SDGR - Earnings call transcript Q4 2024

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Operator

Thank you for standing by. Welcome to Schrodinger's conference call to review fourth quarter and full year 2024 financial results. My name is Kelvin, and I'll be your operator for today's call. [Operator Instructions] Please be advised that today's call is being recorded at the company's request.

Now, I would like to introduce your host for today's conference, Ms. President Relations Vice Corporate Senior Madden, of and Investor Affairs. Jaren

Jaren Madden

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

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

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

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

Ramy Farid

clinical Novartis $X.X new milestones was to Thanks, predict project with a programs initiating we the by in co-founded. Lilly for their and science joining Structure exciting and at underlying Karen, we today. associated approximately a agreement was XXXX our to billion, collaboration and Ajax biologics. XXXX companies Schrodinger. revenue and expectations, Schrodinger. marked was off-target also for binding and discovery platform, pipeline. We advance you, expanded everyone, our We software established for our collaborative a an us exceeded drug new including thank year continued proprietary software by and informatics launching enterprise platform and resulting $XX important progressed Morphic acquired million with for for toxicity advanced

revenue optimistic the for As continue. Total we broad will I'm was look to XXXX, momentum million. year this $XXX

XX number just ACV customers $X $XXX of revenue increased XX% of than value our customers million grew fourth million. quarter of contract of over annual an increased from of XX. Total to million, to to KPIs. representing growth software increased The our reflected also million, the million. ACV greater business $XX X software from $X to greater number and X than with by $XXX was The with in XX% XXXX XX% revenue Software strength and is

our retention software our customers consequence $XXX,XXX. having KPIs the XXX% ACV a is programs. We performance impact our strong Our is direct for of of at with believe of customer technology this least on was customers'

have priority computational and computational It that is platform. that AI/ML adoption landscape informatics our is in powerful including the release technology Our our continued is our integration clear more driving of reflect the of already for enterprise discovery products rapidly XX increases our off targets. than drug where producing for design. This is to predictive in new in industry methods solutions unique year, physics changing plan and and toxicology solutions the XXXX investment platform, that and we materials continued technology, several and we enabled

rapidly lead broad I of proprietary a This forward we to call. programs. in accelerating provide and enhancements to Phase methods, Our data pipeline Karen to additional our ability X programs. year, discovery of methods collaborative big to from release the our impact and initial applications technologies also a later platform of are a detailed look having AI/ML We progress our update is broadening the our biologics and impact clinical sharing discovery are planning will on that physics-based

We we now the are Geoff. will course turn positioned a well transformational and year. I forward over call providing the to XXXX, the of updates for to look over

Geoffrey Porges

everyone. Ramy, you, afternoon, Thank good and

We financial performance with XXXX. in Schrodinger's pleased very are

have the hosted we Our of will revenue. The renewals and of revenue to is in concentration our The KPIs the software contracts years. and expectations from expect gradually resilience QX software in the continues showed contribution increase, growth cycles exceeded guidance financial we of our large we business progress the and in for our reflected our changing strong and results prior for made through providing reduce XXXX. headwinds the in industry excellent the are year this contract

drug new programs by and collaborations. new the to landmark Lilly agreement are added Our the driven existing and portfolio Novartis Otsuka expanding, collaborations with discovery and

by key driven data higher was revenue. $XX.X compared with proprietary revenue discovery increase coming summarize in with milestones QX programs beginning clinical QX. disclosure clinical year. I'll are an software to results, was The reaching our X financial programs our Finally, from of significant XXXX. million, now drug and this Total QX increase XX%

in to X% by X last hosted Software years. On-prem revenue higher as $X.X was hosted an and projects million have mainly XX% compared The to transitioned for software to in hosted increase maintenance licenses was existing XXXX. to and on-prem customers due from from reflecting large were declined from was to the XXXX. $XX.X over who million, periods revenue QX X% Melinda increase deals that support $XX revenue software hosted by Gates revenue the increased reductions X.X%. quarter, customers in in million, completed by or Bill Maintenance expired. Maintenance driven to & revenue the as prior closed in services including by contributed deals revenue Contribution Novartis, in the the compared closed to new QX increased by QX multiyear tox increased by QX on-prem Foundation. Overall, switching XXXX, of was Hosted XXXX. total contribution by was contracts XX% revenue $XX.X new XX% of revenue matched million. million funded the licenses. Services $X.X revenue project multiyear predictive XX% offset

