November 26, 2019
Ramy Farid, Ph.D.
President and Chief Executive Officer
Schr dinger, Inc.
120 West 45th Street, 17th Floor
New York, New York 10036
Re: Schr dinger, Inc.
Draft Registration Statement on Form S-1
Filed October 30, 2019
CIK No. 0001490978
Dear Dr. Farid:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so we may
better
understand your disclosure.
Please respond to this letter by providing the requested information and
either submitting
an amended draft registration statement or publicly filing your registration
statement on
EDGAR. If you do not believe our comments apply to your facts and circumstances
or do not
believe an amendment is appropriate, please tell us why in your response.
After reviewing the information you provide in response to these comments
and your
amended draft registration statement or filed registration statement, we may
have additional
comments.
Draft Registration Statement on Form S-1
Prospectus Summary
Overview, page 1
1. We note your disclosure that all of the top 20 pharmaceutical companies
license your
solutions. Please quantify the amount of revenues that you received from
these companies.
2. Please provide support for your statement that your platform enables
discovery of
molecules at a lower cost and with a higher likelihood of success.
Our Drug Discovery Business, page 8
3. Please remove the table on pages 9 and 108. In this regard, it is not
appropriate to
Ramy Farid, Ph.D.
FirstName LastNameRamy Farid, Ph.D.
Schr dinger, Inc.
Comapany 26, 2019
November NameSchr dinger, Inc.
November 26, 2019 Page 2
Page 2
FirstName LastName
prominently highlight these programs in your Summary presentation
given that you are
not responsible for the development of these products and you do not
discuss any of these
products in the prospectus. In addition, we note that you refer to
these programs on your
website as "our pipeline." Please revise your website to clearly
indicate that these are not
your product candidates and that your share or potential revenues from
these product
candidates is limited.
4. We note that your table on pages 10 and 100 includes five pre-clinical
programs you are
exploring and for which you have not initiated IND-enabling studies.
As your narrative
disclosure only briefly discusses these programs, and they are not
otherwise discussed in
the Summary section, please explain to us why you believe these
programs are
sufficiently material to your business to be included in a pipeline
table. To the extent you
retain any of these programs in the pipeline table, please add columns
for the phases of
pre-clinical and clinical development that apply to each program and
clearly indicate
where each program is in the development process.
Risks Associated with Our Business, page 11
5. Please include a risk that you do not have any experience in clinical
development and
have not advanced any product candidates into clinical development.
Risk Factors
Our actual operating results may differ significantly from our guidance, page
51
6. Please revise the final sentence of this risk factor to eliminate any
implication that
investors are not entitled to rely on information provided by the
company.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Overview, page 69
7. Please quantify the future cash distributions you are eligible to
receive from the remaining
$600 million of earnouts payable to Nimbus and provide the timing for
the potential
payments.
Internal Control Over Financial Reporting, page 89
8. You disclose that Management and your independent accounting firm
concluded that a
material weakness existed due to a deficiency in the design of
entity-level controls that
resulted in errors in your financial statements. Please revise your
filing to discuss and
quantify the specific errors that you identified so that investors can
better understand risks
associated with your internal control over financial reporting.
Revenue, page 90
9. You disclose that you have determined that you are the principal in
arrangements where
you act as a reseller, and therefore recognize revenue on a gross
basis. Please describe
Ramy Farid, Ph.D.
FirstName LastNameRamy Farid, Ph.D.
Schr dinger, Inc.
Comapany 26, 2019
November NameSchr dinger, Inc.
Page 3
November 26, 2019 Page 3
FirstName LastName
these arrangements and quantify the revenue recognized on a gross
basis. In addition,
provide us with a comprehensive analysis regarding how you concluded
that you were
the principal in the arrangements. Please refer to ASC 606-10-50-12(c)
and ASC 606-10-
55-36 through 55-40.
Critical Accounting Policies and Significant Judgments and Estimates
Stock-Based Compensation, page 91
10. Once you have an estimated offering price or range, please explain to
us how you
determined the fair value of the common stock underlying your equity
issuances and the
reasons for any differences between the recent valuations of your
common stock leading
up to the IPO and the estimated offering price. This information will
help facilitate our
review of your accounting for equity issuances including stock
compensation and
beneficial conversion features.
Our Drug Discovery Collaborations
Collaboration Agreements, page 109
11. You disclose that in aggregate you are eligible to receive up to
approximately $1.4 billion
in potential milestones across your current collaborations, including
up to approximately
$544 million in research funding upon the achievement of specified
pre-clinical and
clinical milestones and up to approximately $820 million upon the
achievement of
specified commercial milestones. Please address the following:
Disclose any material assumptions factored into the determination of
amounts that
you are eligible to receive.
Revise your filing to include all the disclosures required by ASC
808-10-50-1.
We note from your disclosure on page 91 that since inception to
date, you have not
recognized any royalty revenue or commercial milestone payments
from any of your
collaborations. Please discuss when you anticipate that revenue
will be recognized
from these collaborations and provide an estimate of such
amounts.
Business
Our Internal, Wholly-Owned Drug Discovery Programs, page 110
12. You state that you are developing "potent" kinase inhibitors of CDC7
and Wee1. Please
remove all statements that present your conclusions regarding the
efficacy of your product
candidates as this is a determination within the authority of the U.S.
Food and Drug
Administration and comparable regulatory bodies.
General
13. Please provide us proofs of all graphics, visual, or photographic
information you will
provide in the printed prospectus prior to its use, for example in a
preliminary prospectus.
Please note that we may have comments regarding this material.
14. Please supplementally provide us with copies of all written
communications, as defined in
Ramy Farid, Ph.D.
Schr dinger, Inc.
November 26, 2019
Page 4
Rule 405 under the Securities Act, that you, or anyone authorized to do
so on your behalf,
present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
not they retain copies of the communications.
You may contact Tracey McKoy at (202) 551-3772 or Brian Cascio at (202)
551-3676 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Chris Edwards at (202) 551-6761 or Celeste Murphy at (202) 551-3257
with any other
questions.
Sincerely,
FirstName LastNameRamy Farid, Ph.D.
Division of
Corporation Finance
Comapany NameSchr dinger, Inc.
Office of Life
Sciences
November 26, 2019 Page 4
cc: Scott Lunin
FirstName LastName