Chinese mainland's artificial intelligence drug-delivery developer Metis TechBio Co Ltd raised more than HK $2.1 billion ($270 million) in its Hong Kong initial public offering on Wednesday, marking the largest healthcare listing in Hong Kong so far this year and underscoring strong investor interest in how AI could reshape pharmaceutical development.

Founded six years ago, the Beijing-based biotech firm issued about 201.2 million H shares in its global offering. Chris Lai, the company's co-founder and CEO, said the listing would help accelerate the company's goal of applying AI-driven nanotechnology to enable targeted drug delivery and new therapeutic approaches.

The listing places Metis alongside two earlier Hong Kong-listed peers — XtalPi Holdings Ltd and Insilico Medicine Cayman TopCo — referred to as Hong Kong's "AI drug discovery trio", though the companies pursue different commercial strategies in the rapidly evolving sector. XtalPi is a Shenzhen, Guangdong province-based AI drug discovery company, while Insilico Medicine is a global AI-driven biotech firm with strong research roots in China.

AI has attracted billions of dollars globally as pharmaceutical companies seek to shorten drug development timelines, but the industry is still testing whether these technologies can generate sustainable revenues.

China's AI drug discovery sector is moving from laboratory experimentation toward early commercial validation, said Tian Lihui, a finance professor at Nankai University.

According to consultancy iiMedia Research, the sector's revenue expanded from about 70 million yuan ($9.7 million) in 2019 to more than 600 million yuan by 2025, reflecting rapid growth in AI-driven drug development in China.

Early financial milestones among industry peers reflect that shift. XtalPi reported its first annual profit in 2025, while Insilico — though still loss-making — has begun generating tens of millions of dollars in revenue from licensing deals and research collaborations.

"The key question for the industry is no longer whether the technology works," Tian said. "It is how to turn it into scalable profit."

Metis has taken a different route from its peers by focusing on nanotechnology-based drug delivery, a technically complex step in turning promising molecules into effective medicines.

Efficient delivery systems determine whether drugs can reach targeted tissues while minimizing side effects — a challenge highlighted during the development of mRNA vaccines and other next-generation therapies.

"Large-molecule drugs are becoming increasingly important, and effective delivery is a core bottleneck," said Liu Jing, professor of accounting and finance at Cheung Kong Graduate School of Business.

"AI gives companies like Metis an opportunity to narrow the technological gap with established Western leaders."

Metis' core platform, NanoForge, combines AI models, molecular simulation and high-throughput screening to design lipid nanoparticles and other nanomaterial drug carriers.

According to its prospectus, the platform has generated more than 10 pipeline programs, including several clinical-stage candidates. Its most advanced candidate, MTS-004, has completed Phase III clinical trials in China for pseudobulbar affect, a neurological disorder for which there are currently limited treatment options domestically, said the company.

Like many biotech startups, Metis is still in a heavy investment phase.

Revenue rose to 105 million yuan in 2025 from 1.5 million yuan a year earlier, largely due to an upfront payment tied to licensing rights for MTS-004.

The company reported a net loss of 392 million yuan in 2025, narrowing from 499 million yuan the previous year.

The company said about half of the IPO proceeds will fund expansion of its AI infrastructure and nanomaterial platform, while roughly 20 percent will fund ongoing and planned clinical trials.

Metis' listing also highlights how the AI pharma sector is diverging into several business models.

One approach, represented by XtalPi, treats AI primarily as a tech platform, providing computational research services and automated laboratory capabilities to pharmaceutical clients.

Insilico has adopted an AI-biotech strategy, using algorithms to design new drug candidates and advancing them into clinical trials before licensing them to pharmaceutical partners — a strategy with higher potential rewards but also higher financial risks.

Metis represents a more specialized strategy, applying AI specifically to the drug-delivery layer rather than the entire discovery pipeline.

"These paths reflect a broader debate between platform strategies and vertical specialization," Tian said, adding that companies capable of integrating both approaches may ultimately build stronger competitive advantages.

Despite renewed enthusiasm for AI drug development, analysts say capital markets are becoming more selective.

"Valuations are no longer driven purely by technological narratives," Tian said. "Investors are increasingly looking at clinical pipelines, partnerships with major pharmaceutical companies and tangible commercial contracts."

Metis' IPO attracted heavy demand, with the Hong Kong public tranche more than 6,900 times oversubscribed and the international placement 82 times oversubscribed, the company said.

The offering drew several cornerstone investors, including Black-Rock, which subscribed about $50 million, as well as a State-backed investment fund under China Reform Holdings, which made its first investment in an AI pharma company.

lijing2009@chinadaily.com.cn