View:
United States securities and exchange commission logo
October 19, 2020
Peter (Peizhi) Luo
Chief Executive Officer
Adagene Inc.
4F, Building C14, No. 218
Xinghu Street, Suzhou Industrial Park
Suzhou, Jiangsu Province, 25125
People's Republic of China
Re: Adagene Inc.
Draft Registration
Statement on Form F-1
Submitted September
22, 2020
CIK No.: 0001818838
Dear Mr. Luo:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form F-1 Submitted on September 22, 2020
Prospectus Summary
Overview, page 1
1. Please substantially
revise your narrative disclosures to more clearly explain in plain
English your NEObody,
SAFEbody, and POWERbody technologies, and how they are
inter-connected and
utilized for the building of your product pipeline. Also expand your
explanations of the
figures at the top of pages 2 and 3 (and in your Business sections),
including with respect
to the images in each of the three circles in the figure on page 3.
Peter (Peizhi) Luo
FirstName LastNamePeter (Peizhi) Luo
Adagene Inc.
Comapany
October 19,NameAdagene
2020 Inc.
October
Page 2 19, 2020 Page 2
FirstName LastName
2. We refer to your statements on pages 4 and 6 and in your Business
section comparing the
safety of ADG126 with ipilimumab based on a separate study. As this
comparison is not
based on head-to-head studies, please delete these discussions, or
advise.
3. Revise to limit your Summary discussion of your ongoing trials to
serious adverse events,
trial endpoints, and to the extent applicable, whether they were met.
In the Business
section discussion of preliminary efficacy assessments, clarify, if
true, that the trials did
not have efficacy endpoints.
Our Pipeline, page 4
4. With respect to your product candidates other than ADG106 and ADG104,
revise your
column headings to show "Phase II" as a separate column or otherwise
advise. With
respect to ADG106, please explain why the table does not show separate
Phase I and
Phase II columns when your narrative disclosure appears to refer to
separate phases. In
addition, based on your narrative disclosure regarding your status of
development for
ADG106, please shorten the arrows in your pipeline table to more
precisely indicate the
development status of such product candidate, or advise, and shorten
your arrow for
ADG116 to the end of the IND enabling column as it does not appear you
have
commenced your Phase 1 Australia trial yet based on your narrative
disclosures, and it
does not appear you are intending to rely on the paused U.S. trial.
5. Please revise your pipeline table to show the target indications of
each included product
candidate. In addition, please explain why it is appropriate for your
pipeline table to
include a row generally for "Preclinical Assets." Based on your
discussion in the Business
section, these assets appear to be in an early stage of development,
and it does not appear
that you have identified any specific preclinical candidates to
pursue.
ADG106: Novel agonistic anti-CD137 NEObody candidate, page 5
6. We note your disclosure on page 5 and elsewhere in your prospectus
that in preclinical
and clinical trials, your product candidate has shown "robust
anti-tumor activity," "was
observed to balance between safety and efficacy of CD137 agonism,"
demonstrated
"favorable safety results," "potent antitumor efficacy" and
"preliminary clinical efficacy,"
and you also refer to "effective doses." Similar statements appear
elsewhere in your
prospectus, such as your statement on page 42 referring to the
"significant safety
margin" of ADG126, and your statement on page 151 that ADG126 "was
observed to
effectively inhibit tumor growth." Please revise your disclosures to
remove all such
statements suggesting that your product candidate is safe or
effective, insofar as
determinations as to safety and efficacy are within the sole authority
of the FDA or
comparable foreign regulatory authorities.
ADG116: Novel anti-CTLA-4 NEObody candidate, page 7
7. We note your disclosure that you have a Phase I clinical trial open in
the United States for
ADG116 as a monotherapy in patients with advanced/metastatic solid
tumors, but that you
Peter (Peizhi) Luo
FirstName LastNamePeter (Peizhi) Luo
Adagene Inc.
Comapany
October 19,NameAdagene
2020 Inc.
October
Page 3 19, 2020 Page 3
FirstName LastName
are not enrolling patients in the trial. Revise to disclose in your
Summary that your Phase I
trial was placed on clinical hold by the FDA following a death of a
patient, as you explain
on page 31, and that you intend to conduct your trial in Australia at
higher starting doses
than is currently permitted in the U.S.
