
These data support the mechanism of action for ADG126 as shown below in data presented at AACR 2023: ADG126 Monotherapy Tumor Biopsy: Case Study Shows Increased Teff / Treg with Treg Depletion in TME of an HCC Patient who Progressed on Atezolizumab + Bevacizumab* * Data from paired tumor biopsies were collected before and after treatment.
The PCAOB is required under the HFCA Act to make its determination on an annual basis with regards to its ability to inspect and investigate completely accounting firms based in the mainland China and Hong Kong. The possibility of being a “Commission-Identified Issuer” and risk of delisting could continue to adversely affect the trading price of our securities.
The PCAOB is required under the HFCAA to make its determination on an annual basis with regards to its ability to inspect and investigate completely accounting firms based in the mainland China and Hong Kong. The possibility of being a “Commission-Identified Issuer” and risk of delisting could continue to adversely affect the trading price of our securities.
In addition to filing and prosecuting patent applications in China and the United States, we may elect to file counterpart patent applications in additional countries and regions where we believe such foreign filing is likely to be beneficial. 124 Table of Contents As with other biotechnology and biopharmaceutical companies, our ability to maintain and solidify our proprietary and intellectual property position for our platform technologies and product candidates will depend on our success in obtaining effective patent claims and enforcing those claims if granted.
In addition to filing and prosecuting patent applications inthe United States and China, we may elect to file counterpart patent applications in additional countries and regions where we believe such foreign filing is likely to be beneficial. 115 Table of Contents As with other biotechnology and biopharmaceutical companies, our ability to maintain and solidify our proprietary and intellectual property position for our platform technologies and product candidates will depend on our success in obtaining effective patent claims and enforcing those claims if granted.
According to the Measures for the Exemption of Value-Added Tax from Cross-Border Taxable Activities in the Collection of Value-Added Tax in Lieu of Business Tax (for Trial Implementation) revised in June 2018, if domestic enterprises provide cross-border taxable activities such as professional technical services, technology transfer, software services, the above-mentioned cross-border taxable activities are exempt from VAT. 4.C.
According to the Measures for the Exemption of Value-Added Tax from Cross-Border Taxable Activities in the Collection of Value-Added Tax in Lieu of Business Tax (for Trial Implementation) revised in June 2018, if domestic enterprises provide cross-border taxable activities such as professional technical services, technology transfer, software services, the above-mentioned cross-border taxable activities are exempt from VAT. 145 Table of Contents 4.C.
Trading in our ADSs on the Nasdaq or over-the-counter will be prohibited, and as a result, our ADSs will be delisted under the HFCA Act, if the PCAOB has determined that it has been unable to inspect registered public accounting firms headquartered in mainland China and Hong Kong for two consecutive years.
Trading in our ADSs on the Nasdaq or over-the-counter will be prohibited, and as a result, our ADSs will be delisted under the HFCAA, if the PCAOB has determined that it has been unable to inspect registered public accounting firms headquartered in mainland China and Hong Kong for two consecutive years.
Our DPL platform empowers us to engage the dynamic epitope of the conformationally dynamic target which might be challenging using conventional antibody discovery approaches. We believe that the high-affinity and cross-reactive primary hits from our AI-Powered DPL library screening save time and cost from discovery to early clinical proof of concept.
Our DPL platform empowers us to engage the dynamic epitope of the conformationally dynamic target which might be challenging using conventional antibody discovery approaches. We believe that the high-affinity and cross-reactive primary hits from our DPL screening save time and cost from discovery to early clinical proof of concept.
We believe our AI-powered antibody discovery and engineering DPL platform significantly increase R&D productivity for antibody drug discovery, as illustrated by our clinical and preclinical pipeline. For example, DPL library screening against CTLA-4 or CD137 antigens has yielded a large number of high affinity primary hits.
We believe our antibody discovery and engineering DPL platform significantly increase R&D productivity for antibody drug discovery, as illustrated by our clinical and preclinical pipeline. For example, DPL screening against CTLA-4 or CD137 antigens has yielded a large number of high affinity primary hits.
Our DPL platform combines AI algorithms and ever-increasing big data in antibody sequence, structure, and binding epitope and affinity from public and our own proprietary databases to design, construct and screen high-quality proprietary antibody libraries with well-defined sequence, scaffold and biophysical attributes for antibody drug discovery.
Our DPL platform combines computational biology, algorithms and ever-increasing big data in antibody sequence, structure, binding epitope and affinity from public and our own proprietary databases to design, construct and screen high-quality proprietary antibody libraries with well-defined sequence, scaffold and biophysical attributes for antibody drug discovery.
The SEC maintains an internet site at www.sec.gov that contains reports, information statements, and other information regarding issuers that file electronically with the SEC. Recent Regulatory Development Implication of the Holding Foreign Companies Accountable Act The Holding Foreign Companies Accountable Act (the “HFCA Act”), was enacted on December 18, 2020.
The SEC maintains an internet site at www.sec.gov that contains reports, information statements, and other information regarding issuers that file electronically with the SEC. Recent Regulatory Development Implication of the Holding Foreign Companies Accountable Act The Holding Foreign Companies Accountable Act (the “HFCAA”), was enacted on December 18, 2020.
ADG153 is currently in the IND-enabling phase. ● ADG138 : This novel HER2xCD3 POWERbody is masked on both arms with an impressively high therapeutic index relative to its parental non-masked TCE in both HER2 high and low expressing solid tumors including HER2 high resistant/refractory tumors relative to a benchmark antibody (DS-8201, a HER2 targeting antibody drug conjugate commercially available in specific indications).
ADG153 is currently IND-ready. ● ADG138 : This novel HER2xCD3 POWERbody is masked on both arms with an impressively high therapeutic index relative to its parental non-masked TCE in both HER2 high and low expressing solid tumors including HER2 high resistant/refractory tumors relative to a benchmark antibody (DS-8201, a HER2 targeting antibody drug conjugate commercially available in specific indications).
As of the date of this annual report, we have received approximately US$1.5 million and US$1.2 million in aggregate payments under the 2018 Sanjin Agreements and the 2019 Dragon Boat Agreements, respectively. 121 Table of Contents Additional Discovery AGREEMENTs In addition to our SAFEbody technology licensing collaborations and out-licensing collaborations, from time to time, we further enhance our discovery efforts to leverage our DPL platform and antibody engineering capabilities with other biotechnology and pharmaceutical companies.
As of the date of this annual report and since the date of respective agreement, we have received approximately US$1.5 million and US$1.2 million in aggregate payments under the 2018 Sanjin Agreements and the 2019 Dragon Boat Agreements, respectively. 112 Table of Contents Additional Discovery AGREEMENTs In addition to our SAFEbody technology licensing collaborations and out-licensing collaborations, from time to time, we further enhance our discovery efforts to leverage our DPL platform and antibody engineering capabilities with other biotechnology and pharmaceutical companies.
There were no intercompany loans provided by Adagene Inc. to Adagene Suzhou during the years ended and as of December 31, 2020, 2021 and 2022.
There were no intercompany loans provided by Adagene Inc. to Adagene Suzhou during the years ended and as of December 31, 2021, 2022 and 2023.
This analysis suggests prolonged exposures of activated ADG126 in the tumor microenvironment (TME), with cleaved ADG126 on average accumulating ≥3-fold during repeat dosing, associated with the longer half-life of total ADG126 compared with its parental antibody.
This analysis suggests prolonged exposures of activated ADG126 in the tumor microenvironment (TME), with cleaved ADG126 on average accumulating ≥3-fold during repeat dosing, associated with the longer half-life of total ADG126 and its preferential accumulation in TME compared with its parental antibody.
Our DPL platform is empowered by our computational platform, artificial intelligence and three innovative technologies: NEObody, SAFEbody, and POWERbody. Life is motion : Harnessing the Dynamic Power of Antibodies The motion of proteins and their dynamic interactions trigger a cascade of complex biological and pharmacological effects.
Our DPL platform is empowered by computational biology and three innovative technologies: NEObody, SAFEbody, and POWERbody. Life is motion : Harnessing the Dynamic Power of Antibodies The motion of proteins and their dynamic interactions trigger a cascade of complex biological and pharmacological effects.
Further, analysis of a clinical sample from a hepatocellular carcinoma (HCC) patient previously treated with atezolizumab and bevacizumab and then followed by lenvatinib demonstrated about nine-fold Teff/Treg improved ratio after dosing relative to before dosing due to reduction in Treg and improvement in T effect cells.
Analysis of a clinical sample from a hepatocellular carcinoma (HCC) patient previously treated with atezolizumab and bevacizumab and then followed by lenvatinib demonstrated about nine-fold Teff/Treg improved ratio after dosing relative to before dosing due to reduction in Tregs and improvement in T effector cells.
ADG138 is currently in the IND-enabling phase. ● ADG152: This CD20xCD3 POWERbody integrates the company’s proprietary bispecific TCE platform with SAFEbody precision masking technology to minimize cytokine release syndrome (CRS) and on-target off-tumor toxicities for an increased therapeutic index.
ADG138 is currently IND-ready. ● ADG152 : This CD20xCD3 POWERbody integrates the company’s proprietary bispecific TCE platform with SAFEbody precision masking technology to minimize cytokine release syndrome (CRS) and on-target off-tumor toxicities for an increased therapeutic index.
ADG126/ADG116 is designed to target CTLA-4 conserved epitope with species cross-reactivity for translational fidelity. 103 Table of Contents Moreover, ADG126 has been observed in preclinical animal studies to mediate effector functions to eliminate highly upregulated CTLA-4 expressing cells, particularly regulatory T-cells in the TME, primarily through its strong ADCC.
ADG126/ADG116 is designed to target CTLA-4 a unique and conserved epitope with species cross-reactivity for translational fidelity. ​ 97 Table of Contents Moreover, ADG126 has been observed in preclinical animal studies to mediate effector functions to eliminate highly upregulated CTLA-4 expressing cells, particularly regulatory T-cells in the TME, primarily through its strong ADCC.
Other than the above disclosed transfer of funds, we did not transfer any type of assets between Adagene Suzhou and other Adagene subsidiaries in 2020, 2021 and 2022. 86 Table of Contents Restrictions on Foreign Exchange and the Ability to Transfer Cash between Entities, Across Borders and to U.S.
Other than the above disclosed transfer of funds, we did not transfer any type of assets between Adagene Suzhou and other Adagene subsidiaries in 2021, 2022 and 2023. 85 Table of Contents Restrictions on Foreign Exchange and the Ability to Transfer Cash between Entities, Across Borders and to U.S.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Investing activities Net cash used in investing activities was US$0.7 million in 2022, which was primarily attributable to the purchase of property, equipment and software. Net cash used in investing activities was US$2.5 million in 2021, which was attributable to the purchase of property, equipment and software.
Net cash used in investing activities was US$0.7 million in 2022, which was primarily attributable to the purchase of property, equipment and software. Net cash used in investing activities was US$2.5 million in 2021, which was attributable to the purchase of property, equipment and software.
Financing activities Net cash generated from financing activities was US$17.8 million in 2022, which was mainly attributable to proceeds from borrowings of US$25.8 million, offset by (i) repayment of borrowings of US$4.4 million, and (ii) purchase of treasury shares under stock repurchase program of US$4.0 million.
Net cash generated from financing activities was US$17.8 million in 2022, which was mainly attributable to proceeds from borrowings of US$25.8 million, offset by (i) repayment of borrowings of US$4.4 million, and (ii) purchase of treasury shares under stock repurchase program of US$4.0 million.
For the year ended December 31, 2021 and 2022, income tax expense was US$1.7 and US$0.5 million due to taxable profits generated by the U.S. subsidiary, respectively. Share-based compensation We grant restricted shares and stock options to eligible employees and nonemployees and accounts for share-based compensation in accordance with ASC 718, Compensation—Stock Compensation.
For the year ended December 31, 2021, 2022 and 2023, income tax expense was US$1.7 million, US$0.5 million and US$1.7 million due to taxable profits generated by the U.S. subsidiary, respectively. Share-based compensation We grant restricted shares and stock options to eligible employees and nonemployees and accounts for share-based compensation in accordance with ASC 718, Compensation—Stock Compensation.
We believe that non-GAAP net loss and non-GAAP net loss per ordinary share for the year provide useful information about our results of operations, enhance the overall understanding of its past performance and future prospects and allow for greater visibility with respect to key metrics used by its management in our financial and operational decision-making. 166 Table of Contents Non-GAAP net loss and non-GAAP net loss per ordinary share for the year should not be considered in isolation or construed as an alternative to operating profit, loss for the year or any other measure of performance or as an indicator of its operating performance.
We believe that non-GAAP net loss and non-GAAP net loss per ordinary share for the year provide useful information about our results of operations, enhance the overall understanding of its past performance and future prospects and allow for greater visibility with respect to key metrics used by its management in our financial and operational decision-making. 157 Table of Contents Non-GAAP net loss and non-GAAP net loss per ordinary share for the year should not be considered in isolation or construed as an alternative to operating profit, loss for the year or any other measure of performance or as an indicator of its operating performance.
To date, we have not made any material adjustments to our prior estimates of research and development expenses. 171 Table of Contents Share based compensation 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 we conclude that it is probable that the performance conditions will be achieved.
To date, we have not made any material adjustments to our prior estimates of research and development expenses. 162 Table of Contents Share based compensation 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 we conclude that it is probable that the performance conditions will be achieved.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2022 that are reasonably likely to have a material and adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future results of operations or financial condition. 5.E.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2023 that are reasonably likely to have a material and adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future results of operations or financial condition. 5.E.
No provision for Hong Kong profits tax was made as there were no assessable profits derived from or earnings in Hong Kong for the years ended December 31, 2020, 2021 and 2022. United States Our subsidiary in the U.S., Adagene Incorporated, is incorporated in the U.S. and subject to U.S. federal corporate income tax at a rate of 21%.
No provision for Hong Kong profits tax was made as there were no assessable profits derived from or earnings in Hong Kong for the years ended December 31, 2021, 2022 and 2023. United States Our subsidiary in the U.S., Adagene Incorporated, is incorporated in the U.S. and subject to U.S. federal corporate income tax at a rate of 21%.
Research and development expenses are charged to expense as incurred when these expenditures relate to our research and development services and have no alternative future uses. As of December 31, 2022, we have several ongoing clinical studies in various clinical trial stages. The contracts with CRO and CMO are generally cancellable, with notice, at our option.
Research and development expenses are charged to expense as incurred when these expenditures relate to our research and development services and have no alternative future uses. As of December 31, 2023, we have several ongoing clinical studies in various clinical trial stages. The contracts with CRO and CMO are generally cancellable, with notice, at our option.
See “Item 3 Key Information— Risk Factors—Risks Related to Doing Business in the PRC—If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.” Critical Accounting Policies and Judgments Basis of presentation Our consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or U.S.
See “Item 3 Key Information— Risk Factors—Risks Related to Doing Business in the PRC—If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.” 150 Table of Contents Critical Accounting Policies and Judgments Basis of presentation Our consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or U.S.
Actual results could materially differ from those estimates. 170 Table of Contents Certain of these estimates are considered critical as they involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our consolidated financial statements. Our critical accounting estimates are summarized below.
Actual results could materially differ from those estimates. 161 Table of Contents Certain of these estimates are considered critical as they involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our consolidated financial statements. Our critical accounting estimates are summarized below.
This is due to numerous risks and uncertainties associated with developing drugs, including the uncertainty of: ● the scope, rate of progress, results and cost of our clinical trials, preclinical studies and other related activities; ● the cost of manufacturing clinical supplies, and establishing commercial supplies, of any product candidates; ● the number and characteristics of product candidates that we pursue; ● the cost, timing and outcomes of regulatory approvals; ● the cost and timing of establishing sales, marketing and distribution capabilities; and ● the terms and timing of any collaboration, licensing or other arrangements that we may establish, including any required milestone and royalty payments thereunder.
This is due to numerous risks and uncertainties associated with developing drugs, including the uncertainty of: ● the scope, rate of progress, results and cost of our clinical trials, preclinical studies and other related activities; ● the cost of manufacturing clinical supplies, and establishing commercial supplies, of any product candidates; ● the number and characteristics of product candidates that we pursue; ● the cost, timing and outcomes of regulatory approvals; 148 Table of Contents ● the cost and timing of establishing sales, marketing and distribution capabilities; and ● the terms and timing of any collaboration, licensing or other arrangements that we may establish, including any required milestone and royalty payments thereunder.