The the We These number offsetting the each QX, in churn are to the Novartis continued customer outcomes of the to million industry in our for but from in payments little customers a compared software strong platform, QX continue with SMID $X.X XXXX. collaboration the was churn seeing segments. Small and segment. Drug software result in year, add and to and in by also milestones our biotech global revenue increase existing software, the million was biotech cap in our collaborations, growth are was recognized companies upfront quarter. to mid-cap discovery received the pharma the we contribute for quarter very our due of in validation $X.X encouraged acquired. very amortization small to of accounts, but being positive revenue equally, biotech are our top XX embrace new

QX, Turning project, overall in The was XXXX. discovery software along The due in to in in $X.X royalties. in margin million to The the $XX.X project. Drug of due same in million costs QX with due period to higher cost $XX.X XXXX. of XXXX. tox compared profitability was predictive margins. increase quarter, million, software increases QX compared in our and was revenue compared the tox XX.X% margin increase revenue to The predictive decrease was was The to gross as by to margin the cost the and expenses. Overall, of associated gross gross the XX.X% compared The royalties XXXX cost of $X.X cost of the with higher million higher some due XXXX the was lower XX% in mainly to decline declined from FTE increased the to goods to QX well higher XX.X% XX% software. expenses and as in in QX was XXXX. QX to discovery technology drug

XXXX. discovery the expect internal ahead, projects of and trend the of associated Looking goods to project of continues tox R&D in for into cost moves year balance this predictive continue drug with expenses more we for our as as this

the expenses Therapeutics $XX.X and in based operations $XX.X largest was at professional flat mainly R&D. This and XXXX. last mark-to-market of FTE declined being in were of year, last XXXX valuations. projects Our The operating QX million relatively the allocation change of million year. Sales small to million operating $XX.X million in million were with a loss QX $XX the share to to $XX on QX discontinued QX diluted lower share QX diluted lower in count that million, and unfavorable $X.XX QX to The million, $X.XX in Structure the fully currency and QX associated X% same $XX.X million, remains quarter $XX.X income XX.X to $XX.X net loss a for and was was income based $X.X was in compared essentially royalties. Total XXXX, of million compared million Full in to and was headcount QX $XX decreased in balance compared to the increased The value was diluted $X cash was XXXX. expenses in from compared last periods changes and a of million, million compared by QX balances. Total compared services currency $XX.X XX.X to the million, after on in other in loss of million, $X.X compares stable expense company in X.X% due during our a decreases equity loss was year. million and decline by in expenses value $XX.X from marketing for private the year summarize financial $XX.X XXXX fair G&A count of loss in a taxes associated expense higher full to to year, XXXX. Other for compares CRO and offset share. R&D million of million spending to net the million. QX foreign lower a in taxes of $XXX the This year. The in year. I'll now $X.X a to in and due net year million $XXX last share by results. revenue before million, was per resulting effect loss loss $X.X was the year loss prior or per QX of million for or lower in the fluctuations

of of the large last tox XX.X% The to multiyear of Software was the the reduction $XX million contribution XX% from hosted from XXXX. by to of accounts more $XX increasing year in XXXX, offset large Gates revenue funded by $XXX project non-recurring XXXX. revenue compared XX% impact impact transitioning $XX revenue growth to software revenue. Hosted coming year, was due signed milestones in number revenue million to at predictive an from XXXX. On-prem to for from $XX revenue contracts on-prem increased this the to for discovery Contribution of Foundation. Drug those and due was with million Hosted new year. X/X received contract X/X million, to or in hosted $XXX as contributed licenses. flat contracts from the due compared grew software revenue less partners $XXX million signed million grew the million to

and associated the in the stable Software X% to contribution to R&D XXXX marketing The XX%, gross sales to compared to G&A X% revenue margin compared the in year million, increasing by to to Overall, by million. $XXX XXXX. XX% and was at with XX% XX.X% in compared was costs to X.X% increased by increasing gross was margin in margin with XXXX. increasing XX.X%, gross change million, due by to XXXX relatively compared expenses for XXXX. Operating higher $XXX $XX

diluted Nimbus $XXX our Morphic XXXX per million in to $XXX by per loss million profit share operating Other million, Our of diluted compared net was XXXX. our more during income to and income the or driven $X.XX $XX or associated to was year, stake in compared $XX.X The million, in the was and loss Structure in million, $XXX XXXX. XXXX. and the gains the gains with distribution share in the of for value year $XXX XXXX from in net compared in was XXXX $X.XX this million

million in compared used operating to XXXX. net QX, in million $XX in Our $XX QX was activities cash

Our XXXX, the for net $XXX in cash to million activities XXXX. million in compared used was year operating $XXX in

