Earnings call transcript Q4 2022

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Operator

Thank you for standing by. Welcome to Schrödinger's Conference Call to review Fourth Quarter and Full Year 2022 Financial Results. My name is Liz, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Instructions] [Operator

Jaren that would being your Corporate now today's is advised company's at host Affairs. call President conference I Vice request. like Ms. Please this go be Relations recorded is the for of ahead. Please Investor Senior and Madden, to introduce

Jaren Madden

we call results. and on company, a you, and the progress issued Thank today's review good Earlier full will our we our and schrödinger.com. on everyone. afternoon, which and quarter year which our company financial XXXX provide today, to fourth summarizing results release Welcome during an available press at is update website financial the across

President me Geoff of Chief Here our are today Executive on Porges, Ramy Officer; Officer; Financial Farid, Akinsanya, R&D, with Chief Therapeutics. call Karen and

open remarks, call prepared will our Q&A. we for the Following

compounds, like of Litigation the Act and clinical business Harbor XXXX that remind and related potential expenses. and to strategic the programs, our expectations the advance resources, properties our our our today's and of business future will to and our clinical made XX, our as collaborative related of operating initiation full as related statements the management ending first cash XXXX, of are plans for our accelerate of potential to proprietary provisions outlook well including, March our you the the proprietary discovery drug growth programs, discovery to for the to submissions drug software timing our IND year trials use of for quarter favorable call, Reform pursuant make the forward-looking of Securities and XXXX, statements that without limitation, Safe the to I'd during Private

on expectations, prospects, about we on These assumptions our are views and have available currently plans, our based forward-looking to made. strategies us statements and intentions, the information which reflect

ended the number Risk differ filings from factors, section and we considerations a of the in in Actual elsewhere Form project Factors with XX-K XX, including the today to SEC, results may the XXXX. described what important our December we year the make due materially including for

These forward-looking future update future, them represent and today or result we information, new otherwise. we only the views of whether our statements caution as of may events that you a not in as

turn With I'd to over to like the Ramy. call that,

Ramy Farid

Thanks, everyone joining today. Jaren, us and thank you for

strong to in to year new revenue Our expand exceeded Schrödinger. fourth performance our collaborations platform, the and capabilities clinic. expectations development computational our our a quarter internal entered the collaboration, of enhance we existing XXXX, SGR-XXXX into first strong capped and candidate our progress continued and made tremendous In at advanced

the a XXXX. for revenue year million, was Total $XXX XX% over increase

Software for revenue grew scale commercial a we initiatives up by our facilitating of broader as year-over-year, number of platform. implemented successfully adoption and XX%

seeing million which also discovery nearly the that are XXXX, an year. of prior discovery with double inflection in of revenue drug in We $XX.X revenue drug is

results distribution Progress we at Nimbus' and collaborator of million validates in Phase Takeda's $XXX.X we psoriasis. inhibitor strength cash companies a month, stakes this received positive following which Xb our platform our TYKX underscores from model. in Earlier hold business from of further following acquisition equity Nimbus the trial

in XXXX. working began Nimbus We with

are program this pivotal toward and We delighted trials. to partnered with see Takeda advancing

month. a stage company successfully also an Therapeutics, clinical of earlier IPO, We that co-founders completed are Structure this

and neurology. will our now We expanded progress you to As has programs. continues XX XX into hear proprietary from Karen, projects and have pipeline collaborative

some around year. provide additional this details of undisclosed later to programs our expect We

and Our of computational platform continued company our driver is key the our for foundation success. a

machine that and development learning computational chemistry, teams of our to platform. the computer science push continue design to world-class boundaries molecular have We advance

wide predictive our range of to drug-like exploration available space. hit to a discovery to accuracy the includes broaden chemical increased of properties advances and This key hit of rates enhance and

enable further to biologics. We are technology advancing also discovery the novel of

excited the the business very and the we by are companies this about biotech adoption companies. increasing materials the can in our grow we among we software largest We pharmaceutical opportunities as have continue ahead, emerging by year. industries, to believe Looking well adoption increasing as

We this a programs number progress continued collaborative also and both and proprietary across the year. of expect growing have pipeline

Before to talented our to our gratitude year our results, success. call express dedicated the absolutely Geoff? critical full who the and like XXXX quarter fourth turning and over financial my Geoff deep to I'd to take to are employees, to review overall opportunity exceptionally

Geoff Porges

everyone. Ramy Thanks, and afternoon, good

doubled, had collaborations. an discovery XXXX. we and drug portfolio advanced, excellent almost we ultimately explained, in our revenue quarter Ramy our profitability was year a added and As fourth strong increased, Revenue growth expanded and software great exceeded new expectations, two

growth burn was expense year for year. cash of than of end forecast the our at our operating was the towards we expectations and the lower range of Our low the the start

sufficient Our foreseeable capital the for cash for strong expectations to operations cash our from balance our sheet with and remains have declining we addition fund future. of that in the and the Nimbus the future, believe distributions we burn

I will highlights results QX and the initial XXXX and with then our year take conclude through outlining you financial start by will results our for guidance off full our of XXXX.

as the was Software of software QX collaboration agreements commercial new million, compared as an revenue of increase XXXX. XX% This quarter. and adoption the step-ups our increase during effect by implemented existing significant to technology other for $XX.X of well in combined strategies customers, reflect QX

more Increases the at renewals the previously to in QX contract were headwind of XXXX. growth revenue and late from period our expected start signed in the quarter significantly above than contract and in multiyear offset the multiyear expectations adoption

