Delivers Third Quarter Total Revenue of $42.6
Million; Maintains Full-Year 2023 Revenue Guidance
Continued Progress for SGR-1505, Healthy
Volunteer Data Expected in Fourth Quarter of 2023
Phase 1 Study Initiated for SGR-2921; Discloses
PRMT5-MTA Discovery Program
BMS Returns Two Programs From Collaboration
Schr�dinger, Inc. (Nasdaq: SDGR), whose physics-based
computational platform is transforming the way therapeutics and
materials are discovered, today announced financial results for the
quarter ended on September 30, 2023.
“Schrodinger had an excellent third quarter marked by strong
revenue growth and significant pipeline progress. More of our
software customers are increasing the scale of their use of our
technology, and we remain very confident about the outlook for the
full year,” said Ramy Farid, Ph.D., chief executive officer of
Schr�dinger. “We initiated our Phase 1 clinical study of SGR-2921
and our Phase 1 study of SGR-1505 in healthy volunteers is nearing
completion. We look forward to sharing more details about our
proprietary programs later this year.”
Today, Schrodinger announced that the rights to two related
oncology discovery programs would revert to the company, after
Bristol Myers Squibb elected not to proceed with further
development of these programs for strategic reasons.
Third Quarter 2023 GAAP Financial Results
- Total revenue for the third quarter was $42.6 million compared
to $37.0 million in the third quarter of 2022.
- Software revenue for the third quarter was $28.9 million
compared to $24.7 million in the third quarter of 2022.
- Drug discovery revenue was $13.7 million for the third quarter
compared to $12.3 million in the third quarter of 2022.
- Software gross margin was 76% for the third quarter compared to
72% in the third quarter of 2022.
- Operating expenses were $79.8 million for the third quarter
compared to $63.4 million for the third quarter of 2022.
- Other expense for the third quarter was $8.7 million compared
to other income of $6.5 million in the third quarter of 2022,
driven by changes in the fair value of equity investments and
interest income.
- Net loss for the third quarter was $62.0 million, compared to
$39.9 million in the third quarter of 2022.
- At September 30, 2023, Schr�dinger had cash, cash equivalents,
restricted cash and marketable securities of approximately $503
million, compared to approximately $456 million at December 31,
2022.
Three Months Ended
September 30,
2023
2022
% Change
(in millions)
Total revenue
$
42.6
$
37.0
15.1
%
Software revenue
28.9
24.7
17.0
%
Drug discovery revenue
13.7
12.3
11.4
%
Software gross margin
76
%
72
%
Operating expenses
$
79.8
$
63.4
25.9
%
Other (expense) income
$
(8.7
)
$
6.5
N/M
Net loss
$
(62.0
)
$
(39.9
)
N/M
For the three and nine months ended September 30, 2023,
Schr�dinger reported net losses of $62.0 million and net income of
$71.4 million, respectively, compared to net losses of $39.9
million and $122.0 million for the three and nine months ended
September 30, 2022, respectively.
For the three and nine months ended September 30, 2023,
Schr�dinger reported non-GAAP net losses of $50.4 million and
$134.8 million, respectively, compared to non-GAAP net losses of
$44.9 million and $117.0 million for the three and nine months
ended September 30, 2022, respectively. See “Non-GAAP Information”
below and the table at the end of this press release for a
reconciliation of non-GAAP net income (loss) to GAAP net income
(loss).
2023 Financial Outlook
Schr�dinger today updated its financial guidance for 2023. The
company’s financial expectations for the fiscal year ending
December 31, 2023 are as follows:
- Software revenue growth is expected to be in the range of 15
percent to 18 percent.
- Drug discovery revenue is expected to range from $50 million to
$70 million.
- Software gross margin is expected to be similar to software
gross margin for the full year 2022.
- Operating expense growth in 2023 is expected to be
significantly lower than operating expense growth in 2022.
- Cash used for operating activities is now expected to be higher
in 2023 than 2022, based on the mix of revenue, the timing and size
of milestones and expectations for new business development
activity this year.
Recent Company Highlights
Wholly-Owned Pipeline
- Schr�dinger continues to advance SGR-1505, its investigational
MALT1 inhibitor. The Phase 1 dose-escalation study in healthy
volunteers is nearing completion, and the company expects to report
data from the study in the fourth quarter of 2023. Enrollment in
the Phase 1 dose-escalation study in relapsed or refractory B-cell
malignancy patients is ongoing in the U.S. and EU. The U.S. Food
and Drug Administration recently granted Orphan Drug Designation to
SGR-1505 for potential treatment in mantle cell lymphoma.