Our XXXX. was the at of cash and securities QX compared end balance million to end of $XXX at million $XXX QX marketable XXXX, the

at reflect not initial position balance receivable $XXX for the cash the end our financial Our QX effect guidance our from Novartis, added cash now provide XXXX. the to January. I'll million did of of XXXX which in

software our range expect to the XX% revenue of to We $XX and to the revenue in expect to million drug of $XX XX% be currently million. range growth be discovery in

weighting which software from a of expect revenue revenue increase We our revenue earlier fourth our periods. proportion quarter slightly hosted contracts, of bolsters further our in and the should reduce in

million $XX be the revenue revenue quarters be will of in software that weighted million range towards discovery $XX to the drug the of is expectation the current will year. later Our and QX, in

margin Our in the gross the is by likely in range tox to initiative. is the predictive contribution to of be driven The the XXXX. compared software XX% reduction to revenue from increase XX% in XX.X%

their Our in as cash activities X% large lower from business our than not growth productivity of used investment XXXX, net in newly tox of our XXXX, expenses are with driven associated of now the Many by adoption up their We in expect R&D technology, of and goods and XXXX predictive to increasingly shift cost we expenses the companies technology our of to in continue efforts. expect to and be initiative, collaborations. interested have to operating in increasing be by the drug less scaled announced than these XXXX. In operating are discovery software to improving by customers. grow likely certain

We our biologics including and should at not machine to learning the many with platform, technology are capabilities meaningfully contribute the already expanded yet adopted for enhancements have our companies our year. methods our and having who with integration anticipate that encouraging of to this and AI scale, growth of discussions physics-based

biotech expect fielding are meaningfully and emerging we small companies, growth While we year. inquiries our this to contribute new from companies to don't

market had to and leave that Our year strategically and significant operationally, growth than is don't entering from of this less expect Schrodinger financially with we results either. To excellent us that exposure X% XXXX. in revenue, an strong positioned year China XXXX conclude, well

to and value our opportunities significant collaborations beyond. many in our continued XXXX have growth drive We to and in software business poised are contribute

to is sheet including our balance metrics, operating R&D. trending to strong, turn our in therapeutics Our now and KPIs the and call are operating on expenses Karen the right direction. I'll comment over

Karen Akinsanya

challenging I laid portfolio, afternoon, expected with you, initial clinical and new as stage our with a the drug from with Phase data targets. are we the our In initial adding have of collaboration we a delivering for of excellent of the and Thank November, as with agreement with exciting record collaboration we we SGR-XXXX addition collaboration of another year and Novartis partnerships collaboration Novartis, target. Last differentiated progressed, proprietary reflects Geoff, Lilly. Dose builds These to high-value target achievements high-value collaborative in to Lilly. with year we and and and important our X program expanded track robust agreement. well The of molecules significant milestones Otsuka, another signed packages pipeline. existing recently agreement for good established expansion this a advanced our pleased made X initiated the initially with as these announcement announced for everyone. collaborations with program pre-clinical in by expansion programs. Beginning Otsuka we study we and new our and on the was productive therapeutic the our escalation our the the the SGR-XXXX. groundwork Phase XXXX Today's XXXX an team area presentation SGR-XXXX studies advances on discovery for signed I for all month, a discovery

to Turning programs. our clinical

in with is MALTX and in and of Our for the BTK a It regulates which SGR-XXXX. downstream most inhibitor is Phase resistance. our malignancies is BTK program elevated MALTX validated target and signaling, I patients NF-kappaB clinically B-cell lymphomas. inhibitor is advanced pathway leukemias

B-cell Phase the we ongoing patients and escalation and at and quarter. efficacy evaluating study pharmacodynamic I PK/PD report data is to medical Our relationships SGR-XXXX malignancies relapsed/refractory expect pharmacokinetic second well as a as meeting data with in safety, preliminary dose in

to inhibitor an acute with in Our of syndrome. goal or development. Enrollment our myelodysplastic SGR-XXXX, of is provide initial CDCX the leukemia understanding profile myeloid I is in SGR-XXXX further also of inform ongoing to Phase patients study our

