(Yicai) March 31 -- Shares of Insilico Medicine Cayman plunged after the founder of the Hong Kong-listed artificial intelligence-driven biotechnology company rebutted rumors about an acquisition by US drugmaker Eli Lilly, sparked by the pair's recent USD2.8 billion licence deal.

Shares of Insilico Medicine [HKG: 3696] closed down 4.6 percent to HKD56 (USD7.14) today, after earlier swinging between a gain of 5.3 percent and a drop of 9 percent.

Insilico Medicine's valuation is relatively low, with the company hoping to maintain its independence at this stage, Alex Zhavoronkov, who is also its co-chief executive officer, told Yicai and other media yesterday. There is no possibility of being acquired by a pharmaceutical firm, he added.

Global tech giants, such as Google, are also positioning themselves in AI-driven drug discovery and development, Zhavoronkov said. However, the process requires extensive experimental validation, which is one of the reasons Insilico Medicine focuses on China and its unique infrastructure and policy support, he pointed out.

On March 29, Insilico Medicine and Lilly linked arms on a licensing and drug development tie-up, agreeing to leverage the former's capabilities to accelerate the AI discovery and development of novel drugs across multiple areas.

Under the deal, Lilly will make an upfront payment of USD115 million, followed by potential development, regulatory, and commercialization milestone payments and royalties that can bring the value of the deal to up to USD2.8 billion, Insilico Medicine pointed out.

The agreement triggered an antitrust review by the US Federal Trade Commission, with Zhavoronkov noting that it has received preliminary review approval.

More and more companies are recognizing the importance of AI in empowering the pharmaceutical industry, Ren Feng, co-CEO and chief scientific officer of Insilico Medicine, told Yicai. This is beneficial for driving the vigorous development of the entire sector, and especially for the growth of Insilico Medicine, because it brings increasing collaboration opportunities, Ren stressed.

The number and value of Insilico Medicine's partnerships have grown significantly since last year, Ren pointed out.

Insilico Medicine supports its research and development projects through the provision of software services, drug development collaborations, and out-licensing its products. It offers software services to build ties with pharmaceutical firms to facilitate future collaborations, which was also how its Lilly partnership began.

"In the short term, we primarily rely on out-licensing our projects to generate revenue," Ren said. "However, we do not rule out the possibility that, in the next five to 10 years, our pipeline may expand into late-stage clinical development for profit."

Headquartered in Boston with its core business in Shanghai, Insilico Medicine went public on Dec. 30. The fibrosis and cancer treatment developer has yet to achieve profitability. As the first AI pharmaceutical firm listed in Hong Kong, it has been included in the Stock Connect program linking the city with the Chinese mainland stock markets.

Editor: Martin Kadiev