The carrying amount of long-term borrowings approximate their fair values since they bear interest rates which approximate market interest rates. We did not transfer any assets or liabilities in or out of Level 3 during the year ended December 31, 2021 or 2022.
The carrying amount of long-term borrowings approximate their fair values since they bear interest rates which approximate market interest rates. We did not transfer any assets or liabilities in or out of Level 3 during the year ended December 31, 2022 or 2023.
We did not record any accrued expenses related to cancellation of CRO or CMO contracts as of December 31, 2021 or 2022 as we did not have any plan to cancel the existing CRO or CMO contracts. Income taxes We follow the liability method of accounting for income taxes in accordance with ASC 740, Income Taxes , or ASC 740.
We did not record any accrued expenses related to cancellation of CRO or CMO contracts as of December 31, 2022 or 2023 as we did not have any plan to cancel the existing CRO or CMO contracts. Income taxes We follow the liability method of accounting for income taxes in accordance with ASC 740, Income Taxes , or ASC 740.
Recent accounting pronouncements A list of recent relevant accounting pronouncements is included in Note 2 “Summary of Significant Accounting Policies” to our consolidated financial statements included elsewhere in this annual report. 163 Table of Contents Results of Operations The following table summarizes our consolidated results of operations for the periods presented.
Recent accounting pronouncements A list of recent relevant accounting pronouncements is included in Note 2 “Summary of Significant Accounting Policies” to our consolidated financial statements included elsewhere in this annual report. 154 Table of Contents Results of Operations The following table summarizes our consolidated results of operations for the periods presented.
The actual benefits ultimately realized may differ from our estimates. The assessment of the deferred tax assets as well as related valuation allowance is disclosed in note 11 to our consolidated financial statements included elsewhere in this annual report. ​
The actual benefits ultimately realized may differ from our estimates. The assessment of the deferred tax assets as well as related valuation allowance is disclosed in Note 10 to our consolidated financial statements included elsewhere in this annual report. ​
Our Dynamic Precision Library fuels our three antibody technology platforms, which can be used alone or together to create novel, differentiated antibody-based therapeutic candidates. By leveraging our proprietary DPL platform and three platform technologies, we have developed a robust pipeline of innovative product candidates in various stages of development, ranging from research and discovery to preclinical and clinical development.
Our DPL fuels our three antibody technology platforms, which can be used alone or together to create novel, differentiated antibody-based therapeutic candidates. By leveraging our proprietary DPL platform and three platform technologies, we have developed a robust pipeline of innovative product candidates in various stages of development, ranging from research and discovery to preclinical and clinical development.
Changes in assumptions or estimates can materially affect the revenue recognized. The assessment and conclusion reached for revenue recognition are disclosed in note 10 to our consolidated financial statements included elsewhere in this annual report.
Changes in assumptions or estimates can materially affect the revenue recognized. The assessment and conclusion reached for revenue recognition are disclosed in Note 9 to our consolidated financial statements included elsewhere in this annual report.
We expect to incur additional operating losses in the near future and our operating expenses will increase as we continue to expand our research and development capabilities, invest in preclinical tests and clinical trials and increase our efforts in obtaining regulatory approvals.
We expect to incur additional operating losses in the near future as we continue to expand our research and development capabilities, invest in preclinical tests and clinical trials and increase our efforts in obtaining regulatory approvals.
The income tax expense for the year ended December 31, 2022 was primarily attributable to the current tax expenses on income reported by Adagene Incorporated, our wholly owned subsidiary in the U.S.
The income tax expense for the year ended December 31, 2023 was primarily attributable to the current tax expenses on income reported by Adagene Incorporated, our wholly owned subsidiary in the U.S.
We have forged strategic collaborations with reputable global partners that leverage our technology in multiple approaches at the vanguard of science. We aim to push the boundaries of antibody discovery and engineering through the precise design, construction, and selection of antibody product candidates intractable to traditional antibody technology.
We have forged strategic collaborations with reputable global partners that leverage our technology in multiple approaches at the vanguard of science. 146 Table of Contents We aim to push the boundaries of antibody discovery and engineering through the precise design, construction, and selection of antibody product candidates intractable to traditional antibody technology.
An entity could apply for the TASE certificate every year. Adagene Suzhou was first recognized as a qualified TASE in March 2015 and renewed in December 2018 and December 2021. Adagene Suzhou can enjoy the preferential tax rate of 15% from 2015 to at least 2023.
An entity could apply for the TASE certificate every year. Adagene Suzhou was first recognized as a qualified TASE in March 2015 and renewed in December 2018 and December 2021. Adagene Suzhou can enjoy the preferential tax rate of 15% from 2015 to at least November 2024.
We anticipate that our expenses will increase significantly in connection with our ongoing activities, as we: ● continue advancement of and investment in our proprietary DPL platform; ● advance the development of ADG116, ADG126, ADG106, ADG206 and other preclinical drug candidates; ● continue our ongoing and planned research and development of other lead product candidates; ● discover and develop additional antibody product candidates and further expand our preclinical and clinical product pipeline; ● maintain, expand and protect our intellectual property portfolio; 155 Table of Contents ● expand our collaborations with contract manufacturing organizations and contract research organizations; ● seek regulatory approvals for any product candidates that successfully complete clinical trials; ● establish sales and marketing teams and distribution network to commercialize any product candidate for which we may obtain regulatory approval; ● attract, hire and retain additional clinical, scientific, management and administrative personnel; ● expand our operations globally; and ● incur additional costs associated with operating as a public company.
We anticipate that our expenses will increase significantly in connection with our ongoing activities, as we: ● continue advancement of and investment in our proprietary DPL platform; ● advance the development of ADG126, ADG116, ADG206, ADG106 and other preclinical drug candidates; ● continue our ongoing and planned research and development of other lead product candidates; ● discover and develop additional antibody product candidates and further expand our preclinical and clinical product pipeline; ● maintain, expand and protect our intellectual property portfolio; ● expand our collaborations with contract manufacturing organizations and contract research organizations; ● seek regulatory approvals for any product candidates that successfully complete clinical trials; ● establish sales and marketing teams and distribution network to commercialize any product candidate for which we may obtain regulatory approval; ● attract, hire and retain additional clinical, scientific, management and administrative personnel; ● expand our operations globally; and ● incur additional costs associated with operating as a public company. 147 Table of Contents Key Components of Results of Operations Revenue Licensing and collaboration revenue.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the section entitled “Selected Consolidated Financial Data” and our consolidated financial statements and the related notes included elsewhere in this annual report. This discussion contains forward-looking statements that involve risks and uncertainties.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes included elsewhere in this annual report. This discussion contains forward-looking statements that involve risks and uncertainties.
Non-GAAP net loss per ordinary share for the year ended December 31, 2021 on both basic and diluted basis was US$1.09. We use non-GAAP net loss and non-GAAP net loss per ordinary share for the year, which are non-GAAP financial measures, in evaluating our operating results and for financial and operational decision-making purposes.
Non-GAAP net loss per ordinary share for the year ended December 31, 2022 on both basic and diluted basis was US$1.28. We use non-GAAP net loss and non-GAAP net loss per ordinary share for the year, which are non-GAAP financial measures, in evaluating our operating results and for financial and operational decision-making purposes.
The assumptions used to estimate the fair value of the share options granted are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year eneded December 31, ​ 2020 2021 2022 ​ ​ ​ ​ ​ ​ ​ ​ Risk-free interest rate 0.68% - 0.83 % 1.11% - 1.67 % 1.92% - 4.25 % Dividend yield 0 % 0 % 0 % Expected volatility range 72.3% - 73.4 % 73.1% - 75.5 % 74.2% - 74.9 % Exercise multiple 2.2 - 2.8 2.2 - 2.8 ​ 2.2 - 2.8 ​ Contractual life 10 years 10 years ​ 10 years ​ ​ Borrowings Borrowings are recognized initially at fair value, net of transaction costs incurred.
The assumptions used to estimate the fair value of the share options granted are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year eneded December 31, ​ 2021 2022 2023 ​ ​ ​ ​ ​ ​ ​ ​ Risk-free interest rate 1.11% - 1.67 % 1.92% - 4.25 % 3.38% - 4.86 % Dividend yield 0 % 0 % 0 % Expected volatility range 73.1% - 75.5 % 74.2% - 74.9 % 72.6% - 73.1 % Exercise multiple 2.2 – 2.8 2.2 – 2.8 ​ 2.2 – 2.8 ​ Contractual life 10 years 10 years ​ 10 years ​ ​ Borrowings Borrowings are recognized initially at fair value, net of transaction costs incurred.
Pursuant to the PRC Enterprise Income Tax Law, or EIT Law, which became effective on January 1, 2008, a uniform 25% enterprise income tax rate is generally applicable to both foreign-invested enterprises and domestic enterprises, except where a special preferential rate applies.
Pursuant to the PRC Enterprise Income Tax Law, or EIT Law, which became effective on January 1, 2008 and was last amended in December 2018, a uniform 25% enterprise income tax rate is generally applicable to both foreign-invested enterprises and domestic enterprises, except where a special preferential rate applies.
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; or 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. 162 Table of Contents A change in any of the terms or conditions of share-based awards is accounted for as a modification of the awards.
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; or 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.
As of December 31, 2022, we had US$143.8 million in cash and cash equivalents. 167 Table of Contents We intend to finance our future working capital requirements and capital expenditures primarily from funds raised from financing activities, including the net proceeds received from our initial public offering, future public and private offerings of our securities, proceeds from our collaborations, and/or proceeds from borrowings.
As of December 31, 2023, we had US$109.9 million in cash and cash equivalents. 158 Table of Contents We intend to finance our future working capital requirements and capital expenditures primarily from funds raised from financing activities, including the net proceeds received from our initial public offering, future public and private offerings of our securities, proceeds from our collaborations, and/or proceeds from borrowings.
ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2—Other inputs that are directly or indirectly observable in the marketplace. Level 3—Unobservable inputs which are supported by little or no market activity.
ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2—Other inputs that are directly or indirectly observable in the marketplace.
The following table summarizes our research and development expenses for our clinical-stage product candidates, preclinical product candidates and research pipeline for the years ended December 31, 2020, 2021 and 2022, respectively. ​ ​ ​ ​ ​ ​ ​ ​ For the Year ​ ​ Ended ​ ​ December 31, ​ ​ 2020 ​ 2021 ​ 2022 ​ ​ US$ ​ US$ ​ US$ ​ ​ (in thousands) ADG126 ​ 12,091 ​ 3,543 ​ 19,229 ADG116 ​ 3,156 ​ 11,236 ​ 15,271 ADG106 12,504 14,798 4,604 Preclinical product candidates, research pipeline and others 5,787 38,522 42,236 Total 33,538 68,099 81,340 ​ At this time, we cannot reasonably estimate the nature, timing and estimated costs of the efforts that will be necessary to complete the development of, or the period, if any, in which material net cash inflows may commence from, any of our product candidates.
The following table summarizes our research and development expenses for our clinical-stage product candidates, preclinical product candidates and research pipeline for the years ended December 31, 2021, 2022 and 2023, respectively. ​ ​ ​ ​ ​ ​ ​ ​ For the Year ​ ​ Ended ​ ​ December 31, ​ ​ 2021 2022 2023 ​ ​ US$ ​ US$ ​ US$ ​ ​ (in thousands) ADG126 ​ 3,543 ​ 19,229 ​ 20,855 ADG116 ​ 11,236 ​ 15,271 ​ 5,779 ADG106 14,798 4,604 2,209 Preclinical product candidates, research pipeline and others 38,522 42,236 7,796 Total 68,099 81,340 36,639 ​ At this time, we cannot reasonably estimate the nature, timing and estimated costs of the efforts that will be necessary to complete the development of, or the period, if any, in which material net cash inflows may commence from, any of our product candidates.
Our net losses were US$42.4, US$73.2 million and US$80.0 million for the years ended December 31, 2020, 2021 and 2022, respectively. As of December 31, 2022, we had accumulated deficit of US$258.8 million. We expect to continue to incur significant expenses and operating losses for the foreseeable future.
Our net losses were US$73.2 million, US$80.0 million and US$18.9 million for the years ended December 31, 2021, 2022 and 2023, respectively. As of December 31, 2023, we had accumulated deficit of US$277.8 million. We expect to continue to incur significant expenses and operating losses for the foreseeable future.
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 consolidated statements of comprehensive loss.
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 consolidated statements of comprehensive loss.
Holding Company Structure Adagene Inc. is a holding company with no material operations of its own. Adagene Inc. holds certain intellectual properties and outsources certain research and development activities related to these intellectual properties to its subsidiaries. We conduct our operations primarily through our subsidiaries. As a result, our ability to pay dividends depends upon dividends paid by our subsidiaries.
Adagene Inc. holds certain intellectual properties and outsources certain research and development activities related to these intellectual properties to its subsidiaries. We conduct our operations primarily through our subsidiaries. As a result, our ability to pay dividends depends upon dividends paid by our subsidiaries.
Net cash generated from financing activities was US$145.4 million in 2021, which was mainly attributable to (i) proceeds from initial public offering net of underwriting commissions of $149.4 million, and (ii) proceeds from borrowings of US$4.4 million, offset by (i) repayment of borrowings of US$5.1 million, (ii) payment of initial public offering costs of US$1.6 million, and (iii) purchase of treasury shares under stock repurchase program of US$2.4 million.
Net cash generated from financing activities was US$145.4 million in 2021, which was mainly attributable to (i) proceeds from initial public offering net of underwriting commissions of US$149.4 million, and (ii) proceeds from borrowings of US$4.4 million, offset by (i) repayment of borrowings of US$5.1 million, (ii) payment of initial public offering costs of US$1.6 million, and (iii) purchase of treasury shares under stock repurchase program of US$2.4 million. 160 Table of Contents Capital Expenditures Our capital expenditures are incurred primarily in connection with research and development equipment.
The tax incentive was recognized as other income upon receipt as the incentive was not dependent upon having a tax liability and further performance by the Group was not required. Taxation Cayman Islands We are incorporated in the Cayman Islands.
In addition, the subsidiary in Australia received research and development tax incentive from the Australian Taxation Office. The tax incentive was recognized as other income upon receipt as the incentive was not dependent upon having a tax liability and further performance by the Group was not required. Taxation Cayman Islands We are incorporated in the Cayman Islands.
The following table presents our selected consolidated cash flow data for the years ended December 31, 2020, 2021 and 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended ​ ​ December 31, ​ 2020 2021 2022 ​ ​ US$ ​ US$ ​ US$ ​ ​ (in thousands) ​ ​ ​ ​ ​ ​ ​ Net cash used in operating activities (28,530) (43,415) (48,612) Net cash (used in) generated from investing activities 7,073 (2,510) (686) Net cash generated from financing activities 4,439 145,357 17,823 Effect of exchange rate on cash and cash equivalents (364) (192) 843 Net increase (decrease) in cash and cash equivalents (17,382) 99,240 (30,632) Cash and cash equivalents at the beginning of year 92,533 75,151 174,391 Cash and cash equivalents at the end of year 75,151 174,391 143,759 ​ 168 Table of Contents Operating activities Net cash used in operating activities was US$48.6 million in 2022.
The following table presents our selected consolidated cash flow data for the years ended December 31, 2021, 2022 and 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended ​ ​ December 31, ​ 2021 2022 2023 ​ ​ US$ ​ US$ ​ US$ ​ ​ (in thousands) ​ ​ ​ ​ ​ ​ ​ Net cash used in operating activities (43,415) (48,612) (28,455) Net cash used in investing activities (2,510) (686) (77) Net cash (used in) generated from financing activities 145,357 17,823 (5,367) Effect of exchange rate on cash and cash equivalents (192) 843 74 Net increase (decrease) in cash and cash equivalents 99,240 (30,632) (33,825) Cash and cash equivalents at the beginning of year 75,151 174,391 143,759 Cash and cash equivalents at the end of year 174,391 143,759 109,934 ​ 159 Table of Contents Operating activities Net cash used in operating activities was US$28.5 million in 2023.
