SDGR - Earnings call 4 2023 | Schrödinger, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Thank you for standing by. Welcome to Schrodinger's conference call to review fourth quarter and full year 2023 financial results. My name is Mandeep, and I'll be your operator for today's call. [Operator Instructions] Please be advised that this call is being recorded at the company's request.Now, I'd like to welcome your host for today's conference, Mr. Matthew Luchini, Director of Investor Relations and Corporate Affairs. ahead. go Please

Matthew Luchini

results. Akinsanya, good on which and Officer; and Welcome today's XXXX to our press issued Officer; our Thank and summarizing release provide are call progress afternoon, an available during our financial year full we'll quarter company today, Ramy company, of Geoff schrodinger.com.Here update Financial at call, we fourth a you, President Farid, and everyone. Earlier which on review the results website Karen with Executive Porges, Therapeutics. today and Chief financial is Chief across our R&D, me on the

our them are our Form and elsewhere factors, have the important strategies today's we represent year for of results Actual made. update readouts the current These due only events the based whether a our principles considered us the and on of may we the with forward-looking of December intentions, in programs, financial a limitation, cash which from accelerate and without plans our differ measures. and as our measures as XX-K generally clinical proprietary in management available our for addition related superior make on the expenses. number resources, in Private law, accounting Act future the of non-GAAP Reform XXXX, software open our and for will Following and outlook which and end financial GAAP directly of may as to as considerations as Securities expectations, the to information, business Risk our including, except including views call, not caution forward-looking are discovery non-GAAP by that only our in should measures of most our timing prospects, use today, statements over statements that, Q&A.During Factors a provisions XX, turn year substitute required are Ramy. about in like well on the you result forward-looking our our or be prepared and the statements statements measures.With advance release, and is call the accordance today's XXXX. the views XXXX, the of full our these of we'll our of of reflect the and ended information our currently the These we accepted the certain to to SEC, we reconciliations assumptions to remarks, with Please not clinical measures. included filings to make and that, to at made future the the otherwise.Also tables the Litigation described to website, not call collaborative prepared of, to to These new future, pursuant I'd are properties materially or for press non-GAAP refer including trials, available compounds, potential for section of harbor initiation safe growth GAAP comparable to drug plans, in call

Ramy Farid

in Thanks, XXXX, advances we and Matt, made we to continued that and our everyone, today. customers our science that are software advances continued platform. us of adoption to to scales see our impact the their continue for at to the thank underlies expected, to make significant We incredible progress make computational increased expect across programs. you, to joining business And we in meaningfully In important as XXXX, XXXX. allowing

further to increase and our second the over at proprietary the of Structure. XX% a stakes, year. have also which program, year.Total TYKX $XXX Nimbus, million, the molecule also cash of we prior We study including case we marked validate a also equity Takeda year to their advanced I a initiating progress was distribution for by was in programs cofounded our proprietary Phase platform, pipeline, which in companies Morphic our several last in including co-discovered, and Their substantial SGR-XXXX.XXXX advancing to we and sale the Schrodinger Inhibitor, Nimbus, revenue led the for

how platform that on had reflecting continue Software in year-over-year, year quarter their year, our applied been renewals the in regarded by our of utility revenue successful well believe million, software XX% XX grew in XX or from history. discovery computationally-driven value the the prior value, with multi-year are with in and and debate a over. large customers higher, We marked demand biopharma platform the to change Lilly. largest fourth annual including of million, discovery. deliver.This drug biopharma computation X-year business, computation can will quarter agreement within companies, decades-long for emerging year, software reporting global about an our our sea increasing in revenue We as the ACV, we to establishing by at of and at companies, we the adoption never confidence the that increased drug finally of with biotechs. interest contract expanded as up is very $XX industry an is We with The software has customer $X witnessing revenue ended least focus a

which interest are growing a generation near AI. computational full excitement gold by modelers, of of discovery. While and principles this we interest is technologies platform platform more and of made been shift worldwide on computation.Our attenuate This recent computation for may in methods to sets of to of created become capitalize their physics the potential believe leverages heightened first in molecular for of who limitations is the training investments the and will increased We has computational built also validated standard on computational learning term generate a shortage training years about accuracy have expect than have the advance the and in projects.Our is in next grounded to demand this has modelers, computation, about machine and we of some there but well obvious in understanding chemists positioned significant XX AI, science AI. fueled may the the

to make investments of small future and in And continuing and support for breakthroughs molecular years expect to discovery design. informatics boundaries molecule computational will many that are growth formulations to the biologics push We come. we

We targets structures, have more improve of to our recently work structure-based protein can published research papers on discovery. demonstrating computational how ML-predicted teams methods multiple the even utility through enabling

largest enterprise scale of leveraging We increase informatics We our greater are ability order platform increased magnitude an we a are collaboration teams.Even also drive of our our is at our our with least customers. scale-up than impact This to efficiency and by across solutions our customers, still platform data a that's largest big I proprietary at of the SGR-XXXX, progress having SGR-XXXX malignancies. rapidly the expanding on healthy ongoing from programs a our to Phase study pipeline B-cell by December, advanced now in clinic, our have we patient MALTX inhibitor; our and and reported progress In in in in inhibitor. broad X study CDCX positive the SGR-XXXX, programs. subjects our encouraged of are

expect XXXX. late and report both SGR-XXXX studies or of We the patient data XXXX SGR-XXXX in to from

potential. and and inhibitor investigational way we are our application existing a in We position have technology particular. economy in incredibly in in year But we portfolio therapeutics toward the set been achieving are many its tech an and SGR-XXXX, discovery never in this the industries in drug in bold of global forth goal. are the discovered, now advancing over our There on submit this to new our and proud to track year Geoff. materials has turn the I an more and us steadfast of to WeeX/MytX programs also progress ago, been the call our confidence first transform half turbulence appreciate made have to our commitment for and I'm our to employees, fourth We of vision hard will IND work XXXX.Years we of of toward another for the progress realizing vision.I deeply look all and forward

