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United States securities and exchange commission logo
June 5, 2023
Raymond Tam
Chief Financial Officer
Adagene Inc.
4F, Building C14, No. 218
Xinghu Street, Suzhou Industrial Park
Suzhou, Jiangsu Province, 215123
People s Republic of China
Re: Adagene Inc.
Annual Report on
Form 20-F for the fiscal year ended December 31, 2022
Filed April 28,
2023
File No. 001-39997
Dear Raymond Tam:
We have reviewed your filing 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 these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Annual Report on Form 20-F for the fiscal year ended December 31, 2022
Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent
Inspections, page 212
1. We note your statement
that you reviewed your register of members and public filings
made by your
shareholders in connection with your required submission under paragraph
(a). Please
supplementally describe any additional materials that were reviewed and tell
us whether you relied
upon any legal opinions or third party certifications such as
affidavits as the basis
for your submission. In your response, please provide a similarly
detailed discussion of
the materials reviewed and legal opinions or third party
certifications relied
upon in connection with the required disclosures under paragraphs
(b)(2) and (3).
Raymond Tam
FirstName LastNameRaymond Tam
Adagene Inc.
Comapany
June 5, 2023NameAdagene Inc.
June 5,
Page 2 2023 Page 2
FirstName LastName
2. We note that your disclosures pursuant to Items 16I(b)(2), (b)(3),
(b)(4), and (b)(5) are
provided for us, our, or our operating entity. We
also note that your list of
subsidiaries in Exhibit 8.1 appears to indicate that you have
subsidiaries in Hong Kong
and countries outside China. Please note that Item 16I(b) requires
that you provide
disclosures for yourself and all of your consolidated foreign
operating entities.
With respect to (b)(2), please supplementally clarify the
jurisdictions in which your
consolidated foreign operating entities are organized or
incorporated and provide the
percentage of your shares or the shares of your consolidated
operating entities owned
by governmental entities in each foreign jurisdiction in which
you have consolidated
operating entities in your supplemental response.
With respect to (b)(3), (b)(4), and (b)(5), please provide the
required information for
you and all of your consolidated foreign operating entities in
your supplemental
response.
3. In order to clarify the scope of your review, please supplementally
describe the steps you
have taken to confirm that none of the members of your board or the
boards of your
consolidated foreign operating entities are officials of the Chinese
Communist Party. For
instance, please tell us how the board members current or prior
memberships on, or
affiliations with, committees of the Chinese Communist Party factored
into your
determination. In addition, please tell us whether you have relied
upon third party
certifications such as affidavits as the basis for your disclosure.
4. With respect to your disclosure pursuant to Item 16I(b)(5), we note
that you have included
language that such disclosure is to our best knowledge. Please
supplementally confirm
without qualification, if true, that your articles and the articles of
your consolidated
foreign operating entities do not contain wording from any charter of
the Chinese
Communist Party.
Consolidated Financial Statements
Note 9. Share-Based Compensation, page F-21
5. We note that on November 9, 2020, the company passed a board
resolution to waive the
vesting schedules and conditions of 2,375,000 share options granted to
certain
management members. Pursuant to this board resolution, these
management members
exercised all related share options and paid the exercise price by
issuing recourse
promissory notes in the total amount of US$5,197,650. Additionally, we
note that you
determined in accordance with guidance set out in ASC 718-10-55-31
that there has been
no substantial change to the vesting conditions and the company shall
continue to account
for the share awards in accordance with their original terms. You
disclose that as of
December 31, 2021, there were 1,585,000 shares unvested according to
the original
vesting conditions. Please tell us and revise future filings to
disclose the number of
unvested shares as of the end of the period of the financial
statements. Additionally with a
view towards disclosure, tell us whether these unvested shares are
included in the table on
page F-33 of potentially dilutive securities that have not been
included in the calculation
Raymond Tam
Adagene Inc.
June 5, 2023
Page 3
of diluted net loss per share.
6. As a related matter, we note that on January 16, 2021, the company passed
a board
resolution whereby certain management members surrendered a total of
491,119 ordinary
shares as repayment for their respective promissory notes issued in
connection with the
exercising of options granted to them. Please tell us and revise future
filings to disclose
whether these ordinary shares are part of the 2,375,000 shares issued on
November 9,
2020 or whether the shares are from other ordinary shares already held by
those
management members and how you accounted for the surrendered shares. Cite
the
applicable accounting guidance which supports your treatment.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Lynn Dicker at 202-551-3616 or Kevin Kuhar at
202-551-3662 if you
have questions regarding comments on the financial statements and related
matters. Contact
Kyle Wiley at 202-344-5791 or Christopher Dunham at 202-551-3783 if you have
any questions
about comments related to your status as a Commission-Identified Issuer during
your most
recently completed fiscal year. Contact Jimmy McNamara at 202-551-7349 or Tim
Buchmiller at 202-551-3635 with any other questions.
Sincerely,
FirstName LastNameRaymond Tam
Division of
Corporation Finance
Comapany NameAdagene Inc.
Office of Life
Sciences
June 5, 2023 Page 3
cc: Xuelin Wang, Esq.
FirstName LastName