Our research and development expenses consist principally of (1) payroll and other related costs of personnel engaged in research and development activities, (2) costs related to pre-clinical testing of our technologies under development and clinical trials such as payments to contract research organizations, or CRO, and contract manufacturing organization, or CMO, 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. 156 Table of Contents For the years ended December 31, 2020, 2021 and 2022, our research and development expenses were US$33.5 million, US$68.1 million and US$81.3 million, respectively.
Our research and development expenses consist principally of (1) payroll and other related costs of personnel engaged in research and development activities, (2) costs related to pre-clinical testing of our technologies under development and clinical trials such as payments to contract research organizations, or CRO, and contract manufacturing organization, or CMO, investigators and clinical trial sites that conduct the clinical studies, (3) costs to develop the product candidates, including raw materials and supplies, product testing, depreciation and amortization, and facility related expenses, and (4) other research and development expenses.
The operating results in any period are not necessarily indicative of the results that may be expected for any future period. ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended ​ ​ December 31, ​ ​ 2020 ​ 2021 ​ 2022 ​ ​ US$ ​ US$ ​ US$ ​ ​ (in thousands, except per share information) ​ ​ ​ ​ ​ ​ ​ Revenue: Licensing and collaboration revenue 701 10,175 9,293 Expenses: ​ ​ Research and development expenses (33,538) (68,099) (81,340) Administrative expenses (10,315) (14,440) (11,874) Total operating expenses (43,853) (82,539) (93,214) Loss from operations (43,152) (72,364) (83,921) Interest income 629 76 378 Interest expense (202) (364) (693) Other income, net 972 1,779 2,168 Foreign exchange gain (loss), net (645) (603) 2,555 Loss before income tax (42,397) (71,476) (79,513) Income tax expense — (1,702) (459) Net loss attributable to Adagene Inc.’s shareholders (42,397) (73,178) (79,972) Other comprehensive income (loss): ​ Foreign currency translation adjustments, net of nil tax (6) 257 (755) Total comprehensive loss attributable to Adagene Inc.’s shareholders (42,403) (72,921) (80,727) Net loss attributable to Adagene Inc.’s shareholders (42,397) (73,178) (79,972) Accretion of convertible redeemable preferred shares to redemption value (248) (28) — Net loss attributable to ordinary shareholders (42,645) (73,206) (79,972) Weighted average number of ordinary shares used in per share calculation: ​ —Basic 15,951 50,032 54,135 —Diluted 15,951 50,032 54,135 Net loss per ordinary share ​ —Basic (2.67) (1.46) (1.48) —Diluted (2.67) (1.46) (1.48) ​ 164 Table of Contents Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Licensing and collaboration revenue Our licensing and collaboration revenue was US$9.3 million for the year ended December 31, 2022, compared to US$10.2 million for the year ended December 31, 2021.
The operating results in any period are not necessarily indicative of the results that may be expected for any future period. ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended ​ ​ December 31, ​ ​ 2021 2022 2023 ​ ​ US$ ​ US$ ​ US$ ​ ​ (in thousands, except per share information) ​ ​ ​ ​ ​ ​ ​ Revenue: Licensing and collaboration revenue 10,175 9,293 18,111 Operating expenses and income: ​ ​ Research and development expenses (68,099) (81,340) (36,639) Administrative expenses (14,440) (11,874) (8,673) Other operating income, net — — 3,481 Loss from operations (72,364) (83,921) (23,720) Interest income 76 378 4,283 Interest expense (364) (693) (1,108) Other income, net 1,779 2,168 1,844 Foreign exchange gain (loss), net (603) 2,555 1,446 Loss before income tax (71,476) (79,513) (17,255) Income tax expense (1,702) (459) (1,691) Net loss attributable to Adagene Inc.’s shareholders (73,178) (79,972) (18,946) Other comprehensive income (loss): ​ Foreign currency translation adjustments, net of nil tax 257 (755) (951) Total comprehensive loss attributable to Adagene Inc.’s shareholders (72,921) (80,727) (19,897) Net loss attributable to Adagene Inc.’s shareholders (73,178) (79,972) (18,946) Accretion of convertible redeemable preferred shares to redemption value (28) — — Net loss attributable to ordinary shareholders (73,206) (79,972) (18,946) Weighted average number of ordinary shares used in per share calculation: ​ —Basic 50,032 54,135 54,738 —Diluted 50,032 54,135 54,738 Net loss per ordinary share ​ —Basic (1.46) (1.48) (0.35) —Diluted (1.46) (1.48) (0.35) ​ 155 Table of Contents Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Licensing and collaboration revenue Our licensing and collaboration revenue was US$18.1 million for the year ended December 31, 2023, compared to US$9.3 million for the year ended December 31, 2022.
Research and Development Services : The portion of the transaction price allocated to research and development services performance obligations is deferred and recognized over time as delivery of such services occurs. 160 Table of Contents Milestone Payments : At the inception of each arrangement that includes development, commercialization, and regulatory milestone payments, we evaluate whether the milestones are considered probable of being reached and to the extent that a significant reversal of cumulative revenue would not occur in future periods, estimates the amount to be included in the transaction price using the most likely amount method.
Milestone Payments : At the inception of each arrangement that includes development, commercialization, and regulatory milestone payments, we evaluate whether the milestones are considered probable of being reached and to the extent that a significant reversal of cumulative revenue would not occur in future periods, estimates the amount to be included in the transaction price using the most likely amount method.
Reconciliation of GAAP and Non-GAAP Results ​ ​ ​ ​ ​ ​ ​ ​ For the years ended ​ ​ December 31, ​ ​ 2020 ​ 2021 ​ 2022 ​ ​ US$ ​ US$ ​ US$ GAAP net loss attributable to ordinary shareholders ​ (42,645,392) ​ (73,206,488) ​ (79,971,847) Add back: ​ ​ Share-based compensation expense 10,129,541 18,679,658 ​ 10,520,282 Accretion of convertible redeemable preferred shares to redemption value 248,113 28,553 ​ — Non-GAAP net loss attributable to ordinary shareholders (32,267,738) (54,498,277) ​ (69,451,565) Weighted average number of ordinary shares used in per share calculation: ​ ​ —Basic 15,950,698 50,032,009 ​ 54,135,084 —Diluted 15,950,698 50,032,009 ​ 54,135,084 Non-GAAP net loss per ordinary share ​ ​ —Basic (2.02) (1.09) ​ (1.28) —Diluted (2.02) (1.09) ​ (1.28) ​ ​ ​ 5.B.
Reconciliation of GAAP and Non-GAAP Results ​ ​ ​ ​ ​ ​ ​ ​ For the years ended ​ ​ December 31, ​ ​ 2021 2022 2023 ​ ​ US$ ​ US$ ​ US$ GAAP net loss attributable to ordinary shareholders ​ (73,206,488) ​ (79,971,847) ​ (18,946,370) Add back: ​ ​ ​ ​ Share-based compensation expense 18,679,658 10,520,282 ​ 7,271,700 Accretion of convertible redeemable preferred shares to redemption value 28,553 — ​ — Non-GAAP net loss attributable to ordinary shareholders (54,498,277) (69,451,565) ​ (11,674,670) Weighted average number of ordinary shares used in per share calculation: ​ ​ ​ ​ —Basic 50,032,009 54,135,084 ​ 54,737,530 —Diluted 50,032,009 54,135,084 ​ 54,737,530 Non-GAAP net loss per ordinary share ​ ​ ​ ​ —Basic (1.09) (1.28) ​ (0.21) —Diluted (1.09) (1.28) ​ (0.21) ​ ​ ​ 5.B.
Operating and Financial Review and Prospects – 5.A Operating Results —Year Ended December 31, 2021 Compared to Year Ended December 31, 2020” beginning on page 166 of our annual report on Form 20-F for the year ended December 31, 2021 filed with the Securities and Exchange Commission on April 26, 2021 incorporated by reference into this annual report.
Operating and Financial Review and Prospects – 5.A Operating Results —Year Ended December 31, 2022 Compared to Year Ended December 31, 2021” beginning on page 165 of our annual report on Form 20-F for the year ended December 31, 2022 filed with the Securities and Exchange Commission on April 28, 2022.
We had no financial assets and liabilities measured and recorded at fair value on a nonrecurring basis as of December 31, 2021 and 2022. 161 Table of Contents 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 our technologies under development and clinical trials such as payments to contract research organizations, or CRO, and contract manufacturing organizations, or CMO, 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, (4) other research and development expenses.
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 our technologies under development and clinical trials such as payments to contract research organizations, or CRO, and contract manufacturing organizations, or CMO, 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, (4) other research and development expenses.
This increase was primarily attributable to an increase in interest rate and increase in the amount of term deposits placed. 165 Table of Contents Other income Our other income increased from US$1.8 million for the year ended December 31, 2021 to US$2.2 million for the year ended December 31, 2022, primarily attributable to (i) an increase in government subsidies received by Adagene Suzhou to support our ongoing operations in Jiangsu Province during the year ended December 31, 2022, and (ii) a research and development tax incentive from the Australian Taxation Office received by Adagene Australia Pty Ltd, our wholly-owned subsidiary in Australia.
Other income Our other income decreased from US$2.2 million for the year ended December 31, 2022 to US$1.8 million for the year ended December 31, 2023, primarily attributable to a decrease in government subsidies received by Adagene Suzhou to support our ongoing operations in Jiangsu Province during the year ended December 31, 2023, offset by an increase in the research and development tax incentive from the Australian Taxation Office received by Adagene Australia Pty Ltd, our wholly-owned subsidiary in Australia.
The functional currency of our Australia subsidiary is Australian dollar, or AU$.The functional currency of our Swiss subsidiary is Swiss Franc, or CHF. The determination of the respective functional currency is based on the criteria stated in Accounting Standard Codification, or ASC, 830, Foreign Currency Matters . We use US$ as our reporting currency.
The determination of the respective functional currency is based on the criteria stated in Accounting Standard Codification, or ASC, 830, Foreign Currency Matters . We use US$ as our reporting currency. The financial statements of our PRC subsidiary, Australia subsidiary and Swiss subsidiary are translated from the functional currency to the reporting currency.
The difference between our net loss of US$42.4 million and the net cash used in operating activities was mainly due to (i) an increase in prepayments and other current assets of US$2.3 million due to our prepaid service fees to our vendor, (ii) a decrease in contract liabilities of US$0.3 million, offset by (i) non-cash share-based compensation expenses of US$10.1 million, (ii) an increase in accounts payable of US$1.1 million (iii) a decrease in accounts receivable of US$0.5 million, (iv) a decrease in amount due from related parties of US$1.3 million, (v) an increase in accruals and other current liabilities of US$1.2 million, and (vi) depreciation and amortization of US$0.9 million.
The difference between our net loss of US$18.9 million and the net cash used in operating activities was mainly due to (i) a decrease in accounts payable of US$0.6 million, (ii) a decrease in contract liabilities of US$15.1 million as performance obligations were satisfied, (iii) a decrease in amount due to related parties of US$2.6 million, (iv) a decrease in accruals and other current liabilities of US$0.1 million, and (v) a decrease in lease liabilities of US$0.2 million, offset by (i) non-cash share-based compensation expenses of US$7.3 million, (ii) a decrease in prepayments and other current assets of US$1.6 million, (iii) a decrease in amounts due from related parties of US$0.4 million, (iv) depreciation and amortization of US$1.0 million, and (v) amortization of right-of use assets and interest of lease liabilities of US$0.2 million.
The Non-GAAP net loss was US$69.5 million for the year ended December 31, 2022, compared to US$54.5 million for the same period in 2021. Non-GAAP net loss per ordinary share for the year ended December 31, 2022 on both basic and diluted basis was US$1.28.
The Non-GAAP net loss was US$11.7 million for the year ended December 31, 2023, as compared to US$69.5 million for the year ended December 31, 2022. Non-GAAP net loss per ordinary share for the year ended December 31, 2023 on both basic and diluted basis was US$0.21.
Loss from operations As a result of the foregoing, our loss from operations increased by 15.9% from approximately US$72.4 million in the year ended December 31, 2021 to approximately US$83.9 million in 2022. Interest income Our interest income was US$0.4 million for the year ended December 31, 2022, as compared to US$0.1 million for the year ended December 31, 2021.
Loss from operations As a result of the foregoing, our loss from operations decreased by 71.7% from US$83.9 million in 2022 to US$23.7 million in the year ended December 31, 2023. 156 Table of Contents Interest income Our interest income was US$4.3 million for the year ended December 31, 2023 as compared to US$0.4 million for the year ended December 31, 2022.
We calculate 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, we recognize incremental compensation cost in the period when the modification occurs.
A change in any of the terms or conditions of share-based awards is accounted for as a modification of the awards. We calculate 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.
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.
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 Adagene Inc., Adagene (Hong Kong) Limited, Adagene Incorporated, Adagene PTE.
This gain of foreign exchange was primarily attributable to the appreciation of U.S. dollars against Renminbi which positively impacted our U.S. dollar denominated accounts receivable of Adagene Suzhou. Income tax expense Our income tax expense was US$1.7 million for the year ended December 31, 2021 as compared to US$0.5 million for the year ended December 31, 2022.
Foreign exchange gain (loss), net We recorded foreign exchange gain of US$2.6 million and US$1.4 million for the year ended December 31, 2022 and 2023, respectively. This gain of foreign exchange was primarily attributable to the continued appreciation of U.S. dollars against Renminbi which positively impacted our U.S. dollar denominated accounts receivable of Adagene Suzhou.
We are subject to VAT at a rate of 3%, 6%, or 13% on the services we provide and related surcharges. We are also subject to surcharges on VAT payments in accordance with PRC law. 158 Table of Contents As a Cayman Islands holding company, we may receive dividends from Adagene Suzhou.
We are also subject to surcharges on VAT payments in accordance with PRC law. As a Cayman Islands holding company, we may receive dividends from Adagene Suzhou.
Based on our current operating plan, we believe that our current cash and cash equivalents will be sufficient to meet our current and anticipated working capital requirements and capital expenditures for at least the next 12 months.The assumptions on which our estimates are based may prove to be wrong, and we may use our available capital resources sooner than we currently expect.
Based on our current operating plan, we believe that our current cash and cash equivalents will be sufficient to meet our current and anticipated working capital requirements and capital expenditures for at least the next 12 months, and expect that our current cash balance will be sufficient to fund operations into 2026.
The financial statements of our PRC subsidiary, Australia subsidiary and Swiss subsidiary are translated from the functional currency to the reporting currency. Transactions denominated in foreign currencies are re-measured into the functional currency at the exchange rates quoted by the People’s Bank of China, or the PBOC, prevailing on the transaction dates.
Transactions denominated in foreign currencies are re-measured into the functional currency at the exchange rates quoted by the People’s Bank of China, or 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.
Research and development expenses The following table sets forth a breakdown of the major components of our research and development expenses in absolute amounts and as a percentage of our total research and development expenses for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended ​ ​ December 31, ​ ​ 2021 ​ 2022 ​ US$ % US$ % ​ ​ (in thousands, except percentages) Research and development expenses ​ Payroll and other related costs of personnel ​ 28,293 41.5 % 24,093 29.6 % Costs related to clinical programs ​ 15,278 22.4 % 29,384 36.2 % Costs related to clinical trials ​ 8,371 12.3 % 14,277 17.6 % CMC and toxicology costs associated with the clinical programs ​ 6,907 10.1 % 15,107 18.6 % Costs related to preclinical testing of non-clinical programs ​ 16,795 24.7 % 20,697 25.4 % Costs required to develop the product candidates ​ 3,103 4.6 % 2,216 2.7 % Other research and development expenses ​ 4,630 ​ 6.8 % 4,950 ​ 6.1 % Total ​ 68,099 ​ 100 % 81,340 ​ 100 % ​ Our research and development expenses increased by 19.4% from US$68.1 million for the year ended December 31, 2021 to US$81.3 million for the year ended December 31, 2022, primarily attributable to increased research and development activities for our clinical programs and preclinical testing for candidates in the IND-enabling phase.