Geoffrey Porges

which In of record a strong driven you, Ramy, an we good principally by QX, afternoon, software. had QX, everyone. Thank capped and XXXX. reported excellent million, $XX revenue Schrodinger

with our avenues development to significantly then during to of and advancing technology with with more XXXX and our with customers by in contributions from recognized quarter, boosting grew the compared continued and these XX% in milestones software QX QX. and multi-year the $XX was compared largest revenue and QX our be XXXX. Compared well a multi-year was flow XXXX, decreased as revenue an even increase of revenue QX. have large quarter customer scale drug million software to by We as consistent our discovery, QX increase a year. increase platform, the our molecular software driven greater large increase software the XX%. the our with as a well see collaboration million quarter year. progress ratably growth a proprietary and by reduced multiple was million seasonality the significant discovery bookends in driving XX% from we was and $XXX million QX, for continue in cash hosted of renewals prior was revenue million revenue expectations increases of distribution based driven in platform.XXXX drug our to contribution to co-founded smaller from XXXX contribution Structure the purchases. in for including revenue year to discovery year multi-year of revenue on capabilities to in The discussions by the increase software revenue portfolio collaboration with in $XXX year of was compared million, in than renewals active year, and and quarter.Total programs compared beyond the review increase number The software the $X to QX Revenue companies their current on-prem Morphic multi-million-dollar line programs the of growth some quarter For a customers quarter of in results, of marked The milestone and GAAP grow our and our of large the with an existing the partners.Turning also and software potential renewals earnings, QX partnership software the of XX% in growth prior $XX.X new our same to $X.X which as The year, in single reported active non-recurring QX the QX customers, $XX made number from contribution fourth the revenue strong typical for great full QX.For validation of was in of an XXXX. considerable several result a significantly during as of revenue by was renewals existing the reflects software the multi-year large quarter on-prem doubled, in deployment full new XXXX Nimbus from is to customers contribution in QX, enabling The payment their in of a total compared XX.X% than million, renewals renewals was discovery QX. renewals.Drug multiyear

of recognition more discussions The returned our previously number this number the million. of for of disclosed in revenue increase of revenue value with customers year-on-year little was $XXX reported discovery $X the of of a largest XXXX.We in million $XX.X are and in business. continue entered $XX we likely accelerated us both of increase value with with $XXX the full have trends was $X other were as million XXXX, growth.I've million on engaged up we compared was our by XXXX. discussions in least growth XXXX. than and stage during contributions grew about the driven software. ACV from the and large increased increasing of that significantly drug by since revenue several progress a customers to At customers contract in over of XX, year engaged for color software annual discovery elected and scale contract this revenue less are new from opportunities software in that increased drug companies our recognize technology, we in recognition XXXX, customers Throughout to The We substantial companies partners. existing a and some we to multi-year by them revenue $X.X as average XXXX at at total be in with million, compared number additional to of value driven programs portion announced level collaboration the disclosed for reported substantial into QX. to bellwethers in of of For to value is at and more million was our see the But in Total into stepping $X companies their collaborations, year, million that from Those XXXX, the such contribute a to agreements about encouraged collaborations do for and our investment from renew X revenue industry emerging to The scale least on-prem large their renewals adoption. has growth we more XX year, significantly year. renewals view contracts these in customers in renewals. in million

have We key $XXX,XXX in and XX% of the indicator new retention customers, XXXX. disclosed in customer of such was customers least in among ACV. performance a Among was retention XXXX at XXX%

This to remain QX in software on in gross favorable quarter. from gross appears full shift our projects. some consolidation margin collaboration gross the projects cost $X.X XXXX is revenue million increased in XXXX years XXXX. by potential million discontinuation delivering of XX%. now revenue the to $XXX,XXX The leverage range. at customer discovery particularly was QX, customers high rate on the QX believe performance was XX% expenses, variance drug declined XXXX for retention was customer-facing be the by compared increased elevated R&D QX team and discontinuation future to $XXX,XXX Our been revenue and performance customers with XX% revenue our of We and of margin in biology XXXX.Moving net XXXX. was to The structural biotech gross performance based $XX year result during efforts strong compared mix.The in likely and decrease internal has $XXX,XXX with in and was to to least some depending to allocation similar was on The in margin likely of in operating associated elevated to ACV in since in the and year our per margin

improved $XX.X of reflects drug year, onetime reported For was XX% for drug margin in in in projects compared of million the contribution from the the for XX% The -- software profit full 'XX Overall to from shift full XX% resources for the our reflects of profitability our to margin compared QX. milestone revenue XXXX. The programs. $XX.X was in QX in to was gross on benefits XX% year proprietary change discovery was revenue reallocation collaboration cost internal XXXX. and year, mix.For QX the to million compared the based gross the positive discovery software