Our Global Partnership and Collaborations, page 7
8. We note your statement that your recent partnerships are "validations
of [y]our DPL
platform and technologies as well as their potential broad application
to a wide range of
antibody modalities. Given the early stage of development of your
product candidates
derived from the platform and your partnerships and collaborations,
such statements imply
an expectation of regulatory approval and are inappropriate given the
length of time and
uncertainty with respect to securing such approval. Please delete such
statements here and
in the Business section. In addition, please qualify the fourth bullet
on page 8 to state that
you may not be able to enter into additional collaboration agreements
beyond the ones
with ADC Therapeutics and Guilin Sanjin.
Risk Factors, page 8
9. Please add a bullet to highlight that you may be classified as a PFIC
for the current taxable
year and the resulting consequence to investors.
Implications of Being an Emerging Growth Company, page 10
10. Please supplementally provide us with copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to
do so on your behalf,
present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
not they retain copies of the communications.
Risks Factors, page 18
11. We note your disclosure on page 224 that certain shareholders will
possess board
representation rights following the offering. Please add a risk factor
discussing
the board representation rights in sufficient detail so that investors
can clearly understand
the corporate governance, control of the company, and resulting
conflicts of interest that
may arise. For example, include in your revised disclosure that your
CEO has such rights,
and if true, that your sole supplier is also a significant shareholder
with these rights. In
addition, please also add appropriate disclosure in the summary risk
factors disclosing that
certain shareholders will have board representation rights.
Use of Proceeds, page 96
12. Please expand your bullet points to disclose the estimated proceeds to
be allocated to each
of your target indications and product candidates and clarify the
stage of development you
expect to be able to complete for each indication using the estimated
proceeds. In
addition, please add disclosure to the extent you will need additional
funds to further
Peter (Peizhi) Luo
FirstName LastNamePeter (Peizhi) Luo
Adagene Inc.
Comapany
October 19,NameAdagene
2020 Inc.
October
Page 4 19, 2020 Page 4
FirstName LastName
develop your material product candidates.
Capitalization, page 98
13. Please revise long-term borrowings to include the current portion of
long-term
borrowings.
Results of Operations, page 111
14. For research and development expenses, please separately present the
costs incurred for
preclinical testing from costs incurred for clinical trials. Please
disclose the amount of
costs incurred by program for each period presented.
Management s Discussion and Analysis of Financial Condition and Results of
Operations
Share-based Compensation, page 123
15. Once you have an estimated offering price or range, please explain to
us how you
determined the fair value of the common stock underlying your equity
issuances and the
reasons for any differences between the recent valuations of your
common stock leading
up to the IPO and the estimated offering price. This information will
help facilitate our
review of your accounting for equity issuances. Please discuss with
the staff how to
submit your response.
Our Pipeline
ADG106: Novel Agonistic Anti-CD137 NEObody Candidate
Mechanism of Action, page 136
16. Please include additional descriptive labels for the figures at the
top of page 137.
Specifically, please clearly label ADG106 in addition to the other
objects depicted or
otherwise revise the graphic to clarify this illustration.
Clinical Development Plan, page 147
17. We note your disclosure that you are conducting a Phase Ib cohort
expansion for
ADG106. In conjunction with your disclosure on page 139, revise to
clarify the material
details on the expansion trial, including the number of expected
participants, trial design,
endpoints and any protocols.
ADG116: Novel Anti-CTLA-4 NEObody Candidate, page 152
18. Expand your disclosure regarding your trials with ADG116 to describe
the Phase I trial
that occurred in the U.S. prior to its clinical hold. Please also
revise to provide details for
your planned Phase I trial in Australia, including the number of
patients, dosage, duration,
and endpoints.
Peter (Peizhi) Luo
FirstName LastNamePeter (Peizhi) Luo
Adagene Inc.
Comapany
October 19,NameAdagene
2020 Inc.
October
Page 5 19, 2020 Page 5
FirstName LastName
Our Platform, page 161
19. Please revise to more clearly explain to investors the technology
underlying your DPL
platform, including by clarifying the "proven applications commonly
used in the industry"
and whether or not you have licenses to use these applications. In
addition, please describe
the underlying technology unique to your POWERbody technology so that
investors can
better understand this specific technology.
