aibioAdagene files to sell up to US$100,000,000 of ADSs at market
Tickers ADAG
Adagene Inc. filed a prospectus supplement for an at-the-market program of up to US$100 million of American depositary shares, sold through Leerink Partners. The filing repeats the warning that its auditor is in mainland China, where trading in its ADSs could be barred.
Key facts
- Company
- Adagene Inc. (NASDAQ: ADAG)
- News type
- Financings
- Primary source
- Adagene Inc. 424B5 (2025-05-30)
The program
Adagene Inc. (Nasdaq: ADAG) filed a prospectus supplement dated May 30, 2025, covering American depositary shares, or ADSs, with an aggregate offering price of up to US$100 million. Each ADS represents 1.25 ordinary shares. The program is an at-the-market offering, under which the company sells shares over time at prevailing prices through an agent. It is filed under registration statement No. 333-287161.
The sales agent is Leerink Partners LLC, under a sales agreement dated March 29, 2024. Sales may be made on The Nasdaq Global Market, through a market maker, or in block transactions, all at market price. Leerink is not required to sell any specific number or dollar amount and will use commercially reasonable efforts. It may be paid a commission of up to 3.0% of gross proceeds. There is no minimum sale requirement and no escrow arrangement.
The last sale price of the ADSs on Nasdaq was US$1.955 on May 29, 2025. The supplement does not say how many ADSs have been sold under the 2024 agreement, or how many remain available. It also gives no count of ADSs outstanding on its cover pages, so the dilution from a full sale cannot be measured from it. Leerink may be deemed an underwriter under the Securities Act, and the company agreed to indemnify it for certain liabilities.
Holding-company structure
Adagene is a Cayman Islands holding company. It runs its U.S. business through Adagene Incorporated and its China business through Adagene (Suzhou) Limited. The supplement warns that investors buy shares in the holding company, not in the subsidiaries that have the operations. It says the company currently relies principally on equity financing for its cash requirements, and that cash raised abroad, including from this offering, may be moved to the U.S. and Chinese subsidiaries.
The supplement says Adagene Inc. paid Adagene Suzhou US$24.5 million in 2022, US$20.5 million in 2023 and US$16.3 million in 2024 for research and development services, with no intercompany loans in those years. Its PRC legal counsel is Jingtian & Gongcheng.
The auditor and delisting risk
The prospectus says the company's auditor is headquartered in mainland China. The Public Company Accounting Oversight Board could not inspect such firms without approval from Chinese authorities. Under the Holding Foreign Companies Accountable Act, trading in the ADSs on U.S. markets could be prohibited if the PCAOB cannot fully inspect the auditor for two consecutive years.
The PCAOB issued a determination on December 16, 2021 and vacated it on December 15, 2022, and the company does not expect to be named under the act in the near future. The supplement says the risk "could continue to adversely affect the trading price of our securities."
Chinese regulation
The annual report on Form 20-F, filed March 24, 2025, lists further exposure. It cites Chinese data-protection rules and regulations on human genetic resources, effective May 2024, which require approval for cross-border transfers of samples and related data. Penalties can include confiscation of samples and fines.
The 20-F says the company may need approval from the China Securities Regulatory Commission for overseas offerings, and that it "cannot assure" it will not.
The pipeline behind the program
The supplement describes Adagene as a clinical-stage antibody company. Its lead candidate is ADG126, called muzastotug, an anti-CTLA-4 SAFEbody that the company says is in phase 1b/2 development, with the focus on phase 2 dose expansion combined with pembrolizumab in advanced or metastatic microsatellite-stable colorectal cancer. The company calls its clinical profile potentially best-in-class, which is its own description. In February 2025 it announced an investigator-initiated phase 2 trial of ADG126 before surgery in stage II or stage III colorectal cancer.
Earlier candidates include ADG206, a masked anti-CD137 agonist, which the supplement says is in Phase 1. The company says preclinical data showed 4-fold stronger activity in its activated form than a benchmark antibody; those are laboratory findings. Two further programs, ADG138 and ADG153, are described as IND-ready.
Adagene has out-licensed Greater China rights to ADG104 to Sanjin and to ADG125 to Dragon Boat Biopharmaceuticals. Roche sponsors a triple-combination trial of ADG126 with atezolizumab and bevacizumab in first-line liver cancer, and Merck supplies pembrolizumab for some combination trials. The supplement does not give the company's cash, net loss or runway, so the size of the program cannot be set against what the company burns.