Liquidity remains under pressure as evidenced by a 2024Q4 free cash flow of -$23.0M, highlighting a structural dependency on external capital to fund R&D.
| Cash from Operations | -15.66M | -29.7M | -28.45M | -48.61M | -43.41M | -28.53M | -18.15M | -14.26M |
| Operating CF Margin % | -204.11% | -28778.91% | -157.11% | -523.12% | -426.67% | -5943.69% | -3781.99% | -943.95% |
| Operating CF Growth % | 47.28% | -4.38% | 41.47% | -11.97% | -52.17% | -57.16% | -27.26% | - |
| Net Income | -17.61M | -33.42M | -18.95M | -79.97M | -73.18M | -42.4M | -16.43M | -15.27M |
| Depreciation & Amortization | 589.79K | 926.25K | 1.21M | 1.45M | 1.13M | 858.41K | 816.69K | 909K |
| Stock-Based Compensation | 3.74M | 4.91M | 7.27M | 10.52M | 18.68M | 10.13M | 611.71K | 126.54K |
| Deferred Taxes | 0 | 0 | 0 | -44.16K | 622.43K | 0 | 0 | 0 |
| Other Non-Cash Items | -1.6M | -222.24K | -1.44M | -2.5M | -9.95K | 645.02K | -1.23M | -547.85K |
| Working Capital Changes | -775.3K | -1.89M | -16.55M | 21.94M | 9.35M | 2.23M | -1.92M | 513.83K |
| Change in Receivables | -9.04K | 213.72K | 397.4K | 6.89M | -3M | 480K | -480K | 268.67K |
| Change in Inventory | 0 | 0 | 0 | 0 | 6.02M | 925.17K | -2.59M | 0 |
| Change in Payables | -1.36M | 1.15M | -572.37K | 344.51K | 1.51M | 1.1M | 153.74K | 389.12K |
| Cash from Investing | 476.8K | 1.11M | -77.36K | -686.05K | -2.51M | 7.07M | 24.86M | -29.51M |
| Capital Expenditures | -17.05K | -33.58K | -85.01K | -690.94K | -2.51M | -935.2K | -151.83K | -514.7K |
| CapEx % of Revenue | 0.22% | 32.54% | 0.47% | 7.44% | 24.67% | 194.83% | 31.63% | 34.06% |
| Acquisitions | 0 | 0 | 0 | 0 | 0 | 7.93K | 7.7K | 5.17K |
| Investments | - | - | - | - | - | - | - | - |
| Other Investing | 1.4K | 169 | 7.66K | 4.89K | 0 | 7.93K | 25.01M | 5.17K |
| Cash from Financing | 4.45M | 3.77M | -5.37M | 17.82M | 145.36M | 4.44M | 69.69M | 51.06M |
| Debt Issued (Net) | -12.24M | -3.42M | -5.37M | 21.48M | -702.86K | 5.02M | 234.68K | 1.06M |
| Equity Issued (Net) | 16.69M | 7.33M | 0 | -3.98M | 147.43M | 0 | 69M | 0 |
| Dividends Paid | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Share Repurchases | 0 | 0 | 0 | -3.98M | -2.36M | 0 | 0 | 0 |
| Other Financing | 0 | -137.3K | 5.5K | 323.21K | -1.37M | -580.6K | 459.8K | 50M |
| Net Change in Cash | -10.67M | -24.74M | -33.82M | -30.63M | 99.24M | -17.38M | 76.47M | 7.32M |
| Free Cash Flow | -15.67M | -29.73M | -28.54M | -49.3M | -45.92M | -29.46M | -18.31M | -14.78M |
| FCF Margin % | -204.34% | -28811.45% | -157.58% | -530.55% | -451.34% | -6138.52% | -3813.62% | -978.01% |
| FCF Growth % | 47.29% | -4.19% | 42.11% | -7.36% | -55.86% | -60.96% | -23.86% | - |
| FCF per Share | -0.42 | -0.83 | -0.81 | -1.42 | -1.43 | -1.05 | -0.52 | -1.52 |
| FCF Conversion (FCF/Net Income) | 0.89x | 0.89x | 1.50x | 0.61x | 0.59x | 1.74x | 1.05x | 0.97x |
| Interest Paid | 402.96K | 778.51K | 1.05M | 603.68K | 0 | 0 | 0 | 0 |
| Taxes Paid | 1.6K | 33.95K | 1.38M | 2.43M | 0 | 0 | 0 | 0 |
Liquidity and milestone dependency
According to recent financial statements, Adagene's operating cash flow frequently diverges from net income, with an OCF/NI ratio reaching 1.10 in 2025Q4, highlighting the disconnect between accounting-based revenue recognition from licensing milestones and the actual cash burn required to sustain the company's ongoing clinical development programs.
The volatility in the OCF/NI ratio suggests that cash flow is heavily dependent on the timing of non-recurring partnership payments rather than operational efficiency. Investors should monitor this divergence, as it indicates that reported net income provides a poor proxy for the company's actual liquidity position.
As reported in quarterly filings, the company's free cash flow trajectory remains consistently negative, with a 2024Q4 FCF of -$23.0M, underscoring a structural reliance on external financing or sporadic milestone inflows to fund the high-intensity research and development activities required for its pipeline.
The absence of positive free cash flow suggests that the company is in a capital-intensive phase where cash outflows are dictated by clinical trial milestones. This trajectory warrants caution, as the current burn rate appears to outpace the company's ability to generate self-sustaining cash from its licensing model.
Based on historical cash flow data, working capital changes have been highly erratic, including a significant -$2.3M outflow in 2025Q4, which suggests that the timing of partner payments and clinical trial vendor obligations creates unpredictable swings in the company's short-term liquidity and available cash reserves.
These fluctuations in working capital reflect the lumpy nature of milestone-based revenue and the associated timing of R&D expenditures. The inconsistency in these cycles makes it difficult to forecast cash availability, increasing the risk of liquidity crunches during periods of delayed partnership payments.
Data from recent SEC filings indicates that stock-based compensation, such as the $2.0M recorded in 2025Q2, consistently offsets some of the cash-based operating expenses, effectively masking the true economic cost of talent retention while the company continues to burn through its primary cash reserves.
While stock-based compensation is a non-cash expense, its prevalence suggests that the company is utilizing equity to preserve cash, which may lead to future dilution for shareholders. Analysts should adjust for these non-cash charges to better understand the true underlying cash burn rate of the business.
Quick answers to the most common questions about buying ADAG stock.
Adagene Inc. (ADAG) generated $-15.7M in net cash from operating activities in 2025. This reflects the cash generated directly from core business operations.
Adagene Inc. (ADAG) reported negative free cash flow of $15.7M in 2025, indicating capital requirements exceeded cash from operations.
Adagene Inc. (ADAG) spent $0.0M on capital expenditures in 2025. CapEx represents the cash invested in physical assets like property, plant, and equipment to maintain or grow the business.