Insilico and SK Biopharmaceuticals sign AI drug deal worth up to $2.5B

Insilico Medicine has agreed to an AI drug discovery partnership with South Korea’s SK Biopharmaceuticals that Fortune reported could be worth more than $2.5 billion. The deal puts Insilico’s platform to work on neuroimmune therapies, an area where drugmakers are seeking new treatments for central nervous system conditions.

Under the agreement, Insilico will use its Pharma.AI system to design potential drug candidates, Fortune reported. SK Biopharmaceuticals will take responsibility for later clinical development and commercialization of any treatments discovered through the collaboration.

Fortune reported that Insilico is expected to receive $18 million in near-term payments. The overall value could reach as much as $2.5 billion if development and sales milestones are met, with royalties also included.

Largest Asia-Pacific partnership for Insilico

The agreement is Insilico’s largest partnership so far with a company in the Asia-Pacific region, according to Fortune. It also follows another high-value drug discovery agreement: in late March, Insilico signed a deal with Eli Lilly valued at $2.75 billion to pursue preclinical oral medicines, Fortune reported.

Alex Zhavoronkov, Insilico’s co-CEO, told Fortune that the company wants to become the “SpaceX of the pharmaceutical industry.” He said scale improves the company’s AI systems and that he wants Insilico to reach a point where competitors cannot keep up.

Donghoon Lee, president and CEO of SK Biopharmaceuticals, said in a statement cited by Fortune that the combination of Insilico’s AI discovery tools with SK Biopharmaceuticals’ clinical development and U.S. commercialization capabilities could speed work on new CNS therapies. Lee also said the collaboration could serve as a repeatable platform for future discovery and development projects.

Insilico’s shares rose 5.6% in Hong Kong trading on Monday after the deal was announced around midday local time, Fortune reported. The company’s stock has gained 35% since its late-December IPO, while SK Biopharmaceuticals fell 1.7% on Monday and is down 30% for the year, according to Fortune.

Korean biotech ambitions

SK Biopharmaceuticals is part of SK Group, the South Korean conglomerate that also owns SK Hynix. Fortune reported that SK Hynix, a major memory-chip supplier to Nvidia, became South Korea’s most valuable company on Monday, passing Samsung Electronics.

Zhavoronkov told Fortune that South Korea’s AI-related boom has created substantial resources and that some of that investment is now moving into pharmaceuticals. He said he expects more Korean companies to seek larger roles in pharmaceutical research and development, clinical trials, manufacturing and sales.

Insilico’s business model uses AI to screen large numbers of molecules before selecting candidates for clinical trials, Fortune reported. The company was founded in Boston and has offices in mainland China, Hong Kong and Abu Dhabi.

Fortune reported that Insilico has several drugs in clinical testing, including a Phase II candidate for idiopathic pulmonary fibrosis, a disease involving lung scarring. A report from ING cited by Fortune said China accounts for about one-third of innovative molecules in global drug pipelines and receives roughly three-quarters of Asia’s biotech venture funding.

This story draws on original reporting from Fortune.