Just like "Internet+", AI has long since become a "basic energy" that can benefit thousands of industries, and biomedicine is a popular industry for AI landing.
With the continuous development of technology, more and more companies have created a complete business closed loop, achieved large-scale revenue and rushed to the capital market, which also provides us with an excellent observation window.
On November 30, XtalPi submitted its prospectus on the Hong Kong Stock Exchange. From 2020 to 2022, the company's revenue increased from 35.6 million yuan to 13.3 billion yuan, with a compound annual growth rate of 934%。
Service revenue in the early years was just the tip of the iceberg. XtalPi and Eli Lilly's AI small molecule new drug discovery collaboration is as high as 2$500 million. With the progress of the cooperation pipeline, future milestones and commercialization shares represent greater imagination.
In terms of business model, XtalPi has chosen a different path:Compared with the biotech model, which relies on pipelines, XtalPi, which takes the innovative platform model, spreads the high risks of pharmaceutical R&D through a large number of collaborations, spreads the high risks of pharmaceutical R&D, and creates stable cash flow and grows service ordersThe underlying technology is highly scalable, and the business is constantly enriched.
Today, XtalPi is not only expanding in the field of AI pharmaceuticals, from small molecule drug discovery to the research and development of protein drugs such as antibodies, but also entering the field of new materials such as lithium batteries.
Compared with the market prospect of new drug R&D, the new material R&D market is also worth paying attention to. 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.
Behind the continuous lighting up of business segments from "smart medicine" to "smart manufacturing" is XtalPi's determination to build an AI ecosystem.
In the end, it remains to be seen how much XtalPi can achieve, but its development ideas are worth learning from the market. It's not an easy path to take to make new technologies, take new models, and go from proof of concept to the education market, but maybe as Musk said:
It's difficult, it's worth what I do;It is difficult to have the opportunity to achieve different achievements.
Tough Pathfinder
In the business world, there are two entrepreneurial paths, one is imitative innovation, and the other is pioneering creation.
The first path is clearer because there is a mature model to learn from;However, there is no mature model to learn from the second path, and a complete set of business closed loops needs to be reconstructed.
XtalPi has chosen the second path.
Eight years ago, three postdoctoral fellows from China came up with the idea of XtalPi on the MIT campus, and after returning to China to start their own business, XtalPi is almost the earliest AI pharmaceutical start-up in China.
At the beginning of the business, the company chose to use the underlying quantum physics technology to tackle the difficult and economic benefits of the link - crystal form.
Once the compound structure of a clinical candidate is determined, researchers need to determine the drug crystal form, which is not only related to the quality of the drug, the formulation design, but also the length of patent protection of the drug.
Traditional methods have a long cycle and have bottlenecks in terms of cost, accuracy, and throughput. XtalPi's treatment of drug crystal forms is based on the combination of quantum chemical computing and AI to calculate the forces between molecules and atoms, and to judge the stability and solubility of different crystal forms. In this way, XtalPi can complete the project without a lot of data accumulation and obtain a large amount of virtual data.
But at that time, AI pharmaceuticals were still a cutting-edge concept, and it was uncertain whether customers would pay for itAt the industry level, AlphaGo has not yet made waves, and foreign AI pharmaceuticals have just started.
The turning point came in 2016. AlphaGo shocked the world, and XtalPi brought its self-developed quantum physics + AI algorithm to participate in the crystal form ** blind test competition organized by Pfizer, and won the championship with a 100% ** rate.
At the beginning of 2017, XtalPi became the leading provider of Pfizer's drug crystal form** and other services, and has continued to expand its cooperation, including the customized development of an artificial intelligence drug simulation platform for Pfizer for new drug discovery based on its AI technology.
The acceptance of new technology solutions at the industry level requires a process, from trial to approval. Big foreign pharmaceutical companies are more willing to take the lead in paying for new technologies, but they are also more demanding.
In the final analysis, the industry has long recognized the tool attributes of AI pharmaceuticals, and no matter how cutting-edge the concept is, it will eventually return to the measurement of creating value for pharmaceutical companies.
AI pharmaceutical companies have continued to explore how to get through this road, and the development model of the industry has also evolved in recent years.
From the perspective of XtalPi's development stage, the period from 2015 to 2018 is the stage when its algorithms are implemented and verified, and it is marching from crystal form research and development to new drug research and developmentFrom 2018 to 2020, XtalPi established a wet laboratory from a pure algorithm R&D technology company to acquire R&D capabilities that combine virtual and real life, and also built a small molecule drug discovery platform, antibody, peptide and protein drug discovery platform.
