Xtalpi, a Hong Kong-listed company, is making waves in the tech world. It started with a bang in 2016. Wen Shuhao, the company's cofounder and chairman, and his team participated in a blind test. The challenge was to predict the 3D structure of molecules. These molecules show how effective a drug can be. Wen's team used AI and quantum physics-based calculations. The result was a perfect prediction accuracy rate.

The success led to a 10-year partnership with Pfizer. During the pandemic, Xtalpi helped speed up the development of Paxlovid. This is the first approved Covid oral drug in the U. S. Wen's team worked with global pharma giants. They include Eli Lilly, Johnson & Johnson, and Merck. These companies used Xtalpi's AI and quantum physics algorithms to discover new drugs.

Wen Shuhao is not stopping at drugs. He sees potential in using his technology for other industries. Solar panels and electric vehicle batteries are on his radar. Wen expects revenue from these new materials to match or exceed drug discovery revenue within three years.

Xtalpi's revenue in the first half of 2024 was mostly from AI drug discovery. The company made 102. 6 million yuan ($14 million). They also earned from new materials discovery services. The company's net loss widened to 1. 3 billion yuan. This is due to significant fair value loss of convertible redeemable preferred shares. Xtalpi continues to invest heavily in research and development.

Wen Shuhao was inspired to dive into drug discovery. He saw a significant difference in the level of advancement in drug development between the U. S. and China. Wen wanted to use his expertise in using sophisticated math equations. These equations study molecular behaviors.

Wen went back to China in 2015 and started Xtalpi. He did this with MIT postdoctoral fellows Ma Jian and Lai Lipeng. Xtalpi is one of the few AI drug discovery companies in Asia. It has garnered investor interest. According to Xtalpi’s IPO prospectus, the company is the world’s most well-funded startup in this space.

Xtalpi seeks to distinguish itself with its quantum physics algorithms. Wen says these algorithms could increase the accuracy of predicting molecular interactions. This is crucial to the efficacy and safety of drugs. The quantum physics algorithms calculate the molecular structures. The resulting datasets are used for machine learning to train its AI models. The AI model then screens through billions of molecules and generates ones that could potentially be made into new drugs. The potential molecules are later tested in Xtalpi’s robotic labs in Shenzhen and Shanghai. They are also tested in Somerville, Massachusetts.

Xtalpi doesn't develop its own drugs from start to finish. Instead, it provides proprietary algorithms designed for early-stage drug discovery. These algorithms help pharma companies identify molecules that can interact with their drug targets. Xtalpi’s technology combines quantum physics, AI, and robotics. This makes it one of a kind. Xtalpi’s business model allows it to spend the resources on improving its technology. It does not have to risk them in human trials.

There are doubts over Xtalpi’s technological capabilities. Calculating how molecules interact to cause therapeutic effects is computationally intensive. It is difficult to get to work because it’s a “very tricky computation problem. ” Scientists have been trying to adopt computational methods to speed up the time-consuming drug development process. The release of the popular AI chatbot ChatGPT in 2022 sparked renewed hope for machine learning on the medical front.

Wen thinks that the fact that the 2024 Nobel Prize in chemistry was jointly awarded to the team that developed Alphafold showcases AI’s potential on the medical front. AI tools like Alphafold can predict the structures of proteins in minutes. This helps scientists better understand how the building blocks of life work.

Wen sees potential in helping commercialize a more energy-efficient solar panel material called perovskite. By combining perovskite with conventional silicon solar cells, a solar panel can convert up to 43% of sunlight it receives into electricity. Wen is also looking at helping commercialize the next-generation EV battery. Many major car and battery makers have been racing to mass produce solid-state batteries. Solid-state batteries have been dubbed the “holy grail” of batteries. One of the difficulties of producing solid-state batteries is improving the solid electrolyte component.

Wen is confident that Xtalpi can excel at both its drug and materials discovery services. Last month, Xtalpi entered into a strategic partnership with Microsoft China. They will co-develop AI models for drug and materials discoveries. Wen believes that Xtalpi's technology is rare, and they are able to create high value-added super medicine and super materials.

From Drugs to Solar Power: The Quantum Leap of Xtalpi

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