Full Press Release Details
Schr dinger, Inc. Reports Second Quarter 2020 Financial Results and Business Updates
Total revenue of $23.1 million, up 21% year-over-year
Software revenue of $20.9 million, up 44% year-over-year
New strategic agreements with Thermo Fisher and Viva Biotech
Rapid progress across internal pipeline; three programs in late-stage discovery
Conference call today, Monday, August 10, 2020 at 8:30 a.m. ET
NEW YORK - August 10, 2020 - Schr dinger, Inc. (Nasdaq: SDGR), whose physics-based software platform enables discovery of high-quality, novel molecules for therapeutics and materials, today announced financial results for the second quarter ended June 30, 2020.
"We made excellent progress during the second quarter across our entire business, including growing our software business, advancing our drug discovery programs, and developing new platform capabilities," said Schr dinger CEO Ramy Farid, Ph.D. "We are excited about the opportunities across our business to continue transforming drug discovery and materials design for our customers, our collaborators, and for our own internal programs."
Second Quarter Financial Results
Revenue was $23.1 million for the second quarter of 2020, an increase of 21% compared to the second quarter of 2019.
Software revenue was $20.9 million for the second quarter of 2020, representing a 44% increase from the second quarter of 2019. Drug discovery revenue was $2.2 million for the second quarter of 2020, representing a 52% decrease from the second quarter of 2019.
Gross profit reached $13.6 million in the second quarter of 2020, an increase of 38% over the second quarter of 2019. Software gross margin in the second quarter of 2020 was 82%, compared to 75% in the second quarter of 2019.
Operating expenses for the second quarter of 2020 were $30.7 million, representing an increase of 29% from the second quarter of 2019.
Other income, which includes gains on equity investments and changes in fair value of such investments, was $13.1 million in the second quarter of 2020 versus $13.2 million in the second quarter of 2019.
Net loss, after adjusting for non-controlling interests, was $3.4 million, compared to a loss of $0.5 million in the second quarter of 2019.
Schr dinger ended the second quarter with cash, cash equivalents, restricted cash and marketable securities of $284.5 million, a decrease of $4.2 million from the end of the first quarter of 2020.
"We are executing on our strategy to drive growth in our software business and rapidly progress our drug discovery programs," said Schr dinger CFO Joel Lebowitz. "We continue to invest to advance the science underlying our platform and to progress our internal and collaborative drug discovery programs, which we believe will deliver long-term results."
Second Quarter Business Updates
Driving growth in Software business
Creating value from biotech equity stakes
Expanding platform reach
Advancing collaborative and wholly-owned drug discovery programs
Advancing the underlying science
"We are excited by the scientific advances and progress we have made on behalf of all our stakeholders," said Dr. Farid. "Our leading physics-based computational platform is transforming discovery programs for life sciences and materials science with higher quality, novel molecules, and more rapidly than traditional methods."
Business Impact of COVID-19 Pandemic
While we did not see material impacts to our business from the COVID-19 pandemic during the first half of 2020, we have identified certain market risks that, if they materialize, could affect the growth of our software business and the timing of our drug discovery revenues for at least the remainder of 2020. Some of our software customers may experience increasing budgetary pressures, which may cause them to delay or reduce purchases. In addition, our sales force has limited in-person interactions, and their ability to attend industry conferences and events that promote and expand knowledge of our company and platform has been hampered. Relative to our drug discovery programs, certain programs, particularly ones that are in clinical studies or preparing to enter clinical studies, could be delayed which could result in delays in achieving milestones and related revenue. While there remains uncertainty about the extent of the effect of the COVID-19 pandemic, we do not envision a long-term impact from the COVID-19 pandemic on our ability to execute on our long-term strategy.
Webcast and Conference Call Information
Schr dinger will host a conference call to discuss its second quarter financial results on Monday, August 10, 2020 at 8:30 AM Eastern Time. The conference call can be accessed live over the phone by dialing (833) 727-9520 (domestic) or +1 (830) 213-7697
(international) and refer to conference ID 9992538. The webcast can be accessed under "News & Events" in the investors section of Schr dinger's website, https://ir.schrodinger.com/news-and-events/event-calendar. The archived webcast will be available on Schr dinger's website following the event.