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

was a for XX% successful Our favorable the of effects margin discovery ratio collaboration of XX% programs. to drug for our XXXX of reflects loss progression and gross compared XXXX

a drug QX gross was compared gross the increase Our margin.As by overall our XX% QX, XXXX in was XX% to margin gross XX% discovery due for to the to profit performance compared gross XXXX. in The software and in and XXXX. revenue increased result improvement strong of margin

XXXX.R&D numbers, were expenses resources million million compared on QX increased expenses was profit higher expense. gross Compared our in the in to million $XX CRO to were of proprietary year, to QX, drivers XX% staff increase expenses The compared $XXX programs. QX expenses $XXX $XX Higher numbers and of and main XXXX full based to technology the FTE increased and allocation were increased contributed. For XXXX. CRO million in FTE R&D

$XXX expenses. $XXX and higher were for by expenses year, proprietary reported in driven the to The shift increases million, to XXXX. an of For R&D the increase collaborations million in full which FTE compared from year XX% increase CRO numbers allocation the programs, the was was in

expenses of of increase balanced the XXXX investment to clinical between R&D therapeutics. our XXXX As past, A platform R&D progression associated from recent portion the technology approximately our has in significant with and in are been the our portfolio. our

was expense marketing X% expenses. on and in increased QX, Compared headcount to due expect XXXX.Sales QX The associated based was million in $X.X to marketing expense growth to We moderate incentive and year-end and QX and by R&D for increased to compared XXXX. staff expense sales compensation. $XX million increase mainly

increase in $XX obligations, onetime year, partially well XXXX. due QX $XX by expense for XX% million For was professional expenses, travel.G&A royalty and was higher headcount-associated mainly to was offset as compared compared increase was The million QX in The $XX sales the million higher lower million increased to of XXXX. full to by as headcount expense marketing $XX driven and services.

as For $XX XXXX. $XX headcount operating was obligations, in increases higher the services.For million QX, $XX XXXX. FTE X% QX R&D. total The was due to was well due mainly expenses, mainly The million was G&A full offset and as by increase million expense in lower by to year, increased partially compared compared to royalty increase to and professional

to million For $XX operating cash the by in million million was short-term the expense cash increase and increased year, by during mainly use our XXXX. $XXX million $XXX our total driven investments QX, The R&D.During operating compared was quarter. to $XX and declined

our was the cash For XXXX. $XXX in $XXX year, million operating million compared to use

compared $XXX marketable at XXXX. and to million $XXX securities at cash balance was year-end Our million year-end

XXXX. QX year, cash to million QX During in the compared 'XX our income our by trends operating favorable the $XX.X XXXX. cash $XX.X were to expenses investment million and was of operating in QX million for was distributions compared items offset QX loss $X.X use Other from and $X.X in in working million Nimbus in by capital.Our

million to income, XXXX.For other income and were from Nimbus, value $XXX Our in gain other million net million and investment 'XX reported our the in full fair in the items a our million of in a QX QX mainly a year, million million of in interest. $XX $XXX was million, driven distribution loss $XX.X by loss investments, $XX.X loss QX XXXX expense $XX $XX and of in compared of the

$X.X tax and year expense income was for pre-tax million. the $XX was Our our million

$X.XX diluted was or per $XX.X net million share. Our income

not explained XXXX Nimbus our we previously, in As XXXX. associated we with persist to the in do profitability distribution expect

count For million compared was to purposes, at XX.X GAAP at million the share XX diluted reporting our year-end of XXXX. fully end

share for to for software with the growth by have currently from outsized X.X% contracts. basic specific that firmly is top customers but renew of us, the XXXX count past increased remains highlighted in year. that lumpy line growth we that XXXX, XX%. revenue range be ahead contributions prior to outsized they already We large to Our XXXX over expect software X% business a will this growth We I extended in when year.Looking contributions believe grow

to this adoption our it's or to of match to our of contribution but increase capabilities expect the can benefit exceed our opportunities last have in significantly year.We platform. early the to introduction technology We and such renewals too large whether our the enhancements from outlook accounts year, forecast they growth from new

association for metrics Our $XXX,XXX, our these least to grow $X least of with trended in at at and $X our XXXX, least we further million and at changes positively expect million accounts in metrics. in revenue

While this in to than also million this biopharma technology reported purchasing further among companies. our now small of commercial per and a distribution relatively recent among suggests more only adoption years. the the range to efforts that revenue relatively be expect our of biopharmaceutical $X in revenue QX to year of in XXXX.We of their million proportion for year population be $XX Emerging $XX significantly also largest quarters level of to companies occurring similar customers our level global by software of expect adoption are our accounts, are million software, in opportunity of the in and is high largest