$XX.X to quarter is compared new found and revenue in Revenue million the period. in of of discovery Drug collaborations in the Total revenue same XX% prior in projects million the to revenue year was quarter, $X the quarter discovery for revenue of increase was driven quarter to due progress the software the XXXX. an increased both in recognition compared for by growth. million, of $X.X the which

software our gross Moving revenue on during the was expenses, margin XX%. now to the quarter,

royalty as well margin year, seen on We in as to in our our impact positive this existing customers the by quarter. changes accelerated purchases have improvements gross of obligations the due during software

in the improving period new The quarter discovery the cost reflect $XX and XXXX loss QX the XX% compared in was for shift XX%, drug during ratio for existing million ratio loss was The which of our from to the activities programs completion the collaborations in the XXXX. revenue revenue our in significantly of initiation ratio The declined percentage the discovery of collaboration revenue million QX the cost XXXX. than lower proprietary our progress $XX.X mainly during QX of discovery delivering was staff and programs. and our of to timing of collaborations,

is later profitability revenue from quarter-to-quarter, in more While such we costs. program's increase revenue of our the likely milestones of to our to development research advance discovery declining to obligations to discovery profitability continue fluctuate expect size do and programs development, stages as of to and improve, the the our ongoing

to was margin business. in based gross on improved ratio and compared XX%, the software drug Overall, XX% XXXX discovery for profitability loss QX in reduced

$XX.X in investments. based expenses XXXX, R&D the The on increase compared $XX.X QX and increased in technology expenses increases technology CRO QX, to were headcount, and to XXXX. in million main increased were X% R&D increased expenses Compared QX higher were million increased expenses. headcount drivers of

increases million sales QX to compared were XXXX. based resume to headcount and Sales compensation in The increased due expenses, million, to $X QX, increase expense and and XXXX. compared year expenses by travel marketing $X.X on end associated in Compared for staffing mainly to was marketing QX as and XX% incentive higher allowances.

headcount, flat G&A compared higher G&A was software and well as expenses QX QX to QX in mainly increase increases QX due XXXX. between to expense was The XXXX. professional services, facilities. $XX.X for million, in $XX.X million as and

$XX.X For increases to The and sales QX, a to lesser extent increase $XX.X compared in and total due marketing in R&D increases XXXX. operating million, to million QX expenses G&A. in and was

Our $X.X Other compared to $X.X $XX.X operating XXXX. for loss an XXXX. expense in million XXXX, of QX QX expenses in million, income to million was in were million QX and QX $XX.X compared

a in of $XX.X reported net XXXX, XXXX. was to $XX.X QX QX million Our loss loss million compared in

in net loss XXXX $X.XX The was compared QX of XXXX. share net a net QX and $X.XX share per QX loss to of per in in loss share $X.XX, per

QX, during declined $XX During our $XX operating cash by our and quarter. and million used was million cash the cash resources

the for $XX.X million. reporting count of share Our was purposes

summarize now will full year our financial I results.

full in sales increases $XXX.X to million, compared was prior pharma XX% increase by but revenue customers, our driven software the the of existing seasonal an was to including, clients. year, year. our For The big exclusively, increase not

compared was driven the For year. initial $XX.X collaborations from and progress revenue discovery in we in This existing by full was year, increase collaborations million XX% the the during are $XX.X revenue XXXX. making the new drug million, recognized to

in that compared XXXX. revenue discovery just drug In was to more revenue than slightly half our of discovery associated XXXX, under collaboration with with drug BMS half

Going of of this downstream so upfront recognition revenue associated will forward, the revenue milestone, from from transition milestones. development amortization collaboration with the the

million, Total revenue compared $XXX.X XXXX. both and was million revenue software XX% The discovery revenue by for increase in to driven $XXX.X growth. total the year was in

year, XX% full the margin gross our XX%, For XXXX. was compared for software to

the margin leverage our lower year and to due fixed improved for on software obligations gross operating Our royalty costs. favorable

delivery. faster was in the loss of XX% discovery XX% drug Our collaboration for revenue cost as ratio than XXXX increased to XXXX, compared

overall and discovery margin our the The to XXXX. was lower in margin in on gross was to software losses revenue. XX% Our increase XXXX gross for due compared improvement XX% drug

The XX%, increase compared an to expense mainly was driven expenses R&D headcount year, increases by full XXXX. $XX increase million and the For in million, in technology. and was CRO higher reported of $XXX.X

investment between our drug portfolio. and in our our approximately is R&D recent years, proprietary balanced platform As technology

$XX.X and expense by This the associated of XX% in For sales was higher full XXXX. compared $XX.X year, costs. marketing to and headcount million, was increase million driven

in locations. higher XXXX, cost to costs expense to increased compared costs services to due in in G&A and XXXX. million was $XX international Travel headcount have lease compared also increases associated associated million, The with XXXX. facilities new increased costs, largely the and was certain increase U.S. and For professional $XX

and The operating to$XXX total was R&D, costs increase $XXX CRO sales and compared associated was mostly XXXX. by increased with in that increased million, headcount in marketing the to increases higher driven expenses. For and year, expenses including services G&A professional million

net year, compared For million net was full $XXX $XXX a our XXXX. to million, loss of in the loss

the to our loss share net compared per full year, For was for $X.XX $X.XX, XXXX.