Research and development expenses The following table sets forth a breakdown of the major components of our research and development expenses in absolute amounts and as a percentage of our total research and development expenses for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended ​ ​ December 31, ​ ​ 2022 ​ 2023 ​ US$ % US$ % ​ ​ (in thousands, except percentages) Research and development expenses ​ Payroll and other related costs of personnel ​ 24,093 29.6 % 18,492 50.5 % Costs related to clinical programs ​ 29,384 36.2 % 12,264 33.5 % Costs related to clinical trials ​ 14,277 17.6 % 11,162 30.5 % CMC and toxicology costs associated with the clinical programs ​ 15,107 18.6 % 1,102 3.0 % Costs related to preclinical testing of non-clinical programs ​ 20,697 25.4 % 978 2.7 % Costs required to develop the product candidates ​ 2,216 2.7 % 1,449 4.0 % Other research and development expenses ​ 4,950 ​ 6.1 % 3,456 ​ 9.4 % Total ​ 81,340 ​ 100 % 36,639 ​ 100.0 % ​ Our research and development expenses decreased by 55.0% from US$81.3 million for the year ended December 31, 2022 to US$36.6 million for the year ended December 31, 2023, reflecting clinical focus on and prioritization of the company’s masked, anti-CTLA-4 SAFEbody ADG126.
In addition, the research and development expenses of Adagene Suzhou are subject to a 75% super-deduction for the income tax, which increased to 100% from October 2022 to December 2022. The enterprise income tax is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards.
In addition, the research and development expenses of Adagene Suzhou were subject to a 75% super-deduction for the income tax, which increased to 100% from October 2022 to December 2022.
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 our policy to recognize interest and penalties related to unrecognized tax benefits, if any, as a component of income tax expense.
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 also subject to state income tax in California of 8.84%. Dividends payable by an U.S. entity, to non-U.S. resident enterprises shall be subject to 30% withholding tax, unless the respective non-U.S. resident enterprise’s jurisdiction of incorporation has a tax treaty or arrangements with U.S. that provides for a reduced withholding tax rate or an exemption from withholding tax.
Dividends payable by an U.S. entity, to non-U.S. resident enterprises shall be subject to 30% withholding tax, unless the respective non-U.S. resident enterprise’s jurisdiction of incorporation has a tax treaty or arrangements with U.S. that provides for a reduced withholding tax rate or an exemption from withholding tax. 149 Table of Contents PRC Our subsidiary in China is incorporated under PRC law and, as such, is subject to PRC enterprise income tax on their taxable income in accordance with the relevant PRC income tax laws.
Our highly differentiated and wholly-owned clinical-stage pipeline consists of two anti-CTLA-4 antibodies ADG116 (NEObody) and ADG126 (SAFEbody), and two anti-CD137 antibodies ADG106 (NEObody) and ADG206 (POWERbody). ADG116, ADG126 and ADG106 are in Phase 1b/2 clinical evaluation in single agent and/or combination clinical trials designed to evaluate safety and preliminary efficacy, while ADG206 is in Phase 1 single agent clinical trial.
ADG126, ADG116 and ADG106 are in Phase 1b/2 clinical evaluation in single agent and/or combination clinical trials designed to evaluate safety and preliminary efficacy, while ADG206 is in Phase 1 single agent clinical trial.
Net cash used in operating activities was US$28.5 million in 2020.
Net cash used in operating activities was US$48.6 million in 2022.
The timing of expenses is impacted by the commencement of clinical trials and enrollment of patients in clinical trials. Research and development expenses are expected to increase as we advance the clinical development of ADG116, ADG126, ADG106 and ADG206, and further advance the research and development of our other product candidates. The successful development of our product candidates is uncertain.
The timing of expenses is impacted by the commencement of clinical trials and enrollment of patients in clinical trials. The successful development of our product candidates is uncertain.
Under the criteria of ASC 606, we recognize 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. We adopted ASC 606 for all periods presented.
For elements of collaboration arrangements that are accounted for pursuant to ASC 808, an appropriate recognition method is determined and applied consistently. 151 Table of Contents Under the criteria of ASC 606, we recognize 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 dividend yield is based on the expected dividend policy over the contractual life of the share options. Our management is ultimately responsible for the determination of the estimated fair value of its ordinary shares.
Our management is ultimately responsible for the determination of the estimated fair value of its ordinary shares.
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 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.
Net loss attributable to Adagene Inc.'s shareholders Our net loss for the period increased by 9.3% from US$73.2 million for the year ended December 31, 2021 to US$80.0 million for the year ended December 31, 2022. The 2022 net loss was higher largely due to increases in costs associated with clinical, pre-clinical and CMC activities.
Net loss attributable to Adagene Inc.’s shareholders Our net loss for the period decreased by 76.3% from US$80.0 million for the year ended December 31, 2022 to US$18.9 million for the year ended December 31, 2023.
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 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.
Net cash generated from investing activities was US$7.1 million in 2020, which was primarily attributable to withdrawal of short-term investments of US$8.0 million, partially offset by purchase of property, equipment and software of US$0.9 million.
Investing activities Net cash used in investing activities was US$0.1 million in 2023, which was primarily attributable to the purchase of property, equipment and software. The Group also made short-term investments in certain money market funds during 2023.
Administrative expenses Our administrative expenses decreased by 17.4% from US$14.4 million for the year ended December 31, 2021 to US$11.9 million for the year ended December 31, 2022, primarily attributable to a decrease in personnel expenses of US$2.1 million, and a decrease in professional fees and office-related expenses of US$0.4 million.
Administrative expenses Our administrative expenses decreased by 27.0% from US$11.9 million for the year ended December 31, 2022 to US$8.7 million for the year ended December 31, 2023, due to both a reduction in personnel and in office-related expenses as a result of implementation of cost-control measures.
Our licensing and collaboration revenue in 2022 was recognized due to fulfillment of performance obligations over time associated with the collaboration and technology licensing agreement with Sanofi to develop antibody-based therapies. Such revenue was also recognized from the material transfer and option agreement with ADCT as performance obligation was satisfied at a point in time in 2022.
Our licensing and collaboration revenue in 2023 was recognized due to fulfillment of performance obligations associated with the collaboration and technology licensing agreements with Exelixis and Sanofi to develop antibody-based therapies, respectively. Such revenue also included a milestone payment of US$3.0 million from Exelixis received in 2023.
For awards not being fully vested, we recognize 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. The fair value of share options was determined using the binomial option valuation model, with the assistance from an independent third-party appraiser.
For vested awards, we recognize incremental compensation cost in the period when the modification occurs. For awards not being fully vested, we recognize 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.
Our capital expenditures were US$0.9 million, US$2.5 million and US$0.7 million, in 2020, 2021 and 2022, respectively. We intend to fund our future capital expenditures with our existing cash balance. We will continue to incur capital expenditures to meet the expected growth of our business.
Our capital expenditures were US$2.5 million, US$0.7 million and US$0.1 million in 2021, 2022 and 2023, respectively. We intend to fund our future capital expenditures with our existing cash balance. Holding Company Structure Adagene Inc. is a holding company with no material operations of its own.
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.
Level 3—Unobservable inputs which are supported by little or no market activity. 152 Table of Contents 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.
Our licensing and collaboration revenue for the years ended December 31, 2020, 2021 and 2022 was primarily derived from granting licenses to use and otherwise exploit certain of our intellectual properties. To date, we have not generated any revenue from the sale of products and do not expect to generate any revenue from product sales in the near future.
Our licensing and collaboration revenue is currently comprised of upfront and/or milestone payments associated with out-licensing arrangements. Our licensing and collaboration revenue for the years ended December 31, 2021, 2022 and 2023 was primarily derived from granting licenses to use and otherwise exploit certain of our intellectual properties.
The increase was primarily due to increased research and development activities for our clinical programs and preclinical testing for candidates in the IND-enabling phase. Our research and development expenses may vary substantially from period to period according to the status of our research and development activities.
For the years ended December 31, 2021, 2022 and 2023, our research and development expenses were US$68.1 million, US$81.3 million and US$36.6 million, respectively. The increase in 2022 was primarily due to increased research and development activities for our clinical programs and preclinical testing for candidates in the IND-enabling phase.
We have incurred net accumulated operating losses for income tax purposes since our inception. We believe that it is more likely than not that these net accumulated operating losses will not be utilized in the near future.
We believe that it is more likely than not that these net accumulated operating losses will not be utilized in the near future. Therefore, we have provided full valuation allowances for the deferred tax assets for subsidiaries other than the U.S. subsidiary as of December 31, 2021 and for all subsidiaries as of December 31, 2022 and 2023.
Actual results could materially differ from those estimates. 159 Table of Contents Foreign currency translation The functional currency of Adagene Inc., Adagene (Hong Kong) Limited, Adagene Incorporated, Adagene PTE. Ltd. and Adagene Project C1 PTE. Ltd. is the U.S. dollar, or US$. The functional currency of our PRC subsidiary is Renminbi, or RMB.
Ltd. and Adagene Project C1 PTE. Ltd. is the U.S. dollar, or US$. The functional currency of our PRC subsidiary is Renminbi, or RMB. The functional currency of our Australia subsidiary is Australian dollar, or AU$.The functional currency of our Swiss subsidiary is Swiss Franc, or CHF.
Net cash generated from financing activities was US$4.4 million in 2020, which was mainly attributable to proceeds from borrowings of US$6.1 million, partially offset by repayment of borrowings of US$1.1 million. 169 Table of Contents Capital Expenditures Our capital expenditures are incurred primarily in connection with research and development equipment.
Financing activities Net cash used in financing activities was US$5.4 million in 2023, which was mainly attributable to repayment of borrowings of US$13.5 million, offset by proceeds from borrowings of US$8.1 million .
Our administrative expenses consist primarily of wages, salaries and benefits for personnel other than research and development staff.
Our administrative expenses consist primarily of wages, salaries and benefits for personnel other than research and development staff. Other income Other income primarily includes government subsidies that Adagene Suzhou received from local government in the PRC. The receipt of such government subsidies is not dependent on our performance of any obligations.
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, we have made reference to historical volatility of several comparable companies in the same industry.
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.
Removed
Beginning in January 2020, the emergence and wide spread of COVID-19 has resulted in quarantines, travel restrictions, and the temporary closure of stores and facilities in the United States and China and elsewhere. Substantially all of our operating and workforce are based in the United States and China.
Added
Our highly differentiated and wholly-owned clinical-stage pipeline consists of two anti-CTLA-4 antibodies ADG126 (SAFEbody and NEObody) and ADG116 (NEObody), and two anti-CD137 antibodies ADG206 (POWERbody) and ADG106 (NEObody).

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Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Dr. Hu-Lowe had over 12 years of career at Pfizer Oncology November 1999 to December 2011, where she led cross-functional teams advancing programs from preclinical into clinical development. Dr.
Hu-Lowe had over 12 years of career at Pfizer Oncology November 1999 to December 2011, where she led cross-functional teams advancing programs from preclinical into clinical development. Dr.
The audit committee is responsible for, among other things: ● reviewing and recommending to our board for approval, the appointment, re-appointment or removal of the independent auditor, after considering its annual performance evaluation of the independent auditor; ● approving the remuneration and terms of engagement of the independent auditor and pre-approving all auditing and non-auditing services permitted to be performed by our independent auditors at least annually; 183 Table of Contents ● obtaining a written report from our independent auditor describing matters relating to its independence and quality control procedures; ● reviewing with the independent registered public accounting firm any audit problems or difficulties and management’s response; ● discussing with our independent auditor, among other things, the audits of the financial statements, including whether any material information should be disclosed, issues regarding accounting and auditing principles and practices; ● reviewing and approving all proposed related party transactions, as defined in Item 404 of Regulation S-K under the Securities Act; ● reviewing and recommending the semi-annually financial data the annual financial statements to our board for inclusion in our semi-annually earnings releases and annual reports, respectively; ● discussing the annual audited financial statements with management and the independent registered public accounting firm; ● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any special steps taken to monitor and control major financial risk exposures; ● at least annually, reviewing and reassessing the adequacy of the committee charter; ● approving annual audit plans, and undertaking an annual performance evaluation of the internal audit function; ● establishing and overseeing procedures for the handling of complaints and whistleblowing; ● meeting separately and periodically with management and the independent registered public accounting firm; ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance; and ● reporting regularly to the board.
The audit committee is responsible for, among other things: ● reviewing and recommending to our board for approval, the appointment, re-appointment or removal of the independent auditor, after considering its annual performance evaluation of the independent auditor; ● approving the remuneration and terms of engagement of the independent auditor and pre-approving all auditing and non-auditing services permitted to be performed by our independent auditors at least annually; 173 Table of Contents ● obtaining a written report from our independent auditor describing matters relating to its independence and quality control procedures; ● reviewing with the independent registered public accounting firm any audit problems or difficulties and management’s response; ● discussing with our independent auditor, among other things, the audits of the financial statements, including whether any material information should be disclosed, issues regarding accounting and auditing principles and practices; ● reviewing and approving all proposed related party transactions, as defined in Item 404 of Regulation S-K under the Securities Act; ● reviewing and recommending the semi-annually financial data the annual financial statements to our board for inclusion in our semi-annually earnings releases and annual reports, respectively; ● discussing the annual audited financial statements with management and the independent registered public accounting firm; ● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any special steps taken to monitor and control major financial risk exposures; ● at least annually, reviewing and reassessing the adequacy of the committee charter; ● approving annual audit plans, and undertaking an annual performance evaluation of the internal audit function; ● establishing and overseeing procedures for the handling of complaints and whistleblowing; ● meeting separately and periodically with management and the independent registered public accounting firm; ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance; and ● reporting regularly to the board.
The plan administrator has broad authority to: ● select participants and determine the types of awards that they are to receive; ● determine the number of shares that are to be subject to awards and the terms and conditions of awards, including the price (if any) to be paid for the shares or the award and establish the vesting conditions (if applicable) of such shares or awards; ● cancel, modify or waive our rights with respect to, or modify, discontinue, suspend or terminate any or all outstanding awards, subject to any required consents; ● construe and interpret the terms of the 2021 Plan and any agreements relating to the plan; ● accelerate or extend the vesting or exercisability or extend the term of any or all outstanding awards subject to any required consent; ● subject to the other provisions of the 2021 Plan, make certain adjustments to one or more outstanding awards (including a repricing of the exercise or base price of any outstanding option or share appreciation right without shareholder approval) and authorize the termination, conversion, substitution or succession of awards; and ● allow the purchase price of an award or our ordinary shares to be paid in the form of cash, check or electronic funds transfer, by the delivery of previously-owned ordinary shares or by a reduction of the number of shares deliverable pursuant to the award, by services rendered by the recipient of the award, by notice and third party payment or cashless exercise on such terms as the plan administrator may authorize or any other form permitted by law. 180 Table of Contents A total of 2,994,000 of our ordinary shares was authorized for issuance with respect to awards granted under the 2021 Plan.
The plan administrator has broad authority to: ● select participants and determine the types of awards that they are to receive; ● determine the number of shares that are to be subject to awards and the terms and conditions of awards, including the price (if any) to be paid for the shares or the award and establish the vesting conditions (if applicable) of such shares or awards; ● cancel, modify or waive our rights with respect to, or modify, discontinue, suspend or terminate any or all outstanding awards, subject to any required consents; ● construe and interpret the terms of the 2021 Plan and any agreements relating to the plan; ● accelerate or extend the vesting or exercisability or extend the term of any or all outstanding awards subject to any required consent; ● subject to the other provisions of the 2021 Plan, make certain adjustments to one or more outstanding awards (including a repricing of the exercise or base price of any outstanding option or share appreciation right without shareholder approval) and authorize the termination, conversion, substitution or succession of awards; and ● allow the purchase price of an award or our ordinary shares to be paid in the form of cash, check or electronic funds transfer, by the delivery of previously-owned ordinary shares or by a reduction of the number of shares deliverable pursuant to the award, by services rendered by the recipient of the award, by notice and third party payment or cashless exercise on such terms as the plan administrator may authorize or any other form permitted by law. 170 Table of Contents A total of 2,994,000 of our ordinary shares was authorized for issuance with respect to awards granted under the 2021 Plan.