- Today Schr�dinger announced the initiation of the Phase 1
clinical study of SGR-2921, an investigational CDC7 inhibitor, in
patients with acute myeloid leukemia or myelodysplastic syndrome.
The study is designed to evaluate the safety, pharmacokinetics,
pharmacodynamics, and determine the recommended dose. SGR-2921 has
exhibited anti-tumor activity as a monotherapy and in combination
with standard of care agents in multiple preclinical tumor
models.
- Schr�dinger continues to advance SGR-3515, an inhibitor of Wee1
and Myt1. Concurrent loss of function of Wee1 and Myt1 confers
selective vulnerability in cancer cells, a mechanism referred to as
synthetic lethality. IND-enabling activities are ongoing to support
an IND submission for SGR-3515 in the first half of 2024.
- Today Schr�dinger announced that one of its previously
undisclosed discovery programs is PRMT5-MTA (protein arginine
methyltransferase 5/methylthioadenosine). PRMT5 has been shown to
be a synthetic lethal target for MTAP-deleted cancers with
potential roles in the treatment of both hematologic and solid
tumors. The company expects to provide more details about its
PRMT5-MTA program and other early-stage programs at its Pipeline
Day on December 14, 2023.
Schr�dinger Collaborators
- In October, Schr�dinger collaborator Morphic Holdings presented
additional Phase 2a data from the EMERALD-1 trial of MORF-057, an
oral ɑ4ꞵ7 inhibitor in development for ulcerative colitis and
Crohn’s disease at United European Gastroenterology (UEG)
week.
- In September, Structure Therapeutics presented positive results
from the Phase Ib multiple ascending dose study of GSBR-1290, an
oral GLP-1R, in healthy overweight or obese individuals.
- In September, Schr�dinger and the Bill & Melinda Gates
Foundation renewed their agreement to invest in the discovery and
development of novel non-hormonal contraceptive agents for global
health.
Platform
- During the third quarter, Schr�dinger and Gates Ventures LLC
extended their agreement to develop and apply simulation methods to
improve battery performance for a second three-year period. The new
research agreement includes total consideration of $6M and runs
through August 2026.
- Schr�dinger announced quarterly software release 2023-3, which
incorporated a number of important updates, including a major
enhancement to the company’s Induced Fit Docking (IFD) technology
for optimization of certain key ADMET properties, the first full
release of technology that can be used to optimize antibody
affinity as a function of pH, and technology to more accurately
predict small molecule pKa values, a key intrinsic molecular
property.
- In August, Schr�dinger scientists published the results of a
novel automated workflow, FEP Protocol Builder (FEP-PB), which uses
active-learning to automate development of accurate FEP+ protocols,
increasing the number of targets amenable to the technology.
Third Quarter 2023 Webcast and Conference Call
Information
Schr�dinger will host a conference call to discuss its third
quarter 2023 financial results on Wednesday, November 1, 2023, at
4:30 p.m. ET. The live webcast can be accessed under “News &
Events” in the investors section of Schr�dinger’s website,
https://ir.schrodinger.com/news-and-events/event-calendar. The
archived webcast will be available on Schr�dinger’s website for
approximately 90 days following the event.
Schr�dinger Pipeline Day Webcast Information
Schr�dinger will host its Pipeline Day in New York City on
Thursday, December 14, 2023, beginning at 10:00 a.m. ET. Pipeline
Day will be a hybrid event, with limited in-person attendance
available to members of the investment community, and a
simultaneous webcast will be available for individual investors and
other interested parties who wish to join virtually. The live
presentation can be accessed in the “Investors” section of
Schr�dinger’s website and will be archived for approximately 90
days. To participate in the live webcast, please register for the
event here. It is recommended that participants register at least
15 minutes in advance of the event.
Non-GAAP Information
Included in this press release is certain financial information
that has not been prepared in accordance with generally accepted
accounting principles in the United States (GAAP). The company
presents non-GAAP net income (loss) and non-GAAP net income (loss)
per share, which exclude gains and losses on equity investments,
changes in fair value, and income tax benefits and expenses.
