Daiwa: INSILICO (03696) BD and PCC output hit record highs; first-half revenue rose 287.2% year-on-year to US$106 million

Daiwa released a research report stating that INSILICO (03696) BD and PCC output hit record highs, with its revenue surge in the first half of this year mainly driven by accelerated outbound licensing activities. First-half revenue rose 287.2% year-on-year to US$106 million, with the core businesses of drug discovery and pipeline development growing substantially. The value of newly signed outbound licensing deals reached US$7.3 billion, equivalent to approximately 7% of China's total BD value for the same period, bringing the company's cumulative total outbound licensing deal value to US$11 billion. New outbound licensing partners include Eli Lilly, Takeda, Servier, Sanofi, SK Biopharmaceuticals, CMS, Qilu, and Tenacia, among others. Management reiterated its 2026 revenue guidance of US$150 million to US$200 million unchanged, and expects the company to achieve adjusted non-IFRS net profit breakeven in 2026; in the subsequent years, net profit is expected to gradually increase from the 2026 level. The company expects to have 12 preclinical candidate compounds (PCCs) in 2026, with a target of approximately 10 per year thereafter. INSILICO has already nominated a record 9 PCCs in 2026, and management expects total PCC output to reach 12 by the end of 2026, maintaining approximately 10 per year thereafter. Leveraging its AI-driven platform, the company can develop a PCC within 12 to 18 months at an average cost of US$3 million to US$5 million, approximately one-fourth to one-fifth of traditional development time and about one-tenth of the cost of US peers. The company currently has 33 PCC assets in its pipeline, among which the most advanced ISM001-055 (TNIK) has entered Phase 3 clinical trials for IPF in China, with data readout expected in 2029; the next most advanced ISM5411 has entered Phase 2 clinical trials for IBD. The company has also begun producing PCCs in large molecule modalities, with PCCs for ADC and PROTAC expected in 2026, and cyclic peptides possibly in 2027.