The nominating and corporate governance committee is responsible for, among other things: ● recommending nominees to the board for election or re-election to the board, or for appointment to fill any vacancy on the board; ● reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience, expertise, diversity and availability of service to us; ● developing and recommending to our board such policies and procedures with respect to nomination or appointment of members of our board and chairs and members of its committees or other corporate governance matters as may be required pursuant to any SEC or Nasdaq rules, or otherwise considered desirable and appropriate; ● selecting and recommending to the board the names of directors to serve as members of the audit committee and the compensation committee, as well as of the nominating and corporate governance committee itself; ● at least annually, reviewing and reassessing the adequacy of the committee charter; ● developing and reviewing at least annually the corporate governance principles adopted by the board and advising the board with respect to significant developments in the law and practice of corporate governance and our compliance with such laws and practices; and ● evaluating the performance and effectiveness of the board as a whole. 185 Table of Contents Duties and Functions of Directors Under Cayman Islands law, our directors owe fiduciary duties to our company, including a duty of loyalty, a duty to act honestly and a duty to act in what they consider in good faith to be in our best interests.
The nominating and corporate governance committee is responsible for, among other things: ● recommending nominees to the board for election or re-election to the board, or for appointment to fill any vacancy on the board; ● reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience, expertise, diversity and availability of service to us; ● developing and recommending to our board such policies and procedures with respect to nomination or appointment of members of our board and chairs and members of its committees or other corporate governance matters as may be required pursuant to any SEC or Nasdaq rules, or otherwise considered desirable and appropriate; ● selecting and recommending to the board the names of directors to serve as members of the audit committee and the compensation committee, as well as of the nominating and corporate governance committee itself; ● at least annually, reviewing and reassessing the adequacy of the committee charter; ● developing and reviewing at least annually the corporate governance principles adopted by the board and advising the board with respect to significant developments in the law and practice of corporate governance and our compliance with such laws and practices; and ● evaluating the performance and effectiveness of the board as a whole. 175 Table of Contents Duties and Functions of Directors Under Cayman Islands law, our directors owe fiduciary duties to our company, including a duty of loyalty, a duty to act honestly and a duty to act in what they consider in good faith to be in our best interests.
The compensation committee is responsible for, among other things: ● overseeing the development and implementation of compensation programs in consultation with our management; ● at least annually, reviewing and approving, or recommending to the board for its approval, the compensation for our executive officers; ● at least annually, reviewing and recommending to the board for determination with respect to the compensation of our non-executive directors; ● at least annually, reviewing periodically and approving any incentive compensation or equity plans, programs or other similar arrangements; ● reviewing executive officer and director indemnification and insurance matters; 184 Table of Contents ● overseeing our regulatory compliance with respect to compensation matters, including our policies on restrictions on compensation plans and loans to directors and executive officers; ● at least annually, reviewing and reassessing the adequacy of the committee charter; ● selecting compensation consultant, legal counsel or other advisor only after taking into consideration all factors relevant to that person’s independence from management; and ● reporting regularly to the board.
The compensation committee is responsible for, among other things: ● overseeing the development and implementation of compensation programs in consultation with our management; ● at least annually, reviewing and approving, or recommending to the board for its approval, the compensation for our executive officers; ● at least annually, reviewing and recommending to the board for determination with respect to the compensation of our non-executive directors; ● at least annually, reviewing periodically and approving any incentive compensation or equity plans, programs or other similar arrangements; ● reviewing executive officer and director indemnification and insurance matters; 174 Table of Contents ● overseeing our regulatory compliance with respect to compensation matters, including our policies on restrictions on compensation plans and loans to directors and executive officers; ● at least annually, reviewing and reassessing the adequacy of the committee charter; ● selecting compensation consultant, legal counsel or other advisor only after taking into consideration all factors relevant to that person’s independence from management; and ● reporting regularly to the board.
The current term of our independent directors, namely Andy (Yiu Leung) Cheung, Min Li and Mervyn Turner, is one-year from the date of filing of this annual report on Form 20-F. The initial term of our independent director Cuong Do is two-year from the effectiveness of the appointment.
The current term of our independent directors, namely Andy (Yiu Leung) Cheung and Mervyn Turner, is one-year from the date of filing of this annual report on Form 20-F. The initial term of our independent director Cuong Do is two-year from the effectiveness of the appointment.
Compensation Committee. Our compensation committee consists of Peter Luo, Andy (Yiu Leung) Cheung and Min Li and is chaired by Peter Luo. We have determined that each of Andy (Yiu Leung) Cheung and Min Li satisfies the “independence” requirements of Rule 5605(a)(2) of the Listing Rules of the Nasdaq.
Compensation Committee. Our compensation committee consists of Peter Luo, Andy (Yiu Leung) Cheung and Li Zhu and is chaired by Peter Luo. We have determined that each of Andy (Yiu Leung) Cheung and Li Zhu satisfies the “independence” requirements of Rule 5605(a)(2) of the Listing Rules of the Nasdaq.
Ms. Zhou received her bachelor’s degree in law from South-Central University for Nationalities in 2003. She is a DDI Certified Trainer. 174 Table of Contents Key Employees Yan Li, M.B.A. has served as our Senior Vice President of Bioinformatics and Information Technology since November 2011. Ms.
Ms. Zhou received her bachelor’s degree in law from South-Central University for Nationalities in 2003. She is a DDI Certified Trainer. Key Employees Yan Li, M.B.A. has served as our Senior Vice President of Bioinformatics and Information Technology since November 2011. Ms.
The holder is the depositary of our ADS program. In addition, 26.0% of our outstanding ordinary shares were held by record holders in the United States. Our principal shareholders do not have different voting rights. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company. 6.F.
The holder is the depositary of our ADS program. In addition, 25.5% of our outstanding ordinary shares were held by record holders in the United States. Our principal shareholders do not have different voting rights. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company. 6.F.
Nominating and Corporate Governance Committee. Our nominating and corporate governance committee consists of Peter Luo, Andy (Yiu Leung) Cheung and Min Li, and is chaired by Peter Luo. We have determined that each of Andy (Yiu Leung) Cheung and Min Li satisfies the “independence” requirements of Rule 5605(a)(2) of the Listing Rules of the Nasdaq.
Nominating and Corporate Governance Committee. Our nominating and corporate governance committee consists of Peter Luo and Andy (Yiu Leung) Cheung, and is chaired by Peter Luo. We have determined that Andy (Yiu Leung) Cheung satisfies the “independence” requirements of Rule 5605(a)(2) of the Listing Rules of the Nasdaq.
The board of directors may, at any time, terminate or, from time to time, amend, modify or suspend the 2019 Plan, in whole or in part. No awards may be granted during any period that the board of directors suspends the 2019 Plan.
Amendment and Termination of the 2019 Plan. The board of directors may, at any time, terminate or, from time to time, amend, modify or suspend the 2019 Plan, in whole or in part. No awards may be granted during any period that the board of directors suspends the 2019 Plan.
The awards granted under the 2019 Plan are subject to the terms of our recoupment, clawback or similar policy as it may be in effect from time to time, as well as any similar provisions of applicable law, any of which could in certain circumstances require repayment or forfeiture of awards or any ordinary shares or other cash or property received with respect to the awards (including any value received from a disposition of the shares acquired upon payment of the Awards). 179 Table of Contents Amendment and Termination of the 2019 Plan.
The awards granted under the 2019 Plan are subject to the terms of our recoupment, clawback or similar policy as it may be in effect from time to time, as well as any similar provisions of applicable law, any of which could in certain circumstances require repayment or forfeiture of awards or any ordinary shares or other cash or property received with respect to the awards (including any value received from a disposition of the shares acquired upon payment of the Awards).
Each award under the 2019 Plan shall be evidenced by an award agreement in the form approved by the plan administrators. The terms of the award agreements will be determined by the plan administrators and consistent with the terms of the 2019 Plan. Conditions of Award.
Each award under the 2019 Plan shall be evidenced by an award agreement in the form approved by the plan administrators. The terms of the award agreements will be determined by the plan administrators and consistent with the terms of the 2019 Plan. 169 Table of Contents Conditions of Award.
However, the plan administrator will retain its authority until all outstanding awards are exercised or terminated. 181 Table of Contents The following table summarizes, as of March 31, 2023, the number of ordinary shares under outstanding awards that we granted to our directors and executive officers under the 2019 Plan, which replaced the 2015 Plan, and under the 2021 Plan, excluding awards that were exercised, forfeited or canceled after the relevant grant dates. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ordinary ​ ​ ​ ​ ​ ​ Shares ​ ​ ​ ​ ​ ​ ​ ​ ​ Underlying ​ Exercise ​ ​ ​ ​ ​ ​ Equity Awards ​ Price ​ ​ ​ Name ​ Granted ​ (US$/Share) ​ Date of Grant ​ Date of Expiration Executive Officers ​ Peter Luo, Ph.
However, the plan administrator will retain its authority until all outstanding awards are exercised or terminated. 171 Table of Contents The following table summarizes, as of February 29, 2024, the number of ordinary shares under outstanding awards that we granted to our directors and executive officers under the 2019 Plan, which replaced the 2015 Plan, and under the 2021 Plan, excluding awards that were exercised, forfeited or canceled after the relevant grant dates. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ordinary ​ ​ ​ ​ ​ ​ Shares ​ ​ ​ ​ ​ ​ ​ ​ ​ Underlying ​ Exercise ​ ​ ​ ​ ​ ​ Equity Awards ​ Price ​ ​ ​ ​ Name ​ Granted ​ (US$/Share) ​ Date of Grant ​ Date of Expiration Executive Officers ​ Peter Luo, Ph.
Employees We had a total of 198, 259 and 248 employees as of December 31, 2020, 2021 and 2022, respectively. The following table sets forth the numbers of our employees categorized by function as of December 31, 2022.
Employees We had a total of 259, 248 and 174 employees as of December 31, 2021, 2022 and 2023, respectively. The following table sets forth the numbers of our employees categorized by function as of December 31, 2023.
We have determined that each of Andy (Yiu Leung) Cheung, Min Li, Yuwen Liu and Cuong Do satisfies the requirements of Rule 5605(a)(2) of the Listing Rules of the Nasdaq and meets the independence standards under Rule 10A-3 under the Securities Exchange Act of 1934, as amended.
We have determined that each of Andy (Yiu Leung) Cheung, Cuong Do and Ulf Grawunder satisfies the requirements of Rule 5605(a)(2) of the Listing Rules of the Nasdaq and meets the independence standards under Rule 10A-3 under the Securities Exchange Act of 1934, as amended.
Mr. Cheung has many years of auditing and accounting professional experience. Mr. Cheung was deputy area managing partner of Ernst & Young (“EY”) in Asia Pacific overseeing the business operations, finance, information technology and risk management functions from July 2018 to June 2020. Mr. Cheung was the assurance leader for EY in Greater China from July 2013 to June 2018.
Cheung was deputy area managing partner of Ernst & Young (“EY”) in Asia Pacific overseeing the business operations, finance, information technology and risk management functions from July 2018 to June 2020. Mr. Cheung was the assurance leader for EY in Greater China from July 2013 to June 2018. Mr.
Executive Officers Position/Title Peter Luo, Ph.D ​ Co-Founder, Chief Executive Officer and Chairman of the Board Fangyong (Felix) Du, Ph.D ​ Chief Technology Officer and Director JC Xu, M.D., Ph.D ​ Chief Scientific Officer Qinghai Zhao, Ph.D ​ Chief Manufacturing Officer Man Kin (Raymond) Tam, M.B.A., B.
Executive Officers Position/Title Peter Luo, Ph.D ​ Co-Founder, Chief Executive Officer, President of R&D, and Chairman of the Board JC Xu, M.D., Ph.D ​ Chief Scientific Officer Qinghai Zhao, Ph.D ​ Chief Manufacturing Officer Man Kin (Raymond) Tam, M.B.A., B.
Liu has confirmed that she has no disagreement with the Board. ​ Executive Officers Peter Luo, Ph.D. is our Co-Founder and has served as our Chief Executive Officer since November 2011 and Chairman of the Board of the Directors since February 2018. Dr.
Yan Li confirmed that she has no disagreement with the Board and remain as a key employee of the Company. ​ Executive Officers Peter Luo, Ph.D. is our Co-Founder and has served as our Chief Executive Officer since November 2011 and Chairman of the Board of the Directors since February 2018. Dr.
Share Ownership The following table sets forth information concerning the beneficial ownership of our ordinary shares, as of March 31, 2023, by: ● each of our directors and executive officers; and 187 Table of Contents ● each person known to us to beneficially own more than 5% of our ordinary shares.
Share Ownership The following table sets forth information concerning the beneficial ownership of our ordinary shares, as of February 29, 2024, by: ● each of our directors and executive officers; and 177 Table of Contents ● each person known to us to beneficially own more than 5% of our ordinary shares.
Each committee’s members and functions are described below. Audit Committee. Our audit committee consists of Andy (Yiu Leung) Cheung, Min Li, Yuwen Liu and Cuong Do, and is chaired by Andy (Yiu Leung) Cheung.
Each committee’s members and functions are described below. Audit Committee. Our audit committee consists of Andy (Yiu Leung) Cheung, Cuong Do and Ulf Grawunder, and is chaired by Andy (Yiu Leung) Cheung.
As of March 31, 2023, the aggregate number of our ordinary shares underlying our outstanding awards under the 2019 Plan is 2,714,814, excluding awards that were forfeited, cancelled or exercised after the relevant grant dates. The term of the awards will expire not more than ten years after the date of grant.
As of February 29, 2024, the aggregate number of our ordinary shares underlying our outstanding awards under the 2019 Plan is 2,538,070, excluding awards that were forfeited, cancelled or exercised after the relevant grant dates. The term of the awards will expire not more than ten years after the date of grant.
Zhao worked as an Executive Director and the Head of CMC at NGM Biopharmaceuticals from 2014 to 2016. Dr. Zhao also held various positions at Human Genome Sciences, Inc., Cogenesys and Teva Biopharmaceuticals USA from 2001 to 2014. Dr.
Zhao was vice president of CMC/ Manufacturing at AnaptysBio (NASDAQ:ANAB) from 2016 to 2017. Prior to AnaptysBio, Dr. Zhao worked as an Executive Director and the Head of CMC at NGM Biopharmaceuticals from 2014 to 2016. Dr. Zhao also held various positions at Human Genome Sciences, Inc., Cogenesys and Teva Biopharmaceuticals USA from 2001 to 2014. Dr.
Eng. ​ Chief Financial Officer and Director Chunfang (Vicky) Gu M.B.A ​ Senior Director of Finance Ling (Jolin) Zhou ​ Executive Director of Human Resources ​ 172 Table of Contents Key Employees Position/Title Yan Li, M.B.A. ​ Senior Vice President, Bioinformatics and Information Technology Xiaohong (Kristine) She ​ Senior Vice President, Head of Clinical Operations Guizhong Liu, Ph.D. ​ Head of Biology and Pharmacology Alexander Goergen ​ Vice President, Head of Business Development Songmao Zheng, Ph.D. ​ Vice President, Head of Clinical and Quantitative Pharmacology Jiping Zha ​ Executive Vice President of Clinical Development Wenlin Zeng ​ Vice President of Early Stage CMC Ami Knoefler ​ Vice President of Investor Relations and Corporate Communications Dana Hu-Lowe ​ Vice President of Global Product Team Leadership Ai Li ​ Vice President, Head of Biometrics ​ Non-Employee Directors Position/Title Yumeng Wang ​ Director Andy (Yiu Leung) Cheung ​ Independent Director Min Li ​ Independent Director Yuwen Liu* ​ Independent Director Cuong Do ​ Independent Director Mervyn Turner, Ph.D. ​ Independent Director * The expiry of initial term of our independent director Yuwen Liu has been extended from February 2023 to April 2023.
Eng. ​ Chief Financial Officer and Director Chunfang (Vicky) Gu M.B.A ​ Senior Director of Finance Ling (Jolin) Zhou ​ Executive Director of Human Resources ​ 163 Table of Contents Key Employees Position/Title Yan Li, M.B.A. ​ Senior Vice President, Bioinformatics and Information Technology and Director* Xiaohong (Kristine) She ​ Senior Vice President, Head of Clinical Operations Guizhong Liu, Ph.D. ​ Senior Vice President of Early Drug Discovery Alexander Goergen ​ Vice President, Head of Business Development Songmao Zheng, Ph.D. ​ Vice President, Head of Clinical and Quantitative Pharmacology Jiping Zha ​ Executive Vice President of Clinical Development Wenlin Zeng ​ Vice President of Early Stage CMC Ami Knoefler ​ Vice President of Investor Relations and Corporate Communications Dana Hu-Lowe ​ Vice President of Global Product Team Leadership ​ Non-Employee Directors Position/Title Yumeng Wang ​ Director Andy (Yiu Leung) Cheung ​ Independent Director Cuong Do ​ Independent Director Mervyn Turner, Ph.D. ​ Independent Director Li Zhu, Ph.D. ​ Independent Director Ulf Grawunder, Ph.D. ​ Independent Director * Ms.