Adjusting net income to exclude the impact of these items results
in a financial presentation for the company without the impact of
our equity investments and tax benefits and expenses. Management
believes non-GAAP net income (loss) and non-GAAP net income (loss)
per share are useful measures for investors, taken in conjunction
with the company’s GAAP financial statements because they provide
greater period-over-period comparability with respect to the
company’s operating performance, by excluding non-cash
mark-to-market and other valuation adjustments for the company’s
equity investments, non-recurring cash distributions from the
company’s equity investments and the tax impact of these
distributions that are not reflective of the ongoing operating
performance of the business. However, the non-GAAP measures should
be considered only in addition to, not as a substitute for or as
superior to, net income (loss) and net income (loss) per share or
other financial measures prepared in accordance with GAAP.
Other companies in Schr�dinger’s industry may calculate non-GAAP
net income (loss) and non-GAAP net income (loss) per share,
differently than we do, limiting their usefulness as comparative
measures. For a reconciliation of non-GAAP net income (loss) and
non-GAAP net income (loss) per share to GAAP net income (loss) and
GAAP net income (loss) per share, respectively, please refer to the
tables at the end of this press release.
About Schr�dinger
Schr�dinger is transforming the way therapeutics and materials
are discovered. Schr�dinger has pioneered a physics-based
computational platform that enables discovery of high-quality,
novel molecules for drug development and materials applications
more rapidly and at lower cost compared to traditional methods. The
software platform is licensed by biopharmaceutical and industrial
companies, academic institutions, and government laboratories
around the world. Schr�dinger’s multidisciplinary drug discovery
team also leverages the software platform to advance a portfolio of
collaborative and proprietary programs to address unmet medical
needs.
Founded in 1990, Schr�dinger has approximately 800 employees and
is engaged with customers and collaborators in more than 70
countries. To learn more, visit www.schrodinger.com, follow us on
LinkedIn and Instagram, or visit our blog, Extrapolations.com.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of The Private Securities Litigation Reform Act of 1995
including, but not limited to those statements regarding
Schr�dinger’s expectations about the speed and capacity of its
computational platform, its financial outlook for the fiscal year
ending December 31, 2023, its plans to continue to invest in
research and its strategic plans to accelerate the growth of its
software licensing business and advance its collaborative and
proprietary drug discovery programs, the long-term potential of its
business, its ability to improve and advance the science underlying
its platform, the initiation, timing, progress, and results of its
proprietary drug discovery programs and product candidates and the
drug discovery programs and product candidates of its
collaborators, the clinical potential and favorable properties of
its CDC7, MALT1, and Wee1/Myt1 inhibitors, including SGR-1505,
SGR-2921, and SGR-3515, the clinical potential and favorable
properties of its collaborators’ product candidates, as well as
expectations related to the use of its cash, cash equivalents and
marketable securities. Statements including words such as “aim,”
“anticipate,” “believe,” “contemplate,” “continue,” “could,”
“estimate,” “expect,” “goal,” “intend,” “may,” “might,” “plan,”
“potential,” “predict,” “project,” “should,” “target,” “will,”
“would” and statements in the future tense are forward-looking
statements. These forward-looking statements reflect Schr�dinger’s
current views about its plans, intentions, expectations, strategies
and prospects, which are based on the information currently
available to the company and on assumptions the company has made.
Actual results may differ materially from those described in these
forward-looking statements and are subject to a variety of
assumptions, uncertainties, risks and important factors that are
beyond Schr�dinger’s control, including the demand for its software
platform, its ability to further develop its computational
platform, its reliance upon third-party providers of cloud-based
infrastructure to host its software solutions, factors adversely
affecting the life sciences industry, fluctuations in the value of
the U.S. dollar and foreign currencies, its reliance upon its
third-party drug discovery collaborators, the uncertainties
inherent in drug development and commercialization, such as the
conduct of research activities and the timing of and its ability to
initiate and complete preclinical studies and clinical trials,
whether results from preclinical studies will be predictive of the
results of later preclinical studies and clinical trials,
uncertainties associated with the regulatory review of IND
submissions, clinical trials and applications for marketing
approvals, and the ability to retain and hire key personnel on its
business and other risks detailed under the caption “Risk Factors”
and elsewhere in the company’s Securities and Exchange Commission
filings and reports, including its Quarterly Report on Form 10-Q
for the fiscal quarter ended September 30, 2023, filed with the
Securities and Exchange Commission on November 1, 2023, as well as
future filings and reports by the company. Any forward-looking
statements contained in this press release speak only as of the
date hereof. Except as required by law, Schr�dinger undertakes no
duty or obligation to update any forward-looking statements
contained in this press release as a result of new information,
future events, changes in expectations or otherwise.