year was our $XXX million and operating cash our investments to $XXX short-term million year, the by used at cash and declined $XXX million end. For

the sufficient resources, by half to first cash cash our our distributions operations increased we XXXX foreseeable trajectory of significantly from expect and our We position believe reserves the the the are cash burn of future. fund our in and our to Nimbus given that be available for

guidance XXXX. now initial full the will in our financial year for share QX I of

XX%. of software XXXX in expect for XX% to range be to revenue We the growth

technology. our XXXX, customers, see predominantly of come continue strong we to this QX and for existing in towards be to from skewed we expect increased As demand growth to where adoption

confident and are outlook the growth software why we going which forward. business, We about long-term providing for very is guidance growth are our annual opportunities rate

high software customers our now have $X discovery biopharmaceutical this has million reached purchasing efforts. While been in largest each of level that by a only technologies adoption handful of of are companies digital over their embraced global year,

still modest some still technology our and Most generally our although at disappearing, or are purchases. and leading of joining our is and biotech maintaining customers their rank deploying industry few only acquired increasing customers companies companies are among such Biotech IPOs are are very being not the scale. their through there

renewals million. range today software QX in of million our $XX the our the in contracting Given best strength estimate be of timing to revenue QX, the $XX in will of XXXX that is and

the million expect discovery to of $XX $XX We in be XXXX. drug million revenue for range to

to discovery of revenue goal in $XXX of million or XXXX. continue have greater We achieving the

reflects guidance the they can and our about generate uncertainty and collaborations caution collaborations on However, achieving timing the in stage at milestones this of major in counting about new revenue the deals and existing year.

of we be million range our expect based in existing to discovery achievement the development in expected million QX, to revenue of $XX collaborations. the on milestones For $XX

XXXX. expect margin this software to be believe our reported to I sustainable be in gross our outlook We gross that beyond XXXX. is margin similar to likely

technology our margin in our outlook leverage is and Our based trends obligations increase operating favorable the we scale improved as deployments. royalty of on gross

is growth to lower in expected favorable on and other and events, XXXX Nimbus that likely the anticipate expense similar our of in end timing cash outlook growth cash in for growth from XXXX than be expected Based Operating XX% XXXX. and be revenue XXXX. of we our at of position position cash more than to the XXXX amount end at the distributions the will the significantly

We period in based expect income GAAP the Nimbus contributions to other profit on report a positive from during to XXXX QX distributions. our the

do the year. cover sufficient We NOLs period of expect not credits obligations for our this and current this to balance anticipate having and tax tax to tax liabilities be cash

net forecast anticipate also we in report to XXXX. We may our losses positive XXXX, in that operating reverts current profit a while

reduce losses continue we believe of in between is to platform our collaborative is even and portfolio achievable, XXXX, as we our goal this substantially XXXX Our operating and and programs. proprietary invest and goal our to

update will I turn for Karen to drug on now the our an discovery call programs. over

Karen Akinsanya

Geoff, good afternoon, Thank and you, everyone.

continue programs, number in in important progress eligible pipeline from We We since ongoing the ended previous of collaborators the across XX to year. up throughout from has to increased with XX XXXX make up year. our The for royalties, XXXX XX XX, the prior year.

is of and some projects and are balanced manage of which risk are wholly-owned collaborative programs, to and portfolio help strategy have the some mix to of a a Our R&D create pipeline. partnered across proprietary which

SGR-XXXX, MALTX most wholly-owned update is sites months. to open in A coming on an the patient inhibitor. programs team enrollment study with our the and escalation to sites dose beginning with expects open will across globally additional I our U.S. the multiple in start X Phase advanced

This to is pharmacokinetics, designed and combination refractory Once study early dose expansion B-cell recommended BTK is of an signs in evaluate monotherapy therapies relapsed determined, evaluate of cohort is SGR-XXXX inhibitors. a with planned clinical to malignancies. as the patients such or pharmacodynamics in activity BCL-X and the as other with SGR-XXXX safety

the patients number investigational into relapsed advanced is a significant B-cell trial challenging. Phase refractory X result malignancies, of drugs our As for of recruiting

to are are dosing. the patients hard sites looking screening working and Our of initiation on forward we

safety for data SGR-XXXX. actively and to accelerate pharmacology is Our gathering evaluating team opportunities

of a our combination CDCX including data The in xenograft December. of the vivo Meeting strong or models, anti-tumor repair preclinical program, derived and presented in exhibit target demonstrated to SGR-XXXX activity pathway, cell at new multiple Annual that as Hematology the DNA with preclinical care. American Moving in a Society we model ASH standard tumor across in monotherapy data

submission We studies through are the to SGR-XXXX this are enabling IND advancing FDA IND on year. track and for an

WeeX our to Turning program.

target We have are enabling candidate. we activity studies. we as as off strong SGR-XXXX demonstrates in through models. that preclinical forward effects further our SGR-XXXX anti-tumor development pleased selected to announce move look to limited SGR-XXXX We characterizing IND with

of cancer has and evidence clinical of other of data WeeX Clinical company's including in programs unmet high in from ovarian uterine proof concept provided activity with several need, forms cancers.