As a objectives schedule. The progressing dose evaluate clinical this continue II well second to and completed, recommended anticipate and Phase this multiple study year. reminder, we tolerability the and to in initial of SGR-XXXX the escalations determine safety of Phase half the with dose data to I of and the are is study reporting

of I study SGR-XXXX, also our advancing. Phase is our WeeX/MytX Third, co-inhibitor

study PK/PD, and Our schedule to inhibition. both dosing other these solid escalation safety, concurrent cancer confers patients advanced in solid addition inhibits ovarian, of vulnerability and to and WeeX/MytX lethality. breast preliminary ongoing proteins includes loss elevated X stress. This to uterine cells be tumors dose amplified with will sensitive in cancer and with SGR-XXXX in predicted evaluate termed replication tumors the synthetic antitumor MytX WeeX activity

intermittent potential any allowing mechanism-based recovery toxicity. Our efficacy intended from maintain schedule hematological is to while dosing

in the our with study pleased second this and year. anticipate initial progress are We this half in reporting data of

involved development program cell Beyond and discovery candidate, inflammation our early programs diseases. a non-small osimertinib-resistant we our we or including for in neurodegenerative EGFR clinical Recently, progressing CXXXS brain metastases. for programs, cancer, are targets selected also lung

advanced X Over the some have programs. early our partnered and several we of programs past into clinic years, the stage

ventures emerging from creation our collaborations. additional We continue to out-licensing, value portfolio new see for or opportunities through

much to X call turn Ramy. programs the clinical sharing all to We are the forward from looking back throughout clinical year. I'll results now very

Ramy Farid

Karen. Thank you,

very successful to our like about this a this to their time, to we we'd take opportunity XXXX, for we the very happy further and business for and our had across dedicated hard providing year. At thank you the outlook and your As I XXXX be updates I'm to heard, work employees throughout would accomplishments. take forward look questions. excited

Operator

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

Kaiyue Yang

Congrats Kyle the quarter. Michael is Yee. for Yang This on

us. a quick ones question First few for --

little The of second first could guidance? proportion Novartis what revenue assumption behind comes your XXXX question discovery partnership? And understand is, previously And drug is, could revenue what a you J&J's of from molecule you bar. program. bit share your that your We as sort please guidance your used the the thoughts from is tell first-generation MALTX us on you please updated about data a

how a So has second-generation the about think and bar should we J&J a MALTX knowing molecule now has as well? that AbbVie also initiated

Ramy Farid

Do the Yes. -- to want you first? Geoff cover

Geoffrey Porges

Yes.

Let me forecasting that The the pretty the revenue start for quite in broad-based. drug is off discovery comes question guidance few collaborations. a with revenue XXXX increase about different we're your drug discovery. It from

on portion. But programs. of up is XX which number just of projects. I probably of that part of want collaboration, sort As amortization you to we're to other significant the it's of upfront we're going in upfront revenue it it payment multiple we've that of those those indicated think there that recognition are you is over all payment imagine a wouldn't years. I a scaling imagine, would months, of at from most activities of because but be Novartis peak going is the to be the to sort XX

new a year. making other contribute. new collaborations in announced in collaboration the as and such the agreement. Lilly collaboration of the Otsuka Lilly that, -- a the our those we We of contribute in program, agreement today, BMS also have new the of we're agreement, beginning new announced a program progress some Both sorry, we at the with As a

that well. provided similar So pretty that's we it's as broad-based. frankly, really guidance for on software, the And

Ramy Farid

question? Perfect. Karen, the can second address you

Karen Akinsanya

Yes.

So excitement, mechanism. out, pursuing a there that is about in I as That's target. a you companies reflected, I of this think, number lot think, of point as MALTX the are

our I we're with very trial. Phase in the are We pleased progress making

as dose we initial signs which for PK/PD as this a of you, activity. important this well safety, study studying is to are combinations, for escalation Just super where is clinical remind think we the mechanism,

I bar, in would that trial. understanding on Now say performance in terms of molecule we're the of focused our really this the

some be As you of focused focus other companies this this point are we this our you describing laser but profile there data on on an the update medical quarter, escalation of sorry. year far our will heard, the of at molecule. that study sharing from with as profile half out, -- And the the second year in so dose entering a second conference space,

Operator

next Your of of line Mani Partners. Leerink the from question Foroohar comes

Unknown Analyst

This is CJ ] on the for Congrats Mani. [ progress. on

over see this this you Is at previously a start question this the something pace would more is year? noted seasonality half Our decade? show longer XQ becomes that we term we time. that's would weighted something Or happening is to that over next more

