The 18C plate finally ushered in a façade.
On November 30, XtalPi submitted its prospectus on the Hong Kong Stock Exchange. When it comes to China's AI pharmaceutical industry, XtalPi is a company that cannot be avoided no matter what.
Relying on its unique technological advantages, XtalPi has won the favor of the world's top pharmaceutical companies, providing drug discovery solutions for Pfizer, Eli Lilly, Johnson & Johnson and other large pharmaceutical companies, which has driven the company's performance to continue to grow explosively. According to the prospectus, the company's revenue from 2020 to 2022 will be 35.6 million yuan, 62.8 million yuan, and 13.3 billion yuan, with a compound annual growth rate of 93 from 2020 to 20224%
Thanks to its success in the AI pharmaceutical sector, XtalPi is highly sought after in the primary market. Since its establishment, XtalPi has completed a total of 8 rounds of financingIn 2021, the company's valuation has soared to 19With a fund of 6.8 billion US dollars, it has become one of the most valued AI startups in China.
However, it is narrow to define XtalPi as an AI pharmaceutical.
The development of AI-based technology platforms to "empower all industries" is the vision of many companies in the AI boom triggered by AlphaGo in 2016. Although this super vision has not yet been realized, there is a light at the end of the tunnel, and XtalPi is "expanding the circle" with AI pharmaceuticals as a starting point
Through the underlying technology platform combined with "AI + robot", more new fields such as new materials and new energy are empowered.
This platform has been rigorously polished and tested by the biopharmaceutical industry, and has successfully migrated to the field of discovery of bio-based new materials. At present, Xinshengtai, a joint venture subsidiary of XtalPi, has obtained a proof of concept in this field.
Entering the field of new materials is the first step for "XtalPi" to expand to "XtalPi", which can create commercial and social value in a larger market space with its "AI + robot" advantages. In other words, XtalPi is forging a new growth curve that will bring new increments once the commercialization is smooth.
This is a new milestone in the development of XtalPi, and perhaps it is also the reason why the company has chosen to IPO in Hong Kong at the moment.
In the face of the emerging opportunities of the "AI + Robotics" era, all enterprises must respond like never before, and XtalPi, which is the first to embrace the wave of technology, is no exception.
01Understand the three elements of XtalPi
To fully understand XtalPi, we must start with its three major elements: quantum physics, artificial intelligence, and robotics.
In the AI pharmaceutical model, AI can mine valuable insights from massive biomedical data to obtain molecules, crystals, etc. with complex and key properties, so as to reduce costs and increase efficiency in drug research and development.
XtalPi's self-developed intelligent automated drug discovery platform has a series of computing tools combining quantum physics and artificial intelligence, such as molecular general force field, molecule generation, virtual screening, ADMET**, and free energy perturbation calculation.
But AI empowerment is not unfounded. In the real world, AI drug development is generally trapped by data. The development of AI pharmaceuticals is limited by many challenges, such as large differences in data collection, uneven quality, and difficulty in obtaining data for failure results.
The question of whether there is an egg or a chicken has plagued countless AI pharmaceutical companies. In this regard, XtalPi's solution is to start with a physical approach, that is, first-principles calculations based on quantum physics
Return to the most basic conditions of things, transform the complex multi-objectives of drug research and development into quantum physics problems at the microscopic level, and accurately simulate the physical and chemical properties and biological performance of specific molecular structures based on first principles (interaction forces between molecules and atoms) to achieve a breakthrough from "0 to 1".
High-performance scientific computing based on quantum physics can generate high-precision virtual data without any training set, overcoming the lack of data that often occurs in the early stages of AI application.
Based on accurate but expensive quantum physics calculations, the empowerment of AI algorithms enables XtalPi to significantly reduce the amount of computation and computational time, and continuously generate innovative molecular structures.
To put it simply, XtalPi's computer-based tools are composed of two elements, "quantum physical model and AI algorithm", which can continuously accumulate high-precision data, optimize and iterate algorithms, and strengthen chemical Xi, so as to have a virtuous cycle of "the more calculations, the more accurate".
On the basis of the above, the company has completed the construction of the intelligent robot wet laboratory, which will constitute another distinctive core competitiveness.
The so-called wet laboratory is relative to dry experiments. Dry experiments analyze data and simulations in the cloud with bits**, while wet experiments involve hands-on lab operations and real-world validation**. From a functional point of view, the dry experiment is similar to drawing drawings, and the wet experiment is similar to the actual construction on the construction site.
