SHANGHAI - The9 Limited (NASDAQ:NCTY), a Shanghai-based Internet company, has signed an agreement to acquire an additional 21.7% stake in WM Therapeutic Co., Ltd., a developer of AI-based precision medicine platforms for brain diseases. This deal follows The9's initial investment in 2021, bringing its total ownership to 30%.
WM Therapeutic specializes in using Generative AI large language models for developing digital precision medicine tools, including brain disease screening platforms, AI diagnostic equipment, and personalized treatment devices. Their technology leverages multi-dimensional omics data analysis, original drug discovery, and brain-computer interface research.
Under the terms of the agreement, The9 will pay $1.5 million in cash and issue 251,290,500 restricted Class A ordinary shares to WM Therapeutic. These shares are subject to lock-up conditions and will be released based on The9's market capitalization milestones or if WM Therapeutic completes a qualified IPO or if The9 exercises an option to increase its stake to 51% under certain conditions.
Yan Gao, Founder and CEO of WM Therapeutic, highlighted the company's efforts in addressing unmet clinical needs in central nervous system disorders, including depression, anxiety, and Alzheimer's disease. WM Therapeutic has established partnerships with renowned pharmaceutical and insurance companies and is part of the Johnson & Johnson JLab family, using its platform to aid in CNS drug development.
The9's expansion into the health tech sector aligns with its strategy to diversify its high-tech internet business portfolio, which already includes blockchain and cryptocurrency mining operations. The company's investment in WM Therapeutic represents a continued interest in AI applications across various industries.
This report is based on a press release statement.
InvestingPro Insights
The9 Limited (NASDAQ:NCTY) has recently bolstered its stake in WM Therapeutic Co., Ltd., marking a strategic move to deepen its involvement in the AI-driven health tech space. As the company navigates this expansion, investors may find the following data and tips from InvestingPro particularly insightful:
InvestingPro Data highlights that The9 has a market capitalization of $26.58 million, which is crucial for investors considering the impact of the new shares issued to WM Therapeutic. While the company's revenue has seen a significant jump with a growth of 182.09% over the last twelve months as of Q2 2023, it's important to note the substantial negative gross profit margin at -37.15%, indicating that costs exceed revenues at the gross profit level.
Additionally, The9 does not have a Price-to-Earnings (P/E) ratio as it was not profitable over the last twelve months, with a reported operating income margin at -258.84%. This data point underscores the InvestingPro Tip that The9 has been unprofitable during this period, which is a critical consideration for investors assessing the company's financial health and future profitability.
Investors should also be aware of The9's price volatility, as highlighted by two InvestingPro Tips. The stock has experienced significant price fluctuations, with a 3-month price total return of -30.35%. Moreover, the company's short-term obligations exceed its liquid assets, which could present liquidity challenges.
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