Schr dinger's industry-leading computational platform facilitates the research efforts of biopharmaceutical and industrial companies, academic institutions and government laboratories worldwide. Schr dinger also has wholly-owned and collaborative drug discovery programs in a broad range of therapeutic areas.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995 including, but not limited to those regarding our expectations about the speed and capacity of our computational platform, our plans to continue to invest in research and our strategic plans to accelerate the growth of our software business and advance our collaborative and internal drug discovery programs, our ability to improve and advance the science underlying our platform, including through these use of new technologies, our expectations regarding the increase in the fair value of our equity stake in Relay Therapeutics, our expectations related to the use of our cash, cash equivalents, and marketable securities as well as our expectations related to the COVID-19 pandemic's impact on our business. Statements including words such as "anticipate," "believe," "contemplate," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "potential," "predict," "project," "should," "target," "will," "would" and statements in the future tense are forward-looking statements. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Actual results may differ materially from those described in these forward-looking statements and are subject to a variety of assumptions, uncertainties, risks and factors that are beyond our control, including the demand for our software solutions, our ability to further develop our computational platform, our reliance upon third-party providers of cloud-based infrastructure to host our software solutions, our reliance upon our third-party drug discovery collaborators, the ability to retain and hire key personnel and the direct and indirect impacts of the ongoing COVID-19 pandemic on our business and other risks detailed under the caption "Risk Factors" and elsewhere in our Securities and Exchange Commission filings and reports, including our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2020 filed with the Securities and Exchange Commission on August 10, 2020, as well as future filings and reports by us. Any forward-looking statements contained in this press release speak only as of the date hereof. Except as required by law, we undertake no duty or obligation to update any forward-looking statements contained in this press release as a result of new information, future events, changes in expectations or otherwise
Ten Bridge Communications
| Condensed Consolidated Statements of Operations (Unaudited) | ||||||||||||||||
| (in thousands, except for share and per share amounts) | ||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Revenues: | ||||||||||||||||
| Software products and services | $ | 20,900 | $ | 14,482 | $ | 44,712 | $ | 33,087 | ||||||||
| Drug discovery | 2,192 | 4,528 | 4,554 | 6,664 | ||||||||||||
| Total revenues | 23,092 | 19,010 | 49,266 | 39,751 | ||||||||||||
| Cost of revenues: | ||||||||||||||||
| Software products and services | 3,862 | 3,671 | 7,863 | 6,804 | ||||||||||||
| Drug discovery | 5,647 | 5,488 | 12,195 | 10,092 | ||||||||||||
| Total cost of revenues | 9,509 | 9,159 | 20,058 | 16,896 | ||||||||||||
| Gross profit | 13,583 | 9,851 | 29,208 | 22,855 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 16,657 | 9,531 | 30,357 | 17,969 | ||||||||||||
| Sales and marketing | 4,362 | 5,343 | 9,151 | 10,436 | ||||||||||||
| General and administrative | 9,651 | 8,940 | 18,587 | 14,026 | ||||||||||||
| Total operating expenses | 30,670 | 23,814 | 58,095 | 42,431 | ||||||||||||
| Loss from operations | (17,087 | ) | (13,963 | ) | (28,887 | ) | (19,576 | ) | ||||||||
| Other income: | ||||||||||||||||