Geoffrey Porges

in the quarters years. more will all why as become our more seasonality the this quarter of less in we the weighted, seen our hard because revenue weighted. becomes year, you We we a time. because, hosted revenue become that we've is the we the we hosted that of do But that will will revenue mean foundation opportunities keep through suggested -- you less think great that's weighted emphasized year. think last X actually couple continues it QX but see over less So, It's coming becomes it that up course, with gradually fourth perhaps distribution. And of distribution

of number that QX be So other quarters this that would want that, you the as come also deals QX, will I sort QX hosted imagine, guidance to particularly, the for the closed that provided I things QX lower similarly being weighting that going in recognized deals. revenue out reflects of in quarters down. some to of quite of add impact the and do than But, are year. I'll we to signed we I year we think QX a the still do point as and cyclically kind think, QX of that

is that a So some coming QX. of out into tail of QX

Operator

of of line comes Capital Markets. question Schoenhaus next the Scott from Your KeyBanc

Steven Dechert

the potentially What you progressing moving of what Scott. follow-up, how hosted on-prem your hosted? when from new next do level And consideration This over do demand percentage a transitioning take see for to customers customers? of and from to been and discovery into then like software existing of Steve the arrangements the drug years? And combination couple on book as is for has

Geoffrey Porges

of maybe talk I'll you And then maybe hosted. the discovery a can basis Ramy, talk And bit cadence of that from you you then little about the give about So question. to drug can a transition sense of making decision. Karen, on-prem the the

in that X So terms of contracts about cadence, in our came remarks, my X the -- compared think that software to prepared the out also from a to QX. think sudden previously sort trend. We in pointed I I don't a kind the amount QX forward. is of the percentage goal I of in compared there in a same the switch, was and we about difference as of hosted base think to revenue that's point XXXX or rapidly even we assumption of but would indicated -- reasonable the transition accelerated a of envisage that continuation in terms reasonable cadence of I kind going that, XXXX of that

Ramy Farid

little And Remember, me the as small. deliver not it not bit a licenses it When you us, we in extremely underlying server, just far on burden on more let the hosting Yes. seamlessly host does we're the the the the the it's of and the this the cases, means hosted, majority what as that by license to customer server, impact far or is do us sort it's has mean large us just we software as remind as actually concerned of software. allow is as we're customer. sell. license the for as hosting server license concerned, far But what

Geoffrey Porges

the they Why make do transition?

Ramy Farid

was it is software a deliver just just -- just the bit I Yes. what -- It's I right? I think deliver to I mean, little the that's seamless more saying. -- licenses,

Karen Akinsanya

think And deals. was about Yes. question the last I combination

Ramy Farid

we -- demand in for for combination? demand what the Yes, are seeing

Karen Akinsanya

No. the you're customers, mean, team how well the lot deals of showcasing drug a these discovery. aware, and really execute few potential as software see. software programs combined discovery drug that's I you're And partners time years. over led with think of the Yes. I number team both spend I and to as and a we think aware, I last

to that continue. expect We

a to actually excited but hard It will true, give it's think talked we're about you think these extent which opportunities. I watch as they not to we to just I row and to have us seat a be those chance, the gives of scale platform up sense but about get that use the deal, us that out with it. the most them front see the platform, so Novartis the of

Operator

comes Your of from TD of Brendan line Smith next question Cowen. the

Brendan Smith

about, driving new that to over us and time? And question that retention prior capital that's R&D allocation is some up bit this responding that where what software product ask thinking focus wanted of bit to of kind that product offerings retention they're moving you give strategy just curious just really how aspects your you on just little off of then maybe actually feedback telling really and investment and and of users piggyback how driving forward? ACV maybe I about new just feedback impacting a your are you're a some to a sense customer of offerings. Can more stickiest some kind about of are of the

Ramy Farid

customers and is something to a from of use impact. And are on simple. continue Yes. fewer means The impact coming our isn't exciting, is that our kind candidates become more having impact. to that improving, it, customer course, it. development said that there we probability reports It's to Quality from getting they dependent development it's improving. molecules is is the of of that projects. getting get making retention is to when very We're in It's very, an they're remarks, to very candidate. success have constant rapidly. They're And which technology pretty what not on molecules you of the option

there aspect alternatives. of the The rate certainly obviously, are not developing. of other And we're alternatives retention viable kind suggests of are that there whether course, it is, this to technology that

that this offering, lot a and important enterprise We areas. And we to improve When work then our in the us, and is informatics there's off-target enhancements in -- into new drug us, to example, that of about, start remarks budgets, of biologics the is we continuing investing They're to excitement not talked taps as have It's a helps new indicated improve in platform a That's technology you course, technologies. And -- becomes real impact that to predictive continue in with continued they see right? around which with in that in advance of more your platform developing question, area. then, of software -- discovery. And of also the that. a right, the improvements as asked giving well need customers received. a retention. see by real as there's our and you it they -- really whole for in they're The to a specific just part and very one broader stickiness, starts particular, as across are, to that we going the enterprise, space. toxicology, the also to continue aspect you been feedback, -- continue know in a panel number of partnership, us to we're

that impact a making we structure projects. new crystal in customers. released science That's The that their in good and an doing advancing from of an last exciting prediction. having receiving category seeing lot technology great We're the particular, on is it's year, feedback They're other that's that we're area formulations, science. -- we're