WuXi Pharmatech Healthcare Fund I L.P. is an indirect wholly owned subsidiary of WuXi AppTec Co., Ltd (SSE: 603259; SEHK: 2359). WuXi AppTec Co., Ltd. is a listed company on the Shanghai Stock Exchange and the Main Board of the Hong Kong Stock Exchange. The registered address of WuXi Pharmatech Healthcare Fund I L.P. is P.O.
WuXi AppTec Co., Ltd. is a listed company on the Shanghai Stock Exchange and the Main Board of the Hong Kong Stock Exchange. The registered address of WuXi Pharmatech Healthcare Fund I L.P. is P.O.
Each executive officer has agreed to hold, unless expressly consented to by us, at all times during and after the termination of his or her employment agreement, in strict confidence and not to use, any of our confidential information or the confidential information of our customers and suppliers.
An executive officer may terminate his or her employment at any time by giving a prior written notice. 168 Table of Contents Each executive officer has agreed to hold, unless expressly consented to by us, at all times during and after the termination of his or her employment agreement, in strict confidence and not to use, any of our confidential information or the confidential information of our customers and suppliers.
In addition, the performance milestones applicable to the share options that remain outstanding were also modified. As of March 31, 2023, we had granted equity awards representing 3,979,160 ordinary shares under the 2021 Plan, excluding awards that were forfeited, cancelled or exercised after the relevant grant dates.
In addition, the performance milestones applicable to the share options that remain outstanding were also modified. As of February 29, 2024, we had granted equity awards representing 6,229,557 ordinary shares under the 2021 Plan, excluding awards that were forfeited, cancelled or exercised after the relevant grant dates.
He became Merck’s first Chief Strategy Officer and a member of the senior executive team in 2008, before retiring from the company in 2011. Dr. Turner received his BS and Ph.D. in Chemistry from the University of Sheffield in 1970. He also completed his postdoctoral research in biochemistry of histocompatibility at Havard University in 1974. 6.B.
He became Merck’s first Chief Strategy Officer and a member of the senior executive team in 2008, before retiring from the company in 2011. Dr. Turner received his BS and Ph.D. in Chemistry from the University of Sheffield in 1970.
These shares, however, are not included in the computation of the percentage ownership of any other person. ​ ​ ​ ​ ​ ​ ​ Ordinary Shares Beneficially Owned as of March 31, 2023 ​ ​ Number ​ %* ​ Directors and Executive Officers:† Peter Luo(1) 12,799,269 ​ 23.4 % Fangyong (Felix) Du(2) 1,303,938 ​ 2.4 % JC Xu ** ** % Qinghai Zhao ** ** % Man Kin (Raymond) Tam ** ** % Chunfang (Vicky) Gu ​ ** ​ ** % Ling (Jolin) Zhou ​ ** ​ ** % Non-employee Directors Yumeng Wang — — % Andy (Yiu Leung) Cheung (independent director) ** ** % Min Li (independent director) ** ** % Yuwen Liu (independent director) ​ ** ​ ** % Cuong Do (independent director) ​ ** ​ ** % Mervyn Turner (independent director) ​ ** ​ ** % All directors and executive officers as a group 13,014,227 23.8 % ​ ​ ​ ​ ​ ​ Principal Shareholders: ​ ​ Peter Luo act-in-concert group(3) 12,799,269 23.4 % JSR Limited(4) 5,340,742 9.8 % Asia Ventures II L.P.(5) 4,826,037 8.8 % F-Prime Capital Partners Healthcare Fund III LP(6) 4,632,237 8.5 % Wuxi Pharmatech Healthcare Fund I L.P.(7) 5,282,120 9.7 % General Atlantic Singapore AI Pte.
These shares, however, are not included in the computation of the percentage ownership of any other person. ​ ​ ​ ​ ​ ​ ​ Ordinary Shares Beneficially Owned as of February 29, 2024 ​ ​ Number ​ %* ​ Directors and Executive Officers:† Peter Luo(1) 12,008,498 ​ 21.8 % JC Xu ** ** % Qinghai Zhao ** ** % Man Kin (Raymond) Tam ** ** % Chunfang (Vicky) Gu ​ ** ​ ** % Ling (Jolin) Zhou ​ ** ​ ** % Non-employee Directors Yumeng Wang — — % Andy (Yiu Leung) Cheung (independent director) ** ** % Cuong Do (independent director) ​ ** ​ ** % Mervyn Turner (independent director) ​ ** ​ ** % Zhu Li (independent director) ​ ** ​ ** % Ulf Drawunder (independent director) ​ — ​ — % All directors and executive officers as a group 12,303,123 22.3 % ​ ​ ​ ​ ​ ​ Principal Shareholders: ​ ​ Peter Luo act-in-concert group(2) 12,008,498 21.8 % JSR Limited(3) 5,340,742 9.7 % Asia Ventures II L.P.(4) 4,826,037 8.7 % F-Prime Capital Partners Healthcare Fund III LP(5) 3,382,237 6.1 % Wuxi Pharmatech Healthcare Fund I L.P.(6) 4,982,740 9.0 % General Atlantic Singapore AI Pte.
She most recently served as consultant and Senior Director at Ascendis Pharma from June 2015 to August 2021, and previously held multiple leadership positions at Jazz Pharmaceuticals, PDL BioPharma, Abgenix and Bristol-Myers Squibb from May 2007 to March 2013. She received her bachelor’s degree in mass communication/public relations from Boston University in 1992.
She most recently served as consultant and Senior Director at Ascendis Pharma from June 2015 to August 2021, and previously held multiple leadership positions at Jazz Pharmaceuticals, PDL BioPharma, Abgenix and Bristol-Myers Squibb from May 2007 to March 2013.
As of March 31, 2023, 4,324,177 ordinary shares authorized under the 2021 Plan is available for award purposes. Such number includes an annual automatic increase in an amount equal to 5% of the total number of outstanding ordinary shares on December 31, 2022.
As of February 29, 2024, 6,936,060 ordinary shares authorized under the 2021 Plan is available for award purposes. Such number includes an annual automatic increase in an amount equal to 5% of the total number of outstanding ordinary shares on December 31, 2023.
(“GA AI”), a company incorporated under the laws of Singapore. GA AI is wholly-owned by General Atlantic Singapore Fund Pte. Ltd. (“GASF”), which is controlled by General Atlantic Singapore Interholdco Ltd. (“GAS Interholdco”) The members of GAS Interholdco that share beneficial ownership of the ordinary shares and ADSs held of record by GA AI are the GA Funds.
(“GASF”), which is controlled by General Atlantic Singapore Interholdco Ltd. (“GAS Interholdco”) The members of GAS Interholdco that share beneficial ownership of the ordinary shares and ADSs held of record by GA AI are the GA Funds.
For the fiscal year ended December 31, 2022, we did not set aside or accrue expenses related to pension, retirement or other similar benefits to our executive officers and directors.
For the fiscal year ended December 31, 2023, we did not pay any cash compensation to non-executive directors who are not independent directors. For the fiscal year ended December 31, 2023, we did not set aside or accrue expenses related to pension, retirement or other similar benefits to our executive officers and directors.
A director will be removed from office automatically if, among other things, the director (i) becomes bankrupt or makes any arrangement or composition with his creditors; (ii) dies or is found by our company to be of unsound mind; (iii) resigns by notice in writing to our company; (iv) without special leave of absence from our board of directors, is absent from three consecutive meetings of the board and the board resolves that his office be vacated; (v) is prohibited by law or the Listing Rules of the Nasdaq Global Market from being a director; or (vi) is removed from office pursuant to any other provisions of our post-offering amended and restated memorandum and articles of association. ​ Board Diversity ​ The board diversity matrix is set out below. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Board Diversity Matrix (As of the Date of This Annual Report) Country of Principal Executive Offices The People’s Republic of China Foreign Private Issuer Yes Disclosure Prohibited under Home Country Law No ​ ​ ​ Non- Did Not Disclose ​ ​ Female ​ Male Binary Gender Part I: Gender Identity Directors 2* 7 0 0 Part II: Demographic Background Underrepresented Individual in Home Country Jurisdiction — LGBTQ+ — Did Not Disclose Demographic Background — ​ Note: *Yumen Liu, a female director, will depart from our board upon filing of this annual report. 186 Table of Contents Interested Transactions A director may, subject to any separate requirement for audit and risk committee approval under applicable law or applicable Nasdaq listing rules, vote in respect of any contract or transaction in which he or she is interested, provided that the nature of the interest of any directors in such contract or transaction is disclosed by him or her at or prior to its consideration and any vote in that matter. ​ 6.D.
A director will be removed from office automatically if, among other things, the director (i) becomes bankrupt or makes any arrangement or composition with his creditors; (ii) dies or is found by our company to be of unsound mind; (iii) resigns by notice in writing to our company; (iv) without special leave of absence from our board of directors, is absent from three consecutive meetings of the board and the board resolves that his office be vacated; (v) is prohibited by law or the Listing Rules of the Nasdaq Global Market from being a director; or (vi) is removed from office pursuant to any other provisions of our post-offering amended and restated memorandum and articles of association. ​ Board Diversity ​ The board diversity matrix is set out below. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Board Diversity Matrix (As of the Date of This Annual Report) Country of Principal Executive Offices The People’s Republic of China Foreign Private Issuer Yes Disclosure Prohibited under Home Country Law No ​ ​ ​ Non- Did Not Disclose ​ ​ Female ​ Male Binary Gender Part I: Gender Identity Directors 2* 7 0 0 Part II: Demographic Background Underrepresented Individual in Home Country Jurisdiction — LGBTQ+ — Did Not Disclose Demographic Background — * Including Ms.
D. 287,415 ​ $ 13.85 January 2021 January 2031 Peter Luo, Ph. D. ​ 500,000 ​ $ 5.6 ​ February 2022 ​ February 2032 Peter Luo, Ph. D. ​ 372,819 ​ $ 1.06 ​ December 2022 ​ December 2032 Peter Luo, Ph. D. ​ 202,973 ​ $ 1.06 ​ December 2022 ​ December 2032 Fangyong (Felix) Du, Ph.
D. 287,415 ​ $ 13.85 January 2021 January 2031 Peter Luo, Ph. D. ​ 500,000 ​ $ 5.6 ​ February 2022 ​ February 2032 Peter Luo, Ph. D. ​ 372,819 ​ $ 1.06 ​ December 2022 ​ December 2032 Peter Luo, Ph. D. ​ 500,000 ​ $ 1.04 ​ May 2023 ​ May 2033 Peter Luo, Ph.
Ltd.(8) 4,782,441 8.7 % Notes: * For each person and group included in this table, percentage ownership is calculated by dividing the number of shares beneficially owned by such person or group by the sum of (i) 54,715,839 being the number of ordinary shares as of March 31, 2023 and (ii) the number of ordinary shares underlying share options held by such person or group that are exercisable within 60 days after March 31, 2023. ** Represents beneficial ownership of less than one percent. † The business address of our directors and executive officers, except for Cuong Do, Yumeng Wang, Yuwen Liu and Mervyn Turner, is 4F, Building C14, No. 218, Xinghu Street, Suzhou Industrial Park Suzhou, Jiangsu Province, 215123, People’s Republic of China.
Ltd.(7) 4,782,441 8.7 % Panacea Venture Healthcare Fund II, L.P.(8) ​ 2,750,000 ​ 5.0 % HAN 2020 IRREVOCABLE TRUST(9) ​ 6,000,000 ​ 10.9 % Notes: * For each person and group included in this table, percentage ownership is calculated by dividing the number of shares beneficially owned by such person or group by the sum of (i) 55,196,230 being the number of ordinary shares as of February 29, 2024 and (ii) the number of ordinary shares underlying share options held by such person or group that are exercisable within 60 days after February 29, 2024. ** Represents beneficial ownership of less than one percent. † The business address of our directors and executive officers, except for Cuong Do, Yumeng Wang, Mervyn Turner and Li Zhu, is 4F, Building C14, No. 218, Xinghu Street, Suzhou Industrial Park Suzhou, Jiangsu Province, 215123, People’s Republic of China.
The calculations in the table below are based on 54,715,839 ordinary shares issued and outstanding as of March 31, 2023, excluding the 832,500 ordinary shares, issued but deemed to be not outstanding as of March 31, 2023, held by Great Han Fortune LP. Beneficial ownership is determined in accordance with the rules and regulations of the SEC.
The calculations in the table below are based on 55,196,230 ordinary shares issued and outstanding as of February 29, 2024, excluding the 285,000 ordinary shares, issued but deemed to be not outstanding as of February 29, 2024, held by Great Han Fortune LP. Beneficial ownership is determined in accordance with the rules and regulations of the SEC.
We also engage consultants and part-time staff as and when appropriate. ​ ​ ​ ​ ​ ​ Number of Function ​ Employees Research and Development ​ 196 Computational Biology and Informatics 32 ​ ​ Technology Development 67 ​ ​ Drug Discovery 50 ​ ​ Clinical Development 36 ​ ​ CMC Development ​ 11 ​ ​ General Administration ​ ​ 49 HR 6 ​ ​ Finance 18 ​ ​ IT 12 ​ ​ Administration 13 ​ ​ Business Development and Marketing ​ ​ 3 Total ​ ​ 248 ​ Our success depends on our ability to attract, motivate, train and retain qualified personnel.
We also engage consultants and part-time staff as and when appropriate. ​ ​ ​ ​ ​ ​ Number of Function ​ Employees Research and Development ​ 118 Computational Biology and Informatics 16 ​ ​ Technology Development 40 ​ ​ Drug Discovery 29 ​ ​ Clinical Development 25 ​ ​ CMC Development ​ 8 ​ ​ General Administration ​ ​ 53 HR 5 ​ ​ Finance 14 ​ ​ IT 16 ​ ​ Administration 18 ​ ​ Business Development and Marketing ​ ​ 3 Total ​ ​ 174 ​ Our success depends on our ability to attract, motivate, train and retain qualified personnel.
As of March 31, 2023, a total of 25,831,040 ordinary shares, representing 47.2% of our outstanding ordinary shares, including ordinary shares issued in advance but deemed not outstanding to facilitiate conversation of ordinary shares to ADSs for the employee share incentive plans, are held by one record holder in the United States.
As of February 29, 2024, a total of 33,681,015 ordinary shares, representing 61.0% of our outstanding ordinary shares, including ordinary shares issued in advance but deemed not outstanding to facilitiate conversation of ordinary shares to ADSs for the employee share incentive plans, are held by one record holder in the United States.
Luo also completed his postdoctoral research in protein folding at Stanford University in 1998. Dr. Luo’s spouse is Xiaohong (Kristine) She who is our Senior Vice President, Head of Clinical Operations.
Luo also completed his postdoctoral research in protein folding at Stanford University in 1998. Dr. Luo’s spouse is Xiaohong (Kristine) She who is our Senior Vice President, Head of Clinical Operations. JC Xu, M.D., Ph.D. has served as our Chief Scientific Officer since August 2020. Dr.
