Insilico

Date of Prospectus: December 18, 2025

Insilico’s Hong Kong IPO: Deep Dive Analysis, Key Metrics, and Investor Outlook for 2025

Insilico (Stock code: 3696) launches its highly anticipated Hong Kong IPO, presenting a unique opportunity in the rapidly growing AI-driven drug discovery sector. This investor-grade analysis covers every essential detail: offer structure, financials, cornerstone investors, risk factors, business model, and prospects—equipping market watchers, analysts, and investors with all the data required for informed decision-making.

IPO Snapshot: Key Offer Details and Structure

Insilico’s IPO delivers a robust opportunity in the AI-powered pharma sector, with a significant offer size and strong sector tailwinds.

Over-allotment Option: Up to 15% of Offer Shares (14,203,500 Shares) may be allotted to cover over-allocation.
Free Float: 57,486,000 Shares (HK\$1,382.5 million value) will be held by public investors upon listing, exceeding HKEX requirements.

Use of Proceeds: Funding Growth and Innovation

Insilico’s IPO is primarily growth-driven. Proceeds are earmarked for:

• Pre-clinical and clinical R&D of ISM001-055 and other pipeline candidates
• Expansion and development of automated labs
• Investment in generative AI platform (Pharma.AI)
• Working capital and general corporate purposes

Approximately 65% of proceeds from pre-IPO investments have already been utilized for these purposes, indicating an ongoing commitment to R&D and platform development. The focus is squarely on scaling core drug discovery and AI capabilities rather than deleveraging or debt repayment.

Dividend Policy

There is no explicit dividend commitment or payout ratio target disclosed. All profits are expected to be reinvested for business growth in the foreseeable future.

Placement and Share Issuance Breakdown

• Public Offer: 9,469,500 Shares (10% of total offer)
• International Offering: 85,221,000 Shares (90% of total offer, subject to reallocation and over-allotment)
• Cornerstone Investors: Shares will be issued to cornerstone investors; Eli Lilly and Company is named as a cornerstone, subscribing for the equivalent of US\$5 million.
• Employee/ESOP: Pre-IPO and Post-IPO Equity Incentive Plans exist, with 37,002,240 Shares reserved for outstanding options and RSUs (6.64% of post-IPO share capital)

No pre-listing disposals or sales by investors or early shareholders are disclosed.

Investor Participation and Book Quality

Cornerstone Investors:

• Eli Lilly and Company (US\$5 million allocation)

Full details of other institutional allocations and book quality metrics are not specified. However, cornerstone participation from a global pharmaceutical leader like Eli Lilly signals institutional confidence in Insilico’s platform and prospects.
Lock-up: All cornerstone investors are subject to six-month lock-up agreements post-listing, supporting price stability.
Assessment: The presence of major institutional and cornerstone investors, alongside strict lock-up conditions, supports expectations of strong first-day performance and post-listing stability.

Deal Parties, Sponsors, and Underwriters

Insilico’s IPO is supported by a syndicate of leading global and regional investment banks:

• Joint Sponsors: Morgan Stanley, CICC, GF Securities
• Overall Coordinators, Joint Global Coordinators, Joint Bookrunners, Joint Lead Managers: Morgan Stanley, CICC, GF Securities, BNP Paribas
• Joint Global Coordinator, Joint Bookrunner, Joint Lead Manager: SINOLINK (HK)
• Joint Bookrunner and Joint Lead Manager: BOCI

The presence of these major banks as sponsors and coordinators, with a full underwriting syndicate, signals strong institutional support and robust execution for the offering.
Stabilization/Greenshoe: 15% over-allotment option is available to help support the share price post-listing.

Business Model and Competitive Position

Insilico is a global AI-driven drug discovery and development company, established in 2014.

• Core Platform: Proprietary generative AI platform, Pharma.AI (comprising Biology42, Chemistry42, Medicine42, Science42)
• Revenue Streams: Project-based business model, primarily earning from out-licensing and collaboration with international pharmaceutical and healthcare companies
• Key Products/Assets: Over 20 clinical or IND-enabling stage assets generated using Pharma.AI; three out-licensed with maximum contract value up to US\$2.1 billion (upfront payment US\$110 million, milestone payments up to US\$1.9 billion)
• Lead Asset: One Phase II asset under self-development, at a more advanced stage than many peers
• Customer Segments: Global pharmaceutical and healthcare companies
• Geographic Reach: Global, with R&D and clinical activities across China and international markets

Industry Definition and Size: Insilico operates in the global generative AI market for pharmaceuticals, a fast-growing segment transforming drug discovery, nutrition, agriculture, smart laboratory, and energy solutions.

