The battle for the title of "Asia-Pacific's leading AI pharmaceutical company" is heating up, as Crystal Technology, backed by Tencent and Sequoia, launches its IPO on the Hong Kong Stock Exchange.

HKEX may welcome a feast of "head-to-head competition" from AI pharmaceutical companies.

Following the submission of an IPO application by AI pharmaceutical company InSilico Medicine Cayman TopCo ("InSilico Medicine Cayman TopCo") to HKEX in late June this year, mainland Chinese companies have also entered the stage.

On November 30th, AI pharmaceutical company QuantumPharm Inc. ("Crystal Technology") submitted an IPO application to HKEX.

The news of Crystal Technology's IPO did not come as a surprise to the market.

As early as 2021, there were rumors that Crystal Technology would go public in the United States, but there have been no new developments since then.

In its prospectus, Crystal Technology explained this and pointed out that the introduction of the new 18C special technology company regulations was the reason for its decision to change course and list on HKEX.

"In May 2021, we considered the possibility of conducting an initial public offering in the United States (planned for listing in the United States). During the process of planning for a U.S. listing, we submitted confidential applications to the U.S. Securities and Exchange Commission for review. Our directors believe that we have provided satisfactory responses to the questions raised by the SEC and have conducted reviews, and there is no disagreement with the SEC or other professionals regarding the planned U.S. listing. In view of the listing system set forth in Chapter 18C of the Listing Rules, our directors decided to suspend the planned U.S. listing and seek a listing in Hong Kong." Crystal Technology explained.

Among them, the 18C special technology listing standards mainly target the new generation of information technology, semiconductor, and other industries. This is also the biggest difference in the listing standards chosen by Crystal Technology and InSilico Medicine Cayman TopCo, with the latter applying for HKEX under the 18A biotechnology company standard.

Crystal Technology thus became the second company to apply for HKEX under 18C. Prior to this, only Black Sesame International Holding Limited, a supplier of automotive-grade intelligent automotive computing SoCs and solutions based on SoCs, adopted this standard to pursue HKEX.

A banker in Shenzhen told Zhitong App (ID: TradeWind01) that Crystal Technology's customer base has expanded from biopharmaceuticals to other fields such as energy, which meets the requirements of 18C.

"The company launched intelligent automated solutions at the end of 2022, including solid-state development services and automated chemical synthesis services. The customer base has also expanded from biotechnology and pharmaceuticals to areas such as biomaterials, new chemical surfactants and catalysts, energy, automation, agricultural technology, and cosmetics," the source pointed out. "The formal launch of 18C provides a good opportunity for innovative technology companies to list in Hong Kong, and the company also meets the requirements of the 18C rules."

Perhaps because it chose the 18C listing standard, Crystal Technology emphasized its information technology attributes in the description of its business structure. "We are a cutting-edge research and development platform that combines quantum physics, artificial intelligence empowerment, and robot-driven innovation. We use a combination of first-principles calculations based on quantum physics, advanced artificial intelligence, high-performance cloud computing, and scalable and standardized robotic automation to provide pharmaceutical and materials science research and development solutions and services to global enterprise groups and innovative companies in industries such as pharmaceuticals and materials science," said CrystalTech.

Nevertheless, providing end-to-end solutions for pharmaceutical companies in drug discovery and research remains an important source of revenue for CrystalTech, with drug discovery business generating revenue of CNY 88 million in 2022, accounting for 65.7% of the total.

In terms of backlog orders, CrystalTech also signed a collaboration agreement with Eli Lilly in May this year for AI-driven small molecule drug discovery, with total prepayment and milestone revenue reaching USD 250 million.

However, looking at the overall performance, CrystalTech is still in a loss-making state during the reporting period, with revenues of CNY 36 million, CNY 63 million, and CNY 133 million in 2020, 2021, and 2022, respectively, while the corresponding losses amounted to CNY 734 million, CNY 2.137 billion, and CNY 1.439 billion.

It is worth mentioning that CrystalTech has a strong lineup of shareholders. Tencent, Sequoia Capital, and China Life's subsidiary, China Life Chengda (Shanghai) Health Industry Equity Investment Center (Limited Partnership), are all important shareholders of CrystalTech.