Eng. ​ * ​ $ 1.06 ​ December 2022 ​ December 2032 Chunfang (Vicky) Gu ​ * ​ $ 1.33 ​ February 2019 ​ February 2029 Chunfang (Vicky) Gu ​ * ​ $ 1.48 ​ March 2020 ​ March 2030 Chunfang (Vicky) Gu ​ * ​ $ 1.83 ​ August 2020 ​ August 2030 Chunfang (Vicky) Gu ​ * ​ $ 5.6 ​ February 2022 ​ February 2032 Chunfang (Vicky) Gu ​ * ​ $ 1.06 ​ December 2022 ​ December 2032 Ling (Jolin) Zhou ​ * ​ $ 1.48 ​ March 2020 ​ March 2030 Ling (Jolin) Zhou ​ * ​ $ 1.83 ​ August 2020 ​ August 2030 Ling (Jolin) Zhou ​ * ​ $ 5.6 ​ February 2022 ​ February 2032 Ling (Jolin) Zhou ​ * ​ $ 1.06 ​ December 2022 ​ December 2032 Non-Employee Directors ​ Yumeng Wang — ​ — — — Andy (Yiu Leung) Cheung * ​ $ 11.2 June 2021 June 2031 Min Li * ​ $ 11.2 June 2021 June 2031 Yuwen Liu ​ * ​ $ 2.24 ​ May 2022 ​ May 2032 Cuong Do ​ * ​ $ 0.8 ​ November 2022 ​ November 2032 Mervyn Turner ​ * ​ $ 1.33 ​ November 2018 ​ November 2028 All directors and executive officers as a group 3,508,641 ​ ​ Various dates from November 2018 to December 2022 Various dates from November 2028 to December 2032 Note: * The shares held by each of these directors and executive officers represent less than 1% of our total outstanding shares. 182 Table of Contents As of March 31, 2023, our award holders other than our directors and executive officers as a group held outstanding awards to purchase 3,185,333 ordinary shares.
Eng. ​ 40,000 ​ $ 1.33 ​ December 2023 ​ December 2033 Chunfang (Vicky) Gu ​ * ​ $ 1.33 ​ February 2019 ​ February 2029 Chunfang (Vicky) Gu ​ * ​ $ 1.48 ​ March 2020 ​ March 2030 Chunfang (Vicky) Gu ​ * ​ $ 1.83 ​ August 2020 ​ August 2030 Chunfang (Vicky) Gu ​ * ​ $ 5.6 ​ February 2022 ​ February 2032 Chunfang (Vicky) Gu ​ * ​ $ 1.06 ​ December 2022 ​ December 2032 Chunfang (Vicky) Gu ​ * ​ $ 1.04 ​ May 2023 ​ May 2033 Chunfang (Vicky) Gu ​ * ​ $ 1.33 ​ December 2023 ​ December 2033 Ling (Jolin) Zhou ​ * ​ $ 1.48 ​ March 2020 ​ March 2030 Ling (Jolin) Zhou ​ * ​ $ 1.83 ​ August 2020 ​ August 2030 Ling (Jolin) Zhou ​ * ​ $ 5.6 ​ February 2022 ​ February 2032 Ling (Jolin) Zhou ​ * ​ $ 1.06 ​ December 2022 ​ December 2032 Ling (Jolin) Zhou ​ * ​ $ 1.04 ​ May 2023 ​ May 2033 Ling (Jolin) Zhou ​ * ​ $ 1.33 ​ December 2023 ​ December 2033 Yan Li ​ * ​ $ 13.85 ​ January 2021 ​ January 2031 Yan Li ​ * ​ $ 5.60 ​ February 2022 ​ February 2032 Yan Li ​ * ​ $ 1.06 ​ December 2022 ​ December 2032 Yan Li ​ * ​ $ 1.05 ​ May 2023 ​ May 2033 Yan Li ​ * ​ $ 1.33 ​ December 2023 ​ December 2033 Non-Employee Directors ​ ​ ​ Yumeng Wang — ​ — — — Andy (Yiu Leung) Cheung * ​ $ 11.2 June 2021 June 2031 Min Li * ​ $ 11.2 June 2021 June 2031 Min Li ​ * ​ $ 0.94 ​ June 2023 ​ June 2033 Cuong Do ​ * ​ $ 0.8 ​ November 2022 ​ November 2032 Cuong Do ​ * ​ $ 1.07 ​ October 2023 ​ October 2033 Mervyn Turner ​ * ​ $ 1.33 ​ November 2018 ​ November 2028 Mervyn Turner ​ * ​ $ 1.06 ​ May 2023 ​ May 2033 Li Zhu ​ * ​ $ 1.15 ​ September 2023 ​ September 2033 All directors and executive officers as a group 4,672,222 ​ ​ Various dates from November 2018 to December 2023 Various dates from November 2028 to December 2033 Note: * The shares held by each of these directors and executive officers represent less than 1% of our total outstanding shares.
Yuwen Liu will depart from our board and audit committee upon the filing of this annual report on Form 20-F. We have determined that Andy (Yiu Leung) Cheung qualifies as an “audit committee financial expert.” The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company.
We have determined that Andy (Yiu Leung) Cheung qualifies as an “audit committee financial expert.” The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company.
Zheng had served as Scientific Director/Group Leader, leading numerous biologics programs at Janssen BioTherapeutics, Janssen R&D since 2013. Dr. Zheng received his bachelor’s degree in biological sciences from Sichuan University in 2007 and Ph.D. degree in pharmaceutical sciences from University of Washington in 2012. Jiping Zha, Ph.D. has served as our Executive Vice President of Clinical Development since September 2021.
Zheng received his bachelor’s degree in biological sciences from Sichuan University in 2007 and Ph.D. degree in pharmaceutical sciences from University of Washington in 2012. Jiping Zha, Ph.D. has served as our Executive Vice President of Clinical Development since September 2021. Dr. Zha is responsible for clinical development, clinical operation and drug safety group.
Dr. Zeng brings more than 20 years of experience in drug discovery and drug development in the biopharmaceutical industry. Prior to joining us, Dr. Zeng was the senior director of upstream process development responsible for both early and late stage programs at Gilead Sciences, Inc from July 2020 to June 2021 .
Zeng was the senior director of upstream process development responsible for both early and late stage programs at Gilead Sciences, Inc from July 2020 to June 2021 .
She is an inventor of more than 120 issued and pending patents and has published more than 50 articles in peer-reviewed journals. Qinghai Zhao, Ph.D. has served as our Chief Manufacturing Officer since October 2020. Dr. Zhao has more than 25 years of experience in protein therapeutics development and defining product development strategy from early stage IND through commercial filing.
She is an inventor of more than 120 issued and pending patents and has published more than 50 articles in peer-reviewed journals. 164 Table of Contents Qinghai Zhao, Ph.D. has served as our Chief Manufacturing Officer since October 2020. Dr.
The registered address of JSR Limited is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands. Information set forth above is based upon JSR Limited's Schedule 13G/A filing with the SEC on February 6, 2023. (5) Represents 4,826,037 ordinary shares held by Asia Ventures II L.P., a limited partnership incorporated in the Bermuda.
JSR Limited is controlled by GP Healthcare Capital Co., Ltd. The registered address of JSR Limited is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands. Information set forth above is based upon JSR Limited’s Schedule 13G/A filing with the SEC on February 6, 2023.
Before joining Adagene, she served as an Executive Director and Global Product Team Leader at Turning Point Therapeutics from April 2019 to October 2021. She was the Senior Director of Strategic Alliance and Program management at Wellspring Biosciences Inc. from March 2013 to March 2019, where she managed both internal discovery and IND-enabling programs and strategic alliance with Janssen Pharmaceuticals.
She was the Senior Director of Strategic Alliance and Program management at Wellspring Biosciences Inc. from March 2013 to March 2019, where she managed both internal discovery and IND-enabling programs and strategic alliance with Janssen Pharmaceuticals. Dr.
Compensation Compensation For the fiscal year ended December 31, 2022, we paid an aggregate of US$3.7 million in cash to our executive officers and an aggregate of US$0.2 million in cash to our independent directors. For the fiscal year ended December 31, 2022, we did not pay any cash compensation to non-executive directors who are not independent directors.
Gallen, School of Business in Switzerland. 6.B. Compensation Compensation For the fiscal year ended December 31, 2023, we paid an aggregate of US$2.6 million in cash to our executive officers and an aggregate of US$0.3 million in cash to our independent directors.
He also completed his postdoctoral training in cancer biology at Mount Sinai School of Medicine in 2004. Alexander Goergen has served as our Head of Business Development since October 2017 when he joined the Company. Mr. Goergen has worked in various roles at the Covance, TRC and International AIDS Vaccine Initiative from October 2008 to October 2012.
Alexander Goergen has served as our Head of Business Development since October 2017 when he joined the Company. Mr. Goergen has worked in various roles at the Covance, TRC and International AIDS Vaccine Initiative from October 2008 to October 2012. Prior to joining us, Alexander worked in business development for Catalent Pharma Solutions Biologics Division since October 2012. Mr.
The 2019 Plan provides for the issuance of up to an aggregate of 11,391,131 of our ordinary shares. We have terminated the authority to grant additional awards under the 2019 Plan and all future awards will be granted under the 2021 Plan. Therefore, the effective maximum number of shares issuable under the 2019 Plan is 10,125,726.
We have terminated the authority to grant additional awards under the 2019 Plan and all future awards will be granted under the 2021 Plan. Therefore, the effective maximum number of shares issuable under the 2019 Plan is 9,970,732.
Wang also serves as a non-executive director of Ocumension Therapeutics (1477.HK) and Biotheus Inc. Ms. Wang received her bachelor’s degree in business administration in June 2013 and her master degree in biotechnology in 2021 from The Hong Kong University of Science and Technology. 176 Table of Contents Andy (Yiu Leung) Cheung has served as our independent director since February 2021.
Wang received her bachelor’s degree in business administration in June 2013 and her master degree in biotechnology in 2021 from The Hong Kong University of Science and Technology. Andy (Yiu Leung) Cheung has served as our independent director since February 2021. Mr. Cheung has many years of auditing and accounting professional experience. Mr.
Information set forth above is based upon FIL Ltd's Schedule 13G filing with the SEC on February 19, 2021. (6) Represents 4,632,237 ordinary shares held by F-Prime Capital Partners Healthcare Fund III LP. F-Prime Capital Partners Healthcare Advisors Fund III LP is the general partner of F-Prime Capital Partners Healthcare Fund III LP.
The registered address of Asia Ventures II L.P. is Pembroke Hall, 42 Crow Lane, Pembroke, Bermuda HM 19. Information set forth above is based upon FIL Ltd’s Schedule 13G filing with the SEC on February 19, 2021. (5) Represents 3,382,237 ordinary shares held by F-Prime Capital Partners Healthcare Fund III LP.
He obtained a master’s degree in accounting and finance from London School of Economics and Political Science in the United Kingdom in August 1983. Mr. Cheung is a member of Hong Kong Institute of Certified Public Accountants. Min Li, Ph.D. has served as our independent director since February 2021. Dr.
Cheung received his bachelor’s degree in accounting and finance from the University of Lancaster in the United Kingdom in July 1982. He obtained a master’s degree in accounting and finance from London School of Economics and Political Science in the United Kingdom in August 1983. Mr. Cheung is a member of Hong Kong Institute of Certified Public Accountants.
Do is President and CEO of BioVie Inc., a clinical-stage company developing innovative therapies for Alzheimer’s Disease, Parkinson’s disease and refractory Ascites. Prior to BioVie, Mr. Do was President of Samsung’s Global Strategy Group where he helped to set the strategic direction for Samsung Group’s diverse business portfolio, including the growth of its biologics businesses.
Do was President of Samsung’s Global Strategy Group where he helped to set the strategic direction for Samsung Group’s diverse business portfolio, including the growth of its biologics businesses.
D. ​ * ​ $ 1.06 ​ December 2022 ​ December 2032 Qinghai Zhao, Ph. D. * ​ $ 2.26 October 2020 October 2030 Qinghai Zhao, Ph. D. ​ * ​ $ 5.6 ​ February 2022 ​ February 2032 Qinghai Zhao, Ph. D. ​ * ​ $ 1.06 ​ December 2022 ​ December 2032 Man Kin (Raymond) Tam, M.B.A., B.
D. ​ 60,000 ​ $ 1.33 ​ December 2023 ​ December 2033 Qinghai Zhao, Ph. D. * ​ $ 2.26 October 2020 October 2030 Qinghai Zhao, Ph. D. ​ * ​ $ 5.6 ​ February 2022 ​ February 2032 Qinghai Zhao, Ph. D. ​ * ​ $ 1.06 ​ December 2022 ​ December 2032 Qinghai Zhao, Ph.
The general partner of Asia Ventures II L.P. is Asia Partners II L.P. a Bermuda exempt limited partnership. The general partner of Asia Partners II L.P. is Eight Roads GP, who is ultimately controlled by Eight Roads Holdings Limited. The registered address of Asia Ventures II L.P. is Pembroke Hall, 42 Crow Lane, Pembroke, Bermuda HM 19.
(4) Represents 4,826,037 ordinary shares held by Asia Ventures II L.P., a limited partnership incorporated in the Bermuda. The general partner of Asia Ventures II L.P. is Asia Partners II L.P. a Bermuda exempt limited partnership. The general partner of Asia Partners II L.P. is Eight Roads GP, who is ultimately controlled by Eight Roads Holdings Limited.
(3) Represents (i) 8,035,316 ordinary shares held by Peter Luo; (ii) 337,415 ordinary shares underlying share options granted to Peter Luo that are vested or will be vested within 60 days of March 31, 2023, (iii) 766,667 ordinary shares held by Great Han Fortune LP for the benefit of Peter Luo and (iv) 33,333 ordinary shares held by Great Han Fortune LP for the benefit of Peter Luo that will be vested within 60 days of March 31, 2023; (v) 0 ordinary shares held by HAN 2020 GRAT, for which Peter Luo is a Trustee; (vi) 52,198 ordinary shares held by Xiaohong She, who is the spouse of Peter Luo; (vii) 48,230 ordinary shares underlying share options granted to Xiaohong She that are vested or will be vested within 60 days of March 31, 2023, (viii) 192,083 ordinary shares held by Great Han Fortune LP for the benefit of Xiaohong She, (ix) 4,167 ordinary shares held by Great Han Fortune LP for the benefit of Xiaohong She that will be vested within 60 days of March 31, 2023; (x) 785,944 ordinary shares held by Ping Ren, who is the spouse of Fangyong (Felix) Du, (xi) 397,500 ordinary shares held by Great Han Fortune LP for the benefit of Ping Ren, (xii) 5,000 ordinary shares held by Great Han Fortune LP for the benefit of Ping Ren that are vested or will be vested within 60 days of March 31, 2023, (xiii) 115,494 ordinary shares underlying 115,494 share options granted to Ping Ren that that are vested or will be vested within 60 days of March 31, 2023, (xiv) total of 1,312,357 ordinary shares held by Raymond Tam, JC Xu, Qinghai Zhao and several key employees of the Company, and (xv) total of 713,565 share options granted to Raymond Tam, JC Xu, Qinghai Zhao and several key employees that are vested or will be vested within 60 days of March 31, 2023.
(2) Represents (i) 1,799,691 ordinary shares (including ordinary shares represented by the ADSs) held by Peter Luo; (ii) 337,415 ordinary shares underlying share options granted to Peter Luo that are vested or will be vested within 60 days of February 29, 2024, (iii) 1,075,000 ordinary shares held by Great Han Fortune LP for the benefit of Peter Luo and (iv) 33,333 ordinary shares held by Great Han Fortune LP for the benefit of Peter Luo that will be vested within 60 days of February 29, 2024; (v) 6,000,000 ordinary shares held by HAN 2020 Irrevocable Trust, for which Xiaohong She is the Trustee and may be deemed the beneficial owner; (vi) 52,198 ordinary shares held by Xiaohong She, who is the spouse of Peter Luo; (vii) 48,230 ordinary shares underlying share options granted to Xiaohong She that are vested or will be vested within 60 days of February 29, 2024, (viii) 230,000 ordinary shares held by Great Han Fortune LP for the benefit of Xiaohong She, (ix) 4,167 ordinary shares held by Great Han Fortune LP for the benefit of Xiaohong She that will be vested within 60 days of February 29, 2024; (x) total of 1,561,717 ordinary shares held by Raymond Tam, JC Xu, Qinghai Zhao and several key employees of the Company, and (xi) total of 866,747 share options granted to Raymond Tam, JC Xu, Qinghai Zhao and several key employees that are vested or will be vested within 60 days of February 29, 2024.
He holds a BA from Dartmouth College and an MBA from the Tuck School of Business at Dartmouth. 177 Table of Contents Mervyn Turner, Ph.D. , has served as our independent director since April 2023. Dr.
