Insilico Medicine IPO Falls Through Again Amidst Market Volatility
Insilico Medicine, a pioneering biotech company integrating artificial intelligence in drug discovery and development, has halted its plans to list on the Hong Kong Stock Exchange (HKEX) for the second consecutive year. The clinical-stage startup, which has amassed over $400 million in funding since its inception a decade ago, allowed its IPO application to lapse, HKEX's website confirmed. The company initially filed for the listing in March, and applications expire after six months of inactivity.
The decision comes during a period of heightened activity among biotechnology firms pursuing initial public offerings (IPOs) in the United States. On the same day Insilico's lapse was publicised, BioAge successfully went public on Nasdaq.
Had the listing proceeded, Insilico would have followed the path of XtalPi, another AI-driven biotech firm, which raised $115 million through its HKEX listing earlier this summer. Other companies like Sichuan Biokin Pharmaceutical and Duality Biologics also have plans to list on the Hong Kong exchange, with Sichuan Biokin targeting a $500 million raise.
This month, Insilico unveiled Phase 2a data on its idiopathic pulmonary fibrosis drug candidate. However, multiple questions remain about the experimental drug’s efficacy and strategic direction. CEO Alex Zhavoronkov expressed caution regarding the timing of the IPO. He emphasised the importance of market conditions and valuation in making such a decision, referencing previous AI drug discovery companies that went public prematurely and subsequently struggled.
Insilico had also attempted an HKEX listing last year but did not complete the process. Additionally, the company reportedly made discreet preparations for a US listing in the autumn of 2021. Following these previous efforts, Insilico announced a $60 million Series D funding round in June 2022, designed to sustain operations for at least three years.
Addressing the market challenges, Zhavoronkov stated, “Every day I’m approached by an AI company because they are running out of cash. And so right now you can see the clear winners are crystallised." Insilico was one of the early advocates for employing AI in drug discovery, a sector that has seen numerous entrants but also faces significant hurdles in initial clinical trials. In recent years, the field has witnessed substantial investments, including a more than $1 billion investment in Xaira Therapeutics.
Financially, Insilico reported having $177 million in cash and equivalents at the end of 2023, according to its IPO materials. Although a significant amount, the company is moving into more capital-intensive stages of human trials. In 2023, Insilico spent $97 million on research and development, marking a $19 million increase from the previous year.
Currently, Insilico is engaged in early- to mid-stage clinical trials across China, New Zealand, and the United States for conditions including idiopathic pulmonary fibrosis, various solid tumours, inflammatory bowel disease, and anaemia of chronic kidney disease. The company has outlined additional testing plans for later in 2024 and 2025. Sanofi and Fosun Pharma are notable partners, and Insilico has out-licensing agreements with Menarini’s Stemline and Exelixis.
Recently, Insilico relocated its headquarters from New York to the Boston area, ten years after originally founding the company in Baltimore. The firm will maintain a presence in New York and also operates offices and laboratories in Montreal, Hong Kong, Abu Dhabi, Taipei, Shanghai, and Suzhou. As per their March IPO filing, Insilico employs 356 staff and consultants, 81% of whom are dedicated to research and development.
Zhavoronkov is Insilico’s largest shareholder with a 10.32% stake. Other significant investors include Palace Investments, Qiming Venture Partners, Warburg Pincus, and Aramco Ventures. The executive team features industry veterans like former GSK China R&D expert Feng Ren, who serves as CSO and co-CEO; former Eli Lilly associate VP Sujata Rao, who is the Chief Medical Officer; ex-WuXi Biologics SVP Michelle Chen, who oversees business operations; and Alex Aliper, who is the company’s president.
Source: Noah Wire Services