Operator

Michael of Ryskin America. comes Bank from of line Your the next of question

Michael Ryskin

KPIs of of released performance. terms ask -- I the XXXX want in you about to some your

XX sort those software function, over sort feels a reassess at seems $X bit And ACV to a making there? of of follow-on taking prior just Maybe little what top seeing you seeing onetime how like top a a something question, Or but look really the from step like number of with a that? is million, just customers, is top are Why that? Just a you XX ACV this bit of jump accounts that a jump? of it perspective. sustainable of in customers X, that's are you little

Ramy Farid

scale. has can lot used It's be a to this talked a question. from Yes. No, see address we that. this about technology We've impact at to great that

molecules much be face, drug reach requires at to that problem and gets that space. it's huge sense, of problem. It some plus we over scale. not this multi-parameter spend, the programs programs internally enough to don't incredibly that's we don't that to of when TAM. inflection think support clear technology again, we're million we or exploring solve -- amounts that working that's you an the at gives numbers and huge explore to have really using scale access there's We technology so that And that's we're the discovery very this technology only XX impact. But material You design We in chemical optimization done see all that $X think can as created in XX And over internally, that larger the limit. to the by in on our said a to know you using value become then. even an enough complicated

think experience that's -- that that through for that out level to partnerships they technology, of now -- companies record. these to there's still yes, and outcomes that the is, of of by our spending I required on. see $XX room than see more we million But that. And evidence significantly start bit So impact quite our that $X reflected reflects to And going again, more own the Karen so. our at mentioned range access achieved. have it actually And and so or that impact a in get achieve partner's track can to experience to turns to we've what's million Novartis and Lilly kind like they're companies

Operator

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

Vikram Purohit

So X. we had

you'd First talk was to be want see meeting secondly, the for was understand wanted the sensitivities flow Or the be us to wondering, some end to range? And program that bookings in revenue a cut? you is through I you to before data think XQ. could that if I what for more MALTX? data or of then you'll do BD potential going you data just on Just follow-up in do position into there? that evaluating here each partnerships just wondering also the a you of drives more on guidance, the medical think points that update evaluate mentioned post MALTX,

Ramy Farid

first, the yes. cover will Geoff,

Geoffrey Porges

revenue full we QX guidance for for the the on then So and year. guidance, revenue provided

kind QX have mentioned much the through the imagine, can Vikram, is for earlier revenue X/Xs outlook I are we closed as late about the an you the we're of the as delivering first uncertainty higher way that in we As of for confidence well. have question, QX. because year quarter that than And full on QX deals some in that

a broad pretty foundation there's So QX that number. behind

revenue year, things. the in big pretty to we quarter. fourth going that deliver have that chunk full of in And based a is confidence we're several have on we'll to have still the For the

Ramy have $X below an talk well customers awful First, in penetration of the we Yes, the under industry. that of much lot million, still the but heard leaves industry that. that is you about X over

fact, In advance opportunity where that, we we think discussions. below to have substantially an

coming their up." are saying, customers We'll second would in results technology, stepped all that And The new course, the deploying of really into in is to that, useful. have new that taking up, we level. capabilities utilization both and "Hey, the customers existing step a which higher be already then

thing of that where that way third we've -- contracts bank a on-prem we future than a strange take revenue say upfront. I'll in an the puts because in rather hosted the contract place, all hosted The the contract you in revenue put is

contract. is years, been than we the for hosted of of prior because prior in it's about compared So in, of situation higher actually that we're to revenue high that years terms a of revenue degree in certainty XXXX base the have

very degree So, revenue all confidence about of guide the give us year. high elements of those for a the

discussions of those up. we towards depends the mature, confidence large Now what high is, end, at on just end we'll stage. particularly where think about a customers those got magnitude year. of the step-up the year the bottom the to in is think top And very degree this going end and actually of as it we've But

Karen Akinsanya

an MALTX, on restate just ongoing think trial. this escalation to I is that dose important So

a are that of people abstract. sharing kind aligning the hem-onc profile cutoff As partners on what with per time emphasize space the when what the the is we again in data will be I MALTX. But for be you we will our impactful -- XQ in know, potential of we submit lot spend looking for, would what

with in be think discussions study, as I have discussions, we approach a progresses. And will a complete it further companies second rounds we'll year ongoing. of So the as round. Obviously, more

we'll give yes, I interim meeting. an So update, think, at medical the

Operator

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

Malcolm Hoffman

on from you tariffs. any recent Hoffman if proposed Malcolm of I think to wanted for is that could could you This impacts foresee U.S. ask guys Evan.