Competitive Advantages:

• Proprietary AI platform with proven pipeline generation
• Significant out-licensing deals with top-tier pharma
• First-mover momentum in AI-driven drug development

Financial Health: Revenues, Profitability, and Capital Position

Operating Model: Revenues are project-based and variable, driven by the timing of out-licensing deals and milestone achievements. Profitability is affected by deal closures and non-cash fair value changes in financial liabilities (notably revaluation of convertible redeemable preferred shares).

Capitalization and Leverage: Significant net proceeds expected from the IPO; no indication of material debt repayment, suggesting a well-capitalized and growth-focused balance sheet.

Management Team

Key management as disclosed:

• Dr. Alex Zhavoronkov – Founder, CEO, and largest single voting shareholder (8.37% post-IPO voting rights)
• Other directors and senior management are detailed in the prospectus, with expertise spanning AI, biotech, and global pharma sectors.

Sector Trends, Market Timing, and Industry Environment

Sector Momentum: The global generative AI market is surging, especially in drug discovery, with AI transforming discovery, development, and business models across pharma and adjacent sectors.
Recent Company/Sector Developments:

• 14 new preclinical candidates nominated and 9 IND approvals prior to IPO
• Three significant out-licensing deals secured

IPO Timing:

• Offer period: December 18–23, 2025
• Expected Listing Date: December 30, 2025

Macro Environment: Not explicitly detailed, but the prospectus underscores rapid industry growth and positive regulatory and capital market conditions for innovative biotech listings in Hong Kong.

Conclusion: Market conditions and sector momentum are favorable for Insilico’s IPO, with strong tailwinds for AI-enabled life sciences and supportive institutional participation.

Risk Factors

Material risks highlighted:

• Highly variable and unpredictable revenue streams due to reliance on out-licensing and milestone payments
• Significant reported losses influenced by fair value changes in financial liabilities
• Extensive government regulation and potential for regulatory scrutiny
• IP risks and reliance on proprietary AI platform
• No guarantee of future licensing deals or sustained profitability
• Potential volatility in trading price and liquidity post-listing
• Risks associated with rapid industry and technology changes

The prospectus provides detailed risk disclosures and advises investors to read the full risk section for a comprehensive understanding of exposures.

Growth Strategy and Expansion Plans

Insilico’s strategy includes:

• Accelerating AI-driven discovery and nomination of new drug candidates
• Advancing lead assets through clinical development (notably ISM001-055)
• Expanding out-licensing and collaboration pipeline with international pharma
• Continuous enhancement of Pharma.AI and laboratory automation
• Cost efficiency initiatives and enhanced expenditure management

No major M&A or capacity expansion disclosed beyond internal R&D and platform growth.

Ownership Structure and Lock-up Arrangements

Pre-IPO and Post-IPO Shareholding:

• Dr. Alex Zhavoronkov: 8.37% voting rights post-IPO
• Pre-IPO Investors: Series A–E venture rounds, all subject to six-month lock-up post-listing
• ESOP (Pre-IPO and Post-IPO Plans): 6.64% diluted post-IPO share capital (upon full exercise/vesting)

No special rights for pre-IPO investors will survive after listing.

Valuation and Peer Comparison

Issuer metrics:

• Market capitalization at offer price: HK\$13,406 million
• Net tangible liabilities per share: HK\$(18.41) (pro forma, post-offering)

No peer company symbols, P/E, P/B, or sector multiples are disclosed in the prospectus. No comparative sector tables are provided.

Research Coverage and Analyst Opinions

No explicit analyst coverage, price targets, or valuation opinions are included in the prospectus.

IPO Allotment Results

Final subscription levels by tranche and oversubscription metrics are not disclosed.

Listing Outlook: Market Debut and Investor Takeaways

Based on the disclosed facts:

• Strong cornerstone and institutional participation (notably Eli Lilly)
• Top-tier global underwriters and a fully underwritten offer
• Sector and company-specific momentum
• Strict lock-up for insiders and pre-IPO investors

These factors support the likelihood of a robust first-day performance, with the IPO appearing worth subscribing for investors seeking exposure to AI-driven biotech. The first-day trading range is likely to remain at or above the offer price, with additional upside potential supported by book quality, sector sentiment, and the stabilization mechanism.

Access to Official Prospectus

To access the full prospectus and related documents, visit:
www.hkexnews.hk
insilico.com

How to Apply for Insilico Hong Kong Offer Shares

Application Channels:

• HK eIPO White Form service (www.hkeipo.hk) – for applicants wishing to receive physical share certificates
• HKSCC EIPO channel – via brokers or custodians who are HKSCC participants

Application Window:

• Start: 9:00 a.m., Thursday, December 18, 2025
• End: 12:00 noon, Tuesday, December 23, 2025

Eligibility: Applicants must be at least 18 years old and have a Hong Kong address (for HK eIPO White Form). Existing shareholders, close associates, and directors (and their close associates) are not permitted to apply without a waiver.