development believe been in behind Our this and area immunology competitive and in pipeline advantage. many of urology. We therefore, has challenging, neuroscience for extends programs therapeutics is and oncology lagged oncology The platform beyond where an includes can incredibly has significant years. our provide a

ability about scientists advances successful Our penetrate the make required in accurate the properties owned both leveraged blood-brain computational are development making as area, such neuroscience. neurology predictions ability key in the wholly in and this barrier. as resulted to This important we has collaborative and our internally, the for to drug is method portfolio being now new of addition in programs expand in

in target meets biomarker achieved Parkinson's all genetically the is in clinic. modifying target We recently we we for is announced program, a selection. This that with others disease. validated use It promising concept potential criteria advancing proof disease the of a which are with by LRRKX program

insight of generated are have drug that challenges. multiple overcoming LRRKX We proprietary into structures cryo-EM design providing

insights Our on drug-drug opportunity the enhancing of other an minimizing structural biology improve provide LRRKX selectivity profiles and inhibitors interactions. to by

and emerging an Co. well to We collaboration expanded also Otsuka an Pharmaceutical knowledge small discover agreement as molecules recently agreement. CNS multi-component a include announced as target, for that the with licensing disease transfer

clinical drug through Otsuka will optimization other CNS be discovery the for will activities. Schrödinger responsible and For drug for program, be responsible design development and all lead

the with program neuroscience BMS. existing we our neurology new front, recently on finally in And collaboration a added to

BMS collaboration multi-target with very well. is proceeding Our

to development quarter the partnership is in our to advance which first drug expect within status soon, included first candidate Geoff provided. We guidance XXXX discovery program this

are delivering two We after proud years to candidate beginning be a our approximately development together. partnership

on focus elect may key points. initiating or We independently that continue programs advance to to we to inflection new partner

of in oncology, We lead at the have optimization neurology. areas various programs several discovery stages through up immunology and undisclosed

share year. to this more later these expect about programs We details

and and are collaborative summary, of we progress pleased advancements with the XXXX our programs. made pipeline proprietary over in we across In expect past have the continued year

the throughout and updating patients about excited forward are we We look you we our to medicines R&D the year. to are to new efficiently, activities more doing bring on work

I now will it to Ramy. over back turn

Ramy Farid

Karen. Thanks,

time, be we ahead, excited As very would hear, the you happy can to are and year your about we questions. at this take

Operator

[Operator Instructions] question Do first line Piper Our comes Kim of from the Sandler. with

Do Kim

Good my afternoon taking Great. and thanks for questions.

renewing that guidance, on the fourth How quarter looking of assume and driven the renewals the year software and was dynamics next at upside. in early renewals would years agreements multiyear First, sales multiyear by fourth quarter those we for should the the of and think agreements XXXX we for the lower? and interest renewals, customer the should about be drove that range these the

Ramy Farid

for Thanks. Hi, Ramy. This question. the Do. Thanks is

it's first, sort are in So, growth while three from the a saw in that it some to typical the deals came QX of part beginning is question, of that, of the growth source your multiyear multiyear two all important some years the the deals, the understand QX, wasn't years we of all case extraordinary them, that growth. actually, of to that of and

bit close was easy and technology a me, opportunities sort work, the the we -- the it we a a the before We allowed business, the wasn't and end of quite -- had year the that we the of strength number deals of it work. at of of took strength believe think that number end of are us hard of to

us for for mutual have also, doing them reasons. going of emphasize and the we It's strategic for them often while, do let been So these been we me has something interest on, customer. multiyear a deals

we XX% reason that we for that there XX% the that come them are about very doing and very XXXX we XXXX. XXXX some the headwinds is, up giving the multiyear deals to a despite make confident despite been may were happening not lumpiness, the the you of be sense? of that while, for have given the some growth good course renewal maybe lumpiness we multiyear still still right? XXXX, deals, some the out multiyear in of feel because feel they cause, at in Hope can year, that that some deals But call guidance So for

Do Kim

That’s Yeah. helpful.

Ramy Farid

Yeah. Yeah. Geoff something, can add sorry.

Geoff Porges

Do. Sorry,

compared we that coming multiyear the thing fourth quarter is, overcame headwind think of the those -- to you the start of see headwind I quarter into at can that were indeed that overcome up of signaled flagged something we more than quarter. fourth some the and XXXX First deals and particular others the we of a

we fourth the As the XXXX we but more the reported multiyear some or have did sign out, Ramy that I in very growth deals of offset in in than significantly contribution the quarter broad there pointed fourth in quarter quarter. multiyear obviously XXXX, boundaries of what deal fourth indicated more less that was

And I'd over XXXX customers them, annual software and all significantly believe first to contract being very the don't would indicated this in to that existing customers being is stepping XXXX. and important. we have They customers they in indicated those value our -- $X from say in was went with million two significant their four identify had larger much in very we deployment customers. that up customers for specifically that of And have and cases from I interest want but time

is fourth the headed have with the which and in technology customers their trend what having is quarter and direction in existing with up purchases. is positive alluded that experiences to right consistent the stepping So I

agreements, of saying, the our technology. customers up to the of fourth software deployment up scale want they those a of was step but the in to Now, we driver step elected the biggest in purchase of fraction of that multiyear implement cases, quarter

hope more little that So gives bit I you color. a

indeed quickly multiyear from more of once for get we a end when clearly, contracts effect have the to overcome on the through then confident business those XXXX, XXXX, the are given trends obviously, to we of contracts that some And XXXX that going XXXX XXXX, that in could two commentary have to and multiyear what you contracts. years, strong think, about the is and overcome the given sufficiently but we in I Ramy even said three can are we we see years

in technology our the will quite it customers using our expectation be And for multiyear years at a agreements them they their the disruptive that those will and end expansive basis, that renew once on the stop agreements their level, for many will have cases technology multiyear a they of been higher three we because using be to optimistic is at renew are standard, clearly year. pretty calendar to

gives more I color. hope that So you

Do Kim

definitely more? a the it things more up on Does of I million. helpful come hit the want the $XXX of these all make guidance milestones million if sounded to you clear. remains at lot adjusted guidance, to just That's more range discovery a to side like is follow Yeah. that $XXX the unadjusted drug on and goal or probability

Geoff Porges

Yeah. question, now that important and to start paths $XXX exist still clearly million knew Do. XXXX. are than an XXXX greater we multiple That's and path the those at of in We -- there the

we guidance know successful successful in for certainty we development guidance and stage initiatives control have within that's both that about be so think if complete we achieve projects their and a are this control partners projects the we really today. it's the objective. and about giving And at execution sensible would then, to our the basis we if we and of degree that what of with the But are provided year, yes, business with our of highly

Do Kim

Congrats on taking Perfect. progress my the and thanks for Great. all questions.