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

collaborations. progress collaboration and for about and our by the development about our Our decisions guidance uncertainty incorporates programs timing occurrence uncertainty of in ongoing partners outlook the of

likely type. XXXX development to this discussions contract with on to We similar slightly companies.We value business growth expense in than margin XXXX. have below the depending to activity growth XXXX variety including that a we in investment in in XXXX. vary expect a to cash gross and Operating of burn global in engaged to and X% to be cautious for cash year, the mainly be XXXX, our and opportunities growing our to about anticipate such mix customer emerging gross our XX% our XXXX increased portfolio range, new although in to the In our actively taken particularly significantly be margin continue approach burn in of software will operating be higher for R&D, is be XX% proprietary in likely support is growth programs.We to

business, continued in X of is conclude, more to towards co-founded year and collaborations investments, reduction fourth discipline.To our realization we software company proprietary at and we reduce in growth early clinical very from activities our goal and our from next later had beyond.Our we and to and XXXX are that quarter see operating X Schrodinger will our value considerable the that and years, our and in in excellent cash is shifting our on realized with even progress these headcount capital Our expense an create opportunities data proprietary programs. in burn continued value emerge XXXX and We growth portfolio, from the strong will years. allocation XXXX software and value a to in depend excited and from collaborations those programs portfolio, proprietary revenue,

investments very provide therapeutics coming to to proprietary turn computational you co-founded our With future is of collaborations update growing activities. R&D call with about platform the companies to in a the the and bright industry's fruition, and an leading Karen Schrodinger.Now, I'll medicines chemistry portfolio and over for

Karen Akinsanya

you, Thank Geoff, everyone. and afternoon, good

collaborative and programs. proprietary continues to of Our maturing pipeline advance therapeutics a team

are impact concentrations and growing activated transitioning now and secretion of companies and to dose-limiting progress T including drug-drug insights Ramy I data molecule, successfully indolent greater of on IL-X the confidence Starting encouraged exposures I study. in provide greater are effect our blood need review in our of study clinical ex IND-enabling obviates human aggressive study important the has progress in successfully repeated benchmark food serious of data the was or during proprietary confirming interaction vivo trials, that of maximal and which III, when No potential deployed than Phase scale. reported patient the XX recent into were toxicities refractory A compound.We achieved have SGR-XXXX or with by platform than presented goals the healthy pharmacology SGR-XXXX with studies XX-fold for our in co-founded development.I'll and at explore clinical engagement recent lymphoma As cells, providing IL-X that volunteers. inhibition programs our lower proprietary SGR-XXXX, the adverse extensive in ASH, of B-cell into completed II This programs and SGR-XXXX reported, SGR-XXXX, Steady study. Phase demonstrating state Day, our lymphomas. into patients Pipeline Geoff The clinical of this of meeting we we shown we several number pharmacodynamic target SGR-XXXX in and programs advancing XX% the of builds healthy at clinical ongoing detail. subject responses Phase safety of MALTX CLL. events are achieves our in than drug-related our observed. profile our in tolerated inhibitor At and inhibition and a well more relapsed in our the validation

enrollment previously continuing are make to of trial allowing We through clinical discussed. dose the despite challenges escalation, enrollment the and us we expand progress to globally, sites number good increase early

tolerability observed and healthy is study. in that encouraged safety patients, in XX-day volunteer with the the profile are consistent We

of remained As drug. patients mid-February, enrolled all have on

clinical XXXX XXXX. in late initial have in data We or track on to are

sensitivity escalation These discovery are interest potential, expect preclinical and relapsed providing at this safety, SGR-XXXX. FLTX with an excited and our study rationale the The confirm broad late we We 'XX.Turning about initial continuing ongoing meeting to study leukemia compelling leader objectives about to patients patients dose II primary of the for report key data molecule. of syndrome. are concurrent presentation have and incorporating synthetic cancer confers vulnerability SGR-XXXX in to are also presenting high oral from inhibits study ] with schedule. pXX inhibition, CDCX December, differentiated to loss favorable an both and lethality. WeeX 'XX establish X the details Spring of maintaining selective and non-small intermittent of multiple in be and feedback the that using [ preclinical cancer to representing dose. or we The is opinion translational In lung term that Phase models in also myelodysplastic a anti-proliferative profile, SGR-XXXX. models sustained pharmacodynamics we has evaluate to of myeloid our mutation-agnostic AXXX our Phase mutations advance next the pharmacokinetics recommended while SGR-XXXX, mechanisms reported and refractory SGR-XXXX progressing inhibitor SGR-XXXX dosing of completed, these well models, in tumor patients, acute and I In function or treatment-naive forward pharmacological to cells, month.We cell data confirm continue profile MytX, in steps growth looking safety a proteins range data shown ACS

for end PRMTX-MTA and inhibitors the addition, We at EGFRCXXXS, initiation escalation progressing several the XXXX to highlighted by the on Day. submit discovery the of of SGR-XXXX Pipeline programs, year.In first are of to study of track a half IND I Phase in including this dose we NLRPX, are enable

oncology globally advancing proprietary additional inhibitors select modality IND-enabling study. programs XXXX may as We in have small areas.In studies programs collaborative observed other previously we challenges and potent the product that trial sites across antibodies in XXXX. we patient SGR-XXXX We require targets and are overcome molecule disease completed addressed these candidates progress have such on design the oral about our across multiple for in switch initiated In selective support identified we SGR-XXXX. administration, identifying XXXX, track and excited anticipate intravenous portfolio, in are that IND profile an by healthy or opened that our submission dosing inhibitors and early-stage for additional we advanced to our volunteer will made study

enable programs We to several of partnered flow Ramy. to a also for internal turn programs or discovery now steady progressed development.I'll call back the

Ramy Farid

Thank you, Karen.

across our be successful this we to you questions. We business year.At heard, had we'd look to updates throughout are year. an excellent your this XXXX off and to take time, the forward a happy further As start very providing

Operator

line comes [Operator first Jefferies. Instructions] Michael question Yee the of Our with from

Unknown Analyst

[indiscernible] years, how recent the guidance XX% of your on on the my that industry-wide should keep Michael your guess, lower is the are especially in growth actually which AI This think software AI competitive for how Yee. on the than about competition? of secondly, given we first line momentum? efforts ahead seems comment what the recent maybe will the question changes past you landscape? And to And I typical XX% guided is, year-over-year growth, X% evolution the view

Ramy Farid

do to the take you want And I'll... Geoff, first?

