In the Hong Kong stock market, biotechnology is considered a star sector, and leading companies such as Beijie Shenzhou (06160.HK), Junshi Biotech (01877.HK), and Genting Xinyao B (01952.HK) are also among investors' attention.
Recently, another biotech company, InSilico Medicine Cayman TopCo (hereinafter referred to as “British Silicon Intelligence”), submitted a listing application to the Hong Kong Stock Exchange. Morgan Stanley and CICC (03908.HK) are co-sponsors.
It is worth mentioning that$InSilico Medicine Cayman TopCo (810503.HK)$In addition to being a biotech company, they also have AI concepts that are popular this year, which also makes the company's IPO even more remarkable.
Focusing on AI biotechnology, it is favored by many well-known organizations
Established in 2014, British Silicon Intelligence is an end-to-end biomedical technology company driven by generative artificial intelligence. It uses the rapidly developing proprietary Pharma.AI platform to accelerate the discovery and development process of new drugs across biological, chemical and clinical development fields.
Specifically, Pharma.AI can rapidly discover new targets (including those that were previously untreatable), efficiently generate drug candidates, and predict the likelihood of drug candidates succeeding in clinical trials.
As an AI biotech company, the company has won the favor of many well-known institutions and enterprises since its establishment. According to the prospectus, during 2018-2022, British Silicon Intelligence went through 7 rounds of financing, and the post-investment valuation quickly rose from US$54.4 million to US$895 million.
In the process, these institutions and enterprises also became shareholders of the company, including Qiming Venture Capital, Lilly Asia Fund, Innovation Factory, Baidu Venture Capital, Sequoia China, Yao Ming Kangde (02359.HK), and China Biopharmaceuticals (01177.HK).
After many years of development, British Silicon Intelligence has now effectively established a diversified complete in-house generation pipeline composed of 31 projects, covering 29 drug targets, covering fibrosis, oncology, immunology, and other treatment fields with huge demand gaps.
Up to now, its pipeline includes one clinical phase asset for phase II studies, two clinical phase assets for phase I studies, ten pre-clinical assets, and multiple early detection stage assets.
In other words, British Silicon Intelligence has not yet commercialized any products.
In addition to the development of generative AI-driven treatment pipelines, the company's business model also includes software licensing.
Overall, British Silicon Intelligence's business has spread across the US, Greater China, Canada, and the Middle East.
There are no commercialized products yet, and there is a continuous loss in performance
Although it has the aura of “AI biotechnology,” British Silicon Intelligence, like companies such as BeiGye Shenzhou and Genting Xinyao B (01952.HK), failed to achieve profit.
According to the prospectus, in 2021 and 2022, the company achieved revenue of US$4.713 million and US$30.147 million, respectively, with impressive growth rates.
It should be pointed out that British Silicon Intelligence's revenue mainly comes from drug discovery services and software solution services.
Among them, revenue from drug discovery services comes from R&D cooperation, including advance payments and other funds based on successful development milestones. For cooperative arrangements and drug development projects with pharmaceutical companies, the company was mainly commissioned to use its AI-driven drug discovery platform to identify potential drug candidates with ideal drug properties.
Revenue from software solution services comes from subscription fees associated with authorized components of British Silicon Intelligence's proprietary generative AI platforms (i.e. Biology42, Chemistry42, and Medicine42). The company grants customers access to AI-driven proprietary drug development software on a subscription basis and charges an upfront fee. Subscriptions generally last for one year, and customers have the right to renew.
The company said it expects to continue to generate most of its revenue from these sources and expand revenue streams after the commercialization of approved drugs.
On the other side, British Silicon Intelligence's service costs, sales and marketing expenses, and R&D expenses also increased simultaneously during the period. Among them, R&D expenses were 384.89 million US dollars and 78.175 million US dollars respectively.
In the end, the annual losses in the above two periods were US$131 million and US$222 million, respectively.
Notably, the company made it clear in its prospectus that it expects to continue to generate losses in 2023.
In addition to continuous losses, the company's cash flow is also a bit tight. According to the data, as of December 31, 2022, British Silicon Smart's cash and cash equivalents were US$208 million.
What are the prospects for core products?
As a pharmaceutical company, the R&D progress of products owned by British Silicon Intelligence is worth paying attention to, and is related to the company's long-term prospects.
According to information, ISM001-055 (also known as INS018_055), the core product that British Silicon Intelligence has placed high hopes on, is a potent selective inhibitor of TNIK (TNIK is a novel anti-fibrosis target identified through our Pharma.AI platform). It has high affinity and potential for treating IPF.
IPF is a fatal lung disease characterized by deformation of the lung structure and respiratory failure. The results of the completed phase I clinical trial in New Zealand showed that ISM001-055 had good safety, tolerability and PK data for healthy volunteers. The results of completed phase I clinical trials in China also showed that ISM001-055 had similar good safety and tolerability in healthy volunteers.
Looking at the market outlook, according to Frost & Sullivan's data, the global IPF drug market is expected to grow from US$1.7 billion in 2017 to US$3.3 billion in 2021, with a compound annual growth rate of 17.4%, and is expected to reach US$5 billion in 2025 and US$7.1 billion in 2030, with compound annual growth rates of 11.1% and 7.3% respectively.
Currently, only two drugs have been approved globally to treat IPF, namely pifenidone and nidanib, both of which were first approved in 2014. Both are offered by the US, EU, and China.
In addition, a number of drugs targeting different targets are being clinically tested.
Judging from progress, British Silicon Intelligence initiated phase IIa clinical trials in China under the one-time approval process of NMPA in April 2023. In February 2023, the company submitted an IND application for the US phase IIa trial to the US FDA and obtained the FDA's IND approval in June 2023. Following the successful completion of the phase IIa study, the company plans to launch phase IIb and phase III studies of ISM001-055 for IPF indications.
Additionally, ISM001-055 was certified as an orphan drug by the FDA in February 2023, making British Silicon Intelligence eligible for incentives, including obtaining a potential seven-year market franchise after approval.
According to British Silicon Intelligence, we believe ISM001-055 may be the first drug candidate of its kind and may bring better treatment results to IPF patients.
epilogue
Taken together, British Silicon Intelligence has a bright aura. Although no products have been commercialized, its revenue has still recorded a significant increase.
However, the problem is that whether it is subsequent R&D or promoting commercialization, it is necessary to “burn money,” but the company's “home base” is not particularly strong, so whether the IPO can be successful is of great significance to it.
British Silicon Intelligence also stated in its prospectus that the net capital raised from this IPO will be mainly used to fund further clinical research and development of core products; fund clinical research and development of other pipeline drug candidates; further develop and expand robotic laboratories; develop new generative AI models and related verification work; and be used as working capital and other general corporate purposes.
Author: Yunzhi Fengqi
Editor: Terry