Ramy Farid

Do. Thanks,

Operator

Citi. of the with next comes question Our line from David Lebowitz

David Lebowitz

discovery drug Thank much those would that been the first, my for, at had not question. I if receiving taking asset, you TYKX for and licensed all, via payments occurred? the equity you how have deal different, and guess guidance for gains very on

Geoff Porges

discovery on revenue. distribution Hi, effect TYKX The the David. doesn't any have drug

not different cash So TYKX quite the is not reported distribution outlook but line. that through our revenue our have occurred, be would discovery

income line, prepared will my reported through in it As our I so… other remarks, indicated be

David Lebowitz

been the it occurred, say binding the drug different? been have had never I for deal discovery was, kept guidance would potentially What to meant this,

Ramy Farid

No.

Geoff Porges

answer, is No sorry. the

Ramy Farid

no. it's yeah, mean, I Yeah.

Geoff Porges

Yes.

David Lebowitz

Okay.

Ramy Farid

But your now Yeah. we understand question.

David Lebowitz

dynamic year? I trying of these And the is time, a versus back multiyear the larger beyond so. payment, figure Yeah. I lot upfront Is the the contract and partnerships the how just partnerships. the it then if know forward? that. there be to on it's multiyear look dynamic for going of same more mid am a tend steady at what Is this impact single to guess to customers out I mechanism to upsize over and

Ramy Farid

three question. seem of, Absolutely. sign Because a Yeah. more interaction that middle three-year That's to no which some the obvious it may many deal, absolutely great that you enough point, is deal the not that, customers that sort multiyear don't there have what we -- recognizing customer access essentially not recognizing it's years. is that say, customer of examples and at case every licenses. in term a we a there they if That's is with let's many, for of have the are

remember, prepared where that his majority the is coming of the is is are utilizing this the from, happening, this under what's said what growth remarks, is This customers Geoff software. in our

colleagues and there the have those of are at technology in multiyear sufficient and middle in are term and some middle continuously. can -- the but not happen to year, It's all at that the the peer examples and the licenses once number They get of to of so of results they of if to are get are of using to happening seeing then the that term actually we discussions even a -- us, need a it's of scale that software, it happening. and more start that the not they access kind a companies it increase -- they using is they a the trying their colleagues their

David Lebowitz

Got it.

Ramy Farid

Yeah.

David Lebowitz

on seen we far? see enrollment study, you in thoughts question able based data what last your on when thus you any on have actually have And be do might to

Karen Akinsanya

Hi, David.

described being that we enrollment our hard to the pharmacology we activated and as the have we data sites efficacy investigators data. remarks, sites gather in preliminary patients bring is and safety, in So with are and our are and described working ongoing,

be that be by year, this that's will suspect about available year the to next detail we us able and in to describe I will position into to end of more talk a with others. you data the that in more we

in look sharing are on it we So we forward future. updates the working and to

David Lebowitz

Thank you for taking my questions.

Ramy Farid

a Thanks lot, David.

Operator

question Our with line Michael the comes of from next Yee Jefferies.

Unidentified Analyst

Yi taking the existing talked Hey, the case ask guys think assets my you. congrats drugs really activity forward? or two would guess, could more of with does ultimately, Is the [ph] I lead with $XXX -- previous new the you play, if on are sort for guidance? said I on guidance new and Is it three nice about, And out it include. Thank with you on here a question want of development This drug the expecting how of million, oncology include the Chen for is drug you agent related guys. drug Thanks moving for still discovery forward, that on MALTX, be combination you the single the this are you discovery going about doesn't assets. to the the for is that Mike. on quarter. pipeline licensing questions. consistent

Ramy Farid

Go ahead, Karen?

Karen Akinsanya

Thanks a lot.

drug Geoff any eligible licensing for we not where as collaboration, of completed the does have future mature a that well are out, our from out discovery milestones. to described ongoing as we pointed revenue guidance range discovery collaborations you as given of So, it assets, include as from

as we preclinical you our programs, regard activity MALTX. your well in We understanding data, believe On target. occurring that the second we to based as monotherapy clinic about as and know, some what other question, MALTX, are are from see to is this we on excited pretty expect with do

that there BTK domain the we for improved also work for public are other on do combination we believe of inhibitors that in and B-cell that malignancies. is in MALTX agents However, potentially opportunity with inhibitors, doing, a being BCLX based the substantial data and that are treatment with

remain sharing we enthusiastic look and more to very program about forward So our MALTX about the future. in

Unidentified Analyst

you it. still Thank outlicensing strategy the after of human mature the And data? around assets it. initial changed the quick just thinking or obtaining follow-up, has Got one are of at Got you. thinking outlicensing some of all

Karen Akinsanya

very past, landscape So as and the we is shared we dependent. think this in asset

ourselves data. I in early as view generating we clinical think general, capable of very

assets We other partnership that agents. very companies in also some will believe do of well our with have who combination

makes However, will that for basis, to whether it evaluate continue through I whether or do to to to an development continue programs asset-by-asset Schrödinger on partner emphasize want sense investing them. it in makes these we sense

have that as So to think obviously an asset clinic. progress in will to I the we opportunity these review continue

Unidentified Analyst

Understood. Thank you.

