BEIJING — The American pharmaceutical powerhouse, Eli Lilly, has inked a substantial $2.75 billion agreement to introduce AI-developed drugs by Insilico Medicine, a Hong Kong-based firm, to the international market.

According to a joint announcement made on Monday, the deal provides Insilico with an upfront payment of $115 million, with the rest contingent upon achieving regulatory and commercial benchmarks, as well as royalties from future sales.

Insilico, leveraging generative AI tools, has developed at least 28 drugs, with nearly half already progressing to clinical trials, as shared by Alex Zhavoronkov, the founder and CEO of Insilico, with CNBC. The company, which listed publicly in Hong Kong last December, has seen its shares surge by over 50% since the start of the year.

“In several respects, Lilly surpasses us in certain AI domains,” Zhavoronkov remarked, highlighting that the U.S. pharmaceutical giant integrates biology, chemistry, and automation seamlessly under one leadership. As a part of this collaboration, Insilico will also become a member of Lilly’s Gateway Labs community, fostering biotech innovation.

The two companies have worked together since signing an AI-based software licensing agreement in 2023. 

“This collaboration allows us to explore novel mechanisms and accelerate the identification of promising therapeutic candidates across multiple disease areas,” Andrew Adams, group vice president of Molecule Discovery at Lilly, said in a statement. He called Insilico’s AI-enabled discovery “a powerful complement” to Lilly’s clinical development.

Eli Lilly CEO David A. Ricks attended a high-level forum in Beijing earlier this month, just weeks after the company announced plans to invest $3 billion in China over the next decade. The company reported that slightly less than 3% of its revenue came from China last year. 

Insilico develops its AI outside of China, in Canada and the Middle East, but conducts early preclinical drug development in China based on that AI research, Zhavoronkov said. In addition to reducing research time, he said AI can synthesize molecules more quickly than those discovered using more traditional methods.