Jefferies: For INSILICO (03696), drug assets are more important than proprietary models; maintain "Buy" rating.

Jefferies released a research report stating that INSILICO (03696) management reiterated at the bank's Asia-Pacific Healthcare Conference that the company is transitioning from platform validation to asset and recurring milestone conversion. The bank maintains its "Buy" rating on the stock with a target price of HK$100. The bank noted that business development momentum remains strong, with the China Phase III clinical trial of AI-driven innovative drug candidate Rentosertib being the next major clinical validation point, while partnerships are expected to be key catalysts before data readout in 2029. The bank noted that INSILICO's cumulative potential total deal value is approximately US$11 billion, including US$7.3 billion signed year-to-date, accounting for about 7% of all business development deals in China. In addition to new upfront payments, existing partners are increasingly contributing milestone payments, supporting a more recurring revenue base. The company has generated 33 preclinical candidate compounds (PCCs), of which 8 have been out-licensed and 6 have entered Phase I. The 320-patient China Phase III trial of Rentosertib began dosing in September (the first two patients were dosed on September 9), with top-line data expected in 2029, and total trial and CMC costs estimated at approximately RMB 200 million. Management explained that the U.S. Phase II was terminated due to slow enrollment rather than the disclosed clinical issues, and intends to use China Phase III data to support out-licensing or a subsequent U.S. Phase IIb/III pathway. The bank believes that the company expects foundation model capabilities to converge over the next three to five years and is open to adopting superior third-party models; the long-term investment thesis increasingly depends on converting time advantages into clinically validated drugs, milestones, and licensing deals, rather than maintaining permanent model superiority.