Operator

from comes question next Markets. the Our Capital of line with BMO Gary Nachman

Gary Nachman

afternoon. Good guys. Hi,

maybe multiyear on new most year. the growth. And Geoff, XX% So, be deals, the part encourage would XXXX XX% And of those but some as up XX%. is that the could you weighing the with have that drive agreements, said and from existing did discounts customers to first, of to to on in customers, I growth, is be of a closing offer bit and to respect to software latter growth just that rebate following clear of just some to forward you revenue the some XX% little you potentially that expected pulling want any help well

potentially? customers there of out new is Thanks. much some how of terms comment in the Just

Geoff Porges

Yeah.

. Okay.

deals. So question let multiyear me off about the start with the

nature pull multiyear in certain and of does you for the cases, a your pro the greater just to in So most than than one-third, but so deal than be get revenue you compared is deals, there contribution year or deal, the more in forward the a deal, upon one because the say, first rata first deal a period annual depending recognized way, in in let's do the sign a third which year. contribution greater in to

quarter, of no the upside came from means majority fourth but by a of the it from customers. came in majority So I the the that revenue mentioned existing upside revenue multiyear proportion deals the of

And said continue we the customers in retention. the and mind to bear all of that have high we XX companies are top say our customer we confirms pharmaceutical that level of very

with total more XXXX in went number Our that's over year annual contract to customer XXXX than from a customers value. $X,XXX

So the our is customer base. biopharma universe

to going it's these needle. big customers, have are customers, so mathematically, the the not more So, we move pharmas -- if if customers and our XX all whole we really

So customers but flagged are of $X those that plus to I that, moving that's value, minority landscape. handful is and will technology increasing the at global million be annual in large small are a up a adoption have who pharma why that there the contract of relatively that

for opportunities they increase range customers to really but So sell to drivers. principal peers also move we use, those their see largest towards that the

we the QX So, very contracts periods, that have revenue of lots XXXX. will signed that annual to to be to opportunity was able to guidance effects and been we confident longer contribution and multiyear answer, been of from have that's reported deals future summarize, to grow, within otherwise encompassed small in are in continue they overcome a that our might the

that of of be about that want scale about our thing. customers question The the we but of of discounts technology. say your last publicly commenting the to and rebates commercial excited sort about strategies, our in part ramping sort deployment to that don't We up of interest are suffice in very

we and for as that to advantages well. see will us they think that's think that We beneficial

to So be to of technology. pretty and the the going think interest and getting large of try benefit course to that's that be are facilitate in of everybody's we scale working deployment we diligently

Ramy Farid

I just remind one And will to thing lot say talked and extra this perfect I a add just about before. you will just we and that's

we course from see there this year course to customers. to the mostly younger business given and Of really continue science happening, we we happen that's business continue a come growth we of adding continue that have expect to expect, and to the And new material that beyond. does

Gary Nachman

to a helpful. initiatives been that just Okay. the adoption with with of going some more progressing and how your and that's much then one little other push if XXXX too, continue to in forward. going Great. talk the existing order to associated customers those more is ramping and much about spend to initiatives that accelerate That's have software bit in up of how as utilization well just just Ramy that's And follow-up be

Ramy Farid

Yeah.

Here's have, have we which about what the we talked before. challenge

you will when course, But they impact their scale. to the use of -- we programs. on scale our the high software see customers, order have it in see to up impact, to So has

of break So cycle have to we we this and into. there, egg chicken right have kind

the found using really are starting And things. overwhelming are molecules. this likelihood of on on timelines success, One impact the show software profound the incredibly of they to is effective, on really what two there that of data has the quality projects, we this is their a become scale to or validation have at high the

from our That's happening own programs.

You heard Karen lot talk the about talk a about speed. We quality molecules.

ignore, of You right? have and see and been clear. involved Morphic becoming I validation mean, to is overwhelming companies, structure the we very and hard the and success and a little of Nimbus sort other it's

customers way a up. become effective have very very, that's to convince So that they scale to

what sure That's discovery to the they about. drug Remember, is this way that strategy is somewhat our -- Now, the other the customers once get transformation done. what of is access of involves, a other making this it.

This little things programs, shifting they with more Where all teams and making them computation, we of are and bit chemistry that learn because to resources and relying training. in so is that so been that, running. it many that validation can successful on calculations have to it's more that's more by about product going in smaller are in on we how a engaging knowhow do us doing very that transferring work

up increase to that very that to this Geoff have of makes don't you the is, we customer we requires this that A factor think near that us require extra amount about anywhere effort, sense. XX software if talked of what that usage I resources. and tell significant scaling spend seeing, by their of are in But -- doesn't

the that that of of is operational you be sort problem, leverage which of to see continue pretty we egg new ways we able and breaking are heard to into we clearly coming So of and KPIs chicken reported. have up we kind from this working, clever as some think with

Gary Nachman

Thank great. That's Yeah. you.

Ramy Farid

Yeah. Yeah.

Operator

of Our the Purohit Stanley. question Vikram from Morgan next with comes line

Unidentified Analyst

is Will question quarter. the This our guys. Thanks and Hey, [ph] Vikram. on congrats for for on taking

us you have believe all working is what to been molecule development candidate Just particular could the us XXXX, or through new the walk in candidate from you differentiated aspects at how on one you the optimize?