Logically, realizing the closed loop of dry and wet experiments is the only way for AI for Science. Only by synthesizing and testing the structures of new drugs and materials obtained from dry experiments through wet experiments, and then feeding the data back into the model, can the model be continuously iteratively optimized, step by step close to the target candidates, and sufficient structural data can be generated, untying the shackles of lack of data on AI.
In order to build the key foundation of data, XtalPi has developed high-precision quantum physical computing methods, built data models and algorithms, and invested in independent research and development of automation laboratories since 2020.
In 2022, XtalPi built a scalable and standardized wet laboratory for intelligent robotsIn 2023, it launched the "XtalPi" and "XtalPi" brands.
This opens up both ends of the company's original business. On the one hand, a large amount of standardized data generated by the automation laboratory is continuously fed back to the intelligent model to accelerate iteration and realize the "small steps and fast running" of R&DOn the other hand, automated experiments are expected to solve the problem of data shortcomings in AI drug R&D and improve the efficiency and success rate of innovation.
It's a difficult road, but it's worthwhile. As mentioned above, this has already been initially reflected at the company's revenue level.
Of course, if you choose independent research and development, the upfront cost investment will inevitably be huge, but the technology can be highly customized, and future development does not have to be controlled by others. In the year, XtalPi suffered an operating loss of 12.6 billion yuan, 29.9 billion yuan, 52.5 billion yuan, in the first half of 2023, the operating loss is 43.5 billion yuan.
Losses are inevitable, but fortunately, the balance of cash and financial assets on the company's books is as high as 321.1 billion yuan. According to the prospectus, assuming that the company's average cash burn rate in the future is close to the level of cash burn in the first half of this year, its abundant cash reserves will be able to sustain the company's operation for about 53 months.
In addition, XtalPi's investors also seem to be bullish and supportive of its platform and strategy in the long term. Under the new 18C regulations, Sequoia, Image Architecture (behind Tencent), Wuyuan Capital, China Life Chengda, and PICC Health Pension** have become leading senior independent investors, reaching the upper limit of the 18C requirement, giving innovative enterprises greater stability.
It seems that XtalPi, which has completed the closed loop of technology and commercialization logic, is entering the fast lane of development.
Necessity and chance
The development of the industry is always accompanied by necessity and chance, and so is the company. There is also inevitability and chance behind the development of XtalPi.
The inevitability mainly lies in the company's underlying technology genes. The founders are all scientists, from quantum physics, computational chemistry and other basic disciplinesThe success of interdisciplinary integration has promoted the company's successful implementation in subdivided fields.
At the opening of the 2023 World Artificial Intelligence Conference, XtalPi's intelligent automated drug discovery platform won the SAIL Award as a total solution, and received the award on the same stage as HUAWEI CLOUD and Qualcomm, which also confirmed its technical strength and forward-looking.
The chance lies in the fact that the company chose the right technology application scenario and successfully seized the wave of domestic biotechnology development.
In the past few years, under the background of the end of the era of follow-up innovation and the coming of source innovation, the AI pharmaceutical track has also reached new heights in the dual voices of optimism and doubt, and has been pinned on high hopes for becoming a key technology for China's innovation "corner overtaking".
Because of this, AI pharmaceutical companies have sprung up. XtalPi has already blazed a trail to accelerate its development by relying on orders from major foreign pharmaceutical companies.
At the same time, under the policy framework of collaborative innovation in the Guangdong-Hong Kong-Macao Greater Bay Area, XtalPi has settled in the "Hetao Shenzhen-Hong Kong Science and Technology Innovation Co-operation Zone". On August 29, the "Development Plan for the Shenzhen Park of the Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone in the Hetao was issued" to give the Hetao Cooperation Zone a new positioningThe Shenzhen-Hong Kong Science and Technology Innovation Opening-up and Co-operation Pilot Zone, the International Advanced Science and Technology Innovation Rules Pilot Zone, and the Guangdong-Hong Kong-Macao Greater Bay Area Pilot Transformation Cluster.
Under the top-level design, the "Hetao Shenzhen-Hong Kong Science and Technology Innovation Co-operation Zone" has ushered in unprecedented development opportunitiesWhileAs a "benchmark enterprise", XtalPi has frequently endorsed the science and technology innovation policy of Hetao, and has taken the lead in enjoying the unique policy dividends of the cooperation zone.
In recent months, XtalPi has frequently announced collaborations with research institutes such as HKU, HKUST, and Cheung Kong Life Sciences, proving that it is able to compete for and integrate superior resources and gain greater development momentum under the opportunities of the "Guangdong-Hong Kong-Macao Greater Bay Area".