| Gain on equity investment | 4,156 | - | 4,156 | - | ||||||||||||
| Change in fair value | 8,359 | 12,661 | 5,280 | 12,034 | ||||||||||||
| Interest income | 570 | 524 | 1,269 | 962 | ||||||||||||
| Total other income | 13,085 | 13,185 | 10,705 | 12,996 | ||||||||||||
| Loss before income taxes | (4,002 | ) | (778 | ) | (18,182 | ) | (6,580 | ) | ||||||||
| Income tax expense (benefit) | 64 | (51 | ) | 155 | (5 | ) | ||||||||||
| Net loss | (4,066 | ) | (727 | ) | (18,337 | ) | (6,575 | ) | ||||||||
| Net loss attributable to noncontrolling interest | (716 | ) | (227 | ) | (1,161 | ) | (281 | ) | ||||||||
| Net loss attributable to Schr dinger common and limited common stockholders | $ | (3,350 | ) | $ | (500 | ) | $ | (17,176 | ) | $ | (6,294 | ) | ||||
| Net loss per share attributable to Schr dinger common and limited common stockholders, basic and diluted: | $ | (0.05 | ) | $ | (0.01 | ) | $ | (0.33 | ) | $ | (0.14 | ) | ||||
| Weighted average shares used to compute net loss per share attributable to Schr dinger common and limited common stockholders, basic and diluted: | 63,296,366 | 44,495,701 | 51,981,647 | 44,493,667 |
| Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
| (in thousands, except for share and per share amounts) | ||||||||
| Assets | June 30, 2020 | December 31, 2019 | ||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 110,380 | $ | 25,986 | ||||
| Restricted cash | 500 | 500 | ||||||
| Marketable securities | 173,646 | 59,844 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $50 and $50 | 13,849 | 18,676 | ||||||
| Unbilled and other receivables | 3,345 | 7,062 | ||||||
| Prepaid expenses | 5,294 | 6,468 | ||||||
| Total current assets | 307,014 | 118,536 | ||||||
| Property and equipment, net | 5,837 | 6,268 | ||||||
| Equity investments | 22,680 | 15,366 | ||||||
| Right of use assets | 11,918 | 12,762 | ||||||
| Other assets | 2,102 | 2,338 | ||||||
| Total assets | $ | 349,551 | $ | 155,270 | ||||
| Liabilities, Convertible Preferred Stock, and Stockholders' Equity (Deficit) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 5,523 | $ | 3,524 | ||||
| Accrued payroll, taxes, and benefits | 5,757 | 7,034 | ||||||
| Deferred revenue | 23,138 | 25,054 | ||||||
| Lease liabilities | 5,839 | 5,584 | ||||||
| Other accrued liabilities | 2,791 | 3,824 | ||||||
| Total current liabilities | 43,048 | 45,020 | ||||||
| Deferred revenue, long-term | 1,979 | 2,205 | ||||||
| Lease liabilities, long-term | 7,777 | 8,888 | ||||||
| Other liabilities, long-term | 600 | 900 | ||||||
| Total liabilities | 53,404 | 57,013 | ||||||
| Commitments and contingencies | ||||||||
| Convertible preferred stock: | ||||||||
| Series E convertible preferred stock, $0.01 par value. Authorized zero and 77,150,132 shares; zero and 73,795,777 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively | - | 109,270 | ||||||
| Series D convertible preferred stock, $0.01 par value. Authorized zero and 39,540,611 shares; zero and 39,540,611 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively | - | 22,000 | ||||||
| Series C convertible preferred stock, $0.01 par value. Authorized zero and 47,242,235 shares; zero and 47,242,235 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively | - | 19,844 | ||||||
| Series B convertible preferred stock, $0.01 par value. Authorized zero and 29,468,101 shares; zero and 29,468,101 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively | - | 9,840 | ||||||
| Series A convertible preferred stock, $0.01 par value. Authorized zero and 134,704,785 shares; zero and 134,704,785 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively | - | 30,626 | ||||||
| Total convertible preferred stock | - | 191,580 | ||||||
| Stockholders' equity (deficit): | ||||||||