In the field of AI drug discovery, a molecule designed through "computer tools" is a complete process after it has been verified in a wet laboratory.
Logically, only by realizing the closed loop of dry and wet experiments, synthesizing and testing the structures of new drugs and new materials obtained from dry experiments through wet experiments, and then feeding the data back into the model, can we finally continuously iteratively optimize the model and approach the target candidate molecule step by step.
This is where XtalPi's Smart Robot Wet Lab comes in. By replacing manual labor with robot-driven methods, XtalPi not only achieves the goal of reducing costs and increasing efficiency, but also enables the generated data to be used as a feedback for training computer-based tools, acting like a data mining field, continuously providing AI with standardized R&D data and improving the innovation ability of human scientists.
As a result, these three elements together form the "flywheel" of XtalPi's "AI + Robot". Theoretically, as the flywheel spins faster and faster, XtalPi's data accumulation as an innovative R&D platform increases, and the accuracy and coverage of the model also increases. Another advantage of this combination is that even in the face of new research systems and topics, the combination of quantum physics and automated experiments can quickly provide sufficient and reliable data, build models, and turn the wheel.
02From AI pharma to AI innovation platform
With equal emphasis on research and commercialization, it is the common choice of all major AI startups today.
What sets XtalPi apart is that it believes that a well-used underlying platform and technology can leverage great business and social value.
Several of the key components that make up XtalPi's innovative R&D platform are all monetizable, and they have all entered the monetization stage.
For example, the company's "computer-based tools" are used in the field of new drug research and development. To date, the company has served more than 100 biotechnology and pharmaceutical companies and research institutions around the world, and has contributed to more than 500 projects. For example, during the epidemic in 2020, with the empowerment of XtalPi, Pfizer's Paxlovid completed the mutual confirmation and accurate matching of the drug crystal form** and the experimental results within 6 weeks.
If the traditional method is followed, these jobs will take at least a few months to complete. This undoubtedly accelerates the launch of this blockbuster drug, which is a confirmation of the commercial and social value of this platform.
From the perspective of customer composition, 15 of the top 20 global biotechnology and pharmaceutical companies in terms of revenue in 2022, such as Pfizer, Johnson & Johnson, Eli Lilly, etc., are all customers of the company, which shows that the company's technical strength has been recognized by the industry.
This is also reflected at the company's revenue level. In 2020, the company's business revenue was only 12.66 million yuan, and it has increased to 87.66 million yuan in 2022.
But that doesn't mean XtalPi is just an AI pharmaceutical company. In fact, the company has expanded its business into the field of new materials. At present, the company's joint venture subsidiary, Xinshengtai, has obtained a proof of concept in the field of bio-based new materials.
In cooperation with the Institute of Chemical Engineering of the Guangdong Academy of Sciences, Xinshengtai discovered two highly competitive bio-based surfactants in only 4 months, which were verified by the Institute of Chemical Engineering, significantly reducing the time and cost of discovering new materials.
In terms of new energy batteries, in July this year, XtalPi also reached an in-depth cooperation with Yanyi New Materials, a leading enterprise of lithium battery functional materials, and the two parties gave full play to their respective advantages in technology research and development to jointly promote the research and development of a new generation of new lithium battery materials. As the leading champion in the field of lithium battery functional materials, Yanyi New Materials has been highly recognized by the industry's leading customers and top investment institutions, including CATL, BYD, etc.
As with the development of new drugs, the core purpose of new materials research and development is to discover molecules with specific properties, such as stronger or more conductive. Therefore, XtalPi's "computational tools" can also be empowered based on "quantum physics models and AI algorithms".
Compared with the market prospect of new drug research and development, the new material research market is also worth paying attention to. In recent years, driven by demand, the market demand for the research and development of new materials has been increasing, and because new materials do not require cumbersome and lengthy links such as in vivo verification such as biological activity, they are more explosive.
According to the Frost & Sullivan report, the global market size reached $14.8 billion in 2022 and is expected to grow to $58.5 billion by 2030.
In such a market with significant growth, if XtalPi's "computer-based tools" can open up the situation, it may be able to bring new incremental performance.
At the same time, based on the intelligent robot wet laboratory, the company has formed an intelligent automation solution business, which can greatly help customers improve operational efficiency and reduce operating costs, which is the "intelligent manufacturing" business mentioned by the company.
