One of the original AI-driven drug discovery and development biotechs has let its plans to list on the Hong Kong stock exchange lapse for the second time in as many years.
Insilico Medicine, a clinical-stage startup that has raised more than $400 million in its first decade, will not move forward with the proposed listing at this time, according to an update from the HKEX site. It filed for the IPO in March. Applications on the exchange lapse after two quarters of no action.
The move comes as multiple biotech startups have lined up IPOs stateside. Earlier Thursday, BioAge went public on the Nasdaq.
Insilico would have been the second AI-driven biotech to land on the HKEX this year, following Chinese company XtalPi’s $115 million listing earlier this summer. Meanwhile, another drug developer, Sichuan Biokin Pharmaceutical, filed this month for a listing on the exchange with an eye toward a $500 million raise, Bloomberg News reported in July. Meanwhile, BioNTech- and BeiGene-partnered Duality Biologics also plans to list on the Hong Kong exchange.
This month, Insilico presented some Phase 2a data on its idiopathic pulmonary fibrosis drug candidate, but multiple questions remain about the experimental medicine’s efficacy and future plans.
“Of course we want to raise, but we also want to raise at the right valuation,” CEO Alex Zhavoronkov told Endpoints News during an interview about last week’s data readout. “And we want to raise when the market is in the right position. Because currently, those IPOs of quote, unquote, AI drug discovery companies that may not have been ready at that time — and they either in-license the drugs or start with very, very old targets and just repositioned traditional biotech as AI — many of them have failed, right? And they are trading at cash or sometimes below cash. So you don’t want to go out when something like that is happening.”
Multi-year holding period
Insilico had filed for a listing on the HKEX last year, as well, but did not follow through. It had also reportedly confidentially filed for a US listing in fall 2021, according to a Bloomberg report from November of that year, citing anonymous sources.
The company then disclosed a $60 million Series D in June 2022. The Series D would fuel the biotech for at least three years, Zhavoronkov told Endpoints at the time of the 2022 financing.
“You can see that some of the biotech companies out there are slaughtered,” Zhavoronkov said. “Every day I’m being approached by an AI company because they are running out of cash. And so right now you can see the clear winners are crystallized, right?”
The company was one of the early biotechs to tout artificial intelligence’s role in the future of drug discovery. Many have emerged since, and initial clinical trials have been tough. New power players have come to the fore in recent years, including a more than $1 billion bet on Xaira Therapeutics, which marked one of the largest biotech startup launches in history.
Trials planned
Insilico had $177 million in cash and equivalents at the end of 2023, according to its March IPO filing. While that sounds like a large coffer, the biotech is entering the costly stages of human trials. It spent $97 million on R&D in 2023, a $19 million year-over-year increase, according to its IPO paperwork.
The biotech is in early- and mid-stage clinical trials in China, New Zealand and the US for idiopathic pulmonary fibrosis, various solid tumors, inflammatory bowel disease and anemia of chronic kidney disease, among other areas. It has plans for testing in multiple additional diseases later this year and in 2025. Sanofi and Fosun Pharma are among Insilico’s partners, and it has out-licensing deals with Menarini’s Stemline and Exelixis.
Insilico recently moved its headquarters from New York to the Boston area, 10 years after originally setting up shop in Baltimore. The AI-driven firm will retain a site in New York and also has offices and labs in Montreal, Hong Kong, Abu Dhabi, Taipei, Shanghai and Suzhou. It had 356 employees and consultants, 81% dedicated to R&D, according to its March IPO filing.
Zhavoronkov holds the largest amount of shares in Insilico at 10.32%, according to the March IPO prospectus. Additional large owners include Palace Investments, Qiming Venture Partners, Warburg Pincus and Aramco Ventures, among others.
Its executive team also includes former GSK China R&D vet Feng Ren, who is CSO and co-CEO. Former Eli Lilly associate VP Sujata Rao is chief medical officer, former WuXi Biologics SVP Michelle Chen is business chief and Alex Aliper is president.
Max Gelman contributed reporting.