Karen Akinsanya

Yeah. Happy too.

So for you are WeeX WeeX WeeX a has activities. profiles, so characteristic this have similar inhibitor, other have XX is is been that selectivity -- the optimized inhibitors. we kinase well inhibitors years SGR-XXXX believe is it to so aware But a off has working and few potent the target past what we previous it very on

the We and efficacy the been data of validates the correlates profile replicate very profile the have of X that I in all Phase terms vivo in believe, WeeX we that way what's inhibitors seen optimized activity are we the through that and nicely kinase with seeing really, clinic. in think, and that

that believe in that to WeeX we on going combination inhibition and the we the other in Furthermore, is believe be used eventually clinic with marketplace agents.

drug-drug inhibitors. opportunity to properties drug As WeeX think a things physical potential maximize really including result of like interactions, chemical properties important are like for that, other we the the

We are the compound. have platform been and aspects profile of those happy all the working the of using on we with very

its we So forward look moving and to forward in this the studying clinic. profile

Unidentified Analyst

Okay. and That's much great. congrats very again. Thanks

Ramy Farid

Thanks

Karen Akinsanya

Thanks.

Operator

Our from Goldman the line with next question of Shibutani Chris comes Sachs.

Unidentified Analyst

quarter Charlie on Thank year. Hi, and taking questions everyone. for much congrats you This and great is [ph] Chris. our so the on for

regarding expenses. we the had expected the one, one quick in guidance, year-over-year operating regarding Just reduction

spend are what the course wondering there? of during are where the you Just year where you see there yourself the saving on the -- drivers and

Geoff Porges

growth opportunities in revenue be lower. XXXX, continue going we significantly forward. Charlie, think be clear, XXXX. deliver expect think to have lower it me significantly We than in said XXXX, XX% line will the reported do growth. is that OpEx that in in with what operating to it be XX% We more we We will to we Yeah. be let growth and rate XX% leverage have

So It's a reduction. it's growth. in not an reduction absolute

the reduction question be But growth, be think, most is, the continue R&D as the in let G&A growth will that's reduction closely be growth we I then will has somewhere the to the course, that portfolio me result. and growth about Karen to think, just greatest to that where growth, the I in your going and marketing tied in platform described most be sales between will least then expense in address in in growth reduction support line. the of and revenue and be The

Unidentified Analyst

WeeX you Thank I clarification for then, forward happy moving That's there. and the much inhibitors, guess, there. with the regarding really the it. that Got hear so excited progress helpful. R&D spend the about to and And

we wondering taking you more of much versus of like like of a off in maybe seen should indications in out or newer that selective, some uterine piggybacking you terms is are concept more whether just of thinking I space kind Just XXXX for really on able that comparable the thinking of expect potency like the then in think way a last competitors proof of and the about the the toxicities. carcinoma just there might should to competitors WeeX is be be achieve of or -- kind into question. that not you is curious it questions. we limited are you pressing of it's about from to to our indications it regarding pursue, the about am potency, how of and potency we be Thank that a indications have WeeX, might the but you so relative thinking by basis terms are so higher doses and be higher

Karen Akinsanya

Yeah.

has and WeeX really XXXX there well serous of data inhibition, that, as are number as cancer, carcinoma in uterine been correct you quite other on in correct a or ovarian So -- solid impressive tumors.

with the the We basically potential years sensitive about understand launch MD last population, tumor and two have collaboration Anderson we type. to sensitive working over for been that more

of excited going test That trial on we domain based very respond know clinical that do enough with collaboration some to of out the opportunities data, coming there collaboration. patients believe while well are the X that our we is public existing data enrich to that we and is also in Phase

we to where is selectivity maintain we an well to the binding, dose AACR, while as as compound respect to compound on-target the intermittently seeing is stop more ability leading this combination of But potent. optimized the at think are presented profile potency, With actually the able being and that importantly, of that efficacy, the believe do more dosing. to some we we

to course, and it molecule in So in we well clinic. been see we this potential replicate if existing what's the does to the a have being case, as as the clinic, quite able but profile to interesting already characteristics think in this test of the that's differentiated dosing clinic need relative seen to regimen, the to the actually compounds, well that be it as as has of

Ramy Farid

think he I might have…

Unidentified Analyst

guys. you, Thank

Ramy Farid

to Yeah. Well, question. are next we going sorry,

Operator

with comes from Michael next Ryskin Our Bank of question America.

Wolf Chanoff

the Wolf Hi. Thanks is taking This on question. Mike. for for Chanoff

market So both due I and with trends I I pressure wanted market large recently signaled to have cohort them how I expect biotechs on you little have you level ask under then pharma that a to customers bit, more remain stabilize color you know seen about follow-up. that a low a XQ one. am and capital more higher environment. can perform have throughout how And XXXX? to trended provide in each quick they wondering you if the

Geoff Porges

Sure.