Condensed Consolidated
Statements of Operations (Unaudited)
(in thousands, except for share
and per share amounts)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Revenues:
Software products and services
$
28,904
$
24,667
$
90,469
$
87,759
Drug discovery
13,665
12,313
52,071
36,353
Total revenues
42,569
36,980
142,540
124,112
Cost of revenues:
Software products and services
7,034
6,866
20,844
21,478
Drug discovery
11,896
12,913
38,554
40,316
Total cost of revenues
18,930
19,779
59,398
61,794
Gross profit
23,639
17,201
83,142
62,318
Operating expenses:
Research and development
46,833
32,885
130,279
91,830
Sales and marketing
9,109
7,161
27,276
21,260
General and administrative
23,890
23,318
73,414
67,507
Total operating expenses
79,832
63,364
230,969
180,597
Loss from operations
(56,193
)
(46,163
)
(147,827
)
(118,279
)
Other (expense) income
(Loss) gain on equity investments
—
(3
)
147,322
11,825
Change in fair value
(14,522
)
5,273
61,869
(16,591
)
Other income
5,804
1,234
13,067
1,265
Total other (expense) income
(8,718
)
6,504
222,258
(3,501
)
(Loss) income before income taxes
(64,911
)
(39,659
)
74,431
(121,780
)
Income tax (benefit) expense
(2,887
)
194
3,041
199
Net (loss) income
$
(62,024
)
$
(39,853
)
$
71,390
$
(121,979
)
Net (loss) income per share of common and
limited common stockholders, basic:
$
(0.86
)
$
(0.56
)
$
1.00
$
(1.71
)
Weighted average shares used to compute
net (loss) income per share of common and limited common
stockholders, basic:
71,924,451
71,207,992
71,679,765
71,140,682
Net (loss) income per share of common and
limited common stockholders, diluted:
$
(0.86
)
$
(0.56
)
$
0.95
$
(1.71
)
Weighted average shares used to compute
net (loss) income per share of common and limited common
stockholders, diluted:
71,924,451
71,207,992
74,966,791
71,140,682
Condensed Consolidated Balance
Sheets (Unaudited)
(in thousands, except for share
and per share amounts)
Assets
September 30, 2023
December 31, 2022
Current assets:
Cash and cash equivalents
$
249,378
$
90,474
Restricted cash
6,230
5,243
Marketable securities
246,905
360,613
Accounts receivable, net of allowance for
doubtful accounts of $150 and $125
19,884
55,953
Unbilled and other receivables, net for
allowance for unbilled receivables of $100 and $100
12,253
13,137
Prepaid expenses
13,111
8,569
Total current assets
547,761
533,989
Property and equipment, net
22,498
14,244
Equity investments
91,863
25,683
Goodwill
4,791
4,791
Intangible assets, net
—
587
Right of use assets - operating leases
119,822
105,982
Other assets
7,413
3,311
Total assets
$
794,148
$
688,587
Liabilities and Stockholders'
Equity:
Current liabilities:
Accounts payable
10,318
$
9,470
Income taxes payable
1,084
355
Accrued payroll, taxes, and benefits
25,508
24,882
Deferred revenue
43,313
57,931
Lease liabilities - operating leases
16,279
11,006
Other accrued liabilities
8,536
5,166
Total current liabilities
105,038
108,810
Deferred revenue, long-term
12,102
25,598
Lease liabilities - operating leases,
long-term
112,720
105,485
Other liabilities, long-term
707
800
Total liabilities
230,567
240,693
Stockholders' equity:
Preferred stock, $0.01 par value.
Authorized 10,000,000 shares; zero shares issued and outstanding at
September 30, 2023 and December 31, 2022, respectively
—
—
Common stock, $0.01 par value. Authorized
500,000,000 shares; 62,823,295 and 62,163,739 shares issued and
outstanding at September 30, 2023 and December 31, 2022 ,
respectively
628
622
Limited common stock, $0.01 par value.
