SecProbe.io

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).

 FirstName LastNameRaymond Tam
 Comapany NameAdagene Inc.
 June 5, 2023 Page 2
 FirstName LastName
Raymond Tam
Adagene Inc.
June 5, 2023
Page 2
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

 FirstName LastNameRaymond Tam
 Comapany NameAdagene Inc.
 June 5, 2023 Page 3
 FirstName LastName
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,
Division of Corporation Finance
Office of Life Sciences
cc:       Xuelin Wang, Esq.