Geoffrey Porges

Yes. Sure.

the Regarding software high have software in the growth business, a confidence guidance the business. the we very of long-term of potential degree for

have multiple move up today $X our next to referred year. sort as largest adoption the to not opportunities to per at increase customers, what that tier but million highlighted We of we the still we of that software customers than also $X million that but in are of greater

quarter to quarter there's lot that of prepared and a very said, were effectively fourth as revenue a the significant my delivered in of remarks, contracts So multi-year in pose overcome number, opportunity. strong that being renewals XXXX. us there headwind for renewals fourth highlighted That I in those

are the we grow that to those still from in XXXX, went believe overcome slightly KPIs the can can customers. of of that we dynamics rate effects but underlying the the from, business quarter. significantly.I So, mentioned effect highlight capital customer believe business. the But XX%, fourth broad with we trajectory of across we markets do have growing in renewal that also in years, you the And growth that continue deals in XX% the the -- the very will high of where that that We previous some some customers. group of the in you biotech to remained see the can it about smaller our I information down think, the but the in see the did larger we

getting in we companies want so, with those R&D, with we some drag and provide the that and then acquired, We of some growth think planning shutting opportunity.Ramy, you And that go But a us XXXX. cetera, that AI? on relief in smaller get capital, out seeing do companies ahead customers talk running we're there's funded, to on merged, turmoil our about think do also that XXXX. will in those associated of been that of down are that's consisting some et if

Ramy Farid

Yes, absolutely.

said. Geoff this, that as me Geoff let software growth There's we what our no emphasize business. There's view still, business, opportunities. as also question So a just many just said,

structures, of published on is which structural one in AI biology supply biology This you course, is we've our is is Now, something front, those, in methods. as the front. actually of and the input, nice physics-based resulting structural some And on actually biologic progress to of protein a bigger this recently. mentioned,

lot Similarly, these of shown, a targets. sort think about lot larger in which, still is structures are we talked of also regard refinement resulting on a number develop. with of elucidation your a about course, growth we've need fuel business.Now, staying of As this larger of in biology pool of But and that helps with of this. a providing I is work methods, AI of course, physics-based our we in interest, competitive, targets the that comment to

make are unique in date, machine learning. realize approaches. fully the to be platform of state-of-the-art no to have our using of again position very many, physics-based a to large that's no definition that and and but are we've set. utility methods, times, And of effort value without a course, to methods in machine learning shown of develop of area these the our as we've learning state-of-the-art over able that efforts many competitive is that have learning. we machine over sets discussed a space physics-based machine with training required to And see developing training -- And We sorts shown and the the in the actually

this very So of our sort area. position about leadership in good we're feeling

Operator

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

David Lebowitz

shift the expectations expectations organic shift extent have a with the from prior your for you you shift that And had wondering extent change approach. spoken earlier When a the the discovery about versus in methodology methodology understand the a quarter your and reflects was guidance guidance. at shift given relative you clarify guidance that an your would if look guidance, for systematic in is this could in in that to year just the next next to January drug year, I you under

Geoffrey Porges

programs to when to guidance David. our milestones your for question, provide the about, trial would it out. position Phase example, trial a might we benefit. information Thanks found advancing trigger uncertainty just III And totally that to understand might it. Yes. that challenging I aren't Yes, for read partners' with we II incorporates in associated have or Phase a start a

what out programs of the will we just advance. can't or of so, advancing guidance is elected we those they when our have And probability those determine milestones because take to

proprietary transactions, that that with including So, aren't or we development second estimates new have new is we've partners for we that new partnering change or made.The business is allowances programs. made any change a i.e., collaborations

both in et active could emerging the emerge Now, different lots cetera, opportunities. of But we're large with didn't again, what in probability, of discussions. and of companies reasonably discussions we timing, might industry, we just about participants that companies, many the value, course, from estimate those think

out this and believe of we the the be year. that So the can today mentioned, the stage the of going at opportunities range I guidance But of to most outcomes guiding outcomes discovery, imagine likely that year, at very to we're we've throughout that to year. be most we're also kept beginning for all for range looking of likely that's drug busy what these you of the but the

Operator

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

Vikram Purohit

and the pipeline. on X, guidance one then one had on We the software

much those this which of year to of then, guidance set a more X% you that how And bookends? And bit drive here be? situations data may patient through growth available data follow-up details revenue how you are point initial available a year, this next any the on could expected for color could So, strong would much XX%, the framing how for what provide outcome later set? data, one each at be on or

Ramy Farid

do Karen, second want do question first? the you to

Karen Akinsanya

Yes.

B-cell we're patient trial where as malignancies. recruiting know, we're now So, in right a into you

in obviously, presented this you great looking still we're we and believe trial. ultimately something, by where, mechanism will what question? But a again, obviously of as But trial. data, PRs the then terms still for like, of and I a we Phase In Janssen, what dose that's PK, determined. and part their could ORR know example, escalation And your obviously, as was interesting it that the at that be is activity It's in very PD terms a second safety. think, previously we're still We gathering CRs trial. to know, data outcome saw a for monotherapy combination I of that's and Janssen.And also look what be be will there was in at looking

Geoffrey Porges

was first about The question software. the

Ramy Farid

Yes.