China of roughly this those I want context Just be of Could your to by X% revenue. is You noted get exposure there. only any ongoing disputes? impacted meaningfully it. to appreciate

Geoffrey Porges

Yes. appreciate I question. the

one given a sensible context. it's the think I

total our for low substantially the revenue than actually think is It's X%. single less I in digits. China

the to risk having question that. I but that is We see we are less which associated is to recover lot your as answer, would X%. of expecting don't ourselves another in equally, of sort future, exposure with dovetail with NIH sort immediate our of a than

Our -- our less including to exposure is mid-single still institutions really X%. our mid government about considerably different business digits, And of total high NIH academic to total all exposure, digits. single parts is U.S. than across U.S. high

expect to it's a business. there's a -- of on lot lot tough our there, looks research. of being But that academic have impact going turmoil it So to don't medical for environment and like be we out a

Operator

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

Matthew Hewitt

answer to to questions, we then follow-ups. as Obviously, revenues X those far be how I'm should trying think necessarily to But be thinking is then Thanks when come of are going I'll revenues concerned, for we we the lines should the so I'm over January, dispersing hit. know about year. and ask I'll drug Lilly you different be the to should going cadence with But don't just the as in those? discovery of the update. thinking signing contract attached first, I the that? -- actually for milestones back how are with them and course let there have the you anything

Geoffrey Porges

they're my indicated back-end remarks I in again somewhat likely that to be prepared weighted.

and even, the a period example, new imagine, contract similarly, Lilly the while for well of frankly, recognize year program scale we then mentioned Otsuka As you the up all and with -- that as those ready up, I going you time Novartis is will, up with as revenue up. teams that we're And those go, can as those project it to collaborations, contribute, during scale course, of Novartis of teams. and takes teams scale to project revenue spin to

very don't not think we're it's will to think that So -- of the increase heavily weighted, yes, it's I gradually I going but back-end sort year. it I say throughout would --

Matthew Hewitt

you be can of prime toxicology, the any from think And feedback predictive you're some ready that customers? beta could the you secondly, then And initial time? do for getting that provide when

Ramy Farid

Yes.

a at clear feedback As challenge every that I really essentially indicated, been recognition the excellent. this there's has faces a It's that single solves wide some real point. project

science methods, quality As of the that's the it's recognized and widely. being impressive, far as also the the and of accuracy

to will to be ahead we habit not information of using kind it and but that over Karen. I releases, more have to around this released, more are forward we're of is actual will release committed time can announcements you and for with customers maybe it. I important, releasing as more and sharing of As when dates look the announcing far it in as it this year, we say hand

of We are it, it's a have using our it to so access -- projects. already. I impact collaborators had big on our number mean and a

Karen Akinsanya

Yes, that's correct.

As drug the gets those want powerful we you and being in something out and tool. very our been team we access it as both using able really profiles said. a to dial don't dial own ongoing the internal want and actually with is is the early programs, technology, in Ramy know, we've discovery collaborators, to And and

Matthew Hewitt

year. little like kind were trigger of think and expecting you really some one, be the think bit noted that simply get What using get that thing? pharma you And still pharma, to bigger what's Is drug to discovery there? money be do with Or this to didn't maybe then from overcome? comfortable adoption a biotech But a It standpoint? Is their this it more it that in you that to they is you on hurdle with last sound lagging going change the balance standpoint. going here. small is picture need sheets? to the take software other maybe needs there Is is much an to small feel it -- small board

Ramy Farid

thoughts. customers. at a pharma we give the a to some hand of than we've me think before talked I'll large number using have you number the they majority higher about is are software, let clear, first over of small make that, about have companies to just our But it that and if programs this of the scale potentially, Geoff something

a companies But So news good That's the there the and the question, are value recognizing broader are there you can. is that small Geoff, maybe sign. it. plenty that good relatively using of

Geoffrey Porges

Yes.