Authorized 100,000,000 shares; 9,164,193 shares issued and
outstanding at September 30, 2023 and December 31, 2022,
respectively
92
92
Additional paid-in capital
871,100
828,700
Accumulated deficit
(307,748
)
(379,138
)
Accumulated other comprehensive loss
(491
)
(2,382
)
Total stockholders' equity
563,581
447,894
Total liabilities and stockholders'
equity
$
794,148
$
688,587
Condensed Consolidated
Statements of Cash Flows (Unaudited)
(in thousands)
Nine Months Ended September
30,
2023
2022
Cash flows from operating activities:
Net income (loss)
$
71,390
$
(121,979
)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Gain on equity investments
(147,322
)
(11,825
)
Fair value adjustments
(61,869
)
16,591
Depreciation and amortization
4,198
3,202
Stock-based compensation
35,307
29,425
Noncash investment (accretion)
amortization
(4,962
)
2,102
Loss on disposal of property and
equipment
140
14
Decrease (increase) in assets, net of
acquisition:
Accounts receivable, net
36,069
8,673
Unbilled and other receivables
884
(3,272
)
Reduction in the carrying amount of right
of use assets - operating leases
5,722
4,812
Prepaid expenses and other assets
(13,048
)
(6,837
)
Increase (decrease) in liabilities, net of
acquisition:
Accounts payable
742
1,959
Income taxes payable
729
638
Accrued payroll, taxes, and benefits
626
499
Deferred revenue
(28,114
)
(19,535
)
Lease liabilities - operating leases
(2,577
)
920
Other accrued liabilities
2,607
(128
)
Net cash used in operating activities
(99,478
)
(94,741
)
Cash flows from investing activities:
Purchases of property and equipment
(10,924
)
(6,668
)
Purchases of equity investments
(4,125
)
(600
)
Distribution from equity investment
147,136
11,825
Acquisition, net of acquired cash
—
(6,427
)
Purchases of marketable securities
(224,513
)
(203,375
)
Proceeds from maturity of marketable
securities
345,074
283,711
Net cash provided by investing
activities
252,648
78,466
Cash flows from financing activities:
Issuances of common stock upon stock
option exercises
7,099
1,628
Principal payments on finance leases
(5
)
—
Payment of offering costs
(373
)
—
Net cash provided by financing
activities
6,721
1,628
Net increase (decrease) in cash and cash
equivalents and restricted cash
159,891
(14,647
)
Cash and cash equivalents and restricted
cash, beginning of period
95,717
123,267
Cash and cash equivalents and restricted
cash, end of period
$
255,608
$
108,620
Supplemental disclosure of cash flow
and noncash information
Cash paid for income taxes
$
2,194
$
462
Supplemental disclosure of non-cash
investing and financing activities
Purchases of property and equipment in
accounts payable
274
198
Purchases of property and equipment in
accrued liabilities
685
109
Acquisition of right of use assets -
operating leases, contingency resolution
514
1,513
Acquisition of right of use assets -
operating leases in exchange for lease liabilities - operating
leases
15,085
14,767
Acquisition of right of use assets in
exchange for lease liabilities - finance leases
279
—
Reconciliation of GAAP to
Non-GAAP Financial Measures (Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
(in thousands, except per share
data)
Net (loss) income (GAAP)
$
(62,024
)
$
(39,853
)
$
71,390
$
(121,979
)
Income tax (benefit) expense
(2,887
)
194
3,041
199
Loss (gain) on equity investments
—
3
(147,322
)
(11,825
)
Change in fair value
14,522
(5,273
)
(61,869
)
16,591
Non-GAAP net loss
$
(50,389
)
$
(44,929
)
$
(134,760
)
$
(117,014
)
Non-GAAP net loss per share of common and
limited common stockholders, basic and diluted
$
(0.70
)
$
(0.63
)
$
(1.88
)
$
(1.64
)
Weighted average shares used to compute
net loss per share of common and limited common stockholders, basic
and diluted
71,924,451
71,207,992
71,679,765
71,140,682
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231101751621/en/
Matthew Luchini (Investors) Schr�dinger, Inc.
matthew.luchini@schrodinger.com 917-719-0636 Allie Nicodemo (Media)
Schr�dinger, Inc. allie.nicodemo@schrodinger.com 617-356-2325
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