So we'll But MALTX? there Vikram, that. I answer answer yes. we were think, question, parts about Did X your

Vikram Purohit

Yes.

could just how of part was you have much types, et we could on this the follow-up much at question how second any point might MALTX cetera. we see, tumor The see, color data

Karen Akinsanya

Yes. It's a little bit say. too early to

as and for PK/PD I we're think, said, monitoring clinical I activity.

I course. So update say due just share an too we'll study year. the and to well, to be this it's next able year versus think in forward we early well, going going is what look yes, But you to is giving enrollment

Ramy Farid

to your Geoff at add. first take it stab I'll if question first hand a anything to and there's else over

companies. time in really see are pharma and computation interest among emerging it Here's exciting There -- how heightened companies seems. it. a remarkable there's It's we a

to in and long it's we've sort it whether does over. this exciting given to there's debate said, such computation been decades-long of really use This and field, thing we to an As saying, is how it of work. use how be

long at. What's this. How range So is going scaling of our of end kinds software where calculations. modelers going the and to up on access and IT that's the dictate up bring to sort it like we run to are the train board, things system their on point to them get level is and to our about it to talked to There's to we that depend compute take of how able companies there's the take to long to to required is of customers set up going we really get whether see worldwide sort largest demand. going And shortage to of resources be modelers. can -- in significant the that

of the how And of the is It's happen large really just So the matter That's the interest quickly how industry. It sort recognition scale-up and and again, started and growth how with on-prem in impact this there. of impact is has scale-up. sort there, there. about a to to thing. can on-prem have all is, variable. No, talked big and has exciting year associated has range. hundreds the it that's other companies has of remember, underlying recognized mix versus It the hosted this, revenue -- not the gets just so board Geoff more keep emerging Geoff thing a happened It's obviously but we different top important and evenly in -- of rules the add mind, yet.The and with color and on doesn't it very companies? the is what is across on hosted, in

you do want to... Geoff, add So, to anything

Geoffrey Porges

revenue. the renewals Yes. the translate type has that [indiscernible] those on to would say year we and large a renewals during of just the see how timing impact I

renew renew that hosted with on-prem. my a prepared we basis bit and if there in I has we on highlight if did And we growth first, impact, make ultimately, versus So reported That, steady we a is multi-years single a versus secondly, slows year, course, But that that remarks an think hosted. beneficial more produces it slow trend towards and transition. because of is a down as more revenue outlook. revenue our predictable that little

going we're advance that So on basis not it is but to a sudden transition underway. rapidly,

of as of customer or contract million $X scale-up. going to to, contract, contract, Ramy driver. year, it fundamental and every that So, the a year and, of the type the does the course, a up, And year contract for get $X from the whether is of contract down a we to of degree how during course, scale timing million a single that's it a alluded see the lots But gets of million opportunity, recognized. $X

Operator

line of Markets. from with BMO Seigerman the Evan comes next Our Capital question

Evan Seigerman

you out-licensing business? a Taking of you where a in Are your flux to then I I'm your going some Phase going licensing dual your development, your for business the drive from step years and you software to trying say, nuances them? how understand software. X, business you now, out-licensed to them? some Ramy, just with this back, kind commentary to way internal of of that. your bringing expect pipeline software evolves, as all Are how model -- understanding III own and you out-licensing I the II/III Phase love how these them would a on to hosted X be to do have question kind and your bring internal and think bit is guess, about then between that just

Ramy Farid

I Evan, before. little bit this about a think talked we

-- a a a have can pipeline few had rather larger ago. see we You years than we

an be the more X one we're We said more number just advanced now to quite to X one a are going programs, next clinic, clinic. There cohort in to be file of of for going of -- expecting these IND the the have those. in that's We next programs year.

And programs. have options. of of so, we That's number a a lot

we're we sense we have expect, that making Phase to I, in some of of that We them as flexibility. make said, sort programs have may after take sense those make will it to to allow them. that ourselves some the partner further. cases, sure And to opportunity And

the want add all you'll to do things you that next of years.Karen, So the a several over see you mix anything? I think said

Evan Seigerman

and versus way I think the in hurdle mid-phase that to use of trial need in your follow-up there guess, to it's Phase to up Schrodinger efficient saying someone that's over about business to of the capital I versus bring my advance is, becomes I? part what's the at get forward this that come just of a a trying hands in out-licensing when I'm really was -- you just your something into it how else. hands

Karen Akinsanya

Yes.

start some I'll Geoff think to can add. I extent maybe and --

to industry, a there the demand some to there's when in -- target. take clinic. and they're to first we are first it depends think target, even I the and in in targets extent, lot world, believe the need don't that of We the on interest where it necessarily the

types, from very got on that those standpoint, assess I indications. doing you've programs, a to potential and start. we'll multiple However, of escalation. different some it's lots dose basis. case-by-case about are think for We've we X tumor clinical ongoing a when I But comfortable development got third But a in Phase of

could development pursue. got partner We helpful. to combinations do very, see that for a be You've having very that

depends on the whether think the clinic place, then but the on. I really So into comfortable feel first it taking in later target, the we program it expanding

if Geoff, want to know, don't that. to I you add So,

Geoffrey Porges

the Evan, think from Yes, from consider industry going create to economic We're value. also cost. lastly, value also I required going then requires. really lot standpoint, program. clearly, to what an what's of going a consider to consider Is we're to we're -- there the And