how biotech impression. So not they they because then discover so frankly, lot successful, acquired. are segment I companies some small are keep for reluctant the of finds that a And actually a wrong their and the of has that just it, platform It's as is software have them our conveyed whole pharma or use lagging. out that being the churn may Is acquirer to or even validation molecules. in

discovery. focusing causing advancing area all program their companies some churn. But about just something. to are or therapeutic just clinical investing seeing an down on concentrating the restructuring is in thing headlines one And core appetite that or on naturally, that we're that's has and that their the So effect other for

would pretty growth I again of to biotech to for we what kind for say, what to see be, that. commitment in driver which want be segment your that drug would a sort capital still of, question the to us, answer my So for for is would discovery environment -- emerging direct I do is tepid, a renewed providing companies,

Operator

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

Chris Shibutani

Two if I may. questions,

us recognized made it can by of revenue in modeling for that, then made revenue a partnership with about second then Geoff but question to to clarify in sequencing? And being you well. mentioned from tied and think Geoff, XXXX should -- With Gates be majority in that's Foundation. announcements Karen the the perhaps, business, just you recognition, as where toxicology perspective, still the how contribution the a predictive you XXXX. model the about anything do appears and revenues that that will With for we the several

have clinical You X assets.

R&D ago to you about candidates into a one having And clinic. is another at there to You've for currently enter a the the clinic? choose advance into over talked potential year child? favorite gating to decide your currently, factor about little a multiple the is What could you Day that

Geoffrey Porges

Thanks, Chris.

QX $XX of terms initiative would recognized disclosed in We million that In the that you total believe correct. revenue is between predictive in tox million of be and recognized indicated for we've grant, the in revenue, And most are XXX% XXXX. revenue We around XXXX then to $X $XX.X I QX. the million.

is but So, that's will most a the There XXXX. will tail recognized continue kind of that of of be in the recognition. into of that XXXX, bit balance a that of cadence

Karen Akinsanya

we is the in focus I'd I on the that on X the think clinic. programs, in XXXX the Yes. programs say really have

we of I we've think that years. And we also and we'll whether sort target within intend do that's is the have or focused decide within have the the from take profile coming to assets, over those the of targets, whether the exciting lot pursuing been clinic on, other ourselves landscape, of will time when one pipeline product emerge we that right, opportunities but each a partner. just companies into that to similar said, programs, as we to pretty the we're right when programs progress, our in have, of you X early year, with partner, the we and last clinical pipeline this behind about Novartis, respect in and hands of the we data want those we've to advanced space with stay full decision assets. programs clinic. the when on those our year. With to share excited partnered got We've the As some know, our not of will merits there will the flexible to advance now are to terms But the programs

Operator

comes Your next line of the from David Lebowitz Citi. question of

Unknown Analyst

Lee Ike Lebowitz. [ This David for on is ]

inhibitor, We the on have the XXXX. WeeX/MytX one

advantage then safety going this given results degree past there to an think very there this in -- you are you canvassing based have done For I particularly is data? Phase a say to see dual well, the on do as any related you're on discontinuations two, one study the what are guess, I when to be coming tumors, given before that particular you different you you with solid approach? And out focused the later there mechanism work that that interest out And on signals year, stands the class? of we you've note

Karen Akinsanya

Yes.

MytX allows studies, what with past were dose more mean, contribution. preclinically this essentially all, I dosing with you to to So take is intermittently while that break observed the allowed in we've the the inhibitor with our efficacy, ability observed shared that dual for think, you have off to in what holiday. we first I safety, WeeX, of we a respect you in that a But preclinical that's the

exploring that in Phase currently I you As trial. we're our know,

not efficacy. you're WeeX are But the providing we're say people call can going this The about do tolerate be that on while very on year. we update necessarily something that right ensuring focus reserving That's the to We profile. to drug. for an is on how later this maintain that it's clear. has efficacy

on of well course efficacy profile tumor at And activity focus dose just tumors, clinical this or of as out fully so the escalation the safety understand the coming trial that's going trial. I to a during as to the types. also is profile to least question be want initial answer this

there's also something mechanism that of important some other that uterine But that what we've types about there, to molecules again previous and carcinoma. you know cancer, of the replicate time from comments, to tumor activity trial. is there's with be types our We're we respond that with repeatedly that with excited there potential pretty aspect and that's serous as time seen different I ovarian to WeeX. WeeX will seeing tumor looking proof in activity platinum-resistant we're think have

] I incur [ some additional also know think sensitivity. we CCNE

of and emerge this that the uterine on. exploring We in at in we types, other about ovarian course, beyond tumor sharing time. lot strategy but later been a are interested, will haven't That

Operator

lines. and are ladies you please no disconnect call. concludes your time. There With questions that Instructions] for you that, thank [Operator participating gentlemen, further this We that conference at ask and your

Schrödinger (SDGR) 26 Feb 252024 Q4 Earnings call transcript