| Common stock, $0.01 par value. Authorized 500,000,000 and 425,000,000 shares; 50,139,639 and 6,121,821 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively | 501 | 61 | ||||||
| Limited common stock, $0.01 par value. Authorized 100,000,000 and 146,199,885 shares; 13,164,193 and zero shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively | 132 | - | ||||||
| Additional paid-in capital | 417,032 | 11,655 | ||||||
| Accumulated deficit | (122,272 | ) | (105,096 | ) | ||||
| Accumulated other comprehensive income | 727 | 16 | ||||||
| Total stockholders' equity (deficit) of Schr dinger stockholders | 296,120 | (93,364 | ) | |||||
| Noncontrolling interest | 27 | 41 | ||||||
| Total stockholders' equity (deficit) | 296,147 | (93,323 | ) | |||||
| Total liabilities, convertible preferred stock, and stockholders' equity (deficit) | $ | 349,551 | $ | 155,270 |
| Condensed Consolidated Statements of Cash Flows (Unaudited) | ||||||||
| (in thousands) | ||||||||
| Six Months Ended June 30, | ||||||||
| 2020 | 2019 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (18,337 | ) | $ | (6,575 | ) | ||
| Adjustments to reconcile net loss to net cash used in | ||||||||
| operating activities: | ||||||||
| Gain on equity investments | (4,156 | ) | - | |||||
| Noncash revenue from equity investments | (169 | ) | (92 | ) | ||||
| Fair value adjustments | (5,280 | ) | (12,034 | ) | ||||
| Depreciation | 1,758 | 1,793 | ||||||
| Stock-based compensation | 4,504 | 1,051 | ||||||
| Noncash research and development expenses | 1,147 | 227 | ||||||
| Noncash investment accretion | (205 | ) | (212 | ) | ||||
| Decrease (increase) in assets: | ||||||||
| Accounts receivable, net | 4,827 | 233 | ||||||
| Unbilled and other receivables | 4,126 | 1,044 | ||||||
| Reduction in the carrying amount of right of use assets | 2,622 | 1,551 | ||||||
| Prepaid expenses and other assets | (447 | ) | 1,149 | |||||
| Increase (decrease) in liabilities: | ||||||||
| Accounts payable | 1,999 | 123 | ||||||
| Accrued payroll, taxes, and benefits | (1,277 | ) | (35 | ) | ||||
| Deferred revenue | (1,973 | ) | 1,779 | |||||
| Lease liabilities | (2,634 | ) | (1,547 | ) | ||||
| Other accrued liabilities | (1,334 | ) | 2,682 | |||||
| Net cash used in operating activities | (14,829 | ) | (8,863 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | (1,327 | ) | (1,393 | ) | ||||
| Purchases of equity investments | (2,869 | ) | - | |||||
| Distribution from equity investment | 4,582 | - | ||||||
| Purchases of marketable securities | (177,694 | ) | (65,504 | ) | ||||
| Proceeds from sale and maturity of marketable securities | 64,808 | 12,325 | ||||||
| Net cash used in investing activities | (112,500 | ) | (54,572 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Issuances of common stock upon initial public offering, net | 211,491 | - | ||||||
| Issuances of Series E preferred stock, net | - | 29,893 | ||||||
| Issuances of common stock upon stock option exercise | 232 | 180 | ||||||
| Contribution by noncontrolling interest | - | 100 | ||||||
| Net cash provided by financing activities | 211,723 | 30,173 | ||||||
| Net increase (decrease) in cash and cash equivalents and restricted cash | 84,394 | (33,262 | ) | |||||
| Cash and cash equivalents and restricted cash, beginning of period | 26,486 | 77,716 | ||||||
| Cash and cash equivalents and restricted cash, end of period | $ | 110,880 | $ | 44,454 | ||||
| Supplemental disclosure of cash flow and noncash information | ||||||||
| Cash paid for income taxes | $ | 149 | $ | 43 | ||||
| Supplemental disclosure of non-cash investing and financing activities | ||||||||
| Purchases of property and equipment | - | 26 | ||||||
| Acquisitions of right of use assets in exchange for lease obligations | 1,778 | 464 | ||||||
| Right of use assets recognized on adoption | - | 16,475 | ||||||
| Reclass of deferred financing costs to additional paid in capital | 1,858 | - |