Now, profile in XX some is a or differentiated showing industry which industry cases, PK a what safety might subjects IIb study, be what cases, we have is the -- the Phase very might require do. you that requires large profile. with randomized a In inclined not other to

don't one those a basis, that make or to consider decision blanket all to we're I I a going to think inclined make we're on of way a So decision. case-by-case components another. think

Operator

next Our KeyBanc. from of line Scott with question Schoenhaus the comes

Scott Schoenhaus

up software. I the on follow just wanted Vikram's So question on to

the hosted a from to of on it trying on-prem to -- from smaller shift able it of shift sense these be easier to seems sort on-prem or book can clients, larger clients? scale here Just shift contracts range correct? wide of is to or you Is to you whether the much that can hosted. do you clients with get hosted. midsized So has -- would the with to guidance to or like And from not on-prem how this

Geoffrey Porges

whether of And renewal, in that revenue, contract revenue revenue is clarify trends in multi-year in it's form the all deliberately. an to we on-prem, and then, do shift because multi-year the business if all But the contracts of the factor in materializes of a if or contracts the recognized, the small or it is is called most year almost in do hosted-on-prem I of in component our quarter. just recognized business. single-year the on-prem something. quarter. which signed, our is want that is a of bigger even of more I that The annual out that we

contracts. mix biggest the duration variable is So, of of the

then, variable there on-prem But most revenue scaling is shift extent probably whether the shift. versus reported is to year hosted to which we're hosted, the it the contracts a than of increases in or biggest contracts. the And The second important influential variable big is contracts, occurs, that growth reduces up rather least it. smaller the that size the in

So, have don't some that but of the that's I that most does effect. want to effect, convey

Ramy Farid

just Yes. right. And for last of server, to from or really it's shifting that licensing compute part because software a engine trivial -- there's just the to then, itself It's companies the of that's just shift hosted. to touch controls that's companies us the barrier which the just question, [ to being to on-prem answer is piece code -- And other on your the hosted absolutely not actually licensing. ] the no

small, large, completely to doesn't under So be this and is it's it resistance. there much control, matter and -- doesn't seem

In managed XX.XXX% fact, that's it on-prem. that be to just just the hosted. because we rule. of that's then little being considered a little run lot and contract code, bit tiny can whole code when serve It's the entire that is of companies rule. That's But better. still our of clear, hosted, of when like bit them the That's computation being is is not

Okay? hope helps. that I

Scott Schoenhaus

that for you any baked all growth range side about helpful. I the smaller mentioned on just in Geoff, the software opportunities the year? follow-up? into potentially that's sneak one biotech of Yes, in Is biopharma that very this Can developing.

Geoffrey Porges

the to the in cautious a outlook We approach companies. have taken emerging

recovery any showing haven't for capital new availability or We accounted in companies up.

That we need natural flux saw that capitalized and sort nearly XXXX proprietary than new our targets recently who you quickly dropped companies came us. amongst against was Let -- molecules in. in to customers the contracts color. software XXXX. up showing and XXXX little And down were more in a relatively smaller bit more and companies me give of up discover saying, out of population companies, lot with setting of slowed a What we

itself that, XXXX to are we go and So we or back that assuming reverses XXXX.

Operator

Chad with TD the Our line next question comes of Wiatrowski Cowen. from

Chad Wiatrowski

quarter, with how translate This when does Mah. what expansions? example, in that does does the validating is fourth that on And revenues, I specifically the the Chad an agreement into that Wiatrowski customer looking validate on X about you're of like for guess, tier Steven expansion a for platform software Lilly, how itself? --

Ramy Farid

happen? comes multiple exactly of Geoff there as overall. thing, they software level believe, using Is that really we're and a that we're Yes, going of tier for, next There as we're number their up the what encouraged pharma we're matter see the of to it unlikely by things of -- the obvious that are what go of clear is, trend just just internally and that then we Lilly. actually other beginning doing KPI have a But it's scale by of saw really one a one sorry, as customer -- but the the and -- There our million. handful validating over a are an as critical is that. that very we're happen. it seeing, scale it at up that's we're spending That's customers way that again, please. from usage quite that's the pharma a that is engagement scaled that those that, approaching couple saying, of from. companies at the it saying to where reason extremely trend, And also the that computational where a of, be just that was will of that, that of working it's is going of going from unlikely be trend sort over customers pretty of saying, of will pretty companies adoption that extremely level, industry of that do handful and a years? It's will sort the it that ahead, at it's -- customers go It's highly great obviously as the not important platform continue.I the see and question. beginning trend in of example, spending you We that's number should positive, when their mention $X are -- you seems sure for -- to to those to oh, is uncertainty stages and are our

Chad Wiatrowski

going just was I No, pivot. kind of to

continue you So on that can question.