ADC Therapeutics Agreements, page 164
20. Please revise your disclosure regarding the ADC Therapeutics
Agreements to disclose the
aggregate payments received to date.
Sanjin Collaboration/ Out-Licensing Agreements, page 165
21. Please revise your disclosures regarding the Sanjin Greater China
Agreement and Dragon
Boat ROW Agreement to disclose the aggregate payments received to
date. Also revise to
specify the period Sanjin is required to pay the percentage of net
sales.
Intellectual Property, page 167
22. Please expand the discussion of your intellectual property portfolio
on page 167 to specify
(i) the material patents and patent applications you have for each of
your specific product
candidates, and (ii) the type of patent protection granted or
requested (composition of
matter, use or process) for each patent or pending application. In
addition, please revise
your disclosure to specify the jurisdictions in Europe in which you
have pending
applications
Competition, page 169
23. We note that you cross-reference to "Market Opportunity and
Competition" sections
elsewhere in the prospectus where you disclose two advanced CD137
agonist antibodies
in development and ipilimumab as competition to ADG106 and
ADG126, respectively. Please revise your disclosure to enhance your
description of the
competitive business conditions you face in respect to your material
product candidates,
including disclosing the names of your main competitors, the stages of
development for
your competitors' candidates and if applicable competition from
existing approved
products.
Regulation, page 172
24. Please add a discussion regarding applicable regulation in Australia
as you disclose that
you intend to conduct clinical trials in Australia.
Related Party Transactions, page 212
25. Revise to clarify whether the transactions with WuXi Biologics
included providing you
Peter (Peizhi) Luo
FirstName LastNamePeter (Peizhi) Luo
Adagene Inc.
Comapany
October 19,NameAdagene
2020 Inc.
October
Page 6 19, 2020 Page 6
FirstName LastName
with manufacturing and quality control testing, as you state on page
169 that you rely on
WuXi for your supply needs.
Notes to the Consolidated Financial Statements
10. Collaboration Arrangements, page F-29
26. Please expand your disclosures for the Dragon Boat Greater China
Agreement to include
the nature of the milestones along with the US dollar amount for the
upfront fee and the
total potential milestone payments. Refer to ASC 606-10-32.
27. For the ADCT Collaboration and License Agreements to address the
following:
Clarify that the agreements are being combined for revenue
recognition purposes, if
appropriate, per ASC 606-10-25-9.
Clarify if you are required to perform research and development
services in addition
to providing a license along with whether the research and
development services for
the masked antibodies generated under the collaboration portion of
the agreement is a
separate performance obligation. Refer to ASC 606-10-25-14 through
25-22. Please
also tell us how this impacts revenues recognition, if at all, in
accordance with ASC
606-10-25-23 through 25-37.
Disclose the US dollar amount for each category of milestones that
are to be met to
receive payments.
18. Condensed Financial Information of the Parent Company, page F-40
28. We note that Adagene Inc., the parent company, is an offshore holding
company. As
such, please tell us why the parent company recognized revenues,
contract liabilities, and
research and development expenses. Please also provide footnote
disclosures for the
amounts due from related parties and amounts due to related parties.
Please confirm that
the changes in amounts due to related parties are reflected as cash
financing transactions
and the amounts due from related parties are reflected as cash
investing transactions.
Exhibits
29. We note your disclosure on page 171 of various lease agreements for
properties located in
China and California. Please file your material lease agreements as
exhibits to your
registration statement or please advise. Refer to Item 8 of Form F-1
and Item
601(b)(10)(ii)(D) of Regulation S-K.
Peter (Peizhi) Luo
Adagene Inc.
October 19, 2020
Page 7
You may contact Tracey Houser at 202-551-3736 or Terence O'Brien at
202-551-3355 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Jason Drory at 202-551-8342 or Dorrie Yale at 202-551-8776 with any
other questions.
Sincerely,
FirstName LastNamePeter (Peizhi) Luo
Division of
Corporation Finance
Comapany NameAdagene Inc.
Office of Life
Sciences
October 19, 2020 Page 7
cc: Li He, Esq.
FirstName LastName