guidance. those existing we in prepared fourth is really been grow clear think, that trends quarter up purchases that, of So, captured and upside the I the in and and the the their continuation our the customers remarks commentary stepped in have in revenue

large that not just but the companies honest, Now are because course, to to development small I I also are that be project. like in to annual number using as projects exclusively, with And as companies, technology well. in mostly, pharmaceutical value if out, of companies range indicated of relatively that use are that or reason they very significant biotech point even our companies universe achieve that there more dozens, contract that hundred a committed the or purchase can not annual have really that same

still what go large to digital technology that that's many a in -- terms up become the of long companies discover. So that conviction step to increasingly deployment they most to way in drug approach gives the us attempt as the have of that their in

think color mostly there some some -- I biotech. to want pharma, don't I So there's

of We K, if in I think, had in effects you we back go contribution was your saw. international, XXXX. three the and to that been beginning our question at that, quarter. One would than going into slightly Now, the up so XXXX, issues international we temporary exchange, the issues markets look the less see of flagged from you about was

higher customers exchange. those headwinds We think not result reverse priced stabilize as those to our at that because itself is technology expensive, to least trying XXXX, locations more start materially the in if in become of that that a face price won't

before, an we we that's that So be in shape think think have said going should we issue, be don't to there. we good

be biotech up Secondly, that companies emerging lack case. the to of and continues the we flagged

We particularly relatively in seeing but new are customers, are small back the half of level any purchasing they XXXX.

so So by to very very brand from de not definition, new new customers, clearly XXXX, number novo new went customers, XXXX but our not -- large customers. large who

the of that about thesis and companies created, case. and continues that companies that the playing portion So to being that's capital, new of I challenging think that out with number the markets capital biotech use limited for think, of be I

quarter, changes things some coming thing across the beginning occurred the the hiring that That year. last cetera. about signal have The end of the really in any big the the and quarter. and that was identified my et the of last there pharma have didn't time year about end issue, companies pharma They materialize to of at some in some the the pricing, interesting portfolios, been their of in uncertainty the portion

was even our priority and that number of a and them indicated At customers in the deployment those the pre-purchasing. of scale up technology stepped their high terms for end the a of the for and quarter, stepped them up of materially

and for virtue number by enterprises indicated deployment of drug core they are the the So activities discovery multiyear their the core of scale with chase to discovery that that of we and we contract of their technology. years purchase drug of

think, So question. end that the got quarter, hope went outlook I we XXXX. I purchases, and have we the the as and had we very I the the that you the through us optimism and and so of clarified think, hear quarter the pharma to for uncertainty about the that's from behind about answers

Wolf Chanoff

you pipeline this client It you longer spending does. Has recently. And wondering, the industry in internal Reduction just know tied to your about was it bit, some heard behavior from we term have the spoken on across a Inflation but if a I I changed have Act. any have related seen strategy? shift note, mixed messaging

Geoff Porges

we that again, in this not something our Look, for discussions up filed XX-K if flagged But definitely that hear today, we well. the that our you hear with direct as we Yes. it's at something look we customers.

It's cetera. significant calls something coming hear, through press not that out hear we investor we et are it's a our groups, this, same like conference channels that customers. degree things of trade to from the But releases, something you seeing events,

made comment is priority add a Now, this And capabilities of maybe strategic you can to that lot we expanding our from progress as will Ramy its now, for there. have he and a and on technology adapting have heard I us. biologics

And companies the portfolios, but saying that small companies are doubt their component to no there molecules. of no adding are biologics there's that aren't

to a our that. So you technology has if lot we think that want utilities. add to of Ramy,

Ramy Farid

Yeah. No.

said think to we looking report perfectly. are technology to forward the I progress on to extending we on are it you biologics. And making continuing

We have time. been in that a space long for

to it. to the methods hearing in coming biologics. years in to software invest use are to These modality that better continue fact, based will and the be are us We design physics ability on the and think, you I leverage pretty agnostic we to significant the and from starting progress

Wolf Chanoff

guys. you, Great. Thank

Ramy Farid

Yeah.

Operator

from [Operator Sedell of Craig comes next Instructions] the Jack line [ph] Our question Craig-Hallum. with

Unidentified Analyst

four a time, taking about Thanks as for years cash that on continue of sheet. burn This to was Matt. moderating quarter balance at the bit is had and discussed our probably grow, Jack on for question. curious, revenues I Hi. you you last cash your

five sale, infusion your candidates, infusion M&A cash additional on funding from of hand. you the of the opportunities puts With to plans internal cash? interest are increase years or for your it that you in receiving Does TYKX new closer

Geoff Porges

Jack. changing that… as result asking capital from what I hear are we Nimbus, terribly a that, our is priorities apologize, think you didn't allocation you are additional that the I receiving but of capital I well, is

Unidentified Analyst

particular In M&A

Geoff Porges

Is right. Yeah. that the

Unidentified Analyst

correct. Yeah. That's

Geoff Porges

Great.

think well, the we I very cash are that, happy about So, distribution.

and I to things between and the your it's long think then. certain cash think happen and now we moderating math but I a six is of our got at incorrect, going additional we years, are lot -- think five that with distribution, have a burn have both right, time, with point, a not years, we

the So add value to innovating technology, and for the to are which creating. differentiated we think of capabilities our is capital highly our platform proprietary highest continuing and that allocation highly priorities and

in in we continue for or being own portfolios to the portfolio our of, that invest of deployment have from case structure. technology, and of opportunities secondly, both in the in of the the And partnered companies example, that the with to emerge co-founders

priorities. highest the are those So

or Now, we technology that against. bring add and we we the our curious think open-minded certainly to going are technologies technology our clinical that targets if organization or us that development be and opportunities can very forward is path emerge deploy to complementary opportunistic current and highly exciting accelerate our

certainly receptive of primary our are not be going to to but strategy. capital that, direction allocation We the that's

Unidentified Analyst

That's Thank you. very helpful.

Operator

am time. That this no today's I showing concludes call. further questions at

disconnect. now may You

Schrödinger (SDGR) 28 Feb 232022 Q4 Earnings call transcript