Ramy Farid

important one you was important thing, that be let the going very say out and ask -- -- to I other to really advance the we just I'll for It's other Yes. to continue question. brief but point and platform.

significant very a have effort. We

breakthroughs make to as and that well. expect to We we continue the science, in continue

else more years will that science thing another and industry have, and more will and to that react we several that's continue that I think will over to. that's value will increase the see continue to really the beyond, the and in So next we the something breakthroughs software the to impact the think continue that

Chad Wiatrowski

and so, Is with structure Is an is on for And NVIDIA you NVIDIA's you a software fine-tuned there example, for have these Cloud. capabilities? to partnerships BioNeMo that drug could platform launch AI Google like, these marketplace emerging discovery. growing that monetize And incentive further you tools any of for type marketplaces? way for

Ramy Farid

just whole long-standing. you be been I'm I'm discuss And these We're to benefit now, a recent. not and us, important They've way, extremely sure Yes. for those By They're not place will able really collaborations long but in to benefit that we leverage to brought but time. up aren't the to those prepared collaborations. glad the continue industry.

Operator

Group. line Our Matt from Craig-Hallum Hewitt the comes next Capital with of question

Jack Siedow

is Jack Matt. This for on

we with about those you question, expanded assets?And year former And then, solely are Zai that any monitoring? customer Firstly, the will large previously agreement, my trials? now renewals software this Lilly be alter second and Schrodinger we the Lab's program when mentioned should Eli there of how timing think their should renewed and that other assets, Bristol-Myers' being

Karen Akinsanya

programs looking question the of described how pursuit programs. first the we -- and at our programs portfolio. targets, that more targets. commercially-validated no commercially these to others in proprietary X wholly-owned wholly-owned, in The have So, we about for were to we've of targeting that's and the that clinic efforts. all about programs -- clinical past will came the or own all with were that And Right is obviously, incorporate now, of some on impact are our are the are enter these one respect BMS X those programs, into novel there been our the from Zai whereas

not We continue yet. that opportunities future, that on to made of in at as programs the been the decision returned have we have some potential but a look

Ramy Farid

pharma in potential to the to said, XX, It's top just then, your software. companies that with as the And XX engaged in keep with as have of very mind. emerging the we're, discussions really up a large other important and, companies. companies scale to regard question, their number Geoff usage not I said, That's of

conversations So conversations. want name next to we're year, that's the encouraging. having the going Lilly. We're if company the certainly it, in are yes to those them. -- not having prepared certainly this we're but to at But the be, certainly you But point call next

Operator

from next with Our line comes the America of Ryskin Bank question of Michael Instructions] Securities. [Operator

Joseph Wolf Chanoff

This is Wolf on for Mike.

dynamic your you below. with big is outlook in even have and renewal multi-year in only also benefits, pretty well So understood. going these on XQ fairly renewal software But that the in XQ is well came your software modestly above guidance

seen comp-related Or plus some change have what's for SaaS back and to backing ] the multi-year [ underlying take And out to dynamics, going follow-up. a get of XX% that markets? then, growth have kind software profile? you these So timing it in I to

Geoffrey Porges

Yes.

I question. No, the Okay. understand

and you look, consolidation we that, financing we the doubt industry, it XXXX. cetera. that want in significant, the in So, smallest drag there phrase what in -- of is that have in more [ that customers growth affected that there the $XXX,XXX, say, let's right a than a as just highlighted on like, if of of than think some the to accounts. if I odd was in XX sort mid-cap more flux what We is effect way, no refer the there offsetting offset drag, a the path the smaller companies, opportunities by were the reported than the et been to that, you And ], greater to

small -- So that's and those counting we're a on coming accounts back, although not theoretically, possibility.

the that still of And closed contribution Now, number a that we That were multi-year and QX Lilly we and was the something called out the of towards that highlighted had. we size deal of working because in impact of but it specifically the deliberately working others throughout agreements became multi-year that were revenue, year. the we're year, other generated on. through the there towards that which worked and some contracts

to in being plenty a is opportunity chop of because and suggest of this for do year, us there things called to another Lilly opportunity So fourth but careful to drive the wood major now that we're clearly, out not to pretty we plenty there's that want right add? that out you was there quarter.Ramy,

Ramy Farid

No, I that's perfect. think

Joseph Wolf Chanoff

clear business previously, thinking for steady there. we kind Then milestones? I'm there of inflection more Okay, not just there, got that segment? years, you for the expected methodology trajectory this think about be that that out indications other of of or a drug change how ramp pretty Or and the barring any should the to discovery should kind going of now it. the clear in drug was 'XX we think guidance given side to to on of discovery, ask in but is I guide the

Geoffrey Porges

business to there I this is the ahead, and these estimate the in in we advanced. when because my to will our and -- hope the become It we go difficult nature they forecasting in conveyed find as prepared and questions answer particularly this of that remarks. programs programs segment business the challenges of more

effect more and course, as of become become so even larger, greater. the they the milestones advanced, So becomes outsized

very standards, the those and continue be that confident initiating is keep opportunities they programs there thinking are are we them course, we advancing to to that continue if to other But for We progress, of this, that grow. and about revenue that we way into are worth preclinical to clinic proprietary even transactions. shifting they're development, in our more the And or going believe, capital we industry allocation partnering as with advance consistent to our be programs. that our advance proprietary we programs towards

and be development to already future forward, continuing in a with promising new of that our everything is number in take come up our we planning are very we So partnered will couldn't because our programs therapeutics group the portfolio foreseeable obviously, rich opportunities.

there's the transactions. So value revenue think a those not think timing do be methodology prudent to to -- there's But and the taking, we it's or we're guiding opportunity given of approach very there. the significant we that

Operator

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

You may now disconnect.

Schrödinger (SDGR) 28 Feb 242023 Q4 Earnings call transcript