Do was also a senior partner at McKinsey & Company, where he spent 17 years helping to build the healthcare, high technology, and corporate finance practices. He holds a BA from Dartmouth College and an MBA from the Tuck School of Business at Dartmouth. Mervyn Turner, Ph.D. , has served as our independent director since April 2023. Dr.
Ltd. pursuant to our current effective shareholders agreement. Ms. Yumeng Wang is currently a vice president at General Atlantic, primarily responsible for investments in healthcare and life sciences sectors. Prior to joining General Atlantic, Ms. Wang served as an equity research analyst at The Hongkong and Shanghai Banking Corporation, mainly focusing on the healthcare sector. Ms.
Non-Employee Directors Yumeng Wang has served as our director since April 2023 designated by General Atlantic Singapore AI Pte. Ltd. pursuant to our current effective shareholders agreement. Ms. Yumeng Wang is currently a vice president at General Atlantic, primarily responsible for investments in healthcare and life sciences sectors. Prior to joining General Atlantic, Ms.
Zha has served as executive director of translational sciences at NGM Biopharmaceuticals from April 2017 to September 2021, and held various leadership positions at MedImmune, Crown Bioscience, Genentech from November 2003 to March 2017. Dr. Zha has over forty publications in high-impact scientific journals, such as Cell, Science and Nature, and authored multiple patents. Dr.
He is a physician scientist with over 20 years of formative experience in both academia and biotech industry. Dr. Zha has served as executive director of translational sciences at NGM Biopharmaceuticals from April 2017 to September 2021, and held various leadership positions at MedImmune, Crown Bioscience, Genentech from November 2003 to March 2017. Dr.
The terms of the 2015 Plan, the 2017 Plan and the 2019 Plan are substantially the same other than the maximum aggregate number of shares we may issue under the respective plan. 178 Table of Contents The purpose of the 2019 Plan is to attract, motivate, retain and reward certain officers, employees, directors and other eligible persons and to further link the interests of award recipients with those of our shareholders generally.
The purpose of the 2019 Plan is to attract, motivate, retain and reward certain officers, employees, directors and other eligible persons and to further link the interests of award recipients with those of our shareholders generally. The 2019 Plan provides for the issuance of up to an aggregate of 11,391,131 of our ordinary shares.
Mr. Cheung has served as an independent non-executive director of JW (Cayman) Therapeutics Co. Ltd (HKEX:2126) since October 2020 and an independent non-executive director of Hua Medicine (HKEX:2552) since January 2023. Mr. Cheung received his bachelor’s degree in accounting and finance from the University of Lancaster in the United Kingdom in July 1982.
Cheung has served as an independent non-executive director of JW (Cayman) Therapeutics Co. Ltd (HKEX:2126) since October 2020 and an independent non-executive director of Hua Medicine (HKEX:2552) since January 2023 and an independent non-executive director of CanSino Biologics Inc. (HKEX: 6185, SSE: 688185) since February 2024. Mr.
Other than Andy (Yiu Leung) Cheung, Min Li, Yuwen Liu, Man Kin (Raymond) Tam, Felix Du, Cuong Do and Mervyn Turner, each director is not subject to a term of office and holds office until such time as his successor takes office or until the earlier of his death, resignation or removal from office pursuant to the applicable provisions of our memorandum and articles of association.
Peter Luo and Yumeng Wang is not subject to a term of office and holds office until such time as his or her successor takes office or until the earlier of his death, resignation or removal from office pursuant to the applicable provisions of our memorandum and articles of association.
Prior to joining Adagene, Dr. Zhao was Vice President of Technical Development and Manufacturing at Forty Seven Inc. (NASDAQ:FTSV) from 2017 to October 2020. Prior to that, Dr. Zhao was vice president of CMC/ Manufacturing at AnaptysBio (NASDAQ:ANAB) from 2016 to 2017. Prior to AnaptysBio, Dr.
Zhao has more than 25 years of experience in protein therapeutics development and defining product development strategy from early stage IND through commercial filing. Prior to joining Adagene, Dr. Zhao was Vice President of Technical Development and Manufacturing at Forty Seven Inc. (NASDAQ:FTSV) from 2017 to October 2020. Prior to that, Dr.
Liu served as head of molecular cancer biology in CrownBio from October 2011 to September 2015. Dr. Liu received his bachelor’s degree in biology in 1992 and master’s degree in cell biology in 1995 from Beijing Normal University and Ph.D. degree in cell biology from Peking Union Medical College in 1998.
Liu received his bachelor’s degree in biology in 1992 and master’s degree in cell biology in 1995 from Beijing Normal University and Ph.D. degree in cell biology from Peking Union Medical College in 1998. He also completed his postdoctoral training in cancer biology at Mount Sinai School of Medicine in 2004.
(4) Represents 5,340,742 ordinary shares, consisting of (i) 4,828,242 ordinary shares and (ii) 512,500 ordinary shares in the form of ADSs, are held of record by JSR Limited, a British Virgin Islands company. JSR Limited is controlled by GP Healthcare Capital Co., Ltd.
Dr. Hua Gong, Yu (Albert) Ren and Fangyong (Felix) Du are no longer subject to the concert party agreement due to their departure from us. (3) Represents 5,340,742 ordinary shares, consisting of (i) 4,828,242 ordinary shares and (ii) 512,500 ordinary shares in the form of ADSs, are held of record by JSR Limited, a British Virgin Islands company.
Information set forth above is based upon FMR LLC's Schedule 13G/A filing with the SEC on February 9, 2023. (7) Represents 5,282,120 ordinary shares in the form of ADSs that were held of record by WuXi PharmaTech Healthcare Fund I L.P., a limited partnership incorporated in the Cayman Islands.
Information set forth above is based upon General Atlantic, L.P.’s Schedule 13G filing with the SEC on February 11, 2022. (8) Represents 2,750,000 ordinary shares held by Panacea Venture Healthcare Fund II, L.P., a limited partnership incorporated in the Cayman Islands.
Dana Hu-Lowe, Ph.D. is currently our Vice President of Global Product Team Leadership. Dr. Hu-Lowe has more than 20 years of industry experience in oncology and R&D including years of experience in project and strategic alliance management, and leadership for both preclinical and clinical product programs.
Hu-Lowe has more than 20 years of industry experience in oncology and R&D including years of experience in project and strategic alliance management, and leadership for both preclinical and clinical product programs. Before joining Adagene, she served as an Executive Director and Global Product Team Leader at Turning Point Therapeutics from April 2019 to October 2021.
Zha received his M.D. degree in basic medicine from Shanghai Medical University in 1987 and Ph.D. degree in Microbiology and Immunology from University of Tennessee in 1993, and was Board-Certified in Anatomic Pathology by American Board of Pathology in 1999. 175 Table of Contents Wenlin Zeng, Ph.D. has served as our Vice President of Early Stage CMC since June 2021.
Zha has over forty publications in high-impact scientific journals, such as Cell, Science and Nature, and authored multiple patents. Dr. Zha received his M.D. degree in basic medicine from Shanghai Medical University in 1987 and Ph.D. degree in Microbiology and Immunology from University of Tennessee in 1993, and was Board-Certified in Anatomic Pathology by American Board of Pathology in 1999.
She’s spouse is Peter Luo, Ph.D., our Co-Founder, Chief Executive Officer and Chairman of the Board. Guizhong Liu, Ph.D. has served as our Head of Biology and Pharmacology since October 2015. Dr. Liu has over 15 years of experience in drug discovery and development, both in small molecule kinase inhibitors and large molecule antibodies in oncology and immunology field.
She’s spouse is Peter Luo, Ph.D., our Co-Founder, Chief Executive Officer and Chairman of the Board. 165 Table of Contents Guizhong Liu, Ph.D. has served as our Senior Vice President of Early Drug Discovery since October 2023. Dr.
The term of director position for each of Andy (Yiu Leung) Cheung, Man Kin (Raymond) Tam, Felix Du, Min Li, Cuong Do and Mervyn Turner is subject to re-appointment by the board of directors.
Terms of Directors and Officers Our officers are elected by and serve at the discretion of the board of directors. Most of our directors, including directors Andy (Yiu Leung) Cheung, Man Kin (Raymond) Tam, Cuong Do, Mervyn Turner, Li Zhu and Ulf Grawunder, have fixed term of office and are subject to re-appointment by the board of directors.
F-Prime Capital Partners Healthcare Advisors Fund III LP is solely managed by Impresa Management LLC, its general partner and investment manager. Each of the entities listed above expressly disclaims beneficial ownership of the securities listed above except to the extent of any pecuniary interest therein. The address of these entities is 245 Summer Street, Boston, MA 02210.
F-Prime Capital Partners Healthcare Advisors Fund III LP is the general partner of F-Prime Capital Partners Healthcare Fund III LP. F-Prime Capital Partners Healthcare Advisors Fund III LP is solely managed by Impresa Management LLC, its general partner and investment manager.
Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. Information set forth above is based upon WuXi PharmaTech Healthcare Fund I L.P's Schedule 13G filing with the SEC on January 26, 2022. 189 Table of Contents (8) Represents 4,452,441 ordinary shares and 264,000 ADSs representing 330,000 ordinary shares held by General Atlantic Singapore AI Pte. Ltd.
Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. 179 Table of Contents (7) Represents 4,452,441 ordinary shares and 264,000 ADSs representing 330,000 ordinary shares held by General Atlantic Singapore AI Pte. Ltd. (“GA AI”), a company incorporated under the laws of Singapore. GA AI is wholly-owned by General Atlantic Singapore Fund Pte. Ltd.
He has published over 40 peer-reviewed papers in high-profile journals involving key signalling pathways and targets in cancer biology. From July 2007 to August 2011, Dr. Liu served as an assistant professor of the department of oncological science at Mount Sinai School of Medicine. Prior to joining us, Dr.
Liu served as an assistant professor of the department of oncological science at Mount Sinai School of Medicine. Prior to joining us, Dr. Liu served as head of molecular cancer biology in CrownBio from October 2011 to September 2015. Dr. Liu served as our Head of Biology and Pharmacology from October 2015 to October 2023. Dr.
Eng. * ​ $ 1.48 March 2020 March 2030 Man Kin (Raymond) Tam, M.B.A., B. Eng. * ​ $ 1.83 August 2020 August 2030 Man Kin (Raymond) Tam, M.B.A., B.
D. ​ * ​ $ 1.04 ​ May 2023 ​ May 2033 Qinghai Zhao, Ph. D. ​ * ​ $ 1.33 ​ December 2023 ​ December 2033 Man Kin (Raymond) Tam, M.B.A., B. Eng. 138,519 ​ $ 1.48 March 2020 March 2030 Man Kin (Raymond) Tam, M.B.A., B.
Goergen received his bachelor’s degree in Chemistry from Lafayette College in 2008 and master’s degree in Biotechnology from the University of Wisconsin-Madison in 2011. Songmao Zheng, Ph.D. is currently our Vice President, Head of Clinical and Quantitative Pharmacology, and leads quantitative model-informed drug discovery and development in both preclinical and clinical space. Prior to joining us, Dr.
Songmao Zheng, Ph.D. is currently our Vice President, Head of Clinical and Quantitative Pharmacology, and leads quantitative model-informed drug discovery and development in both preclinical and clinical space. Prior to joining us, Dr. Zheng had served as Scientific Director/Group Leader, leading numerous biologics programs at Janssen BioTherapeutics, Janssen R&D since 2013. Dr.
Each of Andy (Yiu Leung) Cheung, Min Li and Yuwen Liu’s initial term has been extended to April 2023 and will expire upon the filing of this annual report on Form 20-F. The Board has decided to renew Andy (Yiu Leung) Cheung, Min Li and Man Kin (Raymond) Tam’s term of director position for one year.
The initial term of our independent director Li Zhu is one-year from the effectiveness of the appointment. The Board has decided to renew Andy (Yiu Leung) Cheung, Mervyn Turner and Man Kin (Raymond) Tam’s term of director position for one year.
Information set forth above is based upon General Atlantic, L.P.’s Schedule 13G filing with the SEC on February 11, 2022.
Information set forth above is based upon Peter Luo’s Schedule 13D/A filing with the SEC on March 1, 2024.
Board Practices Board of Directors Our board of directors currently consists of nine directors, including five independent directors, namely Andy (Yiu Leung) Cheung, Min Li, Yuwen Liu, Cuong Do and Mervyn Turner. Yuwen Liu will depart from our board and applicable committee upon the filing of this annual report on Form 20-F.
Board Practices Board of Directors Our board of directors consists of nine directors currently, including five independent directors, namely Andy (Yiu Leung) Cheung, Cuong Do, Mervyn Turner, Li Zhu and Ulf Grawunder, and eight directors from June 15, 2024 due to the effectiveness of Ms. Yan Li’s resignation.
The business address of Yumeng Wang is Suite 5704-5706, 57F, Two IFC, 8 Finance Street, Central, Hong Kong; the business address of Yuwen Liu is 3 Fl, Building No. 10, Dongshahu Equity Investment Center, East Suhong Road, Suzhou Industrial Park; the business address of Cuong Do is 660 Destacada Ave, Miami, United States FL 33156-8000; and the business address of Mervyn Turner is MJ Turner Consulting LLC, Westfield, NJ, USA.
The business address of Yumeng Wang is Suite 5704-5706, 57F, Two IFC, 8 Finance Street, Central, Hong Kong; the business address of Cuong Do is 660 Destacada Ave, Miami, United States FL 33156-8000; the business address of Mervyn Turner is MJ Turner Consulting LLC, Westfield, NJ, USA, and the business address of Li Zhu is 33345 7th St, Union City, CA, 94587-2128, United States. 178 Table of Contents (1) Represents 12,008,498 ordinary shares held by Peter Luo act-in-concert group, as set forth in note (2) below.

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Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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As of December 31, 2022, the amounts due to WuXi AppTec Group were US$1.5 million. Transactions with WuXi Biologics (Cayman) Inc. or WuXi Biologics We received research and development services, including provision of manufacturing and quality control testing services, from WuXi Biologics, an entity controlled by the ultimate controlling party of one of our principal shareholders.
As of December 31, 2023, the amounts due to WuXi AppTec Group were US$0.3 million. Transactions with WuXi Biologics (Cayman) Inc. or WuXi Biologics We received research and development services, including provision of manufacturing and quality control testing services, from WuXi Biologics, an entity controlled by the ultimate controlling party of one of our principal shareholders.
Related Party Transactions The following is a summary of transactions since January 1, 2022 to which we have been a participant in which any of our then directors, executive officers or holders of more than 10% of any class of our voting securities at the time of such transaction, or any members of their immediate family, had or will have a direct or indirect material interest.
Related Party Transactions The following is a summary of transactions since January 1, 2023 to which we have been a participant in which any of our then directors, executive officers or holders of more than 10% of any class of our voting securities at the time of such transaction, or any members of their immediate family, had or will have a direct or indirect material interest. 180 Table of Contents Employment Agreements and Indemnification Agreements See “Item 6 Directors, Senior Management and Employees—6.B.
The amounts for the purchase of the services were US$27.8 million in 2022. As of December 31, 2022, the amounts due to WuXi Biologics were US$17.8 million. ​ 7.C. Interests of Experts and Counsel Not applicable.
The amounts for the purchase of the services were US$1.9 million in 2023. As of December 31, 2023, the amounts due to WuXi Biologics were US$16.4 million. ​ 7.C. Interests of Experts and Counsel Not applicable.
Compensation—Share Incentive Plan.” 190 Table of Contents Other Related Party Transactions Transactions with WuXi AppTec Group We received research and development services from WuXi AppTec Group, the parent company of one of our principal shareholders. The amounts for the purchase of the services were US$7.4 million in 2022.
Compensation—Employment Agreements and Indemnification Agreements.” Share Incentives See “Item 6 Directors, Senior Management and Employees—6.B. Compensation—Share Incentive Plan.” Other Related Party Transactions Transactions with WuXi AppTec Group We received research and development services from WuXi AppTec Group, the parent company of one of our principal shareholders. The amounts for the purchase of the services were US$0.8 million in 2023.
Removed
Employment Agreements and Indemnification Agreements See “Item 6 Directors, Senior Management and Employees—6.B. Compensation—Employment Agreements and Indemnification Agreements.” Share Incentives See “Item 6 Directors, Senior Management and Employees—6.B.

Other ADAG 10-K year-over-year comparisons