Third Arc Bio has selected its first lead candidate under an amended strategic collaboration with Adagene Inc. (Nasdaq: ADAG), triggering an expansion of the partnership's scope and an increase in total potential milestone payments to Adagene. Under the amended terms, Third Arc Bio will sponsor and fund clinical development of the selected program.

The lead candidate is an undisclosed masked CD3 T cell engager generated using Adagene's NEObody and SAFEbody precision masking platform, which incorporates tumor microenvironment-activated masking technology to selectively engage T cells at the tumor site while reducing on-target off-tumor toxicity. The specific tumor-associated antigen target and oncology indication have not been disclosed. No timeline for advancing the selected candidate into clinical trials was disclosed.

The amended agreement increases total potential payments — including development and commercial-based milestones — payable to Adagene, though revised financial terms were not disclosed. The original November 2025 agreement covered two masked CD3 T cell engager programs with total potential payments of up to USD 840 million. Adagene retains a no-cost option to develop and commercialize resulting candidate molecules in Greater China, Singapore, and South Korea.

One day prior to this announcement, Adagene reported a USD 2 million preclinical milestone payment from Exelixis, Inc. (Nasdaq: EXEL) related to XB404, a masked antibody-drug conjugate built on the same SAFEbody platform, alongside a candidate selection payment for a separate Exelixis ADC program. In April 2026, Adagene and Incyte Corporation (Nasdaq: INCY) entered a clinical collaboration to evaluate muzastotug (ADG126), Adagene's masked anti-CTLA-4 antibody, in combination with Incyte's TGFβR2×PD-1 bispecific antibody INCA33890 in microsatellite stable colorectal cancer patients. Third Arc Bio is led by Peter Lebowitz, M.D., Ph.D., former Global Head of Oncology R&D at Johnson & Johnson, who was also added to Adagene's Scientific and Strategic Advisory Board in April 2026.

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