Since November, XtalPi has been cooperating with Hong Kong enterprises and research institutes on projects.
XtalPi is also expected to become one of the first 18C companies to land on the Hong Kong stock market. After the release of the 18C consultation paper in October last year, the Hong Kong Stock Exchange invited XtalPi as a representative of hard technology companies to provide feedback on the customized policy. The official landing of 18C this year provides more opportunities to support the financing needs of scientific and technological innovation enterprises and encourage technology enterprises to practice innovation. As the first stock of AI for Science, its secondary market and refinancing performance are worth looking forward to.
Last year, Hong Kong unveiled the Hong Kong I&T Development Blueprint to increase support for I&T enterprises and develop the I&T ecosystem. XtalPi also said in its prospectus that it hopes to leverage Hong Kong's trend of promoting technological innovation and establish wet and dry laboratories and strategic alliances in Hong Kong to support its business development.
With the continuous introduction of incentives for hard technology innovation in the Loop and Hong Kong, XtalPi has once again taken the lead in expanding its presence in both places.
It is this combination of necessity and chance that makes XtalPi such a unique existence.
Where is the cumulative effect of superiority headed?
Every industrial revolution, whether it is a steam engine revolution or an electrical revolution, is essentially a revolution in tools. The same is true of the industrial revolution under the wave of artificial intelligence.
In the case of XtalPi, the company initially used these tools for biomedical research, and in the future, the value of the tools will radiate to a wider range of industries.
Essentially, XtalPi does not focus on biology, but designs, synthesizes, and tests new molecules for drug discovery. Ultimately, it's about designing new functional materials that can be used to heal people and generate electricity.
XtalPi is building an AI ecosystem, and the companies that can go through this path will be a handful.
Specifically in the field of AI pharmaceuticals, because of the high entry threshold of the industry, it is not easy to win the cooperation of enough pharmaceutical companies, and the advance capital investment is large, so the industry will show the characteristics of high concentration.
Innovation always stands on the shoulders of predecessors to explore higher, and the principles of physics are gradually summarized, but once the amount of computing and data is enriched to a certain extent, the same algorithm and the same tools can trigger the upgrade from quantitative change to qualitative change.
Because of this,The differentiated advantages of independent access to high-quality structural data and the overall advantages of the first mover pose a great challenge to the latecomers.
The advantages are not only reflected in the technical level, but also in the verification and closed-loop level of the business model.
In addition to empowering customers with technology, XtalPi has also incubated and invested in several innovative companies, including GEODE, Higg Biosciences, Pharmacotech, and Xinshengtai, focusing on key upstream and downstream industry chains and technologies, covering multiple disease areas, as well as AI-enabled drug and new material development. These companies bring their respective technologies to the collision with XtalPi's platform, and they are both users of XtalPi's technology and potential contributors to its long-term profits.
As a star enterprise in the field of AI drug delivery, Pharmaceuticaltech has laid out an innovative platform for the design of LNP vectors driven by AI algorithms for mRNA delivery, and has quickly built more than 10 drug pipelines, covering small molecule drugs and mRNA-based nucleic acid drugs, focusing on tumor immunity and rare diseases, and announced the completion of two consecutive rounds of financing in 22 years, with a total financing amount of 1$500 million.
Lyman, on the other hand, is a clinical-stage immunometabolism innovative drug R&D company with AI-enabled immunometabolic reprogramming technology, and its metabolism-enhanced CAR-T achieves full response to patients with a traditional CAR-T dosage of 5% in IIT clinical trials, which is expected to overcome refractory hematologic tumors at a lower cost.
Another example is Higg Biotech, which has its own organoid platform, and through cooperation with XtalPi, it will obtain PCC (preclinical candidate compounds) for cancer-targeted drugs in only 6 months for a new diffuse gastric cancer target, and complete three rounds of financing of nearly 100 million yuan in one year.
As the R&D pipelines of the above-mentioned companies gradually emerge and advance to clinical trials smoothly, the company has the opportunity to obtain milestone payments and commercialization shares from the cooperation projects. XtalPi has a stake of up to 35% in these incubated innovative companies.
For XtalPi, in an ever-exploding market, the first-mover advantage established by technology investment will provide a certain guarantee for the sustainable growth of its existing businessThe high scalability of the underlying technology platform and the creation of the AI ecosystem are changing its internal logic and further opening its ceiling.
Summary
Looking back at XtalPi's development in the past few years, the strategic layout from "smart medicine" to "smart manufacturing" can be called a difficult and lonely road, but from the current business situation, this road is becoming more and more open.
This also proves once again a revealing truth in the business world, the hard road is often the right way.