XtalPi's "computer-based tools" business itself can divert traffic for the "intelligent manufacturing" business, and cost reduction and efficiency increase are the main themes of the current pharmaceutical and other industries, so the company's business has grown rapidly in recent years. In the first half of 2023, the business revenue reached 43.87 million yuan, close to the whole year of 2022.
In fact, the "intelligent manufacturing" business has stronger versatility and generalization capabilities. The company's projects have been put into operation, including petrochemical, new materials, new energy, biomedicine, food and drug testing and other industries.
This also means that the potential growth of XtalPi's business may not be underestimated.
On the whole, there are many fields in which XtalPi can leverage the unique "AI + robot" modelBoth AI and robotics are pillar industries of the company, and if the commercialization goes smoothly, the ceiling of XtalPi will continue to increase in the future.
Whether the performance flywheel can be accelerated
For a long time, the biggest charm of technological innovation companies is to follow the transition development line, that is, from 0 to 1, then from 1 to 10, from 10 to 50 ......The flywheel of growth spins faster and faster.
Over the past few years, XtalPi has achieved a similar leap in business development. That is, after the rigorous polishing and testing of the biomedical industry, after completing the mode verification from 0 to 1, it has migrated to the discovery field of new materials such as power tram design, and will expand more in the future.
Next, whether XtalPi can achieve this development trajectory at the performance level is undoubtedly the focus of market attention.
In the early stage of commercialization, scientific and technological innovation enterprises need to invest huge R&D funds and marketing expenses, which may show revenue growth, R&D investment, sales expenses, and loss expansion. This is also the stage of development that XtalPi is currently in. Because of the heavy R&D investment, the company's annual operating loss is 12.6 billion yuan, 29.9 billion yuan, 52.5 billion yuan, in the first half of 2023, the operating loss was 43.5 billion yuan.
However, the company still has a very high margin of safety. As of June 30, 2023, XtalPi's cash and cash equivalents, the current portion of term deposits, the current portion of financial assets at fair value through profit or loss, and restricted cash were 321.1 billion yuan, cash reserves are relatively abundant. Once the company's products are relatively stable, R&D investment and expense ratio are controlled, and revenue continues to grow, it can gradually enter the profit cycle.
Logically, after a long education market and long-term R&D investment, it is a high probability that XtalPi's expenses will be controlledAnd its revenue also has the logic of continuous growth.
On the one hand, as mentioned above, from biopharmaceuticals to new materials, from "smart medicine" to "smart manufacturing", the company has multiple revenue generation**, and the market size in related fields is hugeOn the other hand, the company's diversified revenue generation model seems to provide the company with the possibility of further explosion.
At the core pillar business level, XtalPi mainly focuses on the "service model", that is, generating revenue through services and contributing cash flow steadily. In addition, companies often generate revenue through technology-enabled methods, such as strategic partnerships.
Under the strategic partnership model, companies are usually able to reap subsequent milestone payments. For example, its small molecule new drug discovery cooperation with Eli Lilly in June this year can reach 2$500 million.
In some of the more valuable areas, the company holds an equity interest in the latter by providing services or investments, while earning a portion of the drug research and development results and share price appreciation. Up to now, XtalPi has incubated many star companies such as Jitai Pharmaceutical and Lemon Biotech.
On the whole, the company's service revenue will be the underlying logic to support the steady growth of revenue;The investment incubation and long-term milestone payments have laid "easter eggs" for the subsequent growth of XtalPi.
In essence, if XtalPi can successfully "fission", it is likely to walk out of a sustained high growth trajectory, and it will also become a "new species" in the Hong Kong market. After all, this kind of high scalability and high growth driven by the underlying technology is not available in other business models.
Although everything will be tested by time. However, judging from the number and composition of leading investors, the market is also full of expectations. According to the regulations of the Hong Kong Stock Exchange, the listing of unprofitable 18C companies requires at least 2 or more pilot investors greater than or equal to 3% or 4HK$500 million investment.
According to XtalPi's prospectus, it has a total of 5 pilot investment institutions, namely Sequoia, Image Architecture (a subsidiary of Tencent), Wuyuan Capital, China Life Chengda, and PICC Health Pension**.
The appearance of five top investment institutions actually released a signal: under the capital winter, more and more far-sighted and long-term investors are willing to support such technology companies with solid underlying logic.
In the long run, XtalPi has a clear and stable plan for the application and expansion of the "AI + Robotics" technology platform. With the further demonstration of AI empowerment achievements, the boundaries of XtalPi's capabilities are constantly being opened.
Don't be in a hurry, let the bullets fly a little longer.